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California Mortgage Online Refinance Article
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Refinancing
from:Most of us find ourselves taking out a loan at one time or another in our lives, whether it's for a home, a car or personal reasons. At the time we take out the loan, it's usually set for some many months with monthly payments due on a certain day. The amount of the monthly payments is based on the current interest rate we're charged on the principal balance we borrow. Often, during the term of the loan, we find ourselves refinancing the loan for one reason or another. The main reason why people do refinancing is usually for a better interest rate, specifically if the loan is a home mortgage. With a home mortgage loan, refinancing for a lower interest rate can make a substantial difference in the total balance of our loan.
Lower interest rates are the most common reason for refinancing mortgage loans, but they are not the only reason for refinancing. When banks lend money for the purchase of a home, they will usually only borrow up to 80% of the value of the home (known as equity). For instance, if a home is valued at $100,000, the maximum amount the bank will borrow is $80,000. As time passes, the balance of the loan decreases while the equity of the home increases. Often home owners need extra cash for remodeling or other personal reasons so they choose refinancing by using the equity of their home as collateral.
An example of this method of refinancing would be that same $100,000 home. After a couple of years, the loan balance may be down to $70,000 while the value of the home may have increased to $120,000. In this scenario, the bank will borrow up to 80% of the home's value, which would be $96,000. This amount is $26,000 more than the borrower owes on his mortgage so they are eligible for $26,000 cash out. Refinancing of home mortgage loans is very popular for this reason.
While home mortgage loans are the loans that are most often refinanced, refinancing is not limited to just mortgages. Many borrowers take out loans when they purchase a car. A lot of people like trading their cars off in a couple of years to get a newer model. Many times the first car loan is not paid off, so they do refinancing of their first car loan and add it to the new car loan. Another reason is for additional cash for personal reasons. As long as the collateral of the loan (car, etc.) is worth more than the balance of the loan, banks are more than happy to help with refinancing, if the payments have been made on time, of course.
California Mortgage Online Refinance News
Mortgage rates fall, but many borrowers will have trouble qualifying - Los Angeles Times
Mortgage rates fall, but many borrowers will have trouble qualifying Los Angeles Times, CA - "I anticipate it will increase refinance activity, but there will be nothing dramatic," said Terrin Griffiths, an economist for the California Credit Union ... |
Commercial loan "nightmare" projected for 2009-JPMorgan - Reuters
Commercial loan "nightmare" projected for 2009-JPMorgan Reuters - He said the slowing economy that is wreaking havoc on cash flow expectations may also present mortgage companies with a dilemma as borrowers confront them ... |
Mortgage rate drop sparks surge in consumer interest - San Jose Mercury News
Mortgage rate drop sparks surge in consumer interest San Jose Mercury News, USA - "Low rates are only part of getting a mortgage, though," said spokesman Jason Menke. Banks are refinancing loans for people with good credit scores, ... |
Are you an idiot to keep paying your mortgage? - ABC15.com (KNXV-TV)
Are you an idiot to keep paying your mortgage? ABC15.com (KNXV-TV), AZ - If you took out a home-equity loan or did a cash-out refinance to buy a car, you'll still owe tax on that debt if it is canceled. For state income taxes, ... |
Meltdown far from over, new mortgage crisis looms - The Associated Press
Meltdown far from over, new mortgage crisis looms The Associated Press - And since investors no longer want to buy commercial mortgages, banks are reluctant to write new loans to refinance those facing foreclosure. California ... |