Friday, December 26, 2008

ReFi Fever

With rates falling many long-time homeowners are looking to reduce rates. These reductions can easily shave off well over a hundred dollars per month for most moderately valued homes here in New Jersey. This may mean money that can be saved or used elsewhere - very important in times like these. Naturally, the brokers who earn commission for ReFi's are also pushing them strong. (Better than reverse mortgages we suppose.)

ReFi's can save people money, but first one has to qualify. They still need to have approximately 20% equity in their property. They need to have a good credit score. They need to have an ability to repay. Things that were not necessary during the bubble when so many of us bought houses. This of course excludes an ever-growing segment of the population. But for those you may qualify, an article titled Refinancing home leans an option, experts say from the Daily Record has some advice. Lets take a look -

Homeowners with good credit may be well-positioned to refinance their mortgage with interest rates at historic lows, according to Morris-area financial experts.

Despite the economic crisis and tough lending market, banks are willing to refinance mortgages for homeowners with good credit and homes that have not depreciated significantly in value.

The first steps are basic ones, financial planners said. Check your credit score, and check your home's value. Since many neighborhoods have seen home values drop by 15 to 20 percent, it's important to find out how much your home is worth. In cases where home values are lower than a homeowner's debt, banks won't consider refinancing, experts said.

Next, be honest about your credit, your income and your debt, said Dave Muti, a registered mortgage adviser and senior mortgage planner with Millennium Home Mortgage LLC in Parsippany. These days, a good credit score is considered to be in the 700s. If you've had some late payments in recent months, get payments back on track and wait a few months, experts agreed.

Gone are the "no-document" mortgages where banks gave out loans without checking a borrower's credit history, income or job status, Muti said. No one is giving out money without full background checks now, he said. So be prepared to fill out a lot of paperwork. And don't bother to waste everyone's time if you aren't employed and are heavily in debt, he said.

So to sum up - if you have been untouched by the recession so far you may be in a better position. But if you lost your job, your equity, your credit standing, and feel the recession in your everyday life you will not qualify. Good for some but not good enough for enough people.

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