Dealing with Financial Difficulties… How To Save Your Home

People who have financial difficulties may find themselves in a
situation where they know they can’t continue making their
mortgage payments.

If that happens to you, come up with a game plan before you
become delinquent. Here are the major components of such a plan:

* Document your loss of income. This will position you to
demonstrate to the lender that your inability to pay is
involuntary, should this be necessary later on.

* Estimate your equity in the house. Your equity is what you
could sell it for after sales commissions and paying off your
mortgage. This will help you develop a strategy for dealing with
the lender.

* Determine realistically whether your financial reversal is
temporary or permanent. A temporary reversal is one where, if
you are provided payment relief for up to 6 months, you will be
able to resume regular payments at the end of the period and
repay all the payments you missed within the following 12
months. Prove your case for the reversal being temporary in
writing.

If you can’t meet these conditions, your financial reversal is
considered permanent by the lender. If the change in your status
is permanent, it means that you can resume regular payments only
if the payment is permanently reduced. This requires modifying
the loan contract: reducing the interest rate, extending the
term, or both. You need to understand the position of the
lender.

While some actions you can take on your own, such as selling
your house, other actions have to be negotiated with the lender.
You do better in any negotiation if you know where the other
party is coming from.

The lender’s main objective is to minimize their loss, of
course. The action that minimizes loss to the lender depends on
the equity you have in your house, on whether your financial
reversal is temporary or permanent, and on whether or not you
are dealing in good faith with the lender.

Let’s say you have substantial equity in your house. If you do,
the least costly action to the lender may be foreclosure.

While foreclosure is costly, the lender is entitled to be
reimbursed from the sales proceeds for all foreclosure costs
plus all unpaid interest and principal. They know they won’t
lose any money on the deal.

While foreclosure makes the lender whole, it’s a financial
disaster for you. Your equity is gone, you incur the costs of
moving, and your credit is ruined. You should always avoid
foreclosure even if it means selling your house.

If your financial problems are temporary, and you can persuade
the lender they are, the lender may be willing to provide
payment relief. The lender will probably prefer to keep your
loan rather than to foreclose on it. The burden of proof is on
you in this situation to demonstrate that the relief will really
work.

If your financial problems are permanent, sell the house before
you begin accumulating delinquencies. In a high-equity
situation, there is little hope that the lender will agree to
modify the loan contract, so don’t waste your time trying. Get
out while you can. If you sell, at least you retain your equity
and your credit rating.

If you have little or no equity, and your financial problems are
temporary, it will be easier to persuade the lender to offer
payment relief. With no equity, the foreclosure alternative is
more costly to the lender.

If your financial problems are permanent, the lender probably
will be willing to accept either a “short sale” or a “deed in
lieu of foreclosure.” With a short sale, you sell the house and
pay the lender the sales proceeds; with a deed in lieu of
foreclosure the lender takes title to the house.

In both cases your debt obligation usually is fully discharged.
(It does appear on your credit report, but it’s not as bad a
mark as a foreclosure.) The lender who can get all or most of
his money back in these ways probably will not be willing to
modify your original loan contract. Remember, they just want
their money.

If your equity in the house is negative (you owe more than the
house is worth) but you want to remain there, the lender may
give you payment relief, or make a contract modification if
necessary to make the payment manageable. With negative equity,
these may be the least costly options for the lender.

Your Mortgage Advisor may be able to help you with your
situation and it is always a good idea to sit down and talk with
people that can help you through your difficult times.

Look Past the Bottom Line for a Property’s Potential

It’s unfortunate that many real estate investors tend to look at the bottom line when deliberating about a property, rather than the big picture. The real moneymakers in real estate investments are the people with vision, who think creatively, and are willing to assume some level of risk.

A client’s initial line of questioning about an investment property goes something like this: What has the property’s revenue been for the past three years? How much money will they make starting out? and, How much will they have to invest in the property in the beginning? These are all valid questions. After asking and answering them, investors might try taking off the blinders and thinking outside of the box.

Our population is growing, and land — unlike cars, furniture, or other structures — cannot be remade.

Real estate investors might ask themselves these simple questions:

1. Is there growth in the area where the property is located? Is there anywhere for the growth to go? If so, is it headed towards your property’s location?

2. Has the city or county zoned the are for revitilization or economic development? If so, are there any special funds or benefits available?

3. Is the property accessible to public transportation?

4. Are people beginning to look for homes in this area? If so, investors want to be looking far in advance of others to secure the best property deals.

5. Is the property value in the neighborhood in a slump or an upswing? Purchase during a slump for maximum profits.

The truth is, an investor not make a profit from the property for the first two years. Investment property owners should be looking at the long-term, because they may make money over the next 15 years, while others are not.

Check County Records for Property Value

Do your research, or hire a REALTOR who is motivated to do it correctly. Speak to neighbors to understand the benefits of living there. Look at the neighborhood surrounding the area, and try to determine if those homes have increased in value. For a solid indicator, consider county property tax figures. In some areas you will find a slight increase in the tax base of 1-3%. In other areas, like Williamsburg, Virginia, taxes have increased 15-13%. Tax base increases are linked to improved property value.

Are Revitalization Funds Available?

If your investment property venture is a legitimate business, contact the local Chamber of Commerce and county government to see if there are special funds available for revitalization projects. Most Chamber of Commerces provide such programs as well as classes where investors learn how to access these funds.

There are lots of great examples of properties with potential. I’d like to share some background about one of my own listings, a motel in Williamsburg that has not been open for three years. The owners do not know when it was built - probably in the 50s or 60s. The motel sits on 2 1/3 acres of land, which is all zoned commercially. The motel is situated right on a main thoroughfare that was once called “The Golden Mile” of Williamsburg. It’s geographic location is near York County a phenomenal leader in economic development. York County is enticing businesses by zoning the northern section of town commercial and it will be the site of the new hospital complex that is currently housed in Williamsburg.

Thinking Outside the Box

An important fact is not widely known about the motel’s location, which is key to its investment potential. One mile from the motel property, across from the Williamsburg Pottery, a gated senior community with full amenities (golf courses, recreation center, pool) will break ground in April 2004. The Fortune 500 Company behind the building of this project is set to build 3,000 homes, with an estimated completion date of 2006. Scanning the area, it is obvious there are no European Bakeries, international shops, or stores and eateries which deliver (drug stores, groceries, take out, etc.). A strip mall with leasing options for different businesses, or even an extended stay hotel could be built on this land, and run for a profit. Investors I have shown the property to are wary of the $1,000,000 price tag on the motel. In the coming years this price will seem like a steal for commercial property in the area.

There are many other examples of properties whose potential have not yet been discovered. Remember, once you land that investment property of your dreams, make sure you have a marketing plan, which includes a decent web site, to launch your business. When speculating, trust your creativity and vision, and rely upon the expertise of a REALTOR who knows the area, and shares your vision.

About The Author

Elaine VonCannon is a REALTOR with RE/Max Capital in Williamsburg, Virginia, and she manages investment property as part of her business. Her husband Joe is a contractor who collaborates with her on rehabilitation of properties. She has helped numerous clients invest in and make money on property investments in Southeastern Virginia. vonmor1@cox.net

Secrets of Making Money from Real Estate - Part 3

Great, now how do I actually INVEST in real estate?

Investing in real estate will get easier the more you do it. The first deal may take some time, but like anything, the more you do it the better you’ll become. Here are some guidelines for investing in real estate.

Establish how much you can borrow:

Know your limits. Don’t go looking for $400,000 houses when you can only afford a $200,000 house. Before you invest real estate you must know how much you can borrow from your lender. This can be anywhere from 80%-100%. If you are investing for the first time, banks will most likely only want to lend you 80%-90%. Once you’ve established good relations with the bank after five to ten deals, they will most likely be willing to cut you better deals and offer 100% financing.

Some private lenders may offer you mortgages and home equity loans of 100%-125%, be careful with these especially if they are individuals. Their motives are often only profit.

Most people dread seeing their banker, hoping that THEY will approve your loan application. However from my experience, you need to show the bank who’s boss. By this I mean:

- Do not deal with only one bank, big mistake. Deal with lots of other banks and let the banks know about it. Send out your loan application to as many banks as you like. The best bank that comes back with the best deal wins.
- Always negotiate, just because the “Offered interest rate” is 6% does not mean that they will not lend you lower. Be persistent and confident if you are going to ask for a lower interest rate.

Other things to keep in mind before applying for a loan:
Don’t lie, you’ll get caught and be in a lot of trouble.
Try not to have bad credit history from now on.
Increase your income. Look into taking in foreign exchange students, take a second job, if you own a house with spare rooms consider renting them.

Try to eliminate liability payments. Or lower payments.

Another choice you must make is whether to make the loan an interest only one or a principal and interest loan. I generally prefer to take out interest only loans for several reasons. You will get more cash flow from a property if the payment is interest only. This can go straight to your pocket or cover and unexpected payments with the property. You will also be able to borrow more because you make smaller payments. You may also have the option of paying off the rest of the principal at a later time. Depending where you live, you might also get a tax advantage for taking out an interest only loan. Also, why would you want to pay off debt on something that is already putting money in your pocket and appreciating in value? Wouldn’t the money be better spent on a deposit on another rental property which will give you more cash flow. I know I would rather owe 80% on thirty properties earning me $3,000 a year than two or three properties that I have no debt on.

Does this mean you can’t take out a principal and interest loan? Of course not! If that’s what you really want to do and you still make money on the property, go for it.

Asset protection:

A house will most likely be your biggest and most expensive asset, you’ll certainly want to protect it. There are three ways you can do this. Physical protection, corporate protection, and insurance protection.

Physical protection is what you can change in the properties structure to protect it. So you could go as far as building a moat around the property! The first step would be to not buy a house in areas of high crime or natural disaster such as earthquakes or landslides. Then think about installing security systems, burglar alarms, and fences.

Having your property in a corporate entity such as a limited liability company, corporation, or trust provides legal security and possible tax breaks. This all depends on where you live, so it is important to look into this type of protection if you are thinking about buying a lot of properties.

Insurance is the third type of protection. Many insurance companies or even banks will give you good rates for insurance on an investment property. This is because they consider a house a very safe investment! You can get insured on all kinds of things, like earthquakes, depending on how much you want to pay. Be sure to find out the cost of insurance before you buy a property as well so you can input it into your budget calculations.

There is no I in team:

Before buying a property be sure to have good team. You will definitely need an accountant and a solicitor. It is important to have a team because you can’t do everything, you need specialists. Everyone in your team should be passionate about what they do and know that you are passionate about what you are doing ( real estate investing!). People in your team must have experience in buying property! If you feel that anyone in your team is slack, inexperienced, and has questionable motives don’t work with them anymore.

You may also find It of use to work with a real estate agent who is a property investor themselves. This can be good because If the agent invests in property he or she will have a good idea of what your looking for. However make sure you know the agent’s motives. If they are a property investor themselves, why wouldn’t they buy the property?

Next, Learn how to analyse a deal in Part 4.

This article was written by John Whiteside. The original article can be found here http://www.use-your-equity.com/realestateinvesting.html . Use-Your-Equity can show you how to create value in your home, then show you how to use the newly created equity to make money. http://www.use-your-equity.com for more information.

Nevada Real Estate - A Very Good Gamble!

When you think of Nevada, Las Vegas and gambling are the first things to come to mind. In truth, Nevada real estate is a far better bet than anything you’ll find in a casino.

Nevada

Nevada is dominated by Las Vegas and no bolder statement could exist for American ingenuity. Where else in the world can you find a huge tourist attraction in the middle of an absolutely sun scorched state? I would be willing to gamble a pretty penny there is no other such place.

Centralized populations and heat characterize Nevada. There are two primary cities, Las Vegas and Reno, in which ninety percent of the population lives within 20 minutes. As to heat, Las Vegas is as hot as Phoenix in the summer, but with so much more to do. Still, if you have problems with heat, Nevada real estate may not be for you.

Nevada Real Estate

Can you name the state with the greatest real estate appreciation for the last 12 months? You might be surprised to learn it is Nevada with over 28 percent appreciation. Think about that for a minute. If the pace continues, the average home in Nevada will double in value in less than four years! That is truly an outstanding rate of return.

Although the rate of appreciation is amazing, Nevada real estate is still reasonably priced. The average single-family home in Las Vegas goes for $360,000. In Reno, the price jumps to a still reasonable $440,000. Purchase a home in Nevada and you could easily be looking at making $200,000 over the next two years.

Viva Las Vegas real estate!

Raynor James is with www.fsboamerica.org - FSBO homes for sale by owner. Visit our “sell my home” page at www.fsboamerica.org/seller.cfm to sell your home yourself with a free 1 month listing.

Real Estate Agents and Zillow - On the Importance to Stay Competitive in the Information Age

Journalists and real estate experts have been debating about Zillow, the new brainchild of Richard Barton, and its impact on the real estate industry. Even if Zillow is not as revolutionary as many had anticipated - for better or for worse - it is the latest evidence of how eager people are for information. So eager that the Web site crashed the day it launched because it received 300,000 page viewsmore than the server could handle.

The Internet has changed the way people access all kinds of information because it empowers them with data that was previously only available to specialists and professionals.

The real estate industry is not exempt from these changes. However, instead of being overwhelmed by new technologies, real estate agents have been using them to stay competitive. In a 2002 survey, the NAR found that 63 percent of Realtors have either a personal Web site or space for their own Web pages on their brokerage’s Web site. Furthermore, 94 percent of the survey’s respondents said they use e-mail to communicate with their clients.

But Zillow goes a long way in providing people with valuable information - although some might argue about the accuracy of some of it. Everyone can now do a home appraisal by using a tool called “Zestimate.” People can also look at the price change or the tax information of a particular property.

In the face of the “Zillow threat” the question is whether real estate agents and brokers are going to keep the upper hand in their business, or whether they are doomed to loose it to some newcomer.
In an interview with the New York Observer, Dottie Herman, chief executive of the New York brokerage Prudential Douglas Elliman, talked about Zillow and other real estate search engines on the rise. “There is no reason any of these sites should exist,” Herman said. “We should never have had that competition, because we should have had it on our sites. We should have done it a long time ago.”

Whether or not Zillow succeeds, its very existence should come as a reminder to real estate agents that consumer behavior continues to change because of the Internet. To stay competitive in the information age, professionals in the real estate industry need to provide the same kind of tools on their Web sites as those found on Zillow and other online competitors.

Kris Beldin is a PR coordinator for 10x Media, a marketing solutions company.
Estatblished in 2003, 10x Media has expanded its online presence through consumer information networks Inside Real Estate, Inside Finances and Grab Real Estate which contain thousands of pages for city and state specific real estate information across the nation.

Kings Bay Georgia Real Estate - An Amusing Tale About a Real Estate Agent

This story is true and not meant to hurt anyone, but the more that I think about what happened, the more it makes me laugh. I hope that you not only get a chuckle from it as I did, but take your time and look for a professional real estate agent.

Sometime back I was handling a tranaction for a client that was buying a home. A situation arose that was beyond anyone’s control. I am a get involved and make it work type mortgage lender, so I jumped right into the problem looking for a remedy. I quickly thought of a way to make this real estate transaction work in the best interest of all parties. However, the closing date was going to be delayed a few days during the process. I informed all parties of the problem. My client of whom is most important to me, had no problem with the delay and was happy that I had found resolution to the problem. Well, I am feeling good about what I had done and moved quickly to get the tranaction toward the closing table.

The next day I spoke with this Realtor and they told me they would bring documents, amendments, etc. to me the next morning. When they arrived, they had nothing that I really needed, so we talked a little and I told this agent what I needed. They said they would have it later that day.

I went to a neighboring city on business after that. Early that afternoon, I received a call from an interested party saying this agent was angry with me and that I was a liar. Well, I considered that this agent was new in the business and didn’t seem very bright, so I decided to call the agent and set the record straight. I called, no answer, so I left a message on the agents voice mail to call me>

The agent called back and this is what the agent said: I am typing the words just as they were pronounced: I said Hello, how are you? The agent said I aint doing wurf a krap, you done told me 3 or 4 lies and I am sick of it. I quickly said, calm down, I haven’t lied to you, there is obviously a misunderstanding here. The agent didn’t hear a word I said, as the agent was yelling the whole time.The agent said I am sick en tired of dis shit! I am going to come up er and kick yo ass! Then the agent said you aint nuttin but an ole drunk, Ima coming up er and whoop yor ass. Then they hung up on me!

Well, I was kind of angry at first. Then I thought about Hee Haw and it made me laugh. At the same time I was laughing I thought about how unprofessional this real estate agent was and how scary it is that someone obviously that ignorant could pass the real estate exam. Not to mention, who did the hiring here? You have to qustion their professionalism as well. I can’t imagine anyone buying anything from this person that wasn’t handed out the window of a drive-thru! Geez!

Well, it takes all kinds to make the world go round. But, if you are going to select a real estate agent to help you make the biggest monetary decision in your life, by all means interview them. HEE HAW!

Glenn Keller is a mortgage professional and decided to write this article so homebuyers to be will take the time and search for a professional real estate agent. I feel that it is good to find humor in everything.

Property Investing Secrets 4

Property Investing Secrets:

How to Sell to 100% of the Market Place Using Lease Options

When property investing, you will find if you make houses easy for people to buy, your properties will become easier to sell. Most people who are selling houses today are selling to the 80% of the population who have good enough credit to qualify for a bank loan. These buyers have choice. They have been approved for a loan and they can look at 20 or 30 properties and negotiate hard with the sellers. It’s important to note when property investing that this is not necessarily your market when you sell on a lease option.

I’ve found when property investing that when your exit strategy is to lease option to a new buyer you’re targeting people who may not immediately qualify for a bank loan. This makes up about 20% of the population. Perhaps they are investors who can’t get any more bank loans or they’re new to the country and haven’t established a credit file that will satisfy banks. Sometimes they have a lot of cash but didn’t pay their credit card or phone bills on time and they can’t qualify for a loan due to these credit issues. Also a divorce will hurt credit files. Usually it is not major things, it is just credit issues that stop people from getting a bank loan today, but they can probably qualify in a year or two.

And what you’re going to find is when you’re property investing is that by offering a lease option to new buyers you will appeal to 100% of the market place who are looking to buy a property, not just the 80%. Later down the track after you buyers have made payments to you they will probably want to refinance and pay you off in a couple of years.

A fundamental rule of property investing is when you lease option you are attracting a lot more people because you don’t have the same guidelines as a bank. You make it a lot easier for people to get in-to purchase a property. And the benefit to you is that you’ve made your property easier to sell.

Rick Otton is the director of We Buy Houses Pty Ltd. He has been property investing full time for 14 years. Rick has completed over 351 property transactions in Australia and the United States.

Rick specialises in creating positive cash flow through a variety of strategies he perfected in the United States and adapted to Australian conditions. He sells home study courses on vendor finance, one year mentoring program as well as a yearly 3 day boot camp on the Gold Coast. Go to http://www.rickotton.com for more property investing information ring 1800 003 588 in Australia.

Sunny Isles Real Estate: Sunny Isles Condos and 5 Tips to Boast Profit

Sunny Isles Condos appreciated 25% last year. The exciting news is learning about who is investing in Sunny Isles real estate.

Sunny Isles beach is 2.5 mile-long fine sand beach offering luxury oceanfront living boating, fishing and tennis, abundant shopping, dining and entertainment options. Combine that with highly rated school district.

Oceania, Trump Royale, Trump Grande, Trump Towers…just a few of the new ocean front luxury condos that offer the beautiful south Florida life style. It’s the City of Sun and Sea (being called the new American Rivera), located on a barrier island in Miami-Dade County, bounded by the Atlantic Ocean on the east, the Intracoastal Waterway on the west.

The Leading Players

Few weeks ago, Donald Trump was in Sunny Isles Beach celebrating his recent project “Trump Towers”. By 2008, three oceanfront Trump Towers will be ready for occupancy. They are offered now at Preconstruction prices from the 800’s. The first 2 towers sold in record times and only few units remain in the 3rd tower.

Trump joined forces with large developers in the area to build the towers. This major financial commitment by Trump and partners is a vote of confidence in the future of Sunny Isles beach real estate and the Condo market. Trump is also involved in other luxury projects in South Florida.

Buyers of Sunny Isles beach real estate have been rewarded with high returns on their investment.

5 tips when buying a condo to protect your investment:

- Buy from reputable developers to ensure quality and avoid costly mistakes

- Ensure your view is protected (research future projects)

- research local market prices for comparable projects

- If you plan on renting your condo, research occupancy rate and rental policy to ensure that there is no waiting period to rent your unit

- If you are not local, find a management company or consider Condo-Hotels where major operators can manage your condo and share the profit. There is condo-hotel preconstruction in Sunny Isles Beach that is presenting a good value and return on investment.

Sunny Isles is being transformed in many aspects. It’s in preparation for future residents of Trump Towers and similar class of luxury condos.

It’s historical time and great area to own value real estate to enjoy and profit.

Andrew James
(786) 326-7776

Info@MiamiNewConstructionGuide.com
http://www.MiamiNewConstructionGuide.com

Andrew S James is an acknowledged expert realtor and resident of Sunny Isle Beach Miami. Andrew brings over 20 years expertise in Real Estate Investing combined with strong background in 1031 Exchange, tax savings strategies, Internet and computer engineering. Miami New Construction Guide has an impeccable reputation for its integrity and marketing ability.
They guarantee to save buyers 20K.

Homebuyers Should Steer Clear of White Elephant Properties

First time homebuyers need to know what type of properties might speak to them but not to the majority of homebuyers when they need to sell. According to industry sources the average homebuyer stays in their first home just shy of six years. Buying a white elephant can be a costly mistake, both in selling price and long market times to find the buyer willing to take a chance on a home that doesn’t fit the market.

Features, location and style can create a white elephant property. Mark Nash author of 1001 Tips for Buying and Selling a Home updates homebuyers on what to stay away from when looking for a home. Understanding that all homes are not created equal, Nash outlines what the top elephants are in today’s market.

-Homes that back up or look onto cemeteries. Many homebuyers are very cautious about purchasing a home that features a view of a cemetery. Cultural customs and plain old creepiness keep buyers away from homes that overlook headstones and spooky mausoleums.

-Off-beat locations such as busy streets, corner lots, noisy trains and jets will be more difficult to sell to choosy buyers. Buyers want quiet, middle of the block locations away from busy intersections and train tracks, both commuter and freight lines. You might get a discount when you buy for a second rate location, but it’s one thing you’ll never be able to improve.

-Buy properties that stay in demand. Many smaller homes will fit your budget, but determine if they are in demand by buyers. One bedrooms have a limited audience. Buying a contemporary ( even if it’s a steal) in a neighborhood of colonials will be a tough sell.

-Basement bathrooms and bedrooms don’t have the same appeal as if they are above grade. Some buyers have security issues as well for garden level condos.

-Tuck under garages. Even though news reports on fires originating in automobiles are low, many homebuyers don’t like the idea of sleeping over garages filled with gasoline.

-Mansard roofs. Popular in the the 1970’s this roof style is a hard sell with buyers today. Often seen on a second floor of a two story home, the dormer windows protruding from a sloped roof say ugly to homebuyers.

-In-ground swimming pools in northern climates. With the limited season, the amount of space a pool requires in a back yard and the built in maintenance, many buyers won’t even look at a home with pool.

-Homes on a crawl space when full basements are the norm. Each area of the country has foundation styles that are the custom. Steer clear of crawl spaces when full stand-up height basements are in over two-thirds of homes. In areas where crawl spaces are the norm, steer clear of slab foundations, many buyers find rooms on slabs are cold in winter months.

-Homes that lack central heating systems. Mortgage lenders and buyers appreciate the utility of central heating. If a home you are interested has a wood or other alternative heat source, factor in adding a central system before you resell.

-Earth-sheltered homes. Popular in the 1980’s and very energy efficient, earth homes are not the rage with most home buyers and can be difficult to finance. If you plan to stay a long time, potential resale issues might not be your main concern.

-Homes with knob and tube wiring. Very old homes from the early 1900’s had knob and tube electrical wiring. If a home you are interested is entirely or partially wired with knob and tube, check with your homeowners insurance company before you sign on the line.

Mark Nash’s fourth real estate book, “1001 Tips for Buying and Selling a Home” (2005), and working as a real estate broker in Chicago are the foundation for his consumer-centric real estate perspective which has been featured on ABC-TV, CBS The Early Show, Bloomberg TV, CNN-TV, Chicago Sun Times & Tribune, Fidelity Investor’s Weekly, Dow Jones Market Watch, MSNBC.com, The New York Times, Realty Times, Universal Press Syndicate and USA Today.

Thinking About Refinancing Your Loan?

Refinancing your home or property is a big decision that could drastically affect your financial future, for the good or the bad, depending on how smart you go about the process. Take the time to explore all of the different refinancing options you have available to you. Many loan agents offer you refinancing deals that seem too good to be true, and while most of them seem to have your best interests at heart, do try to keep in mind that they are not paid unless they approve you for a loan–and you take it. Refinancing your mortgage can lower your monthly payments, lower the amount of interest you pay on your loan, or even shorten the term of your mortgage without having to pay a penalty for early mortgage pay off.

Refinancing a mortgage usually involves allowing a loan company to pay off your original home loan in return for you signing a loan contract with them. Most times, the second loan is more beneficial to the mortgagee, especially for that present time.

There are a couple of things you want to consider when trying to decide whether or not to refinance your home loan. First off, a lender usually charges fees on a point system; the points on your mortgage can range anywhere from zero points to four, depending on the credit worthiness of the borrower, and the type of lender you are using. Some lenders may offer a much lower interest rate with a higher number of points, while others may offer a higher interest rate and only zero to one point involved. Points are fees that are equal to one percent of the face value of the loan. A $200,000 loan with three points would cost the borrower $6,000 up front. A lower number of discount points may cause the loan to have a higher interest rate than the loan you are thinking of refinancing, perhaps causing your loan to cost you more in the end.

Of course, when thinking of refinancing, you are going to want to make sure that it will be in your benefit! The penalty costs of paying off your loan or mortgage early, the cost of appraising your home, related attorney costs, settlement fees, and closing costs are all amounts that should be taken into consideration when one is refinancing. As far as your current loan is concerned, these are all costs that, more often than not, have already been taken care of and you could be making things worse for yourself by taking these things on again, especially if your reason for refinancing is a rather tight financial situation.

The mistake not to make is to refinance to save your mortgage, to keep a bank or lender from foreclosing on your property. While sometimes situations like this are inescapable, borrowers who attempt to refinance their properties and homes under conditions such as this often end up essentially paying more than they were, saving their property and possibly harming their credit in the process.

Copyright 2005 http://www.2nd-mortgage-tips.com
This article may be used as long as the links remain live and the resource box stays with this article.

Tracy Price is a staff writer at http://www.2nd-mortgage-tips.com
Please visit for more useful tips on mortgages and refinancing a mortgage.