There are a number of reasons for refinancing your home loan regardless of your financial situation or the economy. Refinancing can help you lower your monthly payment amount, qualify for better terms or interest rates, even build equity in your home at a faster rate. Here are three common reasons for refinancing your mortgage and the advantages that go along with them

I. Consolidate Your Bills

One of the best reasons for refinancing your mortgage is to cash out equity in your home for the purpose of consolidating your higher interest debts. The advantage of refinancing over using other types of equity loans is that you will be left with one monthly payment and a lower interest rate. When you refinance your existing mortgage and take cash back you are actually borrowing more with the new loan than you owe on your existing mortgage. The difference between the old mortgage and your new loan will be paid to you at closing; this is the money you will use to pay off your bills.

II. Lower Your Monthly Mortgage Payment

Many homeowners refinance their home loans because they need a lower monthly payment amount. There are two ways to lower your monthly payment when refinancing. You can qualify for a lower interest rate and extend the term of your new mortgage. The term length of a mortgage is the amount of time the lender grants you to repay the loan. The most common term length is thirty years; however, there are now forty and fifty year mortgage terms available. If you do not qualify for a lower interest rate you can still lower your payment amount by choosing a home loan with a longer term length.

III. Build Equity in Your Home Faster

Many homeowners refinance their home loans to build equity in their homes at a faster rate. By shortening the term length of the new mortgage loan, your new mortgage payment will go up and you will build equity in your home faster. Common term lengths for homeowners refinancing for this reason are 10 to 15 years. You can learn more about your home loan options and common mistakes to avoid when refinancing by registering for a free mortgage guidebook.

Though usually called homeowner loans or personal loans for homeowners, the truth is that these loans are better referred to as home equity loans. The name refers to the secured nature of the loan as home equity loans are backed up by the equity you’ve built on your home.

Home equity is the remaining value of the property that is not affected by mortgages or liens. The difference between the value of the property and the mortgage loan amount that is still owed, constitutes equity. After subtracting the remaining liens (if present), the amount you get will be the home equity loan security.

As with mortgages, the lender can resort to take legal action against the property to recover his money if the borrower fails to meet the monthly payments. However, the legal processes in both cases are essentially different as mortgages have a priority on the property over the home equity loans.

Fast Approval Process

When it comes to timing, as opposed to mortgage loans and refinance mortgage loans, homeowner loans have instant approval. Most of the paperwork needed is already prepared due to the previous mortgage loan and thus only some simple checks have to be done.

Depending on the complexity of the property’s appraisal and the condition of the borrower’s credit report, the loan approval process can take any time between 72 business Hs. and two weeks. Some lenders take more time than others when evaluating applications so you might want to ask the estimate delay before applying if you are very short on time.

Lower Rates, Higher Amounts

Since this loan is requested against property, the amount of money you can obtain is significantly higher than other forms of personal loans. However, it will always be limited to the amount of home equity available in your property. There are some lenders willing to lend over this limit but since in that case only part of the loan is covered, the interest rate charged will be higher.

Nevertheless, in both cases, the interest rate charged for homeowner loans is significantly lower than that of unsecured personal loans. This is due to the lower risk involved for the lender when lending against a property’s equity. For larger loan amounts, requesting a homeowner loan instead of an unsecured loan can save you thousands of dollars over the whole life of the loan.

If you are a homeowner with a Home Equity Line of Credit (HELOC) in addition to your mortgage, you may be concerned with the effect of rising interest rates on your monthly payments. These equity lines of credit come with variable interest rates that the lender will adjust at regular intervals. To avoid paying too much for the financing on your equity line of credit, consider converting the loan to a fixed interest rate.

If you have decided to convert your equity line of credit there are several ways to accomplish this. Here are three ways to convert your equity line and save money in the process.

I. Refinance & Consolidate Your Loans

The most affordable option may be refinancing your primary mortgage and equity line of credit. This will allow you to consolidate the loans to one monthly payment. You will also qualify for a lower interest rate since you are only carrying one mortgage. A fixed interest rate will allow you to budget for a mortgage payment that does not change when interest rates go up.

II. Convert to a Second Mortgage

Second mortgage loans pay out a fixed amount in one sum at a fixed interest rate. You may have the option of converting your equity line of credit to a second mortgage. Once you convert the equity line you will no longer be able to borrow against it; however, you will have a fixed interest rate locked in. You will need to contact your lender to see if your equity line of credit qualifies for conversion.

III. Apply for a New Home Equity Loan

If your lender is not willing to convert your equity line into a second mortgage, you may be able to refinance the line of credit with another equity loan. If you qualify for a second mortgage based on the value of your home you can use the proceeds from this loan to pay off your equity line of credit. To learn more about your mortgage and home equity options, register for a free mortgage guidebook.

To get your free mortgage guidebook visit RefiAdvisor.com using the link below.

If you are in the process of refinancing your home loan you can save yourself a lot of money by shopping for the most competitive loan offer. Comparison shopping means collecting no obligation quotes from a variety of mortgage lenders and comparing all aspects of the loans. Here are several tips to help you compare loan offers and find the best home loan for your financial situation.

Refinancing your mortgage can save you a lot of money if you do it correctly. Because there are expenses involved when refinancing your home loan it will take you several years to recoup your expenses. You should factor how long you plan on staying in your home into your decision to refinance the loan. You can use a mortgage calculator to determine if refinancing will save you money based on prevailing interest rates and your monthly budget.

Shop Around for the Best Mortgage

Once you have decided to refinance your mortgage you can save yourself a lot of money by researching mortgage lenders and shopping for the best loan. The Internet is an excellent tool for comparing loan offers from dozens of mortgage lenders. When you compare loan offers it is important to compare all aspects of the loans and not rely solely on the Annual Percentage Rate or interest rate. Homeowners that focus solely on interest rates often overlook many other fees and closing costs.

Use No Obligation Mortgage Quotes

Stated income and credit quotes allow you to receive loan information without accessing your credit or needing sensitive information. Ask the lenders you consider for a copy of the Good Faith Estimate for comparing loan quotes. You can learn more about shopping for the best mortgage while avoiding common homeowner mistakes by registering for a free mortgage guidebook.

People across the nation are searching for alternative financing solutions for home refinancing, because more likely than not they are already locked into a great rate for thirty years. Take a look at the mortgage refinance loan's little brother, the second mortgage. This junior loan is usually smaller than the older, more senior mortgage loan, but it is more flexible and it may not be as difficult to deal with. Examine the benefits of the younger more agile second mortgage and you may reconsider refinancing your 1st mortgage.

# Second mortgages require no private mortgage insurance (pmi).

# You can borrow up to 125% of the appraised value of your home.

# 2nd Mortgage loans cohesively subordinate to your existing mortgage.

# Flexible credit lines allow you to access money any time.

# Home equity lines of credit can be converted to a fixed rate term.

Second mortgage loans are great financing tools for getting cash out to finance, pool construction, debt consolidation, and even purchase a 2nd home. According to a recent study by Harvard University's Joint Center for Housing Studies those who own second homes are more likely to reduce spending on their primary residence relative to their income than those who do not own second homes. This Harvard study notes "compelling evidence that the choice to adjust (housing) consumption by adding a second home rather than by increasing the value of the primary residence must lower demand elasticities for primary homes among second-home owners even more."

Whatever kind of loan you choose when looking for cash out using you home, make sure that you understand how the loan works. You need to know how the interest is being calculated and if you you have a pre-penalty for early pay off. Above all, take the money you get from the home equity loan and invest it wisely.

If you are in the process of refinancing your home loan with your bank, you will overpay for your new loan no matter where you bank. There are pros and cons with any type of mortgage lender and if you aren’t careful you will pay too much. Here are several reasons why you should never take out a mortgage loan from your bank.

Banks make the majority of their profit by selling your home loan to the secondary mortgage market. Banks are not required to disclose their mark up on your mortgage loan. The mortgage you take out from the bank is funded entirely by the bank and pooled together with their other loans. Once you close on the mortgage the bank will turn around and sell your loan to secondary mortgage market collecting their profit. No one but the bank knows how much they are profiting by selling your loan; the more they overcharge you for the loan, the more the bank will profit.

Pros of Bank Funded Mortgages

• Bank Loans are Convenient
• Bankers are Less Likely to Use Pressure Sales Tactics
• You May Already Have a Relationship with Your Banker

Cons of Bank Funded Mortgages

• Limited Number of Loan Products to Choose From
• No Room for Negotiation on Your Interest Rate
• Interest Rates Are Always Higher
• Banks Are Not Willing to Negotiate Lender Fees and Closing Costs
• Banks are Exempt from Disclosure Rules Provided by the RESPA Act

As you can see the cons of bank funded mortgage loans clearly outweigh and advantages. If you are not familiar with RESPA, it is the Real Estate Settlement Procedures Act that protects borrowers in the United Sates by setting guidelines for disclosure. Banks are exempt from the disclosure rules required of other mortgage lenders. Do you really trust your banker not to take advantage of you?

To learn more about your mortgage options and common mistakes to avoid, register for a free mortgage guidebook.

If you are in the process of taking out a mortgage to purchase your home or refinancing your existing mortgage it is important to understand you rights under the Real Estate Settlement and Procedures Act (RESPA). Here are the basics of the protection RESPA provides homeowners to help you avoid predatory lenders that want to take advantage of you.

The Real Estate Settlement and Procedures Act protects homeowners in the United States from unfair lending practices. RESPA outlines rules for disclosure mortgage lenders are required to follow. Under RESPA you have the following rights:

• You have the right to disclosure about the fees and total cost of your loan, including the interest rate, lender fees, points, and closing costs.

• You have the right to request the lender’s Good Faith Estimate outlining all mortgage fees and settlement charges before agreeing to pay the fees.

• You have the right to know which application and lender fees are not refundable if you decide to cancel your loan application.

• If you are working with a Mortgage Broker you have the right to know exactly what the broker will do for you and how the Mortgage Broker will be compensated for their services.

• You have the right to ask questions about any fees or terms you do not understand on your loan contact or supporting documentation.

• You are protected against lending discrimination based on your race, color religion, sex, marital status, age, national origin, or if you receive income assistance from public funds.

• You have the right to know why your mortgage application is declined and to receive the HUD settlement booklet entitled “Buying Your Home.”

You can learn more about your mortgage options, including common mistakes to avoid by registering for a free mortgage guidebook.

If you are planning to buy a house, you should consider whether you need a 30 year, or 15 year fixed mortgage rates for your monthly payments. It would be ideal if you could have the house paid off as soon as possible, but there are other things that you should look at before you sign any papers.

If you are interested in purchasing a home for your family, you should make sure that the interest rate does not fluctuate over the course of the loan. Lenders may tempt you with deals that are too good to be true, but this often means that they actually are too good to be true. Loans that have 15 year fixed mortgage rates maintain the same amount of interest throughout the duration of the loan. This loan is ideal for people who don’t like surprises.

When my wife and I were looking at houses for sale, we decided to look for loans that have 15 year fixed mortgage rates. We wanted to pay off the house as soon as possible, but we didn’t want to have problems with paying high monthly payments. In addition to considering 15 year loans, we also checked out loans that spanned 30 years as well. We didn’t like the thought of having a mortgage as we were approaching our retirement, so we were hoping to find an ideal loan with 15 year fixed mortgage rates.

However, after taking everything into consideration, my wife and I decided to take a 30 year loan instead. There were significant reasons that led to this decision. The most important factor is that my wife was five months pregnant. This means that her contribution to our monthly finances will be unreliable since she will be raising our child at home. Since loans with 15 year fixed mortgage rates require a high monthly payment, we didn’t want to get in over our heads.

Taking out a 30 year loan would lessen our monthly payments. We also made extra payments throughout the year to make the principal shrink faster. Making a handful of extra payments throughout a twelve month period can knock years off your loan. Although we would have preferred a loan with 15 year fixed mortgage rates, we had to consider our financial needs and abilities. Fortunately, things worked out well for us.

If you understand mortgage terminology and can talk the lingo your loan originator will be less likely to try and take advantage of you. It helps to know what you are talking about when shopping for a mortgage loan. Here is a collection of mortgage terms to help you on the right path when refinancing your home loan.

Discount Points: This is prepaid interest you will pay at closing in exchange for a lower interest rate. Be careful when paying points up front as this fee is often misrepresented and paid to the loan originator as a bonus without any benefit to you.

Origination Points: This is the fee you pay the loan originator for preparing your mortgage loan. A reasonable origination fee is 1-1.5% for a home you are living in.

Yield Spread Premium: This is the commission your loan originator or broker receives when they sell you an interest rate that is higher than you actually qualify. When shopping for a mortgage loan, make sure you receive quotes that do not include YSP.

Good Faith Estimate: Often referred to as the GFE, this document is required by Federal law and discloses all terms and fees associated with a loan. This is an estimate and is only as trustworthy as the broker or lender that creates it.

Junk Fees: This is any fee that violates RESPA. Examples of junk fees include broker “administration” fees, application fees, lock fees, and loan submission fees.

Third Party Fees: These are additional fees incurred when originating your mortgage. Examples include appraisals, loan underwriting, legal fees, and anything else included when closing on your mortgage. These fees are commonly overcharged to boost the profits of your loan originator.

Loan to Value Ratio (LTV): Your loan to value ratio is determined by dividing your loan amount by the value of your home. Loan to Value ratio is an important part of determining your interest rate.

You can learn more about refinancing your mortgage and avoiding common homeowner mistakes by registering for a free mortgage guidebook.

The Internet makes it easy to shop for a new mortgage. You should know that Internet Mortgage lenders are just as guilty of overcharging homeowners for their mortgage loans as Banks and traditional mortgage companies. Here are several tips to help you avoid paying too much when refinancing your mortgage with an online lender.

The Internet is an excellent tool for refinancing your mortgage; you can easily compare loan offers for dozens of online lenders. When you compare online mortgage lenders, you will find they come in two varieties: the first type is a list broker and the second a retail lender or mortgage broker.

List brokers have nothing to do with mortgage loans. They simply put up a flashy website and drive customers to it while collecting their names and contact information. This information is then sold to as many mortgage lenders as possible, enabling the list broker to collect a fee. Retail lenders and mortgage brokers are more familiar; these are the same types of lender that operate offline, but have established an online presence. The advantage of using an online lender is the convenience, speed of processing, non-commission driven customer support, and lower interest rates. Online mortgage lenders like to tell you that they have lower overhead than traditional mortgage lenders and the savings are passed on to you. This is slick marketing at its finest; their overhead has nothing to do with the interest rate you qualify for.

How much can you save by refinancing your mortgage with one of the big names in online mortgage loans? It depends on how much time you have invested comparison shopping for the most competitive mortgage offer. If you read the fine print on their websites you will find they are simply acting as brokers in many of the sates they operate. If your home is in one of these States you will be charged a “co-broker fee” or “Computerized Loan Origination Fee” of as much as $800 just for filling out a form on their website. These sites do not guarantee their interest rates and you will simply be handed off to another lender.

To learn more about qualifying for the best mortgage when refinancing your loan, register for a free mortgage guidebook.

Applying for a home loan for first time mortgage borrowers can be a daunting and confusing task. An alphabet soup family of words is used: FHA, HUD, VA, and more can describe a loan, an agency, or some other plan. How do you know which one is right for you? Well, for starters the Federal Housing Authority of FHA doesn't issue loans, but they do back them. With this in mind, many savvy mortgage companies gear their businesses to helping you obtain these loans especially if conventional financing it out of the picture. Should you work with an FHA lender? Sure, especially if you want to jump into the housing market with some government assistance.

The big advantage in an FHA back mortgage is that the risk of lending money to you is transferred from the lender to the FHA. If you have bad credit, no credit, or simply not enough money to put down on a home, you may still qualify for an FHA backed loan whereas a traditional loan not backed by the FHA could cause you to be turned down.

When visiting a mortgage broker or shopping online for a broker who has FHA experience, you will quickly learn a few things about these types of government backed loans:

Down payments can be extra low, as little as 3% of the home's value versus 5% through conventional loans. In addition, the FHA can require the seller to pay for part of your closing costs while allowing most of the remaining closing costs to be wrapped in the loan. This is particularly helpful for the person who has no spare cash to pay beyond the down payment. You won’t be required to take out private mortgage insurance either which always adds to the cost of a loan.

Another feature of an FHA backed mortgage is that even the 3% figure can be funds that were borrowed or gifted from a relative or friend. Thus, if you don't even have a dollar to put down on a home, then other people's money can come to the rescue.

Many home buyers close their loans, make their payments and don't think about their mortgages again. They don't consider refinancing when they should. If you are among these inattentive homeowners, here are four truths about mortgage refinancing that may surprise you.

Truth #1 – Mortgage Refinancing can save you money. If interest rates have dropped since you got your original loan, refinancing can reduce your monthly payment. When you refinance, you can also choose to shorten your loan term, meaning you will pay less money in interest over the life of the mortgage.

You could also save money by switching from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage. The interest rate on an ARM is based on an index such as the LIBOR or the U.S. Treasury Bill. If they go up, so do your payments. By refinancing to a fixed-rate mortgage, you can prevent payment increases. (Your monthly payment might still increase due to changes in property taxes or insurance, but your principle and interest amounts will stay the same.)

If your original mortgage was for more than 80 percent of your home’s value, you are paying private mortgage insurance (PMI) as part of your monthly payment. As the value of your home increases and the principle on your mortgage decreases, you can get rid of PMI by refinancing for less than 80 percent of your home’s value.

Truth #2 – Mortgage Refinancing is a smart way to access your equity. In the second quarter of 2006, 88 percent of Freddie Mac-owned loans that were refinanced resulted in new mortgages with loan amounts that were at least five percent higher than the original mortgage balances. Homes refinanced during this time had appreciated 33 percent on average since the original mortgage was taken out. The median age of the mortgage was 3.2 years.

“Borrowers who are looking for an inexpensive way to finance home improvements or business investments, or to consolidate high cost debt, are turning to cash-out refinance,” said Amy Crews Cutts, Freddie Mac deputy chief economist. “These borrowers are often willing to refinance into higher rates on their first lien mortgages. . . This is the second consecutive quarter in which the median refinance borrower increased the rate on their first lien mortgage.”

Truth #3 – Mortgage Refinancing is still very popular. According to Frank Nothaft, Freddie Mac chief economist, “The staying power of refinance activity has been much stronger than we initially thought . . . borrowers are reacting to both incentives to cash out home equity through refinance and incentives to change their mortgage as they hit an interest rate adjustment.

Freddie Mac estimates that $500 billion in first lien mortgages will adjust this year and another $650 billion in second liens will see at least one rate change this year. Nationally, home values increased 10.2 percent over the last twelve months.

If you are in the process of refinancing your mortgage and are working with a broker, your mortgage broker could be robbing you blind without you even knowing it. Broker Banks are a special type of lender that is nearly indistinguishable from other mortgage brokers and are exempt from all disclosure laws protecting homeowners in the United States. Here’s how to protect yourself from broker bank fleecing when refinancing your home loan.

When the Real Estate Settlement Procedures (RESPA) legislation was making its way through Congress and the Senate, your friendly neighborhood bankers lobbied intensely to be excluded from the proposed legislation. Millions of dollars changed hands and when RESPA became a law, lo and behold banks were exempt from the newly founded disclosure laws that protect American homeowners from predatory lending practices.

The RESPA loophole for Banks is why you should never apply for a mortgage with your Bank, but what about mortgage brokers? Mortgage brokers are required to disclose under RESPA, but wanted the same loophole afforded to your bank; as a result, Broker-Banks were born. Broker-banks are nearly indistinguishable from any other mortgage broker except for one key factor. Broker-Banks are exempt from the disclosure laws provided by RESPA. This means if a mortgage broker charges you a $1,000 fee for their services, they are required by law to disclose this fee to you. A Broker-Bank can charge you the same $1,000 fee without you even knowing it.

Broker-Banks take advantage of this loophole by exploiting the interest rate you are sold with your mortgage. That’s right; you are sold an interest rate, not qualified by the lender. The Broker-Bank receives a bonus for selling you a loan with a higher interest rate. For every .25% extra you agree to pay on your mortgage interest rate, the Broker-Bank receives a bonus of as much as 1-1.5% of your loan balance. The Broker-Bank overcharges you, pockets a bonus from the lender, and no one is the wiser.

If you are a homeowner that purchased your home with an Option Adjustable Rate Mortgage, you might be feeling the waters rising when it comes to your monthly payments. If you have one of these risky “payment plan” mortgages and have only paid the minimum payment amount, you could be in trouble and don’t even know it. Here are several tips to help you stay afloat with your option ARM and avoid losing your home to foreclosure.

Option Adjustable Rate Mortgages or so called “payment plan” loans are especially troublesome for many homeowners. These loans allow the borrower to choose their payment amount each month from four options, the lowest being a minimum payment amount that does not cover all the interest due that month. The unpaid interest is added on to your loan balance which results in a phenomenon called “negative amortization.” Negative amortization means that your loan is actually growing over time instead of being paid down the way a mortgage is supposed to be paid. When your growing loan balance reaches 125% of what you originally borrowed, the mortgage blows up in your face and the payments skyrocket.

The popularity of these risky loans has soared over the past several years, partly because homeowners don’t understand what they are getting themselves into when borrowing with an option ARM. According to a recent survey of national mortgage lenders over 12% of all mortgages taken out this year are option loans. This is up from .05% of loans in 2003. According to the same survey nearly 80% of homeowners with option ARM loans only make the minimum payment each month; 1 in 5 of these homeowners making the minimum payment will lose their homes at foreclosure.

Refinance Now If You Can

These risky option ARM loans are popular because it’s very easy to qualify for these loans. If you are a homeowner with poor credit refinancing might not be an option; however; if you are able to refinance you should get out of this loan immediately. Choosing a mortgage with a fixed interest rate will give you predictable mortgage payments that you can plan your budget around. You will begin paying down the balance the way a mortgage was intended.

If you are refinancing your mortgage and are considering using a mortgage broker, it is important that you negotiate with your broker for the best loan. Mortgage negotiation intimidates most homeowners; however, when it comes to screening mortgage brokers, the process is very simple. Here are several questions you will need answered when shopping for a mortgage broker that will help you avoid overpaying for your home loan.

Mortgage brokers are a typically a third party that places borrowers with a mortgage lender for a commission. There are several advantages to using a mortgage broker to find your next mortgage loan. Brokers can save you time and money if used with caution. Here are questions to ask your broker before entering into an agreement.

• I’m shopping for a mortgage broker, one with access to a variety of wholesale lenders that close in the lender’s name. Is this how you work?

This is important to determine if the broker is actually a broker and not a broker-bank. Broker-banks are exempt from RESPA legislation that protects homeowners from predatory lenders and will overcharge you for the mortgage every time. You only want to work with a mortgage broker that does not close in their own name.

• Do the quotes come from the wholesale lender’s rate sheets or are you issued a company rate sheet?

This is important because you want your interest rate lock to come from the wholesale lender and not the broker. If the broker locks from a company rate sheet you will get stuck with a higher interest rate because the brokerage company pads the interest rates in order to receive additional commission from the wholesale lender. Make sure the interest rate guarantee you receive comes from the wholesale lender, and not the mortgage company.

• Tell your broker that you will pay 1 to 1.5 points for origination fees and processing fees and no more. Tell the broker you will not pay Yield Spread Premium (YSP). Tell the broker you will pay the necessary third party charges, but will not pay any broker markup.

YSP is the markup the broker adds to your interest rate in order to receive a bonus from the wholesale lender. Mortgage brokers cleverly disguise this markup in their loan documents and Broker-Banks are not required to disclose this markup at all due to a loophole in RESPA legislation.

• Ask your broker to see the original lock confirmation from the wholesale lender and the lock agreement from the broker’s mortgage company. Insist on seeing the HUD documents and the Good Faith Estimate prior to your closing date.

If the broker agrees to these terms you have found a good mortgage broker for your home loan. You can learn more about your mortgage options including common mistakes to avoid by registering for a free mortgage guidebook.