Refinancing real estate is a big business. You may have heard the term “conforming” and wondered what a loan would conform to? The answer is that loans that have certain characteristics and are of a certain type of considered confirming and can be sold into the stock and bond market. As a typical mortgage holder, this buying and trading is almost invisible to you and with the exception of possibly a letter saying your loan was sold, everything about the loan stays the same.

Refinancing a home mortgage is much easier than applying for a completely new one. There are two major type of refinancing options. Those where you are simply refinancing to gain a lower interest rate and new loans where you are looking to take out some of your equity in cash.

The first option, that of lowering your interest rate may at first seem like a good deal. Remember however that during the first few years of a loan, the huge majority of the payments all go to interest. By doing a refi, you are able to lower your payment and get a lower interest rate but you also start all over on that 30 year mortgage. So you pay a little less money per month but pay it for a longer period of time. Be certain to check and see if even with the lower interest rate which way actually costs you more in the long term.

Another thing to consider is the cost of the loan. If you’re NOT a long term type or homeowner and plan to move within the next 3-5 years, does refinancing a home mortgage make sense when all the costs and fees are considered?

Taking out equity from your home is another popular reason to consider refinancing a home mortgage. In this scenario, a homeowner isn’t as concerned about lowering their monthly payments but wants cash for a variety of reasons. Once again however, a new mortgage may not be the best solution. Consider a 2nd mortgage. Seconds are typically for 15 years and they have the benefit of preserving your great interest rate on your primary mortgage. There are several types of loans that are essentially a second mortgage on your home.

Anyone considering a home mortgage refinance should look at all the options before making the decision. Know and understand your situation and if you plan on being in the home long term. (>5years). Check out the available options and make the right decision for your situation. Refinancing a home mortgage can make a lot of sense given the right circumstances.

By: Abbie Frank

Nobody plans to fall behind with the payments on their mortgage, but life has a funny way of throwing difficult times at us, whether it be unexpected medical bills, or loss of employment, these things have a way of coming up when we least expect them and normally we are not prepared for them! If we have no money stashed away for a rainy day, being able to afford these unexpected bills or expenses and keeping the daily running of our house up, including paying loans or mortgages, proves impossible. Bills go by unpaid, things that would seem urgent and important before, may now go down in their ranking of importance. This is where many people end up defaulting on their mortgage.

Default on a mortgage is where required payments are not made on time or not paid at all. It can also be not complying with certain rules and regulations that are set out before the contract is made.

It is really important to try and make all of your payments on your mortgage in time. We’ve all heard the warning “if repayments on your mortgage are not kept up, you run the risk of losing your home” Well, it’s true! If, however, for whatever reason, it is not possible to keep up your payments, there is a Mortgage Default procedure that you must go through.

A default on the mortgage is where a payment is missed, and is more than thirty days late. It will be noted on the clients credit report and affects their credit score negatively. When a number of mortgage payments is missed, usually about three or four, the client is classed as being in default. If you are running behind on your payments, the best thing you should do is contact your mortgage provider and tell them the news. Many loan and mortgage companies will be happy enough to try and work out some sort of agreement with you in order to help you out of your difficult position. That is, however, if you do inform them and you don’t bury your head in the sand! The longer you wait to inform them, the worse it will end up being for you, and the less likely they are to want to negotiate terms. Missing three or four payments, when you are referred to as being in default, most mortgage companies will need the complete payment of the missed payments in full as well as paying any late fees you may have accumulated.

If you are unable to pay the balance off in full, the mortgage company has rights to start foreclosure proceedings. There are some ways in which you can prevent or try to delay the foreclosure proceedings including selling your home, declaring yourself bankrupt or loan modification. Again, these things can only really be arranged if you talk to your mortgage provider early enough.

If there is no agreement reached, a foreclosure notice will be given, generally by mail. The letter will state a period of time in which you can pay off the missed payments and reinstate the mortgage. If this isn’t done, you will then be given a notice of foreclosure sale, where your property will be put up for auction and bought by the highest bidder. You must then move out of your house within a set period of time or face being evicted!

Obviously, this isn’t the most pleasant experience in the world, so if you do get yourself into this position, speak to your lender as soon as possible to see if there is away you can negotiate terms and not lose your house due to missing payments. The most important thing to remember is to try your very hardest to keep up repayments with your mortgage!

By: Jim Power