Buying a home is a dream that many people cherish, and sometimes realize. Nowadays, there are various banks, lending firms and other financial organizations that offer a variety of home loans, thereby providing financial assistance to borrowers for buying a home and realizing their dreams.
There are two different types of home loans depending on the mode of interest rate. These include fixed-rate mortgage loans and adjustable-rate mortgage loans.
In case of fixed-rate mortgage loans, interest rates are fixed for the entire period of loan, which means that the borrower is required to pay a similar amount every amount towards mortgage payment.
In case of adjustable-rate mortgage loans, interest rates are low during the initial 2-3 years, but areadjusted periodically depending on the market index. In most cases, the adjustments cause an increase in monthly mortgage payments. Many borrowers default with their monthly payments primarily because they are unable to adjust to the increase in monthly mortgage payments. Defaulting with loan repayments causes a significant damage to the credit history of an individual. In most cases, these individuals end up as bad credit customers. Borrowers defaulting with their mortgage payments or having bad credit often face the risk of home foreclosure. Home loan refinancing is a useful solution for such borrowers.
Apart from paying off existing mortgage loan, people also use refinancing for different reasons. Home loan refinancing is useful in generating cash required for home renovations, for switching between fixed and variable interest rates, and also for obtaining a loan at a lower interest rate. Home loan refinancing is more profitable when the home equity value is high. One can obtain refinanced home loan at a very low rate using high home equity as collateral.
However, one should be really careful while opting for a home loan refinancing. Not every customer has a requirement for home loan refinancing. But, many customers opt for one under the influence of fraudulent loan brokers. It is important to consult an expert from an independent consultancy before considering for a home loan refinancing. Also, the consumer has to pay certain charges towards closing costs and prepayment penalties while going for refinancing, and this cost should be offset by the perceived benefits of refinancing. The entire exercise is useless if the saving is equal to the costs paid.
Home Loan Refinancing
Don't Panic - Refinancing Your Home is Easy
Do you remember a bank called, "Providian?" Some might, depending on where they are located in the United States, as it was not a nation-wide bank. For those who do not remember, Providian was one of the leading credit-card-issuing companies in the country, until it was bought out by Washington Mutual in 2005.
In following, Washington Mutual was bought out by JP Morgan Chase in September, 2008.
Both companies were known for their high approval-rate-percentages regarding credit cards. Washington Mutual was also known for its high approval rate in home mortgages.
As a former employee of Washington Mutual, I am now known as previously working for "one of the largest banking failures in history;" a quote regularly seen in the media. Washington Mutual was not the only bank that was seized by a larger, more powerful financial corporation in the fall of 2008. Wachovia was bought out, and caught in the middle of a messy battle for ownership rights by Wells Fargo and Citibank. Wells Fargo came out on top.
These banking disasters are partial contributors to some of the economic instabilitythat is prevalent in our society at the moment. More importantly, the failure of so many home mortgages has made potential home-buyers rather uneasy about investing their money in property.
The excessive rate of home-mortgage approvals in conjunction with Washington Mutual led to the failure of WAMU LLC and of people's ability to continue making payments on a loan they could never afford in the first place. Therefore, the sudden eruption of 'mortgage crisis's' that hit the media is the leading contributor to the surging panic people experience when debating on whether or not to invest their money in a home.
People are supposed to trust their banks. Washington Mutual could no longer be trusted as a helpful or honest lending source. Homebuyers must realize not all companies operate this way. If you are in the market for financing or refinancing your home, there are places that are dependable and will be responsible for getting our economy back on track.
Texas is a state that did not experience as devastating of a blow as some areas in the U.S. Property values in Texas are in their prime, making right now an opportune time to invest, as the values will skyrocket over the next few years.
