Save Your Money with Mortgage Refinance & Mortgage Loan Modification

by Paul Davenport

When you have bought a home on loan and after paying a portion of the loan amount you seek financing to pay off the remaining money, this process is called mortgage refinance.This can be a good option if you see that the money you save on the interest balances the money you have to pay during refinance.

What are the main steps involved in mortgage refinancing? Mortgage refinance includes the following 3 major steps:
  1. Research: Before you apply for home refinance, you must be aware about how much money you owe on your existing mortgage. Another very important thing that you need to know is the current value of your home. You can find the current value of your home from the internet and for the former information, simply ask your lender. This information is important for you to know that you don't owe more than what your home is currently worth. If so, may be you won't find refinance for your remaining mortgage. However, if you have some equity built then you may be considered a good candidate for refinance.

  2. Seek quotes: You are surely acquainted with this step since you already have a mortgage. Seek quotes from lenders and then make a comparison amongst all of the quotes that you receive.

What are the advantages of mortgage refinance?
  • With cash out refinance you can exchange higher interest rate for lower i.e. you can choose a loan that requires you to pay at lower interest rate than you were already paying on your mortgage. You may find lower interest rates when the Federal Reserve goes into a rate-cutting phase. You can grab your chance then.

  • With a refinance loan, you can shorten the length of your mortgage payment.If you were on a paying term of say 35 years on your old mortgage, you could bring the term down to between 10 and 20 years. With the rate of interest being lower too, you can easily save with such a plan.

Features Home Loan Modification Plan:

A home loan modification, unlike a refinancing, is not a new loan. Instead, it changes the terms, conditions, and other elements of your current home loan. The Government has set aside over $75 billion in funds for mortgage lenders and banks to participate in Obama's "Making Home Affordable" plan. Here are some of the incentives.

-Mortgage lenders and banks can receive up to $1500 for approving homeowners for mortgage loan modifications.

-The Government will make up any of the difference in money a lender may lose using this plan. For instance, a homeowners new monthly mortgage payment can not exceed 31% of their gross monthly income, so if you modify mortgage and the homeowner only pays 31% of their income, the Government will make up the losses.

-The homeowner will get as much as $1000 each year for 5 years just for staying current on their newly modified home loan.

-The total amount you can benefit from the Governments plan is up to $10,500 when everything is said and done.

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