Refinance Debt with an FHA Loan

FHA allows high loan to value to consolidate debt

 

Refinancing debt with an FHA loan to consolidate multiple bills into one new loan has become a popular option for homeowners.  FHA, the Federal Housing Administration allows homeowners to borrow up to 95% of their home’s value for a cash out refinance.  This cash out can be used to refinance debt the homeowner has including: credit cards, student loans, automobile loans, personal loans, and second mortgages or home equity lines of credit.

 

This refinancing option is especially beneficial to homeowners whose property has increased in market value since the home was purchased.  A cash out refinance allows homeowners to refinance their existing mortgage by getting a new mortgage for more than they currently owe, the difference after paying closing costs and the new escrow account is the cash out.  This allows homeowners to access the equity they have built up in their home.  FHA does require the homeowner to have owned their current home for at least one year before obtaining a cash out refinance.

 

Taking consumer debt and converting it into a mortgage can be financially beneficial.  Refinancing expensive credit card debt into a tax deductible, low rate mortgage can be a good thing as long as future credit card charges are paid off in full monthly….click here to read entire article

 

 

Avoid the Hassle of Four Lenders Calling

For years now, well-known mortgage sites such as LendingTree, LowerMyBills and NexTag have operated by collecting a borrower’s contact information and selling it off as a lead to four lenders who call with a quote.  Known as lead generators, these sites all offer the same promise of having multiple lenders compete for your business.

 

However, the end result typically turns into a huge hassle of relentless sales calls, spam, and junk mail for the borrower.  Some sites actually sell collected info to other sites, continuing the cycle of more pushy sales calls at dinner, work and elsewhere.

 

Plus, these sites don’t look for the lenders with the lowest interest rate, just lenders who are willing to pay their expensive lead fees.  These lead fees, ironically, prevent you from getting the lowest rate possible.

 

Here’s an interesting television report on an investigation by consumer reports.  Consumers have learned the whole process is more hassle than it’s worth.

 

Why be sold off as a “lead” to, well…who knows who?  Enter the Next Generation Mortgage Site

 

If you don’t get excited about fending off sales pitches by phone or e-mail, there’s been no other option until now.  LionSaves.com is a leading mortgage refinance calculator that focuses on debt consolidation and gives a complete analysis while you remain anonymous.

 

Sure, there are plenty of basic refinance calculators out there that let you enter whatever interest rate and loan amount you want, even though they don’t apply to your situation.  But what good is a calculator that gives you inaccurate and incomplete results?  It’s useless.

 

This debt consolidation loan calculator is the next level.  It’s like talking to a loan officer that’s been programmed into the site.  It’s an idea whose time has come because it puts you in control with personalized info.   No one will ever call because you remain anonymous.  

 

For a hassle free refinance quote there is no better place to go than LionSaves.com. The analysis is free and accurate.  Armed with this information, you decide if refinancing is the right option for you.  When you have made your choice you can apply for the new loan with LionSaves or you can take the information and find the lender that best suits your needs.

Most Lenders Don’t Want You To Know This Refinance Tip

This key number can negate refinancing.

 

Whether you need the extra money for bills, home improvement, or your child’s college education or you simply want a lower interest rate, refinancing your mortgage is an option homeowners can consider.

 

Most homeowners, however, don’t look at one of the most important factors when deciding if refinancing is the right choice for them.  This factor is the Payback Period.

 

What is the Payback Period?

 

Payback Period is an economics term that refers to the amount of time it takes an investor to recoup his or her original investment.  For example, if you gave a friend $1,000 to start a business, the payback period would be the amount of time it took for your friend to return that $1,000 to you.

 

In terms of mortgage refinancing, the Payback Period is how long it takes for the monthly savings on the refinancing to equal or exceed the closing costs of the new loan.

 

Calculating the Payback Period

 

While you can use a refinance calculator to figure out the exact payback period for your situation, let’s look at a hypothetical example to illustrate how those calculations are determined.

 

Let’s say you refinance your home and end up saving roughly $300 per month because of the reduced interest rate and the lower principal (by the time you refinance you should have already paid a chunk of your home’s cost).  The closing costs associated with that loan are $3,500.  The question is – based on these numbers – how long the payback period would be.

 

To find the answer, you simply divide the closing costs by the monthly savings.  In this case, that would be $3,500 divided by $300.  The result would be just over 11.6 months, so the payback period for this mortgage would be almost one full year.

 

Why Does the Payback Period Matter?

 

Knowing the payback period, whether you do the calculations by hand or use a refinance calculator, can help you determine whether refinancing is the best choice at this time. Let’s come back to the example we used above.

 

If you are planning to put the house on the market in six months, then you’ll be selling the house before you’ve been able to recoup your investment through the savings.  That would be an unwise investment decision.

 

On the other hand, if you have no plans to sell within the next year, you would accumulate enough monthly savings to make the investment in the refinancing worth the cost.

 

Other Factors to Consider

 

Using a refinance calculator can help you determine the payback period, but there are other factors you want to consider as well.  For example, if you refinance a home you’ve been paying on for five years then you need to consider if the extra savings will also be enough to cover the additional five years of interest you will be paying on the loan.

 

If you took out the original loan in 2008, the loan should have been paid in full by 2038.  If you refinance after 5 years, you won’t pay the mortgage off until 2043.  Those extra years could add on enough interest to outweigh your initial monthly savings.

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