If you’re a homeowner, you’re probably well aware of the financial benefits of your mortgage payment, like the tax deductions for any interest paid. But do you know about the dozens of benefits involved in a mortgage refinance?

First of all, if you have an adjustable mortgage rate, your current interest rate could go up as much as 3% when it expires, increasing your monthly payment hundreds of dollars. And that’s just to start! You can expect another increase in another few months. But if you refinance your current mortgage to a low, fixed rate, your principle and interest payment will never go up. A straight refinance of this type, whether you’re going from an adjustable or fixed rate to a lower fixed rate, with no cash out (except for the closing costs), will grant the lowest APR.

Some believe that if you’re going to refinance your current mortgage, you might as well go all the way and wipe the slate clean, paying off all credit cards, car payments and even home equity/second mortgages in the process. Besides gaining the tax advantage of deductible mortgage interest paid, the interest rates for refinancing as typically significantly lower than other types of credit. In the end, you could save hundreds of dollars right off of your bottom line each month, freeing up extra money to put into your savings account or other investment sources.

You can’t forget about home improvements, especially with the rising costs of heating and cooling your home. New, high-tech, double-paned windows will not only help to keep your home’s inside temperatures indoors, they will increase the value of your home. Adding new or upgrading insulation will also help. And don’t forget about expanding your deck! Even though it won’t do a thing to keep your energy costs down, it will definitely add a few more dollars and a bit of fun to your home.

Finally, my personal favorite is the skipping a month of payment! The reason for this is because you actually pay for the month that just passed. For example, say that you refinanced your mortgage on July 31. There is no payment due in August! Your first payment would be due September 1, as you would pay for the previous month. But, if you refinanced your mortgage on the 15th of July, you will prepay interest at closing to cover you until the end of the month. Your first payment still wouldn’t be due until September 1.

Mortgage rates are again on the rise, and the only people that know when they will come back down are those with a crystal ball. To protect yourself and your home, refinancing to a lower mortgage rate either from a fixed or adjustable rate to a comfortable monthly payment will save you money (and headaches) in the long run.

John Woodson recommends that you visit http://www.mortgage-refinance-info.com for more information on Mortgage Refinance.
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A mortgage is a loan secured by property or real estate. A mortgage is usually paid back with monthly payments that usually include principal, interest, insurance, and taxes. The principal is the amount of the loan, and the interest is what it costs you to borrow the money for the month. The taxes are a percentage of the value of the property and remitted to your local government, while the insurance covers the mortgage amount in case of default by the borrower as well as property loss from hazards. The tax and insurance monies may be collected and held in escrow to be paid annually.

How do banks decide how much mortgage money you can borrow? They base their decision of the amount of a mortgage on their estimate of your ability to repay the loan. This estimation is based on your income, available cash, debt, and your credit history. The amount of money banks will loan is usually in the neighborhood of two to four times your annual salary. When applying for a mortgage your debt to income ratio can be a limiting factor. Banks first look at your front-end ratio or how much of your income will be devoted to paying your mortgage. About 28% of your annual income is the amount most banks feel a person can afford to pay for a mortgage, and this of course would cover the amount of the principle, interest, and any escrow payments. You can calculate this yourself by taking your annual salary and multiply by .28 and then divide by 12, this will give you an estimate of the maximum mortgage amount you could be offered.

The back-end ratio will also be taken into consideration as well. This is the amount of your gross income is required to pay all your debts, which could include car payments, credit card payments, personal loans, student loans, alimony, and child support. The amount of your total payments should not exceed 36% of your gross income. This can also be calculated by taking your annual salary and multiplying by .36 and dividing by 12. This will give you your maximum allowable amount of debt.

Well I hope this helps clear up a little of the confusion you may have regarding mortgages, and how much you may be able to borrow.

For even more info on mortgages visit How Much Money Can I Borrow For A Mortgage?

Article Source:http://www.articlesbase.com/mortgage-articles/how-much-can-i-borrow-for-a-mortgage-1629101.html

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The Obama administration generated a simplified loan modification program that aims to reduce homeowner’s monthly mortgage payments based on their monthly gross income. There are two types of programs under Obama’s plan: The Home Affordable Modification Program and Home Affordable Refinance Program for mortgage refinancing.

How will Obama’s Loan Modification Plan Work?

• Servicer will reduce monthly mortgage payments of the borrower to not more than 38% of borrower’s monthly gross income.
• The government will assume part of the principal amount and manage other cutbacks to hit threshold of 31% on the borrower’s monthly gross income.
• When 31% is achieved, the borrower enters trial period for 3 months.
• If the borrower succeeded in paying timely mortgage payments during the trial period, a new fixed rate will take effect for the new modified loan that will run for 5 years.
• Benefits such as cash incentives are thrown in to lure lenders/investors, servicers to join, and for borrowers to pay on time from trial period until the term ends (5 years).

Who can qualify for Obama’s Home Affordable Modification Program?

• Only owner-occupied homes are eligible.
• Applicant must satisfy the Front-End Debt to Income (DTI) ratio of 31% to the monthly gross income set by the program. Total PITIA (principal, interest, taxes, insurance) and HOA (excluding mortgage insurance premiums) must hit this threshold.
• Applicant must satisfy the Back-End Debt to Income ratio of less than 55% to the monthly gross income which is the monthly total debt payable (eg, credit cards, car payments, student loans, etc.).
• Homeowners that have limited liquid assets and serious substantial income loss.
• Loan initiated on or before January 1, 2009.

Home-owners with unpaid principal mortgage balance equal to the following:

• 1 Unit: $729,750
• 2 Units: $934,200
• 3 Units: $1,129,250
• 4 Units: $1,403,400

Take note that the mortgage applied can be modified under this program only once. Your untimely records of delinquent balances will also be waived. If faced with foreclosure, proceedings will be temporarily suspended while undergoing the trial period. Should the applicant fail, foreclosure measures will resume. This is a charge-free program. New borrowers will be accepted until Dec. 31, 2012. Timely mortgage payers are automatically disqualified from this program.

What To Prepare If You Qualify For Obama’s Mortgage Plan And How?

• If employed, you must present substantial documents to validate income loss, such as, recent pay slips and income tax return.
• If self-employed, third party documents for profit and loss statement must be provided.
• Substantial information of assets.
• Account balances on all monthly payments and monthly housing expenses, such as, credit cards, student loans, second mortgage, insurance and taxes, etc.
• HUD-counselor approved document that states counseling commitment must be submitted. Only then shall the loan modification take effect.

It is advisable to collect and present all these to the loan servicers for initial assessment. They can help you determine early if you can be considered for a loan modification.

What Are The Benefits Of Obama’s Loan Modification Program?

If you qualified for Obama’s loan modification modification, the following benefits will take effect:

• Servicer Incentive Payment of $1,000 is paid to the servicer for every eligible loan modified.
• Pay for Success fee of $1,000 additional payout each year for three years to the servicer if the borrower pays timely from trial period of three-months until term ends. A fixed rate for five years will take effect after trial period.
• Pay-for-Performance Success Payment of $1,000 is given to the borrower each year for 5 years which will be redirected to the principal amount provided that borrower follows program guidelines.
• For every successful modification, a one-time incentive of $1,500 and $500 shall be given to lenders/investors and servicers, respectively. A successful loan modification means that the borrower completely made timely mortgage payments during programs term.

Who can qualify for Obama’s Home Affordable Refinancing Program?

• Home being refinanced must be a primary residence.
• Current loan must be secured by Fannie Mae or Freddie Mac. Contact them at 1-800-7FANNIE, or 1-800-FREDDIE to inquire or log on online at http://www.fanniemae.com/homeaffordable.
• Applicants must have current and timely mortgage payments for the last 12 months.
• First mortgage payable must not exceed 105% of your home value.
• Must have a stable income.

Note that, mortgage refinancing will be at fixed rate for 15 or 30 years. The interest rate is based on the market rate upon closing. No prepayment penalties will be charged but, applicant will pay for fees related to the mortgage refinancing.

If you are financially incapacitated while indebted to a home of diminishing value, you probably will not qualify for Obama’s loan modification programs.

Get your Free Do It Yourself Loan Modification Kit. loan modification kit includes everything you need to complete a loan modification on your own. It will teach you how to negotiate with your lender and most importantly what NOT to say to your lender. The secret to a successful loan modification is how you present your case to the lender. This DIY loan mod kit will explain the loan modification negotiation process in explicit detail.

Visit our website for How to articles, mortgage calculators, free sample hardship letters, foreclosure timelines, and dozens of informative articles on loan modifications and foreclosure. Stop by to check out our growing library of free financial kits. We currently have bankruptcy kits, credit repair, and loan mod with more on their way!

FreeDIYkits “Helping Homeowners Help Themselves”

Article Source:http://www.articlesbase.com/mortgage-articles/obamas-loan-modification-mortgage-refinance-plans-1470951.html

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