When's the right time to refinance your home?

When's the right time to refinance your home?

Your current mortgage may suddenly become more expensive than a new loan with a lower rate. You may just want to lower your monthly payment or tap some of the equity you've built up. Or you may want to change loans altogether, switching from a 30-year to a 15-year loan term or from an adjustable to a fixed interest rate. Even if you don't think you're ready to refinance now, it doesn't hurt to check your numbers and look at current loan rates. The lower your new interest rate, the less it will cost you to refinance, and the longer you plan to hold your new loan, the more likely it is that you'll save significantly in the long run.

To recoup the cost of refinancing and achieve real savings, you need a realistic estimate of how long you'll stay in your house. Consider all possibilities, such as whether your job could change or if you could be transferred. Then do the math. For example, on a 30-year $120,000 loan at 7 percent, you could save about $20 a month for every quarter-point reduction in interest. If your new rate is 1.5 percent less than what you currently pay, that could mean saving as much as $120 a month, or $43,200 over the life of your loan. You may only plan to stay in your house five years, though, which means you would save only $7,200. If it costs you $4,000 to refinance your loan, your total savings then drops to $3,200. If you stay in the house only three years, you save even less. Assess your time frame realistically. It will help you know whether refinancing is for you, and also help you choose the right loan.

Refinancing can be an effective savings tool if you want to trim your monthly payment or cut the overall interest you pay on your loan, especially if you match your new loan to the amount of time you plan to keep your house. For example, if you keep your house a long time, refinancing from an adjustable-rate loan to a fixed-rate loan could save you significantly over the long run. If you are comfortable with your current mortgage payment and you plan to keep the house a while, refinancing from a 30-year loan to a 15-year loan could cut your overall interest payments and build your equity faster. The tradeoff is this: while the rate will be around 0.25 percent lower on a 15-year loan, the payment (figured on a shorter term) will be about one-third larger. On the other hand, if you stay in your house only three to five years, you may want to look at adjustable-rate or balloon-payment loans so you can take advantage of the even lower rates these loans carry in the early part of their terms.

Thank you for reading my blog. Email me if you have any questions kevin@bluefinancialgroup.com

Is Reverse Mortgages Right for You?

There has been a lot of advertisement on Reverse Mortgages and it's many benefits versus a conventional mortgage program. Reverse mortgages seem like the next best loan program compared to an adjustable rate mortgage but is it really? Before you go and get yourself into a reverse mortgage, please click on the link below and read more about it.

http://www.ftc.gov/bcp/edu/pubs/consumer/homes/rea13.shtm

Weekly Market Update! by Blue Financial Group

Keeping you updated on the market! For the week of January 28, 2008


MARKET RECAP

There sure was a heck of a lot to talk about for a holiday-shortened week. Without a doubt, the Federal Reserve was the leading topic of conversation, shocking capital markets on Tuesday by cutting the fed funds by a whopping 75 basis points to 3.5% to boost what seemed to be a sinking stock market.

But not everyone cheered. Some pundits are worried that by responding so decisively to stock-market developments, the Fed could be undermining the goal of rate cuts, which is to stabilize the economy, by kowtowing to equity investor interests. The Fed obviously disagreed, believing that it stood a better chance of short-circuiting negative psychology by acting immediately instead of waiting a week.

The other hot topic was the congressional economic stimulus package that would give most tax filers refunds of $600 to $1,200. The package also provides tax incentives for businesses and contains a measure that would help an important segment of the mortgage market by temporarily raising the conforming loan limits for Fannie Mae and Freddie Mac beyond the current $417,000. The new cap, expiring December 31, could be as high as $730,000, depending on a metropolitan area's median housing price.

The Freddie Mac weekly survey showed that mortgage rates continued on their downward trajectory. On that front, the 30-year fixed-rate mortgage averaged 5.48%, the 15-year mortgage averaged 4.95%, while the five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.13%. We are now looking at prime rates unseen in nearly three years.



NEW PROPOSITIONS

Not every economist agrees with the economic stimulus package proposed by congress last week, but at least it is supported with accepted economic theory. Another package isn't: President Bush's plan to mitigate the subprime crisis by freezing interest rates on adjustable rate mortgages. It's a short-term salve at best, which could turn into a long-term cancer by making lenders even less willing to extend mortgages to credit-risky (not to mention credit-needy) borrowers.

A better proposition is Fannie Mae and Freddie Mac moving to risk-based pricing, which means that homeowners with weak credit or little equity will pay for the risk associated with underwriting their mortgage. That's a long-term positive (though in the short-term it could dim the benefits of refinancing) because it will help stabilize the housing market by better matching risk and rates and by guiding borrowers to homes they can afford.

Of course, lower mortgage rates will help the housing market as well. And lower rates could be in the cards this week should the Federal Reserve lop another 25 or 50 basis points off the fed funds rate on Wednesday.


Get your weekly market updates on my blog! Or send me your email address so I can add you to my distribution list!

Don't forget to check out my site: www.bluefinancialgroup.com

mrkevinkhuu - mortgage advisor for life!

I have been in the mortgage lending industry for over 8 years, mostly working with direct lenders in operations side of the business. I have been through ups and downs of the market and have worked with experienced, honest loan consultants and rookie loan consultants. I was tired of seeing homeowners being placed in loans that just didn't seem to make sense. So, instead of complaining, I've decided to venture over to the other side of the industry.

I am a mortgage advisor... NOT a sales man. I listen to my clients and try to understand their current situation and provide them with loan options that I feel will put them in a better position (lower interest rate, lower monthly payment, consolidate high interest rate credit cards, or improving credit history) than they currently are in.

If you are in the market for a new home loan or just want to learn more about your options, please email me at: allaboutmortgage@mrkevinkhuu.com for a FREE consultation!

Business Cards that Stands Out!

Business cards is the least expensive form of marketing one can have. But everyone's got a business card so how can you make your business card Stand Out compared to your competition. I was surfing the web for marketing tools and came across this website that create business cards with a "character" of its own. check it out for yourself at www.showoffcards.com!