Home Mortgage Refinance

I have worked in the mortgage industry for years and everyone always asks me for some basic information relating to home loans and refinancing. I wanted to write this article to inform and to help you with a process that can be complicated but doesn't have to be. I continue to work in the mortgage industry for Amerisave. I still do home mortgage refinancing and will include my contact information below to help you personally.

Choosing a loan - Fixed Rate, Adjustable Rate or Somewhere In Between?

Home loans come in many shapes and sizes. Deciding which loan makes the most sense for your financial situation and goals means understanding the benefits of each.

The 3 Basic Types of Home Loans:

Whether you are buying a home or refinancing, there are 3 basic types of home loans. Each has different reasons that you would choose them.

Fixed Rate Mortgages

Should I choose a fixed rate mortgage? Fixed rate mortgages usually have terms lasting 15 or 30 years (there can be other terms like 10 and 20 years). Throughout those years, the interest rate and monthly payments remain the same.

A fixed rate mortgage may be right for you if you:

• Like stability -You prefer to know far in advance how much you owe.
• Think your income and spending will stay the same -You believe that what you can afford today matches what you will be able to afford 5 or 10 years from now.

Here is one thing to think about. Fixed rate mortgages typically have interest rates that are initially higher than adjustable rate loans. The higher rate means you'll make higher monthly payments. It may also mean that you will need to make a bigger down payment in order to be approved for a fixed rate loan.

Experts say that if you plan to live in your home for more than 5 years, a fixed rate loan is a very good idea. They reason that if interest rates rise, the monthly payment on a fixed rate loan becomes lower than the payment on an adjustable rate loan.

But what if interest rates are lower in a few years? Like any mortgage, you may be able to refinance your fixed rate loan during times when interest rates drop. Be aware, however, your ability to refinance does depend on:

1. The amount of equity you have in your home
2. The property's market value
3. Your finances at the time

Home Mortgage Refinance

Adjustable Rate Mortgages

Should I choose an adjustable rate mortgage? Adjustable rate mortgages (often called ARMS) typically last for 15 or 30 years. But during those years, the interest rate on the loan may go up or down. Monthly payments increase or decrease.

An ARM may be right for you if you:

• Are comfortable with a payment range - You're comfortable knowing a payment range instead of an exact amount for future monthly payments. You know your interest rate caps limit how much your rate and, therefore, payments may change over the year and lifetime of the loan.

• Foresee your income increasing - You believe that affordability is a big consideration today, but your career prospects are very bright.
• Plan to stay in your home or loan for less than 5 years - You sell or refinance your home before the interest rate on an ARM has gone up significantly.

With an ARMcomes several benefits that make your mortgage more affordable. The initial interest rate on these loans is typically lower than a fixed rate mortgage. That means monthly payments are also lower.

The lower monthly payments make it easier to get approved for an ARM. And, typically you can borrow higher amounts. This may be good news if you are:

• Buying a home for the first time
• Moving up to a more expensive home
• Refinancing
• Looking for a way to consolidate debt
• Planning on making an investment for which you need cash now

However, the lower rates and lower payments can change. Each ARM includes an agreement that says your lender can adjust the rate at a specific time. This is called an adjustment period. Adjustment period forARM loans can range from 1 month to several years.

As a general rule, the shorter the adjustment period, the lower the initial interest rate offered - a 1-month ARM often comes with a lower initial interest rate than does a 6-month or 1 year ARM.

How much change should you expect? As interest rates in the general economy change, your ARM rate changes, too. To determine the amount of change, lenders base your new rate on an interest rate index which is published and not controlled by the lender, plus a small margin.

Examples of indexes include:

• Interest rates set by the government - Treasury Bills and the Federal Home Loan Bank.
• Interest rates banks charge each other - such as LIBOR, London Inter-Bank Offering Rate.

Periodic interest rate changes are great news if interest rates go down. But what if interest rates rise - or rise a lot? The majority of ARMs have rate caps for your protection.

Two rate caps to look for in an ARM:

• Adjustable Period Cap - limits the amount your rate can change at each adjustment period. The most common caps are between 1% and 2%.
• Lifetime Cap - limits the amount your rate can change from the initial rate through the life of the loan. The most common caps are between 6% and 7%.

ARMs without a cap are not a good idea. If your lender offers no rate cap, look for another lender.

Home Mortgage Refinance

Combination Rate Mortgages

Should I choose a Combination Rate Mortgage? Combination rate mortgages combine fixed interest rates and adjustable interest rates. Lenders often refer to these loans as hybrid loans. For the first 2 or 3 years (5, 7 and 10 can also be available), the interest rate is fixed. It remains the same and so does your monthly payment. During the remaining years of the loan, your interest rate becomes adjustable and can vary.

A combination rate mortgage may be right for you if you:

• You need ability today - You want to gain control of your finances by knowing your monthly payments will be the same for the next few years.
• You want to repair your credit - You hope to eventually get a home loan with a better interest rate, but must first show you can repay a mortgage.

During the first 2 or 3 years (or longer, depending on the product), combination rate loans typically have lower interest rates than fixed rate loans. Monthly payments are lower and you may be approved to borrow higher amounts.

If you have a lot of consumer debt - credit card balances, medical bills, high-rate automobile loans - these loans are a good choice. The amount of debt you have can be higher than on other types of loans.

You can also use a combination rate loans to refinance a home and consolidate debt. Using the cash that may be available, you can pay off your bills. Then, all your debt is in the form of a home loan. You make 1 payment each month instead of a dozen. And your total monthly payment is lowered. This can free up extra cash to do whatever you want with.

Home Mortgage Refinance

The information above pertains to refinancing first mortgages only. This section will deal with mortgages in the second position (home equity loans), specifically fixed rate seconds and/or home equity lines of credit (HELOCs.) A home equity loan is secured by a second mortgage on the borrower's principal residence. It is generally used for debt consolidation, home improvement, education, and car purchases.

Fixed Rate Second

A fixed rate second mortgage is a loan for a fixed amount of money with the following features.

• A fixed rate second mortgage is an amortized loan.
• It requires the borrower to take the full amount of the loan at closing and begin making principal and interest payments immediately.

Features

• Amortization: The borrower has a choice of a 30 year amortized payment with a 15 year loan term (also known as a 30/15 balloon loan;) or a 15 year amortized payment with a 15 year loan (straight 15 year fixed) term. The 30 year amortization has lower monthly payments, while the 15 year amortized payment pays off the loan faster.
• Fixed interest rate: The borrower has the security of knowing exactly how much interest will be paid and how much the payment will be each month over the life of the loan, no matter what happens to the interest rate.
• Secured by the equity in the borrower's home: Securing a fixed rate second with the equity in the borrower's home makes it possible to offer larger credit lines - up to $500,000 (more of less depending on lender.) In most cases, interest payments are tax deductible, unlike credit cards or personal/unsecured loans.

Benefits

• Fixed rate seconds have fixed terms, fixed interest rates and fixed monthly payments. Personal budgeting is easier and there are no concerns about changing interest rates.
• Underwriting guidelines are more flexible than traditional second mortgages, making it easier to qualify.
• There is usually no prepayment penalty.
• Tax deductible interest in most cases, unlike credit cards or personal/unsecured loans.
• Larger loan amounts
• Amortization up to 30 years, with no prepayment penalty
• A choice of either a 30 year amortized payment due in 15 years or a 15 year amortized payment due in 15 years. The 30 year amortized payment gives the benefit of lower payments, while the 15 year amortized payment loan gives the advantage of being paid off faster.

Home Mortgage Refinance

HELOC

A HELOC is a revolving line of credit with the following features:

• The borrower has a fixed credit line.
• The borrower can take out (draw) the full amount or partial amounts over a period of time (draw period) depending on the borrower's needs.
• A HELOC is a simple interest loan, which means that interest is not compounded. With a simple interest loan, any principal reduction pays the loan down faster than a compound interest loan. (Most loans, such as credit cards, car loans, personal loans, and student loans, are computed with compound interest.)

• The borrower is ONLY required to make interest payments during the draw period.

Features

• Simple interest: A HELOC is a simple interest loan, which means the interest is not compounded, during the draw period. Monthly payments will vary, depending on the outstanding balance and fully indexed rate. The interest is calculated by multiplying the Average Daily Balance by the Daily Periodic Rate, which is then multiplied by the number of days in the billing cycle. Because the borrower pays interest only on the outstanding HELOC balance, a substantial savings can be realized by paying the loan off early. Also, payments to the principal immediately reduce the monthly payment, potentially saving the borrower hundreds, or even thousands of dollars.
• Revolving line of credit: A HELOC is a revolving line of credit, similar to a credit card. This means that during the draw period, the available credit can be used over and over again as the balance of the HELOC is paid down. The borrower is given flexibility and control over the amount of money to borrow, since the borrower has a choice of either drawing the full amount of the credit line, or using the funds only as needed. As the borrower makes payments and reduces the outstanding balance, the line of credit is restored and available for use again.
• Secured by the equity in the borrower's home: Securing a HELOC with the equity in the borrower's home makes it possible to offer larger credit lines, up to $1,000.000. In most cases, interest payments are tax deductible, unlike credit cards or personal/unsecured loans. A borrower can take out a HELOC for a variety of reasons, such as: debt consolidation, home improvement, education, automobile purchase, investments, vacations, etc.
• Draw period: A draw period is the time frame in which the borrower can utilize the available credit on the loan. A draw is a periodic advance of funds against the line of credit. When the borrower makes a minimum payment during the draw period, funds are applied towards interest only, not principal.
• Repayment period: A repayment period is the remaining term of the loan after the draw period. During the repayment period, the borrower can not draw down funds from the HELOC. When the borrower makes a minimum payment during the repayment period, funds are applied towards interest and principal.

Benefits

• HELOCs have one of the lowest interest rates and minimum payments of any other consumer loan. This reduces the need for jumbo pricing, which facilitates financing.
• Application and documentation requirements are generally less than for traditional first or second mortgage, making it easier to qualify for a HELOC.

• Mortgage insurance (MI) is not required on a HELOC, which reduces monthly payments.
• HELOC's may create significant monthly cash flow when the borrower uses them to pay off existing debts.

I hope this article has answered questions regarding basic home refinance. As mentioned at the beginning of this article, please feel free to contact me at the web address address below (in the "Amerisave Business Opportunity" section) with any further questions or concerns.

Home Mortgage Refinance

Job Description:

AmeriSave is one of the nation's leading and fastest-growing retail mortgage companies, serving customers in 48 states and DC. Amerisave currently employs over 300 mortgage professionals and has funded over $5.5 billion. Amerisave is a direct lender selling loans directly to Wall Street, which means you have access to the best possible rates and pricing. We do all types of loans; prime, government and sub prime; more products, means more sales. Amerisave has a solid reputation and is one of only 4 certified UpFront Mortgage Lenders. To learn more visit Amerisave.com, check out the About Us and the In The News section. Also, take a minute to get an instant online quote and take a look at our guarantees.

We have incredible technology for the delivery and management of leads, which is integrated with our state of the art loan pricing system. In seconds you can find the best rate and program from many investors for the customer’s specific needs with out having to look through investor guidelines and product books. Pull credit, take the app, quote the best program and close the deal in minutes.

We purchase over 30,000 internet leads a month from most of the major suppliers, including LendingTree and LowerMyBills. We get the best quality leads at the best price.

You may be working from home, but you will not be alone. You will be assigned to an in-house support team which will include a support manager, processors, underwriters and closers. We have over 40 in-house processors and you will get decisions from underwriting in less than 4 hours typically. Close your loans in as little as 7 days.

Through a revolutionary system the Amerisave’s Business Partner Program (ABPP) provides an amazing opportunity to mortgage originators nationwide. ABPP gives mortgage professionals the opportunity to increase their income dramatically. With commission splits up to 80%, unlimited access to internet leads, and the ability to recruit your own sales team with overrides up to 30%, there are no limits to your income possibilities.

Here's How it Works:

First, you can personally produce. For every funded loan we will pay you between 50% and 80% of Gross Loan Revenue, one of the most lucrative compensation splits in the industry. Even closing as little as four loans a month can pay you between $6,200 and $9,920 based on the average per loan Gross Loan Revenue. That’s a six figure income in itself.

Second, you can recruit and manage others who will produce for you. For every loan that your employees close you can make as much as 30% of Gross Loan Revenue. If you brought five people into the business that only close two loans a month each you could make $9,300 a month. Most Sales Managers in the mortgage industry don’t make that much from twice as many people.

Third, you can do both. You can personally produce and recruit others who will produce for you. This option offers you the greatest income potential. In the conservative scenarios above this combination approach would amount to more than $200,000 a year. Now just imagine if you could close more than four loans a month or recruit more than five people. The income potential is basically unlimited.

Please CLICK the link below to learn more about this amazing opportunity!

www.amerisave.com/bpp/webinarSchedule.cfm

Please contact me at amerisaveloans@gmail.com with any questions.