Monday, December 27, 2010

Kentucky Mortgage Refinance Questions to ask: Kentucky Housing VA FHA KHC USDA and FNMA

Six questions to ask before refinancing your mortgage Kentucky Housing VA FHA KHC USDA and FNMA

Kentucky Mortgage Refinance Questions to ask Kentucky Housing VA FHA KHC USDA and FNMA

Are you thinking about refinancing your kentucky mortgage? Are you not sure how much money you’ll save if you do – or if you’ll even qualify for a new kentucky mortgage  loan? Kentucky Housing VA FHA KHC USDA and FNMA

Here are six questions to ask yourself before you refinance.

What are the fees?

There are many standard fees associated with a mortgage refinancing – lender fees, title fees, inspection fees, insurance fees, etc. – that you should always know before deciding to refinance.

However, as reports there are also other, newer fees to look out for – so-called “risk adjustment” fees from Fannie Mae and Freddie Mac. These fees – which can be 2 percent of the loan’s value – will be higher for borrowers who don’t have perfect credit scores, and for those who have less than 20 percent equity in their homes. These fees can also be converted to a higher interest rate. This may be why you can seem to get the advertised rates. This is something you should ask your Loan Officer about.

Knowing all the fees associated with your refinancing will help you determine if it makes mathematical sense to refinance.

How good is your credit?

The better your credit, the better chance you have at getting the best mortgage rate. Keep in mind that only those with excellent credit scores – usually around 760 or better – get the best rates.

The lower your credit score, the higher your rate will likely be – if you’re approved by the lender at all. Tighter lending standards in the wake of the credit crisis have left many people with bad credit scores unable to refinance.

How much equity do you have in your home?

One of the key things a lender wants to see before approving a borrower for refinancing is for the borrower to have at least 20 percent equity in his or her home.

If you’re not sure what percent equity you own, you can use a loan-to-value calculator to figure it out. Quite simply just divide you current loan balance into your estimated house value.

If you have very little equity – or even if you are underwater on your home due to falling home values – you may still be able to refinance your mortgage under the government’s Making Home Affordable program. Visit the program’s website to see if you qualify.

What type of mortgage should you get?

Because rates are at historic lows, some people who got 30-year mortgages a few years ago may be able to halve the length of their loan (and thus drastically cut the overall interest paid on the loan) without paying much more a month.

Compare the monthly payments between a 15-year and 30-year mortgage to see how much you’d owe – and how much you’d save over the life of the loan.

Or, if you’re planning to be in a home for only 3 to 7 years, an adjustable-rate mortgage may be for you. Read about different types of mortgages, and see how much your payments would be with each one, with this calculator.

How much will you save a month?

Use a mortgage refinance calculator to see if refinancing make financial sense for you.

How much you save – and how much you pay in fees – are key questions in determining if it makes financial sense to refinance. For example, if you are going to be paying $6,000 for all the fees related to refinancing a 30-year fixed-rate mortgage, and you’ll be saving $200 a month in payments with a new mortgage, then you’ll “break even” 30 months into the new loan, meaning that it only makes sense to refinance if you’re keeping the new loan for more than 2 1/2 years.

Do you have all your papers in order?

Because of the strict lending standards these days, lenders will want to scrutinize your financial situation before you are approved for a refinance.

Before approaching a lender, you’ll want to pull together the following paperwork:

• Copies of your past two years’ tax returns

• Copies of your past two years’ W-2s

• Copies of your most recent paystubs

• Copies of your most recent checking, savings, and investment statements.

Kentucky Mortgage Refinance Questions to ask

Kentucky Housing VA FHA KHC USDA and FNMA