Refinance Mortgage: The Cost Of Doing Business

There is always a possibility of getting a no-cost refinance. Mortgage rates being what they are, this is, of course, a very welcome option. But lenders are in business to make money. Keep this in mind when you are trying to get a refinance. Mortgage problems make your entire fiscal situation even worse if not properly managed.

If your creditor is not earning income by charging direct costs for the loan, those fees will be integrated into the loan or you will be paying through an interest rate that is higher than normal. It is true that some banks offer true no-cost loans but not a lot of them do. Make sure you read your agreement thoroughly. You can get a Good Faith Estimate. When you do, ask the lender to guarantee it. Legally, Good Faith Estimates do not have to be guaranteed. This makes them almost worthless. However, lenders will guarantee these estimates if they do business with you.

It is a complex thing to seek refinance. Mortgage transactions have many costs attached. These include, loan discount points, processing costs, administration costs, application costs, and many others. Lender charges can be negotiated by the borrower. Some of them can even be waived. A Yield Spread Premium is the money that banks give to mortgage brokers for bringing your loan. Ask about this beforehand as you might have received a lower interest rate if the lender did not pay the broker a Yield Spread Premium.

What Is The Downside?

The bad things about a refinance? Mortgage refinance fees you pay to acquire the loan for one thing. You might not recoup these fees for a number of years. Another is the extension of the amortization period. You may be qualified to shorten it but you simply may not want to pay more each month. Also, a mortgage refinance makes the entire mortgage just that much bigger. The position of your equity will be affected by the refinance. Mortgage will increase if you take out the refinance in cash

Bill payment is something people do with a refinance. Mortgage payment is not the priority for them. They also use the cash to pay off credit cards. This is not a wise course of action. You will only dig yourself deeper into debt.

And The Upside?

Sticking with the home long enough will help you break even on the cost of the mortgage refinance. Lower interest rates and monthly payments will greatly improve your cash flow. You can also shorten your loan period in exchange for higher mortgage payments. Finally, the cash you obtain can help you in another investment. You just have to make sure the rate of return is higher than your interest payments.

Clearly, there is a lot to learn about mortgage refinance. A lot of it depends on your particular situation. As with most things, seeking professional advice will yield better results. Make sure that the counselor understands your situation and what you intend to do with the refinance.

Businesses Cannot Live Without Commercial Mortgage

When starting a brand new business or expanding an existing one that you already own, many businesses seek sources for a commercial mortgage that they can use to buy property in which to house their venture. Essentially, there is little difference between a commercial loan and a residential mortgage as the credit worthiness of the business owner is considered before taking action on the loan application.

The business itself, regardless of how viable it may seem, will not qualify for a loan without the owners or principals of the business having the reputation of repaying their financial obligations. If the owner has got a bad credit history, the odds of them receiving a commercial mortgage are reduced without going through some companies that do offer loans to people with questionable credit histories.

Even those with stellar credit reports may have some difficulty obtaining commercial mortgage approval if the plausibility of the business does not meet the requirements of the lender. The institutions responsibility is make loans only to those who can show the ability and willingness to make timely repayment of the loan and the property for which the loan is being sought also has to meet specific criteria.

A property is disrepair may not qualify unless it can be shown to be refurbished to a good value for a reasonable cost. Essentially, a lender will not loan money on a building that will have to be replaced almost immediately, unless the property itself is valued above the loan value. Even in these situations, the lender may require a time line in which improvement will be made and proof during the renovation stage that the improvements are on track to meet the deadline date.

Acquiring a commercial mortgage typically requires more financial information than a regular mortgage in that information about the business is collected along with information about the owner or principals who are accepting the responsibility of repaying the loan. Business information may include the value of any assets such as equipment or accounts receivable as well as projected income show in the form of firm orders for products or services.

If the business has been established for any amount of time, an income history may be required as well as showing that the business has paid its debts in a timely manner. Those seeking a commercial mortgage to raise money to get out of debt, may find the option not very likely. However, funding a business loan to erase debt to enable the business to purchase additional properties may be possible, if all properties are eligible to be used as collateral.

With many commercial mortgage agreements, it is not unusual for an amount of 80 percent to be granted to those with good credit, as the lender may consider a 20 percent down payment as a commitment by the buyer to maintain ownership of the property. Having the financial commitment in place is usually a good indication of the new owners willingness and desire to see the loan through to completion.