Currently I have a 30-year fixed-rate mortgage of $148,000 at 6.75%. My monthly payment inclusive of property tax and home insurance premium is $1,276. I’m also paying $122 each month for PMI. My home’s appraised value is $183,600. When my loan is no longer subjected to PMI, I want to refinance my mortgage to take out $10,000 to $15,000. What will my monthly payment be like?

To get your answer, you need to first get some realistic data such as interest rates, points and closing costs. The following link gives you an excellent source of free quotes from established lenders, and you are not obligated to take out any loans from them:

Get Free Quotes for your analysis

(1) Your existing monthly loan payment
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Although you are paying 1,276 a month, your monthly loan payment is actually 960. The balance of 316 (= 1,276 less 960) comprises your property tax and home insurance premium.

(2) Your loan-to-value ratio
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Right now your loan-to-value is 80.6% (= 148,000 / 183,600 x 100%).

In 12 months’ time, your loan will be reduced by 11,519, ie 960 x 12, to 136,480 (= 148,000 less 11,519). Your then loan-to-value will be about 74% (= 136,480 / 183,600 x 100%), assuming your home’s appraised value will remain unchanged.

(3) How much cash will you be able to take out
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If you don’t want to pay PMI, your refinanced mortgage cannot exceed 80% of your appraised value, ie 80% x 183,600 = 146,880.

Let’s assume that you’ll refinance your mortgage one year later when your loan is reduced to 136,480, as shown in paragraph (2) above. The maximum amount of cash you can take out will be your refinanced mortgage (ie 146,880) less your loan balance in 12 months’ time (ie 136,480):

146,880 - 136,480 = 10,400.

(4) What will your new monthly payment be
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Set out below are some of free quotes I receive from a lender:

Rate	Payment	APR	Lender fees & points	Other closing costs	Govt taxes & fees	Total costs
5.500%	$834	5.895%	$6,203	$1,260	$597	$8,060
5.625%	$846	5.966%	$5,335	$1,260	$597	$7,192
5.750%	$857	6.043%	$4,573	$1,260	$597	$6,430
6.250%	$904	6.367%	$1,789	$1,260	$597	$3,646
6.500%	$928	6.539%	$594	$1,260	$597	$2,451
6.750%	$953	6.750%	$-415	$1,260	$597	$1,442

Note:

(i) Other closing costs include fees of closing attorney/agent, appraiser, title insurance, and credit reporting.

(ii) Total costs = Lender fees & points + Other closing costs + Govt taxes & fees

(iii) Homeowner’s insurance and property taxes are omitted

Assumption

The above free quotes are given based on the following assumptions:

(a) Loan amount = $146,880

(b) Property value =$183,600

(c) Propery type = single

(d) Product = 30 year fixed

(e) Property state = Georgia

(f) Loan purpose = Refinance with cashout

(g) You have no second mortgage/home equity lines

(h) Your current credit rating = excellent

Any of the 6 options in the table above will give you a monthly payment less than your current monthly payment of 960 (see paragraph 1 above).

The 5.500% option gives you the largest cash savings because the monthly payment is the lowest, ie 834. But this option requires the largest cash outlay — the total costs is 8,060. This will reduce your intended cash takeout of 10,400 (see paragraph 3 above) to only 2,340 (= 10,400 less 8,060). This option will thus defeat your purpose.

If you want to maximize your cash takeout, the 6.750% is your option. Your monthly payment savings will be minimal because your new monthly payment (953) is almost equal to your current monthly payment (960) , but your cash takeout will be maximized at 8,543 (= 10,400 - 1,260 - 597). Will this be acceptable to you, since your objective is to take between 10,000 and 15,000 cash out?

Summary

There is no general answer as to what your revised monthly payment will be after you refinance your mortgage. Your lender’s offers will determine your monthly payment, and also whether or not you’ll be able to meet your objective of taking out 10,000 - 15,000 cash.

You must never make your decision based on only qualitative considerations. You must always work out the numbers and analyze them. To get reliable results, you should use realistic data. You should get free quotes from lenders. There are many lenders who are keen to provide you with the relevant information. Try this good resource:

Get Free Low quotes for your analysis

Be sure that these lenders tell you their fees, points, other third parties’ fees, and all other attendant costs. Ask them for their APR (annual percentage rate) because this is the real cost of your loan. Look at the APRs in the table above. Each APR is higher than the corresponding interest rate because APRs take into account your interest costs, the lender’s fees and points. Thus APRs are more accurate measures of your overall loan cost.

Using the data in the table above, it’s clear that you can:

(a) take cash out from refinancing your mortgage, and

(b) keep the monthly payment the same as, or less than, your current monthly payment, and

(c) avoid paying PMI.

The only question remaining is: are you satisfied with less than 10,000 cash takeout?

Tags: apr, cashout-mortgage-refinance, interest-rate-free-quotes, mortgage-payment, PMI

I’m not applying for a home equity loan yet, and I don’t want to disclose personal information.

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You can explore a wide variety of financial institutions that make home equity loans, such as savings and loan associations, commercial banks, mutual savings banks, mortgage companies, and the bank where you have your checking or savings account.

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Your local newspaper is one source where you can find the lender who offers the most attractively priced loan. Look for the lender’s shoppers guide to mortgage credit. You can find these shoppers guides in many localities. You can use them to identify the lenders with low rates.

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In any case, the way to find the most attractive [tag]home equity loan rates[/tag] and terms is to shop around.

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An effective way to shop around is to get no-obligation, free quotes of individualized loan rates and terms from established lenders. You don’t have to be applying for a loan in order to get these free quotes. These lenders are hungry for your business. Let them compete to impress you with their offers. They are just too happy to give you their best information that includes not only loan interest rates but also points, fees, closing costs, and other relevant information.

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No credit check is needed for getting these free quotes. Only basic, non-intrusive particulars are required, such as your property’s locality and value, the loan amount you need, you contact details, and so on. Lenders need these data to assess your financial situation and quote you more personalized loan rates.

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The most attractively priced home equity loan is not one that charges the lowest interest rate. Your interest rate is only one part of your mortgage loan. There are other costs that lenders charge you, such as points, fees, transaction costs, closing costs etc that may add thousands of dollars to the cost of your loan. Some lenders have different names for these costs.

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If lenders notice that you’re hung up on loan interest rates, they may play to your weakness and offer you low rates to lure you while increasing the other costs mentioned above. From these multiple sources of income, they may reap a return (known as [tag]APR[/tag] or [tag]Annual Percentage Rate[/tag]) higher than the interest rate they charge you.

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What you should be concerned with is your loan’s APR. To lenders, APR is their real profit. To you (the borrower), APR is your real cost. Your home equity loan rate is only one of the components of your loan’s APR.

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When you ask for free quotes, make sure that you’re given not loan interest rates only, but also all the other costs and fees that the lenders will charge. Be sure that they quote their APRs too.

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What we have discussed so far deals with your question on loan interest rates only. Interest rate evaluation is only one part of your loan evaluation.

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Get your no-obligation, free quotes here.

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Tags: annual-percentage-rate, apr, Home equity loan rates, interest-rate-free-quotes

I am already having 2 mortgages on my house. Each month my paycheck is just sufficient to cover my expenses and financial commitments. I just want a bit of security by getting a $10k personal loan, and don’t want to get ripped off. Any suggestions?



Yes, there is such a thing as $10k personal loan that you can get. Many personal loan lenders advertise online. Some operate online through the internet, while some have storefront lending offices in local communities. You may want to check out this one:
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==> http://www.klikks.com/unsecured_personal_loan

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Can you resist the temptation?

Although you are living paycheck to paycheck each month, you do not mention that you are in cash deficit. You want the $10k personal loan just as a standby security — just in case you need some cash.
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My concern is: can you really resist the temptation of not utilizing the personal loan unnecessarily? Once you utilize the loan, you will be unable to repay it, given your monthly breakeven financial position. You will be in trouble.

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Secured or unsecured personal loan?

If you must have the personal loan, then consider whether you want a secured or unsecured one.

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[tag]Secured personal loan[/tag]

If the $10k personal loan can be secured against your house (assuming it has enough equity), you will be able to get a lower interest rate and better loan terms vis-a-vis an unsecured personal loan, because the lender perceives that his risk is greatly reduced by your collateral (ie your house).

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[tag]Unsecured personal loan[/tag]

If you opt for an unsecured personal loan, your [tag]credit score[/tag] and history are the only guarantees of repayment for the lender. In other words, your repayment is only based on your personal characteristics. Thus, the loan terms and requirements for approval will vary according to what your credit report shows.
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You may have read some lenders’ personal loan ads that say something like this: ….up to $x no [tag]home ownership[/tag] required…. above $x home ownership required.
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What does this mean? This means home ownership influences the outcome of your personal loan application. Since you own a house, you have an advantage in applying for an unsecured personal loan.
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Home ownership is generally a guarantee for the lender because it implies solvency (the ability to meet financial obligations on time) in many ways. For starters, maintaining a property is not cheap, and thus it shows the lender that you have been able to manage your finances properly. But it also implies that in case you cannot afford the monthly payments and the lender has to resort to legal means to recover his money, there are more probabilities he will be able to get enough money from your assets to recover the amount owed and any legal fees he might incur.
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—– Sidebar —–

Just because your $10k personal loan is not secured does not mean you are not risking your house. If you default on your loan repayment, the lender can take you to court to recover his money. In the worst case scenario this can lead to your house being repossessed or sold to repay the debt. Of course, in practice, you will not allow a mere $10k personal loan to cause you to lose your house!
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The best way to avoid this is by being very certain about your ability to repay the loan, and keeping in contact with the lender should problems arise. Many lenders would rather resolve disputes without resorting to legal action.

—– End of sidebar —–

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Home ownership also helps you get higher loan amounts either with secured personal loans or unsecured personal loans.

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Advantage of unsecured personal loan

Unsecured personal loans can be arranged more speedily than a secured personal loan where you may have to wait to have your collateral approved.

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Variable or fixed interest rate

Personal loans come either with a [tag]variable interest rate[/tag] or a [tag]fixed interest rate[/tag]. If you opt for a variable interest rate personal loan you can get significantly lower rates. However, you need to bear in mind that variable rates can increase suddenly due to the money market conditions and you might end up paying more than what you would have paid if you selected a fixed interest rate personal loan.
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Therefore a fixed interest rate personal loan may be better for you.

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Fixed monthly repayment

Unlike credit cards or lines of credit, your personal loan monthly repayment installments are fixed. While this helps your repayment discipline and cash flows budgeting, it also means that you must be able to make your repayment punctually without fail every month — unlike credit card debts for which you can pay only the minimum payments if you have insufficient money.
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Therefore I have to stress again that you must be very certain that you will be able to repay the personal loan throughout the loan period, since you are financially tight.

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Don’t get ripped off

(1) Shop around

You should never go with the first interest rate quote you find. Instead, seek out a few lenders and compare their offers. You may want to start here to get some free quotes and ideas.
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Naturally, you want to find the lowest interest rate, but that should not be your only deciding factor. If the lenders you have sought out offer similar interest rates, you need to read the fine print of the offers to see what other features are offered with these loans. When you do this, you may discover some unacceptable terms in some of the offers.

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(2) Beware of hidden costs

As you dig deeper, read the fine prints and ask questions, you may find out that some lenders include extra fees or misleading terms in their offers. They may include [tag]arrangement fees[/tag] and [tag]early repayment fees[/tag] (which I loathe and never accept) in their loan agreement. These fees should be reflected in their [tag]APR[/tag] ([tag]annual percentage rate[/tag]).
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APR measures the lenders’ real profit. Their real profit is your real cost. Put simply, APR includes the lenders’ interest charges and all other charges and fees they add to your loan.
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Ask them to reveal the fees and costs they include in their APR calculation. The more charges they levy on you, the higher their APR. Ask them to drop the fees you do not accept. In short, you want a low APR.

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(3) There’s no free lunch

If you successfully negotiate with the lender to gain an advantage, do not hastily think that you have won and got a good deal. Lenders have their profit objectives. Your lender may appear to give you a concession, but he may modify the loan structure or the terms of the agreement to gain back an advantage so as to preserve his profit objective. Therefore, again, study the revised terms and the final loan agreement carefully.

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(4) Know your credit score

It is advisable that you obtain your [tag]credit report[/tag] before you apply for your personal loan. Knowing your credit score can give you the confidence to negotiate a lower interest rate. Obtaining the credit report also gives you the ability to correct any misinformation before applying for your personal financing.

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Summary

(1) Do you really need the $10k personal loan?
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(2) Will you be able to repay the loan?
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(3) Which suits you better, a secured personal loan or unsecured personal loan. A secured personal loan is cheaper than an unsecured personal loan, but will take longer to get approved.
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(4) Variable interest rate or fixed interest rate? It is advisable that you go for fixed interest rate.
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(5) Shop around. Compare offers.
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(6) Evaluate both interest rates and APRs. Seek a low interest rate AND a low APR.
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(7) Interest rates and APRs are not the only deciding factors. Study the loan agreement and fine print to make sure there are no unfavorable terms.
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(8) Obtain your credit report before you apply for the loan.

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Oh, one more point: your personal loan interest charges are not eligible for [tag]tax deduction[/tag].
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Why?
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The IRS says so.

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Tags: annual-percentage-rate, apr, arrangement-fees, credit-report, credit-score, early-repayment-fees, fixed-interest-rate, home-ownership, secured-personal-loan, tax-deduction, unsecured-personal-loan, variable-interest-rate