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Save Money With Better Rates
Bottom line – researching refinancing rates for a second mortgage will save you money. On an average day, rates can vary as much as a point or more. Over the course of your loan, that can add up to thousands of dollars.
No one lender will have the best rates on every type of financing. That is why you have to request quotes based on your credit, income, and property location. Each lender will weigh those factors differently and offer you a different rate.
Educate Yourself On Rate Options
No lending package fits everyone's budget. Researching rates and terms will help you decide which type of financing best meets your needs. Also remember that you can negotiate lower rates by agreeing to pay higher closing costs.
For instance, you may find a second mortgage fix rate of 6.25% for thirty years with no closing fees. The lender may also offer a 5.625% for fifteen years with closing costs. If you plan to sell your home is a year, the higher rate mortgage is actually cheaper. However, if you plan to stay in your home for several years, you would do better with the fifteen year loan.
Don't forget to check out refinancing both your mortgages into one loan. Combining your loans will lower your total rate. But if you have an especially good deal on your first mortgage, keep it.
Don't Forget To Look At Terms
Terms are just as important as rates because they can also cost you money. The shorter your loan, the less you will pay in interest costs. But you will also have a higher monthly payment.
You should also be aware of hidden fees, such as those for early payments. This can cost you thousands if you sell or refinance in the future. You also don't want to get trapped by only being able to deal with the one lender if you do choose to refinance.
With online lenders, it doesn't take long to find quotes on rates and fees. Within minutes you can have dozen of offers waiting for your review.
When Love is Gone
When love leaves, the travails of married couples begin. Everything about their partner is gross, unappealing, and irritating. Life becomes a struggle to keep up with the pretense that things are okay.
When you're the aggrieved partner, you silently wish that things will suddenly take a better turn, especially with an unpaid mortgage. Refinance plans have to take a backseat for a while, so, no go.
Not all divorces end well, but for those who want more money from their house faster, they'll settle fast and work around their mortgage. Refinance is usually another exit of a relationship and to get the spouse out of the house fast.
What to do Before the Divorce
There's no reason for couples to fight like wildcats over property bought during their marriage. If you're in this mess, try to convince your spouse to talk it over like politically correct adults.
Issue number one to be discussed is the custody of the children. Both of you must understand that the children need both of you in their lives. Work it out between you with the children's well-being in mind.
The second issue is the home. Equally divide the value of the house, subtract the outstanding balance of the mortgage and calculate the remaining equity and split it between the two of you 50-50.
If you want to keep the house, you'll have no choice to but to get a mortgage refinance to pay off your spouse. Untangle the legalities and ask the lender about your options as a divorcee.
During the Divorce
If you have opted to buy out your partner, get an appraiser to have an accurate assessment of the property before splitting your spoils. The value should then be entered in the divorce settlement agreement.
If you one of you has no idea about the appraisal values, then get your own appraiser just to be sure everything on paper is accurate. A real estate broker can also give you an idea of the current sales value of the house. Also ask your lender about the exact balance of your mortgage.
If you have agreed not to get the house, despite your contributions towards the monthly payment, pack up and go. You'll still be getting your share of the equity. If you got the kids, you can temporarily stay at your parents or a sibling, or stay in the house until the dust has settled.
Things to Watch Out For After the Divorce
If your spouse got the house and is paying for the mortgage, be prepared. If he or she fails to pay the mortgage, your credit ratings will be affected and getting a loan for yourself will be difficult. This is because mortgage companies or lenders have signed a contract bearing both your names and can follow up on repayment of the loan from the two of you.
If both of you are jointly tied to a debt, investigate ways to have your or your ex-spouse name removed. As a parting shot, make sure that if only your spouse is obligated to a lender, he or she is responsible, not you. This is your way to get a mortgage refinance when you're starting all over again.