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[R140]Refinance Mortgage Closing Costs

by Rateempire, Rat

You may own a house, which you have bought with a lot of efforts in the process - mortgages, credits, insurance. Surely, the volume of the bills always grows up - both qualitatively and quantitatively. But, there must be a way to stop this increasing pressure of bills, other than shifting on to a better job. Here is a good alternative that you can use. In fact it is more sensible if your ultimate motive is to save money in long run by paying your bills and controlling other expenses judiciously.

What you can do here is, refinance your mortgage, and use the extra money that you get from your house in paying off any outstanding or dues that you have accumulated and not getting the money to shell out the bills.

In bank or loan terminology, it is known as "Home Refinance with Bill Pay" or "Combo Loan". House and property are two of the best friends that can help you as the day progresses. More often than not the valuation of a property or house is bound to increase over time. Refinancing is done when you are getting a lower interest rate than your previous rate, and thus saving some money, on the way. A good refinancing is the one when the new rate is at least 1.5% lesser than the earlier one.

What happens in the refinancing is that the Financing Company, from which you are taking the loan, pays off your mortgage and also gives cheques to the creditors to which you are liable. Such companies also have cash back policies, which are not too favorable most of the time for you. What you have to remember is that you are saving money a lot by the help from such companies, but they also know you are in a position to pay off your debts, which you are about to incur from them.

For example, suppose there is a couple, who bought a house 8 years ago. The house needed a lot of repair, so the price they paid was low. It was a two-storied house. They removed all the torn and old wallpapers that were in place, and decorated those with new papers. They repaired the whole of the insides with colors of their choice. Re-roofed the porches. They also added some new appliances and sold; they also sold the garage. All the remodeling cost them some money and they also saved some from the garage sale.

Now as they will go to refinance the house and they will find out that the refinance price is more than the price they had to shell out when they purchased it 8 years back. The duo now can use that money to pay off their various debts they incurred over the years. In fact they can receive the price of a much newer home.

Thus with a simple refinancing, the business loans can be paid off, credit card bills cleared, some debtors can also be given their payments and still you can save some money to keep in the bank.

If you are purchasing a home and have a substantial portion of your assets inside of a retirement account such as a 401K, 403B or other retirement product or annuity, you may choose the increasingly popular option of tapping those funds to make a down payment on your new home. Like any other accounts you may have in your name, such as brokerage accounts and bank checking, savings and money market accounts, most popular retirement accounts qualify as assets to be counted toward your “reserves”, a measure used by mortgage lenders to determine how many months of payments you must have in order to serve as a buffer covering payments you might miss if there were any interruption of your income.

Retirement accounts such as 401(k) or 403(b) annuity accounts are generally administered or sponsored in whole or in part by your employer. In addition to serving as excellent documentation of your earnings and savings, your 401K or 403B accounts can be used in a variety of ways to help finance your new home purchase. Depending on the specific restrictions applied to your account, you may have the option of withdrawing money directly from the account or “borrowing” money in the form of a loan (against your own funds) which is repaid at a generally low rate of interest. Regardless of whether you cash money out of your account or take a loan against it, be sure to thoroughly document any details of the transaction, including any withdrawal or loan application paperwork, demand drafts, cashier's checks, deposit tickets, etc. for the purpose of substantiating this source of funds to your lender.

Lenders do treat down payment money from retirement accounts differently from program to program and state to state, sometimes from case to case. In particular, borrowing money in the form of a loan may increase what the lender's perceives as your monthly debt obligations, because even though you are borrowing money from your own account, you are still obligated to make a payment every month which you wouldn't have to make otherwise, and lenders will often consider this to be detrimental to your qualifying DTI or Debt to Income Ratio, making it harder to borrow as much money as you may need. On the other hand, cashing out any type of retirement account will always create a taxable event and sometimes also a penalty fee, which generally accounts to more than the nominal interest rate common to the loan option. Speak with your loan officer about the requirements of your individual program and weight the options with him/her or another trusted financial professional.

You may also consider speaking to your employer about any down payment assistance programs which may be available to you as part of your benefits package. These can come in many forms, but it is important to clarify with your employer that any down payment assistance granted does not amount to a loan and that there is no expectation of payment. Why would an employer want to help you make a down payment? Call them old fashioned, but most companies do want their employees to stick with them, and if your employer helped you achieve ownership of your dream home, how would you feel about them? As with the 401K, 403B or other retirement account options, down payment assistance from your employer should be documented in detail and all copies of communication, checks, deposit tickets and statements of account, along with signed records stipulating that the funds are given freely and not to be repaid, should be kept for submission to your lender.

Article Source : How To Become Mortgage Broker

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Both Rateempire & Tristan Hunt are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Rateempire has sinced written about articles on various topics from Finances, Diamonds and Mortgage. RateEmpire and marketpl. Rateempire's top article generates over 18100 views. to your Favourites.

Tristan Hunt has sinced written about articles on various topics from Finances, Mortgage and Real Estate. Tristan Hunt is a seasoned financial professional with a wealth of experience in the mortgage industry, advising clients on . Tristan Hunt's top article generates over 33100 views. to your Favourites.