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Refinancing your mortgage may be the best option to get the money you need or get your finances back on track. However, there are a few things you should know before you dive head first into the world of refinancing. Being an informed consumer is half the battle. Use these tips to get a head start and familiarize yourself with mortgage refinancing.

Know the Factors that Will Affect Your Rate

There are several factors that can influence the rate of your loan. Failing to familiarize your self with these factors can be dangerous to you as a financial consumer. Once you’ve decided to refinance your mortgage make it a point to know the following facts and figures:

Credit Score - As with any financial move, it’s always important to know your credit score. Your credit score will indicate to the lenders how likely you are to repay the loan and to do so in a timely manner.

Loan Term - The amount of time you have to repay your loan can directly impact your interest rates. In many cases the longer it takes you to pay off your loan the higher the interest. Likewise, a shorter repayment period can offer you lower interest rates.

Type of Rate - Is your interest rate a floating one that can change over time or is it locked in? Both can be beneficial on different and harmful on different levels making this something to consider when before you commit to any particular refinancing plan.

Know What Type of Loan You Need/Want

As a homeowner in the process of refinancing your mortgage, there are several options available to you. The type of loan you choose depends on several factors. You’re loan officer should be able to guide you in the right direction finding you a loan that fits your needs. However, it will be beneficial to you as the home owner to ask your self these questions:

How much time will I need to pay off this loan?

How much money will I really need?

How much can you pay a month and will you be able to overpay your monthly fee?

Am I being one hundred percent honest with my self and the loan officer about my specific needs? If not what am I leaving out?

Familiarize Yourself with Mortgage and Refinancing Terms

It’s nearly impossible to make a well informed decision about your refinancing options if you don’t understand the basic terminology used by loan officers. Before you begin the refinancing process read up on your options and familiarize yourself with important terms. This can be as simple as going to a website that specializes in home loans or refinancing and reading the information they have available.

Watch the Rates

Mortgage refinancing should help you the homeowner by reducing your monthly payments. In order for this to benefit you, the interest rate should be lower than your initial rate. Interest rates can change often so it’s in your best interest to pay attention to any drop in interest rates. Periods when the reduced interest rate will be the best time to refinance your home.

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Buying low and selling high is the key phrase with real estate purchased for the purpose of flipping. The most important part of that phrase is “buying low”. With a foreclosure there are three times a purchase can be made.

(1) Pre - foreclosure, when, or before the homeowner has been notified by the bank that because they are behind with payments the mortgage company is requiring a financial solution to be worked out that is acceptable to them, or to pay the loan off.

(2) At the auction, or commonly called “at the courthouse steps”.

(3) Or an REO property which means real estate owned. REO is what the bank calls the property, when they have gotten the property back, because it was not purchased at the auction.

The common problem with a foreclosure is that because lenders have had available 100% financing, or ARM’s which is short for adjustable rate mortgage, or allowed lower income qualification, and higher debt allowances, there is very little equity in 95% of the foreclosures. With a tight budget a for a homeowner, any little, or big change in their family budget can spell disaster for their mortgage payments. Therefore if foreclosure comes, there is very little equity in the property. Sometimes there is so little, that if the owner wants to hire a real estate agent to sell their property, they would have to pay the agent “out of pocket”. This is further complicated by the fact that the owner probably does not have the cash, because they are in foreclosure.

During the pre foreclosure stage, sometimes a homeowner is in denial, or thinks they will be able to sell for a big profit, or thinks they will win the lottery. When this is the case they often will not allow an investor to purchase the home. At the auction the opening bid is usually what the bank is owed, plus late payments, and late fees, plus attorney fees. A home with very little equity, could well be over the market price when all that is added, even though repairs are needed. The last stage is the bank listing the home through a real estate agent, and trying to sell it in the competitive market. Many times it will be listed at full retail price of other homes in the neighborhood that may be in tip top shape. Just because a home is a foreclosure home, or bank owned home does not mean it is a bargain. There are other things to be beware of, such as liens, and 2nd mortgages. At the auction most liens are wiped out, but not Federal tax, or if it was the second mortgage that went into foreclosure, the 1st position mortgage is still due. There are other strategies of working with the homeowner in distress, and with the bank that an experienced real estate investor can use. These are too lengthy to explain under this title.

To flip a house and make a profit you need the price you buy the property for to be 65 to 70% of ARV (after repaired value). In that percentage you need to include the cost of closing fees on financing, and the cost of repairs, not just the cost of the property. Most often things that will be estimated in error are the repairs. The estimation is often too low, either by the repair labor or material costing more than expected, or by missing some important repairs or replacements like needing a new roof, or a termite infestation. A temptation I often face is to upgrade, or add some things to the rehab that I think will really sell the property, but I failed to include in the original estimation. Most of the time, a regular lender will not lend the sale price plus the repair money to a real estate investor. There are lenders called “hard money” lenders. These lenders are where most investors go to get short term money including repair money at a rate of 13-18%. But the loan is for the 65 to 70% of ARV that I mentioned above.

Now you have purchased the property. You already have your list of repairs, and costs. Are you going to do the work yourself, or hire it done? I like to do the work myself, and sometimes do, if the list is not too extensive. However, time is money. Can you really save money by doing it yourself, when it may take you three times longer than hiring it done?

Sometimes I hire most of it done, but reserve a few projects that I like to do, and are really expensive to have done. One example is ceramic or stone tile. I like doing it, and can save at the minimum $5.00 a square foot. If you hire contractors, handymen, etc., be sure you have several estimates to choose from, and make sure they can show up for the time you have allotted to start and finish the job. Again time is money. If you have to wait two weeks for them to come, it is costing you money. While working on the house you still have to pay mortgage payments, and builder’s hazard insurance.

What should you do to the house? First of all, plan on the necessary repairs needed to make the house sound, and livable. Things such as roof, and plumbing, electric, HVAC are first on the list. Fresh paint is a must. Choose a neutral color. All the rooms painted the same color make the house appear larger. For cosmetic upgrades, concentrate on the kitchen, and baths. Use hardwood, or ceramic tile, and new carpeting to give a solid, and plush look. Especially hardwood, and ceramic tile will add value to the home for the appraisal. New appliances in the kitchen give a polished look. New faucets throughout, and new switch, and outlet plates are two fairly low cost items that help give the new look.

You are now almost done with the rehab. Start your marketing now. In doing the rehab, take care of any exterior fixes, and upgrades, including landscaping first. This is so you can take a nice picture of the outside for advertising purposes. You can add other pictures of the inside as the rooms are completed. Assuming you have chosen a neighborhood that most of the houses are appealing, and well kept, this first impression will go far. When prospective purchasers call, have them drive by the home and see the outside and the neighborhood first. Also tell them the date of your first open house, or make an appointment with them to see the home at your finish date. It is a good strategy to schedule more than one appointment at about 15 to 30 minutes apart.. This creates an urgency to decide.

If you sell the house before 90 days FHA loans are hard to get because of the ruling in mid 2003. It was called anti flipping law. The prospective purchaser can go to a non-conforming loan. A list of repairs, and copy of receipts to give to the prospective lender is an important document to use. Mortgage lenders that specialize in investor loans, often can help the end purchaser in getting a loan. Also, a short term lease option with a prospective owner that qualifies for financing is an option. It could be for three to six months, and take it past the time required by some lenders.

The house is sold. Have you made $50,000, $30,000, or just a couple thousand, because of misjudgments. It is commonly said with real estate investing , “Do not quit your day job.” Although it can become your full time job, you will have to go through a learning curve when actually doing projects. You will learn through mistakes. Beginners, and seasoned investors can make mistakes, and in real estate investing, they can be expensive.

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You are having a rough time with your rental property or even your private residence.

The problem is that your mortgage payments and/or other expenses are driving you into the poor house and you cannot sell or even refinance the property in this market.

You cannot keep up the mortgage payments or the negative cash flow much longer. You may not even be delinquent, but you know it is a matter of time before you will be.

You may also be upside down in the property, that is you owe more on the property than it is worth.

Is that your problem? We have the answer!

It is called Equity Sharing. The last time those words were uttered was a generation ago in the early 1980’s, when interest rates were in the 14-19% range and few people could afford mortgages at those rates.

People would ban together to purchase property as co-owners, sharing the equity.

There were many different models but most resulted in 1 party, the investor, putting up enough cash to allow his equity share partner to be able to afford the resulting smaller mortgage payments.

The other partner, the resident, moved into the property and maintained it while paying the mortgage and other operating expenses.

A second popular model was where an investor was brought in to cover or at least greatly reduce the negative cash flow resulting from the high mortgage payments which resulted in negative cash flow.

Whichever model was used, the result was often a lawsuit or worse.

In most cases, although there was a written agreement, both parties were on the title as co-owners.

That was the crux of the problem. What happened when one partner died, got divorced or was sued?

His portion of the house was in play. Perhaps creditors forced the property to be sold. Maybe it ended up in the litigation between divorcing parties.

Most commonly, a dispute would arise between the partners. One was not doing his job. Maybe one wanted to sell or refinance or wanted out or whatever.

The result was often a mess and equity sharing deservedly fell out of favor, also the interest rates came down and equity sharing, like seller financing, was no longer needed.

Now we are in an environment where the benefits of an equity share could be the salvation for someone over the barrel as we described above. No way out, foreclosure and disaster over the horizon.

Now, there is a way to have the advantages of the equity share model, while eliminating the downside!

The solution is to use a properly constructed Land Trust to hold title to the property.

This eliminates the possibility of the property becoming caught in the middle of a dispute between 2 or more owners.

While it is too complicated to go into here, suffice it to say that the land trust will give everyone the benefits they were looking for, ownership, tax advantages, equity, etc. while avoiding the hassles that can accompany joint ownership of real estate.

Should an equity share partner get sued or divorced, his portion of the ownership can be sold without the expense and turmoil of selling the whole property.

The biggest benefit of using a land trust is that no lawsuit or judgment creditor, not even the IRS can attach the title or take someone’s ownership of property in a properly constructed land trust! I

If Jim gets sued, they can take his other assets but they cannot take his interest in the land trust and the creditor can not affect the ownership of the property.

If you feel the confidence of the earth could be the answer you're looking for, make sure that you have written specially by someone experienced in Illinois land fund. There are many different types of funds and only version of Illinois will give you the benefits described in this article.

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I am trying out a rather risky investment thesis by investing in financial stocks. I have begun to start building a position in the major financial stocks. I believe that the last few weeks have presented some good buying opportunities for financials. The three financial stocks that I have invested in are Wells Fargo, JP Morgan and Bank of America.

Wells Fargo is probably the best capitalized of the major banks. The recent addition of Wachovia has given Wells Fargo about 800 billion in deposits. Wells Fargo size is a major competitive advantage. They have a Tier 1 capital ratio and a solid balance sheet. Wells is currently the 2nd largest bank in the US in terms of market cap. Wells also has excellent management. Wells Fargo management have already accounted for a 74 billion dollar writedown of Wachovia’s total loan portfolio. This should reduce Wells exposure going forward. Wells stock has held up pretty well over the last few months compared to its peers. Wells has historically had a 22% profit margin and solid ROE of 18% over the last five years. It doesn’t hurt that Warren Buffett loves Wells Fargo and has owned it for years.

JP Morgan Chase should emerge from the financial crisis as the dominant player in the banking industry. JP Morgan got a steal with the acquisitions of Washington Mutual and Bear Stearns for well below their true value. JP Morgan has the largest deposit base of any bank in the country which gives it a strong capital base. JPM has solid management that has delivered an 18% profit margin over the past 5 years. The return on equity averaged 10.5%. I think this will increase in the future as Jamie Dimon and company realize the synergies of the Washington Mutual acquisition. JP Morgan currently sells well below its book value and pays a healthy dividend.

Bank of America is definitely the riskiest of the 3 banks. From its purchase of Countrywide just before the subprime crisis to its pending merger with Merrill Lynch, Bank of America has made some questionable moves. The Countrywide and Merrill Lynch deals that appeared cheap before now look severely overvalued. Bank of America’s shares have plummeted and this may provide an opportunity. The stock was selling for $10 recently which is well below its book value. Bank of America has historically averaged a 16% ROE and a 27% profit margin. I think that the Bank of America name is a major competitive advantage. Bank of America has a huge deposit base and the BOA name has significant goodwill. I think the Merrill Lynch acquisition will be a valuable brand for Bank of America long term. But I am not so sure about the Countrywide acquisition. Countrywide has a damaged brand name due to its heavy association with the subprime crisis. However, I do think with their ability to access capital and their strong brand name Bank of America will remain a viable entity.

These 3 stocks will probably continue to face difficult circumstances in 2009. I think that in the long run, these banks will benefit from the financial crisis and emerge with greater market share and strong financial structure.

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We all know about the 700 Billion Dollar Economic Stabilization Package or how is commonly called: The Big Bailout Bill of Wall Street financial institutions that was just passed by Congress last week, and many homeowners wonder if it will include any extra help for the regular, middle class homeowners who are facing the possibility of foreclosure.

The government plan to rescue the financial system was passed by the House for a vote after it passed the Senate Wednesday night. The Bill would allow the Treasury to buy up seven hundred billion of bad assets, most of which are backed by mortgages from banks, in an effort to clean up their balance sheets so that they can resume lending.

Experts and economists say that the U.S. credit crisis will not be resolved until the housing market smoothes out, foreclosures slow down and home prices stop falling. But home prices are still declining, so in order to help the economy, the issue of homeowners facing the possibility of foreclosure will have to be resolved first.

We already know that the seven billion bailout legislation calls for the Secretary of Treasury to execute a plan to aim foreclosures by working with lenders to modify loans, and here is when things get complicated, since there is a new housing rescue law that was approved in July and is bound to work in a similar platform allowing borrowers who can not meet their current mortgage terms to refinance into more affordable, fixed-rate loans backed by the Federal Housing Administration.

In general, when considering whether to modify a loan, Lenders determine whether the borrower has the means to make payments on their loan, if the loan terms were changed slightly. This is where 80% of homeowners fail to comply, because with the actual inflation and increased cost of living, their income ratio to expenses rarely leave room for the new mortgage loan unless the principal gets seriously reduced, which is not happening right now.

The original homeowners rescue plan intent to help homeowners facing foreclosure through HUD, Fannie Mae, Freddie Mac, and FHA Agencies, by reworking existing mortgages Loans directly with Lenders, the thing is, this does not appear to be working as planned, and now with this Bailout, what is being discussed is actually; to buy this mortgages from the original Lenders, and the Government, then try to work out a plan to keep homeowners in their homes.

It is very important that homeowners understand that under the previous Housing rescue Law from July, It is up to the lender to determine what is more financially viable for them if modify your loan, or just foreclose your home. So do not be so confident that under this plan you will get help. I talked about this in previous articles that you can read in my site.

Often when a borrower has not being late on mortgages payments, but faces a big spike in rates, the modification may call for freezing interest rates at the introductory level. The workout could also reduce principal balance or stretch out the term of the loan, from 30 years to 40 years, for example. Unfortunately at this point most homeowners do not fall in this category.

The bill also allows loan to guarantees and credit improvements to avoid foreclosures, but Treasury refuse to be more specific about this. Loan guarantees generally refer to mortgages backed by a federal agency, such as the FHA, or by mortgage insurers Fannie Mae and Freddie Mac. The truth is that the legislation falls far short of helping troubled homeowners, and the Government is nor being specific about this.

Nothing is clear about what is going to happen to homeowners now facing foreclosure, if you will get real help or if all this is going to stay rolled in red tape and bureaucracy. In the meantime banks keep foreclosing properties every minute of the day. The only reality is that you have to Make sure that your stay in the house for as long as possible, and if you are going through financial problems, it is more difficult to achieve.

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Wondering how the Obama federal loan modification plan will affect your Countrywide loan workout application?  Will it be easier to qualify for the help you need to lower your monthly mortgage payment?  Even if you have already applied for a loan modification with Countrywide you may have a second chance.  Learn more about how the plan works and if you will benefit.

Thousands of struggling homeowners have felt like they are painted into a corner with no option but to lose their home.  A Countrywide mortgage modification has been very difficult for many borrowers to qualify for.  The Obama federal loan modification plan will aim to provide relief to almost 5 million homeowners across the country, many of whom might have already been turned down for a loan workout.  Now, participating lender must agree to review the eligibility of every homeowner who requests information about the plan to determine if they might qualify.  During the review process, any foreclosure will be stopped until a determination of eligibility is made.

Countrywide is authorized to offer the Obama federal loan modification plan, and will accept applications from all interested homeowners.  The loan workout program will offer substantial interest rate reductions to qualified homeowners-as low as 2%.  In return, the Treasury department is offering monetary incentives and is sharing the costs with the lenders to help entice their participation.  But the good news is the borrowers who successfully maintain the new modified loan will also be paid a bonus-up to a $5000 credit towards their loan balance.

The plan has been expanded to include second liens as well.  Now homeowners who have lost a significant amount of equity may have their interest rate reduced to 1% or in some cases see the entire second loan balance forgiven.  Countrywide will be paid 12 cents on the dollar by the Treasury Department for second liens that are retired and that meet certain qualifications.

What should you do if you need a Countrywide loan modification and are interested in the Obama plan?  Since the lender is flooded with requests, borrowers are being advised to start gathering the required paperwork and learn more about how to qualify for this free loan workout program.  Successful candidates will have an edge by learning More information about the plan, a pre-qualification, and training necessary changes the application documents to be submitted in advance, so that it has a better chance at achieving the adoption of principles.

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People love the concept of being homeowners but then God plays the final card; man proposes God disposes. Circumstances get really unruly and a man comes on the verge of losing his house. All such people lose an asset and at the same time lose the prestige they had built over years. This is where Country wide loan modification help comes into the picture.

What would the homeowners not do to prevent foreclosure? Stop foreclosure is the principle on which Country wide loan modification works. It essentially sees the emotional investment that a home is, leave alone the monetary one. Thus it wishes that somehow the home should always belong to the owner.

Bankruptcy and liquidation can be unnerving. The organization looks to give out plans which help the modification or restructuring of the mortgage. The new mortgage settled with the lender invariably has a better interest rate structure, lower principal balance and most of the time an expanded tenure so that the effective EMI’s come down. Such monetary negotiations help a distressed homeowner to get a much needed reprieve.

Now if the home is affiliated by FHA or VA then only such lender-specific negotiation is possible. At the same time, the loan modifications become quite easy as the lender is backed by the organizations and is secured against a borrower default.

Business can also be seen with heart and this is exactly how Country wide loan modification look at foreclosures. In cases, when the lenders are not impressed with the repayment structure, they ask the VA to themselves purchase the loan from the lender and help with an affordable modification. A homeowner is not a fraud looking to run away with money, its just that he’s in deep pits and would like to come up to current mortgage stage with the help of a possible monthly mortgage schedule.

Country wide loan modification has trained staff that has the experience of many practical cases, something that can prove invaluable along the path of stopping foreclosures. Its tough and stressful time for you anyways, so they take most of the load off your shoulder and run errands themselves. They take a fee called contribution but it’s far lesser than the effort that they put.

People trained over weekends are far from ideal, Country wide loan modification claim. It’s very important to be well versed with the Foreclosure law. Further, it’s important to know the difference between a negotiable position and a lost cause.

In all such cases they help with the best short sale process. Short sale is a process where a lender bank buys off the home from a present homeowner at a price lesser than what needs to be paid off by the borrower.

Expert Country wide loan modification loss mitigation professionals look to read the condition of homeowners in separate buckets and negotiate with the lender accordingly.

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The changes in financing options available for residential investment properties over the last 5 years are staggering. Lenders have relaxed the credit and income guidelines for qualification that formerly deterred many would-be investors from entering the real estate. In addition, the down payment requirement has been eliminated for borrowers who qualify. This article surveys the landscape for lenders offering residential investment financing products.

Types of Lenders: