Mortgage : Home Loans : Refinance : Home Equity Loans

By Ben Afzal

Basics

Often times buyers buy a property but find that the loan they are in isn’t the best one for them.

They may look for a loan type that offers them a much lower payment.

People generally refinance for one of two reasons:

• getting cash out from their equity
• lowering their monthly payment

Getting cash out if usually not an option on your property immediately after you purchase a property for 100% financing.

Most lenders require at least 6 months or 12 months after the purchase date to allow use of a higher appraised value to cash out equity. Until that point lenders will only refinance a property to lower its payment.

Reasons To Lower Payment

• A borrower may want to lower their payment for two reasons:
• purchase of a brand new property where the appraisal value can be much higher
• bad current loan you want out of

In a rising real estate market a borrower can often sign up to purchase a new property that will be built in the future. The contract price is agreed to up front but the market value of the property may be much higher at the time the property is finished.

You can purchase a property for the contract price even though it is worth much more at the time of acquisition. When you purchase a property a mortgage lender will use the lower of the contract price or the appraisal value. This means you can’t use the appraisal value up front. A lender on a refinance will allow you to use the current appraisal value.

You can then use this additional equity as leverage to get a lower payment. Borrowes can sometimes even qualify for an option payment loan, which allows for a particularly low payment.

Many mortgage lenders allow you to refinance a property the day after you buy a property.

Here is how you can do it, and when it may make sense for you.

===========================================
For additional Mortgage Refinancing information
and resources visit Mortgage Refinancing.
(http://www.refinance-refinance.net)
===========================================

This entry was posted on Friday, October 13th, 2006 at 2:21 am and is filed under Refinance. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.