Asian Journal- The Filipino-American Community Newspaper

There has been a good number of inquiries as to whether it is time to refinance their loans for a variety of different reasons. Of course, the answer definitely would depend on the whole scenario for each borrower. Our company policy is very different from other mortgage companies. Our policy is to make sure we get all income/asset/credit information from the borrowers and then make sure that the appraisal value is acceptable to the program selected. Then we formally approved the loan and issue a commitment to the borrowers with a guaranteed rate lock and a guaranteed closing fees. All these process is done in a matter of a few minutes as long as all income information and appraisal value are verified.

With this process, I am able to make sure that the clients are fully understanding on how the process of the loan works, we make sure that you are happy with the whole transaction and advice you with options that will benefit you the most. I wish I could say yes to everyone who wants to refinance their loans, but I would be lying so my policy might be conservative but it is guaranteed that if we take your loan, you will close on schedule and on the rate and terms that we first disclosed to you. The only thing I cannot control in a transaction is the title insurance. There are instances when a property has been recorded incorrectly with the county and it could take months to resolve that problem. We would normally know about these things in three-five days.

Here are some of the reasons for refinancing:

• If you have an adjustable rate that is due to increase in payments, if would be wise to do it now while the rates are low and you can get a fixed rate option loan and still pay the same amount.

• If you are interested in cashing out money to pay off credit card debts and consolidate your loan. Even if you have those 0% credit card offers, remember you still owe that amount of money and it has to be repaid. Consolidate your debts into one payment, you would be surprise in the savings. Plus the tax benefits too. Remember, credit card interest are always non tax deductible while mortgage interest is tax deductible. Wouldn’t it feel great if you paid Uncle Sam less and more money in your pocket to enjoy?

• Rates over 6 percent or higher fixed rate mortgage are also due for refinancing, the current rates as of December 1, 2008 is about 5.25 percent. You should refinance to a better rate and might even be able to refinance the loan with no cost, your rates would be based on your current loan balance. If you have high rates but only have a few years remaining, then we would have to analyze your loan, it might not be worth refinancing. Call me for advice.

• Loans with Negative Amortization are also being converted to fixed rate mortgage. Negative Amortization where you principal balance increases for the first three years of your loan must be fully understood. I am surprised with how many callers asking me about their Negative Amortization loan or Option loan payment program and not understanding how they adjust. It has its share of disadvantages if you are not aware of them.

• Interest Only loans that are adjustable are definitely the first to go, with the way the market is going it is better to be safe than sorry. A low payment option does not always mean interest only program. There are other fully amortized loans that can offer a lower payment and yet pays both interest and principal.

• Combo Loans, paying a first and a second mortgage. If there is enough equity in your property it might be smart to combine both payments into one. A second mortgage is always higher in rates compared to your first loan. A line of credit is even scarier if you took out a large amount and plans to pay it off within 5-10 years.