Mortgage Loan Refinance And Debt Consolidation

Credit Report Scores - Who Determines Them?

There are three major credit reporting agencies: , , and .

Each of these credit reporting agencies receives information from credit grantors such as credit card companies, stores granting credit, mortgage companies, and banks. They compile your credit history and compute your credit report scores.

They provide your history and credit report scores to others who have a genuine interest in your credit worthiness.

Consolidation Loans

How Interest Rate Changes Affect Mortgage Rates Mortgage rates depend on the interest rate the government charges to lend money to banks--the federal lending rate. Variable mortgage rates are often a fixed percentage above this "prime rate." Long term and short term treasury bond rates also indicate the trend in long term (30 year fixed rate) and short term (e.g., 7 year fixed with balloon payment) mortgage rates. If the 30 year treasury index is higher than the 5 year treasury index, the overall trend in interest rates are upward. If the 30 year treasury index is lower than the 5 year treasury index, the overall trend in interest rates is downward. What if interest rates are headed upward? For a $100,000 loan, for every quarter point increase in a mortgage rate you will pay about $20.83 per month more in interest charges. For a $100,000 mortgage, you will pay about $416.67 per month in interest if the mortgage rate is 5%. If the interest rate increases to 5.25%, you will pay about $437.50 per month in interest charges. That's an increase of $20.83. So, if interest rate are increasing, there is increasing pressure to get a consolidation loan soon. What if interest rates are headed downward? On a $100,000 mortgage loan, every time the mortgage rate drops by a quarter point, you will save about $20.83 per month in interest charges. Let's say you have $30,000 in credit card debt at 18%. This is costing you about $450 per month in interest charges. Consolidating this $30,000 debt into a 5% mortgage would cost you $125 per month in interest. You would save ($450 - $125=) $325 per month in interest charges. It would cost you $325 per month to wait for a better mortgage rate deal. This simply is not worth it. After you get a consolidation loan, if mortgage rates continue to decline, you can always refinance you mortgage at a lower rate and get the benefit of lower interest payments. It would still be smart to consolidate as soon as possible.

Consolidation Loans and Your Credit Rating

A consolidation loan rolls several debts into a new mortgage on your home.

You may currently have debts similar to:

• Existing mortgage
• Credit card debt
• Department store debt
• Unpaid utility bills
• Tax liens
• Builders liens
• ... other debts

A consolidation loan can eliminate (or drastically reduce) both the number of your non-mortgage debts and the amount of those debts. Reducing the number and amount of your non-mortgage debts will help raise your credit score.

Your credit score is based on the following factors:

• Bill payment history -- 35% of your FICO score
• Debt relative to your credit limit -- 30% of your FICO score (Good: non-mortgage loan payments less than 5% of gross income, few installment loans, Bad: many debts, maxed out credit cards)
• Length of credit history -- 15% of your FICO score (Best, entire credit history of 7 years shows no negative reports)
• Types of credit -- 10% of your FICO score (Good: mortgage, car loans, Bad: high credit card debt)
• New credit -- 10% of your FICO score (Bad: many rejected applications, new accounts, or credit inquiries)

Consolidation loans help in several ways:

1. Reducing your non-mortgage debt by rolling it into a mortgage loan will reduce both the number and amount of these debts.
2. Decreasing the number of credit cards with continuing debt will reduce the amount of your income going to non-mortgage debt.
3. And, eliminating unpaid utility bills as well as tax and builders liens will remove serious blemishes from your credit report and help your credit score.

Both your credit report and your credit score will benefit from consolidation loans.

Refinance Your Home Mortgage

Take advantage of low mortgage rates.

Now you can lower your monthly payments, consolidate high-interest debt, and have cash to make home improvements.

When refinancing, you can choose to borrow enough to only pay off the mortgage balance you owe or, if you have enough home equity built up, you may also be able to borrow an additional amount in what is called "cash-out" refinancing.

This extra amount can come in handy if you are looking to pay off other debts such as auto loans or credit cards. However, you should evaluate a cash-out refinancing carefully.

Generally, when refinancing your home you look for a new loan with more favorable terms. You refinance if you want to pay off a higher interest rate loan with a lower interest rate loan. The new lender pays off the current lender and becomes the lien holder on your home.

If you have other debts and want to combine loan payments, you may decide to use a consolidation loan to refinance your mortgage. Advantages of a loan consolidation include:

We custom tailor our loans for each individual – no cookie-cutter loans.

We work with you to find a loan that fits your specific needs.

We have extensive experience finding the right loan for every customer.

Mortgage and Mortgage Refinance

How Interest Rate Changes Affect Mortgage Rates Mortgage rates depend on the interest rate the government charges to lend money to banks--the federal lending rate. Variable mortgage rates are often a fixed percentage above this "prime rate." Long term and short term treasury bond rates also indicate the trend in long term (30 year fixed rate) and short term (e.g., 7 year fixed with balloon payment) mortgage rates. If the 30 year treasury index is higher than the 5 year treasury index, the overall trend in interest rates are upward. If the 30 year treasury index is lower than the 5 year treasury index, the overall trend in interest rates is downward. What if interest rates are headed upward? For a $100,000 loan, for every quarter point increase in a mortgage rate you will pay about $20.83 per month more in interest charges. For a $100,000 mortgage, you will pay about $416.67 per month in interest if the mortgage rate is 5%. If the interest rate increases to 5.25%, you will pay about $437.50 per month in interest charges. That's an increase of $20.83. So, if interest rate are increasing, there is increasing pressure to get a consolidation loan soon. What if interest rates are headed downward? On a $100,000 mortgage loan, every time the mortgage rate drops by a quarter point, you will save about $20.83 per month in interest charges. Let's say you have $30,000 in credit card debt at 18%. This is costing you about $450 per month in interest charges. Consolidating this $30,000 debt into a 5% mortgage would cost you $125 per month in interest. You would save ($450 - $125=) $325 per month in interest charges. It would cost you $325 per month to wait for a better mortgage rate deal. This simply is not worth it. After you get a consolidation loan, if mortgage rates continue to decline, you can always refinance you mortgage at a lower rate and get the benefit of lower interest payments. It would still be smart to consolidate as soon as possible.

Refinance Your Home Mortgage

Take advantage of low mortgage rates.

Now you can lower your monthly payments, consolidate high-interest debt, and have cash to make home improvements.

When refinancing, you can choose to borrow enough to only pay off the mortgage balance you owe or, if you have enough home equity built up, you may also be able to borrow an additional amount in what is called "cash-out" refinancing.

This extra amount can come in handy if you are looking to pay off other debts such as auto loans or credit cards. However, you should evaluate a cash-out refinancing carefully.

Generally, when refinancing your home you look for a new loan with more favorable terms. You refinance if you want to pay off a higher interest rate loan with a lower interest rate loan. The new lender pays off the current lender and becomes the lien holder on your home.

If you have other debts and want to combine loan payments, you may decide to use a consolidation loan to refinance your mortgage. Advantages of a loan consolidation include:

We custom tailor our loans for each individual – no cookie-cutter loans.

We work with you to find a loan that fits your specific needs.

We have extensive experience finding the right loan for every customer.

Credit Report Scores - How to See Them

Each of the three credit reporting agencies can provide you with a one-time copy of your credit report. Equifax, Experian, for example, will provide your report online for a fee of $9. Trans Union charges from $7.50 to $9 for your credit report.

All three credit reporting agencies will also provide a one-time copy of a "3-in-1" credit report. This contains your credit reports and your credit report scores from all three reporting agencies. Trans Union charges $34.95 while Equifax and Experian each charge $39.95.

Credit Report Scores - Improving Then

A good score helps you get the best loans. The loan officer will be glad to see you because you will:

• Qualify for a larger loan
• Get a loan faster
• Get the best interest rates.