Time to refinance? You've got to run the numbers - MarketWatch

WASHINGTON (MarketWatch) -- Question: I have a two-year-old, 15-year cash-out refi in Texas. It's now considered a home equity loan, at 6.5%. I am thinking that it does not make sense for me to refinance again at 5% to save $170 per month because I would have to pay two additional years on the back end.

The savings is net of borrowing 100% of the $5,000 in closing costs, so there will be no up-front cash out of pocket. The original loan was for $143,500 and has a balance of $131,500. By refinancing, the $1,250 payment would be reduced to $1,080 on a new loan balance of $136,500. E.L.

Answer: To make the right choice, at least arithmetically, you gotta run the numbers. Here's how:

1. Figure out what you are going to spend by refinancing. In your case, that would be $5,000 plus, since you are going to roll that amount into the loan's principal, whatever your interest costs will be.

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Making an Offer on a Home. It’s not all about the Benjamin’s… — The Phoenix Real Estate Guy

If you read enough Q&A sites, talk to enough people, and listen closely, you will often hear this when people talk about making an offer on a home:

“We put in a full price offer and didn’t get the house!”

or

“The seller’s accepted an offer from someone who offered less than we did!”

Most peoples gut instinct leads them to believe that what matters in making an offer on a home is the price. Part of this may stem from real estate agents incessant harping that “price is everything”. And while aggressive pricing is the key factor in getting a home sold (at least in the Phoenix real estate market, and many other US markets as well), there are other factors besides price that a seller should evaluate on any offer their home receives. And if the seller is evaluating other factors, the savvy buyer will consider those factors when making an offer on a home…

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Where to Find a Down Payment to Buy a Home

12 Ways to Find a Down Payment

By Elizabeth Weintraub, About.com

Home ownership in America has increased from 25% in the early 1900s to 67% at the end of that century. During all those years, many home buyers struggled to come up with a down payment. In some cases, the banks required as much as 50% down before they would lend on a mortgage.

Today, the desired down payment is typically 20%; however, few people have that much cash available to them. FHA loans, for example, require only 3.5% down. But the fact remains that the more a buyer puts down, the lower the mortgage. Low mortgage balances carry low mortgage payments.

Here are 12 ways to find that down payment.

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How to Buy After Bankruptcy or Foreclosure

Put your fears aside. Just because you have bad credit, filed bankruptcy or gone through a foreclosure does not mean you cannot buy a home. You most certainly can buy a home with bad credit. But you're going to pay more than a borrower who has sparkling credit.

The Waiting Period After Foreclosure / Bankruptcy

• The period between bankruptcy filings is seven years, but the ding to your credit report stays for 10 years.
• For better rates with a conforming loan, the wait is four years after filing bankruptcy.
• FHA guidelines are two years after a foreclosure, which means you could qualify for as little as 3.5% down.
• Hard-money lenders will often make loans six months after filing bankruptcy or a foreclosure, but will a require 20 to 35% down payment. The interest rate will be very high and the loan terms are not as favorable; many will contain prepayment penalties and be adjustable.
• Subprime lenders (not to be confused with hard-money lenders) are no longer making 100% financed loans.

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Walking away from mortgage is costly

Call it the fast unraveling of the American dream.

Americans are losing their properties at an alarming rate. The national foreclosure rate now stands at 3.3 percent, and more than 11 percent of all mortgages are either delinquent or in foreclosure, according to the Mortgage Bankers Association.

In most cases, homeowners end up in foreclosure because of a job loss or a gimmicky mortgage with a rate that resets so high the homeowner no longer can afford to make the payment.

However, some homeowners who can afford their mortgage -- even if they struggle to make the payment -- may be tempted to abandon their dwellings simply to get a financial fresh start.

Such a decision can have dire and lingering financial ramifications, experts say.

"Unfortunately, people can often be most victimized when they're scared about their financial well-being," says Stephanie Bittner, community education and outreach coordinator for Consumer Credit Counseling Service of Delaware Valley.

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The Pros and Cons of Easing Access to Credit

Over the past few weeks, President Obama has unveiled multiple plans for aid to small businesses, including lowering loan fees, increasing guarantees on government-backed loans, and buying up to $15 billion in Small Business Administration-backed loans. But will the new programs unfreeze credit as they are intended to do? And how can entrepreneurs take advantage of the warmer climate if they do?

Sanford Ehrlich, executive director of San Diego State University's Entrepreneurial Management Center, says the lending initiatives are likely to provide some relief, but he worries it won't be enough to help companies that are really struggling.

"Anything that will increase lending will be good for small business, but you have to be a fairly liquid small business to take advantage of this program. If you have too much inventory, too little cash flow, you're currently carrying debt that's been called, or balloon payments are staring you in the face, adding more debt to your current situation isn't going to help," Ehrlich says. "So many small businesses are in serious trouble that the number this will help will be limited."

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Ready to Make a Purchase Offer ?

Making a purchase offer and actually buying a home are generally two different actions, but home buyers sometimes confuse the two. Especially in states such as California where the purchase offer is not the final negotiation due to contingencies in contracts.

In some states on the East Coast, it is common to write a letter of intent to purchase and, in many ways, it seems the more civilized way to buy a home. However, many other states contain provisions in standard purchase contracts that let a buyer cancel the contract and get back their entire earnest money deposit.

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How Will Foreclosure Effect Credit Scores?

The amount of damage to a credit score caused by foreclosure, deed in lieu or a short sale during 2008 and 2009 may be mitigated by the slower economic times, say some credit and legal experts.

FICO may have to adjust its credit scores to lessen the impact of a foreclosure in the last two years, says Todd J. Zywicki, a professor of law at George Mason University.

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