Do You Qualify for an Az Refi.?

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Upside down on your mortgage and wondering if a refinance is a smart plan or a viable option? You came to the right place. Az Refi is not the only options out there nor is it always the smartest plan and with lending getting tighter and tighter you need to know what your options are.
The first step in considering your Az Refi is to find out if you are qualified for a refinance. Lenders have tightened the guildeines used to evaluate loan applications. Let's take a look at what lenders are looking  for when they evaluate your application:
1. How much money you make and how much money you owe.
Lenders look at a DTI or debt to income ration. Conventional lenders look for a DTI that's no more then 38%. That being said some programs have more flexibility and allow a larger DTI ratio. You'll want to discuss your debt to income ratio with a few different lenders to see if your particular financial situation will allow you to get an az refi. Most lenders will require that you back up your income claims with recent paycheck stubs, W-2 forms or federal income tax returns.

2. What is your home worth versus how much do you want to borrow?
Another deciding factor in qualifying for a refinance is your Homes LTV or loan to value. To find out what your current loan to value, divide the amount you want to borrow by the current value of your home. You can often get a general sense of what your value is worth by visiting a free site like zillow.com that gives you recent solds and current appraisal value of your home.

Most lenders are looking for a LTV of less then 80% for a refinance. However, there are loan programs out there with some flexibility. Here are two examples:
 The new Making Home Affordable Program which allows refinancing up to 105% LTV.
Who qualifies?
Borrowers who have a good track record of making their mortgage payments and the loan must be owned or backed by Freddie Macor Fannie Mae.
 The Streamline refinancing program offered by the Federal Housing Administration (FHA).
who qualifies?
This is for borrowers who have a FHA insured loan.
3Credit Score and how it impacts your interest rate.
There is not a minimum credit score for refinancing but your credit score will determine what type of interest rates you'll get. If you have been Paying your bills on time and keeping a strong credit score(FICO score) you will most likely be offered a lower interest rate and better terms.

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AZ Refinance Step 2

Once you find out you meet the requirements for an AZ refi then it's time to start talking to some lenders.Here are some really important insider tips that you NEED to know so you won't make the same mistakes your  neighbors did.
Tips to Avoid paying too much in interest rate markups and morgage junk fees.
Mortgage quotes are marked up to give someone a commission. This is on top of the loan origination fee.
Does this mean you end up paying double for a refinance loan?
Yes, but I will explain how this can be avoided and should be avoided to save you money.
How do broker's get away with charging me more?
Ever heard of Yield Spread Premium? Probably not but you've probably paid a lot extra for your mortgage because of it. Mortgage Brokers will find out what interest rate you qualify for and then "mark up" the rate.
They can do that? Yes, and many of them do!
Mortgage Brokers get kick backs from lenders for every .25% they overcharge you. Lenders will often pay the broker 1% of your loan amount on top of the origination fee that you may be overpaying for as well.
How to Avoid the Unfair and Unneccesary Yield Spread Premium
You need to find a mortgage broker that is honest and reputable. One source is the Better Business Bureau. They will give lenders a grade rating and you can read how long the person has been in business as well as complaints filed against them.
When you meet with the broker come armed with knowledge. Be straight forward and tell the broker that you are not willing to pay a Yield Spread Premium and that you are willing to pay a flat 1% loan origination fee.
Should you go to a bank to get the best rates?
When you are shopping around for the best rates this is an important piece of information to be aware of:
Banks will not give you par mortgage rates. Banks don't have the same markup as your mortgage broker but the way they make profits off you is to markup the interest rates to make premium profits when the loan is sold. The banks are not required to disclose they've marked up your rate or the profit margin due to a loophole in the Real Estate Settlement Procedures Act.

What are the Key pieces to be aware of when entering a loan contract?
1. Make sure your loan does not create a Yield Spread Premium for the Broker. There are honest and reputable brokersthat will agree to arrange a loan without a Yield Spread Premium and a 1% flat origination fee. This may require thatyou talk to several different lenders but the money saved will often be well worth your time.
2. Once you lock in your mortgage rates you will need to get a confirmation letter from your lender. Make sure the letter is from the lender and not the mortgage broker. Only written confirmation from the lender guarantees that the rate is locked. Never accept just verbal confirmation. This written confirmation has to clearly disclose any Yield Spread Premium paid to your mortgage broker.
3. The Good Faith Estimate and then the HUD-1 settlement statement are two documents you need to pay close attention to. Initially you are going to receive a good faith estimate. Just note that it is only a estimate of fees. The HUD-1 will show all the final fees including mortgage junk fees and Yield Spread Premium.
Let's look at what fees are going to be listed and what are and are not negotiable.
-Origination fee-1% of loan amount is reasonable.
-The Mortgage Broker's fee as it appears on the Good Faith Estimate is negotiable.
-Appraisal Fee and Credit Report Fee are typically not negotiable as they are usually ordered by the lender or the mortage broker.If you have an appraiser who is considerably less expensive then the lender's "approved" appraisers then have your appraiserbecome certified by your lender.
-Lender's inspection, underwritting and processing fees may be somewhat negotiable but lenders stay fairly firm on these fees.
-Courier and wire transfer fees are typically charged for getting the loan documents to the escrow company for closing on the loan. These may be reduced or waived.
Why are the numbers on the Good Faith Estimate DIFFERENT then on the final HUD-1 statement?
Typically the final fees are going to be slightly different on the final HUD-1 statement because of pro-rations. They may calculate the fees up to the day of closing or the first of the month. These should be fairly small adjustments. If after reviewing you notice new charges or expenses ask why they have been added. If the explanation does not sound reason-able, ask to have them reduced or removed. Remember, once you've signed the documents it means you have approved them and it will be challenging to get them to make changes at a later date.

Az. Refi Step 3

What type of AZ Refi loans avoid costly markups and junk fees?
A wholesale interest rate or par rate is not marked up to createa yield spread premium for the loan originator and you don't pay discount points to qualify. You'll pay the flat 1% loan originationfee up front which will save you from paying an unneccesarily higherpayment for the life of the loan.
Where Should I find a broker?
It's up to you the consumer to find the right person to work with by talking to several lenders and making sure they are honest and reputable. Some suggest working with a local broker that doesn'twork for a large nationwide company. Self employed local brokers don't have the enormous overhead as the nationwide companies and therefore has room to negotiate the kind of deals you are looking for. Don't let yourself get pressured into working with someone that you haven'tchecked out. Go to the Better Business Bureau website and ask for references from past clients. By coming in knowledgeable you will safeguard yourself from agreeing to a contract that doesn't have your best interest at heart.
Will a refinance ultimately save me money?
Once you find out what the interest rate and closing costs will be there is a calculation to find out how long before you save money. Take the amount of money you save with a lowered mortgage payment and divide your closing costs and fees by this savings. This will show you how many months it's going to take to see a savings from the refinance. Then youwill want to consider how long you are going to stay in the home and if the length of time before you save money isacceptable.
Here's an example:
Let's say that refinancing your Arizona home lowers the payment from $1400 a month to $1100 and the closing costsand fees add up to $4500. Divide $4500 by the $300 you're saving.It will take 15 months to start saving money.

Will Obama's Plan help in a AZ Refinance?

Will Arizona Homeowners be rescued by Obama's Housing Plan?
With 51% of homeowners under water in Arizona, Obama's Home Foreclosure relief plan seems timely. The announcements made at the end of March 2010 discussed relief efforts to borrowers who are unemployed and or deeply underwater with their home valueway below the loan balances due.
Forebearance if you are unemployed.
If you are unemployed you can get 3 months forebearance on your loan. Loan Servicers participating in theMaking Home Affordable Program are required to offer help to all jobless borrowers.
Who is Eligible?
-Show that you are drawing unemployment benefits.
-You currently reside in the home.
-The Loan originated before Jan. 2009
-Loan Balance must be below $729,750
-Can't be more then 90 days behind on your payments.
Employed but Deeply Underwater and can't afford payments.
The government is trying to create a win win situation for the lender and the homeowner by encouraging lenders to reduce the principle balance on homes that are valued much less then currenly owed in mortgages. Participating Lenders would have to lower the 1st Mortgageby at least 10%. After refinancing the 1st mortgage can not be more then 97.75% of the homesvalue. The total of the 1st and 2nd mortgages may be as high as 115% LTV.
Who qualifies for loan balance relief?
-Must be current on existing mortgage payment.
-Residing in the home. -Qualify under FHA guidelines which includes a credit score of minimum 500-New loans can't be more then 31% of a borrowers income.
For updates and information check out the White House's "home affordable" website. This site also has interactive steps to help you determine whether you're eligible for government backed programs.