We are in the process of refinancing our loan and we are supposed to close around the fifteenth of this month. My question is, should we make our mortgage payment? I know that the lender and the settlement company have gotten figures from our current lender and I don't want to pay my mortgage and then pay again at settlement.

You should always pay your mortgage to make sure that they receive your payment by the due date. If it is late, it could cause damage to your credit history and they will probably charge you fees for being late. Do not expect that the settlement company will be able to get your loan paid off by the due date, even if you close before the fifteenth of the month. When you settle, there is a three day right of rescission that must pass before they can record your new loan and then pay off your old lender. The rescission period is up at midnight on the third business day after you settle. So, if you close on Monday, your settlement company could record your new loan on Friday and send off your payoff to your old loan company. Even if it goes out overnight, the old lender will not receive it until Monday. This doesn't leave room for error. If you close on Monday the Eighth, best case, your old lender gets paid off on the fifteenth. Too close for comfort. Pay your mortgage in advance of settlement and rely on your settlement company to get updated figures once the payment is received so that you aren't charged twice.

I have a current interest rate on my mortgage of 9%. It is a VA loan. I have been waiting for rates to go down. I am interested in a streamline refinance, but the lenders I have spoken with keep quoting me rates that I think are high. They say that its because I wont have to pay any closing costs. I am willing to pay some costs if it will get me a better deal. Can I do a streamline loan if I pay closing costs?

Please don't wait any longer to refinance your home. Interest rates are so much lower that you are losing money every month that you don't refinance. The lenders that you have spoken to are correct in that a normal streamline refinance has you incurring no cost for the transaction. This usually implies a higher interest rate to cover the costs. If you are willing to pay for the cost of your refinance out of pocket, you may still use a streamline loan. This means that there will be no cost for appraisal or credit report. You will have to show that you have the funds to handle the transaction. You may also cover the cost of the refinance by borrowing the closing costs, but an appraisal may be required. Remember, that if you have twenty percent equity in your home, and can qualify, a conventional loan may benefit you more than a new VA loan. Please go over all of your options with a loan officer before you refinance. Don't wait too long though.

I recently had a surprise when I went to settlement on my refinance. When I went to closing, I was expecting to come up with a few hundred dollars, I was borrowing my old loan amount plus the closing costs. When I got there, I was told I needed a check for over fifteen hundred dollars! When we went over the numbers I determined that the old loan company had added money to what I owe them. I called them myself just days before to get my balance and they gave me a different number. The settlement people told me I had to close, so I did, but I'm still not happy with the answer I got. Could you help me understand what happened?

The difference is between your balance and your payoff to your old mortgage company. Interest is paid in arrears. That means that the payment you make in May pays April's interest. When you close on a loan and pay off your old lender, you owe them your balance PLUS the daily interest until they are paid off. If you closed at the end of the month, as most people do, you owe almost a full month's interest to the old lender. The new lender will collect interest to the end of the month you close also. The good news is that your next payment isn't due until the 1^st of the month following the month after you close, you skip a month.

I was thinking about refinancing my home but now the rates have gone up a little. My co-worker tells me that since it is an election year rates will probably come back down in the Fall. I know there is no way of predicting what rates will do. However, is their any truth to what he is saying or should I refinance now before rates go up any more?

Traditionally, election years have yielded better rates in the fall near election time. I'm not sure that this year is going to have that affect. The rates are being directed by the Federal Reserve and this is a non-partisan group. I think that if rates are still low enough to make a refinance for you viable, that you should take advantage of the current rates and programs. Waiting for rates to fall could prove to be too late.

* I wrote this in 1996 and I still believe that response is valid.

I'm having difficulty refinancing my home. I bought it for $155,000 three years ago. I got a good deal because it was listed at $170,000 originally. I borrowed $147,250, but I had to have PMI because they wouldn't use the value, only the sales price. Since then, I have added many features. I put in a deck and a fence. I put in a hot tub and finished part of the basement. I am trying to refinance to get rid of my PMI and get a lower rate. The appraiser came out and appraised the property at $160,000. I have put in over $15,000. My house is in much better shape than most of the homes in my neighborhood. Doesn't the appraiser take that into consideration? What can I do?

You are the same position as a lot of folks lately. They bought at a good price and have improved the property, but the value has not improved. Several things account for this phenomenon. When you purchased the property, you bought closer to the true value of the property, even though the seller was asking a lot more than you paid. Secondly, you probably set the market for other sales in your neighborhood, bringing prices down. Another consideration, is that not all home improvements bring dollar for dollar improvement to the value of the property. According to a recent article in Home Improvement Magazine, most improvements gained 85% of what they cost. Some items add little or no value, pools and hot tubs fall into this category. If you have over improved for the neighborhood, this can cause a problem also. You can still refinance and get rid of PMI though. What you need to look for is a combination loan. Either an 80/10/10 or 80/15/5 without PMI is what you need. This will be a combination first and second trust. The rates on these are very competitive these days, but shop around. Good luck. I'm sure you can find what you need.

Can I refinance my vacation home and take money out of it? I own a house at the beach that has a lot of equity in it and I have looked into refinancing, but most lenders will only allow me to pay off my old loan. If I only take out a loan to pay off my old loan, it isn't worth it to refinance. If I can get some cash back, though, it is worth it because I can invest the money in the market. Please advise me of my options.

There are many lenders who would love to assist you with this loan. What you have found though, is that not every lender can or will help you. Most lenders can offer you a new loan of up to 70% of the appraised value of the home. Some lenders may even be able to get you 80%, but there is usually a rate premium to be paid for this feature. Make sure you understand all of the lender's criteria. They may require two appraisals, tax returns, and they may charge more for a loan with "cash-out" than for loans that only pay off your existing liens. Find out everything that they will need up front. You don't want any surprises later in the process.

We bought my home about four years ago with an adjustable rate mortgage. We got a good price and the seller paid all of our closing costs, including points. We put five percent down and the value has stayed pretty much the same. We have been looking into refinancing so that we could get a fixed rate mortgage. I had heard that rates were around seven percent. I wanted to use a "no-cost" refinance, but rates on these programs seem closer to eight percent. Why is there such a difference? Have I called the wrong companies? We don't want to pay all of those closing costs.

If you have an adjustable rate mortgage that will adjust this year, and it is tied to a treasury security, than you will have an interest rate of around 8.5%. If you are sure that you will be in your home for several more years you should refinance to take advantage of today's rates. A "no-cost" loan has the same features as a loan that costs you out of pocket, but the pricing is higher so that the lender can pay your closing costs on your behalf. Be aware that since they are fronting the money to close your loan, many lenders will impose a pre-payment penalty for the first few years to ensure that they recoup the cost. The other alternative to a 'no-cost" refinance is one where you roll the closing costs into your new loan. This means that you will be borrowing several thousand dollars more than you currently owe. The advantage is that , overall, you will pay less interest. The down side is that you have to have enough equity in the property to begin with, and your principal balance will be higher for several years. I normally recommend this for folks who are sure that they will remain in the property for more than seven years. It also benefits folks with more equity in their homes than those with little or no equity. Have an appraisal done and then see what your options are. Good Luck.

My parents helped me purchase my first home several years ago. We all qualified for the loan and they are on the mortgage with me. They would like to have their names off of the mortgage. My question is this, is there a way to remove them from liability without refinancing? Can I use the FHA streamline loan to lower my payment and remove them?

Unless you can get the current lender to remove your parents from liability, you cannot release them without refinancing. You may get them to quit claim the property to you, but that won't release them from liability. You cannot use the streamline program if you change the deed in any way. If the current borrowers are all of you, then all of you need to remain. That doesn't mean that you can't refinance without them. You may have an easier time refinancing now. Rates are lower and you can show that you have been making the current payment on your own.

Many folks use a quit claim deed to get someone off of a property, this often happens in divorce situations. If you have done this or are preparing to, make sure that the party keeping the property is required to refinance and release you from liability. I have had several occasions lately when one spouse quit claimed a property to their ex-spouse and the ex-spouse fell behind on the payments. This reflects poorly on YOUR credit. You need to get released from liability from the lender. This includes credit cards, auto loans, etc. Keep this in mind.

I am a Realtor and over the years I have purchased several investment properties. I own fifteen of them and it is always difficult to refinance because of the number of properties I own. I have taken to paying them off recently because the balances are low. The problem is that I want to refinance the remaining few to get a better rate. I don't have the cash to pay them off myself, and frankly, I 'm not sure that having no mortgages on them is a great idea. I also have difficulty qualifying because most of my income is from these rental income. Is there anyone you can think of who will help me out and not charge me an arm and a leg?

You have several things that cause you to fall "out of the box". Your income will scare off most lenders, but mostly because they don't want to take the time to go through your tax returns. There are no doc loans you could look into, but your best interest rate will be on a fully verified loan. The other problem is the number of properties. What most lenders won't tell you is that it is the number of properties with liens on them, not the total number. If you have paid off most of the properties and can get the total number of properties down to four with loans, through this process, you fit back in the box. You can usually get up to 65% of an investment property's value for cash back on a fixed rate loan. Go over your whole portfolio with a lender and see if you can consolidate the loans to get your best deal. If you can't get down to four loans total, there are plenty of loans for investors with nine properties and even more, and at competitive rates. Shop for a lender who will take the time to get you a good deal.

Three years ago I purchased a townhouse in Alexandria. I assumed the loan that the owner had and put about $5,000 down. I see that rates have improved here lately and I want to know if I should refinance, can I refinance and can I use a streamline loan?

As long as you qualified for the assumption, you can use the streamline refinance feature that is offered to FHA and VA borrowers. If you used a non-qualified assumption, you are making payments on the previous owner's loan, you may not use the streamline features. This means that you would need to qualify and the mortgage company will want to verify your current income, credit and do an appraisal on the property. This costs a little more, but with rates the lowest in years, my guess is that it would still be worth looking into.

I have been thinking about refinancing my home loan. The last time I did this I found my lender in the paper. I got a five year balloon at a low rate, which isn't due for another year, but I want to refinance before rates go up. Is there a better way to choose a lender? I'm not sure that I got the best rate. How can I be assured that I am getting the best deal?

It seems as though you had some difficulties with the process last time you financed a home. This can be a complicated process and you need to get your loan through a company that understands what you need and can facilitate your deal smoothly and efficiently. The best rate is not necessarily the best deal for you. You can find a lender through a referral from a friend or Realtor, financial planner, accountant etc. You can also find rates in the paper, over the Internet, cable TV and Radio. You may even have gotten a flyer in the mail or by delivery service. I have used all of these methods to attract new clients. None of these methods can assure you that you will get great service. A referral is actually your best source for that. You need to interview several lenders to determine that they will find you the best loan for your circumstances and then the best rate on that loan. For instance, you now need to refinance to get out of a balloon note. Did you know you would be in the property this long? How long will you be in the property now? Should you be shopping for a new five year loan, or maybe a longer term this time? You can shop all day and find the best thirty year fixed rate loan, but if that is not what you need, you won't get the best deal. Shop around but look for service, and price combined.

I have been shopping around from different mortgage companies for the last few weeks. I am trying to refinance my home loan. I spoke with several different lenders and I found one that had a very attractive rate. I set up an appointment to go in and fill out the paperwork. I took time off from work. When we started to fill out the papers, he told me that the interest rate had changed. He said that rates change all of the time and that the rate he quoted me earlier was no good. I finished filling out my application, but I still feel uneasy about this. I'm not sure if I was lied to over the phone, just to get me to come in. Do rates change more than once a week? Should I be concerned about this loan officer? Please let me know as soon as possible. They want to do an appraisal and a credit check. If I shouldn't go with this loan company, I need to know now.

I cannot give any advice about the loan company you have applied with, but I can give you some insight. Rates on home loans change with the market, all day, every day. Mortgage companies typically set their rates as the markets open, every morning. Most companies will offer these rates through the day unless market changes, usually a change in the bond market, force them to change during the day. We often get rate changes throughout the day. Even though most periodicals show rates from companies once a week, the rates change all the time. You need to know this when you are shopping around. Some lenders can lock you in over the phone. Some lenders require a signed loan application before they can lock you in. The lender you are dealing with probably quoted you accurately over the phone and then again when you arrived. What he should have let you know, is that the rate over the phone would be subject to change. If you are truly uncomfortable, keep shopping. First, though, I recommend talking with the loan officer to see if he can alleviate any of your concerns.

I have owned my home for several years. When I bought it I used an adjustable rate mortgage. The rate has gone up on it and I have been trying to refinance it. A few months ago, I started the refinance process. I had an appraisal done and my credit report run. I didn't lock in and rates went up. Now that rates are lower again, I want to refinance. My question is, do I have to pay for another appraisal and credit report? If I could save the $350, it would be great.

Your appraisal should be good for 120 days and your credit report should be good for sixty days. The deal is that these documents also need to be acceptable to the lender you are using. If you go back to the lender you tried to refinance with before, they should be okay. If, for some reason, you want to go to another lender, the appraisal needs to be assigned to the new lender. Have the new lender contact the appraiser for a new copy of the appraisal. The appraiser must also be approved by the new lender. In most cases, if the appraiser holds a state sanctioned license, there should be no problem with approval. The credit report is another story. Normally, you would need to pay for a new credit report. If you have paid for an appraisal lately and not received a copy of it, please contact your lender to request it.

I have a property that I rent out that has no mortgage on it. I have been doing very well in the stock market lately. Is there a way that I can take money out of my investment property to invest in the stock market?

With good credit and income verification you can usually take out up to 80% of the value of that property to do whatever you want. Fixed rate conforming loans usually limit you to 65% and some lenders will only let you walk away with $100,000. You need to speak with a lender about the particulars. You are not the only one lately that would like to better their return on their investment. Get good advice before you put all of your eggs in one basket.

I have been watching interest rates go down because I am going to refinance my mortgage. I currently have an ARM that is going to be in the mid 8% range this fall. I was going to refinance into another ARM to take advantage of the lower payments and interest rate. What confuses me is that the rates on ARMs don't seem to be dropping that much. Why is this? Does it make sense to refinance using an ARM when fixed rates are low?

Recently, interest rates have dropped because of buying in the long term bond market. This causes long term rates for fifteen and thirty year loans to be lower. The shorter term loans are governed by the overall market but more directly by the shorter term bonds. The gap between long term rates and short term rates is getting smaller. The rates on most ARMs are still lower than for fixed. If you were refinancing for the short term, an ARM might still be the best option for you. If you would like a longer solution, but thought interest rates were too high for you, check them out today. You might be pleasantly surprised.

I refinanced my house several years ago into an ARM. The rate has been good but now it is going to adjust up to about 8.5%. I thought at the time, that I would have sold by now. Now I think I will be in this house for a while. With rates again at a low point, should I refinance? What loan would be good? Is there any way to avoid the hassle of refinancing and still take advantage of the low rates?

If you feel that you will be there for more than a year, it would behoove you to refinance again. Thirty year fixed rate loans are again at a low point. That does not mean that I recommend this loan to refinance into. Because rates fluctuate so much, we usually have a low rate cycle at least once every five years. This would mean that your chances of refinancing again in five years is pretty good. A five or seven year loan would probably work for you. The loan is amortized over thirty years to keep the payments low, but the payment remains fixed for five or seven years. This would mean that you plan to refinance or sell in five to seven years. Although you do not have to, when it adjusts, you will be right back where you are today. Unless you have a conversion option, you will have to refinance. On a positive note though, refinancing a loan is simpler today than it has ever been. With the advent of automated underwriting and streamlined processes, your transaction should be fairly simple.

I currently have a VA loan that is currently at 7.5% for thirty years. I have had a lot of friends tell me about the streamline refinance loan. My question is, what costs are involved and at what rate would it be worth it for me to refinance?

If you are looking for a true streamline refinance, there should be no costs to you. The lender adds no principal to your current loan balance, and you pay no costs at closing. Because there are no costs, even the slightest drop in interest rates can be a benefit worth pursuing. For instance, if you have a $100,000 loan at 7.5%, your principal and interest payment is $699.21 per month for thirty years. At 7.25%, the payment is $682.18, a savings of $17.03 per month. This may not seem like much, but over thirty years, it adds up to $6,130.80. You only need to be sure that you are making a payment that pays off your loan in the same amount of time as your first loan. If you took out the original loan five years ago, make sure that you pay the new loan off in twenty-five to stay on track and not add five years worth of payments on the back of the loan.

We are refinancing our home and are planning to close the fifth of next month. Should we make our mortgage payment on our current loan? We would like to skip a payment.

Since interest is paid in arrears you never skip a payment. At settlement, you will pay interest up to the day you close to your old mortgage company. If you did not make your payment or recently made one but it has not cleared their system, your payoff to the old company will include last month's worth of interest AND the current month's up to the day of disbursement. If you are fully approved and there is not enough time to send a payment to your old company, then hold off. Understand, though, that you will owe that money at settlement. If you are taking cash-out of your property or "rolling-in" your closing costs, then it may appear that you skip a payment. In fact you have financed it for the term of the loan. Please, if you are not approved yet or your settlement is near the fifteenth of the month, MAKE your payment. If anything delays your settlement, you will be hit with a late charge and that could adversely affect your credit history.

I just refinanced my mortgage and I have been telling my son that he should too. He says that when he bought his home, he only put 5% down, so he doesn't have much equity in it. If his home appraises for about the same as homes in his area have sold for, he would still currently owe 90% of its value. He is also concerned that since his current interest rate is only 8%, that he wouldn't save that much money anyway. I told him that he should look into it anyway. With current rates where there are, wouldn't he save money?

He could save money in several respects. First, the interest rates are lower than what he is currently paying. If he refinanced to a thirty year fixed rate loan at 7.5%, he would save about fifty dollars per month for every one hundred thousand dollars he borrowed. He could probably also do away with the expense of Private Mortgage Insurance by using a combination loan. This is where he refinances 80% of the property's value with a first trust and ten percent with a second trust, thus avoiding PMI. Not every lender offers this, so he will have to shop around. Some lenders require that the first trust be only 75% and the second trust be 15% of the home's value, to avoid PMI. Please check with your lender. Many folks think that they have to lower their interest rate by two percent in order to save money. This is one of many circumstances that proves this to be inaccurate. He could save a hundred dollars per month easily by refinancing. Have him look into this further.

My husband and I currently have a 30-yr mortgage with a fixed rate of 8.375%. Our monthly payment of $1,292 includes principal, interest, taxes and a $67 per month fee for PMI. The initial loan amount in May 1991 was $142,000 (sales price was $149,000 with a 5% down payment) and the outstanding balance is now somewhere in the neighborhood of $132,000. After reading in your column about various options such as buydowns, 80/10/10, ARMs and COFI loans, and with interest rates so low, I'm wondering if we should be considering refinancing with one of these loans at this time. It is possible that we might move in the next three years. Any suggestions on the best course of action to reduce our current monthly payment without any large outlays of cash? Thanks for your help.

Interest rates today are lower than your current interest rate. You could save money by refinancing into any of the loans I mentioned. Which loan works for you will depend upon several things. If you wish to avoid PMI (private mortgage insurance) but the house does not currently have twenty percent equity, you can use an 80/10/10 as long as you have at least ten percent. This combines a first trust of up to 80% of your home's current appraised value with a second trust of ten percent. The first trust can be a fixed rate or an ARM such as a one year, three year, five, seven or ten year ARM. All are distinguished by the initial fixed period. The second trust is usually a fixed rate for fifteen or thirty years. The interest rate on the second trust is usually higher but because there is no payment for mortgage insurance, your overall payment will be lower. COFI ARMs are very popular for refinances also because of their extremely low start rates. If you want to maximize your cash flow over the next few years, a COFI loan may be just what the doctor ordered. Have a loan officer show you several payments on different loan products and make sure you get a "Good Faith Estimate of Settlement Charges" before you sign anything. This is necessary to determine how much you will have to put up to refinance.

I would like to refinance my home mortgage, and a friend told me that I might qualify for "streamline refinancing". Can you explain how a streamline refinance works? How can I qualify and how is it different from a regular refinance?

Most refinance loans require the borrower to have their house re-appraised, a full credit check as well as income, and their assets verified. There may also be closing costs that the borrower will either have to pay in cash at closing or roll into the loan amount. A streamline refinance reduces the amount of documentation required to lower your rate. This program specifically relates to mortgages that were financed under the Veteran's Administration, VA loans or the Federal Housing Administration, FHA loans. You may reduce your payment and your interest rate on these loans with only a twelve month satisfactory payment history on your mortgage. There is no credit check, income verification or appraisal done, if you go with a no closing cost option. There may be an appraisal done if you opt to go with a lower rate and pay closing costs by financing them. The term streamline refers to these programs but is occasionally used by lenders to denote a program with less paperwork requirements. To qualify for a true streamline refinance, you must currently have an FHA or VA loan and have made your last twelve payments on time. This is a very easy way to get a lower rate. There are hundreds of programs that you might also check out before you decide to go with a streamline loan. Please ask your loan officer about all of your options.

I currently have a VA loan at 8.5% and I would like to refinance while rates are low. I am not sure though, whether I want to go with a VA streamline loan or a conventional fixed rate. I don't have much equity in the property, probably 5%. Can you refinance a VA loan with a conventional loan? Do I have to use a streamline loan? Can any lender help me if I need a VA loan?

If you have a VA loan, you are eligible for a streamline refinance. Your rate must be reduced and you must also lower your payment by at least $50. A streamline refinance can be very beneficial because there are fewer closing costs. If you are just lowering your interest rate and not financing your closing costs, you don't need an appraisal or a credit report. This saves money. In addition, the paperwork is streamlined. For instance, there is no income verification, no credit check and no asset check except for closing costs. Since there is no appraisal, you may also refinance even if you have no equity in your property. Most of the programs that allow you to refinance up to 95% of the current value, offer this feature only if you are paying off a conventional loan. A lender that does not have this restriction may charge higher fees. Please shop around. To answer your other question, not all lenders offer VA loans. You must go to an approved VA lender, even for a streamline refinance.

I have been thinking of refinancing and I'm concerned about the costs involved? What are the costs and it is possible to finance some or all of them in the mortgage?

Many people have asked me about these "no cost" refinances that you hear about and I want to remind you that there is no free lunch. There will always be costs involved with refinancing, whether you live in D.C., Maryland, or Virginia. Some of these include, but may not be limited to; an appraisal, credit report, underwriting fee, document preparation fee, settlement fee, survey, pest inspection, title search, processing fee, and recording fees to the state or local jurisdictions. Depending on the amount of equity in your property, you can usually finance these fees and the points (one point equals one percent of the loan amount) associated with the loan into your new loan. You usually pay the prepaid items such as interest to the end of the month, real estate taxes, and insurance out of pocket or deduct it from cash you are receiving from a "cash-out" refinance. You may also find a "no-cost" refinance where the interest rate is high enough so that there are not only no points associated with it but that the originating company has enough "above par" fees to cover your closing costs as well. This option seems attractive to people who are unsure of the time they will spend in the property, but deserves a second look if you are keeping the property for a long time.

In the past couple of months everyone is talking about refinancing. I currently have an adjustable rate mortgage (ARM) at 7 ½% with a balance of $246,000. Would now be a good time for me to refinance considering I just did it a couple years ago?

Many people are refinancing out of adjustable rate mortgage in order to gain the security of a fixed payment. Even thought their new payment may lower immediately, these refinancers feel that they will save money in the event their ARM would have gone up. If you are going to stay in your home for a long time, typically more than four years, and you like the idea of a fixed payment, then now would be a good time to look into refinancing. You will need to consider some other options such as qualifying and the amount of equity in your property but a loan counselor can help you with those particulars.

I was interested in refinancing my house but I see that interest rates have gone up? What determines the interest rates for mortgages? Will the rates come back down or are the low interest rates we have been use to seeing a thing of the past?

Mortgage rates have gone up recently. Mortgage rates are determined, most directly, by the direction of bonds. Although many people watch the 30 year treasury long bond the more accurate indicator is the 10 year Treasury bond. As bond yields rise interest rates fall and vise versa. Bond traders buy and sell in reaction to moves by the Federal Reserve with regard to short term rates. If there is an anticipation that the Federal Reserve will raise rates or not lower them, rates will rise. Recently, rates have risen because the economy is improving. More jobs, higher retail sales and stronger consumer confidence, which could lead to inflation. To reduce inflation the Federal Reserve has said they would raise rates. If the economy continues to grow at a steady pace, or start to slow down, rates will remain as they are or go down. If it makes sense for you to refinance at today's rates, don't wait. The rates in the future are more likely to be higher.

We have a conventional mortgage of 30 years, fixed at 8.75%. The loan company has offered us a refinance at 7.65% 30 years fixed, with no cost. Should we accept? We are trying to save as much as possible in terms of money out of our pocket. Should we go back to the same settlement company we used three years ago, to do our closing this time? We are planning to stay in our townhouse for at least another five years.

If you are planning to refinance, and many folks are, your current lender is a good place to start. There are several reasons for this. One, the costs may be lower because they can modify your current documents and not require you to go through another closing. In this case, a "no point" loan becomes a "no cost" loan. Two, your current lender may be more lenient in offering you new credit, if you have paid them on time. You may find, though, that your current lender cannot offer you a new loan. Many buy loans but do not originate, or don't actually lend in your area. You may also consider that a new loan with no cost is not as cost effective as a loan with costs at a greatly reduced, or discounted, rates. The interest rates with points and fees are usually much lower. If you are going to be in the property for at least five years, I have found this to be a better option. If you have the equity, you can still refinance without any out of pocket expenses. If you need to go through a closing, I always suggest checking with your previous settlement company, some costs may be cheaper. You should, however, shop for those services again, just to make sure. The quote you received is very competitive, but you should shop around anyway, and compare all of the costs.

A couple of years ago my friend and I purchased a home together for investment purposes. I now want to remove her name off the deed of trust. Is there any way I can do this without refinancing?

No. You need to refinance to remove someone from a mortgage unless the property has transferred to a related party through joint tenancy. Your friend will still be obligated on your mortgage until the loan is refinanced. If you have difficulty financing on your own, you may elect to add another co-borrower to help out. If you are buying your partner out of the property as well, remember to figure in all of the associated costs. In Maryland, you will have a transfer tax whenever you change the deed. This can be expensive.

I owe $155,000 on a mortgage and $100,000 on a home equity line. I am looking to refinance my first trust and my home equity line into one loan. The thing is, I want to keep my home equity line open. I have called several lenders who told me that I have to close my home equity loan in order to refinance. Is this true?. If I'm going to be in the property at least five years, should I look at ARMs or a fixed rate loan.

There are many factors to consider when refinancing your home loan. How long you will be there should be a determining factor. Your current loans should also be a factor. You have not mentioned the interest rates or terms on your current loans, but let's assume that the current market is lower. You can finance a new loan and keep your old home equity line, but both lenders have to agree. Your old lender will have to subordinate their lien to the new lender's lien. They will probably want a copy of the appraisal and will cap your combined loan to value at 80%. Your new lender should not have a problem with you keeping your old loan, as long as the loan to value is below 80%. Please check with them before proceeding. You may want to consider refinancing only a portion of your home equity line so that your first trust does not go over $227,150, the new conforming limit. This will allow you to take advantage of the lower conforming rates, and finance only a small amount on your home equity line. Again, speak with your lender about this option. Good Luck.

I have an FHA loan on an investment property that I would like to refinance. Can I use a streamline refinance?

The only way that you can use a new FHA loan on an investment property is through the streamline process. There are some considerations though. You would have had qualify for it in the first place, or fully assumed it. This means that You either purchased the property with an FHA loan as an owner and now it is an investment property; you purchased it as an investor, but more than two years ago; you assumed it more than eleven years ago. A streamline loan does not discriminate against investors by charging a higher rate. This can be a huge savings. What you need to consider, is whether it is worthwhile. If you have had the loan long enough to have paid off the Mortgage Insurance, or currently have more than 20% equity in the property, there may be better programs for you. Please review all of your options with a loan officer before you proceed.

What are the costs involved with a streamline loan? I have a VA loan at 8% and I want to get a lower rate. I want to know if it is worth it.

There are several types of "streamline" loan. The most common is for either an FHA or a VA loan. This allows a person with an FHA or a VA loan to lower their rate or term without an appraisal or a credit and income check. This saves time and money. The rates on these are usually quoted as 'no cost" because the lender pays the closing costs. With this program you only finance your existing balance and add nothing to the principal of your loan. You can also use the streamline program to get a lower rate if you wish to pay closing costs, but you will need to have an appraisal, and possibly a credit check. This takes longer and adds to the cost. There are alwff rcosts when financing a home, in the case of the no cost streamline loan, the costs are absorbed by the lender and charged to you as a higher interest rate.

I am thinking of refinancing my home. Currently my interest rate is 9.5% and I owe $202,000. I am aware that I can save money on my monthly payment, but I can't afford the closing costs. Can I borrow the closing costs?

With today's interest rates you will save money on your payment. You can borrow the cost to refinance in the new loan amount, if you have enough equity (usually 10%) or in the interest rate by settling for an interest rate that is high enough to allow your lender to cover the costs. The is no such thing as a "NO COST" refinance, but there are ways that you can refinance without any out of pocket expenses.

I read with great interest your column last week in the Prince George's Journal. My husband and I recently did 2 VA streamline (supposedly) refinancing; one for our residence and one for our rental property. We went with the bank that held the loan on our rental property. Well, we paid closing costs on both loans. No points, but according to your article, they shouldn't have cost us anything. What happened?

There are several types of "streamline refinances". The most common, the one I wrote about, is the no cost refinance. You can still qualify under the streamline guidelines if you pay your own closing costs and / or points. The benefit to paying some or all of these costs is that you should get a lower interest rate. You can still refinance and add costs to your loan amount. The difference with this type of refinance is that you would incur the cost of an appraisal. If you can fit into the streamline guidelines, you would save this cost. I apologize if I made it sound like all streamline refinances have no costs associated with them. The benefit to the streamline program is that there are fewer costs and most lenders who offer them have a rate at which you will not be charged these costs. As you found out, there are other options available. If you were looking for a no cost streamline refinance, with no out of pocket costs, and nothing added to the loan, that is what you should have gotten.

I have an FHA loan that I took out several years ago that I would like to refinance. The interest rate is 9%. I think the property is worth around $135,000 and I owe $105,000. My question is, what type of program should I use? I have heard about using a "streamline" program, would that be best? Should I take a conventional loan instead? Please advise me soon, I want to catch rates while they are low.

If you have an FHA or a VA loan, you are eligible for a streamline refinance. These programs can be very beneficial from several vantage points. First, there are fewer closing costs. If you are just lowering your interest rate and not financing your closing costs, you don't need an appraisal or a credit report. This saves money. In addition, the paperwork is streamlined. For instance, there is no income verification, no credit check (just your last twelve mortgage payments) and no asset check except for closing costs. Since there is no appraisal, you may also refinance even if you have no equity in your property. If one of these circumstances sounds like a benefit, you should look into a "streamline" refinance.

In your case though, it may behoove you to look into a conventional refinance. There is more flexibility in the number of programs available and if your house appraises for $135,000 you can probably avoid the Private Mortgage Insurance. With the government programs, FHA & VA, regardless of equity, you still pay an insurance. With a conventional loan if your appraisal shows that you have 20% equity, you can avoid PMI. You will need to pay for an appraisal and credit report, but overall, it may be cheaper for you in the long run. If you don't plan to be in the property very long, you may also wish to look into an Adjustable Rate Mortgage with a fixed period of three to seven years. Please check out all of your options with your mortgage lender before you proceed one way or the other.

My neighbor just refinanced his home with a 10/1 ARM. I'm considering doing the same but all I don't understand about the 10/1 ARM. I have always used 30 year fixed mortgages in the past and liked the security of a fixed payment. How does a 10/1 ARM work and is it better than a 30 year fixed? Are there other programs that are better than the 10/1 ARM?

The 10/1 ARM has grown in popularity because it has a lower rate than the 30 year fixed rate loan and has a ten year period that remains fixed. Since most borrowers sell or refinance within that period, it works well for them. If you plan to remain with this loan for over ten years, it adjusts annually thereafter for twenty years. Many of these programs can jump to their life cap at the first adjustment, so make sure you understand the terms before you sign. This has been a great alternative to the fixed rate for many people.

I'm thinking about refinancing my townhouse. I have a balance of $205,000 at 9.375% interest. I bought my home ten years ago for $350,000 and it should appraise higher than that now. I'm very confused about the different offers I have been given. Some lenders offer rates with no cost and some offer rates that are lower but closing costs run near $10,000. Why is there such a difference and which one is better for me? I want a lower rate and I'm interested in a fifteen year loan if the payments aren't too high. Should I pay points and closing costs?

You have several options with the scenario that you have given me. You can definitely lower the amount of interest you are paying. What you have not mentioned how long you plan to keep the property. The length of time you will keep the loan or property changes my advice. I'll show you why. If you borrow enough to just pay off your current loan, you can either take a loan with no closing costs and no points or a loan where you pay all of your closing costs and some points. Here is a comparison:

$205,000 8.5% interest, 15 years PI payment = $2,018.72 No Points or closing costs

$205,000 7.375% interest, 15 years PI payment = $1,885.84 approx. $8,000 in points & closing

Saving $132.88 per month the difference would take you over five years to make up for the cost. If you are not going to stay for more than five years, do not pay any closing costs. Over the life of the loan, you will save ~$24,000 versus the $8,000 cost if you stay the full term. Either loan will save you money over your current loan. Because you have a lot of equity, you could also opt to finance your closing costs and take the lower rate. This would save you the out of pocket expenses and still give you the lower interest rate. The payment looks like this:

$213,000 7.375% interest, 15 years PI payment = $1, 959.44 This still saves you $59.28 versus the no cost option.

The loan will have a higher principal balance for several years, so again, you need to be relatively sure that you will be in this property for awhile. Good luck. I hope this information helps you out.