Ask Bill your personal finance question

Tips to Refinace Fast

Can I refinace If we only been in our home for 1 year?

Can I refinace If we only been in our home for 1 year?

Read full question
Bill's Answer
4.5
/5.0
(4 Votes)

Bills.com | Find Learn Save

If you bought a home less than a year ago, you are not required to wait any specific amount of time to refinace your mortgage. However, there are some considerations, including Loan-to-value and pre-payment penalties.

If you are looking to refinace and would like an introduction to pre-screened mortgage lenders, Bills.com makes it easy to compare mortgage offers and different loan types. You can apply for free here:

Mortgage Refinance Quote

Back to your question, most home owners do wait until they have some equity in their homes before refinancing, as a year into your mortgage you will have paid down very little (if any) principal balance. If you had a 100% loan to value, obtaining a 100% refinance loan can be more difficult than qualifying for 100% financing at the time of purchase. When making loan decisions, one of the most important factors potential lenders review is the loan-to-value ratio, or LTV, of the proposed loan. This ratio compares the amount of the loan you are trying to obtain to the current value of your home. The interest rates charged on 100% loan-to-value refinance loans, such as the one you propose in your question, are generally higher than the rates charged on loans with a with lower loan-to-value ratios (it's intuitive, since they are riskier loans for the lender). However, if your credit score has increased significantly since you first purchased your home (or if your income has risen), you may be able to obtain a lower interest rate despite the fact that you are refinancing at 100% LTV.

You should contact several potential lenders to discuss the loan terms they can offer you on a 100% LTV refinance loan. After speaking with several lenders, you should be able to determine whether or not a refinance loan is a financially viable option for you.

Another problem encountered by many borrowers trying to refinance their home loans are early refinance penalties charged by their current lenders. Many loan agreements, especially “sub-prime” loans designed for borrowers with credit problems, state that borrowers must pay a penalty to their current lender if they wish to refinance their loan before the expiration of a certain period defined by the loan agreement. These “penalty periods” vary from loan to loan, but are frequently between two to five years from the date of the original mortgage. Before you attempt to refinance your current mortgage, you should contact your current lender to discuss whether or not your current loan agreement includes a prepayment penalty, and if so, its amount and when you can refinance without penalty. These penalties can be quite costly, and can easily make a refinance loan too expensive to save you money over your previous loan. Again, you should find out the amount of the penalty, if any, on your current loan, then contact several potential refinance lenders to discuss whether or not a refinance loan is a practical solution for you.

To learn more about refinance loans, I encourage you to visit the Bills.com Home Refinance Information page at http://www.bills.com/home-refinance/

If you enter your contact information in the Bills.com Savings Center at the top of the page, we can have several pre-screened lenders contact you to discuss the refinance options available to you. I wish you the best of luck in finding a loan the meets your needs, and hope that the information I have provided helps you Find. Learn. Save.

Best,

Bill

www.Bills.com

Get Mortgage Rates!
4.5
/5.0
(4 Votes)

People also like to Read

Daniel Cohen

Learn home equity basics, how to use home equity, and the different types of home equity loans. ... Read more >>

Betsalel Cohen

Obama Passes HARP, but borrowers are looking for HARP 3.0 Mortgage Refinance programs. When a HARP 3 update is announced, you... Read more >>

Daniel Cohen

HARP Mortgage Program Refinance | Home Affordable Refinance Program (HARP) was just updated to avail low interest rates to mo... Read more >>

Daniel Cohen

US Bank | Learn about US Bank and no-closing-cost refinance mortgage loans. US Bank offers no closing cost mortgage loans, bu... Read more >>

Betsalel Cohen

Low mortgage rates can help you save money. Also, refinance now if you want to lower your payments, take out cash, get rid of... Read more >>

Betsalel Cohen

Did you take an FHA loan a number of years ago? You might be able to lower your payment and/or save big money by refinancing ... Read more >>

0 Comments

1500 characters remaining
loading...