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Mortgage Refinance

We make it easy to get the lowest mortgage refinance interest rate in your area.

Our loan specialists can customize a loan that is perfect for your needs. In no time at all, you can be on the way to a lower interest rate, a lower monthly payment, or switching from an adjustable rate mortgage to a fixed rate mortgage.

When Should I Refinance?

The best time to refinance is when interest rates in your area drop below the rate of your current mortgage.  With a lower interest rate, you’ll save money on your mortgage payment every month.  Be sure to read our article titled Reasons to Refinance Now.

Turn Your Adjustable Rate into a Fixed Rate

With adjustable rates on the rise you can benefit greatly from refinancing your home for a low fixed rate.  These benefits include a lower monthly mortgage payment, and the security of knowing your mortgage payment won’t increase.

Cash-Out Refinancing

Using the equity in your home, you can refinance your mortgage for a higher amount than your current principal balance and receive the extra funds as cash.  You can use this money however you would like, including, remodeling your home, paying off high-interest rate credit cards, paying off student loans, or consolidating all your debt.  How much cash out you can receive by refinancing depends largely upon the principal balance remaining on your mortgage and the amount of equity in your home.

Eliminate PMI

Private Mortgage Insurance is usually required if your downpayment on your home was less than 20 percent.  If your home equity has increased since your purchase, you may have enough equity to elimate that PMI payment by refinancing your mortgage.

Save Thousands in Interest

When you refinance your home you can decide to switch your mortgage to a shorter term, such as 10, 15, or 20 years.  Depending on how much lower the refinance rate is, you will likely pay more per month for this shorter term home loan.  However, in the long-term you are saving thousands in interest.  And because more of your monthly mortgage payment goes towards the principal, your home equity will increase much quicker.

Reasons to Refinance Now

To refinance is to pay off an existing mortgage with funds obtained from a new mortgage loan. There are numerous great reasons to refinance your mortgage, among them the following:

Lower Interest Rates: A prime time for many people to choose to refinance is when interest rates drop lower than the rate they’re currently paying. By taking out a new loan with a lower interest rate, not only do your monthly payments decrease, but so does the total amount you pay over the life of the loan, in the thousands of dollars.

Fix That Rate: If you currently have an adjustable rate mortgage, you may seriously want to consider refinancing to a fixed rate mortgage. Adjustable rate mortgages are far riskier to the borrow than fixed rate mortgages. The payments are unstable with a tendency to increase dramatically over time, making budgeting your monthly housing payments increasingly difficult.

Build Equity Faster: Buy refinancing to a loan with a shorter loan term, you pay off your loan faster and therefore build up equity in your home faster, equity that you can then use to make improvements to your home, pay for a big purchase or an emergency, or obtain additional credit. Borrowing against home equity through a refinance mortgage usually comes with a lower interest rate than other forms of credit, such as consumer loans and credit cards.

Own Your Home Free-and-Clear: It’s a phrase every homeowner covets, when they can finally be done paying off the money they borrowed to buy their home and own it outright. Refinancing is an excellent way to own your home free-and-clear sooner than you ever could have otherwise. One way to accomplish this is by reducing the loan term, or the amount of time you have to pay off the loan. A shorter loan term generally involves larger payments, but if you can afford to make them, it could be a wise and rewarding decision to refinance your current mortgage to one with a shorter loan term.

Get Cash in Hand: If you already have equity built up in your home, then you can refinance for a larger amount than you currently owe and take that additional amount out in cash. This is also known as a cash-out refinance.

Consolidate Debt: As home mortgages generally carry far lower interest rates than other forms of debt (ie.

credit cards, car loans, or student loans), many people choose to refinance their home lo

Home Equity Line of Credit

Would you like money available in case of emergencies?  Need to send your kid to college?  Thinking of improving your home?  A Home Equity Line of Credit (HELOC) from Somerset Investors Corp. may be just what you’re looking for.  A HELOC works a lot like a credit card with a much lower interest rate.  You will have money available, secured by the equity in your home, that you can draw on and use at any time.  Or, you can decide to withdraw the entire amount in one lump sum at closing.  Best of all, the interest is usually tax-deductible! 

New Home Financing

Somerset Investors Corp. can find you the perfect loan and start your home purchase off right. With hundreds of loan programs available, we’ll help you match your needs with a loan you’ll love for as long as you own your home. Somerset Investors Corp. can find you the perfect loan and start your home purchase off right. With hundreds of loan programs available, we’ll help you match your needs with a loan you’ll love for as long as you own your home.

Fixed Rate Loans

Several categories of conventional loans exist, the most common and familiar being the fixed rate mortgage. In the cases of fixed rate mortgages, the borrower will lock in an interest rate, and pay down both the principal and interest on the loan at that interest rate every month until the mortgage is paid off. The most typical term of a fixed rate loan is 30 years, though fixed rate mortgages can also be obtained for much shorter terms, the primary difference being in the size of the monthly mortgage payment.

Conforming Loans

Other conventional loans are known as conforming loans. In these cases, an arrangement is made between borrower and lender that comply with the stipulations of two federally run mortgage trading companies (or Government Sponsored Entities – GSEs) Fannie Mae (FNME) and or Freddie Mac (FHLMC).

Fannie Mae and Freddie Mac do not directly approve or deny loans. They buy and sell home mortgages, working with lenders to make home ownership easier for people to attain. Lenders like to sign up borrowers with conforming loan, because they can then sell these loans to Fannie May or Freddie Mac in order to more quickly receive the funds coming to them, and use those funds to make other investments. Fannie Mae and Freddie Mac, in turn, then repackage these loans to sell to investors as securities.

The current guidelines for a conventional Fannie Mae loan set a maximum purchase price for a single-family home at slightly above $415,000 (though residents of Alaska, Hawaii, or Guam may be able to qualify for an even larger loan).

The interest rate as well as the short- and long-term pricing on a conforming loan is determined primarily by the type of loan applied for. Also taken into consideration will be the amount of funds you already have to contribute to closing costs, your credit rating, credit score, and credit history, your employment history, and the type and location of the home in question.

Jumbo Loans

Other forms of conventional loans are nonconforming loan instruments that do not meet Fannie Mae or Freddie Mac loan qualifications, such as jumbo loans, or loans so large they fall outside the Fannie Mae and Freddie Mac loan limits (or purchase limits). Jumbo loans are provided by private investors and as such ordinarily come with much higher interest rates than conforming loans.

FHA Loans

Government entities from a local to a federal level and private entities alike have worked to develop loan programs that make home ownership a reality for many people considered under-qualified for traditional mortgages. These include loans for first-time homebuyers and people with a low-to-moderate income that are insured by the Department of Housing and Urban Development (HUD) via the Federal Housing Administration (FHA).

HUD and the FHA do not make loans directly, rather they insure loans, meaning that the lender still gets paid back even if you default on the home loan.

How Home Equity Works

What is Home Equity?

Your home equity is the appraised value remaining in your home after you subtract the remaining balance you owe on your existing home
mortgage (s). It can be thought of as the part of the home you actually own instead of the bank: the part you’ve paid for so far.

It isn’t difficult to build equity in your home, and chances are if you’ve owned your home for a while and have been making your regular mortgage payments, you probably have built a considerable amount of home equity already. Though the housing market rises and falls in cycles, the overall tendency is consistently upward. In other words, property values tend to rise over the long term.

How Can Home Equity Be Used?

Once you have equity in your home, you can start to use it to fund nearly anything you want  or need. Having equity in your home puts you in a powerful position, as you can use that equity to qualify for credit and borrow money. Buy a new car, take that dream vacation, fund a college education, make renovations and improvements to your home. Whether to pay for an emergency or finance a dream, there are two primary ways to tap into the wellspring that is your home equity: a home equity loan and a home equity line of credit.

What Are Home Equity Interest Rates Like?

A good question to ask before borrowing money from any source is: how much is it going to cost in the long run? Because your home is being used as collateral on the home equity loan or home equity line of credit, the risk for the lender is considerably lower, and therefore interest rates on home equity loans and home equity lines of credit are usually lower than the average interest rate on a credit card.

Home equity loans and home equity lines of credit are, however, usually higher than the interest rate on the average fixed rate mortgage. And in general, home equity loans usually have lower interest rates than home equity lines of credit.

What Are Some of the Other Benefits of Home Equity?

As if borrowing money weren’t advantage enough, home equity offers a bevy of other benefits as well, including:

Consolidating Debt

Debt consolidation was designed to help individuals who are “drowning in debt” to regain control of their financial lives. Consolidating debt gives individuals the chance combine their various monthly payments into a single monthly payment that is usually lower than the sum of the individual monthly payments on the same debt. Payments on consolidated debt are also quite often at a lower interest rate than the rates offered by the individual lenders.

Warning Signs

If one or more of the following applies to you, debt consolidation may be in order:

* you pay for normal living expenses with credit;

* you transfer balances around from one credit card to another;

*  you can only afford the minimum monthly payments on your credit cards, and no more;

* you have maxed out one or more credit cards;

* you find yourself spending more than half your income to pay your monthly credit card payments;

* you’re looking to open yet another line of credit in order to better manage your current debt, expenses, and lifestyle;

The following is a breakdown of some of the best and most common ways to consolidate debt:

Debt Consolidation Loans

The “traditional” way to consolidate debt is to take out a debt consolidation loan. This is a personal loan that is unsecured, and therefore considered riskier other types of loans. Lenders therefore will usually charge higher interest rates for these loans, the advantage to getting such a loan being the single (and hopefully smaller) monthly payment. People with lots of debt may find they have difficulty getting a lender to give them a debt consolidation loan, however, and may need to look further to find a viable debt consolidation solution.

Debt Settlement

Debt settlement agencies help you resolve debt by becoming the intermediary between you and your creditors, You stop paying your various creditors and instead make a single payment to the debt settlement agency.

Debt Consolidation

There’s no need to struggle with the high interest rates of credit cards any longer!  Whatever your reason for falling into debt, Somerset can help get you back on your feet.  Our debt consolidation specialists can help you:

Lower Your Monthly Payment 
You’ll benefit from the ease of paying just one low monthly payment while quickly eliminating your debt.

Save Money

Somerset Investors Corp. offers some of the lowest mortgage interest rates in the industry.  Combine your high interest credit cards, personal loans, retail cards, home improvement loans, time shares, and boat loans into a single low interest debt consolidation loan.  Even if you have bad credit, Somerset’s debt consolidation specialist can get you on the right track.

Consolidate Mortgages

Take advantage of lower interest rates by consolidating all your mortgages into a single mortgage with a low interest rate.

Smile during Tax-Time

A debt consolidation loan can save you money on taxes!  Unlike credit cards, mortgage interest is usually tax deductible.  Consult a tax professional or one of our debt consolidation specialists to get the facts.

Still deciding if debt consolidation is right for you?  There’s never any fee or obligation to speak to our debt consolidation specialists.  They can work with you to determine just how a debt consolidation loan will benefit you.

Reverse Mortgage

If you’re a homeowner 62 years or older, consider the tax-free income benefits of a Reverse Mortgage.  Unlike a regular mortgage, with reverse mortgages the lender makes payments to you.  You can choose to receive the money from a reverse mortgage in fixed monthly payments, a line of credit, or in a lump sum.  More than 55% of borrowers choose the line of credit, which allows you to draw from the loan at any time.

The amount of your reverse mortgage is determined primarily by your age and appraised home value.  To find out just how much you can get, speak to one of our Reverse Mortgage Specialists today!

Home Equity Loan vs. Home Equity Line of Credit

There are advantages and disadvantages to both home equity loans (HELs) and home equity lines of credit (HELOCs), making the choice between the two dependent on your unique needs and circumstances.

Amount You Can Borrow

Both home equity loans and lines of credit allow you to borrow up to 100% of the equity in your home. In some cases, lenders will even allow you to borrow up to 125% of your home equity.

Qualifying Requirements

Both HELs and HELOCs require you show proof of the following:

                * personal income;

                * ownership of the home ownership (ie. Title);

                * current mortgage;

                * current value of the home (via a professional appraisal).

A home equity loan additionally requires proof that at least 20% of the home’s value has already been paid off. So, if you have yet to pay off at least that much of your home’s value, then your choice of which instrument to apply for is made for you.

Purpose for the Money

If you wish to use the money borrowed in a lump sum for a single, one-time expense (ie. a particular renovation, an emergency, a desired purchase, or to consolidate debt), then a home equity loan may be the better choice.

If you don’t have a single, particular use for the money in mind and don‘t think you‘ll need the money all at once but rather feel that you’ll be needing it on a periodic basis (ie. for lengthy and drawn-out remodels, medical bills, or college tuition payments that will be made in intermittent sums), then a home equity line of credit may be the better choice.

How Much Mortgage Can I Afford?

To establish how much mortgage you can realistically afford, you can use one of two main formulas – called “Qualifying Ratios”. Qualifying ratios examine a person’s income and expenses in order to estimate how much money can reasonably be spent on monthly mortgage payments.

Buying the Home: Down Payment and Closing Costs

This is the first and most obvious factor most people consider in buying a home. How much of a down payment can I afford? And how much can I spend on closing costs?

The down payment is usually between 3% and 20% with most conventional loans preferring down payments within the 10-20% range. Low-to-moderate income households, however, can find programs enabling them to purchase homes with as little as 3-5% down.

Closing costs are fees for various items that must be handled through your lawyer in order for the deal to legally go through. These include: origination fees, title insurance, attorney fees, recording and transfer fees, and pre-pays.

Keeping the Home: Monthly Housing Expenses

Taken into account when determining monthly housing expenses are:

                * Mortgage principal;

                * Mortgage interest;

                * Taxes;

                * and Insurance.

This is commonly written as “PITI” for “Principal, Interest, Taxes, Insurance”.

In the case of conventional loans, your monthly housing expenses should fall below 26-28% of your gross monthly income. For FHA mortgages, the qualifying ratio is 29%. If you carry any long term debt (that‘s expenses extending 11 months into the future or more), then the ratios change slightly. Conventional loans allow a maximum monthly housing expenses and long-term debt combined of 33-36% of gross monthly income; FHA loans allow a 41

How to Apply for a Mortgage

Once you select a lender and a mortgage suitable to your needs and abilities, it’s time to officially apply for that mortgage. Submitting an application for a mortgage can seem intimidating at first, but it need not be difficult.

Before sitting down to fill out a mortgage application, be sure you have the following information handy:

* your income, past and present;

* a list of your assets;

* a tally of your regular expenses and existing financial obligations;

* an accounting of your employment history

Mortgage applicants will also need to provide the following records or documents:

* the past two year’s W-2s;

* pay stubs for the month leading up to submitting the application;

* statements from all the applicant’s bank accounts – checking, savings, retirement, investments, etc.

* proof of current outstanding debts that show both the current balance and minimum monthly payment on each (ie. credit cards, car loans, student loans, other home mortgages, child support, alimony, etc.)

If you are self-employed or you own a ¼ share or more in a business, you will also be asked to provide copies of your federal income tax returns.

The preceding is not the only information a lender may require of you, but it is a partial listing of the information that any and all lenders will most assuredly require.

After you’ve submitted your application, the lender will order a property appraisal (paid for by you), and will have your credit checked. Oftentimes, a potential borrower might choose to have the property appraised independently before submitting an application, just to make sure that the property value merits the offer made. Potential borrowers may also check their own credit first before applying for a mortgage so that they may take the initiative to fix or correct any negative items remaining on their credit report before the potential lender takes a look at it. The 3 major credit reporting agencies – Experian, Equifax, and TransUnion – now allow all consumers to receive a free copy of each of their credit reports once per year.

How FHA Works

The Federal Housing Administration (FHA) does not directly make loans to borrowers but rather provides insurance on loans made by approved lenders. FHA-insured mortgages can be obtained for single-family, multi-family, manufactured and mobile homes, and hospitals.

The FHA was created in 1934 by congress to help Americans to obtain a mortgage and purchase a home. Until the FHA came into being around 60% of Americans rented their homes, and most mortgages had high monthly payments, short loan terms, and stringent approval requirements. In 1965, it became part of the U.S. Department of Housing & Urban Development (HUD).

FHA loans differ from conventional loans in a number of ways. The down payment required for a conventional loan is typically much higher than for an FHA-insured loan. FHA loans also have lower credit requirements than conventional loans, making them more available to a wider range of potential homebuyers.

FHA mortgage insurance appeals to lenders because it protects them against loss should the borrower default on the loan. That is the key difference between FHA mortgages and conventional mortgages – that lenders still get paid no matter what. Because FHA mortgages are more preferable to lenders than conventional loans, it‘s far easier for a borrower to get approved for one. It is therefore quite often to a potential homebuyer’s advantage to pursue FHA-insured mortgages.

FHA loans offer borrowers several other valuable benefits, not least of which is those aforementioned smaller down payments. Unlike a conventional loan, which ordinarily requires 10-20% down, FHA-insured loans only require down payments as low as 3-5%. The FHA is also more flexible in calculating factors to determine whether or not to approve the loan, factors such as household income and repayment ratios.

The borrower is the one who pays for the mortgage insurance, usually by having it folded into their monthly mortgage payment. The cost of FHA mortgage insurance typically drops off when the balance remaining on the loan is greater than three-quarters of the property value or after 5 years, which takes longer.

Having insured over 30-million properties since its formation in 1934, the FHA is the world’s single largest mortgage insurer. It is funded completely by way of self-generated income, via the mortgage insurance payments made by its mortgagees (or borrowers). Currently, the FHA has nearly 5-million single-family homes and nearly 15,000 multi-family homes in its insured-mortgage portfolio.