Welcomed relief program is making its way to homeowners who struggle with their mortgage payments. The new federal program allows people to refinance or modify their mortgages.
With this new program few questions arise that may or may not directly affect you, however credit implications and tax implications may skyrocket.
Credit Rating for Refinance
Generally refinancing does not hurt your credit since you are getting a new loan or simply re-placing your old loan with a new one. One of the terms for federal program is that borrower can’t have missed a payment is the past year.
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Credit Rating for Loan Modification
You missed payment s and your credit has been affected. A loan modification should improve yur credit standing n the long run and you should get back on track.
Interest Rates for Refinancing
In most cases your interest rate will be higher and your monthly payment will increase as well under the federal refinancing program. However, those who have adjustable rate mortgages should apply as adjustable loans will re-set to a higher interest rates.
Allow lender to give you a “good faith estimate” and compare all new interest rates, mortgage payment and total cost of the loan. Compare the numbers with your current loan to see if refinancing is a good option.
Future of Interest Rates
There are many misconceptions if interest rates will go even lower. Despite two straight weeks of record-low mortgage rates, this week Freddie Mac mortgage rates inched up to 4.87 percent from the prior week's 4.78 percent. Waiting for the rate to go lower may backfire, so it is a good idea to refinance now.
Tax Implications
Refinancing a mortgage is tax deductible and the cost should be evenly divided to be deducted over the life of the loan. Fees, such as appraisal fee is not deductible.
How to get started
Work directly with your lender or get mortgage quotes here http://www.ratetake.com/
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