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Home Loans and Refinancing

jb15 · 11 · 4153

jb15

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on: Oct 05, 2011, 02:14 AM
Hi All,

I am doing a research about Home Loans and Refinancing. Any simple comment, idea, and fact will be so much appreciated.

If you do know websites that can also provide me information about these, please do share.

These are the questions in my mind:

Issues about home loans?
What is refinancing home loan?
Is refinancing legal?
What are the advantages of it?
Are there any negative points about it?

(I have been reading posts from PMT Forum and I am learning a lot. I appreciate people sharing ideas, knowledge and facts to those who are beginners like me. How wonderful it is to have people like you here in the country. Your words are not only informative but also inspiring. Again, many thanks!) :thankyou:


naldcagape

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Reply #1 on: Oct 05, 2011, 07:46 PM
Refinancing is legal. It basically is getting a new loan to pay off an existing loan with the same bank. You use it to take advantage of better terms.

For example, say you have a loan of Php1M at 15% per annum for 15 years. After 3 years, interest rates went down to 10%. You refinance to take advantage of the new interest rate.


jb15

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Reply #2 on: Oct 05, 2011, 10:11 PM

naldcagape THANKS!


freefront

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Reply #3 on: Oct 06, 2011, 06:36 AM
Negative? Factor in the processing fees and the time horizon and see if you still come out winning. Is the new rate locked or is there a first few years teaser rate and then it becomes adjustable?


jb15

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Reply #4 on: Oct 06, 2011, 05:38 PM
Negative? Factor in the processing fees and the time horizon and see if you still come out winning. Is the new rate locked or is there a first few years teaser rate and then it becomes adjustable?

This is interesting. The teaser could be inviting and yet after probably a few years, the interest rate will be adjusted...


If anyone can share a concrete story or scenario, it would be so much better but this seems to be clearer to me.

A few things I would like to share from http://www.loansense.com.au/home-loan-australia-blog/


The following are some of the most common reasons why people choose to refinance their homes.

1. Lower Payments. When interest rates fall below your current mortgage interest rates you may want to consider refinancing to lower your payments. Although there are costs involved, if you plan to stay in the home for a long time then the reduced monthly payments will likely offset the costs associated with the refinancing.

2. Reducing the Term of your Loan. Some people decide to refinance their home at a shorter term in order to reduce the overall costs of the loan. For example, if their current loan is for 30 years at a fixed rate of 8.00% and they refinance for 15 years at a 7.00% interest rate the savings could be thousands of dollars over the life of the loan even though the monthly payment amount may not change that much.

3. Converting Equity into Cash. Another reason why some decide to refinance their homes is to convert equity into cash. This cash is often used to do home improvements which will increase the value of the home.

4. To Consolidate debt. A common reason for refinancing is to finance a higher loan balance and use the cash difference to pay off credit cards, auto loans, and other debts.

5. To Convert an Adjustable Rate Mortgage to a Fixed Rate mortgage. When interest rates are low, it might be a good time to convert an adjustable rate mortgage to a more stable fixed rate loan which will likely save the borrower money over time.

Deciding on whether to refinance your current mortgage will depend on many factors including the current interest rates, your reasons for refinancing, how long you plan to stay in the home, your current loan features, and your goals for mortgage refinancing.


jb15

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Reply #5 on: Oct 08, 2011, 09:01 AM
As my research continues, from a fixed rate, you can refinance to a variable rate and vice versa.
But most common is from variable to fixed.

Any comment please share.

Also, Bangko Sentral is providing the country an interest rate (standard) I wish to know, how is that interest rate affects the Home Loan Interest Rates. Do each lender follow that certain rate? I think some banks do not.

Help please.

Post Merge: Oct 08, 2011, 10:01 AM
This is what I git from the BSP's website:
05 May

The Monetary Board decided to increase by another 25 basis points the BSP’s key policy interest rates to 4.5 percent for the overnight borrowing or reverse repurchase (RRP) facility and 6.5 percent for the overnight lending or repurchase (RP) facility.  The interest rates on term RRPs, RPs, and special deposit accounts (SDAs) were also raised accordingly.

Anyone who can help me understand this, and how will this relate to Home Loan rates, thanks in advance.

Really need help..
« Last Edit: Oct 08, 2011, 10:01 AM by jb15 »


naldcagape

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Reply #6 on: Oct 08, 2011, 10:42 PM
As my research continues, from a fixed rate, you can refinance to a variable rate and vice versa.
But most common is from variable to fixed.

Any comment please share.

Also, Bangko Sentral is providing the country an interest rate (standard) I wish to know, how is that interest rate affects the Home Loan Interest Rates. Do each lender follow that certain rate? I think some banks do not.

Help please.

Post Merge: Oct 08, 2011, 10:01 AM
This is what I git from the BSP's website:
05 May

The Monetary Board decided to increase by another 25 basis points the BSP’s key policy interest rates to 4.5 percent for the overnight borrowing or reverse repurchase (RRP) facility and 6.5 percent for the overnight lending or repurchase (RP) facility.  The interest rates on term RRPs, RPs, and special deposit accounts (SDAs) were also raised accordingly.

Anyone who can help me understand this, and how will this relate to Home Loan rates, thanks in advance.

Really need help..
The BSP publishes many rates. Loan rates are usually indexed to one of these, I just forgot what it is. The banks uses the published rates + a margin for their profit if they are borrowing from the BSP.

Banks kasi have different fund sources - they can get from the BSP, CASA, Treasury, etc... kaya iba-iba ang loan rates ng iba-ibang banks. Ung interest rate ng fund source + margin nila ang magiging rate na ipapasa sa borrower.


mark_ruiz2005

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Reply #7 on: Jan 15, 2012, 04:38 PM
Basically, refinancing is not only with the same bank or financing institution, it can also be from other banks. Say if you have a loan from Bank A at a rate of 10% p.a., you can actually have it refinanced from other bank or financing institution at lowered rate. Now, the disadvantage of refinancing is that if the Bank or financing institution where your property is mortgaged charged you with a pre-termination penalty and ofcourse the fees and other charges that you may incur in registration/cancellation of the mortgaged/lien on the Title.
« Last Edit: Jan 15, 2012, 04:39 PM by mark_ruiz2005 »


noipsg

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Reply #8 on: Jan 16, 2012, 12:13 AM
pag kaka alam ko ganito yun:

loan repricing:
the loan is renegoniated at a potentially new rate on the same bank.

loan refinancing:
the loan is renegoniated at a potentially new rate in a new bank.

You have to check your loan contract for the fine prints to avoid penalties :)


RayEthell13

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Reply #9 on: May 24, 2012, 08:18 PM
Refinancing allows borrowers to obtain a loan better suited to their current circumstances. The rapid increase in homeowners equity due to rising property values in Australia has resulted in a surge of people investigating refinance options. As many as 33% of all loan applications are by people looking to refinance.  Be sure to find out what your existing loan is costing you and compare that with whatever refinancing you are offered. Also compare features of the new and old loans and factor in changeover costs

« Last Edit: May 25, 2012, 11:22 AM by FutureGizmo »


kcmendoza

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Reply #10 on: Aug 22, 2012, 06:35 PM
Guys you have any update rate for home loan rate for Bank financing, please share


 


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