Refinancing is becoming a hot topic these days with the rising interest rates, sluggish housing markets and increased number of foreclosures.  If you’re thinking about a refinance, here’s a few things to consider:

-Why do it?  Well for a couple of reasons.  You may have a variable interest rate loan and be concerned that your rate will raise your payments higher than you can afford to make.  Another reason would be to use the home equity to pay off outstanding debts like credit cards or student loans.

-Is it worth it?  Well, if you plan on moving out of your home in the next year or two, probably not.  You’re more likely to lose money in those instances.  But if you’re planning on lengthy stay, the money you’ll save will compensate for any closing costs.

-Shop around for rates.  Check with different banks and lenders, asking about their rates and terms.  Also ask your current lender about their rates and terms.  They already have business with you and would like to keep it, so they are very likely to offer you favorable terms, especially if you let them know you’re shopping elsewhere too.  Sneaky, but effective.  With the housing markets slowing down, competition for new loans is keen and the lenders know it.

Most important for you to know is that nothing is final until you sign on the dotted line.  Do your research and make an informed decision.

Chase is expanding their interactive eSummit online training program to broker and correspondent home equity customers.  The eSummit holds presentations to help participants learn more about the products and features that are offered by Chase.  You are able to ask Chase experts questions online and receive live answers instantly.  The eSummits are held bi-monthly and allow Chase customers to learn of new and exciting news and new products from Chase.  

Chase is one of the leading home equity lenders in the United States.  They have generated more than $54 billion of home equity originations.  Chase works through banks, brokers, correspondents and mortgage offices.  The eSummits are available to customers on the Chase website under the Home Equity section.  

With interest rates on the rise, you may be asking yourself what you should do before your mortgage payments rise higher than you can afford you pay.  Your home and credit are on the line and time is of the essence.  What do you do?

It’s possible to take a “cash-out” refinancing loan.  You can call your lender and ask to have your variable rate credit line converted to a fixed rate, fixed term mortgage; you may be surprised how easily the yes answer comes.  You can take out a simpler refinancing loan that again locks your interest rate and eliminates the credit line.  You can sell the house and downsize.  Or you can take a second and third job to pay the note… just kidding.

Banks want your business, and will attempt to keep you a happy customer who’s not going to be returning a home you can no longer afford the payments on.  So give it a shot, check with your banking institution or lender what your options are for checking the rapid rise in interest rates on your home.  The important thing to note is that these lenders want and need your business, especially with the housing markets drying up so quickly.  You’ll find them to be especially accommodating if you simply ask.  A paying customer is better than a bankrupt one.

Individuals who have taken out a home equity line can often find themselves in a financial bind.  Their variable rate can rise and cause their monthly payments to rise as well.  These rising payments and interest rates are causing for financial pain to many homeowners.  

Many homeowners have chosen to cut back and face the rising payments, but fear that the rising payments will only continue to grow.  Many decide that they will refinance their first mortgage and pull out enough money to pay off their home equity loan.  This is known as “cash-out” refinancing.  Many people use this method to pay off their variable rate credit lines.  Other homeowners are taking a chance and calling their lenders.  They are asking for something they never knew was possible-converting their variable rate to a fixed rate.  Lenders are not advertising this option but if you confront them with the idea, they are more than happy to help you out.  They are able to do this quickly with no appraisals, no credit checks, no title or closing costs and no fees.  

Some banks are also able to change your line of credit into a multiple tax-deductible financial planning choices.  You can take different lines of credit and convert them into fixed-rate or variable-rates.  Different loan amounts can be converted to fixed-rates for a specific period of time to help you pay for individual projects.  For example, you can take a $50,000 variable-rate credit line and convert $30,000 of it into a fixed-rate loan for five years to pay for education. 

J.P. Morgan Chase and Citibank home equity groups allow customers to divide their credit lines into several different groups with different terms, rates and at no additional costs. 

There are a few scams used by unethical lenders that one should watch out for.  These abusive lenders may target the elderly, minorities, low-income or bad credit individuals who own a home.  This home is the only asset these people have and the lender is basically out to get it. 
The first scam is called equity stripping and it applies to these people.  They find people who need money but have a low monthly income.  Knowing that they cannot make the monthly payments, they tell them to “pad” their income on the loan application.  They then put them in a loan that the people will not be able to pay back.  Suddenly, these people are behind on payments and will eventually lose their house.  These people are just trying to make a living and then abusive lenders come by and basically steal from people who are already barely making a living. 
The second scam is loan flipping.  This can happen to anybody.  You are contacted by a lender who tells you to either consolidate your debt or make your home’s equity “work” for you.  You may have had your mortgage for years.  The will tell you about a loan with a low interest rate and then refinance your home’s mortgage or an equity loan.  You are able to make your monthly payments and you get some extra money.  Then they call you back and offer you a loan that they can refinance with your current loan.  What they don’t tell you is that there is fees and penalties for refinancing the first loan again.  Eventually, you end up with a string of debt that has grown over the years and you can’t get out. 
Both of these scams are commonly used.  You should first be aware that the lender’s who call you on your home phone during the day do not really know anything about you.  They tell you to come and consolidate your debt or get a home equity loan.  What they are really doing is trying to bait you into a loan that will only hurt your credit.  Financial responsibility and common sense must be used in these situations.  If you are already in financial problems another loan is only going to sink you more.  Be smart and tell the phone lenders to take you off their call list and only take loans out on large purchases that you know you can pay back. That is the best way to avoid such situations.