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If you are in the process of mortgage refinancing, one important part of your application approval and the interest rate you receive is the Loan-to-Value ratio or LTV. Here are the basics of Loan-to-Value ratio and what you need to know to qualify for the best mortgage loan.

What is the Loan to Value Ratio?

Your Loan to Value Ratio is calculated by dividing the balance of your outstanding mortgage by the appraised value of your home. The more equity you have in your home when refinancing, the lower your LTV ratio will be. The lower your LTV the better your mortgage interest rate will be, saving your money with a lower mortgage payment.

Problems with High LTV Ratios

If your Loan to Value Ratio is high, you can expect to pay more for your mortgage loan. Having a high Loan to Value ratio means you are more of a risk for the lender. Lenders pass this additional risk on to you in the form of higher interest rates and lender fees. If your Loan to Value ratio is greater than 80%, the lender could require you to purchase Private Mortgage Insurance as a condition of approval.

Private Mortgage Insurance (PMI) is expensive and does nothing for you but drive up your cost. PMI only protects the lender from losses due to foreclosure on your home. This costly insurance could drive your monthly payments up several hundred dollars and negate any benefit you might receive from mortgage refinancing.

You can learn more about your mortgage refinancing options and how to avoid costly homeowner mistakes by registering for a free mortgage guidebook.

To refinance an underwater home, most people are looking to get out of a negative equity situation and get into a positive equity situation.

Although, there is no technically no refinance possible, it is possible to get a new loan with a loan amount less than the current value of the home. This in itself creates the effect similar to be able to refinancing an underwater home. For example, if John owes $600,000 for a home worth $400,000, then he will get a new loan for $360,000. The new loan is 90% of the current value of the home.

Qualifications

The home-owner needs to be upside down by at least 25%. For example, if the home loan is worth $100,000, the home should be valued at $75,000 or less. There has to be a source of income to be able to pay the new mortgage. If there is no income source or the income is too low, there are certain work-arounds available as well. Other qualifications exist but each one of them has a workaround for it for most home-owners.

Final Result

The home-owner ends up with a new loan of 90% of the current home value thereby lowering their monthly payments and interest over the life of the loan significantly. The new loan is for a 30 year period and the interest rate is fixed for 30 years. The underwater refinance problem is definitely taken care of. For John’s example above, if his payments on a $600,000 loan at 6% are approximately $3600. With the new loan of $360,000 with his estimated value of the property to be $400,000, the new monthly payments would be approximately $2160. Every month, John saves about $1440. Over the course of a year, John will save $17,280.

The VA interest rate reduction refinancing loan is a type of veteran home loan which has long term period for repayment.

The VA interest rate reduction refinancing loan, which is a government loan, guarantees to provide service to veterans, members, reservists and other qualified unmarried surviving for the refinance of VA home loan. In order to get this veteran loan you must be a current VA credit holder, so that you are able to utilize the Interest Rate Reduction Refinancing Loan program or the IRRRL. The maximum term is 360 months and the interest rate also varies on the credit amount. Payments against the loan should be made monthly.

If you want to get the benefit of the VA interest rate reduction refinancing loan then you can contact a lender dealing with this kind of government loans, to get all the information about the qualifying criteria of this veteran loan. By seeking assistance of a lender, you need to meet the basic program requirement, which includes the following:

- The payment made on a monthly basis must be less than the principle amount.
- The rate of interest must be less than the original loan unless you are refinancing an Adjustable Rate Mortgage.
- The term of this loan program must not exceed 360 months or 10 years.

One can opt for the VA interest rate reduction refinancing loan, when he or she has been entitled for a VA home loan on the refinanced property. The occupancy requirement of the VA Government Loans are different from the IRRRL because here the veteran or the spouse of an active duty service member must provide in writing to certify that he or she has occupied the property. No written or credit information is required unless the refinancing of the loan is past 30 days or more or the monthly loan payment increases twenty percent or more.

The interest rate reduction refinance can be done just by including the cost in the new loan or it can be done by setting up the rate of interest on the new loan, so that the lender is able to pay the closing cost. One thing that should be remembered, that the interest payment and principal must be less than actual principal payment of the VA home loan. The guarantee of the interest rate reduction refinancing loan is at least 25 percent of the loan amount.

The US home owners are dealing with a lot of stress due to the foreclosures and bankruptcies. Now the 2009 Stimulus Package introduced by President Obama aims at stopping these foreclosures and bankruptcies. They have used refinancing and loan modification as the major tools. In order to make the plan work many attempts have been made to strike an ‘Home Affordable Refinancing’ for the house owners.

Here are some points that would explain how the Obama Package would help in refinancing the homes with affordability:

o The house owners can apply for this package irrespective of their equity holding. The earlier rule that called for a mandatory 20% equity holding is now written off. Also they are eligible for loan modification in both the cases whether they have made all the payments or missed some of them. Here are eligibility conditions for applying for one:

- Your loan deed must be insured or owned by Freddie Mac and Fannie Mae.

- Your loan value must be greater than the current market value of the house over 105%. If you meet both these conditions you are eligible to apply for the home affordable refinancing.

o Earlier the refinancing or loan modification deal became expensive owing to the middle men. Now the homes would become affordable through refinancing as you can contact the banks directly. In case you need some professional guidance you may contact the HUD (US Federal Housing & Urban Development Department) counselors for help. They do no charge you for their services as they are directly paid by the US Government. The best way to contact the banks and mortgage companies is their official website.

o Obama’s refinancing deals for homes are affordable as the monthly loan payments are restricted to 31% of the gross monthly income of the owner.

o The Federal Government has reduced the rates of interest from 6.5% to 5.16%.

o There are various grants available like the personal loan that would help you get some disposable income for yourself or to clear up your debts.

The homes after refinancing would become affordable surely owing to the help of the US home owners.

What would be your reason for refinancing your mobile home? Would you want to payoff debt, buy a bit more land, use the money to add one, or do you have another reason? Most reasons are going to be valid and are going to be what you need to refinance. There are some things you need to know about refinancing a mobile home that are going to be different than a typical loan. Here are some mobile home refinance loans tips to help you.

First, if you do not already own your own land, then you need to consider making a plan to purchase some land for your mobile home. This makes getting finances much easier and you will no longer have to pay rent for a spot in a park. Plus if you decide you want pets or children you will have a lot more room for them with your new land. If you want to add on later this is easier to do with the land as well.

Second, make sure your home is fixed to the ground and is not on wheels. Also, get rid of the trailer hitch because it makes your home look like it is easily moved and that is not very secure for a bank. This will help you when appraisal time comes because there will be no pictures with wheels or a hitch to help underwriting tell you no. This is a must and most lenders will not even touch you if you do not get rid of the wheels and hitch.

Last, make sure you do everything you can to help your credit score. Get a free credit report and pay off any small debts you can to help your credit score. This will greatly improve your chances of being approved when it comes time to to get one of many mobile home refinance loans. Plus paying off some debts will help your debt to income ratio which also helps your chances of qualifying.

President Obamas “Making Home Affordable” plan will allow millions of homeowners the chance to get a 4.5% fixed rate home loan through refinancing or mortgage modification. Here is what you need to know:

These are some of the eligibility requirements that a homeowner must meet in order to use President Obamas “Making Home Affordable Plan” for themselves:

-Homes which have decreased by value 15% or more can use this plan. This helps millions of homeowners who have seen the value of their home go down, even though they make their payments regularly and on time. The tough economy and bad housing market have left homeowners feeling helpless as they watch the value of their home drop. Now, these homeowners can use the housing bailout plan from Obama and get a low 4.5% interest rate.

-Homeowners, as a result of financial hardship or the bad economy, may owe more on their mortgage then the homes market value. Now though, a homeowner can get a refinance or mortgage modification, even if they owe up to 5% more than their homes value.

-Mortgages backed, insured, or financed, through Fannie Mae and Freddie Mac are automatically eligible for modification. President Obamas plan calls for this, and they have no choice.

-A homeowner who wishes to use this plan, must live in the home to be refinanced or modified as their primary residence. This plan does not offer assistance for second homes, investment properties, or rental homes.

Taking advantage and getting a 4.5% fixed mortgage through refinancing or mortgage modification is a quick, easy way a homeowner can lower their monthly payments. Millions of homeowners are covered under this housing bailout plan, and should take advantage. Applying and qualifying is easier than ever, and homeowners should take this chance to save a lot of money.