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Many homeowners who have little to no equity in their property can refinance at 125% of their homes value. A 125% refinance can help you consolidate debt, improve your home or help pay college tuition. The rates for an over equity loan are much higher though and there are some risks associated with a refinance at 125% of a homes value.If you refinance and use 125% of your home equity to consolidate debt or take cash out, make sure you are getting a fully amortized fixed rate. If you do not get a fully amortized fixed rate, there is a great chance that when your ARM adjusts or your balloon comes due, you will not be able to refinance or afford your payment.
A 125% refinance mortgage can make a big difference in your monthly obligations and the payment now qualifies for a tax deduction.
Refinancing at 125% is a good idea for those with 100% ARMS - who still have good credit. The thing is, which lenders offer it and will they be around in the coming months?
125% refinance mortgages are becoming increasingly more difficult to find a lender who is willing to accept this type of risk. For the few lenders who will still do 125% refinances, the guidelines for qualifying for these loan types are very strict and demanding. A high credit score, excellent credit history, and low debt to income ratio are mandatory.
Having a 125% loan refinance can be very risky. It creates an extremely leveraged loan with no home equity that can be dangerous in a decreasing home price market.
Refinance 125 in the News:
| Junk Bonds Pull Ahead as TXU, Freescale Soar: Credit Markets (Bloomberg) |
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March 12 (Bloomberg) -- High-yield, high-risk bonds are beating investment-grade debt for the first time this year as confidence in the U.S. economic recovery gains strength.
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| Corporate Bond Risk Falls in Europe Amid ‘Glut’ of Issuance (Bloomberg) |
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March 10 (Bloomberg) -- The cost of insuring against default on European corporate bonds fell as a “glut” of new issuance helps reassure investors that companies will be able to refinance their debt.
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| Mortgage Rate Trend Index (Bankrate.com via Yahoo! Finance) |
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Each week, Bankrate.com surveys experts to gauge which way interest rates are headed on mortgages.
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| Deans Knight Income Corporation Releases Annual Financial Statements and Management Report of Fund Performance for the ... (Marketwire) |
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VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 11, 2010) - Deans Knight Income Corporation (the "Company") (TSX:DNC) is pleased to release its annual financial statements and Management Report of Fund Performance for the year ended December 31, 2009. T
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| Pag-IBIG sells P11.96-b bonds at record-low rate (Manila Standard Today) |
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Home Development Mutual Fund, also known as Pag-IBIG Fund, has sold P11.963 billion worth of five-year bonds Tuesday at a record-low coupon rate of 5-percent rate to refinance maturing obligations and shore up funds for housing loans amid increased demand.
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