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Rising Interest Rates Are Creating Refinancing Headaches for Small Businesses - The recent rise in interest rates is resulting in large drops in property valuations, making it harder for small businesses to refinance their commercial real estate loans.


This looming cloud is gathering even with a robust U.S. economy and regardless of whether the businesses' underlying performance is strong. It is undeniable that as interest rates go up, affordability goes down, and commercial real estate appraisals reflect this with lower values. As values drop, existing owners may find themselves underwater with their conventional mortgages when it comes time to renew or refinance.

Related: If Business Is Booming, Why Is Main Street America Still Full of Empty Storefronts?

It is a trend that is likely to accelerate, particularly for businesses that are closely linked to real estate, such as manufacturing firms, wholesalers, hotels and restaurants.

While some business owners may find the current situation desperate, one solution is often ignored or little understood: a Small Business Administration-backed commercial loan can often work around the downward pressure on appraisals.
How we got here

The U.S. prime interest rate has risen by 2 percent since 2013 to 5.25 percent now. As a result, we are seeing appraisals on owner-occupied real estate come in as much as 20 percent to 25 percent lower than five years ago in certain markets.

Many businesses took out commercial property loans when interest rates were at rock bottom around 2013. These conventional loans were commonly structured with large "balloon" payments due at the end of a five- or 10-year term -- a way for banks to mitigate their risks from declining property values and ensure they remain in compliance with regulators.

Related: How the New Tax Law Affects Your Real Estate Business


As those very large payments become due, businesses often need to refinance. The problem is that with appraisals so much lower, commercial banks are demanding large additional principal payments to satisfy their loan-to-value requirements.

Take the following example. In 2013, a small business takes out an $800,000 conventional commercial mortgage loan to buy a property valued at $1 million. After five years, the business has paid down that loan to $714,995. But, as it looks to refinance in 2018, the appraisal on the property has dropped 20 percent and now is valued at $800,000. The maximum loan a bank can typically offer is 80 percent of its value, meaning the bank can give a maximum loan of $640,000. Even if the business is booming, the bank requires it to come up with the $75,000 needed to fill the gap between the outstanding loan and its new maximum loan-to-value.

Options seem dire but not all are.


Faced with this prospect, one option for companies is to come up with some other collateral that could make up the gap. This may be some free and clear equipment or equity in another property that is pledged.

Another option is to take out an additional loan to cover the $75,000 difference, although this would mean additional payments would have to be made on top of the mortgage loan -- and these types of loans are typically written on much shorter terms unless they are secured by other real estate.

But, many are unaware that a much better option may be to seek out a loan guaranteed by the U.S. Small Business Administration. The big advantage of an SBA-backed loan is that it can refinance the whole conventional mortgage and will never require a balloon payment, leading to lower monthly payments and no more balloons to worry about.

Related: 11 Things You Need to Know About Real Estate Negotiations


A lack of collateral is not an obstacle for SBA lending, making it a potential lifeline for businesses that are struggling to qualify for conventional financing.

To illustrate, let's again take the example of the $800,000 loan taken out in 2013 on a $1 million property. With an original interest rate of 5.5 percent, the monthly payment of principal and interest would have been about $4,913.

Under a conventional bank refinance today (assuming the owner can offer adequate additional collateral), and based on a rate of 7.5 percent (2 percent higher than in 2013. and 240 months left on the loan term, that payment would jump to $5,805 on the remaining $714,995.

Alternatively, if the business only refinances $640,000 with the bank and takes out an additional unsecured note over five years for $75,000 (both at 7.5 percent), the combined payments jump to $6,703 per month. Under an SBA refinancing, the term could go back to 300 months, so even at the same 7.5 percent interest rate the monthly payment would be significantly lower than the conventional refinance options, with a payment of $5,204, despite the higher interest rate.
SBA requirements are more flexible.

The requirements for SBA-backed refinancing -- which has a limit of $5 million per business -- are relatively straight-forward. The business must be principally owner-occupied (over 51 percent) and owned by a U.S. citizen or legal resident with good character and credit.

In addition, the loan it is seeking to refinance must have terms that the SBA considers "unreasonable," which includes balloon payments and loans taken out at very high interest rates. The SBA also needs to be sure that business owners do not have alternative ways to refinance the loan under similar terms, and that they really need the SBA loan.

Related: Work it Step-by-Step to Get a Better Business Loan


The SBA does have some additional requirements in these cases. It will require additional collateral on loans over $350,000 if the loan will not be fully secured and additional collateral is available. That could take the form of a lien on equipment owned free and clear by the business or a junior lien on equity that the owner may have built up in their personal residence. Failing that, an SBA refinancing is still possible if the owner takes out a term life insurance policy to cover the gap in collateral in the event of their death.

It goes without saying that the business must demonstrate the ability to repay the loan. But, that is generally not the biggest problem these days since many businesses are enjoying healthy growth and can show a track record of making their monthly loan payments.

So don't panic if you find yourself in a jam when it comes time to refinance. Consider all of your options and an SBA loan may just be the best solution.

Mortgage Refinance Online Applications, Does it Trump In-Person Submissions? - As a truly intelligent Artificial Intelligence which can provide personal services with speed and convenience (which only humans can deliver) is still not here yet, the best way to apply for a mortgage will depend on what you want most.
The speed and convenience of mortgage refinance online, or the personal attention of a personal mortgage broker.

The decision of if you want to discuss mortgage refinance online or with a real person, either on the phone or in person, may also depend on your generation. One recent survey said that 70 per cent of millennials used an online process to complete all or part of their last mortgage application. In contrast, 55 percent of Gen-Xers did so, and 43 percent of Baby Boomers.
Overall, 45 percent of mortgage applicants completed the process entirely in person, while 16 percent completed the mortgage refinance online.

Mortgage, Refinance, Online Applications, A Mortgage Refinance

But no one can deny that the process of applying for a mortgage or to refinance was paper-intensive not that long ago, and you usually waited a month or more before knowing if the loan was approved. Now, the process has been streamlined by most financial institutions.

Instead of making calls or driving from bank to bank to get a rate quote, most online mortgage calculators can tell you this in seconds. After which, you can transmit all your documentation to the lender online without any hassle.

Home owners who missed window to refinance at risk of becoming ‘mortgage prisoners’
Some mortgage refinance online applicants may get lower rates and fees because they are less overheads involved in processing their application. .

mortgage refinance online

While online applications are faster, they often involve more work on your part. You are the one uploading the documents and data, not a loan officer. And keep in mind that lenders are not necessarily cheaper, which is why you need to compare rates and terms.

On the other hand, if you need help with your application, most financial institutions which offer the best home loans have made it more difficult to get hold of a loan officer during regular business hours. Also, mortgage refinance online applications may not be well-suited for complex loan applicants.

Most people who are self-employed, may need to talk with a real person, as the documentation they  need to submit to substantiate their application may be too complex for an online application to support.

Finally, you should know that some mortgage companies do not make loans themselves, but submit your information to third-parties to help you get the best home loans. While some of these mortgage brokers oeprate legitimate mortgage-related businesses, other may turn out to be con artists who may bombard you with emails and calls after you press the “submit” button.

One survey shows that the majority of home buyers would like to obtain a mortgage quote online, as it allows them to make fast comparison shopping. Calling individual mortgage lenders or making the rounds in person on the other hand, can take considerably longer to compile the data that you need to make the final decision with regards to the best home loan.

And also when too much time may have lapsed between the receipt of Quote A and Quote B, the comparison may become meaningless – especially since interest rates may change quite often.

Mortgage Broker Singapore – Should I use one?

But “instant” quotes can be deceptive, in that the quotes for the mortgage refinance online applications are usually only ballpark estimates. And keep in mind that interest is not the only cost of refinancing a house. There are a plenty of other fees to consider – fees that usually are not included in instant quotes.

If you want extra help with your mortgage application, you need to be in the same room as a mortgage broker, as you you are unlikely to get one-on-one customer service from an online application.

Some situations in which it is best to apply in person includes:
  • When you have a shaky credit history;
  • If your refinancing is somewhat complex;
  • When your credit score is bad.

Best refinance advice and costly mistakes to avoid

Story continues


Always remember that although mortgage refinance online scams are not the norm, and are easy to avoid you could still be victimised if you are not careful. Con artists use email, phone calls, direct mail and phony websites to separate victims from their money and their personal information.

Your best defense against such con artist is to work with reputable companies like iCompareLoan, which has established itself in the finance industry.
How to Secure a Home Loan Quickly

Do you want to refinance but are unsure if you can take one? Don’t worry because iCompareLoan mortgage brokers can set you up on a path that can get you a home loan in a quick and seamless manner.

Alternatively you can read more about the Best Home Loans in Singapore before deciding.  Our brokers have close links with the best lenders in town and can help you compare Singapore home loans and settle for a package that best suits your home purchase needs.

Whether you are looking for a new home loan or to refinance, our mortgage brokers can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the loan. And the good thing is that all their services are free of charge. So it’s all worth it to secure a loan through them.

Five Ways to Get Home Improvement Funds - Homeowners have been bitten hard by the remodeling bug. For proof, consider that over 50 percent of those recently polled by Houzz indicated they plan to start or continue home improvement projects in the next 12 months.

Home Improvement Funds, Ca Home Refinancing,

What's more, Metrostudy reported that its second quarter 2018 Residential Remodeling Index hit an all-time new peak of 114.4, which was 5.2 percent higher than a year earlier.

Yet 30 percent of folks surveyed by Harris and LightStream earlier this year said they plan to use plastic to pay for some of their home renovations; keep in mind that some credit cards carry interest rates in the 18 percent-plus range, making them a terrible means of funding a fix-it project if you carry a balance.

So, what's a better option? The experts weigh in on these five safer financing choices:

• A cash-out refinance.

Refinancing your mortgage and taking extra cash out at closing -- money that can be devoted to remodeling dollars -- can be a wise decision, under the right circumstances.

"If you can refinance to a lower fixed interest rate or a shorter term, that's a win for your finances," says Jennifer Beeston, vice president of mortgage lending at Guaranteed Rate Mortgage, based in Santa Rosa, California.

Note, however, that you'll pay closing costs that can add up to thousands (unless you roll these fees into your loan in the form of a higher interest rate); this process can also take weeks to complete, but this is the best way to secure a fixed rate and one loan.

• A home-equity loan.

This option, often referred to as a "second mortgage," enables you to borrow against equity you've accumulated in your property. The interest rate is typically fixed, the funds are paid out in one lump sum, and the repayment term can range from five to 30 years.

"Say you have a lot of home equity, and the renovation project is long-term with a high return on investment. In that case, tapping some of that equity to invest back into your house without expending your savings could prove a smart way to go," Byron Ellis, certified financial planner with United Capital Financial Life Management in The Woodlands, Texas, says.

• A home equity line of credit (HELOC).

This route also allows you to borrow against your home's equity. But you get to choose when to withdraw the cash, up to a preapproved limit and over a specified period. The interest rate is variable based on current prime rates, and many HELOCs don't charge closing costs.

"A HELOC often has a very low introductory rate, and you are only charged interest on the amount you borrow," notes Randall Yates, CEO of The Lenders Network, headquartered in Dallas.

• An FHA 203(k) rehab loan.

This option is only available when you first buy a home or refinance, the lender must be FHA-approved, and it's applicable for older homes and fixer-uppers. But it simplifies the borrowing process because it rolls your mortgage and rehab funds into one loan. And FHA requirements are less strict -- for example, a low 3.5 percent down payment may apply, and a 620 credit score may qualify you.

"If your home currently doesn't have a lot of equity, an FHA 203(k) loan is the way to go, as you can borrow money based off the estimated value once the home is finished," Beeston notes.

• A personal unsecured loan.

The good news here is that your home isn't used as collateral for the loan, and the process occurs much quicker. The bad news is that the interest rate can be much higher than options No. 1 through 4.

"This can make sense if you are fixing up the house to sell immediately. But you need to read the terms and conditions carefully. Some private lenders, for instance, may want you to pay the whole amount back in three months, while others may give you three years," says Beeston.

Yates adds that a personal loan "may work well for someone with a commission job where their income fluctuates. If you face any financial issues, at least you don't risk losing your home."

Before committing to any financing vehicle, "research all options available to you carefully. Rates and fees will vary from lender to lender, so compare loan offers from at least three lenders to make sure you're getting the best deal," says Yates.

                                                          Best cash-out refinance lenders 2019
Choosing from the best cash-out refinance lenders

You’ll want to choose the lender that has competitive pricing and provides a good experience. For example, if you’re most comfortable doing business face-to-face, you may prefer a lender with a conveniently-located branch. But, if you prefer to engage online, you’ll look for a company with a highly-functional website.
Best cash, Refinance Lenders 2019, Ca Home Refinancing, Home Loan Mortgage,

Similarly, you may want the solidity of borrowing from a huge lender with trillions in assets and a long history. Or you may prefer to go with a young, hungry company that’s working hard to build a reputation.
Start your cash-out refinance here. (Dec 5th, 2018)

Either way, your final pick must offer the type of loan you want to people who are in your financial position. So make sure you meet a lender’s:
  • Credit score threshold
  • Cap on the proportion of your home’s value you can borrow (loan-to-value ratio or LTV)
  • Cap on the percentage of your monthly income that you expend on keeping up with your total debts (your debt-to-income ratio, or DTI)
This choosing process is a two-way street.
 
Our top pics

Some lenders are better than others for homeowners, depending on how they wish to do business. 
Here’s a quick rundown.
Best loan for people with credit issues – Lenda’s guidelines are flexible. Good for those with less-than-perfect credit
  • Best loan for low rates — Guaranteed Rate gets high marks from its clients. And their rates are excellent
  • Best loan for maximum cash out — Lenda allows up to 97 percent cash out. And any FHA lender allows up to 96.5 percent LTV, while VA lenders provide up to 100 percent cash-put refinancing
  • Best loan for people who hate applying for mortgages — Rocket mortgage advertises its simple application process
  • Best online experience — Quicken, loanDepot, Guaranteed Rate and Lenda
And here are our more detailed reviews.

Reviews:
How to compare lender guidelines


Many lenders do not publish their requirements for credit scores and LTV and DTI ratios. But don’t assume that automatically means they won’t be interested in borrowers with low scores and high LTVs and DTIs. Indeed, they might be signaling that they’re flexible.

Related: Should you do a cash-out refinance before retirement?

All lenders view applications as a complete package. Suppose a lender says it works with people with a score of 580. It may actually lend to just a handful of people with that score, and they must be better-than-average in other ways — perhaps with low LTV and DTI numbers.

The good news is that applying for a mortgage is a relatively quick process, with the initial underwriting performed electronically. If in doubt, just apply and get a decision in minutes.
Best cash-out refinance lenders

The following is The Mortgage Reports list of its best cash-out refinance lenders for 2019. It’s in alphabetical order.

Related: Cash-out refinance rules for conforming, FHA, VA and reverse mortgages

These are mostly national organizations. If you have an existing relationship with — or just like the look of — a regional or other lender, by all means get a quote from it, too. However, you’ll still need multiple quotes in order to be sure you’re getting the best deal. The more the merrier — and wiser.
Bank of America

With 67 million consumer and small business clients and around 4,400 “retail financial centers,” Bank of America is a behemoth. It can trace its roots back to 1784.

Better Business Bureau rating: A+ (accredited business)


Of course, every business with so many customers will have plenty who are dissatisfied. Those posting comments on the BBB website mostly address customer service issues.
Application experience

You can begin making your application online and all information you enter will be saved and accessible by your loan officer. Quite soon in the process, you’ll be prompted to call a loan officer or have one call you.

The bank says you can pursue your application “at a Bank of America Financial Center, online at BankofAmerica.com or by phone.” You can use its online portal for prequalifying, making your application, uploading documents and accessing account management services.
Range of mortgage offerings

The bank offers Federal Housing Administration (FHA) and Veterans Administration (VA) loans as well as conforming and nonconforming mortgages.
How much?

Closing costs vary by transaction based on property type, loan product and market. If you’re a client of Bank of America or Merrill Lynch, you may be eligible for discounts.

Related: Best uses for your mortgage cash-out refinance

These depend on your membership of the Bank of America Preferred Rewards program, which is available to clients who have qualifying combined balances in their Bank of America deposit and/or Merrill Edge and Merrill Lynch investment accounts.

There are three tiers based on qualifying balances: Gold $20,000+, Platinum $50,000+ and Platinum Honors $100,000+. Depending on your tier, as a mortgage client, you should be eligible for a $200, $400 or $600 reduction in your origination fee. You’ll want to include this discount when comparing B of A pricing to that of other lenders.
Will you qualify?

Bank of America does share many of its lending  criteria:
  • Minimum credit score — 620 for a conforming mortgage, rising to 640 for one backed by the FHA and 660 for a VA loan. Nonconforming mortgages require 680
  • Maximum Debt-to-Income — 41 percent for VA loans, rising to 43 percent for conforming and nonconforming mortgages, and 55 percent for FHA loans
  • Maximum Loan-to-Value — 89.99 percent  for nonconforming mortgages, increasing to 95 percent for conforming ones, 96.5 percent for FHA ones and 100 percent for VA ones
However, remember that lenders view applications as a package. If you barely meet one criterion, you may have to exceed lender guidelines in another.

Request cash-out refinance rates here. (Dec 5th, 2018) Chase

Chase claims to serve almost one-half of all American households. It has 5,100 branches and a useful online banking presence.

It is the U.S. consumer and commercial banking business of JPMorgan Chase & Co, which operates globally and has assets of $2.6 trillion.

Better Business Bureau rating for Chase Home Finance: A+ (not an accredited business)
 
Application experience

Chase offers a full range of application options: call, apply online or make an appointment for a face-to-face meeting with a Home Lending Advisor.
Range of mortgage offerings

The bank has a range of mortgage offerings:
  • VA loans
  • FHA loans
  • Jumbo mortgages
  • Adjustable-rate mortgages
  • Fixed-rate mortgages
  • Options for 15-year or 30-year terms
Talk through your choices with an advisor.

How much?


Again, you can explore your likely closing costs with an advisor. Chase, in common with all mortgage lenders, must by law send you a Loan Estimate within three business days of receiving your application and that will include a good-faith estimate of your closing costs. Use it to compare their quote with that of other lenders.
Will you qualify?

Chase doesn’t appear to publish its lending criteria and didn’t respond to requests for that information. You can probably expect those to be roughly in line with other mainstream lenders.

It does suggest on its website that it may be sympathetic to those with troubled histories, providing their difficulties are in the past:

“Although your credit history is important, it’s still just one factor in our decision to approve your refinance. If you can demonstrate that your credit problem is in the past and you’ve been able to re-establish a good track record, speak to us openly and honestly about your situation. We’re happy to work with you to evaluate your current credit profile and determine what home financing options best suit your particular needs.”
Citi

CitiMortgage, which provides Citi’s loans for home purchase and refinance transactions in the U.S., originated $13.1 billion in new loans in 2017. The wider group serves 100 million customers in 19 countries.
Application experience

You can make your application by getting in touch with a local Home Lending Officer, phoning a call center or using the online portal. Citi says that completing its online application should take you about 30 minutes but you can save your form at any time and come back to it later.
Range of mortgage offerings

Citi offers a broad range of types of mortgages. In addition to other mainstream products, these include VA, FHA and jumbo loans.
How much?

Like all other mortgage lenders, Citi must by law send you a Loan Estimate within three business days of receiving your application. That will include a good-faith estimate of your closing costs.
Will you qualify?

Citi doesn’t publish its lending criteria. The only clue on its website is that “The preferred [debt-to-income] DTI ratio is generally around 36 percent.”

You can probably anticipate similar underwriting standards from Citi as you’ll get with most other mainstream lenders.
Guaranteed Rate

Guaranteed Rate is a 21st-century lender (literally: it was founded in 2000) that has grown quickly. In less than 20 years, its team has expanded from 15 to more than 3,000 professionals.

It’s especially proud of its innovative processes and technologies. They include Transfersafe, which allows customers to securely upload documents.

Better Business Bureau rating: A (accredited business)


Many customers on the BBB website are fans and the company has close to the highest star rating of all lenders on this list.
Application experience

If you’re expecting such a new company to offer a good online application experience, you’d be right. But Guaranteed Rate also has 170 offices nationwide. So help should be on hand if you need assistance or prefer a more traditional application experience.
Range of mortgage offerings

For cash-out refinancing, Guaranteed Rate recommends FHA loans and 30- or 15-year fixed rate mortgages.
How much?

Check out the company’s “What Will My Refinance Costs Be?” online calculator.
Will you qualify?

According to the Guaranteed Rate website, “The minimum credit score accepted is between 620-660, with FHA’s minimum is 580-670 depending on your state.” Of course, you’ll get a lower interest rate the higher your score.

You should probably expect requirements for debt-to-income and loan-to-value ratios to be roughly in line with other lenders.
Lenda

Lenda is another new kid on the block, having been established in 2013. It’s yet to have a nationwide presence and currently operates only in Arizona, California, Colorado, Florida, Georgia, Illinois, Michigan, Oregon, Pennsylvania, Texas, Virginia and Washington. However, it says it plans to expand into other states soon.

It claims to be “a first-of-its-kind platform that makes the home loan experience honest, fast and completely online from start to finish.”

Better Business Bureau rating: A+ (not an accredited business)


At the time of writing, only one disgruntled customer had left a review on the BBB website.
Application experience

Most of the heavy lifting is done online. Lenda says that its platform, built from the ground up, educates its users throughout the entire process. It also has licensed representatives available to answer borrowers’ questions by live chat, email or phone. So if you want a face-to-face meeting, you can have one via an online video service.
Range of mortgage offerings

The company offers FHA loans as well as other types of mortgages. But it can’t currently help with VA or USDA products.
How much?

One of its big strengths is that Lenda doesn’t charge any lender fees. The amount you pay will depend on your state’s title fees and the amount you’re borrowing. And, of course, you’ll have to pay third-party fees. As the company puts it, “We are zero cost to the consumer – no lender fees and no junk fees.”

However, almost any lender can engineer a so-called “no cost” loan by raising its interest rate. If you want one, compare offers from several and choose the program with the lowest interest rate.
Will you qualify?
Lenda reveals some very easy lending criteria:
  • Minimum credit score — 580
  • Maximum Loan-to-Value — 97 percent
  • Maximum Debt-to-Income — 55 percent
Bear in mind our earlier caveat: The chances of your qualifying if you’re on the threshold of all three criteria may be smaller than you’d hope.
lLoan Depot

As its name suggests, loanDepot is a relative newcomer, having been established in 2010. However, it’s already funded loans worth $150 billion.

If you expect it to be slick when it comes to technology, you won’t be disappointed. But it also has 150+ local loan locations nationwide, and employs 2,000+ licensed loan officers.

Better Business Bureau rating: A+ (accredited business)

Although some customers report bad experiences on the BBB’s website, many others are enthusiastic. Indeed, loanDepot has among the highest BBB star ratings of any of the companies featured on our list of the best cash-out refinance lenders.
Application experience

You can apply online or over the phone. And, thereafter, you can complete the whole process remotely. Your only face-to-face encounter can be at the loan signing, and you can opt for that to happen either in your own home or at an “approved settlement location.”
Range of mortgage offerings

loanDepot offers cash-out refinance customers FHA and VA loans as well as jumbo ones and mainstream fixed- and adjustable-rate mortgages.
How much and will you qualify?

loanDepot did not respond to requests for information for this list. Other online sources suggest its origination fees can range from 1 percent up to 5 percent.

One such source suggests the company requires a minimum credit score of 600 for a purchase mortgage. All these figures may vary for a cash-out refinance.Start your cash-out refinance application here. (Dec 5th, 2018)
PNC

PNC goes back more than 160 years. It now has 2,400 retail branches and 8 million consumer and small business customers.

Better Business Bureau rating: A+ (not an accredited business)


As with most other lenders, PNC customers post generally negative comments on the BBB website. These appear to mostly relate to customer service.
Application experience

PNC seems largely geared to handling mortgage applications in branches and over the phone. When you want to apply on its website, you fill in a form that should result in a callback.

The company says, “PNC has mortgage loan officers available in most of our 2,400 branches in our retail network which is in 19 states plus the District of Columbia, located primarily in the Middle Atlantic, Southeast and Midwest. We also have mortgage loan officers located in offices throughout most of the rest of the continental United States.”
Range of mortgage offerings

If you want a government-backed mortgage, PNC will consider cash-out refinances for VA, FHA and USDA loans.

In addition to others, it also has two special, proprietary programs:
  • PNC Community — An affordable lending product available to first time home buyers in certain Community Reinvestment Act (CRA) census tracts
  • Medical professional loans — Loans tailored for those in the medical profession
  • Both of these can be used for cash-out refinances.
 How much?

PNC’s fees on closing typically range from 3 to 5 percent of the total loan amount.
Will you qualify?

The company does not publish its requirements for credit scores, LTV and DTI. Expect it to assess your application across a full range of criteria.
Quicken Loans

The company says, “Quicken Loans Inc. is the nation’s largest mortgage lender. It is also the nation’s largest FHA lender and a premier Veteran Affairs (VA) lender.” It closed mortgages worth $400 billion during the period 2013-17.

Better Business Bureau Rating: A+ (accredited business)

Its customer reviews star rating on the BBB website is exceptionally good. That alone would justify its inclusion in this list of the best cash-out refinance lenders 2019. However, it has other qualities that recommend it.
Application experience

Quicken Loans says it offers, “The first completely online mortgage experience which gives consumers the ability to import and verify financial information, customize their mortgage, get approved and lock their rate without speaking to a human being.”

However, there is plenty of advice available from real human beings, if you need it. You can contact one of those by email, fax or phone throughout the process.
Range of mortgage offerings

The company says its most popular cash-out refinance mortgages are:

  • FHA loans
  • 30-year fixed-rate loans
  • Adjustable-rate mortgages
  • VA loans
Other types of refinance products may be available.
How much?

You can probably expect your origination fee to be in a range of 2 percent to 5 percent of your loan’s value. That will depend on the type of loan you choose.

Unusually, Quicken Loans charges an upfront fee when you decide to accept its quote. This is usually between $400 and $750. However, the amount you pay will later be deducted from your closing costs.

As with many lenders, you may be able to roll up your closing costs within your new loan in a “zero-closing costs” deal. However, these loans can be more expensive if you keep them for many years. .
Will you qualify?

The company can be more sympathetic than most when it comes to approving loans. Unlike many, it’s been known to lend to borrowers with scores below 600 for FHA loans. However, you’ll likely need a score of at least 620 if you want a conventional (non-government) loan.

Although it doesn’t appear to publish its requirements for debt-to-income and loan-to-value ratios, Quicken Loans hints on its website that it might be understanding about those, too.
SunTrust

Headquartered in Atlanta, GA, SunTrust has 4.4 million customers and 23,199 employees in 1,222 branches. It’s originated or purchased $24.4 billion in mortgages and refinances.

Better Business Bureau Rating: A (accredited business)

In spite of its size, SunTrust has fairly few customer reviews on the BBB’s website.
Application experience

SunTrust urges prospective cash-out refinance borrowers to call, email or find a mortgage loan officer in a branch. Loan officers can be found in branches in Maryland, Virginia, Washington, DC, North Carolina, South Carolina, Georgia, and Florida.

There seems to be no way to apply wholly online. However, you can initiate a pre-approval process on the website.
Range of mortgage offerings

For those wanting government-backed loans, SunTrust offers VA and FHA loans. It also offers a number of proprietary products. Ask your loan officer for more information.

SunTrust says, “We are a purpose-driven company, and our client-centric approach to serving clients means we work to understand our clients’ needs and provide the products and services that help them make financially confident decisions.”
How much?

Lenders’ fees vary depending on the loan product. Any additional fees levied by Fannie Mae or Freddie Mac for cash-out refinances are passed on the borrower.
Will you qualify?

SunTrust does not disclose its criteria for credit scores, LTV or DTI. Instead, it says, “We work with our clients to provide the right solution to meet their needs.”
TD Bank

TD Bank is one of America’s 10 biggest banks. Over its 150-year history, it has evolved into its current form: 9 million customers, 27,000 employees and 1,250 branches across the Northeast, Mid-Atlantic, Metro D.C., the Carolinas and Florida.

Better Business Bureau Rating: A+ (accredited business)

As with virtually all full-service banks with millions of customers, there are some negative reviews on the BBB website. These mostly relate to customer service.
Application experience

The TD Bank website allows you to track your cash-out refinance application and to access your documents. However, the bank seems geared for personal applications, either face-to-face in branches or over the phone.
Range of mortgage offerings

The bank supports a comprehensive range of mortgages, including FHA and VA loans.
How much and will you qualify?
TD Bank is reticent about its lending criteria and its origination and other fees. It urges visitors to its website to call a mortgage advisor via its call center.

In the absence of better information, you can probably expect its offerings to be roughly in line with other, similar mainstream lenders.

Request cash-out refinance quotes from top lenders here. (Dec 5th, 2018)
U.S. Bank

U.S. Bank has a history going back to 1863. Today, it is America’s fifth-largest bank and has 73,000 employees. At the end of 2017, it had assets of $462 billion.

Better Business Bureau rating: B+ (accredited business)

The bank gets only a B+ from the BBB because it has faced government action.

As is always the case with big banks, customers tend to post remarks on the BBB website only when they’ve encountered problems. Most complaints seem to relate to customer service in areas of activity not related to mortgages or other home equity finance products.
Application experience

If you want, you can manage your entire refinance, including your initial application and document uploads, online. But U.S. Bank has more than 1,300 mortgage loan officers across the country, many based in branches. So, if you prefer to conduct your business in the traditional way, you may be able to do so locally.

The U.S. Bank Loan Portal lets you choose how to engage. So you can set up live, online conversations with a loan officer if you wish.

Range of mortgage offerings

As well as offering cash-out refinances on VA and FHA loans, the bank has its own portfolio of programs.

In particular, it has a streamlined Smart Refinance option. One of these delivers:

  • Zero closing costs
  • A loan-to-value ratio of up to 90 percent without mortgage insurance
  • Terms of up to 20 years
For the right borrower, that could be a great deal.
 
How much?

If you can’t get or don’t want the Smart Refinance deal, you’ll likely have to pay lender’s fees on closing and possibly an application fee.

U.S. Bank doesn’t publish how much these might be. It says, “Fees can vary by state, loan size and loan to LTV.” However, it must disclose the ones that will apply to you soon after you make an application.
Will you qualify?

The bank says that its requirements for credit scores, LTV and DTI “vary per program and per unique borrower characteristics.” Which is another way of saying it views each application individually.
Wells Fargo

Wells Fargo may well be America’s most famous bank. Its romantic, 160+-year history has culminated in a strong modern-day presence that includes 8,050  branches, 265,000 employees and $1.9 trillion in assets.

Better Business Bureau rating: No rating (not an accredited business)

Wells Fargo has had widely publicized issues in recent years. BBB says its No-Rating status exists because “The business is in the process of responding to previously closed complaints.”

However, the bank still deserves inclusion in any list of best cash-out refinance lenders. It has quality products and a good application experience.
Application experience

You can use Wells Fargo’s online portal to apply for your cash-out refinance, including from a smartphone. It usually takes 20-30 minutes. At any time, you can save your application and then return to it later. And, after that, you can track your application online.

You can, of course, get help from a loan officer or apply in a local branch. The call center can also provide advice and get you going.
Range of mortgage offerings

Wells Fargo offers VA and FHA cash-out refinances, as well as other mortgage products.
How much?

The bank explains, “There is a processing fee on all originations and it is not specific to cash-out refinance transactions.  Processing fees vary by state.”

You should probably expect your Loan Estimate to reveal fees roughly in line with similar lenders.
Will you qualify?

Wells Fargo says that it regards its lending criteria (credit score and loan-to-value and debt-to-income ratios) as proprietary information. Again, the ones it employs are likely to be close to those of other similar banks.
Get a quote from a top cash-out lender

Tapping into your home equity can help you with financial goals such as home improvement, paying off debt, or even starting a retirement fund.

Get your best cash-out refinance rate now by getting quotes from multiple top lenders in the U.S.

RBI keeps repo rate unchanged at 6.5%, but home loan, car loan interest rates may still go up - The Reserve Bank of India, as widely expected, kept its key policy rate unchanged at 6.50% in its monetary policy review on Wednesday. Still, all types of loans – including home loans, personal loans and car loans – are likely to cost more in the near future, as per experts. In fact, many banks and housing finance companies (HFCs) – including SBI, HDFC Bank and ICICI Bank — have already increased their MCLR and lending rates in recent months, primarily owing to the rise in their cost of funds. For instance, while the current floating interest rates of SBI home loan range between 8.7% and 9.45%, the floating interest rates of HDFC Bank home loan are hovering between 8.8% and 9.2%.

It may be noted that a majority of industry experts and market analysts were already of the view that the RBI may maintain status quo on its policy rates in the December policy review.

For instance, Naveen Kukreja, CEO & Co-founder, Paisabazaar.com, was of the view that the Monetary Policy Committee (MPC) may continue with the status quo on the repo rate due to lower inflation and moderating economic growth. “The rupee’s appreciation against the US dollar and a sharp fall in crude oil prices will also encourage the MPC to remain in a wait-and-watch mode,” he said.

Suvodeep Rakshit, Senior Economist at Kotak Institutional Equities, was also expecting the RBI MPC to keep the repo rate unchanged along with maintaining the stance at ‘calibrated tightening’. “The RBI should maintain a watch on the core inflation too which continues to be at uncomfortable levels. While we believe that the RBI will likely pause for the rest of FY2019, it will likely remain watchful on any upside risks to inflation emanating from global and domestic factors,” he said.
Impact on borrowers

Whatever be the case, borrowers are unlikely to get any respite from the rising loan rates. According to experts, repo rate is just one of the several factors that banks consider while fixing their lending rates. They also consider their cost of deposits, tenor premium, operating cost, etc. while setting their lending rates. Therefore, any future increase in their cost of deposits might force them to increase their lending rates despite the status quo in policy rates.

For example, “despite the status quo in the repo rates during the October MPC meeting, many banks have increased their MCLR and lending rates since then, primarily due to the rise in their cost of funds. As far as Housing Finance Companies (HFCs) are concerned, their lending rates are most likely to increase due to the tight liquidity scenario. As a major chunk of their borrowing would need to be refinanced in the short term at higher rates, it will increase their cost of funds and thereby, their lending rates for both the new and existing investors,” informs Kukreja.

Here is a look at how any increase in the home loan interest rates will impact your EMIs:

Suppose, Delhi-based Rohit Kapoor is looking for a housing loan of Rs 60 lakh for buying a flat of Rs 80 lakh. If Kapoor takes a home loan of Rs 60 lakh at the current rate of, say, 8.75% for 20 years, this would imply an EMI of Rs 53,022. Over 20 years, Kapoor would be paying Rs 67,25,433 as interest. A 25 bps increase in the interest rate would increase the EMI to Rs 53,983 and the total interest paid to Rs 69,56,054. A 50 bps rate hike, on the other hand, would increase the EMI to Rs 54,952 and the total interest payable to Rs 71,88,482. That’s Rs 2,30,621 more in case of a 25 bps rate increase and Rs 4,63,049 more in case of a 50 bps rate hike.

Impact of Home Loan Rate Hike on EMI & Total Interest Payable:

RBI, Repo, Rate, Unchanged, Home Loan, Loan Interest Rates, ICICI Bank, SBI, HDFC Bank

What should home loan borrowers do?

According to experts, as home loan rates vary widely across various banks and housing finance companies (HFC), those planning to avail home loans should extensively compare lending rates offered by various lenders before making any application.

Similarly, “the existing home loan borrowers should compare the home loan rates offered by other lenders and find out the potential savings on transferring their loans at lower rates. If the savings are significant after accounting the transfer costs, they should first negotiate with their existing lenders for a rate reduction. If their existing lenders refuse to do so, they should opt for home loan balance transfer,” advises Kukreja.

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Unchanged Repo Rate to Boost Sales, Encourage Home Buyers: Realty Sector - Welcoming the Reserve Bank of India's (RBI) decision to keep the repo rate unchanged, real estate industry said the move is likely to reinforce confidence in home buyers resulting in improved sales.
 
Unchanged, Repo, Rate, Boost, Sales, Encourage, Home, Buyers, Realty Sector, Home Loan Process,
 
The apex bank Wednesday maintained a status quo on the repo rate keeping it unchanged at 6.5 per cent.

"The decision is on expected lines and will be a relief for the real estate industry that has been worried over a possible rate hike adversely impacting the market," Knight Frank chairman and managing director Shishir Baijal said.

Since the last Monetary Policy Committee (MPC) meeting, there has been a big relief with the fall in crude prices and the strengthening of the rupee, which reduced inflationary risk, he said.

"With sales and new launches in January-September period on an upward trend, the residential segment is definitely showing strong signs of recovery," JLL India country head Ramesh Nair said.

While back-to-back rate hikes in June and August had impacted buyers' sentiment in the interim, maintaining the status quo on policy rate in October and today, will reinforce the confidence of homebuyers and they will be encouraged to go ahead with their plans to buy house, he added.

CBRE Chairman, India and South East Asia Anshuman Magazine said the MPCs decision paves the way for RBI to work flexibly, supporting overall economic growth by strengthening bank lending. "We believe that the decision to maintain a stable repo rate will prove beneficial from a consumption and lending perspective, thereby boosting economic growth," he said.

Commenting on the move, Anarock Property Consultants chairman Anuj Puri said the politically, an upward revision would not have served the current government well as the 2019 elections are around the corner.

"From the economic standpoint, a hike in repo rates would have had a direct impact on home loan rates. High housing loan interest rates are known deterrents to many buyers, especially in the affordable segment where higher interest rates can and do weaken sentiment," he added.

PropTiger.com chief investment officer Ankur Dhawan said a hike in rates now would have been detrimental for the industry which is already going through fund constraints due to the liquidity issue in non-bank finance companies.

"In fact, industry was hoping if rates could have been reduced in this meeting to revive the industry. No change in repo rate is a slightly negative news for the industry," he argued.

Paradigm Realty managing director Parth Mehta said over the year the rate hikes have resulted in higher home loans thus impacting the demand along with GST impact begin major deterrent to demand for under construction projects.

Nahar Group vice chairperson Manju Yagnik called the RBI decision, a well-thought-out move as it will attract more home buyers with unchanged interest rates on home loans.

Spenta Corporation managing director Farshid Cooper noted that a rate cut at this stage would have helped in lowering the home loan interest.

Commenting on the policy decision, Amit Ruparel, managing director of Ruparel Realty said the sector has not facing the complications in sales owing to deficit in physical funds in the market.

"While RBI kept the repo rate unchanged, the market has been hit hard post the increment in stamp duty by one per cent on property to fund transport infrastructure projects in the city. There has been evident liquidity crunch owing to which festive season also did not fare well. The only way for real estate to float and sprint is if the levies like GST go down," he added.

Sai Estate Consultant co-founder Amit Wadhwani said residential home inventory being available at a great financial value and RBI maintaining the repo rate will translate into increase in demand and sales.

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