A typical debit card is issued by retailers, other vendors, or more often, banks. These little plastic cards enable you to use your account almost as if the bank was ‘loaning’ you money – it just comes out of your bank account. It allows you to pull cash out of your account from anywhere you can swipe a card, and you can also check the balance remaining in your account. Every time you spend money, either by withdrawing or by buying something, the money is taken from an account at the bank, or a prepaid amount on the debit card.

With prepaid debit cards, you are buying a debit card with a set amount. Prepaid debit cards have a line of credit that is the same as the mass amount on deposit with the company on the card, making it a “pre-funded” instead of borrowed way to spend. For example, if you spend $20 on a prepaid debit card, you will have $20 on that card (unless the institution you purchased it from charges a fee). Instead of money being taken out of an account somewhere in a bank, every time you make a purchase or take money “out”, it will be taken directly from the balance on the prepaid card. There is a data strip on the back of the card that reads information to the computer, when swiped through the machine, and it shows how much you have left on your prepaid debit card. You can “reload” your card, (that is, put more money on it to spend) at the same place you bought it, some retailers, a few check cashing places, and certain kinds of kiosks.

Debit cards and prepaid debit cards are different from the cards that banks give just for withdrawing your money out of an ATM (automatic teller machine). Debit cards and prepaid debit cards don’t require a PIN (personal identification number) to use the funding on the balance, or in the account, unless the user is trying to withdraw money from an ATM. Another very good reason people like debit cards or prepaid debit cards is that they don’t require or run a credit check on the applicant – so even those with destroyed credit can normally get one. This way, they have a way to easily access their money without extremely high interest rates.

Debit cards and prepaid debit cards have the “Visa” or “Mastercard” logos on them to ensure they can work in almost every way a normal credit card can be used. Visa and Mastercard began placing their logos on these types of cards in the late 1980s.

Perhaps the greatest thing about these cards is that they help you control your spending. You absolutely cannot overspend; therefore you can’t go into debt, and you can’t bring fees and charges down on you to cost an arm and a leg. How’s that for smart?

MIT Museum and
MIT’s Center for Advanced Visual Studies
Presents the Exhibition
Red Lines, Death Vows, Foreclosures, Risk Structures:
Architectures of Finance from the Great Depression to the Sub-Prime Meltdown

Compton Gallery
Room 10 – 150
77 Massachusetts Ave.
Cambridge, MA
Opening Reception
September 9, 5:30 p.m.
Exhibition September 10 – December 21, 2008

CAMBRIDGE, MA — The Center for Advanced Visual Studies and the MIT Museum are pleased to announce Red Lines, Death Vows, Foreclosures, Risk Structures: Architectures of Finance from the Great Depression to the Sub-Prime Meltdown, an exhibition by designer Damon Rich and the Center for Urban Pedagogy (CUP). The exhibition explores possible relationships between finance and buildings through an installation of models, videos, photographs, and drawings.

Red Lines immerses visitors in a landscape of pulsating capital and city buildings. The immense head of a pioneering real-estate appraiser gazes over a field of floor-mounted house portraits. A jagged free-standing graph of the 20th century’s prime rate reflects a flickering neon sign advertising the process of block busting. A paired set of projected videos features interviews with mortgage stakeholders including financiers, anti-foreclosure counselors, and government regulators – and their voices haunt the gallery.

Red Lines aims to support a broader, richer conversation about how society finances its living environments and how the financial decisions of individuals has impacted families, communities and businesses. Through public programs, contributions to the curriculum at MIT, and off-site works like the educational video Predatory Tales produced with Lawrence Community Works of Lawrence, Massachusetts, Red Lines provides multiple sites where new dialogues about these crucial topics can begin.

During his year-long residence at MIT’s Center for Advanced Visual Studies (CAVS), guest curator Damon Rich, designer and founder of CUP, studied the fundamentals of real estate markets: property law, pro-formas, appraisal, mortgages, and more. Working with MIT students and volunteers, he traveled to Washington, DC to visit and interview representatives of the Mortgage Bankers Association and the Comptroller of the Currency. In Chicago, Rich and Meg Rotzel of CAVS created a video with the National Training and Information Center about the anti-redlining movement of the 1970s, and the democratic reforms it brought to banking. In Boston, Rich spent time with mortgage brokers as they relaxed after work in bars and restaurants. These interviews, photographs, napkin sketches, and yellowed clippings provide the material for the work in the exhibition.

This exhibition is supported by the National Endowment for the Arts, the Graham Foundation, the LEF Foundation, and the New York State Council for the Arts. Special thanks to the Loeb Fellowship of the Harvard Graduate School of Design.

Additional images from the exhibition can be found on CAv’s website.

Congratulations to Refinance.net’s Aaron Gross on having his work chosen.

The number of newly scheduled auctions on foreclosed properties in Los Angeles county fell 51 percent, the greatest monthly decline in two years.

The law, passed on July 8, requires lenders to contact homeowners and explore options to avoid foreclosure before initiating the process. Some sections of the law became effective on Sept 8.

Its implementation accounted for most of the decline, to 2,389, in the number of newly scheduled auctions foreclosures in Los Angeles County, said PropertyShark.com Chief Executive Bill Staniford.

By comparison, such auctions fell only about 1 percent to 4,863 between August and September.

However, the law requires only a 30-day waiting period before the lender files the foreclosure notice, which means the closure of that period might result in a reversal of this month’s dip, Staniford said.

“We could see this snap right back,” he said.

Foreclosures are at the heart of the slump afflicting the U.S. housing sector, its worst since the Great Depression. The boom that peaked in 2006, fueled by a wave of lending to risky subprime borrowers, was followed by a bust as those borrowers began to default on their mortgages.

Foreclosures force supply up and prices down, setting off a vicious cycle in which a growing number of otherwise creditworthy homeowners default as well because they are “underwater” on their mortgages, or owe more than their homes are worth.

Metropolitan areas such as Los Angeles and Miami, where subprime lending and the accompanying overbuilding was most common, saw the highest price spikes, the steepest declines and the sharpest surges in foreclosures.

But in localities where prices have dropped more precipitously, as in Los Angeles, the rate of increase in foreclosures is slowing.

“Buyers will be there at the right price,” Staniford said.

October’s foreclosures in Los Angeles are still up year over year, but only 10.9 percent versus an increase of 338 percent to 2,155 between October 2007 and October 2006.

In Miami, however, foreclosures increased 34.9 percent to 861 from October of 2007. Between September and October, foreclosures in the city rose 93.5 percent.

Home Sales, Factory Orders Up in July
Friday August 24, 4:40 pm ET
By Jeannine Aversa, AP Economics Writer
Positive Commerce Department Reports Suggest Economy Was Stable Before Credit Crunch Worsened

WASHINGTON (AP) — New-home sales turned up and factory orders soared in July, suggesting the economy was on stable footing before a credit crunch took a turn for the worse.

The Commerce Department reported Friday that sales of new homes rose 2.8 percent to a seasonally adjusted annual rate of 870,000 units. The increase came after a 4 percent drop in June.

Another report from the department showed that orders placed with factories for big-ticket goods jumped 5.9 percent in July, the most in 10 months.

The latest batch of economic news was better than analysts had expected. They were forecasting home sales to fall and calling for a much smaller, 1 percent gain in factory orders.

On Wall Street, the reports cheered investors who have been consumed by worry in recent weeks about the country’s financial health amid spreading credit troubles. The Dow Jones industrials vaulted 142.99 points to close at 13,378.87.

The housing report showing the July sales boost comes as credit standards have been tightening on home mortgages. Credit problems took a turn for the worse in August, making it even harder for some buyers to get financing. That means home sales in the coming months will likely show renewed weakness, economists said.

“Sales in August will face significant headwinds from further tightening in credit conditions, reduced availability of mortgage credit as many lenders shuttered their doors and upward pressure on mortgage rates, especially for non-conforming jumbo loans” of more than $417,000, predicted Brian Bethune, economist at Global Insight.

By region, sales in the West shot up 22.4 percent in July and increased 0.6 percent in the South. Sales, however, tumbled 24.3 percent in the Northeast and were down 0.9 percent in the Midwest.

The improvement in overall sales didn’t change the big picture of the housing market, which has been suffering through a deep slump for more than a year. Sales are down 10.2 percent from last year, and the weakness is expected drag on into next year.

To lure buyers, some builders are offering incentives including help with closing costs or lining up financing, and working with lenders to lower interest rates on loans, said Bernard Markstein, senior economist at the National Association of Home Builders. Some builders also are throwing in free upgrades to sweeten deals for buyers.

Home prices were mixed. The median price of a new home was $239,500 in July, up 0.6 percent from last year. The median price is the point where half sold for more and half sold for less. The average home price, however, dropped to $300,800 in July, down 3.4 percent from same month last year.

…

Fears that the painful housing slump and credit crunch could hurt the economy have gripped Wall Street investors in recent weeks, causing stocks to swing wildly.

Credit is the economy’s life blood. If it becomes too hard to get, spending and investment by people and businesses can stall, short-circuiting the economic growth.

“The downside risks to growth have increased appreciably,” Fed Chairman Ben Bernanke and his colleagues concluded on Aug. 17. It was a much more sober assessment than they had offered just 10 days earlier when they met to examine economic conditions and interest rates. Against this backdrop, the central bank sliced the rate it charges banks for loans, a narrowly tailored move aimed at propping up sagging financial markets.

If problems persist, the Fed could opt for more aggressive action: reducing an important interest rate, called the federal funds rate, on or before Sept. 18, the Fed’s next regularly scheduled meeting. The Fed hasn’t cut this rate in four years. It is the Fed’s main tool for influencing overall economic activity.

The funds rate, the interest banks charge each other on overnight loans, has stayed at 5.25 percent for more than a year. A rate cut would bring lower interest rates for millions of people and businesses.

New-home sales and durable goods reports: https://www.esa.doc.gov/ei.cfm

Here Are Five Things You Should NOT Do to Obtain Your Free Credit Report:

1. Never follow an email link offering a free credit report.
2. Never utilize a search engine to find a free credit reporting company. (Imposters utilize website names that are extremely similar to the real companies.)
3. Never give a credit card number for a ‘free’ credit report.
4. Never purchase anything so that you can receive your free credit report.
5. Never click on a pop-up ad for a free credit report.

The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies – Equifax, Experian, and TransUnion – to provide you with a free copy of your credit report, at your request, once every 12 months.

A credit report includes information on where you live, how you pay your bills, and whether you’ve been sued, arrested, or filed for bankruptcy. Nationwide consumer reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home.

Q: How do I order my free report?

Visit annualcreditreport.com, call 877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. Do not contact the three nationwide consumer reporting companies individually. They are providing free annual credit reports only through annualcreditreport.com, 1-877-322-8228, and Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

You may order your reports from each of the three nationwide consumer reporting companies at the same time, or you can order your report from each of the companies one at a time. The law allows you to order one free copy of your report from each of the nationwide consumer reporting companies every 12 months.

A Warning About “Imposter” Websites

• Only one website is authorized to fill orders for the free annual credit report you are entitled to under law – annualcreditreport.com.
• Other websites that claim to offer “free credit reports,” “free credit scores,” or “free credit monitoring” are not part of the legally mandated free annual credit report program.
• In some cases, the “free” product comes with strings attached. For example, some sites sign you up for a supposedly “free” service that converts to one you have to pay for after a trial period. If you don’t cancel during the trial period, you may be unwittingly agreeing to let the company start charging fees to your credit card.
• Some “imposter” sites use terms like “free report” in their names
• Others have URLs that purposely misspell annualcreditreport.com in the hope that you will mistype the name of the official site. Some of these “imposter” sites direct you to other sites that try to sell you something or collect your personal information.
• annualcreditreport.com and the nationwide consumer reporting companies will not send you an email asking for your personal information. If you get an email, see a pop-up ad, or get a phone call from someone claiming to be from annualcreditreport.com or any of the three nationwide consumer reporting companies, do not reply or click on any link in the message. It’s probably a scam. Forward any such email to the FTC at spam@uce.gov.

Q: What information do I need to provide to get my free report?

A: You need to provide your name, address, Social Security number, and date of birth. If you have moved in the last two years, you may have to provide your previous address. To maintain the security of your file, each nationwide consumer reporting company may ask you for some information that only you would know, like the amount of your monthly mortgage payment. Each company may ask you for different information because the information each has in your file may come from different sources.

Q: Why do I want a copy of my credit report?

A: Your credit report has information that affects whether you can get a loan, such as when you complete requests for mortgages online – and how much you will have to pay to borrow money. You want a copy of your credit report to:

• make sure the information is accurate, complete, and up-to-date before you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job.
• help guard against identity theft. That’s when someone uses your personal information – like your name, your Social Security number, or your credit card number – to commit fraud. Identity thieves may use your information to open a new credit card account in your name. Then, when they don’t pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job.

Q: How long does it take to get my report after I order it?

A: If you request your report online at annualcreditreport.com, you should be able to access it immediately. If you order your report by calling toll-free 1-877-322-8228, your report will be processed and mailed to you within 15 days. If you order your report by mail using the Annual Credit Report Request Form, your request will be processed and mailed to you within 15 days of receipt.

Whether you order your report online, by phone, or by mail, it may take longer to receive your report if the nationwide consumer reporting company needs more information to verify your identity.

There also may be times when the nationwide consumer reporting companies receive a high volume of requests for credit reports. If that happens, you may be asked to re-submit your request. Or, you may be told that your report will be mailed to you sometime after 15 days from your request. If either of these events occurs, the nationwide consumer reporting companies will let you know.

Q: Are there any other situations where I might be eligible for a free report?

A: Under federal law, you’re entitled to a free report if a company takes adverse action against you such as denying your application for credit, insurance, or employment and you ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft. Otherwise, a consumer reporting company may charge you up to $9.50 for another copy of your report within a 12-month period.

To buy a copy of your report, contact:

• Equifax: 800-685-1111; www.equifax.com
• Experian: 888-EXPERIAN (888-397-3742); www.experian.com
• Trans Union: 800-916-8800; www.transunion.com

Under state law, consumers in Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey, and Vermont already have free access to their credit reports.

Q: Should I order a report from each of the three nationwide consumer reporting companies?

A: It’s up to you. Because nationwide consumer reporting companies get their information from different sources, the information in your report from one company may not reflect all, or the same, information in your reports from the other two companies. That’s not to say that the information in any of your reports is necessarily inaccurate; it just may be different.

Q: Should I order my reports from all three of the nationwide consumer reporting companies at the same time?

A: You may order one, two, or all three reports at the same time, or you may stagger your requests. It’s your choice. Some financial advisors say staggering your requests during a 12-month period may be a good way to keep an eye on the accuracy and completeness of the information in your reports.

Q: What if I find errors – either inaccuracies or incomplete information – in my credit report?

A: Under the FCRA, both the consumer reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take full advantage of your rights under this law, contact the consumer reporting company and the information provider.

1. Tell the consumer reporting company, in writing, what information you think is inaccurate.
   Consumer reporting companies must investigate the items in question – usually within 30 days – unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it must investigate, review the relevant information, and report the results back to the consumer reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide consumer reporting companies so they can correct the information in your file.

   When the investigation is complete, the consumer reporting company must give you the written results and a free copy of your report if the dispute results in a change. (This free report does not count as your annual free report under the FACT Act.) If an item is changed or deleted the consumer reporting company cannot put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider.

2. Tell the creditor or other information provider in writing that you dispute an item. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct – that is, if the information is found to be inaccurate – the information provider may not report it again.

Q: What can I do if the consumer reporting company or information provider won’t correct the information I dispute?

A: If an investigation doesn’t resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay a fee for this service.
If you tell the information provider that you dispute an item, a notice of your dispute must be included any time the information provider reports the item to a consumer reporting company.

Q: How long can a consumer reporting company report negative information?

A: A consumer reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. There is no time limit on reporting information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you’ve applied for more than $150,000 worth of credit or life insurance. Information about a lawsuit or an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer.

Q: Can anyone else can get a copy of my credit report?

A: The FCRA specifies who can access your credit report. Creditors, insurers, employers, and other businesses that use the information in your report to evaluate your applications for credit, insurance, employment, or renting a home are among those that have a legal right to access your report.

Q: Can my employer get my credit report?

A: Your employer can get a copy of your credit report only if you agree. A consumer reporting company may not provide information about you to your employer, or to a prospective employer, without your written consent.

Additional resources:

About.com: Free Credit Report Scam

Before you commit to a lender, ask these top 10 questions. If you don’t like the answers you receive, continue shopping for a loan until you find a mortgage broker / lender with whom you feel comfortable.

1. Which Type of Loan is Best?

Reputable lenders will find out more about you before throwing out loan options. You wouldn’t expect a doctor to suggest surgery before she assessed your medical situation, would you? Choose a lender who gathers enough information from you before she suggests a certain type of loan. Don’t be afraid to ask a lender to explain the pros and cons about:

* Fixed-rate loans.
* Adjustable-rate loans.
* Interest-only loans.
* Negative-amortization loans.

2. What is the Interest Rate & Annual Percentage Rate

The annual percentage rate (APR) is derived by a complex calculation that includes the interest rate and all the other related lender fees divided by the loan’s term. However, bear in mind that:

* Many lenders do not compute APR correctly.
* There is no way to accurately compute an APR rate for an adjustable loan.
* It does not account for early payoffs.

If your interest rate is adjustable, ask about its:

* Adjustment frequency
* Maximum annual adjustment
* Highest rate (Cap)
* Index
* Margin

3. What are the Discount Points and Origination Fees?

Each “point” is equal to 1 percent of the loan amount. Therefore, 2 points on a $100,000 loan cost $2,000.

* Sometimes lenders charge origination fees in addition to points.
* Points “buy down” the interest rate, meaning the more points you pay, the lower the interest rate.
* Points are also tax deductible, even if the seller pays some or all of the points.

4. What Are All the Costs?

All the costs of a loan include not only fees that go into the lender’s pocket but also related third-party vendor fees such as:

* Appraisal
* Credit report
* Lender’s title policy
* Pest inspection reports
* Escrow (where applicable)
* Recording fees
* Taxes

An estimate of these fees constitutes the Good Faith Estimate or GFE, which the lender is required by federal law to give to you.

5. Will the Lender Guarantee the GFE?

According to the Real Estate Settlement and Procedures Act (RESPA), lenders have three days after you’ve applied for a loan to give you the Good Faith Estimate, containing all the costs of your loan. Points to consider:

* Since lenders are not required to guarantee GFEs, this document is worth about the cost of the paper on which it is printed.
* However, there is a lot of pressure on lenders by consumers to guarantee their GFEs.
* If your lender refuses to stand behind its estimate, go elsewhere.

6. Do You Offer Loan Rate Locks?

Interest rates fluctuate and change daily. If you have reason to believe that interest rates are moving up, you might want to lock your loan. Lenders typically charge zero to one point to lock a loan rate and points. Ask your lender:

* Do you charge a fee to lock my interest rate?
* Does the lock-in protect all the loan costs?
* For how long will you lock this rate?
* Will you give me the loan lock in writing?

The alternative is to pay the prevailing rate and points on the day your loan funds.

7. Is There a Prepayment Penalty?

In some states, prepayment penalties are no longer allowed, so ask. Typically, prepayment penalties let the lender collect an additional six months of “unearned interest” if you pay the loan off early through a refinance of sale of the property. Be sure to ask:

* How much is the prepayment penalty?
* What are the terms of the prepay? Some are in effect only during the first 2 to 5 years of the loan.
* Would the prepayment penalty apply if I refinanced through you at a later date?

8. Are You Equipped to Approve Loans In-House?

Underwriters review loans and issue conditions before approving or rejecting a loan.

* Ask if a lender can handle its own underwriting.
* VA and FHA loans typically take longer to process, but some lenders meet government requirements to automatically approve or disapprove a loan without sending it to the VA or FHA.

9. How Much Time Do You Need to Fund?

Average loan processing time periods fall between 21 and 45 days. To properly write a purchase contract, you will need to include a closing date, and that date should be coordinated with your lender. Find out:

* What is your anticipated turnaround time?
* What obstacles could possibly hold up closing?
* How long after final application approval will the loan fund?

10. What is the Yield Spread Premium?

If your loan officer is receiving a yield spread premium (YSP), a commission paid directly by the lender to your representative, this fee will be disclosed on your settlement statement at closing. YSPs are a controversial matter because:

* Lenders say if borrowers are happy with the terms, the fact the loan officer receives a bonus is not relevant.
* Borrowers say if the loan officer did not receive a YSP bonus, the loan would have cost less.
* You should negotiate upfront; at closing is too late.

More recently, the loan’s appeal has dimmed amid higher short-term interest rates, as well as horror stories. But the mortgage is still being marketed aggressively.

If you are thinking about taking out an option ARM, here are some important tips:

Know your options. Each month, an option ARM gives you a choice of four payment amounts:

1. The highest amount, if paid every month, would be enough to pay your loan off in 15 years.
2. The next-highest amount is calculated to pay off the loan in 30 years.
3. Pay only the interest accruing that month – and none of the principal.
4. The minimum payment / teaser – is the most tempting, and usually the one that’s advertised. It is calculated based on a “teaser” interest rate that can be as low as 1 percent or 2 percent a year. But after the first month, if you make the minimum payment, not only are you not paying down the loan, you’re not even paying all of the interest that’s accruing. As a result, your total debt is actually increasing.

Understand the teaser. The artificially low initial interest rate on an option ARM is known as the teaser rate because it’s the number that lures you into taking the loan. But although the payment may be fixed for several years, the teaser rate expires after the first month. The additional interest is added to the mortgage balance.

Borrowers are often tricked into believing that the teaser rate will last for as long as the fixed minimum payment does.

Examine your income. Option ARMs can be good for borrowers whose take-home pay varies widely. For instance, a good candidate might be a salesperson who earns huge commissions in some months and not much in other months or a person who reliably gets a large year-end bonus. But if you have a fairly stable income, an option ARM is probably not for you.

Don’t plan to refinance. If you’re thinking about getting an option ARM and refinancing if the payments get too high, don’t count on it. Three things could keep you from refinancing, particularly in today’s market:

• You may no longer have sufficient equity. If you borrowed $100,000 on a $120,000 property, for example, making only minimum payments could put your loan balance above the value of your home, especially if it has not appreciated in the meantime.
• If you struggle to make payments before trying to refinance, that could lower your credit score, making it more difficult – and costly – to refinance.
• Your option ARM will probably have a prepayment penalty, which would boost the cost of refinancing the loan.

Read the documents. The only way to really know how your mortgage works is to read the loan papers. That can mean making your way through a 2-inch stack of documents. Even then, you may run into trouble.

Consumers can go to a loan broker to help them find the best deal among competing mortgage lenders.

There are several ways to lower your monthly payment and put cash in your pocket even if you cannot qualify for a lower interest rate:

• Cash back refinancing allows you to take advantage of the equity you have built in your home. For many homeowners refinancing with cash back is a more affordable option than a second mortgage or home equity line of credit. Refinancing with cash back allows you to qualify for a lower mortgage rate because your home is secured by only one loan.
• If your financial situation has changed since purchasing your home you may qualify for a better mortgage rate. Many homeowners find being promoted, taking a new job, getting married or divorced changes their qualifying ratios and improves the mortgage rate they receive.
• Even if your credit prevents you from qualifying for a lower mortgage rate you can still lower your payment amount by extending the term length of your loan. Term length is the amount of time you have to repay the mortgage; the most common term lengths are 15 or 30 years. There are now 40 and 50 year terms to allow the greatest amount of flexibility when refinancing with cash back.

The cash you receive from refinancing can be used for any reason; many homeowners use this money to consolidate higher interest debt. The advantage of using the money for this reason is that you gain a tax deduction for consolidating your bills. Other common uses include home repairs and renovations, wedding and education expenses.

See the Internet’s easiest 3-question home mortgage refinancing application at refinance.net.