You’ve lived in your home for some time and circumstances such as an expanding family mean you need a new one. This brings up the subject of bridge loans.
From Here to There
You have two basic options when you are considering selling one home to move to another. The first option is to sell your home, make sure it closes and then find a new one. This is by far the safest option.
The second option is to buy and sell at the same time. Typically, you try to close on your sale around the time you close on the purchase. Theoretically, this allows you to move seamlessly from one home to the next. This is an option rife with potential problems. What happens if there are problems with the sale of your home such as escrow issues or the buyer failing to get a loan? Suddenly, you are looking at being the owner of two homes. Disaster has struck since you’re undoubtedly using proceeds from the sale of your old home to fund the new purchase. With no sale, you have no funds and sleepless nights follow.
Bridge loans are often touted as a solution for this problem. In theory, a lender will provide you with a loan to cover the gap in time between the sale and purchase of the two homes. While bridge loans do accomplish this, they should be considered a last resort for a few reasons.
First, bridge loans are obscenely expensive. You’re in a tight spot and the lender knows it. Points and interest rates are going to be shocking. The lender knows there is a higher chance you will default on the loan, so you can expect to pay for the risk up front.
The second problem with bridge loans concerns your old home. Inevitably, you will anticipate a fairly quick sale of your home, but what if it doesn’t happen? Suddenly, you are making payments on two homes. Few people can afford to make such payments and you can quickly run out of cash.
Financing a move from one home to a new one can be a tricky process. Make sure you put a lot of thought into it or you could be in for a very bad surprise.
Showing posts with label Home Loans. Show all posts
Showing posts with label Home Loans. Show all posts
Wednesday, December 16, 2015
Benefits to Homeownership Outweigh Mortgage Risks
For people considering buying a home for the first time, things can be a bit intimidating. You just have to keep in mind the benefits far outweigh the risks.
Benefits to Homeownership Outweigh Risks
There are many benefits to owning a home. Sure, there are the usual obstacles to get over. First, people don’t want to put that much money into it, they’d rather just rent.
Also, they don’t want to have to go through the lengthy process of buying the home and even searching for the right home in the first place. Then they don’t want to have to go through the mortgage process and go into debt to get the home. While these are definitely disadvantages, the simple fact is that there are so many major advantages to owning a home that going through these steps ends up being well worth it.
The most notable benefit to owning a home is equity. Equity is the value of the home. When mortgaging a home, your initial equity is the down payment you made on the home. As you make additional payments, your stake in the equity of the home rises (since the lender owns the rest of the equity). However, it is also important to note that equity also rises when the value of the home rises. This equity is solely yours, the equity of the lender does not increase. That is why many California homeowners are sitting on gold mines.
This equity can be used for valuable things such as home equity loans and home equity lines of credit. These are low interest loans with the home used as collateral. Equity opens up many valuable new doors and is just one reason why owning a home is one of the best things you can ever do.
Another advantage is the tax savings. Every dollar of interest paid in the mortgage payments can be used as a tax write-off. This can be a very considerable amount, especially early on in the loan when the interest is front-loaded, and it can save you a lot of money in taxes.
Of course, it really comes down to the simple fact that you own a home. That home is yours and that with that comes a certain pride. Owning a home is one of the most important things you will ever do. Don’t pass it up, don’t choose to rent if you don’t have to. There are just too many advantages of owning a home to pass up.
Benefits to Homeownership Outweigh Risks
There are many benefits to owning a home. Sure, there are the usual obstacles to get over. First, people don’t want to put that much money into it, they’d rather just rent.
Also, they don’t want to have to go through the lengthy process of buying the home and even searching for the right home in the first place. Then they don’t want to have to go through the mortgage process and go into debt to get the home. While these are definitely disadvantages, the simple fact is that there are so many major advantages to owning a home that going through these steps ends up being well worth it.
The most notable benefit to owning a home is equity. Equity is the value of the home. When mortgaging a home, your initial equity is the down payment you made on the home. As you make additional payments, your stake in the equity of the home rises (since the lender owns the rest of the equity). However, it is also important to note that equity also rises when the value of the home rises. This equity is solely yours, the equity of the lender does not increase. That is why many California homeowners are sitting on gold mines.
This equity can be used for valuable things such as home equity loans and home equity lines of credit. These are low interest loans with the home used as collateral. Equity opens up many valuable new doors and is just one reason why owning a home is one of the best things you can ever do.
Another advantage is the tax savings. Every dollar of interest paid in the mortgage payments can be used as a tax write-off. This can be a very considerable amount, especially early on in the loan when the interest is front-loaded, and it can save you a lot of money in taxes.
Of course, it really comes down to the simple fact that you own a home. That home is yours and that with that comes a certain pride. Owning a home is one of the most important things you will ever do. Don’t pass it up, don’t choose to rent if you don’t have to. There are just too many advantages of owning a home to pass up.
Advantages of a Fixed Rate Mortgage
This is the most popular type of mortgage as the monthly payment for interest and principal remains fixed through out the mortgage term, Property Insurance and taxes may increase but the monthly repayment of the amount will be stable.
Fixed rate mortgages are available for 10 years, 15 years, 20 years and 30 years period of time, there are also fixed rate mortgages available “Biweekly” this helps to shorten up the loan by making the payment every two weeks.
Fixed rate mortgages have 2 distinct features, first one is that the interest rate would remain the same through out the term of your mortgage, second feature is that payment of the loan remains level for the life and are structured for the repayment of the loan at the end of the mortgage term.
The most popular fixed rate loans are 30 years mortgage and 15 years mortgage. During early payment period, a large amount is being taken for the interest and the rest goes off to the balance principal amount, for instance a 30 years of fixed rate mortgage will take 22.5 yrs of the level payment of the loan for the payment of the half of the mortgage amount. Under 30 years of mortgage, month after the month you can choose to pay only interest or you can pay off principal with interest as it is a great option available for those who have tough time for money at times, with this option of lowering the payment you can increase the cash flow for paying off interest bills, remodeling your house, financing schools or college needs or increase your retirement savings.
With Fixed rate mortgage your loan rate is fixed for the mortgage term, you can pay interest only for 10 years and pay the balance interest plus principal for the next 20 years, this helps you to refinance the loan with out any pre payment penalty.
The advantages of 30 years mortgage is, when it is compared with 15 years mortgage the monthly payments are lesser, interest rate remains the same even if the interest rate goes up, monthly payment does not increases as it remains the same for the entire 30 years, compared to 15 years mortgage you would be paying higher rate of interest and the interest rate remains the same even if the interest rate gets decreased.
If you have planned for a long-term loan and does not like to take up the risk you may opt for fixed rate mortgage.
Fixed rate mortgages are available for 10 years, 15 years, 20 years and 30 years period of time, there are also fixed rate mortgages available “Biweekly” this helps to shorten up the loan by making the payment every two weeks.
Fixed rate mortgages have 2 distinct features, first one is that the interest rate would remain the same through out the term of your mortgage, second feature is that payment of the loan remains level for the life and are structured for the repayment of the loan at the end of the mortgage term.
The most popular fixed rate loans are 30 years mortgage and 15 years mortgage. During early payment period, a large amount is being taken for the interest and the rest goes off to the balance principal amount, for instance a 30 years of fixed rate mortgage will take 22.5 yrs of the level payment of the loan for the payment of the half of the mortgage amount. Under 30 years of mortgage, month after the month you can choose to pay only interest or you can pay off principal with interest as it is a great option available for those who have tough time for money at times, with this option of lowering the payment you can increase the cash flow for paying off interest bills, remodeling your house, financing schools or college needs or increase your retirement savings.
With Fixed rate mortgage your loan rate is fixed for the mortgage term, you can pay interest only for 10 years and pay the balance interest plus principal for the next 20 years, this helps you to refinance the loan with out any pre payment penalty.
The advantages of 30 years mortgage is, when it is compared with 15 years mortgage the monthly payments are lesser, interest rate remains the same even if the interest rate goes up, monthly payment does not increases as it remains the same for the entire 30 years, compared to 15 years mortgage you would be paying higher rate of interest and the interest rate remains the same even if the interest rate gets decreased.
If you have planned for a long-term loan and does not like to take up the risk you may opt for fixed rate mortgage.
Tuesday, December 15, 2015
Adjustable Rate Mortgages – Interest Rate Strategy
Over the last few years, many people squeezed into new homes using adjustable rate mortgages. With interest rates going up, you now need a new interest rate strategy
Adjustable Rate Mortgages – ARMs
Adjustable rate mortgages carry a bit of a gamble for home owners. Essentially, you trade smaller interest rates and lower initial payments on the gamble rates will not increase over time. If rates stay low, you make out like a bandit. If rates increase, you need to consider your options to avoid getting stuck with a high interest rate loan and resulting cash flow problems from increased monthly mortgage payments.
For the last three or four years, adjustable rate mortgages have been offered with incredibly low interest rates. Many people used these low, low, low rates to buy homes that would otherwise be beyond their means. Starting in 2004, Federal Reserve Chairman Alan Greenspan started making noises about increasing money borrowing rates. He has followed through on these hints. Although mortgage rates aren’t tied directly to the Federal Reserve Bank, they are heavily influenced by it. As a result, many people are now facing tight finances.
Avoid Rising Rates
There are really only two solutions for avoiding the increase in interest rates on adjustable rate mortgages. The first strategy is to immediately convert to a fixed rate mortgage product. Fixed rates are still at historic lows when compared to rates offered over the last 50 years. By flipping to a fixed rate, you will be able to solidify your budget and finances since you will know exactly what you have to pay each month. If rates decrease in the future, you can always try to flip back to an adjustable mortgage loan.
Unfortunately, some home owners are simply going to have to face the fact they lost one the interest rate gamble. Typically, this will occur when you realize you simply can’t afford to make the monthly payments required by getting a fixed rate loan. In such a situation, you are going to have to sell your home and downsize. In most situations, it is better to do this now since you’ve probably built up a sizeable chunk of equity over the last few years and want to avoid a loss of that equity as the market cools down. While this may sound like a disaster, it really isn’t. Yes, you have to downsize, but you should still have built up a chunk of equity.
Interest rates are going up whether you want to acknowledge it or not. The time to deal with your adjustable rate mortgage is now, not when you straining to make payments.
Adjustable Rate Mortgages – ARMs
Adjustable rate mortgages carry a bit of a gamble for home owners. Essentially, you trade smaller interest rates and lower initial payments on the gamble rates will not increase over time. If rates stay low, you make out like a bandit. If rates increase, you need to consider your options to avoid getting stuck with a high interest rate loan and resulting cash flow problems from increased monthly mortgage payments.
For the last three or four years, adjustable rate mortgages have been offered with incredibly low interest rates. Many people used these low, low, low rates to buy homes that would otherwise be beyond their means. Starting in 2004, Federal Reserve Chairman Alan Greenspan started making noises about increasing money borrowing rates. He has followed through on these hints. Although mortgage rates aren’t tied directly to the Federal Reserve Bank, they are heavily influenced by it. As a result, many people are now facing tight finances.
Avoid Rising Rates
There are really only two solutions for avoiding the increase in interest rates on adjustable rate mortgages. The first strategy is to immediately convert to a fixed rate mortgage product. Fixed rates are still at historic lows when compared to rates offered over the last 50 years. By flipping to a fixed rate, you will be able to solidify your budget and finances since you will know exactly what you have to pay each month. If rates decrease in the future, you can always try to flip back to an adjustable mortgage loan.
Unfortunately, some home owners are simply going to have to face the fact they lost one the interest rate gamble. Typically, this will occur when you realize you simply can’t afford to make the monthly payments required by getting a fixed rate loan. In such a situation, you are going to have to sell your home and downsize. In most situations, it is better to do this now since you’ve probably built up a sizeable chunk of equity over the last few years and want to avoid a loss of that equity as the market cools down. While this may sound like a disaster, it really isn’t. Yes, you have to downsize, but you should still have built up a chunk of equity.
Interest rates are going up whether you want to acknowledge it or not. The time to deal with your adjustable rate mortgage is now, not when you straining to make payments.
A Summary of Mortgage Fees
Most people focus on the current mortgage interest rates when shopping for a home loan. Interest rates are certainly important, but they do not represent the only significant expense associated with financing a home. When you are making plans to purchase a new home, it is important to consider the big picture of all the fees associated with getting a mortgage, rather than focusing solely on interest rates.
Before you can decide just how much house you can afford to purchase, you need to look at an overall summary of mortgage fees so that you will have a clear understanding of all the expenses involved. Many factors can impact the total amount of money you need to borrow, as well as the final out-of-pocket requirement for your monthly payment.
Down Payment
Most home buyers will be required to make a down payment in order to be considered for mortgage loan approval. The amount of money an individual is required to put down may vary significantly based on a variety of factors, including: the cost of the home, the applicant's credit history, the borrower's qualification for down payment assistance programs, and many other variables. Typically, home buyers are required to make down payments ranging from five to 20 percent of the home's purchase price.
Prepaid Interest
The day you close on your home loan, you will be required to pay the interest that will accrue on the loan between the current time and the day the first monthly payment is due. Prepaying interest allows you to exert some degree of control over the due date for your monthly payments. Many people are able to include the initial prepaid interest in the total amount financed, which keeps them from having to pay this amount out of pocket at the closing table.
Keep in mind that the longer you put off your first payment, the more prepaid interest you will have to pay at the time of closing. It makes sense to utilize prepaid interest to make sure that your payment due date is convenient to your income schedule, but there is no benefit to postponing the first payment simply because you are allowed to do so.
Homeowners Insurance
When you finance a home, the premium for your first year of homeowners’ insurance coverage is due at the closing table. No mortgage company will allow a sales transaction to take place without being certain that insurance coverage is in effect the moment the title transfers into the mortgagee's name. As with prepaid interest, many home buyers who are able to do so elect to include their initial homeowners insurance premiums in the total amount financed.
Escrow Account
As long as you have a mortgage on your home, your lender is likely to require you to make escrow payments toward your property taxes and homeowners insurance premiums. This money goes into an escrow account, which the lender uses to make sure these important expenses are paid when they are due. Requiring escrow accounts protects the lender, who has a vested interest in making sure the property is sufficiently insured and remains free of tax liens.
Title Insurance
One of the most important components of a home loan transaction is the process of verifying that the seller has the legal right to transfer title of the home to the buyer. In addition to verifying that the title of the home is clear prior to closing, it is advisable to protect the home from future title problems tied the actions of past owners with a title insurance policy.
Sellers are typically responsible for paying for title research, since this work is required to verify that they do in fact own the property and have a legal right to transfer it to the buyer. Homebuyers, however, usually pay for the accompanying title insurance policies, which protect them against potential prior claims to the home's title that might surface once the transaction has been completed. Mortgage lenders typically require title insurance policies as a condition of closing.
Other Closing Costs
A number of additional expenses must be considered in any comprehensive summary of mortgage fees. For example, when title to a property is transferred, a warranty deed must be created, and the changes to the title of the property must be recorded. Additionally, most lenders require property appraisals, surveys, and termite inspections prior to approving a loan. The fees associated with these legal and real estate services are part of the closing costs for a home loan. They can be paid for by the buyer or seller, based on the terms agreed upon in the purchase agreement.
Before you can decide just how much house you can afford to purchase, you need to look at an overall summary of mortgage fees so that you will have a clear understanding of all the expenses involved. Many factors can impact the total amount of money you need to borrow, as well as the final out-of-pocket requirement for your monthly payment.
Down Payment
Most home buyers will be required to make a down payment in order to be considered for mortgage loan approval. The amount of money an individual is required to put down may vary significantly based on a variety of factors, including: the cost of the home, the applicant's credit history, the borrower's qualification for down payment assistance programs, and many other variables. Typically, home buyers are required to make down payments ranging from five to 20 percent of the home's purchase price.
Prepaid Interest
The day you close on your home loan, you will be required to pay the interest that will accrue on the loan between the current time and the day the first monthly payment is due. Prepaying interest allows you to exert some degree of control over the due date for your monthly payments. Many people are able to include the initial prepaid interest in the total amount financed, which keeps them from having to pay this amount out of pocket at the closing table.
Keep in mind that the longer you put off your first payment, the more prepaid interest you will have to pay at the time of closing. It makes sense to utilize prepaid interest to make sure that your payment due date is convenient to your income schedule, but there is no benefit to postponing the first payment simply because you are allowed to do so.
Homeowners Insurance
When you finance a home, the premium for your first year of homeowners’ insurance coverage is due at the closing table. No mortgage company will allow a sales transaction to take place without being certain that insurance coverage is in effect the moment the title transfers into the mortgagee's name. As with prepaid interest, many home buyers who are able to do so elect to include their initial homeowners insurance premiums in the total amount financed.
Escrow Account
As long as you have a mortgage on your home, your lender is likely to require you to make escrow payments toward your property taxes and homeowners insurance premiums. This money goes into an escrow account, which the lender uses to make sure these important expenses are paid when they are due. Requiring escrow accounts protects the lender, who has a vested interest in making sure the property is sufficiently insured and remains free of tax liens.
Title Insurance
One of the most important components of a home loan transaction is the process of verifying that the seller has the legal right to transfer title of the home to the buyer. In addition to verifying that the title of the home is clear prior to closing, it is advisable to protect the home from future title problems tied the actions of past owners with a title insurance policy.
Sellers are typically responsible for paying for title research, since this work is required to verify that they do in fact own the property and have a legal right to transfer it to the buyer. Homebuyers, however, usually pay for the accompanying title insurance policies, which protect them against potential prior claims to the home's title that might surface once the transaction has been completed. Mortgage lenders typically require title insurance policies as a condition of closing.
Other Closing Costs
A number of additional expenses must be considered in any comprehensive summary of mortgage fees. For example, when title to a property is transferred, a warranty deed must be created, and the changes to the title of the property must be recorded. Additionally, most lenders require property appraisals, surveys, and termite inspections prior to approving a loan. The fees associated with these legal and real estate services are part of the closing costs for a home loan. They can be paid for by the buyer or seller, based on the terms agreed upon in the purchase agreement.
A Guide To Adjustable Rate Mortgage Loans
An effective tool used by home buyers, ARM or Adjustable Rate Mortgages, offers a lower interest rate at the beginning of the loan and the risk of a hike in rates is shared by the borrower and lender.
ARM, is ideal if you are certain about rising income expectations and short-term home ownership. There are four basic aspects. One is that the initial interest rate is fixed 1-3 percentage points lower than fixed rate mortgages. Second there is what is known as adjustment interval, when after the initial period has elapsed the rate is modified in keeping with prevalent rates. Third, an index against which lenders can measure the difference between the interest earned on the loan and what would be earned in actuality in other investments. And, fourth, the component added by the lender to the index, usually 1.5-2.5 percent.
An ARM has in addition, safeguards like interest rate caps. This limits the amount of interest rate that can be applied to the payment during adjustment. Normally this cap would be about 2% point cap over the life of the loan.
ARM is ideal when it lends you buying power. You can opt to buy a property with a higher value and still pay a lower initial monthly payment. If you know for certain that you will reside in the house you are buying for a maximum of 5-7 years then ARM is the mortgage that will save you money. If you are prepared to take risks then ARM offers the greatest possible savings especially if the rate stays steady or declines over the years.
ARM is a calculated risk as there are no certainties. However if at the end of five years your plans change and you are about to continue in the same home for another 10 years then it is prudent for you to switch from ARM to a fixed rate mortgage.
ARM, is ideal if you are certain about rising income expectations and short-term home ownership. There are four basic aspects. One is that the initial interest rate is fixed 1-3 percentage points lower than fixed rate mortgages. Second there is what is known as adjustment interval, when after the initial period has elapsed the rate is modified in keeping with prevalent rates. Third, an index against which lenders can measure the difference between the interest earned on the loan and what would be earned in actuality in other investments. And, fourth, the component added by the lender to the index, usually 1.5-2.5 percent.
An ARM has in addition, safeguards like interest rate caps. This limits the amount of interest rate that can be applied to the payment during adjustment. Normally this cap would be about 2% point cap over the life of the loan.
ARM is ideal when it lends you buying power. You can opt to buy a property with a higher value and still pay a lower initial monthly payment. If you know for certain that you will reside in the house you are buying for a maximum of 5-7 years then ARM is the mortgage that will save you money. If you are prepared to take risks then ARM offers the greatest possible savings especially if the rate stays steady or declines over the years.
ARM is a calculated risk as there are no certainties. However if at the end of five years your plans change and you are about to continue in the same home for another 10 years then it is prudent for you to switch from ARM to a fixed rate mortgage.
A Good Understanding of Mortgage Backed Securities
Mortgage backed securities are one of the important reasons for the fast pace growth of real estate industry. Hence it is very important to have a good understanding of mortgage-backed securities
Mortgage backed securities are very important bonds. Investors buy the interests of the mortgage security and the monthly payment of the mortgage acts as a revenue earned from it. The value of the mortgage varies due to the fact that it can be paid off before the term and hence it is not like a bond. The mortgage may be repaid any time through outright cash payment or with refinance. Actually, the mortgage-backed security is issued by a retail lender who extends the mortgage loan. The reasons for issuing mortgage-backed securities are many.
The main reason is for creating liquidity that can be used by them for many purposes. It is not possible for a lender to wait for thirty years to recover his money and make profit out of it. To solve this problem, the lender sells the securities in the secondary market by keeping the property of the borrower as collateral for security. The creditors also use these securities to clean their balance sheet. Although they might seem to be a little speculative and fishy, the fact is that they drive the market. Understanding mortgage backed securities helps to clear all kinds of doubts about it.
A good understanding of various mortgage points:
Mortgage points are those, which are asked by the mortgage broker to be paid by the borrower. It is actually a lending fee expressed in terms of percentage on the quantum of the loan amount. Sometimes a creditor may ask the borrower to pay origination points on the mortgage. This fee enables the lender to get many of their costs earlier in the deal instead of waiting to recover them as part of interest payments. Understanding origination points is very important as the margin of interest may be low but the lenders get their inflow of cash by making the borrower to pay front end fees of the loan. Discounts points too can be offered by the lender for making one or two points of payments when the borrower makes on the mortgage loan amount. The borrower enjoys a slashed down interest rate from the lenders for doing so.
People who are purchasing homes for the first time are shocked by jargons like PMI and piggy bank loans. Hence, a good understanding of mortgage is the best method to start with. When applying for mortgage loans, the lenders first look at the borrowers credit score to find out how the commitments can be met by him. They check for the amount of money the borrower posses, how prompt he had been in paying the dues, how often he had played the balance transfer game, etc. The credit score makes a great impact on the down payment made by the borrower in turn it affects the interest rates on the mortgage offered to him. Understanding various mortgage programs will help in the selection of the most suitable one for the borrower.
Mortgage backed securities are very important bonds. Investors buy the interests of the mortgage security and the monthly payment of the mortgage acts as a revenue earned from it. The value of the mortgage varies due to the fact that it can be paid off before the term and hence it is not like a bond. The mortgage may be repaid any time through outright cash payment or with refinance. Actually, the mortgage-backed security is issued by a retail lender who extends the mortgage loan. The reasons for issuing mortgage-backed securities are many.
The main reason is for creating liquidity that can be used by them for many purposes. It is not possible for a lender to wait for thirty years to recover his money and make profit out of it. To solve this problem, the lender sells the securities in the secondary market by keeping the property of the borrower as collateral for security. The creditors also use these securities to clean their balance sheet. Although they might seem to be a little speculative and fishy, the fact is that they drive the market. Understanding mortgage backed securities helps to clear all kinds of doubts about it.
A good understanding of various mortgage points:
Mortgage points are those, which are asked by the mortgage broker to be paid by the borrower. It is actually a lending fee expressed in terms of percentage on the quantum of the loan amount. Sometimes a creditor may ask the borrower to pay origination points on the mortgage. This fee enables the lender to get many of their costs earlier in the deal instead of waiting to recover them as part of interest payments. Understanding origination points is very important as the margin of interest may be low but the lenders get their inflow of cash by making the borrower to pay front end fees of the loan. Discounts points too can be offered by the lender for making one or two points of payments when the borrower makes on the mortgage loan amount. The borrower enjoys a slashed down interest rate from the lenders for doing so.
People who are purchasing homes for the first time are shocked by jargons like PMI and piggy bank loans. Hence, a good understanding of mortgage is the best method to start with. When applying for mortgage loans, the lenders first look at the borrowers credit score to find out how the commitments can be met by him. They check for the amount of money the borrower posses, how prompt he had been in paying the dues, how often he had played the balance transfer game, etc. The credit score makes a great impact on the down payment made by the borrower in turn it affects the interest rates on the mortgage offered to him. Understanding various mortgage programs will help in the selection of the most suitable one for the borrower.
5 Ways To Get The Lowest Mortgage Interest Rate You Can
Everyone loves a bargain and getting a lower mortgage interest rate can save you a substantial amount of money over the life of your loan. There are several ways to go about ensuring that you pay the least amount of interest when you take out a home mortgage.
Be aware of your credit score.
Good credit is the key to not only getting a mortgage, but to getting the best interest rates available. Mortgage lenders like to reward borrowers that pay off their bills in a timely manner. Chances are if you have been faithful with your other payments, you will be faithful to pay them back, so they can afford to take a risk on you and offer a lower interest rate.
Close any existing credit card accounts that you no longer use.
If you have several credit card accounts, they can affect the interest rate on your mortgage, even if they have a zero balance. Lenders see open accounts as potential for debt, which adds a risk of them not getting their money back. To balance this risk, they will often charge you a slightly higher interest rate.
Lock in interest rates before you close.
Once you have agreed on a low interest rate, ask the lender to lock in that rate. Rates can fluctuate drastically in the time it takes for you to get your mortgage and that could mean paying a totally different interest rate than what was originally quoted.
Make the biggest down payment you can afford.
Putting a down payment from your savings on your house, lowers the amount you plan to finance, lowering the interest you will pay over the life of your loan.
Shop Around.
You don’t have to work with the first lender that you approach. With the vast amount of online mortgage brokers, it is easy to compare offers and pick the company that offers you the lowest interest rate. Don’t be afraid to tell brokers that you are shopping around, or ask them if they can match the interest rates of a competitors quote.
Be aware of your credit score.
Good credit is the key to not only getting a mortgage, but to getting the best interest rates available. Mortgage lenders like to reward borrowers that pay off their bills in a timely manner. Chances are if you have been faithful with your other payments, you will be faithful to pay them back, so they can afford to take a risk on you and offer a lower interest rate.
Close any existing credit card accounts that you no longer use.
If you have several credit card accounts, they can affect the interest rate on your mortgage, even if they have a zero balance. Lenders see open accounts as potential for debt, which adds a risk of them not getting their money back. To balance this risk, they will often charge you a slightly higher interest rate.
Lock in interest rates before you close.
Once you have agreed on a low interest rate, ask the lender to lock in that rate. Rates can fluctuate drastically in the time it takes for you to get your mortgage and that could mean paying a totally different interest rate than what was originally quoted.
Make the biggest down payment you can afford.
Putting a down payment from your savings on your house, lowers the amount you plan to finance, lowering the interest you will pay over the life of your loan.
Shop Around.
You don’t have to work with the first lender that you approach. With the vast amount of online mortgage brokers, it is easy to compare offers and pick the company that offers you the lowest interest rate. Don’t be afraid to tell brokers that you are shopping around, or ask them if they can match the interest rates of a competitors quote.
9 Tips on Applying for a Second Mortgage
People usually apply for a second mortgage or home equity loan when they need money for debt consolidation, to pay large expenses or for home remodeling and home improvement. Second mortgages are generally categorized as fixed interest rate home equity installment loans (HELOANS) and adjustable mortgage rate home equity lines of credit (HELOCs). Which you choose depends on your needs, but the application and approval process is similar for both. These nine tips will help your loan process be as hitch-free as possible:
1. Compare options like mortgage refinancing and other loan options to determine if a second mortgage is the best choice.
2. Make sure you can tell lender what the purpose of the loan is. Your answer will help determine whether or not you are approved.
3. Check your credit report for errors and get your FICO scores (myfico.com/12) because lenders will review your FICO score to determine your loan rates. Check "How to Improve Your Credit Score" for more information on cleaning up your credit.
4. Compare several home equity loan options. Discuss the loan programs with your broker or lender and find the best loan for your situation. Getting a good interest rates isn't a bad idea either.
5. When applying for a loan, you will get a mortgage checklist from your lender containing the list of paperwork you need to close the loan, including:
• Copy of deed to property.
• Recent tax appraisal.
• Last two years' W-2's, tax returns and current pay stub, or two years' tax returns if self-employed. Be sure to include all schedules.
• Proof of income from alimony, child support, disability payments, lawsuit settlement, inheritance or other income source.
• Copies of your last 3-6 bank statements.
• List of all open credit accounts (account numbers, payment amounts, and balances).
• Your current mortgage statement.
• Homeowners insurance information (name, account number and phone number of agent).
6. Faxing documentation from the checklist will expedite the loan process more than mailing it.
7. Fill out your loan application thoroughly, or it may delay approval and loan closing.
8. Beware of bad loans. The Federal Trade Commission (FTC) warns that you may be signing into trouble if the lender encourages you to falsify your application to get the loan, urges you to borrow more than you need, pushes you into unrealistic payment terms, shows up at closing with a different loan product than you agreed to, asks you to sign blank forms, or denies you copies of documents you signed.
9. Has your mortgage application been rejected by a lender? Ask why it was rejected to find out what you need to do to secure mortgage loan approval in the future. Sometimes paying down some credit cards can increase your credit score just enough to qualify.
1. Compare options like mortgage refinancing and other loan options to determine if a second mortgage is the best choice.
2. Make sure you can tell lender what the purpose of the loan is. Your answer will help determine whether or not you are approved.
3. Check your credit report for errors and get your FICO scores (myfico.com/12) because lenders will review your FICO score to determine your loan rates. Check "How to Improve Your Credit Score" for more information on cleaning up your credit.
4. Compare several home equity loan options. Discuss the loan programs with your broker or lender and find the best loan for your situation. Getting a good interest rates isn't a bad idea either.
5. When applying for a loan, you will get a mortgage checklist from your lender containing the list of paperwork you need to close the loan, including:
• Copy of deed to property.
• Recent tax appraisal.
• Last two years' W-2's, tax returns and current pay stub, or two years' tax returns if self-employed. Be sure to include all schedules.
• Proof of income from alimony, child support, disability payments, lawsuit settlement, inheritance or other income source.
• Copies of your last 3-6 bank statements.
• List of all open credit accounts (account numbers, payment amounts, and balances).
• Your current mortgage statement.
• Homeowners insurance information (name, account number and phone number of agent).
6. Faxing documentation from the checklist will expedite the loan process more than mailing it.
7. Fill out your loan application thoroughly, or it may delay approval and loan closing.
8. Beware of bad loans. The Federal Trade Commission (FTC) warns that you may be signing into trouble if the lender encourages you to falsify your application to get the loan, urges you to borrow more than you need, pushes you into unrealistic payment terms, shows up at closing with a different loan product than you agreed to, asks you to sign blank forms, or denies you copies of documents you signed.
9. Has your mortgage application been rejected by a lender? Ask why it was rejected to find out what you need to do to secure mortgage loan approval in the future. Sometimes paying down some credit cards can increase your credit score just enough to qualify.
100% Mortgage Financing – A Way To Avoid Private Mortgage Insurance
Ideally, traditional mortgage lenders want new homebuyers to have a 20% down payment when purchasing a new home. Thus, if purchasing a $200,000 home, you should be prepared to have $40,000 as a down payment.
Unfortunately, many people do not have this kind of money lying around. For this matter, private mortgage insurance (PMI) was created as a way for mortgage companies to recoup their money if a homeowner defaults on the loan. There are various loans available to assist people with down payments. In some instances, homeowners can obtain 100% financing, and avoid PMI
What is Private Mortgage Insurance?
Because Americans are earning less money, and home prices are steadily increasing, the majority of the population is unable to save the recommended down payment of 20%. In order to make owning a home possible, mortgage companies created a particular mortgage insurance, (PMI), for people with less than 20% to put down on a home. This insurance protects the lender if you default on the mortgage.
How to Avoid Paying Private Mortgage Insurance
On average, PMI may increase your mortgage payment by $100 – sometimes less, sometimes more. However, there are ways to avoid paying this additional insurance. The obvious involves having at least 20% as a down payment. If this is not an option, homeowner may agree to a higher interest rate. Another tactic entails getting approved for 100% financing.
How Does 100% Mortgage Financing Work?
100% mortgage financing makes it possible to buy a home with no money down. Also referred to as a piggyback loan or 80/20 mortgage loan, 100% mortgage financing involves obtaining a first mortgage for 80% of the home cost, and a second mortgage, or home equity loan, for 20% of the home cost. Together, the first and second mortgage allows a home purchase with no money down, and no private mortgage insurance.
Unfortunately, many people do not have this kind of money lying around. For this matter, private mortgage insurance (PMI) was created as a way for mortgage companies to recoup their money if a homeowner defaults on the loan. There are various loans available to assist people with down payments. In some instances, homeowners can obtain 100% financing, and avoid PMI
What is Private Mortgage Insurance?
Because Americans are earning less money, and home prices are steadily increasing, the majority of the population is unable to save the recommended down payment of 20%. In order to make owning a home possible, mortgage companies created a particular mortgage insurance, (PMI), for people with less than 20% to put down on a home. This insurance protects the lender if you default on the mortgage.
How to Avoid Paying Private Mortgage Insurance
On average, PMI may increase your mortgage payment by $100 – sometimes less, sometimes more. However, there are ways to avoid paying this additional insurance. The obvious involves having at least 20% as a down payment. If this is not an option, homeowner may agree to a higher interest rate. Another tactic entails getting approved for 100% financing.
How Does 100% Mortgage Financing Work?
100% mortgage financing makes it possible to buy a home with no money down. Also referred to as a piggyback loan or 80/20 mortgage loan, 100% mortgage financing involves obtaining a first mortgage for 80% of the home cost, and a second mortgage, or home equity loan, for 20% of the home cost. Together, the first and second mortgage allows a home purchase with no money down, and no private mortgage insurance.
5 Important Things to Remember to Get the Best Mortgage
The market of new houses is now experiencing a great increase in sales and profit. Old houses are now being traded for newer ones. A great way to finance your new home purchase is to mortgage.
If there are instances that you are not eligible because of some credit concerns, you should not worry. You can still plan for it in the future. It is probable that in just a few months, you can buy a home if you consider the following tips:
1. Do not make too much purchases for the next couple of months. Instead, prepare money for your down payment. The reason for this is that even a debt of only 15,000 dollars will still appear unpleasant to the mortgage lenders credit score system.
2. Do not choose a very costly home especially if it is just going to jack up your expenses. You have to ensure that you are able to pay for your debt load consistently, so before choosing the type of house you want, consider your income first.
3. Do not get disqualified for a mortgage. Make sure that you will get approved. In order to qualify, you are required to submit your credit information to a mortgage lender. And you must allow your lender to get your credit report and debt/income data.
4. Do not forget the form of money personality you have before taking a mortgage.
5. Keep in mind that home possession may provide many problems. The charge of non-payment on a loan is a lot larger than the fine of missing a rent fee.
Therefore, if you are planning to apply for a mortgage, be sure to remember these five important things in order to end up successfully with the best mortgage there is.
If there are instances that you are not eligible because of some credit concerns, you should not worry. You can still plan for it in the future. It is probable that in just a few months, you can buy a home if you consider the following tips:
1. Do not make too much purchases for the next couple of months. Instead, prepare money for your down payment. The reason for this is that even a debt of only 15,000 dollars will still appear unpleasant to the mortgage lenders credit score system.
2. Do not choose a very costly home especially if it is just going to jack up your expenses. You have to ensure that you are able to pay for your debt load consistently, so before choosing the type of house you want, consider your income first.
3. Do not get disqualified for a mortgage. Make sure that you will get approved. In order to qualify, you are required to submit your credit information to a mortgage lender. And you must allow your lender to get your credit report and debt/income data.
4. Do not forget the form of money personality you have before taking a mortgage.
5. Keep in mind that home possession may provide many problems. The charge of non-payment on a loan is a lot larger than the fine of missing a rent fee.
Therefore, if you are planning to apply for a mortgage, be sure to remember these five important things in order to end up successfully with the best mortgage there is.
3 Terms Every Mortgage Holder Should Know
Getting a mortgage can be a very confusing process. There is a lot of paperwork to sign, documents to read and procedures to be followed. You'd think you were applying to go to Harvard or Yale, except they don't require that much paperwork for you to be admitted! Although getting a mortgage can be a confusing process, there are three terms that every mortgage holder should know to better understand what he is she is getting into.
Going into a mortgage knowing just a few facts will help you immensely in understanding what type of commitment you are getting into.
The first term you should understand is, amazingly, the word "term". Term refers to the length of the mortgage you are taking out - or the amount of time you are making payments.
Many mortgages run the gauntlet of between ten and thirty years. The longer the mortgage, typically the lower your monthly payment will be (and the more interest the mortgage company makes). Generally speaking, you should go for the shortest term you can comfortable afford - you'll save potentially tens of thousands (and in some cases potentially over a hundred thousand) dollars in interest by keeping the length of the mortgage as short as you can.
Next, understand the interest rate on your mortgage and how it is calculated. The interest rate refers to the amount of interest charges you will pay for the money you are borrowing, expressed as a decimal - such as 5.2 for 5.2%. Is it fixed or adjustable? In other words, is it the same through the life of the loan or does it change at specified periods in time? Most home buyers should try and steer clear of adjustable rate mortgages even though they can look better up front. They can often reset to higher interest rates and come back to bite you if you aren't ready for a jump in your monthly payments!
Finally, understand what closing costs are and how they are going to affect your purchase price. Often times, you are going to be responsible for coming up with these closing costs out of your own pocket. Closing costs consists of things such as appraisals done on the house, attorney fees, notary fee, deed fee - if there is a fee they can think of it usually falls under the term closing costs! Be a smart and savvy consumer, if you see a fee that you don't understand or doesn't seem right - speak up! Some mortgage lenders try to sneak in any fee they can think of to make a few extra dollars profit.
Understanding these three terms can help make you a more informed home buyer and help you find the mortgage that is right for you. As with any product, it is important to shop around for a mortgage when you are considering buying a house. Even a small change in the interest rate between two lenders can often to amount to thousands of dollars in savings. Don't be afraid to comparison shop - it's your money after all!
Going into a mortgage knowing just a few facts will help you immensely in understanding what type of commitment you are getting into.
The first term you should understand is, amazingly, the word "term". Term refers to the length of the mortgage you are taking out - or the amount of time you are making payments.
Many mortgages run the gauntlet of between ten and thirty years. The longer the mortgage, typically the lower your monthly payment will be (and the more interest the mortgage company makes). Generally speaking, you should go for the shortest term you can comfortable afford - you'll save potentially tens of thousands (and in some cases potentially over a hundred thousand) dollars in interest by keeping the length of the mortgage as short as you can.
Next, understand the interest rate on your mortgage and how it is calculated. The interest rate refers to the amount of interest charges you will pay for the money you are borrowing, expressed as a decimal - such as 5.2 for 5.2%. Is it fixed or adjustable? In other words, is it the same through the life of the loan or does it change at specified periods in time? Most home buyers should try and steer clear of adjustable rate mortgages even though they can look better up front. They can often reset to higher interest rates and come back to bite you if you aren't ready for a jump in your monthly payments!
Finally, understand what closing costs are and how they are going to affect your purchase price. Often times, you are going to be responsible for coming up with these closing costs out of your own pocket. Closing costs consists of things such as appraisals done on the house, attorney fees, notary fee, deed fee - if there is a fee they can think of it usually falls under the term closing costs! Be a smart and savvy consumer, if you see a fee that you don't understand or doesn't seem right - speak up! Some mortgage lenders try to sneak in any fee they can think of to make a few extra dollars profit.
Understanding these three terms can help make you a more informed home buyer and help you find the mortgage that is right for you. As with any product, it is important to shop around for a mortgage when you are considering buying a house. Even a small change in the interest rate between two lenders can often to amount to thousands of dollars in savings. Don't be afraid to comparison shop - it's your money after all!
2nd Mortgage Loan After Bankruptcy
A 2nd mortgage loan after a bankruptcy is the easiest way to access cash. With online sub prime lenders, you can qualify for a mortgage as soon as your bankruptcy closes. But for near conventional rates, it is better to wait two years and build a solid credit history.
Bankruptcy And Sub Prime Lenders
Millions of people file for bankruptcy every year for many understandable reasons, such as job loss or illness. Sub prime lenders understand this and are willing to lend to such people
Specializing in high risk loans with unconventional terms, sub prime lenders can work out financing for virtually anyone. Legitimate lenders will offer rates that are competitive with reasonable closing costs.
Bankruptcy Affect On Your 2nd Mortgage Rates
The first two years after a bankruptcy are the most difficult for your credit score. Right after your bankruptcy, you will qualify for “E” class loans, the highest rate mortgages.
After a year and a good credit history, you can qualify for better rates with a “C” class loan. Rates are typically about 3% to 5% higher than conventional rates. And in two years, you can possibly have an excellent credit score and get prime mortgage rates.
Other factors also affect your mortgage rates. Keeping a large percent of your equity in tact along with cash assets could possibly bump up your credit score.
Comparison Shopping For Better Rates
No matter when you decide to secure a 2nd mortgage, you need to shop loan rates before settling on a lender. Each financing company has its own formula for determining rates and closing costs. A careful search of loan estimates will ensure you get the cheapest rates and fees.
If you don’t have a specific lender in mind, start with a mortgage broker site. They partner with several different companies to come up with special offers. From there you can expand your search to individual lender sites.
When you are looking at rates, be sure they include closing costs as well. With some lenders, low rates are available only if you pay thousands up front. You may also want to consider a home equity line of credit if you want to keep loan processing fees to a minimum.
Bankruptcy And Sub Prime Lenders
Millions of people file for bankruptcy every year for many understandable reasons, such as job loss or illness. Sub prime lenders understand this and are willing to lend to such people
Specializing in high risk loans with unconventional terms, sub prime lenders can work out financing for virtually anyone. Legitimate lenders will offer rates that are competitive with reasonable closing costs.
Bankruptcy Affect On Your 2nd Mortgage Rates
The first two years after a bankruptcy are the most difficult for your credit score. Right after your bankruptcy, you will qualify for “E” class loans, the highest rate mortgages.
After a year and a good credit history, you can qualify for better rates with a “C” class loan. Rates are typically about 3% to 5% higher than conventional rates. And in two years, you can possibly have an excellent credit score and get prime mortgage rates.
Other factors also affect your mortgage rates. Keeping a large percent of your equity in tact along with cash assets could possibly bump up your credit score.
Comparison Shopping For Better Rates
No matter when you decide to secure a 2nd mortgage, you need to shop loan rates before settling on a lender. Each financing company has its own formula for determining rates and closing costs. A careful search of loan estimates will ensure you get the cheapest rates and fees.
If you don’t have a specific lender in mind, start with a mortgage broker site. They partner with several different companies to come up with special offers. From there you can expand your search to individual lender sites.
When you are looking at rates, be sure they include closing costs as well. With some lenders, low rates are available only if you pay thousands up front. You may also want to consider a home equity line of credit if you want to keep loan processing fees to a minimum.
Monday, December 14, 2015
Home Selling Advice
What do buyers need when they plan to buy a home? In fact, there are so many aspects one needs to consider. In the seller's point of view, you should follow some home selling advice. Here are some advices for your success of selling home:
First, your should be an informative seller. You could put the "Home for Sale" in your front yard. Don't forget to put your phone number on it, so a buyer can get contact you..
Second, your should put a reasonable price, valued by the physical price of your home, environment and location. The better location where your home is placed, the better price you can put. And the better physical condition of your home, better price should be granted. Don't forget that a buyer needs an achievable price. So the process of the negotoation will determine it.
Third, correlated on physical condition of your home, your home curb appeal is the most important thing. You can do some works to improve appealing of your home exterior. Just to make it beautiful, tidy, and fresh. The color of your home is necceesary to be considered.
Fourth, get your buyer in the right mood by creating a cozy environment in your home. What do I mean by "cozy environment"? Very important is fresh air, clean environment, fresh odor, and the most important is a homelike sitation. Just make a buyer feel like in his own home sweet home.
Fifth, When you get down on the negotiation, your should learn how to make a great offer. The point is, you should be a great win-win negotiator. On the Internet there are many articles about how to be a great communicator and negotiator. Just follow the rules and tips.
Sixth, good presentation of your home selling can add great value to attract a buyer. Know your entire home and its contents, and present it to your buyer. Tell them how sweet your home is, how much you love it, your experience in your home, the great moments you have passed by etc. Just be a familiar and friendly seller that can give much impression to your buyer.
First, your should be an informative seller. You could put the "Home for Sale" in your front yard. Don't forget to put your phone number on it, so a buyer can get contact you..
Second, your should put a reasonable price, valued by the physical price of your home, environment and location. The better location where your home is placed, the better price you can put. And the better physical condition of your home, better price should be granted. Don't forget that a buyer needs an achievable price. So the process of the negotoation will determine it.
Third, correlated on physical condition of your home, your home curb appeal is the most important thing. You can do some works to improve appealing of your home exterior. Just to make it beautiful, tidy, and fresh. The color of your home is necceesary to be considered.
Fourth, get your buyer in the right mood by creating a cozy environment in your home. What do I mean by "cozy environment"? Very important is fresh air, clean environment, fresh odor, and the most important is a homelike sitation. Just make a buyer feel like in his own home sweet home.
Fifth, When you get down on the negotiation, your should learn how to make a great offer. The point is, you should be a great win-win negotiator. On the Internet there are many articles about how to be a great communicator and negotiator. Just follow the rules and tips.
Sixth, good presentation of your home selling can add great value to attract a buyer. Know your entire home and its contents, and present it to your buyer. Tell them how sweet your home is, how much you love it, your experience in your home, the great moments you have passed by etc. Just be a familiar and friendly seller that can give much impression to your buyer.
Tuesday, October 6, 2015
Homepath Program
The Homepath Program is provided by Fanni Mae and offers special financing to potential home buyers on foreclosed properties owned by Fannie Mae and along with special discounts home buyers receive other exclusive benefits.
Among these benefits is the Fannie Mae Firstlook program that give buyers a 20 day period to consider properties prior to them being marketed to investors. This program is offered to owner occupant buyers and gives them the opportunity to make offers without investor competition.
Another special benefit for Homepath buyers is the ability to utilize local housing assistance programs such as HUD to fund a down payment or to put towards the purchase of a property which is not typically allowed by banks when seeking a conventional mortgage. With a Fannie Mae Homepath loan you can request up to 3% closing cost assistance towards your purchase.
In addition Homepath also offers investors special financing programs for the purchase of multiple properties.
So whether your an investor or even a first time home buyer the Fannie Mae Homepath program is definitely something to heavily consider.
Among these benefits is the Fannie Mae Firstlook program that give buyers a 20 day period to consider properties prior to them being marketed to investors. This program is offered to owner occupant buyers and gives them the opportunity to make offers without investor competition.
Another special benefit for Homepath buyers is the ability to utilize local housing assistance programs such as HUD to fund a down payment or to put towards the purchase of a property which is not typically allowed by banks when seeking a conventional mortgage. With a Fannie Mae Homepath loan you can request up to 3% closing cost assistance towards your purchase.
In addition Homepath also offers investors special financing programs for the purchase of multiple properties.
So whether your an investor or even a first time home buyer the Fannie Mae Homepath program is definitely something to heavily consider.
Sunday, October 4, 2015
Improve Your Credit Score Before Buying a Home
Several months before you begin to look for a home, you should take steps to get “credit approved” for your loan. Start by making a list of all your existing loans and credit cards, with the company names, account numbers and monthly payment amounts. This will help you to analyze the information shown on your credit report. Include all closed loans and credit cards if these records are available.
1) Get a Financial Check-Up
Make an appointment with a good mortgage lender, and request a full credit approval. As a part of the approval process, your credit report will be ordered. It will include data from the three main credit reporting agencies – Equifax, Experian, and Trans Union. The report will show three credit scores – one from each agency. The interest rate and type of loan available to you is related to your credit score.
The assistance of a mortgage professional to help you to understand your credit report and offer suggestions on how to improve your score is invaluable. For the average person, interpreting a credit report and dealing with errors is a daunting task. Credit reports are filled with frustrating jargon and codes. They are not written for the general public to read. Even more intimidating is the task of communicating with credit agencies to dispute or correct information.
2) Correct Mistakes
Credit reporting agencies often have mistakes in their data. The information in your credit file is input by computers. A computer weighs your data using complicated mathematical formulas to arrive at a credit score.
Nearly everyone has paid bills late for one reason or another. Perhaps a bill was sent to a wrong address, or you have had a dispute with a vendor. It is likely that you have some issues on your report that should be disputed or corrected. Each of the websites of the three main agencies has a dispute resolution page. Feel free to use it.
3) Deal With Real Credit Issues
You may have had serious credit problems at some point in the past. Reviewing this may be emotionally draining, and will bring up the underlying situation that caused the credit problems. Get advice on how long the issues will remain on your report, and how to re- build your credit worthiness.
Or, you may have a persistent habit of overspending. In this case, you should talk with a financial advisor or personal counselor to help you work out of debt, and establish better habits. The National Foundation for Credit Counseling offers low cost assistance for serious credit problems. If you place yourself under their supervision to handle your debts, you will not be able to obtain new credit during the work-out period – which may be years. Before doing that, ask a mortgage lender or financial advisor if there is a way to redeem your credit without their supervision.
4) Check Your Credit File
A law, passed in 2005, requires the three main credit agencies to provide a free credit file disclosure each year. It has been suggested that you could order a file from the first agency in January, one from the second in May and one from the third in September. The central site where your file can be ordered is annual credit report dot com. The purpose of this law seems to be to help people find out if they are a victim of identity theft. This enables you to monitor your file for any new credit that did not come from you.
If you take advantage of the free credit file reports, you should check them for mistakes. Use the credit report that you reviewed with your mortgage lender to compare with the data in your credit file. Keep in mind that the free credit file disclosure is not a credit report. It does not include a credit score.
5) Understand Credit Scores
Less than 620 – Poor
620-680 – Average – You may need to put more cash down on your loan.
680-720 – Good
720 – 800 – Excellent
800-850 – Seldom seen
6) Play by the Rules
The information in your credit file is scored by these factors:
35% – Payment history – Paying bills on time is very important. Today many people use auto draft or pre-written checks through online banking to pay bills. These help to prevent late payments. If you want a good credit score, do not pay late!
30% – The relationship between your available credit versus how much you have used is an important factor in your score. If you are over 50% drawn against your available credit, this will count against you. For this reason, it helps to keep old credit card accounts open, even though you do not use them. They build up the total amount of credit available to you, relative to what you have charged.
15% – The length of credit history on each loan has an effect on your score. A more seasoned loan is scored higher. For this reason it is not a good idea to open credit cards offering low initial rates, then close them after a few months and open new credit cards.
10% – The number of inquiries made on your credit report affects your score. Each time you open a credit card or new loan, your credit information is pulled. Keep these to a minimum. A recent law has made it possible for people shopping for homes or autos to have multiple inquiries, from the same industry (mortgage or auto), done over a 30 day period without penalty. However, to be on the safe side, do not allow your credit report to be pulled unless absolutely necessary.
10% – The types of credit used may hurt your score. Loans from finance companies, signature loans, furniture loans and some retail store loans are considered a poor judgment because of their high rates, and may count against you.
7) Improve Your Credit Score
It is easy and necessary to borrow money. We customarily make everyday purchases using credit cards, and set up loans for homes, cars and other purchases. Your credit score is especially important in the purchase of your home. It will affect the type of loan available, down payment required, and interest rate charged. A low score can cost you thousands of dollars in additional interest over the years. Even insurance companies factor your credit score into their decisions. More than ever, you need a good credit score, or you will pay the price.
Finance providers, rental agencies, car dealers, insurance companies and credit card companies are not going to help you improve your credit score. In fact, they have an economic interest in charging you a higher rate. It is up to you to be proactive about understanding and improving your own credit score. A good time to start is when you begin the mortgage approval process for a home purchase. It is a good habit to have.
1) Get a Financial Check-Up
Make an appointment with a good mortgage lender, and request a full credit approval. As a part of the approval process, your credit report will be ordered. It will include data from the three main credit reporting agencies – Equifax, Experian, and Trans Union. The report will show three credit scores – one from each agency. The interest rate and type of loan available to you is related to your credit score.
The assistance of a mortgage professional to help you to understand your credit report and offer suggestions on how to improve your score is invaluable. For the average person, interpreting a credit report and dealing with errors is a daunting task. Credit reports are filled with frustrating jargon and codes. They are not written for the general public to read. Even more intimidating is the task of communicating with credit agencies to dispute or correct information.
2) Correct Mistakes
Credit reporting agencies often have mistakes in their data. The information in your credit file is input by computers. A computer weighs your data using complicated mathematical formulas to arrive at a credit score.
Nearly everyone has paid bills late for one reason or another. Perhaps a bill was sent to a wrong address, or you have had a dispute with a vendor. It is likely that you have some issues on your report that should be disputed or corrected. Each of the websites of the three main agencies has a dispute resolution page. Feel free to use it.
3) Deal With Real Credit Issues
You may have had serious credit problems at some point in the past. Reviewing this may be emotionally draining, and will bring up the underlying situation that caused the credit problems. Get advice on how long the issues will remain on your report, and how to re- build your credit worthiness.
Or, you may have a persistent habit of overspending. In this case, you should talk with a financial advisor or personal counselor to help you work out of debt, and establish better habits. The National Foundation for Credit Counseling offers low cost assistance for serious credit problems. If you place yourself under their supervision to handle your debts, you will not be able to obtain new credit during the work-out period – which may be years. Before doing that, ask a mortgage lender or financial advisor if there is a way to redeem your credit without their supervision.
4) Check Your Credit File
A law, passed in 2005, requires the three main credit agencies to provide a free credit file disclosure each year. It has been suggested that you could order a file from the first agency in January, one from the second in May and one from the third in September. The central site where your file can be ordered is annual credit report dot com. The purpose of this law seems to be to help people find out if they are a victim of identity theft. This enables you to monitor your file for any new credit that did not come from you.
If you take advantage of the free credit file reports, you should check them for mistakes. Use the credit report that you reviewed with your mortgage lender to compare with the data in your credit file. Keep in mind that the free credit file disclosure is not a credit report. It does not include a credit score.
5) Understand Credit Scores
Less than 620 – Poor
620-680 – Average – You may need to put more cash down on your loan.
680-720 – Good
720 – 800 – Excellent
800-850 – Seldom seen
6) Play by the Rules
The information in your credit file is scored by these factors:
35% – Payment history – Paying bills on time is very important. Today many people use auto draft or pre-written checks through online banking to pay bills. These help to prevent late payments. If you want a good credit score, do not pay late!
30% – The relationship between your available credit versus how much you have used is an important factor in your score. If you are over 50% drawn against your available credit, this will count against you. For this reason, it helps to keep old credit card accounts open, even though you do not use them. They build up the total amount of credit available to you, relative to what you have charged.
15% – The length of credit history on each loan has an effect on your score. A more seasoned loan is scored higher. For this reason it is not a good idea to open credit cards offering low initial rates, then close them after a few months and open new credit cards.
10% – The number of inquiries made on your credit report affects your score. Each time you open a credit card or new loan, your credit information is pulled. Keep these to a minimum. A recent law has made it possible for people shopping for homes or autos to have multiple inquiries, from the same industry (mortgage or auto), done over a 30 day period without penalty. However, to be on the safe side, do not allow your credit report to be pulled unless absolutely necessary.
10% – The types of credit used may hurt your score. Loans from finance companies, signature loans, furniture loans and some retail store loans are considered a poor judgment because of their high rates, and may count against you.
7) Improve Your Credit Score
It is easy and necessary to borrow money. We customarily make everyday purchases using credit cards, and set up loans for homes, cars and other purchases. Your credit score is especially important in the purchase of your home. It will affect the type of loan available, down payment required, and interest rate charged. A low score can cost you thousands of dollars in additional interest over the years. Even insurance companies factor your credit score into their decisions. More than ever, you need a good credit score, or you will pay the price.
Finance providers, rental agencies, car dealers, insurance companies and credit card companies are not going to help you improve your credit score. In fact, they have an economic interest in charging you a higher rate. It is up to you to be proactive about understanding and improving your own credit score. A good time to start is when you begin the mortgage approval process for a home purchase. It is a good habit to have.
Mortgage Interest Rate Analysis
In the very beginning of the month of August the mortgage interest rates remained quite stable. Except a few mortgage program interest rates most of then remained unchanged to what it was in the last week of July. Interest rates of mortgage programs like 10-Year Treasury and 30-Year Treasury were down by 0.06% and 0.04% respectively. And the interest rate of programs like USD LIBOR 6-month and USD LIBOR 1 Year were up by very nominal 0.015% and 0.022%. Other than these, the interest rates of 30 year fixed average, 15 year fixed average, 5/1 ARM average, 3/1 ARM average and some other programs remained unchanged.
On the third day of the month most of the mortgage interest rates fell down by units in decimal due to change in market conditions. But the interest of short-term mortgage loans like USD LIBOR 6-month and 1-year were raised up to 5.318% and 5.230%.
During the first 15 days of the month the mortgage interest rate fluctuated a lot. Though the average fluctuation rate was very low but it kept on fluctuating up and down. On most of the occasions the short-term loan interests got affected and kept changing everyday.
Analysts believe that the decline in the mortgage industry is due to the higher unemployment in the recent times. Some believe that the recent drastic drop in mortgage market is due to the tighter lending standards and cooling home prices. This fall in the mortgage interest rate has in fact started to affect the sub-prime lending too.
Due to the fall in mortgage interest rates the U.S. mortgage applications rose for the second straight week. Experts believe that the recent disturbance in the mortgage market is the reason behind the rising applications. The housing sector and the homebuilders market are down and so are the financial companies including mortgage companies. Last week, the fall in the mortgage market spread to the financial markets with a rapid speed and provoked the fear that tighter credit will have a bigger impact on consumers, markets and the economy.
It has been forecasted that the interest rates for the 80% of homeowners and buyers that qualify for A-paper mortgages will probably remain stable or slightly increase in the near future. Those who are with sub-prime credit or don’t have proper documents to prove income, may face difficulty in getting the loans or they might be charged with higher interest rates or huge down payment.
On the third day of the month most of the mortgage interest rates fell down by units in decimal due to change in market conditions. But the interest of short-term mortgage loans like USD LIBOR 6-month and 1-year were raised up to 5.318% and 5.230%.
During the first 15 days of the month the mortgage interest rate fluctuated a lot. Though the average fluctuation rate was very low but it kept on fluctuating up and down. On most of the occasions the short-term loan interests got affected and kept changing everyday.
Analysts believe that the decline in the mortgage industry is due to the higher unemployment in the recent times. Some believe that the recent drastic drop in mortgage market is due to the tighter lending standards and cooling home prices. This fall in the mortgage interest rate has in fact started to affect the sub-prime lending too.
Due to the fall in mortgage interest rates the U.S. mortgage applications rose for the second straight week. Experts believe that the recent disturbance in the mortgage market is the reason behind the rising applications. The housing sector and the homebuilders market are down and so are the financial companies including mortgage companies. Last week, the fall in the mortgage market spread to the financial markets with a rapid speed and provoked the fear that tighter credit will have a bigger impact on consumers, markets and the economy.
It has been forecasted that the interest rates for the 80% of homeowners and buyers that qualify for A-paper mortgages will probably remain stable or slightly increase in the near future. Those who are with sub-prime credit or don’t have proper documents to prove income, may face difficulty in getting the loans or they might be charged with higher interest rates or huge down payment.
Zero Down Mortgage Loans
Zero Down Mortgage Loans – Understanding No Money Down Loans
In many housing markets across the country, the increase in home prices does not match the average household income. Hence, many people are unable to save money for a down payment. Ideally, mortgage companies prefer applicants to have a down payment of at least 5%, in addition to paying closing costs. Unfortunately, this is an unrealistic expectation. Thus, many homebuyers are taking advantage of zero down mortgage loans.
How Do Zero Down Loans Works?
Fortunately, many mortgage companies recognize how difficult it is to save for a down payment. Thus, some lenders have created special loan programs that make it possible to buy a home with little out-of-pocket expense. Ordinarily, if you had a down payment for a home, you would obtain better rates. However, because of low mortgage rates, you do not need a down payment to secure a good rate.
There are many options for a zero down home loan. For starters, some mortgage lenders offer an 80/20 loan. This involves offering a mortgage for 80% of the asking price, and a 20% home equity loan for the remaining balance. This option is very useful; moreover, homebuyers avoid paying private mortgage insurance.
Additionally, homebuyers may obtain a mortgage loan for 103% of the asking price. This is beneficial because it allows new homebuyers to afford down payment and a portion of the closing fees.
How to Find a No Money Down Mortgage Loan?
If you are hoping to buy a home with zero down, contact a mortgage broker. There are various loan programs that offer zero down loan options. However, you must be willing to look for them. If using a mortgage broker, the company can help you find a lender.
Brokers have access to loans offered by private lenders, government programs, sub prime lenders, etc. Meeting the qualification for a zero down mortgage will vary according to lenders. Some lenders require good credit, no bankruptcies, etc. Meanwhile, other lenders are eager to offer no money down loans to people with less than perfect credit. Working with a mortgage broker can make your dreams of homeownership a reality.
In many housing markets across the country, the increase in home prices does not match the average household income. Hence, many people are unable to save money for a down payment. Ideally, mortgage companies prefer applicants to have a down payment of at least 5%, in addition to paying closing costs. Unfortunately, this is an unrealistic expectation. Thus, many homebuyers are taking advantage of zero down mortgage loans.
How Do Zero Down Loans Works?
Fortunately, many mortgage companies recognize how difficult it is to save for a down payment. Thus, some lenders have created special loan programs that make it possible to buy a home with little out-of-pocket expense. Ordinarily, if you had a down payment for a home, you would obtain better rates. However, because of low mortgage rates, you do not need a down payment to secure a good rate.
There are many options for a zero down home loan. For starters, some mortgage lenders offer an 80/20 loan. This involves offering a mortgage for 80% of the asking price, and a 20% home equity loan for the remaining balance. This option is very useful; moreover, homebuyers avoid paying private mortgage insurance.
Additionally, homebuyers may obtain a mortgage loan for 103% of the asking price. This is beneficial because it allows new homebuyers to afford down payment and a portion of the closing fees.
How to Find a No Money Down Mortgage Loan?
If you are hoping to buy a home with zero down, contact a mortgage broker. There are various loan programs that offer zero down loan options. However, you must be willing to look for them. If using a mortgage broker, the company can help you find a lender.
Brokers have access to loans offered by private lenders, government programs, sub prime lenders, etc. Meeting the qualification for a zero down mortgage will vary according to lenders. Some lenders require good credit, no bankruptcies, etc. Meanwhile, other lenders are eager to offer no money down loans to people with less than perfect credit. Working with a mortgage broker can make your dreams of homeownership a reality.
Cash Out Refinance
If you have owned your home for a period of time long enough to obtain some equity through your monthly mortgage payments and appreciation, you may be considering borrowing off the equity you have established in your home.
This can be known as cash out refinancing, where you basically refinance your home and get some cash back in the way of a lump sum at the closing table.
Borrowing off of the equity in your home is done by many people and used for many different things.
Such as, home improvement projects, new cars, college expenses, family vacations, etc.
Of course, just like everything else in life, the process isnt one of the easiest of things to do in the world. But if you take your time, do your homework, and find the right lender and loan officer, the task in front of you will be a lot less painful.
The mortgage industry is a very competitive one, so be sure to shop around and look for the deal that is best for you.
If you are not interested in doing the shopping around yourself, consider finding a mortgage broker to do the shopping for you.
A mortgage broker is a person who works as a liaison between the customer and the lender. It is the job of the mortgage broker to shop lenders for the consumer to find the mortgage program that best fits their needs and budget.
Allow for a few brokers to assess your situation, than base your decision on the one that best fits your needs and budget.
Keep in mind, most cash out refinances are tax deductible, so be sure to run it by your accountant at tax time.
Wednesday, September 30, 2015
Shortsale of a Home
A shortsale is a realestate transaction in which the bank agrees to sell a property for in most instances significantly less than the original loan amount. This is done by the home owner requesting approval from the lender to attempt to sgortsale the property. Next once the lender has approved the potential shortsale of the property it will be listed for sale and actively marketed. Prospective buyers can then submit offers for the banks consideration and if they accept an offer the home can then be purchased for the agreed upon prprice and the original. This type of transaction benefits all parties involved because the original borrower is able to walk away from the outstanding balance of their mortgage, the bank is able to dump the distressed property and the new owner gets the property at a significantly lower price than it would typically sell for. There are some rules though that the buyers and sellers must abide buy such as what is referred to as an arms length transaction were a family member could purchase the property on behalf of the original borrower to attempt to get the title to the property for less than they originally purchased it for and this type of transaction is illegal and if caught the lender could reattach the original loan amount. Shortsales are a great way to get out of a loan you cannot afford to repay and for investors pickup great properties at deeply discounted prices.
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