Legal Pitfalls of Arranging a Mortgage

Copyright 2006 Tracey Anderson

A mortgage is often the biggest commitment a person undertakes, and one should take time to consider all of the legal and financial details before diving head-first into such an agreement. Your mortgage broker, banker, or real estate agent can often be a good source of information about these details; if there is still confusion, you may even wish to engage a solicitor to review your contract, watch out for unusual or potentially harmful clauses, and explain the details to you. Always take time to read the contract, and seek out third-party advice if you do not understand it. An unscrupulous lender, broker, real estate agent or seller may attempt to pressure you into signing an agreement without reading it, or worse, yet, signing a blank form for them to fill in later. Avoid succumbing to this pressure, and always understand what you are signing before you have signed it. If you are being pressured to sign a contract immediately without a thorough reading, then the best thing to do is walk away.

Once you've found a house and arranged for the mortgage, the legal process of transferring ownership between parties, known as conveyance, is very specific and complicated. Your mortgage broker, lender, or real estate agent may be familiar with the process, and may be able to give you advice on the matter. However, the process itself must be done by a solicitor or registered conveyancer. Alternately, a homeowner can choose to do the process individually using a do-it-yourself kit. Conveyance naturally comes with a conveyance duty which must be paid to the state, although in some states, you may be able to qualify for an exemption if you are a first-time home buyer.

The property title itself, which in most cases is called a Torrens title, establishes proof of ownership. Old System titles are more complicated, and require the buyer to show clear title for every previous owner.

The issue of survivorship must also be addressed. Typically in the case of a husband and wife, the home is held in joint tenancy, so that if one spouse passes on, the other will retain the right to the property. If a home is held in tenants-in-common, however, each tenant's share of the home is separate, and in the case of death would become part of the deceased's estate. Under common law, if no other arrangement is specified, joint tenancy is assumed.

Before buying a home, legal hassles can be avoided by executing a thorough inspection. You can choose to inspect the home yourself, or hire a licensed inspector. Either way, you will be able to gain knowledge about any existing conditions of the home that you can use in your negotiations. Having knowledge of the home's condition and any flaws or defects ahead of time will put you in a better legal position, since it may be difficult to recoup any costs for undetected flaws after the transaction has already been finalized.

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Has Your Adjustable Rate Mortgage Become a Gamble?

Three or four years ago, interest rates on home loans dropped to levels not seen since the 1960's.  Millions of Americans took advantage of the favorable rates, which bottomed out near 5% for fixed rate, 30-year loans.  For adjustable rate mortgages, they rates were even lower.  Many buyers passed on the opportunity to lock in at fixed rates and gambled on the lower payments afforded by adjustable rate loans in order to buy either larger or more expensive homes.  That worked out fine at the time, as the rates kept the monthly payments affordable.  Unfortunately, the sixteen increases in the Federal interest rates since 2004 are about to have a dramatic effect on those buyers, many of whom many find out that they can no longer afford to pay for the homes in which they live.

Many adjustable rate loans are set up in such a way that the interest rate is fixed for the first three years of the loan's repayment schedule.  After that, the interest rate adjusts regularly, based upon prevailing market rates.  For the millions of homeowners who gambled and took out these loans in 2003, the Big Adjustment is going to come soon, and it isn't going to be pretty.  As the rates adjust to current rates from the low rates of 2003, many homeowners are going to be shocked to see that their monthly payments rise by as much as 50%.  Some will be fine with that, having anticipated this increase for some time.  Others will suddenly find themselves unable to pay for a house that they have long thought they could afford.  This will undoubtedly lead to an increase in the foreclosure rate, which is already some 60% above the rate of last year.  In Michigan, the rate is up by 90% over last year, as hundreds of owners have walked away from their home loans.

What can you do if you have an adjustable rate loan that is about to become unaffordable and may yet become even more so?  Your best bet may be to refinance and take out a 15 or 30-year, fixed-rate loan.  The benefit of doing so is the security that comes with knowing that your payment will remain stable over a long period of time, no matter what happens to the interest rates in the marketplace.  If you cannot afford your loan now and refinancing with a fixed-rate loan will still leave the payments unaffordable, you may have no choice but to sell the property and move to something smaller and/or less expensive.  You will not be alone.

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Flexible Mortgage Guide

In today’s ever-changing world, people need more and more flexibility when it comes to borrowing and mortgages. With this in mind, more and more lenders are offering what they term as ‘flexible’ mortgages. However, the term ‘flexible’ can mean a lot of different things. If you are unsure about which mortgages are flexible and what the benefits of a flexible mortgage are, then this article might be helpful to you.

What does flexible mean?

Although there are a lot of mortgages that claim to be flexible, there are some things that define a truly flexible mortgage. There are four main characteristics you should look for when determining if a mortgage is flexible. These are:

·    Being allowed to overpay
·    Being allowed to underpay
·    Being able to take payment holidays
·    Interest is calculated daily

Overpayments

One of the best features of flexible mortgages is the ability to overpay. With traditional fixed repayment mortgages, there is no easy way for you to pay more than your fixed repayment each month. If you have a flexible mortgage, then you will have the ability to pay as much as you can each month. This means that during the good months you can speed up the process of paying your mortgage back. If you regularly overpay then you can save yourself thousands of pounds in interest payments.

Underpayments

Underpayments are another useful feature of flexible mortgages, but they should be used sparingly. If you are unable to make the repayment in a given month, then you can just pay as much as you can, effectively underpaying on your mortgage. Although this is good as it stops you from defaulting, there are penalties involved. The more you underpay, the longer the mortgage will last or the higher your repayments afterwards will be.

Payment holidays

Payment holidays are similar to underpayments, but they let you completely halt payment for a period of time. Although this might sound appealing, there are usually restrictions. Lenders will not let you take a payment holiday unless you have overpaid in the past, and after your holiday you will have to overpay again to get the repayments back on schedule. However, payment holidays are useful for people who are self employed or who want to take a break from work for personal reasons.

Other benefits

Another benefit of flexible mortgages is the ability to borrow back money from your mortgage. If you have overpaid in the past but are now in need of extra cash to fund home improvements or some other purchase, then you can borrow the money back that you have overpaid. Although you will be changing your mortgage terms again, getting a loan at the rate of your mortgage is the lowest personal loan rate you can possibly get.

If having flexibility and the chance to overpay and underpay is important to you, then you should definitely opt for a flexible mortgage.

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Compare Mortgage Rates For Refinancing - Why Obtain Multiple Quotes?

Obtaining multiple refinancing quotes will save you money and future headaches. By researching several lenders, you will find the most competitive rates. You will also be able to select a company that provides excellent terms and service for your budget priorities, saving you future hassles.

Save Money With Multiple Mortgage Offers

Lenders know people can find loan quotes in minutes on the internet, so they offer better rates and terms online in order to compete. Rates can vary as much as a point or more between companies on loans with the same terms. Depending on the size of your refi, even a slight difference in rates can save you thousands.

By searching online, you expand the pool of available financing companies you can work with. So you can get the best loan rates, even if the company office is across the nation. Searching online also helps you save time on your search.

Better Terms With More Choices

The right terms can be just as important as finding the lowest rate. With online lenders, you have optimal options for the length of your loan. Cap limits on adjustable rate mortgages vary widely between companies and should also be considered in any mortgage decision.

Fees, for such things as early payment or application processing, can also differ considerably between companies. Comparing quotes will help you weed out the bad terms. But also know you have the option to negotiate these terms and fees with lenders.

Educate Yourself In The Process

One of the byproducts of researching refinancing rates is that you become better informed about the lending process and market rates. Understanding the terms, cost calculations, and loan fees helps you make better choices.

Knowing the differing terms will help you select the best loan package. So you may find that since you plan to move in less than seven years, a low cost refi is better than the rock bottom low interest rate loan with high closing costs.

As with any large purchase, comparison shopping is imperative in find the best value on your next refinance. The time you spend now will pay dividends for years to come in lower monthly payments and interest costs.

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Baltimore Mortgage Choices

Located in the upper Chesapeake Bay region, Baltimore is a city rich in American history. During the War of 1812, Baltimore’s Fort McHenry came under attack by British forces which had just completed the burning of Washington, DC some forty miles to its south. The battle for Baltimore was a key turning point in the war and saved the young union from certain defeat. It is this tenacity of spirit that has sustained the city for nearly three centuries and is what attracts new home buyers in their quest to find affordable housing there. A Baltimore mortgage awaits you if you want to invest in this historic city.

Purchasing a house in Baltimore is a lot like purchasing a home in any established American city: you make a down payment, contact several lenders for competing bids, and you choose a lender based on the information given. Your Baltimore mortgage is ready and your move is assured, right? Well, it isn’t always that easy! Let’s take a look at some web sites that can give you helpful and important information as you shop for a mortgage:

1. Bankrate.com – this site features up to date mortgage rates from all over the nation. Narrow your search to Baltimore and local mortgage rates will appear in your search results. The rate given should be a good point of reference for you as contact lenders.

2. Interest.com – works in the same way to Bankrate; put in your Baltimore mortgage information and the rate will appear.

Other helpful sites of note include:

3. ChaseHomeMortgage.com

4. HomeLoanCenter.com

5. Amerisave.com

6. Ingdirect.com

7. LendingTree.com               

While this list isn’t inclusive, it is a good beginning. In addition, you can check your local phone book for a list of Baltimore mortgage companies. Sometimes the smaller, local companies are more willing to help out, especially if your have other circumstances present, including being self employed, bad credit, have suffered a loss in income, or have experienced any other “life impacting” changes.

Your Baltimore home is waiting for you -- contact a Baltimore mortgage broker today to learn about your mortgage options.

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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!

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An Overview of the Mortgage Process

House hunting can be an exhilarating process as you try to pick that perfect property. Applying for a mortgage isn’t nearly as much fun. Following is an overview of how the mortgage industry works.

An Overview of the Mortgage Process

You have a nice chunk of money saved away for a down payment. You have started shopping for a home or have found the perfect property.  It is time to enter the world of financing, better known as getting a mortgage. Before entering the labyrinth, it might help to get an overview of how the mortgage process works.

A mortgage simply is a debt instrument that acts to secure a cash loan to you on a home. In exchange for giving you the money, the lender puts a first lien on the prospective home for loan amount. If you default, the lender can foreclose and sell the home to recover the debt amount.

In mortgage industry terms, applying for a mortgage is known as originating a loan. To originate the loan, you will first have to find a lender you are comfortable with. You may have a close relationship with a bank that will suffice. Many will find it advisable to use a mortgage broker to shop for the loan that best meets their needs. Different lenders offer different loans and terms.

As part of the origination process, you will fill out a lengthy loan application. Depending on the nature of the loan, you probably will also be required to submit documentation supporting your claims of income and so on. There are no document or partial document loan applications, but most people don’t qualify for them. Once your application is submitted, a lender inevitably will ask for more information or documentation. Depending on how the review, known as underwriting, goes, the lender may decline or accept your application. Often, the lender will add a stipulation to the loan that cover issues it is concerned about.

Once you are granted the loan, you will close on the residence you are after. Most people are then very surprised by what happens. Inevitably, your mortgage lender will sell the loan to another entity. To raise cash to issue more home loans, lenders sell their current stock of mortgages on a secondary market. Your lender may continue to handle the administration of the loan, but will often just hand the entire thing off.

Your mortgage will be terminated at some point in time. Positive reasons can be the sale of the home, refinancing or simply paying off the balance. Negative reasons can include default or bankruptcy. Regardless, the above represents the basic structure of the mortgage industry and how your loan moves through it.

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Be Careful With 125 Loans

Many borrowers think they have found the perfect loan -- the 125. But you should be cautious when considering this product.

A 125 loan is named for the amount of equity you can pull out of your home, which is usually 125%. Some of the loan is secured by your home and some of it isn't, making it a mixed loan type. The portion that is unsecured causes your interest rate to be higher than with a fully secured home equity loan.

Many borrowers turn to 125 loans because they can simply make one payment to their lender instead of several payments to many lenders. The single payment is often lower than the total of all the payments it replace, due to differences in interest rates. The rates are often much better than credit card rates, but if you roll other loans in, such as student loans, you may actually be raising some rates on your debt.

For example, you may have a car loan with a balance of $11,000. You have an interest rate of 8.5% and 4 years left of payments. You roll the note into your 125 loan, which has a rate of 11.5%. You've actually raised your interest rate.

If you roll in a credit card with a $12,000 balance and an interest rate of 19%, you are lowering your rate. But you will be looking at upwards of ten years of payments.

The real danger comes in when borrowers take out a 125, roll over their credit card debt and then go out and max out those cards again. This is called reloading. You now have double the debt to repay. You are in a worse situation now and are risking losing your home.

When you take out a 125, you have to be dedicated enough to cut up each credit card right then and there. This will help you avoid temptation.

You may be saying, but wait -- I get to deduct the interest on a 125 on my income taxes. Yes, you are saving 28 cents for every dollar you spend. Doesn't make a lot of sense. Plus, the amount of interest on the loan above the value of your home is not tax deductible. If you deduct it, it will bite you in the taxes.

You are also now upside down in your home equity. You owe more than your home is worth. You can't sell it until the value of the house increases or you pay off the loan enough to reduce the balance below the value of the house. That takes around five to 10 years in most cases.

If you are forced to sell your home, you will probably have to pay money at closing just to get it off your hands. You are paying to sell your home. If you plan to stay in your home for a long time, you may not need to worry about this as much.

But keep in mind that the unexpected happens. When you open yourself up to a lot of debt, you are putting your future at risk. Taking out a 125 loan to get rid of the debt isn't necessarily your best option. It certainly isn't the easy way out, as you may have been told. It is the same debt, just new place. Be very careful, it's your house on the line this time.

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California Mortgage Company

Mortgaging your house is a big project. It might as well be one of the biggest investments that you are supposed to make. If you are in California and you want to invest in real estate you should spare some time for a California mortgage company. The right mortgage company will help you acquire the right deal. A reputed company will go through your profile, check your qualification and give you the option which will suit your financial situation best.

The basic objective of opting for a professional is guidance. While we want to own our homes and have healthy savings as well, the entire process of going about it could be confusing and cumbersome since we are not experts. And following the wrong advice could be disaster. There are many reputable California Mortgage Companies out there whose primary objective is to fulfill the customer's demand. They value every customer need and idiosyncrasies and provide solutions which match their myriad dreams of a home.

The more professional California mortgage company will be able to provide you with the best of the deal by analyzing your personal profile. This would of course include your financial profile which is the biggest asset or curse for a borrower depending on his or her spending habits. The deal would be consisting of terms, rates and closing costs. Self-employed people can also get loans from a reputed company.

There are many loans on offer for your special needs. For example, some California mortgage company might be giving no documentation loans, Debt Consolidation Cash Out, Borrower programs for self-employed, challenged credit loans, loans based on low FICO score. One of the main criteria of finalizing a good deal is to have a high FICO score. A low FICO score means chances of getting a best rates are low.

Before you search for a California mortgage company you need to know about some basic terminologies and become familiar with the procedure.

Adjustment period: It is the frequency of adjusting the rate of an adjustable rate mortgage with the base rate.

Annual Percentage Rate: This one is the annual rate, which is the effective interest rate to be paid on a loan.

Base rate: In the mortgage industry, an underlying rate of interest is taken as an index. This is the base rate.

Cost analysis: It is the subtraction of homeownership benefits from homeownership costs taking all the factors like mortgage interest, closing costs, homeowner's interest & property taxes and PMI.

Equity: It is the difference between the market value of a home and the total amount of debt.

Term: The loan is taken for the time, which is referred to as the term. General period of a home mortgage loan is about 15-30 years.

Before you look for your suitable California mortgage company, just have a glance on the terminology and look out for the professional company that is offering you the best of the term. There are a number of ways to check your FICO rating also. You can improve your transaction history by paying all your credits on time.

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Don't Be Afraid Of Getting A Mortgage Online.

No matter what your credit history is, or what your circumstances are, the Internet has made the home loan process much easier. This article will outline a five-point plan to assist you in your pursuit of financing online:

Step 1: Don't be afraid to go shopping.

Discussing personal mistakes in life can paralyze us with fear, namely, getting into the "bad credit" issues. But getting into this "stuff' is completely unnecessary in the preliminary phase of shopping for a loan, beyond the basic information provided in an online short-form.

In other words, you don't really have to talk about the nitty-gritty details, until after a loan offer has been presented to you. So don't fret about it at first.

Because we're on the subject, if you are a consumer with credit history issues, let me briefly take this opportunity to state the obvious:

1. You're no different than anyone else. We all live imperfect lives.

2. Credit problems do not make you a bad person, and are really just reference points.

3. There are loan products designed for you.

4. There are lending institutions that are interested in earning your business.

5. There is nothing wrong with you, or your credit, or your situation. You can find a loan.

First, get into the right frame of mind. Don't be afraid to ask questions, and don't be intimidated by your credit history. Be honest. Give truthful information. But don't feel shame or regret for your past or present personal circumstance. They make you who you are, and that earns you respect.

Step 2: What's the going rate?

Information is free, so why not be informed? Many resources are available on the Internet to get current interest rates, and it's easy to compare them.

So to start with, take a look at two pieces of information:

1. Current Interest Rate, 30-year fixed

2. 6-month trend graph

A little exercise: Do you see the current rate? What about the 6-month graph? Are rates going up, down, or staying about the same? Is the current rate higher than it was 6 months ago? Lower then 6 months ago?

Now don't feel the need to analyze this information too much. For now, just look at it, and perhaps, check it several times a week to stay informed. If you do this, you're already 10 steps ahead of the game!

You are now an informed shopper. When an offer is presented to you in the near future, you'll be able to ascertain how good an offer it actually is by knowing how it compares to the "going rate". (Hint: Don't forget to check terms and fees, also known as "points", and conditions relating to your loan offer. Often times you will see higher points or less favorable terms, in exchange for a lower rate.)

You will be able to assess if you think rates are declining or on the rise, which may help you to decide if the present is the right time to make a purchase.
Step 3: Obtain several offers.

When you buy a car, do you seek out the best deal? When you go grocery shopping, do you consider which store offers the best prices? Shopping for a mortgage should not be seen any differently, and the best way to do this is to obtain several preliminary loan offers online.

1. Preliminary loan offers are simple, painless, and easy to get.

2. They contain the terms, rates, and pertinent information you need to assess the lenders.

3. They will take all the guesswork out of where you stand.

Get three or four offers and compare them. How do they compare to each other, and to the going interest rates mentioned in Step 2?

Many companies conduct searches for thousands of lenders, a lot of them in your local area, and they provide you with four loan offers almost instantly. Take advantage of this! These are no obligation services, and for the most part, the online application forms are simple. They take only a few minutes to complete.

You don't need to get into your credit history at this point. Completing the simple form is all it takes. If you qualify, and a lender is located that wants to do business with you, then you'll go to the next step, which is to discuss this possible opportunity over the phone.

Step 4: Remember this.

1. Lenders should never ask you for personal or private information during this preliminary phase. Of course they'll need to know some basic information about you and your situation, but never give out information you feel uncomfortable disclosing (such as your social security number), and look for a "privacy policy" on their website.

2. Remember that these are "preliminary" loan offers, which means no immediate commitment on your part. You complete a simple, on-line short-form, and then you get several offers in return. The lenders that made the offers may wish to talk with you over the phone, but that's where the preliminary process ends. The ball is in your court to choose a product that meets your needs, or to keep shopping.

3. These services are offered for free and you should not be asked for any service charges any time.

Step 5: Understanding your Options

If you've followed this simple plan, you will discover that there are consumer loan products tailor made to meet everyone's needs. Remember to examine the terms and rates, obtain several loan offers, and then talk to the lenders over the phone. Find out who they are, and whether or not you'd like to do business with them. Throughout this process, stay informed by checking interest rates, and settle for nothing less than what is attainable.

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Getting the right mortgage

Selecting a mortgage can be a difficult task. First of all, you need to decide which mortgage would suit your needs best.

For those who want to know what their monthly outgoings are going to be, should look at a fixed rate mortgage, as these are mortgages that are set at a fixed price for a certain period, which can be anything from 1 year to 5 years.

A variable mortgage is just that, it’s a mortgage rate that changes (or varies) with the base rate. So if the base lending rate increases so does your mortgage rate, however the positive aspect of this type of mortgage is that if the lending rate lowers so does your mortgage repayment. This is not for all – as there is an element of risk involved (this was true back in the late 1980’s, when unfortunately rates rocketed as house prices tumbled)

You may also need to think about a repayment mortgage or an interest only mortgage.

The difference is that the latter does just that, it only pays the interests, so whilst your monthly payments will be less, you will still have the capital to settle at the end of the mortgage duration. However a repayment mortgage will be a little more expensive, but at least you will be paying off both the capital and the interest, which means ultimately your mortgage is reducing.

When you have agreed which type of mortgage suits your lifestyle then don’t be afraid to shop around whilst you are  still tied to a contract – as there is usually a set time when you have the ability to negotiate another rate and/or go to another lender who is offering you something cheaper.

I would always suggest that in today’s competitive market that you shop around, as there are lots of different lenders with differing rates, and you need to find the right one to suit your budget and lifestyle.

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Interest-Only Or 50 Year Mortgages - Do They Really Make Sense?

With hotspots like Las Vegas, much of California and Florida still enjoying a good real estate market, many banks and mortgage companies are now spreading out payments over 50 years to make them more affordable. Prior to these 50-year mortgages, interest-only mortgages were promoted and sold as the way to go. The real question here is which is better?

Let’s first digress on what an interest-only mortgage is. Interest-only home loans or mortgages aren’t as a general rule permanently interest-only. The bank or mortgage company will normally offer the borrower 2 to 5 years at interest-only; after that they must start paying off the principle. During this time, the principle has grown. A great many borrowers may find themselves unable to pay the higher payments that come at the end of this interest-only period.  In this case, interest-only loans are similar to ARMs, and have similar default and foreclosure rates (higher than for regular fixed mortgages where the payment stays the same throughout).

The 50-year mortgage simply spreads your payments out over a longer time period and greatly increases the amount of interest you will payback; this also tends to reduce your build-up of equity.  Alex Diaz Jr., Vice President of Statewide Bancorp in Rancho Cucamonga, stated that “the 50-year mortgage has particular appeal in California because prices are higher than the rest of the country. The 30-year fixed mortgage is great, but with gas prices so high, people we're dealing with are concerned about making prices work, and the 50-year mortgage is something they're starting to consider."  The real estate market has grown by leaps and bounds in California with the average home selling in excess of $300,000.

The 50-year mortgage was designed to do three things. First, it makes it much easier for someone to buy a home in these high price areas. Second, it can help buffer and insulate the borrower against a housing bubble or possible localized deflation. Third, it keeps the selling prices high.  However, many so-called real estate experts will tell you that the interest-only loan does the same thing, but does it? The main problem with the interest-only loan is that it does not insulate or offer any protection for the borrower from increasing principle, negative equity (which can happen should there be a drop in housing prices), and, of course, those increasing payments when the term you agreed is over.

Keeping this in mind, plus the fact that there is only a very minor difference in initial payments (payments over the interest-only period), clearly the 50-year mortgage should be a better way to go.

If your budget allows, a good tactic to use is to make bi-monthly payments which will reduce the interest and term of the loan saving you many thousands of dollars. There are many lenders out there now offering this option to their borrowers.  As they say, the real money in real estate is made from buying low and selling high.

The problem is that in most of these hot communities, the selling price often ends up being much higher than the asking price, plus houses do not stay on the market for very long at all.  So, buying low is normally out of the question.  Just try finding a bargain foreclosure or HUD homes for sale in California, it's a little like trying to find gold in the old days.  In these hot communities, the real money is made by buying and holding for a number of years allowing for the yearly increases and returns on additions and upgrades.  Money can be made for sure, but with a uncertain future. It is really best to have a payment program set in stone – always use a fixed term and rate mortgage. You can still sell in five years or less, make money, and have the added comfort of a fixed payment.

Have an opinion or a question you would like me to answer, then write me! http://www.CarlHampton.com

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Making UK Mortgages More Accessible

Previously, in the UK, if you wanted to apply for a mortgage to buy a new home, the amount that would be lent to you would be automatically tied to how much money you earned. With runaway UK housing prices over the last decade, and with incomes remaining fairly stable, this method of calculating how much you could borrow on a mortgage has become out dated. Today, many new home buyers need to look for more creative ways to borrow money if they want to buy a new home in Britain.

The Affordable Mortgage

Probably the most common of the new forms of mortgage is the affordable mortgage. Unlike mortgage that fixed to your earnings, affordable mortgages are calculated based on how much you can afford to repay each month once you have taken into consideration all of your other expenses. So, for example, if you have recently bought a new car on hire purchase and will be making hire purchase payments for the next three years, these hire purchase payments will be deducted from your salary and what remains will determine whether or not you can afford to repay the mortgage loan. UK affordable mortgage loans have allowed new home buyers to borrow as much as 50 percent of their monthly disposable income in mortgage repayments, which usually gives new home buyers a much better chance of buying a new home.

The Flexible Repayment Mortgage

Growing in popularity is the flexible repayment mortgage. As mentioned, traditional mortgages take into account what you current earnings are, how much you borrow, the interest rate, and then calculates, roughly, a monthly repayment that will be fixed (variable on interest) for the remaining 20 to 30 years of the mortgage term. Real life, however, is not like that. It is highly unlikely that you’ll be earning the same in 10 years time as you earn today. A flexible repayment mortgage takes this into consideration. It allows you increase your mortgage repayments over time. As such, within parameters, you are able to borrow more on your UK mortgage than you earn today on the expectation you’ll be earning more in the future.

The Current Account Mortgage

Strictly speaking, the current account mortgage is not a mortgage at all – it’s an overdraft. As such, it is not restricted by the same lending ratio limits that traditionally apply when applying for a UK mortgage. Nonetheless, so long as you are financially disciplined enough not to be overly concerned with having to live with a large overdraft on a daily basis, this type of new UK home mortgage can mean the difference between being able to buy a house now and having to wait until you have enough of a deposit or a high enough salary to qualify for a traditional UK mortgage.

The world of UK consumer finance is forever evolving. To try and respond to recent demographic changes in the UK, and to ever rising costs of living in the UK, UK credit lenders are having to be more and more ingenious when it comes to obtaining new business. As such, if you find yourself in the position where you simply cannot afford to buy a new home on your current salary, don’t give up, look around and see if you can find a UK home lender who’ll agree to lend you the money to buy your new dream home on more flexible terms and conditions than was previously the case.

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Mortgage Tips: Pros and Cons of Refinance Loans for People with Bad Credit

If you’re stuck under some high credit card bills and your credit rating is slipping, one of the best ways to immediately improve your credit is a home equity loan.  When the loan closes, home owners have cash-on-hand to pay off bills.  The result: their credit rating starts to improve immediately.

Banking executive Dan Ambrose refers to those as the “band-aid loan”, also known as the 2/28 in mortgage lingo.

“Most sub-time loans are short term loans, not A paper market, which means a fixed rate for two years then the loan adjusts.”

He’s talking about 30 year refinancing mortgages for people with less than stellar credit.  Lenders offer a home-equity loan at a set interest rate for two years, and then the loan converts to a variable rate loan, where the interest rate fluctuates with the prime rate at the time.

That’s the down-side to the “band-aid loan.”  Lenders usually charge higher interest rates for people with lower credit scores.  Dan warns consumers to prepare themselves for when the loan converts.  Home owners could face a higher interest rate than the original home loan, and their monthly payments could hit them harder.

If consumers take the cash from their equity loan and pay-off their bills in full, after 18 months of perfect mortgage payments, Dan says the consumer’s credit improves to the point that “now every bank will deal with them.”

If you think a home-equity loan could save you form your creditors, watch out for the current housing market in your area.  “Watching the marketplace, I saw the writing on the wall”, says Dan.  “The real estate values are going down.  They’re starting to slow down drastically.”

And there’s the other potential roadblock for homeowners in this situation.  Lower home values means less equity and possibly not enough equity to satisfy their payment needs.  If the equity isn’t enough to pay all of your bills, and after two years your payments are even higher than before, you could possibly put yourself in a worse situation.

“People with marginal credit or no equity do have some options such as the 125% loan to get ahead.”

A 125% loan offers you a loan for more than your home is actually worth.  Talk to a mortgage professional to make certain the credit risk is worth the return.  Dan says most importantly; use the equity cash to pay-off those bills before you splurge on your dream vacation.

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Refinance & Mortgage Tips: Your Down Payment Is Key

If you are buying a house, the first thing you need to figure out is how much of a down payment you can afford to make. This may seem like the sort of advice your father would give you, but rest assured there are a few reasons why knowing what you can put down and where you’ll get the money can make all the difference when shopping for a house and a mortgage to finance your new purchase.

Before you pick up your local newspaper and browse the real estate section looking for a new house, call up your banker, your accountant, or your spouse and find out how much you’ve got in savings and liquid assets to make the down payment and pay the closing costs on your mortgage.

First you must consider the source of your down payment, because this affects how much of the down payment your lender will actually attribute to you the applicant for the purpose of qualifying you for loan programs and determining your rates and payments. If the money is from your savings and securities / investment portfolio, be sure you can prove it. If you have employer retirement tax deferred accounts, 401(K) 403(b) accounts etc. and would like to use those as a source to finance the down payment, the lender will likely have several special conditions and limitations on the treatment of those funds. If you are receiving the down payment in part or in total as a gift, your lender will have another set of rules which will affect your payments. How you pay for closing costs will also have some affect on your final rates and payments; the more you take from a third party like the seller, the more risk the bank assumes.

A rule of thumb about size: the bigger the better when it comes to your mortgage down payment, at least from the perspective of programs, rates and payments. The more you put down out of your own savings, the lower your payments and the broader your selection of loan programs. An added benefit is that more money down means that any blemishes on your credit report or a low score count for less and less the more you pay upfront, and you also reduce your income requirement by improving your debt to income ratio. By knowing how much you can put down, you will know in advance how much house you can be qualified to purchase by your mortgage lender, get that mortgage pre-qualification letter, and know what to put in your purchase offer with your realtor, lawyer and seller when it’s time to make an offer. By finding out what you can afford to put down, you can get a head start on knowing your overall homebuying budget, financing options, and also have time to take care of the documentary requirements, seasoning and time-sensitive pre-requisites associated with closing your deal, saving you weeks if not months of wasted time sorting out these matters after you’ve found the house of your dreams.

So find out what you can put down and where you can get it from, contact a mortgage broker to find out what you can afford and what you can do with your down payment and documentation to get the best rates, payments and terms, and then take a pre-approval letter from the broker with you to start shopping for homes with a full knowledge of what you’ll be asking for and writing on the contract.

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Mortgage your home restoration

A commuter rail boom in the New York and New Jersey has enabled many professionals in the area to live further from the big city. One of the places they're moving is Morris County, New Jersey, a group of historic small towns 20 miles to the west. Settled more than 300 years ago, the area offers a well-established, attractive residential base, and solid property investment potential. Morris County includes more than 30 municipalities, and a wide variety of charming unincorporated areas. Homes here are often beautifully restored Victorian and Colonial-era buildings dating back to the early 20th century, which add to an already high quality of life in this attractive area.

Big City professionals also know Morris County for its wide variety of Fortune 500 headquarters, offices, and major facilities. Companies with operations here include AT&T, Honeywell, Bayer and Wyeth, BASF, Novartis, Exxon, and Colgate-Palmolive - good news for anyone who wants to avoid the daily commute to their corporate office job. Many professionals who move to Morris County also find jobs here, and are able to confine their relationship with New York and New Jersey to weekend visits.

Morris County's uncrowded layout is another reason for its popularity. The county has less than 500,000 residents spread across more than 1,247 km and dozens of communities, which compares nicely to the urban sprawl of millions per square mile just to the east. Morris County's low density has put it in high demand with wealthy buyers - it's the sixth wealthiest county in the Nation by median household income, and tenth by per capita income.

Affluence with a taste for old world charm is part of the reason many of Morris County's older homes here have been carefully preserved. A wide variety of old mansions have also been converted into museums, art studios, and schools. When visitors come to Morris County, they make a point of checking out heritage buildings like Acorn Hall in Morristown, which dates back to 1853.

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Refinance To Save Your Hard Earned Pounds

Have you heard of refinance? What it isn’t new for you. But, it was newer to me. In fact mortgages too were newer to me. I had considered it my fate to be stuck to the high interest mortgage. It was refinance (commonly known as remortgage) that gave me the faith that I can not only change the mortgage and its terms, but also the mortgage lender.

Refinance allows borrowers to repay an existing mortgage prematurely. While a high rate of interest was the push-factor in your case, different people may have different motivation behind the use of refinance. Extending the term of repayment, changing terms of repayment, and changing the type or category of mortgage earlier taken form the several reasons behind refinance decisions.

What differentiates refinance from a premature settlement of mortgage is that borrowers do not have to use their personal resources for making balance payments to the mortgage lender. It is another mortgage lender who makes the repayment.

The new mortgage lender would calculate the balance of the mortgage along with the interest accrued on it. Depending on the lending policy of the original mortgage lender, the borrower will either have to pay some repayment penalty or will qualify for a rebate. The total of these will be the amount of the new mortgage.

Sometimes people draw an amount larger than what is owed as mortgage. Borrowers principally use this to settle their debts. Accordingly, the borrower would draw an amount in excess of the original mortgage. The principal benefit of this method is that borrowers can consolidate their debts at very low rates of interest.

Borrowers who had taken mortgages at the times when the interest rates were very high will be especially interested in refinancing. They will find the presently prevailing cheap rates of interest very attractive. A low rate of interest also influences the monthly instalment that borrower has to pay. Monthly instalment, which is derived after adding a certain interest on the actual mortgage costs, is sure to come down if rates of interest are lower.

While borrowers are very quick in drawing mortgages and loans, they would often think of repaying them as an unnecessary expense. Though they would continue repaying the monthly instalments, it is often out of force. Many borrowers start having palpitations at the thought of mortgage due date approaching fast. Through refinance, these borrowers can extend the payment due date and get more time to plan repayment. The new mortgage pays off the original mortgage and the term extends to the period when the new mortgage is agreed to be amortised.

Another important reason for the use of refinance is to alter the form of mortgage. Many a times people may use specified mortgages instead of the regular mortgages. These are first time buyer mortgage, endowment mortgages etc. As soon as their benefit period ends, they become troublesome for the borrower. For instance, borrowers will find first time buyer mortgage in the initial few years to be very lucrative. This is because of a discounted rate of interest. However, once the discount period ends borrowers will have to shell a very high APR. Refinance offers a solution to such borrowers. The existing mortgage will be exchanged for a new mortgage with the additional features like a good rate of interest, improved terms, etc.

Refinance has been born out of the competition that has emerged in the finance market. The number of loan providers in the UK has seen a sharp increase in the recent years. Online lending has added largely to the number of loan providers in the UK. Now, borrowers are not to be restricted in their loan search through physical distance. They can easily contact loan providers from different parts of the UK and check for refinance opportunities with them.

Borrowers always stand a chance to get the best deals in refinance mortgages, with every lender trying to win over them with the attractive terms. However, try distinguish between loan providers who actually have a good product and those who have just window dressed their product to trap borrowers. You certainly do not intend to fall in a new mortgage trap after coming out from one.

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The Cost Of Refinancing - What Costs To Expect When You Refinance Your Home Mortgage Loan

Refinancing can save you thousands, especially if you have several years left on your mortgage. However, you can also choose to refinance simply to tap into your home’s equity or reduce your monthly payments.

“How much will it cost?” is a common question for homeowners considering refinancing their mortgage. While costs vary between lenders and loan amounts, the following will give you some guidelines to help you compare financing companies and their offers.

New Home Loan Fees

When you refinance, you are getting a new loan and paying for all those fees again. Fees, including application fee, appraisal fee, survey costs, attorney review fee, title search, and home inspection, will usually add up to around $1000 and $2000. That is in addition to the loan origination fee, usually 1%, and any additional points.

Some lenders offer zero point loans and low refinancing costs but with higher interest rates. These types of financing packages make sense if you are concerned about initial costs and are willing to spend more over the course of your loan.

Loan Points

Each point equals 1% of the loan, which is due at the loan’s signing. So a point on a $100,000 loan would be $1,000. Besides the loan’s origination fee of 1% or more, you can also purchase lower interest rates with points. If you plan to stay in your home for over seven years, then you can probably save money with lower interest payments.

Locate Lower Costs

You can also sometimes locate a lower cost for your mortgage by comparing companies. The easiest way to do this is to request quotes online to compare interest rates and fees.

You can also sometimes negotiate a lower interest rate or closing cost with your original mortgage company. It helps if you can tell them that you have found a better offer with another lender. But sometimes other lenders will have the better deal.

Different Loan Terms

A shorter loan term or a fixed rate mortgage can also save on long term interest costs. By picking a 15 year term loan, you can nearly cut your interest costs in half. You can also protect yourself from rising interest rates with an adjustable rate mortgage by converting to a fixed rate mortgage.

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Top Ways to Benefit from the Current Mortgage Crisis

The current mortgage crisis might be a nightmare for the people who are directly involved in it. However, with a little bit of smart planning and a lot of hard work you can benefit from this mortgage crisis and come through the other end with flying colors. Remember that not every crisis has to be the end of the world, and if you are considering getting into the housing market you might be able to benefit from the current mortgage crisis in more ways than one.

<i>Stable Interest Rates</i>

The first way that you can benefit from the current mortgage crisis is to take advantage of the now stable interest rates that you can find. Many lenders are aware that people are no longer keen to invest in changing interest rates, and that many of these have led to foreclosures. Therefore, there are beginning to be many lenders that are advertising their own brands of stable interest rates that will not be changing with the market. These rates are something that you should take advantage of, because they will allow you to lock down your rates and your home payments for the life of your loan. If you can budget in this way, you will be able to get the home of your dreams at an interest rate that you can really afford.

<i>Hold On Tight!</i>

If you do have a home and are fighting with the market, the best thing that you can do is to buckle down and hold on tight. If you can keep your home through this crisis, it will end up being much better for you in the end. Remember that many lenders who put out adjustable rate mortgages are now allowing people to change to a fixed rate mortgage. If you can talk to your lenders and go through this process before you have to deal with foreclosure, you will be able to get an interest rate that you can afford, and a locked down home payment that you will be able to take care of each month. If you haven't fixed your rate or you cannot do it, hold on to your home as long as you can. Are there other things to sell or other ways to get the money for your home payment? If you can hold onto your home through the mortgage crisis, you will find home payments dropping again and will soon have more money than you do now.

Remember that you should also avoid the temptation to get out while property values are so low. Even if it seems like it is a better idea to get out before values dip any lower, you will actually lose money if you sell in the middle of the current mortgage crisis. Therefore, if you can hold onto your property until the values go back up again, you will be able to make your money back, or even make more money. Remember that this crisis cannot last forever, so if you can ride it out in whatever way you can you will benefit in the end. Remember that often patience is the best key that you might have to riding out the current crisis.

<i>Invest (if possible)</i>

One of the biggest ways that you can benefit from the current mortgage crisis is to invest if you can. If you are able to buy or invest in property that has been foreclosed upon, you will find that you can get this property at a much cheaper rate because of the foreclosure. This is something that will allow you to gain property and to gain money as well. The best thing to do when you invest is to buy a property and then sit tight on it until property values go back up again. They will eventually rise once more, and you will find that at that time you can resell your property and find yourself with quite a profit. If you are able to buy property at this time, you will surely be one of the people who benefit the most from it in the end.

No crisis can last forever, and that includes the current mortgage one. If you are able to hold on to what you have, invest in what you can afford, and lock down good interest rates, you will find that the market will eventually turn and you will again be able to prosper. You can take advantage of all of the other things that the market has to offer, and this crisis will pass you by without even a mark.

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Why you should consider using a mortgage broker

Copyright 2006 Tracey Anderson

Mortgage rates and fees vary from lender to lender, and it's not always easy to compare all the details to find the best deal. Mortgage brokers help consumers sort through all those details and find the best mortgage solution possible, often through resources and connections that an ordinary consumer does not have access to. Using a broker can save both time and money. The broker is very familiar with the industry, and can be a valuable asset to a home buyer looking for a good deal on a mortgage. In addition to having substantial connections, the broker will have good insight into the process and how best to qualify. The broker will often have close connections with lenders, who view a good broker as a valuable customer and will sometimes make special rates or discounts available to brokers that are not available to the general public because of this leverage.

Because mortgage brokers make the process simpler for their customers, many loans in Australia are initiated by brokers. There are many reputable brokers in every state. Choose one with a good reputation and that is in good standing with the Mortgage Industry Association of Australia (http://www.miaa.com.au), a self-regulating body that imposes a set of ethical best practices on all of its members.

Look for an independent and unbiased broker. Of course, one expects a broker to receive a commission for their services, but some brokers attempt to sell mortgages with high fees that are not in the consumer's best interest, in order to receive higher commissions. The Australian Securities and Investments Commission (http://www.asic.gov.au) has cracked down on brokers that advertise that they are impartial when they are not. The ASIC recommends that if a consumer plans to use the services of a broker, to first look around to get an idea of existing rates, to be informed enough to know if they are receiving a good deal.

In the past, there has been some reluctance to use mortgage broking services because of the lack of regulation. Financial services of all types tend to be heavily regulated, and for good reason. Consumers must be protected against unscrupulous and predatory operators. And make no mistake, there are predatory mortgage brokers, just as there are predatory members of every segment of the financial community. Nonetheless, most are honest and provide a useful service. And more recently, there has been significant attention on the mortgage broking industry, and Australia is in the midst of a regulatory overhaul designed to keep mortgage brokers on an even keel.

Presently, the mortgage broking industry is regulated by individual states. Check with your local government regulatory agency to determine qualifications, and check on your broker's status. In a report to ASIC, The Consumer Credit Legal Centre (http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/finance_mortgagebrokers_report.pdf/$file/finance_mortgagebrokers_report.pdf) highlighted some of the differences between states. NSW, Victoria, ACT and Western Australia have more specific broker legislation, but not all states have a licensing scheme for brokers. National regulation would impose stricter regulations throughout the country, to ensure that consumers are protected. In the current regulatory environment, brokers are even more aware of their need to operate above-board and honestly.

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What Are Subprime Mortgage Loans?

Subprime lending refers to the extension of credit to higher-risk borrowers, a practice also commonly referred to as "B/C" or "nonconforming" credit. Loans to subprime borrowers serve communities that may have been underserved by other lenders in the past. In recent years, subprime mortgage lending has grown dramatically, with over 90% of all subprime mortgage loans made in or after 1993. By the end of 1996, the total value of outstanding subprime mortgage loans exceeded $350 billion. In 1997 alone, subprime lenders originated over $125 billion in home equity loans. Subprime loans have become a significant and growing part of the home equity market. Subprime originations constituted 11.5% of the total home equity lending market in 1996; by the first half of 1997, they had grown to 15.5% of this market. At the same time, the composition of companies involved in the subprime market is evolving. One of the dramatic changes in this market has been the growth in subprime mortgage lending by large corporations that operate nationwide.

The subprime mortgage market has flourished because such lending has been profitable, demand from borrowers has increased, and secondary market opportunities are growing. Lenders typically price subprime loans to consumers at rates of interest and fees higher than conventional loans. Higher rates and points can be appropriate where greater credit risks are involved, as is often the case with subprime loans. Critics assert, however, that the interest rates and fees charged by some subprime lenders are excessive, and much higher than necessary to cover increased risks, particularly since these loans are secured by the value of a home. Some attribute lenders' high rates on first mortgages in part to federal deregulation of certain state interest rate ceilings in 1980.

The relatively high profit margins in the subprime mortgage industry have fueled demand in the secondary market from investors seeking higher-yielding securitized assets, especially in an environment of generally low interest rates. In 1996, the subprime mortgage sector issued over $38 billion in securities, the largest increase in securitizations for any lending industry sector in that year. The secondary market's expansion has, in turn, helped to sustain growth in the industry by enabling lenders to raise funds on the open market to expand their subprime lending activities. Freddie Mac, one of the primary government-sponsored enterprises involved in the purchase of mortgages, recently announced plans to enter the secondary market in subprime loans by purchasing significant numbers of "A minus" subprime mortgages by 1998 and the higher-risk "B and C" loans by 1999.

The market for subprime loans is expected to continue growing. Credit card delinquencies are rising and personal bankruptcies are at record levels, which negatively affect borrowers' credit histories, pushing more consumers into higher risk categories. Meanwhile, consumer spending continues to be strong. Together, these factors increase the market for subprime loans. In addition, more borrowers generally may be seeking home equity loans due to the change in the tax code limiting allowable interest deductions to those on a first mortgage.

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Understanding Credit Scoring On Mortgage Refinancing or Second Mortgage Loans.

For years, lenders have utilized "credit scoring" to determine whether or not an individual is a good credit risk.  Credit scoring has recently become a hot topic, due in large part by the mortgage lending industry's willingness to use the process to evaluate one's likelihood of repaying home mortgage refinancing or second mortgage loans.  Even insurance companies use credit scoring as part of their underwriting procedure when writing automobile and home insurance coverage. 

Credit scoring is a system, based on a statistical program, which awards points for certain factors that help predict who is most likely to repay a debt, such as a mortgage refinancing or second mortgage loan.  The total number of points, or score, is what lenders use to determine an individual's creditworthiness.  A large random sample of customers is taken, and analyzed statistically to identify characteristics relating to credit risk.  These factors are then given a weight based upon how strong a predictor they are of who would be a good credit risk. 

Credit scoring models do vary from lender to lender, but most generally include the following factors:

1)    Your current amount of debt as compared to your potential total available credit.

2)    Payment history on current and previous accounts.

3)    The length of your credit history.

4)    The number of credit inquiries (each time a creditor pulls credit in response to your application).

5)    The number of separate open accounts.

6)    Collection actions including judgments, repossessions, foreclosures, and bankruptcies

Using the statistical program, lenders compare this information about you to the credit performance of other consumers with similar profiles.  Therefore, it is usually more reliable than a subjective or judgmental decision, because it is based on real data and statistics.  Although it may seem somewhat impersonal, when used properly, credit scoring can allow creditors to evaluate credit applications faster and more accurately than individuals, in an impartial and unbiased manner. 

In addition, the home mortgage refinancing and second mortgage loan process has been shortened as a result of the speed in which mortgage lenders can now make decisions utilizing the credit score model.

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Sub-Prime Mortgage Loan - How Sub-Prime Loans Differ From Conventional Loans

Sub-prime mortgage loans offer more flexibility than their conventional mortgage loan cousins. With terms determined by Freddie Mac and Fannie Mae, conventional loans have strict guidelines on loan amounts, terms, and PMI requirements. With sub-prime mortgages, lenders can provide more choices with an increase in rates.

The Limits Of A Conventional Loan

Conventional loans are often sought for their low rates. But those low rates come with limitations. Freddie Mac and Fannie Mae buy mortgages after they have been processed by a financial company. This frees up money for the lender to make more loans. However, Freddie Mac and Fannie Mae have tight guidelines on what types of loans they will purchase.

Among these limitations are caps on loan amounts. In 2006 the limits were set at $417,000 for a single family house. Every year these caps are reevaluated. Conventional home loans also require you to carry private mortgage insurance if you borrow more than 80% of the home’s value.

To qualify for a conventional mortgage, you must have good credit, cash assets, and steady employment history.

The Options Of A Sub-Prime Loan

Sub-prime home loans provides financing for those with poor credit or unusual application terms. This can include jumbo loans, exceeding the limits of a conventional loan. People with unusual or unpredictable jobs may also find an easier time getting financing with a sub-prime lender.

Sub-prime mortgage terms are determined by the individual lender. So you can get a zero down loan with a poor credit score. You can also find near market rates by placing a large down payment at closing. Private mortgage insurance is not required with a sub-prime mortgage, potentially saving you hundreds a year in premium costs.

Getting The Right Mortgage For You

Most financing companies handle both types of loans, so you can easily get quotes for both types. To find the right mortgage, you have to take the time to crutch the numbers.

Look at the APR to determine the total cost of the loan. But also factor in any plans to move or refinance in the future. By turning over your home loan in a few years, you don’t want to pay out large application fees for low rates that don’t have time to save you money

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Remortgages - Worth The Switch?

It’s becoming more popular to remortgage your house these days – all this means is switching to a different mortgage and sometimes a different lender to take advantage of a better deal.

If your circumstances have changed since you first took out your mortgage, you may find you want to switch to a new mortgage that better suits you. Likewise, if you chose a mortgage with a special rate for the first few years, once it reverts you’re paying more than other mortgages. So it can save money to remortgage, but there are a few things to consider first:

Charges

Are there early repayment penalty charges attached to your current mortgage? In some cases it can still be worth changing – the difference in interest paid in the long run could more than cover the cost of any penalties incurred.

Fees

You will have to anticipate all the associated costs of taking out a new mortgage, including a valuation fee for a surveyor, solicitors fees and any charges for arranging your new mortgage. Some deals offer cash to help cover costs, or ‘fee-free’ deals; you should balance the total cost against what you would save in interest to see if it really is worth switching.

Features

Many people are choosing to switch to one of the new generation of mortgages – either a flexible one that allows them more control over their payments; a current account mortgage that effectively allows you to merge all debts, savings and your current account to gain the best interest rates and save money. Offset mortgages are similar, but accounts are still held separately. This means you can move money between different accounts, but you won’t have a terrifyingly large overdraft showing on your current account!

Equity Release

If the value of your home has risen since you took out your mortgage, you can remortgage to the higher amount, and thus release the equity as a cash sum. There will be limits on how much you can borrow, depending on your income and the value of the property. Another area of ‘equity release’ are the schemes for retired people to access cash or a regular income through the value of their home. This means, effectively, that they buy your home from you while granting you the right to live in it for the rest of your life, rent free. ‘Home reversion’, ‘roll-up’ schemes and ‘home income plans’ all fall into this category. Be aware that any scheme you sign up to should be a member of Safe Home Income Plans (SHIP

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Quality Internet Mortgage Leads

If you are a loan officer or mortgage broker on the market for internet mortgage leads. Sometimes it may be better to go after quality leads, as opposed to buying your leads in quantity.

If you are looking for internet mortgage leads in quantity, or bulk, you will get a heck of a lot of leads for your money. But for the most part, these leads you purchase in bulk, have been recycled, or sold from lead company to lead company. Some are even more than a year old.

If you choose to purchase your internet mortgage leads based on quality, you will not be getting as many leads as you would if you bought in bulk, but at least the leads will be “real time,” or “fresh.” Meaning, you normally will be receiving the lead on the same day the prospect applies.

But before you go ahead and open an account with an internet mortgage lead company specializing in real time leads, do a little bit of research.

Here are a few things to look for in a lead company:

Where do the leads come from?

Make sure the lead company you are considering owns and operates the web sites from which they obtain their leads, this is pretty much a guarantee that the leads will be same day fresh.

If a company works with affiliates or buys their leads from another company, than most likely they will be a few days old by the time you get them.

You also don’t know how many times the company the leads are being purchased from sell to other lead companies.

How is their return policy?

Ask about their return policy, is it fair? If you receive a lead where the contact information is wrong, the customer cannot be contacted, you ask for good credit prospects and receive prospects with 400 credit scores and no income, than you should receive a refund or credit to your account.

The reasons for asking for a refund are not limited to what was stated in the above paragraph. You have every right to request a refund for any reason you believe to be reasonable.

When you purchase leads that are fresh, you will pay more for them, so don’t be shy when it comes to asking for a refund.

What will it cost to start?

Look for a company that has a low minimum deposit requirement to open an account.

Some companies require your minimum deposit to be $500.00, if this is not an ideal situation for you or your budget, than look for a company with a low minimum deposit around $100.00.

How is their customer service?

If you make an attempt to contact an internet mortgage lead company via phone or e-mail, and they are unresponsive or slow in getting back to you, than move on to the next lead company.

There is no reason or excuse for poor customer service. If you find the customer service to be poor during your research, than you can count on it to be poor when you have a problem or you are requesting a refund.

The most important thing to consider when shopping around for internet mortgage leads is the research. You work hard for your money, so when you buy leads, make sure your money is well spent. Good luck.

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Mortgage Refinancing Basics

Your mortgage may have a 30-year term, but not many homeowners stay with the same loan for that long. In fact, the average American refinances his or her mortgage every four years, according to the Mortgage Bankers Association. That’s because paying off your present mortgage and taking out a new one can mean big savings over several years. However, refinancing comes with a price in the short term, so it’s important to consider both the costs and benefits before making your decision.

Why refinance?

Here are some reasons to consider refinancing your mortgage:

1. To obtain a lower fixed rate. If you took out a fixed-rate mortgage several years ago and interest rates have since dropped, refinancing may lower your payments considerably. A $150,000 mortgage with a 30-year term and a rate of 8 percent, for example, carries a monthly payment of $1,100. The same mortgage at 6 percent will have a payment of less than $900 a month.

2. To switch to a fixed rate or an adjustable rate mortgage. Adjustable-rate mortgages (ARMs) offer lower interest rates initially, but some homeowners find the fluctuations stressful. If rates are on the way up, you might consider locking in at a fixed rate and consistent monthly payment. On the other hand, if you want to reduce your monthly payments and are comfortable with the interest rate changes of an ARM, it could save you money to refinance to an ARM.

3. To reduce your monthly payments. Refinancing for a longer term will lower the amount you have to pay each month. You will end up paying more in interest charges over the life of your loan, but if you’re having difficulty making your current payments, this strategy could provide some relief.

4. To turn home equity into cash. You may want to take out a new mortgage with a larger principal, in order to turn some of your home equity into cash for a major expense. This is called cash-out refinancing. The advantage of taking out a loan secured by your home is that you can get a lower rate of interest than you can with an unsecured loan or credit card. However, if the interest rate offered for your refinanced mortgage is higher than your current rate, a home equity loan or line of credit might be a better choice.

Is refinancing right for you?

If you’re refinancing in order to pay less interest, you won’t usually see the savings right away. That’s because lenders typically charge fees when you take out a new mortgage, and you may also have to pay a penalty for getting out of your old one. To determine whether refinancing makes financial sense for you, consider these issues:

1. How long you plan to be in your home. If you expect to move in a year or two, you may never realize the potential savings you’d get from refinancing. As a rule of thumb, the longer you plan to stay in your current home, the more sense it makes to refinance.

2. The prepayment penalty on your current mortgage. Many mortgages carry a penalty if you pay them off early. The amount varies, but it is usually a small percentage of the outstanding balance, or several months’ worth of interest payments.

3. The costs of the new mortgage. When you take out a new loan, your lender may charge a number of fees including application, appraisal, origination and insurance fees, plus title search, insurance and legal costs that can add up to thousands of dollars. Lenders may also charge discount points, which are paid upfront to secure a lower interest rate. As a guideline, expect fees to eat up any potential savings unless your new interest rate is at least a half a percentage point lower than your current one.

To learn more about mortgage refinancing and when it makes sense, visit http://www.lendingtree.com/cec/yourhome/yourmortgage/mortgage-refinance.asp

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Mortgage & Refinance Tips: Determining Your Income

When you apply for a refinance, debt consolidation or purchase mortgage, one of the most important factors in qualifying for the loan is your income. That may not seem like much of a surprise, but you may be surprised at all of the different ways your income can be calculated based on how well you can document it, and how much this can affect your loan process. Get a leg up on the loan officer and learn how to determine your income yourself.

Your lender looks at your income on the basis of how well you can document it, and will allow you to borrow more money at lower rates the more you can document your income. If you have been in your job for a while and have years of W2 statements, IRS filings, and bank statements you probably fall into the Full Documentation or “Full Docs” basket. Typically you can borrow the most money as a percentage of the property’s value with a full doc income verification.

If you are on a salary and you get two checks a month, take the gross amount before taxes on your check and multiply by 2. That’s it, that’s your income (of course you’ll need to present a little bit more documentation to the lender!).

If you get paid once every two weeks you can multiply the gross amount before taxes on your check by 26 (as there are 26 pay periods in a year) and then divide by 12, the number of months in the year.

Hourly employees should multiply their hourly pay by 173 to get their monthly pay, unless of course you earn substantial overtime or commissions.

In the event you earn substantial overtime or commissions/bonuses, you will have to pull out your W2s from the last few years and average them, usually just the past two years are used. So add up all sources of documented income for each year and divide by 24.

Self-employed / 1099 individuals should pull out Schedule C of their last two tax returns, add up the Profit line (which indicates how much money you told the IRS you made) for both years and divide by 24.

If you earn money from rental of a property or any part thereof, you must have a legal rental contract and necessary local approvals to rent the property just to include the rental income at all, and you will only be able to use a portion of this rental income because lenders will assume that there is some risk of vacancy in the future.

If you cannot fully document and verify your income or the bulk of it comes from commissions, bonuses or self-employment you may be able to apply on the basis of “Stated Income”, where if you have a sufficiently high credit score (in most case 620 or better but in special cases as low as 580) you are allowed to simply state to the lender what your income is. Stated income loan programs generally reduce the amount of money you can borrow in a cash out refinance, debt consolidation or purchase loan, and people who are on a fixed income such as social security or pension are not eligible for stated income programs. There are also a variety of limited document programs and even no document or “no docs” mortgage programs available for people with good credit and fixed incomes who need to borrow less than 70% of the value of their property.

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How To Pay Your Home Mortgage Off And Be Debt Free In 6-10 Years Or Less With Little Change To Income Or Expenses The New Zealand Way

Ariel Metekingi knew there was a way to pay off debts and a home mortgage quicker than what was being offered on the US market. Living in New Zealand where homeowners pay off their homes and are debt free on an average of 6-10 years, he experienced how it worked there and in Australia.

"I was surprised to find that Americans, generally considered worldwide leaders and innovators, are laboring with archaic mortgage programs where the major face-lift has been bi-monthly mortgage payments and the second mortgage," says Metekingi. "I found that the American Mortgage industry was seriously lacking in some of the wealth building mortgage and financial principles that have become so prevalent in New Zealand and Australia."

Enter Money Principal Group, a company located in Utah, founded by Metekingi. Their premier innovative mortgage product, The Mortgage Eliminator, is based on a 30 year+ proven Australian industry standard and model in use by over a third of homeowners in that country. It was later introduced to the New Zealand market, where homeowners achieve similar results; paying off their debts and mortgage on average of 6-10 years.

This powerful new tool to combat the current financial plague of debt in America combines a mortgage and a full-service bank account. The new "all-inclusive" type loan creates huge savings in interest payments and loan payoffs in one-half to one-third the time requiring little to no change to current spending habits or income.

How does it work? Homeowners deposit income and other assets into the new mortgage account and since it allows access like a checking account, expenses are paid out from it by check or ATM card. The fundamental part is, when the homeowners' money isn't being used it sits in the mortgage account reducing the daily loan balance on which interest is computed. This saves on average hundreds of thousands in interest over the life a typical loan. Less interest paid means more money for principal, so the homeowner builds equity faster and owns their home sooner.

"What this does for homeowners, is it empowers them to take control of their financial health," says Metekingi. "With our program, a homeowner can combat the financial cancer known as consumer debt plus current mortgage options and it allows the homeowner to reach their goals sooner in life, rather than later. This isn't a mystical trick of numbers; it is simply taking away the interest spread banks earn and gives it back to the homeowner."

Is this new loan product and system for everyone?

Yes, if you can achieve the simple disciplines of budgeting and currently have positive cash flow or are willing to review your budget to recover funds to create significant positive cash flow. You must be coachable and allow your goals to dictate your plan of action. If you're willing to do that, the payoff is unlimited and getting rid of debt and your home mortgage in 6-10 years is no longer a dream, it's a reality.

"The ability to be mortgage free within 6-10 years, quickly eliminate consumer debt, and free up existing income to start a significant investment program for the future is a now a reality. This can all be possible without requiring any additional income or reducing standard of living. The Mortgage Eliminator has empowered the individual in New Zealand and Australia to positively impact their own financial destiny in ways, which traditionally, many could not otherwise achieve," says Metekengki. "It is now available for the US, to achieve the same level of financial success and freedom, already experienced and proven in these international markets."

For more information on how you can be debt-free and pay off your home mortgage in as little as 7 years, and experience the savings with the Money Principal Program using their proprietary calculator, visit http://www.PDXLoan.com or call 1-800-862-0784 ext 21.

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Home Loans For People With Very Bad Credit - Improve Your Chances Of Getting Approved

If you have bad credit and are looking for a home loan, there are a few things you can do to improve your chances of getting approved and to help you get a reasonable interest rate.

Apply Online - The internet has a few companies that will take your application and submit it to hundreds of different lenders. You will receive up to the 4 best offers that you could qualify for. These offers are pre-approvals. You will still need to work with the broker to lock in an interest rate. Also, the benefit of using these companies is that they will not pull your credit initially. This is good because every time your credit is pulled, your credit score drops just a little. The mortgage company will just ask you to describe your credit, instead of pulling it.

Look Into Down Payment Assistance Programs - There are programs like Neighborhood Gold and Nehemiah that will help you get a down payment for your loan. Find out what their requirements are and if you could qualify. However, make sure the lender will work with them before you plan on it. Some lenders will not accept down payment assistance programs.

Apply With 2-3 Different Mortgage Companies - Sometimes one lender will be able to do a loan that another lender cannot. All mortgage brokers have access to different loan programs. What may be impossible for one, may be doable for another.

Keep Your Credit Score as High as Possible - Don't have your credit pulled over and over, this will drop your credit score. Keep making your payments on time. Also, pay off any amount you can on credit cards, this will help your credit score go up. If you have more than one credit card, divide the amount you have to pay down credit cards among all the different cards. It helps your credit score to not be maxed out on any lines of credit.

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Don’t Let Bad Credit Stop You

When I worked as a loan officer, it wasn’t unusual for me to come across people who thought they were out of luck because they had bad credit.

This is really not the case, although it is fair to say that you would not be able to walk down to your local bank, have a seat in the branch manager’s office and walk out with a mortgage.

However, there are alternatives, and you do have choices.

If you contact a broker, tell them your situation, be completely honest and up front with them, otherwise you are just wasting their time as well as your own, and believe me, whatever your situation may be, they have heard worse. Nine times out of ten they will be able to help you.

Conventional banks are not the only ones that lend money. Brokers have access too literally hundreds of banks with a wide variety of programs for people in unique situations from foreclosure buy outs, to 100% financing with poor credit scores.

I speak from experience, because when I was a loan officer I did mortgages for people in unique situations.

Foreclosure buy outs, bankruptcy, late payments on prior mortgages, the list goes on.

I would sit down with my customer, take down as much information as possible, than present their information to many different lenders for them to review. Most times I would find one with a program to help my customer.

Keep in mind, with unique situations, there is risk involved on the part of the bank, so you can’t expect to get the best rate in the world.  But if it is reasonable, and can put you into the situation you want to be in, than it is well worth it.

So if you think your credit, or a bad situation is preventing you from getting a loan, think again, there is probably a program out there for you, you have nothing too loose.

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Bridge Loans – From One Home to the Next

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.

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1st And 2nd Mortgage Refinance Loan

Refinancing a first and second mortgage requires some extra considerations. Depending on your equity, you may find that combining the two mortgages results in a higher interest rate. You may also find that you have to carry PMI with the refinanced mortgage.

Will Refinancing Benefit You?

Refinancing two mortgages allows you to consolidate your loans into one payment, often lowering your monthly bill. You may also find lower rates under the right circumstances.

Those with a large amount of equity benefit most from consolidating loans since they qualify for the lowest rates. It is important to look at interest savings, not just monthly numbers which can be misleading.

However, if you have less than 25% equity, you may end up qualifying for higher rates. With less than 20% equity, you will also have to pay for private mortgage insurance. Even with these factors, you may still find that you will save money by refinancing.

Have You Done Your Research?

To see if refinancing makes sense for you, research mortgage lenders. You can quickly go online and request quotes and terms. Look at the different offers, and work out the numbers. An online mortgage calculator can help you figure out monthly payments and interest costs.

An easy way to compare cost is to first add up your interest payments for both mortgages. Use this number to compare interest payments with each potential mortgage.

You also need to factor in the cost of refinancing. Just like with your original mortgage, you will have to pay fees and points. You want to be sure that you can recoup these costs with your interest savings.

Why Do You Want To Refinance Both Mortgages?

While refinancing both mortgages is convenient, you may decide to refinance only one or both separately. With your main mortgage, you can expect to get low rates.

A second mortgage will usually qualify for higher rates, but you can lock them in. You may also choose to convert from a line of credit to an actual mortgage. Again, you will want to investigate financial packages before signing up with a lender.

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30 Year vs. 15 Year Mortgages

Discussions of mortgages often focus on interest rates, but there is a much more basic decision to make. Should you go with a 30 year mortgage term or a 15 year mortgage term?

30 Year vs. 15 Year Mortgages

Any discussion of mortgages tends to turn on two points. How can you qualify for the most money with the lowest payment? How can you get the lowest interest rate for the mortgage? While these are two important issues, there is an addition one that people fail to consider, resulting in significant wasted money.

The term of a mortgage is extremely critical for a couple of reason. First, it sets the length of the obligation you are undertaking. Second, it defines the amount of interest you are going to pay over the life of the loan. These are huge issues when it comes to building equity.

The longer the loan, the more total interest you are going to pay. The trade off, of course, is you are going to have smaller monthly payments the farther you stretch out the obligation. While this may sound like a good goal when you first get the mortgage, it can backfire on you in the long run.

Most people focus on interest rates as a way to save money on mortgages. This is a valid approach, but playing with the length of the loan is a better way to save money. If you can cut the payments in half by going with a shorter loan, you can save huge amounts on the total interest repaid to a lender.

The decision on the term of the loan is relatively simple, but entirely dependent upon your personal situation. There is no absolutely correct choice. First, you need to determine if you can comfortably afford the higher payments that come with a shorter term loan. In general, a 15 year mortgage will have payments 20 to 25 percent higher than a 30 year loan. Of course, you will pay the loan off faster, to wit, be building equity in the home quicker.

The modern mortgage industry has a variety of different term length products. When applying for a loan, take the time to evaluate the different terms to see if you can find a loan that is perfect for your situation.

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