The Pros and Cons of a Bi-Weekly Mortgage

Having a mortgage can be expensive; with the interest that is charged over the life of your mortgage, a large portion of what you end up paying is nothing more than interest payments and not the loan itself. Obviously it's important to be able to pay off your mortgage as quickly as possible in order to keep the interest at a minimum, just as it's important to make sure that all of your payments are made on time so as to avoid late fees or other costs. One option that can help you to pay off your mortgage early while giving you the added benefit of having to pay less at any given time is a bi-weekly mortgage.

If you aren't familiar with the term, a bi-weekly mortgage is a payment plan which allows you to make a partial payment on your mortgage every two weeks. It's not an actual mortgage loan, but instead is a service which will help you to pay off your mortgage faster than you would be able to by simply making your standard payments each month. There are a number of pros and cons associated with bi-weekly mortgage services, and you should stop and consider some of these in order to make sure that a bi-weekly mortgage plan meets your financial needs.

<b>How Bi-Weekly Mortgages Work</b><br>

When you're using your standard mortgage payment plan, you're making one payment every month for a total of 12 payments per year. With a bi-weekly mortgage plan, however, you're making a payment equal to one half of your current payment every two weeks… this equals out to 26 half-payments over the course of a year. A bi-weekly mortgage essentially allows you to make one extra full payment each year, taking a full month off of your repayment schedule every year that you're using the bi-weekly mortgage plan. Even though you have to pay a service charge to the company offering the bi-weekly mortgage service, the savings that you receive in interest works out so that you still save money even with the added fees.

<b>Advantages of a Bi-Weekly Mortgage</b><br>

Obviously, the biggest advantage to a bi-weekly mortgage plan is the fact that you can pay off your mortgage early and save a significant amount of money on the interest that you have to pay. For most homeowners, this savings will be quite significant as they will be able to pay their mortgage off as much as two or three years early. Since the individual payments are lower than they would be if you were paying the full amount once per month, bi-weekly mortgage payments can also be much easier to fit into your budget. Many companies who offer bi-weekly payment services will let you tailor your payment due dates so that they best fit your income, letting you make payments when you get paid.

<b>Disadvantages of a Bi-Weekly Mortgage</b><br>

While bi-weekly mortgage payments may sound wonderful, there are some drawbacks associated with them as well. Probably the most important of these is the fact that even though you're making your payments to the service provider, you are still the one who is responsible for your mortgage. The service provider isn't a lender and doesn't have any sort of influence or control over your mortgage itself. They only make your mortgage payments once per month, just like you would; in the unlikely event that there's some problem in processing the payment, you may be required to pay it out-of-pocket while the problem is sorted out or risk receiving late fees or an interest rate increase for a late payment.

Another main drawback to bi-weekly mortgages is that the service which these companies offer isn't anything that you couldn't do by yourself with proper budgeting. When it comes down to it, if you have the self-control to structure your budget similar to making bi-weekly payments you could actually save significantly more by doing it yourself than you would through one of these services. You will save more because the service will charge you a transaction fee for each time they process one of your payments (in some cases you may have a fee for each time that they receive a payment from you via direct deposit, for each time that they make a payment, and an additional fee for account maintenance.) Depending on how you budget your finances, you may also be able to pay off your mortgage even faster than you would through a payment service by simply setting aside slightly more than one half of your monthly payment every two weeks. This only applies if you budget your money, of course.

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Mortgage Refinance Bad Credit Loan

In this article, you will be provided information to help you understand what options you've available to you when it comes to the matter of debt consolidation loan and mortgage refinance options.

The fact is millions of Americans with bad credit; refinance their home mortgage loans every year, using sub prime mortgage refinance loans. Virginia mortgage refinance loans can be used to pay off either the first or second Virginia mortgages. Finding a California sub prime mortgage refinance loan lender requires research.

By doing a price and cost comparison, by taking the time to shop around, you will be able to find a debt consolidation loan and mortgage refinance option that will actually meet your needs. You usually will not have to pay anything to the broker to aid you in finding a debt consolidation loan and mortgage refinance options that you can consider. You will want to make certain that you are dealing with a debt consolidation loan and mortgage refinance lender that is experienced, reputable and reliable.

These lenders have dedicated staffs, who work with consumers that have low credit scores, seeking mortgage refinance loans. The most popular options for bad credit home loans are cash out mortgage refinance and home equity loans. When it comes to debt consolidation loan and mortgage refinance options, you will want to keep in mind the very lender through which you have your current mortgage.

A bad credit mortgage refinance may be possible for you. Bad Credit Lenders provide poor credit mortgage refinance loans, bad credit home loans, and hard money loans. You can access these types of lenders that specialise in debt consolidation loan and mortgage refinance options both online and in the real world.

If you decide that mortgage refinancing is your best option, then pay careful attention to the mortgage refinance rate. The big question is 'can you get a mortgage refinance loan with a low credit score'. A Virginia mortgage refinance loan is a good solution for those individuals in Virginia who cannot meet their monthly mortgage loan payments.

Yes - it is a true that a person with a credit score above 670 will find it easier to get a mortgage refinance loan than a person with a low credit score - but this is doesn't mean that you cannot find a loan. As the value of your home increases and the balance on your home decreases, you may be eligible to remove your PMI with a mortgage refinance loan. When you get the bad credit mortgage refinance you are using your house as collateral.

You will be able to find the debt consolidation loan and mortgage refinance option that makes the most economic and financial sense for you, a loan package that will work for you today and down the road into the future as well.

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How To Avoid Mortgage Scams

With record numbers of individuals seeking home loans these days, it’s no surprise that scam artists have developed new ways to separate borrowers from their money. Mortgage scams are on the rise and typically target people who are overextended, have bad credit, or are in need of financial relief. These scams can cost a lot – in fact, they can result in the loss of your home. Guard yourself against con artists with a little background on common mortgage scams:

Slight-of-Hand Signings

There are documented cases of homeowners who unwittingly signed away the title to their homes because they were confused by paperwork. With any decision involving your finances, get everything in writing and insist on reading the documents carefully before signing. Ask questions and make sure you understand the answers. Be sure you never sign paperwork with blank spaces or allow someone to rush you through the process.

High-Priced Home-Buying Seminars

You’ve seen ads in the newspaper (and on bus benches) for those home-buying seminars or programs catering to people with less-than-perfect credit. If you’re considering such services, check out their fee structure first, and make sure you’re not buying into a scam. If you’re required to pay large fees in advance, chances are the service is not legitimate. Consult the Better Business Bureau before taking action.

The Reconveyance Racket

Say you’re struggling with mortgage payments or in foreclosure. A business or individual offers to buy the property and sell it back to you, once you get your finances back in shape. The process is called “reconveyance,” and there are legitimate companies offering these services. If you encounter a scammer, however, you could find yourself unable to repurchase your home.

Target: Reverse Mortgages

If a member of your family is considering a reverse mortgage, they should protect themselves against scams specifically targeting reverse mortgages and speak with a HUD-approved counselor first. Make sure they get at least three separate offers in writing, and that they understand the terms and conditions before signing. Remember, borrowers generally have up to three business days in which they can cancel a loan document.

Home Equity Hard Knocks

In this type of scan, the homeowner is approached by a contractor offering home renovations at an affordable price. When the homeowner protests that they can’t afford the work, the contractor suggests he arrange financing through a lender acquaintance. The homeowner agrees, the contractor commences work, and then presents the homeowner with a bunch of paperwork. Some of the papers may be blank or incomplete and the contractor threatens to walk off the job unless they are signed immediately. After the fact, the homeowner discovers they’ve applied for a home equity loan with high rates and accompanying fees. At this point, the contractor has all the leverage because the work is underway and he’s probably received a kick-back from the unscrupulous lender.

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Commercial Mortgage Loans

Commercial Mortgage Loans are specially tailored for purchasing property that can be used for commercial use, the expansion for current business premises, and any residential and commercial investment as well for property development.

Difference between residential loans and Commercial loans

If you are considering buying a property of four units or less, it is considered as a home loan. However a property of five units or more is considered as a commercial loan. Commercial mortgage loans can be obtained at different variable interest rates as compared to residential loans. 

Commercial Mortgage rates

The interest rate of commercial loans is much higher as compared to the residential loans. This is quite obvious as commercial loans are considered risky by many bank lenders, as the ability to meet the repayments is dependant on the performance of the business. Therefore the rate of interest is charged after the lender has carried out a thorough assessment of your business proposal. If your business has a good standing and has shown stability over the years then you shouldn't have much problem in securing a commercial mortgage loan. You can obtain a commercial mortgage loan for a standard period of 25 years with domestic property. It can also be as short as a ten year repayment term.

If you are considering buying a business property or expanding your current business you can take assistance of a broker like I Loan Resource, we can help you meet all your requirements and provide you a commercial mortgage loan that best suits you.

I Loan Resource use only the best lenders from worldwide to help you with your loan problems. We have pre-qualified these companies and set strict standards that they must educate you on your loan and not conceal any costs that you will incur. If you are looking to refinance your home, get a new home loan or just using your equity to consolidate your debt then I Loan Resource can help you find the right lender.
If you are worried that your credit is bad then please fill out our online form and we will have a specialty lender contact you and explain how you can get the loan that best suits you.

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Adverse credit mortgages - real estate borrowing with discordant credit

How far can you go to get the right thing? You would not mind making an extra effort in order to get it. Same is true with mortgages. And especially with mortgage for adverse credit. It takes time and patience to get the right one. 

<a href="http://www.cheapestmortgageuk.co.uk/adverse_credit_mortgage.html" style="text-decoration: none">
Adverse credit mortgages</a> are meant for those mortgage people who are struggling with the aftermaths of having adverse credit. Some lenders specialize in adverse credit mortgages. They are not uncompromising with qualifications for adverse credit mortgages. Having adverse credit would not reduce your chances of finding a mortgage. 

If you have adverse credit, you should start by checking your credit score. Credit score is easily available at the three credit reporting agencies - Experian, Equifax and Trans Union. Or you can get your latest FICO score. A credit score will provide the lender with the information about the credit risk you are as a borrower. Knowing your credit score will tell you where you stand as an adverse credit borrower. Also this will prevent you from getting duped by lender. Lenders might charge more interest rates for adverse credit than applicable.  

For an adverse credit mortgage borrower accurate credit score will carry a lot of value. The credit score varies from 500-720. Since you have adverse credit your credit score might be below 580. Adverse credit borrower will have one of the following on their credit history.  

Late payments: Timeliness of payments holds the maximum points in your credit score. Your credit score decreases by 15-40% with thirty day late payments.

Outstanding credit: You may have no late payments yet adverse credit score. This is because you have outstanding debt. This may be because you have drawn over your credit limit. Try to distribute this overdrawing and you will find that you have improved your credit score in just a few weeks. 

Bankruptcy – bankruptcy will result in adverse credit. For an adverse credit mortgage, it will be more beneficial if you have a chapter 13 bankruptcy rather than a chapter 7. 

Foreclosure – A foreclosure stays on your credit report for 7-10 years and will mean adverse credit if you want a mortgage.

CCJ – County Court Judgments or any court judgment will imply that you need to apply for adverse credit. 

Credit checks – Many credit checks could also result in adverse credit. Mortgage lenders are doubtful if there are many credit checks. 

Mortgage lenders are usually acceptable of adverse credit. This is because mortgage means you are giving your home as security for the loan amount. A home has a lot of latent equity. A good stable income, good equity and down payment will help you overcome the reverberations of adverse credit. The down payment for adverse credit mortgage is 10-20%. Different mortgage lenders have different criteria for adverse credit mortgage. This will mean that you will have to travel far and wide on the web space to find a lender has lending terms that suit you.  

Just stop making any credit mistakes when you apply for adverse credit mortgages. 

• Do not delay payments on your adverse credit mortgage.
• Don’t close accounts. 
• Do not neglect revolving accounts like credit cards. Restrict the use of credit cards to the minimum.
• Do not disregard your credit limit.
• Do not ignore any negative information on your credit card. Try clearing it; it will cost you a lot if it stays. 
     
Adverse credit mortgage is linked to high interest rates. However, that may not be the case with you. Remember that once you have taken adverse credit mortgage and start making regular monthly payment, in due course you will have a new improved credit history. 

So what if you don’t conform to the traditional mortgage rules.  If you have been told that you can’t get mortgage for adverse credit, it is simply not true. And if you are told you can’t be helped then start helping yourself with research. Shopping around for adverse credit mortgage will make you aware of what you can get with adverse credit mortgages at your terms. A smart shopper keeps on looking around till he finds the right thing. So, how far can you go to get the right thing?

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Second Mortgage a Good First Step

A second mortgage can be the first step to climbing out of debt, especially for homeowners who have bad credit. A second mortgage is a loan taken out in “second position” on a property that already has a mortgage. There are fixed-rate loans, adjustable-rate loans and home equity lines of credit (also known as HELOCs). Fixed-dollar-amount mortgages are the way to go when you need all the money at once. A HELOC is a credit line that can be drawn upon as needed up to the limit of the loan.


<b>“Bad Credit” Second Mortgages</b>
Your right to credit is guaranteed by the Equal Credit Opportunity Act. You can’t be denied credit based on race, gender, marital status or ethnicity. But how much money you can borrow and how much interest you will be charged will depend on your credit score.


Credit is easy to get and hard to control. Not using it properly will get you a low FICO score from the three major credit bureaus. Generally, a score of 680 or better signifies good credit. Scores in the 680-620 range are still considered good, but will cause creditors to take a second look before lending you money. 620 and lower, and you are in the bad credit range.


Here are some indications that you are in bad credit territory:
- You have to apply for new credit cards to pay off old ones, thus rotating but not retiring your debt.
- You can only make the minimum payments on your loans and cards each month.
- You are at the limit on all your cards and accounts.
- You have to get subprime financing when you need to borrow money.


<b>Improving Your Financial Situation</b>
It’s a catch 22 that getting a bad credit second mortgage can lower your FICO score initially, but it can also help raise it in the long run—if you use the money to pay off high interest debts. This new loan doesn’t reduce your debt; it just restructures it to help you get back on your feet financially. An added bonus is that the interest you pay is tax deductible. The IRS says joint filers can deduct all the interest to a maximum of $100,000 on home mortgages.


It’s easy to shop and compare bad credit second mortgages online at reputable sites like www.badcreditsecondmortgages.com. The no-obligation application process is quick and confidential. Interest rates are still relatively low, but might rise in 2006, so now is a great time to see if a second mortgage is a good financial move for you.

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Mortgage loans are one of the most desired loans now a days.

<p><strong>Mortgage loans</strong> are one of the most desired loans now a days. Mortgage loans are larger  in amounts. They are the highest investments that the companies invest and  highest amounts that the customers want, and then interest percentages will  play a predominant role. Then to plan these we have to look for the good loan  provider, who takes care according to your financial status and plan for us in  various types.</p>
<p>Here we have such type of  Loan provider named <strong>Maico Mortgage Loans</strong>,  one of the successful loan providers with various options of interest plans on  the mortgage loans. The team of Maico will plan the loan according to the  customers financial status and type of usage he had and suggest the plan to the  customer. </p>


<p>The various types of Loan  plans provided by the Maico are:</p>


<ul>
  <li>Stated income  loan</li>
  <li>Interest only  loan.</li>
  <li>Imperfect  credit loan.</li>
  <li>Home equity  loan.</li>
  <li>No doc loan.</li>


  <li>First time  home buyer loan.</li>
  <li>No closing  cost loan.</li>
  <li>Standard ARM  loan.</li>
  <li>Low payment  loan.</li>
</ul>
<p>For more details visit www.maicomortgageloans.com</p>


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How To Get The Best Mortgage

Getting a mortgage is a very important decision, so you have to make sure that you get the best mortgage for your needs. Despite this, many people simply opt for the first deal that looks attractive without really shopping around. If you really want to find the best mortgage for your needs, then you need to carry out a number of checks at each juncture before you sign for the mortgage.


Check your credit


Before you apply for any type of loan, you should get hold of your credit report and make sure that all the information is accurate. It is your responsibility to make sure that the report is accurate. If the report has mistakes in it, then you could end up paying a lot more for your mortgage.


Know the jargon


Another step you should take before applying for a mortgage is to learn the terms involved in mortgage lending. Learn about the types of mortgage as well as any abbreviations that are commonly used. The more you know, then the less likely you are to sign something that will cost you extra money.


Know your limits


The last step to take before applying for a mortgage is to know exactly how much you can afford to pay back each month, and how much you are looking to borrow. That way you won’t overstretch yourself and will get the amount of money you need to buy your ideal property.


Shop around


After you have done some research and got your credit checked, you should begin shopping around for a mortgage. The more lenders you look at both on and offline, the more likely you are to find the best deal. 


Determine all the costs


Although a low interest rate is important, there are usually other costs involved in getting a mortgage that you might not know about. Make sure that you know exactly how much it will cost you complete the mortgage application, and any other fees that might apply such as late or early payment fees.


Don’t be pushed into something


One of the most important things to remember is not to be pressured into signing anything you are uncomfortable with. Any lender that tries to get you to borrow more than you can afford or is pushy about you signing should be avoided. If you are in any doubts at all, do not sign the agreement and look elsewhere. If you need help understanding clauses then get a lawyer to look over the contract and explain the terms. Also, make sure you do not agree to anything that you don’t need, such as costly credit insurance. 


Check and double-check


Once you have found a lender that you are happy with, make sure that you check the contract thoroughly again, and read all of it through a few times, especially the small print. This is especially true if something was previously agreed and then you have met on another occasion to sign the deal. If anything changes then walk away and don’t sign. If you are careful and know what you are looking for, then you will find the best mortgage for your needs.

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FHA Home Mortgage Purchase Or Refinance Loan - Why You Might Consider Getting An FHA Loan

Most borrowers have heard of FHA home loans. They are very common. You hear about them mostly as loans for first time borrowers, which is common. However, most people don't realize that FHA loans can also be does for refinancing. They are not only for purchasing a house.


HUD owns and operates FHA, which is a program designed to help borrowers who might have difficulty buying a house. If the borrower falls within FHA's requirements FHA insures the loan for the lender, which makes the loan very low risk for the lender, which is very good for the borrower. It could mean a lower interest rate, better terms and just an overall better loan.


FHA's requirements are; a down payment of 3-5%, the home must be under the FHA's set loan limit for the county that the borrower lives in and a few other small requirements.


The main advantage to an FHA loan, is if you can fall within their requirements, your credit history or income level, will not hold you back from getting a home loan. If you are getting turned down from other lenders because of a high debt to income ratio or because your credit is bad. You may want to consider applying for an FHA loan, where those requirements are either non-existant or much more flexible. 


If the idea of down payment is holding you back, consider also, that FHA loans allow the use of a non-profit organization as a source for the down payment, which opens up the option of using down payment assistance programs like Neighborhood Gold.


To view our list of recommended mortgage lenders online, who offer FHA programs, visit this page: http://www.abcloanguide.com/govloans.shtml

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An Introduction To Commercial Mortgage Brokers

To secure a commercial mortgage efficiently, you would do well to go through a mortgage broker who is a specialist in the area. There is a lot of paperwork to be completed when applying for a loan. Even if you prepare your application carefully and provide all required documents, you may not get the loan.  This is a grave possibility, and you will have to begin the tedious process over again.


Market experts advise all borrowers, small or big, to utilize the services of a reliable, reputable and experienced commercial mortgage broker. Most people dither from hiring a broker to avoid paying the brokerage, but the lender will often take care of that payment so the onus is not on the borrower.


Commercial brokers are the key mediator between the lender and borrower. They have expertise not only in brokerage, but also in areas of investment, management, and consulting. A broker submits your completed commercial mortgage application to several commercial lenders simultaneously. This increases your chances of approval and saves you precious time. The commercial mortgage broker works with many different lenders daily, and knows what each lender looks for in an application. This in turn implies that brokers will send your application to only those lenders who are likely to approve your loan under their given policies. 


Brokers receive payment only when they are successful in matching applicants with lenders. What motivates them are financial incentives. Working with a commercial broker will cost you nothing at all. In fact, your chances of getting your loan approved quickly will increase. Also, you will be left with more time to get back to your business. Additionally, your broker may get multiple lenders to approve your loan, which will permit you to bargain for better mortgage terms. An added advantage is that your commercial mortgage broker will lead this negotiation so you can trust his expertise. 


Most people are unaware or wary of trying out a broker’s services. A commercial mortgage broker can remarkably streamline your commercial mortgage approval process through his expertise.

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1st And 2nd Mortgage Refinance Loan - Consolidate 1st And 2nd Mortgages Into One Low Payment

Refinancing both your first and second mortgages will result in one low monthly payment that could save you thousands in interest charges. By combining both mortgages, you qualify for lower rates than if you refinance separately. You can see a significant savings with your second mortgage refinance, which is often several points higher than your first mortgage rates. You will also save on application fees and other closing costs.


Strategies To Lower Your Mortgage Payment


You have a couple of options to lower your mortgage payment when refinancing. The first choice is to find a low rate mortgage. So even if you choose the same length for your loan, you will still see a savings in your monthly mortgage bill. Adjustable rate and interest only loans will give you the lowest payments, at least at the beginning of your home loan. But a fixed rate loan can also give you reasonable rates with security that they won’t rise in the future.


The other option is to extend your loan term, especially in the case of your second mortgage which usually is for five to ten years. By consolidating your loans to a thirty year loan, you lengthen your payment schedule for principal, so you have a smaller payment. However, your interest rate and charges will be higher than with a shorter term.


Getting The Best Loan


Once you determine the type of loan and terms you want, do your shopping for a good lender to save even more money. Lenders will vary in how much they charge for closing costs and interest rates. The APR will tell you how loans compare overall, both in terms of rates and closing costs.


But if you are planning to move or refinance again in the future, then be wary of paying high closing costs. Even if they secure you a lower rate, you will only see a savings if you keep the mortgage for several years.


Don’t base your lender decision based on posted loan rates. Ask for a personalized loan quote based on your general information. With more accurate numbers, you can make an informed choice as to who has the best financing for you.

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Tips for Locking In the Lowest Mortgage Rate

Whether you are a first time home buyer, or you have been purchasing real estate for years, one of your main goals other than finding the perfect piece of property is to make sure that your mortgage rate is as low as possible.  Anyone who has had to navigate the tricky waters of the mortgage markets knows that rates can vary day by day and knowing when to lock in the rate can save you thousands over the life of the loan.


When looking for a mortgage one of the most important things to keep in mind is that competition is key to getting the lowest rate.  Many first time home buyers make the mistake of not shopping around for a mortgage.  They take the first offer that is presented to them and often end up with a rate that can be as much as one or two full points higher than rates for others with a similar financial background.  They think that their real estate agent is there to help guide them to the best choice - when in reality they are there to earn their commission.  The best advice for new home buyers is to always make sure that you separate your financial transaction of buying the house away from the process of finding a home.  The rule of thumb is you should compare rates from at least three different providers, more if you have the time.


Even experienced real estate buyers can sometimes end up over paying their interest.  The biggest gotcha is not locking in your rate when you had to the chance.  This is especially true in times of economic downturn or when there is uncertainty in the credit markets.  Often you have less than 48 hours to lock in a rate once presented to you by your lender.  If you are uncertain whether rates are going to go up or down after you lock in a good rule of thumb here is to watch the 10-year Treasury note.  Mortgage rates tend to follow the yield for the 10-year note more than they do any other short-term investment, including Fed rate adjustments.


When you do decide to lock in a rate make sure that you get it in writing, including a full disclosure of the terms.  Oral agreements won't hold up should you need to pursue legal action.  A written agreement protects both you and the lender from any miscommunications.  You will know exactly what you are getting on what terms and how long the rate lock is good for.  Typically, you want to aim for 30-60 days to give you enough time to find the house that is right for you.  However, 30 days is becoming more standard as the rate markets continue on their rollercoaster ride.


You might also want to consider asking about a float-down agreement to lock in the rate.  Under this agreement the lender keeps the rate at your locked in value should rates go higher, but if they decrease they lower the rate to match.  The only drawback to these agreements is they can be expensive and depending on the size of the mortgage note the cost to enter into such an agreement may very well offset any savings you would gain unless the mortgage rate declined by more than half a point or more in many cases.


Locking in a mortgage rate is the best way to get the mortgage you want at terms you can agree with.  It lets you focus on finding the perfect home of your dreams instead of worrying about fluctuating mortgage rates.

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Secured Loans / Second Mortgages

During the past five years lenders have seen a boom in the demand for second mortgages as borrowers look to capitalise on the equity in their home. The low cost of borrowing coupled with the spiralling value of homes in the UK has led to a substantial strengthening of the equity position of many a homeowner. The equity position of some homeowners is in fact so strong that they now find themselves in the fortunate position of having more equity in their home than they have debts secured against their home on first mortgages and other loans.


Buoyed by the healthy state of positive property equity confidence is running high when it comes to homeowners committing to further borrowing. Many are taking the opportunity to secure second and even third charge loans against the equity in their property in order to release cash funds. Even the more conservative borrowers are now beginning to see the light, despite experts predicting of an imminent slowdown in the housing market. 


If you're thinking about releasing equity in your home through a second mortgage, here are some things you'll need to consider before you take the plunge: -


Interest rates on second mortgages


The interest rates charged on second mortgages are often higher than those that are levied on first mortgages. This is because lenders see second mortgages as a higher risk than first mortgages and so compensate for this risk through fixing higher interest rates on second mortgages. 


The increased risk factor on a second mortgage is down to the fact that these types of mortgages are a second charge on the property. That is to say that in the event of you defaulting on repayment to the point that your home is repossessed, the first mortgage lender legally gets first bite of the cherry when it comes to recovery of the loan. For second loans secured against the property, the lender has to wait its turn, running the risk that it may recover only part of the loan advanced or in some cases none of the loan advanced. 


Lending criteria


Different lenders have different lending criteria for second charge mortgages. Whilst all lenders are likely to assess applicants for a second mortgage on the value of their home, their ability to repay the loan and their current income to debt ratio, not all lenders will give the same weight to these factors in the final analysis. This is why you may be rejected by one lender but accepted by another on an almost identical second mortgage offer. 


Can you afford the repayments?


For a lender to be convinced that you are able to meet the repayments on a second mortgage, you'll need to be sure how you're going to repay the loan. You should never take on a second mortgage without first planning how you will pay the money back. 


Different types of second charge mortgages


There are several different types of second charge mortgages to choose from. Be sure to get information on all your options and select the type of second mortgage that is most suitable for your circumstances. It is advisable to never borrow more than the current equity value in your home.

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Option Arm Mortgage Loans: How do they work?

Typically, option arm mortgage loans give the consumer four payment options each month - a 30year fixed payment, a 15 year fixed payment, an interest only payment and a deferred interest or minimum payment.


The 30 year, 15 year and interest only payments are based on the fully indexed rate.  The fully indexed rate is calculated by adding the margin to the index.  The index would most likely be the Libor, MTA, COSI, COFI, or CODI.


Here’s an example: 


Let’s say you have a margin of 3.15 and an index of 3.32.  This would give you a fully indexed rate of 6.47% (3.15 + 3.32 = 6.47).  This is the rate that is used to compute the 30 year, 15 year, and interest only payments.  


Depending on the lender and loan program you select, the deferred interest or minimum payment could either stay fixed between 1% and 2% for 5 years or the PAYMENT could start at around 1% and go up or down a maximum of 7.5% annually for 5 years.  


The minimum 1% to 2% payment is an interest only payment and is based on a 30 or 40 year amortization.


The reason an option arm loan is called a deferred interest or negative amortization loan is because the difference between the minimum 1% payment and the interest only payment is added to the loan amount each month if the consumer chooses to make the minimum payment.  So the loan balance increases over time instead of decreasing.  


Once the loan hits the 5 year mark or if the deferred interest reaches 110% or 115% of the original loan amount, the loan will recast.  Which means it will convert to an interest only or principal and interest loan at the fully indexed rate.




The fully indexed rate is calculated monthly and therefore could change from month to month.


Here are a few benefits of the option arm mortgage loan: 


* The minimum payment is 100% interest; therefore, 100% of the payment is tax deductible


* The deferred interest is mortgage interest so it may be tax deductible


* If the client makes bi-weekly payments, the amount of deferred interest will decrease by approximately 30% or be completely eliminated.


* The minimum payment increases the client’s cash flow


* This loan gives the client several payment options


* It also allows clients to use their mortgage as a financial tool to build wealth.  




In closing, here are four important points to keep in mind when selecting an option arm loan program:


1) Get a 30 year amortization (not 40 years).  The 30 year amortization will keep the 1% payment option available longer.


2) Choose an index which is less volatile.  Like the MTA instead of the Libor.


3) Select an option arm program that has a 115% recast instead of a 110% recast to increase the chances of the payment options being available for the full 5 years.


4) Select an option arm with a low lifetime interest rate cap




For more information on this and other mortgage related topics, please visit:


http://Mortgage-Training.Mortgage-Leads-Generator.com


Please feel free to reprint this article as long as the resource box is left intact and all links are hyperlinked.

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Option Arm Mortgage Loans: How do they work?

Typically, option arm mortgage loans give the consumer four payment options each month - a 30year fixed payment, a 15 year fixed payment, an interest only payment and a deferred interest or minimum payment.


The 30 year, 15 year and interest only payments are based on the fully indexed rate.  The fully indexed rate is calculated by adding the margin to the index.  The index would most likely be the Libor, MTA, COSI, COFI, or CODI.


Here’s an example: 


Let’s say you have a margin of 3.15 and an index of 3.32.  This would give you a fully indexed rate of 6.47% (3.15 + 3.32 = 6.47).  This is the rate that is used to compute the 30 year, 15 year, and interest only payments.  


Depending on the lender and loan program you select, the deferred interest or minimum payment could either stay fixed between 1% and 2% for 5 years or the PAYMENT could start at around 1% and go up or down a maximum of 7.5% annually for 5 years.  


The minimum 1% to 2% payment is an interest only payment and is based on a 30 or 40 year amortization.


The reason an option arm loan is called a deferred interest or negative amortization loan is because the difference between the minimum 1% payment and the interest only payment is added to the loan amount each month if the consumer chooses to make the minimum payment.  So the loan balance increases over time instead of decreasing.  


Once the loan hits the 5 year mark or if the deferred interest reaches 110% or 115% of the original loan amount, the loan will recast.  Which means it will convert to an interest only or principal and interest loan at the fully indexed rate.




The fully indexed rate is calculated monthly and therefore could change from month to month.


Here are a few benefits of the option arm mortgage loan: 


* The minimum payment is 100% interest; therefore, 100% of the payment is tax deductible


* The deferred interest is mortgage interest so it may be tax deductible


* If the client makes bi-weekly payments, the amount of deferred interest will decrease by approximately 30% or be completely eliminated.


* The minimum payment increases the client’s cash flow


* This loan gives the client several payment options


* It also allows clients to use their mortgage as a financial tool to build wealth.  




In closing, here are four important points to keep in mind when selecting an option arm loan program:


1) Get a 30 year amortization (not 40 years).  The 30 year amortization will keep the 1% payment option available longer.


2) Choose an index which is less volatile.  Like the MTA instead of the Libor.


3) Select an option arm program that has a 115% recast instead of a 110% recast to increase the chances of the payment options being available for the full 5 years.


4) Select an option arm with a low lifetime interest rate cap




For more information on this and other mortgage related topics, please visit:


http://Mortgage-Training.Mortgage-Leads-Generator.com


Please feel free to reprint this article as long as the resource box is left intact and all links are hyperlinked.

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Mortgage Refinance or Home Equity Loan – What’s the Difference?

Many people use the terms mortgage refinance and home equity loan interchangeably, but the two are not the same thing. Before you consider one or the other, be sure you know what your lender is referring to.


The reason the two terms are often confused has to do with the fact that you’ll typically be refinancing your existing mortgage when you have some equity established in your home. Equity is simply the difference between the market value of your home and the amount you owe against it. To put it into dollars, a person who owns a home that has a market value of $100,000 and a mortgage on that home of $60,000 has $40,000 in equity. 


That’s not to say that all lenders are willing to loan you an additional $40,000. In fact, many lenders have caps on the amount they’ll loan. It might be that a particular lender will only loan up to 90 percent of the market value of the home. In that case, the loan value of the home would only be $90,000. Though the amount of equity technically remains the same, the amount of loan available depends on the lender’s guidelines.


If you have $40,000 in equity in your home, you may want to cash in on at least some of that money. But how do you go about getting it? The two main options are to take out a mortgage refinance loan or a home equity loan. A mortgage refinance is exactly what the name implies – your original mortgage will be figured into a new loan, giving you a mortgage refinance loan. But a home equity loan leaves the existing loan as it stands. You’ll have a second payment on top of the original mortgage.
So which is better? It actually depends on several factors. Did you get great terms and rates when you financed the original loan? If so, you may want to consider a home equity loan so that you keep those great rates and terms on your original mortgage. 


Can you afford to make the “double” payments required? Remember, if you take out a home equity loan you’ll still be making the original mortgage payments and your home equity loan will be tacked on top of that. Some people find that the budget simply won’t stretch to make those necessary payments. 


There’s plenty to consider before you decide whether it’s time for a mortgage refinance or you should take out a home equity loan.

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Keeping your Home Despite a Job Loss

Job loss is a grim specter for a mortgage holder.  For most of us, that mortgage payment is at the top of the monthly bill payment list.  You can talk almost any creditor into short term relief and even long term restructuring – the phone company, your car loan(s), credit card companies; they deal with delinquent payment plans daily.  Mortgage companies get nervous much more quickly, but most are willing to consider at least one skipped payment if your unemployment is for a short period.  


Mortgage Insurance?


You may not remember this in the flurry of documents and signing sessions that accompanied your home purchase, but you may well have an insurance policy that protects your lender against mortgage default.  If you have a loan that is more than 80% of the home’s value when purchased, you probably are also paying for mortgage insurance.  It’s incorporated into that list of particulars you pay on every month: principal, interest, taxes, homeowner’s insurance – and mortgage insurance.  It’s meant to protect the lender; see what protection it provides for you.


Talk to your Lender


It is important to talk to your mortgage lender.  Job upheaval is sufficiently commonplace in this country that many mortgage holders have become flexible about restructuring loans, as long as you are prompt in informing them and honest about your job prospects.  
A typical restructuring will allow for lesser payments until your income is reestablished, at which point the bank will again restructure to get you back on schedule. Keep in mind that prospective new employers are almost as likely to check your credit rating as prospective lenders.  


Before you enter into discussions with your lender on this prospect, decide what you can afford.  Don’t be grateful for whatever is offered, and agree to a financing plan that you can’t meet.  Tell your lender that your maximum temporary mortgage payment has to be 60% of the norm, not the 75% they are proposing.  If you lose the house, it costs them money too.


Bankruptcy – The Poison Pill


The long term answer to keeping your home while unemployed is filing for bankruptcy.  The unattractive fallout from exercising this option is known to most of us, although the hard and fast rules have changed somewhat.  What used to be seven years of no credit at all has become credit card eligibility after two years.  Depending on the circumstances of your bankruptcy, you may be eligible for high risk auto loans and other debt within two to three years after bankruptcy.  That assumes, of course, that you have regained employment status and are once again making mortgage payments.  Also, bankruptcy has become so common that the Federal Government is on the verge of making it a much less attractive option for consumers.


Near Term Borrowing


With near-term unemployment and an unclear future, many people have put mortgage payments on their credit cards until the limits on those cards are reached.  It may blow holes in your credit rating, but it will keep you current on the mortgage and stave off bankruptcy.  You can attempt to obtain a home equity loan to fill the hole in your monthly budget, but those are much harder to come by when you’re unemployed.  If there are others in the household who are employed, the home equity loan may be a viable option.

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Getting 100% Financing With Bad Credit - Is No Down Payment A Good Idea?

Getting 100% financing with bad credit can get you into a home with little out-of-pocket expense. However, higher rates will make the loan more expensive than financing with a down payment. There are some cases when zero down can be a benefit, especially if you plan to move or refinance soon.


The Cost Of Zero Down


Zero down will cost you more with higher interest rates. These rates will also increase your monthly payments. Some financing companies also require you to pay additional points or fees at closing. It is best to request quotes for 100% financing from many lenders to find the best offer.


You can reduce these rates with an adjustable rate mortgage (ARM). These types of loans are the easiest to qualify for and start with lower monthly payments. The only drawback is that rates and payments can increase over time. But you always have the option of refinancing to lock in your current rates.


Saving On Living Expenses


While 100% financing can be expensive, it will save you money on living expenses. Purchasing a home is an investment, unlike rent. Your monthly payment is increasing your home’s value. Time and market demand will also increase your property’s value.


By working with a subprime lender, you don’t have to worry about private mortgage insurance (PMI) with zero down. Lenders absorb the risk with the higher rates. You also have the tax deduction of your interest payments each year and in some cases, the closing costs of the loan.


Financing Based On Your Future Goals


Zero down loans do have a place for homeowners. If zero down means the difference between renting and owning, then invest with the 100% financed loan. By keeping some cash reserves, you improve your credit score and protect yourself from a financial emergency.


If you plan on moving or refinancing in a few years, then a zero down loan doesn’t have the full financial impact. Since you are paying interest on a short period, you don’t suffer years of higher rates.


As with any type of mortgage, shop around for lenders. Be honest about the financing package you want. And remember, you can refinance for better rates and terms as your credit score improves.

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Choosing the home loan lender type for you

There are a multitude of different lender types in the housing market and before refinancing or borrowing it pays to know who's who. Each option has it's pluses and minuses it comes down to choosing the person or institution that suits your needs and who you feel comfortable with. Here's a brief intro:


Mortgage Brokers
Mortgage brokers are responsible for introducing borrowers to lenders - they act as an intermediary offering prospective borrowers information on various lending institutions and their products. With the various types of lending institutions available, not to mention the vast array of products on offer, the borrower has various options and choices. The task of the mortgage broker is to determine the most suitable loan for the borrower. While the broking service is often free, a small fee may be charged, and the broker will generally receive commission from the lender they recommend.


Mortgage Managers
Mortgage managers are lending specialists who arrange funding for home and investment loans. Unlike banks,building societies and credit unions, mortgage managers do not have a base of customer deposits with which to fund their loans instead they source their funds via a process known as securitisation. This is a process whereby assets with an income stream are pooled and converted into saleable securities. The mortgage managers job is to set up the loan and perform a liaison role with all parties involved, namely originators, trustees, credit assessors and borrowers. They provide the customer service role and are there to manage your loan throughout its term.


Credit Unions
A credit union is a cooperative that is owned and controlled by the people who use its services. Each member is both a customer and a shareholder in the credit union.Deposits from members are used to fund loans to other members, with the credit union business structure facilitating the process. Credit unions serve people who share a mutual interest, such as where they work, live, or go to church. Credit unions are non profit organisations, and because there are no external shareholders there is no pressure to earn profits at the expense of customers. Like banks, they offer a wide variety of banking facilities such as loans, deposits and financial planning. Credit unions main function is to serve members needs rather than make a profit. They therefore put a great deal of emphasis on customer service and meeting the needs of members.


Building Societies
Building societies operate in the same manner as banks and obtain their funding primarily through customer deposits. As with credit unions, customers are members. In a sense they own the society, which is why they are often referred to as mutual societies.


Banks
In Australia banks are regulated by the Reserve Bank. Banks are the original lending institutions and for the most part they source their funds through customers term deposits and savings deposits via their branch networks. Customers are paid interest on deposited funds and these funds are then available to lend to borrowers. In turn, these borrowers pay interest to the bank on the sum lent. The margin between interest paid on deposits and interest received from loans provides banks with their major source of revenue. A downside of Banks is that Banks generally have a large network of branches supported by many staff members involved in the day to day operation of taking deposits and lending funds. Much of the banks profits are swallowed up in the maintenance of their branch structures, whereas various other types of lenders don't have such hefty overheads.

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An Introduction to Mortgage Protection Insurance

Purchasing a home is a major expense that requires a significant and long term financial commitment. When you initially apply for a mortgage, you are approved for loan funding based on your financial status at the time of application. Most people do not expect that their financial situations will get worse over time, but in some cases that is exactly what happens. Whether through the loss of employment or the death of a family member, it is an unfortunate fact that many people find themselves in situations that keep them from being able to keep up with their home loan payments. 


<b>Importance of Mortgage Protection Insurance</b>


For many families, making mortgage payments would become difficult or even impossible in the event of the death of one or more members of the household. Before investing in a home, it is important to stop and think about how the house payments could be made if a major source of household income were to become permanently unavailable as the result of an unanticipated death. 


While no one wants to think that their family will ever face a worst case scenario, it's necessary to make contingency plans for every possible situation. Mortgages are such a large expense that it is important to consider how one's family would be able to avoid the threat of foreclosure, in addition to losing a loved one, if such a situation were to arise. Fortunately, it is possible to protect your family from having to face the possibility of such a situation by investing in mortgage protection insurance. 


Simply put, mortgage protection insurance is a life insurance policy that will pay off your mortgage following the death of one or more covered individuals. The primary purpose of this type of coverage is to reduce the financial burden placed on surviving family members following the death of a loved one. Homeowners who invest in this type of insurance coverage are making an important commitment to their families. This type of converge can ensure that one's family will never be forced out of its home as the result of income loss following the death of a family member. 


<b>Who Needs Mortgage Protection Insurance?</b>


In single income households, or families in which one partner earns the majority of the money, many people think that the only covered life needs to be that of the primary breadwinner. However, it is likely that the death of a non-working spouse, or one who works part time, can also have a serious impact on a family's ability to continue to afford to make mortgage loan payments. 


Many people make the mistake of focusing only on income loss following death. They neglect to think about the expenses that will increase if either adult household member is no longer around. For example, if the non-working spouse is staying home with young children, the family does not have to pay for full-time child care. However, if that parent were no longer there, the working parent would have to pay for child care, which is a significant expense, in order to continue working. 


<b>Where to Get Mortgage Protection Insurance</b>


There are a number of different options for making sure that your family remains financially able to stay in its home following the unexpected death of one or more members of the household. Many banks and other lenders offer mortgage protection insurance policies that can be purchased at the time you close on your home loan. 


These types of policies are specific to one's mortgage, and proceeds are disbursed to pay off the remaining loan balance upon the occurrence of a covered event. It is also possible that the company who carries your homeowners' coverage offers a mortgage protection policy. Payments for these types of polices can generally be included in the escrow payments for homeowners insurance and property taxes that are included in your monthly house payment.


Another mortgage protection insurance option, however, is to take out term life policies on the adult members of the household. These types of policies put more control in the hands of the surviving family members. Policy proceeds can be used to pay off the mortgage in a lump sum, as with a traditional mortgage protection insurance policy, or the individual can choose to continue making monthly payments while investing or otherwise utilizing the remaining funds. 


No matter which coverage option you select, the important thing is to make sure that your family is protected even under the worst possible circumstances. When you think about the alternative, the cost of mortgage protection insurance really seems to be quite small. When you purchase mortgage insurance protection, you are investing in peace of mind for yourself and for your family.

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