Getting a Home Inspection

If you are in the process of purchasing a new home, it will definitely be in your best interest to have a home inspection done.
Not only will you want to have a home inspection done for your own sake, and peace of mind. But most lenders will require that you have a home inspection before they will proceed with the loan. The lending institution has just as much interest in the home as you do, so that is why they require a home inspection.
Getting a home inspection requires hiring a company to send out a home inspector to go through the home you are going to purchase. With you present, the home inspector goes through the home, and thoroughly inspects to make sure nothing in is need of major repair that cannot be seen with the naked eye.
Basically, a home inspector goes through a home and checks wiring, fixtures, plumbing, and the foundation of the home to make sure it is structurally sound. He will also inspect the outside of the home along with the roof to make sure there isn’t any exterior damage.
Along with the home inspection, it would also be in your best interest to inspect for wood boring insects, such as termites and beetles.
A pest inspection is also required by the lender before they proceed with a loan.
A pest inspection is done separately from the home inspection and is done through a different company that specializes in pest inspections.
Not only are home and pest inspections required by the lending institutions, but it would be in your best interest even if they were not. They cost anywhere from $300.00 to $400.00 depending on the size of the home, and you are aloud to be present and ask questions through the entire inspection.
Imagine if you found your dream home and loved it so much that you purchased it without having the home inspection done. On the day that you and your family move in, it is the happiest day of your lives. Than, three days after you move in, you get your first rain fall while in your new house. Than, the next thing you know, you have rain coming through the ceilings up stairs.
After something like this, you’ll be wishing you had the home inspected. Trust me.
Believe me, this stuff happens. So be smart, and get a home inspection. It beats paying $15,000.00 to $20,000.00 for a new roof.
In addition, once you have a home inspection done, you will have peace of mind that the house is sound and in good living condition. However, should anything happen to go wrong after you move in that was covered under your home inspection, you will have the home inspection company to hold accountable for the damage, and not have to pay it out of your own pocket.
To summarize, the home inspection is very important to both you and the lending institution. You both have an interest in the property, so have the home inspection done, you will sleep a lot easier.

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Refinanced Your Home – Claim a Tax Deduction For Points

The mortgage refinance market has cooled off dramatically with recent rate increases. Many people, however, refinanced during 2005 and can claim tax deductions.
Refinanced Your Home – Claim a Tax Deduction For Points
Mortgage rates have been shockingly low over the last few years. This is hardly news to anyone that owns a home. The nominal rates, however, did result in a major boom for the mortgage industry. As rates jostled up and down, millions refinanced to save just the fraction more on their home loans.  Heck, many people refinanced multiple times! Alas, this rapid refinance craze has come to an end with the rise in mortgage interest rates.
If you refinanced this past year to get lower rates, I have some good news. Not only did you get lower rates, but you probably built up some additional tax deductions you can use to cut your tax bill.
To obtain a mortgage, whether new or a refinance, homeowners often have to pay points. These nasty little charges represent a percentage of the loan and are typically an upfront charge. Fortunately, points are deductible. Generally, you will claim a deduction for points as part of the mortgage interest deduction that makes our real estate industry so attractive. The type of loan, however, impacts how the points are deducted.
If you obtained a new home loan for a residence, you can deduct the full amount of the points. To do so, however, you must itemize on your tax return. Since you should be deducting the interest paid on the mortgage as well, this is a no brainer.
If you refinanced an existing home loan for a residence, however, things are a bit different. Yes, you can deduct the points paid on the refinance. Unfortunately, you have to deduct them over the life of the loan. In practical terms, you cannot deduct the full $3,000 you paid in points when you refinanced in August of last year. Instead, you can deduct a percentage of the $3,000. The percentage is the value of the points divided by the number of months of the loan. There are two ways around this tax handicap.
If you refinanced twice in 2005, and some of you did, you can deduct the full amount of the points on the first refinance. Why? You can do this because the life of the first refinance was less than a year, which all occurred in 2005.
In certain cases, points may also be immediately deductible if you used a refinance for home improvements. It is a bit technical and beyond the scope of this article. If you actually used a refinance to improve the home, and you can prove it with receipts, speak with a tax professional to write off all your points immediately.

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Locating a Down Payment

Locating a Down Payment
If you are a saver, and many of you are, than the need to locate a down payment will not be an issue for you.
But there are also many of us out there that have not had the luxury to save as much as we would have liked for various reasons. With this challenge at hand, we will need to track down a source for a down payment.
If you have excellent credit, and when I say excellent, I mean your credit history is perfect without a blemish on it, you will most likely be able to apply for a mortgage with 100% financing, if you choose to go that route.
A lot of lenders offer this product, and if you can swing it, than you won’t need to come up with any cash for a down payment, and you will only be responsible for closing costs.
If you are unable to go with 100% financing, here are a few ideas you might look into to come up with a down payment.
Retirement Plans
If your employer offers a retirement plan such as a 401k, you might want to consider borrowing from it to help out with your down payment. Most 401k plans offer this option for home purchasing reasons. You do however have to pay this money back on a monthly basis.
The down side to using a 401k plan is that when you pay the loan back, you are doing it with after tax dollars.
With that being said, it is still worth looking into, and a lot of people consider this option.
Family
When all else fails, ask family members to give you a helping hand. This is not an uncommon practice among newlyweds who often approach their parents for assistance with their down payment.
If this is not for you, I understand. It can be tough to swallow your pride and approach family members to help you out.
Save
If you are at the end of your rope, and there doesn’t seem to be any down payment money in sight. You just might have to bight the bullet, start saving, and wait it out.
A great way to jump start your savings is with your tax return money. Depending on what your return is and what percentage the lender requires you to put down, your tax return could have you in the door sooner than you think.

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Home Equity Loans The Best 2nd Mortgage for Financing Home Improvements

Tired of looking at those avocado green kitchen appliances?  The wood paneling and shag in your family room?  The worn fiberglass tub enclosure in the guest bath?  Home improvement is sweeping the country.  Approximately half of fixer-uppers are do-it-yourself, while the other half is contractor driven.
So how do you decide when to move or stay around, when a home remodel is a good idea or not?
“The American Homeowner Foundation estimates the total cost of moving to be at least 10 percent of your home's current value. In other words, if you can make things right with your home for less than 10 percent of what you could sell it for, it makes sense to stay put and fix it up.”
There’s a couple of ways for you to start the transformation of your home.  If you have enough equity built up for the total cost of the project, a traditional home equity loan might work for you.  Benefits of home equity loans often include a better interest rate.  You might even lower your mortgage payment while increasing the value of your home.
For the do-it-yourselfer working toward several small projects, a home equity line of credit allows flexibility.  The lender basically sets up a line of credit based upon the equity in your home.  The, issues you checks or a credit card to draw from the account as you need the cash.
Simply make sure refinancing your home makes financial sense says Lori Vella a senior banking executive.  "Improving your home is almost always a smart investment, especially in this rate environment. Just make sure you'll be in the home long enough to recoup the cost of refinancing," says Vella.
A 2004 survey by Remodeling Magazine compares construction costs to likely return on investment (ROI) at resale.  RM sent surveys to 20,000 appraisers, sales agents, and brokers.  Those industry insiders generating 356 responses (a 1.78% response rate). 
The RM survey shows minor kitchen remodels do the best, returning 92.9 percent of your investment, followed closely by new siding at 92.8 percent.  The survey also lists bathrooms, attic bedrooms, deck additions and family or sun room add-ons as lucrative investments.  Most of those remodels returned 80% to 90% for the home owners.
A home remodel is one of the best ways to improve the value of your home.  Financially speaking, a home-equity loan could allow you to lower your mortgage payment, lower your interest rate, and when the remodel is said and done add thousands of dollars to your net worth.
Don’t forget to check with your local utility company if you want to improve the energy efficiency of your home.  Most offer an energy efficient mortgage program.
If purchasing a fixer-upper is what you looking to do.  HUD has a 203(k) program designed to finance both the purchase of the home and the remodel costs in one easy mortgage.  Most mortgage lenders offer access to the HUD 203(k) program.

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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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Do You Know How To Find The Best Mortgage Deal?

People will spend months or even years planning to buy their own home. They will work hard to build good credit. They will save a sizable down payment. They will search for the perfect house. Then they will settle for the first mortgage they see.

What is wrong with this picture?

It is important to remember that if you have good credit and a down payment then you are in the driver's seat when it comes to negotiating a mortgage. You are the dream customer that lenders want on their books. Even if your credit is not perfect and your down payment is nonexistent you are still an attractive client for many lenders.

Repeat this mantra whenever a lender acts as if they are doing you a favor by lending you money: I am going to give them a lot of money. Yes, you are. Over the next five to 30 years you are going to pay a lot of interest to this lender as well as repay the principal they originally put up. They are not giving you anything. This is a business deal and the lender stands to make a lot of money so you need to protect yourself to get the best deal you can.

While most lenders tend to make you think you should be grateful to them for taking this huge risk on you, it really is the other way around. A mortgage lender can't lose. If you honor the deal they will make a lot of money and if you don't honor the deal then they simply take your house back and keep the interest you paid in the meantime!

However there is an even bigger fallacy that lenders like to perpetuate. They don't want you to know how desperate they are for your business.  Look around and you will realize the truth of this. Check out the television, radio, and print ads that abound and you will see the mortgage lenders are getting pretty competitive.

That is why you simply must shop around to find the best mortgage deal available for you. In the end you could save yourself thousands of dollars. Here are five ways to help you find the best deal:

   ~ Shop around - Get quotes from various lenders. Look at local and national lenders and don't overlook the internet.
   ~ Compare terms - Interest rates vary from lender to lender but lenders offer different interest rates depending on the terms of the mortgage. How long will it be (15, 20 or 30 years)? Will it be variable or fixed?
   ~ Tweak some of the optional items that you control, such as the type of insurance you will carry and whether or not you will use escrow for taxes etc.
   ~ Adjust your down payment - Sometimes being able to increase the percentage of what you are putting down can make a difference in the lenders terms (similarly buying a less expensive house will work the same)
   ~ Haggle - Yes! Lenders often act as if their rates are written in stone but this is not the case. This is where shopping around can really come in handy. If you can show that you've got a slightly better deal with another lender then sometimes another lender will lower their rate to beat the competitor. Hey it's worth a try!

Just remember that you are in control of your future. You can choose whether or not to accept a mortgage lenders terms. There are a lot of lenders out there so you do not need to sign with the first offer you receive.

One last hint: It might be best to go through this process before you've found the home of your dreams! You can get preapproved for a mortgage with most lenders and that removes the pressure and worry of losing the home of your dreams while you negotiate with a lender. It also puts you in the driver's seat when you are negotiating to buy that dream home when you finally find it if you already have a mortgage ready to go.

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Refinance Home Mortgage

Copyright 2006 Darren Dunner

Are you considering refinancing your home mortgage? Refinance Home Mortgage allows you to take a new mortgage for relatively lower interest rate. Home refinance is nothing but paying off one home loan with another loan. If you do everything correctly you can easily apply for a refinance home mortgage and pay of your other outstanding debts.

A Refinance home mortgage is the best option for those who have a good financial sense and are willing to put their money to good use. Refinance loans can help you consolidate your debt, lower your interest rate and help you get the cash out. Mortgage loans help you to buy residential or commercial properties without paying the full value of the properties up front, while paying a fraction of the real value of the property. By getting mortgage loans you are pledging your property against the remaining value of it. The opportunities for getting a home mortgage loan have increased tremendously, with numerous banks and financial institutions offering various options. However, you need to be careful in comparing different rates available in the market, as you must be considering the monetary benefit of the home mortgage loan seriously. Home mortgage loan brokers have extensive knowledge about the best resources available for mortgage loans and they would be able to help you out in finding out the best possible deal for you. It will be very difficult for you to find out yourself a lucrative mortgage loan, since mortgage rates tend to vary based on interest rates. Since stock markets play an important role in the direction of interest rates, it would be better for you to get professional assistance from professional brokers. I personally believe that lay persons would not be aware of interest rate, stock market, Wall Street sentiment and overall macroeconomic trends that influence the home mortgage loan rates. Apart from financial companies and banks, thrift institutions, commercial banks, mortgage companies, and credit unions, etc also offer lucrative home mortgage loans, given owning a house is a dream of everybody. Benefits of Refinance home mortgage

If you refinance mortgage your old rate with higher monthly payment is replaced by new and lower interest rate that equates a lower monthly payment. You can easily convert your current adjustable rate into a fixed rate mortgage. Mortgage refinance will allow you to shorten the length of your mortgage You can easily cash out some of your equity for debt consolidation You can also remove the mortgage insurance if you have reached 20% equity mark

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Mortgage Brokers – The Nuts and Bolts

Using a mortgage broker to shop for home loans can make the borrowing process a lot less stressful than doing it yourself. Here are the nuts and bolts on getting a good broker.

Competent Mortgage Brokers

There are a couple of obvious situations where going with a mortgage broker makes perfect sense. If you have less than perfect credit, a mortgage broker is going to be able to open your eyes to numerous loan options a traditional bank would never tell you about. If the idea of handling the mass of paperwork involved in the loan application scares you, a mortgage broker is definitely going to be a savior since they will take on that burden. Still, how do you know if you are talking to a competent broker?

The first issue to address when considering whether to use a mortgage broker is scope.  Scope refers to the number of different lenders the mortgage broker works with in home financing. Generally speaking, the more lenders the broker works with, the better mortgage options you will get and, ultimately, the better financing. A good mortgage broker should have at least eight different lenders they work with and be able to go find others should your particular situation call for a special financing package. If the broker identifies only two or three lenders, you need to move on to the next broker.

The second biggest issue is the mortgage broker’s knowledge of the lending industry. By knowledge of the industry, the broker should be able to identify multiple lending programs and the various lenders and options for each. For instance, you might ask the broker who he works with and the loan options available for a person with a 580 [poor] credit score. Further, ask the broker if he has arranged funding for such loans before and the specifics of the loans used. If the broker shows a depth of knowledge and starts rattling on about options, you’ve found the correct broker. If they don’t, you haven’t.

Broker Fees

Mortgage brokers are paid upon performance. If they don’t get you a loan, they don’t get paid. The positive aspect of this is you can be the mortgage broker is going to bust their tail coming up with a solution for your problem. The negative aspect is you need to make a determination as to whether the options give to you are good loans for your situation. The commission of a mortgage broker is typically paid out of the loan proceeds, but costs such as appraisals are your responsibility. The broker should have no problem telling you their commission rate on the loan.

If you don’t trust banks to give you the best deal or have been turned down by a lender, mortgage brokers are a great way to find good deals. Understand the nuts and bolts of what they do and you are on your way to getting a loan.

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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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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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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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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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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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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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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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Low Refinance Rates

If the thought of paying your high housing loan interests makes you feel queasy, then opt for refinancing and get rid of all your worries and anxieties. Refinance your loan and lead a stress free life. And the veritably low refinance rates available in the market today makes mortgage refinance a lesser devil to tackle than usual.

What is Refinancing? Securing a loan to pay off your previous loan against the same assets, property etc is called refinancing. It is generally undertaken when the interest rates on the new loan are lower than that charged on the previous one. There are no-cost as well as low-cost refinance loans. In low-cost refinance loans the costs are included in the loan.

When to Refinance? Interest rates fluctuate, when the Central Reserve enters a rate cutting period. The prevailing rates may become significantly lower than when you originally secured your first loan. By refinancing your mortgage when interest rates are lower, you can exchange higher interest rates for a lower one, which, in turn, will lower your monthly payment. Low refinance rates leads to interest savings ultimately recovering the cost you've paid for the new loan. Refinance when you find the current market rates are low. You can enjoy the benefits of refinance if you can secure an interest rate 2 per cent below the rate on your current loan. Refinancing is beneficial even if the rate decline is only 1 percentage point, that is, even if you have contracted a fixed-rate home loan at 9 per cent, you will benefit from refinancing the rate to 8 per cent. This is possible due to low refinance rates which may vary from 2-2.5 per cent.

Benefits of low refinance rates - Reduces Interest Cost

Low refinance rates reduces interest costs and helps save more money at the end of month that would. It brings great respite in times of emergency by providing ready cash. Refinance rates are usually lower than the original loan when you actually compare rates, thereby allowing you to have extra cash, while simultaneously lowering your monthly mortgage payment.

- Lowers Monthly Mortgage Payment

In essence, refinancing a mortgage or other type of loan can lower the monthly payments owed, either by changing the loan to a lower interest rate or by extending the period of loan so as to spread out the repayment over a longer period of time. Low refinance rates helps save money which can be used to pay down the principal of the loan, thus further reducing payments.

In order to avail low refinance rate, keep a check on your credit score. Your credit history will make a big difference in refinance rate offered to you. Paying points are also one more way of getting low refinance rate. So, refinance your loan, pay low rate of interest and invest the savings thereby for exigencies. Low refinance rates sure make borrowing seem like a piece of cake. But do not get carried away with low refinance rate alone. Remember there is something called closing costs and redemption penalty.

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Finding a Mortgage Refinance Advisor

Finding a Mortgage Refinance Advisor

If you are looking to refinance your home for a lower rate, or you are interested in a refinance with cash out to do some home repairs, buy a new car, etc., you may want to consider finding a mortgage refinance advisor.

There are actually two ways you can go about refinancing your home. The first would be to do the shopping around for a refinance on your own. The second way would be to locate a mortgage refinance advisor.

A mortgage refinance advisor. Otherwise, known as a mortgage loan officer or mortgage broker are not at all hard to find.

The internet is perhaps the best resource for tracking down a mortgage refinance advisor. There are literally hundreds of them right in your own back yard, and the internet would be by far the best way to begin your search.

Once you have found a mortgage refinance advisor, don’t stop there, shop around. By shopping around with a few different loan officers and brokers, you will give yourself the ability to compare rates and prices.

Think of it the same way you would go about purchasing a new car. Shop around, test drive a few by going to different dealerships. Once you have test driven a few cars and compared pricing, base your decision on the best and most reasonable deal.

By shopping around as opposed to committing to the first mortgage refinance advisor you come across could mean the difference of thousands of dollars in closing costs and interest fees’ over the life of the loan.

By allowing no more than four loan officers or mortgage brokers to assess your situation, you are putting yourself in a much more ideal situation. Especially if your credit is challenged or your situation is unique, not only will the mortgage refinance advisors’ expertise come into play, you will be in a position to compare rates and pricing.

Remember, the majority of mortgage refinance advisors are paid on commission, so it is just as important to them as it is to you to get to the closing table. Good luck.

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Refinancing with Home Equity Loans

If you have lived in your home for a reasonable amount of time, you may be considering refinancing.

Refinancing can be done in a few different ways. One of the most popular recently has been the home equity loan.

A home equity loan is a loan used to pay off your existing mortgage at a lower rate.

Also, when refinancing with a home equity loan, you have the option of liquidating some of the equity you have established in your home through monthly mortgage payments and appreciation.

Lets suppose you owe $125,000.00 on the mortgage to your home, but your home is worth $200,000.00. This means you have $75,000.00 worth of equity that you can liquidate.

Realistically, you could get a home equity loan for $150,000.00, pay off your existing mortgage, and have $25,000.00 left for home improvement, a new car, college tuition, etc.

Home equity loans also come in the form of a line of credit, better known as a home equity line of credit.

The difference between a home equity loan and line is that the line comes with a variable rate, which means it will adjust with the prime rate, so be careful when deciding.

The home equity credit line can also be re-tapped once it has been partially paid off, or paid off in full, which makes for much convenience.

Before deciding on how you want to go about doing your refinancing, be sure to educate yourself as much as possible about the mortgage industry.

Also, shop around for the best rate and program that fits your needs and budget. The mortgage industry is a competitive one, so let them fight for your business. Good luck.

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Purchasing a Home with Bad Credit

If you would like to purchase a home but believe you are unable to because your credit has gone through some challenges, think again, there just may be some hope for you.

The mortgage industry is a very diverse one. And these days it is no longer a requirement to have perfect credit in order to purchase a home.

And no longer is it necessary to go down the street to your local bank in order to apply for a mortgage.

There are many lenders out there across the country known as wholesale lenders who specialize in different niches with specialty programs for people in all types of situations such as yourself.

The most important thing for you to do is to educate and familiarize yourself with the mortgage industry. This way you will have somewhat of an idea of what you are getting into, and a better understanding of what the people in the industry are talking about once you start to deal with them on a daily basis.

One thing you may want to consider is speaking with a broker if you are not comfortable finding a program for your needs on your own.

A broker is not a lender. They work as a liaison between the lender and the consumer. It is their job to find you a program to fit your needs and budget. They also will council and educate you through the entire mortgage process.

Remember, just because your credit is poor, it does not mean that you are at the mercy of the broker or the lender. Allow for a few of them to compete for your business, than base your decision on the one that best fits your needs and budget.

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