Information about Home Equity Lines of Credit

When a homeowner is looking for a home equity line of credit they need to pay attention to the following. You need to make sure that you are getting the very best possible interest rate. You’ll want to find a lending company that won’t waste your time, which is why many consumers choose to deal with an online mortgage broker. Also homeowners will not only want to find a lending company that will help them save money but also help find a loan that will meet all of their unique needs.

Homeowners looking into a home equity line have the potential to be approved for up to 125% of the total value of their home.

Information on Bad Credit Home Equity Loans

Even if you find yourself to be in a bad credit situation you can still be able to get money out of your home as long as there is a bit of equity built up. There is also a great potential for a homeowner to be able to get up to 125% in financing in a home equity line of credit. Generally if you have poor credit it will take a while long to find a company that will finance you but it can be a very beneficial pursuit in the long run.

When shopping around for bad credit lending companies be sure to consider:

1. Whether of not the company offers a program for those with less then perfect credit?
2. Is this particular company popular among those that are in a bad credit situation?
3. Does the lending company appear to be reputable?

What If I Don't Have Enough Equity?

Equity Basics

The difference between the market value of the property and the amount of loans you have on the property is the equity in your property.

A factor that you cannot control is the market value of your property, which changes over time.

As you slowly pay them down, the loans on your property can also change over time in size.

Remember, if you are considering refinancing and you don’t have much equity, you may also be trapped with a prepayment penalty that makes your refinance not very economical.

Refinance Options

There are a number of loan options left for borrowers who have little equity in their property.

If the borrower wants a severe reduction in their monthly payment several lenders are now offering minimum payment option loans up to 100% of the value of the property. These loan types were restricted to 90% or 95% of the value of the property in the past.

A minimum payment option loan allows a borrower to make a monthly payment that is less than interest only. It is typically much lower than a regular monthly payment. It may result in negative amortization – check the terms of the specific loan you are considering.

Cashing Out

You may still have the option to get cash even if you have little equity in your property.

Quantities of lenders offer owners the chance to cash out up to 125% of the appraised value of the property.

This allows borrowers to go higher than the normal 100% appraisal value cap that the majority of other refinance loans have.

This loan type is generally a full documentation loan which means the borrower may need to disclose and document employment, income, assets, and other items.

Refinance Mortgage Home Equity Loan: Consolidate Your Mortgage and Home Equity Loan

For homeowners who are carrying home equity loans in addition to mortgages, refinancing into one monthly payment may save quite a bit of money. Consolidating loans has the advantage of a lower monthly payment, and often a fixed interest rate. Consider these tips to help in refinancing your primary mortgage and home equity loans, without over paying for that financing.

There are many advantages for homeowners with multiple loans who want to refinance. Consolidating will make your monthly budget much easier to manage by providing the borrower with one lower monthly payment. The homeowner will also qualify for a much lower interest rate on the new mortgage than the old one. Home Equity Loans tend to come with higher interest rates because there is an additional risk, which is passed from the lender to the borrower in the form of higher interest.

Refinancing also comes with risks, however. The biggest disadvantage is that you are starting amortization from the beginning again. Most of your monthly payments will be applied to interest, therefore very little actually goes to repaying the principle of the loan. There is also an additional risk of overpaying for the new mortgage loan, so to avoid overpaying, it is important to shop a variety of mortgage lenders and brokers to find the right rates and options. Make sure to compare all aspects of the loans, not just the interest rates.

Home Equity Loan: Second Mortgage Loan Advantages

A second mortgage might be a better choice than a home equity line of credit for homeowners. Second mortgages have many advantages in today’s economy, making them a far better choice than the typical home equity line of credit.

Interest Rates are Rising: When you opt for a Home Equity Line of Credit, or HELOC, your loan may have a variable interest rate, which will change when the lender adjusts your loan, and may rise and fall over time. When you opt for a home equity loan with fixed interest, your rate is locked in at this rate only, and will remain the same for the duration of the loan. Locking in your rate with a Fixed Interest Rate Loan will guarantee that your payments never change, regardless of how the interest rate changes.

Only Borrow What you Need: Home Equity Lines of Credit (HELOC) tend to be risky because it is tempting to keep spending. The borrower is provided with a debit card which can be used to make purchases, drawing money out of the equity line. Because it is so easy to gain access to this equity, many homeowner tend to overspend. Using a second mortgage instead will allow these homeowners to borrow a fixed amount, rather than offering them the temptation to overspend.

Fixed Payment Amounts: Second mortgages come with fixed interest, so borrowers can count on their payment to always remain the same for the duration of their loan. This allows many homeowners to budget for additional payments while still keeping control of their finances. Because Home Equity Lines of Credit (HELOC) have variable interest rates, homeowners will run the risk of their payment always increasing as interest rates rise over time.

Home Equity Loans – A Great Source To Explore

Investing in your own home is a very great decision that can turn out to be a valuable asset. Equity on your home is gradually increased as you make payments against the mortgage. You can then use this equity as collateral to get a home equity loan.

When you need money fast, for special needs like school, debt or for home improvement, a home equity loan is a valuable asset because it can cover all the costs involved. It is generally better to take out one of these loans when you know exactly how much money you are going to need, so that you only cash-out as much as you actually need, and do not have to end up paying interest back on more. The period of repayment for these loans can be anywhere from five to thirty years, though they generally average at about fifteen.

Home Equity Lines of Credit may be a better option if you are trying to use your home equity for short-term borrowing. This allows the borrower access to extra funds when needed, without forcing them to borrow anything extra. This is especially helpful for people who need a substantial amount of money for an immediate purpose such as home improvement costs, or medical bills. Home Equity Lines of Credit tend to be close-ended, meaning that you can only use the credit limit for about 10 years. After these 10 years, the account is amortized, and will be treated like a term debt which become regular repayments of principal and interest until it is paid off.

The approval for these loans is fairly easy, as the lender generally has enough collateral to cover the loan amount. The value of the collateral will continue to increase. A good credit rating is preferable, because it will allow qualification for lower rates and better deals come time to refinance. Therefore, a credit history is especially important, and many lenders rely heavily upon them to determine the rate of interest for their offer.

The most important decision for any borrower is to select the right lender. Every lender has different terms, and it is important to select a lender who is offering a low fee, low interest rates and other incentives, because if you chose the right lender, you may end up saving thousands of dollars in the end. It is advisable to get at least three different quotes from the home equity lenders you have chosen, to allow you to choose the best terms and conditions, interest rates and fees. When you have several quotes to compare, choosing the best one is fairly easy.

Secrets & Benefits of Secured Loans

Over recent years, borrowing money has become increasing popular in the United Kingdom. This phenomenon can be partially attributed to the fact that it has become a lot easier to do so in recent years. The rising popularity has also been aided by a great variety of new deals and lower interest rates available. Secured loans have gained popularity with people who own property, because they offer excellent value for money and affordability. These loans are available from many lenders, meaning that consumers have plenty of available choices.

The amount available to borrow with a secured loan varies depending on the amount of equity available in the borrower’s property. There are many available benefits with these types of loans, making this type of financing one of the most effective options available. Borrowers can look forward to lower interest rates, because there is less of a risk for the lender.

These loans offer far higher borrowing levels than unsecured loans, but the available amount varies based on the borrower’s available equity. Borrowers can find themselves eligible to borrow tens of thousands of pounds with a secured loan, providing invaluable for borrowers who are looking to raise a substantial amount of equity. The repayment period for these loans is also substantially longer than with an unsecured loan, which means a typical monthly payment will be much smaller.

Secured loans are also far more easy for borrowers who have poor credit to obtain, than a standard unsecured loan. The lender has less of a risk to take than with a standard unsecured loan. Consolidating other loans and credit is one of the most common reasons for taking out a secured loan. With secured loans, borrowers can wrap all of their expensive credit card debt into one single loan. This way, borrowers pay only one lot of interest, and only one monthly payment.

By browsing and booking through the internet, it is possible for a borrower to explore many options with little effort because secured loans are widely available online. The best strategy is to compare various deals to make sure you are getting the best rate and deal.

Secured loans are simply more affordable and easy to achieve, making it easy to accomplish anything you need with one. Far lower repayments and a reduction in interest payments are both very attainable loan options. Harnessing the power of the internet makes finding and applying for the ideal loan very simple.

When a borrower is in need of a large sum of money and has enough equity in his or her property, looking into secured loan options makes a lot of sense. Because of lower interest rates and longer periods of repayment, there are no unmanageable payments to regret.

Credit Card Debt Reduction Companies

To reduce debt, borrowers have two main choices:

• Consolidate debt with a home loan,
• Use a non-profit debt management program to lower payments.

It is generally recommended that borrowers go with companies designed to help both homeowners, and non-homeowners with debt consolidation loans. Companies with debt management programs with both programs for good and bad credit are also recommended.

Consolidating debt can be a stellar way to lower monthly payments, enabling borrowers to reduce their debt faster. It is difficult for most people to pay off all of their debt, especially when it is impossible for them to pay more than the monthly amount due.

When choosing a debt consolidation company, try to find one that is offering services that you could not complete yourself, so that you are not being charged for nothing. Many debt management companies will provide credit counseling, negotiate lower payments with debtors, and offer additional mortgages to consolidate debt.

The absolute best possible solution is to consolidate debt into one loan, lowering credit card and other bills enough that more can be paid on the principal every month. With this method, debt will actually be paid off faster because you will be paying more than is necessary every month.

Bad Credit Home Equity Loans

Even with a bad credit history, borrowers can take cash out of their home as long as they have at least a little bit of equity in their home. It is also possible for a borrower to be approved for 125% financing for their home equity line of credit. It takes a little more searching for a borrower to find a home equity loan that they can be approved for, but it is well worth it if it benefits in the short or long run.

Home Equity Lines of Credit

When choosing a lender for a Home Equity line of Credit, pay attention to these details:

• Make sure that you are getting the lowest available interest rate.
• Work with companies that aim to help you save time, like online Mortgage brokers.
• Work with companies that aim to help you save money, like online Mortgage brokers.
• Make sure that you are getting the best possible loan that you can qualify for.

Home Equity Lines of Credit are best used for:

• Consolidating debt on credit cards
• Completing home improvements
• Getting Cash-Out for Emergencies
• Investments

A Home Equity loan can be financed for as much as 125% of the value of the property.

Know Your Refinance Goals Up Front

Refinancing Purpose

Borrowers typically refinance in an attempt to get a lower payment, cash out their equity, or sometimes both. In this scenario, the first thing to do is to completely understand your loan.

Loan Options

There is a wide variety of loan options available to borrowers. These loans range from 30-year fixed loans, to interest-only loans, to minimum payment loans. Usually 30-year fixed mortgages have the highest interest rate. Generally the longer the loan is fixed for, the higher the interest rate will be. Higher interest rates translate into higher monthly payments.

Lower Your Payment

You may be able to use additional equity, if your property increases in value, as leverage to lower monthly payments. The more equity present in a property, the lower your interest rate will generally be on that property. Mortgage lenders perceive higher equity properties to be less risky, because they can seize the house and pay off the mortgage based on equity if you ever stop making payments. This way, they are more likely to get all of their money back.

Little or no equity is a much higher risk for the lender.

Cashing Out

While cashing out, the mortgage lender may decide to pay off some of your credit lines including credit cards, car loans, etc. Some lenders actually even make this a requirement for approval. They will often require that the escrow company directly pays off your creditors from the refinancing proceeds, to make sure that the debt is paid off.

How Do Multiple Refinance Quotes Help You?

Sources for Loans

There are many available sources for mortgage loans. They are available through neighborhood banks, specialty mortgage lenders and mortgage brokers. Free offers are available from all of these sources.

Mortgage Deals

The best rate for mortgages are usually reserved for borrowers with great credit, and the ability to document things like their income and assets. With far less documentation, borrowers can still be approved but it usually involves a higher interest rate to compensate for the additional risk.

Credit Issues

Credit issues should not be allow to hold you back from refinancing your mortgage. There are lenders available who will work with people who have challenging credit. It is possible for you to be rejected by one lender, or even a couple of lenders, but this doesn’t mean that you won’t be accepted by other lenders. It is important to check your credit score and reports to make sure there are no disputes or errors that need to be resolved before you begin searching for a mortgage.

Comparing Offers

Mortgage offers vary greatly, even for the same loan amount and type. Many lenders consistently offer a good deal to their borrowers, though there are lenders who may also continue to try gouging their customers for as much as possible. You shouldn’t have to pay more than 1-2% of the total loan size in fees. Many people end up paying more, but should not have to unless they have a very difficult loan, or the loan amount of very small.

How To Reduce Your Payments

If you believe that you are paying entirely too much per month for monthly credit card, store card and loan fees, it may be beneficial for you to replace them with a convenient repayment debt consolidation loan. Debt consolidation loans wrap all of your monthly payments into one single payment by paying off all of your individual debt, to create one big loan that you can pay off on the terms that are convenient.

If your goal is to reduce interest and lower monthly payments, avoid bankruptcy, consolidate bills and have one monthly payment, or to get out of debt as quickly as possible, a debt consolidation loan could definitely be the answer you are looking for. These loans are secured on your home, and tend to be low cost, low rate and low interest meaning that they are easy to apply for and easy to pay off, and make managing your debt much easier than if you were trying to manage each piece of debt separately from the rest.

Refinance your Home Loan: Basics

There are many reasons to refinance a home loan, including but not limited to the following:

• Consolidation of debt or bills
• Saving money on current Mortgage loan
• Paying home off faster
• Getting cash out for an emergency
• Lowering monthly payments
• Completing home improvements
• Refinancing 2nd and 1st mortgages into a single loan.

The best place to start is online, because there are many benefits to using an online Mortgage broker. In addition to saving money and time right away, you will also be able to research interest rates to ensure you get the best possible rate. Borrowers who refinance online tend to make more educated decisions, because all of the information they need is available to them.

It is important to know what options are available to you, so that you may secure the lowest possible interest rate. Applying online allows lenders to compete over you, allowing you to compare several different sets of interest rates and options to find the one that best suits your needs. Make sure to compare all available terms, and do not finance until you have explored many different options.

Refi Facts to Consider

Above all else: Beware of predatory lenders. Some lenders tend to take advantage of high-risk borrowers. Make sure that you are applying with a reputable lender to save yourself from excessive fees and interest rates.

The following things can keep lenders from approving you for a mortgage loan:

• Bad credit
• Poor credit
• Bankruptcy
• Poor credit history
• Foreclosure
• Low credit scores

The best way to research mortgage lenders is to use the internet, because you can do a lot of research, and discover a lot of information the average loan officer would not tell you. Also, you can apply through as many mortgage companies and lenders as you want, and because lenders will be competing for you, you will more than likely get the best possible interest rate available without much hassle. Generally, lenders will give you an offer before they even complete your credit check, and your offer does not change after you’ve accepted it.

Make sure to compare all bad credit mortgage loan companies, to find the one that offers the lowest possible interest rate. There are mortgage loan companies who will strive to help you. You just have to locate the right one.

The Break-Even Point

After all of the considerations made by borrowers in deciding whether or not to refinance, what it really all boils down to is a simple question. How long will it take, before you start saving money? Theoretically, this is easy to calculate.

First, start with the amount you will save when you lower your monthly payment. Add up all the costs associated with refinancing, and divide this number by your monthly savings. The number this calculation reveals is the number of months that will pass before you reach the break-even point.

Here is an example: If a borrower wants to refinance to lower his or her payments from $1,000 to $800, saving $200 per month, and their costs of refinancing add up to $5,000:

$5,000 / $200 = 25 months before the borrower will see the savings.

Break even points depend on other factors as well, including tax situation and whether closing costs are paid upfront or added to the new mortgage principal. There are variables to consider when choosing whether or not to refinance, and the Break-Even point is definitely one variable worth looking at.

Is Refinancing Right for You?

If a borrower refinances in order to pay less interest, they usually will not see the savings right away because lenders tend to charge fees for new mortgages, and there are often penalties for getting out of old mortgages as well. The following issues need to be considered by all borrowers who are considering refinancing:

How long do you plan to live in your current home?

If a borrower only plans on continuing to live in the home for another year or two, he or she may never actually reap the rewards of refinancing. Generally, the longer one plans to remain in the home, the more important it is to consider refinancing.

What is the prepayment penalty on your current mortgage?

Many if not all mortgages carry a penalty of some sort, if you pay them off earlier than the intended date. This amount varies, but can be expected to equal a small percentage of the outstanding balance, or several months worth of interest.

What is the difference in borrowing costs between the mortgages?

When you refinance into a new loan, there may be additional fees added to the cost that are charged by the lender. These fees include application, appraisal, origination and insurance fees, in addition to title search, insurance and legal fees that tend to add up quickly. Lenders also tend to charge discount points, which are paid upfront in an attempt to secure a lower rate. Because of these fees, a posted interest rate does not reflect the entire cost of the mortgage. Other factors, like length of term, type of rate, discount points and upfront and ongoing fees also contribute to this post. It is important for a borrower to weigh the pros and cons of both the old, and potential mortgage, to determine whether or not it is a wise decision to refinance.

Your reduced tax savings:

Refinancing to a lower rate may mean that you’ll have less interest to deduct if you claim mortgage interest on your tax return. Money will still be saved overall, but real savings from the refinance will not be as large as originally believed. It is important to consult a tax advisor for help understanding the tax implications of refinancing.

Why refinance?

To obtain a lower rate:

If interest rates have dropped significantly since you took out a fixed-rate mortgage several years ago, refinancing at this point may considerably lower monthly payments. With this option, you can drastically reduce your monthly payment by shaving hundreds of dollars off the cost, simply by altering the interest rate.

To switch type of rate:

Adjustable Rate Mortgages may offer an initially lower interest rate, but many borrowers become frustrated with rate fluctuation. If rates are currently rising, it would be wise to switch to a Fixed Rate Mortgage, locking in the interest rate without having to worry about those fluctuations. However, borrowers who have Fixed Rate Mortgages, are looking for smaller monthly payments and can handle the interest rate fluctuations should consider refinancing into an Adjustable Rate Mortgage.

To improve adjustable rate mortgage features:

There are protective caps in place that effectively limit how much payments for Adjustable Rate Mortgages can actually increase in any given year, and also over the full term of the loan. These caps vary for each individual loan, however, so it may be beneficial to refinance into a different Adjustable Rate Mortgage with more preferable options.

To build home equity faster:

If it becomes possible to increase monthly payments for a period of time, a borrower might consider refinancing their mortgage with a shorter term. These higher payments will enable the borrower to pay off his or her home faster than originally able to, substantially saving on long-term interest charges. However, borrowers are not required to refinance simply because they are paying more than the pre-determined monthly payment, so they can choose not to refinance if they prefer.

To reduce monthly payments:

The amount a borrower has to pay each month will be drastically lowered if the borrower refinances for a longer term. The borrower will end up paying more over the life of the loan in interest, but this is a viable option for those who are looking for temporary relief from higher monthly payments.

To turn home equity into cash:

If a borrower is seriously in need of some cash for a major expense, but cannot find a viable option to secure the money from another source, it may be worthwhile to consider taking out a new mortgage with a larger principal in order to convert home equity into cash. Cash-Out Refinancing is an option worth considering, however, borrowers may end up paying significantly more if they are refinancing into a higher interest rate or a significantly longer loan term.

Mortgage Refinancing Basics

The best way to determine whether you’ll come out ahead or not when refinancing, is to weigh both the costs and benefits of your decision.

Though mortgages may have 30-year terms, very few homeowners actually stay with the same loan over that period of time. The average American generally refinances his or her mortgage within four years, because paying off your present mortgage to take out a new one can mean very obvious savings over several years. Refinancing comes with a price, however, so it’s important to consider both the costs and benefits before making your decision.

The Refinancing Option

When a borrower purchases a house, they are faced with a closing date. On this closing date, borrowers must provide funding to complete the purchase. What this means, is that there is a point where there is no longer enough time for the purchaser to back out of a deal with a loan provider. At some point in the middle of this transaction, the purchaser is literally at the mercy of the provider.

If a borrower has not locked the price of the loan in by this point, they may end up particularly vulnerable. Loan providers promise to lock rates “at the market price”, but the market price is actually whatever the loan provider decides to say it is, and therefore can make it possible for providers to cheat.

Even if the borrower has managed to lock his or her rate, only the rate and the points are actually covered. Locks do not cover lender fees that are expressed in dollars, nor do they protect third party settlement charges. There are many ways for these fees to be increased later.

When and When Not to Refinance

In order to take advantage of stabilized payments and/or lowered costs, it would be worthwhile for borrowers with adjustable rate mortgages to refinance into fixed rate mortgages.

There are four factors which should contribute to the decision-making process:

1. What is the current rate of the Adjustable Rate Mortgage(ARM)?
2. When is the next Adjustable Rate Mortgage(ARM) adjustment period?
3. What is the Adjustable Rate Mortgage(ARM)'s fully-indexed rate?
4. What are the rate and terms of the available Fixed Rate Mortgages?

It is important to fully understand all four of these factors, though many borrowers tend to only know the current rate and period of adjustment. The most current available value of the interest rate index that is used by the Adjustable Rate Mortgage along with the margin, is known as the Fully-Indexed Rate(FIR). Both the index and the margin are shown in the note, but the current index value has to be looked up separately.

What makes the Fully-Indexed Rate important is the fact that is can predict how your Adjustable Rate Mortgage will change better than anything else can. This is because at the next adjustment date, your Adjustable Rate Mortgage will reset, equaling the index value at that time added to the margin amount. Though seldom relevant, it is important to know that there is a limit on the size of a rate change, a number which can also be found in the note. If there is no change between the most recent and next adjustment dates, the Adjustable Rate Mortgage rate during the next adjustment will be equal to the most recent Fully-Indexed Rate.

There are four indexes which impact this generalization: Cost of Funds Index(COFI), Cost of Savings Index(COSI), Certificate of Deposit(CODI) and Twelve-Month Treasury Average(MTA). These indexes slow the market, meaning that the best way to estimate what they will be when your Adjustable Rate Mortgage rate is adjusted, is to project their value twelve months ahead rather than looking at their current value.

A purchase mortgage should be as easy to shop for as a refinance mortgage

Backing out of a purchase mortgage basically means that you are backing out of the purchase entirely as buyers are not able to change their minds about these types of mortgages. However this does not mean that shopping for a purchase mortgage should be a difficult task.

The best way to make sure that shopping for a purchase mortgage is easy to shop for is to require that lending companies while able to potential buyers up to a certain amount, are going to have to be able to take care of all other remaining costs. This would ensure that mortgages would all carry one price and interest rate so potential buyers can focus on that rate while shopping around for a mortgage without worrying about any additional charges. This rule is relatively new however many are hoping that is will see a rise in popularity very soon.

An Adjustable-Rate-Mortgage into Fixed-Rate-Mortgage Calculator

What are the biggest issues put to use by using this calculator?

The Time Horizon: Normally the case for refinancing is generally linked to how long the consumer is planning to stay in the home. The longer the time period that the consumer plans to stay in the home the stronger the case there is. This is normally because negative impacts to an adjustable rate mortgage can happen over a long period of time.

Features of an Adjustable Rate Mortgage: If you have some great options with your current adjustable rate mortgage it is usually not a very desirable idea to refinance. Some great features that can be offered with an adjustable rate mortgage include low interest rates, long periods of time before adjustments and a low maximum rate.

Features of a Fixed Rate Mortgage Rates associated with an adjustable rate mortgage are generally a bit higher then an adjustable rate mortgage, however the actual total of the difference can actually determine a large amount. There are also several factors that can reduce the benefit of refinancing. This includes items like settlements costs and refinancing fees.

Pre-Payment Penalties: A pre-payment penalty is required on an adjustable rate mortgage if the homeowner refinances. A pre-payment penalty on a fixed rate mortgage is treated just like an additional fee.

Insurance on mortgages: Generally insurance on a home does not need to be required if the house has appreciated at all. Insurance premiums on Fixed Rate Mortgages are normally fairly low if insurance is needed. The reason for this is to be able to offset costs involved with a fixed rate mortgage.

Future Mortgage Interest Rates: Assumed future interest rate patterns can be determined by using calculator 3e. Stable index and worst case are two assumed future interest rate patterns that can be figured out in this manner. Homeowners can actually state a specific interest rate increase that they would like to be able to stick with to get a more accurate predication of interest rates in the future.

How Do I Use A Mortgage Closing Cost Comparison Calculator?

If you are concerned about getting a mortgage to purchase a property or refinance one, you will almost certainly end up with several offers from competing lenders.

There are many terms to contrast between them.

A basic comparison is how much your closing costs match up to your total cash taken out from a refinance. Clearly you are hopeful for your closing costs to be a small fraction of your cash out.

Your mortgage offer (in the form of a good faith estimate) ought to contain some or all of the following factors:

• New Loan Note Rate
• New Total cash out
• New Loan Amount
• New Regular Monthly Payment
• Loan Length (Years)
• New Total payments over time
• New Interest Only Payment
• New Total interest paid over time
• New Loan Total Closing costs

Remember that the offers you receive from different lenders are simply estimates, not guarantees, of interest rates and closing costs. You can use this to compare your total closing costs as percentage of your refinance cash out. This will put the whole deal in perspective. You can decide if you are paying too much.

One technique borrowers use to decrease their closing costs is to accept a higher interest rate. This is using a "no closing cost option" which frequently means trading no closing costs for a higher interest rate. If receiving the maximum cash out is your priority this may be the choice for you.

How Do I Get Out Of An Adjustable Rate Mortgage?

Scores of people recently obtained mortgages that are not up for adjustment.

Their loans were simply fixed for 2 years or 3 years and now these borrowers face their loan turning adjustable and their monthly payment skyrocketing.

There are several options to refinance out of your current adjustable loan. These loan options include:

• 5 year interest only
• 30 year fixed
• 30 year fixed, 10 year interest only
• 40 year loan

5 Year Interest Only

This is a loan that is fixed for only 5 years and requires an interest only payment. If you plan on keeping the property for only one or two years than an interest rate that is stable for 5 years may work for you. This loan frequently has a lower interest rate than a 30 year fixed rate.

30 Year Fixed

This is the traditional secure loan. The interest rate never changes for the life of the loan. This is the most payment immovability you can get in a mortgage.

This type of loan typically has the highest interest rate and monthly payment.

30 Year Fixed, 10 Year Interest Only

This is the similar to the 30 year fixed loan, except that the first 10 years require only an interest payment. This is lower than a regular payment. It has the advantage of interest rate stability with a lower payment up front.

40 Year Loan

This type of loan stretches your payment out so that you don't pay as much as a 30 year fixed.

What Is A Quick Mortgage Loan Checklist?

Here are some loan connected factors you may well want to consider:

• How many different offers you want to get from different lenders
• Research the type of loan you are interested in
• What will the closing costs be?
• Will you come across problems because you are self-employed?
• Understand what your monthly payment will be under different loan types
• Use online mortgage calculators to aid you in doing the loan math - there are many available online for free
• Contrast loan offers from different lenders for the same loan type
• Evaluate loan offers made on the same day since interest rates fluctuate from day to day
• Verify your credit report
• Correct any errors on your credit report prior to looking for refinancing
• Your neighborhood bank probably doesn't offer the best mortgage
• Make a decision on how long you expect to keep the property - you can fix the interest rate for this timeline
• There are new loan options such as 40 year mortgages or 50 year mortgages
• Is the mortgage adjustable?
• Does the loan have private mortgage insurance?
• Will you have to get a hard money loan if your mortgage is risky?
• Decide how much you can put down, and how your payment size will change with different down payments
• Will you need a co-borrower to help your loan?
• Can you use builder incentives to get upgrades on your new property?

How Many Different Mortgage Offers Should You Get?

You ought to get at least 3 to 5 competing offers.

Some things to consider when shopping around:

• Track record on closing costs
• Your credit rating
• Speed of closing

Track Record on Closing Costs

You should verify if this lender has a reputation for "bait and switch" tactics. This is offering one estimate of closing costs up front and a different, usually higher, set of closing costs when you are actually signing your loan documents.

Some lenders have a reputation for gouging their customers. You ought to check on the mortgage lender's reputation on the internet. Frequently there are complaints online from other borrowers who have been mistreated.

Credit Rating

Your credit rating is something you can obtain from your credit report.

You should obtain a copy of this prior to even starting the process to make certain there are no errors on it.

If your credit rating is checked too many times this might affect your credit by lowering it.

Some reports point out that having a few different mortgage lenders check your credit in a small time frame doesn't influence your credit a great deal. Credit bureaus know you are seeking one mortgage. They may treat this in a different way than applying for 5 different credit cards, which could result in 5 new credit lines.

Check if they can price your loan out with your credit report so it doesn't have to be rechecked.

Your credit report should be an up to date report, not one from quite a few months ago.

Speed of Closing

If you need to move fast on a property or a refinance you ought to also check with the lender to see how swift they move to get the loan done.

See if they can make your loan a priority to complete.

The flip side of this is that you must be available all of the time during the loan process to answer questions or to provide additional documentation. A cell phone or page may be critical here.

How Can I Use A Buy Down On A Mortgage?

Mortgage lenders carefully look over your application and offer you an interest rate based on many factors, including:

• Your income
• Assets
• Bank statements
• Tax records
• Employment documentation
• Letters of explanation
• Business licenses or permits
• Credit history

Mortgage lenders use all of these factors and more to verify what kind of a risk you are. The higher your risk the more likely they are to boost your interest rate. This increase is compensation to the lender is compensation for lending to a higher risk borrower.

Interest Rate Offered Too High?

Mortgage lenders add up all your risks and offer you an interest rate as a result.

The higher your interest rate is the higher your monthly payment is.

For some borrowers the interest rate may be way too high.

You possibly will be able to "buy down" your interest rate by paying the lender money up front.

In a purchase loan you might be able to use a closing cost credit towards this. In a refinance you may be able to use some of your equity to pay for the buy down. Either way you can avoid coming up with hard cash out of your pocket. You can try to use your own cash to buy down your interest rate as well.

How Do I Know If Builder Loans Are The Best Deal?

Basics

Builders usually have the advantage on their competition to provide you a mortgage for their newly built property.

Nearly all builders require a borrower to be "pre-qualified" which is when a mortgage lender finds you qualified for the mortgage amount and rates you are looking for. The builder will frequently have a financial company of their own that will propose to do this for you.

It is expedient, but you are not required to use their lender to purchase the property. You are free to use any lender you desire.

Even if you are pre-qualified by the builder you may still work with other parties.

Incentives

Many lenders stress that their lending process works effortlessly with the builder to make sure the loan process works and things go smoothly.

This may be significant when a lender has the right to cancel your purchase if your loan documents do not arrive in time. This can and does happen, and buyers may lose out on buying a property they really desire and it may have risen in value. This is one situation you do not want to happen to you.

Builders also tender financial incentives if you use their lender. They can offer free upgrades, appliances, or other incentives.

This may be an attractive offer for many buyers who want to stretch their dollars.

If you look at your purchase from a strictly financial sense you may desire to compare several offers with the lenders offer.

Some lenders have a limited selection of loans they can offer.

Outside lenders and brokers may have a much wider range of loans available to you. This may include minimum payment option loans.

Great Credit Scores and Mortgages

Credit Score Basics

Your credit score is a basic financial gauge that a mortgage lender will use to determine if you get a loan or not.

First they will utilize it as a cut-off to see if you even qualify for a certain mortgage program. The same lender might have many different types of mortgages available. Generally each of the different loan programs has its own underwriting criteria.

Credit score minimums are typically set for each of the lender's programs.

The second way a mortgage lender will use your credit score is to “price” your loan.

This means deciding what interest rate you are eligible for.

Your credit score is one of several factors that go into calculating what your interest rate will be, but it is very important.

Frequently mortgage lenders will have a top down approach to credit score grading. If your credit score falls between 719-700 you may be offered one rate and another rate if your score is between 680-699. This continues all the way down to the minimum credit score. The credit score utilized here is the “mid score” which is the middle credit score on your credit report. You generally have three different credit scores but the one most lenders use for lending purposes is your “mid score”.

The Best Deals

There are a number of mortgage lenders who focus on working with people who possess great credit. This is the sort of lender you want to work with.

These types of lenders will regularly include additional incentives for borrowers with excellent credit. Case in point, they may lower your interest rate by 0.25% if your credit score is over 720.

There are a lot of lenders who concentrate on borrowers with bad credit. They generally don’t have good loan programs for borrowers with excellent credit. They might be able to offer you a loan, but it is doubtful it will be as good as an offer from a lender that usually works with high credit borrowers.

Some large lenders work with borrowers of all credit types.

Mortgages: Tips to Get From Application to Closing

You've found the home of your dreams and negotiated an excellent price. Now you've found a lender and you qualified and submitted all the paper work and got approved. Sure glad that's over. BUT - it isn't over!!!

It is like buying a car; once you get to the finance office you believe you are done and can breathe a sigh of relief. Wrong again!!! Finance offices in car dealerships are profit centers and gigantic ones too.

Mortgage lenders are not about making you feel good, have your best interest at heart, leave that warm fuzzy feeling type of folks. You must be responsible and do your homework. Get multiple quotes and stay alert. After all, this is the biggest purchase of your life.

Listed below are several things to be on the lookout for that could save you some money but most of all help ensure that you receive a fair and first-rate deal on your mortgage. Get you from application to closing without a hitch.

• LOAN OFFICER SHOPPING. Any professional shopper would be the first to tell you SHOP, SHOP, SHOP!!! This is the largest purchase of your life, so do your homework and locate the best mortgage broker in town. Don't simply ask your real estate agent who may be in partnership with a crook mortgage broker. All of the lending programs are similar. COMPARE and find the best lender.
• OVER BORROWING. The reasoning here is that when you apply don't fall victim to the thought that if get an interest only or an ARM you will qualify for a bigger house. Of course you can. Then when reality sets in, two to three years later, and you have the full load to pay plus a premium you may be unable to afford the house. Mortgage lenders are there to sell you things not to ensure you can make the payments.
• HIDDEN COSTS Interest rates aren’t the only costs associated with the loan. Normally there is a price associated with receiving a good rate. Get ALL costs in writing, up front, and compare to what the costs are at closing. Lenders rely on the stress factor knowing if they get you in the closing room and they pull a fast one you seldom have an option.
• WATCH FOR EXTRAS. Credit life insurance, biweekly payment programs, the list goes on and on. The majority of these is worthless but will make your lender happy because of the huge profits for them.

Most Mortgage Loan Officers are honest, hard working folks. Like any industry, there are always the small numbers that give the rest a bad name. Those are the ones with predatory practices that give everyone a bad name. Have a backup lender standing in the wings just in case something goes wrong at closing. Don't be intimidated into accepting something that is wrong.

Following these tips will help you greatly get from the application process to closing of the loan without any problems.

How Mortgage Lender Programs Work

Lender Loan Basics

There are hundreds of different mortgage lenders available today.

You can get your mortgage from many different sources. This can include your current neighborhood bank, credit union, a mortgage lender, or a mortgage broker.

No source is automatically better than the other. You can compare offers from each one to see which is right for you.

Lender Types

Some lenders have a wide number of mortgage loans, while some mortgage lenders specialize in certain types of loans.

The lender that you are working with may not be able to provide you with the loan you are looking for. This is not necessarily because you don’t qualify for it. This may be because the lender just does offer the type of loan you are looking for.

Lenders also have different loan guidelines. What may be acceptable to one lender is not acceptable to another. Do not assume because one lender rejects you that another lender will not approve you. It is easy to get disheartened, but do not be.

There are specialized mortgage lenders that work with people who have bad credit.

Program Types: Lenders can have many different loan types. These can include from 30 year fixed, 1 year fixed, 3 year fixed, 7 year fixed, 10 year fixed, interest only, 40 year terms, 50 year terms, minimum payment options, and many other types of loans.

Lenders will also change their loan programs over time.

Some lenders specialize in certain types of loans and try to have better overall rates or more flexible standards for a particular lending niche.

Credit Type

Some lenders will work with all kinds of credit types. Some lenders will prefer to work with borrowers who have good or excellent credit.

Some lenders will focus on sub prime borrowers who have bad credit. These types of lenders do not have loan programs that are good for people who have good to excellent credit.

Loan To Value: Each loan type usually comes with a maximum amount of money the lender will loan against the value of a property. These caps can often be 80%, 90%, 95%, or 100% of the value of a property.

Some lenders will even go to 125% of the value of a property in a refinance. This is usually a full documentation type loan.

How Your Mortgage Is Affected By Debt Ratios

Debt Ratio Basics

Mortgage lenders will evaluate your loan application in the same way that it evaluates other applicants. Total debts are measured as a monthly amount, including monthly credit card payments, car payments, student loans, department store cards and other amounts. This information is all readily available on your credit report, so it isn’t a good idea to hide your debts from your mortgage lender. They will see it on your credit report, and you may lose your chance at a loan as a result. The total amount of monthly debt is compared to total monthly pre-taxed income. Total debt also includes proposed mortgage payments. Your lender will figure out what your monthly payment will be based on the loan level and interest rate that you qualify for.

Income

Pre-taxed income includes base salary, commissions, bonuses, rental income, interest income and any other possible source of income. The lender compares these numbers to generate a debt to income ratio.

Lender Approval

Mortgage lenders have guidelines for different loan programs. Some are harder to get and have a lower debt to income ratio than others. Others, like a five year fixed loan may require a debt to income ratio of below 40%, while another may require a debt to income ratio below 36%.

Loan Amount

A lender will occasionally use this debt to income ratio to help determine how much of a loan can be approved for you. If your mortgage payment is too large of an increase in debt load, the lender may have to approve you for a smaller loan.

Different Lenders

Different lenders have different rules. Some will not lend to a borrower with a debt to income ratio above 42%, while others will tolerate up to 55%.

Credit Repair and Mortgages

Credit Report

Credit reports usually list credit lines that you have had for several years. This includes current credit lines that have been paid on time, credit lines that have been closed, and credit lines experiencing problems. Credit lines on your credit report can represent credit carts, debt collectors, student loans, car loans, mortgages, or any other form of received credit.

Interest Rates

Offered interest rates tend to be based in part on your credit rating, so much so that many loan program have a minimum required credit score. Mortgage lenders often have many different available loan programs, and each one may have a different credit score minimum.

Credit Repair

Credit scores can and do change over time, so it is important to resolve issues directly with each creditor. If debts are paid off, or errors are removed, you should call credit bureaus to let them know that a change needs to be made to the information they have about you. Do not assume your credit report will update quickly.

How Credit Reporting Agencies Affect Your Mortgage

Credit Report

Credit reports usually list credit lines that you have had for several years. This includes current credit lines that have been paid on time, credit lines that have been closed, and credit lines experiencing problems. Credit lines on your credit report can represent credit carts, debt collectors, student loans, car loans, mortgages, or any other form of received credit.

Bad Credit Issues

Credit scores will be lowered by items in “delinquent credit lines” section of your credit report. It will include items that you have been late in paying, or have stopped paying. This may include credit cards that were late once years ago, and items that are bad debt collections. If you do not recognize a name on the credit report, generally this means that the debt has been passed to a collections agency.

Credit Reporting Agencies

Credit reporting agencies collect information from your different credit lines, and are fed all kinds of information about payment and credit habits. If a problem exists with a creditor, it is important to resolve it directly with them and to receive written verification that the debt has been paid off or the issue has been resolved. You can supply this documentation to a credit reporting agency to make sure that they update the information.

Debt Consolidation Refinance - How To Save Your Money

Beginning the Mortgage Process

Debt conslidations with mortgage refinance usually involve increasing the mortgage balance and using the proceeds to pay off higher interest expenses like credit cards and student loans. Mortgage rates are generally lower than consumer interest like car loan rates and credit card rates. This is because mortgage rates are collateralied by the property that you own. Mortgage rates are tax deductible, unlike most other forms of consumer debt. This represents additional savings for the borrower, so it is important to speak with a tax advisor about it.

Competing Offers

It is possible to get competing offers from different mortgage lenders and brokers, which come in the form of “good faith estimates”. These are written estimates of fees and interest rates, and they are not guaranteed.

Debt Consolidation Requirements

After being approved by a mortgage lender, you will receive a terms anc conditions list that your loan officer receives to let you know what additional requirements are made in order to complete the loan. One of the things that is typically listed is the exact debts that need to be paid off. Make sure to carefully evaluate this list so that you are paying only what you are actually meant to pay. Many lenders will require some, or all consumer debts to be paid off. Make sure you are clear on which debts will and will not be paid off with the mortgage.

How Can I Get A More Expensive House

Loan Options

There are many newly available loan options aiming to help borrowers stretch their dollar. Although lenders used to require that both principal and interest were paid each month, there are now new loan options that allow borrowers to pay interest only payments, or even less if higher loan balances can be afforded. There are two basic options that are available for getting an expensive house: Interest only loans, and minimum payment option loans.

Interest Only Options

Interest only loans get you a lower payment than a regular loan can. This loan type can be used for several reasons. Payment stability is possible with no negative amortization, which means the loan balance basically increases over time. This is not possible with an interest only loan, because the loan balance constantly remains the same.

Minimum Payment Options

Minimum payment options allow borrowers to pay even less than in interest-only loans. Any amount paid less than the interest-only payment is added on to the principal, which is known as negative amortization. An increasing loan balance is sometimes acceptable to borrowers who believe the property value will increase, or they don’t really mind the increasing loan size. This type of loan above all else allows borrowers to really stretch their mortgage dollar.