Home Mortgage and Refinancing » mortgage loan

The Two Main Types of Home Mortgage Loan

Mortgage Maven — Sun, 16 May 2010 07:17:40 +0000

There are two major types of loans to look at when you are looking for a home mortgage loan. They are the fixed rate and the adjustable rate loans. Both have their advantages and disadvantages depending on your personal situation. The fixed rate loan is the most favorable as your rate remains the same throughout the term of the loan whereas the adjustable is subject to change.

If you are on a tight budget, a fixed rate loan will not change, therefore you will know what your payment will be each and every month. As you are aware, interest rates are subject to fluctuations daily, so with a fixed rate loan there are no surprises and you can plan your budget accordingly. The fixed rate loan never changes and will remain the same throughout the term of the loan. Therefore, if you lock in at a relatively low rate and the interest rates increase, you are at an advantage.

On the downside however, if you lock in at a certain rate and the rates decrease then you are at a disadvantage. But if the interest rate and the payment fall within your budget criteria you will always be able to cover your payment.

When a fixed rate is advertised by a lender, you need to know that this rate is based on certain financial parameters. Your rate may be different if you do not meet the guidelines advertised.

However, an adjustable rate loan is a little easier to qualify for as they usually start out with a lower interest rate, and therefore a lower payment. If you know your salary will increase annually, then your income will grow and you’ll be able to afford an increase in your payment.

If you are uncertain of your income, however, the fixed rate mortgage loan may be the safest way to go because you will always know what your monthly payment will be as it will not change.

Understanding 125 Home Equity Loan

admin — Fri, 09 Oct 2009 13:56:37 +0000

A 125 home equity loan, like the name indicates, is a loan that is based on the equity in your home. However, traditional home equity loans are generally only for the actual amount of the equity that you have built up on your house. With a 125% home equity loan, you can receive 25% more than your equity.

The 125 home equity loan is basically a second mortgage. The borrower will still pay their regular mortgage and then have a second payment to make each month for the 125 loan. For example, if your house has an appraisal value of $100,000 and your first mortgage is for $90,000, you will be able to get a 125 loan amount of $35,000.

This type of loan can be very advantageous to homeowners who need a large sum of money, but do not have sufficient equity built up in their home to cover their cash needs. Homeowners may want to do some major home improvements, pay for their children’s college education, have unexpected medical or other emergencies come up, want to start a business, or have other situations where cash is needed. A 125 home equity loan also comes with several potential disadvantages as well.

The most advantageous thing about a 125 home equity loan is providing homeowners with potentially large sums of cash that they need. A 125 home equity loan will have a lower interest rate than a credit card or personal loan would. Part of the interest on a 125 home equity loan will most likely be tax deductible, which is not the case with personal loans or credit cards.

125 home equity loans also have some disadvantages. One of the major disadvantages is high closing costs. The closing costs on a 125 home equity loan could wind up costing a homeowner several thousand dollars and other fees may be added also.

High interest rates are another drawback to 125 home equity loans. The interest rate on this type of loan is higher than for a regular home equity loan or first mortgage. However, the interest rate will most likely be lower than the rate for a personal loan or a credit card.

One other drawback to a 125 home equity loan is that it can put the borrower at risk and make it difficult for them to sell their house. If home values depreciate it will be difficult to sell the house and move because the homeowner will still be responsible for paying the difference to the lender. Since the borrower already received more money than the house was worth in the first place, having the house depreciate in value will make it even harder to pay the loan back.

There are some nice advantages to 125 home equity loans but there are several potential disadvantages as well. So before you make your final decision regarding this type of loan, be sure to weigh all of these factors. It might be a good idea for you to review this will your financial adviser or accountant as well.

Five Basic Areas to Know for First Time Home Buyers

admin — Thu, 08 Oct 2009 19:21:12 +0000

If you are buying a home for the first time. It is imperative to know several important aspects of the process. The glossary of loan terms is one thing that you should familiarize yourself with. However here are the 5 areas that can be critical. Being aware of these will help you avoid costly mistakes.

Today home loan programs are more responsible with FHA being the most popular with a minimal 3.5% down. A family member can gift you the required down payment. It is preferred to have between 10-20% down. If you can muster 20% down you may avoid mortgage insurance.

Real Estate agents will want to know that your are pre-qualified. This entails a look at your income, assets and credit history. It is a prime indicator of your sales price limit, ability to repay the loan and your probability of paying back the loan. In this step, your monthly payment is determined based on the current interest rates. Your credit score will also determine the rate. A score of 700 or higher earns you the best rates. Financial experts recommend around 25% of your income as a mortgage payment. A debt ratio of 38% or higher becomes a concern with regards to affordability. Your assets will be verified to confirm down payment, closing costs are in the bank and for how long. You may need 2-6 months of payment reserves to allow a cushion depending on loan product.

You will want to know your costs of doing your home loan. The Good Faith Estimate is the disclosure for this. It will detail all the loan particulars such as interest rate, monthly payment etc. It mostly gives you the detail of fees from the lender, title and escrow, and your taxes and insurance prepaid amounts. Keep in mind initially it is an estimate just as the title implies. You should get this disclosure before you leave a lender or shortly after a phone application. It is wise to keep this form to keep everyone generally accountable. Expect reasonable differences however as factors change along the way.

Your trusted local real estate agent and home loan professional will help guide navigate you through the process. You are now pre-qualified for a purchase price and can start looking for a home with features and location in mind. In the process of negotiation, it is normal to ask the seller to pay 3-6% of the closing costs. Check with your loan professional to be sure your loan product allows this. After making an offer, you will likely get accepted! This is the good news you want to get started. Now the ordering of the home inspection, appraisal, formal loan approval and satisfying underwriter conditions begin. Expect to be asked for more information, possible delays, and roadblocks as part of the process to completing your purchase.

The Closing is what is considered drawing loan documents for signing the deed of trust, the note, and all disclosures in title. In some cases a mobile notary may be used. Finally your loan should be ready to fund and record. Now the house is yours!

To sum it up, good communication and experienced professionals will help make the overall transaction smoother. Choose carefully in the beginning who you want to work with. Cathy Acosta of Mission Hills Mortgage Bankers says, I love first time home buyers as I am a teacher at heart and can empathize with their inexperience. It is important to not assume buyers know or understand the loan process fully. Seek people you trust and are recommended. Learn as much as you can and most importantly take the initiative.

Finding the Best Mortgage for You!

admin — Thu, 03 Sep 2009 01:22:50 +0000

When it comes time to take out a mortgage there are many things that make it difficult to decide between a bank and a mortgage broker. It is a complicated choice because of the needs of each borrower and the sheer amount of different mortgage products to be considered. The choice is not simplified by the fact that mortgage products are generally under constant revision and changes are hard to keep up with increase the difficulty of making a wise choice. This means that if you found the perfect mortgage and lender a few months ago, it may not be the best choice now. However, this general guideline can be helpful in making your mortgage lender choice.

First of all, banks have a tendency to be conservative than brokerages; their policies and practices are traditional and they will only offer you mortgage products from their institution. Banks know that having more products to offer will help them gain return customers. Because banks only offer their own line of mortgage products they usually offer better terms and discounts to their customers. Bank customers that have substantial holdings in two or more accounts should consider getting their mortgage at their own bank first.

If the potential home buyer does not already have a strong relationship with a particular bank, then going through a broker may be more appropriate. A broker usually represents a number of different lenders selling different lines of products. A good broker can review an individuals circumstances and recommend a specific lender and product that can best meet the clients needs. Further, a broker will provide advice on how to present the clients financial information and will do much of the leg work involved in getting the process underway.

Generally brokers do not receive payment until the mortgage is closed, although some do charge a fee up front. While this can mean that a broker will be invested in helping a client obtain lending, it also means that the broker wants the client approved for any loan, and possibly one that is not idea for the homebuyer. Inappropriate mortgage approvals were a big factor in the sub-prime mortgage bubble burst of 2007.

Once the decision to use a mortgage broker has been made the next step is to make a list of brokers to check into. Start by gathering names from friends and family who have worked with brokers, and also the names of local brokers. Then you can begin to research, making sure they are properly licensed, if there are many customer complaints about their service, and if the broker has had legal difficulties. You can check this information with news sources, the Better Business Bureau, and the Attorney Generals website. At this point the list should only include those brokers that have a sterling reputations and no problems with licenses, legal problems, or customer complaints.

Once a homebuyer has researched the list and narrowed it to reputable brokers then it is time to interview or consult with each one. Consultations are important because each broker will have a different group of mortgage projects to offer. Interviewing brokers gives the homebuyer a pretty good idea about which broker can help them get the best mortgage for their needs.

The Perfect Mortgage–Shopping At A Bank or Brokerage

admin — Thu, 03 Sep 2009 01:10:39 +0000

There is no simple answer to the question of whether mortgage brokers or banks offer the best chance to find the ideal mortgage. This is because there are many different mortgage products available and each borrowers financial situation is unique. Further, the products available are subject to constant change and revision, so just because one lender seemed desirable six months ago does not mean it still is today. Nevertheless, there are still a few simple guidelines that can be followed to determine whether to use a bank or a broker.

In general, banks tend to be more conservative in their policies and practices and only offer their own line of mortgage products. However, they also know that the more products they sell to customers, the more likely they are to retain that customers business. For this reason, they frequently offer better terms and discounts to existing customers that are interested in one of their mortgage products. If a potential home buyer already has two or more accounts with a particular bank and has a notable amount of money held there, this bank should probably be the first place to look for a mortgage product.

Obtaining a mortgage through a brokerage may be a better choice if there is no strong relationship with a banker. A broker has many different products to offer because they represent several lenders with a wide variety of financial products. A good broker can do a lot to help find the ideal mortgage by studying the applicants situation completely so they fully understand the needs of the borrower. This puts them in a position to recommend the best possible mortgage product and lender for an individual. A broker can be invaluable by doing much of the beginning application work and advising clients on the best way to display their current financial statements.

Once you have decided to enlist the help of a mortgage broker then it is time to begin researching your options to find the most reputable broker to help you. Start by making a list of brokers that have worked with and are recommended by friends and family. You can also include brokers working in the general area. Once there are several brokers on the list start doing research to make sure they are properly licensed. Checking with the Better Business Bureau or Attorney Generals website can reveal if there have been many customer complaints about the broker or if there are legal difficulties he or she is dealing with. Any broker that has complaints, legal problems, or lacks a proper license should be removed from the list of potential brokers.

Save Time And Money Using A Free Mortgage Calculator

admin — Sun, 26 Jul 2009 10:09:08 +0000

When you’re learning about something new, it’s easy to feel overwhelmed by the sheer amount of relevant information available. This informative article should help you focus on the central points concerning UK free mortgage calculators.

UK mortgage calculators can help to work out the interest burden. Mortgage calculator results are supplied for estimating purposes only and should be verified by your lender of choice. Mortgage Calculator Pro is a quick and easy to use calculator for brokers, realtors, and home buyers. Within seconds, you will be able to calculate the monthly payment for a mortgage, car payment, credit card, or other types of fixed rate loans.

Interest rate is the annual cost of the loan lending, also known as annual percentage rate (APR). The amount of the loan amount is going to borrow from lenders and loan. Interest rates are predicated on so many economic factors that it’s virtually impossible to tell what they will do week to week. Even the most adroit economists can only guess as to what rates will do. Interest rates on adjustable rate mortgages fluctuate based on general interest rates (otherwise known as an index). There are many adjustable rate mortgages that can be considered hybrid mortgages, in that they offer a fixed interest rates for a period of 1, 3, 5, or 7 years.

I trust that what you’ve read so far has been informative. The following section should go a long way toward clearing up any uncertainty that may remain.

Free mortgage calculators are a great home buying tool. You can use a mortgage calculator to determine the approximate monthly payment on a home loan. Free mortgage calculators online calculate the monthly payments and prints an amortization schedule. The calculator is a tool for people in the real estate market. Help you calculate figures related to the mortgage. Simply enter your data in the “input” section for the total amount of mortgage you are seeking, the length of term of the loan and the estimated interest rate you are paying. Paying off short term loans and credit cards with a mortgage could cost you more over the long term.

Mortgage calculators can also be used to calculate payments on debt consolidation mortgage loans and see your monthly savings. Mortgage calculators on the web are mostly for fixed rate mortgages. Your mortgage advisor can actually assess your financial and psychological profile and determine if a fixed, floating, interest only or hybrid is suitable for you. Mortgage Calculator Pro is an example of one of those apps which are made for business professionals (realtors in this case). It provides brokers, real estate agents, and anyone interested in this field with an easy way to calculate monthly payments for mortgage, auto loans, credit cards, and other types of fixed loans.

Simply fill in the loan amount, the term and then play with the rate. It’s important to remember that the figures are only a guide, the exact cost will depend on the particular mortgage you have. Simply complete one of our mortgage inquiry forms to see how much you could save. Simply finished sum total of our mortgage enquiry forms to dream of how much you could prevent. As a sum total supermarket mortgage stockbroker we can search the lender supermarket to appropriate the most beneficial deals and the lowest rates.

That’s the latest from the UK mortgage calculators authorities. Once you’re familiar with these ideas, you’ll be ready to move to the next level.

Vocabulary Terms In Real Estate Purchase Contracts

admin — Sat, 25 Jul 2009 08:27:34 +0000

An offer to buy real estate is usually submitted by a proposed purchase contract. There are quite a few vocabulary terms found in real estate purchase contracts which you may not fully understand, below are the most common of these:

Purchase price – how much is offered for the property.

Earnest, escrow, hand or good-faith money – these terms are used for money which shows seriousness on the buyer’s part and will be forfeited if the contract is signed by both parties but the buyer cannot consummate to purchase.

Financing terms – how the buyer will pay for the property. This must describe any proposal loan from the cellar and any required loans from third parties. If the buyer cannot arrange the required loans he or she is generally not required to forfeit the earnest money.

Deposit increase – conditions under which the buyer must increase the earnest money to maintain the contract.

Closing – when and where closing is to take place, which party selects a closing agent and also who pays closing agent fees.

Title – what type of title insurance or abstract must be provided and who pays.

Assessments – does the seller or buyer pay for assessments that are a lien?

Expiration – a date and time when the author must be accepted before it becomes void.

Commissions – which party owes a brokerage commission and how much it is.

Pest control inspections – gives fire the right to inspect for insects and certain other rights or options if wood destroying insects are found.

Occupancy are operating permit – this is used to ascertain validity.

Inspections (city and/or county) – to ascertain compliance with local building and permit regulations.

Personal property – a list of what is included in the sale, this is usually furniture and equipment.

Existing leases – these must be delivered to the buyer as they remain binding.

Arbitration – stipulations for settlement to be conducted by a specified arbitration board in the event of disputed terms.

Encumbrances – the buyer is to take title subject to encumbrances, or provide, within a brief period of time, objections to restrictions, easements and unpaid taxes that must be cleared by the seller.

Although not all of these terms will appear in every real estate purchase contract these are some of the normal ones which you should understand fully before signing any purchase contract. Your real estate agent or broker should be very knowledgeable on all of these points and able to further help you understand any of the real estate purchase contract vocabulary terms which you still fail to fully comprehend.