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The Advantages And Disadvantages Of Mortgages

Nov 24

Posted by admin in Loans, Mortgage Refinance

The following article includes pertinent information that may cause you to reconsider what you thought you understood about the advantages and disadvantages of mortgages. The most important thing is to study with an open mind and be willing to revise your understanding if necessary.

Lenders make money through interest, so if you pay off the principle of the loan early, you are avoiding paying the rest of the interest that would have compiled. When you have a fixed interest rate, you will likely be responsible for a penalty that covers a percentage of the interest you would have had left. Lenders base ARM rates on a variety of indices, the most common being rates on one-, three-, or five-year Treasury securities. Another common index is the national or regional average cost of funds to savings and loan associations.

Congratulations to everyone who is taking advantage of the lower interest rates. I also traded in my 30 for a 15 year mortgage some years ago and have not regretted it one bit. Content topics include financial news and personal finance, consumer product reviews, personal growth, advanced learning strategies, innovative marketing solutions, and search engine optimization consulting. Lewi likes to spend his free time composing music and exploring remote areas of the great southwest. Contrary to common wisdom, we find a positive relationship between mortgage rate volatility and home mortgage loans. Further investigation indicates that this is due to volatility in the bond market.

If you base what you do on inaccurate information, you might be unpleasantly surprised by the consequences. Make sure you get the whole story on the advantages and disadvantages of mortgages from informed sources.

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Don’t lose hope; careful financial planning as early as possible should be your number-one priority long before you meet your mortgage lender. Bank repos and foreclosures is an opportunity to save money when it comes to buying foreclosed properties. Bank home foreclosures represent a huge break for anyone who wants to buy a home for his/her family without spending a fortune on it.

Banks want to see that you fulfil your commitments, so it’s better to pick up the phone and negotiate a “pennies on the dollar” settlement now, and get it behind you. Otherwise many lenders will require you to pay the full amount as a part of your closing conditions and will give you a higher interest rate as a result of your clear demonstration of defaulting on your debt.

Take time to consider the points presented on the advantages and disadvantages of mortgages above. What you learn about mortgage amortization calculator resources that may help you overcome your hesitation to take action.

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There’s more to a mortgage than a low rate

Nov 23

Posted by admin in Mortgage Refinance, Real Estate

Homeowners and buyers are in a rather enviable position these days. Interest rates are at historic lows and the cost of borrowing for a home is about as low as it can get. That’s great news. But it’s not the only thing homeowners and purchasers need to think about their mortgage.

There are a number of other features to consider before signing up for a mortgage and what is probably the largest debt that most Canadians will ever take on in their lives. “When it comes to choosing a mortgage, getting a good rate is just the tip of the iceberg,” says Mary Gronkowski, regional sales director with Mortgage Intelligence Inc., a national mortgage brokerage company. “You have to be aware of all the other features that may lie below the surface. All features of a mortgage should fit a homebuyer’s personal goals, both now and down the road.” One type of mortgage to consider is an assumable mortgage.

An assumable mortgage means it can be transferred to another borrower. It allows a purchaser to take on your mortgage’s terms and payments as part of the sale of your home. With extremely low interest rates today, that could be a big selling feature to a potential buyer in the future. Given the low rates today, many homeowners are thinking about refinancing their mortgage. Whether you should refinance your mortgage in a period of low interest rates depends on how much it will cost you to break your existing mortgage compared to how much you will save in interest payments. If you break an existing mortgage you will have to pay the greater of three month’s interest or the interest rate differential (IRD). An IRD is a penalty for early prepayment of all or part of a mortgage outside of its normal prepayment terms. Usually this is calculated as the difference between the existing rate and the rate for the term remaining, multiplied by the principal outstanding and the balance of the term.

For example, if you had a $100,000 mortgage at nine per cent interest rate with 24 months remaining and wanted to renegotiate your mortgage at 6.5 per cent for 24 months, your IRD would be $5,000 ($100,000 x 2.5% $2,500 x 2 years $5,000). It may only make sense to refinance your mortgage if the interest rate savings over the remaining life of your mortgage exceed the value of the IRD. Another strategy is to take a variable rate mortgage. If interest rates go down and you keep your mortgage payments the same, you will be paying off more of your principal with each payment and will pay down your mortgage faster. Many borrowers are taking advantage of low interest rates by accelerating payments on their mortgages. Many lenders will allow you to double up payments periodically or make lump sum payments of up to 20 per cent of the principal once a year.

You should make sure you understand the size and frequency of payments your lender will allow before you sign up. Some mortgage lenders will have an option to skip a payment without penalty, which may come in handy in today’s economy. Another option that many mortgages have is portability. This allows you to transfer your existing mortgage over to a new property, another big advantage if you have a mortgage at current low rates. Not all portability features are the same, however. Some lenders allow up to 120 days to transfer the mortgage while others allow for only a few days or a week. “Choosing the right mortgage involves considering where you are now and where you may be three to five years from now,” says Gronkowski. “Working with a professional can help you make sense of the many options available to you.” Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.

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Better refinance than modify mortgage

Nov 23

Posted by admin in Mortgage Refinance

Don’t try to modify mortgage just because you owe more than your home is worth. Reuters reported today that the Obama administration is behind on their goals for mortgage modifications and is still seeking alternative ways to help homeowners hang on to their homes. What many people are not aware of is that government sponsored enterprises such as Fannie Mae and Freddie Mac have relaxed some of the mortgage guidelines when it comes to existing homeowners who have lost value in their homes. Many times when I call upon a customer I begin to qualify them for a refinance and they tell me they are in the middle of a loan modification. When I sit down and do the math I end up asking the question “why don’t you just refinance your mortgage?”. If you have a perfect mortgage history, you should be looking at a refinance first before any talk of a modification.

The Home Affordable modification program is running behind on its goals because the pipeline of modifications that was in process had to be looked at all over again based on the new set of rules that came out on April 1st, 2009. There are people out there who have been trying to modify for eight months now. If they succeed their credit will reflect this and their credit scores will be compromised. When a bank does a modification they look at net income (after taxes) and every single expense in the entire budget of the household. This includes food, gas, electricity, car insurance, phone, cable, entertainment, etc. When a lender analyzes a refinance they look at gross income (before taxes), the mortgage payment and the debts that appear on the credit report. A loan modification is quite often granted to someone with a 100% to 110% debt ratio. A mortgage loan is often granted to someone with a debt ratio of 30-50%. (Mortgage and consumer debt compared to gross income.)

Here are some startling facts for borrowers who are thinking of modifying who really fall into the other side of the Home Affordable legislation. (The mortgages refinance side)

Banks are looking at present values and previous values now. In some cases they will take into account the value three years prior and compare. Florida, California did you hear this? If the only issue is that the customer is upside down, we have a legitimate shot at the loan. In some cases we can get an appraisal waiver to completely avoid an appraisal. In other cases we can do a manual underwrite and get a loan up to 125% of the value of the home. Even more, in many cases, we can do the same loan without verifying income.

A loan modification requires that we show the problem, like a layoff or a cut in income, and then we show the fix or some underlying reason why we should give this person a second chance. A mortgage loan looks for continuity in pay and work history. It has been my experience that customers who are current on their mortgage get turned down for loan modifications where customers who are current on their mortgage have a very good chance of getting approved for a refinance. If the only problem is that you are upside on your home you should be looking at the Home Affordable Refinance program through either Fannie Mae or Freddie Mac. Modifications stretch the term of the loan first, lower the interest rate second, lower the balance third, hardly ever. A refinance will lower the rate from say 6.625% to 5.125% and save approximately $130 to $500 a month and the work is done in 3 weeks to a month with no adverse effects on the customer’s credit bureau. Rates are expected to stay low until about the end of the year when the Federal Reserve is expected to stop purchasing American mortgage backed securities.

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You Can Get A Bad Credit Mortgage

Nov 15

Posted by admin in Credit, Mortgage Refinance

Recently, my significant other and I decided to buy our first home. We were unaware of the fact that we had bad credit until we sat down with a mortgage lender who told us our credit scores were terrible. He suggested a bad credit mortgage.

There are lots of causes to bad credit. One of the biggest causes of bad credit is if you are making a habit of late credit card payments. Late credit card payments are like a huge red buzzer to lenders. It alerts them that you have been irresponsible in the past with making payments, and statistically speaking, you will be irresponsible again. That makes you a serious risk to their lending institution. Another popular cause of bad credit is filing for bankruptcy. You can file for many different kinds of bankruptcy. The two most popular forms of personal bankruptcy are a complete wiping of the proverbial slate and a debt reorganization plan. Either way, the filing stays on your credit record for seven years. This, much like the late payments, causes traditional lenders to fall out of their chairs. They look at you and see a lack of responsibility seething from your pores. It is a major signal to lenders that you are not to be trusted with loans. As a result, it can cause a very poor credit score.

Even with the red flags going off in their minds, there are lots of reasons that lenders decide to give their money away to people who have proven themselves untrustworthy according to their credit reports. One of the biggest reasons they loan to people with bad credit scores is that they make more money from the loan. If you are looking for a bad credit mortgage loan, you will almost always pay a much higher interest rate or you will have more points assigned to your loan. Either way, your monthly payments are going to be higher, and the total amount you will pay the bank in the long run will also be much higher. This means more money for the bank, if you manage not to default on your loan.

Even if you have bad credit, though, you will probably still qualify for a bad credit mortgage. This is a great option for people who want to buy their first home, but cannot seem to do so under traditional mortgage programs. Most of these lending institutions believe that everyone deserves a second chance, especially when it comes to attaining the American dream of home ownership.

There are a number of different companies, primarily internet based, that offer bad credit mortgage loans. Most of them offer fast, personal service. You can often get a loan decision in a matter of minutes via your e-mail account. This can be a refreshing change to people who are used to sitting down in a stuffy bank environments.

While obtaining a bad credit mortgage can be more difficult, and they can cost more in the long run, it can help you to reestablish your line of credit after you have experienced credit problems. For us, a bad credit mortgage was the solution to home ownership. Perhaps when our credit report looks a bit sunnier, we can refinance and leave the world of bad credit loans for the world of loans that offer better rates.

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Bad Credit Mortgage Refinancing: Solution To Financial Crises

Nov 14

Posted by admin in Credit, Mortgage Refinance

Getting bad credit mortgage refinance is a good option if you are going under debt. Debt situations can trouble us at any stage of our life: whether you take a loan for higher education, getting married, for renovating the home, or paying medical expenses. Another debt trap people fall into often is credit card loans. To repay the credit card bill, you need to take out another loan. This continues until it becomes a vicious debt cycle.

Refinancing Options
Today, you have more refinancing options that ever before. The most popular is to consolidate all debts into one, and then working towards repaying the debt. The best way to repay debt is to work towards having a flexible payment plan that allows you to manage financial matters better with the help of the best mortgage refinance rate.

In order to repay the consolidated debt amount, you may need to take out another loan. The best way to do this is to go for refinancing, as they are also available as no cost mortgage refinance.

Poor Credit
Many lenders may refuse to do business with you if your previous credit report is not good. If you have loan arrears, delayed payments, and other repayment issues showing on your credit record, you may have lost all chances of getting debt relief: except in the form of bad credit mortgage refinancing.

This kind of loan helps you make good even if your credit record is poor. You need to search online before you can find a lender willing to lend you the amount you need. You also need to work out a plan with the lender that allows you to repay previous debts through Second mortgage refinance.

Raising The Credit Score
Understand that the sooner you clear your debt, the better your credit rating will be, and the faster your financial recovery. You also need to work out a bad credit mortgage refinancing plan that results in the most savings. You may also need to pay closing costs, in which case you have to take a look at your funds. A good credit plan will help you repair your credit record. If you pay your new loan faster, it will show in your favour in your credit report.

There are many advantages of going in for a bad credit mortgage refinancing plan, from raising your credit score to helping you deal with financial problems. So if you have a debt situation you cannot manage, dont wait. Start working out a repayment plan as soon as you can.

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Online Mortgage Calculators: What Can They Do For You

Nov 13

Posted by admin in Mortgage Refinance

If you are planning on applying for a mortgage, the very best thing you can do before you do anything else is to locate and use a mortgage calculator. You can find many loan and mortgage calculators online. Simply use your favorite web browser and conduct a quick Internet search for online mortgage calculators. Your search will bring up many websites that offer you the use of their online mortgage calculators for free.

Online mortgage calculators can help you make informed decisions about the type of mortgage that best suits you. They will also help you gauge the amount of mortgage that you can actually afford to repay. There are so many types of mortgages out there and you need to know all about them, how they compare, and which ones are best for you. There are fixed rate mortgages and adjustable rate mortgages. Online mortgage calculators can calculate payments and determine whether your choice of mortgage is the right one for you.

Online mortgage calculators can help you to:

1. Determine what mortgage amount is affordable depending on your financial situation now and in the near future.

2. Determine other information vital to applying for a mortgage.

3. Determine your monthly payments by calculating loan amount, length of loan, interest rates, and terms.

4. Compare different mortgage products, e.g. fixed rate versus adjustable rates. You can also compare 30 year and 15 year mortgages.

5. Determine how extra payments will help you decrease the number of years of the mortgage payments.

Before you make any decision about the mortgage process, do yourself a favour and use one of the hundreds of online loan and mortgage calculators hosted by various companies, such as Bankrate, Calcbuilder, Interest, HSH.

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Weighing The Pros And Cons Of Arm Mortgages

Nov 10

Posted by admin in Mortgage Refinance, Real Estate

When you decide to purchase a house, you will be faced with the important decision of securing a mortgage. One of the options you will be given at your financial institution is an adjustable rate mortgage, commonly known as ARM mortgages.

An ARM mortgage is just as its name implies-a term mortgage with a changing interest rate at intervals of time throughout the course of the loan. There are several advantages and disadvantages to ARM mortgages, and it is up to you whether the risk involved with an adjustable rate mortgage is worth it, or not.

In some cases, such as when interest rates are at an extremely high point, an ARM mortgage is the best solution for your mortgage needs. If the interest rate is at an extremely low point, then an ARM mortgage is not the best decision to make and you would go for a fixed rate mortgage. However, if the interest rate is floating somewhere between low and high, the decision becomes much more difficult. The risk is if the interest rate will end up higher in a few years or lower, and how it will impact the payments you are making.

Largely, your own financial situation may determine the suitability of an ARM mortgage. The biggest risk is landing a high interest rate in a few years that you will be stuck with for one or two years until the rate is reviewed again. However, if rates fall to a low when your interest rate is reviewed, you could save enough money on monthly payments to allot for a raise in later years.

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