Archive for March, 2008
Home Mortgage Refinancing – What are the Reasons You Need to Consider
There are many reasons why you may wish to consider home mortgage refinancing. So what are these reasons and how can they justify you getting a home refinancing?
More and more homeowners around the country have decided to refinance their home to consolidate debts, for making home improvements or to pay off their mortgage faster.
If you are considering home mortgage refinancing, it is a good idea to first understand what is actually involved in refinancing your home. Home mortgage refinancing involves obtaining a secured loan in order to pay off an existing loan. In most cases, the loan will have been secured by either property or some other type of assets. The most common reason for refinancing a home mortgage is to take advantage of a lower interest rate. This is especially true in the event you have had an adjustable rate mortgage or you financed your home some years ago.
Even if it does not seem that interest rates have gone down that much since you first financed your home, you may be surprised to learn how much difference even a small amount of interest reduction can make in your payments. In addition, changing circumstances may allow you to now qualify for a lower interest rate that was not possible when you financed the home. This is because interest rates are not only based on the prevailing interest rate at the time you finance the home but on other factors as well including your down payment amount and your credit rating. If your credit rating has improved since you first purchased your home, you may be in a very good position to now qualify for a lower interest rate with a home mortgage refinancing.
Another common reason for home mortgage refinancing is to actually reduce the length of your mortgage loan. For example, if you originally had a 30 year fixed rate loan you might wish to consider refinancing to a 10 or 15 year loan. This type of mortgage refinance allows you to pay off your mortgage sooner and over the duration of the loan save far more money in interest payments. In many cases, you may also be able to take advantage of receiving extra cash from your refinance while lowering your monthly mortgage payments if rates are lower. Of course, another option would be to keep your payment the same and pay off the loan even faster while also enhancing the equity.
You might also consider refinancing your home in order to pay off higher interest credit card bills. Typically, the interest rate you will be able to obtain on a home mortgage refinance loan will be lower than what you pay on your credit cards. There is also the convenience factor of being able to only pay a single loan payment every month versus multiple credit card payments. You should understand that with this type of loan, your home will serve as security for the loan until it is paid off.
Regardless of which type of home mortgage refinancing you ultimately decide is best for you, it is important to remember that you may also be able to take advantage of important tax advantages as well. Consult your tax advisor to find out whether you can deduct the interest on your home equity loan. You may be surprised to discover that it is completely tax deductible; something that can not be said for credit card interest.
Which home refinancing option is best for you? Find out more about the benefits of refinancing your home at Home Mortgage Refinancing or Home Mortgage
Reverse Mortgage Costs
The Typical Costs Associated with a Reverse Mortgage for Seniors
There are various costs that will be incurred during the process of obtaining a reverse mortgage for seniors. The list of costs for a typical home equity mortgage probably include home owners insurance, origination fees, appraisal fees, and closing costs. The list of costs of a reverse mortgage is much the same, with a few subtle differences.
Most reverse mortgage lenders will require an origination fee. This fee covers the lenders overhead costs of preparing the reverse mortgage. The amount of your origination fee will vary depending on the lender, the value of the home and the type of reverse mortgage that you get. If you get a HUD reverse mortgage, for example, you will pay either $2,000 or two percent of the maximum FHA limit, whichever is greater. Under the Fannie Mae Home Keepers loan, the origination fee will not be more than two percent of the value of the home.
The Federal government handles the Reverse Mortgage for Senior program through the Federal Home Administration (FHA) in the Department of Housing and Urban Development (HUD), which handles the insurance. Rather than being required to obtain home owners insurance, you will be required by the FHA to pay a mortgage insurance premium. This premium allows HUD to back reverse mortgage loans, and pay any amount due once the home has been sold to repay the loan. This becomes particularly important in the event that you outlive the term of the Reverse Mortgage loan. You will continue to receive your monthly payments thanks largely to this HUD insurance. The premium also provides funding for HUD to ensure that your loan will be serviced regardless of what may happen to your loan service provider during the course of the reverse mortgage.
Like other home equity mortgages, you will be required to cover the cost of an appraiser in your reverse mortgage. The appraiser evaluates your home and determines its value as well as the amount of equity in the home. This cost is required, as the appraisal value of your home is one of the deciding factors for your reverse mortgage loan amount. Proprietary Reverse Mortgage loans, made by private companies (and not insured by the government) often have higher mortgage limits. If you home is valued at much over $200,000, it may be wise to shop of a proprietary reverse mortgage loan.
Closing costs and many other costs for your reverse mortgage may also apply. These reverse mortgage costs may include such things as credit reporting fees, document preparation, recording fees, courier fees, title insurance, and/or a survey of the property to determine boundaries. Overall, the cost of your reverse mortgage will likely equal thousands of dollars. The good news, however, is that all or most of the cost of your reverse mortgage will be rolled into the loan amount, so that up front costs are minimal. Because of all of these costs, it usually is not advisable to enter into a reverse mortgage unless you plan on living in your home for at least 5 more years.
The reverse mortgage for senior program can be very beneficial for seniors in certain situations. It really pays to do your homework and know what you are getting into and just what costs are involved.
Resources:Learn more about the new reverse mortgage options available by visiting http://www.retiree-finance.com , a popular website for information on retirement finance and Reverse Mortgages .
Mortgage Note Buyers Can Give You a Large Sum of Cash For Your Debt Contract
Choosing mortgage note buyers is one of the most crucial aspects of a contract sale. How much you get for your note is essentially their decision, so its important to find a professional who can give you the best price. Though theres a pretty good market for debt instruments, youll find that not all buyers are the same. How do you pick the good ones from the bad? Here are some tips to get you started.
Look for professionals. With any note buyer mortgage note prices are determined by the risk they hold. A well-established buyer will be more prepared to deal with inflation, interest rates, and other factors that reduce the contracts value. Experienced buyers can also be more flexible in structuring the sale, since they know their way around the trade.
Watch out for upfront fees. You shouldnt be made to pay just to have your note assessed. Most mortgage note buyers will review your case and give you a quote for free. The only fees you might have to pay are the appraisal and title policy, and only if there are discrepancies in the title or if the appraisal is less than the sale price. If they charge any other fees, including points and closing costs, scratch them off your list.
Do your research. There are lots of note buyers out there, so take advantage of your options. Get quotes from different mortgage note buyers before settling on one. If you can, take some time to look them up online, or ask around to see if they have a good reputation.
Have your buyers credit reviewed. The buyer should go over your payors credit upfront. There is a trick called bait and switch that you should watch out for. In this type of deal, you sell your buyer mortgage note at a decent price, but they lower the price later on, often claiming that your property buyer has low credit. To avoid getting tricked, make sure they do a credit review before giving you a quote.
Know your options. Mortgage note buyers should go over your selling options with you and give you an honest opinion on which one is best. For instance, many sellers arent aware of the partial sale option, where they cash in only part of the contract and keep getting monthly payments. Make sure to bring up this option with your buyer so they can decide if it can work for you.
Attitude is important. Look for a buyer youre comfortable talking to and who answers all your questions honestly. Some mortgage note buyers will shower you with jargon just to confuse you, and eventually force you into a deal whose terms you dont understand. Make sure your buyer can explain things in laymans terms and answer all your questions honestly.
Get it all on paper. Dont sell your buyer mortgage note without a written agreement, or any proof of sale. The agreement should contain all the details such as contingencies, purchase price, and date of purchase. Make sure you understand everything it says on the paper.
Remember the concept of time value: your money is worth more today than it will be tomorrow. Selling your mortgage contract can help protect your investment. By cashing in, you can do what you want with your money now, before inflation beats you to it.
Jamie has been working in the finance industry for many years and is a contributing editor to http://www.selling-your-note.com . Sell your buyer mortgage note on our site to a top debt purchaser.
Mortgage Calculators Easy As 1,2,3
First Mortgage Trust have developed a number of diverse calculators over the years not only to improve the quality of their clients online experience but also in response to client, consumer and third party requests. Among the calculators are Mortgage Payment Protection , Bridging Loans, Secured Loans, Buy To Let Rental and Mortgage Calculator, Affordability and budget, How much can I borrow, monthly mortgage payments for both interest only and repayment, flexible mortgage calculator and three conveyancing calculators for purchase, sale and purchase and remortgage.
The benefit of online mortgage related calculators are many and varied. First Mortgage Trust’s extensive collection of online calculators allow client retention and leaves them in complete control. not only to compare current outgoings but also for anticipated costs and savings. Every cost associated with selling, purchasing and remortgaging is available and for the client to interact with. Mortgage calculators help to create a sticky website.
Calculators are of benefit to solicitors, Independent Financial Advisers, mortgage brokers and those involved in residential and commercial real Estate. The calculators can be used both online and offline for ease of reference to professionals. Other benefits are client and consumer retention as website visitors no longer have to leave a professionals site to confirm or check figures.
For Financial services web designers, webmasters and search engine optimization this becomes invaluable keyword rich content and is an essential must have for any associated site. With around 500,000 searches every month in the US & UK for ‘mortgage calculator’ this confirms the demand for information required by online clients.
First Mortgage Trust’s conveyancing purchase and sale & purchase calculators include a database of approximately three hundred and seventy local authority search fees. First Mortgage Trust update this database annually. Although local search indemnity insurance is now popular amongst conveyancing solicitors it must be remembered that not all lenders will allow this and may well insist on a local authority search. Clients can also work out stamp duty, another substantial cost in the home buying process along with many other functions.
With the ever changing landscape of lending and underwriting criteria it is important that the consumer have calculators available to them. Many lenders have now increased income multiples to as much as 5.6 joint for high credit score, high earners. Before a client proceeds with a mortgage it is important that they have an idea of borrowing capacity, after establishing borrowing capacity they can further confirm monthly figures to confirm affordability.
It is also important that any calculator placed on a financial services website not only carries disclaimers but also keeps pace and reflects changes with legislation from a regulatory perspective. The Financial Services Authority have expressed some concern over the self certification mortgage. A non status mortgage whereby income is not verified by the lender. Therefore a mortgage budget and affordability calculator is essential along with hints as to why the consumer is self certifying their income, this is in accordance with responsible lending practices.
With rising property prices diminishing rental yields a buy to let mortgage and rental calculator also proves exceptionally popular. Where the amount of mortgage available can be reduced substantially by a valuers comments or rental assessment it is important that the client is forearmed.
Mortgage made easy
Synchronize your brain with mortgage dictionary to understand the basic concepts of mortgage. Everybody will finance a mortgage loan in some point of life. In fact, a large percentage of the total household credit in North America constitutes residential mortgage. Since purchasing a home is substantial amount of money, Residential Mortgage is the most common way to acquire a home.
Mortgage Loan
The physical property holds and secures the loan. It is a loan to finance the purchase of property, or real estate in a specified period payment and interest rates. The lenders serve the right to repossess the property or real estate in case of default.
Face Value
The borrower promises to the pay the original principal amount which is the face value of the mortgage.
Mortgagor and Mortgagee
Mortgagor is also called the borrower or owner, while Mortgagee is also called the lender. In the mortgage contract, it states the lender who serves the right to repossess the real estate in the event of default. You can also see the same information on the title of the property which is registered at the provincial government’s land title office.
Term
The lender usually sets up a 20 or 25 year amortization period which is how long to repay the whole mortgage. The term of a mortgage divides the amortization period into several length of time. Most Mortgagees commonly offers 6 months to 5 year term in fixed interest rates.
First mortgage and Second mortgage
The first mortgage refers to the current mortgage, while the second mortgage refers to the additional mortgage. Financial institutions offer Home Equity Loans and Home Improvement Loans which are good example of second mortgage.
100% Mortgage Financing With A Lowly “500″ Credit Score?
The financing vehicles have been in place for several years now for a borrower using some creativity with a seller to make 100% financing possible. However, the real estate market had been so hot in many areas in the U.S. the sellers did not have to even entertain anything resembling creative financing. With a softening market, creative financing is back as a helpful tool to allow sellers to unload their properties as long as an over supply of inventory exists.
Harold and Laura had been renting a home in a suburban area for three years. They had been digging out from under a heavy debt load of medical collections. Laura was leaving work one day and a truck had crossed the line and pinned her in her small car for a half an hour until the jaws-of-life was used to extract her out from her crushed vehicle. With a broken hip, ankle, eye socket and fibula a long recovery ensured and Laura was not able to work for two years. The other driver was at fault, but any financial recovery was years down the road as the other insurance company was playing hardball. In the meantime, with constant harassment for the out standing medical bills and the weight of credit card and installment debt that existed prior to the accident was just overwhelming.
Harold had been working two jobs just to meet the basic family needs. Family help was limited and really wasn’t expected. Laura’s therapy had been going on for a year now and real progress was being made. Her employer had kept her job open as a customer service representative ironically at a credit card service center. The benefits were limited and very little of the medical bills and rehab had been covered. Harold and Laura had been seeking some financial advice from a local bankruptcy attorney. It was decided that with their level of income and huge medical bills that filing a Chapter 7 Bankruptcy action might be the best thing to do for mental sanity and cash flow. A Chapter 13-payback plan would be crippling for many years to come. As the bankruptcy attorney explained to Harold and Laura that in his practice example after example comes before him where just bad things happen to good people and that there was no shame in taking care of their financial affairs in this manner. The rationalization process followed.
Two months before filing the bankruptcy, the insurance company was offering a small settlement based on an allegation that Laura may have temporarily been distracted by talking on her cell phone and thus reduced her reaction time. Rather than put up a long protracted fight Harold and Laura, for better or worse settled for an amount that just covered her payoff on her totaled car. They were relieved of that installment. Their attorney for the accident urged them not to settle, but with Laura’s eminent recovery and the stress of the whole ordeal, they grabbed what they could at the time.
Harold and Laura received their notice of the Final Discharge of their Chapter 7 Bankruptcy. All the collections for medical bills, non-secured credit cards and one major medical bill that had resulted in a judgement being awarded for the first responding hospital had all been wiped out. They excluded their family car from the Bankruptcy matrix (which names all the debtors), which still had a $6,850 balance with a $295/month payment remaining. They also excluded a credit card that they had for years and had a low balance and a low monthly payment. This allowed Harold and Laura to maintain two trade lines and their on time rental payment of some $1,250/month outside the Bankruptcy action. Laura had now been back to work at her old job for two weeks. She was fortunate to take advantage of a car pool with a fellow worker who lived a half mile away.
It was like the world had been lifted off their shoulders. Now Harold and Laura had their rent, one car payment and a small credit card and their home utilities. The cell phone service had gone by the way side many months before.
Even through the most brutal times and the lowest of the low, Harold and Laura, as their custom, visited Open Houses after church every Sunday. It was always in the neighborhood and never more than two home visitations. It was Harold and Laura’s way to cope with the dark cloud that had beset them. During this process, they became familiar with a local Realtor who took a very personal interest in their situation. The Realtor, named Betty, knew they were not ready to do anything until some things had been handled. At the most recent Open House visit, Harold and Laura shared that they had put their financial challenges behind them. Laura was feeling great and off all her pain medication. Betty raised the prospect and questioned them if she could figure out a way to get them into a home at a little more than they were paying in rent with little or no money out of pocket, would they have an interest at least in hearing more about it. Harold raised his hands with palms up and a shrug of the shoulders, and shared that it wouldn’t hurt to listen to some possibilities. The accident had caused a detour in the quest to own a home, but it had not killed their dream.
Betty set up a meeting with the Realtor’s in-house mortgage broker to discuss their options. A joint credit report was pulled and as Harold at the time made the most money his middle score was utilized to qualify for a mortgage. His middle credit score was right at 500. The mortgage broker went on to explain that they would qualify for an 85% Loan To Value mortgage. Due to their lack of a cash down payment, it was added, that the only way that they could use this loan option would be with a seller held second of 15% loan to value with the seller also paying up to 6% of the contract selling price. This would then give them a 100% Combined Loan To Value (CLTV). The loan would need to be a Fully Documented loan with verification for employment and income. The mortgage broker felt like he could present Laura’s employment gap due to the accident and use her current income for qualifying purposes. Totaling up the income versus the debts, it was determined that Harold and Laura could buy a home in the $175,000 range IF the seller would offer reasonable terms on the 2nd mortgage. Betty piped in that she had been sitting on a listing for six months and the owner now may have an interest in holding some paper versus renting the property again and deal with the tenant challenges on repairs and upkeep. The home was close to their current residence.
Betty was able to work out the deal with reasonable terms on the second mortgage that would keep the overall monthly payment down at least for the first three years. As the mortgage broker explained, that should be plenty of time to establish a better credit history and qualify for a lower interest rate loan in two years. As an added bonus, the seller agreed to pay all the closing costs and prepaid expenses such as annual hazard insurance and tax escrows plus replacing a leaky roof. Harold and Laura moved into their newly purchased home putting all the travails of the past in the rear view mirror.
Sometimes bad things happen to good people. In this current real estate market, there are creative possibilities. It won’t last forever; the time is at hand for seller help and creative financing.