Archive for June, 2008
One Closing, Two Home Mortgage Loans
A little efficiency in life can go a long way. Since free time seems to come at a premium these days, why not consider killing two birds with one stone using one loan closing to obtain two home financing instruments? Not only will you save time down the road, you’ll also realize some compelling benefits.
HELOC Basics
HELOCs are powerful, versatile, and very popular financial instruments. They function like any other revolving credit account, in that you can take cash withdrawals and make payments as needed. Even better, you can choose not to draw on the account and it won’t accrue any interest. Having access to a large sum of cash can be a comforting precautionary measure, particularly if you don’t have a liquid fund set aside for emergencies. Other common uses for HELOCs include debt consolidation, big-ticket purchases, college tuition, and home improvement projects, among others.
HELOCs and interest rates
Unlike a conventional mortgage, the HELOC carries a variable rate of interest. While variable rate debt can be riskier, it’s a good long-term companion to the fixed-rate debt of your conventional mortgage loan. A fixed rate mortgage insulates you from rate increases, but doesn’t give you access to rate decreases. Over a complete cycle of rising and falling rates, the characteristics of the two instruments are complementary. Incidentally, your credit cards also have variable interest, but at rates much higher than a HELOC. This is why HELOCs are often used for debt consolidation purposes.
On a conventional HELOC, the interest rate will be quoted as a margin plus or minus the prime rate. As is true with all mortgages, the best rates are reserved for borrowers with excellent credit. Borrowers with bad credit will be offered somewhat higher rates.
Leveraging the time and energy you put into your first home mortgage loan to close a HELOC at the same time will increase your purchasing power and provide you with access to emergency cash. The other upside is the time you’ll save, which is absolutely priceless. And since time is money, saving time also means saving money.
By Catherine Brock - MortgageLoan.com
Home Equity Loans for the Credit-Challenged
If you have bad credit, finding a home equity loan, or any loan for that matter, can be a frustrating task. In today’s market, however, mortgage loans for people with bad credit are available, even though the interest rates that they’ll face will be higher than those for borrowers with stronger credit numbers. Unfortunately, you should also expect to pay slightly higher fees on your loan as well. Despite the elevated costs, you can still find a good home equity loan if you gather as much information as you can, and follow the tips listed below:
- Understand the product and process. Unfortunately, the mortgage industry still has its shared of lenders who will take advantage of potential borrowers with poor credit and a lack of knowledge about mortgages and the mortgage marketplace. It’s important to understand the basics and specifics of your mortgage, and how loans differ. For example, an adjustable-rate mortgage will give you a low monthly rate for an initial period of two- to seven years; but then the rate adjusts upward. On the other hand, a balloon mortgage will have the same initial, low payment period, but when it concludes, the entire mortgage will be due in full.
- Comparison shop. Competition in the marketplace is a good thing for the consumer; it naturally regulates costs. When it comes to home equity loans, there’s plenty of competition out there to choose from. And with more competition comes cheaper prices. Research lenders on the Internet and compare quotes from several lenders on rates and closing costs. Before making a commitment, check with the Better Business Bureau to make sure a lender doesn’t have any complaints lodged against it.
- Pick a loan that’s right for you. As long as you qualify, most lenders will be happy to give you as much money as you want. They don’t mind if you have to start making huge monthly payments on the loan. Make sure the that loan benefits you in the long run. Will it help you get your finances back on track, and eventually qualify you for a better loan? That should be the ultimate goal of this financial transaction.
- Check closing costs diligently. Each mortgage lender is required by law to provide you with a Good Faith Estimate detailing the proposed costs of the loan. Make sure that you understand all the charges, and keep a watchful eye out for inflated origination fees and so-called “junk fees”, which only serve to increase a lender’s profit yield.
When it comes to home equity loans for people with poor credit, the biggest favor that you can do for yourself is to study the mortgage marketplace and what’s available in it. There’s a plethora of information available to anyone who needs it. Familiarize yourself with the different types of loans that are offered. Find out how you can improve your credit. An excellent place to start your research is in the Mortgage Loan Education Center . You’ll find valuable calculators, tools and information to help you pinpoint the best mortgage available. In the end, you’ll get a loan that will help, and not hurt, your financial situation.
By: www.finweb.com
Getting a Home Equity Line of Credit
Credit cards are a good thing, but a home equity credit line is a great way to use the equity in your home to finance big ticket items such as home improvements, paying off high-interest debt, financing a car, or paying for college tuition.
A credit card is a revolving line of credit that you use when you need it, and make payments only if you use it. But credit cards can charge very high interest rates. A home equity line of credit (HELOC) is also a revolving line of credit. You draw from it again and again as you need it, and make payments only if you use it. But, unlike most credit cards, you get a much lower interest rate with a home equity line of credit than with a credit card.
Using a home equity line of credit is a way to turn bad debt into good debt. In other words, the interest on the debt you have on your high-interest credit card cannot be deducted from your taxes. But the interest on your HELOC is usually tax-deductible*.
There is also flexibility that can be built into home equity loans that you wouldn’t get for say, an auto loan. There are different home equity programs that have an interest-only option. With an interest-only loan, you can pay only the interest for a pre-determined amount of time and pay as much principal as you want, even none. You can’t do that with an auto loan. Most lenders offer home equity lines of credit for up to $100,000. But Quicken Loans offers a line of credit for up to $500,000! This is a great option to have when buying your dream vacation home.
It’s fairly easy to get a home equity line of credit. That’s one of the best things about it! Nowadays, many companies allow you to apply online and close within a very short period of time, 7-10 days typically. There’s less paperwork to deal with, the closing costs are less expensive and the process is just as easy as applying for a credit card. If you get a home equity line of credit at the same time as your first mortgage with the same lender, you only have one closing to go to for both loans.
Home Refinancing With Poor Credit
Home refinancing with poor credit should only be considered if the homeowner has much equity in their home or if the original mortgage loan carries an unbelievably high rate. Credit scores directly determine the interest rate that will be offered. Refinancing a house is not a good idea if the borrower’s credit has fallen since the origination of the mortgage loan. If the borrower is adamant about refinancing, choosing a mortgage brokerage or lending institution with low closing costs and no points is the wisest course of action. Sometimes it is not always beneficial to refinance. Determining if the time is right for an individual will rely on knowledge, research, help, and faith in God for guidance. “In thee, O LORD, do I put my trust: let me never be put to confusion” (Psalm 71:1).
Good mortgage brokerages may not always be easy to find. A good brokerage will let the borrower honestly know if home refinancing with poor credit is even worth their time. If calculations are done, and the time and money spent are added up, the end result should be either a decrease in monthly payments, or a decrease in the total amount of interest paid throughout the life of the loan. If these benefits do not exist for the borrower, and the mortgage company does not point that out, the consumer should not accept the deal. In recent years, there has been a record number of mortgage fraud cases that have left the consumer with more debt and much worse problems than they originally had. In cases where something does not seem to be right, it is important to drop negotiations to keep from losing a great deal of money.
With some help, home refinancing with poor credit can be changed by the end of the month. The fastest way to lower a credit score up to 30 points in 30 days is to pay down the balances on all cards and accounts until they reach under 20% of the total spending limit. This proves to lenders that the applicant is a responsible consumer. Lenders make refinancing difficult for some, but if credit is improved, the process is a breeze and can be completed in as little as 2 weeks. This situation may begin poor, but it doesn’t have to end that way. As the borrower makes regular monthly payments to the refinance mortgage, their credit will begin to improve even more.
Taking advantage of home refinancing with poor credit enables those that have made mistakes in the past to come clean and embark on a new path, free from the consequences of bad or no credit. In today’s real estate financing market, there are many creative avenues for financing homes, refinancing homes, or financing businesses and commercial properties. Thorough research should be done prior to application with any mortgage brokerage or lending institution. Experts advise a quick check with the BBB or Better Business Bureau. The BBB rates businesses and companies according to customer complaints and compliments.
For more information: http://www.christianet.com/homerefinance
Home Builder Spec Home Loans
Home builder spec home loans are available on the Internet, and most include a convenient application process. Users looking for financing for an upcoming building project can find a lender that will allow him to begin his payments after the construction has been completed. A spec house is a home that is built on speculation, or includes plans to build a house without a pre-sale of the building. After the spec house is finished, the buyer puts it up for sale. With this type of financial arrangement, a builder can finance up to 90 percent of his project. He can also draw requests for money online at any time during the construction phase.
An applicant can get home builder spec home loans for as much as 1.5 million dollars. Land equity and prepaid costs can be used as a down payment for some deals. But the builder must have an average or better credit rating score and provide a 10 percent post-closing liquidity of the total amount. He must also have a 15 percent minimum gross profit margin to qualify. Some lenders also require that the applicant have a certain number of years’ experience, or a co-signer with home-building experience, in order to qualify.
Applicants can hold up to ten contracts at one time, enabling them to begin more than one construction project at a time, as long as he meets the other qualifications. The terms are normally 12, 15, or 18 months, giving the home builder plenty of time to complete the project and sell the speculative house. The total amount of home builder spec home loans a person can take out at one time may equal a sum of no more than 1.5 million dollars no matter how many houses they have being built. Once a person applies for a contract, the lender will work with him to process the paperwork and to help him get the most from his loan and glorify God at the same time.
In Luke 14:27, Jesus gives us advice about building: “Which of you, intending to build a tower, sitteth not down first, and counteth the cost, whether he have sufficient to finish it?” That’s what makes taking out home builder spec home loans so important. Each person must first sit down and count the cost. Without the right kinds of financing, many projects would fail before they began. The right financing can make the difference in any construction business.
For more information: http://www.christianet.com/homeloans
Mortgage Tip: Ask about your Lender’s Variable Rate Mortgage “Lock-in Privileges”
Not all variable mortgages are created equal. In the current mortgage market, the spread between fixed and variable rates is very wide. Fixed rates are around 5% while variable rates are closer to 4%. As a result, most borrowers are opting for variable rate mortgages. When trying to decide which variable rate mortgage to go with, one of the most important things you need to find out about,