Mortgage & Home Deals

Home Loan Rate : Facts You Should Know About Adjustable Rate Mortgage

David — Fri, 18 Jul 2008 05:47:00 +0000

An adjustable rate mortgage makes a different in the amount of the home loan rate that you qualify for in purchasing a house and obtaining a mortgage loan. The adjustable rate mortgage or ARM allows for lower monthly payments initially.

Definition

An ARM or adjustable rate mortgage is a type of mortgage loan where the home loan rate fluctuates periodically depending on any of an index measurements. Common indexes used include Prime rate plus x, LIBOR (London Interbank offered rate) or other index, including one developed by the lender. This causes the payment amount to vary or the term of the loan to vary to cover the increased (or sometimes decreased) amounts owed. Adjustable rate mortgages have the effect of transferring part of the risk of making the loan from the lender to the borrower. The rates of ARMs usually start lower, but can increase at a much faster rate than the borrower is prepared to cover.

Advantages

In times of expanding earnings and economy, adjustable rate mortgages are a good deal for the borrower, because it allows them to get a larger loan than they would have been able to afford otherwise. The home loan rate starts out at a lower level and then increases (usually) after a waiting period to keep pace with increasing interest rates. The ease of obtaining an adjustable rate mortgage and the lower payments in the beginning are two major advantages of this type of loan. If the borrower's income increases over time, the ARM is the ideal way to get started with home ownership.

Disadvantages

The major disadvantage of obtaining a mortgage with a home loan rate that is tied to an outside index is that in most instances, the rates increase over time. If the borrower has obtained a loan with payments at the top end of the borrowing capability, and the interest rates on the loan rise dramatically, the borrower may find that pay raises or earning capacity have not increased as rapidly as the payments on the mortgage loan. It can be very easy to find oneself in a foreclosure mode when this happens.

Prime rate

The prime rate, or the rate at which the best banks can borrow money is one of the favorite indexes used to calculate the home loan rate. For instance, the mortgage loan may be listed as prime rate plus two percent. If the mortgage loan is an adjustable rate mortgage, the loan may be structured to start at prime rate plus two percent. If the prime rate increases by one quarter percent, the loan can be increased over time to cost the extra one quarter percent. Usually, the amount cannot be increased more than so many times in a time period. There is also usually a top limit to growth for the loan payment.

How are they obtained?

Any mortgage lender can agree to lend the borrower money using an adjustable rate mortgage. In fact, lenders approve of such loans since they remove part of the risk of lending money from the lender and place it upon the borrower. When the home loan rate increases to the lender, it can in turn be passed on to the borrower. Personal financial advisors often suggest that adjustable rate mortgage are something to be very sure you understand what you are getting and what can go wrong.

Choosing a home loan rate is easy, understanding what it is and what your options for obtaining a good rate is something entirely different. Check out a good web site for the best resources on the internet. Click here at Home Loan Rate or Home Loan to learn more.No tag for this post.

Home Loan Rate : What Can You Afford?

David — Fri, 11 Jul 2008 05:43:00 +0000

The question of what a home is worth versus what you can afford is one that can best be answered by reviewing some of the factors that go into the determination of what size of a home loan rate will best fit within your budget.

Amortization Schedule

The amortization schedule is typically a part of the loan documents package that you will receive when you sign the papers on your loan. The home loan rate amortization scheduled tells you each payment period what the amount of your total payment is and what portion of the payment goes toward principal and what portion is retained to pay the monthly interest. Each month, if the payment is monthly, the amount of the payment going toward the interest is smaller and the amount going to pay against the principal is larger. If you pay extra against the principal, the results are even more noticeable.

Income to Debt ratio

Another factor that helps you to know what you can afford is a measurement by the mortgage company when preparing the amount of your home loan rate. This is your income to debt ratio. Credit bureaus often include this figure in their report to the lender. The calculation to determine whether or not you qualify for one of the best rate loans depends on factors such as the income to debt ratio. In recent years, the debt to available credit has been used more widely to measure affordability of the mortgage loan.

Credit capability

The amount you can afford on your home loan rate is certainly driven by the credit history and capability of the prospective borrowers. The person with a high credit score can qualify for a better deal on the loan terms than one with a low or non-existent score. Even with a very good score from the credit bureaus, you should not over extend the size of the loan which you negotiate. By taking on too much debt, you can place yourself in a position where you are only a few days and a weekly paycheck away from being in trouble financially and those type of stressors are not healthy.

Market Value

The market value of the house you purchase is essentially whatever you are prepared to pay for the property. Your home loan rate doesn't depend directly on the market value, but indirectly is a factor in determining whether you can afford a specific loan and the terms associated with it. Sometimes the market value is based on what neighborhood properties that are similar in design are selling for. A real estate buyer's agent can help you to determine what the market value of a particular property would be.

Assessed value

The assessed value of the home doesn't have a direct bearing on whether you can afford the home loan rate of a specific piece of property, but it does make a difference indirectly. When the county tax assessor looks at the value of the house, it is known as the assessed value of the property. The assessed value is typically quite different than the market value of the property. The assessed value is driven by such things as the value of other houses in the neighborhood, and what the market price of the previous property sale was pegged at.

Finding a web site that contains a wealth of resources to help you in your search for the best Home Loan Rate is not difficult. Just log in to http://www.homemortgageloan-refinance.com and take advantage of all the tips, links and helps you will find there.No tag for this post.

Can I Get a Loan Even After Bankruptcy?

David — Thu, 03 Jul 2008 20:19:51 +0000

Some people believe that if they have filed a bankruptcy, their financial life is over. To some extent that is true but only when you are not fully informed.

The truth is that bankruptcy leaves a big bad stain on your credit report and if you can avoid bankruptcy then we recommend you should try every little thing possible to avoid bankruptcy. But if you have already filed a bankruptcy then don’t think that there is no life left in your financial world. In fact, you can get a loan even after bankruptcy!

Bankruptcy loans are totally different than say poor credit loans. You need to work a lot on your credit score before you can apply for a loan after bankruptcy. Basically, you have to prove to your creditors that you are no more a risk. How do you do that?

Easiest way to do that is to make sure that your credit report stays dent free after bankruptcy. In order to avoid a poor credit score, you must pay all your utility bills, credit card bills etc on time. Never ever miss your payment’s due date! This has a huge impact on your credit report and shows that you are now willing to rebuild your credit score and that you are serious about avoiding bad credit ratings.

You should use your credit card as much as possible. Yes, that’s true! Use it every time you buy grocery or gas or any other daily life need but do not spend more than you can repay in a month. Basically, use your credit card as an alternative to cash and instead of paying in installment; repay the credit card bill on time so you don’t have to pay any interest on it. This not only gets your credit card reward points rather quickly and easily but it also shows has a very positive impact on your credit report.

Do a little more research on the internet. See what other people did to get out of bad credit and how they managed to build up their credit score again and try to learn from their experience. Find more helpful tips regarding bankruptcy loans on Credit & Mortgage Index and practice those tips religiously for a couple of months.

After that you will be able to get a reference letter from your credit card company and other companies. Use those reference letters and apply for a loan with different lenders - you may also be able to find some bad credit lenders. This will help you go a long way and will help you get after bankruptcy loans. Good luck!

Tags: Bankruptcy loans

Home Loan Rate : What Are The Variables That Affect The Rate

David — Thu, 03 Jul 2008 16:01:00 +0000

There are many factors that determine the home loan rate that you will be charged on a new or refinancing mortgage loan. Knowing and understanding how each of the variables affect the interest rate will help you to make the best choice of loan.

Type of loan

The type of loan that you select has a significant impact on the home loan rate. A variable rate loan may start out at a low rate and quickly escalate to a much higher rate. In fact, this is one of the major reasons why homeowners find themselves in trouble when they purchase a home with monthly payments that are at the limit of their personal affordability and then the payments increase because the interest rates increase. A fixed interest rate may cost slightly more than a variable loan to begin with, but you know what the rate will be in two years.

Economy

The economy of the nation has an impact on the home loan rate, particularly if the loan as a variable rate loan. Often the loan rate is tied to the prime interest rate plus a certain number of points. Of course, when the economy is slowing down, loans are somewhat harder to get and the qualifying process may be more stringent. When the economy is booming and loans are easy, more people can qualify to get a mortgage loan because the restrictions are less onerous. People are more willing to take a chance on a larger loan when they feel positive about the state of the economy.

Credit score

When applying for a new loan, the loan broker will almost always check the credit score before deciding what the home loan rate will be. The higher the credit score of the potential borrower, the better deal can be put together with the broker. Conversely, if the credit score is low or if there is little credit history, the loan is likely to cost more or require a higher percentage of the total as a cash down payment. Careful attention to making mortgage payments in full and on time will allow the borrower to create a new a better credit history so that a refinance later will have a better rate.

Loan Term

Theoretically a loan can be for any length of time, and this factor is one that many potential borrowers don't think about. They just assume the best home loan rate will be at a 30 year mortgage term. Even conventional loans can be taken for 15 years, 20 years or 25 years. Shorter term loans cost much less in interest over the term of the loan, so even at a higher monthly payment and the same interest rate, the shorter term loan is a better deal, with significantly less money paid in interest.

Balloon payment

Another common way to structure a mortgage loan that will affect the home loan rate is whether or not there is a balloon payment attached to the payment of the loan. Often a mortgage will be structured to run for two or three years with a very low interest rate at the end of which there is a balloon payment that is the balance of the loan. At the end of the initial period, often the rate will increase, or the monthly payment will jump. Sometimes the entire loan is refinanced at that point.

Learning about the variables that impact Home Loan Rates or Home Loan figures is simple when you access the great resource web site found at http://www.homemortgageloan-refinance.com/Fixed-or-Adjustable-Home-Loan-Rate--and-%238211%3B-Factors-To-Consider-When-Choosing-One.php . Check out the tips, links and cautions available here.No tag for this post.

No Change To House Prices For May

David — Wed, 02 Jul 2008 07:16:27 +0000

According to a recent report released by the Land Registry there was no change to house prices for the month of May, with figures showing that house prices were up 1.8% over the year. However, property sales figures remain bleak, with officials from the Land Registry claiming that property sales in March stood at just 53.080, which was half the figure seen with sales in March of the previous year.

The report also showed that annual price growth fell for the ninth consecutive month, with the average house price now down to £183,266. With sharp drops in property values reported by many lenders, completed property sale figures have plummeted, and agencies such as the Council of Mortgage Lenders have predicted that the number of property sales will continue to tumble this year due to tighter credit loans conditions and further predicted house price falls, which could lead to thousands of estate agents and related industry officials losing their jobs.

House prices have already tumbled over recent months, with a sharp fall of 2.4% in March, according to Halifax figures. Many industry officials have predicted that house prices will continue to fall over the course of this year and next, with the government, the Council of Mortgage Lenders, and various other industry officials predicting house prices falls of between 5-10% by the end of this year, although some officials have predicted that the falls will be greater.

The Land Registry report showed that between December of last year and March of this year there was an average of 61,950 house sales transactions per month, and this is a steep fall from the average monthly figure of 100.693, which was seen during the same period in 2007.

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Refinance Home Loan : How To Decide When You Should Apply One

David — Sat, 28 Jun 2008 12:22:00 +0000

Deciding to refinance home loan is a decision that can best be made by the individual homeowners after reviewing all the facts and identifying all the financial implications.

Why should I apply?

There are many reasons to refinance home loan, although some are not good reasons. The main good reason is to reduce the amount of interest payment during the balance of the loan term. However, another primary reason why homeowners choose to get a new loan on their home is to free up ready cash either through the equity in the house, or through paying off credit card loan or other high interest payment. Usually a home loan is requested when the homeowner has need of a significant amount of money either on short notice, or over the next weeks or months.

What will it cost?

The loan fees will vary depending upon the type of loan, the broker and the interest rate. There is also the factor of your credit score that can impact the interest rates you will be charged. Typically, the better credit score you have, the lower the interest rates and thus the fees associated with obtaining the loan. When determining the home loan refinance package that you accept, make sure that you don't allow lenders to do multiple credit score pulls from the credit bureau, as that can lower your credit score significantly. Another factor to review is how much of the loan fees are being rolled into the loan and thus will require you to pay interest over the term of the loan.

What can I use the loan proceeds for?

When you refinance home loan, the cash you receive, or make available through an equity account can be used to pay for almost anything you wish. However, most homeowners are wise enough to only take out a loan for the purpose of bettering their financial position. Perhaps they need to pay for college debts or prepare for upcoming educational costs. They make take out the loan in order to remodel the home. Sometimes a home loan is obtained to pay off credit card debt and use the money saved for other purposes. Another common use for a refinance loan is to pay for large medical bills.

Things to avoid in a refinance

In a time of increasing economic stress in the United States, many homeowners are refinancing homes because they can't afford the original payments. A home loan refinance can be obtained that will lower your monthly mortgage payment, but caution should be exercised that you are not just placing a band-aid on a mortal wound. Don't use a refinance loan to stave off a pending foreclosure or bankruptcy, unless by doing so you can significantly improve your personal financial picture.

Benefits of a refinance loan

The benefits of a refinance loan are numerous, but the primary reason to refinance home loan is to obtain cash for needed payments, repairs, renovations or projects. Indirectly, a loan such as this can also be used to reduce payments in interest for either credit card debt or for the home mortgage as well. The loan can also be used to reduce monthly payments. Each of these benefits is arrived at in different ways and with a different loan structure.

For the best resources to Refinance Home Loan , be sure to visit http://www.homemortgageloan-refinance.com on the internet. You can locate the best tips, cautions, links and information on the subject of home refinancing.No tag for this post.

Should You Go with a Variable or Fixed Rate Mortgage?

David — Tue, 24 Jun 2008 19:44:00 +0000

I recently got into a discussion with a client about whether he should go with a fixed or variable rate mortgage and I shared with him a copy of a paper that was written by Associate Professor Moshe Milevsky at Schulich School of Business in 2001. The paper is called 'Floating Your Way to Prosperity' and you can find a copy of it and other papers written by Professor Milevsky at http://No tag for this post.

Your Paying 161% Interest For Your Mortgage!

David — Tue, 24 Jun 2008 14:17:00 +0000

By John Mark Ridings

You read the title correctly and you're not in a deep sleep having a nightmare. I am sorry that you had to find this out from some stranger but this is a Truth. I am in the mortgage business and when I discovered this I almost fell of my chair. For example if you have a 200,000.00 for a thirty year term at 6% and pay it to full maturity the effective interest rate will be 161%. Now do you understand why 95% of all Americans will never own their own home and if you are reading this, odds are you are one of them! It blows my mind to think that Americans will make mortgage payments for 20, 30, and 40 and 50 years and still will never achieve home ownership, why!

What I discovered is there are two factors why we will never own our home. The first is a banking instrument called amortization and the second is to continually refinance your current Mortgage. Let's first take a look amortization and explain the origins of it and how it works. After the great depression the president of the United States, FDR realized the government needed something to stimulate the economy what they decided to do is to focus on new home construction. His advisors discovered that home construction was a viable way to jump start the economy. The benefits of new home construction are that it creates jobs and affects numerous sectors of the economy.

One of the obstacles in their plan was how to finance homeowners. Before the great depression homeowners would put down 80% and finance 20%. After the depression potential buyers didn't have the resources to make large down payment. What they proposed was to increase the term of the loan, great idea but now the lenders were taking on greater risk with longer term loans. Whenever the banks liability or risk increases the lending institute will then pass it on to the consumer in the form of compound interest or cost. To solve that problem and reduce the risk to the lender they created the bank instrument called amortization. A definition of amortization in its simplest form, the bulk of the interest on the mortgage will to be paid in the first 7 to 10years of the loan.

On a 200,000.00 mortgage for a thirty year term at 6% interest it is not until the 21st year of the loan does principal overtake interest? Let me give you an example for the above scenario. On this loan the payment would be approximately $1,199.00 per month, in your first month $1,000.00 would go to interest and $199.00 would be applied to principal. Don't take my word for it look at your Truth and Lending Statement and you will see that you'll pay two and a half times for your home. Albert Einstein said "Compound interest is the 8th wonder of the world. He who understands it earns it! He who doesn't pays it!" He could have said it about Relativity, Physic's or Electricity but he did not. He understood the power of compound interest and so do the banks.

Here is an example of compound interest. If you would open a savings account at 3% and would deposit $ 1,000.00 and leave it there for 48 years or a working lifetime you would have a return of $ 4,000.00. The banks will take the same $ 1,000.00 and will get 18% on there money and at the end of 48 years will accumulate a return of $ 4,096,000.00. No you don't need glasses you read it correctly. This is why there is a bank on every corner and more banks than churches.

The second component is refinancing your existing mortgage. Every time you refinance, you're resetting the amortization schedule which puts the bulk of interest in the first 7 to 10 years. The national average says Americans will refinance their home every 3 to 5yrs. Mr. Einstein also made another profound statement "the definition of insanity is doing the same thing over again and expecting different results". We have been taught to refinance our homes every time we are able to save a percentage point or more. That's what the lenders and mortgage companies want you to believe. Presently there are few options available to homeowners to reduce mortgage debt, one is a bi-weekly and the other is adding extra money to your current mortgage. Both will eliminate a few years off your debt but most individuals are not disciplined enough to do so and that includes myself.

By now you are probably asking yourself how I can stop the insanity. Now there is an award winning product revolutionizing the way we pay our mortgage. It is reducing mortgage debt by one third the time. A similar concept is being used throughout Europe, Australia and New Zealand and is reducing mortgages by fifty percent. Are they smarter than we are, no but they have found a solution. You need stop this cycle and let me show you how to become debt free through mortgage cancellation. My passion is to see you financially free.

For more information contact me at [mailto:jmridings@paidinfull.org]jmridings@paidinfull.org or go to http://www.paidinfull.org and watch the 10 min video overview. It will change your financial future. I want to help you please call me at 708-983-3431 for a free copy of 101 Ways to Stop the Money Leak.

A successful restaurateur in Chicago, One day I woke up and all that I had labored for was taken away. Starting over at 49 is a journal of my journey back to the place of achieving my goals for my life. Also to help Americans achieve financial freedom.

Article Source: http://EzineArticles.com/?expert=John_Mark_Ridings [http://ezinearticles.com/?Your-Paying-161%-Interest-For-Your-Mortgage!&id=1264537 ]http://EzineArticles.com/?Your-Paying-161%-Interest-For-Your-Mortgage!&id=1264537No tag for this post.

Home Loan Refinance : How To Choose a Broker

David — Fri, 20 Jun 2008 19:28:00 +0000

One of the most important parts of obtaining a home loan refinance is selecting a loan broker to work with you in designing and obtaining the loan. The experience and integrity of the broker can make the difference between a good loan and a disaster.

Due diligence

Due diligence is the term used to refer to the research you should do before committing yourself to any financial or contractual deal, especially if you don't know the other party to the deal personally. The term is commonly understood to mean that you check out the facts that you know or can obtain access to, in order to verify that the person or entity is who they say they are. When you are selecting a broker to work with in completing a home loan refinance, you should review the business reputation, credentials, specialties and any needed licenses or registration information. You should never accept this type of claim at face value.

What is the reputation?

A loan broker, whether for a new loan or a refinance will have had other borrowers work through him or her in order to obtain a loan unless the broker is completely inexperienced. When you are selecting a home loan refinance broker, you should determine the reputation of both the broker and the company for which he or she works. You can check for information at the Better Business Bureau or similar registry locations, both online and via telephone or mail service.

What type of loan broker?

There are several types of loan brokers who can be contacted when you get ready to do a home loan refinance so you will want to make sure that you choose the type of loan broker that will do the best job for you. For example, there are loan brokers that work with commercial loans, or residential loans. Sometimes loan brokers will only work with developers for large development projects. A loan broker can work mainly with Veteran's Administration loans or HUD project loans. Make sure you get the type of broker that knows the niche that you will be using.

Specialty loan brokers

In addition to loan brokers focusing on certain types of loans, the broker may also deal with certain specialties. For example if you have poor credit, a home loan refinance with a regular lender may not agree to underwrite the loan. A manufactured housing loan specialist is sometimes a little harder to find. There may be fewer companies to deal with when you need a specialty loan. Rural loans are another example. Some large brokers won't agree to lend in a rural area, simply because the broker doesn't understand the rural market.

What are the terms?

When you are selecting the correct broker for your home loan refinance, you will want to look at the loan preparation charges that the broker assesses. There can be a great deal of variance between two brokers doing the same type of loan, so be sure that you review and understand all the charges that will be required of you at the time of closing. It can be a very unpleasant surprise if you don't realize that you are being charged a series of loan origination fees that significantly reduces the amount of cash that you were planning on receiving at closing.

Check the top quality resources available at http://www.homemortgageloan-refinance.com/Bad-Credit-Home-Loan-Refinance.php for the best information about loans, broker, terms and great tips and cautions before signing on the bottom line for your Home Loan Refinance or Home Loan .No tag for this post.

Credit Crunch: Make No Predictions of What Lies Ahead

David — Thu, 19 Jun 2008 19:18:00 +0000

From the Oregonian:

There are new signs that the worst of the global credit crisis is yet to come and that banks and brokerages caught up in the market turmoil may lose nearly $1 trillion by the time it has passed. Major U.S. investment banks this week announced yet another painful quarter amid the implosion of mortgage-backed securities and risky credit investments. Regional banks have scrambled to secure fresh capital to stay in business, and by Wednesday there was new talk that embattled investment bank Lehman Brothers might be forced into a sale.
With each passing quarter, Wall Street's top bankers have indicated that the worst of the market turmoil was done, only to face more pain months later. The uncertainty has caused already battered investors to lose confidence in financial companies, and expectations have increased that more layoffs, asset sales and capital-raising will be needed in the weeks ahead.
"We thought this was going to be the kitchen-sink quarter, and we're finding out that CEOs and CFOs still don't have a handle on the credit crisis," said William Rutherford, a former state treasurer of Oregon who now runs Rutherford Investment Management. "We haven't disinterred all the dead bodies. What else is out there?"
The deepening credit crisis could cost the global financial system about $945 billion by the time it's over, according to a report from the International Monetary Fund. So far, banks and brokerages have written down nearly $300 billion from bad bets on mortgage-backed securities and other risky investments.
After reporting largely disappointing second-quarter results, executives at Goldman Sachs, Morgan Stanley and Lehman Brothers still weren't entirely clear when the hemorrhaging will end. David Viniar, Goldman Sachs' chief financial officer, said Monday that March marked "the bottom of the crisis, at least for now" -- making no predictions of what lies ahead.

Remember when $1 trillion in losses was 'at the very high end'?

How to pay off your mortgage in 5 year or less

David — Thu, 19 Jun 2008 11:40:00 +0000

How to pay off your mortgage in 5 years or less l have found a short video on how to pay off your mortgage in a short amount of time l hope you find it helpfull to your learning.

How to pay your mortgage in 5 years or less take a look.
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Unemployment Rate Up To 5.6%

David — Tue, 17 Jun 2008 14:26:00 +0000

From the Oregonian :

Oregon lost jobs in May for a third consecutive month -- the first time that's happened since early 2003 -- as the state's unemployment rate rose to 5.6 percent.
Payroll employment dropped by 3,700, on a seasonally adjusted basis, reaching 1,735,200, the lowest level since October. Job losses hit construction, manufacturing and professional and business services again in May, and spread to the trade, transportation and utilities sector.
But the three-month decline has not come close to the deepest monthly losses in downturns during each of the past three decades. In addition, some resilient sectors of Oregon's economy, such as educational and health services, have protected the state from unemployment highs reached during 2003, for example.
"The employment trends are showing a modest downturn," said David Cooke, an Oregon Employment Department economist. "There are substantial corrections in certain industries -- construction and manufacturing, notably -- and other industries continue to add jobs."
Manufacturing lost 2,300 jobs in May, seasonally adjusted. Construction lost 1,600; trade, transportation and utilities also trimmed 1,600; and professional and business services dropped 1,000.
If not for educational and health services, a sector that added 1,400 jobs during a month when it usually loses 2,100, Oregon's economy would look much worse. If not for strong government hiring, for instance, unemployment would be higher. And if not for recently cashed U.S. economic-stimulus checks, retail trade -- down 3,200 jobs, seasonally adjusted, since February -- would likely be in worse trouble.

Home Loan Refinance : A Primer

David — Sat, 14 Jun 2008 04:00:00 +0000

Homeowners choose to obtain a home loan refinance for many reasons. Before doing so, you should determine the answers to some questions in order to decide whether a refinance is right for you.

Why refinance?

Most homeowners choose a home loan refinance when they are in need of significant amounts of extra cash for a variety of reasons. For example, you may have a youngster who is nearing college age and you want to provide cash to reduce the amount of college loans that will be due upon graduation. You may need cash for pressing medical bills, or you may choose a home loan when you want to do major renovation to your home. Another common reason for refinancing and pulling equity from your home is to consolidate credit card debt and thus lower interest rates.

When is the best time to refinance?

Choosing a home loan refinance can make good sense at several times in your financial life. For example, you may have acquired your existing mortgage at a time when interest rates were high, due to the nation's economy, or you may have had a higher interest rate because of personal credit issues. Refinancing should not be done frivolously, but when you are in genuine need of the cash, or when the savings in interest fees will more than offset the cost of the refinance. Because the refinance option taken too frequently can be a sign of a homeowner in financial trouble, you should avoid the refinance option except for times when it makes good financial sense to do so.

What is the bottom line?

The bottom line will result in a savings over all to you, or an increase to you. At times, the homeowner will do a home loan refinance and save thousands of dollars in interest fees since the interest rate has dropped. Another time when the interest fees will be lower over the term of the loan is if you are repaying a larger payment in order to reduce the term of the loan. If you are spreading the mortgage out over a longer period of time in order to reduce the payment amounts, you may end up with significantly more interest costs, plus the costs of the loan itself.

What can you use the money for?

A home loan refinance with cash out can be used for almost any purpose you wish. Depending on the way you structure your loan, you may have lump sum cash available; you may decide to have a line of credit tied to your home equity value, or you may use the funds to pay off existing debts and bills in order to free up disposable income each pay period in the future. The choice will depend upon the individual needs in your situation and how your tax picture is structured.

Things to watch out for

Be cautious in structuring a home loan refinance. You will want to verify that you are obtaining your loan through a legitimate broker or direct lender. Make sure that you don't end up with a different type of loan than you thought you were getting. For example, if you want a fixed rate loan, take care that you aren't sold a variable rate loan or one where you have a negative equity building.

Determine the characteristics and terms of a home refinancing choice is important. Choose a resource site that will help you to understand and compare various loan options. The best site on the internet can be located here at Home Loan Refinance or Home Loan .No tag for this post.

The fuss over froth revisited

David — Wed, 11 Jun 2008 16:04:00 +0000

Exactly one week ago, I had the pleasure of sitting on a panel to talk about financial blogs along with Jon Lansner of the Orange County Register and Mark Lacter of LA Biz Observed at the Reuters AdvicePoint Investment Conference in Long Beach.

It was a fun time - one of the quickest hours I can recall with lots of questions from the audience and some interesting give-and-take between the three of us and moderator Ray Fazzi.

The first question was the funniest - a white-haired gentleman in the back of the room asked, "How do you make money on blogs?"

None of us could really answer that question.

Since my badge looked something like what you see below, the subject of the retired Fed chairman and his legacy came up with almost everyone I spoke to at the conference as well as a number of times during the panel discussion.
So, it was not much of a surprise later in the day when Jon forwarded a link to his mid-2005 column on the subject of Alan Greenspan's "froth" characterization of the then-booming housing market.

It's worth having another look at three years later. It begins...

What in the world is Federal Reserve boss Alan Greenspan thinking when he says there's "froth" in some of the nation's hottest housing markets?

Understanding the word's meaning is critical in this town, where many folks wonder if the wealth created by soaring home prices is a permanent addition to their checkbooks.

Well, the wondering is over. We all know the answer to that question now - housing wealth is about as permanent as stock market wealth.

After going on to talk about beer heads and baristas, a pricey gourmet coffee analogy concludes the piece:

Greenspan says he's cool with a national economy dotted with dicey regional housing markets that have been heavily financed with exotic, untested loan products.

That logic works for me only if housing is undergoing a froth-like metamorphosis, where changing tastes make folks comfortable spending far more money than previous generations on old favorites.

The Starbucks analogy is a good one.

It's more than just a coincidence that the Starbucks (Nasdaq: SBUX ) share price peaked at about the same time that home prices peaked back in 2006.

I can't tell you how many $4 Starbucks cups I used to see when I slogged away as a software engineer in Southern California a few years ago. Stopping on the way to work for a latte when you could brew a cup at home for about 10 cents never made any sense to me.
(Note: Starbucks stock would make a fine addition to the S&P Case-Shiller Home Price Index chart series - see government inflation , job creation , revolving credit , and Countrywide stock .)

In a " froth update " earlier this week, Jon looked back at when the mid-2005 "tiny bubbles" characterization was formalized in a Federal Reserve speech and suggested readers weigh in on the matter.

Not surprisingly, the retired Fed chairman fared rather poorly.

Full disclosure: No position in SBUX at time of writing.

Fisher: Silly interest rate talk

David — Tue, 10 Jun 2008 22:51:00 +0000

Does anyone really think that the Federal Reserve is going to be raising short-term interest rates anytime soon? And if so, by anything more than some token amount that will likely have all sorts of disastrous, unexpected effects on markets?

Remember what happened with the housing market back in 2004 when former Fed chief Alan Greenspan began his "baby-steps" campaign? Well, just think how emboldened commodity traders will become when that first quarter-point rate hike comes and the price of oil doesn't drop as expected.

Does anyone really think that interest rates are going to be moving up during an election year with job losses already totaling 324,000 through just five months with what will likely be a massive downward revision to that total before November?

Dallas Fed head Richard " eighth inning " Fisher was talking yesterday like he was a cowboy about to go "round up" inflation with a big lasso.

According to this report from Bloomberg, it's not so much if or when, but how much and how fast rates will be raised.

Any move to increase interest rates to counter rising inflation pressures should be "very deliberate" and gradual, Federal Reserve Bank of Dallas President Richard Fisher said.

"We need to proceed in a very deliberate manner and I expect us to do so,'' Fisher said in a speech today in New York. Fisher said he disagreed with the idea that "we could move less than gradually if the forces of inflation were threatening.''

The Dallas Fed chief is the only member of the Federal Open Market Committee to dissent three times this year from decisions to lower the overnight bank-lending rate, favoring either no change or less aggressive reduction. Chairman Ben S. Bernanke yesterday said policy makers will "strongly resist" any surge in inflation expectations, delivering his clearest message yet that the central bank is done lowering interest rates.

"You don't want central banks with trigger fingers," Fisher said to the Council on Foreign Relations. "One would expect gradualism."

And you don't want Fed Bank Presidents who imply something that the central bank can't deliver - after a while of talking and not delivering, people start to catch on.

It looks like we're in for months and months of "silly interest rate talk", a phrase that, if memory serves, Chuck Butler at Everbank coined a few years back.

If they really wanted to do something about rising prices and the plunging dollar, they'd take rates back up to at least four percent - the "official" rate of inflation. And if they were really serious about it, they'd take rates up to five percent, six percent, or more - closer to the "actual" rate of inflation.

But there's that little problems of jobs to deal with.
Now, admittedly, no one really thinks that the Bernanke Fed will wait as long as the Greenspan Fed waited to start raising interest rates back in the summer of 2004 - there was a whole year of job growth back then before short-term rates began rising and they were talking about "deflation" when home prices were rising by more than 20 percent a year in parts of the country.

Ahhh... memories...

That's actually very ironic - today we're talking about in-flation while home prices are dropping by more than 20 percent a year in parts of the country.

Is there some imminent reversal in the employment picture that Richard Fisher knows about that will make the current downturn the briefest of all economic slowdowns following the bursting of the biggest financial bubble in the history of the planet?

Yeah, that sounds >like< a plan.

Should I install a solar energy system using a home equity loan, even when rates are at 8.25%?

David — Tue, 10 Jun 2008 17:34:00 +0000

Q. What is your take on upgrading your house to include solar energy and taking the money out of the equity of your home even when rates are at 8.25%. They may not rise before summer, but do you see them rising after that?

A. It's often hard to determine whether solar heating or electrical systems will save much if any money in the long run. You not only have to consider the cost of buying, installing, maintaining and financing the equipment, but the price of natural gas and electricity over the next decade as well. That is very difficult to forecast. But most homeowners who install solar systems seem to be happy with their decision. Even if they don't save a lot of money, they have the satisfaction of knowing they did something good for the environment. How do you put a dollar figure on that?

But if you're going to do it, you should do it now because you should qualify for some generous tax credits that are only available this year. Whether you're installing photovoltaic panels that turn sunlight into electricity or a water heating system, you'll receive a tax credit for 30% the cost of the system, up to a maximum of $2,000. Each project must meet specific criteria and the work must be completed by 2007. Your contractor should know the details. (You can also get tax credits for other improvements, such as new windows, air conditioning units and water heaters.)

As far as where the prime rate will go this year, the best guess is that it should stay at 8.25% at least until August. What the Federal Reserve decides to do after that will depend on the economic data we see over the next six months. If you decide to go with a home equity loan to finance your project, be sure and shop around. Some banks, particularly smaller ones, are offering rates that are 0.5% or even 1.0% below prime. You can find the best deals on our comparison charts of home equity rates.

Another option would be a cash-out refinancing. This is where you refinance your primary mortgage for more than your current balance and use the extra cash to pay for your solar project. With home equity rates so high, that has become a very popular way to get money for home improvements and to pay off credit card debt, because average mortgage rates are still below 6.5%. If you're paying more than 7% on your current mortgage, or you have an adjustable rate loan that's poised to go that high, this could be a less expensive way to go.

By: http://home-equity.interest.com

Protect Yourself From Home Equity Loan Scams

David — Tue, 10 Jun 2008 17:33:00 +0000

It's become almost instinctive these days for some people to rush to tap into the equity in their homes when they find themselves in need of cash. That's because of the growing awareness that home is where the money is. However, it pays to stay alert as you pursue funding, since your budget will be affected for years to come.

There are a wide variety of home equity loan scams out there. Whether you're planning to tap your equity through a home improvement loan, a home equity loan, or a home equity line of credit (HELOC), here are some tips to keep you out of trouble.

No rose-colored glasses: Don't be dazzled by dollar signs. Make sure that you've considered all the costs and conditions of any loan before signing on the dotted line. Since your intention is to solve a short-term problem with a long-term solution, consider whether the loan you choose makes sense over the long haul.

Don't succumb to pressure: Avoid being bullied into accepting home mortgage products that you don't want, such as credit insurance. Shop around for the extras that you do want before allowing them to be rolled into your loan. They may be cheaper somewhere else. If you can't reasonably handle the monthly payments or the loan costs, reject the offer. Follow your gut instinct-it's probably right!

Watch what you sign: Read everything carefully before you sign anything, and make sure that you understand it. Don't put your John Hancock on anything that has blank spaces that could be filled in later.

Don't deed your property: If you think that you should deed your property over to another party for any reason whatsoever, consult with an attorney first.

Even if you're desperate, act like you're not. Take your time, stay on your toes, and make a good decision. You'll need to live with it for a very long time. And you'd like to live with it inside your own home, not on the street because you inadvertently lost it.

By Jan Lindsey - MortgageLoan.com

One Closing, Two Home Mortgage Loans

David — Tue, 10 Jun 2008 17:32:00 +0000

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

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