Learning About Reverse Mortgages

You may have heard that a reverse mortgage is a way to borrow against the equity in your home without having to sell your property first and without having to make monthly payments. Both of these statements are true, but before you run out and sign up for a reverse home loan, you need to…

You may have heard that a reverse mortgage is a way to borrow against the equity in your home without having to sell your property first and without having to make monthly payments. Both of these statements are true, but before you run out and sign up for a reverse home loan, you need to understand the process and make sure you meet all of the eligibility requirements.

First of all, reverse mortgages are only available to seniors who are 60 years or older. Although neither the principal borrowed amount or interest on that principal need to be repaid during the life of the loan, both amounts are due at the end – which comes when the homeowner dies, sells the home, or moves out for more than 364 days .

If you are seriously considering getting a reverse mortgage, here are some of the factors that will increase your likelihood of getting the most out of your loan without threatening your financial future:

  • A reputable lender. The recent economic crisis has led several banks in Australia to stop offering reverse home loan products, at least temporarily. Be patient and look for an established bank or lender that will take the time to explain the process and risks to you. Do not be tempted by lenders who promise you a large return with almost no risk; unfortunately there are unscrupulous companies which practices risk not only the money you give them, but your entire home as well.
  • Good home value. The amount you may borrow is based in part on the value of your home, so the more it is worth, the larger the loan you will be able to take out. What's more, if the value of your home increases during the loan period, you will be able to keep that equity after the principal and interest from the loan are paid off. Try to keep your home in good repair so that it is worth as much as possible at the end of the loan period.
  • Plans for the future. Before you decide to take out a reverse mortgage, you should have specific plans for both the money you receive and also for what you intend to do at the end of the loan period. This type of loan is specifically intended to allow borrowers to remain in their home while they use the money they borrow. If you intend to move out of your home in the next year or two, such as to an assisted living facility or retirement community, it might make more sense to simply sell your home outright at that time. But if you would like funds now for things like travel, pursuit of a hobby, monetary gifts to relatives or other reasons, then a reverse home loan may be the best plan for you.

Mortgage and Its History

In simple terms, a mortgage is a loan in which your house functions as the collateral. The mortgage lender loans you a huge sum of money (usually 80 percent of the value of the house) which you must pay back with interest over a set period of time. If you fail to pay back the…

In simple terms, a mortgage is a loan in which your house functions as the collateral. The mortgage lender loans you a huge sum of money (usually 80 percent of the value of the house) which you must pay back with interest over a set period of time. If you fail to pay back the loan, the lender can take your home through a legal process known as 'foreclosure'.

You might be thinking that mortgages have probably been around for hundreds of years. Wrong, it was just in the 1930s though that mortgages actually got their start. Although banks are the traditional mortgage lenders, it would surprise you to learn that they were not the ones that came up with the idea. Yea that's right insurance companies did. These ruling insurance companies came up with this idea not with the aim of making money no, but with the hopes of gaining ownership of properties if the borrowers fail to keep up with the payments. That was somewhat a smart but greedy idea do not you think?

It was actually in 1934 that modern mortgages came into existence. The Federal Housing Administration (FHA) initiated a new kind of mortgage aimed at people who could not get under the existing mortgage programs. Mortgage loan terms were limited to 50 percent of the property's market value, and the repayment schedule was spread over three to five years and ended with a balloon payment. An 80 percent loan at that time meant your down payment was 80 percent (not the amount you financed). With loan terms like this it's no wonder most Americans were renters. FHA started a program that lowered down payment requirements. They set up programs that offered 80 percent Loan To Value (LTV), 90 percent LTV and higher. This for sure forced commercial banks and other mortgage lenders to do the same, thereby creating much more opportunities for average Americans to own houses. The FHA then went further to begin a trend of qualifying people for loans based on their actual ability to pay back the loan, rather than the traditional way of simply knowing someone. The FHA also lengthened the loan terms, instead of the traditional length of five-to-seven-years loans, the FHA offered 15 year loans which historically stretched 30 year loans.

The FHA then dropped a smart move, they set standards for the quality of the construction of houses rather than just financing any house, the FHA set quality standards that the houses had to meet in order to qualify for the loan; of course they would not want the loan to elaborate the building, this started another trend that commercial lenders eventually followed. Before FHA, traditional mortgages were interest only payments that ended with a balloon payment which directed to the principal of the loan. This was the main reason why foreclosures were so common. The FHA then came into action again, this time they started the amortization of loans, which meant that people got to pay an incremental amount of the loan's principal amount with each interest payment, reducing the loan gradually over the loan term until it was totally paid off.

Which Is Better, A 30 Year Fixed or a 2 Year Arm?

If you're getting ready to refinance your home or buy a new one, one of the things you have to decide what type of terms you want for your loan. Two of the most popular choices are the 30yr fixed and the 2/28 arm (adjustable rate mortgage). Let's take a look at them both. The…

If you're getting ready to refinance your home or buy a new one, one of the things you have to decide what type of terms you want for your loan. Two of the most popular choices are the 30yr fixed and the 2/28 arm (adjustable rate mortgage). Let's take a look at them both.

The terms of a fixed rate mortgage are pretty simple. Your interest rate never goes up no matter what is happening to interest rates in general. If you've got what is called a 2yr arm or a 5yr arm, your loan's interest rate is only fixed for that amount of time. So which is better?

If you have a fixed rate loan and rates are climbing, you're going to be patting yourself on the back. If you're locked in at 5% and all your friends are refinancing at 6% you've gotta be pleased with yourself. However, if rates drop and you're sitting with a 5 and everyone else is getting deal done at 4, you're probably going to be kicking yourself in the butt. Getting a fixed rate loan is the safe play. It's easier to keep on top of your finances if your main bill never changes. If you've got a variable loan that $ 1200 payment that you have borrowed for could suddenly wind up at $ 1500, leaving you scrambling as you hut for a way to come up with that extra $ 300. The one thing you can do if rates are plummeting is to refinance your home at the new lower rate. Of course that can be expensive and maybe not possible if your credit is less that desirable. It's just something you are going to have to crunch the numbers over before you can make an informed decision.

So under what circumstances should I opt for a loan that is only fixed for the first 2-5 years? If you're in an environment where rates are dropping, or expected to drop you might want to opt for a loan that is variable for a short period of time. Getting any loan that is only fixed for part of the life of the loan ensures that you will get a lower rate. If you are only staying in the home for five years, why not get a loan that is only fixed for five years? It does not matter if rates are going up because because you will have sold the home before the rate hikes affects you. Sometimes people with less that desirable credit opt ​​for a variable loan because they can not afford the payment that they would have on a 30yr fixed rate loan. In general, the difference between a fixed rate mortgage and a variable one is one percent; sometimes as much as another half a percent more. If you've got a $ 400,000 mortgage that one to one and a half percent is going to mean a huge difference in your mortgage payment. Sometimes it is a matter of qualifying. A 30 year fixed rate mortgage may put the payment too high to qualify when it comes to your debt to income ratio. If you opt for a loan that is only fixed for a couple years that gives you time to work on your credit score so you can qualify for a 30yr fixed later.

So the answer to the question, which is best a fixed rate loan or a variable, can not be answered without first crunching the numbers to determine which makes the most sense. Both types of loans are useful for different sets of circumstances. Make sure you discuss this with your broker so together you can come up with the best loan your needs. Good luck and happy borrowing.

Are You A Financially Struggling House Owner? The Harp Program Can Help You!

Having financial problems is not easy, especially if you can not pay your mortgage anymore. In fact, this can be one of the most stressful problems that one could experience in his or her life. However, lenders are not keen to repossess your house from the moment you have problems, no matter what many people…

Having financial problems is not easy, especially if you can not pay your mortgage anymore. In fact, this can be one of the most stressful problems that one could experience in his or her life. However, lenders are not keen to repossess your house from the moment you have problems, no matter what many people think.

In reality, if you do have problems they will do anything that lies within their power to help you stay in your home. This is also in their own interest. When they repossess the home of every homeowner that faces some financial difficulties, the next thing they got to do is to sell these houses. And after the last couple of years .. with the housing market fallen down, they will not get a good price – that is if the houses can be sold in the first place- so they will lose a lot of money. That's why mortgage lenders will help you as much as possible to overcome financial troubles.

The lender is willing to discuss your problems with you. Show them you are willing to cooperate and you will pay everything you can. Take full advantage of the conversation with your lender and ask a lot of questions. When you understand what your options are, your chances to keep your home increase.

Let's take a look at the available options: there are government organizations that offer free advice to help you pay your mortgage. But as a house owner, there are a couple of things you can do yourself. To make sure that you do not risk to lose your home, there are a couple of steps to take:

1. Face the problem

When your lender sends a letter, or you get a telephone call; do not ignore it! Keeping your mortgage current has to be your number one priority and this comes before any other debts you have to pay.

2. Evaluate your situation

Write down all your expenses and make a personal budget plan. This way it will become clear what you are spending your money on. Maybe there are still expenditures that you do not really need? Try to save yourself some money where you can. Apart from necessary bills like your mortgage (on the first place), other loans, supermarket bills, fuel bills etc., it may be a possibility to make a reduced offer of payment? If this is not possible, a reschedule of payments could be an option.

It is also advisable to ask your lender if you claim all the benefits that you qualify for. Your mortgage lender will help you for sure and the Citizens Advice Bureau could assist you too.

3. Cooperate with your lender

Make sure they are aware of your bad financial situation. Explain to them what the steps are you are willing to take to find a solution. It is important that you are honest during the whole process. If there are any changes in your situation, let them now it immediately.

4. Show your lender you are willing to pay all you can

In some cases, they allow home owners who are in financial trouble to reduce their monthly mortgage payments. If you get a reduced payment, make sure you KEEP pays the new amount every month!

5. Take only financial advice from people you trust

Your lender will be able to help and that is a great start. There is also the possibility to get free advice from organizations such as Shelter, National Debtline and Citizens Advice Bureau.

Be very wary of organizations and companies that ask you money for advice to refinance your mortgage. A fee is never asked from official government organizations! Beware of persons that ask money for their housing counseling services or home loan modification. The Government designed a special home loan modification program a couple of years ago which is called Harp program. Find out if you are eligible for a Harp loan with government help and visit the website below ..

Choose Experience

Whether you are buying a new home or refinancing an existing one, one of the most important things you can do is choosing the right broker or loan officer. Choose the wrong guy and that could spell doom for your loan. When shopping for a lender you should ask the broker / consultant you are…

Whether you are buying a new home or refinancing an existing one, one of the most important things you can do is choosing the right broker or loan officer. Choose the wrong guy and that could spell doom for your loan.

When shopping for a lender you should ask the broker / consultant you are working with how long he / she has been in the business. If the person you are talking to does not have a lot of experience in the field it would not hurt to ask if that person owns a house or rents. If he has never owned a house he may not know the details that can sometimes plague a loan and prevent it from funding. On the other hand, an experienced broker has probably 'seen it all' and can help you avoid some common pitfalls.

When I was a new loan officer I sometimes lost transactions because I did not know the best way to package the loan. You can take the same loan, package it one way and it gets turned down, and package it another way and it funds. This kind of thing is not all that uncommon. I learned the hard way how to put together a loan so that I would not lose it somewhere in the lending process. It takes time to close a loan and sometimes it takes a lot of doing to keep one afloat. An experienced broker is going to scan your loan thoroughly for problem area and anticipate them before an underwriter sees it and halts the process.

If the deal your broker has just put together is a shaky one you should know about it. Ask what he / she is doing to ensure success. Find out if there is anything you can do to help. The first lender I worked for had in house underwriters that were actually in the same building as we were. That was great because at different times during the day we were allowed to contact the person working on our loans and check on the progress. One thing I learned the hard way was this. I had submitted a loan using W-2 with a borderline debt to income ratio. I figured that with all the other aspects of the loan it was still a pretty low risk deal. Sometimes the debt to income ratio did kill the deal. I tried to back peddle and resubmit it with a stated income deal but that did not work either. I was told that once the underwriter had seen the actual income from the W-2 he could not just forget about it, and work on it as a stated income deal. Once the underwriter has seen anything it's too late to turn back and change things. In the end, that deal that I tried to change up ended up getting declined and I lost the loan and therefore the commission.

That could have been avoided and I might have been able to close the loan if I had first submitted it as a stated income deal. Had I know that unwritten rule about once and underwriter sees something, I probably would not have lost the deal. That's just one example where inexperience caused me to lose the deal.

Give yourself the best chance by working with someone who has been at it for at least two years. That should be enough. Then make sure you are on top of things and following the progress of your loan as well. Those two things should keep your deal out of hot water. Good luck and happy borrowing.

How to Pay Off a Mortgage Early

Taking out a home loan or mortgage is probably the largest investment you can make, but it also takes a long time to pay off in full. There are some ways to pay off a mortgage early, but it takes deduction and budgeting. Any advertising that suggests it can be done otherwise is probably a…

Taking out a home loan or mortgage is probably the largest investment you can make, but it also takes a long time to pay off in full. There are some ways to pay off a mortgage early, but it takes deduction and budgeting. Any advertising that suggests it can be done otherwise is probably a scam. If you want to pay off your home loan faster, these tips will help you reach your financial goal and save you money in the long run. Just be sure that your loan features allow you to pay off the loan early without penalties.

Get the Lowest Interest Rate Possible
One of the biggest things that can save you the most money is to have a lower interest rate. This will save how much you owe substantively. If you can have a low rate from the start, you'll save the most money. If you already have a loan, you can refinance it to a lower rate if you qualify.

Make the First Payment on the Settlement Day
If you can, make your first payment for your home on the settlement date. This will help to pay down the principle balance and also lower the overall interest paid down the road.

Pay More on Each Payment
The easiest way to help lower your debt on the property is to make more than the minimum payment each month. Budgeting to add in as much as you can on these payments will help with the principle, lower the amount of total payments owed, and also the amount of interest that is owed in total.

Make Extra Payments
Making extra payments is another great option to lower the balance that is owed and the amount of interest that is owed. Most of the early payments are put towards the interest of the home loan and not the balance itself, so paying this off quickly helps to cut the amount of interest owed down the line quicker.

If Interest Rates Are Lowered, Pay More
If your interest rate is lowered, pay more than the minimum amount due. At least pay as much as you were, if you are able to do so. If you can keep paying at least what you were paying at the previous interest rate, you'll pay off your mortgage much faster and save money, too.

Setup an Offset Account
Some lenders offer borrowers the option of setting up an offset account. This is basically a savings account that is connected with the home loan. The balance that the borrower has in the savings account is subtracted from the principle of the loan. For example, if someone owes $ 100,000 on their loan, and they have $ 10,000 in their savings account, they are only charged interest on $ 90,000.

Why Many Seniors Are Using a Reverse Mortgage

A reverse mortgage may not very familiar to many of you. It is actually just another type of loan, an equity loan to be specific. The objective here is to defer a mortgage interest and this has been offered since the 1960s. Its popularity owed to the TV commercials that featured celebrities promoting the loan.…

A reverse mortgage may not very familiar to many of you. It is actually just another type of loan, an equity loan to be specific. The objective here is to defer a mortgage interest and this has been offered since the 1960s. Its popularity owed to the TV commercials that featured celebrities promoting the loan.

There are various types of a reverse mortgage. The most common is the Home Equity Conversion Mortgage (HECM) provided by the Federal Housing Administration.

Compared to the regular mortgage which needs to be paid monthly over a specific period of time, the interest on a reverse mortgage becomes due only when the original loan reaches its maturity. For those in a difficult financial situation, this is really helpful. It allows families and homeowners to continue living in their homes and pay their taxes as well as insurance without having to worry about paying monthly payments on the reverse mortgage. They will, however, receive monthly statements containing information on their interest charges and balance.

It is important to note that this type of mortgage is available only for those aged 62 years old and older. All US citizens and permanent residents in this age group are eligible to apply as long as they have sufficient equity in their home. The loan amount is usually dependent on the age of the youngest homeowner, current rates and home value.

The latest reports say the number of senior citizens taking advantage of reverse mortgage is on the rise. A study has found a 15 percent increase in seniors aged 62 to 64 who have applied for this type of mortgage since 1999. It added that the main reason for taking the action was because of their need for money. Other factors taken into account were job losses as well as higher living costs and debt. The research was done by MetLife Market Institute and the National Council on Aging.

Reports also revealed that in 2010, more than 80,000 Americans more than 62 years old availed of a reverse mortgage. This figure was also an increase from only 25,000 in the year 1995.

Experts are not surprised with the increase in these figures confirming that many seniors these days do not have sufficient retirement funds or are not even planning for their retirement. Many are said to be financially-strapped today the reason for their decision to apply for a reverse mortgage.

What's also worth noting is that the age of seniors grabbing this opportunity is getting youger. The minimum age to be able to apply for this loan is 62.

Fortunately, reverse mortgages are no longer getting a bad image. Being supported by the government and even financial planners, many people are considering it a favorable option. In addition, the rates for this mortgage are low and the fees are going down as well.

This loan is also not taxable, and will not affect a homeowner's social security benefits and the rates are adjustable, too. In fact, it can also be re-funded. Applicants including those facing foreclosure need not worry as well about an income or credit check.

Knowing When to Refinance and Save Thousands

The reasons why you should refinance are endless; however, it's all about timing and research. Getting these two aspects right the first time can save you money for a family vacation, renovations, a new car, a new speedboat … you get the point. Some might want to refinance to lower their monthly payments, others to…

The reasons why you should refinance are endless; however, it's all about timing and research. Getting these two aspects right the first time can save you money for a family vacation, renovations, a new car, a new speedboat … you get the point. Some might want to refinance to lower their monthly payments, others to consolidate an outstanding debt and others just to find a better mortgage product to suit their needs.

Think of it this way; are you the same person you were 5, 10 maybe 15 years ago? If you're like anyone else, probably not. You may have found a new job or need a change in your mortgage product, from an ARM to a fixed rate mortgage for example.

There are certain rules to follow so that you do not end up defaulting or wasting money. The traditional refinancing rule of thumb – wait until you find an interest rate at least 2% lower than what your rate is now. Although it's usually true it can be inaccurate because in the time you wait for the rates to drop 2%, you could have already spent several thousand dollars on your current mortgage. For some people, as little as 0.5% of a decrease in rates can be enough. The best thing to do here is to really do your research and understand the market as good as possible so that you know when refinancing is best for you.

Another factor when refinancing is your future plans with the home. Typically, some plans such as a balloon mortgage will require a refinance when the period is over. But if refinancing is not mandatory, you could have to wait as long as you stay in the home to refinance. The key thing is to be truthful no matter how much you love your home. Figure out how long you think you will be living at the home for. Timing is crucial so understanding when to refinance and when you will start saving money only comes with research. The fact is that refinancing can cost a great amount of money, so you'll want to be as certain as possible of your situation with for example, if your employer will relocate you to another city, or that you'll change jobs soon. Do you have a physical condition that would force you to move? Evaluating your situation now and in the future is very important so try not to cut corners on this step.

The next step is to figure out if you need more or less of a mortgage. Most lenders will let you borrow about 80% or more of your homes appraised value; however if you're looking for a 'cash-out refinance' it could be lower than 80%.

Now that you know why you may want to refinance, how long you'll be staying at your home and how much of a loan you need, we can look at possibly the most difficult part of a mortgage – the closing costs. The closing costs are what you pay out of your pocket to refinance your mortgage. While some closing costs are present, others are dependent on your local market. Figuring out your closing costs can take some time and effort because they can cost up to $ 5,000 and will determine how much you save when refinancing.

As you may remember from getting your first mortgage, there are several other services trying to charge you – evaluating your property, researching your title to the property, insurance, credit reports, and inspections for varmints, safety and structural factors. These services can easily add up to a few thousand dollars and they will save you money in the long-run but there are ways in cutting these costs. For example you can update your title insurance instead of getting a completely new one. Shopping around and comparing as much as possible can also save you money from these fees.

Remember, a mortgage is like buying a vehicle. You would not run to any car dealership and buy the first car you see, would you? The same goes for a refinance as well, do your research, talk to a lot of different lenders, compare rates and look into your homes future.

Here Are Some Common Mistakes People Make That Can Delay the Loan Process

Whether you're buying a new house or refinancing an existing one you should know some common mistakes people make that often delay or even stop the loan process. Probably the most important thing here would be this; check up on your broker or Mortgage Consultant. I hate to say it, but you have to keep…

Whether you're buying a new house or refinancing an existing one you should know some common mistakes people make that often delay or even stop the loan process. Probably the most important thing here would be this; check up on your broker or Mortgage Consultant. I hate to say it, but you have to keep on top of your loan because your Loan Officer may not be on top of everything and if he's not that that could mean a delay or cancellation of your loan. The more familiar you are with the loan process the better that way you can be checking up on him / her.

If you are working with a loan officer who has a lot of non-prime loans he is working on he is going to be a very busy guy. Keeping loans afloat can take a lot of work and sometimes it does not take much for one to fall apart. If your credit score is in the 600's or lower most likely your loan will be considered non-prime. If you do not know, ask your broker or loan officer.

Know where your loan is in the financing process. If your loan officer is about to have a title company open escrow and do a title search let him know ahead of time if there are any issues. If you have a lien against the property you are refinancing that does not show up on your credit report, tell your broker. It will certainly show up on the title report. Head these problems off before it pops up and delays your loan. Once an issue like this surfaces your loan loses its place in line with the underwriters and processors and it will take time to get your file moving again. Speaking of the title, if you are refinancing, make sure that everyone who is on title, and going to stay on title, will be there to sign the proper documents when the time comes. I have had borrowers forget that Granny Smith is on title and she happens to live three thousand miles away. If you have a case like that you need to make sure you take the necessary steps to either remove her from the title, or have her sign the loan docs when you're ready to close.

So much of your success on borrowing to refinance or purchase a home depends on preparedness. It behooves you to make sure you and your loan officer is prepared. Too many little things can pop up if you are not paying attention. When your loan officer is juggling seven loans make sure yours is not the one that gets knocked if he loses concentration.

Make sure you send him all the documents he requests for the first time. If he needs bank statements, send full statements, even if that means every month has five pages. These are just a few things you can do to make the loan process flow more smoothly. The more involved you are the better and less likely that either of you will be blindsided by some kind of problem. Good luck and happy borrowing.

Details Of HARP 2.0

The government's Home Affordable Refinance Program has received much attention in recent months. After a disappointing first run, the program has been revamped in effort to include more at-risk homeowners and provide help to those who may not previously previously qualified. The Basics HARP is part of the Making Home Affordable Program initiative to help…

The government's Home Affordable Refinance Program has received much attention in recent months. After a disappointing first run, the program has been revamped in effort to include more at-risk homeowners and provide help to those who may not previously previously qualified.

The Basics

HARP is part of the Making Home Affordable Program initiative to help homeowners struggling with mortgage debt and foreclosure. The program requires that anyone interested in refinancing their mortgage have a mortgage backed by Fannie Mae or Freddie Mac, which is the case for the majority of homeowners with conventional loans. The mortgage also must have been secured prior to May 21, 2009. Applicants must also be current on the mortgage payment and can not have had more than one late payment over the last year.

The New Program

Although these program requirements seem strict, the new HARP has actually expanded its horizons and made several changes to the rules. First, the loan-to-value limit cap has been eliminated. Previously, there was a 125 percent cap on the amount of mortgage debt owed compared to the value of the home, meaning anyone that 25 percent more on the mortgage than the home's value was disqualified. Many homeowners who are considered underwater on their homes exceeded this value, leaving them without options to refinance. The new HARP does not have any specific loan-to-value limit cap in order to qualify.

Second, the revised program has eliminated automatic appraisals and some of the fees associated with refinancing. According to HARP 2.0 guidelines, homeowners no longer have to obtain, and pay for, an actual appraisal on the home, but can use an automated estimate system to determine the value on the home. The closing cost fees have also been reduced or eliminated to make refinancing more affordable for qualified homeowners. The 2 percent upfront fee requirement has been eliminated, as well as put a 0.75 percent cap on fees for 30 year refinanced mortgages.

The new program has also expanded the reach for owners of condominiums, who were previously ineligible to qualify for refinancing. These days, underwater condo owners may be eligible for the program regardless of the percentage of units that are considered underwater or delinquent. The old program also required that applicants meet certain income requirements in order to qualify for the HARP offer. Under HARP 2.0, there is no income verification requirement for applications. The last, and sometimes most important change, is that the new program will be in effect until December 31, 2013.

When Is The Right Time To Refinance My Home Mortgage?

Refinancing My Home Mortgage – Is Now The Right Time? Several Things You Need to Know to Make the Right Decision 1. Are the current rates and mortgage market your best indicators to know when to refinance? 2. What about the other factors that has to do with mortgages, such as your mortgage insurance, rising…

Refinancing My Home Mortgage – Is Now The Right Time?

Several Things You Need to Know to Make the Right Decision

1. Are the current rates and mortgage market your best indicators to know when to refinance?

2. What about the other factors that has to do with mortgages, such as your mortgage insurance, rising monthly payments and your long-term goals for paying off your mortgage loan?

3. Will refinancing enable you to consolidate debt and to lower your overall monthly payments?

Each of these is important questions when considering whether to refinance your home. You'll have to take time and carefully study each factor involved to determine how best you can balance these factors so you can make a complete and informed decision.

If you are paying on a mortgage loan requiring you to carry mortgage insurance, determine if you have enough equity to eliminate that insurance with a refinance. If so, taking advantage of home mortgage refinancing could actually save you hundreds of dollars a month, especially if your rates have not changed or have changed only slightly.

Fixed Rates are Easy to Compare-

If you have a fixed rate on your first mortgage, you will easily be able to compare it with the current mortgage rates that are available. Being able to easily compare rates enables you to know whether refinancing right now is a good idea or not. If your fixed rate is lower than the current interest rates being offered on your primary mortgage loan then you know that you will not want to refinance right now.

Adjustable Rate Mortgage (ARM) and Home Mortgage Refinancing-

If you are a homeowner that has an adjustable rate mortgage and the interest rates are starting to rise, your payment will be increasing as well. If this is the case, you need to consider how much more you will be paying per month as the interest rates continue to rise.

If you signed a three- or five-year ARM in the last few years, be sure you are aware of your introductory term expiration date. You will want to start refinancing your loan unless you want to start making a much higher monthly payment.

You are probably realizing that the right time to refinance is more about you than the market. Although low interest rates are always a factor, your personal situation is the best indicator.

Whatever you do, take the situation into your own hands. Refinancing before you have to make your first increased payment with a three year or five year ARM beginnings can save you a lot of money each month which can have a huge impact on your lifestyle. This is a clear indication that now is the time to 'refinance my home mortgage.'

What Is a Reverse Mortgage? An Easy Explanation!

A reverse mortgage is a non-traditional mortgage that is designed for the homeowner age 62 or older who wishes to access equity out of their current home or to purchase a new home (both of which need to be your primary residence). This is how it works: You may borrow up to 75% (depending on…

A reverse mortgage is a non-traditional mortgage that is designed for the homeowner age 62 or older who wishes to access equity out of their current home or to purchase a new home (both of which need to be your primary residence).

  • This is how it works: You may borrow up to 75% (depending on your age) of your home's appraised value. The older you are, the higher percentage of loan the bank will offer on the reverse mortgage. As an example, a borrower who is 80 years old would have received a significantly higher loan that if they were applying at age 62. Qualifying is easy because it's based on your income and age, not your credit score. You have no monthly payments; rather, each month the interest you would have paid is added to the loan balance.
  • You can use the balance of the money for anything you want – medical bills, a trip around the world, whatever.
  • The home is still in your name and you can sell it, will it or do whatever you want with it. The loan can be paid off at any time, or left on the home for as long as you wish.
  • If the borrower passes away prior to the end of the loan period, the home must be sold or refinanced with a new loan. The bank would be paid off first, just like a traditional mortgage. The balance of the equity would go to the heirs of the borrower.
  • If at any time the loan balance on the home is greater than the value of the home there are no penalties or due dates. This is a non-recourse loan, meaning that even if the home is sold for fair market value – and that value is less than what the bank is owed – they accept the loss. They can not recoup the difference from you, the borrower.
  • You might be wondering why a bank would give this kind of loan. Frankly, it is a good risk. The bank usually gets paid off prior to the end of a 30-year loan. Also, because the loan balance is lower compared to the value of the home the return on their investment is quite high.
  • A reverse mortgage, while a good deal, tends to have higher closing costs than a traditional mortgage. Additionally, reverse mortgage loans are currently taking an average of 60 days to process on a new home purchase, and about 4 weeks if the reverse mortgage is on your current residence.
  • In the end this is a great way to access your home's equity without having to sell your home – and it's a great way to buy a new home – without having to make a monthly payment for the rest of your life.

The Stated Income Loan Program

A stated income loan is basically just what it sounds like; you simply state the amount of income you need to qualify for the loan without the burden of proof. You know the old saying, if it sounds too good to be true, it probably is too good to be true? Well with stated loans…

A stated income loan is basically just what it sounds like; you simply state the amount of income you need to qualify for the loan without the burden of proof. You know the old saying, if it sounds too good to be true, it probably is too good to be true? Well with stated loans that whole saying goes out the window. Here's how it works.

One of the most difficult parts of the loan process is having enough income to qualify for the loan. With the stated loan program in place you no longer have to worry about it. You just tell your broker what your job is and he will calculate the amount of income you need to qualify for the loan. You do not need to prove that you actually make that amount every month. What's the catch?

Most lenders did not have some minimal guidelines that they adhered to when doing one of these programs. You had to make sure your story made sense. In other words, if you put on your application that you were a Chimney Sweep and made seventeen thousand dollars a month, it's gonna raise all kinds of red flags. Some lenders did not even do that. The first lender I worked for just required you to furnish a letter from a client stating you did work for them. They did not care if the income made sense because you had the letter. The issue here was this; no one actually got a legitimate letter. You simply asked someone in the office to write a letter and then put their cell number on it and that was it. The underwriters never bothered to check to see if the letter was real or not. That's why declared income loans were dubbed liar loans.

These programs soon became the bread and butter of nearly every lender as it was the easiest and quickest way to get your loan done. It was so easy that most Mortgage Consultants in my office did little other than these loan programs. The problem with stated loans is that few borrowers actually made the income that they claimed and soon found themselves unable to pay for their mortgage and when the housing bubble burst and home prices plummeted, they could no longer refinance out of the problem. Pretty soon those borrowers owed more than their homes were worth and could not sell them to alleviate their financial woes. The next logical event in many borrowers was foreclosure.

So the question is, can I still get a stipulated income loan program? Surprisingly, the answer is yes, but you're going to have to jump through some hoops though. Most have an equity requirement. You will have to a 40% -50% down payment on a purchase, or on are finance a minimum of 50% equity. You also have to top shelf credit as well. So lenders are basically taking steps to remove as much of the risk of making loans as they can. Realistically, most borrowers today will have to go with a more traditional approach to when it comes to qualifying for a loan when it comes to income. Good luck and happy borrowing.

Home Loan Refinancing With Bad Credit: An Effective Way to Save Your Home

There can be little doubt that for most of us, the largest single debt we face is our home loan. With the average family home costing in excess of $ 150,000, it is certainly not a light load to carry, and it can weigh especially heavily on our minds when we also have a bad…

There can be little doubt that for most of us, the largest single debt we face is our home loan. With the average family home costing in excess of $ 150,000, it is certainly not a light load to carry, and it can weigh especially heavily on our minds when we also have a bad credit rating to wrangle with. This is the time when home loan refinancing with bad credit is necessary.

It is surprising how many people still believe that a refinancing transaction is more damaging to a financial status that beneficial. The simple fact is that through home loan financing, not only is the pressure of financial obligation gone, but often a home is saved.

What is true is that any refinancing deal must fit within certain parameters in order to be effective, and this is where wisdom in the choice of lender and loan terms comes in to play. And as for guaranteed home loan refinancing, even with bad credit, most lenders are happy to accommodate such a loan deal.

Mechanics of A Refinancing Loan

To those unfamiliar with its workings, a refinancing loan may seem like a backward move. But in fact, home loan refinancing, with bad credit a major factor in the equation, is just the ticket to improving the overall financial situation for a home owner under pressure. The basic mechanics of the loan is that the existing mortgage is bought out by a new mortgage deal.

With the original repaid, the credit score of the borrower can be duly adjusted, but it is important to stipulate at the start of any negotiations that this is the case. However, the key to effective refinancing is that the second mortgage is lower and more cost effective than the first.

This is possible because over the life to-date of the original mortgage, a certain amount of the principal will have been paid off already, so the sum needing to be bought out will be less. With the reduction guaranteed, home loan refinancing, even with bad credit, can ease the financial burden very effectively.

The Core Benefits of Refinancing

The benefits of home loan refinancing with bad credit are hard not to embrace. As already mentioned, by paying off the original mortgage, the home owner will see their credit rating adjusted accordingly. This absolutely means that it will be improved, even though they are immediately taking on another loan.

With the improved credit rating, the rate of interest that the lender charges will lower. The result is that where the repayments on the original mortgage was $ 1,500 per month, home loan refinancing can see the repayments fall to probability just $ 1,000, depending on the loan and interest rate.

And that means extra cash every month to spend on other things, like paying outstanding utility bills or catching up on other debt repayments. So, since these benefits are guaranteed, home loan refinancing, even with bad credit, is clearly a wise option when choosing a strategy to get out of financial trouble.

How to Secure a Refinancing Deal

There are two avenues to take when looking for a lender that provides home loan refinancing with bad credit that suits your situation. The first is simply to stick to your current mortgage provider. This can be very beneficial because they already know your reputation well. So, a good interest rate on any home loan refinancing deal can be secured.

However, other lenders can be approached if the deal is not good enough. In this case, there may be some penalties or fees to pay, so factor that into the calculations too.

With guaranteed home loan refinancing, even with bad credit, there can always be optimism that a tight financial situation can be lived – with your home intact.

Securing Mortgage Loans With Bad Credit Rests on Three Criteria

It would be nice to think mortgages can be easy to come by, but unfortunately, lenders are very cautious about approving them. So, when an application is received seeking a mortgage loan, with bad credit part of the equation, lenders have a natural hesitancy. However, it is important to note that this does not automatically…

It would be nice to think mortgages can be easy to come by, but unfortunately, lenders are very cautious about approving them. So, when an application is received seeking a mortgage loan, with bad credit part of the equation, lenders have a natural hesitancy. However, it is important to note that this does not automatically mean rejection.

The sheer number of people who now find themselves with poor credit ratings means that lenders can not afford to simply ignore this demographic. In fact, mortgage loans with bad credit are available from lenders with expertise in bad credit lending, offering the best possible terms as a result.

But, as with every loan, there are criteria to meet, and only after that is done can an applicable hope to get mortgage approval despite bad credit ratings. Different lenders may have specific criteria, but generally speaking there are three in particular to heed.

Proof of Income

The most obvious one is that proof of income is provided as part of the application for the mortgage loan with bad credit. After all, repayments can not be made when the borrower has no income. However, simply quoting a number is not enough. Proof means that a pay slip, bank statement or other kind of receipt is provided.

While employment is also a key concern, it stands to reason that with an income, the applicant obviously has a job. But an aspect that very interests lenders is how long the applicant has been in their present employment. Often, a minimum period of 6 months full-time employment applies to applicants, especially when it comes to mortgage loans, to prove that the applicable is not just a seasonal or short-term contract worker.

Remember too that the income needs to be enough to cover the repayments, and with some ease. The debt-to-income ratio means that a certain percentage of excess income must remain free to achieve mortgage approval permanently bad credit. This is to protect the borrower, ensuring they have ample to cover unexpected monthly expenses, and not find themselves over-extended.

The Down Payment

Making a down payment on a new home is widely seen as simply part of the purchasing process. But it also has a definite impact on an application for a mortgage loan with bad credit. Basically, it relates to the size of the mortgage required, with the higher the down payment, the lower the mortgage sum needed.

For example, if a 10% down payment is made on a home that costs $ 150,000, then $ 15,000 can be taken from the total. So, a mortgage loan of just $ 135,000 is needed. That means that repayments are less per month, and therefore more manageable, which is good for both borrower and lender alike.

Of course, the other reason that a down payment is important in alleviating fears lenders has regard to the trustworthiness of an applicable. The fact that as much cash as $ 15,000 might have been saved shows financial discipline, which is exactly what convinces a lender to grant mortgage approval despite bad credit.

Signs of Improvement

And it is this kind of sign that lenders look out for all the time. Granting mortgage loans with bad credit is a larger risk than lending to someone with a perfect credit record. But if there is evidence that the borrower is doing all he or she can to improve their low credit score, then is highlights the nature of the borrower.

Taking out a debt consolidation loan is a perfect example, especially when the monthly outlay has lowered, leaving extra funds to repay the mortgage loan with. With this completed, there can be surprise if mortgage approval permanently bad credit is granted.