March
17
2011
A mortgage calc is a most useful tool. Are you in the real estate business, or are you often thinking to yourself what would the payment on such a property be at given rate, or what with the difference be between a 20, 25 and/or 30 year term in actual dollars? Some of us can juggle and calculate those numbers quickly enough in our heads for an estimated
guess, but when making a quote for a client or customer, having a mortgage calc close at hand to render this information instantly and accurately is a fantastic benefit.
The prospective borrower and user of a mortgage calc can find amazing utility in this simple yet effective tool. So often today, many shoppers look at dozens if not hundreds of potential home listings prior to taking a closer look at the numbers. Once a list has been narrowed down and a particular style of home, in combination with its location has been established, a more thorough review can begin.
Having the convenience of a mortgage calc allows you to take a stack of property listings and determine quickly, the options that would meet your financing needs. One can prepare a chart or make notes concerning what a property must sell for in order to be within budget according to the interest rate criteria you have selected.
A good mortgage calc will have all sorts of options allowing you to display the information you require, in a number of different formats and methods. Most often, you can choose from the option of displaying this information via a pie chart or bar graph, or any number of traditional graphs. These features allow you to quickly visualize the difference between interest paid, and principal applied throughout the term of the loan.
Some mortgage Calc’s even offer the function of the sliding bar input feature. This nifty little feature is like the sliding bar on a volume control for a video. As you actuate or slide the bar, the resulting numbers are continually changing in the results field. This is truly a time-saving benefit afforded by the use of a mortgage calc. Give one a try today and see for yourself what it truly handy tool this is to use.
February
17
2011
When you purchase a home through a let to buy mortgage you are at first leasing your home. A let to buy mortgage quite simply means that the person whom owns the home is allowing you to live in the home. The homeowner will generally charge you more than the current mortgage on the home. When the homeowner charges you, the tenant, more in addition to the mortgage payment that the homeowner is being charged the homeowner is using this fee to put toward the let to buy mortgage.
At the termination of the let to buy mortgage the home then becomes the tenants property. The person who originally owned the house will need to claim the profit from the sale as a capital gains tax. The capital gains tax will be assessed to the original homeowner upon the sale of the property; because the property is not the home that the original homeowner resided in. So, since it was a luxury to have more than one home and to sell one of those homes through a let to buy mortgage agreement then the original homeowner will need to pay taxes on the proceeds from the sale.
When a person purchases a home through a let to buy mortgage agreement the person is not asking a bank for the funds to pay for the home. The person purchasing the home will enter into an agreement with the current homeowner, and ask the current homeowner for the right to live at the house, and to pay the current homeowner to live at the house. The keys exchange hands at the time the let to buy mortgage agreement is entered into. The mortgage holder then for someone who purchases a home through a let to buy mortgage is the original owner of the home. The paperwork is drawn up that the tenant, purchaser, will pay the original owner of the land an agreed upon amount. Then the tenant moves in, and can call the home his, or her own.
January
22
2011
Reverse mortgage is a new kind of loan against your home that you need not pay back as long as you live in that house. With reverse mortgage you can mortgage the value of your home in cash without repaying the loan every month and as well as without moving out of the house, and this cash can be repaid in several ways like you can pay at one stretch in single lump sum of amount, or in regular cash advance monthly, or in credit line account that is you can decide how much available cash can be paid or combinations of any of these methods.
No matter how you pay back this loan, as you do not need to pay back anything until your death or sell your home or move out of your house permanently. For the eligibility of reverse mortgage you should have own your home and your age should be 62 years or older.
For other kind of loans the lender check your income documents for the verification of your repayment status monthly, but in reverse mortgage there is no need of repayment of loan monthly, so you need not require any income proof, even if you have no source of income but still you are eligible of reverse mortgage.
With other kind of mortgages you may lose you home incase if you do not make your repayment monthly, but in reverse mortgage you may not lose your home by not making the repayment, mostly reverse mortgages does not require any repayment as long as you live and that is the reason reverse mortgage differs from other loans
With reverse mortgage your debt gets increased and the equity of your home decreases, as the lender lends you the cash and you dont make the repayment, and the debt amount get increased as the interest is being added up with your balance loan amount and ultimately your debts increase and your equity decreases, unless the value of your home is getting increased. Incase if the value of your home decreased there will not be any equity left out except your loan amount so it is nothing but spending down your home equity while you live in your home with out the need of making repayments.
Exception in reverse mortgages are when you get the loan advance without interest charged on it your debt would remain the same and your equity would grow with the increase in home value. But normally home value does not grow at high rates and also the interest rate is also charged so finally the majority of the reverse mortgages ended up with falling equity and rising debt loans.
January
15
2011
What Is A No Doc Or Low Doc Home Loan?
A “Lo Doc” or sometimes call “Lo Doc Home loan” are mortgage or home loans where documentation for verification of your income is not required. However, all other documentation is.
These loans are ideally suited to self-employed, independent contractors, investors, credit rating impaired, ex-bankrupt or clients with arrears on current mortgages and borrowers who have been rejected by traditional lenders. Including people with suitable incomes but to meet bank verification takes valuable times and money.
Low Doc Home Loans (Low Document) are usually slightly more expensive than traditional loans due to the higher risk profile.
This is primarily for people who are looking to purchase investment properties, residential or refinance existing housing property and dont have PAYG or current taxation returns confirming their income, which normally sustains a standard investment loan.
There are 3 main types of Low Doc or No Document Loans.
No Ratio Loans
These loans are for lenders who may not wish to disclose their incomes, Thus there is no debt to income ratios for the lender to consider. Good credit and abundant assets the No Ratio borrower has makes up for the lender not considering the borrowers income information. If gathering income documentation’s is going to be a logistical nightmare, then this loan can offer a quick and easy process.
No Doc Loans
To get credit the No Doc loans requires the least amount of documentation. The lender evaluates your loan request with the minimal amount of financial information from the lender and maximum privacy is assured.
Stated-Income (Low Doc) Loans
If your income fluctuates week to week, month to month, the Stated-Income, or Low Doc loans are the most attractive. However unlike the No Doc Loans, the Low Doc Loan does require the lender to disclose earnings, usually for two years, and might need to show tax returns and bank statements.
If you think a No Doc or Low Doc loan is right for your situation, talk to a mortgage expert. It might be beneficial for you to pay a higher rate for this loan. A good mortgage banker can also show you how to obtain the necessary documentation.
January
8
2011
Things such as County Court Judgements (CCJ’s) or a poor credit history can scupper the chances of you getting a personal mortgage because mortgage companies deem you a high risk.
If you are self-employed, and even have a pristine credit history, you may find it just as difficult to get a mortgage due to your circumstances, which is unfair.
However, there are more and more specialist mortgage companies that are sympathetic and able to offer bad credit mortgages to people – as well as mortgages for the self employed.
Many of these companies do not charge excessively high interest rates as they have done in the past, meaning that you should be able to get a mortgage and pay a fairly realistic interest rate.
Apart from the obvious benefit of taking out a mortgage for whatever purpose you need it for, having a mortgage can actually improve your credit scoring – making it easier for you to borrow money and get credit in the future! However, you will need to make your monthly repayments on time, and this will help improve your credit score over time.
Of course, when choosing a bad credit mortgage, do shop around. While there are understanding lenders out there willing to provide a mortgage without charging you the Earth, there are still, sadly, some unscrupulous mortgage companies.
Do your homework – get several quotes; check out the interest rate and any financial penalties you would be liable for should you pay the mortgage off early. And make sure you are fully happy with the amount you are repaying.
How the web can help you if you are looking for a bad credit mortgage
If you have a poor credit history, finding a mortgage specifically for people with bad credit can be difficult. And even if you do find a mortgage, how do you know that it is the right one for you?
Using the internet can help. There is tons of information on there relating to bad credit mortgages such as free guides, as well as access to providers of bad credit mortgages.
Going online also allows you to compare multiple providers so that you can look at all the product features and benefits to decide whether it is right for you.
There are also websites that accept online mortgage applications and there are hundreds that offer free and immediate online quotes. This means that you can see how much you can really afford to pay out for a mortgage.
January
1
2011
Insurance – we need it for our life, our car, our house, our health and yes, in some cases, even for our mortgage. Private Mortgage Insurance (PMI) is the mortgage industry term used to describe insurance that protects the lender of your mortgage against any type of default. It’s primarily used when you put down less than 20% of the purchase price of your home.
Each month you will be required to submit a premium payment that is calculated based on how much your down payment is and the total size of your loan. Typically the payment amounts to around one-half of one percent of the total loan value. These payments are usually added to your mortgage payment to make it easier to keep track of and keep paid.
The good news about PMI is that for those who are required to obtain it, they won’t need to keep it through the life of the loan. Typically when you reach the point where you have paid down 20% of the loan amount most mortgage lenders will automatically discontinue the PMI insurance premiums. They are required by law to discontinue it when you your total remaining balance on the loan reach 78% of your original loan amount. For most homeowners, this will amount to roughly a 37 – 50 reduction in monthly payments.
You should be aware that if your loan is classified as a “high risk” then by law lenders can require you to maintain PMI insurance until you have 50% equity built up. Typically such loans are made to those who took out loans in which they didn’t produce adequate documentation of income, and those with spotty credit histories. It is always best to talk directly with your mortgage provider about the length of time you will be required to carry PMI. When you sign the paperwork for your mortgage they should include information about when you will no longer be required to carry PMI.
Of course, the best financial move you can make is to not have to pay PMI at all. Some ways to avoid having to pay this include taking on a higher interest rate (typically from .75 to 1 full point) or taking out two mortgages to purchase a home, with one covering 90% of the purchase price and the other covering 10%. Both of these options require you to carefully go over the numbers to see if they provide financial benefit over the life of the loan. A full percentage point increase in interest can amount to a massive amount of additional interest charges over the life of the loan that may far exceed what you would pay in PMI insurance.
Of course, if you really want to come out ahead in the whole mortgage game your best bet is to have 20% down for your down payment and make sure your credit report is as clean as you can get it. It takes time to achieve both of these, but a few years of savings and working on your credit can reap great rewards in your dream of buying a house.
December
25
2010
What counts as mortgage interest and how do I calculate it?
When an individual takes out a loan from a financial institution or establishment in order to fully or help fund the purchase of land or a residential building for the purpose of primary or secondary residency, this is known as a mortgage. This essentially boils down to the mortgage being money that a person owes when it comes to purchasing land or a building for residential purposes.
When individuals borrow money, the establishment or organization that funds the loan will charge the individual interest on the amount borrowed. Mortgage interest is any amount of interest paid on of the loans identified as mortgage for an individual to buy their home, a second mortgage for an alternate residency, a line of credit or a home equity loan. The money that the individuals need to repay for borrowing the loan, not including the loan amount, is the mortgage interest.
Calculating this amount can be a little tricky since there are different factors to consider for each individual loan. The first number that needs to be clearly defined is the overall amount of the loan. This is often the largest initial number for the formula. House loans can range from just a few thousand pounds to millions of pounds, and the amount is dependent upon the home or land being purchased. Next, individuals need their interest percentage. This can be a percentage or two, or less in some cases, or more than eight. Again, this will vary from individual to individual based on the standards and regulations as defined by the specific financial establishments.
For example, a person may get a 315,000 loan for their home. The bank may charge them a total of 6.5 percent interest. This number is calculated by multiplying the amount of the loan (315,000) by the percentage turned into a decimal (.065). This amount is calculated to be 20,475.00. 20,475 is the amount of interest due for a single year. In order to calculate the overall amount of interest that the individual has already paid, they need to take their annual interest rate and multiply it by the number of years that they have been paying their mortgage. Individuals who are looking for the amount of interest that they will pay overall can multiply the annual interest by the total number of years that the individual has to pay off the mortgage. This number is specified in the loan and varies from loan to loan and financial establishment to financial institution.
A simple equation follows:
Loan Amount (L) x the Interest (I) = Annual Loan Amount (A) x Years (Y) = Total Interest (TI)
L x I = A
A x Y = TI
The interest percentage needs to be turned into a decimal. This is done by placing a decimal point two places to the left of the interest rate. For example, 6.5% becomes .065, 8.9% becomes .089, 3.2% becomes .032 and so on.
Typically, the higher a person’s mortgage payment is per month, the lower their interest will be when compared to an individual who has a lower monthly payment and the same loan and loan repayment period of time. This is because individuals who pay their loans off faster have borrowed the money for less time. Therefore, they are able to pay the establishment back faster. The less time a person borrows money, the less interest they will be required to pay since interest is paid back over time.
December
18
2010
Using a Second Mortgage for an 80-20 No Money Down Home Purchase Loan
Many renters want to own their own home, but they simply dont have the down payment to make the purchase. If youre able to afford a house payment as much as your monthly rent, an 80-20 no money down loan could get you out of the rent trap. (80% first mortgage – 20% second mortgage) “It allows people to buy without a down payment, or for those people who would prefer not to touch their savings to get into a house,” says mortgage expert. “What we’re seeing is a lot of young professionals,” he adds. “People who have gotten out of college and have good jobs. They have good credit, but they haven’t had the opportunity to accumulate a lot of savings.”
The 80-20 loans are also known as piggyback loans. The buyer takes out a loan for 80% of the cost of the home. Then takes out a second mortgage for 20% of the loan to use as a down payment. The homebuyer has three options for the 20% part of the loan. Most often the 20% loan is secured from a separate lender, but look up for the second loan to have a higher interest rate.
MortgageDaily.Com shows The second lender-the one who is only financing 5% to 20% of the loan-doesn’t see much benefit from lending the money unless he can actualize a high interest return. If the buyer borrows from the same financial institution, they could open a home equity line of credit and withdraw two separate amounts; one amount for 80% of the loan and 20% for the down payment.
The third option is to borrow the 20% part of the loan directly from the seller, also known as a purchase money loan. Kipplinger.com shows there is a down-side to the 80-20 loan. You likely will have to pay a higher interest rate, buy private mortgage insurance (borrowers usually pay 20% of a home’s value to avoid this) and make bigger monthly mortgage payments. Plus, it can be dangerous to be so highly leveraged. But in an expensive housing market, it can be the only way to afford a home.
Doug Duncan, chief economist of the Mortgage Bankers Association of America says, Most banks offer special mortgages to low- and moderate-income borrowers because the Community Reinvestment Act requires financial institutions to provide a certain share of business to these economic groups. But no- and low-down options for jumbo loans (higher than 300,700) are harder to find.
The costs of the higher interest rate from the 80-20 mortgage are sometimes off-set because there is no mortgage insurance built into the loan. The State of California only requires mortgage insurance for all home loans exceeding 80% loan to value or LTV. An 80-20 loan allows the home-owner to step aside the insurance requirement, thus having a lower monthly payment.
If your goal of an 80-20 loan is to have a lower monthly mortgage payment, another option is the T.A.M.I. program. The T.A.M.I. program includes mortgage insurance where as the 80-20 program doesnt require mortgage insurance. Robin M. Root; a senior level loan officer says the T.A.M.I. provides lender-based mortgage insurance in exchange for a slightly higher interest rate. Since the IRS, allows a deduction for all interest paid for home loans, the cost of the mortgage insurance is tax deductible. And, unlike the 80-20 loan program, when the buyer has equity built up, the homeowner has the flexibility to open a home-equity loan for home improvements or cash emergencies.
December
11
2010
If you are in the market for a mortgage to buy a house you’ve no doubt heard the term “points” being thrown about. No, they aren’t talking about the score from last night’s NFL game; they are actually talking about a fee that is paid to the lender of the mortgage you are taking out to buy your home. Points can have impact on your mortgage, both positive and negative, so being informed about how they can help and hurt you is crucial when determining if a mortgage loan is the right fit for you.
In the simplest form, points are a onetime fee that is paid to a lender and are used to secure a loan below the current market interest rate. Each point represents 1% of the mortgage amount. So if you have a mortgage for 150,000 then one point would be equal to 1,500. A seller would pay points on a loan to reduce the interest rate of the loan which could potentially save them much more than the points cost up front over the life of the loan.
Points are not always paid for by the buyer; they can sometimes be paid by the seller as well. A seller would typically pay for points when they are in a rush to sell the property or have been having a hard time finding buyers for the property. In this case it is used as an incentive to get the buyer to move on the property.
There are times when it may not be in your best interest to purchase points. A rather simple way of doing this is to determine the payback period, or length of time it takes you to pay back the points you purchased up front. First, determine your monthly payment amount without points, and then with points. If you are paying 900 without points and 800 with points, your monthly savings is 100. Now take the total cost of the points, say 2 points on a 150,000 mortgage which would be 3,000, and divide the cost by the monthly savings. 3000100 = 30 months. It will take you 30 months to realize your savings of 100 per month. For a 30 year loan, it would make a lot of financial sense to purchase the 2 points up front if you can afford them.
Where you have to be careful with points is when you don’t plan to be in your current home long enough to reach the payoff. You also have to keep in mind that the cost for points is above and beyond your down payment on the house you want to purchase as well. It can add significant up-front costs, which is why it is a wise move only if you plan on occupying the house for a long period of time and have significant cash up front to be able to afford it.
One final note about points – they are tax deductible as they are considered prepaid interest. They are deductible by the buyer, even if the seller pays for them. Points are deductible fully in the year they are paid for a new purchase, and over the life of a loan for a refinance.
December
4
2010
All of us would like to save money on mortgage payments, but not many of us know how to go about it. Following some simple tips on how to get the best mortgage rate would help improve your financial situation and also help in avoiding mistakes before you actually apply for refinancing.
One can save thousands of pounds by simply garnering for the lowest interest rates in mortgage refinancing. This would help in effectively lowering your monthly dues.
Once you have totally understood the risks that can be associated with variable interest rates, it becomes easy to qualify for a low an adjustable rate of Mortgage. Most homeowners in pursuit of qualifying for best mortgage rates try to keep a track of low interest rates. It is at this time when homeowners with adjustable mortgages rates can reap benefits of low payment amounts. The only problem with this type of mortgage scheme is that when interest rates are on the rise your monthly installment payments also shoot up simultaneously. This leaves us high and dry and in an unstable financial condition.
For any kind of mortgage refinancing, one needs to check on the stability of the credit status. In order to even qualify for a lower mortgage rate one has to improve the credit. In case your financial situation has improved since the time when you bought your home, you can upgrade for a better rate by just applying for the same. All of us have faced credit problems at some time or the other. But for acquiring the best mortgage rates, building up a good credit account is of prime importance.
A sound advice would be to invest some time in developing your credit bit by bit. This adds to your financial confidence as well as saves you much of your money in the long run. If you could transcend your search for the best mortgage rates into the lowest market rates available you could be setting yourself up for the future. Request your credit reports from credit agencies and scan for any kind of irregularities.
It is advisable that you immediately ask the agency to remove the irregularities since these might affect your credit rating, which in turn will affect your hopes of securing the best mortgage rate for yourself.
Most mortgage loans come with a term length, in other words the given span of time for repayment of the loan. Though most mortgage loans come with a thirty-year term length; there is however forty and fifty year terms available too. Most short-term mortgages are usually considered low risk and come with lower interest rates.
While searching for lower interest rates, be sure to compare multiple mortgage offers which detail out lender fees as well as closing costs. Try to compare and contrast the best mortgage rates of various lenders in such a way that you get the best refinance loan package deal. Before you choose a lender, make sure that you have contacted credit unions, mortgage companies, banks, etc. Ask for best mortgage rate from various financial institutions before you accept any offers. You will save your time and money by contacting mortgage brokers as well and you can also submit your information to different lenders for their opinion.