Mar 16
adminCheap Mortgages
Even with a Chapter 7 bankruptcy in your credit report you can still qualify for a sub-prime mortgage. Once approved, you can then use your mortgage to improve your credit history, qualifying you for lower interest rates in the future.
The Effects of a Bankruptcy
A bankruptcy will affect your credit score based on how long ago it was. So a bankruptcy discharged less than a year ago will qualify you for a D loan. These types of loans usually require 30% down and a high interest rate.
By waiting a year after a bankruptcy, you can qualify for a B or C loan with their lower rates and down payment requirements. If you wait two years, you can qualify for a FHA home loan. In four years, you can qualify for a conventional loan.
Besides your bankruptcy record, financing companies will want to see a steady payment history. This includes your credit and rent payments. Cash reserves for six to twelve months will also offset your credit risk.
Search For Lenders
Not all sub-prime lenders evaluate borrowers the same way. So you may qualify for a B loan with one lender and a C lender with another. To find who will offer you the best financing, you will need to request quotes from several lenders.
You can request quotes over the phone or online. Online sites will provide a fairly accurate quote based on the generic information you provide. You can also use free mortgage broker sites which provide home loan quotes from several different financing companies.
Before You Apply
Before you apply for your mortgage, make sure that all accounts involved in your bankruptcy have been closed. You can request a copy of your credit report from the reporting agencies to check your information. You may also consider including a letter in your report explaining the circumstances of your bankruptcy. Some lenders will look more favorably on your account if illness or job loss affected your finances.
After Your Mortgage
Once you have purchased your home, plan on rebuilding your credit history by making regular payments. Within two years you may qualify for a conventional mortgage with low rates.
Mar 09
adminCheap Mortgages
Introduction:
Shared ownership mortgages were formed to help people buy the property of their own, when they cannot afford to buy full property at a time. The share of property is usually 50%, but may also be 25% or 75%, and is purchased from housing associations. Thus you own a certain shares of property and pay rent on the remaining part of the property. You will not be asked to share the property with someone else and may mortgages and rent for the property.
Demands for shared properties are growing continuously and there are limited vacant properties and even if you meet the criteria for shared ownership, you may be asked to wait for some time. Once you have become a shared owner, you are bound to pay all utility bills and taxes and your responsibilities include that of a full owner. Most of the housing associations provide you the opportunity to purchase share and become a full owner as and when you can afford to buy the shares.
Social Landlords:
Social landlords are non-profit organizations such as housing associations or housing societies. These social landlords provide home for rent and sale to those people, who cannot afford to buy.
Shared Ownership Lease:
If you buy a property as a shared owner, you enter into a contract with the social landlord. The contract is a legal document, which provides you a lease usually for 99 years. You occupy the house and your responsibilities include that of a full house owner. Social landlord further provides you the opportunity to purchase full shares as per the certain clause provided in the contract. As it involves legal documentation, you are advised to legal help before entering into contract.
Houses offered for shared ownership:
Renovated houses and flats are generally offered for shared ownership. Sometimes a few new houses may also be offered. Prices of these houses or flats are generally below than the prices of properties available sale in the market in the same area.
Shared Ownership Mortgages:
The amount of share, you purchased for a shared ownership is mortgaged, which you will have to arrange and the rent for remaining part of the house will be deposited with the social landlords.
Mortgage Selection:
Before selecting any of the mortgage option, you should see your financial health and repayment capabilities. You will also have to pay service charges, charges for utilities, and other taxes. On the basis of all your financial capabilities, you should select a share 25%, 50% or 75% of the property. The benefit of higher share will allow to pay less rent for the remaining part of the property. The common part of mortgage includes fixed rate mortgage and adjustable rate mortgage.
In fixed rate mortgage, the interest rate remains same for throughout the mortgage periods. Some mortgage may be as high as for 30 years and some may be lower periods. The benefits of fixed types of mortgage are that you can plan in advance the amount to be paid.
In adjustable rate mortgage, interest rate generally starts lower than the fixed rate mortgage and may vary once or twice during the year as these rates are linked to a financial index. Depending on financial index (Treasury Security Index for United States) the rates may be either low or high. As the initial amount in these rates is always lower than the fixed rate mortgages, a more mortgage loan can be secured for the same burden.
Mar 02
adminCheap Mortgages
Bank managers are probably the most risk-averse individuals you are likely to meet without proof of a regular salary and sound financial track record you may presume a frosty reception when you ask about borrowing. However, there are options available for people who dont conform to the norm.
If you are self-employed or have an erratic income, you can consider a self-certified mortgage. As the overall mortgage market has become more flexible and competitive in the past few years, the amount of lenders offering self-cert mortgages has increased. Whereas they used to be the preserve of specialist lenders, and come with pretty strict terms and conditions, you can now find self-certs from most of the major high street banks and building societies.
The set up
Normally, lenders will look for a larger deposit when you take out a self cert mortgage 25% is usual. As far as proving your earnings, some lenders such as the banks and building societies, will look for certified accounts for the last 3 years. They may also require bank statements and carry out credit checks. However, there are some mortgages available where the lender only asks for you to verify that you can afford the repayments.
Whos it for?
This type of mortgage usually caters for self-employed people, but there are others who can benefit. People who work overseas, or who earn bonuses that do not show as part of their salary may choose to self-certify. Business owners and company directors sometimes award themselves a minimal salary, but have a larger income through dividends, for example. This can be useful when it comes to tax management, but make finding a conventional mortgage harder. If you have an erratic income, you may want a more flexible mortgage that allows you to increase or decrease your monthly payments according to your current situation.
The drawbacks
You may find the terms less generous than with other types of mortgage, and the lender may apply Higher Lending Charges or an indemnity to protect them. The FSA recently highlighted the disturbing trend of some brokers encouraging borrowers to inflate their reported income in order to gain a larger mortgage. Remember it is a criminal offence to lie about your income, and over-estimating what you earn could mean that you find yourself with monthly repayments that you cannot afford. If you are subsequently unable to meet repayments your home could be repossessed.
Feb 23
adminCheap Mortgages
During the past five years lenders have seen a boom in the demand for second mortgages as borrowers look to capitalise on the equity in their home. The low cost of borrowing coupled with the spiralling value of homes in the UK has led to a substantial strengthening of the equity position of many a homeowner. The equity position of some homeowners is in fact so strong that they now find themselves in the fortunate position of having more equity in their home than they have debts secured against their home on first mortgages and other loans.
Buoyed by the healthy state of positive property equity confidence is running high when it comes to homeowners committing to further borrowing. Many are taking the opportunity to secure second and even third charge loans against the equity in their property in order to release cash funds. Even the more conservative borrowers are now beginning to see the light, despite experts predicting of an imminent slowdown in the housing market.
If you’re thinking about releasing equity in your home through a second mortgage, here are some things you’ll need to consider before you take the plunge: -
Interest rates on second mortgages
The interest rates charged on second mortgages are often higher than those that are levied on first mortgages. This is because lenders see second mortgages as a higher risk than first mortgages and so compensate for this risk through fixing higher interest rates on second mortgages.
The increased risk factor on a second mortgage is down to the fact that these types of mortgages are a second charge on the property. That is to say that in the event of you defaulting on repayment to the point that your home is repossessed, the first mortgage lender legally gets first bite of the cherry when it comes to recovery of the loan. For second loans secured against the property, the lender has to wait its turn, running the risk that it may recover only part of the loan advanced or in some cases none of the loan advanced.
Lending criteria
Different lenders have different lending criteria for second charge mortgages. Whilst all lenders are likely to assess applicants for a second mortgage on the value of their home, their ability to repay the loan and their current income to debt ratio, not all lenders will give the same weight to these factors in the final analysis. This is why you may be rejected by one lender but accepted by another on an almost identical second mortgage offer.
Can you afford the repayments?
For a lender to be convinced that you are able to meet the repayments on a second mortgage, you’ll need to be sure how you’re going to repay the loan. You should never take on a second mortgage without first planning how you will pay the money back.
Different types of second charge mortgages
There are several different types of second charge mortgages to choose from. Be sure to get information on all your options and select the type of second mortgage that is most suitable for your circumstances. It is advisable to never borrow more than the current equity value in your home.
Feb 16
adminCheap Mortgages
In these times of rising interest rates, second mortgages or first mortgage refinancing might be just the thing to keep your housing costs from going through the roof. In a recent article in Parade magazine, How To Save on Your Mortgage, Lynn Brenner considered the question,
Will Your Mortgage Rate Go Up?
If you have a fixed-rate mortgage, you have nothing to worry about. But millions of home owners are sitting on a financial time bomb: Their monthly payments are preset to skyrocket sometime in the next 18 months. These owners have hybrid adjustable rate mortgages (ARMs), which start with a fixed rate for three to 10 years but later are adjusted annually.
Lets say you bought a house in 2003 with a 200,000 three-year hybrid ARM. For the first three years, your rate was about 3.8% and your monthly payment was 930. But this year, your rate could be reset to 7.3%, says Greg McBride, senior analyst at Bankrate.com, a personal finance site. That means your monthly payment could jump to 1,334.
Brenner goes on to recommend that, If you have an adjustable rate mortgage thats due to adjust this year or in 2007, consider refinancing. Taking out a new loan with different terms and paying off the old one can save you money. Refinancing does not make sense for everyone, however. If you intend to move in a year or two, for example, you may not save enough to recoup the costs of refinancingusually about 1.5% to 2% of the loan.
If you plan to stay in your house 10 years or longer, a fixed-rate mortgage is worth the extra cost to avoid rate increases. A hybrid ARM is a little less expensive, but you are vulnerable to future rate hikes, so look for one whose fixed rate lasts as long as you expect to stay in the house.
Benefits of Fixed-Rate Second Mortgages
Fixed-rate second mortgages can be less expensive than refinancing first mortgages. They usually have lower annual percentage rates (APR) than other forms of borrowing and they can save on taxes because the interest on mortgages is deductible. Second mortgages are also easier to get than unsecured loans or lines of credit.
Like a first mortgage, a second mortgage payment consists of principal and interest. Unlike a first mortgage, nothing is put into escrow to cover expenses such as homeowner insurance, property taxes and Private Mortgage Insurance.
Applying for a second mortgage is often faster than refinancing a first mortgage and requires a lot les paperwork. Its safe and secure to apply online from the convenience of your own home.
Mortgages as Products
Mortgages are products, just like automobiles or new living room furniturejust a whole lot more expensive. A home is often the largest financial transaction people ever undertake. Before signing the loan papers, get information from several lenders. Compare all the important information such as interest rates, discount points, closing costs, legal fees, title and insurance, etc.
If you have bad credit, you will be charged a higher interest rate, but according to The Equal Credit Opportunity Act, you cannot be denied a loan on the basis of race, color, religion, national origin, sex, marital status or age.
To get current rates on mortgage refinancing, visit www.easysecondmortgages.com. For a competitive second mortgage quote, check out www.easymortgagerefinancing.com.
Feb 09
adminCheap Mortgages
Reverse Mortgages – Get The Money You Need – Part 1 Of 4
Reverse Mortgages are loans that allow you to borrow back the equity in your home. Just as you once paid the bank, the bank now pays you. Isn’t that a nice change?
If you are 62 years of age or older, they are a way to borrow against the equity in your home (the value of your home minus any mortgage debt you now have) to provide you with tax-free income. Seniors struggling because of falling retirement account balances and increases in the cost of medical care are looking for new sources of cash to maintain their standard of living.
The amount you can borrow depends on your age, the value of your home and interest rates.
Fortunately, you continue to own and live in the home for the life of the loan. There are no loan payments until you sell the house, die or move out for a period of a year or longer.
You can get the money as a line of credit, a monthly payment, a lump sum, or a combination of all of these. A monthly payment is a guaranteed of income for as long as you live in your residence, whereas; a lump sum could be used as you wish, such as to purchase an annuity that could provide you with a life long income. With a line of credit, you don’t have to pay interest on money you haven’t withdrawn and your money will earn interest while it’s waiting to be used by you.
A Reverse Mortgage might be worth considering if:
-You plan to stay in your home.
-You want to enhance your lifestyle and enjoy your golden years.
-You want funds for major expenses such as medical bills, or for major home repairs.
-You need additional income to live on and your only significant asset is your home.
-You want the peace-of-mind that comes from knowing your financial needs are taken care of.
-You own your home free and clear, or you have a small first mortgage.
-You don’t plan to leave your home to your heirs.
What are some of the potential advantages of Reverse Mortgages?
-It can help you maintain your financial independence or improve your quality of life.
-You can stay in your home and keep title to the property.
-The money you receive is tax-free and is not usually considered income.
-You make no payments until the loan ends or the house is sold.
-Your income is not a consideration in obtaining the loan since there are no payments until the loan ends.
-You cannot owe more than the value of the home at the end of the loan.
If you’re a senior, I hope you can see the benefits of taking advantage of this income source, if you need it.
This is a four part series, one each week right here, same location. In Part 2 next week, we’ll explore much more, including the drawbacks of a reverse mortgage and what types are available.
Feb 02
adminCheap Mortgages
Reverse mortgages can be a great solution for seniors who wish to remain in their home but are having difficulty making their monthly payments and meeting other financial obligations. If you are over age 62 and own your own home, the bank will actually pay you money so you can stay in your home, rather than the other way around. It is important to collect as much reverse mortgage information as possible before deciding whether to take out the loan.
Anyone is eligible for a reverse mortgage loan, even if they have no income. Your home must be a single family residence in a one to four unit dwelling, a condominium or some type of manufactured home. Cooperatives and most mobile homes are not eligible. The home must be at least one year old and you have to first meet with an authorized counselor.
You can obtain the loan as a lump sum payment, a fixed monthly amount or as a line of credit that you use whenever you need it. The money can be used for just about any purpose. This can include paying property taxes or medical bills, home repairs and improvements, paying off credit cards or just daily living expenses. The amount of money you receive depends upon your age, the amount of equity in the home, its appraised value and current interest rates. The reverse mortgage loan does not have to be repaid until you sell the home, permanently move out, or pass away. Your loan could also become due if you allow the property to deteriorate, you fail to pay property taxes or hazard insurance, or if the last surviving borrower does not occupy the home for 12 months in a row due to illness.
There are some fees involved with a reverse mortgage loan, similar to those you would incur with a regular mortgage. These include origination fees which cover the lenders operating expenses and are currently capped at the greater of 2,000 or 2% of the maximum FHA loan limit. In addition you will be required to take out mortgage insurance and pay an appraisal fee which ranges between 300 – 400. Other closing costs include fees for a credit report (usually under 20), flood certification, closing and title search, document preparation, recording, courier, pest inspection and a land survey. In addition, a monthly service set-aside fee of 30-35 per month will be charged.
When you meet with your counselor, you should be able to obtain all the reverse mortgage information you require before you make your final decision. It will be nice to have the option of staying in your own home if that is what you desire.
Jan 26
adminCheap Mortgages
More than 25% of homeowners are paying for their homes with an interest-only mortgage say the Abbey. The reason is obvious their monthly payments are much less. For example, a 125,000 interest only mortgage at an interest rate of 5% and repayable in 25 years time, costs 525 per month – but on a repayment basis the monthly cost rises by 210 to 735 per month.
Understandably, this level of cash saving has proved highly popular with first time buyers struggling to get the feet on the property ladder and others working on a tight monthly budget. But there’s a time bomb lurking. 37% of homeowners with interest only mortgages are failing to save any money for repaying the mortgage when the mortgage capital eventually becomes repayable at the end of the term.
The Financial Services Authority (FSA) is concerned about this problem so last year they ushered in new rules requiring lenders to seek evidence from new borrowers about the steps they’re taking to repay the capital. And it won’t be sufficient for the borrower to say that they intend to repay the mortgage by selling the property. From now on, the FSA is likely to judge any new mortgage that is granted as being miss-sold unless the application includes details of a verifiable repayment vehicle which is likely to generate sufficient to repay the mortgage. And, if the figures don’t stack up, the lender will be in hot water with the FSA.
The ideal type of repayment vehicle they will be looking for will be an existing personal equity plan (PEP) or an Individual Savings Account (ISA). Even the 25% tax-free cash from a personal pension plan (PPP) will be acceptable. But borrowers will have to provide evidence to the lender that these financial arrangements are in position just saying you intend to do it won’t wash!
From reactions so far, we can see that individual lenders are interpreting the FSA’s rules in different ways. For example, take the Nationwide Building Society: their new rules say that you won’t qualify for an interest only mortgage if you plan to repay using an inheritance or are relying on future pay rises. Even if you intend to fund your repayment investment from bonuses rather than from regular income, you’ll still be required to show that the bonus scheme exists and that the expected level of savings from bonuses are realistic.
However, the Nationwide Building Society will agree an interest only mortgage if you aren’t a first time buyer, the mortgage you want is less than two thirds of the new property’s value and you have at least 150,000 of net equity in your existing property.
Lots of mortgage advisers seem to agree that interest only mortgages should only be used as a last resort when income is tight. That’s because whichever investment vehicle the borrower uses to repay the mortgage, the investment returns are never guaranteed and it could fail to deliver sufficient capital at the end of the term to fully repay the mortgage. This means there’s an element of risk involved. Therefore, many advisers prefer to be sure and recommend a repayment mortgage where there is absolutely no risk of a shortfall.(They may have in mind the desirability of avoiding any risk exposure within the advice they provide although this is covered by their professional indemnity insurance!)
Having said that, some advisers will acknowledge that an interest only mortgage can be useful if the borrower plans to simply shelter under the mortgage’s lower repayments as a temporary stop gap of say four or five years, and then switch to a repayment mortgage. Of course, the FSA will still expect the borrower to provide evidence to the lender that a suitable investment or savings plan is in place prior to the borrower releasing the interest only mortgage.
However, in our view, if advisers do recommend an interest only mortgage, they should recommend a scheme where the borrower can make penalty free overpayments. With such mortgages, the borrower is only committed to paying the monthly interest, but as and when spare capital becomes available, money can be paid in to reduce the outstanding mortgage. There are plenty of mortgages available like this. Most allow the borrower to repay at least 10% of capital each year, penalty free, but please check the details before you sign up for the mortgage.
Jan 19
adminCheap Mortgages
When you are dealing with mortgages, it is important to check twice the calculation as well as the English when the lenders specify the word No cost Mortgages.
The fact is that no cost mortgage means it will cost something, now the question arises in your mind how much it cost the answer is the cost depends on what kind of mortgage you plan to go. There are two types of basic cost involved while getting mortgage, In one type of cost the lender cannot control that includes the appraisal cost, filing fees, title search, attorney fees etc, and the next type of cost is the lenders cost that is loan application fees, credit check, admin fees and processing fees etc, with out which nothing is possible.
To few lenders no cost means they do not want any cost from their pockets, all the cost will be added in the loam amount, for instance the loan cost is 5,000 and you plan to borrow 150,000 in this case the 3,000 gets added up with the loan, and ultimately you will be borrowing 1,53,000 that is with interest for the entire amount. In this case when you take 30 years loan at 6.25% rate interest the monthly interest with principal is 942.05 and the interest is 18.47, which is 18.47 per month more than 923.58 you would make on 153,000. You may not realize you are paying interest for 3,000 every month until you clear the entire amount, in addition to that this 3,000 wont be paid off till the 20th month of mortgage well into the subsequent year its only after 19th payment that the principal you owe will reduce below 150,000 to be exact 149,948.25.
How does this sounds to you, this is the way no cost mortgage works, you pay accumulated interest on unpaid balance of the loan every month and to pay off the 3,000
You would be paying 18.47 besides the interest you pay for 1,50,000. So if you have paid that 3,000 from your pocket you would be paying the interest with principal for the actual amount you are borrowing, just by the word no cost mortgage you dont start paying the loan until your loan reached 20 months.
In some cases you may not pay any cost in the beginning but you will end up paying with closing cost and sometimes the lender will take in charge of paying all the cost like application fees, commission, attorney fees and then in turn charge the borrower with high interest rate.
By this time you could get a clear idea how much it will cost you for no cost mortgage
No cost loans are very expensive, just because its convenient that you dont spend a penny from your pocket it is better, in a long run it cost you more than to spend from your pocket, so it is important to remember that you are not really saving money by opting for no cost mortgage.
Jan 12
adminCheap Mortgages
Interest rates can affect the type of mortgage you choose and dictate when its wise to make a change. Here are a few of the factors that can be affected by a swing in interest rates:
Choosing a mortgage
When interest rates are rising, a fixed-rate mortgage is usually a good choice, since it locks in the current rate and protects you from the higher rates to come. When rates are falling, an adjustable-rate mortgage (ARM) becomes more attractive, as its interest rate changes periodically (usually every one, three, or five years), allowing you to benefit from the new, lower rates.
Some people choose an ARM even when rates are rising. This is because the interest rate on an ARM is substantially lower — as much as two percentage points lower than that of a 30-year fixed-rate mortgage. That means youll pay less until mortgage rates have increased a full two percentage points. After that, youll pay more than a fixed rate.
There are also hybrid ARMs, which have a fixed rate for a certain time period — typically three to 10 years — and then become adjustable. (A 51 ARM, for example, has a fixed rate for five years, after which the interest rate is adjusted annually.) Hybrid ARMs can be the right choice if rates are likely to rise in the short-term but then flatten or fall. However, these long-term trends can be difficult to predict.
Refinancing
A change in the interest rate trend can make it worthwhile to switch to a different type of mortgage. When rates are falling, you can save money by moving from a fixed-rate to an adjustable-rate mortgage, so you can benefit from the lower rates. If interest rates appear set for a sustained rise, switching from an ARM to a fixed-rate mortgage can lock in a lower rate and protect you from higher payments. However, you should make sure that any closing costs dont offset the benefits of refinancing.
For more information on mortgages and interest rates, visit http:www.lendingtree.comcecyourhomeyourmortgageinterest-rate-trends.asp?
Older Entries
RSS