Home Loans

Refinancing Online - Can You Really Save Time and Money?

2010-10-28T02:18:00.001-07:00

You've decided to refinance your home mortgage loan. Interest rates are the lowest they have been in decades. But, you are wondering if you should refinance online.

Can You Really Save Time And Money Refinancing Online?
One of the largest financial aspects in people lives could not escape the Internet. Refinancing online is an integral part of the mortgage industry. This has become a paradigm shift that greatly helps benefit the consumer today. Now there is much more competition, which gives more financial power to the home owner wanting to refinance. You can now get the information you need in regards to home mortgage loans in minutes, instead of weeks.

Refinancing Online Is Much Easier Today Than In The Past
With today's online mortgage brokers; it's easy for you to get the information you need. This takes far less time, because there is little paper work involved while shopping for the best deal online. This can help you get a lower interest rate, because mortgage brokers are very competitive to earn your business. One of the biggest advantages is you don't have to run all over town pulling credit reports and talking to multiple lenders. Online mortgage lenders can give you multiple quotes from many lenders.

Refinancing Online With Easy Forms - Only Takes Minutes
With easy online forms, this takes a few minutes instead of hours without the hassle of talking to several high pressure loan brokers. There is no commitment until you are comfortable and have shopped around to find yourself the best deal for refinancing your home mortgage.

Refinancing In The Past Was A Hassle
Refinancing your home mortgage in the past (before the Internet), was a real hassle for both mortgage lenders and borrowers. The process of gathering information to compare rates, fees, points and loan programs was a time consuming task. There was not a centralized information source for mortgage programs and to go for refinance home loans, rates and financial advice for consumers. A home owner would talk to a couple of banks and just go for what seemed to be the lowest rate and fees for their situation.

Home Owners Now Have The Advantage Of Refinancing Online
Home owners can now access current financial information and news. Looking for the best rates and fees for refinancing between lenders, takes a few clicks of the mouse. Within seconds you can now have all the information you need. With mortgage calculators, loan programs and financial tools, the borrower is now empowered from the Internet.

Thousands Everyday Are Now Using The Internet For Refinancing
The Internet is now the fastest and hassle-free way for refinancing your home mortgage online today. Many borrowers use the Internet when looking for resources and doing research before refinancing. Most of the consumers now days are completing the entire process online, while saving time and money. Using the Internet for all areas of finance has made life easier. With enumerable sources of information online that the Internet provides, it has helped consumers make and save thousands of dollars and countless hours of research. Home123 at http://www.home123.com is offering Mortgage Loan Calculator to plan more securely about your finances when applying for any mortgage plan.

How much is too much for Mortgage Closing Costs?

2010-10-14T04:35:00.000-07:00

Something that is very important for you to take into consideration when purchasing or going to refinance home loans for your home is the closing costs.

I would love to tell you that closing costs are not expensive, but believe me they are. Once you add up all the fees' involved, such as points, taxes, title insurance, county costs and various other fee's, it really begins to add up.

The first thing you need to understand is that nobody works for free so be prepared to pay at closing.

The total amount of fees' depends on quite a few things. For instance, the percentage of loan origination fees' (points) the lender is going to be charging you. Another large fee is the title search and insurance. The title fee varies by state and is determined by the amount of the home.

Closing costs on average should not exceed 5% of the total amount of the purchase price, and this does not include the down payment.

The total amount of these fees' does not all go to the lender. Generally only the loan origination fee and the application fee go to the lender.

The rest of the fee's such as the appraisal, credit report, interest for the period in between closing and your first monthly payment, home ownerâ€™s insurance, title insurance, pro rated property tax, etc., go to their appropriate institutions when applying for the home mortgage loan.

Before you go to closing, the lender is required by law to send you a Good Faith Estimate (GFE).The GFE disclose an accurate estimate of the entire fee's you will be responsible for at closing.

Make sure you go over the GFE with a fine tooth comb, and if there are any fees' you donâ€™t understand, call your lender or broker and ask for an explanation.

As I stated earlier, you must be prepared to pay closing costs. Closing costs are not cheap, but you should not pay a penny more than what is required.

If your closing costs are somewhere between two and 5% of the amount of the mortgage, you should be in good shape.

If they are drastically higher, consider finding another lender.

Remember, do your homework. Put yourself in a position to understand all the jargon that fills up all the paperwork you will be signing.

Also, take your time and shop around, always look for the best rate at the lowest possible price. My recommendation for you people visiting this article is to visit http://www.home123.com and use Mortgage Loan Calculator for better decision when applying for a loan.

The Certified Guide on How to Avoid the Most Common Home Mortgage Mistakes (Part II)

2010-03-04T20:22:00.000-08:00

TITLE INSURANCE

Paying too much for Title Insurance is a very common mistake. All lenders will require Title Insurance each time a mortgage loan is granted. This is because it insures that the title to the property is free from any surprise liens that occurred previously. So, in essence, it covers the timeframe prior to the mortgage closing. That is why a new one needs to be done even on a refinance. Generally speaking, law regulates title policy fees so all title companies charge the same amounts.
There are a few different things you can do to save yourself money on title insurance. If you are refinancing, you can save over 50% by providing your old title policy and get the “refinance” rate instead of the higher “basic“ rate. Even on a purchase, you can save 20 to 25% by getting the “re-issue” rate if you get the old title policy from the seller.

RATE SHOPPING
Most people will check the Internet or pick up the newspaper to look up current interest rates. What you see isn’t always what you get. Unfortunately, there are many ways to get hurt when shopping for the best rate:
Short Pricing — It is not necessary for lenders to state the “lock-in” duration when advertising a rate, so while a rate may sound good, it may not allow enough time for you to close on your loan. Most people don’t ask how long the quoted rate is guaranteed for — so make sure you do!
Low Ball Pricing — Some companies will lure you into a mortgage application with promises of a low rate, only to have the rate changes for the worse just before closing. They may tell you your rate has expired or that the program is no longer available, or they may even delay the closing to break the lock. It is not nearly as important to shop rates as it is to shop for a reputable lender.
Products — With all the different products and options available, borrowers need a good mortgage professional to help choose the right one that will best suit their needs and goals. After all, a mortgage is typically the largest financial transaction people make in their lifetime. It is far more costly to get the best rate on the wrong product that it is to get a competitive rate on the right program for you.

POINTS vs. NO POINTS
So you’re in the market for a mortgage. After hearing about all the options and products, your head is probably spinning. If that weren’t enough, after you pick your mortgage, you then have to decide whether to pay points, and how many.

What is a point, anyway? Points are prepaid interest. One point equals one percent of the mortgage amount. One point on a $200,000 mortgage is $2,000.

People are often tempted to pay points because it will reduce their interest rate. And why not? If it saves you money in the long run, then it must be good. But in the real world, it usually doesn’t work out that way.

Let’s look at an example: You take on a $200,000 mortgage with a 30-year fixed rate. Your lender offers 8 percent with no points, or 7.75 percent with one point, or 7.50 percent with two points, and so on.

Generally, one point equals a quarter of a percentage point. It’s not a hard and fast rule, but it usually works out that way.
• The 8-percent/zero-point option equates to a monthly mortgage payment of $1,467.
• The 7.75-percent/one-point option equates to a $1,433 monthly payment, but with $2,000 paid up front.
So your choice is: save $2,000 now, or save $34 each month going forward.

It’s quite natural for you to make a few quick math calculations: $2,000 divided by $34 equals roughly 59. So 59 months (nearly five years) from now, the point you paid will pay for itself.

This is probably how some mortgage bankers will explain it to you. In turn, you might respond by saying: I plan to live here more than five years, so the point makes sense. That can be a big mistake. Worse yet, it’s the kind of mistake that goes unnoticed. The simple calculation is flawed; that’s the whole problem. This is one case where simplicity isn’t good.

Here’s why. The question really boils down to how you can best use that $2,000. You can pay a point, you can invest it, you can pay down other debt, or you can put it toward a bigger down payment on your house. If you plow it into the down payment, now you have a mortgage balance of $198,000. This changes the original choice you were faced with above. Now the choice is:
• The 8-percent/zero-point option gets a monthly mortgage payment of $1,452 with the lower starting balance.
• The 7.75-percent/one-point option equates to a $1,433 monthly payment, but with $2,000 paid up front.
So now your choice is: put the $2,000 toward the down payment, or pay the point and save $19 each month going forward. Now when you do the quick math: you will divide $2,000 by $19 and come up with about 105 months, or nearly nine years. This isn’t quite the no-brainer the previous decision was.

The average family changes residences about every nine years, according to the National Association of Realtors. And first-time homebuyers move frequently. The Mortgage Bankers Association says the typical homeowner refinances once in nine years. All this brings us to the average life of a mortgage, which is less than five years. So, more often than not, borrowers will find themselves with a new mortgage before one point pays off.

The case for avoiding points is even more compelling when you refinance a mortgage. That’s because the tax treatment is less favorable. The points paid on a first mortgage when you purchase a home are fully deductible on your federal taxes that year. That’s one of the selling points of points to begin with. But on a refinance, you must amortize those points over the life of the loan. This leaves you with slim pickings, at best, on the tax benefit side of the equation. On a refinancing with $3,000 of points paid, you get to deduct just $100 per year on a 30-year loan.

Lenders love to take your point money. But you should keep it and put it toward a sure thing, like cutting your loan size.

PRE-PAYMENT PENALTIES
Watch out for pre-payment penalties. I don't like prepayment penalties under any circumstance and would do my best to avoid them. If you are getting a great deal on a loan that has a pre-payment penalty, try to keep it to a one-year period. Additionally, make sure it's a "soft" pre-payment penalty. That means there is no penalty if you sell your home, and you can reduce your principal up to 20% per year. The only time you pay the penalty with a soft pre-payment penalty is if you refinance. Still, there are so many options out there, why be stuck with a lemon like a pre-pay?

NEGATIVE AMORTIZATION
Negative amortization is when the loan balance increases rather than decreases. This is a dangerous game and is offered in exchange for a lower payment. An example might be where the borrower makes a payment based on a low 4% rate but the actual rate being charged is 8%. The difference between what is being charged and the amount paid is added to the loan balance. Just like a credit card! You pay interest on the interest as well (ouch). Your home should not be treated like a credit card. If the situation persists and home prices level off or even depreciate like they did 10 years ago, you may be unable to sell your home because you owe more than the value. You may also be unable to refinance the loan because you exceed the maximum loan to value limits. Avoid this like the plague.

PROCESSING FEES

The most damaging of all could be the additional processing fee (this may have a separate or different name). This is really “points.” What is worse is the fact that, because the lender is hiding it as a fee rather than points, they rob you of the tax deduction.

The Certified Guide on How to Avoid the Most Common Home Mortgage Mistakes (Part I)

2009-12-16T02:53:00.000-08:00

SELLER CONTRIBUTIONS

A "seller contribution" is one of the best-kept secrets in the home-buying process. That’s when the seller of a home puts up some of the money needed toward the buyer’s closing costs. It can mean the difference between a sale of a home and no sale.

Seller contributions can be negotiated at the time of a home purchase by having the seller pay closing costs rather than or in addition to a reduction of the home sales price.

A seller contribution can seal a home purchase in some cases where the buyer does not have enough cash for both the down payment and closing costs. Many people can qualify for the payment on a home mortgage but encounter challenges in gathering the necessary cash. Often, people worthy of a mortgage don’t have a lot of ready cash sitting around at the moment they find their dream house. Don’t let the idea of a seller contribution scare you. An experienced mortgage broker or banker can help you figure out the best way to put a deal together. He or she should also be able to help you understand the details well enough to be comfortable with the purchase structure.
There are many other benefits of utilizing a seller contribution. Using the money from a seller contribution for the closing costs can free up more cash for a larger down payment. This can reduce or eliminate the need for private mortgage insurance (PMI) and can thereby save the borrower anywhere from $50 to $200 each month in PMI charges. This can also be used to achieve better price break points in the loan-to-value ratio to help the borrower get a better interest rate. Another benefit is the improved pricing or accessibility of "no income verification"
mortgages. This is where the borrower cannot verify the income needed but may still obtain the mortgage by increasing the amount of down payment. If the borrowers have consumer debt with high monthly payments, preventing them from qualifying, they can use the seller contribution to pay off some or all of those debts. This allows them to qualify or significantly reduce their overall monthly payments. Also, closing costs are virtually non-tax-deductible. However, points are still tax-deductible. If paying points, it is very smart to use a seller contribution because while the seller pays the points, they are still tax-deductible to the buyer.

A seller contribution is easy to implement. There are no negative tax consequences to the seller except for a negligible real estate transfer tax in some areas. A seller contribution must be fully disclosed. The amount of seller contribution must not exceed the actual amount of closing costs. The buyer or real estate agent should check with the lender to make sure that they are within allowable limits, normally 3 to 6 percent of the purchase price.

Refinance with a Purpose

2009-11-18T01:22:00.000-08:00

So many homeowners rush to refinance when rates decline. They shop, looking for the lowest rates and lowest fees, but while wrapped up in all the shopping frenzy, they could be missing the big picture. A home mortgage is typically the largest financial transaction that individuals make in their lifetime. While price is important, the paramount element in securing a home loan is the strategy of the program and how it fits into your life plan.

The vast majority of homeowners will secure their mortgages based solely upon the interest rate, and then wonder how to work their financial goals around it. Since there are literally hundreds of mortgage plans to choose from, the far wiser approach would be to begin with the end in mind. First, have a long-term financial strategy in place. Then you can find a mortgage that fits into and helps achieve the goal of that plan.

Just like the lost driver who refuses to ask for directions, most families do not have a financial roadmap to reach their goal or destination. They just “hope” that things will “work out.” When your children’s college education, your financial freedom or your quality of life after retirement hangs in the balance, you can’t afford to just “hope.”

Let’s take an example:

We often see someone refinancing to save $200 per month. They decide to do this not because they are struggling to make ends meet but because it simply would be foolish to throw that money away. After figuring the after-tax effect of the $200 savings, the net for most families would result in a savings of around $140 per month. Unfortunately, there isn’t a lot you can buy with that today. Most borrowers would simply spend the additional monthly savings and not have much to show for it in the long run.

Consider that many long-term, professionally managed financial plans can achieve a long-term rate of return of 12%. This rate of return would cause a lump sum to double every six years. Okay, back to our borrowers who would save $200 ($140 net of tax benefit) per month by refinancing? Let’s assume they have a very young child and have not yet put together a college savings plan. They could, at current rates, borrow $30,000 more and still keep the same monthly payment that they currently have. If invested with a professional money manager or financial planner, that money could double in six years, bringing the total to $60,000 (assuming a 12% rate of return). Six years later, the total would double again equalling $120,000. Add another six years, and the total would be $240,000 in 18 years. Now that’s a great way to get your child off to college!

The above example, while realistic and based upon historic returns, does not provide a guarantee that the results will be as illustrated. But even if only half of the sum were achieved, the total would still be a handsome $120,000 accumulation. That’s still far better than the net $140 per month that would likely be spent without a plan.

It seems so obvious to have a solid financial plan before deciding on such a large monetary undertaking as a home mortgage. If you are not a dentist, would you attempt to perform a root canal on your spouse? (I am not asking if you want to). The obvious answer is no. Why, then, do so many homeowners go for such a long period of time without consulting a financial planning expert before making major financial decisions? That financial planning expert can sometimes be your Mortgage Loan Representative, but check first to make sure they have the expertise to help guide you along the way.

Selecting the Right Mortgage Product Requires More Than Just Information

2009-10-30T22:35:00.000-07:00

Are you considering buying a new home or refinancing your present one? With the range of mortgage products available today, many people feel as though they need a crystal ball in order to make the right choice. It certainly would be handy to see into the future, but there are more prudent and more logical ways to navigate your way through the available options.

There are many mortgage types — pick-a-payment, hybrid adjustable, fixed-rate interest only, reverse, negative amortization, FHA, CHFA, VA, Fannie Mae, Freddie Mac. All these mortgages are referred to as MPs (mortgage products) or MOs (mortgage options).

When you start looking for a mortgage, try to keep an open mind. Be prepared to listen carefully so you can hear about all the mortgage products available to you. What might have been right for your parents, or what might be right for a friend, might not be right for you.
Here are some questions you should ask yourself before you meet with a mortgage professional:
• How long do you plan to stay in the house? You can use a range of years — for example, 2 to 5 years, 6 to 10 years, 12 to 20 years.
• Are you anticipating large expenditures in the near future? For example, you might need a new car, or you may be saving for a child’s college education.
• Is your family getting larger or smaller? Are you planning to have more children, are your children going off to school, or are your children grown and married?
• Is your income remaining steady, increasing, or subject to large variations? Is your spouse working, or is your spouse planning to stop working? Do you anticipate cutbacks in overtime or a slowdown in business?
• Is this your dream house or an interim house? Do you expect to improve it over time?
• Will the monthly payment curtail other activities, such as vacations or hobbies? If so, are you prepared to give those up for a while?
• Will the money from a refinancing improve the property’s value? Will it improve your cash flow, or will it improve your financial condition in some way?

Your mortgage professional will help you evaluate your answers to these questions, and he or she will help you find the right mortgage product for you. A good mortgage professional is like a good physician — both probe for information to help guide them toward making a recommendation that will be best for you.

When you are ready to buy or refinance, be sure to get a referral from someone you trust an attorney, accountant, financial planner, or good friend or relative who has gone through the experience. Remember, the more you know, the better off you are. Perhaps then you won’t need that crystal ball!

Getting to the Truth in Real Estate Mortgages

2009-10-24T03:35:00.000-07:00

Have you noticed all the media attention being given to the various new types of mortgages that have become popular in the last five years or so? Many of these mortgages make it easier for people to buy homes. In some cases, people get more house than they thought they could afford, and that is good, especially when that extra bedroom is needed for a growing family, but in other instances, Some people perhaps buy more house than they need or can afford.

While it is true that our low interest rate environment has fueled the real estate market and made it possible for more people to achieve the goal of owning a home much earlier in their life than ever before, credit is also due to the introduction by banks and aggressive mortgage companies of a lot of new mortgage products, including: low start rate loans, interest-only options, deferred interest loans and a proliferation of no-money-down loans.

Stories about unqualified buyers who have been led astray by unscrupulous loan officers or real estate agents are picked up and exploited by the media, but as far as I am concerned, the whole story is often not heard. As a mortgage professional, I work with other professional men and women who take their careers and their client relationships seriously, and I am confident that most companies have a high code of ethics and have trained their loan officers to make sure that each client is making an informed decision and is entering into the purchase of a new home or refinancing of an existing home with a maximum amount of confidence and knowledge.

Of course, every decision is not the right one, and often the passing of time alone changes a person’s needs, qualifications, and circumstances. No one has control over this, and there are no crystal balls to help make personal or business decisions. Here is a typical example in my experience: It’s time to buy a house. Husband and wife are excited and anxious to make the move. They want to upgrade their living style, space and perhaps location for job or school reasons. The market is hot, houses do not stay on the market too long, they realize they need to act quickly and be prepared to pay more than they expected. The mortgage broker gives them all of their choices of loan programs; among them are the conventional 20% down fixed rate mortgage. But now they realize they will also want to fix up the house once bought, so putting less money down is an attractive idea. They are also very optimistic about their job and income future. Things are going well, and raises and promotions are in sight, so they decide to take a chance on a lower interest rate adjustable product to help keep the payment down to where they need it to be. One year later, interest rates go up, and the raise in income did not come through. You can see that this couple made their decision based on their needs and financial capabilities at that time. The mortgage broker presented them with all their options and discussed each product’s benefit and potential hazards. It is a professional’s job to do the research, present the facts and help their client evaluate the various what-if scenarios. They cannot predict the future, nor should they speculate about their clients personal lives. So is it possible that we simply have too many choices and it is in our nature as humans to select the path of least resistance? Personally, I do not think so. I believe that choices empower people and drive the marketplace into staying competitive. It is we as consumers who need to do our part and take responsibility for ourselves and our decisions. You need to find the right professionals to help you in any financial decision you make, but at the same time, we all must be prepared to live with and work out the choices we make in life. However, I do have advice for potential homebuyers and refinance candidates, and that is simply to trust the person you are doing business with and to ask as many questions as you can. A true professional will always take the time to help you understand what you do not know. The following are a few other good tips and practices.

Phone solicitation: There are groups of unethical mortgage telemarketers who call homeowners and offer a “free survey” of your “financial and debt” picture. In reality, the vast majorities of these callers are reading from a script and have little to no real experience in the mortgage field. The operators of this type of solicitation Company move from one hot industry to another year after year, leaving a wake of unsatisfied clients behind them. They were selling alarm systems last year and probably will be selling frozen beef next year. This type of mortgage marketing is an embarrassment to the real professionals in the industry, and consumers should beware.
You don’t need to receive these unwanted phone calls. Simply add your name to the national Do Not Call Registry, and the calls should stop. We provided a link to their website here: https://www.donotcall.gov/

Direct mail: Unfortunately; there is no such thing as a Do Not Mail list, and if you are like me, you receive all kinds of mortgage offers and solicitations. (Some sound so good that even I have been tempted to call!) Keep in mind that a letter in the mail with an offer that is too good to be true is usually just that — not true. Read everything carefully, even the letters that look like they are from your current mortgage holder, and do not be tempted to jump at the offer. A good direct mail piece should give you timely or practical advice about the product or service the company is offering. This is a sign of honesty and integrity on the part of the solicitor.

E-mail spam: If someone is spamming you about a mortgage, how much trust do you really have in them to deliver a worthwhile financial product? Spammers are often hiding behind a curtain of deceit, using foreign and untraceable URLs and phony names. You can be sure no one took the time to sit down and write you personally about a mortgage.

When you are ready to buy a house, or when you want to refinance your home, be sure to get a referral from someone you trust — an attorney, accountant, financial planner, or good friend or relative who has gone through the experience. Remember, the more you know, the better off you are!

Credit Score & Getting Approved

2009-10-11T21:18:00.000-07:00

A good credit history is now more important than ever. Solid credit keeps the cost of consumer financing down, and it can be the deciding factor in whether or not an auto loan or home loan application is approved.

In today’s fast-paced, high-tech age, your credit history will be reviewed more often by artificial intelligence than human intelligence. This computerization has made the loan process much more efficient, and that’s a good thing. But computers take all the subjectivity out of credit evaluation, and that means you have to take ownership of your own credit standing to avoid being blindsided by a potential stain on your credit record.

It is important that everyone know his or her credit score. In fact, everyone is entitled to one free credit report a year. Various companies, including Experian Consumer Relations (888-397-3742), can show you your credit profile. Fairly frequently, erroneous information appears on a credit report. This can take a few months to correct, which might mean the difference between being able to purchase the home of your dream — or not.

Credit scores usually range between 400 on the low side to 800 on the high side. On rare occasions, these ranges may be exceeded. Additionally, a given score may not be obtainable at all — due to factors like lack of credit history or too few lines of credit.

If you know your score, then you can see what the creditors see and have the ability to get a jump-start. Here is a quick breakdown of what a score means to a creditor:

720 and over Wonderful! You are at the top, entitled to best rates and terms.
700 – 719 Excellent score. You are a very desirable borrower.
680 – 699 Good credit. You should be in strong shape to buy.
660 – 679 Okay credit. Don’t look for other exceptions.
640 – 659 Borderline. You’re okay if everything else is strong.
620 – 639 Weak. The rest of your file must be perfect.
600 – 619 Difficult. Needs some work or a special program.
Below 600 Trouble. Try to fix up your credit.

Borrowers with scores over 700 can usually be granted exceptions for other problem areas, like new employment or frequent job changes. These borrowers can get the benefit of extended qualifying ratios to help them obtain a loan. This is a big plus not only in getting approval but also in avoiding the more costly "no income verification" option.

If you would like to improve your credit, there are a few things you should know. An easy way to start is by increasing your credit limits. If the ratio between the amount of credit you owe and the maximum credit limit increases, the computer views it as a plus in scoring.

Try to avoid frequent inquiries into your credit history. This can trim your score a few points. The good news is that the negative effect of multiple inquiries only lasts about 30 days.
Keep in mind that you have a right to an error-free credit report. For instance, if your profile shows a late payment without a specific month of delinquency, that item can be removed. This is a great tool, but you do need to check on your credit and make the requisite phone calls.
Remember that it may take a couple of months for your credit score to reflect any changes. There are three credit bureaus that report a score, so in essence; you will get three separate credit scores. Most creditors usually take the median of the three scores.

Refinance With Home123

2009-10-01T22:32:00.000-07:00

Refinance with Most Recognize Name in Home Refinancing

Bank or Mortgage Company — What’s the Better Choice?

2009-10-01T22:18:00.000-07:00

There has been a long-running debate as to whether a borrower should use a bank or a mortgage company to obtain a home purchase loan or refinance. The question of which type of lending institution would provide a better rate, better service or best advice is a common concern for most borrowers. Borrowers are also looking for high integrity and stability in a given lending institution. Some borrowers are even worried that the company lending the money may go out of business — leaving them to deal with the consequences. And of course, everyone wants the best price.

First let’s dispose of the myths:

After your loan has been settled and the check has been cashed, it doesn’t matter if the lending institution goes bust. Someone else will take over the servicing of your loan without any change to the terms of your loan.

There is a concern, however, if the lender were to go out of business prior to your closing. This event could jeopardize fees you’ve paid, the rate you have locked in, the loan approval and the timing of your closing. Fortunately, this rarely happens since most states monitor the solvency of lenders on a regular basis. Another myth is that the monthly payments will be made to the institution that “holds” the mortgage. In the vast majority of loans issued, the mortgage is sold off into a large pool of loans, called “Mortgage Backs,” sold back to the public as securities. The monthly payments on a mortgage are made to a servicing entity that collects the payments and allocates the portions for principal, interest, taxes and insurance. They also maintain the account and act as the borrower liaison. So contrary to popular belief, these service entities have no ownership position in individual mortgages.

Can a bank be better priced? The answer is “sometimes yes” and “sometimes no.” Pricing structures and programs will vary greatly from bank to mortgage broker and from one bank to another as well. Pricing will not be as dependent on the type of institution as it will be on the programs the institution has available. Sometimes a mortgage banker or broker will be better priced than a bank, but in some cases the respective rates may flip-flop within a few weeks time. It is important for consumers to check all sources and not limit themselves.

Do mortgage bankers and brokers have a better product menu and greater expertise than a bank? The answer again is “sometimes.” Specific elements like price, service and competency should be judged on a case-by-case basis, not by the type of institution represented.

The important distinctions are, reputation, resources and accountability. Almost everyone knows a friend, relative, neighbor or co-worker who has recently had a mortgage borrowing experience. This is a great way to gather the names of legitimate mortgage loan salespeople — a.k.a. “originators” — in your area. Another source can be your local realtor or your attorney. Not only will they have multiple experiences with these loan originators, they will also act as a source of accountability for the loan originator. A mortgage loan originator will be very wary of losing a valued referral source, based on negative feedback. That fear stems from the fact that they probably receive other referrals from that particular source. The loan originator knows that most realtors and attorneys can be very influential in their marketplace. Therefore, the originator is going to be accountable for his/her actions. This accountability will help you in the long run. Once you have a list of accountable and reputable loan origination candidates, you can see if the advice, programs and pricing they offer suit your needs. The result should lead to your best overall loan and mortgage experience.

Home Equity Loans

2009-05-02T07:02:00.000-07:00

Home Equity Loans are often referred to as second mortgages because they are secured by the equity that you have in your property. Your first (original) mortgage probably has a term of 30 years, while Home Equity Loans usually have a term of five to 15 years. Common uses for Home Equity Loans include debt consolidation, home improvements, and paying for tuition.

Because it is a secured loan with the property as collateral, a Home Loans generally has lower interest rates and tax advantages that aren't available with a credit card. For the same reason, Home Equity Loans can be risky, because defaulting on payments puts the property at risk of foreclosure. Homeowners must also be prepared to pay the balance of the loan or line of credit when they sell their home.

Irrespective of the purpose, a best home equity loans can come in handy in any situation such as when youre planning on renovating your house, purchasing a new car, consolidating your outstanding debts, providing for childrens higher education or any other reason.

Borrowing against home equity is the brightest and the wisest strategy that most homeowners should adopt but still the market trends dont demonstrate the appropriate use of this source of finance. Currently this facility is being used by less than 1/3 of the homeowners as most homeowners still take alternative routes such as auto loans, credit cards and personal loans.

A possible reason why homeowners choose this path rarely is perhaps because of those few creepy lenders who trick on ignorant homeowners and charge them unusually high costs on such loans.
Another de-motivating factor is the risk associated with home equity loan, especially the fear of their house getting foreclosed. If this is what keeps you back from using a home equity loan then try analyzing why most of these foreclosure cases take place. Mostly the homeowner is at fault, such as he may be borrowing excessively without considering his ability to pay back or maybe he is under the wrong impression of his property appreciating at the very high rate and so he goes on borrowing.
Home equity loans, as the name makes it clear, and issued against your share in the value of your house. By your share we mean that part of the equity which is not under your first mortgage. Your equity will be calculated as the total worth of the house less the remaining balance of your first home mortgage. Most lenders would require you to have a good enough amount of equity in the house before they approve your home equity loan.
The advantages:
There is a long list of advantages of borrowing against home equity in comparison to any other method of borrowing. A home equity loan is a great opportunity to get sizable loans on reasonable rate of interest and attractive terms and conditions. The interest rate is usually low because of less perceived risk by the lender is in such loan cases.
Besides the interest rate, the other advantage comes in the form of tax benefits. The total amount of interest that you pay over a home equity loan in a year will get you tax deductions for that year. This tax relief is not common with any other kind of loan such as personal loan or auto loan.
Getting the home equity loan is usually much easier and faster in comparison to the unsecured loans because of the perceived low risk factor. Lending against home equity is considered safer by most lenders and so they have kept the application and approval procedure short and simple.
The final decision:
Before you take the final decision about using or not using home equity to get a loan, you need to analyze and consider several factors and especially those which are related to your personal financial situation.
The decision of using a home equity loan to consolidate your outstanding debts should be carefully evaluated because in the process you would be risking your house. However on the other hand using the same loan for home improvements or renovation seems much better because this will just go on to increase the value of your assets and therefore should be considered as an investment and not as expenditure.
Borrowing against home equity to make investments is another great idea especially so if the returns on their investments are good enough to pay off the interest over the loan and still get you some money.

People also use best home equity loans to buy expensive items, but this is not a very practical idea because these assets usually will depreciate in value over the years and become significantly invaluable while the payments for the loan may not have ended. But instead of buying an expensive item if you plan to rather buy some property that will be much better for the reason that the property will appreciate with time and get you good returns.

Lastly, when you plan to borrow against home equity what you must consider is how worthwhile is risking your house for your specific financial need. Also proceed further only if youre sure enough that you can pay back the loan as per the terms and conditions or else be ready to lose your property.

Basic Financial Success Rules

2009-03-27T00:08:00.000-07:00

Needless to say that managing money makes you feel accountable, motivated, and secure. Though introducing better improvements to your financial situation is a good thing to do at any time of a year most of people prefer to do it at the very beginning of a new coming year. Regardless of the time you choose all techniques are the same. Here are 5 key points of everyone’s personal financial success:

1. Work out your budget
Your personally planned budget is a must-have thing. How can you see where your money go if you don’t budget? Without a strict budget you will spend all your money no matter how much you earn hundreds or thousands of dollars. And your budget should be created depending on your earnings. A must-have item of your budget should be a retirement plan, think of your future today.

2. Keep your work paid what its worth

Before getting to the job perform a market research if you haven’t done so yet. Find out what others charge for a kind of job, and evaluate the difficulties of specifically your task, which would result in at least minor changes of the basic cost. Don’t try to work for quantity; irrational working doesn’t lead to a prospect. Remember that too much work leads to health damage, and without financial return that is obviously absolutely unacceptable.

3. Spend always less than you earn
Once planning your budget always remember that you should not spend everything you earn. Have a savings plan. When the funds are going away for your bills and living requirements try to do everything possible to decrease your expenses and save. Effective cost-cutting efforts may result in big savings taking to attention that it is often easier to spend less than earn more. If you can’t allocate funds for your savings try to exclude anything that might be not absolutely vital for your living.

4. Keep your records clean and positive
The more black spots you’ve got in your history fixed the worse your reputation is considered and the harder it is for you to use available to you tax deductions and credits. That’s why it is vitally important to keep your credit records and other history public records clean.

5. Pay off your debts in time
Not paying your debts in time is number one problem that most of financially unstable people experience, and that is the worst problem out of all named above. While your debts prevent you from following your savings plan due to need to pay much more than expected, they also may result in bad credit history. Credit cards are very easy to use, and sometimes you may forget this is real money, but the time comes when you have to pay off your negative balance, which is always a painful thing if you don’t control your expenses. The better way is to try to use cash when possible.

Of course these are only basic advices, and there are many more like updating your will, insurance coverages, additional investments and others. But if you manage to follow at least these 5 rules you are guaranteed to proceed to your financial success, and the first step as you know is the most important.

Home Loans
Home Equity Loans

Home Loans

2009-03-12T04:17:00.000-07:00

When you work with Home123, you get the personal attention you need. Home 123 offering a complete solution of your Mortgage and home loans problems. Mortgage calculators will enable you to understand how much money you can save, or how much loan you can afford and the Loan Checklists ensure that you can prepare in advance all of the documentation required.

Beside these offers home123 also offering:

Home Purchase Loans
Home123 offers competitive loan products. We can help get you a loan whether you are a first time home-buyer or if you're simply looking to purchase your next home.

Debt Consolidation Loans
A loan that gives you cash back to pay existing debt. You may be able to lower your monthly payment or interest rate, and possibly gain tax advantages.

Refinance Loans
This is generally the process of obtaining a new loan on your home and using the proceeds, to pay off the entire balance of the underlying loan, and may include receiving a cash distribution.

Home Equity Loans (Second Mortgage)
A loan for any purpose that is secured by your home in addition to your primary mortgage. The most common types of second mortgages are Home Equity Loans and Home Equity Lines of Credit (HELOC).

Reverse Mortgages
A Reverse Mortgage, also called a Home Equity Conversion Mortgage (HECM), is a special type of home loan that allows homeowners to convert the equity in their homes into cash that is paid to them in a lump sum or in a stream of payments. With this type of mortgage repayment not required until the borrower no longer uses the home as a principal residence.

FHA Loans
FHA Loans are mortgages that are insured by the Federal Housing Administration in case of default. This program helps borrowers who might not otherwise qualify for a loan, get the financing they need. FHA insured loans are available for both home purchases and refinancing.

VA Loans
VA Loans are loans insured by the Veteran's Administration that are available to individuals with military service.

Tips Before Choosing Mortgage Loan

2009-02-04T02:35:00.000-08:00

The mortgage is a security for the loan for new investment while refinance is reinvestment or repairing of the present condition of the previous investment structure. There are many people who can’t buy a house or real estate within their savings. This will drive lots of people to have their house purchases and paid by a mortgage. To seek the best mortgage loan for you - and to avoid the problems that can be happen, try this tips:

1. First thing that you must do is to applying a pre-approval application to many different lenders to make sure you are getting the lowest rate. Check the application to make sure they aren’t pulling your credit history. Remember, you want to reserve your credit pull only for the lender that you are most likely to work with. Check for this information on their website. Usually they tell you whether or not they are going to pull your credit.

2. When evaluating the different lender offers that you got in the mortgage loan pre-approval process, pay closest attention to the interest rates they are offering & the closing costs.

3. Make sure your mortgage doesn’t have early payoff penalty or a pre-payment penalty of any kind.

4. Choose your interest rate and closing costs and write it as soon as you decide. Remember to check if that loan has a pre-payment penalty as well. Sometimes - lenders leave out this important information if they think it might scare you away from refinancing with them.

Some times customer feels difficulty in understanding their rules, regulations and payment rules and interest rates at which they have to make payments to the lienee. Complete awareness about the rules is the first right of the customer.

Why to go for Mortgages

2009-01-10T07:06:00.000-08:00

Mortgage allows investors to pool money in a trust to lend to individuals and companies. They secure their borrowing by a mortgage over residential or commercial properties. The trust collects the interest paid on these loans and then distributes the interest, less charges, as income to investors.

Borrowers should bear in mind that there are two different kinds of mortgage points-discount points and origination points-and that lenders do not all charge the same amount for these different types of points. Discount points refer to an amount of money paid to a lender to obtain a loan at a specific interest rate. These points are like pre-paid interest on a loan that a borrower takes out for a new home, with each point equalling to 1% of the total principal amount of the loan. Origination points are used to pay for the costs of obtaining the loan in the first place. They are much less popular than discount points, as they do not provide borrowers with any valuable benefits and are not tax deductible. Borrowers are therefore better off trying to get a loan that does not require them to acquire these kinds of points.

Reverse Mortgages

2009-01-02T22:08:00.000-08:00

Reverse Mortgages are becoming common in America. It’s a safe plan that can give older Americans greater financial security.
How can you define Reverse Mortgage? What is it? A reverse mortgage is a special type of home loan that lets a homeowner convert a portion of the equity in his or her home into cash. Mortgages have come a very long way in the past fifty years. Lenders today offer many more options than the basic 30-year fixed-interest product that normally comes to mind. There are even mortgages in which payments are made to the homeowner and not the lender. These very specialized programs are known as reverse mortgages. There are three types of reverse mortgages: Single purpose reverse mortgages, which are known as Home Equity Conversion Mortgages and proprietary reverse mortgages, which are private loans. Single-purpose reverse mortgages generally have very low costs. But they are not available everywhere, and they only can be used for one purpose specified by the government or non-profit lender, in most cases, you can qualify for these loans only if your income is low or moderate. Before applying for a HECM, you must meet with a counselor from an independent government-approved housing counseling agency. The counselor must explain the loan’s costs, financial implications, and alternatives.

Mortgages

2008-12-26T03:25:00.000-08:00

Most home buyers have to borrow money in order to purchase their home. Few have enough money sitting in the bank, or in other easily saleable assets, to pay the entire cost of the home at once. (Even those few who do have enough money usually find it financially advantageous – perhaps for extra tax relief -- to borrow some of the money.) The home loans they receive is called a mortgage. Generally, a mortgage is a loan of money to the home owner secured by a "lien" on the real estate.

A mortgage is a security document that allows the borrower to keep title of the property while using the property as security or collateral for a loan. The lender then places a lien on the property in the event the owner does not pay the agreed payment. When the borrower pays off the loan, the lender gives the borrower a satisfaction of mortgage that removes the lien from the property. About half the states in the U.S. use mortgage foreclosure as the means of satisfying the loan balance.

Mortgage allows investors to pool money in a trust to lend to individuals and companies. They secure their borrowing by a mortgage over residential or commercial properties. The trust collects the interest paid on these loans and then distributes the interest, less charges, as income to investors.

Borrowers should bear in mind that there are two different kinds of mortgage points-discount points and origination points-and that lenders do not all charge the same amount for these different types of points.

Discount points refer to an amount of money paid to a lender to obtain a loan at a specific interest rate. These points are like pre-paid interest on a loan that a borrower takes out for a new home, with each point equaling to 1% of the total principal amount of the loan.

Origination points are used to pay for the costs of obtaining the loan in the first place. They are much less popular than discount points, as they do not provide borrowers with any valuable benefits and are not tax deductible. Borrowers are therefore better off trying to get a loan that does not require them to acquire these kinds of points.

For Further Details:

Home Equity
Refinance