The Advantages of Purchasing a Home after Bankruptcy

Planning on purchasing a new home after a bankruptcy? Today, more lending companies are catering to individuals who have a bad credit history or even those who have just survived a bankruptcy. Bad credit mortgage loans or sub prime loans give these individuals a chance to move on with their lives. So if you’re ready to take on a new responsibility, then go ahead. There’s no reason why your plans should be hindered. In fact, acquiring a home loan after bankruptcy does have its advantages. Let’s take a look at these advantages.

Boost Your Credit
Just because you’ve had bad credit problems in the past mean you can never change your credit worthiness. Bankruptcy does not have to be the end of the road. You can always start anew by getting a home loan after your bankruptcy has been discharged. Yes, it is very possible to boost your credit even after bankruptcy.
Since the only way to increase your credit score is to show that you are a good payer, obtaining a mortgage loan gives you a chance to achieve this. All your financial transactions are reported to the major credit bureaus so you can be assured that making timely payments will have a positive result on your credit. By submitting your monthly payments for your mortgage loan in time and without any miss, you will be able to rebuild your damaged credit reputation.

Build Up Your Home Equity
Renting a home also involves monthly fees. Most homes or apartments for rent are costly especially if you look for ones located in respectable communities or villages. If you have a large family, you may be renting a larger apartment with a more expensive monthly rate. Your tenant collects your monthly rent and that’s about it. But if you will purchase a home and apply for a mortgage loan, it’ll be like saving your money for the future.

By purchasing your own home and obtaining a mortgage loan, your monthly fees will not be vain. The money you pay for your mortgage loan is in fact an investment. After 15 or 30 years, you can proudly say that you are the sole owner of your home without paying monthly bills. And there’s more to that. The value of a home increases over time, so once you’re done with your mortgage, you can even sell your home for a higher price.

Obtain a Home Equity Loan
Having your own home gives you the option to apply for a home equity loan. A home equity loan will enable you to get cash that is within the value of your home. Once approved, you can withdraw money from your home equity loan at any time during the duration of your loan’s term. You can use this cash in starting up a business or to help you when emergencies arise. You may also use the money from your home equity loan to pay debts that you may have with other creditors. 

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4 Important Questions to Ask Before Refinancing Your Mortgage

Thinking of refinancing your home mortgage can seem overwhelming, with so many options on the market. If you break your thought processes into four categories it will be a whole lot easier for you to focus: Think about the term of your mortgage, your current interest rate compared to the new rates on offer, are you staying put or planning to move in the short term future, and do you have enough credit to find a mortgagee happy to take over your loan?

The mortgage term is how long the loan is spread over, and then there is the payback period meaning how long will you be with the new financier before you have made back to money it cost for the refinancing. These costs include appraisal fees, bank fees, lawyer fees and early pay out fees assigned to your current mortgage.

Some lending institutes will allow you to absorb those charges associated with transferring into your home mortgage so you don't pay anything in cash at the time. Probably the most important thing for you to understand is exactly how much your interest rate will go down. If the new rate is over two percent less than the old one, refinancing is probably going to be worth your while. Any less than that and the recovery period or payback time will be too long and will result in more of a loss to you.

For those people who are hoping to move home in two years or less refinancing beforehand is not a good idea. The refinancing costs for doing the mortgage twice over will be too high leaving you noticeably behind. Lenders looking to refinance your loan for you are focused on the LTV or loan-to-value ratio. This means the amount of your mortgage in comparison to your home's appraised value.

In some cases the mortgagee will only refinance if the new loan is to be 90% or less of the homes value, but every bank and lender has their own LTV limits. In some cases simply paying refinancing costs yourself will give you a better LTV. If you do your research, refinancing your home mortgage can save you thousands in interest, but it can lose you the same if you don’t do it right. Check if you know someone who can recommend a lender to refinance with, or take time to see a variety of different ones and make your own informed decision.

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Three Steps to Saving Money on Second Mortgage

A mortgage, whether a first mortgage for a home purchase or a second mortgage for debt consolidation is a financial product in a competitive market. There are over 19,000 mortgage lenders in the U.S., and there can be variations among them when it comes to fees, rates, and terms.

When shopping for a second mortgage, here are three steps that could save you thousands of dollars over the life of the loan.

• Compare information - Obtain information from several lenders. Second mortgages are available from a variety of financial institutions: commercial banks, mortgage companies and credit unions. Since rates and points can change daily, you will want to check the Internet or your local newspaper often when shopping for a second mortgage.
• Negotiate the best deal - Have lenders write down all the costs associated with the second mortgage, then ask if he or she will waive or reduce one or more of the fees, or agree to a lower rate to secure your business. There is no harm in asking. Once you are happy with the terms, ask for a written “lock-in” from the lender.
• Know your rights - The Equal Credit Opportunity Act prohibits lenders from discriminating on the basis of race, color, religion, national origin, sex, marital status, age, whether all or part of the applicant’s income comes from a public assistance program, or whether the applicant has in good faith exercised a right under the Consumer Credit Protection Act.

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The Benefits of a Fixed Rate Mortgage

A vital question that faces most homeowners at some stage is whether or not to opt for a fixed rate or variable mortgage. The age-old weighing up of security over potential savings is one that has plagued buyers for decades, and one to which there is no definitive right or wrong answer.

Both variable and fixed rate mortgages have advantages and disadvantages, but with the right financial advice it should be easy to understand which type of mortgage relates to your situation and can provide you with the best chance of financial freedom in years to come.

The standard type of mortgage is variable; that is the rate of interest repayments is variable against the Bank of England base rate. An alternative to that is the fixed rate mortgage, which sets a fixed rate of interest to provide buyers with a guarantee of exactly what price they will be required to pay for their borrowing. The main question faced by prospective borrowers is whether to gamble and secure a rate, which may ultimately be higher throughout the duration of repayment, or whether they want to rely on the base rate for lending as a guide to the extent of their repayments. Either option could be considered a gamble against the interest rates, and both can provide their own financial benefits at the end of the day.

With a standard type of mortgage, economic security is the order of the day, and if the economy goes through a stable period, you are more likely to have to repay less over time. While rates are low, that is also the time to secure a fixed rate mortgage, securing your interest rate forever more to avoid the insecurity of relying on a fluctuating rate.

The problem with fixed rate is that the rate is generally fixed at a proportionately raised rate above the base rate before it is fixed, therefore it can prove to be expensive if the economy ultimately performs well over the duration of the mortgage repayments. One of the major benefits of a fixed rate mortgage is the ability to budget accurately. With the uncertainty of a variable mortgage, it can often be hard to manage your finances, and if interest rates increase in may eventually find it impossible to live within your planned budget, making for a tough financial situation ahead.

However, the fixed rate mortgage guarantees a level of repayment which, although it may be high, is at least fixed to allow secure budgeting over the longer term. Either way, selecting a mortgage comes down to your individual circumstances, and although it may be a tough decision it is important to make sure you fully consider the available options before committing yourself. It comes down to a choice between security and the potential for savings over the term of the mortgage. With appropriate guidance and advice, you should be able to make the decision that best suits your needs and circumstances to provide you with the best option.

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It's Not About Rate: The Right Way To Get A Mortgage by Richard Cohen ISBN: 1425991785 ISBN-13: 9781425991784 About how to make the loan process understandable, uncomplicted, and smooth.

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Become A Mortgage Broker & Remain Sane

They is not difficult to become a mortgage broker; however, many people get discouraged because they are not aware of the shortcuts that are available to them. If you want to know how to become a mortgage broker without losing your mind, here are a few simple steps to guide you along the way.

First of all, you should be aware of the basic process of how to become a mortgage broker. There are certain licensing requirements set forth by the state which require you to pass an exam. Many states also have requirements regarding criminal history that exclude felons and people that have been convicted of crimes of moral turpitude. If you do not have a criminal record, or at least one that prohibits your licensing, and you can pass the exam, you can be a mortgage broker. Where do people get discouraged? During the exam process, it is easy to second guess yourself and your abilities, as the test is not exactly easy.

The biggest mistake people make in trying to become mortgage brokers is studying for and taking the exam on their own. While you may not be able to have someone in there to help with the exam, you can certainly get help in preparing for it. There are several training courses and study classes you can take that will cover the material on the test, answer any questions you have, and provide sample tests. These study courses are invaluable when it comes to preparing for and passing the test.

Another consideration to make is the knowledge and encouragement you can obtain from a mentor. In the same manner that knowing what is on the test can help you pass, knowing what awaits you on the road to being a mortgage broker can help you succeed. There is no reason to travel alone when someone is available to show the way.

On the other hand, you can always do it the hard way. You can order books that are hard to read and seem to complicate things; you can decide to figure things out for yourself and not ask for help when you need it; and you can choose to get discouraged and quit. It is a lot more difficult to be successful when you do things the hard way. However, now that you know the easy way, it's look much more inviting?

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Who Need Subprime Second Mortgage

This is a right time to apply for subprime second mortgage. The boom in non-prime lending means that subprime second mortgages are readily available to borrowers. These are few things that you need to know about Subprime Second Mortgage application.

Subprime lenders are providing first mortgages, second mortgages and home equity loans to those who don't qualify for conventional financing requirements. Many of the more than 19,000 mortgage lenders in the U.S. offer some form of subprime mortgages.

Subprime borrowers are people with a FICO score of 620 or lower. In fact, the “sweet spot” for the subprime industry consists of borrowers with credit scores between 620 and 640. Bad credit means you will pay more when you borrow money. However, a subprime second mortgage could still save you thousands of dollars over other forms of borrowing.

Prior to the widespread availability of subprime loans, many deserving people with poor or insufficient credit histories could not get a mortgage. Now these folks are able to become proud homeowners as part of the American Dream.

A subprime second mortgage makes sense when you don’t want to refinance your first mortgage but want to access your home equity for legitimate reasons such as home improvements, debt consolidation, medical bills or college tuition. As an added bonus, the interest paid on a second mortgage is usually tax deductible.

Borrower Beware
Recent research reveals that subprime mortgages are three times more likely to happen in minority neighborhoods. Even affluent minorities are more likely than whites to take out subprime mortgages. The AARP notes that older female borrowers held 45% of subprime mortgages and only 28% of prime mortgages.

Some dishonest lenders will try and exploit the financial troubles of borrowers by offering easy-but-expensive credit that could lead to them eventually losing their homes. Or, these disreputable people resort to exorbitant fees, prepayment penalties or balloon payments to snare the unwary.

Learn more about how to avoid Subprime Second Mortgage fraud, and get a free loan quote at Easy Second Mortgages. Even if you have bad credit, you may still qualify for a good second mortgage.

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Low Interest Mortgages

Your purchasing a home and need to find the lowest possible interest rate on your mortgage loan. Getting a lower interest rate on your mortgage loan can result in a lower monthly payment or can allow you to afford a more expensive home for the same monthly payment. Here are some suggestions that can help you to get a lower interest rate on your mortgage loan.

Increase Your Down Payment - One of the most important components for loan pricing is the loan to value percentage (loan amount / home value) of your loan. Borrowers using 95% or 100% loan to value financing will find themselves paying a much higher interest rate. If you have access to more money for your down payment, you can get a lower interest rate at 80% or 90% loan to value and use the different interest rates to determine the best use of your available funds.

If you are refinancing your home, getting cash out of your house above the 70% loan to value will cost more than at under 70% loan to value and the interest rates really rise for loans at 80% and 90% loan to value ratios. When researching interest rates, be sure to ask about the interest rate for lower loan to value percentages.

Shorten The Term of Your Mortgage - Lenders will charge lower interest rates for loans with shorter terms. For fixed mortgage loans, try a 20 year or 15 year term instead of the standard 30 year fixed rate. A 20 year term can reduce your interest rate by as much as 1/8% while a 15 year term may save you up to 1/2% of an interest rate. The drawbacks include a higher monthly payment and stricter guidelines for underwriting, but the total interest that is paid over the life of the loan will be dramatically reduced with a shorter term.
Improve Your Credit Score - Lenders often give lower mortgage rates for customers with exceptionally good credit, especially on large loan amounts, loan amounts in excess of $400,000. To qualify, you will need a credit score of at least 780, which is a score achieved by less than 20% of all credit scored borrowers.

Paying Discount Points - Consider paying discount points, or higher fees, for a lower interest rate. One discount point, 1% of the loan amount or $1,000 per $100,000 borrowed, will give you a lower interest rate on any quoted mortgage program. You will need to analyze the cost of the lower interest rate against the monthly savings that the lower rate will bring for your mortgage payment.
If you would pay $2,500 to lower the interest rate by 1/4% on a $250,000 loan, this amount can save you approximately $600 per year in interest. If you plan to live in your house for more than 4 years ($600 for 4 years), then paying a point to get a lower interest rate will save you money past the 4th year for the remaining length of the mortgage loan.

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Best Mortgage Type for You?

Q) I need to refinance my mortgage this year, and I am trying to decide what the best loan option is for me. My friends and family have told me to stay away from adjustable rates, but it seems like I may get a better payment that way. What are the pluses and minuses of adjustable rates versus fixed rates?

A) This is a great question and it will depend a lot on your unique situation, long- and short-term goals, and how long you intend to be in your home. Let's take a look at both options and who might benefit from the different loan types the most.

Adjustable rates mortgages, also known as ARMs, have received a lot of bad press over the last few months in the news. However, when you know the ins and outs of an ARM you might find it meets your situation better than a fixed-rate loan. An ARM works like this: The interest rate is typically lower initially than a fixed rate, and in many instances this rate is fixed for a pre-determined amount of time--say three, five, or seven years. At the end of the fixed term, the rate adjusts based on several factors, a fixed margin (usually between two and four percent) and an adjustable index, like the Wall Street Journal Prime rate. The amount your initial rate can go up or down is also governed by "caps" usually two to six percent above or below the initial rate. Despite these caps, which are designed to protect the borrower, there can still be a large payment shock if your rate goes from five percent to 11 percent.

So who are these types of loans best suited for? Here are a couple of scenarios where an ARM may make more sense than a fixed rate:

1. You know you are moving out of the home before the ARM is set to adjust, and want to take advantage of the better rate.
2. You have gone back to school, and need the lower payment for the next three to five years while juggling the costs of school, home, family, etc.
3. You are taking the savings you gain with an ARM to pay down other, higher interest debt.
4. You have children in college, and need a lower payment for the next few years to support them.

Fixed-rate loans are still the most popular type of loan because of the payment security they offer. Fixed rate loans are traditionally offered in 10, 15, 20, 25, 30, and now 40 year terms. When you refinance with a fixed-rate mortgage, let's say for this example a 30-year fixed rate, you will have a payment that will never fluctuate, and will pay the loan off in 360 equal payments. Traditionally, the longer the term of the loan, say 30 years vs. 15 years, the higher the interest rate will be. So in some instances a shorter term will allow you to pay off your mortgage faster, and at a better rate.

So who is best suited for this loan?

1. People who will be in their home long-term and want payment consistency
2. People that are on a fixed income
3. People adverse to the risk of an adjustable rate
4. People in a declining housing market

As you can see, both loans offer distinct benefits for different situations. The key as always is to assess your personal situation, work with a reputable lender, and customize a loan to meet your needs.

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Predatory Mortgage Lending

Before shopping for a new home, car or credit card, it pays to check your credit report and make sure it's accurate. If you spot any errors or old problems, correcting your credit report can be a lengthy but worthwhile effort. If your credit just isn't up to snuff, there are steps you can take to strengthen your credit profile. Finally, there are lenders for folks with less-than-perfect credit and more Mortgage Lenders PLUS.com articles you can turn to for help.

Checking your credit report - If you are applying for a loan or credit, records of your previous dealings with someone else's money are vital. Whether you get that mortgage or credit card, or not, may depend on a network of credit reporting agencies that either share information with, or are owned by, three major credit bureaus. This report is often a critical factor in credit scoring systems that lenders use to issue credit cards as well as mortgages or other loans.

So, if you're considering making a major financial move it's a good idea to check your credit report to know where you stand. That way you can be aware of, and/or take care of, problems before they jump up and derail your plans.

If you find problems, or if potential creditors discover them, you can take steps to rebuild damaged credit and clean up that record.

If you've made mistakes in paying previous loans, bounced checks, made late payments or had other problems, you may still be able to reduce the amount of damage they will do to your credit with explanations or some basic repair.

Predatory Lending can be Lenders, Appraisers, Mortgage Brokers and Home Improvement Contractors who:

• Sell properties for much more than they are worth using false appraisals.
• Encourage borrowers to lie about their income, expenses, or cash available for down payments in order to get a loan.
• Knowingly lend more money than a borrower can afford to repay.
• Charge high interest rates to borrowers based on their race or national origin and not on their credit history.
• Charge fees for unnecessary or nonexistent products and services.
• Pressure borrowers to accept higher-risk loans such as balloon loans, interest only payments, and steep pre-payment penalties.
• Target vulnerable borrowers to cash-out refinances offers when they know borrowers are in need of cash due to medical, unemployment or debt problems.
• Strip homeowners' equity from their homes by convincing them to refinance again and again when there is no benefit to the borrower.
• Use high pressure sales tactics to sell home improvements and then finance them at high interest rates.

How to Spot a Predatory Loan

• Balloon payments.
• High interest rates.
• Monthly payments you can't afford.
• Penalties for early pay-off of the loan.
• Unauthorized refinancing of your loan.

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Mortgage Laws & Regulations That Consumer Need To Know

Following is a brief description of the major laws and regulations meant to govern the mortgage lending process, protect mortgage borrowers, and govern the practices of financial institutions with regard to mortgage lending and protection of borrower financial information. All of the following are federal laws and regulations. Many states may have additional laws governing the mortgage process and protecting consumers.

Truth in Lending Act
Enacted in 1968, the Truth in Lending Act (TILA), which is part of the Consumer Credit Protection Act, is a federal law that sets forth certain written disclosure requirements. Disclosures required by the act include:

• Finance Charge - this is the amount charged to the borrower for a loan
• Annual Percentage Rate (APR) - this is the actual realized interest rate taking into account other items such as pre-paid interest (points) and certain other charges
• Amount Financed - this is the amount that the consumer is actually borrowing
• Total of Payments - This is the total amount of payments made over the life of a loan
• Total Sales Price - This is the total amount of a real estate purchase including the down payment and mortgage amount

The Truth in Lending Act also sets forth advertising requirements for lenders as well as rescission rights for consumers. The rescission rights in TILA allow consumers 3 business days to back out of a loan transaction.

For additional information on the Truth in Lending Act see: FDIC Consumer Protection.

Fair Housing Act
Also adopted in 1968, the Fair Housing Act prohibits discrimination in housing related transactions (purchase and rental) based upon race, color, sex, religion, national origin, familial status (with or without children), or handicap.

Lenders advertising their compliance with the act will display the Fair Housing Logo as well as the "Equal Housing Lender" slogan.

For more information see: Fair Housing--it's Your Right

Real Estate Settlement Procedures Act
Adopted in 1974, the Real Estate Settlement Procedures Act (RESPA) is another consumer protection law. It covers purchase loans, assumptions, refinance loans, property improvement loans, and equity lines of credit for one to four unit residential properties.

RESPA serves two functions:

1. It requires certain disclosures to borrowers
2. It prohibits certain practices that can drive up the closing costs of a loan

The required disclosures spelled out by RESPA include:

• Required at the Time of the Loan Application
  • The Good Faith Estimate (GFE) of settlement costs
  • A special consumer information booklet (for purchase transactions only)
• Disclosures Before Closing
  • An Affiliated Business Arrangement (AfBA) Disclosure if there is a relationship between the lender and any other party providing services in relation to the loan
  • A HUD-1 Settlement Statement
• Disclosures At Closing
  • A HUD-1 Settlement Statement
  • An Initial Escrow Statement
• Disclosures After Closing
  • An Annual Escrow Statement
  • A Servicing Transfer Statement in the event of transferring servicing for the mortgage

RESPA also provides further consumer protection by prohibiting kickbacks, fee-splitting, unearned fees in return for referrals for settlement services; prohibiting the seller from requiring the use of a certain title insurance company; and places limits on escrow accounts.

For more information see: Your Rights and the Responsibilities of the Mortgage Servicer or RESPA Statute Real Estate Settlement Procedures Act

Equal Credit Opportunity Act
Adopted in 1975, the Equal Credit Opportunity Act (ECOA) prohibits credit discrimination on the basis of sex, race, marital status, religion, national origin, age, or receipt of public assistance. ECOA regulates application content, acceptable and unacceptable questions, and verbal or written discouragement of an application.

For more information see: Facts for Consumers Equal Credit Opportunity

Home Mortgage Disclosure Act
Adopted in 1975, the Home Mortgage Disclosure Act (HMDA) requires that lenders report public loan data on both approved and denied loans.

For more information see: the Home Mortgage Disclosure Act (HMDA) web site

Community Reinvestment Act
Enacted in 1977, the purpose of the Community Reinvestment Act (CRA) is to encourage financial institutions (insured depository institution's) to help meet the credit needs of the communities in which they serve, including low- and moderate-income neighborhoods. The act requires that insured depository institution's be periodically evaluated.

For more information see: the Community Reinvestment Act (CRA) web site

Fair Credit Reporting Act
Adopted in 1978, the Fair Credit Reporting Act (FCRA) is designed to promote accuracy and ensure the privacy of the consumer credit information from consumer reporting agencies such as credit bureaus. The act has been amended numerous times since enactment.

For more information see: Fair Credit Reporting

New Homeowner's Protection Act
Adopted in 1998, the Homeowner's Protection Act (HPA), also known as the PMI Act, establishes rights for homeowners and rules for lenders regarding private mortgage insurance (PMI) cancellation. The act applies to mortgages obtained on or after July 29, 1999.

For more information see: Private Mortgage Insurance (PMI) New Law Requires Lenders to Cancel PMI

Fair Debt Collection Practices Act
Adopted in 1977, the Fair Debt Collection Practices Act requires that debt collectors treat borrowers fairly by prohibiting certain methods of debt collection. It prohibits unfair, deceptive, or abusive practices, including over-charging, harassment. It also prohibits disclosing consumers' debt information to third parties.

For more information see: Fair Debt Collection

Gramm-Leach-Bliley Act
Adopted in 1999, the Gramm-Leach-Bliley Act includes provisions to protect consumers' personal financial information. It has three parts pertaining to privacy requirements:

1. The Financial Privacy Rule - The financial privacy rule requires financial institutions to give their customers privacy notices that explain their information collection and sharing practices. The act also gives customers the right to limit some sharing of their information.
2. The Safeguards Rule - The safeguards rule requires financial institutions to have a security plan to protect the confidentiality and integrity of personal consumer information.
3. Pretexting - The Gramm-Leach-Bliley Act prohibits the use of false pretenses, including fraudulent statements and impersonation, to obtain a consumers' personal financial information.

For more information see: The Gramm-Leach Bliley Act

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Government Mortgages Loan

Government loans are simply mortgage loans that are insured or guaranteed by the federal government. They are most typically fixed rate or adjustable rate mortgages. Government loans account for 20% of all mortgage loans. There are three types of government mortgages.

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FHA Loans
The Federal Housing Authority (FHA) is part of the U.S. Department of Housing and Urban Development (HUD). The FHA does not actually lend money to borrowers. What the FHA does is insure loans (called 203(b) Mortgage Insurance) so that they are shielding lenders from loss should a borrower default on the loan. This effectively reduces the lender's risk allowing them to provide easier qualification for a loan, lower down payments, and lower closing costs. So an FHA Loan is a loan made by a lender that is insured by the FHA.

Features of FHA Loans
FHA loans are an excellent vehicle for the first-time home buyer. FHA loans are available as fixed rate mortgages (FRMs) and adjustable rate mortgages (ARMs). Some of the features of an FHA loan include:

• Available for 1 to 4 unit properties, as well as condominiums and manufactured homes
• Less stringent qualifying requirements
• Down payments can be as low as 3% (or 97% loan-to-value)
• FHA regulates closing costs
• Most closing costs and fees can be included in the loan
• Gifts for down payments and closing costs are allowed
• Will allow a home purchase two years after a bankruptcy
• Will allow a home purchase three years after a foreclosure

Qualifying for an FHA Loan
Because an FHA loan is insured by the FHA, many of the qualification criteria are not as stringent as they would be. The borrower does, however, have to be able to afford the loan. For that reason, a borrower's monthly housing costs should not exceed 29% of their monthly income (this is some times referred to as the housing ration). Remember that total housing costs include mortgage principal and interest, property taxes, and homeowner's insurance (often referred to as PITI).

In addition, a borrower's monthly expense to to cover all debt, home and consumer debt (car loans, personal loans, student loans, credit cards, etc.) should not exceed 41% of their monthly income.

To obtain an FHA loan, individuals need to apply to a HUD approved lender.

FHA Loan Limits
FHA loan limits vary by location. It should be noted, however, that FHA loans are oriented toward lower-income borrowers. As such, the FHA loan limits make an FHA loan appropriate only for lower cost homes. For example, the FHA loan limits for a couple of sample cities are:

               Boston,     MA Wichita, KS
1-Family   $362,790   $200,160
2-Family   $461,113   $256,248
3-Family   $560,231   $309,744
4-Family   $646,421   $384,936

To look up the FHA loan limits in your area see: https://entp.hud.gov/idapp/html/hicostlook.cfm

Other HUD Loan Programs
HUD also has other specialized programs to help certain identified groups purchase a home. These programs include:

• Firefighter/Emergency Medical Technician NextDoor
• Officer Next Door (law enforcement officers)
• Teacher Next Door
• Hurricane Evacuees discounted sales
• Homeownership for public housing residents
• Indian Home Loan Guarantee Program

For More Help
To get more advice on FHA and other HUD loan programs, contact a HUD-approved housing counselor or call (800) 569-4287.

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HCFP Loans
The United States Department of Agriculture (USDA) provides loans and grants to individuals and rural communities for housing and community facilities though Housing and Community Facilities Programs (HCFP). HCFP provides funding for single family homes, apartments for low-income persons or the elderly, housing for farm laborers, as well as funding for community facilities such as childcare centers, fire and police stations, hospitals, libraries, nursing homes, schools, and more.

Housing and Community Facilities Programs for Individuals
Housing and Community Facilities Programs are available for:

• Single family housing for rural Americans
• Home renovations and repair
• Rental assistance programs for the elderly, disabled, or low-income rural residents of multi-family housing

The remainder of this article will focus on the home ownership and renovation programs.

HCFP Direct Loan Program
The Direct Loan Program makes assistance available to individuals or families in the form of a home loan at an affordable interest rate. Most borrowers have an income level below 80% of the median income for the community in which they live (see here for the income limits on the Direct Loan Program for single family homes). There are also loan limits for loans made under the Direct Loan Program that vary by community (see here for the loan limits for the Direct Loan Program).

More information on the Direct Loan Program may be found on the USDA Rural Development Housing & Community Facilities Programs site: http://www.rurdev.usda.gov/rhs/sfh/brief_rhdirect.htm

HCFP Loan Guarantee Program
Under this program HCFP guarantees loans made by private lenders, similar to FHA or VA loans. With the HCFP Loan Guarantee Program, a borrower may borrow up to 100% of the appraised value of the home (100% LTV). Borrowers may have up to 115% of the median income for their area (see here for income limits)

More information on the Loan Guarantee Program may be found on the USDA Rural Development Housing & Community Facilities Programs site: http://www.rurdev.usda.gov/rhs/sfh/brief_rhguar.htm

HCFP Mutual Self-Help Housing Program
This program helps very-low- (50 percent of the area median income) and low-income (between 50 and 80 percent of area median income) individuals or families to construct their own home. Borrowers participating in a HCFP mutual self-help project perform approximately 65 percent of the construction on each other's homes under qualified supervision.

More information on the Mutual Self-Help Housing Program may be found on the USDA Rural Development Housing & Community Facilities Programs site: http://www.rurdev.usda.gov/rhs/sfh/brief_selfhelpsite.htm

HCFP Home Repair Loan and Grant Program
HCFP offers loans and grants for home renovation to very-low-income individuals or families who own their own home. Loans made under this program are 1% loans that may be repaid over a 20-year period.

More information on the Mutual Self-Help Housing Program may be found on the USDA Rural Development Housing & Community Facilities Programs site: http://www.rurdev.usda.gov/rhs/sfh/brief_repairloan.htm

Rural Development Real Estate for Sale
Rural Development real estate for sale includes:

• Government owned real estate and potential foreclosure sales for single family homes (SFH)
• Government owned real estate and potential foreclosure sales for multi-family housing

More information on the Rural Development real estate for sale may be found on the USDA Rural Development Real Estate for Sale site: http://www.resales.usda.gov/

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VA Loans
Since its inception in 1944, the VA loan program has been intended to provide a benefit to veterans for their service to the United States. Similar to FHA loans, VA Loans are not loans that are made by the Department of Veterans Affairs. A VA Loan is a loan that is partially guaranteed by the VA allowing for some very favorable loan features for veterans.

VA Loans are available from lenders who participate in the VA Home Loan program.

Features of VA Loans
VA Loans are available as the following types of loans:

• Traditional fixed rate mortgages (FRMs)
• Graduated payment mortgages (GPMs) whose payments start low and gradually rise to a level payment in the loan's sixth year
• Hybrid adjustable rate mortgages (ARMs) where the initial fixed rate period is at least 3 years
• Traditional adjustable rate mortgages
• In some areas, Growing Equity Mortgages (GEMs) where gradually increasing payments are applied to the principal, resulting in an earlier payoff of the loan

Some of the attractive features of VA Loans include:

• Available for purchasing a home, a unit in a VA-approved condominium, building a home, for home improvements, to refinance an existing home loan up to 90 percent of the VA-established reasonable value, to purchase a manufactured home and/or lot
• No down payment requirements (may finance up to 100% of the cost of the home)
• Limitations on closing costs
• No private mortgage insurance (PMI)
• Will allow a home purchase two years after a bankruptcy
• Will allow a home purchase three years after a foreclosure
• Default assistance to avoid foreclosure
• Mortgage assumability subject to VA approval of the assumer's credit
• No prepayment penalties
• The VA performs loan servicing and offers financial counseling to help veterans avoid losing their homes during financial difficulties

Qualifying for VA Loan
According to the VA, more than 27 million veterans are eligible for VA Loans. Qualifying for a VA Loan is relatively straight forward. The eligibility requirements are:

• The applicant must be an eligible veteran who has available home loan entitlement. The rules of eligibility require some minimum number of days of active duty which vary depending on whether or not the duty was during wartime or peacetime. Visit the VA's General Rules for Eligibility to determine your eligibility. Please note that certain categories of spouses may be eligible for VA Loans, such as the spouse of a veteran who died while in service or from a service connected disability.
• The loan must be for an eligible purpose.
• The property must be owner-occupied by the veteran within a reasonable period of time after closing the loan.
• The veteran must have reasonable credit.
• The income of the veteran and his or her spouse must be sufficient to to cover housing expenses as well as other expense obligations.

The VA Loan Application Process
The process of applying for a VA Loan is also pretty straight forward. The first step is for the veteran to apply for a Certificate of Eligibility (COE). One may be obtained by completing VA Form 26-1880, Request for a Certificate of Eligibility, and sending it, along with proof of military service, to an eligibility center (see http://www.homeloans.va.gov/contact.htm for eligibility center locations and contact information). Proof of military service may be obtained using Standard Form 180, Request Pertaining to Military Records. Veterans may also ask any lender that they are working with to try and obtain a COE through ACE (Automated Certificate of Eligibility).

The next step is for the veteran to find a home that they wish to purchase and sign a purchase agreement. After that, the lender (usually) will order an appraisal from the VA. The formal mortgage application to the lender is the next step. Most loans are authorized on an automatic basis and are approved and closed upon receipt of the appraised value determination. After that it is time for the veteran to close the loan and move in to their new house.

VA Loan Limits
While there is no loan limit for VA Loans, lenders typically pay up to 4 times a Veteran's entitlement, which is $36,000, or 25% of the Fannie Mae/Freddie Mac loan limits in effect at the time for larger loan amounts. As of 2006, this effectively makes the upper VA Loan limit $417,000. Many lenders may have limitations of their own. VA Loans are typically 15 year or 30 year loans. The maximum VA Loan term is 30 years and 32 days.

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Understanding Remortgages

When you choose to remortgage, you get a new mortgage that replaces your existing mortgage. Remortgage is an option when the market interest rates drop significantly. You no longer need to be stuck with a mortgage deal for the rest of your life when you can consider various remortgage options to improve your finances.

Why Remortgage?
Borrowers could choose to remortgage for a number of reasons depending on individual needs and constraints. By remortgaging one can take advantage of the competitive mortgage deals on offer currently.

• Save money with a better deal: Borrowers can save a great deal of money by choosing to remortgage their existing mortgage deal. One can begin by finding out what interest he/she is paying on their current mortgage and find out if whether there is a deal with a lower interest rate. Online remortgage options provide the borrower the convenience of applying online through a simple and secure online application form.
• Raise money for home improvements, dream holiday, new car etc: A remortgage could turn out to be the most cost effective option if you are planning home improvements, a holiday or even a car purchase. You could also release any money locked up in your home to raise cash for your various needs.
• Consolidate debts: Borrowers could also consider remortgage as the quickest and one of the easiest ways to deal with bad debts. One can take advantage of low interest rates and borrow to consolidate expensive debt and save on interest rates.
  

Remortgages helps you take advantage of booming markets and newer remortgage deals. It also helps you move to a more flexible mortgage plan which will suit your needs and constraints better. According to your needs, you could also reduce the duration of paying off loans.

Remortgage does come with a multitude of benefits, but it is always a wise option to do some research before opting for a remortgage. Online remortgage options have provided borrowers a chance to compare offers, obtain free quotes and finally apply for a remortgage through a safe and secure online application form.

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Mortgage Refinance and Credit Repair

Million of Americans have credit problems. Those who own homes can use a mortgage refinance to help with credit repair. Mortgage refinance involves taking out a new mortgage to pay off the original loan. Depending on your equity, the new mortgage can be for more than the amount of the old loan. This money can then be used to for debt consolidation, which can improve your credit rating.

The mortgage refinance business is very competitive. Make sure you don’t get conned by unscrupulous lenders. Jack Guttentag, the Mortgage Professor, cautions, “The refinancing market is something of a jungle, but you are safe if you observe one basic principle: You cannot save money on a refinance unless the interest rate on the new mortgage is below the rate on the existing one.

“Some con artists will show you that your total interest payments will decline if you refinance into their higher-rate loan. However, they get that result by assuming that you will repay your new mortgage (but not your old one) on an accelerated (biweekly) schedule.

“Some others … get (a lower) result by extending the term. If your current mortgage does not have many more years to run, an extension of the term can reduce the payment by more than the higher rate increases it. If you do it, you pay for it big time in the form of a higher loan balance in future years.”

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Getting a Mortgage With Friends

Property prices for even the smallest apartments are beyond the reach of many first time buyers nowadays. As a result, more and more people are clubbing together with friends to share a mortgage and ownership of a property. It’s a very good way to get on the property ladder, but as such arrangements are never normally for life and one or more party will inevitably want to sell eventually, the fine details should be agreed clearly at the outset to avoid financial loss or the loss of friendships.

The terms of a joint ownership mortgage are no different from a standard mortgage. Regardless of the amount of deposit that each person pays or the salary that they are earning, each shares equal liability for making the mortgage repayments as far as the mortgage lender is concerned. So if one person stops making repayments, the others will have to cover their share to ensure that the full repayment amounts are paid. It’s up to the joint owners to decide how they will divide the mortgage repayments and ownership of the property between themselves.

Clearly, a legal agreement is the best way to ensure that everyone understands their rights and responsibilities. This isn’t a sign of mistrust, it’s simply a guarantee of protection for everyone. Although not compulsory when taking out a joint mortgage with friends, it’s certainly wise to do so. It won’t cost much to have one drafted up by a solicitor. In fact so many people are taking out mortgages in this way that some mortgage lenders provide specially tailored joint ownership mortgages that include the drafting of a legal agreement.
Although the mortgage calculation is based on the sum of everyone’s incomes combined, the mortgage lender doesn’t give people different sizes of share in the mortgage or property. How much each person contributes towards the repayments is up to the joint owners to decide. It doesn’t have to be directly related to each person’s salary. This should be set out in the written agreement.

It can become more complicated in circumstances where individuals have put down different deposit amounts. However, again it’s up to the joint owners to decide how they want to divide the shares in ownership and in the mortgage.

If there’s only a small difference in the amount of deposits paid by everyone, it can be evened out informally by those who paid a smaller deposit making separate repayments to those who paid a larger deposit until their contributions are balanced out.

Alternatively, you may decide that each person has their deposit amount returned to them upon the sale of the property before the remaining profit is shared equally among the joint owners. This tends to work best in circumstances where the deposit amounts are low.

A common agreement for joint owners who have paid different deposit amounts, particularly if they are a large sum, is for the share in the ownership of the property to be equal but for each person’s deposit amount to be taken into account when calculating the mortgage repayments, so that those who put down smaller deposits have a bigger share of the mortgage. When it comes to one owner leaving or the property being sold, each person’s share in the profit is determined by calculating their share of the current balance of the mortgage deducted from the current market value of their share.

This is fairer than taking an equal share of the gain plus giving each person back their deposit amount, as those who have been paying more towards the mortgage as a result of their lower deposits will actually have been paying more towards the capital than those who paid lower monthly amounts because of their higher deposit.
There are several different ways in which a person’s circumstances may change, thereby affecting their share of the mortgage and property.

The details of what will happen in such situations should be ironed out in the legal agreement. If for any reason one of the joint owners wants to leave, there are various possible options:

• the person keeps their share of the mortgage and property and rents out their room
• the person sells their share to the remaining owners who can then rent out the room if they wish
• the share is sold to a third party in direct replacement of the person leaving
• the whole property is sold and all parties leave

Insurance should be taken out as part of the legal agreement to cover situations in which people are unable to continue paying their share of the mortgage for a period of time, for example because of illness, injury, redundancy or death. For illness or injury, insurance cover will normally make their repayments for them for up to a year, and if the person is still unable to make repayments after this, their share of the property will almost certainly have to be sold.

If one of the joint owners dies, life insurance will provide a lump sum to pay off the person’s share of the mortgage, and, depending on the legal agreement drawn up, their share of the property will become part of their estate. Writing a will is a sensible precaution for ensuring that the deceased’s estate is distributed according to their wishes.
There are other things you’ll need to agree such as whether third parties can live at the property, and if so, for how long. You’ll also need to decide how you’ll split the fees for buying and selling the property.

All of these issues should ideally be specified in the agreement, which is best drafted by a solicitor to ensure that it’s fair and legally binding and covers all eventualities. Joint ownership with friends should be an enjoyable experience and you wouldn’t want to lose out on friendships or money as a result of misunderstandings.

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Is There Really Zero Down Mortgages?

Yes if you could find someone such as your parents or friends to lend you 100% of the value of the house. Voila that is zero down. But this is extremely hard to come by for many borrowers.

Next try the banks, credit unions and private mortgage lenders. Do they offer a zero down program. Yes possibly.

The way they will structure a zero down mortgage is as follows:

Scenario I: they may offer two separate mortgages. One conventional mortgage for 80 percent of the market value of the house and then a second mortgage or line of credit for the remainder twenty percent. In this case there is no requirement to buy mortgage insurance. This can save you quite a bit on insurance fee.

Scenario II: they may offer one single high ratio mortgage. High ratio mortgage is a mortgage for 81 percent up to 100 percent of the house market value.

That's sounds too good to be true. But it is true. There are however certain conditions to be fulfilled:

Firstly, the mortgage needs to be insured. There are two major mortgage insurance companies in Canada. the Canada Mortgage and Housing Corporation (CMHC) - a Canada Government corporation, and

Genworth Financial- a public corporation. They will charge you a premium for the mortgage insurance from 0.5% to 3.1% depending on the ratio of borrowing to the value of the property. The higher the ratio the higher is the premium. You do not have to deal with the insurance providers as the mortgage lenders will do all the paper work for you. It is hassle free as far as you are concerned.

It is interesting to note that the interest rate on insured mortgages is the same rate as the mortgage rate on conventional mortgages. In other words you are not paying an arm and a leg in interest.

Secondly, the lenders want to make sure that you will be able to make all your monthly debt repayments, including the mortgage, credit card, car loan, consumer loan etc. You have to show to them that you have a proven track record of properly managing your debt obligations.

The lenders will also assess your job and salary and make sure as far as possible that your job is a good steady permanent job and your salary is high enough to fulfill all your monthly debt repayments.

If the above sounds like you, you have a good chance of being approved for a zero down mortgage.

The lenders will also assess the location and type of the property you are purchasing and make certain that it is in a high demand area of the city. They want to make sure that they can sell the property easily in case of default by the borrowers. They also believe that the value of the property will likely go up year by year. Same time next year hopefully some equity would have been accumulated in the property.

We are lucky that in Canada there has been little problem with high ratio mortgages. But in the States last year several high profile sub-prime lenders have got themselves in hot water for lending too aggressively to high risk borrowers. Billions have been lost but that's their problem.

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Types of Buy to Let Mortgages

Buy to let mortgages are relatively new financial products, introduced onto the market in the mid-1990s. These mortgages allow a person to purchase a house or flat with the intention of letting it. A buy-to-let mortgage allows you to obtain the financing needed to buy the property based on the rental income rather than your actual personal income.

It will be relatively easy for you to arrange the mortgage; as long as the projected rental income is greater than 130% of the calculated interest payment, you can purchase the property. In recent months, lenders have relaxed their lending criteria, and have approved mortgages for 110% or even 100% of the monthly payments. However, there may be higher arrangement fees or interest rates imposed in exchange for the reduced rental cover.

The best buy-to-let mortgage for you will depend on many factors, specially the size of the deposit and the purchase price. The deposit level added to the amount you are willing to borrow dictates the maximum purchase price.

It is important to calculate the maximum purchase price so you know what you can afford to buy and then determine the realistic monthly rent that you can achieve. There is no point looking at a property that will not attract sufficient rental income to at least cover your out goings.

Loan To Value
Lenders will have a loan to value (LTV) requirement that stipulates the amount required as a deposit against the purchase price of the property. Most lenders require at least a 10% deposit and often require 15% or more. A 15% deposit results in an LTV of 85%. IN general the larger the deposit that you provide (creating a lower LTV), the lower the risk for the lenders and the better the mortgage deal you will be able to negotiate.

If you ready to arrange a buy to let mortgage, there are three primary options in repaying the loan: repayment mortgage, interest-only mortgage, or a mixed interest and repayment mortgage.

Repayment Buy To Let Mortgages
Repayment mortgage payments consist of an amount that goes to interest payments and an amount to cover a fraction of the capital. This means that at the end of the term all the capital elements of the mortgage will be paid off so you own the property outright. In the early years of a mortgage, virtually all of your payments will cover interest while only a small portion will go to the principal.

For instance, on a £100,000 mortgage for 25 years with a 7.5 per cent interest rate, after ten years of monthly payments, you would still have £79,188 outstanding on your loan. It is only in the second half of the mortgage that the proportions are reversed, and applications to principal progressively increase until you finally pay off the loan at the end of the term.

A repayment mortgage is usually considered a good option if you can put down a large deposit so that the rental payments cover the larger monthly mortgage repayments that are required for a repayment mortgage. The tenants are literally buying your property for you, however be aware of tax laws which dictate that the capital repayment elements of your monthly mortgage payments cannot be reclaimed as a legitimate expense against your tax bill.

Interest-Only Buy to Let Mortgages
With this mortgage, you pay the interest only on your loan during the life of the mortgage. At the end of the term, say 25 years, you will have to pay back the principal. Borrowers usually pay this balance by either selling the property or by cashing in a savings plan � such as an endowment, pension plan, or an individual savings account (ISA) � scheduled to mature at the same time as when the mortgage balance becomes due. This option assures you of the lowest monthly payment, freeing up more money for your developing your property portfolio.

Most buy to let landlords obtain interest only mortgages because the lower monthly payments mean larger loans can be taken out against the property and yet still meet the lenders mortgage to rent ratios. Using the capital gain in one property to finance the purchase of another property with an interest only mortgage is a common way of building a portfolio of buy to let properties.

Mixed Buy To Let Mortgages
This type of mortgage allows you to combine into your monthly payment an amount for part repayment and part interest-only. Your monthly payment thus consists of the amount due on interest charged for the whole loan amount, plus an amount due on capital repayment, over the agreed term. You will have to provide for a repayment vehicle, either a savings or an investment plan, to settle any outstanding balance of the loan that may remain when the mortgage matures, or sell the property.

As noted above, be careful about claiming the capital repayment elements of a mixed mortgage against your tax bill as only the mortgage interest can be claimed as a legitimate expense. The tax inspectors are cracking down on this at present so you may be caught out with a claim for under payment of tax and associated penalties.

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Foreign Property Mortgages Management

If you are considering buying a holiday home abroad and you don't have your suit cases packet full of cash then you will need to consider alternative means of funding your purchase. Just like buying any property you can take out a loan in the form of a mortgage to assist you in raising the money required.

Buying a home abroad isn't always as simple as it sounds and you may have overlooked some of the inevitable complications associated with this kind of purchase. A lot of people spot an area they want to live in or even a property they would like to buy when they are on holiday; at a time when you are away from work and the stresses of your day to day life at home you may be a little less capable rational decisions than normal. Researching the location you want to buy in, the property markets and the travel arrangements should help to give you a bigger picture and help you decide whether you really do want to commit.

Have you considered what the location of your property is like in the winter? The place may be delightful in the summer but what happens in the off-season and what impact could the winter climate have on the property? Do you really want to go on holiday to same place every year? Is it convenient and financially viable to travel regularly to and from your second home?...All these things should be considered.

Thanks to the economic growth in Britain property tends to generally increase in value year on year but this may not be the case for property price trends in foreign climes, so it may be best to rent out your property when you are not using it in order to fund the upkeep of the property and to replace profits that you otherwise might gain from it's capital.

When you are shopping for a mortgage to fund the purchase of your property abroad there are several options available to you that you may want to consider:

• The first option is to extend the mortgage you have on your existing property, this can be a cheaper way to fund the purchase of a foreign property; but don't forget that if you can't keep up with repayments you might lose both properties as a consequence.
• The second option is to take out a secondary mortgage especially for your second property. There are quite a few companies and high street lender that will offer services specifically designed for buying holiday homes outside of the UK, you should compare rates between as many as you can to ensure to get the best deal at a competitive rate.
• Another option that you may want to consider is taking out a mortgage in the country that your holiday home is located. This will involve taking a loan in another currency and there are some risks associated with this kind of commitment. For instance the conversion rate; if the currency in question moves against the pound you could end up paying more for your mortgage. If you do take this option you will need to study closely past trends in currency fluctuation and asses the risks accordingly.

There can be hidden costs when buying a property abroad which you may want to cover with the loan but this will increase the amount you will have to borrow and of course pay back. You should take into account legal fees, valuation costs, taxes, and currency conversion fees.

If you don't fluently speak the language of your chosen destination you may also have to pay for a translator to serve as a middle-man for negotiations with foreign estate agents and so on. Don't forget also the costs of maintaining and insuring your home abroad, you may require specialist insurance for liability etc if you are intending to rent out your home especially if you are intending on hiring any domestic staff.

The list of expenses can be long and all these factors will have an effect on how much you can afford to pay back on your second mortgage. The key to success is to look well ahead and plan for every likely financial eventuality.

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Guide To Council House Mortgages

The Right to Buy scheme allows tenants living in a council property the chance to buy their home at a price lower than the full market value. Tenants can borrow the money to buy their property with a Council House Mortgage (also known as a Right To Buy mortgage). The discounts available vary depending on the area you live in and how long you have been in your council house for.

Most people who are going to buy their home will need a mortgage, which is a particular type of loan. There are various kinds of mortgages available from banks and building societies, so it always important to make sure you get the right mortgage deal for you.

Mortgages are generally available for a period of up to 25 years or sometimes longer, whereby the mortgage holder will pay a monthly amount that covers either the interest on the loan only, or a larger amount that pays off both the interest and a certain amount towards the capital of the loan.

When you contact your local council or landlord about your interest in the Right To Buy scheme, they will inform you of the Open Market Value (OMV) of your property. The OMV is the full value of your house: i.e. the amount you would expect to pay for that property normally. They will also let you what discount you are eligible for. From this you can work out the Right To Buy (RTB) value of your property – in other words, the amount you’ll actually pay.

The amount you need to borrow for your Council House Mortgage will depend on the Open Market Value of your property minus any discount you are eligible for minus any cash you may be able to put towards the purchase (known as a deposit).

There are lots of Right To Buy lenders who will provide a mortgage enabling you to buy your council house. Most will lend up to 95%, whilst others will lend the full 100% of the Right To Buy price.

Some specialist mortgage lenders will allow you to borrow up to 85% of the OMV of your house. So you may be able to borrow more money than you need to buy your house. Here’s an example: say your house is valued at £100,000, and you’re entitled to a 25% discount from the council.

Open Market Value = £100,000
Discount = 25% or £25,000
Right To Buy (RTB) Price = £100,000 - £25,000 = £75,000

Some lenders will offer you up to 100% of the RTB price, in this case:
100% of £75,000 = a maximum mortgage of £75,000
But some specialist lenders will offer you 85% of the OMV, in this case:
85% of £100,000 = a maximum mortgage of £85,000

As you can see, you could get an extra £10,000 by choosing a specialist Council House Mortgage company. You then have the opportunity to use this extra money to improve your new home by fitting double glazing, central heating or even a new kitchen.

Taking out a Council House Mortgage is a big step, so it is well worth taking time and looking around to find the best mortgage lender and mortgage deal to suit you.

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Overview of Capped Mortgages

Capped rate mortgages have variable interest rates that will not rise above a certain upper limit. The interest rate can rise or fall during the term of the mortgage, however it will not rise above the capped upper limit.

Interest on capped rate mortgages is usually charged at the lender’s Standard Variable Rate (SVR) and any changes to this rate will affect the amount of monthly repayments due.

The lender’s SVR normally rises and falls roughly in line with changes to the Bank of England Base Rate (BoEBR). The base rate is assessed each month by the Bank of England’s Monetary Policy Committee (MPC) and any changes to the rate are reflected in lenders’ SVRs shortly afterwards.

While capped rate mortgages have variable interest rates, unlike other variable rate products, capped rate mortgages offer the borrower some protection against interest rate rises with the “cap”.

The capped rate is an agreed upper limit that the SVR cannot exceed during the term of the mortgage, therefore any rises in the lender’s SVR below the cap will be passed on to the borrower, while any rises above the cap will not.

Conversely, any falls in the lender’s SVR below the cap will be passed on to the borrower, therefore reducing the amount of monthly repayments due. The borrower will therefore be protected against rises in interest rates above a certain point, but will benefit from any falls in interest rates.

Because of this, capped rate mortgages are ideal for borrowers who are expecting interest rates to rise and become popular during times of steadily rising interest rates. By taking out capped rate mortgages during periods of historically low interest rates, borrowers can secure themselves against excessive future increases in interest rates while still benefiting from any reductions in rates.

Capped rate mortgages may also have an associated “collar” below which the borrower’s rate cannot fall. These products are known as cap and collar mortgages. Any reduction in the SVR below the collar will not be passed on to the borrower.

It is important to note that most lenders charge an arrangement fee for their capped rate mortgages and the SVR attached to these products are usually slightly higher than for discounted mortgages.

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Right to Buy Mortgages

Under current government legislation (The 1981 Housing Act) council, housing association and housing trust tenants in the UK have the right to buy their homes. This can be a good starting point for first time buyers as homes are often available at generous discounts providing a valuable first foot hold into the property market.

House prices are currently so high in Britain many young people and first time buyers have been left behind and been subsequently frozen out of the property market altogether, this often can be one of the only feasible ways to get onto the property ladder.

After a tenant has lived in the property for a preliminary period (normally 2 years) the tenant then has the right to purchase the property often at a discounted rate. The price you are entitled to buy the property for is dependant upon the type of property and how long you have resided in it. Under the right-to-buy scheme, council tenants are entitled to a 32% discount on the value of their house after they have lived in it for two years, followed by a further 1% deduction for each additional year, up to a maximum of 60%. For flats the available discount rises to 70%. In addition to the discounts on the property discounts on loans and mortgages may also be available depending on your status and eligibility. Surprisingly some mortgage schemes can offer such favourable rates that mortgage repayments are often cheaper then tenants current rent payments so buying your council property could favour you dramatically short and long term.

Mortgages for this kind of property purchase are offered by specialist companies and vary quite dramatically to conventional type mortgages. The mortgages are usually offered for the market value of the home rather than the discounted rate that you purchase it for. For instance if you have lived in the property for ten years and purchase it with a 40% discount you will still be eligible for a mortgage of up to 70% of the properties true market value leaving you with surplus cash.

The right to buy scheme has been designed with mortgages working in this manner so that surplus cash can be mainly used for home improvements and renovations to your property. This means the potential for increasing the value of your home by making home improvements is far greater than when you were a tenant of your local council or housing authority when often houses were rarely if ever renovated or given home improvements.

If you can't or simply choose not to buy a house privately and you are eligible to have the right to buy your residence through this or similar schemes, you should seriously consider this option. It will however be advisable to seek sound professional advice before considering any purchase or mortgage arrangements.

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Flexibility & Convenience of Online Mortgage Loans

If you're thinking about purchasing a new home, or in the market for a mortgage, you may be wondering what options there are for you based on your income and budget.

Traditionally, when you wanted to buy a house, you went to your bank and you received a mortgage with fixed rates and payments.

Mortgage options available today are more flexible, but may incur increased risk for the buyer. Applying for mortgage loans online offers a convenient way too process a loan in the comfort of your own home.

Flexibility and Savings
It's never been easier to negotiate Mortgage loans online. While the conditions and terms of the mortgage remain the same as a traditional bank mortgage, the primary benefit for the consumer is the flexibility in loan applications and processing.

In addition, the stress free environment is ideal for most people when compared to a banking atmosphere. Savings are passed on to the consumers by cutting commissions, eliminating lender fees, and offering competitive rates from a pool of mortgage lenders.

Mortgage services
Internet mortgage services allow consumers to research interest rates and prospective mortgage lenders. After providing basic information such as; mortgage amount, amortization period, employment and credit history, a quote will be provided to you. The list of lenders will generally be higher if your credit rating is good.

Although there are some lenders who can service consumers with bad credit, the better your credit rating, the more likely you are to qualify for mortgage loans at competitive prices. The online mortgage process can allow for great savings over traditional lending channels.

Negotiating a mortgage can be a stressful and demanding time for anybody. The time it takes to research mortgage lenders for their products can be better spent with more productive matters.

The mortgage loans online services will find the best rate for your financial situation and hold your hand through the process.

This saves time by pre-clearing you information with the mortgage lenders, aligning the consumer with the best deal with prospective lenders who want your business.

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What is a Fixed Rate Mortgage

As the term implies, with a fixed rate mortgage the mortgage rate is fixed for a set period of time, so no matter what movements occur in the lender's standard variable mortgage rate, the borrower's arrangement is fixed and, therefore, so are the monthly fixed rate mortgage payments.

A fixed rate mortgage would suit someone who likes to know where they stand. A fixed rate mortgage, as suggested by the name, is a mortgage where equal repayments are made every month.

Fixed rate mortgages allow you to easily manage and plan your monthly expenditure - because the payment will be the same every month and you won't be affected by any rises in the base rate. If the interest rates rise above the fixed rate on your mortgage, you will see the real benefits of the fixed rate mortgage.

A fixed rate mortgage makes it easy to plan ahead, because as the name suggests, the interest rate on your mortgage stays fixed.

This means that as a fixed rate mortgage customer, even if the Bank of England Base Rate changes, the interest rate on your mortgage remains constant over a fixed period of time. This makes your budgeting easier, because you can plan ahead knowing exactly how much your monthly repayments will be.

The fixed rate period can be anything between six months and five years, but it's always best to refer to a financial services professional before deciding what period of fixed interest rate to choose.

The biggest advantage of a fixed rate is that irrespective of fluctuations in interest rates, your monthly repayments remain the same throughout the period of the fixed rate - usually six months to five years.

A fixed rate mortgage is suitable if your mortgage repayments take up a large proportion of your income as it protects you from rises in interest rates. However, you would not benefit from any reduction in the lenders standard variable rate.

Fixed rate mortgages generally incur a penalty if redeemed within the fixed rate period.

The advantage of a fixed rate mortgage is that you know exactly how much your mortgage will cost, and for how long. If interest rates on your mortgage rise, well the fixed rate will not. Conversely, however, when mortgage rates drop, your fixed rate mortgage will not drop with them.

The key benefit of a fixed rate mortgage is that you are able to accurately budget your repayments for a set period of time. In addition, fixed rate mortgages are an excellent option, if it becomes apparent that interest rates may be rising over the coming years, as you can protect your mortgage repayments against rises by choosing a fixed rate mortgage.

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How To Buy A House & Choose a Mortgage Broker

There is no doubt that the market for houses has been on fire recently. More and more people are taking advantage of low interest rates and easy mortgage loan terms to go from being renters to being home owners. With so many people entering the market, it is inevitable that questions will arise.

There are many things to consider when buying your first home. Some of the most important steps to buy a house are:

Learning the home buying process
Start by learning as much as you can about how the home buying and mortgage application process works. Read as much as you can about buying a home. Check out the many books in your local library that offer hints to first time home buyers. Read financial web sites on the internet for tips for first time home buyers. You may even want to sign up for a class aimed at first time homeowners. Many towns and cities offer these kinds of classes, and they can be a great source of information for the buyer looking for his or her first home.

Find out the pre-qualified price range
It is important to find out how much you can borrow before you start looking for a home. Talk with several mortgage lenders in your area and get pre-qualified for a particular price range. The mortgage lender will be able to help you determine how much you can borrow based on your annual income. In general, mortgage lenders recommend that all home related expenses, including the mortgage payment, insurance premiums and real estate taxes, do not exceed 28% of your monthly income.

Get Pre-approved for mortgage loan
The next step is to get pre-approved for mortgage financing. This is similar to getting pre- qualified for a price range, but it is a more formal process. You will need to supply proof of your income for the pre- approval process to move forward. Most lenders will want to see income tax returns from the past two years as proof of the income you are claiming.

House hunting
After you have been pre-approved for your mortgage loan, it is time to actually start house hunting with a realtor (find out why you need to find a realtor before buying a house?). Your mortgage lender will give you a letter stating that you have been pre-approved for a mortgage and the amount you are authorized to borrow. You will need to present this letter to the real estate agent when you get started. It is important to get pre-approved for a mortgage loan before beginning your home search. The real estate agent and real estate company will be much more willing to work with you if they know you can afford the home you are looking at. In addition, sellers will take your offer much more seriously if it is accompanied by a pre- approval letter from your mortgage lender.

Make an offer
Once you have found a home that meets your needs, it is time to make an offer on the property. You will already know the most you can spend from the pre-approval process, and you probably will have your own ideas on what the property is actually worth. In addition, your real estate agent can guide you through the negotiation process and offer procedures. A copy of your pre-approval letter will be presented as part of the written offer. This will ensure the seller that your offer is legitimate.

Negotiation process
If the seller accepts your first offer, congratulations. Your negotiations are over and you're ready to start preparing for your move. More likely, however, is that the seller will come back with a counter-offer. This negotiation process can go on for a short or long amount of time, depending on factors like the motivation of the seller, the local real estate market, and a host of other factors. The real estate agent will be a good guide through the negotiation process. After all, he or she will have been through this process many times before.

Provide copy of Purchase and Sale Agreement to mortgage broker
After the negotiation process has been completed, you will need to present your mortgage broker with a copy of the Purchase and Sale Agreement for the home.

Work to close the mortgage loan
After presenting the Purchase and Sales Agreement, you will need to work with the mortgage broker to ensure you meet all the conditions required for the closing of the mortgage loan.

Home inspection prior closing
Prior to closing, you will want to make sure to have a thorough home inspection performed by a qualified and certified home inspector. A home inspection will protect you from flaws in the construction and condition of the home that are not obvious to the naked eye. Home inspections can uncover things like foundation cracks, termite infestation and other home quality issues.

Hand over down payment
After the home inspection has been performed and the report has come back clean (or all the items uncovered have been repaired), it is time for the buyer to actually hand over the money for the down payment and sign the loan documents.

Collect the house key
After the closing of the loan, the fun part of home buying begins. Your real estate agent will hand over the keys to your new home and you can actually move in and enjoy your beautiful new home. Welcome to moving day!

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Reverse Mortgage - Good Financial Planning Tool?

Simply stated, a reverse mortgage is a loan that enables homeowners (age 62 and older) to convert part of the equity in their home into a tax-free income without having to sell the home, give up the title, or take on a new monthly mortgage payment. More and more homeowners are using this to supplement their retirement income, pay for health care, modify their home, or just get some cash for emergencies. Since this is a new product, some people have misconceptions of what a reverse mortgage is. The bank doesn't give you money and take your house. Let's look at some of the most common questions.

Are reverse mortgages for desperate people? No. It is an excellent financial planning tool used from people of all walks of life.

How do I qualify? You must be 62 or if both parties are on the mortgage, then you both must be at least 62. And, you must have equity in your home.

What if I still owe on my home? You may still qualify even if you have a balance on your first mortgage. The proceeds must be used to pay off the mortgage, first.

How much can I get? This depends on several factors such as, the age of your home, the value, your age at the time of closing, and interest rates.

Is it just monthly payments? No. You can get a lump sum, line of credit, monthly payments or a combination of monthly income and a line of credit.

But, won't I have to pay taxes on these monthly payments to the government? No. The funds are tax-free. Its your money, not additional income.

Should I seek a lawyer or receive some counseling before I get a reverse mortgage. Yes. You must be counseled before receiving a reverse mortgage. You don't have to talk to a lawyer or accountant, but it would be advised.

Who owns the title to my house? You still own the title.

What happens when I die? Once your home is passed on to your heirs, the mortgage becomes due. Your heirs may pay the mortgage and keep the home or sell the home and pay off the home. They may keep any excess sales proceeds.

What if I owe more than the house is worth? You can't. Your repayment amount will never exceed the value of the home at the time the loan comes due. Also, there are no prepayment penalties.

What if I move? If you move, then the mortgage becomes due and must be repaid.

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Factors That Affect Your Mortgage Rate

The amount of your loan can increase your interest rate if the amount financed exceeds the conforming loan limits established by Fannie Mae and Freddie Mac. The conforming loan limit changes at the beginning of each year.

Shorter loans, such as 20 year or 15 year note, can save you thousand of dollars in interest payments over the life of the loan, but your monthly payments will be higher. An adjustable rate mortgage may get you started with a lower interest rate than a fixed rate mortgage, but your payments could get higher when the interest rate changes.

A larger down payment greater than 20% will give you the best possible rate.

Down payments of 5% or less should expect to pay a higher rate as you are starting with less equity as collateral. If you've got the cash now and want to lower your payments, you can pay on your loan to lower your mortgage rate. It's a simple concept, really: In exchange for more money up front, lenders are willing to lower the interest rate they charge, cutting the borrower's payments. Closing costs are fees paid by the lender, if you don’t want to pay all of the closing costs, expect a higher rate which will pay the lender additional interest over the life of the loan.

Credit quality and debt-to-income-ratio affect the terms of your loan through FICO Score. If you have good credit and your monthly income far surpasses your monthly debt obligations, you will get approved at a lower interest rate. However, if your monthly income barely covers your minimum debt obligations, even if you have a credit report, you will not receive the lowest available interest rate.

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