Alternatives to Remortgages

Unlocking equity that has built up in a property can be achieved through a number of means including remortgages.

Mortgage Ripoffs and Money Savers: An Industry Insider Explains How to Save Thousands on Your Mortgage or Re-Finance by Carolyn Warren Praise for Mortgage Rip-Offs and Money Savers

Remortgages are carried out by home owners who want to release the equity in their home and apply for a new mortgage at the same time. Remortgages can either be carried out with the same mortgage lender that the borrower has their existing mortgage with, or with a different lender altogether.

All remortgages that release equity will result in the balance of the new mortgage being higher than the balance of the old mortgage. The old mortgage is paid off with the funds from the remortgage and the excess is given to the borrower and will represent the amount of equity that has been released.

• Getting a Low Interest Mortgages
  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...

While remortgages are extremely popular in the UK, there is an alternative method of equity release that will not require the home owner applying for a new mortgage and redeeming their existing one.
Second mortgages are a popular and effective alternative to remortgages. Second mortgages are also known as secured loans and are loans that are secured against the equity in the borrower’s home.

Instead of applying for a brand new mortgage, the borrower will keep their existing mortgage and secure a second mortgage against the releasable equity in their property. As opposed to remortgages, second mortgages must be issued by a different lender to the lender that issued the existing mortgage.

Both remortgages and second mortgages options have advantages and disadvantages.

Because second mortgages are similar to personal loans in that they are issued for a shorter term than remortgages, they can be the most sensible option when the finance is required for a short period of time.

However, remortgages can involve paying large application and brokerage fees. The longer the time period you stay with the mortgage the more value you will receive out of paying for those fees.

Second mortgages usually incur smaller fees than remortgages. There is no need, therefore, to keep the second mortgage active for a long period of time to gain some pay-back from any fees that may be incurred in securing the loan.

Some second mortgages also offer facilities such as a cheque book and ATM card for draw downs, and a deposit book for making repayments.

Not all second mortgages offer such options so it is advisable to shop around if you require them. Also keep in mind that extra fees may be incurred so ensure that you actually require the extra facilities before signing on the dotted line.

If you require any advice on remortgages, contact an independent mortgage adviser for help.

Related Post:

• Mortgage Financing Loans
• Simple Things That Make A Big Difference To Your Mortgage Loan

More on this article...

Adjustable Rate Mortgage

The adjustable rate mortgage is a type of loan which will be secured on a home which has an interest rate and monthly payment that will vary.

So You Want to Refinance: An Insiders Guide to Refinancing Adjustable Rate Mortgages and Home Loans by Kristina, Benson "A must-have for any home owner looking to refinance." Homeowner Are you paying more than you need to? In this book a mortgage lending insider reveals her answer to this question - and more - in her best selling So You Want to Refinance. If you are baffled by the dizzying array of mortgage companies, sales pitches, and loan products, this book is for you.

The adjustable rate will transfer a portion of the interest rate from the creditor to the homeowner. The adjustable rate mortgage will often be used in situations where fixed rate loans are hard to acquire. While the borrower will be at an advantage if the interest rate falls, they will be at a disadvantage if it rises.

In places like the United Kingdom, this is a very common type of mortgage, while it is not popular in other countries. The adjustable rate mortgage is excellent for homeowners who only plan to live in their homes for about three years. The interest rate will typically be low for the first three to seven years, but will begin to fluctuate after this time. Like other mortgage options, this loan allows the homeowner to pay on the principle early, and they don't have to worry about penalties. When payments are made on the principle, it will help lower the total amount of the loan, and will reduce the time that is necessary to pay it off. Many homeowners choose to pay off the entire loan once the interest rate drops to a very low level, and this is called refinancing.

One of the disadvantages to adjustable rate mortgages is that they are often sold to people who are not experienced in dealing with them. These individuals will not pay back the loans within three to seven years, and will be subjected to fluctuating interest rates, which often rise substantially. In the US, some of these cases are tried as predatory loans.

There are a number of things consumers can do to protect themselves from rising interest rates. A maximum interest rate cap can be set which will only allow interest rates to rise at a specific amount each year, or the interest rate can be locked in for a specific period of time. This will give the homeowner time to increase their income so that they can make larger payments on the principle. The primary advantage of this loan is that it lowers the cost of borrowing money for the first few years.

Homeowners will save money on monthly payments, and it is excellent for those who plan on moving into a new home within the first seven years. However, there are risks to this type of mortgage that must be understood. If the owner has problems making payments, or runs into a financial emergency, the rates will eventually rise, and the owner who cannot make payments may lose their home.

One term that you will hear lenders talking about is caps. The cap can be defined as a clause that will set the highest change possible for the interest rate of the loan. Homeowners can set up a cap on their mortgage, but they will need to make a request from the lender, as the cap may not be present on the rate sheets that are presented.

Related Post:

• Adjustable vs Fixed Rate Mortgages
• Beware Of Exploding Mortgages
• Mortgage Financing Loans
• Factors That Affect Your Mortgage Rate

More on this article...

Texas Mortgage Loans

Texas mortgage loans are very popular and useful for a variety of purposes. In the form of a debt consolidation loan, a new mortgage can help get homeowners out from under mounting bills. Texas mortgage loans are also a popular way to pay for improvements that increase the livability and market value of homes.

According to the May 2006 Economic Outlook put out by Freddie Mac, “…cash-out (mortgage loans), a major source for home improvement funds, remained at a high level: 88 percent of families who refinanced in the first quarter also converted part of their accumulated home equity into cash or consolidated their mortgage debt.”

Texas mortgage loans are easier to get than other forms of borrowing since the loan is secured by tangible property. They come at lower interest rates than other forms of borrowing such as credit cards or unsecured loans and have some great tax advantages not available on other forms of borrowing.

“If you find yourself in need of a sum of money, whether it's to renovate your home, purchase a new car or consolidate debt, a home equity loan can be a very smart financial tool.” - Everyone’s Money Book

Turning home equity into cash makes more sense than borrowing against the value of your life insurance policy. Such a withdrawal will be deducted from the face value of the policy, thus depriving your beneficiaries. A mortgage loan is smarter than drawing on your retirement funds. If you don’t pay the money back in five years, the IRS will assess taxes and penalties. And a mortgage loan is way better than borrowing from family and friends.

More on this article...

Mortgage Financing Loans

Mortgage financing is a loan obtained to purchase real estate. All mortgages have two features in common: principal and interest. Read more about mortgage FAQs.

What types of mortgage financing loans are available?
Fixed Rate Mortgage Loans: Payments remain the same for the life of the loan. Housing cost remains unaffected by interest rate changes and inflation. Adjustable Rate Mortgage Loans: Payments increase or decrease on a regular schedule with changes in interest rates; increases subject to limits.

Is there special mortgage financing for first-time homebuyers?
Yes. Lenders now offer several affordable mortgage financing loans that can help first-time homebuyers overcome obstacles such as bad credit. Lenders may now be able to help borrowers who don’t have a lot of money for the down payment and closing costs or have quite a bit of long-term debt.

What factors affect mortgage loan payments?
The amount of the mortgage financing, the size of the down payment, the interest rate, the length of the repayment term and payment schedule will all affect the size of your loan payment. So will a low credit score in that it will put your mortgage financing at a higher rate.

How does the interest rate factor in securing mortgage financing?
A lower interest rate allows you to borrow more money than a high rate with the same monthly payment. Interest rates can fluctuate as you shop for bad credit mortgage financing, so ask lenders if they offer a rate “lock-in” which guarantees a specific interest rate for a certain period.

How large of a down payment do I need?
There are mortgage financing loans now available that only require a down payment of 5% or less of the purchase price. But the larger the down payment, the less you have to borrow, and the more equity you’ll have. Mortgages with less than a 20% down payment generally require a mortgage insurance policy.

Related Post:

• Three Steps to Saving Money on Second Mortgage
• Who Need Subprime Second Mortgage
• Understanding Remortgages
• Factors That Affect Your Mortgage Rate
• What is a Fixed Rate Mortgage

More on this article...

2nd Mortgage Quick Tips

2nd mortgages can be tempting because you can get a large amount of money. However, there are some common pitfalls you should keep an eye out for. Take a quick glance over these 2nd mortgage quick-tips. You’ll be in a better position to negotiate the best 2nd mortgage.

2nd Mortgage Quick-Tips
Watching these factors will help your 2nd mortgage be a success:

• The APR. Don’t take the first 2nd mortgage rate you see. Contact at least one bank, one credit union, and one dedicated mortgage lender about your 2nd mortgage.
• Try to avoid 2nd mortgages with default penalties applied when you miss a payment or are late. We all think it won’t happen to us, but a clerical error can become very expensive. The interest rate on your 2nd mortgage could increase dramatically.
• If things change, you don’t want to pay a hefty prepayment fee to get your 2nd mortgage off the books. Flexibility is important, so avoid locking yourself in.
• Beware of 2nd mortgages that are bundled in with voluntary insurance policies. While this coverage may be useful, you may or may not need it bundled into your 2nd mortgage. Furthermore, you may already have adequate coverage outside of the mortgage.
• Know about any balloon payments in the deal. Some 2nd mortgages start with low, easy-to-afford payments (at the cost of a huge payment at the end). Read the contract carefully to see if this is why a particular 2nd mortgage is so attractive.

Complete Idiot's Guide to Mortgages, 2nd Edition by Jamie Sutton, CFP, CLU, AFC, Edie Milligan Driskill Covers everything homebuyers and re-financers need to know. Coverage includes an overview of the application process, overcoming qualification hurdles, finding the right type of loan, when and how to refinance to save money, and much more.

2nd Mortgage Costs
Now, before you apply for a 2nd mortgage, prepare for and budget for the costs. In addition to committing to a monthly payment, you might have some up-front costs to get your 2nd mortgage processed.

• Appraisal fees for your 2nd mortgage
• Points
• Application costs for the 2nd mortgage, which may not be refundable if you’re declined!
• Other closing costs. For example, they may do a title search for your 2nd mortgage, along with other processes. Just ask for a printed list of these miscellaneous fees.

As with anything, sometimes you get what you pay for. I recommend using a reputable lender that you can trust for your 2nd mortgage, and one who will simply disclose all the costs. If you find a deal that sounds too good to be true, you’re probably missing something in the fine print.

Related Post:

• Choosing a Mortgage Company
• Comparison of Mortgage Brokers And Banks
• Refinance Your Second Mortgage
• Understanding Remortgages
• Best Mortgage Type for You?

More on this article...

Simple Things That Make A Big Difference To Your Mortgage Loan

What To Know About Yourself In Advance
Predatory Mortgage Lending
Your credit report: You must know how you stand and whether everything it contains is accurate and updated. If not, have it corrected. Next comes how much you want to spend on your new home, whether you need to make a down payment or not and as a consequence of that, how much you need to ask for.

Related to this point is the period of the loan, which determines the monthly payment, adjusted to your budget. This should be done before shopping for a loan, since you want to know what you need and therefore, what to ask the lender for. Then comes the part where you determine the adequate lender for you.

Taking Some Necessary Precautions
Mortgage Refinance and Credit Repair
If you are a credit card holder and have several with an outstanding balance, you might want to pay off some and leave the essential ones, not more than three. This decreases the amount of debt you have, giving you a better credit rating.

Saving time is also a necessary precaution. Get your loan pre-approved first and THEN start shopping for a house.

What To Know About The Mortgage Loan
Well, the outstanding points are that a mortgage loan is of low risk to your lender, since it is backed by the property you are buying. On the other hand, you risk the loss of the property if you do not pay the loan. However, the payment terms are long, making the installments smaller and easier to pay, reducing the risk of default.

Find out the APR, what fees it includes and how it affects your monthly payments. Do not evaluate a loan only for the APR, which is not just the interest rate by itself.

And Now, The Lender
The loan you are looking for is a long term one, so if you make a bad deal, you will be sorry for a long time! Get free quotes before applying for real and when you do, ask for a copy of the contract to take home and read carefully. If you are denied this right or are urged to sign up, just be calm, say good-bye and look for another lender.

Last Considerations
As I have said above, lack of knowledge is no excuse for a bad deal. You have the obligation to find out what expenses there are and account for such items as closing fees, application fees, and everything NOT included in the APR. Escrow is another item to consider, since there might be a middle party connecting you to the seller.

Last but not least, there should be a life insurance and probably an additional mortgage insurance, to cover the payments in case of the borrower’s death and a payment default due to unexpected events, respectively. Leave no stone unturned. A little effort now will make all the difference in the world in the future.

More on this article...

Mortgage Amortization Schedule May Contain Shocking Details

When many first-time home buyers get their mortgage amortization schedule for their proposed loan, they file it away with all kinds of other paperwork they never intend to look at. This can be a huge mistake for several reasons. The biggest, perhaps, is the simple fact not paying attention to this important document can cost you a ton of money.

The Complete Idiot's Guide to Mortgages, 2nd Edition by Jamie Sutton,CFP, CLU, AFC, Edie Milligan Driskill Covers everything home buyers and re-financers need to know, includes an overview of the application process, overcoming qualification hurdles, finding the right type of loan, when and how to refinance to save money, and much more.

A mortgage amortization schedule is nothing more than the month-to-month breakdown of what a loan costs. You can use an amortization schedule calculator to prepare one. The schedule shows exactly how you can apply monthly payments to a loan as interest builds up, and you eventually pay off the loan. The first-time buyer who pays attention to the mortgage amortization schedule will readily see that a $100,000 loan will cost a whole lot more than $106,000 to pay off at a 6 percent interest rate. Having a good understanding of the mortgage amortization schedule and how it works for a particular loan can arm a homeowner with facts you might need down the road to help guide financial decisions.

For example, understanding exactly where you are on a mortgage amortization schedule and finally realizing greater principal reduction with payments might steer you clear of a refinance when it could end costing you a bundle in the long run. It might also help guide use of any extra cash that might be available. Principal reduction payments, for example, can take a basic mortgage amortization schedule and throw a big monkey wrench into it by taking away some of the principal the lender calculates interest payments against.

Anyone who has never seen a loan amortization schedule will likely be in for a start the first time they review one. They can look rather scary. Even if you find the lowest rate loan possible, these schedules show little principal decline during the first few years of a loan. This means a $1,000 payment a month over the course of a few years might only reduce principal by a few thousands dollars even though you paid out $24,000. This happens because you normally pay for a large chunk of the initial compounding of interest. Since the principal amount is at its highest, compounding at a rate of 6 or 7 percent can add a huge lump to what the loan costs.

As a mortgage shopper, you should pay attention to the amortization schedule when it's given to you. Doing so can help guide decisions and might even give you some great ideas for paying off your mortgage quicker. If you are looking at a simple interest mortgage, lenders will allow principal reduction payments. Banks don't love this necessarily, but they will apply the payments to reduce the principal if told to do so. This can quickly change the mortgage amortization schedule and have it working in your favor and not the bank's.

More on this article...

Stop Giving Away Your Equity

Do you know that every year you're giving away the hard-earned equity in your home by paying more than you have to in interest? Most home owners don't realize they can cut up to seven years off of the length of their mortgage, saving thousands of dollars in the process. Think it doesn't add up to a lot?

Think again. Let's lowball it and say you have an $80,000 mortgage and are paying an interest rate of 7 percent. How much will a bi-weekly payment method save you, versus paying the conventional mortgage off over 30 years?

Believe it or not, you would be saving over $25,000. The more your loan amount or the higher your interest, the more money this you can save. When you pay your mortgage bi-weekly, there are a number of factors that come into play.

You're reducing the term of your loan by up to eight years, you're paying less interest over the life of your loan and you're building up equity in your home sooner because more of your money is going towards principal than interest. The savings don't end there.

Due to the fact that your mortgage will be paid off years in advance, you will be able to discontinue your private mortgage insurance earlier than you would if you were paying over a full 30 years, thereby saving you even more money.

The bi-weekly mortgage method is also a wonderful option for people who want to pay off their homes in a shorter period of time than the conventional thirty year mortgages allow, but who don't qualify for a standard 15 year mortgage. It offers homeowners more convenience and flexibility than a fifteen year mortgage.

With a fifteen-year mortgage, if you want to change to a thirty-year mortgage, you would have to refinance. With the bi-weekly payment plan, if your circumstances temporarily change you and need to pay on a monthly basis for a period of time, there is no refinancing necessary.

So how much is someone going to charge you to save you thousands of dollars and build up quick equity in your home? There are various services available to homeowners that will take control of this process for you.

If you use them, you're wasting some of the money you're going to be saving by using this payment method in the first place. There is really no reason to enlist the help of a company to do this for you, when with the proper tools and information, you can do it yourself.

Unless you're independently wealthy and don't care where your money goes, then you will definitely want to look into paying off your mortgage on the bi-weekly plan, and learning how to do it on your own.

Reverse Mortgage Formula: How to Convert Home Equity into Tax-Free Income by Tom Kelly Show you how to convert part of the home equity into tax-free income, letting seniors easily borrow against the value of the home without selling it.

Related Post:
4 Important Questions to Ask Before Refinancing Your Mortgage
Best Mortgage Type for You-

More on this article...