Homeowners's Bankruptcy Mortgage Information

Bankruptcy attorneys estimate that one in every 53 U.S. households filed for bankruptcy in 2006. Most of these people didn’t lose the farm in Vegas or drink away their life savings. Chances are their financial problems stemmed from one of three sources: job loss, divorce, or unexpected and expensive medical emergencies.

Most homeowners who file for bankruptcy do not lose their homes. Bankruptcy laws are designed to satisfy creditors and protect debtors. Putting a family out on the street helps no one.

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Ted Janger of The American Bankruptcy Institute stresses that, “It is important to have competent counsel advise you, both about the choices among chapters and about how best to make sure that bankruptcy operates to solve your financial difficulties, rather than just as a hiatus.”

Establishing Credit After Bankruptcy
For people who got into trouble with credit, the thought of using it again can be frightening. It’s a catch-22. To be considered a good candidate for a new mortgage or car loan, consumers have to rebuild their credit. If they don’t, when a prospective lender looks at their credit report, all they will see is the bankruptcy. There won’t be a new track record of handling credit responsibly or of improved financial management skills.

It doesn’t seem logical, but after people have successfully filed for bankruptcy, they will receive a flood of new credit offers. If they accept a few well chosen ones and pay more than the minimum payment each month, this will appear as positive data in their credit report.

One form of new credit would be a first mortgage refinance or a new second mortgage. Either transaction would depend on the amount of equity in the home and be subject to any guidelines established by the bankruptcy court.

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Why Choose an Interest-Only Mortgage?

You’ve heard the word before, interest-only mortgage. The term has been tossed around until everyone knows the words, but the meaning has become a little murky. An interest-only mortgage can be a great thing for borrowers, but why? Who should get them? What’s the difference between and interest-only mortgage and a traditional mortgage? Let’s dig into what an interest-only mortgage is, why someone would want one and who should actually get them.

An interest-only mortgage is a loan which in which the interest is paid off first, before the principle is paid. If an interest-only mortgage is chosen, the borrower and lender agree on a specified time period, usually five to ten years, during which only the interest is paid. The principal amount of the loan is not reduced by these payments. They borrower has the right to pay more than the interest if they wish too, but it is not required under these terms. This results in lower initial payments for the borrower, sometimes by a substantial amount.

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• 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...

A traditional mortgage is called a “fully amortized mortgage” and payments consist of both interest payments and money directed towards the principle loan amount. These payments are higher than in interest-only mortgages, but the principle amount is reduced much more quickly. Assuming the interest rate stays the same during the life of the loan, a traditional mortgage maintains the amount of the original payment for the life of the loan, while an interest-only mortgage increases in payment size after the initial interest paying period.

Who should get an interest-only mortgage? Anyone with a legitimate need for lower initial payments; they must be prepared to deal with the consequences of choosing this type of mortgage, however. While it is true that an interest-only loan will save you money, that is only the case in the first part of the loan. Since the payments increase after the interest is paid off, the benefits are only applicable for the first part of the life of the loan.

An interest only loan is great for buyers who expect to have a windfall before the loan goes to principle. Borrowers with fluctuating incomes find interest-only loans attractive as well; when income is high, they can pay over the amount and reduce the principle but during low income periods they only have to pay the lower, interest-only payment. Buyers interested in skipping the ‘starter house’ and jumping straight to the house they will eventually need find this type of loan attractive since it can ease the strain of buying a more expensive home. Many homeowners invest the extra money they save every month, putting the money into investments that will pay off before the loan payment increases. In this way they save money through the life of the loan.

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An interest-only loan is not for everyone. Borrowers should examine any interest-only loan for actual benefits; don’t take out an interest-only mortgage if the only difference between that and a traditional mortgage is the interest-only aspect. Look for benefits like reduced future payments after a large mortgage payment and watch for deceptions like “lower interest rates” that are usually not true.

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Getting your First Home Mortgage

Buying 1st home is not an easy choice to make. There is so much involved in purchasing your new property. For one, getting your first time home mortgage loan is a big decision to make.

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However, when done correctly, you can have your dream property for life. Buying 1st home can be one of the best choices you make or it soon can become a choice you wish you never made.

However, with the right information, you can go on to get the dream home you always wanted. It is not as if desiring to buy your property is the hard part. In fact the hard part comes with getting a first time home mortgage loan. It is a big decision to make, and you will need to research to find the best mortgage rate for your needs.

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There may be a few differences in obtaining a new property mortgage loan rather than simply obtaining a loan for an existing property you own, and this is primarily in the inspection process. The largest aspect with getting a first time home mortgage loan is determined by your credit history.

You see, from the mortgage lenders point of view, it is a large sum of cash they will be giving to you. And because of this, the process to get your first time home mortgage loan is going to be one that will require your time. The amount of cash usually involved in property mortgages makes many mortgage lenders nervous especially if the loan is to purchase an existing property. Your credit history will come into play when you are trying to get a mortgage. If you have a great credit history, then the process of getting your first time home mortgage loan will be much easier, and you also will have access to many more mortgage products with the best mortgage rates.

There are many factors which determine how a lender chooses who to accept when giving a first time home mortgage loan, and no two mortgage lenders will reach the same conclusion. They all use different selection processes who to give a first time home mortgage loan to. It all boils down to how much risk the mortgage lender is willing to take.

However, rest assured as there are many mortgage lenders out their, and by researching mortgage lenders, you will find a mortgage that is right for you.

Another point which comes to your aid is that mortgage lenders are normally more ok with a new property mortgage loan because they can guarantee the quality of the house. And this is due to when buying your new property, there are many checks done which protects not just you, but also the mortgage lender.

This is in the best interest of both of you, as it means you won't be buying a house which has potential problems. After all, you would not want to buy your new property, only to find that there are structural problems with the property! That is why there are many parts involved in getting from seeing a property you want to buy, and finally getting the keys to move in. The whole process can be the best thing that you initiate.

Search for the best mortgage rate, and learn about any hidden fee's and costs. In the end, you will have a property which you can be proud of.

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