In the 19th century, Sherlock Holmes relied on impressive observational skills and shrewd reasoning to solve the most complex of mysteries. Holmes' brilliance was never applied to mortgage-related tax deductions, but surely he could have unraveled that case, as well. The famous detective always moved deliberately, approaching each new mystery with a closer look at the facts.
Whether you have an original mortgage or refinanced mortgage, there are three main tax deductions associated with home ownership: mortgage interest, real estate taxes, and points paid. The tax facts relevant to refinanced mortgages are discussed below.
Mortgage Interest
Generally speaking, the interest on a refinanced mortgage is tax deductible. Exceptions arise for homeowners who refinance to cash out equity, and then use the equity-related funds for something other than improving their home. In this situation, only the interest on a maximum of $100,000 of the equity debt is tax-deductible. Here's an example:
You refinance your original $125,000 mortgage for $300,000. The extra $175,000 goes towards vacations, new cars, and other discretionary spending. You can deduct the interest related to the $125,000 refinanced from the first mortgage, and $100,000 of the new equity debt. The interest on the remaining $75,000 would not be tax deductible.
Real Estate Taxes
Real estate taxes are deductible in the year they are paid to the property tax collector. You cannot immediately deduct monies put into escrow for future property taxes; that expense would be deducted later on, in the same year those funds are applied to your property tax liability.
Points
Points paid on a refinance mortgage are, in most cases, deducted proportionately over the life of the loan. That said, points might be fully deductible in the first year if the refinance is used to fund home improvements. You must meet specific requirements to qualify for this deduction, so please check with your tax advisor.
The case isn't closed just yet. Just as Sherlock Holmes outlines his conclusions with trusty Dr. Watson, you should discuss the details of your deductions with a qualified tax advisor. Once you do, you'll see that they, too, are elementary.
http://www.mortgageloan.com/refinancing-debts-and-taxes
Monday, April 30, 2007
Don't Take Advantage of Your Second Mortgage
Make no mistake-a second mortgage is a financial tool that can fix many problems. Need to finance a college education? You can tap the equity in your home for those tuition payments. Want to improve your property with a new kitchen? A 2nd mortgage gets you the cash you need. Looking to start your own business? Home equity loans can be the hero.
Compare Mortgage Rates
While it's a great tool, it does have some potential shortcomings. Counting on your home equity to double as a savings account can be a risky proposition. Here are two examples of why relying on a home equity fix can leave you broke.
1. Mortgage rate spikes can rob you blind
Let's assume that you're counting on using your home equity loan or a refinance mortgage to pay for your child's college education. Perhaps when you developed this plan, rates were low, and a home equity loan, coupled with a tax deduction, seemed like cheap, easy money. Fast forward to your child's college years. Your plan has gone awry, as high interest rates make borrowing very expensive. If this were to happen, that "cheap" money would suddenly be very expensive, making it difficult to meet your monthly payments.
2. The bubble bursts
Anyone who's suffered through the recent housing market stagnation knows the dangers of buying high and borrowing low. If you purchased a home when values were at the peak, the market may have cooled and cut into your home's equity. Suddenly, when it comes time to tap all the money that you had counted on, you find that your home doesn't appraise as highly as it once did. As a result, there's no equity to borrow against, and you're short on funds.
There's no doubt about it-home equity is a great financial tool. But as these two examples indicate, treating it as a savings account can be risky. If you're planning some significant future expenses, beef up your savings while you're building equity. There are simply too many market forces that could work against you if you don't.
Start here to compare mortgage rates from top lenders in our network.
http://www.mortgageloan.com/dont-take-advantage-of-your-second-mortgage
Compare Mortgage Rates
While it's a great tool, it does have some potential shortcomings. Counting on your home equity to double as a savings account can be a risky proposition. Here are two examples of why relying on a home equity fix can leave you broke.
1. Mortgage rate spikes can rob you blind
Let's assume that you're counting on using your home equity loan or a refinance mortgage to pay for your child's college education. Perhaps when you developed this plan, rates were low, and a home equity loan, coupled with a tax deduction, seemed like cheap, easy money. Fast forward to your child's college years. Your plan has gone awry, as high interest rates make borrowing very expensive. If this were to happen, that "cheap" money would suddenly be very expensive, making it difficult to meet your monthly payments.
2. The bubble bursts
Anyone who's suffered through the recent housing market stagnation knows the dangers of buying high and borrowing low. If you purchased a home when values were at the peak, the market may have cooled and cut into your home's equity. Suddenly, when it comes time to tap all the money that you had counted on, you find that your home doesn't appraise as highly as it once did. As a result, there's no equity to borrow against, and you're short on funds.
There's no doubt about it-home equity is a great financial tool. But as these two examples indicate, treating it as a savings account can be risky. If you're planning some significant future expenses, beef up your savings while you're building equity. There are simply too many market forces that could work against you if you don't.
Start here to compare mortgage rates from top lenders in our network.
http://www.mortgageloan.com/dont-take-advantage-of-your-second-mortgage
Refinancing Your Mortgage? Know the lingo
If the saying "familiarity breeds success" holds true, it would be in your best interest, if you're looking for a mortgage refinance, to understand the terminology. There's no need to pour over dry-as-dust mortgage textbooks. Learn a few basic terms, and you'll be headed in the right direction.
Adjustable-rate mortgage:
A loan with a periodically changing interest rate. The mortgage rate is pegged to a specific economic indicator such as treasury bills or the prime interest rate, for example. Terms can vary greatly, and often offer very low introductory rates during the early years.
APR:
The Annual Percentage Rate (APR) is intended to include all of a lender's closing costs, giving a true yearly interest rate. However, many lenders calculate their APRs in different ways.
Fixed-rate mortgage:
A loan in which the rate is set at the time of closing and is constant throughout the mortgage term.
Good Faith Estimate:
Lenders are required by law to produce a Good Faith Estimate, which details all the costs you'll be charged to close your loan.
Loan-to-value (LTV) ratio:
The ratio of your loan amount to the appraised value of your home. (Loan amount/appraised value = Loan-to-value ratio.) Generally expressed as a percentage, a higher LTV can trigger the need for private mortgage insurance or a higher rate.
Points:
A point on a mortgage is 1 percent of the total loan value. For example, a point on a $100,000 mortgage is $1,000 (.01 X $100,000).
Term:
The length of time that you have to repay your mortgage loan. Generally expressed in years, the typical term for most mortgages is 15 to 30 years.
Third party fees:
Charged by vendors, such as appraisers and title companies, these are fees that your lender uses to assess the quality of your loan.
There are plenty of other commonly used mortgage terms, but these are the basics. Study up if you have time. Like any educational initiative, it's bound to pay off in the end.
http://www.mortgageloan.com/refinancing-your-mortgage-know-the-lingo
Adjustable-rate mortgage:
A loan with a periodically changing interest rate. The mortgage rate is pegged to a specific economic indicator such as treasury bills or the prime interest rate, for example. Terms can vary greatly, and often offer very low introductory rates during the early years.
APR:
The Annual Percentage Rate (APR) is intended to include all of a lender's closing costs, giving a true yearly interest rate. However, many lenders calculate their APRs in different ways.
Fixed-rate mortgage:
A loan in which the rate is set at the time of closing and is constant throughout the mortgage term.
Good Faith Estimate:
Lenders are required by law to produce a Good Faith Estimate, which details all the costs you'll be charged to close your loan.
Loan-to-value (LTV) ratio:
The ratio of your loan amount to the appraised value of your home. (Loan amount/appraised value = Loan-to-value ratio.) Generally expressed as a percentage, a higher LTV can trigger the need for private mortgage insurance or a higher rate.
Points:
A point on a mortgage is 1 percent of the total loan value. For example, a point on a $100,000 mortgage is $1,000 (.01 X $100,000).
Term:
The length of time that you have to repay your mortgage loan. Generally expressed in years, the typical term for most mortgages is 15 to 30 years.
Third party fees:
Charged by vendors, such as appraisers and title companies, these are fees that your lender uses to assess the quality of your loan.
There are plenty of other commonly used mortgage terms, but these are the basics. Study up if you have time. Like any educational initiative, it's bound to pay off in the end.
http://www.mortgageloan.com/refinancing-your-mortgage-know-the-lingo
Saturday, April 28, 2007
The Truth About Refinancing Student Loans
There are many students and graduates out there that are struggling with paying for their student
loans. Often times, these people have heard of refinancing student loans in order to make their
payments lower and more manageable. But before you consider refinancing student loans, there are
some things you should first consider. Let this be your guide to the truth about refinancing
student loans.
Refinancing student loans often seems like a good idea. In fact, refinancing student loans is a
good idea, if you use it to your advantage. We shall go over that in a minute. First, you need to
know that most student loans are often of a variable percentage rate until the rate is locked
through means of a loan consolidation, or by refinancing the loan. Currently, interest rates are
quite low so it is a good time for refinancing student loans.
Refinancing student loans is only available to students who have always paid their student loan
bill on time. If this does not sound like you, then I wish you good luck trying to refinance your
student loan. Refinancing rates are often offered between one and two percent lower than your
original student loan rate. Most refinancing rates will save you up to 60 percent. But this is where
the drawback is that most people don't realize when they refinance their student loans.
The drawback is a hidden drawback that most people never really see. I will explain. In order to
get your payment lower through refinancing, you are given a much longer time period to pay the
loan off. Instead of 5 years, it may be 20! This may sound good in the beginning. At the time, it
will leave you with extra money that you may need for other bills. But in reality, it just costs
you more money in the end because you will be paying interest much longer to the lender.
The smart way to do it is to pay more towards your lower interest rate student loan bill that you
have just refinanced. This way it is cheaper and you will pay it off much quicker than normal.
But only do this if you can afford it. If you refinanced your student loan because you couldn't
afford the payment, then just pay it off as best you can at your own pace.
This is the truth about refinancing student loans. This information can either be welcomed, or a
hard thing to hear. Try to use this information to help you when you refinance student loans. If
you utilize all of the information at hand, you should be able to pay your loan off faster and
save some money.
About the Author
Tripp Taylor offers expert advice and great tips regarding all aspects concerning Student Loans. Get the information you are seeking now by visiting http://www.studentloansreview.info
loans. Often times, these people have heard of refinancing student loans in order to make their
payments lower and more manageable. But before you consider refinancing student loans, there are
some things you should first consider. Let this be your guide to the truth about refinancing
student loans.
Refinancing student loans often seems like a good idea. In fact, refinancing student loans is a
good idea, if you use it to your advantage. We shall go over that in a minute. First, you need to
know that most student loans are often of a variable percentage rate until the rate is locked
through means of a loan consolidation, or by refinancing the loan. Currently, interest rates are
quite low so it is a good time for refinancing student loans.
Refinancing student loans is only available to students who have always paid their student loan
bill on time. If this does not sound like you, then I wish you good luck trying to refinance your
student loan. Refinancing rates are often offered between one and two percent lower than your
original student loan rate. Most refinancing rates will save you up to 60 percent. But this is where
the drawback is that most people don't realize when they refinance their student loans.
The drawback is a hidden drawback that most people never really see. I will explain. In order to
get your payment lower through refinancing, you are given a much longer time period to pay the
loan off. Instead of 5 years, it may be 20! This may sound good in the beginning. At the time, it
will leave you with extra money that you may need for other bills. But in reality, it just costs
you more money in the end because you will be paying interest much longer to the lender.
The smart way to do it is to pay more towards your lower interest rate student loan bill that you
have just refinanced. This way it is cheaper and you will pay it off much quicker than normal.
But only do this if you can afford it. If you refinanced your student loan because you couldn't
afford the payment, then just pay it off as best you can at your own pace.
This is the truth about refinancing student loans. This information can either be welcomed, or a
hard thing to hear. Try to use this information to help you when you refinance student loans. If
you utilize all of the information at hand, you should be able to pay your loan off faster and
save some money.
About the Author
Tripp Taylor offers expert advice and great tips regarding all aspects concerning Student Loans. Get the information you are seeking now by visiting http://www.studentloansreview.info
Everything you wanted to know about Mortgage
Mortgage is a loan to finance the purchase of real estate, within specified payment periods and interest rates. The borrower or the mortgager gives the lender or mortgagee a lien as collateral for the loan.
Need for mortgage
The need for mortgage arises just to finance the purchase of a real estate.
Limits for borrowing
Most lenders are prepared to offer 95% of the property’s value and charge less interest with a bigger deposit.
Types of mortgages
1) Fixed rate mortgages:-the interest rates remain fixed or constant over the entire term of loan. The major advantage of this mortgage is that the repayment remains unaffected even if the interest rate in the market goes up.
2) Adjustable rates mortgage (ARM):-here the interest rates fluctuates or floats over time according to the market situations. The interest rates remain lower than a fixed rate mortgage and a person can qualify for a larger loan.
3) Balloon mortgages:-Here the principal and interest payment remains constant for the term which is 5 to 7 years and the interest is amortized over 30 years. Such mortgages are offered at lower rates than fixed ones to make payments easy.
4) Interest only mortgage:-as the name implies the borrower pays the interest only on the loan during the mortgage term and so the capital remains outstanding. Such mortgages are for a period of 5 to 7 years and at the end of its period one can pay the full principal amount or refinance.
5) Cash back mortgage:-In such mortgage cash payments are given to the borrowers to spend in the manner they like.
6) Second Mortgages:-Such mortgage helps one to borrow money again against the same asset of the first loan. Such amounts can be used to finance secondary priorities like home improvement, debt consolidation and children’s higher education.
7) Home loan payment Relief Mortgage:-It is a three year adjustable rate mortgage at one percent point below the national average for such loans after three years the rate will adjust annually to market rates, with rates capped at 1% per year and at the end of 5 years one can repay the loan or apply to refinance and one can enjoy home ownership sooner..
8) Commercial Mortgages:-such mortgages are also granted for the purchase of real estate but for commercial use and not as household use. With the fast overall developments in the field of construction and investment sectors the growth of commercial loans has accelerated.
9) Bad credit Mortgage:-such mortgages are provided to people having a bad credit position or are on the verge of bankruptcy. One has to compare the rates in the market as the rates are higher on such mortgages but are of extreme help in the situation of financial crisis.
About the Author
Kajal Thakkar owns www.homeandfamilybills.com the site is meant to help individuals and families leverage their financial capabilities to the fullest. Visit www.homeandfamilybills.com/home-refinance-loans/home-mortgage-refinancing-rates.php to read more articles on mortgage and debt
By Kajal Thakkar
Independent Writer
Need for mortgage
The need for mortgage arises just to finance the purchase of a real estate.
Limits for borrowing
Most lenders are prepared to offer 95% of the property’s value and charge less interest with a bigger deposit.
Types of mortgages
1) Fixed rate mortgages:-the interest rates remain fixed or constant over the entire term of loan. The major advantage of this mortgage is that the repayment remains unaffected even if the interest rate in the market goes up.
2) Adjustable rates mortgage (ARM):-here the interest rates fluctuates or floats over time according to the market situations. The interest rates remain lower than a fixed rate mortgage and a person can qualify for a larger loan.
3) Balloon mortgages:-Here the principal and interest payment remains constant for the term which is 5 to 7 years and the interest is amortized over 30 years. Such mortgages are offered at lower rates than fixed ones to make payments easy.
4) Interest only mortgage:-as the name implies the borrower pays the interest only on the loan during the mortgage term and so the capital remains outstanding. Such mortgages are for a period of 5 to 7 years and at the end of its period one can pay the full principal amount or refinance.
5) Cash back mortgage:-In such mortgage cash payments are given to the borrowers to spend in the manner they like.
6) Second Mortgages:-Such mortgage helps one to borrow money again against the same asset of the first loan. Such amounts can be used to finance secondary priorities like home improvement, debt consolidation and children’s higher education.
7) Home loan payment Relief Mortgage:-It is a three year adjustable rate mortgage at one percent point below the national average for such loans after three years the rate will adjust annually to market rates, with rates capped at 1% per year and at the end of 5 years one can repay the loan or apply to refinance and one can enjoy home ownership sooner..
8) Commercial Mortgages:-such mortgages are also granted for the purchase of real estate but for commercial use and not as household use. With the fast overall developments in the field of construction and investment sectors the growth of commercial loans has accelerated.
9) Bad credit Mortgage:-such mortgages are provided to people having a bad credit position or are on the verge of bankruptcy. One has to compare the rates in the market as the rates are higher on such mortgages but are of extreme help in the situation of financial crisis.
About the Author
Kajal Thakkar owns www.homeandfamilybills.com the site is meant to help individuals and families leverage their financial capabilities to the fullest. Visit www.homeandfamilybills.com/home-refinance-loans/home-mortgage-refinancing-rates.php to read more articles on mortgage and debt
By Kajal Thakkar
Independent Writer
Florida Refinance - Refinancing In Florida
The decision to buy a home in Florida can be one of the best you will ever make. If you own a home in Florida you may be considering refinancing. Refinancing now can potentially save you thousands of dollars over the length of your mortgage. Florida lenders are offering low interest rates and could save you thousands of dollars over the length of your loan. Mortgage companies serving Florida and the United States are able to offer loan packages that make refinancing your home a wise decision. Compare your current interest rate to the rates being offered now and see how much money you can save by refinancing your home.
Florida is a great place for families, seniors, and businesses. Owning a home in Florida is a good financial investment due to the constantly expanding real estate market. There are many historical and modern cities in the state of Florida. Jacksonville is a historic city and was named for Andrew Jackson. It has two seaports, seven universities and five colleges. Winter Park is equally fascinating and abounds in social, educational and cultural amenities. As an added bonus, both Winter Park and Jacksonville have affordable housing to fit any budget and a multitude of mortgage lenders across the state, both online and traditional, to help you with all your refinancing needs.
Mortgage lenders in Florida and across the country are currently offering the lowest interest rates in many years. If you have been considering refinancing your home, contact a Florida lender today. You can often get multiple quotes from different lenders with one quick online application. Florida is the perfect location for those who enjoy the sunny weather and sandy beaches that dominate the landscape. Refinancing your Florida home can give you lower monthly mortgage payments, which could lead to extra cash in your pocket each month to explore all that Florida has to offer.
Mortgage lenders online generally service loans in all states and will be able to assist you in your refinancing goals quickly and efficiently. Apply today for a home refinance loan and you could start saving money every month and give yourself the freedom to accomplish your financial goals. Lenders are anxious to get your loan approved and will handle the processing of your loan with personal attention and professionalism. Interest rates in Florida are at all time lows and the real estate market is expanding constantly. Refinancing your Florida home is a smart investment in your future.
About the Author
To see a list of recommended mortgage refinance companies online who service the Florida area, visit this page: http://www.abcloanguide.com/refinance.shtml- Carrie Reeder is the owner of ABC Loan Guide, an informational website with articles and more about various types of loans.
Florida is a great place for families, seniors, and businesses. Owning a home in Florida is a good financial investment due to the constantly expanding real estate market. There are many historical and modern cities in the state of Florida. Jacksonville is a historic city and was named for Andrew Jackson. It has two seaports, seven universities and five colleges. Winter Park is equally fascinating and abounds in social, educational and cultural amenities. As an added bonus, both Winter Park and Jacksonville have affordable housing to fit any budget and a multitude of mortgage lenders across the state, both online and traditional, to help you with all your refinancing needs.
Mortgage lenders in Florida and across the country are currently offering the lowest interest rates in many years. If you have been considering refinancing your home, contact a Florida lender today. You can often get multiple quotes from different lenders with one quick online application. Florida is the perfect location for those who enjoy the sunny weather and sandy beaches that dominate the landscape. Refinancing your Florida home can give you lower monthly mortgage payments, which could lead to extra cash in your pocket each month to explore all that Florida has to offer.
Mortgage lenders online generally service loans in all states and will be able to assist you in your refinancing goals quickly and efficiently. Apply today for a home refinance loan and you could start saving money every month and give yourself the freedom to accomplish your financial goals. Lenders are anxious to get your loan approved and will handle the processing of your loan with personal attention and professionalism. Interest rates in Florida are at all time lows and the real estate market is expanding constantly. Refinancing your Florida home is a smart investment in your future.
About the Author
To see a list of recommended mortgage refinance companies online who service the Florida area, visit this page: http://www.abcloanguide.com/refinance.shtml- Carrie Reeder is the owner of ABC Loan Guide, an informational website with articles and more about various types of loans.
Home Mortgage Refinancing - Things To Consider When Looking To Get Cash Out On A Refinance
When you refinance your home mortgage, lenders often tempt you with the option of cashing out part of your home’s equity. Cash at a comparably low interest rate may seem like a good option, but make sure you will financially benefit from it first.
Raising Your Home’s Value
Only some home improvements raise the value of your home. Bathroom and kitchen upgrades are one example of this. However, with most remodel jobs, you will not see a financial gain. If you are using your home’s equity to fund projects, make sure that your investment will pay off.
Saving On Interest Payments
Paying off credit cards with your home’s equity will save you money in two ways. First of all, you will save on interest payments. Secondly, the interest you pay on your mortgage is tax deductible, unlike credit card interest.
PMI Penalty
Private mortgage insurance kicks in if you borrow more than 80f your home’s value. These extra payments can add up to several hundred dollars a year, so be careful how much you borrow. Other lines of credit may be more cost efficient when you factor in the cost of PMI on your mortgage.
The Length Of The Loan
While it may see smart to take out equity at a low interest rate with your mortgage, it may be cheaper to cash out through a home equity loan. Home equity loans allow you to deduct interest payments from your taxes, but they require a shorter repayment period.
Interest rates on a home equity loan are higher, so you will need to compare the costs between refinancing and a home equity loan. Generally, if your mortgage is long-term, a home equity loan is a better deal.
Your Financial Situation
To decide whether to cash out the equity of your home, you have to make decisions around what is best for your financial situation. There are no hard rules for this type of decision.
For example, purchasing a car with your home’s equity may be a wise investment if you need a car and would struggle with a car payment. In the end, financial decisions are about making trade-offs.
About the Author
Carrie Reeder is the owner http://www.abcloanguide.com,an informational website about various types of loans. To view our recommended sources for refinance mortgage loans online, visit this page: http://www.abcloanguide.com/refinance.shtml
Raising Your Home’s Value
Only some home improvements raise the value of your home. Bathroom and kitchen upgrades are one example of this. However, with most remodel jobs, you will not see a financial gain. If you are using your home’s equity to fund projects, make sure that your investment will pay off.
Saving On Interest Payments
Paying off credit cards with your home’s equity will save you money in two ways. First of all, you will save on interest payments. Secondly, the interest you pay on your mortgage is tax deductible, unlike credit card interest.
PMI Penalty
Private mortgage insurance kicks in if you borrow more than 80f your home’s value. These extra payments can add up to several hundred dollars a year, so be careful how much you borrow. Other lines of credit may be more cost efficient when you factor in the cost of PMI on your mortgage.
The Length Of The Loan
While it may see smart to take out equity at a low interest rate with your mortgage, it may be cheaper to cash out through a home equity loan. Home equity loans allow you to deduct interest payments from your taxes, but they require a shorter repayment period.
Interest rates on a home equity loan are higher, so you will need to compare the costs between refinancing and a home equity loan. Generally, if your mortgage is long-term, a home equity loan is a better deal.
Your Financial Situation
To decide whether to cash out the equity of your home, you have to make decisions around what is best for your financial situation. There are no hard rules for this type of decision.
For example, purchasing a car with your home’s equity may be a wise investment if you need a car and would struggle with a car payment. In the end, financial decisions are about making trade-offs.
About the Author
Carrie Reeder is the owner http://www.abcloanguide.com,an informational website about various types of loans. To view our recommended sources for refinance mortgage loans online, visit this page: http://www.abcloanguide.com/refinance.shtml
Friday, April 27, 2007
How To Determine
A Home's Value
What's the difference between an appraisal and a comparative market analysis? An appraisal is a certified appraiser's calculation of the value of your home at a given point in time. It takes into consideration such things as:
* Your home's square footage
* Construction quality
* Home design
* Your home's floor plan
* The neighborhood your home is located in
* Availability of transportation, shopping and schools
* Lot size, topography, view and landscaping
A comparative market analysis is more of an informal estimate of your home's market value. A real estate agent makes an analysis based primarily on sales of comparable homes in the neighborhood. Compared to home appraisals, which typically cost between $200 and $300, a comparative market analysis may be obtained at no cost.
What's the difference between a home's “estimated value” and its “worth”?
While a home's “estimated value” is most commonly determined by either an appraisal or a comparative market analysis, its “worth” is ultimately established by what prospective buyers are willing to pay for it.
Can I find the value of my home through the Internet?
There are a number of other web sites and services that can crunch the numbers and calculate your home's estimated value.
While these calculators rely on recent home sales and refinance transactions in your area to produce a value estimate, an appraisal or comparative market analysis may still provide you with the most accurate assessment.
http://www.rockfinancial.com/refinance/refinancing/home-value.html?lid=1336
What's the difference between an appraisal and a comparative market analysis? An appraisal is a certified appraiser's calculation of the value of your home at a given point in time. It takes into consideration such things as:
* Your home's square footage
* Construction quality
* Home design
* Your home's floor plan
* The neighborhood your home is located in
* Availability of transportation, shopping and schools
* Lot size, topography, view and landscaping
A comparative market analysis is more of an informal estimate of your home's market value. A real estate agent makes an analysis based primarily on sales of comparable homes in the neighborhood. Compared to home appraisals, which typically cost between $200 and $300, a comparative market analysis may be obtained at no cost.
What's the difference between a home's “estimated value” and its “worth”?
While a home's “estimated value” is most commonly determined by either an appraisal or a comparative market analysis, its “worth” is ultimately established by what prospective buyers are willing to pay for it.
Can I find the value of my home through the Internet?
There are a number of other web sites and services that can crunch the numbers and calculate your home's estimated value.
While these calculators rely on recent home sales and refinance transactions in your area to produce a value estimate, an appraisal or comparative market analysis may still provide you with the most accurate assessment.
http://www.rockfinancial.com/refinance/refinancing/home-value.html?lid=1336
Homeowner Tax Tips
Deducting Mortgage Interest. Mortgage interest on a primary residence is usually fully tax-deductible, unless your mortgage balance exceeds $1 million or you took out a mortgage for reasons other than buying, building or improving a home.
To claim this deduction, you should fill out Schedule A, labeled “itemized deductions.” Your lender should send you a “Form 1098” that tells you how much mortgage interest you paid for the year. You should record your interest deduction on line 10.
Late payment charges also may be deducted as home mortgage interest if not for a specific service received in connection with your home loan. The same is true for mortgage prepayment penalties - if you pay off your mortgage early and incur a prepayment penalty, you can deduct that penalty as home mortgage interest (subject to the same requirements for late payments).
Deducting Real Estate Taxes. Real estate taxes, which are annual taxes based on the assessed value of a property, also are tax deductible. Your mortgage interest statement may list the amount of real estate taxes you paid if your taxes and homeowners' insurance were placed in an escrow account when you closed on your mortgage. If real estate taxes aren't included, you could review your cancelled checks to determine your total real estate tax deduction.
Deducting Loan Points Paid on a Purchase. The points you pay on a purchase mortgage are deductible the year you made the purchase. You can deduct any points you paid — and that a seller paid on your behalf* — if you meet the following criteria:
* The loan is secured by your primary residence and the loan was used to buy, improve or build the home.
* Paying points (and the amount of points paid) is not an irregular practice in the seller's geographic area;
* The points are computed as a percentage of the loan principal;
* The points are clearly delineated on the buyer's settlement statement; and
* You put cash into your home purchase in an amount at least equal to the points you were charged.
*Seller Paid Points are Deductible by the Buyer. When a seller pays points for the buyer (or in other words, buys the mortgage rate down) the buyer gets a lower mortgage rate.
Deducting Loan Points Paid on a Refinance. If you refinanced last year, you may be able to write-off any points you paid to buy down the mortgage rate. To do so, you deduct the points proportionately over the life of the new loan. For example, if you took out a 30-year loan, you would deduct 1/30th of the points you paid each year.
Have you refinanced more than once in recent years? Many homeowners have and may have overlooked an important opportunity. Say, for example, you refinanced in 2001 and paid points. You can deduct 1/30th of those points in that tax year. However, rates continued to drop, so you refinanced again in 2003, paying off that 2001 loan. The remaining points from the 2001 refinance — that is, those that haven't yet been deducted — can now be deducted in full since that loan has been paid off.
Deducting Interest on a Home Equity Loan. The interest on a home equity loan may be tax deductible up to $100,000. However, if your home equity loan when combined with your first mortgage amount, increases the debt on your home to an amount more than the property's actual value, there may be deductibility limits. Usually, you can deduct the smaller of interest on a $100,000 loan or your home's value less the amount of your existing mortgage.
As always, you should check with your tax advisor to determine which of these deductions apply to you!
http://www.rockfinancial.com/refinance/refinancing/tax-deductions.html?lid=1337
To claim this deduction, you should fill out Schedule A, labeled “itemized deductions.” Your lender should send you a “Form 1098” that tells you how much mortgage interest you paid for the year. You should record your interest deduction on line 10.
Late payment charges also may be deducted as home mortgage interest if not for a specific service received in connection with your home loan. The same is true for mortgage prepayment penalties - if you pay off your mortgage early and incur a prepayment penalty, you can deduct that penalty as home mortgage interest (subject to the same requirements for late payments).
Deducting Real Estate Taxes. Real estate taxes, which are annual taxes based on the assessed value of a property, also are tax deductible. Your mortgage interest statement may list the amount of real estate taxes you paid if your taxes and homeowners' insurance were placed in an escrow account when you closed on your mortgage. If real estate taxes aren't included, you could review your cancelled checks to determine your total real estate tax deduction.
Deducting Loan Points Paid on a Purchase. The points you pay on a purchase mortgage are deductible the year you made the purchase. You can deduct any points you paid — and that a seller paid on your behalf* — if you meet the following criteria:
* The loan is secured by your primary residence and the loan was used to buy, improve or build the home.
* Paying points (and the amount of points paid) is not an irregular practice in the seller's geographic area;
* The points are computed as a percentage of the loan principal;
* The points are clearly delineated on the buyer's settlement statement; and
* You put cash into your home purchase in an amount at least equal to the points you were charged.
*Seller Paid Points are Deductible by the Buyer. When a seller pays points for the buyer (or in other words, buys the mortgage rate down) the buyer gets a lower mortgage rate.
Deducting Loan Points Paid on a Refinance. If you refinanced last year, you may be able to write-off any points you paid to buy down the mortgage rate. To do so, you deduct the points proportionately over the life of the new loan. For example, if you took out a 30-year loan, you would deduct 1/30th of the points you paid each year.
Have you refinanced more than once in recent years? Many homeowners have and may have overlooked an important opportunity. Say, for example, you refinanced in 2001 and paid points. You can deduct 1/30th of those points in that tax year. However, rates continued to drop, so you refinanced again in 2003, paying off that 2001 loan. The remaining points from the 2001 refinance — that is, those that haven't yet been deducted — can now be deducted in full since that loan has been paid off.
Deducting Interest on a Home Equity Loan. The interest on a home equity loan may be tax deductible up to $100,000. However, if your home equity loan when combined with your first mortgage amount, increases the debt on your home to an amount more than the property's actual value, there may be deductibility limits. Usually, you can deduct the smaller of interest on a $100,000 loan or your home's value less the amount of your existing mortgage.
As always, you should check with your tax advisor to determine which of these deductions apply to you!
http://www.rockfinancial.com/refinance/refinancing/tax-deductions.html?lid=1337
Thursday, April 26, 2007
Points and Refinancing
Refinancing is the process of paying off your current mortgage and taking out a new one. If you're thinking about refinancing but it's been some time since your last mortgage transaction, you may want to refresh your understanding of points.
Lower Your Rate with Points
Points are charges paid to the lender and are usually paid at closing. A point equals one percent of the loan amount. So, if you have a $250,000 loan, one point equals $2,500.
Before you refinance, compare different lenders' rates and points. Usually, a lower rate carries more points. For example, one lender may charge 6.5% interest with no points and another lender may offer 6.375% interest with one point. As a general rule, each point that you pay will reduce the interest rate offered by the lender by about one-eighth of one percent, or 0.125%.
You may want to consider getting a lower interest rate by paying additional points. Reducing the interest rate by paying points is called "buying down" the rate. In some instances, a lender may finance the points so you will not have to pay them up front. If not, the cost of the points will be added to the other closing fees for the loan.
When to Use Points
If you plan to move within a few years of refinancing, paying points to buy down your interest rate might not be a good idea. The general rule is that it takes about 5 to 7 years to recover the cost of points paid at closing.
Consider James Morgan, who has a 30-year fixed-rate mortgage loan for $200,000. His loan interest rate is 6.75% with one point and his monthly payment of principal and interest is $1,297.20. If he did not pay the point, his interest rate would be 6.875% and his monthly payment would be $1,313.86. Paying the point saves him $16.66 per month, or roughly $200 per year.
In 10 years, James will recoup the point he paid to get the lower rate. Because he will continue to pay lower payments each month after that, James will benefit from the lower rate. Over the life of his 30-year loan, James will save roughly $6,000 in monthly payments due to the lower rate in exchange for the upfront cost of $2,000 for the point. But if he moves after just a few years, he will not recover his costs.
Tax Tips
Note: The following includes an overview of tax laws and is not intended as legal advice. You should consult a tax advisor to get answers to your specific tax questions.
If you itemize deductions on your tax return, you should be able to deduct the points you pay on the refinanced loan. However, points paid in a refinance transaction usually must be deducted over the life of the loan, rather than as a lump sum in the year they were paid. For example, rather than deducting the entire $2,000 in points that he paid when he refinanced, James Morgan will deduct $5.56 per month for the next 30 years. ($2,000 / 360 monthly payments = $5.56 per month deduction).
There are two exceptions to the requirement that you deduct refinance points over the life of the loan. First, if you refinance more than once, you can deduct all remaining undeducted points on your first refinanced loan at the time you do your second refinance (and so on for each additional refinance transaction). Second, any points you paid in a refinance transaction for the purpose of financing home improvements may be fully deductible in the year they were paid.
http://www2.blogger.com/post-create.g?blogID=1977096248379717442
Lower Your Rate with Points
Points are charges paid to the lender and are usually paid at closing. A point equals one percent of the loan amount. So, if you have a $250,000 loan, one point equals $2,500.
Before you refinance, compare different lenders' rates and points. Usually, a lower rate carries more points. For example, one lender may charge 6.5% interest with no points and another lender may offer 6.375% interest with one point. As a general rule, each point that you pay will reduce the interest rate offered by the lender by about one-eighth of one percent, or 0.125%.
You may want to consider getting a lower interest rate by paying additional points. Reducing the interest rate by paying points is called "buying down" the rate. In some instances, a lender may finance the points so you will not have to pay them up front. If not, the cost of the points will be added to the other closing fees for the loan.
When to Use Points
If you plan to move within a few years of refinancing, paying points to buy down your interest rate might not be a good idea. The general rule is that it takes about 5 to 7 years to recover the cost of points paid at closing.
Consider James Morgan, who has a 30-year fixed-rate mortgage loan for $200,000. His loan interest rate is 6.75% with one point and his monthly payment of principal and interest is $1,297.20. If he did not pay the point, his interest rate would be 6.875% and his monthly payment would be $1,313.86. Paying the point saves him $16.66 per month, or roughly $200 per year.
In 10 years, James will recoup the point he paid to get the lower rate. Because he will continue to pay lower payments each month after that, James will benefit from the lower rate. Over the life of his 30-year loan, James will save roughly $6,000 in monthly payments due to the lower rate in exchange for the upfront cost of $2,000 for the point. But if he moves after just a few years, he will not recover his costs.
Tax Tips
Note: The following includes an overview of tax laws and is not intended as legal advice. You should consult a tax advisor to get answers to your specific tax questions.
If you itemize deductions on your tax return, you should be able to deduct the points you pay on the refinanced loan. However, points paid in a refinance transaction usually must be deducted over the life of the loan, rather than as a lump sum in the year they were paid. For example, rather than deducting the entire $2,000 in points that he paid when he refinanced, James Morgan will deduct $5.56 per month for the next 30 years. ($2,000 / 360 monthly payments = $5.56 per month deduction).
There are two exceptions to the requirement that you deduct refinance points over the life of the loan. First, if you refinance more than once, you can deduct all remaining undeducted points on your first refinanced loan at the time you do your second refinance (and so on for each additional refinance transaction). Second, any points you paid in a refinance transaction for the purpose of financing home improvements may be fully deductible in the year they were paid.
http://www2.blogger.com/post-create.g?blogID=1977096248379717442
Finding the Best Refinancing Deal for You
If you decide that you are ready to refinance your mortgage, you will want to contact several mortgage lenders or brokers (including your current mortgage lender) to discuss their loan products, rates, closing costs, and fees.
Refinancing your mortgage will affect your financial future, so it pays to invest some time and effort in finding the best deal for you.
In trying to decide what refinancing option is the best for you, here are some items to keep in mind:
Low- or No-Cost Refinancing
If you decide to refinance with your current lender, you may be able to negotiate reduced points or having the loan application fee, credit check, or title search fees waived. A lender other than your current lender may be willing to negotiate these fees as well.
Some lenders and brokers offer "no-cost" refinancing, in which you do not have to pay most of the required upfront processing costs and closing fees. Instead, you may pay a higher interest rate or the costs may be added to the amount you are borrowing.
Interest Rate Lock
An interest rate "lock" or "lock-in" is an agreement by the lender to hold a quoted rate on your loan for you for a specified period of time. Interest rates change often, even hourly sometimes. Ask if and when you can lock in the rate. This may be at the time you apply for the loan or when the lender approves the loan. You'll also want to ask if there is a charge for locking in the rate, how long the lock-in will remain in effect, and whether or not you can obtain a lower rate if interest rates decline before your loan closes.
Re-issue of Title Insurance Policy
A title insurance policy protects the lender (lender's policy) or the homeowner (owner's policy) against loss arising from disputes over ownership of or liens against the property. You should ask your settlement or closing agent to determine whether your title insurer can reissue the policy, which may save you money.
Miscellaneous Fees
Ask about whether fees such as recordation, document preparation, courier, notary, tax services, and other fees can be waived. You may also have to pay fees depending on the type of loan you have chosen or other factors: for example, the funding fee for a Department of Veterans Affairs (VA) loan guaranty, the mortgage insurance premium for a loan insured by the Federal Housing Administration (FHA), or private mortgage insurance premium. These types of fees generally cannot be waived.
Prepayment Penalty
You should determine if your existing mortgage has a prepayment penalty clause. If so, and you pay off your existing mortgage earlier than the terms stated in the loan documents, you may be required to pay a penalty or fee. If your loan is subject to a prepayment penalty, your loan documents should indicate the period during which the penalty applies and explain how the amount of the penalty is calculated, for example, sometimes it is a percentage of the outstanding principal balance of the loan.
In many states, mortgage prepayment penalties are prohibited or limited by law, regardless of the provisions contained in your loan documents. You may wish to contact the appropriate state regulator for information about the laws of your state and whether prepayment penalties can be enforced in your state
http://www.mortgagecontent.net/content/jamesbnutter/Refinance/finding_the_best_refinancing_deal_for_you.html
Refinancing your mortgage will affect your financial future, so it pays to invest some time and effort in finding the best deal for you.
In trying to decide what refinancing option is the best for you, here are some items to keep in mind:
Low- or No-Cost Refinancing
If you decide to refinance with your current lender, you may be able to negotiate reduced points or having the loan application fee, credit check, or title search fees waived. A lender other than your current lender may be willing to negotiate these fees as well.
Some lenders and brokers offer "no-cost" refinancing, in which you do not have to pay most of the required upfront processing costs and closing fees. Instead, you may pay a higher interest rate or the costs may be added to the amount you are borrowing.
Interest Rate Lock
An interest rate "lock" or "lock-in" is an agreement by the lender to hold a quoted rate on your loan for you for a specified period of time. Interest rates change often, even hourly sometimes. Ask if and when you can lock in the rate. This may be at the time you apply for the loan or when the lender approves the loan. You'll also want to ask if there is a charge for locking in the rate, how long the lock-in will remain in effect, and whether or not you can obtain a lower rate if interest rates decline before your loan closes.
Re-issue of Title Insurance Policy
A title insurance policy protects the lender (lender's policy) or the homeowner (owner's policy) against loss arising from disputes over ownership of or liens against the property. You should ask your settlement or closing agent to determine whether your title insurer can reissue the policy, which may save you money.
Miscellaneous Fees
Ask about whether fees such as recordation, document preparation, courier, notary, tax services, and other fees can be waived. You may also have to pay fees depending on the type of loan you have chosen or other factors: for example, the funding fee for a Department of Veterans Affairs (VA) loan guaranty, the mortgage insurance premium for a loan insured by the Federal Housing Administration (FHA), or private mortgage insurance premium. These types of fees generally cannot be waived.
Prepayment Penalty
You should determine if your existing mortgage has a prepayment penalty clause. If so, and you pay off your existing mortgage earlier than the terms stated in the loan documents, you may be required to pay a penalty or fee. If your loan is subject to a prepayment penalty, your loan documents should indicate the period during which the penalty applies and explain how the amount of the penalty is calculated, for example, sometimes it is a percentage of the outstanding principal balance of the loan.
In many states, mortgage prepayment penalties are prohibited or limited by law, regardless of the provisions contained in your loan documents. You may wish to contact the appropriate state regulator for information about the laws of your state and whether prepayment penalties can be enforced in your state
http://www.mortgagecontent.net/content/jamesbnutter/Refinance/finding_the_best_refinancing_deal_for_you.html
Tuesday, April 24, 2007
Applying for a Home Loan
Applying for a home loan may not be the most exciting way to spend your time, but if you are like many potential homeowners, it is probably a necessary evil. If you have some knowledge of the process ahead of time, however, it will go much more smoothly.
Home loan applications tend to be very long, but if you are prepared ahead of time you can finish the application procedure without breaking a sweat. Before you begin filling out the form, make sure you have available your Social Security number, information pertaining to previous employers and residences, recent pay stubs, copies of credit card and loan statements, copies of bank statements and asset information such as stocks, pension and retirement funds. Begin the form by simply filling out each line with the requested information but leave Section I, entitled Type of Mortgage and Terms of Loan, blank.
Next fill out Section II, Property Information and Purpose of Loan, with any of your available information. Only fill in the subject property address line, however, after you have an accepted offer on a property. If you don't have a property yet, simply state the purpose of the loan as purchase or refinance, as well as the type of property the loan will cover (primary, secondary, or investment). Also write down all the names in which the title will be held, how the title will be held, and the source of the down payment (this is usually in cash).
In Section III, Borrower Information, you must fill out your personal information including name, Social Security number, phone, age, years in school, marital status, number of children and their ages, and present and previous employers.
Section IV is Employment Information, while Section V is Monthly Income and Combined Housing Expense Information (use your pay stubs for this section).
Section VI, Assets and Liabilities, can be filled out using bank statements, as well as credit card and loan statements. Leave Section VII, Details of Transaction, blank.
Finally, answer the question in Section VIII, Declaration, then sign and date the application. Also sign Section IX, Acknowledgement and Agreement
About The Author
Jakob Jelling is the founder of http://www.cashbazar.com. Visit his website for the latest on personal finance, debt elimination, budgeting, credit cards and real estate.
Home loan applications tend to be very long, but if you are prepared ahead of time you can finish the application procedure without breaking a sweat. Before you begin filling out the form, make sure you have available your Social Security number, information pertaining to previous employers and residences, recent pay stubs, copies of credit card and loan statements, copies of bank statements and asset information such as stocks, pension and retirement funds. Begin the form by simply filling out each line with the requested information but leave Section I, entitled Type of Mortgage and Terms of Loan, blank.
Next fill out Section II, Property Information and Purpose of Loan, with any of your available information. Only fill in the subject property address line, however, after you have an accepted offer on a property. If you don't have a property yet, simply state the purpose of the loan as purchase or refinance, as well as the type of property the loan will cover (primary, secondary, or investment). Also write down all the names in which the title will be held, how the title will be held, and the source of the down payment (this is usually in cash).
In Section III, Borrower Information, you must fill out your personal information including name, Social Security number, phone, age, years in school, marital status, number of children and their ages, and present and previous employers.
Section IV is Employment Information, while Section V is Monthly Income and Combined Housing Expense Information (use your pay stubs for this section).
Section VI, Assets and Liabilities, can be filled out using bank statements, as well as credit card and loan statements. Leave Section VII, Details of Transaction, blank.
Finally, answer the question in Section VIII, Declaration, then sign and date the application. Also sign Section IX, Acknowledgement and Agreement
About The Author
Jakob Jelling is the founder of http://www.cashbazar.com. Visit his website for the latest on personal finance, debt elimination, budgeting, credit cards and real estate.
Monday, April 23, 2007
Mortgage Repossession - Make Sure You Know The Facts
Mortgage repossession is a devastating thing. Having your home swept out from under you is not only a financial crisis. It can be an emotional one as well.
In the UK, however, there is a piece of federal legislation that prevents mortgage repossession from actual making a person or family homeless. The law is called the Prevention of Homelessness Act, and protects residents of England and Northern Ireland.
It says that if a person or family occupies a dwelling and it is their principal and only home but becomes subject to mortgage repossession or any adversary tenant eviction proceedings, the court can suspend that eviction or mortgage repossession order to give that person or family time to find a reasonable alternative place to live.
The law says that the application may be made by the person who is subject to mortgage repossession or tenant eviction prior to that action being taken.
Where a person occupies the home as her, his or their only dwelling the court has the power to suspend the repossession or eviction enforcement for any period and under any conditions that the UK court sees fit to impose.
The criteria given the court for this mortgage repossession or tenant eviction protection is very lenient. In fact, it almost just says, do what you think is right, judge.
The legislation stipulates that a court can decide to suspend the repossession for mortgage arrears or eviction for unpaid rent to prevent the person or persons residing there from sleeping rough or having to live somewhere not reasonably fit for any habitation by humans.
The definition of mortgage repossession or landlord or tenant repossession proceedings is defined as litigation begun in a court of the United Kingdom by the lender or landlord for purposes of recovering possession of property that is occupied by the debtor or tenant as her or his main or sole residence.
One portion of this homelessness prevention bill talks about variable interest rates, and gives the court the power to actually change the rate of interest that the debtor is paying on the mortgage if that is a reasonable thing to do to prevent repossession and homelessness.
There are some stipulations built in, however. The rate of interest that the court alters the mortgage to cannot be less than that applied by the UK federal Department for Work and Pensions (must like Social Services and its Section H housing assistance in the U.S.)
The Prevention of Homelessness Act also allows the court to put into effect a waiver of charges and fees in the interest of trying to ward off a mortgage repossession. These fees waived could include legal and court costs including the expenses incurred by the debtor for an indemnity clause.
The legislation further stipulates that should someone become eligible for, and acquire public assistance, the payment of the mortgage, to prevent repossession might also be paid out of the public assistance check awarded, at the discretion of the court.
Clearly, in the UK, the government has seen fit to protect the interests of homeowners and tenants and assure that they keep their homes wherever and whenever possible.
About the Author:
James Copper works for Stop Repossession Today who help homeowners stop mortgage repossession and avoid repossession.
In the UK, however, there is a piece of federal legislation that prevents mortgage repossession from actual making a person or family homeless. The law is called the Prevention of Homelessness Act, and protects residents of England and Northern Ireland.
It says that if a person or family occupies a dwelling and it is their principal and only home but becomes subject to mortgage repossession or any adversary tenant eviction proceedings, the court can suspend that eviction or mortgage repossession order to give that person or family time to find a reasonable alternative place to live.
The law says that the application may be made by the person who is subject to mortgage repossession or tenant eviction prior to that action being taken.
Where a person occupies the home as her, his or their only dwelling the court has the power to suspend the repossession or eviction enforcement for any period and under any conditions that the UK court sees fit to impose.
The criteria given the court for this mortgage repossession or tenant eviction protection is very lenient. In fact, it almost just says, do what you think is right, judge.
The legislation stipulates that a court can decide to suspend the repossession for mortgage arrears or eviction for unpaid rent to prevent the person or persons residing there from sleeping rough or having to live somewhere not reasonably fit for any habitation by humans.
The definition of mortgage repossession or landlord or tenant repossession proceedings is defined as litigation begun in a court of the United Kingdom by the lender or landlord for purposes of recovering possession of property that is occupied by the debtor or tenant as her or his main or sole residence.
One portion of this homelessness prevention bill talks about variable interest rates, and gives the court the power to actually change the rate of interest that the debtor is paying on the mortgage if that is a reasonable thing to do to prevent repossession and homelessness.
There are some stipulations built in, however. The rate of interest that the court alters the mortgage to cannot be less than that applied by the UK federal Department for Work and Pensions (must like Social Services and its Section H housing assistance in the U.S.)
The Prevention of Homelessness Act also allows the court to put into effect a waiver of charges and fees in the interest of trying to ward off a mortgage repossession. These fees waived could include legal and court costs including the expenses incurred by the debtor for an indemnity clause.
The legislation further stipulates that should someone become eligible for, and acquire public assistance, the payment of the mortgage, to prevent repossession might also be paid out of the public assistance check awarded, at the discretion of the court.
Clearly, in the UK, the government has seen fit to protect the interests of homeowners and tenants and assure that they keep their homes wherever and whenever possible.
About the Author:
James Copper works for Stop Repossession Today who help homeowners stop mortgage repossession and avoid repossession.
Article Source: ArticlesMaker.com
Guide To Buy To Let Mortgages
One of the most popular areas of property development in recent years has been the buy-to-let facility. Favoring both professional property developers, as well as savvy consumers who can afford to do this, it allows a mortgage to be taken out for the sole reason of letting the property immediately.
With recent figures showing the average price of a house in the United Kingdom now a staggering 167,000 GBP, it's becoming increasingly difficult for people to buy a home, especially in the first-time buyer's market. This has led to a dramatic increase in people choosing to rent a property, as opposed to buying, while they try and save for a deposit for a new home. Men and women are also choosing to stay single these days, as opposed to living with someone or marrying them, therefore leading to an increase in demand in the rental market as well.
The benefits of someone taking a buy-to-let mortgage out are numerous. With interest rates in the United Kingdom at a good high, buy-to-let is an excellent financial gain for those investors who have property that they are letting out. Not only do they own a property whose value is rising all the time, therefore it's a wonderful investment for the future, but they are still making money by charging rent on the property. Depending on the size of the house being let, this can lead to an extremely tidy profit.
For example, say you buy a three-bedroom house and the monthly mortgage is an average 1,000 GBP. If you rent that property out to three separate tenants as a house share, and charge a very reasonable 500 GBP per month per person, you're making an immediate profit of 500 GBP every month, as well as paying for your mortgage. You can see quite easily why buy-to-let is such an attractive proposition.
It's not just the traditional landlords who are benefiting, either. Whereas in the past you may have heard the word landlord and thought of a middle-aged businessman, now it's more frequently younger people who are joining this lucrative market. According to the National Landlords Association, or NLA, the market has changed considerably in the last few years and more and more young landlords are now the norm. With a yield of around six per cent in the British market alone, which in itself will see the average investor make a profitable return of over sixty per cent, it's not surprising that the buy-to-let market is attracting all ages.
Indeed, such is the popularity of this new way to own a property, the buy-to-let market in the United Kingdom is now second only to Poland in this particular area. And with the Polish economy not really allowing for any other option except to rent, this is proof indeed that this is just the start of an extremely profitable avenue.
About the Author:
Teacher Marks are Estate Agents in Central London who focus on practice of surveyors specialising in all aspects of Central London commercial property
With recent figures showing the average price of a house in the United Kingdom now a staggering 167,000 GBP, it's becoming increasingly difficult for people to buy a home, especially in the first-time buyer's market. This has led to a dramatic increase in people choosing to rent a property, as opposed to buying, while they try and save for a deposit for a new home. Men and women are also choosing to stay single these days, as opposed to living with someone or marrying them, therefore leading to an increase in demand in the rental market as well.
The benefits of someone taking a buy-to-let mortgage out are numerous. With interest rates in the United Kingdom at a good high, buy-to-let is an excellent financial gain for those investors who have property that they are letting out. Not only do they own a property whose value is rising all the time, therefore it's a wonderful investment for the future, but they are still making money by charging rent on the property. Depending on the size of the house being let, this can lead to an extremely tidy profit.
For example, say you buy a three-bedroom house and the monthly mortgage is an average 1,000 GBP. If you rent that property out to three separate tenants as a house share, and charge a very reasonable 500 GBP per month per person, you're making an immediate profit of 500 GBP every month, as well as paying for your mortgage. You can see quite easily why buy-to-let is such an attractive proposition.
It's not just the traditional landlords who are benefiting, either. Whereas in the past you may have heard the word landlord and thought of a middle-aged businessman, now it's more frequently younger people who are joining this lucrative market. According to the National Landlords Association, or NLA, the market has changed considerably in the last few years and more and more young landlords are now the norm. With a yield of around six per cent in the British market alone, which in itself will see the average investor make a profitable return of over sixty per cent, it's not surprising that the buy-to-let market is attracting all ages.
Indeed, such is the popularity of this new way to own a property, the buy-to-let market in the United Kingdom is now second only to Poland in this particular area. And with the Polish economy not really allowing for any other option except to rent, this is proof indeed that this is just the start of an extremely profitable avenue.
About the Author:
Teacher Marks are Estate Agents in Central London who focus on practice of surveyors specialising in all aspects of Central London commercial property
Choosing the Right Mortgage Loan Can Save You Time, Money and Grief
This article was written to answer many of the most frequently asked questions on this topic. I hope you find all of this information helpful.
When you are getting ready to buy a house, there is no doubt the the mortgage loan is one of the most important factors affecting which house you will purchase. Not too long ago, many thought that a loan was a loan, no matter which one was chosen. But this doesn't hold true today because of the many different kinds of mortgage loans available to the home buyer. So, before choosing a mortgage loan, it is very important to decide which one is right for you.
Finding the right mortgage loan means weighing your options with what you require in a house and your financial picture, both now and in the future. Also, the right mortgage is not just having the lowest interest rate; it's a lot more than that. And this "more than that" will be determined by your individual status. You can get a good picture of your individual status and what kind or mortgage payment you can afford by considering the following questions:
**What does your financial picture look like right now (this includes the money you have coming in, what you have saved, any cash you have on hand, and your debt-to-income ratio)?
**How do you expect your financial picture to change in the coming years?
**How long are you planning to keep your house?
**How do you feel about a changing mortgage rate?
**Do you plan to pay off the loan before you retire?
The answers to these questions will give you a good idea of your financial picture. Now the next step is to decide two key options: mortgage length, and type of interest rate (fixed interest rate or adjustable interest rate).
The length of your mortgage loan can vary, all the way up to 30 years.
If you're trying to decide between a fixed or adjustable interest rate mortagage, be certain you consider the risks involved with an adjustable rate. In other words, if your interest rate changes and your payment goes up later, will you be able to handle it. You may be able to save some money with an adjustable rate over the life of the loan, but a fixed-rate loan gives you the comfort of knowing what to expect because of the rate is locked in.
One useful tool when considering which mortgage loan is right for you is an amortization schedule or and an amortization caluculator. Amortization is figured out before you even buy the loan for your home, and it is apart of the house loan's paperwork during the closing. You can adjust the numbers in the amortization calculator to see if you will able to make monthly payments on the loan amount you want to borrow. You can see why this would be a very useful tool.
Obviously, you will be able to pay off a shorter-term loan faster, but this will mean that your monthly payments will be considerably greater. An extended loan with a rate that is fixed is sought-after because it offers security, and this allows people to create and maintain their budget. It may cost you more over the life of the loan, but you will have more cash on hand when you need it, and you will have a better chance of not defaulting on the mortagage loan if a crisis come up.
Considering the points listed above in this article, you can see that it's important to closely examine your fianacial situation when trying to find the right mortgage loan for you. Ask yourself those questions, use an amortization calculator, and then shop around. If necessary, seek the advice of someone that you know is knowledgable and trustworthy.
We hope you have gotten some good ideas from this article and that you are able to use them.
When you are getting ready to buy a house, there is no doubt the the mortgage loan is one of the most important factors affecting which house you will purchase. Not too long ago, many thought that a loan was a loan, no matter which one was chosen. But this doesn't hold true today because of the many different kinds of mortgage loans available to the home buyer. So, before choosing a mortgage loan, it is very important to decide which one is right for you.
Finding the right mortgage loan means weighing your options with what you require in a house and your financial picture, both now and in the future. Also, the right mortgage is not just having the lowest interest rate; it's a lot more than that. And this "more than that" will be determined by your individual status. You can get a good picture of your individual status and what kind or mortgage payment you can afford by considering the following questions:
**What does your financial picture look like right now (this includes the money you have coming in, what you have saved, any cash you have on hand, and your debt-to-income ratio)?
**How do you expect your financial picture to change in the coming years?
**How long are you planning to keep your house?
**How do you feel about a changing mortgage rate?
**Do you plan to pay off the loan before you retire?
The answers to these questions will give you a good idea of your financial picture. Now the next step is to decide two key options: mortgage length, and type of interest rate (fixed interest rate or adjustable interest rate).
The length of your mortgage loan can vary, all the way up to 30 years.
If you're trying to decide between a fixed or adjustable interest rate mortagage, be certain you consider the risks involved with an adjustable rate. In other words, if your interest rate changes and your payment goes up later, will you be able to handle it. You may be able to save some money with an adjustable rate over the life of the loan, but a fixed-rate loan gives you the comfort of knowing what to expect because of the rate is locked in.
One useful tool when considering which mortgage loan is right for you is an amortization schedule or and an amortization caluculator. Amortization is figured out before you even buy the loan for your home, and it is apart of the house loan's paperwork during the closing. You can adjust the numbers in the amortization calculator to see if you will able to make monthly payments on the loan amount you want to borrow. You can see why this would be a very useful tool.
Obviously, you will be able to pay off a shorter-term loan faster, but this will mean that your monthly payments will be considerably greater. An extended loan with a rate that is fixed is sought-after because it offers security, and this allows people to create and maintain their budget. It may cost you more over the life of the loan, but you will have more cash on hand when you need it, and you will have a better chance of not defaulting on the mortagage loan if a crisis come up.
Considering the points listed above in this article, you can see that it's important to closely examine your fianacial situation when trying to find the right mortgage loan for you. Ask yourself those questions, use an amortization calculator, and then shop around. If necessary, seek the advice of someone that you know is knowledgable and trustworthy.
We hope you have gotten some good ideas from this article and that you are able to use them.
About the Author:
George Mello is devoted to sharing info he has found to be helpful like mortgage loan info. Don't choose your mortgage loan until you are well armed with information...Amortization Schedule Blog
Article Source: ArticlesMaker.com
Friday, April 20, 2007
Mortgage Refinancing - The Facts
Mortgage refinancing is when a homeowner gets a new home loan to pay off their existing one. The benefits of doing this are that they may be able to save money by getting lower interest rates or special deals. Refinancing is not the best option for everyone, though. For a person who is facing financial problems refinancing could spell trouble.
It is common for a person to want to save money on their home loan. A home is most likely the biggest purchase a person will ever make, but that does not mean they have to stick with one lender and pay the same high interest rates forever. Home owners have the option of refinancing to cut their home buying costs. Refinancing involves shopping around for a better deal then the one they currently have.
When shopping around it is advisable to approach a few good mortgage brokers that work with a large panel of lenders, not just one or two. This way they can search the market place to find the right deal for you. This is even more advisable if you have a bad credit history.
A good broker will have access to a number of specialist adverse or sub prime lenders who will be able to offer you competitive rates. The same is true if you are self employed and have trouble proving your income.
Many times when a person is facing financial problems they see using their home as a way to clear their debts. While that is an option, refinancing to get out of financial problems is not a good idea. One reason is that should the person be unable to make the new loan payment, then their house is now in jeopardy.
Unless a person is truly sure that refinancing their home to get money to pay off debts is something they can afford and will truly solve their problems, then it is not a wise decision.
Some people refinance to change from a variable interest rate to a fixed interest rate. This can be very beneficial. Fixed rates mean that the mortgage payment never changes and is the same form month to month.
With a variable rate the amount of the mortgage can change drastically form month to month as the interest rates fluctuate. However, with a fixed rate a person has to be careful not to lock in on too high of a rate. They would then lose out when interest rates go down, unless they go through mortgage refinance again.
There are also many lenders out there who are not what they say to be. Mortgage refinance scams are common and can really be damaging. To avoid scams a person should always deal with a trusted lender and read every piece of paperwork completely. If a deal does not seem right then it is best to back out before ever signing anything.
Mortgage refinance can be a very good thing if done carefully. There are also many ways in which it can go wrong. Homeowners need to be aware of everything involved in mortgage refinance so they can get the best possible deal that will save them the most money.
They should also always be aware that they are risking their home should they not carrying through with their mortgage obligations. It is important to make sure everything is in place and understood before ever signing the papers.
About the Author:
James Copper has been in the financial services industry for many years. He is currently a Cheap Remortgage Expert for Remortgage-Here, who specialise finding in the Best Remortgage deals available.
It is common for a person to want to save money on their home loan. A home is most likely the biggest purchase a person will ever make, but that does not mean they have to stick with one lender and pay the same high interest rates forever. Home owners have the option of refinancing to cut their home buying costs. Refinancing involves shopping around for a better deal then the one they currently have.
When shopping around it is advisable to approach a few good mortgage brokers that work with a large panel of lenders, not just one or two. This way they can search the market place to find the right deal for you. This is even more advisable if you have a bad credit history.
A good broker will have access to a number of specialist adverse or sub prime lenders who will be able to offer you competitive rates. The same is true if you are self employed and have trouble proving your income.
Many times when a person is facing financial problems they see using their home as a way to clear their debts. While that is an option, refinancing to get out of financial problems is not a good idea. One reason is that should the person be unable to make the new loan payment, then their house is now in jeopardy.
Unless a person is truly sure that refinancing their home to get money to pay off debts is something they can afford and will truly solve their problems, then it is not a wise decision.
Some people refinance to change from a variable interest rate to a fixed interest rate. This can be very beneficial. Fixed rates mean that the mortgage payment never changes and is the same form month to month.
With a variable rate the amount of the mortgage can change drastically form month to month as the interest rates fluctuate. However, with a fixed rate a person has to be careful not to lock in on too high of a rate. They would then lose out when interest rates go down, unless they go through mortgage refinance again.
There are also many lenders out there who are not what they say to be. Mortgage refinance scams are common and can really be damaging. To avoid scams a person should always deal with a trusted lender and read every piece of paperwork completely. If a deal does not seem right then it is best to back out before ever signing anything.
Mortgage refinance can be a very good thing if done carefully. There are also many ways in which it can go wrong. Homeowners need to be aware of everything involved in mortgage refinance so they can get the best possible deal that will save them the most money.
They should also always be aware that they are risking their home should they not carrying through with their mortgage obligations. It is important to make sure everything is in place and understood before ever signing the papers.
About the Author:
James Copper has been in the financial services industry for many years. He is currently a Cheap Remortgage Expert for Remortgage-Here, who specialise finding in the Best Remortgage deals available.
Investing: Are New Mortgages Right For You?
Financial salespeople such as investment advisors and mortgage brokers are recommending ‘new’ types of mortgages for improving cash-flow, freeing up money to invest, and having money to take that dream vacation.
Their sales pitches sound so enticing. But here’s what they don’t tell you.
In the past, the only decision to make when getting a mortgage was whether you wanted a fixed or adjustable rate. Now, seniors are being pitched interest-only mortgages, option-ARMs and reverse mortgages. It’s easy to become confused and overwhelmed. The result is you can spend thousands of dollars in fees and end up with a mortgage that doesn’t meet your needs.
In a traditional mortgage, part of each monthly payment covers interest while the rest goes to pay down the principle amount you borrowed. With each payment you are decreasing the amount you owe and increasing your equity.
Interest-only, option-ARMs and reverse mortgages function quite differently from the traditional mortgage. Instead of decreasing the amount you owe, you will most likely be maintaining the same level of debt. In some cases you will actually be increasing the amount you owe—you will be going further into debt with each payment you make!
With an interest-only mortgage, you pay the amount of interest due each month for the first 10 years. This is still a 30-year mortgage, but you don’t begin paying down principle until year 11. Since there isn’t any money going to principle, your monthly payments will be less than with a traditional mortgage only during those first 10 years.
This can make sense in certain situations—especially for cash-strapped seniors. Since the monthly payment is lower, it will reduce what you take out of your retirement account. That means you won’t have to pay income tax on that retirement money. It can continue to grow tax-deferred.
I only recommend this strategy as long as there remains at least 25% home-equity. Also, it’s not a good idea to tap into equity during the refinancing to buy a new car or take a fancy vacation. This isn’t free money. Spending the equity in your home is no different than spending the money you’ve invested in a CD or mutual fund.
The option-ARM is being heavily promoted these days—but watch out! They’re sold based on their low introductory interest rate (as low as 1%) and a special low payment. And they give you the ‘option’ of the kind of payment you make each month. You can make the special low payment, you can pay the interest-only, or you can pay principle and interest just like a traditional mortgage.
On the surface this sounds good, allowing seniors to increase cash flow or to free-up their home equity so they can invest it in other, ‘better’ investments such as equity-indexed annuities.
But don’t do it. People buying this mortgage think they are getting a great deal because of the low interest rate and the low payment. What they don’t realize (and what isn’t properly explained to them) is that each time they make that special low payment they are going further into debt.
Think about it. Let’s say you borrow $200,000 and the interest-only payment is $1000 per month. If you instead make a payment of $400 then the $600 in interest you didn’t pay is added to what you owe. So next month the interest due is based on owing $200,600. Do this for a year and you have dramatically increased what you owe. Instead of saving money like you thought, you were actually spending the equity in your home on other things.
The low introductory rate only lasts a short time, often just a few months. After that, you can end up paying a higher interest rate than if you went with a traditional mortgage in the first place. The costs of getting an option-ARM are higher as well. These only make sense in a few isolated situations. Most people should stay away from them.
Next week I’ll talk about the advantages and disadvantages of reverse mortgages. I will also share stories from my readers that illustrate the shady mortgage-related sales pitches that are now being used. Don’t buy one of these mortgages until then.
Have a financial question? Send me an email and I’ll personally respond, free of charge. Go to www.guardingyourwealth.com and click on ‘Ask Jeff’.
In addition to being a nationally syndicated columnist and Certified Financial Planning Practitioner, Mr. Voudrie provides personal, private money management services to clients nationwide.
About Author
Nationally-syndicated financial columnist and Certified Financial Planner® Jeffrey Voudrie provides personal, in-depth money management services and advice to select private clients throughout the USA. He’ll answer your financial question – FREE at http://www.guardingyourwealth.com .
Their sales pitches sound so enticing. But here’s what they don’t tell you.
In the past, the only decision to make when getting a mortgage was whether you wanted a fixed or adjustable rate. Now, seniors are being pitched interest-only mortgages, option-ARMs and reverse mortgages. It’s easy to become confused and overwhelmed. The result is you can spend thousands of dollars in fees and end up with a mortgage that doesn’t meet your needs.
In a traditional mortgage, part of each monthly payment covers interest while the rest goes to pay down the principle amount you borrowed. With each payment you are decreasing the amount you owe and increasing your equity.
Interest-only, option-ARMs and reverse mortgages function quite differently from the traditional mortgage. Instead of decreasing the amount you owe, you will most likely be maintaining the same level of debt. In some cases you will actually be increasing the amount you owe—you will be going further into debt with each payment you make!
With an interest-only mortgage, you pay the amount of interest due each month for the first 10 years. This is still a 30-year mortgage, but you don’t begin paying down principle until year 11. Since there isn’t any money going to principle, your monthly payments will be less than with a traditional mortgage only during those first 10 years.
This can make sense in certain situations—especially for cash-strapped seniors. Since the monthly payment is lower, it will reduce what you take out of your retirement account. That means you won’t have to pay income tax on that retirement money. It can continue to grow tax-deferred.
I only recommend this strategy as long as there remains at least 25% home-equity. Also, it’s not a good idea to tap into equity during the refinancing to buy a new car or take a fancy vacation. This isn’t free money. Spending the equity in your home is no different than spending the money you’ve invested in a CD or mutual fund.
The option-ARM is being heavily promoted these days—but watch out! They’re sold based on their low introductory interest rate (as low as 1%) and a special low payment. And they give you the ‘option’ of the kind of payment you make each month. You can make the special low payment, you can pay the interest-only, or you can pay principle and interest just like a traditional mortgage.
On the surface this sounds good, allowing seniors to increase cash flow or to free-up their home equity so they can invest it in other, ‘better’ investments such as equity-indexed annuities.
But don’t do it. People buying this mortgage think they are getting a great deal because of the low interest rate and the low payment. What they don’t realize (and what isn’t properly explained to them) is that each time they make that special low payment they are going further into debt.
Think about it. Let’s say you borrow $200,000 and the interest-only payment is $1000 per month. If you instead make a payment of $400 then the $600 in interest you didn’t pay is added to what you owe. So next month the interest due is based on owing $200,600. Do this for a year and you have dramatically increased what you owe. Instead of saving money like you thought, you were actually spending the equity in your home on other things.
The low introductory rate only lasts a short time, often just a few months. After that, you can end up paying a higher interest rate than if you went with a traditional mortgage in the first place. The costs of getting an option-ARM are higher as well. These only make sense in a few isolated situations. Most people should stay away from them.
Next week I’ll talk about the advantages and disadvantages of reverse mortgages. I will also share stories from my readers that illustrate the shady mortgage-related sales pitches that are now being used. Don’t buy one of these mortgages until then.
Have a financial question? Send me an email and I’ll personally respond, free of charge. Go to www.guardingyourwealth.com and click on ‘Ask Jeff’.
In addition to being a nationally syndicated columnist and Certified Financial Planning Practitioner, Mr. Voudrie provides personal, private money management services to clients nationwide.
About Author
Nationally-syndicated financial columnist and Certified Financial Planner® Jeffrey Voudrie provides personal, in-depth money management services and advice to select private clients throughout the USA. He’ll answer your financial question – FREE at http://www.guardingyourwealth.com .
The Rise and Rise of the Property Market in the UK
The property market has not yet become another subject which could get outdated over a period of time. It is a booming industry attracting many investors into its frame. The rise and fall of the industry will have a cascading effect on the economy.
It may be surprising to know that only 10 per cent of the dwellings in the UK were owner-occupied at the start of the 20th century, while 89 per cent were privately rented. The Government’s ‘right-to-buy’ policy has triggered the growth rate of owner-occupation in the late 1980s and there has been a dramatic increase in the population owning their dwelling units.
In 1970s, over 400,000 houses were built per year. Though the phase of building the dwelling units dwindled by 1990 to an average of 190,000 houses per year, a conservative estimate reveals that in 2001, 69 per cent of the houses were owner-occupied, with the remainder being let privately or through local authorities and housing associations.
The Emerging Trend
The emerging IT phenomena such as eBay trading, and the growth in buy-to-let property have made the people to earn more even without any high start-up costs or superior education, which leads to a greater change in the property market. As a result the UK consumer economy gained much strength over recent years which are attributable to the price increase in the UK’s property market. So any catastrophe in the property market will certainly have greater impacts on the wider economy.
The trend in the market predicts that the English will have more property.
The surveys conducted by many organisations stand testimony to this view. One such is Wealth management arm of Barclays. It presented a report on property market according to which 8 million UK households will own more than $1 million (510,000 pounds) in property, land, savings and investments by 2016. Furthermore, the report says almost half of all the UK households (49 per cent) will hold aggregate wealth between $500,000 and $1million, with all annual household incomes set to increase on average by 67 per cent over the next ten years. It said there will be more than one million UK households with more than $3 million in assets mostly comprising of house property by 2016.
Unaffordable for First Time Buyers
The property market of the UK shows that it is unaffordable for the first time buyers to purchase property. Studies conducted by several forums and analysts of property market uniformly said that the number of first time buyers in the UK has fallen to its lowest point in the last 26 years.
Another study by Halifax reveals that the near 30-year low reduced the number of first time buyer mortgages by seven per cent to around one third over the course of 2006. Furthermore, the study also found that 90 per cent of towns and cities are now unaffordable for first time buyers, with the average property costing in excess of £150,000. The first time buyers will need to appoint a solicitor or property lawyer to deal with the conveyancing so as to undertake the legal formalities of the property transfer. The method of electronic conveyancing, contemplated in the Land Registration Act 2002 will bring greater transparency to chains of transactions, a major source of difficulty for people buying or selling a home, especially first timers. But the emerging companies are offering many services to the first time buyers to buy new properties in tie-up with the property promoters.
Rate of Interest Vs Affordability
The MPC (Monetary Policy Committee) is expected to raise interest rates and it will dent a heavy blow on the new buyers. As per Government’s statistics the number of houses being built has gone up to more than 181, 000 a year from just under 130,000 in 2001. Over the last 30 years, demand for new homes increased by 30%. Many experts opine that unless the government builds more affordable housing and raises the stamp duty threshold, many households will continue to struggle to access the housing market.
Ups and Downs in House Market
The prices of house have surged very slowly over nine years until 1996.
But it has almost trebled thereafter. The average house price that stood at £774 in 1936-45, has spiralled up to a whopping £111,061 during the decade ending 2005.
Uncertainty about the rates of interest and house prices has introduced an element of caution into the market. Yet the growing need of the people to own their dwelling units proves positive to the economic growth.
About Author
James Walsh is a freelance writer and copy editor. For more information on choosing a Mortgage see http://www.which-mortgage.net
It may be surprising to know that only 10 per cent of the dwellings in the UK were owner-occupied at the start of the 20th century, while 89 per cent were privately rented. The Government’s ‘right-to-buy’ policy has triggered the growth rate of owner-occupation in the late 1980s and there has been a dramatic increase in the population owning their dwelling units.
In 1970s, over 400,000 houses were built per year. Though the phase of building the dwelling units dwindled by 1990 to an average of 190,000 houses per year, a conservative estimate reveals that in 2001, 69 per cent of the houses were owner-occupied, with the remainder being let privately or through local authorities and housing associations.
The Emerging Trend
The emerging IT phenomena such as eBay trading, and the growth in buy-to-let property have made the people to earn more even without any high start-up costs or superior education, which leads to a greater change in the property market. As a result the UK consumer economy gained much strength over recent years which are attributable to the price increase in the UK’s property market. So any catastrophe in the property market will certainly have greater impacts on the wider economy.
The trend in the market predicts that the English will have more property.
The surveys conducted by many organisations stand testimony to this view. One such is Wealth management arm of Barclays. It presented a report on property market according to which 8 million UK households will own more than $1 million (510,000 pounds) in property, land, savings and investments by 2016. Furthermore, the report says almost half of all the UK households (49 per cent) will hold aggregate wealth between $500,000 and $1million, with all annual household incomes set to increase on average by 67 per cent over the next ten years. It said there will be more than one million UK households with more than $3 million in assets mostly comprising of house property by 2016.
Unaffordable for First Time Buyers
The property market of the UK shows that it is unaffordable for the first time buyers to purchase property. Studies conducted by several forums and analysts of property market uniformly said that the number of first time buyers in the UK has fallen to its lowest point in the last 26 years.
Another study by Halifax reveals that the near 30-year low reduced the number of first time buyer mortgages by seven per cent to around one third over the course of 2006. Furthermore, the study also found that 90 per cent of towns and cities are now unaffordable for first time buyers, with the average property costing in excess of £150,000. The first time buyers will need to appoint a solicitor or property lawyer to deal with the conveyancing so as to undertake the legal formalities of the property transfer. The method of electronic conveyancing, contemplated in the Land Registration Act 2002 will bring greater transparency to chains of transactions, a major source of difficulty for people buying or selling a home, especially first timers. But the emerging companies are offering many services to the first time buyers to buy new properties in tie-up with the property promoters.
Rate of Interest Vs Affordability
The MPC (Monetary Policy Committee) is expected to raise interest rates and it will dent a heavy blow on the new buyers. As per Government’s statistics the number of houses being built has gone up to more than 181, 000 a year from just under 130,000 in 2001. Over the last 30 years, demand for new homes increased by 30%. Many experts opine that unless the government builds more affordable housing and raises the stamp duty threshold, many households will continue to struggle to access the housing market.
Ups and Downs in House Market
The prices of house have surged very slowly over nine years until 1996.
But it has almost trebled thereafter. The average house price that stood at £774 in 1936-45, has spiralled up to a whopping £111,061 during the decade ending 2005.
Uncertainty about the rates of interest and house prices has introduced an element of caution into the market. Yet the growing need of the people to own their dwelling units proves positive to the economic growth.
About Author
James Walsh is a freelance writer and copy editor. For more information on choosing a Mortgage see http://www.which-mortgage.net
Learn More about Refinancing
Get more about information on refinancing your mortgage and learn about everything from when you should refinance to how you can increase the value of your home. These educational articles will help you make the right decision about refinancing your mortgage and help you achieve your financial goals.
Read more about refinancing mortgages or additional articles about refinance topics from our selection below.
Refinance Tools
* Home Value Calculator
* Should you Refinance Calculator
* Free Refinance Guide
Talk to a Refinance Expert!
Most Popular Refinance Articles:
Interest-Only Refinancing
Learn all about interest-only refinancing and how you can use it to your advantage.
Refinance Questions & Answers
Refinancing your mortgage doesn't have to be a difficult or confusing process. Quicken Loans has the answers to commonly-asked refinance questions.
Reasons to Refinance
It's important to have a clear objective in mind when refinancing. Here are the most common reasons why homeowners refinance. Which one is right for your situation?
More About Refinancing:
How Market Conditions Affect Mortgage Rates
What does it mean for mortgage interest rates when the Federal Reserve drops rates?
Refinance Checklist
Refinancing with Quicken Loans is quick and easy. But even faster when you prepare in advance.
Cash-out Refinancing Versus Home Equity Loans
A home equity loan or line of credit and cash-out refinancing will both allow you to access your home's equity. Which one is best for you?
Learn How Option ARM Mortgages Work
Option ARMs give you great payment flexibility when you need it. Learn more about the four different payment options and whether an option ARM is the right mortgage for your situation.
How To Determine A Home's Value
Do you know the difference between an appraisal and a comparative market analysis? Find out, and see how you can use the Quicken Loans to find the value of your home.
Home Improvements That Pay Off
Using your home equity to make home improvements can be a smart move. Find out which improvements pay off and tip for avoiding home improvement pit falls.
Homeowner Tax Tips
Owning a home offers you several tax advantages, including deducting mortgage interest and interest on home equity loans.
Quicken Loans Refinance Guide
Our free Refinance Guide offers tips for consolidating debt and more. Download the Refinance Guide today and learn how to best manage one of your most important investments... your home!
Refinance Your Investment Property
When interest rates fall, refinancing the mortgage on your investment property becomes very attractive because refinancing offers ways to leverage the equity in your property, lower your monthly payments and increase your cash flow.
http://www.quickenloans.com/refinance/articles/index.html
Read more about refinancing mortgages or additional articles about refinance topics from our selection below.
Refinance Tools
* Home Value Calculator
* Should you Refinance Calculator
* Free Refinance Guide
Talk to a Refinance Expert!
Most Popular Refinance Articles:
Interest-Only Refinancing
Learn all about interest-only refinancing and how you can use it to your advantage.
Refinance Questions & Answers
Refinancing your mortgage doesn't have to be a difficult or confusing process. Quicken Loans has the answers to commonly-asked refinance questions.
Reasons to Refinance
It's important to have a clear objective in mind when refinancing. Here are the most common reasons why homeowners refinance. Which one is right for your situation?
More About Refinancing:
How Market Conditions Affect Mortgage Rates
What does it mean for mortgage interest rates when the Federal Reserve drops rates?
Refinance Checklist
Refinancing with Quicken Loans is quick and easy. But even faster when you prepare in advance.
Cash-out Refinancing Versus Home Equity Loans
A home equity loan or line of credit and cash-out refinancing will both allow you to access your home's equity. Which one is best for you?
Learn How Option ARM Mortgages Work
Option ARMs give you great payment flexibility when you need it. Learn more about the four different payment options and whether an option ARM is the right mortgage for your situation.
How To Determine A Home's Value
Do you know the difference between an appraisal and a comparative market analysis? Find out, and see how you can use the Quicken Loans to find the value of your home.
Home Improvements That Pay Off
Using your home equity to make home improvements can be a smart move. Find out which improvements pay off and tip for avoiding home improvement pit falls.
Homeowner Tax Tips
Owning a home offers you several tax advantages, including deducting mortgage interest and interest on home equity loans.
Quicken Loans Refinance Guide
Our free Refinance Guide offers tips for consolidating debt and more. Download the Refinance Guide today and learn how to best manage one of your most important investments... your home!
Refinance Your Investment Property
When interest rates fall, refinancing the mortgage on your investment property becomes very attractive because refinancing offers ways to leverage the equity in your property, lower your monthly payments and increase your cash flow.
http://www.quickenloans.com/refinance/articles/index.html
Thursday, April 19, 2007
Virginia Refinance
There are many reasons you might choose to refinancing home. One of the main reasons property owners remortgage their mortgage is in order to utilize low interest rates. In the event that interest rates have lowered since the time of your original home loan, you can equity refinance your home loan on a better interest rate and therefore decrease the monthly expenditure.
You may opt to 2nd mortgage as a source of receiving money with a low rate (on behalf of a sizeable acquisition or if you want to consolidate financial obligations). See: Utilizing Equity to Your Advantage.
In the event that you`re thinking about home mortgage refinancing your home loan, you may want to consider other types of loans. For instance, you might want to look into a home loan offering a shorter term. If you currently have a thirty year fixed-rate mortgage, you might consider refinance home loan to a 10, 15 or 20-year mortgage which would lessen the quantity of interest you will disburse throughout the existence of your mortgage and will allow you to pay off the home loan faster.
Furthermore, you might want to switch an adjustable that has high or no restrictions on interest raises to a fixed loan, which offers the stability of knowing exactly what the home loan payment is throughout the existence of your mortgage.
It`s essential to decide the best type of a newer loan. The type of refinance home loans you opt for will depend on the amount of time you expect to continue living in your current house as well as the amount of monthly installment that you are able to comfortably put down.
If you don`t intend to live in your house for a minimum of 5 to 7 years, it would be reasonable to consider an adjustable-rate, balloon loan or two-step loan. An ARM usually has better interest during the initial period of a loan than fixed-rate mortgages. A two-step mortgage can get you a lower interest rate than a 30-year home loan for the initial five or seven years. A balloon mortgage entails better interest for shorter period financing, typically five or seven years.
The mortgage refinance procedure will remind you of what you went through in getting the first home loan. In reality, home loan refinance a home loan is simply taking out a new loan. You`ll find several similar processes as well as the same costs the second time.
To determine whether it pays to equity loan financing, you must work out any re finance costs and respond to the question that might help you decide: How many months will it take to break-even? You should consider refinance home loan if you plan to be in your house for longer than the time it would take in order to break even.
Get hold of Virginia Refinance info by going to:
1. Virginia Refinance Rate - encompassing directions
2. Home Refinance Today
3. Mortgages Home
4. Thorough directions for Florida House Loans Lender - Florida Real Estate Loan Lender
In case you`ve regarded our library of virginia refinance information useful, go over more of our additional topics too.
http://www.avirginiarefinance.com/
You may opt to 2nd mortgage as a source of receiving money with a low rate (on behalf of a sizeable acquisition or if you want to consolidate financial obligations). See: Utilizing Equity to Your Advantage.
In the event that you`re thinking about home mortgage refinancing your home loan, you may want to consider other types of loans. For instance, you might want to look into a home loan offering a shorter term. If you currently have a thirty year fixed-rate mortgage, you might consider refinance home loan to a 10, 15 or 20-year mortgage which would lessen the quantity of interest you will disburse throughout the existence of your mortgage and will allow you to pay off the home loan faster.
Furthermore, you might want to switch an adjustable that has high or no restrictions on interest raises to a fixed loan, which offers the stability of knowing exactly what the home loan payment is throughout the existence of your mortgage.
It`s essential to decide the best type of a newer loan. The type of refinance home loans you opt for will depend on the amount of time you expect to continue living in your current house as well as the amount of monthly installment that you are able to comfortably put down.
If you don`t intend to live in your house for a minimum of 5 to 7 years, it would be reasonable to consider an adjustable-rate, balloon loan or two-step loan. An ARM usually has better interest during the initial period of a loan than fixed-rate mortgages. A two-step mortgage can get you a lower interest rate than a 30-year home loan for the initial five or seven years. A balloon mortgage entails better interest for shorter period financing, typically five or seven years.
The mortgage refinance procedure will remind you of what you went through in getting the first home loan. In reality, home loan refinance a home loan is simply taking out a new loan. You`ll find several similar processes as well as the same costs the second time.
To determine whether it pays to equity loan financing, you must work out any re finance costs and respond to the question that might help you decide: How many months will it take to break-even? You should consider refinance home loan if you plan to be in your house for longer than the time it would take in order to break even.
Get hold of Virginia Refinance info by going to:
1. Virginia Refinance Rate - encompassing directions
2. Home Refinance Today
3. Mortgages Home
4. Thorough directions for Florida House Loans Lender - Florida Real Estate Loan Lender
In case you`ve regarded our library of virginia refinance information useful, go over more of our additional topics too.
http://www.avirginiarefinance.com/
Wisconsin Refinance
You may be one of the many that has thought about refinance home mortgage but did not get around to it. Decreasing the interest rate of a mortgage usually means considerable savings each month. During the summer of 2003, home loan costs plummeted to one of the lowest points in years, touching off a rush over to money lenders` offices. Several homeowners refinance mortgage loan two or three times.
The following are several suggestions on unveiling the secrets of refinance mortgages:
Check your credit prior to starting a home mortgage refinancing process. Many homeowners` efforts to refi home loan have been rebuffed because the household income has dropped.
The most common indicators of credit profiles used by money lenders are "credit scores". Credit scores typically run between 300 and 850, and if you place near 300, it can severely affect your possibility of refinancing loan at a reduced interest rate. Nonetheless, several proprietors with credit blemishes are astonished when the credit scores are higher than they thought they would be.
One obvious method to find a client-friendly money lender is to inquire of friends, neighbors and work associates about offices they`ve used and liked. In addition, you can request referrals from the agent that worked on your current home. Realtors usually have a small list of money lenders that they have found to be reliable.
Use web-based resources for comparison shopping on rates. These days is is not necessary to rely on the money lender to provide you with any data you want to contrast various home loan possibilities. You are able to use net-based "calculators" in order to fine-tune on behalf of different details, like the amount borrowed or the complete period (duration) of the loan.
One of several websites providing free online calculators is www.finance-4.com.
Do not ever give away your authority as a wisconsin refinance client. Proprietors with the earnings as well as the credit score to earn the greatest possible market costs for a refinance morgage can anticipate lenders to compete for them furthermore deal with them favorably.
For an extra measure of caution, you could ask for all money lender promises on rates and fees to be documented when you apply for the mortgage. Additionally, no on line remortgage applicants should be obligated to make an up-front deposit in order to secure a mortgage request.
Do not sign something that could restrict your freedom in the event that the money lender does not deliver as expected, if a money lender pulls a bait-and-switch tactic on closing, you will need the ability to cancel simply. Keep in mind, there are many money lenders out there as well as many loans from which to select.
See the following pages for Wisconsin Refinance articles:
1. Calculator Mortgages Refinance Savings: a thorough definition of Wisconsin Refinance Payment Calculator
2. Free Home Mortgage Loan Quotes - a leaflet
3. Florida Home Equity Loan
4. Universal information regarding Wisconsin Refinance Articles
5. Wisconsin Refinance Interest
6. Several notes about Free House Loans Calculator
Have you been wanting some additional very practical perspective on the ever-confusing the knowledge base of wisconsin refinance? Try out some of this provider`s extra more advanced textual items.
http://www.awisconsinrefinance.com/
The following are several suggestions on unveiling the secrets of refinance mortgages:
Check your credit prior to starting a home mortgage refinancing process. Many homeowners` efforts to refi home loan have been rebuffed because the household income has dropped.
The most common indicators of credit profiles used by money lenders are "credit scores". Credit scores typically run between 300 and 850, and if you place near 300, it can severely affect your possibility of refinancing loan at a reduced interest rate. Nonetheless, several proprietors with credit blemishes are astonished when the credit scores are higher than they thought they would be.
One obvious method to find a client-friendly money lender is to inquire of friends, neighbors and work associates about offices they`ve used and liked. In addition, you can request referrals from the agent that worked on your current home. Realtors usually have a small list of money lenders that they have found to be reliable.
Use web-based resources for comparison shopping on rates. These days is is not necessary to rely on the money lender to provide you with any data you want to contrast various home loan possibilities. You are able to use net-based "calculators" in order to fine-tune on behalf of different details, like the amount borrowed or the complete period (duration) of the loan.
One of several websites providing free online calculators is www.finance-4.com.
Do not ever give away your authority as a wisconsin refinance client. Proprietors with the earnings as well as the credit score to earn the greatest possible market costs for a refinance morgage can anticipate lenders to compete for them furthermore deal with them favorably.
For an extra measure of caution, you could ask for all money lender promises on rates and fees to be documented when you apply for the mortgage. Additionally, no on line remortgage applicants should be obligated to make an up-front deposit in order to secure a mortgage request.
Do not sign something that could restrict your freedom in the event that the money lender does not deliver as expected, if a money lender pulls a bait-and-switch tactic on closing, you will need the ability to cancel simply. Keep in mind, there are many money lenders out there as well as many loans from which to select.
See the following pages for Wisconsin Refinance articles:
1. Calculator Mortgages Refinance Savings: a thorough definition of Wisconsin Refinance Payment Calculator
2. Free Home Mortgage Loan Quotes - a leaflet
3. Florida Home Equity Loan
4. Universal information regarding Wisconsin Refinance Articles
5. Wisconsin Refinance Interest
6. Several notes about Free House Loans Calculator
Have you been wanting some additional very practical perspective on the ever-confusing the knowledge base of wisconsin refinance? Try out some of this provider`s extra more advanced textual items.
http://www.awisconsinrefinance.com/
Refinance Mortgages Info
Getting a decent rate on your home loan is imperative, since for most people this is a long-term obligation and has to be tended to for several years. The better the contract you get for your loan, the more you will save both monthly as well as overall, and you might discover there`s a huge difference in order to the quantity you pay back depending on the loan you choose.
With refinance loan you can enjoy outstanding deals on your home loans, and equity refinance online could result in you enjoying a considerable savings for both your monthly expenses as well as on the whole amount you pay in the end. With increasing lenders striving to provide better and more affordable rates, you might find wonderful interest rates, cash-saving monetary assistance and terrific offers that might make it much easier for you to handle your loan.
Once you have a home loan and you are prepared to mortgage refinance, fixed-rate or adjustable-rate home loan (ARM) will consist of one of the decisions you`ll need to make. They`re two of the main kinds of home loans that are available through money lenders. You need to decide which most meets your needs.
mortage refinance a fixed-rate mortgage is at an inflexible charge that will not fluctuate throughout the period you owe the home loan. This fact can prove to be both an advantage and a disadvantage. If you enrolled at a lofty interest rate, then you`re now at a disadvantage with numerous lenders offering extremely low interest rates. If you enrolled with a minimal interest rate, then you should carry on and keep the money savings you have with your lower interest. This might make budgeting easy on property owners, since their payments do not alter. You are guarded from sudden rising of home loans, regardless in the event that interest rates fluctuate.
refinancing an ARM may be quite different. Your rate will be changed in order to suit the marketplace so if interest rates rise, it will affect your mortgage also and the same applies in the event that the rates fall. The interest rates you pay are higher than a fixed loan from the beginning and your interest could build up daily if needed. That kind of home loan is a lot more dangerous than a fixed mortgage, yet in case you believe you are not going to require the loan for very long, it can surely be worthwhile to go with an adjustable-rate mortgage. You must make certain that you can repay the debt in a specific amount of time, since the rates for this type of home loan are higher in the beginning and can increase with no warning depending on the market. Several people employ this kind of loan as a rapid answer to an immediate difficulty.
Check-out links for Mortgage Refinance articles only at the following pages...
1. Home Equity Loan Calculator: Home Equity Loan Calculator - a thorough review
2. Bad Credit Mortgage Refinance: thorough guidelines for Bad Credit Refinancing
3. A few facts concerning Cost To Refinance Home
4. Lowest Mortgage Refinance Rate Today
5. Right Time To Mortgage Refinance: basic First Time Refinance Home Mortgage guidelines
6. Mortgage Refinance Quote
Learn more by means of going over our additional mortgage refinance texts concerning this issue and also other subjects we`ve written connected to it.
The best information on the mortgage refinance can be found here groups.msn.com, bad credit loans , scout.wisc.edu
http://www.xmortgagerefinance.com/
With refinance loan you can enjoy outstanding deals on your home loans, and equity refinance online could result in you enjoying a considerable savings for both your monthly expenses as well as on the whole amount you pay in the end. With increasing lenders striving to provide better and more affordable rates, you might find wonderful interest rates, cash-saving monetary assistance and terrific offers that might make it much easier for you to handle your loan.
Once you have a home loan and you are prepared to mortgage refinance, fixed-rate or adjustable-rate home loan (ARM) will consist of one of the decisions you`ll need to make. They`re two of the main kinds of home loans that are available through money lenders. You need to decide which most meets your needs.
mortage refinance a fixed-rate mortgage is at an inflexible charge that will not fluctuate throughout the period you owe the home loan. This fact can prove to be both an advantage and a disadvantage. If you enrolled at a lofty interest rate, then you`re now at a disadvantage with numerous lenders offering extremely low interest rates. If you enrolled with a minimal interest rate, then you should carry on and keep the money savings you have with your lower interest. This might make budgeting easy on property owners, since their payments do not alter. You are guarded from sudden rising of home loans, regardless in the event that interest rates fluctuate.
refinancing an ARM may be quite different. Your rate will be changed in order to suit the marketplace so if interest rates rise, it will affect your mortgage also and the same applies in the event that the rates fall. The interest rates you pay are higher than a fixed loan from the beginning and your interest could build up daily if needed. That kind of home loan is a lot more dangerous than a fixed mortgage, yet in case you believe you are not going to require the loan for very long, it can surely be worthwhile to go with an adjustable-rate mortgage. You must make certain that you can repay the debt in a specific amount of time, since the rates for this type of home loan are higher in the beginning and can increase with no warning depending on the market. Several people employ this kind of loan as a rapid answer to an immediate difficulty.
Check-out links for Mortgage Refinance articles only at the following pages...
1. Home Equity Loan Calculator: Home Equity Loan Calculator - a thorough review
2. Bad Credit Mortgage Refinance: thorough guidelines for Bad Credit Refinancing
3. A few facts concerning Cost To Refinance Home
4. Lowest Mortgage Refinance Rate Today
5. Right Time To Mortgage Refinance: basic First Time Refinance Home Mortgage guidelines
6. Mortgage Refinance Quote
Learn more by means of going over our additional mortgage refinance texts concerning this issue and also other subjects we`ve written connected to it.
The best information on the mortgage refinance can be found here groups.msn.com, bad credit loans , scout.wisc.edu
http://www.xmortgagerefinance.com/
Wednesday, April 18, 2007
Annual "Lambs to the Slaughter" ritual has begun
It's that time of the year again. Holiday spending was up another 5% this year to .... get this..... $457.4 Billion. As reported By Parija B. Kavilanz, CNNMoney.com staff writer in the article found here. That's right, billion with a "B". And, once the credit card bills begin to get delivered.... the slaughter will begin. Many might be thinking that I'm going to drone on about the high cost of credit, how long it will take to pay off those credit cards, fees, penalties, etc... Not this time.
The ritual that I'm referring to is mortgage refinancing. Every year thousands of homeowners find themselves in a little trouble with last years spending habits. And this year many people are going to get the old Double Whammy with roughly 12% of adjustable mortgages coming due. Scratching their heads trying to figure out how they will make ends meet, refinancing (or debt consolidation) begins to look appealing. I know, I've been involved in real estate for 20 years, for the last 10 I have actually owned 3 mortgage companies and I can tell you this happens every year... like clockwork.
But here is where it get's a little scary. I like to call the mortgage business "the Wild West". There is no other business where you will find such a wide variety of interest rates and accompanying charges between companies --- for the exact same loan. Please pay attention.... there is only ONE reason for this. Lenders, mortgage companies, brokers, loan originators, loan officers..... GREED. And trust me when I say they are licking their chops waiting for the slaughter to begin.
A lot of consumers try to be smart about getting a home loan. They call 5 different lenders looking at the different rate and fees that each propose. These people "try" to get the best deal for themselves, but little do they know that their efforts will probably be fruitless. Let me summarize the real problem with the mortgage business and consumers getting the best deal.
1. Providing a mortgage should be thought of as a product and not a service. And as a product should have a general worth attached to it --- regardless of the size of the loan provided. Only if people shop for a mortgage based upon how much the mortgage company / lender will make in revenue can they truly get the best deal.
2. Unless you're in the business, it is virtually impossible to determine how much a lender / mortgage company will make off of your transaction. And, let's face it... who has the time or inclination to get super educated on the subject?
What's the solution? More government regulation? Nah, they keep trying, passing more and more regulation each year. To be fair, these regulations have had a share in eliminating the worst of the worst, but hasn't helped a bit for the day-in, day-out ordinary transactions.
Finally, a solution from within the industry itself. What is really needed is some independent, third party advice. Someone without a paycheck riding on the answers. There is at least one web site that promises to do just that. At Free Loan Advice people can download the Free guide titled "The Ultimate Mortgage Shopping Guide". Additionally, they can utilize other resources such as hundreds of articles on virtually every subject having to do with interest rates and mortgages, they can also Ask the Expert for any loan questions they may have. But most importantly this site offersThe Rate and Fee Analyzer, which gives people the answer to the ultimate question.... How much are they making off of me?
This Spam-Free website is 100% Free of any charge and is available to everyone. As web sites like this gain popularity, a fundamental shift in the mortgage industry is underway. The annual "slaughter" will become less and less severe, until one day --- the playing field will be leveled --- and consumers will never again be "taken" by unscrupulous lenders. And, this is all without increased governmental regulation or additional fees of any kind.
Anyone who may be in the market for a refinance or purchase are highly encouraged to check it all out at http://www.freeloanadvice.net
If your family or friends are in the market ... do them a favor and e-mail this article to them as well.
About the Author
With over 20 years in real estate / mortgages, Andrew Bloom has agreed to reveal the true secrets to getting the best possible deal. http://www.freeloanadvice.net is a spam-free site offering genuine, quality mortgage advice that is always 100% Free of any charges.
The ritual that I'm referring to is mortgage refinancing. Every year thousands of homeowners find themselves in a little trouble with last years spending habits. And this year many people are going to get the old Double Whammy with roughly 12% of adjustable mortgages coming due. Scratching their heads trying to figure out how they will make ends meet, refinancing (or debt consolidation) begins to look appealing. I know, I've been involved in real estate for 20 years, for the last 10 I have actually owned 3 mortgage companies and I can tell you this happens every year... like clockwork.
But here is where it get's a little scary. I like to call the mortgage business "the Wild West". There is no other business where you will find such a wide variety of interest rates and accompanying charges between companies --- for the exact same loan. Please pay attention.... there is only ONE reason for this. Lenders, mortgage companies, brokers, loan originators, loan officers..... GREED. And trust me when I say they are licking their chops waiting for the slaughter to begin.
A lot of consumers try to be smart about getting a home loan. They call 5 different lenders looking at the different rate and fees that each propose. These people "try" to get the best deal for themselves, but little do they know that their efforts will probably be fruitless. Let me summarize the real problem with the mortgage business and consumers getting the best deal.
1. Providing a mortgage should be thought of as a product and not a service. And as a product should have a general worth attached to it --- regardless of the size of the loan provided. Only if people shop for a mortgage based upon how much the mortgage company / lender will make in revenue can they truly get the best deal.
2. Unless you're in the business, it is virtually impossible to determine how much a lender / mortgage company will make off of your transaction. And, let's face it... who has the time or inclination to get super educated on the subject?
What's the solution? More government regulation? Nah, they keep trying, passing more and more regulation each year. To be fair, these regulations have had a share in eliminating the worst of the worst, but hasn't helped a bit for the day-in, day-out ordinary transactions.
Finally, a solution from within the industry itself. What is really needed is some independent, third party advice. Someone without a paycheck riding on the answers. There is at least one web site that promises to do just that. At Free Loan Advice people can download the Free guide titled "The Ultimate Mortgage Shopping Guide". Additionally, they can utilize other resources such as hundreds of articles on virtually every subject having to do with interest rates and mortgages, they can also Ask the Expert for any loan questions they may have. But most importantly this site offersThe Rate and Fee Analyzer, which gives people the answer to the ultimate question.... How much are they making off of me?
This Spam-Free website is 100% Free of any charge and is available to everyone. As web sites like this gain popularity, a fundamental shift in the mortgage industry is underway. The annual "slaughter" will become less and less severe, until one day --- the playing field will be leveled --- and consumers will never again be "taken" by unscrupulous lenders. And, this is all without increased governmental regulation or additional fees of any kind.
Anyone who may be in the market for a refinance or purchase are highly encouraged to check it all out at http://www.freeloanadvice.net
If your family or friends are in the market ... do them a favor and e-mail this article to them as well.
About the Author
With over 20 years in real estate / mortgages, Andrew Bloom has agreed to reveal the true secrets to getting the best possible deal. http://www.freeloanadvice.net is a spam-free site offering genuine, quality mortgage advice that is always 100% Free of any charges.
Divorce and Debt
As common sense and statistics tell us, the leading cause of marital discord is money. Therefore, it is not surprising that many times divorce inventories have more red numbers than black ones.
Media sources often portray Hollywood stars of "power couples" divorcing. Included with the typical hype may be which party will get the mansion, vacation home, or car collection, but rarely is there any coverage about how the parties will divide debt.
The hard truth is that debt, just like assets, are included in the community estate. No matter what your own moral compass may register regarding your and your spouse's debt, Texas case law establishes rules that might surprise you. First, debt incurred during the marriage is presumed to be community debt. See Cockerham v. Cockerham, 527 S.W.2d 162, 171 (Tex. 1975). There must be a sufficient amount of evidence to rebut this presumption.
Despite well established case law, Texas divorce decrees contain sections entitled "Debt to Husband" and "Debt to Wife", which seemingly assign responsibility for each debt. These sections of the decree will identify each creditor, the account number, and account balance. At the close of the divorce proceedings, the divorced couple has a lengthy document called a final decree of divorce. The husband, wife, their attorneys, and the judge sign the final decree. Often times the parties order a certified copy of their divorce decree, throw it in a drawer or the safe deposit box, and rarely look at it again unless there are children and custody issues involved.
It may be months or years later when the phone rings and one of the parties is greeted by the monotone utterances of a bill collector reading a script off the computer screen. The dialogue may go something like this:
Bob the Bill Collector: "This is Bob with XYZ Visa. I'm calling because your account is 60 days past due, and I need to know when you plan to remit the past due amount and begin making payments."
You: "What are you talking about? That's my ex's account. Our divorce decree says so. I haven't been married to him/her in over (whatever time frame)! Call that deadbeat for the money."
Bob: "Well, Mr. or Ms. So and So, that doesn't mean you don't owe the debt if your ex defaults."
You: "I have a certified court order signed by me, my ex, our attorneys, and the judge saying that I don't owe you anything for that account. That account is the ex's problem. When you find him/her, let me know because he/she owes me money, too!"
Bob: "Your divorce decree might say you aren't responsible, but the law says you are. Why don't you give me a check by phone and we can get you on a payment plan."
You: "Are you dense?! Did you hear anything I just said?! I'm not responsible and I'm not paying you one red cent on any of that debt. Call the ex but stop hounding me!"
Bob: "Mr. or Ms. So and So, I did hear you, and you're wrong. No matter what your divorce decree says, you owe XYZ Visa. If you don't begin making payments, XYZ Visa will report this delinquent account to the credit reporting agencies, and take action up to and including litigation."
I'll let you fill in the closing dialogue for yourself. You are angry and hang up the phone. You may think that Bob, located at some call center hundreds of miles away, has no idea what he's talking about.
As unsettling as it may be, Bob is right. Unless the XYZ Visa was a party to your divorce suit and agreed to the terms of the final decree, you owe the money. It is highly unusual for a husband and wife or their attorneys to implead creditors into divorce actions due to complex legal issues such as jurisdiction and venue on both the state and federal level.
To understand how you could possibly be responsible for debt assigned to your ex, you must rewind to the point in time when the credit account was opened. You will need to look at the original account agreement. Almost no one keeps those documents, so order a copy of your credit report from one of the big three credit reporting agencies (EquiFax, Experian, or TransUnion). If the account shows up on your report, then you were more than likely a party to the credit agreement. Despite how the divorce decree allocates the debts (both secured and unsecured), the Court has no authority to modify the contractual obligations between the spouses and the creditor.
To say it another way, the court cannot take away the creditor's right to proceed against either spouse(s) for payment of a community debt that was incurred prior to the decree. See Blake v. Amoco Fed. Credit Union, 900 S.W.2d 108 (Tex. App. - Houston [14th Dist.] 1995, no writ).
Let's presume the account was originally opened in both your names and the creditor was looking to both you and your spouse's income and assets to repay the obligation. This means that you are both responsible for the debt. But what about the divorce decree that spells out which assets and liabilities you and your ex were assigned? Is it a worthless piece of paper? No.
You will not be able to file a motion to enforce the divorce decree to get the defaulting spouse to pay the debt. An enforcement action will only assist if there was specific property, such as a vehicle, brokerage account, or personal property, the other spouse failed to turn over. But what about the debt? All is not lost. You could file an action for breach of contract against the defaulting spouse. The divorce decree is a binding contract that both parties voluntarily signed before the court.
If your ex has defaulted on one or multiple obligations, a suit for breach of contract may be cold comfort. As the old saying goes, you can't squeeze blood from a turnip. Nevertheless, if you pursue this option, your damages may include any money you agreed to pay the creditor to keep the account out of collections, interest, and other miscellaneous expenses, such as attorney's fees if any are incurred.
Depending on the size of the debt that the defaulting party hasn't paid, you could seek relief in small claims court. Texas small claims courts have jurisdiction from $0.01 up to $5,000.00. These courts are designed for individuals who want to represent themselves and avoid hiring an attorney. This is where people go to argue the "do right" law. However, if the amount in controversy is greater than $5,000.00, then you must file suit in a county court, county court at law, or a district court with jurisdiction over the matter. At this point, you may consider hiring an attorney to prosecute the claim if there's a reasonable possibility you could collect from the defaulting spouse. If possible, never let things get to this point by utilizing some of the suggestions outlined below.
Before you go to court or sign the final decree of divorce, you should research each and every account that the decree references no matter if that account falls under the "Husband" or "Wife" section. You both need to be aware how the accounts were established, and who and what the creditor deems liable. It may be in your best interests to refinance jointly held debt and establish the debt in each individual's name if that is possible. If you or your spouse's credit score is not strong enough to take this route, then you may consider liquidating assets to repay the debt before the divorce is final and close the account. It will be cold comfort to pay off a debt only to find out that your ex ran up a bunch of charges. A method may be to sell a car, a house, real property, or take a 401-K loan prior to finalizing the divorce to pay off debt. Because a mortgage and car loan can have long terms of payments, it may behoove you to sell those assets and let the other party acquire them on his or her own credit. By paying off those assets, those will no longer appear as debts on your credit report or create potential future problems if the other party fails to make payments to the creditor.
After your divorce is final, you may consider taking these actions:
1. Closing all joint accounts with a low balance or zero balance. 2. Request a credit report from one of the big three credit reporting agencies 90 days after the divorce is final. Look for any errors or discrepancies and aggressively challenge them in writing. 3. Ask each creditor to send you a duplicate notice for the joint accounts - even if the ex was assigned this account. Monitor to ensure that payments are being made on a regular, timely basis. 4. Make an offer for accord and satisfaction - basically, offer the creditor an amount of money in exchange for a release of your liability on the account assigned to your ex. 5. Communicate with the big three credit reporting agencies to notify them of the divorce and any name changes. 6. Create a debt reduction plan. There are many excellent resources available, such as Consumer Credit Counseling Services, Dave Ramsey, or a church based debt reduction plan.
Bottom line - your credit score is an asset just like your home or car. In fact, if you don't have a good credit score, your ability to obtain consumer or business financing may be extremely limited.
Shannon Cavers provides more divorce information and articles at Houston Divorce Lawyer
About the Author
Shannon Cavers is a Houston, Texas based lawyer practicing in divorce, family law and probate. Houston Divorce Lawyer
Media sources often portray Hollywood stars of "power couples" divorcing. Included with the typical hype may be which party will get the mansion, vacation home, or car collection, but rarely is there any coverage about how the parties will divide debt.
The hard truth is that debt, just like assets, are included in the community estate. No matter what your own moral compass may register regarding your and your spouse's debt, Texas case law establishes rules that might surprise you. First, debt incurred during the marriage is presumed to be community debt. See Cockerham v. Cockerham, 527 S.W.2d 162, 171 (Tex. 1975). There must be a sufficient amount of evidence to rebut this presumption.
Despite well established case law, Texas divorce decrees contain sections entitled "Debt to Husband" and "Debt to Wife", which seemingly assign responsibility for each debt. These sections of the decree will identify each creditor, the account number, and account balance. At the close of the divorce proceedings, the divorced couple has a lengthy document called a final decree of divorce. The husband, wife, their attorneys, and the judge sign the final decree. Often times the parties order a certified copy of their divorce decree, throw it in a drawer or the safe deposit box, and rarely look at it again unless there are children and custody issues involved.
It may be months or years later when the phone rings and one of the parties is greeted by the monotone utterances of a bill collector reading a script off the computer screen. The dialogue may go something like this:
Bob the Bill Collector: "This is Bob with XYZ Visa. I'm calling because your account is 60 days past due, and I need to know when you plan to remit the past due amount and begin making payments."
You: "What are you talking about? That's my ex's account. Our divorce decree says so. I haven't been married to him/her in over (whatever time frame)! Call that deadbeat for the money."
Bob: "Well, Mr. or Ms. So and So, that doesn't mean you don't owe the debt if your ex defaults."
You: "I have a certified court order signed by me, my ex, our attorneys, and the judge saying that I don't owe you anything for that account. That account is the ex's problem. When you find him/her, let me know because he/she owes me money, too!"
Bob: "Your divorce decree might say you aren't responsible, but the law says you are. Why don't you give me a check by phone and we can get you on a payment plan."
You: "Are you dense?! Did you hear anything I just said?! I'm not responsible and I'm not paying you one red cent on any of that debt. Call the ex but stop hounding me!"
Bob: "Mr. or Ms. So and So, I did hear you, and you're wrong. No matter what your divorce decree says, you owe XYZ Visa. If you don't begin making payments, XYZ Visa will report this delinquent account to the credit reporting agencies, and take action up to and including litigation."
I'll let you fill in the closing dialogue for yourself. You are angry and hang up the phone. You may think that Bob, located at some call center hundreds of miles away, has no idea what he's talking about.
As unsettling as it may be, Bob is right. Unless the XYZ Visa was a party to your divorce suit and agreed to the terms of the final decree, you owe the money. It is highly unusual for a husband and wife or their attorneys to implead creditors into divorce actions due to complex legal issues such as jurisdiction and venue on both the state and federal level.
To understand how you could possibly be responsible for debt assigned to your ex, you must rewind to the point in time when the credit account was opened. You will need to look at the original account agreement. Almost no one keeps those documents, so order a copy of your credit report from one of the big three credit reporting agencies (EquiFax, Experian, or TransUnion). If the account shows up on your report, then you were more than likely a party to the credit agreement. Despite how the divorce decree allocates the debts (both secured and unsecured), the Court has no authority to modify the contractual obligations between the spouses and the creditor.
To say it another way, the court cannot take away the creditor's right to proceed against either spouse(s) for payment of a community debt that was incurred prior to the decree. See Blake v. Amoco Fed. Credit Union, 900 S.W.2d 108 (Tex. App. - Houston [14th Dist.] 1995, no writ).
Let's presume the account was originally opened in both your names and the creditor was looking to both you and your spouse's income and assets to repay the obligation. This means that you are both responsible for the debt. But what about the divorce decree that spells out which assets and liabilities you and your ex were assigned? Is it a worthless piece of paper? No.
You will not be able to file a motion to enforce the divorce decree to get the defaulting spouse to pay the debt. An enforcement action will only assist if there was specific property, such as a vehicle, brokerage account, or personal property, the other spouse failed to turn over. But what about the debt? All is not lost. You could file an action for breach of contract against the defaulting spouse. The divorce decree is a binding contract that both parties voluntarily signed before the court.
If your ex has defaulted on one or multiple obligations, a suit for breach of contract may be cold comfort. As the old saying goes, you can't squeeze blood from a turnip. Nevertheless, if you pursue this option, your damages may include any money you agreed to pay the creditor to keep the account out of collections, interest, and other miscellaneous expenses, such as attorney's fees if any are incurred.
Depending on the size of the debt that the defaulting party hasn't paid, you could seek relief in small claims court. Texas small claims courts have jurisdiction from $0.01 up to $5,000.00. These courts are designed for individuals who want to represent themselves and avoid hiring an attorney. This is where people go to argue the "do right" law. However, if the amount in controversy is greater than $5,000.00, then you must file suit in a county court, county court at law, or a district court with jurisdiction over the matter. At this point, you may consider hiring an attorney to prosecute the claim if there's a reasonable possibility you could collect from the defaulting spouse. If possible, never let things get to this point by utilizing some of the suggestions outlined below.
Before you go to court or sign the final decree of divorce, you should research each and every account that the decree references no matter if that account falls under the "Husband" or "Wife" section. You both need to be aware how the accounts were established, and who and what the creditor deems liable. It may be in your best interests to refinance jointly held debt and establish the debt in each individual's name if that is possible. If you or your spouse's credit score is not strong enough to take this route, then you may consider liquidating assets to repay the debt before the divorce is final and close the account. It will be cold comfort to pay off a debt only to find out that your ex ran up a bunch of charges. A method may be to sell a car, a house, real property, or take a 401-K loan prior to finalizing the divorce to pay off debt. Because a mortgage and car loan can have long terms of payments, it may behoove you to sell those assets and let the other party acquire them on his or her own credit. By paying off those assets, those will no longer appear as debts on your credit report or create potential future problems if the other party fails to make payments to the creditor.
After your divorce is final, you may consider taking these actions:
1. Closing all joint accounts with a low balance or zero balance. 2. Request a credit report from one of the big three credit reporting agencies 90 days after the divorce is final. Look for any errors or discrepancies and aggressively challenge them in writing. 3. Ask each creditor to send you a duplicate notice for the joint accounts - even if the ex was assigned this account. Monitor to ensure that payments are being made on a regular, timely basis. 4. Make an offer for accord and satisfaction - basically, offer the creditor an amount of money in exchange for a release of your liability on the account assigned to your ex. 5. Communicate with the big three credit reporting agencies to notify them of the divorce and any name changes. 6. Create a debt reduction plan. There are many excellent resources available, such as Consumer Credit Counseling Services, Dave Ramsey, or a church based debt reduction plan.
Bottom line - your credit score is an asset just like your home or car. In fact, if you don't have a good credit score, your ability to obtain consumer or business financing may be extremely limited.
Shannon Cavers provides more divorce information and articles at Houston Divorce Lawyer
About the Author
Shannon Cavers is a Houston, Texas based lawyer practicing in divorce, family law and probate. Houston Divorce Lawyer
Real Estate Short Sales
It was a real estate boom like no other. Interest rates were dropping incredibly, homes were garnishing appreciation by the week, the stock market wasn't moving and first time home buyers were getting their piece of the American dream. Mortgage brokers, Real Estate Agents and New Home builders were raking in the cash. It seemed like it would never end. Month after month, year after year the sales of new and existing homes climbed. Investors threw their money into the housing market and then as fast as it came it went thud.
The thud started around November of 2006. It started incrementally with a slower than expected August, a quiet November and the news articles started to reflect which was inevitably going to commence. In January of 2007 the Real Estate Taxes were due and crash it went. What seems to be happening now is a rush to unload. From the outside looking in you can see the stock market rise as the housing market falls. New home builders with still a glimmer of hope increase the price of new homes yet offering larger than expected home incentives. Upgrades galore, creative financing, buyers agents bonuses and yet they continue to build on the land they have allocated for future expansion. If it seems familiar, it is. It has an uncanny sense of 1983 all over again.
How did this happen and what makes this housing thud different from the last? There are some minor differences that make this more unique than the last housing crash. Back in the 80's interest rates were at sometimes 16%. At that point it made sense to try to assume a mortgage that was a lower interest rate and throw your cash into their equity. But it wasn't realized equity. It was an inflated sense of a market share. As prices dropped home owners found they were in an over valued situation and as the job market suffered they could no longer pull their money out of their house to move on with their lives. It caused a ripple affect of people walking away from thousands of dollars just to save what they had left. Real estate was sold at auction in a manner that you would buy livestock or sheriff's sales and the late night infomercials were non-stop. "No Money Down" was the catch phrase. You can still find those publications that cite 20% interest rates and how finding a home with a 10% interest rate was a real steal.
So what happened in the last decade? Feeding on that premise that no money down is something of a desired situation and interest rates dropping most people would assume the best investment was their home. Out the window went the premise of paying down your note and having a secure position in your most valued asset. For some time it was just a matter of the educated investor refinancing a higher note and gaining equity in their home just by dropping their interest rate. It was a normal progression of an intelligent move. Refinancing could shorten the length of your home loan in some instances by 15 years and also lower your monthly payment. And then arose the hungry new home builder, the starving loan officer competing in a new market and the incredible increase of Real Estate Agents flooding the market.
Here's how it worked. In most instances this was a first time home buyer. They were to purchase a house no money down. There would be two loans. The 80% back loan that was a fixed rate of sometimes as low as 5% and then the front loan. The front loan represented the 20% down that was typically the homeowner's down payment. That 20% loan was an adjustable rate mortgage that was incrementally to increase over 5 years and then a balloon was to sit waiting at the end. The buyer confused by all this new jargon would ask, and then what? It was explained with the advent of interest rates dropping it was standard practice at that point to refinance that loan with another fixed rate loan or refinance the entire note at one fixed rate. It became such a standard practice that the next step made even less sense. Why not just incorporate your closing costs as well? And they did. Up to 6% of your closing costs could be rolled back into your loan. The buyer would ask what their monthly payment was and assumed that was an affordable note and there you have it. It was a disaster waiting to happen.
The second victim was the investor. The investor that in most instances was watching their money sit either in CD's that showed a dropping interest rate or a stock market that refused to move. The investor would buy these new homes with incredible incentives and it was explained that the home had these upgrades to the standard built home, the home would ofcourse appreciate to where they could sell in 5 years and realize the equity of a moving home market, and then reinvest. They even came with appliances so that they could rent them immediately. Could there be a catch?
So here's where it all plays out now. The new home buyer is in the home of their dreams. And the interest rates instead of dropping are now increasing. So incrementally their payment increases. Then to add insult to injury the home they purchased had an estimated tax base of an empty lot. So the taxes figured at closing were estimated on a fraction of the value of completed construction. Here comes the new appraisal on completed construction and your tax base increases by 150%. These new home buyers revisit that 20% loan and notice that the note is coming due. Struggling to understand the increase in their monthly mortgage payment, coming up with the added cash for their balloon, compounded with the increase in gas and consumable goods is overwhelming. So, as suggested by their loan officer they search to refinance.
What was not explained to them is with the rush of foreclosures on the market and millions of people in the same situation, you must have equity to refinance. You must show the ability to be able to support your note. And they are turned away.
The investor finds themselves in a new subdivision competing with new home sales and no equity. The builder has built in their contract that they can not erect a sign in their yard advertising the property for sale until the subdivision is completed. There are not to hang a lock box on the door. So basically they must rely on the local MLS to market their property. To add insult to injury now the new homes are selling the exact same house they purchased 2 to 5 years earlier for less than they purchased it and adding more upgrades and incentives to new home buyers.
This created a flood of foreclosures on the market. People frustrated are electing to walk away from the home and their good credit rating. Lenders are found at the court house steps now purchasing these homes, fixing them up and reselling them. In some instances the homes are not even rehabbed but placed back on the market sold "as-is, where-is". That would be the new catch phrase.
In order to circumvent the costs of the foreclosure the lending market created an alternative for a homeowner to stop their foreclosure. This system has now been name a "short sale" or a "pre-foreclosure". The short sale is handled this way. The homeowner without any equity in their home approaches the mortgage company and requests a short sale. They are to fill out financial information substantiating that they are no longer able to pay the note. Upon acceptable of the package the home is then listed by a real estate agent on the local MLS and marketing as a "short-sale" or "pre-foreclosure". The offers are then submitted directly to the lender and the lender will make the decisive move as to whether to accept the offer or renegotiate. The homeowner at this point is nothing more than a signature on the listing agreement or the closing statement.
Once the lender comes to an agreement with a prospective buyer the closing date is set and the house changes hands. In most instances the loan is reported as being satisfied and the homeowner now can relax and move to a more comfortable situation. There are floods of new seminars on purchasing property in this type of distressed situation and even though it is a reliable way to purchase property the best case scenario is ofcourse an end user. This is a particularly good way for a home buyer to purchase a property in relatively good condition for a discounted price.
As a real estate agent in the Houston area I have found it difficult to find documentation to send my sellers to to educate them in the process. Most websites are about buying real estate in a short sale situation but I have been limited in finding documentation to support how you would sell such home. Henceforth the publication of this article.
About the Author
Linda Landman is a Real Estate agent in Richmond Texas, 30 miles outside of Houston. She specializes in Land and Short Sales.
The thud started around November of 2006. It started incrementally with a slower than expected August, a quiet November and the news articles started to reflect which was inevitably going to commence. In January of 2007 the Real Estate Taxes were due and crash it went. What seems to be happening now is a rush to unload. From the outside looking in you can see the stock market rise as the housing market falls. New home builders with still a glimmer of hope increase the price of new homes yet offering larger than expected home incentives. Upgrades galore, creative financing, buyers agents bonuses and yet they continue to build on the land they have allocated for future expansion. If it seems familiar, it is. It has an uncanny sense of 1983 all over again.
How did this happen and what makes this housing thud different from the last? There are some minor differences that make this more unique than the last housing crash. Back in the 80's interest rates were at sometimes 16%. At that point it made sense to try to assume a mortgage that was a lower interest rate and throw your cash into their equity. But it wasn't realized equity. It was an inflated sense of a market share. As prices dropped home owners found they were in an over valued situation and as the job market suffered they could no longer pull their money out of their house to move on with their lives. It caused a ripple affect of people walking away from thousands of dollars just to save what they had left. Real estate was sold at auction in a manner that you would buy livestock or sheriff's sales and the late night infomercials were non-stop. "No Money Down" was the catch phrase. You can still find those publications that cite 20% interest rates and how finding a home with a 10% interest rate was a real steal.
So what happened in the last decade? Feeding on that premise that no money down is something of a desired situation and interest rates dropping most people would assume the best investment was their home. Out the window went the premise of paying down your note and having a secure position in your most valued asset. For some time it was just a matter of the educated investor refinancing a higher note and gaining equity in their home just by dropping their interest rate. It was a normal progression of an intelligent move. Refinancing could shorten the length of your home loan in some instances by 15 years and also lower your monthly payment. And then arose the hungry new home builder, the starving loan officer competing in a new market and the incredible increase of Real Estate Agents flooding the market.
Here's how it worked. In most instances this was a first time home buyer. They were to purchase a house no money down. There would be two loans. The 80% back loan that was a fixed rate of sometimes as low as 5% and then the front loan. The front loan represented the 20% down that was typically the homeowner's down payment. That 20% loan was an adjustable rate mortgage that was incrementally to increase over 5 years and then a balloon was to sit waiting at the end. The buyer confused by all this new jargon would ask, and then what? It was explained with the advent of interest rates dropping it was standard practice at that point to refinance that loan with another fixed rate loan or refinance the entire note at one fixed rate. It became such a standard practice that the next step made even less sense. Why not just incorporate your closing costs as well? And they did. Up to 6% of your closing costs could be rolled back into your loan. The buyer would ask what their monthly payment was and assumed that was an affordable note and there you have it. It was a disaster waiting to happen.
The second victim was the investor. The investor that in most instances was watching their money sit either in CD's that showed a dropping interest rate or a stock market that refused to move. The investor would buy these new homes with incredible incentives and it was explained that the home had these upgrades to the standard built home, the home would ofcourse appreciate to where they could sell in 5 years and realize the equity of a moving home market, and then reinvest. They even came with appliances so that they could rent them immediately. Could there be a catch?
So here's where it all plays out now. The new home buyer is in the home of their dreams. And the interest rates instead of dropping are now increasing. So incrementally their payment increases. Then to add insult to injury the home they purchased had an estimated tax base of an empty lot. So the taxes figured at closing were estimated on a fraction of the value of completed construction. Here comes the new appraisal on completed construction and your tax base increases by 150%. These new home buyers revisit that 20% loan and notice that the note is coming due. Struggling to understand the increase in their monthly mortgage payment, coming up with the added cash for their balloon, compounded with the increase in gas and consumable goods is overwhelming. So, as suggested by their loan officer they search to refinance.
What was not explained to them is with the rush of foreclosures on the market and millions of people in the same situation, you must have equity to refinance. You must show the ability to be able to support your note. And they are turned away.
The investor finds themselves in a new subdivision competing with new home sales and no equity. The builder has built in their contract that they can not erect a sign in their yard advertising the property for sale until the subdivision is completed. There are not to hang a lock box on the door. So basically they must rely on the local MLS to market their property. To add insult to injury now the new homes are selling the exact same house they purchased 2 to 5 years earlier for less than they purchased it and adding more upgrades and incentives to new home buyers.
This created a flood of foreclosures on the market. People frustrated are electing to walk away from the home and their good credit rating. Lenders are found at the court house steps now purchasing these homes, fixing them up and reselling them. In some instances the homes are not even rehabbed but placed back on the market sold "as-is, where-is". That would be the new catch phrase.
In order to circumvent the costs of the foreclosure the lending market created an alternative for a homeowner to stop their foreclosure. This system has now been name a "short sale" or a "pre-foreclosure". The short sale is handled this way. The homeowner without any equity in their home approaches the mortgage company and requests a short sale. They are to fill out financial information substantiating that they are no longer able to pay the note. Upon acceptable of the package the home is then listed by a real estate agent on the local MLS and marketing as a "short-sale" or "pre-foreclosure". The offers are then submitted directly to the lender and the lender will make the decisive move as to whether to accept the offer or renegotiate. The homeowner at this point is nothing more than a signature on the listing agreement or the closing statement.
Once the lender comes to an agreement with a prospective buyer the closing date is set and the house changes hands. In most instances the loan is reported as being satisfied and the homeowner now can relax and move to a more comfortable situation. There are floods of new seminars on purchasing property in this type of distressed situation and even though it is a reliable way to purchase property the best case scenario is ofcourse an end user. This is a particularly good way for a home buyer to purchase a property in relatively good condition for a discounted price.
As a real estate agent in the Houston area I have found it difficult to find documentation to send my sellers to to educate them in the process. Most websites are about buying real estate in a short sale situation but I have been limited in finding documentation to support how you would sell such home. Henceforth the publication of this article.
About the Author
Linda Landman is a Real Estate agent in Richmond Texas, 30 miles outside of Houston. She specializes in Land and Short Sales.
Tuesday, April 17, 2007
Adjustable vs Fixed Rate Mortgages
Adjustable vs Fixed Rate Mortgages
Brought to you by http://www.wolverinefinance.com
Mortgage rates can either be fixed for the duration of your loan or can be adjustable. An adjustable rate mortgage is a loan that is set up with an interest rate that changes based on pre-determined criteria, primarily tied to the federal interest rate. If the interest rates are up, then your interest rate on your loan will be higher, if the interest rates are low then the interest rate on your loan will go down.
Adjustable rate mortgages (ARM's) are generally fixed interest rates for a period of time and then become adjustable. Generally speaking, the introductory interest rate for an ARM loan will be lower than a fixed rate mortgage. This is done in order to lower initial payments and allow people to take out larger mortgages, or give them smaller payments for the introductory period. This is attractive to people who may know that their income will be increasing over that period of time.
Whether or not to choose an ARM or a fixed rate mortgage has been debated for as long as there have been ARM's. Though people feel strongly in both camps, simple mathematics can assist you in determining which mortgage is best for you and your personality. Your personality? Yes. Some people are not comfortable with any uncertainty in their lives. The idea of having an uncertain mortgage payment in the future may cause them more stress than the money they are saving is worth. Therefore, factor your own comfort level into the equation.
Generally speaking, ARMs are 2, 3 or 5 years, though they can be longer or shorter. At the end of that period your interest rate will become variable unless you sell your home or refinance. If you think that the likelihood of your selling or refinancing within the period of the ARM is strong, than the lower interest rates of the ARM loan will be of great benefit to you. If you think it is unlikely that you will sell or refinance within that period, then you may not benefit from an ARM. Bob and Robyn are a young married couple just starting out. Bob is in advertising sales and Robyn is a teacher. Bob is fairly confident that his income will continue to increase over the next several years as he works his way up to becoming an account executive. Robyn's income is more predictable and is on an upward trend. Being a young couple they do not have the finances for large mortgage payments.
Bob and Robyn are presented with two mortgage proposals for their $150,000 mortgage. Proposal one is a 30-year fixed rate mortgage at 6% and the other is a 5-year ARM at an introductory rate of 5.25%. The fixed rate mortgage payments would be $899.33 per month, not including taxes. The ARM would have a 5-year period where payments would be $828.31 per month, not including taxes. Bob knows that even if he can afford the extra $70.00 per month for the fixed rate mortgage, that $70 per month may be better spent knocking down principle during the ARM period. He is further confident that as his salary increases, he is likely to upgrade his home within five years or refinance to make home improvements. Bob and Robyn took the ARM loan.
John and Catrina are a married couple with three grown children. John has been employed at the same company for 18 years and Catrina has been with her company for 12 years. They have consistent and stable income. Neither John nor Catrina expect any substantial increases in their salaries. After their last child moved out of the home they decided to downsize and buy a smaller home. They have a substantial down payment and will only be taking a mortgage of $100,000 on their new home. John and Catrina are presented with the same loan options as Bob and Robyn were. John and Catrina, however, know that it is unlikely they will sell or refinance in the next five years. They are comfortable with the payment schedule and, therefore, prefer the certainty of the fixed rate mortgage.
There are countless websites that offer mortgage calculators to determine your mortgage payment. For your convenience we offer one on our site. You can review the different payment schedules based on the interest rates quoted for the fixed-rate and the ARM. Once you know the different payment amounts you will be able to determine which loan makes the most sense for you and your unique circumstances.
Your mortgage professional should also be able to assist you in reviewing the options and making the best decision for you. The more open and honest you are with your mortgage professional the more helpful they will be. It is only if they are armed with full and honest information that they will be able to make recommendations to you. About the Author: Max Hunter is the author of many credit related articles. If you are looking for help with Home Loans or any type of credit issue please visit us at http://www.wolverinefinance.com For Credit Repair Software, other products, ebooks & articles, visit http://www.globalbizwiz.com
About the Author
Brought to you by http://www.wolverinefinance.com
Mortgage rates can either be fixed for the duration of your loan or can be adjustable. An adjustable rate mortgage is a loan that is set up with an interest rate that changes based on pre-determined criteria, primarily tied to the federal interest rate. If the interest rates are up, then your interest rate on your loan will be higher, if the interest rates are low then the interest rate on your loan will go down.
Adjustable rate mortgages (ARM's) are generally fixed interest rates for a period of time and then become adjustable. Generally speaking, the introductory interest rate for an ARM loan will be lower than a fixed rate mortgage. This is done in order to lower initial payments and allow people to take out larger mortgages, or give them smaller payments for the introductory period. This is attractive to people who may know that their income will be increasing over that period of time.
Whether or not to choose an ARM or a fixed rate mortgage has been debated for as long as there have been ARM's. Though people feel strongly in both camps, simple mathematics can assist you in determining which mortgage is best for you and your personality. Your personality? Yes. Some people are not comfortable with any uncertainty in their lives. The idea of having an uncertain mortgage payment in the future may cause them more stress than the money they are saving is worth. Therefore, factor your own comfort level into the equation.
Generally speaking, ARMs are 2, 3 or 5 years, though they can be longer or shorter. At the end of that period your interest rate will become variable unless you sell your home or refinance. If you think that the likelihood of your selling or refinancing within the period of the ARM is strong, than the lower interest rates of the ARM loan will be of great benefit to you. If you think it is unlikely that you will sell or refinance within that period, then you may not benefit from an ARM. Bob and Robyn are a young married couple just starting out. Bob is in advertising sales and Robyn is a teacher. Bob is fairly confident that his income will continue to increase over the next several years as he works his way up to becoming an account executive. Robyn's income is more predictable and is on an upward trend. Being a young couple they do not have the finances for large mortgage payments.
Bob and Robyn are presented with two mortgage proposals for their $150,000 mortgage. Proposal one is a 30-year fixed rate mortgage at 6% and the other is a 5-year ARM at an introductory rate of 5.25%. The fixed rate mortgage payments would be $899.33 per month, not including taxes. The ARM would have a 5-year period where payments would be $828.31 per month, not including taxes. Bob knows that even if he can afford the extra $70.00 per month for the fixed rate mortgage, that $70 per month may be better spent knocking down principle during the ARM period. He is further confident that as his salary increases, he is likely to upgrade his home within five years or refinance to make home improvements. Bob and Robyn took the ARM loan.
John and Catrina are a married couple with three grown children. John has been employed at the same company for 18 years and Catrina has been with her company for 12 years. They have consistent and stable income. Neither John nor Catrina expect any substantial increases in their salaries. After their last child moved out of the home they decided to downsize and buy a smaller home. They have a substantial down payment and will only be taking a mortgage of $100,000 on their new home. John and Catrina are presented with the same loan options as Bob and Robyn were. John and Catrina, however, know that it is unlikely they will sell or refinance in the next five years. They are comfortable with the payment schedule and, therefore, prefer the certainty of the fixed rate mortgage.
There are countless websites that offer mortgage calculators to determine your mortgage payment. For your convenience we offer one on our site. You can review the different payment schedules based on the interest rates quoted for the fixed-rate and the ARM. Once you know the different payment amounts you will be able to determine which loan makes the most sense for you and your unique circumstances.
Your mortgage professional should also be able to assist you in reviewing the options and making the best decision for you. The more open and honest you are with your mortgage professional the more helpful they will be. It is only if they are armed with full and honest information that they will be able to make recommendations to you. About the Author: Max Hunter is the author of many credit related articles. If you are looking for help with Home Loans or any type of credit issue please visit us at http://www.wolverinefinance.com For Credit Repair Software, other products, ebooks & articles, visit http://www.globalbizwiz.com
About the Author
I own a mortgage company and want to keep people in the know. You'll always pay more if your credit is poor!
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