Well... my previous forecast while calling for tightening of guidelines and a resulting vicious circle of too much inventory and not enough buyers has just gotten worse.
What exactly is going on?
Let me start by explaining the hierarchy if the mortgage lending industry. You purchase a home and apply for a mortgage from your local broker or bank. They close the loan through a wholesale lender who funds the loan with their money. The wholesale lender then packages your loan with a bunch of other “like” loans and sells them to a Wall Street firm or if they are large enough they securitize them themselves and sell them as such in the marketplace. In either case they get their money back plus a small premium over what they paid your broker or bank. Now these mortgage backed securities (MBS) are purchased by large asset funds created by the large wall street firms to give their large personal and corporate clients a place to invest their cash, and believe me, there is plenty of cash out their to be invested!
Got it?
Now you’ve got billions of dollars worth of these “exotic loans” like pay option ARM’s, Stated income, No Doc, etc. at high loan to values ( 95% - 100% ) that were made over the last 5 years sitting in these big asset funds. Now these loans start to adjust, some as little as 2-3% above the original note rate but a lot more are even higher like the case of some pay option ARM's(6-6.5%) above the low rate option.
Now it doesn’t take a rocket scientist to figure out what happened next, right? You guessed it, housing prices stabilized or went down and folks couldn’t refinance their way out of the loans so they defaulted and foreclosures rose! Here is where the vicious cycle comes in, the more loans that defaulted, the tighter the guidelines got because the secondary market ( Wall Street ) wouldn’t buy these “riskier” loans and then more loans defaulted and the guidelines got tighter, and so on, and so on.
Back to our friends with the large asset funds that are chock full of these types of loans.
Those loans that defaulted are no longer making their payments and if no payments are being made, no interest is being paid (which is the funds source of income from these loans) so these loans have no value, they are non performing assets. On top of that the market no longer accepts these types of loans so the funds can’t even sell the loans that haven’t defaulted yet! Oops!
Now this is a somewhat simplified version, I could get into more complexities but, for the purposes of this forecast and the broad audience it reaches, I think you all can get it.
O.K. what does all this mean to you the consumer? Quite simply, you will have to have more skin in the game ( down payment or equity ), document your income and your assets and have a middle credit score of at least 620 (680 or higher will get you a better rate).
Oh, you’ll still be able to get a stated income loan but it won’t be for anymore than 80% of value and you will have to have the assets commensurate with your stated income as determined by the lender’s guidelines.
As for the pay option ARM’s, they’re dead and don’t hold your breath waiting for their return!
Expect these conditions to exist for the next 12 to 18 months. Values across the country should stabilize or begin rising by then.
But hey, if you’ve got the “bling” there are going to be some good deals out there as people will be willing to unload their properties at a lose rather than go into foreclosure.
As with any other part of our economy the consumer always pays the price so, if you are looking for a mortgage you will probably pay a rate that is a .250% - .375% higher than if these conditions did not exist.
My advice if you have an adjustable mortgage that has gone up recently, go into conservative mode and try not to take on any new debt. These conditions will smooth out in the next year to a year and a half, and in that time you probably will only see one more rate increase that should be smaller than the last one.
That’s as complex as it gets folks!
Warm Regards,
JT
I am a 15 year veteran of the mortgage origination business whose experience spans large financial institutions to Brokers. I have seen so many people(in positions that one would associate with intelligence) get led by slick talking originators into over paying for a mortgage!
http://ezinearticles.com/?The-Mortgage-Industrys-Woes,-What-Does-It-Mean?&id=685511
Wednesday, August 22, 2007
Colorado Mortgage Leads
As a mortgage broker or lender, mortgage leads are a most desired commodity. With a blend of good customer relations, bargaining power and salesmanship, a mortgage lead can be quickly converted into a mortgage client.
All mortgage leads are good, whether they are Texas mortgage leads, Florida mortgage leads or California mortgage leads. Today we will delve into the phenomenon of Colorado mortgage leads, part of the Mountain, Southwestern, and Central regions of the United States.
The United States Census Bureau estimates that Colorado’s population in 2006 was 4,753,37, a 10.49% increase since 2000. An increase this significant, combined with what is the country’s eighth strongest per capita personal income, makes Colorado a booming real estate market attractive to new home buyers and those seeking the beauty of the Rocky Mountains. Colorado mortgage leads are plentiful, and typically excellent converters.
The influx of people looking to move to Colorado cities like Denver, Colorado Springs, Aurora, Fort Collins, Arvada, Pueblo, Westminster or Boulder has been a boon to Colorado mortgage brokers or lenders seeking Colorado mortgage leads. Coloradans comprise debt consolidation leads, 125% 2nd mortgage Leads, mortgage refinance leads, home equity leads, sub prime mortgage leads, prime refinance leads and more. It’s a true haven for mortgage leads, creating an abundance of Colorado Mortgage Leads.
A strong economy and growing population means a hot real estate market and more than enough Colorado mortgage leads to go around. The terrain may be rocky, with plenty of peaks and valleys, but outlook for Colorado mortgage brokers and lenders is as smooth as could be.
Mark Carey is an Internet marketer and webmaster of www.juicyleads.com. JuicyLeads is a major provider of refinance mortgage leads. For mortgage leads and refinance leads, visit http://www.juicyleads.com
http://ezinearticles.com/?Colorado-Mortgage-Leads&id=694340
All mortgage leads are good, whether they are Texas mortgage leads, Florida mortgage leads or California mortgage leads. Today we will delve into the phenomenon of Colorado mortgage leads, part of the Mountain, Southwestern, and Central regions of the United States.
The United States Census Bureau estimates that Colorado’s population in 2006 was 4,753,37, a 10.49% increase since 2000. An increase this significant, combined with what is the country’s eighth strongest per capita personal income, makes Colorado a booming real estate market attractive to new home buyers and those seeking the beauty of the Rocky Mountains. Colorado mortgage leads are plentiful, and typically excellent converters.
The influx of people looking to move to Colorado cities like Denver, Colorado Springs, Aurora, Fort Collins, Arvada, Pueblo, Westminster or Boulder has been a boon to Colorado mortgage brokers or lenders seeking Colorado mortgage leads. Coloradans comprise debt consolidation leads, 125% 2nd mortgage Leads, mortgage refinance leads, home equity leads, sub prime mortgage leads, prime refinance leads and more. It’s a true haven for mortgage leads, creating an abundance of Colorado Mortgage Leads.
A strong economy and growing population means a hot real estate market and more than enough Colorado mortgage leads to go around. The terrain may be rocky, with plenty of peaks and valleys, but outlook for Colorado mortgage brokers and lenders is as smooth as could be.
Mark Carey is an Internet marketer and webmaster of www.juicyleads.com. JuicyLeads is a major provider of refinance mortgage leads. For mortgage leads and refinance leads, visit http://www.juicyleads.com
http://ezinearticles.com/?Colorado-Mortgage-Leads&id=694340
Money Merge Account - Facts and Fiction
I have been a mortgage broker for over 10 years in South Florida. Over the years, many mortgage acceleration programs have crossed my path, but I have never felt truly passionate about one of these programs until I was introduced to the Money Merge Account from United First Financial. The purpose of this article is to outline the benefits and put to rest the misconceptions about these innovative programs and why I truly believe the Money Merge Account is the best of them.
To start with, we first must understand what exactly is meant by the term “mortgage acceleration program” and what every one of these program does and does not do.
Mortgage acceleration programs are designed to “help” or “assist” in paying down your mortgage’s principal balance and save on the total amount of interest you pay on your mortgage. If you borrowed $200,000, then you will be paying back the $200,000, just the amount of interest you pay will be reduced. I usually refer to these programs as the “diet programs of the financial world”. The reason for this analogy is, just like diet programs, every person is capable of losing weight although some of us need help in achieving this goal. The same can be said about our mortgage. We are all capable in paying off our mortgage faster, but some of us lack the financial obedience and discipline to do so. Mortgage acceleration programs keep us on the path toward our ultimate goal (living mortgage free) and making this task easier and less stressful for us; that is all.
With that being said, I would like to look at the two different types of mortgage acceleration programs available today and the pros and cons of each.
The first type of program is the first position Home Equity Line of Credit or HELOC for short. In this program, a client is asked to refinance their existing first mortgage (which is usually a fixed rate, fully amortized loan), their second mortgage (if they have one) and their credit card debt (if they have any) into a first position HELOC. The reason for this is the payment on a HELOC is interest only, BUT the amount of interest we are charged is based on the daily average balance of the HELOC for the prior month. The client is then asked to transfer the full amount of their paychecks (and whatever other money they make that month) into the HELOC (they should always have a $0 balance in their checking/savings accounts). By doing this, it drives down the principal balance of the HELOC. When they need to pay a bill, they simply can write a check from their HELOC to pay it since all HELOCs act as a checking account as well. In essence, the HELOC becomes the client’s checking and savings account.
To put this into prospective, let’s look at an example:
A person starts the first of the month with a balance on the HELOC at $100,000. They are paid twice a month on the 1st and the 15th in the amount of $2,500 each pay period and they have monthly living expenses of $4,000 (to make this example simple, we will assume the client pays all their bills on the 30th of the month). Therefore, they started the month with a $100,000 HELOC balance, but their paychecks were applied throughout the month and then their expenses were written from the HELOC, therefore, their end of the month balance is $99,000 (($100,000 - $2,500 - $2,500) + $4,000). If the interest rate on the HELOC was 10%, people would assume that their payment would be $825 at the end of the month (($99,000 * 10%) / 12 = $825). But this is wrong. There true payment would be based on the average daily balance of the account, which is $93,083.33 ($97,500 for the first 14 days, $95,000 for the next 15 days and $99,000 for 1 day divided by 30 days). Therefore, their payment on the HELOC would be $755.69. This is a difference of $49.31.
Based on the information above, lets look at the pros and cons to this program.
The pros to this program should be easy to identify:
# 1) Every dollar earned and saved is used to help pay down the principal on the HELOC.
# 2) No extra steps are needed to be taken by the client, just transfer their money from checking/savings into the HELOC.
# 3) Access to the HELOC is always available to pay expenses.
The first position HELOC is a very simple and effective way for people to use every dollar they earn and save to help pay down the principal balance and save on they amount of interest they pay on their mortgage. However, there are a number of cons with this program which has prevented me from offering this solution to clients. They are as follows:
# 1) They client never truly knows how many years are left until their mortgage is paid off because a tracking system has not been developed.
# 2) The interest rate on the HELOC is adjustable and tied to the Prime Rate which is controlled by the Federal Reserve. The Federal Reserve has increased the Prime Rate from 4.00% in July 2003 to 8.25% in July 2007. As the rate of the Prime Rate increases, the length of time to payoff the client’s mortgage also increases as well as their payment.
# 3) There is always the “drunken sailor effect” (this is what I call it) to consider as well. This basically suggests that since the client always has full access to the HELOC, they can borrow from the HELOC and drive the principal balance up to its original amount. People who have access to money tend to spend it if it is not watched closely.
# 4) Lenders who offer this program typically charge high fees.
The second type of mortgage acceleration program combines the use of a second position HELOC and computer software to payoff the first mortgage and other debts (this is how the Money Merge Account is setup). In this program, a client obtains a HELOC as a second mortgage on their property. The client is then asked to transfer the full amount of their paychecks (and whatever other money they make that month) into the HELOC (they should always have a $0 balance in their checking/savings accounts). By doing this, it drives down the principal balance of the HELOC. When they need to pay a bill, they simply can write a check from their HELOC to pay it since all HELOCs act as a checking account as well. In essence, the HELOC becomes the client’s checking and savings account.
Computer software is then used to monitor how much money is coming in, the frequency in which the client is paid and how much is going out for expenses. Based on these factors, the computer software will tell the client exactly how much (an exact dollar amount down to the penny) and when (an exact date) to borrow from the HELOC and apply it as an additional principal payment to their first mortgage. The computer software will also keep track of how much principal is owed on the first mortgage and HELOC and how much time is left to payoff the mortgages.
Now that we have an overview of how the program works, let’s look at the pros and cons to this program.
There are a number of pros to this system which make it very useful to a client. They are:
# 1) The client does not have to refinance their existing first mortgage (which is usually a fixed rate).
# 2) The HELOC can be obtained at their local bank and the bank does not charge fees (check with your bank to be sure) to obtain the HELOC.
# 3) A much smaller HELOC is used.
# 4) The interest rate on the HELOC does not matter as long as the client does not have an existing HELOC with a balance. If the HELOC is new and doesn’t have a balance, the client will payoff their mortgage(s) in the same amount of time regardless of the interest rate.
# 5) The computer software acts as a “financial dashboard” clearly showing the client their income, expenses, what they owe on the mortgages and when everything will be paid off.
# 6) The client has to manually input their expenses into the computer software, thus subconsciously making them realize how much money they are truly spending (helps prevent the “drunken sailor effect” from happening).
# 7) The client can clearly see the amount of time added to the payoff of their mortgage with every expense. This is referred to as the True Value of Money. Although some expenses are necessary (food, gas, electric, etc…) many are discretionary and can be cut back on (going out to dinner is a big one). This subconsciously makes the client become more frugal with their money and spend less on unnecessary expenses.
# 8) Every dollar earned and saved is used to payoff the mortgage(s).
# 9) Less expensive then the first position HELOC.
# 10) WILL ALWAYS PAYOFF FASTER THEN THE FIRST POSITION HELOC.
# 11) The results are Guaranteed.
Although the pro list is long, there are some cons to this program:
# 1) The client has to manually input their expenses into the computer software; therefore, there is the chance they will not.
# 2) The program does not move the client’s money for them. Additional principal payments to the first mortgage from the HELOC have to made by the client.
# 3) Clients living in states which will not allow HELOCs (Texas is one of them) are not able to utilize this program.
In this article we examined the two different types of mortgage acceleration programs and listed the pros and cons of each of them. You can clearly see why I have chosen to offer the Money Merge Account to my clients over the first position HELOC. I truly believe this program will help those clients who need assistance in controlling their finances to become mortgage free. At the time of this article, I currently have several clients utilizing the Money Merge Account and all are happy and referring other potential clients to me. It should also be noted that there is not one unhappy client out of the many thousands across the United States who are currently using the Money Merge Account.
Charles Petruzzi has been a mortgage broker in South Florida since 1996 and is a agent for United First Financial and the Money Merge Account. For more information on the Money Merge Account, please visit his website at http://www.mortgageaccelerationllc.com
http://ezinearticles.com/?Money-Merge-Account---Facts-and-Fiction&id=684210
To start with, we first must understand what exactly is meant by the term “mortgage acceleration program” and what every one of these program does and does not do.
Mortgage acceleration programs are designed to “help” or “assist” in paying down your mortgage’s principal balance and save on the total amount of interest you pay on your mortgage. If you borrowed $200,000, then you will be paying back the $200,000, just the amount of interest you pay will be reduced. I usually refer to these programs as the “diet programs of the financial world”. The reason for this analogy is, just like diet programs, every person is capable of losing weight although some of us need help in achieving this goal. The same can be said about our mortgage. We are all capable in paying off our mortgage faster, but some of us lack the financial obedience and discipline to do so. Mortgage acceleration programs keep us on the path toward our ultimate goal (living mortgage free) and making this task easier and less stressful for us; that is all.
With that being said, I would like to look at the two different types of mortgage acceleration programs available today and the pros and cons of each.
The first type of program is the first position Home Equity Line of Credit or HELOC for short. In this program, a client is asked to refinance their existing first mortgage (which is usually a fixed rate, fully amortized loan), their second mortgage (if they have one) and their credit card debt (if they have any) into a first position HELOC. The reason for this is the payment on a HELOC is interest only, BUT the amount of interest we are charged is based on the daily average balance of the HELOC for the prior month. The client is then asked to transfer the full amount of their paychecks (and whatever other money they make that month) into the HELOC (they should always have a $0 balance in their checking/savings accounts). By doing this, it drives down the principal balance of the HELOC. When they need to pay a bill, they simply can write a check from their HELOC to pay it since all HELOCs act as a checking account as well. In essence, the HELOC becomes the client’s checking and savings account.
To put this into prospective, let’s look at an example:
A person starts the first of the month with a balance on the HELOC at $100,000. They are paid twice a month on the 1st and the 15th in the amount of $2,500 each pay period and they have monthly living expenses of $4,000 (to make this example simple, we will assume the client pays all their bills on the 30th of the month). Therefore, they started the month with a $100,000 HELOC balance, but their paychecks were applied throughout the month and then their expenses were written from the HELOC, therefore, their end of the month balance is $99,000 (($100,000 - $2,500 - $2,500) + $4,000). If the interest rate on the HELOC was 10%, people would assume that their payment would be $825 at the end of the month (($99,000 * 10%) / 12 = $825). But this is wrong. There true payment would be based on the average daily balance of the account, which is $93,083.33 ($97,500 for the first 14 days, $95,000 for the next 15 days and $99,000 for 1 day divided by 30 days). Therefore, their payment on the HELOC would be $755.69. This is a difference of $49.31.
Based on the information above, lets look at the pros and cons to this program.
The pros to this program should be easy to identify:
# 1) Every dollar earned and saved is used to help pay down the principal on the HELOC.
# 2) No extra steps are needed to be taken by the client, just transfer their money from checking/savings into the HELOC.
# 3) Access to the HELOC is always available to pay expenses.
The first position HELOC is a very simple and effective way for people to use every dollar they earn and save to help pay down the principal balance and save on they amount of interest they pay on their mortgage. However, there are a number of cons with this program which has prevented me from offering this solution to clients. They are as follows:
# 1) They client never truly knows how many years are left until their mortgage is paid off because a tracking system has not been developed.
# 2) The interest rate on the HELOC is adjustable and tied to the Prime Rate which is controlled by the Federal Reserve. The Federal Reserve has increased the Prime Rate from 4.00% in July 2003 to 8.25% in July 2007. As the rate of the Prime Rate increases, the length of time to payoff the client’s mortgage also increases as well as their payment.
# 3) There is always the “drunken sailor effect” (this is what I call it) to consider as well. This basically suggests that since the client always has full access to the HELOC, they can borrow from the HELOC and drive the principal balance up to its original amount. People who have access to money tend to spend it if it is not watched closely.
# 4) Lenders who offer this program typically charge high fees.
The second type of mortgage acceleration program combines the use of a second position HELOC and computer software to payoff the first mortgage and other debts (this is how the Money Merge Account is setup). In this program, a client obtains a HELOC as a second mortgage on their property. The client is then asked to transfer the full amount of their paychecks (and whatever other money they make that month) into the HELOC (they should always have a $0 balance in their checking/savings accounts). By doing this, it drives down the principal balance of the HELOC. When they need to pay a bill, they simply can write a check from their HELOC to pay it since all HELOCs act as a checking account as well. In essence, the HELOC becomes the client’s checking and savings account.
Computer software is then used to monitor how much money is coming in, the frequency in which the client is paid and how much is going out for expenses. Based on these factors, the computer software will tell the client exactly how much (an exact dollar amount down to the penny) and when (an exact date) to borrow from the HELOC and apply it as an additional principal payment to their first mortgage. The computer software will also keep track of how much principal is owed on the first mortgage and HELOC and how much time is left to payoff the mortgages.
Now that we have an overview of how the program works, let’s look at the pros and cons to this program.
There are a number of pros to this system which make it very useful to a client. They are:
# 1) The client does not have to refinance their existing first mortgage (which is usually a fixed rate).
# 2) The HELOC can be obtained at their local bank and the bank does not charge fees (check with your bank to be sure) to obtain the HELOC.
# 3) A much smaller HELOC is used.
# 4) The interest rate on the HELOC does not matter as long as the client does not have an existing HELOC with a balance. If the HELOC is new and doesn’t have a balance, the client will payoff their mortgage(s) in the same amount of time regardless of the interest rate.
# 5) The computer software acts as a “financial dashboard” clearly showing the client their income, expenses, what they owe on the mortgages and when everything will be paid off.
# 6) The client has to manually input their expenses into the computer software, thus subconsciously making them realize how much money they are truly spending (helps prevent the “drunken sailor effect” from happening).
# 7) The client can clearly see the amount of time added to the payoff of their mortgage with every expense. This is referred to as the True Value of Money. Although some expenses are necessary (food, gas, electric, etc…) many are discretionary and can be cut back on (going out to dinner is a big one). This subconsciously makes the client become more frugal with their money and spend less on unnecessary expenses.
# 8) Every dollar earned and saved is used to payoff the mortgage(s).
# 9) Less expensive then the first position HELOC.
# 10) WILL ALWAYS PAYOFF FASTER THEN THE FIRST POSITION HELOC.
# 11) The results are Guaranteed.
Although the pro list is long, there are some cons to this program:
# 1) The client has to manually input their expenses into the computer software; therefore, there is the chance they will not.
# 2) The program does not move the client’s money for them. Additional principal payments to the first mortgage from the HELOC have to made by the client.
# 3) Clients living in states which will not allow HELOCs (Texas is one of them) are not able to utilize this program.
In this article we examined the two different types of mortgage acceleration programs and listed the pros and cons of each of them. You can clearly see why I have chosen to offer the Money Merge Account to my clients over the first position HELOC. I truly believe this program will help those clients who need assistance in controlling their finances to become mortgage free. At the time of this article, I currently have several clients utilizing the Money Merge Account and all are happy and referring other potential clients to me. It should also be noted that there is not one unhappy client out of the many thousands across the United States who are currently using the Money Merge Account.
Charles Petruzzi has been a mortgage broker in South Florida since 1996 and is a agent for United First Financial and the Money Merge Account. For more information on the Money Merge Account, please visit his website at http://www.mortgageaccelerationllc.com
http://ezinearticles.com/?Money-Merge-Account---Facts-and-Fiction&id=684210
Commercial Mortgages
In today's financial market, commercial mortgages are are wise choice when financing the development of a business, as they provide flexible, easy and affordable financing options. For businesses facing harsh financial problems, commercial mortgages are a great way to stay away from bankruptcy and to get back stability in todays market; for growing companies, commercial mortgages are a great way to finance business changes and make improvements. Commercial mortgages may also be used for a variety of purposes. Some of these purchases of business expansion, developing your business property, commercial investments and much more.
Commercial mortgages are often referred to as loans made by using real estate as a guarantee for paying back the loan. Although commercial mortgages have several similarities to residential mortgages, they do have their differences. Such as in the case of commercial loans the collateral or security put forth for repayment of the loan is a type of commercial building or a companies real estate and not a type of residential property. Therefore, a commercial mortgage deals mostly closed by businesses and not individuals. But with residential mortgages, borrowers often have to present with good credibility and have great credit in order to receive a substantial loan at a fair rate.
Most terms and conditions of commercial mortgages greatly differ from a local perspective; for example, commercial mortgage rules in the United States vary from those closed in other countries in areas such as the commercial loans term, length of time permitted until balloon payment kicks in and more. Nevertheless, the most distinct variation of commercial mortgages are usually in the areas such as interest rates, which are often established by the local market.
When trying to get the most benefit out of a commercial mortgage, it is vital to pay the right attention to interest rate, the repayment schedule, and duration of the loan predetermined in the contract. These are key points that can significantly influence the quality and the effectiveness of any underwritten commercial mortgage. One of the most important piece of advice to remember is that there is no wrong or right way to discuss the conditions of a commercial mortgage. However, it should be very important for you to opt for the repayment plan that will best suit your business needs.
Commercial mortgage interest rates can be divided in two distinct groups, each with specific advantages and disadvantages: commercial fixed rates and commercial variable rates. Commercial fixed rates are perfect on the grounds of constantly rising interest rates in the market; they are favored by business owners who want to steady the monthly payment term. When choosing a commercial fixed rate, one can also acquire an early redemption charge or ERC, which essentially works like this: after the previously recognized fixed rate period of repayment has expired, the borrower will benefit from an extended period of reimbursement, with the stipulation to pay a variable rate recognized by the lender from that point on. The ERC has been adopted by many commercial loan providers, this helps because it allows borrowers to conquer any up-and-coming financial problems during the repayment period.
The commercial variable interest rate is mainly influenced by the change in the base rate established by certain banks. This type of commercial interest rate also varies according to the local market rates and other key factors, and you should avoid it in highly unstable markets. Before you make a choice on a commercial variable interest rate loan, it is important to do an general research of the market in order to proficiently forecast the short-term and long-term outcome of the markets interest rates. If the market forecast is favorable and the interest rates are likely to drop significantly, then the variable interest rate would be a wiser choice; otherwise, you should go for the fixed interest rate.
The method of closing the right commercial mortgage deal has many subtleties and can involve performing an complete series of specific jobs. In order to get the best out of a taken commercial mortgage and to prevail over any impediments over the period of the loan, it is important to employ the services of a highly reputed commercial mortgage company.
Troy Francis is author for century mortgages. Please feel free to use this article for your use. We only ask you kindly leave our link active: http://www.centurymortgages.org
http://ezinearticles.com/?Commercial-Mortgages&id=695826
Commercial mortgages are often referred to as loans made by using real estate as a guarantee for paying back the loan. Although commercial mortgages have several similarities to residential mortgages, they do have their differences. Such as in the case of commercial loans the collateral or security put forth for repayment of the loan is a type of commercial building or a companies real estate and not a type of residential property. Therefore, a commercial mortgage deals mostly closed by businesses and not individuals. But with residential mortgages, borrowers often have to present with good credibility and have great credit in order to receive a substantial loan at a fair rate.
Most terms and conditions of commercial mortgages greatly differ from a local perspective; for example, commercial mortgage rules in the United States vary from those closed in other countries in areas such as the commercial loans term, length of time permitted until balloon payment kicks in and more. Nevertheless, the most distinct variation of commercial mortgages are usually in the areas such as interest rates, which are often established by the local market.
When trying to get the most benefit out of a commercial mortgage, it is vital to pay the right attention to interest rate, the repayment schedule, and duration of the loan predetermined in the contract. These are key points that can significantly influence the quality and the effectiveness of any underwritten commercial mortgage. One of the most important piece of advice to remember is that there is no wrong or right way to discuss the conditions of a commercial mortgage. However, it should be very important for you to opt for the repayment plan that will best suit your business needs.
Commercial mortgage interest rates can be divided in two distinct groups, each with specific advantages and disadvantages: commercial fixed rates and commercial variable rates. Commercial fixed rates are perfect on the grounds of constantly rising interest rates in the market; they are favored by business owners who want to steady the monthly payment term. When choosing a commercial fixed rate, one can also acquire an early redemption charge or ERC, which essentially works like this: after the previously recognized fixed rate period of repayment has expired, the borrower will benefit from an extended period of reimbursement, with the stipulation to pay a variable rate recognized by the lender from that point on. The ERC has been adopted by many commercial loan providers, this helps because it allows borrowers to conquer any up-and-coming financial problems during the repayment period.
The commercial variable interest rate is mainly influenced by the change in the base rate established by certain banks. This type of commercial interest rate also varies according to the local market rates and other key factors, and you should avoid it in highly unstable markets. Before you make a choice on a commercial variable interest rate loan, it is important to do an general research of the market in order to proficiently forecast the short-term and long-term outcome of the markets interest rates. If the market forecast is favorable and the interest rates are likely to drop significantly, then the variable interest rate would be a wiser choice; otherwise, you should go for the fixed interest rate.
The method of closing the right commercial mortgage deal has many subtleties and can involve performing an complete series of specific jobs. In order to get the best out of a taken commercial mortgage and to prevail over any impediments over the period of the loan, it is important to employ the services of a highly reputed commercial mortgage company.
Troy Francis is author for century mortgages. Please feel free to use this article for your use. We only ask you kindly leave our link active: http://www.centurymortgages.org
http://ezinearticles.com/?Commercial-Mortgages&id=695826
Mortgage Lenders Act Like Your Friend in Need, But Seek to Line Their Pockets at Your Expense
A client of mine received a "Smart Watch Report" from her mortgage lender the other day, and asked me to evaluate it for her.
The report was really an invitation to refinance her current mortgage loan and use her equity interest to either get cash now or sell her home and use the equity to buy a new home.
She made her original 30-year fixed rate loan for $142,000 at 5.5% interest a little more than two years ago. Her principal and interest monthly payment is $806. She has her property taxes and home insurance rolled into the loan, making her actual monthly payment $1,014, or $208 more.
Her appraisal at the time of the loan was $200,000 and her mortgage lender set the estimated current value at $253,000, giving her an estimated equity of $114,000+. Her principal owing at the time was $139,000+.
This is what I quickly observed:
1) She needed to buy a new home like she needed another hole in her head, and I told her so. Since she has a fixed income, buying a newer, better home would simply increase her debt and make it more difficult to service the increased debt.
2) While she could refinance her 30-year fixed rate to a 15-year fixed rate loan and save $55,000 over the life of the loan, it would increase her monthly payment for principal and interest to $1,193, an increase of $387 over her current $806 monthly payment.
Rolling her property taxes and home insurance into the 15-year loan would bring her new actual payment to $1,401, again an increase of $387 over her current monthly payment of $1,014.
3) The first offer her mortgage lender made was to do a "cash out " refinance wherein she could get her hands on $89,000+ in cash to fritter away on a new car, vacations and whatever else she did not need. This would be an incredibly dumb move for her to make, and I said so.
To do this her mortgage lender suggested she enter into a new 30-year fixed rate loan at 6.750%, a full 1.25% greater than her current loan. Her APR (annual percentage rate) would be 6.980%, or almost 7%.
Her new payment for principal and interest would be $1,477, or an increase of $671 over her current $806 monthly payment for principal and interest.
Rolling her property taxes and home insurance into the new 30-year loan would bring her new payment to $1,685, again an increase of $671 over her current monthly payment of $1,014.
Should my client take the lure of getting her hot hands on an extra $89,000+ in cash she would pay dearly for a really stupid financial decision.
The mortgage lender that suggested this option in their "Smart Watch Report" could really care less whether my client went into more debt and may not be able to meet the new obligations should she take the "cash out" refinance.
The mortgage lender could not care less if my client dropped dead. The lender still holds the paper on the property (they own it until the current loan is paid off in full) and could easily sell the property to recover its original $142,000 investment while still making a huge profit in the process.
Is what the mortgage lender is offering my client a responsible thing to do? You decide. I fail to see how loaning my client more money at a higher interest rate and increasing her debt is helping her. It would in fact hurt her.
Borrowers do not understand that when they take out a 30-year fixed rate mortgage loan they become an employee of the company lending the money. Teasing the lender with a "cash out" offer that could easily drive them into bankruptcy is hardly a responsible act by any lender, much less a leader in the marketplace.
This is the point and purpose of writing this article and posting it on the Internet: Since when is helping a financially desperate person—or any borrower for that matter—made better by driving them deeper into debt, leaving them as ignorant as you found them, and lining your pockets at their expense?
http://ezinearticles.com/?Mortgage-Lenders-Act-Like-Your-Friend-in-Need,-But-Seek-to-Line-Their-Pockets-at-Your-Expense&id=694078
The report was really an invitation to refinance her current mortgage loan and use her equity interest to either get cash now or sell her home and use the equity to buy a new home.
She made her original 30-year fixed rate loan for $142,000 at 5.5% interest a little more than two years ago. Her principal and interest monthly payment is $806. She has her property taxes and home insurance rolled into the loan, making her actual monthly payment $1,014, or $208 more.
Her appraisal at the time of the loan was $200,000 and her mortgage lender set the estimated current value at $253,000, giving her an estimated equity of $114,000+. Her principal owing at the time was $139,000+.
This is what I quickly observed:
1) She needed to buy a new home like she needed another hole in her head, and I told her so. Since she has a fixed income, buying a newer, better home would simply increase her debt and make it more difficult to service the increased debt.
2) While she could refinance her 30-year fixed rate to a 15-year fixed rate loan and save $55,000 over the life of the loan, it would increase her monthly payment for principal and interest to $1,193, an increase of $387 over her current $806 monthly payment.
Rolling her property taxes and home insurance into the 15-year loan would bring her new actual payment to $1,401, again an increase of $387 over her current monthly payment of $1,014.
3) The first offer her mortgage lender made was to do a "cash out " refinance wherein she could get her hands on $89,000+ in cash to fritter away on a new car, vacations and whatever else she did not need. This would be an incredibly dumb move for her to make, and I said so.
To do this her mortgage lender suggested she enter into a new 30-year fixed rate loan at 6.750%, a full 1.25% greater than her current loan. Her APR (annual percentage rate) would be 6.980%, or almost 7%.
Her new payment for principal and interest would be $1,477, or an increase of $671 over her current $806 monthly payment for principal and interest.
Rolling her property taxes and home insurance into the new 30-year loan would bring her new payment to $1,685, again an increase of $671 over her current monthly payment of $1,014.
Should my client take the lure of getting her hot hands on an extra $89,000+ in cash she would pay dearly for a really stupid financial decision.
The mortgage lender that suggested this option in their "Smart Watch Report" could really care less whether my client went into more debt and may not be able to meet the new obligations should she take the "cash out" refinance.
The mortgage lender could not care less if my client dropped dead. The lender still holds the paper on the property (they own it until the current loan is paid off in full) and could easily sell the property to recover its original $142,000 investment while still making a huge profit in the process.
Is what the mortgage lender is offering my client a responsible thing to do? You decide. I fail to see how loaning my client more money at a higher interest rate and increasing her debt is helping her. It would in fact hurt her.
Borrowers do not understand that when they take out a 30-year fixed rate mortgage loan they become an employee of the company lending the money. Teasing the lender with a "cash out" offer that could easily drive them into bankruptcy is hardly a responsible act by any lender, much less a leader in the marketplace.
This is the point and purpose of writing this article and posting it on the Internet: Since when is helping a financially desperate person—or any borrower for that matter—made better by driving them deeper into debt, leaving them as ignorant as you found them, and lining your pockets at their expense?
http://ezinearticles.com/?Mortgage-Lenders-Act-Like-Your-Friend-in-Need,-But-Seek-to-Line-Their-Pockets-at-Your-Expense&id=694078
All About Discount Mortgages
Discount mortgages are a type of mortgage product that have a variable interest rate which moves roughly in line with the lender’s Standard Variable Rate (SVR).
The discounted interest rates attached to discount mortgages are genuine and will normally apply for a set period of between one to five years. The discounted interest rate is designed to attract new customers.
Once the discount period expires the interest rate will convert to the lender’s SVR which can result in a sharp increase in the monthly mortgage payments due. This means that borrowers should take careful note of when the discount is due to expire and prepare to remortgage to a more suitable mortgage product if required.
Also, because the discounted interest rate is a variable rate, any change in the lender’s SVR will affect the discount mortgage’s interest rate and the amount of monthly repayments due.
The lender’s SVR will normally reflect changes to the Bank of England Base Rate (BoEBR), although this is not a requirement. Therefore borrowers should also take note of any major changes in the base rate as it could affect their own mortgage payments.
Discount mortgages are popular with first-time-buyers who cannot afford high mortgage repayments during the early years of homeownership. Borrowers of discount mortgages will experience a reduction in their monthly mortgage payments during the discounted period when compared to borrowers who do not have a discounted rate attached to their mortgage products.
Despite this advantage, there are several disadvantages to consider before applying for discount mortgages.
The most prominent disadvantage to consider is that discount mortgages often come with stringent terms and conditions including long tie-in periods and costly early repayment charges.
Therefore, if a borrower wishes to redeem their mortgage during the discount period, they may be forced to pay hefty penalties to the lender that may negate the effect of the discount received.
Borrowers should therefore look beyond the discounted interest rate when assessing whether to apply for such discount mortgages.
As with all non-standard mortgage products, professional advice should be sought from an independent mortgage broker before applying for a discount mortgage in order to receive impartial advice as to whether this type of mortgage product is suitable for your particular needs.
UKMortgageSource provides up-to-date information on Discount Mortgages
http://ezinearticles.com/?All-About-Discount-Mortgages&id=693385
The discounted interest rates attached to discount mortgages are genuine and will normally apply for a set period of between one to five years. The discounted interest rate is designed to attract new customers.
Once the discount period expires the interest rate will convert to the lender’s SVR which can result in a sharp increase in the monthly mortgage payments due. This means that borrowers should take careful note of when the discount is due to expire and prepare to remortgage to a more suitable mortgage product if required.
Also, because the discounted interest rate is a variable rate, any change in the lender’s SVR will affect the discount mortgage’s interest rate and the amount of monthly repayments due.
The lender’s SVR will normally reflect changes to the Bank of England Base Rate (BoEBR), although this is not a requirement. Therefore borrowers should also take note of any major changes in the base rate as it could affect their own mortgage payments.
Discount mortgages are popular with first-time-buyers who cannot afford high mortgage repayments during the early years of homeownership. Borrowers of discount mortgages will experience a reduction in their monthly mortgage payments during the discounted period when compared to borrowers who do not have a discounted rate attached to their mortgage products.
Despite this advantage, there are several disadvantages to consider before applying for discount mortgages.
The most prominent disadvantage to consider is that discount mortgages often come with stringent terms and conditions including long tie-in periods and costly early repayment charges.
Therefore, if a borrower wishes to redeem their mortgage during the discount period, they may be forced to pay hefty penalties to the lender that may negate the effect of the discount received.
Borrowers should therefore look beyond the discounted interest rate when assessing whether to apply for such discount mortgages.
As with all non-standard mortgage products, professional advice should be sought from an independent mortgage broker before applying for a discount mortgage in order to receive impartial advice as to whether this type of mortgage product is suitable for your particular needs.
UKMortgageSource provides up-to-date information on Discount Mortgages
http://ezinearticles.com/?All-About-Discount-Mortgages&id=693385
Let to Buy Mortgages Explained
Let to Buy is an alternative to buy to let, with a let to buy mortgage it allows the borrower a big sum of cash to purchase a new property, whilst the existing property is let out to tenants as the standard method.Let to Buy is an alternative to buy to let, with a let to buy mortgage it allows the borrower a big sum of cash to purchase a new property, whilst the existing property is let out to tenants as the standard method.
How the let to buy mortgage operates
Let to buy mortgages operate in the subsequent way: a lender finds out how much they are ready to lend you, without analysing your existing mortgage, their main objective is to make sure the rent covers the mortgage. Various let to buy mortgages require a deposit, even though many lenders will allow a deposit to be unconfined from a house through a secured loan or a remortgage.
let to buy rent worked out
Your original mortgage lender has to be happy in order to take no notice of your current mortgage, proof will be needed at this point, indicating that you fit the new lenders let to buy mortgage calculation. Looking at this as an example, the new lender calculates your existing mortgage balance by somewhat known as the let to buy standard rent calculation. There may be a problem, lenders will analyse it and count it as a commitment. When calculating Let to buy it mainly depends on mortgage rates.
Advantages of a let to buy mortgage
With a Let to buy mortgage you have the power to rent out your existing property while purchasing a totally different part of the county. You can keep your property as a long-term investment and have your mortgage paid by tenants. Let to buy normally starts when a homeowner gathers together more than one property, similar to a pension. The terms and conditions to let to buy lending is different to buy to let, it requires less equity and is known to be very flexible. The disadvantages of a let to buy mortgage?
With a let to buy mortgage you must confirm with your lender for permission, there are mortgage lenders out there, which can refuse you. Your buildings and contents insurance provider must be contacted. If you have Leasehold this can make things complicated, as looking at your requirements would need analysing by a professional.
If you would like more information on UK Mortgages or to get a top Mortgage Quote, please visit our website: www.mortgagequotes.me.uk
Let to buy mortgages operate in the subsequent way: a lender finds out how much they are ready to lend you, without analysing your existing mortgage, their main objective is to make sure the rent covers the mortgage. Various let to buy mortgages require a deposit, even though many lenders will allow a deposit to be unconfined from a house through a secured loan or a remortgage.
let to buy rent worked out
Your original mortgage lender has to be happy in order to take no notice of your current mortgage, proof will be needed at this point, indicating that you fit the new lenders let to buy mortgage calculation. Looking at this as an example, the new lender calculates your existing mortgage balance by somewhat known as the let to buy standard rent calculation. There may be a problem, lenders will analyse it and count it as a commitment. When calculating Let to buy it mainly depends on mortgage rates.
Advantages of a let to buy mortgage
With a Let to buy mortgage you have the power to rent out your existing property while purchasing a totally different part of the county. You can keep your property as a long-term investment and have your mortgage paid by tenants. Let to buy normally starts when a homeowner gathers together more than one property, similar to a pension. The terms and conditions to let to buy lending is different to buy to let, it requires less equity and is known to be very flexible. The disadvantages of a let to buy mortgage?
With a let to buy mortgage you must confirm with your lender for permission, there are mortgage lenders out there, which can refuse you. Your buildings and contents insurance provider must be contacted. If you have Leasehold this can make things complicated, as looking at your requirements would need analysing by a professional.
If you would like more information on UK Mortgages or to get a top Mortgage Quote, please visit our website: www.mortgagequotes.me.uk
http://ezinearticles.com/?Let-to-Buy-Mortgages-Explained&id=691800
How the let to buy mortgage operates
Let to buy mortgages operate in the subsequent way: a lender finds out how much they are ready to lend you, without analysing your existing mortgage, their main objective is to make sure the rent covers the mortgage. Various let to buy mortgages require a deposit, even though many lenders will allow a deposit to be unconfined from a house through a secured loan or a remortgage.
let to buy rent worked out
Your original mortgage lender has to be happy in order to take no notice of your current mortgage, proof will be needed at this point, indicating that you fit the new lenders let to buy mortgage calculation. Looking at this as an example, the new lender calculates your existing mortgage balance by somewhat known as the let to buy standard rent calculation. There may be a problem, lenders will analyse it and count it as a commitment. When calculating Let to buy it mainly depends on mortgage rates.
Advantages of a let to buy mortgage
With a Let to buy mortgage you have the power to rent out your existing property while purchasing a totally different part of the county. You can keep your property as a long-term investment and have your mortgage paid by tenants. Let to buy normally starts when a homeowner gathers together more than one property, similar to a pension. The terms and conditions to let to buy lending is different to buy to let, it requires less equity and is known to be very flexible. The disadvantages of a let to buy mortgage?
With a let to buy mortgage you must confirm with your lender for permission, there are mortgage lenders out there, which can refuse you. Your buildings and contents insurance provider must be contacted. If you have Leasehold this can make things complicated, as looking at your requirements would need analysing by a professional.
If you would like more information on UK Mortgages or to get a top Mortgage Quote, please visit our website: www.mortgagequotes.me.uk
Let to buy mortgages operate in the subsequent way: a lender finds out how much they are ready to lend you, without analysing your existing mortgage, their main objective is to make sure the rent covers the mortgage. Various let to buy mortgages require a deposit, even though many lenders will allow a deposit to be unconfined from a house through a secured loan or a remortgage.
let to buy rent worked out
Your original mortgage lender has to be happy in order to take no notice of your current mortgage, proof will be needed at this point, indicating that you fit the new lenders let to buy mortgage calculation. Looking at this as an example, the new lender calculates your existing mortgage balance by somewhat known as the let to buy standard rent calculation. There may be a problem, lenders will analyse it and count it as a commitment. When calculating Let to buy it mainly depends on mortgage rates.
Advantages of a let to buy mortgage
With a Let to buy mortgage you have the power to rent out your existing property while purchasing a totally different part of the county. You can keep your property as a long-term investment and have your mortgage paid by tenants. Let to buy normally starts when a homeowner gathers together more than one property, similar to a pension. The terms and conditions to let to buy lending is different to buy to let, it requires less equity and is known to be very flexible. The disadvantages of a let to buy mortgage?
With a let to buy mortgage you must confirm with your lender for permission, there are mortgage lenders out there, which can refuse you. Your buildings and contents insurance provider must be contacted. If you have Leasehold this can make things complicated, as looking at your requirements would need analysing by a professional.
If you would like more information on UK Mortgages or to get a top Mortgage Quote, please visit our website: www.mortgagequotes.me.uk
http://ezinearticles.com/?Let-to-Buy-Mortgages-Explained&id=691800
Sharing a Mortgage
Obtaining a mortgage with a friend or friends is set to become more popular in the UK.
First-time buyers are purchasing property in twos simply to gain purchase power, especially in London and general areas with low levels of reasonably priced houses.
Is it a good idea to buy a property with a friend?
HSBC discovered that group mortgages might soar in popularity. It is because getting on the property ladder can be virtually impossible for first time buyers and nearly 50 per cent stated they would be prepared to buy a property with friends or family.
How many people can purchase a property?
Buying a house with up to three friends is relatively standard, and for some potential investors it may be the only option.
Is it worth waiting until I am financially ok?
Many first-time buyers are desperate to get on the property ladder. Simply because they feel renting is wasting money and not building a long-term asset. Many first-time buyers understand how property inflation is going and want to be apart of the long-term benefits.
One day I will have a home?
This is not always the case; the average house price in England and Wales now exceeds £200,000. It is becoming unaffordable, a reason why potential investors are choosing to invest in property as a group.
Who is the best person to have a group mortgage with?
Sometimes it can be a good idea to buy a property with family. You must make sure you can live together as a team and look at the disadvantages to this such as if any domestics were to occur. Before buying a property you must make sure you have trust in your partner and that you both will make equal payments towards the mortgage deal.
What if my partner can not keep up with repayments?
This is another disadvantage when people choose to take on a group mortgage deal. If you have a legal agreement on paper confirming certain terms and conditions, then problems can be diverse. When a legal agreement is created, all aspects are under the terms and conditions of the policy such as if one person wanting to move out or cannot make repayments it would not affect the opposite partner.
Overall if a first-time buyer is having financial difficulties and feel they can make a good return dealing with property, a group mortgage would be highly suited for people in this position.
If you would like more information on UK Mortgages or to get a top Mortgage Quote, please visit our website: www.mortgagequotes.me.uk
http://ezinearticles.com/?Sharing-a-Mortgage&id=691797
First-time buyers are purchasing property in twos simply to gain purchase power, especially in London and general areas with low levels of reasonably priced houses.
Is it a good idea to buy a property with a friend?
HSBC discovered that group mortgages might soar in popularity. It is because getting on the property ladder can be virtually impossible for first time buyers and nearly 50 per cent stated they would be prepared to buy a property with friends or family.
How many people can purchase a property?
Buying a house with up to three friends is relatively standard, and for some potential investors it may be the only option.
Is it worth waiting until I am financially ok?
Many first-time buyers are desperate to get on the property ladder. Simply because they feel renting is wasting money and not building a long-term asset. Many first-time buyers understand how property inflation is going and want to be apart of the long-term benefits.
One day I will have a home?
This is not always the case; the average house price in England and Wales now exceeds £200,000. It is becoming unaffordable, a reason why potential investors are choosing to invest in property as a group.
Who is the best person to have a group mortgage with?
Sometimes it can be a good idea to buy a property with family. You must make sure you can live together as a team and look at the disadvantages to this such as if any domestics were to occur. Before buying a property you must make sure you have trust in your partner and that you both will make equal payments towards the mortgage deal.
What if my partner can not keep up with repayments?
This is another disadvantage when people choose to take on a group mortgage deal. If you have a legal agreement on paper confirming certain terms and conditions, then problems can be diverse. When a legal agreement is created, all aspects are under the terms and conditions of the policy such as if one person wanting to move out or cannot make repayments it would not affect the opposite partner.
Overall if a first-time buyer is having financial difficulties and feel they can make a good return dealing with property, a group mortgage would be highly suited for people in this position.
If you would like more information on UK Mortgages or to get a top Mortgage Quote, please visit our website: www.mortgagequotes.me.uk
http://ezinearticles.com/?Sharing-a-Mortgage&id=691797
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