Friday, September 7, 2007

What to Look for in a Loan - Part 2

In Part I, we discussed the components of the loan that do not require lenders' quotes. The following components of the loan, including interest rate, points, and closing costs can get pretty involved and you will probably need to discuss the different loan options with a mortgage lender. Each lender will have different rates and fees, so I call around to a couple lenders and compare.

5. Interest Rate:
The interest rate is variable depending on your credit score, income, and loan type. The higher the credit score, the better the rate. Lenders have cut-offs for what they consider above average, average, and low. If you can be in the above-average group, they will get the best rates. Your income comes into play when they figure your debt-to-income ratio. This is basically a way to measure how much you are bringing in and how much you are spending. At some point, a lender will not create more debt for you than they think you can handle. One thing to consider about your debt is not what the lender says you can handle but what you want to handle. The loan type also has a heavy influence on your rate. A better rate is given to those who will owner occupy the property.

6. Points:
Points are paid by the Borrower in order to buy down the interest rate. If you get some insanely low interest rate from one lender that seems completely out of whack from the other quotes, this might be because they are quoting you a rate with points. A point is equal to 1% of the loan amount, and you pay this point as part of your closing costs. So for example, with a loan for $240,000, one point would be $2,400 and that point might buy your interest rate of 6.5% down to 6.25%. Buying down your rate will lower your monthly payment.

When comparing lenders, make sure they all quote you a rate with no points. This levels the playing field so that you can determine who has the best rate without having to do all kinds of crazy calculations.

7. Closing Costs:
In addition to points, the Borrower pays 2-3% in loan-related closing costs. The majority of closing costs are lender fees. To demonstrate the price you pay for borrowing money, if you pay cash for a property, the closing costs ends up being more like $300 instead of $6,000 for a $300,000 sales price. The fees you pay include loan origination fees, appraisal fee, lawyer fees, credit score application fee, and document preparation fees.

Ok, so those are the main components of the loan to sort through and compare. Now, the toughest part is to compare lenders and weigh out all the closing costs and points paid along with the interest rates. How do you compare one lender with a 6.5% interest rate with $5,000 in closing costs to another lender who has a 6.0% rate with $8,000 in closing costs? The rate is better but you are paying more for it at closing, so is that $3,000 extra really worth it? To compare this, the lender can provide you with the Annual Percentage Rate (APR), which is the interest rate calculated with closing costs wrapped into it. As long as you are comparing two exact same loan lifes and are putting the same amount down, the APR is the easiest way to determine who has the better overall package.

Ki Gray works in Austin Texas as a real estate agent. His website provides information on the Austin Condos coming up in the Austin Real Estate market along with a free search of the Austin MLS. If you are interested in the moving to Austin check out Escapeso Austin Real Estate.


Article Source: http://EzineArticles.com/?expert=Ki_Gray

Self Cert Mortgages UK - An Easy Guide

Self cert mortgages are available to clients who cannot verify their income instead you certify your income by declaring it on the application form meaning you do not need to provide any proof of income.

They are specifically designed for people whose earning capacity is difficult to assess using the normal practices adopted by most conventional mortgage lenders. These mortgages are available on both residential and commercial property.

Originally only available to the self employed, Lenders have realised there is a demand for the same service from Employed customers who do not wish to prove their earnings by means of payslips or a P60 and instead would like to take advantage of a self-cert mortgage. The chief draw to a self-cert mortgage is that incomes may be declared without accounts to back them up.

Bad Credit
self-cert mortgages can be arranged for those that may have adverse or bad credit. The rate will be a higher but with little or no adverse credit, the interest rate on self-cert mortgages is likely to be a little higher than normal mortgage rates.Additionally, in most cases a bad credit report won't affect your ability to qualify.

Property
With a self cert mortgage, it largely comes down to the cost of the property and the deposit amount (or in the case of re-mortgages the amount of equity you have in the property), as to whether your case can go self-cert or not. A self-cert mortgage can be used for all the usual purposes, property purchase, home extension, debt consolidation, to pay a tax bill, fund raising for a business venture, holiday home purchase or for investing in buy to let property.

You can borrow up to 90% of your property value – the lower the percentage you require the better the rate you can obtain.

Lenders
Lenders usually compute the amount approved for self-cert mortgages based on the borrowers regular expenses and financial circumstances. Lenders will ask you to sign a declaration that you have the ability to make repayments on your mortgage. Some self-certification Lenders will simply ask you to state your "total income"; others will simply ask you to sign an "affordability declaration" stating that you can afford repayments.

Your Application
You will need to declare the reason for wanting a self-cert mortgage to the Lender on the application and sign an additional declaration to confirm your income from all "acceptable sources".Many self-cert mortgage Lenders incorporate this self declaration statement into the actual mortgage application form.

Conclusion
self-cert mortgages are attractively priced and there are a wide range of products to suit most customer requirements. You can have access to thousands of mortgages and some Brokers have the ability to negotiate exclusive deals with a huge range of Lenders. Whatever your employment situation, you can most likely find a self-certification mortgage to suit you.

If you're looking for a low cost, high saving, UK Self Cert Mortgage try Glow Mortgages. We offer a fast and easy mortgage broker service and all applicants are welcome poor credit or not.

This article comes with reprint rights. Feel free to reprint and distribute as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the links above are intact.



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No Deposit Mortgage - No Deposit, Small deposit No Problem

First time buyers are the largest group of people who struggle for the illusive deposit, but those people having suffered a relationship break up can find that by the time they have paid off the joint debts and sold the property at a reduced price in order to get a quick sale, then split the proceeds, there is not much left to start again and apply for another mortgage. Also, those who have sold their property to clear mounting debts, and again, once the debts have been cleared there is often very little left to use as a deposit for the next mortgage.

Here are 3 ways of buying a property with little or no deposit saved –

1. Search around new property developments to find a builder who will provide you with a 5% or even 10% deposit for your mortgage. This is referred to as a ‘builder’s gifted deposit’. Not all lenders accept builders gifted deposits but many do and it’s a great way to get you started.

2. If you are employed, you have been in your job for at least 12 months, you are not heavily committed to many loans or credit cards and you have not had any late payments, defaults, CCJ’s or arrears for the last 2 years, then you may be able to access a 100% (no deposit) or 95% mortgage.

3. The third way is popular with investors. Find a property which has been reduced in price or negotiate a lower price, ie, It has a value of £100,000 and you manage to buy it for £80,000. You have made a 20% saving. You buy the property with a Bridging loan, which is a short term mortgage requiring no deposit. Once you own it, you remortgage the property and you can increase your borrowing from 80% loan to value to 85% or 90%. This would then release 5% or 10% of the equity giving you £5,000 or £10,000 cash released based on the example above. The Bridging loan would probably cost 2% (£2,000), with no deposit required, and for most properties over £125,000 there would be stamp duty to pay and the solicitor fees would probably cost around £1,000. Releasing just 5% would probably cover all of your fees associated with the purchase and you have just achieved raising a mortgage with no deposit contribution from you.

Clearly, you can see there are ways of purchasing a property with no deposit from the purchaser. Likewise, for those who can afford to pay a deposit for their mortgage, you could leave the money in the bank, simply by negotiating your deposit from the seller. Negotiating is a required skill for those building portfolios of properties, what we are talking about in item 3, is using the same technique to purchase your home.

Steve Croxton is a BDM for http://www.12and3.co.uk/mortgage.html We apply creative thinking using standard mortgage and remortgage products to find solutions for our clients. Who ever you may have spoken to prior to speaking to 12and3, Do not believe the answer is no to your mortgage needs until we tell you no.


Article Source: http://EzineArticles.com/?expert=Steve_Croxton1

Take Control Of Your Mortgage Lender - 6 Tips

Home buyers, especially first-time buyers, should be prepared to ask many questions of their mortgage lenders. Keep in mind that this is your money and your future that is at stake. The mortgage lender's agenda is to keep his company wealthy, not you. Remember, bankers are simply business people who need to loan money to make money.

Personally, I would deal only with a local banker. You want and need to develop a working relationship with your banker. Brokers come and go after the deal is done.

Here are a few tips about what to watch out for in dealing with mortgage banks:

1. Shop around - It is surprising that people will shop around for their automobile financing but they are intimidated to do that for a more monumental mortgage loan. Get quote from two or three banks in your area. Compare those quotes and terms online with other banks. Get the best deal for YOU.

2. Let them know you want their best rate - Broadcast the fact that you are shopping for the best quote when you talk to various mortgage lenders. If you state that upfront you will often get more respect from the lender and usually their best deal immediately.

3. Prepayment penalty - this is simply a nefarious way to make more money off of your good effort to save money. Usually the penalty is applied only during the first three years of a mortgage but it is still a very expensive proposition if you have to pay it. Why should you be made to pay an exorbitant fee (often thousands of dollars) if you get transferred to another city or if you can get a lower mortgage rate from another company or if you just want to move?

Lender greed can easily be avoided by doing more research for your load or simply telling your bank you will not take the loan with a prepayment provision. Stand up for your rights! You will be proud of yourself and very glad you did.

4. Bi-weekly mortgages - as a general rule, it is a good idea to pay extra once in a while to lower the principal amount of your mortgage. Since the total interest you will pay can be greatly reduced by using this technique go ahead and use it.

However, be aware that you do not need to hire a company to to make prepayments. You can simply send extra money to your mortgage lender who is required to immediately lower the principal amount by your payment.

The easiest way to effect this great money savings plan is to simply make one full extra payment per year. Pick a month when you know your expenses are lower than usual and make the extra payment at that time. If your mortgage is $1500, for example, just send an extra $1500 once a year. The net effect will be very close to sending a smaller amount each year.

f you need the regular and smaller payment schedule, just take your payment, multiply it by 13 (months) and divide by 12 (months). Then pay that amount each month.

5. Trust your instincts Most successful business people will tell you that trusting your gut instincts is the best barometer for success. If your gut tells you that "something feels wrong" with the mortgage or that the payment amount is just too large to handle, then refuse to sign any contract! You can always take a day or a week to think it over.

Of course, the mortgage lender with try very hard to get you to sign the contract because they have put in time and effort and your credit makes you a good customer. If the lender assures you that the payment is right for you but your gut says "NO" then shake his or her hand and say good-bye.

6. Carefully study mortgage FEES- Lenders are required to put all of their fees in writing. Make sure you read these carefully. If you find a fee that seems high or just "not right" call your lender and ask for an explanation.

The recent foreclosure catastrophe should teach you something very valuable. If you can't afford 20% down and/or your mortgage payment is over 25% of you total NET income, then it is probably best to stay a renter rather than a broke buyer.

Important: Always remember that your lender wants to sell you a product. In this case the product is money. It is like any other product. The lender will treat you like gold once you are found to be worth. Take advantage of your position and get your free education about home mortgages.

Greg Cryns is the owner of Flat Fee Real Estate Guide
http://www.flatfeerealestateguide.com

If you are looking for a flat fee or rebate real estate agent start here.



Article Source: http://EzineArticles.com/?expert=Greg_Cryns

Why To Go For Mortgage?

Your house is a big investment probably one of the biggest you’re every likely to make. It is also the place that you and your loved ones call home; a shelter and haven from the outside world. That’s why it is so important to ensure that your home and family are protected in the event of your death. It’s not a topic that any of us like to dwell on, but the sad fact is that should you die and the family are no longer able to afford repayments on the house, they will lose the property and the roof from over their heads.

Having a good mortgage policy in place to guard your property in the event of your death is vital. When you die, your family will have enough to worry about without the added stress of how they are going to hold on to the family home. Mortgage insurance is what can make them feel like this, with the mortgage balance being paid in full upon your death. This means that your dependants will not have the financial worry of trying to find the mortgage repayments in the event of your death. Neither wills they have to worry about selling up and maybe downsizing in order to keep a roof over their heads the last things that you would want to put them through.

When the mortgage loan is provided to any of member of it, he/she will get a thorough look at his member's finances, which can be a major starting point for cross sell opportunities. This will increase member product usage. If the credit union gives up the mortgage transaction for his/her member to a participant, then the member may be at risk.

In a nutshell, in the event of you or your partner dying, mortgage life insurance can mean that the difference between keeping a roof over your head and ending up having your home repossessed a frightening thought. And while many of us find organizing something like life insurance a somber business as it makes us face our mortality, it is the fair and right thing to do for your partner and any next of kin to make sure that your finances are in order in the event of your death. So why do you need mortgage life insurance cover? A mortgage policy runs for a fixed policy term many people take it put to run concurrent with their (personal loans) mortgage. The policy can help pay off outstanding balance of the mortgage on your home. This will be in the form of a cash sum.

If you are looking for a satisfactory mortgage, then do shop around and do not automatically admit the first quotation you get. Premiums as well as terms of the policy and other benefits can vary wildly from provider to provider and you could be surprised just how cheap mortgage life insurance can be, without any compromise on cover.

The author is a Consultant and working as a manager at Mortgage loans and have written on various topics on mortgage.


Article Source: http://EzineArticles.com/?expert=Destin_Deshawn

Common Types Of Adjustable Mortgage Interest Rates

The mortgage rates that change from time to time based on an index are referred to as the adjustable mortgage rates. These rates should be opted for only when the there is a downward fluctuation in the rates. The adjustable mortgage interest rates are of various types. Here, the most common types are described in detail

• 10/1 year Adjustable Mortgage Rates:

In the case of a 10/1 year adjustable mortgage rate, the monthly payments and the interest rate do not change for a period of ten years.

From the 11th year onwards, the mortgage rates are adjusted on an annual basis. That is, the rates tend to fluctuate every year thereafter.

You should opt for this type of adjustable mortgage rate in the following situations:

• If you are planning to shift to a new place within 10 years.

• If your plans are likely to change, and you would like the loan to remain in effect.

• If you are planning to live for more than 10 years in a particular home.

• If you are willing to have initial payment stability.

• 5/5 & 5/1 year Adjustable Mortgage Rates:

In this case, the monthly payments, and the mortgage interest rates remain the same for a period of five years.

From the 6th year onwards, the mortgage rates are adjusted either on an annual basis (5/1 ARM) or every five years (5/5 ARM).

• 3/3 & 3/1 year Adjustable Mortgage Rates:
In this case, the monthly payments, and the mortgage interest rates remain the same for a period of three years.

From the 4th year onwards, the mortgage rates are adjusted either on an annual basis (3/1 ARM) or every three years (3/3 ARM).

• 1 year Adjustable Mortgage Rates:

In this case, the monthly payments and the mortgage interest rates are adjusted annually for the entire loan term of 30 years.

One must opt for this kind of adjustable mortgage rate in the following situation:

• If you are willing to have the lowest rate possible.

• If you are not able to qualify for higher rate programs.

• If you are ready to cope up with the annual payment changes

Thus, depending upon the borrower’s personal and financial situation, he can decide the type of adjustable mortgage rate that he needs

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Jumbo Mortgages - Basic Facts

Loans that exceed the conventional limitation amounts are commonly referred to as jumbo mortgages. Jumbo mortgage loans have gained a lot of popularity among buyers. These loans are also known as non-conforming loans. Jumbo mortgages are useful when great secondary market lenders like Fannie Mae and Frederick Mac are unable to cover the entire loan amount.

Jumbo mortgages are best suited to those who are self-employed. Business owners take a minimum of two years to get their employment status verified, and hence, they cannot buy homes. Such people can also benefit from the jumbo mortgage loans.

Jumbo mortgage loans should not be confused with standard mortgage loans. Following features of the jumbo mortgage loans distinguish them from the latter:

• Pay-off periods are longer.

• Interest rates are higher

• Minimum down payment requirements are also higher

• Detailed analysis of the proposed property is done

Standard mortgage loans, on the other hand, offer a 30-year long pay-off period in order to reduce the monthly payment amount.

However, there are some risks associated with Jumbo Mortgages. High interest rates and down payments are the negative aspects of this type of loan. Besides, it poses a great risk to the lenders. The process of selling luxurious property for full price becomes daunting in case the jumbo mortgage is in a ‘failure to pay’ status.

Following are some tips to be borne in mind when choosing a jumbo mortgage loan lender:

• To get the best possible rate on your jumbo mortgage loan, you should get several quotes from different lenders, and a do a detailed analysis.

• Bear in mind that several pitfalls are associated with the ‘interest-only’ and ‘adjustable’ rate mortgages. The monthly payments increase significantly after the stipulated period is over.

• As the introductory period comes to a close, refinancing also becomes difficult.

• Try to stay away from assertive lenders who aim at big commissions.

To conclude, speak to several lenders before taking the final decision.

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