Owning a house is a dream with which every American lives. However, many times borrowers find their dreams getting into jeopardy due to subprime mortgage loans. Mortgage refinancing is an effective means to get over such financial crisis. However, it is not only subprime borrowers who can make use of mortgage refinancing option. Mortgage refinancing is the most preferred choice for getting finances in order to make amendments in the house. Apart from mortgage refinancing, lenders are now providing loans for home improvement through renovation refinance loans.
Real estate markets are constantly changing. Homes that are fitted with latest amenities, and are well-maintained, well-furnished and aptly decorated, are being greatly preference. Renovation refinance loans provide financial assistance in situations where one had already used most of the equity built up over the years on the home.
There are certain factors that influence the loan amount in renovation refinance loans. The foremost factor is the loan amount required for making amendments. However, the lender should be convinced that the home value would increase if the desired improvements are made in the home. Refinance renovation loans are offered at slightly higher interest rates.
Some of the basic documents that need to be presented to the lending agency or bank include a complete plan about the renovations, architectural drawings showing the renovations, income values, credit reports and employment records. The loan amount is disbursed in six equal installments. Accordingly, the borrower is required to divide the entire construction into six equal stages. Before disbursing each installment amount, the work completed till that stage is completely reviewed by the bank authorities. One advantage of these loans is that interest for the first six months is folded into overall loan. Hence, the borrower is not required to make any mortgage monthly payments during the initial six months.
Article Source: http://EzineArticles.com/?expert=Pauline_Go
Monday, September 10, 2007
How FICO Can Determine Your Home Loan Approval
If you have tried to apply for a mortgage loan, you probably have come across the term called FICO. Even if you have not heard of it, rest assure it is used every time you look to secure a mortgage loan. It can determine whether or not your loan application is approved and also the interest rate you pay.
So what is FICO?
FICO are sometimes referred as credit scores. It is a computerized software model developed by Fair Issac Corporation (FICO) to determine credit scores. Think of it as your personal financial score card, only that it is rated by a lending institution or company.
They will assign you a credit score based on an analysis of your credit history. It is then entered into a computer. Most major credit reporting companies such as Equifax and Trans Union uses the FICO model. Mortgage lenders then use your credit score to determine whether or not your loan is approved and the interest rate you pay.
You should note that not all credit reporting companies uses the same software so your FICO score may vary at each of them.
So what are the factors in determining your FICO score?
There are many factors used to determine your credit score. Examples are amount owed, types of credit and your payment history. I will try to break down the factors by percentage but do note this is just an estimate since not all credit companies rate the factors the same percentage.
1. Payment History
As much as 35% of your FICO score is determined by your payment history. Your records such as late payment of credit cards or previous loans and the length of time overdue will adversely affect your credit score.
2. Debt To Income Ratio
This accounts for 30%. How much you owe versus your income level can determine your FICO score in this area. Obviously, the more you owe and the less income you have, the lesser chance of your mortgage loan being approved.
3. Length of history
This accounts for 15%. Mortgage companies will check how long your accounts have been open and the amount of activity. So the longer and better your credit history, the better chance of scoring high in this area.
Other factors in determining your FICO score include the number and types of accounts you have, credit card balances, number of credit cards you have etc.
As you can see above, the best way to improve your FICO score is to practice proper financial management. Make sure to pay your credit card bills and loans on time and keep your credit card balances low. It does take time of course.
Ricky Lim is the online editor of http://www.about-homeloan.com where you can find a large respository of home loan and home refinance articles and resources
Article Source: http://EzineArticles.com/?expert=Ricky_Lim
So what is FICO?
FICO are sometimes referred as credit scores. It is a computerized software model developed by Fair Issac Corporation (FICO) to determine credit scores. Think of it as your personal financial score card, only that it is rated by a lending institution or company.
They will assign you a credit score based on an analysis of your credit history. It is then entered into a computer. Most major credit reporting companies such as Equifax and Trans Union uses the FICO model. Mortgage lenders then use your credit score to determine whether or not your loan is approved and the interest rate you pay.
You should note that not all credit reporting companies uses the same software so your FICO score may vary at each of them.
So what are the factors in determining your FICO score?
There are many factors used to determine your credit score. Examples are amount owed, types of credit and your payment history. I will try to break down the factors by percentage but do note this is just an estimate since not all credit companies rate the factors the same percentage.
1. Payment History
As much as 35% of your FICO score is determined by your payment history. Your records such as late payment of credit cards or previous loans and the length of time overdue will adversely affect your credit score.
2. Debt To Income Ratio
This accounts for 30%. How much you owe versus your income level can determine your FICO score in this area. Obviously, the more you owe and the less income you have, the lesser chance of your mortgage loan being approved.
3. Length of history
This accounts for 15%. Mortgage companies will check how long your accounts have been open and the amount of activity. So the longer and better your credit history, the better chance of scoring high in this area.
Other factors in determining your FICO score include the number and types of accounts you have, credit card balances, number of credit cards you have etc.
As you can see above, the best way to improve your FICO score is to practice proper financial management. Make sure to pay your credit card bills and loans on time and keep your credit card balances low. It does take time of course.
Ricky Lim is the online editor of http://www.about-homeloan.com where you can find a large respository of home loan and home refinance articles and resources
Article Source: http://EzineArticles.com/?expert=Ricky_Lim
Knowing When to Refinance Your Mortgage
If you're considering a new mortgage for your home you might wonder if there is a best time to refinance. The news is filled with reports about the credit crisis in the mortgage industry and you might ask if refinancing under the circumstances is even a smart move? Here are several tips to help you decide if mortgage refinancing makes sense for your individual situation.
Deciding whether or not a mortgage refinancing is right for your situation depends on your goals for the new loan as well as your finances. There are several good reasons for refinancing even if you cannot qualify for a lower mortgage interest rate. Many homeowners choose to refinance their mortgages to consolidate their bills or simply borrow against the equity in their homes. Both are valid reasons for refinancing when you might not qualify for a lower mortgage rate.
The Two Percent Rule of Mortgage Refinancing
Many people tell you not to refinance your mortgage unless the new interest rate is two percent lower than what you’re paying on your existing loan. This “Two Percent Rule” is an oversimplification and bad advice. Instead of basing your decision to refinance on an arbitrary number, it makes better sense to base your decision on the costs/savings of the new loan.
Because you’ll be required to pay fees when obtaining a new mortgage you can easily base your decision to refinance on the amount of time it will take you to recoup this expense. Simply divide the total costs you’ll be required to pay by the amount you’ll save each month with a lower mortgage payment. This figure will tell you the number of months required to recoup your expenses from mortgage refinancing.
When to Refinance Mortgage
Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. To get your hands on this "Mortgage Refinancing Toolkit," which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, visit Refiadvisor.com.
Get your free mortgage refinancing tutorial today at: http://www.refiadvisor.com
Article Source: http://EzineArticles.com/?expert=Louie_Latour
Deciding whether or not a mortgage refinancing is right for your situation depends on your goals for the new loan as well as your finances. There are several good reasons for refinancing even if you cannot qualify for a lower mortgage interest rate. Many homeowners choose to refinance their mortgages to consolidate their bills or simply borrow against the equity in their homes. Both are valid reasons for refinancing when you might not qualify for a lower mortgage rate.
The Two Percent Rule of Mortgage Refinancing
Many people tell you not to refinance your mortgage unless the new interest rate is two percent lower than what you’re paying on your existing loan. This “Two Percent Rule” is an oversimplification and bad advice. Instead of basing your decision to refinance on an arbitrary number, it makes better sense to base your decision on the costs/savings of the new loan.
Because you’ll be required to pay fees when obtaining a new mortgage you can easily base your decision to refinance on the amount of time it will take you to recoup this expense. Simply divide the total costs you’ll be required to pay by the amount you’ll save each month with a lower mortgage payment. This figure will tell you the number of months required to recoup your expenses from mortgage refinancing.
When to Refinance Mortgage
Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. To get your hands on this "Mortgage Refinancing Toolkit," which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, visit Refiadvisor.com.
Get your free mortgage refinancing tutorial today at: http://www.refiadvisor.com
Article Source: http://EzineArticles.com/?expert=Louie_Latour
Three Tips For Refinancing Online
With the advent of Internet, all the day to day transactions in life including home mortgage refinancing have become hassle-free and convenient. Most of the information regarding any topic is available on the internet. However, online refinancing does have certain risks that can be avoided with a bit of care.
The most important factor to be considered by the customer before making any commitment is to determine the credibility and reputation of the online mortgage lending firm. Reputation of a lender can be obtained by taking suggestions from friends and relatives, enquiring with the neighbors about their experiences with any online lender, reading reviews that are published online and going through news articles pertaining to a particular lender. It is always better to approach a reputed lender who has been in the business for a long time.
The second important tip is to guard oneself from getting duped by fraudulent online lenders. One should never provide any personal information such as social security number, telephone number, communication number and credit card details to any online mortgage company who does not have a secure website. A secured website could be easily located using the web address. If the URL of a site starts with https://, then the site is secure. Any personal information provided on such sites is safe.
The third important tip that one needs to follow strictly while shopping online is to do a bit of investigation. This investigation might be for the purpose of determining the authenticity of the company or about the customer satisfaction with respect to the company or about the interest rates charged by different companies or even might be for additional charges that are levied while taking a loan. Better Business Bureau can be used to check whether the online refinance companies being considered have any pending customer complaints.
Article Source: http://EzineArticles.com/?expert=Pauline_Go
The most important factor to be considered by the customer before making any commitment is to determine the credibility and reputation of the online mortgage lending firm. Reputation of a lender can be obtained by taking suggestions from friends and relatives, enquiring with the neighbors about their experiences with any online lender, reading reviews that are published online and going through news articles pertaining to a particular lender. It is always better to approach a reputed lender who has been in the business for a long time.
The second important tip is to guard oneself from getting duped by fraudulent online lenders. One should never provide any personal information such as social security number, telephone number, communication number and credit card details to any online mortgage company who does not have a secure website. A secured website could be easily located using the web address. If the URL of a site starts with https://, then the site is secure. Any personal information provided on such sites is safe.
The third important tip that one needs to follow strictly while shopping online is to do a bit of investigation. This investigation might be for the purpose of determining the authenticity of the company or about the customer satisfaction with respect to the company or about the interest rates charged by different companies or even might be for additional charges that are levied while taking a loan. Better Business Bureau can be used to check whether the online refinance companies being considered have any pending customer complaints.
Article Source: http://EzineArticles.com/?expert=Pauline_Go
Chicago, IL - Refinancing Your Mortgage Can Help You Improve Your Financial Situation
The mortgage you started with when you first bought your home, may no longer suit your needs as time goes on. The markets change, and so does your personal situation. It is important to look at your mortgage on a regular basis and make sure your financing works best for where you are now. Refinancing can save you money, help you build wealth and move you closer to your goals - if you approach it in the right way. Having the right information is the key.
Refinancing is simply taking on a new mortgage to replace your existing mortgage. The process of applying and qualifying is similar to what you went through when you bought your home, though it is often easier now that you are already a home owner. Some of the reasons to refinance include:
To lower your interest rate and payments.
To shorten your loan term and pay your mortgage off early.
If your home has increased in value, you can refinance to take cash out for home improvement, college expenses, investments or whatever your needs may be.
You can restructure your debts with a refinance to save hundreds of dollars per month and get rid of your high interest credit card balances.
If you bought with a low down payment, you can refinance to get rid of mortgage insurance or higher rate second mortgages.
These are just a few reasons you may want to take on a new mortgage. It is important, though, to make sure you know why you are refinancing and to make sure the new mortgage will fit in with your over all goals. Too often, home owners make a decision without knowing how it will really affect them, and it can end up costing them thousands and setting them back financially.
Pete Thompson is a long time resident of the Chicago area, and has been a mortgage loan officer specializing in helping first-time home buyers since 1992. Go to http://www.ptmortgage.com for a Free copy of The Real World Home Buyer’s Guide – How to save thousands when buying a home and getting a mortgage.
Article Source: http://EzineArticles.com/?expert=Pete_Thompson
Refinancing is simply taking on a new mortgage to replace your existing mortgage. The process of applying and qualifying is similar to what you went through when you bought your home, though it is often easier now that you are already a home owner. Some of the reasons to refinance include:
To lower your interest rate and payments.
To shorten your loan term and pay your mortgage off early.
If your home has increased in value, you can refinance to take cash out for home improvement, college expenses, investments or whatever your needs may be.
You can restructure your debts with a refinance to save hundreds of dollars per month and get rid of your high interest credit card balances.
If you bought with a low down payment, you can refinance to get rid of mortgage insurance or higher rate second mortgages.
These are just a few reasons you may want to take on a new mortgage. It is important, though, to make sure you know why you are refinancing and to make sure the new mortgage will fit in with your over all goals. Too often, home owners make a decision without knowing how it will really affect them, and it can end up costing them thousands and setting them back financially.
Pete Thompson is a long time resident of the Chicago area, and has been a mortgage loan officer specializing in helping first-time home buyers since 1992. Go to http://www.ptmortgage.com for a Free copy of The Real World Home Buyer’s Guide – How to save thousands when buying a home and getting a mortgage.
Article Source: http://EzineArticles.com/?expert=Pete_Thompson
Mortgage Refinancing – A Warning About Refinancing With a Bank
If you are considering mortgage refinancing with your bank, you should read the following discussion first. Banks fall into a special category of mortgage lenders and routinely charge Service Release Premium (SRP) for their loans. What is SRP and why should you avoid banks altogether for your next mortgage loan? The answer will surprise you.
Banks and Broker-Banks are a unique type of mortgage originator as they fund their mortgage loans with their own money; Broker-Banks are simply banks pretending to be mortgage brokers. Everyone else in the marketplace (mortgage companies & brokers) is a retail vendor that sells mortgage products for wholesale lenders. Because banks fund their loans with the bank’s money, many people mistakenly think taking out a mortgage from the bank or credit union is going to be cheaper than taking out a retail mortgage loan.
The ugly truth about banks comes from the fact that they are exempt from the Real Estate Settlement Procedures Act (RESPA); legislation that protects homeowners from abusive lending practices by requiring mortgage lenders to disclose all fees and markup associated with their loans. When RESPA was being the drafted the banking lobby campaigned feverishly to be excluded from any disclosure legislation. Millions of dollars changed hands and when RESPA became law, your bank was exempt. This means the bank can literally charge you whatever they like and no one is the wiser.
So what is Service Release Premium?
Bank mortgage loans are often called “correspondent loans” because after the banker completes your mortgage that bank will immediately turn around and sell it on the secondary market. Banks earn a premium on the secondary market by charging Service Release Premium, and here’s how it works. Suppose prevailing mortgage interest rates are 6.00%. You have good credit and meet every requirement to qualify for a 6.00% interest rate on the wholesale market. Your banker knows this, but charges you 6.50%. The markup from 6.0% - 6.5% is Service Release Premium. Banks do this because they will receive an additional two points, or 2% of the loan balance, when the mortgage is sold on the secondary market. Because banks are exempt to all RESPA laws protecting you from this fleecing, you will never know it happened.
Every bank does this and because of the loophole in RESPA legislation and no bank will ever disclose how much they have inflated your mortgage interest rate. Another problem with banks is that your banker will be much less likely to negotiate for terms and interest rates because of the loophole. Banks exploit the loopholes in RESPA to make their loans seem more affordable with the fees and closing costs; however, they hit you with undisclosed SRP markup on your interest rate. Your bank will always quote you the highest interest rate they think you will go for.
The bottom line is that your bank will not be less expensive than other options; your bank will always overcharge you for the mortgage loan. You can learn more about finding the best mortgage loan without overpaying by registering for a free mortgage guidebook.
To get your free mortgage guidebook visit RefiAdvisor.com using the link below.
Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. For a free copy of "Mortgage Refinancing - What You Need to Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.
Claim your free mortgage refinance information guide today at: http://www.refiadvisor.com
Albuquerque Mortgage
Article Source: http://EzineArticles.com/?expert=Louie_Latour
Banks and Broker-Banks are a unique type of mortgage originator as they fund their mortgage loans with their own money; Broker-Banks are simply banks pretending to be mortgage brokers. Everyone else in the marketplace (mortgage companies & brokers) is a retail vendor that sells mortgage products for wholesale lenders. Because banks fund their loans with the bank’s money, many people mistakenly think taking out a mortgage from the bank or credit union is going to be cheaper than taking out a retail mortgage loan.
The ugly truth about banks comes from the fact that they are exempt from the Real Estate Settlement Procedures Act (RESPA); legislation that protects homeowners from abusive lending practices by requiring mortgage lenders to disclose all fees and markup associated with their loans. When RESPA was being the drafted the banking lobby campaigned feverishly to be excluded from any disclosure legislation. Millions of dollars changed hands and when RESPA became law, your bank was exempt. This means the bank can literally charge you whatever they like and no one is the wiser.
So what is Service Release Premium?
Bank mortgage loans are often called “correspondent loans” because after the banker completes your mortgage that bank will immediately turn around and sell it on the secondary market. Banks earn a premium on the secondary market by charging Service Release Premium, and here’s how it works. Suppose prevailing mortgage interest rates are 6.00%. You have good credit and meet every requirement to qualify for a 6.00% interest rate on the wholesale market. Your banker knows this, but charges you 6.50%. The markup from 6.0% - 6.5% is Service Release Premium. Banks do this because they will receive an additional two points, or 2% of the loan balance, when the mortgage is sold on the secondary market. Because banks are exempt to all RESPA laws protecting you from this fleecing, you will never know it happened.
Every bank does this and because of the loophole in RESPA legislation and no bank will ever disclose how much they have inflated your mortgage interest rate. Another problem with banks is that your banker will be much less likely to negotiate for terms and interest rates because of the loophole. Banks exploit the loopholes in RESPA to make their loans seem more affordable with the fees and closing costs; however, they hit you with undisclosed SRP markup on your interest rate. Your bank will always quote you the highest interest rate they think you will go for.
The bottom line is that your bank will not be less expensive than other options; your bank will always overcharge you for the mortgage loan. You can learn more about finding the best mortgage loan without overpaying by registering for a free mortgage guidebook.
To get your free mortgage guidebook visit RefiAdvisor.com using the link below.
Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. For a free copy of "Mortgage Refinancing - What You Need to Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.
Claim your free mortgage refinance information guide today at: http://www.refiadvisor.com
Albuquerque Mortgage
Article Source: http://EzineArticles.com/?expert=Louie_Latour
The Secrets of Automobile Loan Refinance
Do you feel that you are paying too high an interest rate on your automobile loan? If so, that creates a need to get an automobile loan refinance. Many people are not happy with their current loan and feel that they were taken advantage of by the lender. It is not uncommon for people to get an automobile loan refinance and save a ton of money. There are others who simply waste money and hope it will work out. This article will reveal why you should get an automobile loan refinance. When to refinance your automobile loan. And finally, whether you should get an automobile loan refinance.
Why Refinance Your Automobile Loan?
The biggest reason to get an automobile loan refinance is because you have an interest rate that is way too high. Some people have an interest rate of nearly 17 percent. Refinancing an automobile loan to get a lower rate can save you a lot of money. By refinancing your automobile loan you can lower your payment significantly or shorten the term of the loan, either way you put more money in your own pocket instead of the lender's. A poor reason to get an automobile loan refinance is to get equity out of your car to spend on something else.
When To Get an Automobile Loan Refinance?
The dollars have to make sense. If you are only going to save three hundred dollars and it costs two hundred fifty dollars in refinance fees, it is not worth it. When you go for an automobile loan refinance many online lenders will provide you with free quotes. Take advantage of this service and get the lowest fees and interest you possibly can. Some people can save thousands of dollars on an automobile loan refinance. If you are near the end of the term of the loan an automobile loan refinance is not in your best interest.
Should You Get an Automobile Loan Refinance?
Yes, if you can get a better interest rate, lower your monthly payment or shorten the term of the loan you should refinance. Some people have saved thousands of dollars by getting an automobile loan refinance. You can too, you just need to take advantage of online companies that specialize in automobile loan refinance.
Why Refinance Your Automobile Loan?
The biggest reason to get an automobile loan refinance is because you have an interest rate that is way too high. Some people have an interest rate of nearly 17 percent. Refinancing an automobile loan to get a lower rate can save you a lot of money. By refinancing your automobile loan you can lower your payment significantly or shorten the term of the loan, either way you put more money in your own pocket instead of the lender's. A poor reason to get an automobile loan refinance is to get equity out of your car to spend on something else.
When To Get an Automobile Loan Refinance?
The dollars have to make sense. If you are only going to save three hundred dollars and it costs two hundred fifty dollars in refinance fees, it is not worth it. When you go for an automobile loan refinance many online lenders will provide you with free quotes. Take advantage of this service and get the lowest fees and interest you possibly can. Some people can save thousands of dollars on an automobile loan refinance. If you are near the end of the term of the loan an automobile loan refinance is not in your best interest.
Should You Get an Automobile Loan Refinance?
Yes, if you can get a better interest rate, lower your monthly payment or shorten the term of the loan you should refinance. Some people have saved thousands of dollars by getting an automobile loan refinance. You can too, you just need to take advantage of online companies that specialize in automobile loan refinance.
Article Source: http://EzineArticles.com/?expert=Gregg_Stonehall
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