Are Option Adjustable Rate Mortgages the Right Option? Getting a mortgage for your home means that there are many different possible options. An option ARM, or adjustable rate mortgage is one possibility available for financing your new home. This mortgage gives you flexibility in the way you meet your monthly payments. Here are some details that will enable you to know if this mortgage is the one you need to purchase your home. The option ARM s outstanding feature is that it provides the borrower with four different ways to make the monthly payments. This gives you the ability to control the way you make the payments. When things get a little tight, you can change the payment you make during that time. The four payment options are as follows: Minimum Payment Option Once you have passed the low introductory payments with its special offer, you can expect that you will start paying the interest rate you received for the first year. The first year of an option ARM allows you to make a minimum payment each month. This can have an interest rate between 1 to 4%. Some option ARM s may even permit you to skip a payment altogether - remember, though, it gets added in somewhere. It is important to note that if the amount of your payment does not cover the interest for those months, it does become added to the principal amount you owe. The following year, however, the interest rate will climb to more normal market conditions, with a max cap of a 7.5% increase. Interest Only Option Another way that you can pay on an option ARM is to choose the interest only option. This allows you to pay the interest only each month. Notice, however, that interest only payments do not reduce your principal. You can expect that the payment size will change monthly based on current market interest rates. 30 Year Fully Amortized Option This option allows you to make standard payments which will fully amortize the loan at the end of 30 years. The payment is calculated each month according to the interest rate at the time. 15 Year Fully Amortized Option This mortgage is based on a 30 year calculation. You are making payments, though, so that it can become fully amortized in just 15 years. You do have the larger payments to make, but will save a lot of money by reducing the payment period. It is very important, especially with the first option that you watch out for negative amortization. While some lenders actually use this term to name their product - it usually is not a good thing. You can find that your payments get raised very high (unusually so) in order to bring your payments into a fully amortizing status. In some cases, the caps may not apply because there is a possible resetting of loan terms when negative amortization occurs over a period of time. Just like with any mortgage purchase you make, you should shop around in order to find the best deals. This will mean getting several quotes and comparing the various fees, interest rates, and terms. You will also want to know exactly what the margins are, too. Joe Kenny writes for the Nations Finance, offering great deals on mortgages for UK residents, visit now to read more on mortgages explained Visit today: Cheap mortgages from Nationsfinance.co.uk
What s a Reverse Mortgage and How do they Work? If you have a home that s paid off – or almost paid off – a reverse mortgage can help you live better by providing a steady stream of dependable income. This type of mortgage is called a reverse mortgage because instead of you paying the lender a certain amount per month for a certain number of years, the lender pays you. These payments are cash advances against the value of your home. There are different kinds of reverse mortgages, but all of them are similar in certain ways. You continue to own your home just as you do with a normal mortgage. You pay the property taxes and are responsible for maintenance, homeowners insurance and property repairs. At the end of the mortgage, you or your heirs must pay all of your cash advances plus interest. If you or your heirs cannot do this, the lender can foreclose on your house. There are financing fees associated with a reverse mortgage just like with a forward mortgage. The money you get form the reverse mortgage can be used to pay these fees. These costs are added to your loan balance and must be paid back with interest when the loan is over. How much money can you get with a reverse mortgage? The monthly amount you get will depend on your age and the value of your home. Here s an example. One reverse mortgage currently available is the Federally-insured Home Equity Conversion Mortgage or HECM. Assuming you have a home worth $200,000 and owe nothing on it, an HECM could get you $641 a month for the rest of your life. Alternately, you could get a credit line account in the amount of $107,466 that you then could draw from whenever you wished. Or you could choose to get a single lump sum payment for the same $107,466. Keep in mind that, as a rule, reverse mortgages are first mortgages. In this case, if you still owe any money on your home, you must pay off the old mortgage first. If you don t have the money to do this, you can usually use money from the reverse mortgage to pay off the old debt. How much will you or your heirs end up owing? The debt will equal all the cash advances you have received, plus all interest that is added to your loan balance. If that amount is less than your home is worth, you or your heirs get to keep the difference. The other good news is that you can never end up owing more than your house is worth at the time the loan is repaid. If you are “house rich” but “cash poor,” a reverse mortgage could help make your golden years more golden, However, make sure you read the loan papers carefully to be certain you understand all the loan s conditions. Douglas Hanna is a retired marketing executive and the author of more than 100 articles on HD radio, the Internet and family finances. Here s something that s both new and free, It s a technology called HD Radio that enables AM and FM radio stations to broadcast their programs digitally. These digital broadcasts provide listeners with radically improved audio quality, more radio channels through multicasting, and new data services. To learn more about this amazing new technology, just go my Web site, http://www.hd-radio-home.com , to get all the buzz.
Today, we try and debunk the top ten myths about reverse mortgages. These are the items about which, people have the biggest misunderstandings: 1) I have to give up ownership of my house to the bank. - This is not true. With a reverse mortgage, you maintain the title ownership to the home. You are free to do with the home as you please. If you decide 5 years down the road that you no longer wish to live in the home, you may sell it and pay off the balance 2) I have to own my home free and clear to be eligible. - Again, not true. In fact, many reverse mortgages pay off traditional, forward mortgages. This eliminates the monthly payment on the mortgage and in many cases can lead to a monthly cash flow for the homeowner. 3) If I stay in the house too long, and wind up owing more than the house is worth, the lender can evict me and take my house. - This is not true. As long as you live in your home as a principal residence, pay your taxes and insurance and keep the house in good condition, the lender can NEVER take your home. 4) When I die, the bank will take my house. - This is false. When you pass away, the loan comes due and your heirs then have 12 months to either sell the home OR pay off the loan with a conventional loan. 5) I will wind up leaving a huge debt for my heirs. - This is not possible. Reverse mortgages carry monthly mortgage insurance and are what is called “non-recourse.” What that means, is that if the borrower winds up owing more than the house is worth, the lender can only recapture the value of the home (less any expenses incurred by the estate for selling the home). The bottom line, however is that your heirs will NEVER owe more than what the house is worth. In addition, if the home still has equity, that equity gets distributed to your estate (your heirs) once the home is sold. 6) I need good credit and income to be eligible. - This is false. Since reverse mortgages do not require a payment from the borrower, credit generally does not come into play. There is a cursory review of credit towards the end of the application process to make sure there are no IRS tax liens, or anything that would encumber the title, but beyond that, how you pay your bills does not come into play. As for income, reverse mortgages require no monthly payment from the borrower, meaning monthly income is not a factor in determining eligibility. Reverse mortgage eligibility is determined by 3 main factors, the age of the borrower, the value of the home and the expected interest rate. 7) How I use the money is restricted. - Not true. It is your money. You can use it any way you want. Reverse mortgage funds can be used for any purpose - whether it s for living expenses, to buy a car, purchase a second home, pay for medical expenses, or pay to send a grandchild to college - there is no limit to the usage of the funds. 
If I choose one payment option, I am locked in to that and can never change. - This is false. There are 4 basic options with a reverse mortgage. You can choose a lump sum distribution, where all of the funds available to you are distributed at the closing. You can choose a term payment, where you get a certain amount of money every month for a certain period of time. You can choose a tenure payment, where you get a fixed monthly payment for the rest of your life. Or, you can choose a line of credit where you spend the money as you need it. You can also choose to combine these options. However, if you were to choose a tenure payment and 3 years into the loan, circumstances were to change, you could, for a nominal fee, change the program and take a lump sum distribution of the funds remaining. 9) A reverse mortgage will impact my eligibility for Social Security and Medicare. - This is not true. The money received from the reverse mortgage will not affect eligibility for retirement, survivor, disability or Medicare benefits payable under the Social Security Act. You should know, however, that eligibility for need-based programs, like Supplemental Security Income (SSI) could be affected if the advances are not spent in the month received. 10) If I take money out of a reverse mortgage, I will be taxed on it. - This is false. According to an American Bar Association guide to reverse mortgages, as a general rule, the IRS does not consider loan advances to be income. It s your money, your equity and you are entitled to use it. Henry Salomon is a 13 year mortgage industry veteran. He has worked in varying capacities throughout his career including: loan officer, branch manager, underwriter, secondary marketing, credit risk management and more. He counts large banks and Wall Street firms among his former employers. He has been a speaker at broker conferences and a panelist at mortgage round table discussions. He is currently the Vice President of Retiring in Comfort. At Retiring in Comfort, he does workshops throughout the state to present reverse mortgages as well as various topics of interest to seniors. To schedule a workshop, he can be contacted at henry.salomon@yahoo.com
A friend of mine called to inform me he had gotten some great news in the mail. He received a letter from a lender in California informing him they would give him a $310,000 mortgage and his monthly payment would only be $999! “Think of the house I could buy,” he told me excitedly! Wow! What am I waiting for?” I am a big fan of low rate fixed mortgages and I was very suspicious the kind of mortgage he was talking about was not one. So, I told him to bring his letter to me and we could figure out exactly what he could qualify for. Instead, he invited me to his house. I thought it was a good idea because he has a billiard table and it might be some consolation to him, that as I was putting his dream of living in a mansion on hold, he would be annihilating me at 8-ball. A Negative Amortization Mortgage I came to his house prepared. I found out that a $310,000 mortgage for 30 years with a $999 monthly payment is a 1% interest mortgage. Then, when I read the proposal he had received, it was as I had expected. What this letter was offering was a negative amortization mortgage. I had to read some very small print but after I did, here s what I found out. Once you close on the $310,000 mortgage, you have up to three years in which they will accept a minimum monthly payment of only $999. During these three years, regardless of what you re paying, the mortgage is a 7% mortgage. In order to amortize normally, or be paid off normally, a $310,000 mortgage at 7% for 30 years requires a monthly payment of $2,062.44. This $2,062.44 includes interest and principal. In the early stages of a negative amortization mortgage, no principal is paid. The entire payment goes toward paying the interest on the loan. The interest due on the first payment of this loan is $1,808.33. Since the payment will be $999, $809.33 ($1,808.33-$999) will be added to the principal. Since this mortgage will have a principal that is increasing instead of decreasing, it is what is known as a negative amortization mortgage. Now, you pay! With the terms of this mortgage, it would accumulate $32,316.76 more debt over 3 years, which when added to the $310,000 original mortgage, totals $342,316.76 principal owed. When the negative amortization period of the mortgage ends, the mortgage becomes a regular mortgage. In this case, that happens after 3 years. Then, there is 27 years left to pay the $342,316.76 owed at 7 %. This would take a monthly payment of $2,354.51. A far cry from $999 a month! There are many different variations of negative amortization mortgages, but this example gives you an idea of how they work. Lately, it seems that the most fashionable type of negative amortization mortgage uses a 40-year term. Sometimes the small payments are allowed for up to 5 years and the principal is allowed to increase up to 25% more than its original value. The idea behind negative amortization mortgages is just to get more people to qualify for a large mortgage, even though when the negative amortization period of the mortgage ends, they may not be able to make the much higher payments. Of course, in a perfect market, the property s value will increase more than the amount the negative amortization mortgage will add to the principal owed. So, in this perfect market, one would gain equity in the property. Then, he could sell the property at a profit. Watch out! Negative Amortization can blow up in your face! If a negative amortization mortgage had not been available, he would not have been able to qualify for a large enough loan to purchase the property, and so, would not have been able to make a profit from it. This, however, is what I call dynamite speculation. Dynamite speculation is speculation that may blow-up in your face. I would never recommend taking the risk a negative amortization mortgage presents to a borrower. He may not be able to make the large monthly obligation he will eventually have, and if the price of his property doesn t skyrocket, he wouldn t be able to sell his property at a profit. So he would be risking foreclosure. As I was being creamed for the seventh game of 8-ball in a row, my friend came to the realization that a negative amortization mortgage was not right for him, and maybe, not right for anybody. He further realized that a few hours ago, he was all ready to buy a new house when he previously had not been giving any consideration to doing so. Therein lies the power of an advertisement for a negative amortization mortgage. In the classic movie, “Smokey and The Bandit,” Sheriff Buford T. Justice strolls up to a young man who was about to strip parts from an abandoned vehicle. He told the young hoodlum to turn around and put his hands on the car. Then the lawman gave the young man a good boot in the pants and warned him, “That was an attention getter!” When you see an advertisement for a mortgage which offers a large loan with a very small monthly payment required, that too is an attention getter. So beware, if you have a mortgage that is anything other than a fixed rate mortgage, after it gets your attention, it might just turn around, and like Sheriff Justice, give you a real good kick in the pants. Ed Lathrop is a successful Real Estate investor. He has developed EzCalculator, a Mortgage Calculator that calculates anything to do with mortgages, shows you how to pay off credit card debt and much more. EzCalculator includes the famous How to Make $100,000 on Your Mortgage calculator. There are no popups or spyware at this site. Come visit this free site at Free Financial Calculator Also, print the amortization schedule of any mortgage at Free Amortization Schedule
The global economy has been extremely unstable since the later half of 2006 and that has directly led to problems for borrowers all over the world. In most of the leading developed countries in the world, interest rates have risen immensely, and that also included the interest rates set by the Bank of England. UK interest rates actually rose five times in the twelve months between August 2006 and August 2007, with the final rate standing at 5.75%. Whilst savers are rubbing their hands together, borrowers all over the world are looking for the lowest rates possible, and low rate mortgages are the most desirable of those on the market right now. Low rate mortgages are popular because they can save homeowners a lot of money, and there is also a degree of flexibility with many low rate mortgages deals out there at the moment. Many providers offer fixed rate products that can save individuals the hassle of strained finances should the UK interest rates fluctuate in future. There are fixed low rate mortgages available out there for two, three, five and even twenty-five years. However, there are also low rate mortgages with variable rates out there too if you prefer to take your chances or do not want to commit to a deal that has major restrictions, as many of the fixed low rate mortgages products do. Low rate mortgages do tend to have more restrictions than those products that have higher rates because the lender prefers to secure your custom in return for offering you a low rate the first place. This is one of the major down sides to low rate mortgages, but may not apply to all of the products out there. The best way to find out whether the low rate mortgages product you are looking at has such restrictions is to read the small print. All exclusions and terms will be contained within the small print, so you should know exactly what you are committing to after reading it! If you do not read it then the likelihood is that you will end up paying far more than you plan to somewhere down the line. http://news.bbc.co.uk/1/hi/business/6272776.stm Jason Hulott is Business Development Director at UK Mortgages service, PolarMortgages. Visit Polar Mortgages now for more information about UK mortgages and remortgages.
One of the best ways to use a mortgage calculator is to help you to compare the interest rates of various loans. Applying for and getting a home loan is a lot of work. It is not something that is easy to do unless you do not care how much you will be paying for your home. Since this is one of the largest investments you will ever make, you will want to insure that you get the best loan for your home as well as for your pocketbook. You can easily do this, though, when you take the time to use this type of tool. The interest rate of a home loan is the most costly part of it. This is the percentage that you will pay to borrow the money to buy the home. Nothing is more important to compare when looking for a home loan than this number. What makes it confusing and even enticing is the fact that many lenders out there who are all offering slightly different interest rates. How do you know which one is offering the lowest rate? If you like one company and would like to work with them, but someone else is offering a lower rate, what will it cost you? These are just what you can learn from using a mortgage calculator . This tool allows you to compare what is out there. You will simply need to punch in some numbers such as the interest rate of the potential loan, the terms of the loan and any fees that may be included as well as the amount of your down payment and out comes a lot of information that is vitally important to your decision. You will learn how much this particular home loan will cost you. The mortgage calculator will tell you how much you will pay monthly in your payments. It will also tell you how much you will pay in total cost. Now, if there are other interest rate charges out there that you are considering, you can use the tool to see just what the difference will be. Simply go back to the blank mortgage calculator and input the necessary information for the new potential home loan. You will get all of the same numbers, this time with the new totals for the new rates. Because there is no charge for using this tool and there is no obligation for using it, it is easy to keep using it to keep seeing the various options that you have. This tool is easy to use too. You can use it to provide you with all of the things that you need to make a good decision about the home loan you are taking in. Compare several different home loan lenders to see what they can offer you and to see just what the difference in dollars and cents is. Taking just a few minutes to carefully consider these options, by using a mortgage calculator can help you to benefit many times over in your home loan. Maksim Fisher is a freelance writer, specialising in finance subjects such as loans, banking, mortgage calculator , etc. He recommends use of a mortgage calculator for calculations at http://www.mortgagecalculatorplus.com .
The property market is set for troubled times over the next year or two after the number of UK mortgage approvals fell by 14% in August. Figures from the British Bankers Association showed that the number of approvals given the go-ahead for home purchases in the month was 61,051, down from 71,178 in August last year. The number of UK mortgages fell for the third month in a row, as buyers left the market, uncertain about the financial future. For all UK mortgages, including re-mortgages, the number of approvals was 168,291 - down 8.8% from the same month in 2006. The total value of loans was £19.1bn. For house purchases the figure was £9.38bn, down £1.1bn from July, and down by £10bn compared to August last year. Britannia Building Society s chief executive Neville Richardson said bringing interest rates down by a quarter of a percent would not be sufficient to solve the crisis in the UK mortgage market. He said: “The mortgage market will be challenging. Just lowering the interest rates will not work. Getting some liquidity back into the market would help.” Mr Richardson thought that the chances of a property crash were low, thanks to good economic fundamentals. Unlike Northern Rock, Britannia uses the global wholesale money markets) for only 25% of its borrowing (Northern Rock s level was 75%), with 60% coming from its customers, so it should not suffer like Northern Rock did. Nationwide s house price figures showed a fall in the annual rate of inflation from 9.6% in the previous month to 9% to mid-September 2007, and the downward trend is expected to continue. Further, the UK s biggest housebuilder, Barratt Developments reported that sales of new houses were down by 10% following the Northern Rock crisis. Worse news for UK mortgage holders is that mortgage lenders are beginning to ask for larger deposits from first-time buyers as the credit crunch continues to bite. Deals that enabled borrowers to take out a mortgage with only a small deposit have been withdrawn by many lenders. Some deals even asked for no deposit at all. Industry watchers see this as the start of a process of providers tightening their lending conditions - and other building societies and banks are expected to follow suit. Uk Mortgage products that lent 95% or 100% of the property values have been scrapped by the Norwich & Peterborough Building Society (N&P). Their maximum loan-to-value is now 90%. For a £200,000 property, the borrower will now have to find £20,000 for the deposit - in addition to other fees and costs, such as stamp duty (which on a £200,000 property would be £6,000). Accord Mortgages, part of Yorkshire Building Society, has also scrapped its 100% lending on UK mortgages. Alliance & Leicester has stripped back its 95% lending to only a few products, and Leeds Building Society requires a 100% loan to have a guarantor. In particular, these changes to policy will affect first-time buyers, as the less a deposit is, the easier it will be for them to get on the property ladder. The credit crunch and accusations of less than responsible lending has caused providers to take a look at own their lending criteria. As well as a cut back in UK mortgage products, those that offer 90% lending usually have high fees attached. Alliance & Leicester, Halifax and RBS/NatWest all have a higher lending charge for borrowing at 90% or more, claiming that it covers the increased risk associated with higher lending. The charges often amount to more than £3,000 on a typical UK mortgage. By contrast, Barclays, Bradford & Bingley, Lloyds TSB, HSBC and Nationwide do not charge more in these circumstances. It is best to get as large a deposit as possible when taking out a UK mortgage, to get a lower fee, and a better interest rate. Nick Riviera is an author on a variety of property related subjects, which include mortgage rate reviews and detailed analysis of the role mortgage brokers provide in the current climate.
Before obtaining good mortgage rates a borrower must understand what actually is in a mortgage interest rate. There are many factors that affect all mortgage rates in every mortgage transaction. Discount points, origination fees, Yield Spread Premium, and 3rd party fees are a few factors that can change your interest rate. Discount points is prepaid interest that is used to lower a mortgage rate. They are tax deductible, and can help lower your monthly payments. One discount point is equivalent to 1% of your mortgage loan amount. For example: Purchase Price $200,000 Down Payment $40,000 Loan amount $160,000 Discount points 1% or $1,600 of your mortgage loan amount. Discount points MAY lower your mortgage rate by 0.5% for every point paid. Every lender is different, and may only lower your mortgage rate by 0.25-0.375%. If your current mortgage rate was 6.5%, and you paid one discount point, then your rate can go as low as 6.125-6.25%. By lowering your rate, you will also be lowering your monthly mortgage payment. The one time closing cost will be 1,600, and will be recovered between 3-4yrs. The way to calculate this is to subtract the higher mortgage payment from the new payment, and divide it by the 1,600. Origination fees work the same way as discount points do. One point is equivalent to 1% of the loan amount. Origination fees do not lower your mortgage interest rate. Origination fees are paid by the borrower to the bank, lender, and/or mortgage broker. This is a common charge on a HUD-1 settlement statement. This charge is associated with originating your mortgage loan. The cash rebate paid to a lender for selling an interest rate higher than the wholesale par rate is called Yield Spread Premium (YSP). If a borrower isn t willing to pay origination fees or discount points, then the mortgage interest rate is raised to recover the loss of revenue. Also, if the borrower is unable to pay closing costs, the lender can raise the rate to balance the revenue made. An origination fee can be charged with the closing cost, and the rate can be raised to create more revenue. This is called charging in the front, and charging in the back . The 3rd party fees such as title fees, title insurance, attorney/escrow, appraisal, etc. can all affect an APR of a mortgage interest rate. Many lenders do not include all fees, and this is why APR s can be different with the same numbers on a Good Faith Estimate. If one lender is charging more fees/points, that can lead to a higher APR. Current mortgage rates are displayed at Freddie Mac s homepage. It updates their webpage weekly with rates from actual closings. They also display the average fee/points paid on a 30yr fixed mortgage, and a 15yr fixed mortgage. Do not be fooled by various advertising websites that doesn t verify the ads promoted by their lenders. Many lenders undercut their rates to draw borrowers, but many of these borrowers do not qualify through their terms. Freddie Mac s Homepage The average revenue made in a mortgage transaction is approximately 2.5% in total origination fees, discount points, and YSP. Some lenders may charge more, but it is still negotiable. Mortgage lenders & Banks aren t required to disclose YSP. You will normally see the interest rate with origination fees and/or discount points. Mortgage brokers are required to show YSP, and is disclosed on a Good Faith Estimate, and HUD-1 statement. Due to higher overhead costs, a mortgage lender and bank can charge a lot more fees than mortgage brokers. North Carolina Mortgages, FHA Secure Programs, FHA Loans, Mortgage Rates
Does your bad credit history haunt you? Is it the reason you have not purchased a home yet? Dont despair! Help is at hand in the form a bad credit mortgage. Bad credit mortgages are the only option for individuals who are restrained due to their credit history. It is a blessing in disguise for people who want to own a home without worrying about their poor credit past. You may have faced CCJs, Defaults, Mortgage arrears, Missed payments or even Bankruptcy against you but a bad credit mortgage can help you sail through trying financial times and help you step into the house of your dreams in the shortest time. The Bad Credit Mortgage Loan Advantage Apart from overcoming your credit challenges a bad credit mortgage loan comes with substantial advantages. You pay competitive interest rates enjoy flexible monthly repayments and preferential terms and conditions for repayment. This is because the property that you buy is placed as security for the loan amount. Therefore a bad credit mortgage loan is an intelligent choice to buy a home rather than spending money for your rent every month and being faced with a deteriorating credit report. With a bad credit mortgage loan you stand to improve your credit rating with regular payments. How does a bad credit mortgage help you clean up your credit? Bad credit mortgage loan will help you pay off your various existing loans and bills. When you have dealt with all your high interest debts over time you can easily untangle yourself from the web of debts. You deal with a single affordable and easy to manage monthly repayment and you are also rid of creditor harassment. Your credit reports show marked improvement and this will influence your finances positively. Online options to simplify your search for a bad credit mortgage loan There are a number of lenders available in the market who can help you with mortgages. Earlier looking for a bad credit mortgage meant waiting to meet lenders and collect information or pushy salesmen who would influence your decisions. But competition has gained momentum due to increased demand for bad credit mortgages. Online lenders provide the best competitive bad credit mortgage loan deals. Bad credit is no longer considered taboo among lenders. Help is available at the click of a mouse for the large number of loan seekers who are troubled by bad credit. You can apply for a bad credit mortgage from almost anywhere as loan as you have a computer with access to the internet. Online application forms are simple in their structure and are extremely user friendly. They are extremely secure and dont cost you anything. Online options allow you to compare bad credit mortgage loan deals, receive no obligation quotes and then make a wise informed choice. For more information and help log on to Buy To Let Mortgage or Mortgages Remortgages
Abbey s 125% Mortgage Comes Under Fire The Abbey has come under fire recently for launching a new product for 125% mortgages. The accusations were that the bank is contributing to eh country’s growing debt problem with such a loan. The main problem with 125% mortgages is that is gives the borrower instant negative equity. This is the circumstance where the value of the house is worth less than the value of the mortgage. It became more prevalent in the housing price crash of the early 1990s – and was never considered a good thing. The loan from the Abbey is the largest of its type ever offered to UK house buyers. It is entirely secured on the property, which could mean that if a borrower missed any sort of payment – even on the portion of the loan above the property’s value (the 25%) – they could lose their home to repossession by the bank. The Abbey has been accused of failing to learn the lessons of the recent problems at Northern Rock and calls by the government and the Bank of England Governor Mervyn King for a return to responsible lending. The timing of the announcement of the 125% mortgage scheme, at least, seems poor. Currently the 125% mortgage on offer from the Abbey is a pilot scheme being offered to first-time buyers and some other groups. Industry experts are not impressed by the mortgage at this time. With instant negative equity, borrowers would be opening themselves up to even bigger problems if house prices should fall – and there is growing evidence that that is beginning to happen. Negative equity would grow even bigger, and some buyers might find themselves an additional statistic on a repossessions list. Northern Rock’s current plight has served to highlight how lending can get out of hand, so 125% mortgages would be unlikely to find favour just now. Anyone tempted into taking out a 125% mortgages would have to be very confident that they would stay in the property for a very long time – until house prices pick up again and they are free of negative equity – or that their income is about to rocket so that the repayments are suddenly dwarfed by their salary. In general terms, though, it is not likely to work for many at the moment. The 125% mortgage from Abbey enable a homebuyer to borrow 100% of the value of the property, plus £25,000, so a first-time buyer looking at a £100,000 house would be able to borrow £125,000 – a mortgage of 125%. Even a loan of £225,000 against a £200,000 property is a mortgage of 112.5%. Loans of less than £100,000 are calculated on a pro-rate basis. Northern Rock, indeed, had a 125% mortgage on offer. The difference was that the 25% of the loan above the property’s value was not secured against the property, and therefore missing a payment on that part of the loan did not put the owner’s property at risk. Abbey said that its 125% mortgages would be useful to house buyers who wished to use extra cash to furnish or refurbish a property. The bank also said it carried out finance checks on all customers to ensure they can afford the loan repayments. An author on a variety of property related subjects, which include mortgage rate reviews and detailed analysis of the role mortgage brokers provide in the current climate.
Which Mortgage? Part 2 Adjustable Rate Mortgage: Almost self explanatory, the interest rate on your monthly repayment will adjust according to the bank rate. So your monthly repayment will go up and down as the bank or mortgage lender decides according to the fluctuations in the interest rate. Sometimes this can save you more money than if you were opting for a long term fixed rate. However, it is a gamble and the market need monitoring so that you can switch to a fixed rate in a hurry if needs be. This switching can also be problematic, as the optional fixed rate when you want to switch, will often be higher than a regular mortgage rate would be offering. So check the small print. (Always!) Experts actually stress that you check the small print carefully on this one and that if you take an adjustable rate mortgage out try it for a three year period only. Some adjustable rate mortgage contracts do have a clause written in that allow you to change fairly easily. VA Mortgages: VA stands for Veterans Affairs and amazingly, twenty nine million American veterans and service employees can qualify for a VA (veteran) loan. These VA loans will usually be at an extremely competitive rate, are easier to qualify for, often need no down payment and do not require to be insured. VA loans also have other advantages and service personnel would be well advised to look into this opportunity. Interest Only Mortgage: A quick way to describe this is to say that it is like having a line of credit. You just keep paying the interest but the principal stays the same. This means reduced payments - which can be a good option in times of financial stress. However, it also means that you have never paid off your house! The length of the term can be anything up to fifteen years. Once the loan comes to full term, you then have to pay back the total loan principal. If the realty market has increased significantly then this may offer no problem. High End Mortgage: This may not affect Mr. Jo Average. These have come into play in New York where a second mortgage may be needed to top up the finances. This is because the first mortgage has a government ceiling on it that may be lower than the house cost. Most people that require this type of mortgage will use specialist help as it is inevitably a higher interest rate and also requires a top notch credit rating. FHA Mortgages: FHA stands for the Federal Housing Administration. This is a scheme to insure a mortgage on a property. Its history goes back to the 1930s where it was used to help higher risk families obtain financing. Because they were paying insurance on their mortgage, the lender was not taking the risk, thus making it easier for people to buy their own home. In Part 1: Fixed Rate Mortgages, Reverse Mortgages, HUD Mortgages, Assumable Mortgages. Provided by the writing team of Stephen Proski. Stephen is an experienced REALTOR® in the Scottsdale real estate market. Discover the gem that is Carefree real estate , located in the Northeastern corner of the Phoenix metropolitan area.
Need a cheap mortgage? Who doesn’t? The trouble is that with the recent upheaval in financial credit markets around the world money is no longer cheap, and therefore there’s not much chance of a cheap mortgage any more. Of course, most providers claim they offer cheap mortgages. They are not likely to advertise expensive mortgages, after all. It is therefore, important to look behind the headlines which battle for your attention and look at the figures and fees in detail, as in the example above. No matter what label the lender puts on a product, to find the cheap mortgage that suits you, you will need to do your own homework, or at least, with the help of a mortgage broker or mortgage adviser. To find the best cheap mortgage deal you need to look for a competitive interest rate for the type of mortgage you want over the period you want. There are so many mortgage products on the market (over 8,000) and with many of them claiming to be cheap mortgages you may miss out on the best if you simply walk into a high street bank. Small differences at the start of a mortgage can make big differences in the total amount you repay. It is always sensible, therefore, to take professional mortgage advice. Mortgage advisers can save you a lot of time and money because they have access to all the mortgage packages on the market, and they know where to find the best cheap mortgages. Of the cheap mortgages on the market at the moment one of the best is a 4.99% fixed rate until 30 November 2009. Let us assume you need a £125,000 mortgage on a property estimated to be worth £200,000 and you want a term of 25 years. That 4.99% reverts to the lender’s standard variable rate for 35 months – the rate currently being 7.74% – and then it changes again, to a long standing borrowers rate of 7.34% for the rest of the period of the mortgage (around 20 years). Other incentives that come with this cheap mortgage are free Accident Insurance for six months, free Sickness Insurance for six months, free Unemployment Insurance for six Months. Importantly, as well, there is no higher lending charge (HLC). With this cheap mortgage your estimated monthly payments would be £730 for the first period of fixed 4.99%. For the next period of 35 months the estimated monthly payments would be £929, and for the rest of the mortgage term, your estimated monthly payments would be £901. All that means that you would pay £142,117 in interest, and would need to pay back the original loan of £125,000. With fees, the total amount repayable is £269,626. The fees are an arrangement fee of £1,999, a valuation fee of £175, a valuation admin fee of £125 and a redemption fee of £210. Other costs you might incur are survey costs at £315, fund transfer fee of £25 and legal fees of around £400. Stamp duty payable on a property worth £200,000 is at 1% - or £2,000. Even with cheap mortgages, the costs mount up. Nick Rivera is an author on a variety of property related subjects, which include mortgage rate reviews and detailed analysis of the role mortgage brokers provide in the current climate.
Subprime lenders are providing first mortgages, second mortgages and home equity loans to those who don t qualify for conventional financing. Many of the more than 19,000 mortgage lenders in the U.S. offer some form of subprime mortgages. Subprime borrowers are people with a FICO score of 620 or lower. In fact, the “sweet spot” for the subprime industry consists of borrowers with credit scores between 620 and 640. Bad credit means you will pay more when you borrow money. However, a subprime second mortgage could still save you thousands of dollars over other forms of borrowing. Prior to the widespread availability of subprime loans, many deserving people with poor or insufficient credit histories could not get a mortgage. Now these folks are able to become proud homeowners as part of the American Dream. A subprime second mortgage makes sense when you don’t want to refinance your first mortgage but want to access your home equity for legitimate reasons such as home improvements, debt consolidation, medical bills or college tuition. As an added bonus, the interest paid on a second mortgage is usually tax deductible. Borrower Beware Recent research reveals that subprime mortgages are three times more likely to happen in minority neighborhoods. Even affluent minorities are more likely than whites to take out subprime mortgages. The AARP notes that older female borrowers held 45% of subprime mortgages and only 28% of prime mortgages. Some dishonest lenders will try and exploit the financial troubles of borrowers by offering easy-but-expensive credit that could lead to them eventually losing their homes. Or, these disreputable people resort to exorbitant fees, prepayment penalties or balloon payments to snare the unwary. Learn more about how to avoid Subprime Second Mortgage fraud, and get a free loan quote at Easy Second Mortgages . Even if you have bad credit, you may still qualify for a good second mortgage. Mike Hamel is the author of three business books and several articles about mortgage financing. His material is featured on sites like Easy Second Mortgages .
House prices continue to rocket in Britain, rising by 204% between 1997 and 2007, significantly outstripping the growth in earnings which rose by only 94%. The situation poses special problems for prospective first time buyers. Those not yet on the housing ladder are keener than ever to make the leap before prices spiral further out of their reach but those who have their mortgage already may be finding it more and more difficult to make the payments as interest rates rise. Figures show that, on average, first time buyers are now spending almost one fifth of their income to meet their mortgage obligations compared to roughly one tenth about ten years ago. Barring some tremendous and unforeseen change in government policy, high property prices look like becoming a permanent feature of life in Britain. Already, the typical price of a house is approximately seven times that of the average annual income and some analysts predict that could rise to become an amazing ten times average income within the next two decades. As a result of these intense market conditions, banks are modifying some of their traditional lending practices to make it all a bit easier for those preparing to purchase property for the first time. In the past, for example, the maximum amount you could borrow on a mortgage was pegged at 3 times your annual income. Now there is much more flexibility and some banks are willing to lend you up to five times your income. Mortgage terms have also changed. Ten years used to be the norm but, with a little prodding from Gordon Brown, who thinks that the prevalence of high and volatile mortgage repayments is a source of instability in the British economy, several banks have now introduced fixed-rate mortgages with 25 year and even 30 year terms. Traditionally, consumers have been reluctant to enter into such long contract arrangements, seeing it as an almost lifelong commitment which can be difficult to reconcile with changes in their own personal circumstances such as marriage break-up, a change of job or a move to a new area. The penalty fees levied by banks for early repayment have been a further deterrent. A number of banks have recognised this problem and, in an attempt to remedy it, are now offering mortgages without punitive fees for early repayment. Quite a few banks have also introduced specially designed first time buyer mortgages Typically these will require a lower deposit than other mortgages, offer fixed-rate payments for the first few years and often there’s some kind of cashback arrangement thrown in too to help purchasers through those difficult early years. As Britain’s property market continues to experience almost permanent boom conditions, no doubt lending institutions will be forced to innovate further to let those hard-pressed would-be first time buyers fulfil their property-owning dreams.
Was The Mortgage Really a Mistake? This is the actually the headline from an article on the front page of the Business section in this past Sunday’s Washington Post. In the wake of the Credit Crisis, a couple was discussing their regrets and fears about their adjustable rate mortgage. Their chief concerns are will they be able to afford their home once their rate adjusts or will there be loans and programs available to refinance when the time comes. Honestly, they share the same fears and worries of many borrowers who purchased homes in the last couple of years with adjustable rate mortgages. Are you starting to worry as well? If not, maybe should. First let’s examine the problem. According to the media, all the issues of the “imploding mortgage market” were caused by mortgage lenders and bankers such as me. Quite frankly we all played apart in this disastrous market; lenders, realtors, and borrowers alike. Realtors listed properties at astronomically high prices causing bidding wars for hot properties. In some cases, sellers had not owned the property even a year and were able to buy and then sell for high dollar profits. They were happy and Realtors too as they skipped to the bank with “fat” commission checks from the higher than “listed” sales prices. As mortgage lenders, we placed a great deal of our clients in Adjustable Rate Mortgages without any regard for the future market. Just as the Realtors many mortgage lenders and brokers benefited handsomely from these shorter period loans with no regard for the clients financial future. I believe myself to be one of the responsible lenders not out to overcharge clients with excessive points and fees but I too am guilty of placing at the least three out every five clients in an ARM. Let’s not forget the buyers who’s only question was,” What is the lowest payment I can get?” so I can afford this overpriced home. So even when trying to be a trusted advisor and present more than one option for mortgage financing inevitably most chose the lower payment adjustable rate programs versus the more stable, higher payment fixed rate options they were given. Well none of us can cry over spilled milk. So instead of asking, Was the Mortgage a Mistake? It is time to review your current situation and figure out where we go from here. Which the couple mentioned in the Washington Post attempted to do by calling there financial planner. Noticed I mentioned attempted because the correct thing to do now is to call your local and accountable Mortgage Lender to schedule a review of your current financing situation. And maybe consider that fixed rate loan before it is too late. The initial discomfort of the possible payment increase will be much less painful than the discomfort of losing your home to foreclosure or premature sale because you cannot afford the new payment when your rate has adjusted too high, credit scores have dropped, or the homes value has significantly decreased. Don’t leave your family’s future to chance with some unscrupulous mortgage lender. And buyers as well don’t get caught in the future asking Was the Mortgage a Mistake? If cost per month is the determining factor, which it typically is for 99% of home purchasers, make sure you are pre-approved before buying and don’t review properties outside of your price range which can lead to that question, How can I get the lowest payment for this house? Basically it will be like starting our cycle of creative financing i.e. interest-only adjustable rate mortgages all over again. Or maybe not(which I will discuss why at a later date) as the credit crisis continues and people are left asking Was the Mortgage a Mistake and the answer is probably yes but it doesn’t have to be… Markita Aldridge-Woods AKA “The Queen of Mortgage Financing” is the expert at helping first time homebuyers and buyers with past bankruptcy and credit challenges purchase a home with low interest rates and very little down in the Woodbridge, Virginia area. For free reports on the secrets other lenders don t want you to know visit my website at http://TheLendingAdvisors.com or checkout my weekly blog at http://QueenofMortgageFinancing.blogspot.com
In this day and age of low housing affordability, it is more difficult than ever for first-time-buyers to secure their first home. A shortage of housing stock has lead to a situation in which demand for housing far outweighs supply and this has, in turn, driven prices up and affordability down. Because of this, many first-time-buyers no longer qualify for standard mortgage products even if they are in full-time, steady employment. Lenders have therefore been forced to invent specialised mortgages that are designed to help people take their first step onto the property ladder. First-time-buyer mortgages are not a product of their own, but rather comprise a small set of products that are aimed at the first home buyer market. They include shared ownership, guarantor, no-deposit, key worker, and standard mortgage products that are only available to people who do not yet have their own home. Shared ownership mortgages are fast becoming the most popular vehicle for first-time-buyer to buy their first property with. Shared ownership products allow people to purchase part of a property and rent out the other part, which is owned by the seller - usually a property developer. Over time, the buyer will purchase the remainder of the property from the developer one portion at a time. A no-deposit mortgage is another product available to some first-time-buyers that is usually targeted towards individuals who have a steady income but who do not have enough savings to pay for a deposit. This type of mortgage products is normally issued with 100% loan-to-value ratios. Exactly which first-time-buyer mortgages are suitable for you will depend on the circumstances under which you are buying the property as well as your personal financial situation. A careful assessment of your personal circumstances may be required by an independent mortgage adviser in order to ensure that you select the right product for your situation. It should also be noted that the property market is always changing and with affordability continuing to decline lenders are constantly assessing the needs of first-time-buyers. Because the first-time-buyer market is so important to lenders, they are constantly working hard to ensure they bring new and innovative mortgages to the market which can help them get a foot on the property ladder. UK Mortgage Source provides information on UK mortgage advisers and provides a contact point for individuals searching for qualified Mortgage Advisors
When shopping for a home mortgage most borrowers with adverse credit have no choice but to use a bad credit lender for their home loan. Although the term bad credit lender can send chills up the spine of many borrowers there really is not that much to be concerned about if you pick the right company. Almost all of the mortgages for bad credit borrowers are originated though mortgage brokers and funded by sub prime lenders. Most local banks and large lenders like Countrywide and Wells Fargo do not offer sub prime mortgage loans any longer. When you are trying to choose your bad credit lender you will want to choose them based on a few items. First just because you have bad credit you do not have to settle for the first offer presented to you. All mortgage broker work on commission and have the ability to adjust interest rates and fees to make you happy. So stay with the sub prime mortgage company that gets you the best deal. Secondly you may want to choose a mortgage company that primarily deals in sub prime mortgages. The reason for this is sub prime loans require constant monitoring to keep up with the newest and best programs available for mortgage borrowers. Additionally many mortgage companies who deal only in bad credit mortgages will generally have researched out the best lenders for their borrowers and not just use the biggest most common lenders every other mortgage company does. This can benefit the borrower through lower interest rates, better loan programs and reduced closing costs. By choosing a dedicated bad credit lender you not only get the benefit of using an expert at sub prime mortgages but many of these companies offer additional services such as low cost credit repair, making them that much more valuable then a standard mortgage company. Need Bad Credit Mortgage information? Then visit our Bad Credit Mortgage library for great information on your bad credit loan options.
There are three levels of assessment that can be carried out on your property; a ‘basic’ valuation, a home-buyers report and a full structural survey. The latter two are prepared for the client whilst the first is for the Lender although often the applicant receives a copy. All lenders need a “ basic survey ” to ensure that the property they are providing a mortgage for is of sound quality, with no obvious structural defects. Some lenders offer this free of charge. However, most do not, in which case you can expect to pay around £300. The second option is a ” homebuyers report ” which gives a more detailed assessment of the superficial condition of the property and costs around £500 The most comprehensive assessment is a “ full structural survey ”. This is a far more detailed version of the basic survey, which will usually uncover defects which are not immediately obvious. It is recommended for older properties. Such surveys are far more costly and you can sometimes expect to pay over £1000. However, if any problems are found with the property, then buyers will be in a good position to negotiate a discount, and thus get a cheaper mortgage. In addition, it ensures you are aware of all defects before committing to a purchase that could have been a very expensive mistake. Either a homebuyers report, or a full structural survey are useful to have done if you are buying a property for the first time. For many people who are re-mortgaging their property, a “ mortgage valuation ” will ensure that the amount they are lending is relative to the property being mortgaged. You can expect to pay upwards of £150, depending on the size and purchase price of the property. As with other surveys, some lenders will offer this service free of charge. It is also common practice for when obtaining a homebuyers report or full structural survey that they are bundled together with the Lenders valuation – and the fee for the ‘homebuyers’ survey of full structural survey covers both reports.. Conveyancing is the term given to all of the legal work involved with purchasing a home, the costs of which varies considerably from £400 to £1,500. The exact cost will depend on the solicitor used, the area, the value of the house and the work involved. Conveyancing is often a slow process, as the solicitor has quite a lot of work to do. In most cases the overall fee will be made up of: Local authority search fees Environmental and drainage search fees Land Registry fee Telegraphic transfer fee Solicitors’ administration costs Stamp duty (currently for properties over £120,000) It is worth noting that some of the searches that used to be carried out by solicitors on buyers’ behalf are now part of the Home Information Packs (HIPs) that sellers must provide would-be buyers before a purchase goes through. An easy way to save on legal costs is to use a licensed conveyancer instead of a solicitor. Although they are often harder to find, the work they do is often of no less quality than a solicitor. With both though, it pays to check out their credentials and for extra peace of mind, get one through personal recommendation. You also need to check that your legal representative is acceptable to the Lender. Most Lenders have restrictions and will not accept every firm to carry out the conveyance on their behalf. Liam G is a UK based financial author, currently focusing on mortgages , in particular the hidden costs associated with taking out a mortgage .
Banks are reporting that the numbers of customers re-mortgaging their properties is at its highest ever. Most of these customers are seeking to take advantage of two important trends in the economy. The first is that lower interest rates , and increased competition among banks and financial institutions is leading to better and better deals being available on the market in general. The second is that most borrowers’ financial situations have improved dramatically since they have first taken out their mortgage and therefore they are able to get far better terms and interest rates for themselves. For example, most people who take out a hundred per cent mortgage will be able to switch it, within two years, to a ninety or ninety five per cent mortgage that offer significantly better terms. For the last couple of years, interest rates in the economy in general have been at historically low levels. Even with recent rate increases, current rates are still far lower than they were when many mortgages still being paid were first taken out. This means that there are savings to be made by fixed rate mortgage holders who can pay off their old mortgage and replace it with a new one taking advantage of today’s lower rates. Even for people with variable mortgage rates there are savings to be made as the formulas for calculating the payable rate may have become more generous in recent years. This is especially true if you look at the increased competition at play in the mortgage market. The main banks have been joined by a plethora of competitors from Britain, the US and Europe, who are all seeking to carve for themselves a share of the market. They are now offering customers better deals and mortgages with more attractive and flexible terms than any lenders have been willing to do in the past. New products mean you can take advantage of discount periods, make over or under payments, off set your other savings against your mortgage or take out interest only mortgages. Many people who took out mortgages in the past are deciding to switch to one of these new products. Also, for many borrowers, as time passes, the value of their home has increased significantly and their income has also increased. This will make them eligible for mortgages that they may not have qualified for in the past. These mortgages will offer them lower rates and better terms and conditions and so will be persuading them to make the switch and opt to re-mortgage. Joseph Kenny writes for the loan site http://www.ukpersonalloanstore.co.uk Homeowners can apply for a secured loan from the companies on site.
Bridging finance is a short-term loan that is used as a way to provide funding for the purchase of a new property while the borrower awaits the sale of an existing property. Unless all the stars are in perfect alignment, it’s tricky to coordinate the sale of one property and the purchase of another property so that the transactions occur simultaneously. Bridging finance or a “bridge loan” as it is more commonly referred to, makes such transactions possible. They keep the borrower from ending up in a dire financial situation as can happen when forced to pay two mortgages at the same time. Bridge loans can be used either for business or for personal reasons. Primarily short term in nature, the process for obtaining a bridge loan is similar to that of most types of loans. Most importantly, it’s advisable to work with a lender that has experience with this type of loan. Also, since the need for a bridge loan often arises with little advance notice, being pre-approved for such a loan is a good idea. Bridge loans typically are structured as interest only loans meaning that the borrower pays only the interest on the loan each month. The borrower continues with this repayment plan until the property the loan is being used for is sold. When the sale finally does occur, the proceeds of that sale are used to repay the principal. The principal payment typically is in the form of a one-time, lump-sum payment. The lender does not need to worry too much about default because the borrower is required to put up collateral to secure the loan. This can be in the form of another piece of property, business machinery or inventory on hand. But rest assured the lender will still thoroughly review the credit history of the applicant, the business and any partners or others with an ownership interest to assess the level of risk it is undertaking. The interest rate assigned to the bridge loan is based on several factors: the anticipated risk associated with the bridge loan, the prevailing interest rates and a premium added by the lender. Since bridge loans are short-term, generally not longer than two years, the lender has only a short time to make money on the deal. The profit is derived from the interest rate. Expect to pay a higher rate of interest for a bridge loan. And remember, the monthly payments on a bridge loan generally will be for interest only. Expect to pay off the bridge loan in full, usually as a one time balloon payment, as soon as the property is sold. In the event that the property is not sold before the bridge loan matures, it can usually be converted to a conventional loan without paying a penalty. But it’s always a good idea to double check this before assuming. Need to source the best Bridging Finance available quickly, try independent commercial brokers Commercial Lifeline, specialists in Commercial Bridging Finance and Commercial Mortgages. Download our free Commercial Mortgage guides by visiting our Commercial Mortgage Guide page. 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 link above is intact.
