Fixed Rate - or Wait

Times they are a-changing and these days we all have to become our own mortgage experts. So, is this a good time for a fixed rate mortgage? Today's market seems to be crying out for would-be home owners to negotiate for only one type of mortgage, and the advice must be clear: finance with fixed-rate mortgages.

In this financial climate, why would anyone do anything else, mortgage interest rates are at their lowest levels since May, in fact we're looking at rates last seen in the 1960s. Why such low mortgage interest rates? Why such low mortgage rates in the face of large balance-of-payments debts, rising oil costs, huge federal deficits, chaos on Wall Street and foreclosures in every state? This low rate is mystifying many financial analysts, especially as it is coupled with record high foreclosures.

Loan applications are up nearly 20% compared with last year, according to a report from the Mortgage Bankers Association. Could this be investors snapping up the foreclosures, or regular buyers taking advantage of the low rates? This is a puzzle, but prospective buyers just have to jump on the bandwagon, ours is not to reason why! Especially if we need a mortgage! So what about a fixed rate mortgage, what are the snags?

The obvious one that has to be addressed is that, paradoxically, mortgage rates have been spiraling downwards. Once we are locked into a fixed rate mortgage, we can no longer take advantage of a (possibly) dropping interest rate.

Therefore the big snag is that we could end up paying more than we need to. But the big advantage is that we will not suddenly have to accept a jump in rates that will mean that our repayments have zoomed out of our range.

The temptation therefore, is to take a variable mortgage rate and see if it goes down further. If you go this route, make sure that you can organize a quick change to a fixed mortgage and read the small print.

Sometimes the downside about a variable mortgage with a change option is this: the fixed rate that you can switch to can be a higher rate than a straight fixed rate mortgage.

As with many things in life, the type of mortgage we choose will probably reflect our personality. If we are optimists, or if we have a daring side to our nature, we may wait before we lock in.

If we are not the gambling type, and we really need to know that we can live within our budget in order to have peace of mind, then we will probably choose to lock in straightaway.

Shop Around For Your Mortgage

When we visit our bank to ask about mortgages, we get advice based on our own particular financial case, and usually we are offered a number of mortgage suggestions. Many of us inevitably feel that the bank has taken a lot of trouble and that we have to pick one of these choices offered to us.

If we are Mr Joe Average, then there will no doubt be adequate mortgage solutions at the bank. But, in fact, the bank has a lot less scope in the choice of mortgages that it can offer you, than other institutions. If you either want something a little different, or your personal details are a little different, you may benefit from shopping around.

A mortgage broker will have many alternative choices at his fingertips. In many cases, you may not realize that some scenarios even exist!

For instance, what if you are a thinking of buying an older home, and need extra renovation cash? Lets say for example the only house you can find that you like needs $20,000 in repairs. There is a mortgage to accommodate this. This type of mortgage is called a “purchase plus improvements” mortgage.

The title is self-explanatory: Once you find the home you want to buy, you decide which repairs or improvements are required. Now you have to act quickly to get written estimates of all the repairs you want included in the mortgage. If you plan on doing the work yourself, you will still need written estimates for the materials. Often a home improvement depot will provide you with these. You have to do all of this very quickly, before your mortgage approval process deadline, so be ready – know where you are going to shop for the materials and the written quotes before the time comes.

The repayment part of the improvement loan works like this: you apply for the mortgage along with the quotes for the improvements. Also, if you are putting 5% down on your house, you will have to cover a 5% down payment on the cost of your repairs as well.

The lender will only reimburse you for the work, after it is completed, so this is the tricky bit. You will need the money up front to pay for the materials in order to do the work. Hopefully, you have a credit card that might work for the short term. If you are hiring someone to work for you, make sure they know that their payment will be at the finish of the work. And, after an inspection has been made by the lender's appraiser.

If you are lucky enough to already have equity in your home (maybe you have had the house for a few years), a mortgage broker can also help you with an equity mortgage.

So as you can see, there are a couple of different options available to finance a renovation depending on whether you have equity, or whether you want to renovate or update a house you are in the process of buying to live in. There are other options as well, so it is advisable to talk to a mortgage specialist before planning a renovation or house purchase.

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.

Which Mortgage Part 1

There has been a large amount of media coverage relating to mortgages and more specifically the recent increase in interest rates. There are so many different types of mortgages that it could get confusing, but several of the most popular ones can be DE-mystified.

Fixed rate mortgage:

This gives the borrower a feeling of stability as the payment amount will stay exactly the same throughout the whole period of the mortgage time. Most fixed terms are for five years or for three years, but in fact they are available for six months, and up to ten years. A fixed rate mortgage will allow for more efficient budgeting, as regardless of the increases (or decreases) in the interest rate, they will remain locked in for the duration. Some contracts allow for the possibility of changing, but there is often a large penalty payment for borrowers who want to alter the existing contract. Fixed rate mortgages are the winners if mortgage rates look like they will go up fairly significantly.

Reverse Mortgages:

This is a loan that allows you to access some of the equity that you have accrued in your home. It really isn't a mortgage because there are no immediate repayments. When agreed, you, or on your death your estate, will repay on the cash advances plus the interest. The owner of the house will still be responsible for repairs and property taxes etc. Many older people opt for this, so that they can remain in their own home and leave it to the children, but also have some spending money for themselves.

HUD Mortgages:

HUD stands for the Department of Housing and Urban Development. Part of HUD's mandate appears to sponsor loans to community and faith based organizations. There are a variety of programs offered, and if you think you can squeeze into this mandate check out the HUD web site.

Assumable Mortgage:

Here you will be taking over the mortgage that the previous owner already has in place on the house that you are planning to buy. This assumable mortgage is often a competitive interest rate (or else you do not want it), but it may require a large down payment. This will be because the previous owner has paid some of the balance off and usually the property has also increased in value. Beware of the odd clause that you would not wish to adopt - you will have to take the mortgage as is. This means that if you wanted to make a yearly lump sum payment off your principal and the option is not there, that is tough luck!

In spite of the low interest rate that an assumable mortgage often carries, it is usually a bad financial move to take out a second mortgage in order to accommodate the assumable mortgage. If it is a very low rate, then you can do the math, but normal advice would be that if you can't find the higher down payment, then scrap it and negotiate a whole new mortgage

Prefer Right Mortgage Broker

Choosing right mortgage broker for the business enables the customer to be successful in his business. The customer should have to make smart selection of mortgage brokers using proper techniques and tools. The client is required to make investigation regarding various kinds of mortgage brokers available in the market. The service of credit agent is required for the customer, because people required finance without schedules for their uncertainty. The service offered by financial dealer will be differed from each of the mortgage broker providing their service.

It is essential for the mortgage broker to get through his commitments and professional carefully to handle the complex problem at the time of providing advice. With regards to the experience and knowledge gained from the business, the consultant is required to provide adequate suggestion to the client. Mainly the credit experts should have to meet the requirements of the clients initially and also provide tips related to payment of mortgage to the mortgage company.

When a person is interested in purchasing any asset or real property, then he goes for mortgage to negotiate the transaction. Mortgage broker is a right person who will be providing service along with advice. They provide essential and more required advice to the clients who are intended to negotiate their business transaction in successful and legal manner. Most of the people obtain the advice of financial dealer is to choose the best debt policies existing and to overcome the problematic debt. The prices charged by the advisor will be prominent and reasonable.

Selecting a financial advisor is not the difficult task. But still more number of customers finds it difficult to select the correct credit debt consultant for their business. Debt consultants are special people who work specially for customers who requires mortgage for the business. They provide advice and other services with regards to the statute, rules and ordinance of the state and federal government of the appropriate state. Even specialized company is also available in the market to help the client in choosing the best mortgage broker in the state.

Most of the clients choose wrong mortgage advises and they face the difficulties in payment of debt. Generally, mortgage broker should lead and advice the client in loan package, selection of mortgage lender, payment of loan schedule and for many other cases. Getting through the performance, service and advice of the broker will help the client to choose the best finance broker of the state. So, it is the responsibility of the client to choose correct mortgage broker and also it is the obligation of the credit advisor to provide excellent performance to his client.

Accelerate the pace of life with reverse mortgage lender

Money plays a crucial role in building and strengthening lives. However, the other true fact that is associated with life is the golden age and believe it or not, it is one of the most testing periods of one’s life and God forbid, if one suffers from the financial woes in this age then it is a set back for him. It also means that life can play a cruel role even though one has always led a life of a king.

However, if you are a senior citizen and are in a dire need of good amount of money, then reverse mortgage lender is a final destination and perhaps a ray of hope for you. Thus, do not hesitate and approach a lender for a secured and wealthy future.

The money offered by the reverse mortgage lender can be utilized for many purposes like health care, house renovation, vacation, and automobile or for various other personal needs. Therefore, applying for a reverse mortgage from a lender is an excellent idea to accelerate the pace of life smoothly. Senior citizens residing anywhere in the United States can rely upon reverse mortgage for intact and reliable future. However, you have to fulfill some basic but significant information to the lender for a secured life. These terms and conditions are easy to follow and fill.

All that a senior citizen has to do for a reverse mortgage loan is that he or she should be above 62 years and own a high valued residential asset. However, the borrower need not pay the loan amount till the time he or she is alive, this way the borrower is able to retain the house also. In case, the house is sold or the person residing in it moves to somewhere else, then only the property will be mortgaged by the lender.

Well, it has been noticed that not many elder citizens are aware of the terms and conditions related to reverse mortgages. This is the reason that many of the senior citizens turn toward reverse mortgage lender for a better and comprehensive understanding of the terms. However, the best thing about a lender is that the borrower does not have to pay any interest on the taken loan, as it will be deducted from the realized cost of the property or a house.

Normally, repayment period of regular mortgage is 30 years, but reverse mortgage loan can be repaid in a form of a monthly installment. Therefore, reverse mortgage lender assures senior citizens with instant finance and that too in a lesser period of time in comparison to other regular mortgages. He understands the intensity of the need, hence, if you are planning to go for reverse mortgage then do a detailed market research before making any decision.

In fact, involve the lender and compare as many plans as you can before settling for any. It is advisable to choose a plan according to the requirement, for instance, you need a loan for home repairing then the best option will be the single purpose loan from reverse mortgage lender. And lastly thoroughly read all terms and conditions to avoid frauds.

Easier Solutions For Home Owners

Easier Solutions For Home Owners

Imagine suing Wall Street because your mortgage company had financed you for a loan that you couldn't repay! It sounds unreal, but a new bill proposed would allow just that! The mere fact that there is even such a bill being thought of could serve as a warning to all of us that care must be taken, as not all financial institutions are not equal!

While this proposed bill may get opposition from Wall Street and mortgage companies, if passed it will make it easier for struggling home owners to pursue other financial options for their home.

It will be easier for anyone who wants to pay down their mortgage, or who wants to try and re-finance their home, if the new proposals by the Senate Banking Committee are accepted.

The chairman of the Senate Banking Committee, Christopher J. DOD is introducing this bill in the hope that it will restrict certain lending practices. It was prompted by the surge in default rates on mortgages made to people with poor credit rating.

One of the advantages to this bill for homeowners is that it will legislate for mortgage brokers to act in the interest of the borrowers. This will discourage the practice of mortgage lenders to pay mortgage brokers a larger commission if the property owner takes out a loan at a higher cost than necessary. The proposals are not expected to take much effect until early next year, giving plenty of time for the opposing factions to organize themselves.

Mr. Dode's bill would also ban such practices as subjecting borrowers to prepayment penalties. Having to make these penalty payments hinders borrowers from trying to refinance or pay off their loans early. Sometimes the penalty written into the loan contract can be as high as three months extra mortgage fees or a lump sum such as $3000.00. Naturally this discourages change to someone who is already struggling financially.

One advantage of this bill is that it has given extra understanding to the ordinary house buyer. Whether it gets through or not, it has brought awareness for the type of questions that need to be asked when looking for financing.

It will be a struggle to get this type of bill through, but it is gratifying to know that in this case, the Senate Banking Committee are backing the man on the street!