Mortgage And Loan Info News

Todays Mortgage Market

noreply@blogger.com (news admin) — Tue, 16 Dec 2008 17:45:00 +0000

by Peter White

Normal High Street Type Lending - Even though the current crisis stemmed from sub prime mortgages criteria and products have changed dramatic lay in this sector as well, borrowers will find it much harder to get certain type of products that they were once used to obtaining.

Gone are the days of 100% mortgages the minimum deposit that is in reality available is at least 10% though many lenders will start at 15% deposit and if its a flat that is the property in question then 25% deposit is much more realistic, also in the past lenders may have fast tracked an application which means if your credit score was high they may not have asked for proof of income however this lending is now much harder to come by. Borrowers will also face much tighter restrictions on the income multipliers lenders will use as once five times a salary could be used to obtain high levels of borrowing this has now severely decreased.

Sub Prime Lending (Poor Credit Mortgages) - This type of lending is quite simply practically non-existent with the lenders (those who are left in the market) restricting their products to match only a few applicants, this of course is very bad news for sub prime clients coming to an end of their current deals as they have very little choice other than to go on the lenders standard variable rate.

Self Certification Mortgages (No Proof of Income Mortgages) - Again this market sector has suffered with criteria being severely restricted both with deposit required and overall suitability, once there were available to those with poor credit and employed applicants however neither of these type of applicants will now be accepted on this type of lending.

But to let Mortgages - Yet again an overall tightening on lending criteria sub prime borrowers are no longer welcome with the 'good old days' of only 10% deposit long gone these days the minimum deposit is 25%. In the past the main basis of the lending decision was on the rental income to be received however now the main income of the applicant is also likely to be taken into consideration when considering any application. Lenders in the past were mainly concerned with the amount of lending they had with a particular borrower but now they will be very wary of any borrower with a large buy to let portfolio as in these days of falling house prices they need to limit their risk exposure.

Self Build Mortgages - Self Build Mortgages have also suffered as a result of this current situation whilst they rarely tended to deal with those with poor credit there were a few self cert deals available but now there are just a few remaining, it is also virtually impossible to obtain a mortgage with no redemption penalty which was very useful as when the new build property was finished you could have then remortgaged to amore traditional mortgage.

In short because of todays turbulent markets you would always be best advised to seek the professional advice of a whole of market mortgage broker to guide you through the pitfalls of todays volatile markets.

http://www.ownbuild.co.uk/buy-to-let-mortgages.htm

Mortgage Loan Overview

noreply@blogger.com (news admin) — Mon, 10 Nov 2008 22:41:00 +0000

by mortgage box

All mortgage pledges have an interest rate in applied to the amount of money you borrowed and havent yet paid back. You pay this interest in monthly installments. In addition to interest, your payment includes an extra amount to pay back the principal. Therefore, the principal balance is reduced with each payment. This means that the interest payment is also reduced, as time passes.

Since the total payment remains constant, more money is applied to principal reduction as the loan ages. The payment schedule is designed so that the loan will be completely paid off at the end of the term even though few mortgage loans survive their full term. Most are ended when the home is sold or refinanced several years after the loan was originated. Definition of a few key terms are provided below to help you better understand mortgage financing. ( A more extensive glossary begins on other post)

Amortization is the process of paying down the principal of the loan. If the interest rate on the loan is fixed, an amortizing schedule for the full term can be prepared when the loan is originated.

Fixed-rate loan have the same interest rate applied over the entire term. The combined monthly payment for principal and interest is unchanged.

Adjustable-rate mortgages (ARMs) provided for adjustment to he interest rare at specified intervals. When the rate is adjusted, the principal and interest payment may change.

A balloon payment occurs when the term of the loan is shorter than the full amortization term. Most balloon payment loans are made by nonprofessional lenders, such as seller who provide financing to induce a sale. They want to limit the life of the loan without making monthly payments prohibitively high. When a balloon payment becomes due, the borrower will have to refinance the loan.

Refinancing is the process of replacing the current financing with a new loan or set of loans. This may involve replacing the original loan with one of the same amount, increasing the amount of the loan, or replacing several mortgages with one mortgage loan.

Loan assumption is the process of allowing a later home buyer to take over the existing loan, possibly substituting for the seller. Many loans have due-on-sale provisions that prevent assumptions. Loans that dont are called assumable mortgages.

An escrow account is required by most lenders. The account provides fund to pay for hazard insurance and property taxes, the borrower makes a deposit in the account with each monthly payment (the total payment is sometimes called PITI, for principal, interest, taxes, and insurance). Since insurance premiums and taxes may vary, the monthly payment may change over time even for fixed rated loans.

A loan commitment indicates the lenders intention to provide a loan with a specified terms. The lenders has to process the loan application before the loan is approved, but a rate commitment may by granted when you apply. This state that, if the loan is approved, it will be for a certain amount and have certain terms.

A loan closing, also called settlement, marks the time when the money is provided (usually coinciding with the closing of the sale) and interest starts to accrue. Payments are often timed to be paid at the beginning of the month and include interest that has accrued during the previous month. Interest accruing between the closing and the end of the month is paid at the closing. http://mortgagebox.blogspot.com/2008/12/mortgage-loan-overview.html

mortgagebox.blogspot.com is reliable guide for home buyers, it shows you how to get a mortgage to purchase a home, a second mortgage or home improvement loan and much more

Adjustable Rate Mortgage Service

noreply@blogger.com (news admin) — Wed, 22 Oct 2008 16:33:00 +0000

by Sadhana Dhanyal

Introductory rate - Lenders usually offer a low introductory rate for a specified period of time at the beginning of the mortgage. When this period ends, the rate resets to reflect the annual percentage rate (APR) as determined by the mortgage agreement. Adjustable Rate Mortgage service can help a borrower make a wise decision.

Adjustment period - The adjustment period is the time between rate changes. For instance a 1-year ARM will have its interest rate and monthly payment changed once every twelve months.

An adjustable rate mortgages, generally has a fixed period of time where the rate is lower than traditional 15 - 40 year fixed rate products. After completion of the initial fixed-rate period, the rate begins to adjust up or down based upon the value of an assigned index. If a borrower is looking for a low initial payment and only plan to be in a home for ten years or less, an adjustable rate mortgage might be a good decision.

Commercial mortgage loan is a type of loan which can be availed by those who own a shop, factory, warehouse office farm or hotel or any other commercial property. Such people can get a favourable deal on these loans. Anyone can make use of these loans. The lenders dont take into consideration a poor credit rating, CCJs or defaults of a borrower. Seeking help from a team of professional experts can help immensely. Many of the Commercial mortgage lenders only accept business through registered intermediaries & packagers.

Borrowers who need money to start a small business or expand your business can do so with these loans. It is the most flexible and affordable finance solution. In fact, it is the right way to raise finance to start up your business firm, expand your existing business, purchase of machinery for industrial units or a land to set up a plant, move your business from one location to another.

Following some simple steps can help a borrower get a suitable commercial mortgage loan:

Find property - A borrower needs to have a building or land in mind before availing this kind of loan. Those who wish to buy a rental property need to have tenants lined up to show the property will be cash flow positive.

Look for a lender - Once you understand your financial commitment, approach a lender. An experienced lender can guide a borrower to get a loan at a reasonable rate of interest.

Expert Author, For further information visit: Adjustable Rate Mortgage

And: Commercial mortgage loan

How to Change Your Driver Seat? Tips on Low Interest Auto Loan

noreply@blogger.com (news admin) — Fri, 19 Sep 2008 19:28:00 +0000

by Faster Auto Loan

Many institutions provide low interest auto loans to extend the loan facility to people from all classes. What stands important here is how to get a low interest deal on an auto loan? You must also check for the financiers prime lending rate. PLRs are determined on the basis of many factors. The financier will have a difference in the PLR and the lending rate to the customer. You benefit if the lending rate is closer to the PLR.

Also the choice of a car greatly matters in determining the interest rates. If its a used car, the condition of the car is adjudged and the interest rate will tend to be higher, as compared to that of a new car or a car in good condition. Another tip would be to get your loan financed through a bank of financial institution. If your auto dealer is enticing you with a so-called great deal through his dealership, beware of the loopholes there.

Read minutely through the lines of such a deal, before you end up taking one. Your credit profile also plays the protagonist in clinching a low interest auto loan for you. Better your profile, lesser is the interest rate that you can bargain on your loan. There are ample of online loan financiers to check for before you just walk into a car showroom.

Try and figure out who can get you the lowest rate deal. Be sure you know the market rates and the current market conditions even before you let any smart sales guy speak to you for the loan. You can only adjudge if the information he is providing is correct, when you thoroughly know the same. Make the use of Internet for your best. You have plenty of websites out there, which provide information on the auto loan interest rates on a daily basis. You can check out the charts as well for yourself for finding out the best rates.

Also, you can submit your request online to these sites, which in turn pass on this information to lending institutions. Also, they provide you 3 best quotes and you who will decide on the best quote. Remember that you have to shop around extensively before you hard lock on the lowest rate deal. Interest rates you get greatly depend on your knowledge, research and your credit profile.

Car loans these days are not too difficult to secure. However, the case was different few years back with all the traditional paper work taking days or months together to get an approval. With the age of instant approval of the used auto loans now, people throng to get a loan approved today so that tomorrow they can drive in their own car. Here, you can change your driver seat with low interest rate auto loan

Same Day Loans: Easily Meet Short Term Needs

noreply@blogger.com (news admin) — Fri, 08 Aug 2008 15:38:00 +0000

by Tess Ocean

Same day loans are short term loans that offer small cash assistance to its borrowers. An amount ranging from £100-£1500 is offered as same day loans. The loan amount is offered for a small duration of 2-4 weeks. The repayment date is generally scheduled on your next payday so that the repayment can be met easily.

Same day loans carry slightly higher interest rates as they are offered for short term. The loan amount can be used for various purposes like:-

Paying electricity bills
Utility bills
Medical expenses
Meeting family emergency
Car repair cost

Same day loans have a significant feature of no credit check. This makes all types of borrowers eligible for same day loans. Bad creditors having bad credit like arrears, defaults, late payments, CCJs, IVA and bankruptcy can also approach same day loans.

A borrower must fulfill the following conditions to get the loan amount approved quickly. The borrower must be:-

18 years or above
have a current active bank account
regularly employed with minimum salary of £1000

Same day loans can be applied online and offline. Applying online is simple and hassle free. Also the tough market competition among lenders allows you to get great deal. You can do so by viewing various loan quotes, comparing them and selecting the one that fits your requirements.

Same day loans dont require lengthy formalities to be fulfilled before applying. No credit check, no documentation and no collateral evaluation are some significant features that make the process fast and simple. Also the loan amount is transferred to your bank account within 24 hours of application approval and thus providing you with urgent cash to meet up your requirements.

Tess Ocean has been associated with Payday Loans In The UK. Having completed her Masters in Finance from Yale University, School of Management. She provide useful advice through her articles that have been found very useful. To find Same day loans, payday loans, no fax payday loans visit http://www.paydayloansintheuk.co.uk/

Mortgage Broker Strategies 101: Back to Basics

noreply@blogger.com (news admin) — Sun, 27 Jul 2008 21:07:00 +0000

by Shane Brooks

Mortgage Broker strategies are important as you very well know, but have you considered all the marketing you can do on a day to day basis. This is not the type of marketing where you put an ad in the paper or hire a call center. These are the little things you can do to make sure that your mortgage business continues to grow. These are the things that cost very little but are huge in terms of keeping business as well as high customer satisfaction.

First Tip

Whether you are sending out a letter, a card, or even an ad for the paper, make sure you use effective writing techniques. First among these is to make sure that you have a headline on everything you do. Whether people realize it or not, the headline grabs the reader. Once they see a headline, they are way more likely to read the rest of the piece of text. Always make sure that the headline has a benefit in it so that your client has a reason to keep reading.

Second Tip

Keep writing! For many people, the thank you note has raised their income by large percentages. Every person, customer or friend, loves to show appreciation. They like to know that you are happy for them and that you realize what they have done for you. When you thank them you are connecting with them and helping to cement a future relationship.

If you make it a point to write thank you notes every day, you can really help your return business. Thank people who didn't even work with you on a mortgage. You can thank those who did something for you: your mechanic, mailman, or even the teacher your kid has at school. Whatever you do, just make sure you send those thank you notes. It will definitely pay off for you.

Third Tip

Be a braggart. When you do something for a client, make sure you tell them. You want to make yourself valuable to the client for a couple of reasons: so that he or she understands why you are getting paid, and so that he or she would refer you to someone else in the future. This can be very valuable down the road. Even though bragging seems harsh normally, so be humble and just point out the things you accomplished because in business you want to be valued.

Fourth Tip

This is a strange one for many, but make sure that if you have a phone person, that he or she always suggests that you are with a client. If he or she says 'I'm sorry but he is working with a customer right now, give me one second to see if he can take a call right now'.

This allows you to look busy and confirms that you are worth the effort to work with. It also gives you an out if you don't want to talk with a certain person for one reason or another.

Last Tip

Though there is an unlimited amount of advice that could be given about mortgage marketing techniques, there are some that are certainly more important. One of those is this: never stop marketing. Even if you are the best mortgage broker that ever walked the planet, if you cannot market then it won't matter. Nobody will know you are great, you will have no business to close, and you will not make any money.

Above everything else, mortgage is about getting clients in your door. The rest is just paperwork and learning the ropes of the loan biz. With that in mind, there is one other thing you should consider:

Form realtor partnerships whenever you can. If you can find a program that will help you hook up with realtors the right way, you should jump on it. By giving yourself that extra advantage, you are enabling your business to grow without making yourself do more work.

With a partnership with the right realtor, you may find yourself with a large number of renters turned buyers on your desk each day. What a great way to run the mortgage business huh?

So no matter what you do, implement a new marketing tip each day. Try to send out thank you notes, thank people in person, look for times to brag about your self, and even try to keep marketing. Above all, find ways to form those partnerships. Getting hooked up with a realtor and with changing renters into buyers, you will grow your business faster than you ever imagined.

Shane Brooks is a hard nosed business man that doesn't take kindly to competition. His hard hitting no nonsense marketing techniques constantly makes waves for his competitors regardless of the market he is focusing on. Shane doesn't mind stepping on the toes of his competitors or ruffeling a a few feathers of the so-called gurus in order to level the playing field. For more info please visit http://www.MortgageSuccessBlueprint.com

Comparing Fixed Rate, Hybrid Arm, Pay Option Arm And Hybrid Option Arm Mortgages

noreply@blogger.com (news admin) — Sat, 19 Jul 2008 20:54:00 +0000

by Tristan Hunt

With all of the options available to homeowners today, adjustable rate financing is a common topic of discussion at our offices. The 3 most popular Adjustable Rate Mortgage (ARM) types today are Hybrid ARMs, Option ARMs, and Hybrid Option ARMs. Sound pretty similar don't they? There are similarities, that's for sure, but there are differences as well.

Hybrid ARMs

Hybrid ARMs are a cross between a traditional fixed rate mortgage and a classic ARM. They generally come in varieties indicating how long they are fixed for, and how often they adjust thereafter. For example, a 3/1 ARM will have a fixed rate for the first 3 years, and can then adjust once every year thereafter. A 2/1 would be fixed for years and adjust every year thereafter, a 5/1 fixed for five years, 7/1 for seven and a 10/1 for ten.

All adjustable rate mortgages are calculated using an index, such as the MTA, the COFI, the COSI or the LIBOR. MTA and LIBOR are most popular. These rates indicate a basic borrowing cost of capital for the lender, this is how much it costs them to lend money in a perfect world. They also have a margin, which is like a risk premium, their profit for making the loan.

Hybrid ARMs have basic characteristics including:

1. Start Rate which remains fixed for X amount of time, so a 3/1 lasts 3 years and adjusts every year thereafter

2. Adjustment Cap Structure which dictates how much the rate can change when the loan begins adjusting. A 5/1/5 adj. cap structure means that the 1st time the rate adjusts it can go up or down 5 points max, any subsequent adjustments are limited to 1 point up or down, and the rate can never go up or down more than five points.

3. Floor: a rate which the note rate or fully indexed rate can never be lower than. (usually the initial fully indexed rate)

4. Ceiling: a rate which the note rate or fully indexed rate can never go higher than (usually 9.95 to 11.95 depending on lender and index)

The minimum payment on a 100,000 dollar regular Hybrid ARM with a 7% rate would be a bit over 665 dollars, and borrowers of all credit levels qualify for Hybrid ARM type mortgages.

One Month Option ARM

Option ARMs are one of the most popular loan types in today's market, and for good reason. Option ARMs are like regular ARMs, but they have 4 payment options instead of just the one fully amortized payment option on a regular mortgage. The minimum payment option is the main point of attraction for majority of the Option ARM customers in the USA today, because it allows them to make smaller payments when cash is tight. The minimum payment for the initial period of the loan for 100,000 dollars would be 322 dollars, versus 665 dollars for the full payment on a conventional mortgage. A great option for the self employed, the small business owner.

On 1 month option arms, they adjust every month after the initial period, so if the initial period is 6 months or 1 year, then every month therafter the rate adjusts. There are 6 month and 1 year option arms wherein the payment adjusts every 6 months or 1 year thereafter as well, however 1 mo arms are most popular. They have additional features in addition to standard Hybrid ARMs:

6. A Minimum Payment: a payment which like a credit card allows you to stay current on the mortgage without paying the full amount of interest due, referred to as deferring interest

7. A Minimum Payment Adjustment Cap: the maximum amount that the minimum payment AMOUNT can increase or decrease in a given period. Typically 7.5%. So if your minimum payment is 1000 dollars, then in the next period it can not go higher than 1075 dollars.

8. a Negative Amortization Cap: This is the maximum the loan balance is allowed to increase due to deferral of interest (making the minimum payment only) before the loan is re-cast and the minimum payment option goes away. Depending on state and LTV this is 110% to 120% of the loan amount.

Option ARM Example: On a $100,000 Option ARM with a 1% start rate, a base or index rate of 4% and a margin of 4%,

- Minimum Payment = 322
- Interest Only = 667
- Deferred Int. = 345 (IO minus Min Pay)
- 1 Year Neg. Am. = 4140
- Recast Balance = 115000 (assuming 115% neg-am cap)
- Months to Recast= 43 (assuming you only make the minimum payment)

When a regular option arm exceeds its negative amortization cap and recasts (typically in 3 and half to 4 years if you're only making the minimum payment) the minimum payment option goes away, and you are left with the fully amortizing payment, although some products are beginning to extend the availability of the interest only option for up to 10 years. Because of the incredible flexibility of these loans, they are limited to higher credit borrowers (generally a FICO score of 660 is required, however certain programs are available for borrowers with FICOs of 600 or better).

Hybrid Option ARMs or Fixed Rate Option ARMs

Hybrid Option ARMs combine some the best features of Hybrid ARMs, such as medium term fixed rates, with the best aspects of Option ARMs, such as low minimum payments, while solving a lot of the problems with both for the average borrower. They are most popular with homeowners who want the stability of a fixed rate mortgage but the option to make very, very low minimum payments, and are considered an ideal compromise between 'safety' and 'flexibility' in the mortgage world.

Hybrid Option ARMs are generally based on normal Hybrid ARMs, in that their initial period is usually 3/1, 5/1, 7/1 or 10/1 meaning 3, 5, 7 or 10 years where the rate and minimum payment stays fixed, and 1 adjustment per year afterwards.

However they have Option ARM like features such as a minimum payment, minimum payment adjustment cap, and neg am cap.

Using the above example the same loan amount in a typical hybrid option arm package

- Minimum Payment = 449 (assuming 3.5%)
- Interest Only = 583
- Deferred Int. = 134 (1/3 of regular option arm)
- 1 Year Neg. Am. = 1608
- Recast Balance = 115000 (assuming 115% neg-am cap)
- Months to Recast= 112 (assuming you only make the minimum payment)

Also, when hybrid option arms recast, most of them allow for an Interest Only option instead of forcing the borrower into a fully amortized payment they might not be able to afford. Along with the long recast timeframes and the fixed rates for the initial period, this substantially reduces payment shock on recast.

Wrapping Up

So we've discussed Hybrid ARMS, Option ARMs, and Hybrid Option ARMs, and will provide a variety of real world examples and detailed treatment of relevant topics in other articles in this series. And as always we welcome your questions and calls.

Tristan Hunt is a seasoned financial professional with a wealth of experience in the mortgage industry, advising clients on debt consolidation, refinancing & investor loans. Phone: 800-515-8443 Website: http://www.RefinanceOne.net.

Rev Up Financially With Lower Equity Home Loan Mortgage Rate

noreply@blogger.com (news admin) — Wed, 21 May 2008 13:50:00 +0000

by Rony Walker

Vroom! Vroom! Nestled in the driver's seat, you feel like you are at home in your favorite recliner. With a firm grip at 10:00 and 2:00 on the steering wheel, you bolt down the German Autobahn with no other cars in sight. The wind whips through your hair as sunrays melt off your cool shades. You glance over at that someone special in the passenger's seat and shout out, 'It doesn't get any better than this!' Suddenly, the sound of a throat being cleared causes your eyelids to sheepishly rise. The voice came from the salesman 'Honest Al,' who is sporting a green plaid suit that was the latest fashion...30 years ago! It hits you that you are in a car showroom. You ask Al about the lowest price he can offer you. After he replies, your jaw hits the car floor. If he had given you an equity home loan mortgage rate at relatively the same value, the result would have been the same.

Good, Better, Best

A gold nugget of shopping wisdom is that you can always find a better price. You could find a better price at a car auction than at a used car lot. You could find a better price in a clothing brand's factory outlet than at a department store's seasonal sale. And you could find a better equity home loan mortgage rate on the Internet than at a fly-by-night mortgage lender. Although it takes some time and effort to find the best mortgage interest rate, it is definitely worthwhile. Except for those who can afford skyscrapers and corporations, houses are the biggest investment for most people. So, it pays to spend some extra time and energy to find the lowest equity home loan mortgage rate available.

A Date with Rates

Life would be easier if you could just take out a mortgage and always pay a standard equity home loan mortgage rate. But the system never works that way. Banks and construction societies are constantly updating and broadening the types of mortgages that they offer. This constantly keeps the market competitive. One of two significant aspects of mortgages is how you pay the interest on the capital. Some examples include:

* Fixed rates, in which the rate is fixed for the timeframe that is agreed upon.
* Variable rates let you pay the current rate, on your loan. The mortgage rate usually changes after interest rate changes are calculated for a year. The mortgage rate can also change each time interest rates change.
* Discounted rates apply over a set period. This program offers the borrower a price cut on the lender's variable rate. The rate paid changes according to changes in the variable rate.
* Capped rates are fixed, but you pay the lower rate in the case that rates fall.

An Engine's Rate

When searching for the best equity home loan mortgage rate from these various types, you can do the footwork yourself by using the search function at websites with equity home loan mortgage rates. Usually the search engine will request that you supply information, such as your credit profile, your home (family) description, and the type of loan. Then after clicking on the search button...BOOM! You have the info you need.

When shopping for clothing, computers, or cars, you can always find a better price. Finding the lowest equity home loan mortgage rate is no different. Speed off and find the best one today!

Scouting for a good equity home loan mortgage rate ( http://www.whataboutloans.com/mortgage/mortgage-rates.html )? See what mortgage loan providers and loans ( http://www.whataboutloans.com/mortgage/mortgage-lender.html ) can do for you when you visit our site now!

Investment Property Mortgage Rate: Some Key Considerations To Note

noreply@blogger.com (news admin) — Wed, 12 Mar 2008 18:47:00 +0000

by Joel Teo

Investment property mortgage rate is one of the most decisive factors when choosing a mortgage. Typically, the lower the interest rate, the better the mortgage. But the assessment of viability of a mortgage really depends on the type of mortgage and other loan terms. It is crucial that you shop around a bit to find a mortgage and mortgage rate that suits your requirements. A mortgage can be obtained from reputable banks, financial institutions, credit unions, and even private mortgage brokers, who would find the best rate possible for you.

Investment property mortgage rate can be classified into three major types: fixed-rate, adjustable-rate and balloon or reset.

Fixed-rate mortgage is a mortgage in which your interest rate and monthly payments are fixed throughout the life of the mortgage. There are two major types of fixed-rate mortgages based on the duration of the mortgage – 30-year & 15-year. The major advantage of a fixed-rate mortgage is that the interest rate and the monthly payments don’t increase with an increase in market rates. However, this can sometimes work against you, simply because the mortgage interest rate remains fixed even if the market rates are down.

Adjustable-rate mortgage (ARM) is a mortgage that has a variable investment property mortgage rate. ARMs usually start with a lower interest rate and lower monthly payments – this contributes to their wide popularity. However, it is imperative that you be aware of the specifics of an adjustable-rate mortgage, including the adjustment periods; indexes and margins; caps, ceilings and floors; and the number system.

Balloon or reset mortgage is based on a 30-year amortization schedule, with a 5-year or 7-year term. At the end of the term, you have an option to either pay off the remaining principal, or reset the mortgage at the current market rates. Therefore, you have the benefit of lower monthly payments, but you are required to repay the complete mortgage by the end of the specified term.

With several types available, you might be perplexed as to what type of investment property mortgage rate should you choose. The following few points will elucidate this aspect.

A fixed-rate mortgage is perhaps the best option if you plan to own the investment property for more than 5 years. But if you wish to sell the property earlier, or you want to start with a lower monthly payment, an adjustable-rate mortgage seems like an apt choice. And if you believe that your income will increase over time, and you can pay off the whole mortgage within 5 or 7 years, then you can go for a balloon or reset mortgage.

Copyright © 2006 Joel Teo. All rights reserved.

Joel Teo writes on various financial topics relating to Ahwatukee Real Estate Investment. Signup for his free online Real Estate Investing newsletter today and gain access to the “Six Day Real Estate Investment Profits Course” now at http://www.realestateinvestment101.info/Ahwatukee.html

The Adjustable Rate Mortgage as Long Term Loan

noreply@blogger.com (news admin) — Sat, 15 Dec 2007 16:43:00 +0000

by Stefano Sandano

Adjustable rate mortgages are long term mortgage loans with variable interest rates. They have a schedule of principal and interest payments just like a fixed mortgage, but the interest rate may be adjusted at regular intervals during the term of the loan. Therefore, the monthly payments are likely to move up and down as the rate is adjusted.

An ARM is an important financing alternative for first and second mortgages. In addition, many home equity loans are structured as adjustable rate mortgages.

In addition to the contract interest rate, discount points, loan to value ratio, and maturity, ARMs have their own unique set of terms:

- Adjustment Interval: most ARMs are adjusted at regular intervals stated in the mortgage contract. In between these intervals, the interest rate on the loan is constant. The shorter the interval, the more sensitive the loan is to changing interest rates. Most first ARMs are adjusted annually

- Initial Interest Rate: all ARMs have an interest rate that is fixed until the first adjustment date. Sometimes this rate is set low to attract borrowers, called a teaser rate. Therefore, the initial interest rate does not indicate the long term cost of the loan.

- Convertibility: some ARMs provide the borrower with the option to convert to a fixed rate loan during the loan term.

Because your payments almost always rise later on, some detractors call it a compact with the devil. Nonetheless, an Arm in some markets can cut your initial payments by as much as a third. That can mean the difference between being able to purchase and being left out in the cold.

The best way to understand an ARM is to compare it to a fixed-rate mortgage. With a fixed-rate mortgage you always know where you stand. Your interest rate and your monthly payment remain constant for the life of the loan whether it is for 3 years or 30 years.

With an ARM, it’s quite different. Your interest rate fluctuates, it moves up and down depending on market conditions. Your monthly payment, which reflects the interest rate, likewise can vary up or down over the life of the loan.

Given a choice between a mortgage where you never know what your monthly payment is going to be, and a mortgage where the monthly payment is fixed, any reasonable person would opt for the fixed-rate mortgage. The real key to deciding whether or not to get an ARM is how long the teaser rate lasts. If you get an initial low interest rate and payment for just 1 month, and then it goes up, you have accomplished almost anything.

On the other hand, if the low monthly payment lasts for several years, it can be just the right thing, particularly if you sell or refinance when the teaser expires. In fact you want the teaser to be for as long as possible so you get a lower monthly payment than you otherwise would get. Second, you hope that once the teaser evaporates and your interest rate and payment go up, you can refinance to another ARM with another low teaser.

Stefano Sandano is a home equity loan expert and if you want to know more about mortgages and loans you can visit http://www.homequity-loan.com.

Brokers or Lenders — Which Do You Want for Your Real Estate Mortgage?

noreply@blogger.com (news admin) — Thu, 18 Oct 2007 07:20:00 +0000

by John Harris

A mortgage is a mortgage is a mortgage. NOT! Not only do mortgages differ between lenders, but they also differ greatly by the lenders, themselves. There are two types of real estate originators — brokers and loan officers.

Brokers generally are self-employed professionals, who work to secure a real estate loan for you. They work through a variety of lenders and earn a fee for the transaction. Most of the mortgage lenders who advertise on the Internet are brokers.

Loan officers are employees of a bank, credit union, or other lending institution, such as a mortgage company. They sell and process mortgages and other loans only for their employers. They are usually local and in a physical location.

There are advantages and disadvantages in using both brokers and loan officers for your real estate purchase, so you need to shop for the one that is right for you and your particular circumstance.

Brokers

The advantages to using a mortgage broker for your real estate purchase are many. Usually, the better deal they get for you, the buyer, the more they are paid on the transaction — a big plus for you. If your local bank, mortgage company, or credit union has refused you a loan, a mortgage broker may be able to find a lender, even if you have bad credit — just expect to pay a higher interest rate. If your real estate is unique or commercial property, using a mortgage broker to secure a loan is at times easier and faster.

One downside of using a mortgage broker is that your mortgage loan will be sold to another lender immediately after closing. Another is that brokers choose to do either non-conforming loans, which are higher risk and usually higher interest rates, or conforming loans. This limits your loan options. Brokers do not have to disclose a “good faith” estimate on what closing costs will be, nor are they regulated by the Fair Credit Act. Additionally, they seldom have a physical office with employees offering you face-to-face customer service, and they generally are in another town or state than where your real estate is located. This means they may not understand the local market in which you purchased your real estate. Important issues may arise from the real estate classifications and terms used by your appraiser, for example.

Loan Officers

Though loan officers offer a variety in the types of loans available, you are limited to only those products offered by one institution. Usually a local institution, the loan officer will be familiar with all local regulations and issues will not arise over lack of knowledge in local market terminology.

Banks and Mortgage Companies

Bank and mortgage company loan officers will give you face-to-face customer services, at least before the closing. Like brokers, banks have the option of selling real estate loans on the secondary market. Some banks sell only low-end mortgages or those that require too much servicing with little return. Some sell the loan but keep the servicing portion, making it appear that your mortgage continues to be owned by the bank or mortgage company. They are required, however, to tell you during the initial paperwork if your mortgage may be sold. I suggest you ask before you ever get to that point, if this is a deal breaker for you.

Bank and mortgage company loan officers are licensed and must meet certain criteria. They have more criteria that you must meet, as well, in order to secure a loan (banks usually require the most). Many real estate buyers are refused mortgage loans by these institutions. Both banks and mortgage companies generally do offer better rates and terms. They also must disclose a good faith estimate on what closing costs will be, and they are regulated and audited under the Fair Credit Act.

Credit Unions

You must be a member of a credit union to apply for a loan with them. Many credit unions do not offer real estate loans. The major advantage of securing a loan from a credit union is that they pass on only actual costs of the loan to you — no broker fees or commissions. They also never sell their loans on the secondary market, they always are local, and give you continuing face-to-face customer service.

What to Do

The time to begin looking for a mortgage lender is before you begin looking at real estate. Ask family and friends for referrals, as well as their experience with the real estate lender. Ask your real estate agent for referrals. Then, contact each prospective lender and ask questions — lots of questions! Compare interest rates, terms, after the closing mortgage sale policies, and what criteria do they require that you meet in order to qualify for a real estate loan.

If you are a residential real estate buyer, consider getting pre-approved for a loan. You will know exactly what you can afford to buy, which usually turns out to be much more than you expect.

Spend as much time shopping for a mortgage lender as you will for your real estate. The deal you get can save or cost you thousands or even millions over the life of the mortgage. Get the best deal possible, as well as the right lender for your real estate purchase.

John Harris is an expert researcher and writer on real estate topics such as economics, credit improvement tips, home selling advice and home buying preparations. For more on San Diego Homes for Sale visit http://www.twtrealestate.com

Getting The Best Deal On Cheap Mortgage Payment Protection Insurance

noreply@blogger.com (news admin) — Thu, 27 Sep 2007 15:16:00 +0000

by Simon Burgess

If you want the best deal on cheap mortgage payment protection insurance then without a doubt the only way to go is by purchasing shopping around and getting the cover independently from a specialist provider. A specialist provider can not only help you to make substantial savings when it comes to the premiums charged for the policy, but will also be able to ensure you get the policy most suited for your needs and, if they are reputable, should provide free advice.

When looking for a policy, never be tempted to take what the high street lenders and banks offer you when you take out your mortgage without first doing a bit of research. The cover doesn’t have to be taken alongside your mortgage regardless of the pressure techniques the lender might use to persuade you it does. While it’s true some lenders will insist that you do take out cover to protect the loan, you can choose where to buy the cover from. High street lenders in the majority simply don’t have the experience needed when it comes to selling mortgage payment protection and, as recent finings from the Financial Services Authority have proved, sales techniques are very poor. This has led to wide spread mis-selling of policies and has left many unfortunate people not being able to make a claim on their policy when needed.

All policies will have exclusions and these are often hidden in the small print and these are what you should be aware of when it comes to taking out the policy. A mortgage payment protection policy is taken out to ensure that if you should come out of work through an accident, prolonged sickness or unforeseen unemployment then the cover will provide a tax-free monthly income which means you can still pay the mortgage. However there are certain illnesses which are excluded and medical conditions that you have at the time of taking out the policy will normally be excluded, this is why it’s important that you check the small print of a policy.

When it comes to getting the best deal on a mortgage payment protection insurance policy then you simply have to go independently to a specialist for it, this is probably the only way to get a quality product while making savings on your premium.

Simon Burgess is Managing Director of the award-winning British Insurance (http://www.britishinsurance.com), a specialist provider of low cost income payment protection insurance (PPI), mortgage payment protection insurance (MPPI) and loan payment protection insurance.

The Mortgage Business Is Changing... Are You In Internet Denial?

noreply@blogger.com (news admin) — Thu, 13 Sep 2007 19:41:00 +0000

by Tom Domin

Refinances are down, new home sales are off, lenders are closing their doors, loan programs are being eliminated, and credit requirements are being tightened...it's no wonder we're not quite as optimistic as we once were.

It's against this backdrop that your on-line mortgage presence and Internet marketing takes on a whole new importance. There is mounting evidence that if you are not on the Internet bandwagon and if you can't be found by people searching for mortgages on the Internet, you are completely 'missing the boat' in the mortgage business.

Many of you have told me 'I just don't get that involved with online marketing. I've been very successful the traditional way for many years.' Here's my response...My sincere congratulations on all of your past success and my profound empathy for the frustration you will suffer in the months and years ahead as your prospects leave you at the station while they board the express mortgage train called the internet.

Here are a few points about this trend to the Internet that you should ponder:

Both Search Engines and web sites are considered 'referrals' and 'trusted sources' by those doing the search. Being directed to your web site by organic search engines is a valid referral, just as a phone call is, or a referral from a friend or associate. People consult Google, Yahoo, MSN and AOL with inquiries and their most delicate questions over a billion times a week! If Internet referrals constitute a 'trusted source,' shouldn't you be one of those 'trusted sources?'

The Internet is alive and on duty 24/7, and you would be amazed at what time of day (or night) people search for homes and mortgages. In contrast, the morning newspaper is usually in the trash by dinner time.

Supporting the proposition that newspaper readership and advertising is not as important as it used to be, consider these facts: In every age group, newspaper readership is down. In the 30-45 age group, less than 35% of people read a newspaper. Even in the 45-55 age group, only slightly more than 45% of people read the newspaper. People are turning to the Internet in staggering numbers.

Many publications including the New York Times are transitioning as fast as they can to Internet publication and advertising as they fear for the future of traditional newspapers in America.

Have you tried to get a teenager to read a book, lately? They are probably too busy Instant messaging, text messaging friends on their cell phones or watching videos on YouTube. Our next generation will be even less paper friendly and even more Internet friendly.

Mortgage professionals that have already committed to online marketing have been able to expand their marketing area and remain effective due to online communication; people find you on the Internet, call you or email you, and use you to help them secure a mortgage in an area they may not know.

So, unless you are in a state of denial about the Internet's importance to your future mortgage transactions, you need to take action immediately.

You do need the Internet...today and in the future...to succeed in the mortgage business. If you are welcoming and ready to exploit the changes you need to make, you'll be more successful in your online mortgage marketing and that's where the money will be in the future!

Tom Domin is the author of '101 Ways to Originate Mortgages' and publisher of 'Tom's Mortgage Tips' a twice monthly Mortgage Newsletter geared for Mortgage Professionals. Put your mortgage career on the fast track and sign-up for FREE at http://www.MortgageMarketingToolKit.com/

Avoiding PMI - Private Mortgage Insurance

noreply@blogger.com (news admin) — Wed, 29 Aug 2007 18:42:00 +0000

by Max Hunter

PMI - a recurring, monthly, unwelcome guest. It sounds similar to and is about as welcomed as a similar acronym. PMI is private mortgage insurance. This insurance policy is paid for by the homebuyer when the amount of their primary mortgage is greater than 80% of the value of the property.

You will note that the term 'primary mortgage' was used. This is for a specific reason. It is not the total of all mortgages and home loans on the property that is evaluated, but rather the amount of the primary or largest mortgage on the property that can trigger PMI.

PMI is calculated by taking 0.5% of your primary loan balance and dividing it by 12 (12 monthly payments). For example, if your primary mortgage is $200,000 and you are required to pay PMI, your mortgage payments would be an additional $83.34 per month. For most homebuyers, this additional premium is a considerable financial burden to undertake.

There are ways around PMI for those homebuyers unable to put down 20% or more on their new home. Mortgage lenders have created loan packages which include two or more home loans that when combined exceed the 80% threshold, while no one of the loans exceed that threshold. Typically there is a primary mortgage and either one or two home equity loans taken out simultaneously which are 81% - 100% (or sometimes more) of the home value. This affords the homebuyer to put less than 20% down, or perhaps put nothing down at all while at the same time eliminating the need to pay PMI.

If you know you are going to be putting less than 20% down on the purchase of your home you should immediately speak to your home lender about avoiding PMI. A good home lender will inform you about these types of packages. Though the rules on these packages may differ from state to state, the vast majority of states allow for these types of loan packages.

When you review this type of package you will note that there will invariably be a different interest rate on the mortgage than there is on the home equity loan(s). The mortgage rate may have a slightly lower interest rate or perhaps even a considerably lower interest rate. You should be able to calculate what the monthly payments would be for the combined loans and then determine if it comes out less than a single mortgage with PMI. Obviously, a good lender is only going to present you the package if the payments are cheaper than a single loan with PMI.

You are able to refinance the loans at any point and combine them into one payment. You would only do this when the value of the home is more than 20% above of the amount you will mortgage. As the value of your home increases through home improvements or time, you can receive an appraisal and speak to your home loan professional to determine if refinancing the loans into one loan makes sense.

These types of loans are often referred to as 80-10-10 loans or 80-15 loans, among other names. An 80-10-10 loan is a mortgage at 80% of the amount to be financed and than two home equity loans at 10% each. You will likely find that all three loans will have a different interest rate with this type of package. 80-15 loans are similar but would be the main loan at 80% and a secondary loan at 15% with the buyer putting down the additional 5%.

It is important to note that when financing 90% - 100% of a home, or more, the appraisal will play a key role in the loan approval process. If the appraisal does not come out at a pre-determined amount, the lender may feel that the transaction is not a sound one. You may need to go back and renegotiate the purchase price of the home or run the risk of being denied the mortgage. Most real estate contracts, however, do have a clause in them that allows the buyer out of the contract if they are denied a mortgage. You will want to speak to the lawyers and real estate agent in advance if you are planning for applying for this type of loan. Some contingency clauses in contracts specify a maximum percentage of a loan you need to qualify for and if you are denied for a loan at a higher percentage you are not protected by this clause.

It is important for you to have all of this information in place before you start your home search. By knowing how your financing is going to be handled you will be able to make sure you are protected in the transaction and you will also be able to negotiate a better deal since your financing has been completed or is close to being completed. The key is knowing in advance what percentage of the value of the home you are able to and willing to put down on your new home.

Max Hunter is the author of many credit related articles. If you are looking for help with Home Loans or any type of credit issue please visit us at http://www.homeloanave.com

Mortgage Payments Vs Rent Payments

noreply@blogger.com (news admin) — Fri, 03 Aug 2007 05:45:00 +0000

by Max Hunter

There is an age-old debate on whether or not it makes more sense for people to rent or buy. Though it is hard to really understand why there is a debate at all. You will definitely hear arguments from both camps that appear logical but if you do a little digging you may find that some of the arguments are thin at best.

The simple fact of the matter is you are always better off making a mortgage payment over a rent payment if you can afford to do so. It is not uncommon for mortgage payments to actually be lower than many rent payments are. So the key is to understand an important, fundamental difference between making a rent payment and making a mortgage payment.

Rent payments are made on a monthly basis for the most part. That money gives you the right to live in the house or apartment for the specified period of time, typically one month. You receive no other tangible benefits from that rent payment. It does not improve your credit score, it does not produce equity, it simply gives you the ability to live in the residence.

A mortgage payment, first and foremost, also gives you the ability to remain in the residence, however, it does much more than just that. First, the mortgage payment helps you build equity in your home. Equity is the difference between what you owe on the property and what the property is worth. That equity can be used for many things including debt consolidation, home improvements, extra funds, etc. Equity becomes a powerful tool in your overall financial plan.

Mortgage payments also include interest payments which can be tax deductible, helping your overall bottom line at the end of the year. Rent is not tax deductible in most cases. Your mortgage payments will also help improve your credit score if you continue to make payments on time. Mortgage payments are tracked if your lender reports the loan, which most lenders typically do. Your overall financial outlook can improve dramatically with an increased credit score resulting from on-time mortgage payments.

Some will argue that you are tied down to a home if you buy it, while renting gives you more flexibility. Though it is important to remember that if you rent a residence you are typically obligated for a specific period of time, typically a year. If you own a home, however, you are able to sell and relocate any time you wish, or you can rent the residence and relocate any time you wish. This is an important and fundamental difference between the two. It is true, however, that how quickly you are able to sell your home will depend on the location, its value, its condition and the market at the time of the sale. You do have the flexibility, however, to sell anytime you find a willing and able buyer.

One time where renting may seem like a more logical choice than buying is if you are going to live in a particular area for only a short period of time. In order to determine if it makes sense to rent or buy in this type of situation you really need to analyze your overall financial plans. You need to get a full understanding of any and all costs associated with you buying the home, the likelihood you would be able to sell it or rent it when you were relocating from the area, etc. For some, even in a short term situation the better financial decision may be buying, especially if they are able to rent it and build equity on their tenant. This may, however, impede them buying a second home, though if they have adequate credit and income they may not have any problem buying the second residence as well.

It is difficult to come up with a scenario that makes renting the clear cut right decision. It seems in most situations buying, if an option for you is the better decision financially. Though consulting with a mortgage professional is the only real way to help determine these things as they can give you a clear understanding of what is and what is not possible for you. Your financial advisor can also assist you in making this decision.

Owning your own home has many non-financial benefits as well, however, only you can evaluate those. You know what is and what is not important for you. You know what obligations you are comfortable having and which you are not. The key is to evaluate your personal situation rather than listen to those who are convinced that one or the other is right for you.

Max Hunter is the author of many credit related articles. If you are looking for help with Home Loans or any type of credit issue please visit us at http://www.homeloanave.com

Mortgage Loans - Which One Is Right For Me?

noreply@blogger.com (news admin) — Wed, 25 Jul 2007 19:38:00 +0000

by Dave Zwierecki

There seem to literally be thousands of mortgage programs out there so how do I know which one is best for me? Finding the right mortgage program to fit your needs and your financial goals can be difficult to do unless you are working with the 'right' mortgage professional and asking the 'right' questions.

Which mortgage program is right for me? This is a very common question asked by many consumers. There is no one answer fits all type response that can be given. Each and every individual person has their own specific financial situation and their own financial goals and dreams. With the number of mortgage programs out there to choose from being in the hundreds and maybe even the thousands, this can be a difficult decision trying to figure out what is going to be best for you. There are interest only loans, ARM loans, Pay Option ARM loans, balloons, fixed rate loans, extendable balloons, conventional loans, FHA loans, and many, many others to consider. Therefore, so what do I need to think about when choosing a loan program then?

Some of the main factors that you will want to consider when choosing which mortgage loan is right for you are: how long will you live in your home, do you have any children attending college currently or within the next few years, is this a starter home, will you have a pre-payment penalty, are you expecting any new family members to be added to your family, how much do you have in liquid assets, are you self-employed or do you work for someone, how much longer until you plan on retiring, do you have enough money for retirement, do you have many other financial obligations besides a mortgage, do you own any other property, and many, many others. Answering these questions, or at least thinking about them before you are ready to finance a home mortgage loan can help to greatly improve your chances of finding the right mortgage loan to meet your demands.

A fixed rate mortgage is always going to provide the most stability in the long run, however since most Americans sell or refinance every 4.6 years a fixed rate does not always make the most sense. An ARM loan can provide a cheaper payment and a lower interest rate upfront for a certain number of years, but there is a lot more risk involved obtaining an ARM loan because of the uncertainty of what will happen after the fixed rate period expires on the ARM. Interest only loans are good for real estate investors and consumers who need the flexibility of being able to make only the interest portion of the monthly payments. Pay Option ARM loans can be a great way to maximize cash flow, especially for self-employed and commissioned borrowers. However, Pay Option ARM loans can incur negative amortization, which is when your balance increases instead of decreases. There are a lot of items that you need to make sure that you understand before entering into a Pay Option ARM loan. FHA loans are usually better for homebuyers, especially first time who may not have the best credit or the best overall financial situation.

Thus, find a good mortgage professional and keep him or her for the rest of your days. The more you work with one person the more familiar they will be with your situation and be able to understand where you are coming from and where you want to go. This will help to insure that you find the proper mortgage loan for your situation.

Dave Zwierecki is a licensed mortgage professional with First Security Financial Services and has over 10 years of experience in the credit and mortgage lending fields. For more information, or to learn more, please visit: http://www.gofirstsecurity.com or for more information on mortgage loan programs visit: http://www.nomoneydown123.com/Florida/mortgage_programs.htm

Discover The FOUR Essential Questions You Must Ask While Shopping For A Mortgage

noreply@blogger.com (news admin) — Sun, 08 Jul 2007 13:33:00 +0000

by Ed Bisquera

How can you be sure you’ve got the right mortgage broker as you shop around?

First: make sure you are working with an experienced, professional loan officer. The largest financial transaction of your life is far too important to place into the hands of someone who is not capable of advising you properly and troubleshooting the issues that may arise along the way. But how can you tell?

Here are 4 simple questions your lender ABSOLUTELY must be able to answer correctly. If they don’t have the answers…RUN…DON’T WALK… RUN…TO A LENDER THAT DOES!

1. What are mortgage interest rates based on?

(The only correct answer is Mortgage Backed Securities or Mortgage Bonds, NOT the 10-year Treasury Note. While the 10-year Treasury Note sometimes trends in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions. DO NOT work with a lender who has their eyes on the wrong indicators.)

2. What is the next Economic Report or event that could cause interest rate movement?

(A professional lender will have this at their fingertips. For an up-to-date calendar of weekly economic reports and events that may cause rates to fluctuate, visit www.pdxloan.com/economicreport/ and join the weekly distribution list for MMG Weekly – this is a copy of a weekly newsletter on current Economic Reports.)

3. When Bernanke and the Fed “change rates”, what does this mean… and what impact does this have on mortgage interest rates?

(The answer may surprise you. When the Fed makes a move, they can change a rate called the “Fed Funds Rate” or “Discount Rate”. These are both very shortterm rates that impact credit cards, Home Equity credit lines, auto loans and the like. On the day of the Fed move, Mortgage rates most often will actually move in the opposite direction as the Fed change. This is due to the dynamics within the fi nancial markets in response to infl ation. For more information and explanation visit Google or research online further).

4. Do you have access to live, real time, mortgage bond quotes?

(If a lender cannot explain how Mortgage Bonds and interest rates are moving in real time and warn you in advance of a costly intra-dayprice change, you are talking with someone who is still reading yesterday’s newspaper, and probably not a professional with whom to entrust your home mortgage financing. Would you work with a stockbroker who is only able to grab yesterday’s paper to tell you how a stock traded yesterday, but had no idea what the movement looks like at the present time and what market conditions could cause changes in the near future? No way!)

Be smart... Ask questions… Get answers!

More than likely, this is one of the largest and most important financial transactions you will ever make. You might do this only four or five times in your entire life… but a reputable experienced mortgage broker does this every single day. It’s your home and your future. Choose someone who makes it their profession and passion, ready to work for your best interest.

Once you are satisfied that you are working with a top-quality professional mortgage advisor, you'll want to continue with the 5 rules and secrets you must know to “shop” for a home mortgage loan effectively. Visit http://www.PDXLoan.com for a complete report on the 5 mortgage shopping secrets.

Ed Bisquera has previously worked as an event planner, music producer and marketing consultant. He is a Mortgage Planning Consultant near Portland, Oregon for Mortgage Express, LLC and mangages http://blog.PDXLoan.com and home mortgage loan information site http://www.PDXLoan.com. Articles, interviews and consulting are available at 1-800-862-0784 ext 21.

100% Shared Ownership Mortgages

noreply@blogger.com (news admin) — Wed, 20 Jun 2007 04:45:00 +0000

by Joe Kocsis

As UK house prices have escalated out of the reach of the first time buyer many people have had to resort to moving into rented accommodation to get a roof over their heads. An Englishman's home is his castle and with the average UK mortgage now being in excess of £197,000, it is now an extremely expensive commodity and the dream of owning your home is looking bleak for the first time buyer.

The truth is that house prices have outstripped incomes and as a result affordability has become a big, big problem. All is not lost, so, what are the alternatives and how could you become that homeowner?

Let us look at some alternatives that could be considered: -

* Shared ownership
* Parent guarantee schemes
* Buying with friends
* Shared equity schemes

Shared Ownership

If you are unable to buy a property outright on the open market, then shared ownership is the ideal solution for you. Shared Ownership is a part buy, part rent scheme, which enables purchasers to buy a home in stages. Purchasers can buy an initial share between 25% and 75% of the value of the property and pay a subsidised rent on the remaining value of the property. Shared ownership properties can be provided by housing associations, housing trusts and local authorities. These organisations try be as flexible as possible with regards to the initial share purchased, but this may be as much as 50% of the market value at some of their developments.

A service charge will normally be payable to cover the cost of communal maintenance. The service charges payable can remain the same whatever percentage you own of your home and continues to be payable should you purchase your home outright where possible. You will need to have sufficient savings to cover the initial cost of home ownership: legal fees and stamp duty for example. You will need to be able to meet the costs of rent, mortgage, service charges and other associated outgoings.

As your income increases, you can buy further shares of your home until you could own 100% of the value and no longer share the ownership with the housing association or trust. The greater the percentage you own, the lower the percentage on which you pay rent. However, if you do not wish to buy more shares in the property, you do not have to. Obviously, the more you own, the less you pay in rent. And, if you can buy your home outright in the future, then no rent will be payable.

100% Shared Ownership Mortgages

Having found the shared ownership house of your dreams a good whole of market mortgage broker should then be employed to find the best and cheapest mortgage. Careful searches can reveal 100% shared ownership mortgages that will not require a deposit, even if you have an adverse credit history.

Finding the right mortgage is a very important financial decision in life as it is more often than not the largest single expenditure in people's lives! People will often search the supermarkets shelves for bargains choosing products for the sake of a 1p or 2p saving per item and there's nothing wrong with that; I do it all the time.

Our parents teach us to be frugal with money in our up bringing and we sometimes become animals of habit throughout our lives. Through the generations, inflation has seen prices increase ten fold and who would have thought years ago that the price of a loaf would touch the £1 figure.

The same can be said about UK property, as the housing market has exploded and the average mortgage has gone way above the £197,000 figure. This is before we align our currency and interest rate with the euro. Ireland has seen a massive explosion in property prices in the post years of joining the euro and it is now an extremely expensive place to buy property.

Consider this as a normal mathematical comparison. A 2% saving on a £100,000 mortgage works out at £2,000 per year and assuming that this saving can be made every year by remortgaging and moving the mortgage to another lender, it equates to an astronomical £50,000 saving over the normal mortgage term of 25 years. It just doesn't make sense to be putting an extra £40 per week into a lenders pockets when they already make billions of £££'s net profit per year.

Most of us have all experienced hard times at some stage in our lives and received letters from banks telling us that they are going to charge us £27 for bouncing a cheque or non payment of a direct debit or standing order. Now is the time to hit back and take some of that money back from them by taking advantage of the discounts that they have to offer to borrowers.

So, if there is massive saving around like that, why do people not remortgage more often?

Surveys conducted by lenders have identified that some people are just not aware, whilst others have said that they just could not be bothered. Some people have stated that the mortgage market is just too complicated.

Well, the range of UK mortgages has increased dramatically over the past few years. Although this increase in mortgage types has added complexity, it has also introduced fierce competition, which has in turn resulted in the availability of some very attractive mortgage products for the customer. With over 10,000 mortgage products to choose from, how do we ensure that we get the best mortgage and remortgage rates?

Employing the services of a whole of market mortgage broker (the equivalent of a supermarket) can pay dividends here, as they have sophisticated computer software to narrow down the best rates for buying with friends, shared equity schemes, parent guarantee schemes and 100% shared ownership mortgages.

Joe Kocsis has over twenty years of experience in the UK Financial Services Industry. Follow this link http://www.mortgages2.co.uk for further information.

Getting Money From A Reverse Mortgage

noreply@blogger.com (news admin) — Fri, 08 Jun 2007 04:55:00 +0000

by Tom Atkins

A reverse mortgage allows homeowners over the age of 62 to cash in on the equity of their home. The homeowner can use these funds in anyway they want.Some have used the money for extended term care or home improvements. Homeowners usually run into very little difficulty in securing these funds.The funds are practically free because with the exception of the fees, more than likely, the mortgages will not be paid back over the course of the homeowner’s life.

There are several payment options to choose when receiving funds from a reverse mortgage. In most cases you can choose one or more of them based on your needs.

* Getting your money in a lump sum: Most often the money from a reverse mortgage is paid in a lump sum. You will receive one payment which equals the value of your home.

* Getting a specific amount paid over the course of a number of years: With this option the homeowner will receive payments over a specific course of time, 10 years for example. This could be a great help in managing funds over a period of time.

* Getting a specific amount paid to the homeowner every month until they die or permanently move out of their home: Receiving monthly payments gives the homeowner a sense of security in knowing that their money will not run out before they die.

* Getting a line of credit. Funds can be provided as a line of credit and be paid back to the lender. A specific amount could be taken out to make repairs or to pay a bill as the funds are needed.

Getting the right type of terms for your needs is totally up to you. Give thought to what your needs are, how much funding is required and how soon you will need the funds. Some homeowners have gotten a lump sum and transferred it into a savings account until needed. The funds are yours and you can do whatever you want to with it with no restrictions.

Tom Atkins is a staff writer at http://www.finance-journal.com and is an occasional contributor to several other websites, including http://www.debt-journal.com.

Mortgage After Bankruptcy: These Steps Could Help

noreply@blogger.com (news admin) — Fri, 25 May 2007 01:25:00 +0000

by R. Lawrence Anderson

If you want to increase your chances of qualifying for a mortgage after bankruptcy, here are some steps you can take:

First, if you plan to apply for a mortgage after bankruptcy, you will want to have any inaccurate or obsolete negative information on your credit reports corrected or removed. This can help increase your credit score.

Also, you will want to establish some new accounts, and pay them in a timely manner over time. If you've paid the accounts on time for about 18-24 months since your bankruptcy, this should help rebuild your credit - which can be a plus when applying for a mortgage after bankruptcy.

Next, you will want to work with an experienced mortgage broker. Why? Because buying a home is probably going to be one of the biggest investments you'll make. You will want to have an experienced professional guiding you through the lending process - especially when it comes to applying for a mortgage after bankruptcy.

A mortgage broker typically has access to dozens of lenders and will probably have a good idea of which ones will (and will not) approve you for a mortgage after bankruptcy. In addition, they will be able to tell you what to expect in terms of the financing process.

So how do you find a mortgage broker? One way is to to ask friends or real estate agents for a referral. Once you have a few names, set up an appointment to interview each mortgage broker.
Among other questions, you will want to know if they have successfully been able to get other individuals a mortgage after bankruptcy. You also want to make sure they are licensed.

Another question you will want to ask is what type mortgage loan (A, B, C, or D) the mortgage broker thinks you can qualify for. Why? The lower the grade of the loan, the higher the interest rate. This is an important consideration when applying for a mortgage after bankruptcy.

In addition, there are other important questions you will want to ask a potential mortgage brokers - ones that could help you save money and/or increase your chances of qualifying for a mortgage after bankruptcy. While there isn't enough room to cover them here, I go into detail on them in After Bankruptcy Credit Solutions.

Also make a point to bring your financial information with you when you meet with a mortgage broker. For example, you should have your income and expenses available as this will help the broker determine the loan amount you may be able to qualify for when it comes to a mortgage after bankruptcy.

Generally speaking, most lenders will allow you to get a home loan with a payment of up to 28% of your gross income. So if you make $4,000 per month, that would be $1,120. But keep in mind that this just an example. Again, a good mortgage broker can explain the criteria that each lender has.

If you have copies of your credit reports from each of the major credit reporting agencies (Experian, Equifax, and Trans Union) this will help also. Your credit report will play a major role when it comes to qualifying for mortgage after bankruptcy.

On that note, if you want to increase your chances of qualifying for a mortgage after bankruptcy, make sure that any inaccurate or obsolete negative information is removed from your credit report. This is important for two reasons: (1) It can mean the difference between qualifying or not qualifying for a mortgage after bankruptcy, and (2) if you end up qualifying for mortgage after bankruptcy, any inaccurate or obsolete negative information on your credit report could cost you up to $1,000s or even $10,000s in additional interest.

How do remove any inaccurate or negative information from your credit report, so you can improve your chances of qualifying for a mortgage after bankruptcy? There are specific steps you need to take. While I cover them in After Bankruptcy Credit Solutions, there is not enough room to go into detail here. Just remember that ideally you want rebuild your credit history before applying for a mortgage after bankruptcy.

By the way if you think that removing inaccurate or negative information from your credit reports takes a long time, I have good news. There is a way to have it removed in as little as 72 hours - the service is typically not available directly to consumers. In After Bankruptcy Credit Solutions I show you how to find this type service if you are trying to qualify for a mortgage after bankruptcy.

In this article we touched on two important steps you can take if you plan on applying for a mortgage after bankruptcy: Correcting or removing any inaccurate or obsolete negative information from your credit reports, and finding a mortgage broker to guide you through the lending process.

Copyright © 2006 Innovative Solutions Publishing, Inc. All rights reserved.

The company and product/service names referenced in this article are the trademarks, registered trademarks or service marks of their respective owners. None of the owners have sponsored or endorsed this article.

DISCLAIMER:

This information is designed to provide only a general overview of the subject matter herein.

This information is provided with the understanding that neither the publisher nor author is engaged in rendering legal, accounting or other professional advice. If legal or other expert assistance is required, the services of a professional should be sought.

Neither the publisher nor author shall be liable for any loss or damages, including but not limited to special, consequential, incidental or other damages, caused by the information contained herein.

R. Lawrence Anderson is the author of After Bankruptcy Credit Solutions which shows individuals how to qualify for credit & loans after bankruptcy. For more information visit: http://www.bankruptcy-credit-solutions.com.

Quick Mortgage Tips For Home Loans, Equity Loans, Reverse Loans, Cash-Out Loans And Refinance Loans

noreply@blogger.com (news admin) — Wed, 16 May 2007 15:20:00 +0000

by Chris Robertson

If you're considering a mortgage loan, you might be wondering what options are available. Today, there are many options besides the conventional methods of obtaining a mortgage. Whether you're applying for a home loan for a new home, a refinance loan, an equity loan, a HELOC, or a reverse loan, you should be aware of what each loan entails.

Buying a New Home

When buying a new home, you'll need to be approved for a new home loan through a lender, or ask the seller to finance the home for you. Before applying at a lending institution, research your options. Determine how much 'house' you can afford. Use online mortgage payment calculators to figure what the payments would be for different home loan amounts. Then, you'll know what price range you can shop within, and whether or not you can afford the payments. Remember, your income/debt ratio must fit within the lender's guidelines to qualify for a conventional loan.

Healthy and 'Not-so-healthy' Credit Scores

If you have an excellent credit score, then your income/debt ratio along with the investment capital you have available will be the main factors in determining home loan availability. However, if there are flaws in your credit history due to non-payment or repossession, you will be limited in the type of home loan you can obtain. But don't lose heart. Many homebuyers whose credit is 'not-so-great' do qualify for non-prime loans. Non-prime loans can be a bit higher-priced than prime loans or have higher interest, but you might still be able to buy your dream home!

Creative Financing

Don't settle for conventional loans if you don't have to. There are many creative ways to finance a new home loan. If you do not have the needed investment capital or a down payment, some lenders will finance the down payment for you as well as the closing costs. If not, the seller might be willing to finance part of the loan to cover these costs. This can work even if the seller doesn't have extra 'money to lend!'

Explain to the seller that it could be advantageous to him because of income taxes. He might much rather claim an income of $100,000 than $120,000! Spreading out payments for $20,000 of the loan amount over a period of five or ten years could make a huge difference on his taxes due for that year. Consult with an accountant to find out if this could work in your situation.

Unusual Types of Home Loans

If you're worried about budgeting with a new home loan payment each month, try a FlexPay loan where several monthly payment options are available to you every month. These options include interest only payments, full-amortized payments, and minimum payments. There are also bi-weekly mortgages for paying more toward your premium each year through a bi-weekly payment schedule.

Hard Money loans are also available when there is a large amount of equity built up in a home. The loan approval is based more on the home or property's value than the borrower's credit history or job/salary history.

Refinance Loans

If you plan to refinance your home, there are several options. A refinance means you are re-evaluating the terms, payments and interest of your loan. You might refinance to simply get the interest rate or payment lowered. Or, you might want to keep a little cash out for yourself as well. This is called 'Cash-out' refinancing. Cash-out loans are made when you want to refinance your home for more than is owed on it. For instance, you owe $60,000, but want to refinance for $80,000. You'll pocket the additional $20,000 to use for home repairs, remodeling or whatever else!

Reverse loans are available for those over 62 years of age who own their home free and clear or have much equity built into it. They can receive a monthly payment, a lump sum or a line of credit. This does not have to be repaid until the borrower moves or passes away. Then, the estate can be sold to pay the note.

Another option for leveraging your home equity is to create a HELOC (home equity line of credit) that is secured by the equity in your home. HELOCs can be used to pay debts, make purchases, or anything else. Be aware, however, that the interest rate can fluctuate monthly.

Now that you are armed with many options for obtaining a home loan or refinancing your mortgage, check with an online lender to find out what plan will work best for you. Use the available tools and calculators to do some budgeting on your own as well. You'll be moving in that new dream home in no time!

Chris Robertson is a published author of Majon International. Majon International is one of the worlds MOST popular internet marketing and internet advertising companies on the web. Visit their main business resource web site at: http://www.majon.com

To learn more about subjects like home loan please visit the web site at: http://www.1Stepfunding.com

For more information and informative related articles and links about this subject matter and content, please visit Majon's Real Estate directory: http://www.majon.com/directory/Real_Estate

What Is A Commercial Mortgage?

noreply@blogger.com (news admin) — Wed, 02 May 2007 13:59:00 +0000

by Benedict Rohan

A commercial mortgage is similar in principle to a residential mortgage except it is used to purchase a property or to raise capital for commercial purposes rather than domestic purposes. As with residential mortgages, the lender retains rights to the property until the loan is repaid in full.

What would you use a commercial mortgage for?

The types of property that people might purchase using a commercial mortgage could be anything from hotels, restaurants, shops and takeaways to office buildings, factories, warehouses and farms.

Sometimes people might buy the business and property at the same time if the two are intrinsically linked, such as a hotel or restaurant.

When properties are purchased to be used as business premises, the mortgage is known as a commercial owner-occupier mortgage.

Alternatively, a commercial mortgage could be used for refinancing.

People might want to unlock capital from their existing business property to expand or improve their premises or facilities, or to raise cash for any other business purpose.

There are many other uses for a commercial mortgage, such as buy-to-let mortgages, where people purchase a property (perhaps residential) as an investment and let it out, or commercial development mortgages, where people purchase a property to develop it and sell it on for a profit.

Why purchase premises rather than rent?

Taking on a commercial mortgage is a major leap for your business and must be carefully considered before entering into the commitment.

However, it can be an excellent investment and owning the business premises that you occupy can bring many advantages to your business:

In most circumstances the proceeds of the loan are not considered to be taxable income and the interest payments are tax deductible.

You’ll have a clear repayment plan, with terms and rates tailored to suit your needs. (See below for more details on this.) This means that you can manage your cash flow more easily.

Mortgage repayments can be cheaper than rent.

Any property purchase is an investment. Your asset could appreciate a great deal in value, thereby increasing your capital.

You have the potential to make money by subletting. For example, you might have space in your property that you don’t currently need, and could make money on it by letting it out to another business until you need it to expand your own business.

Why use a commercial mortgage to raise capital?

If you already own business property and need cash for your business for any reason, unlocking the capital in your property by refinancing or remortgaging is an effective solution. Think of it as a loan that could be used for any business purpose – not just expanding or improving your premises. There are many benefits in doing this:

Commercial mortgages can be easier to obtain than business loans, especially for small businesses, as the property provides security to the lender.

Unlike many business loans, which tend to have a short repayment term, commercial mortgages cover a long period – anything from 15 to 25 years, depending on the lender and the financial circumstances of your business.

In most circumstances the proceeds of the loan are not considered to be taxable income and the interest payments are tax deductible.

There are two ways in which you might use a commercial mortgage to raise capital for your business:

1. Refinance your current commercial mortgage to include the loan amount that you wish to borrow.

2. Release the equity that has accumulated in your current property, i.e. the current value of the property minus any outstanding mortgages or debts tied to it.

What are the costs and repayment options for commercial mortgages?

Repayment plans tend to be similar to residential mortgages. The main options are either fixed rate or variable rate repayment mortgages or interest only/endowment mortgages.

Unlike residential mortgages, however, the interest rates for commercial mortgages tend to be higher as business lending is perceived as more of a risk. The rates will vary depending on the circumstances of your business, but generally speaking, the higher the risk, the higher the interest rate. For the same reason repayment terms also tend to be shorter than residential mortgages – typically 15-20 years.

It’s likely that you’ll also need to raise a deposit, as most lenders won’t provide 100% loan-to-value mortgages – i.e. they won’t provide a mortgage for the full purchase amount and will expect a down payment from you as a form of security (typically 20-30% of the purchase price, although some lenders accept as little as 5%, but with a higher interest rate for repayment).

Other expenses to consider are the setup costs involved in arranging a commercial mortgage, such as legal charges, surveys and broker fees.

In terms of responsibility for repaying the mortgage, this depends on the type of business. If you’re a sole trader the responsibility will lie with you and you may also be personally liable should you default on the repayments – meaning that you could lose personal assets as well as the commercial property that is mortgaged. If you’re in a partnership, the responsibility and liability apply to all partners. If it’s a limited company, the responsibility and liability belong to the business, although personal security may be required to approve the mortgage depending on the profitability of the business.

How do you obtain a commercial mortgage?

When applying for a commercial mortgage, you’ll need to do your homework and build a strong business case to demonstrate your company’s ability to repay the mortgage. Be prepared to undergo a thorough examination of your finances, including:

business history of your company: financial statements, profit and loss accounts, balance sheets, past and current cash flow, all certified by an accountant future projections for your company: long-term business plan, intended use of the property, earnings potential, projected cash flow personal finances: the financial histories of yourself and all other key stakeholders in the business, such as credit worthiness and past earnings All of these factors will determine the lender’s perceived degree of risk in lending you the money, which will in turn determine the term and interest rate of the loan that they are willing to give you.

The obvious first step to many people applying for a commercial mortgage is to approach their bank or business lender, with whom they already have an established relationship. However, for this very reason it’s unlikely that you’ll receive a competitive deal.

The best way to get a commercial mortgage is to use the services of a specialist independent mortgage broker, who can help you get a good package to suit your needs whatever your circumstances. Even if your credit isn’t great, it doesn’t mean that you won’t qualify for a commercial mortgage. Having a broker to represent you will really strengthen your case. They have access to a wide range of lenders and understand their criteria for lending, as well as your specific needs.

They can therefore undertake a targeted search, increasing your chances of finding a suitable loan. In fact, the broker may even be able to obtain several different options from various interested lenders, which provides the scope to negotiate a fantastic deal for you.

Money isn’t all that you’ll save. Imagine if you tried to apply to several lenders yourself – think of the time taken to complete all the applications, and the time wasted in applying to unsuitable lenders.

The independent advice and specialist knowledge that a broker provides are invaluable.

Benedict Rohan works as a freelance finance writer. Commercial Mortgage, Homeowner Loans, Remortgages

Website: http://www.mortgagenation.co.uk

Getting A Mortgage After Bankruptcy

noreply@blogger.com (news admin) — Tue, 10 Apr 2007 10:09:00 +0000

by Anthony Kirlew

It is unfortunate that many bankruptcy attorneys do not give their clients more direction with regard to restoring themselves after their bankruptcy.

There are some simple steps that anyone who files a bankruptcy needs to take in order to restore themselves financially.

Using these steps below, you can restore your credit and prepare yourself to become a homeowner.

1. Get a copy of your credit report.

Many times (most times) the credit accounts that are absolved with your bankruptcy are not removed from your credit report immediately. You can contact each credit reporting agency (Equifax, Experian, and TransUnion) directly to get a copy.

2. Have derogatory credit items that were charged off in your bankruptcy removed from your credit report.

You will need to send a copy (not the original) of your bankruptcy discharge papers to all 3 of the credit bureaus asking them to remove these inaccuracies. This process can be done by mail for free, or online for a small charge by the agencies.

3. Pay all of your bills on time.

Bankruptcy is a means to financial recovery. It is intended to allow you to 'start over' financially. After your bankruptcy, you need to make sure that all of your bills are paid on time. If you are having trouble with an upcoming bill, DO NOT IGNORE IT. This is where most people go wrong. Call your creditors before they call you and let them know what your challenges are. If you can't get a reasonable rep on the line, ask for a supervisor, but again, do this as early as possible, not the day the bill is due or after it is late. If you are having trouble with your bills, you may need to solicit some help.

4. Have a strong documented rental history.

This is critical as it is most likely the largest monthly expense that you have. Underwriters (the people that actually sign off on your loan's approval) will look very hard at how you have paid your rent as they are going to replace it with a mortgage payment of equal or greater size. It is very important to be able to document your rent payment history very specifically. If you rent from an apartment community, then all the bank will have to do is request a Verification of Rent (a.k.a. VOR). If you have a private landlord, then the BEST way to document this is with cancelled checks for the last 12 months rent. Banks can do VOR's for private landlords, but rarely do because they feel that a landlord may have a relationship with the borrower and say what the bank wants to hear to help them get a loan. If you pay with cash or money orders, please stop doing this immediately and start paying with checks. Simply put, this is hurting you because by filing a bankruptcy you have already shown some financial instability. Paying your rent with cash or money order shows further financial instability and will not give you the positive rent history that the underwriter is looking for to give them the confidence in approving your loan.

5. Apply for a secured credit card.

A secured credit card allows you to make a deposit into an account to secure a credit card and then borrow against it to establish a new positive payment history. As time progresses, the bank may increase your credit line to an amount greater than your deposit, and then eventually return your deposit to you. (They will also often pay you interest on your deposit.) Be very cautious of companies that charge excessive fees or interest rates for their secured cards.

6. Prepare 'non traditional' trade references These are accounts that you pay on such as cell phones, car insurance, and store accounts which can be used to document a positive payment history, but would not be traditionally reported to a credit bureau. Ideally, if you can provide 3 of these accounts with a 12-month payment history, this will help your loan officer in convincing the banks underwriter that you are a good credit risk. The best way to document this is with a letter from the company stating that you have had a positive payment history with them for the past 12 months. Alternatively, you can provide 12 months of cancelled checks showing 12 months of timely payments.

7. Resist the urge (or encouragement) to buy a car.

Some may tell you that this is the best way to rebuild your credit. The problem is that your interest rate will be so high, that your payments will make your debt ratios higher than normal, making it harder to qualify for a mortgage. Do you remember the figure of 45-50% of your monthly income that the bank will allow you to use towards your debts? This will quickly be absorbed by a car payment.

Only buy a car if a) you NEED (not want) a car, and b) you have the income to cover the car payment, any of your current debts, and your proposed new car payment.

We have seen SEVERAL people that have cars rather than homes because they went out and bought a car that they could not sell and their debt ratios were too high to qualify for a mortgage. It would be a shame to have a nice car (that depreciates daily), as opposed to a more humble car along with a mortgage on a home that gives you a tax break, and increases in value over time.

I hope this is helpful and helps get you on your way to financial recovery and on to finding the home of your dreams.

Anthony Kirlew is founder of BankruptcyLoans.info (http://www.bankruptcyloans.info), a company specialising in after bankruptcy mortgage services and the author of The Bankruptcy Mortgage Book (http://www.thebankruptcymortgagebook.com) . He has been a featured mortgage columnist on several consumer and finance Web sites including All Experts and SideRoad. Anthony can be reached at http://www.AnthonyKirlew.com.

Secured vs Unsecured Loans

noreply@blogger.com (news admin) — Wed, 28 Mar 2007 18:24:00 +0000

by Adam Heist

Let’s face it: at some point in your life you will probably have to borrow some money. Whether to finance a new car purchase, pay for your kid’s braces, or buy a new home there are times when you will need to get money from an outside source. If a friend or a family member agrees to lend you the money, then that is good for you. However, most loans are with financial institutions such as a commercial bank, a credit union, or with a mortgage company. Not all loans are the same, but all loans fall into one of two categories: they are either secured or unsecured loans. Keep reading and we’ll compare and contrast these two loan categories.

A secured loan is a loan that is backed by collateral. This means that in exchange for a loan, the lending institution will put a lien on something else that you own. For example, if you want to borrow $5000 for a used car, the lender may require that you put your $6000 stamp collection up as collateral. No, you won’t have to turn the stamp collection over to the lender until the loan is paid off, but you will be expected to turn it over should you default on your payments. A secured loan is considered to be a less risky loan and loan rates are historically much lower than an unsecured loan.

An unsecured loan is a loan that has no collateral to go with it. Essentially, the lender is taking a risk that you will pay back in “good faith” your loan and he is going out on a limb to lend money to you. It could be that your lender sees your excellent credit rating and believes that you are a low risk borrower. Even if you have bad credit, a lender might still be interested in allowing you to borrow money. In this case your interest rate will be very high, perhaps 20% or more depending on your state or province’s restrictions.

Secured loans are usually include mortgages where the home is the security or for a new car where the automobile is the security there. Unsecured loans typically involve most credit cards and some personal loans. Student loans are unsecured loans as well.

Naturally, if you want to save on interest then a secured loan is the way to go. However, if you don’t have the collateral and there is a lender willing to give you the money, then an unsecured loan could be of value to you. Just remember that the highest loan interest rates are always with an unsecured loan.

Adam Heist has helped many internet surfers since launching his website loans company which details many aspects of the Loans industry. Adam also prides himself on over-delivering, why not stop by today and see why.