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In 2009 the administration started the “Home Affordable Refinance Program” HARP to stop the tidal wave of homes being foreclosed on. The idea was to let homeowners refinance at lower rates, however many could not qualify for the program, therefore the HARP had to be revised. (more…)
Buying a house is a huge decision, and not one to be taken lightly. There are so many things to consider when you are buying. After you have chosen the house you want to buy (a huge task in itself), you must figure out how you will finance your new castle. Don’t worry, it’s not as painful as everyone makes it seem once you know a few helpful tips to getting your first mortgage. (more…)
There are several choices available when you are ready to inquire about a mortgage loan. The language in the financial industry can become confusing, and, if you not familiar with your choices then you can find your head spinning. It is important to do some research and become familiar with the mortgage loan lingo before you start searching for the right loan. Here are a few pointers that can assist you in understanding the mortgage loan and finding the right one for you. (more…)
The balloon mortgage, also called the “non-amortizing mortgage” is a type of fixed rate loan program that does not entail the complete repayment of interest and principal costs. It is similar to a fixed rate loan program, especially the 30-year term.
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The recent mortgage crisis has its origins in the misplacement of home owners in houses they could not afford with then current salaries. The payments were also way too high for them which led to foreclosures across the country. There are many reasons why they were misplaced including the greed of mortgage brokers and the money they made off of selling bundled mortgages to investment banks.
The banks that got burned are asking that the entities that sold them the bad investments buy them back, which is certainly an interesting concept. They feel cheated and want these loans to be off of their books and back where they feel they belong. The first few transactions of this type were to be used for the framework for future deals, but that has not been the case. (more…)
Long-term mortgage rates have hit a milestone, one that is very good for the average homeowner considering current salaries and is very significant considering our country’s economic state. They have never been lower…ever. At 4.01 percent, no record of a lower interest rate exists. Although Freddie Mac has only been keeping records since 1971, they are calling this the lowest rate that has ever been offered for a fixed mortgage.
In the 1950s, rates were very low, but we have beaten those numbers due to many factors. Now that things are not going well, the Federal Reserve is trying their best to get people to borrow by lowering these interest rates. This is supposed to lead to a better economic future as money circulation is important. Borrowing makes money for banks and allows them to expand and hire, which is the focus of the initiative. (more…)
Refinancing your home loan can be a smart move. The first thing that you need to know is the interest rate on your existing mortgage. You should compare that with the interest rate that you can expect to get if you should refinance. If there is not at least one and a half to two points difference, you are probably not going to better yourself by trying to refinance your home loan. Between closing costs and appraisal fees, it may end up taking a long time before you can recover the cost of taking out a new home loan. You should also think about your future plans before choosing to refinance your mortgage loan. If you are considering moving to a different house in less than two years, a new home loan is not worth the costs that it would incur. Different banks, mortgage companies, and other financial institutions may offer you choices and different interest rates when you are shopping around for a new home loan. Gathering information from all available sources can save you a lot of headaches in the future. Always weigh all of your options before deciding on a refinancing option for your home loan.
Taking Out a Second Mortgage
If you are in a situation where you are in need of money and you are a homeowner, you have the option of taking out a second mortgage on your home. The money from refinancing can help you pay off existing debt, pay for schooling or get you out of your financial bind.
A second mortgage is lower in priority than a first mortgage and is allowed when the property is mortgaged for a value that’s less than its agreed market value. A second mortgage is also allowed when the property has appreciated in value compared to the first time it was mortgaged and it has gained equity.
The second mortgage is generally given at the existing interest rate, however, some lenders give the option of rolling over, which is subject to different costs, but most second mortgages are on a fixed interest rate. Most lenders will allow you to borrow up to 80% of your home’s value if there is that much equity in your home. Your home’s equity is the difference between what you owe on your current mortgage and the recently appraised value of your home. It is imperative to look at factors like closing costs, interest rates and that there is no pre-payment penalty. Pay attention to all fees, there are some companies that will have hidden fees, so you know exactly what your out of pocket expenses will be.
Be sure to shop around for the best interest rates as you would with any major financial decision. Remember that these loans typically take 15 to 20 years to pay back and that your credit score will be a deciding factor as to whether or not you will be approved for a second mortgage.
What are 125% Second Mortgage Loans?
Most of us know what a home equity loan, or second mortgage, is, but what about a 125% second mortgage loan? These are unique home equity loans that allow you to borrow more than what your home is valued at through its equity. These loans are great for individuals who have lived in their home for a short period of time and have not been in it long enough to develop a large sum of equity.
These loans are often used for home improvements and renovations that cannot wait a few years. 125% second mortgages are simple to understand. Let’s say, for example, that you home is worth $100,000 and your first mortgage was for $90,000. You can borrow $125,000 because your home is worth $100,000. That is 125% of your home’s value. These loans are often called no-equity loans because the individual has not had the home long enough to develop enough equity to get a traditional home equity loan for the amount of money they require.
As with all loans it is important that you consider a few things before you take out a 125% mortgage. You will first want to consider that most companies who loan second mortgages will charge you for borrowing the money. Some lenders will offer 12.25% interest but you have to add 10% of what you are borrowing to the loan amount, meaning you will pay interest twice on that amount you are borrowing. If you want a lower rate you will have to pay a higher percentage to borrow the money. Do some shopping around with lenders before you make your decision.
The housing market still remains a mess as people still need payday loans to even pay their rent and as the inventory of empty homes is still higher than it has ever been before. When the market is like this and these empty home sit on the bank’s balance sheet, it is hard to see the full recovery happening anytime soon. The goal is to get rid of these homes however they can to clear their books. (more…)
Although it may seem that the interest rate on home mortgage prices are tied to the Fed’s announcements of lower interest rates, they really aren’t directly affected. The announcement can have an influence on these rates by allowing banks to borrow money from the Federal Reserve at a discounted rate. This savings may or may not be passed onto mortgage loan products depending on the economic climate and what rate your mortgage product happens to be tied to initially. Due to the loss of confidence in the housing sector, demand for home mortgage products has declined. This has more of a direct effect on interest rates offered as banks compete to attract borrowers to their table. If the demand is high, you may end up seeing the reverse dynamic where the interest rate on home mortgage products can increase.
Housing and jobs are the key indicators being watched for signs of recovery. Lending for houses is still following stringent guidelines, but credit is still available to the average consumer via no credit check payday loans and credit cards. The news for the housing market is somewhat mixed, with prices still declining in most of the country, however, the delinquency rate for mortgages has dropped since the panic of 2008. Jobs have been slow to recover, but with an increase in equity lending, it is possible that the housing market is starting to show signs of financial life, if not investment possibilities.
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