Category: Mortgage

What You Need to Know About FHA Mortgage Loan

Posted by admin on October 16, 2015

Before going into the specifics of the FHA loan, it’s crucial to first
address the question: what is a mortgage? You might be surprised to know
how many people don’t understand the terms they signed up for, as
proven by the housing bubble that burst and left hundreds of thousands
of Americans homeless. In basic terms, a mortgage is a collateralized
debt you will take on to pay for your home. Once you default on payments
for a certain period, the bank can take away your home.

What is FHA loan and is it right for me?

The FHA loan allows for a loan downpayment, which makes it attractive
for first time buyers. Why would banks agree to lower the payments for
home loan rates? That’s because the loan is insured against default by
the Federal Housing Administration. Once you default on payments, the
FHA will owe the lender. In theory, nearly everybody can qualify for an
FHA since it doesn’t place a cap on income.

There’s no minimum
credit score under the FHA, or to rephrase it: your credit worthiness
will be assessed individually. Theoretically, even if you have filed for
bankruptcy you are still going to qualify for an FHA . However, even
with the FHA , some lenders might still use your low credit score
against you.

FHA is not a lender

You don’t apply at the FHA for a home loan because it’s an insurance
fund. You need to deal with lenders that are certified by the FHA.
Again, the cost of mortgage can vary from lender to lender, and from
location to location. You won’t be approved, for example, if you take
out a loan greater than the average housing prices in your area. That’s
why it’s crucial that you ask around to get the most attractive home
rates.

What about insurance?

When you
take out an mortgage, grandfathered into the contract are two insurance
premiums: the upfront premium which represents about 2.25% of the total
loan amount as well as the annual premium which is 0.55% of the amount.
You can either pay the upfront premium when you take out the loan or can
be incorporated in your home rates. The annual payment, meanwhile, will
be paid along with the monthly mortgage payment. You must however do
your due diligence and compare the FHA with the rates offered by non-FHA
accredited lender to find out which is better.

Mortgage Market Review and Its Impact For Borrowers

Posted by admin on October 15, 2015

Robin Hood was famous for robbing the rich to give to the poor and
you could be forgiven for thinking that today the very wealthy were
attempting the reverse that situation when it comes to securing the best
mortgage deals. It appears that there is one set of rules for some and a
different set of rules for others, with wealthier borrowers now being
exempt from certain legislation and criteria imposed on mainstream
borrowers. However taking a ‘one size fits all’ approach to lending
really benefits no-one and the main point of regulation is to protect
the best interests of each individual client.

The Mortgage Market Review focuses on “Treating
Customers Fairly” and trying to hard wire a more conservative, but
common sense, approach to all areas of lending. However, some of the
changes are indeed a bonus for high net worth borrowers.

Firstly, entrepreneurs (business people borrowing against their homes)
will enjoy far more flexible criteria and even be able to ‘opt out’ of
standard affordability checks providing they can offer a credible
business plan. However, if banks remain unwilling to lend then more
traditional alternative funding routes typically used by entrepreneurs
may still be the quickest and simplest option.

Secondly, High
Net Worth (HNW) individuals, which are typically classed as those
earning upwards of 300,000 per year in the UK or those that have a net
asset base of 3,000,000 or more, can also enjoy a greater degree of
flexibility and be able to opt out of standard criteria tests when
borrowing a mortgage. The exemption for High Net Worth (HNW) borrowers
from stringent affordability criteria provides lenders with the
opportunity to be flexible when regular checks are not relevant for
certain categories of clients. Many HNW clients have a high level of
complexity with regards their income and assets. Many have irregular
income but their personal or family wealth is so vast that a standard
affordability check are effectively pointless as the risk to the bank or
other lending institutions is minuscule.

All things considered, the Mortgage Market Review willingness to show a
reasonable degree of flexibility for high net worth individuals must
surely be welcomed by all; both by the borrowers themselves but also by
the lenders, which have been freed from irrelevant legislation in
certain circumstances.

Obviously no one wants to see a return to
the days of the overly-easy credit available with minimal checks,
before the global financial crisis. This was one of the main reasons for
the economic predicament in which we now find ourselves embroiled in
the UK, Europe and the USA. But sensible lending does not have to mean
that checking the credit worthiness of a large mortgage borrower can be
done effectively by purely a box ticking exercise and disregarding
anyone who does not fit a particular profile; some common sense must
always be brought into the equation. This is good news for high net
worth mortgage borrowers as a whole and finally a common sense approach
has developed in the mortgage market that has been lacking for too long.

What Does It Mean – A Short Mortgage Glossary

Posted by admin on October 13, 2015

When you are seeking a mortgage it may seem that the process has a
language of its own. Many times there are terms used that can be
confusing or unknown, but are important things for a borrower to
understand. The following list contains some of the more common mortgage
terms and briefly explains them. It is not meant to be exhaustive by
any means and it is always important to make sure that you fully
understand any unknown terms you encounter. Don’t be afraid to speak up,
your lender would be more than happy to explain them.

Adjustable Rate Mortgage (ARM)

This is a type of mortgage with interest rates that can fluctuate based
on market conditions over the life of the loan. Typically an ARM will
have an introductory rate and a monthly cap on the maximum monthly
payment allowed.

Amortization

This is
the progression of decreasing principal over the life of a mortgage.
Each loan payment includes a payment to the principal and a payment to
the interest. An amortization schedule is a document that includes each
payment and reveals the changing ratio of principal and interest and how
the principal will decrease over time.

Annual Percentage Rate (APR)

This is a measure of a loan’s full cost and includes interest and fees
in terms of a yearly percentage rate. Federal law requires all lenders
provide their annual percentage rate so borrowers have a way to compare
the total cost of a loan over time.

Assumption

It is an agreement in which a buyer takes over the existing mortgage and the payments to a lender.

Blanket Mortgage

This is a mortgage that will cover at least two pieces of real estate as security for a single mortgage.

Closing

This is the final meeting between a buyer and seller or their agents in which a property legally changes hands.

Closing Costs

These are expenses that are in excess of the purchase price and can
include items such as origination fees, title insurance, escrow costs,
appraisal fees, and others. Closing costs will vary depending on
location and lender.

Consumer Reporting Agency

These are organizations which monitor individual credit activity and
history to determine the risk a lender must take on to provide someone a
mortgage.

Conventional Loan

This is a
type of mortgage that is not insured by the federal government.
Typically conventional loans require a larger down payment and a higher
credit score.

Default

This is the
failure to make mortgage payments as specified in the mortgage
agreement. Defaulting on a mortgage can lead to foreclosure.

Earnest Money

It describes the process of a buyer giving money to a seller that is included in the purchase price to secure a sale.

Equity

This is the difference between the fair market value of a property and
the current amount of debt an individual holds on that property.

Escrow

It is an account set up that the buyer pays into that can cover expenses such as taxes or insurance payments.

FHA Loan

This is a loan that is insured by the Federal Government allowing
individuals who are unable to qualify for a conventional mortgage to
purchase a home.

FHA Mortgage Insurance

Insurance required when obtaining an FHA loan. The insurance amount is paid in monthly installments.

Fixed Rate Mortgage

This is a mortgage that has a locked mortgage rate which does not change over time.

Foreclosure

This is a process in which the lender can force a sale of a property
when a borrower does not meet the terms of a mortgage agreement.

Interim Financing

This involves loans such as construction loans which are temporary
financing options during a building project. Typically a construction
loan will be replaced by a permanent mortgage when the building is
completed.

Lien

A Lien is a legal claim
on a property by a lender which is held until a mortgage is paid in
full. It protects the lender in cases of default.

Maturity

This is the date that a loan’s principal balance becomes due in full.

Origination Fee

This is the fee which includes costs for a lender’s expenses including
loan document preparation, credit checks, property inspections and
appraisals, and other possible fees.

Points

Mortgage Points describe prepaid interest by the borrower which is
assessed at the time of closing. One point is the equivalent of one
percent of the loan amount. Points that are purchased may be able to
decrease monthly mortgage payments.

Refinance

Refinancing a mortgage is essentially taking out a new loan to replace a
prior loan on a property. Common reasons for refinancing are lower
available interest rates or access to funds made available because of
equity.

Security

Security is the property that a lender holds a lien on as collateral for a mortgage loan.

Underwriting

Underwriting is the process of researching and reviewing information
about a borrower and making a determination on approving a loan. It also
includes matching the level of risk with an appropriate interest rate
and loan amount.

These are the most common terms you will need
to know to understand when considering a mortgage. As mentioned before
if you don’t understand a term, don’t hesitate to ask your lender. You
need to understand exactly what you are getting into when applying for a
mortgage.

An Introduction to Online Mortgage Companies for Best Home Loan

Posted by admin on September 12, 2015

Today, you can find many mortgage companies online that can provide
you a secure form of financial transaction so that you can avail the
best opportunity and manage your personal and professional needs alike.
Moreover, there are many prominent mortgage professionals available
online to ensure you that you get a perfect feasible solution to meet
your financial needs. For instance, if you are looking for the best home
loan lender that is going to surpass your expectations, then you must
search online for the reliable and top service provider. There are many
online mortgages companies who can provide you innovative yet flexible
solutions to meet your financial goals. Whether you need the security of
a fixed rate loan or for any other purpose, they can provide you
services that will definitely meet your expectations. These companies
will also help you to take your decision wisely.

Moreover, you must search for the company that can
provide you best financial services with lower interest rates when
compared to other service providers online. Whether you are buying a new
car, purchasing a dream home, want to pay off your debts or want to
fulfill any other dreams or aspirations, Mortgage Company can help you
while providing you the right loan program to meet your specific needs
and demands. In addition to this, companies keep all your personal
information secure and private. Apart from mortgage services, these
companies provide latest quotes to their clients along with the mortgage
calculator and fast approval of applications.

Therefore, if you
are searching around the best home loan mortgage lender, then there are
few important tips which you should keep in mind. For example: if you
are searching on the web for a mortgage company, then it is imperative
to choose a good lender that specializes in high risk loans. Choose
online mortgage company to apply for a loan application. They maintain
good connections with various lenders and are acknowledged with multiple
loan programs designed to help individuals to meet their specific
requirements. Mortgage companies will deeply understand your needs,
thoroughly examine your quotes and match you with the best loan program.

So, before applying for loans, you must compare the mortgage rates
offered by different companies. If you are interested to buy a new home,
you can take help form online mortgages companies to use calculator to
get the best mortgage rates. Using an online calculator, you can easily
and conveniently compare the rates offered by different lenders. Also,
online mortgage company will enhance your knowledge about the terms,
conditions and policies that you might need to apply for loans to assure
no financial stress. To find the most reliable company, browse over the
internet today.

Low Risk Borrowers Favored in the Mortgage Market

Posted by admin on September 9, 2015

Low risk home loan borrowers who have a mortgage at a low loan to
value, so that they have significantly more equity in their homes than
the amount they have borrowed, are the main beneficiaries of the record
low interest rates currently available in the UK. This low rate
environment in the current mortgage market means that home loan lending
is rising.

In addition to the low rates available (due to the
Bank of England’s base rate holding at a mere 0.5 per cent for nearly 5
years), there has also been increased competition between lending
institutions and two government schemes to encourage lending. These
facts have led to some of the lowest mortgage rates the UK has ever
experienced. But the benefits of this low rate environment are really
only available to the low risk borrowers.

High net worth mortgage clients benefiting from some of the lowest mortgage rates ever

With the UK governments Funding for Lending and Help To Buy schemes
offering banks and building societies access to inexpensive funds they
are able to offer some genuinely low rates, especially for high value
mortgage borrowers who are perceived as low risk.

It is these
high value, large mortgage borrowers with low ‘loan to values’ that have
benefited most because the most competitive mortgage deals are reserved
for those with a deposit of 30 percent or 40 per cent; a level that is
plainly unlikely to be available for young first-time buyers. The real
winners in this situationare the relatively small numbers of potential
home buyers who fall into the low risk category of lending.

Given that first time buyers are the life blood of the property market,
this situation cannot continue forever without further damage to the
already stagnant market. There will come a time when the lending
criteria imposed by banks and building societies will have to be
adjusted if they are to have any volume of business in the home loans
sector. There is an enormous potential market for first-time
buyersmortgages that is not being serviced while the few who are
fortunate enough to be able to borrow will see increasing competition
between lenders for their business. Loans at higher LTVs may soon start
to appear in greater numbers.

It is obvious that certain types
of borrower with plenty of equity and a high, secure income have seen
the cost of their mortgages fall significantly in recent years. Islay
Robinson, director of million pound mortgage specialist Enness Private
Clients believes that deals for borrowers with a 30 per cent to 40 per
cent deposit available have rarely, if ever, been lower. And, the
private banks and other non-traditional lenders thatLondonmortgage
brokers speak to on a daily basis have a keen appetite to lend to high
net worth finance clients.

For the mortgage market in the UK to
return to pre-credit crunch levels, these sorts of deals are going to
have to become available for first time buyers and those borrowers with
only 10 to 20 per cent of the purchase price available as a deposit.
Nevertheless, low risk, large mortgageborrowerswill continue to benefit
from superb deals.

Large Mortgage Choice Greater Than Ever

Posted by admin on August 26, 2015

If you have been seeking to secure a large mortgage (one in excess
of a million pounds) then 2013 has been a year when you were likely to
find a bigger choice of deals than at any time since the start of the
economic slump. More and more mainstream banks and other lenders have
been targeting the high value mortgage market and the choice of million
pound mortgages in the UK is increasing.

Some well-known lending institutions are now
considering lending over 1 million when previously their limit was
perhaps half of this amount. However, many mortgage brokers have urged
high net worth mortgage clients to take professional advice before
approaching a high street lender directly because many of them do not
have the underwriting experience to handle very large mortgages and
complex financial arrangements.

Santander, Investec and Scottish
Widows have launched large home load products aimed particularly at
professionals, who are likely to have well-mapped out career paths.Other
well-known lenders said to be considering million pound mortgages
include the Woolwich, HSBC, NatWest, Nationwide and Halifax.

During recent years many mainstream lenders withdrew their large home
loan offerings and the smaller private banks stepped in to fill the gap
and offer high value mortgages. However, as house-buying activity in the
prime UK property market continues to increase, more banks and building
societies have begun to offer larger loans again. Some are offering
two-year fixed rate deals at under 2 per cent for loans up to 5 million
but these are likely to be available only for those with straightforward
financial affairs and not for those with complicated income
arrangements.

Lenders tend to charge higher arrangement fees for loans in excess of 1
million but if that comes associated with a very competitive interest
rate then it is often worth paying when factored in to the lifetime cost
of the mortgage. Private banks, with their willingness to consider less
than straightforward arrangements with regard to income and ownership,
are still likely to be the best option for wealthy borrowers with
complex affairs. There rates are not significantly higher than the
mainstream lenders and private banks bring added expertise and
flexibility to the arrangement as well as specialist underwriters used
to dealing with high net worth finance clients. High street lenders
without this experience to properly assess a complex financial situation
usually just do not approve the loan.

Some private banks may
require a borrower to transfer some assets under management to secure a
low rate, but this is often a small price to pay for the savings that
can be made on the monthly repayments of a million pound plus mortgage.

While many more lenders will now consider a high net worth mortgage
client than in the past 5 years, many simply do not have the
underwriting expertise to agree a deal for borrowers with complex income
streams according tothe London mortgage adviser Enness Private Clients.
Most high street banks will only consider million pound mortgage deals
for clients with very straightforward income and assets. Consequently,
most high value mortgage borrowers will still be better served by
speaking to a broker who can approach a lender who they know understands
their particular situation.

Criteria For Getting Mortgage Loan

Posted by admin on August 16, 2015

1. Know Your Credit Score

Credit scores and credit activity have a major impact
on mortgage approvals. In addition to higher credit score requirements,
several missed payments, frequent lateness, and other derogatory credit
information can stop mortgage approvals. Pay your bills on time, lower
your debts, and stay on top of your credit report.

2. Save Your Cash

Requirements for getting a mortgage loan often change are ready to
cough up the cash. Walking into a lender’s office with zero cash is a
quick way to get your home loan application rejected. Mortgage lenders
are cautious: Whereas they once approved zero-down mortgage loans, they
now require a down payment.

Down payment minimums vary and
depend on various factors, such as the type of loan and the lender. Each
lender establishes its own criteria for down payments, but on average,
you’ll need at least a 3.5% down payment. Aim for a higher down payment
if you have the means.

3. Pay down Debt and Avoid New Debt

You don’t need a zero balance on your credit cards to qualify for a
mortgage loan. However, the less you owe your creditors, the better. If
you have a high debt ratio because you’re carrying a lot of credit card
debt , the lender can turn down your request or offer a lower mortgage.
This is because your entire monthly debt payments – including the
mortgage – shouldn’t exceed 36% of your gross monthly income. However,
paying down your consumer debt before completing an application lowers
your debt-to-income ratio and can help you acquire a better mortgage
rate.

But even if you’re approved for a mortgage with consumer
debt, it’s important to avoid new debt while going through the mortgage
process. Lenders re-check your credit before closing, and if your credit
report reveals additional or new debts, this can stop the mortgage
closing.

As a rule, avoid any major purchases until after you’ve closed on the
mortgage loan. This can include financing a new car, purchasing home
appliances with your credit card, or cosigning someone’s loan.

5. Get Pre-Approved for a Mortgage

Getting pre-approved for a mortgage loan before looking at houses is
emotionally and financially responsible. On one hand, you know what you
can spend before bidding on properties. And on the other hand, you avoid
falling in love with a house that you can’t afford.

The
pre-approval process is fairly simple: Contact a mortgage lender, submit
your financial and personal information, and wait for a response.
Pre-approvals include everything from how much you can afford, to the
interest rate you’ll pay on the loan. The lender prints a pre-approval
letter for your records, and funds are available as soon as a seller
accepts your bid. Though it’s not always that simple, it can be.

6. Know What You Can Afford

I know from personal experience that lenders do pre-approve applicants
for more than they can afford. After receiving a pre-approval letter
from our lender, my husband and I wondered whether they had read the
right tax returns. We appreciated the lender’s generosity, but
ultimately decided on a home that fit comfortably within our budget.

Don’t let lenders dictate how much you should spend on a mortgage loan.
Lenders determine pre-approval amounts based on your income and credit
report, and they don’t factor in how much you spend on daycare,
insurance, groceries, or fuel. Rather than purchase a more expensive
house because the lender says you can, be smart and keep your housing
expense within your means.

How Much Deposit Do I Need Get help from Mortgage Brokers

Posted by admin on August 9, 2015

Perhaps the biggest challenge facing potential homebuyers is the issue
of how much deposit is required to attain a home loan. There are many
misconceptions about how much deposit is actually required, and good
Perth mortgage brokers can offer invaluable advice and guidance when it
comes to a buyer’s options with regards to this.

The deposit is one of the most important factors which will determine
the success or failure of a home loan application. The amount of deposit
that a buyer can put down will impact upon future repayments, amount to
be borrowed, and the amount of interest which will be payable over the
term of the loan. It will also have a significant impact upon whether
loan approval is likely.

Mortgage lenders and banks will have
differing criteria governing what monies can be used as a deposit; the
more money saved for a deposit, the more likely it is that a mortgage
broker will be successful in negotiating the waiving of certain fees,
and a lower interest rate on the loan.

As a general rule of
thumb, most banks will require a minimum of five percent of the purchase
price as deposit, and this must be in what is referred to as “genuine
savings”. This is actual money which one has had in a bank account for a
period longer than three months, at minimum. This money is used to
demonstrate a pattern of savings behaviour.

It is always advisable to have as much money for a deposit as possible
(and one must not forget that fees such as stamp duty and legal fees
must also be covered over and above the purchase price of the property).
The greater deposit paid, the sooner a home loan will be paid off. More
equity in the home will be available. Some lenders will even offer a
discounted rate for interest when a large deposit is offered.

Persons who are self employed or who have income which is erratic can
have a more difficult time gaining a home loan. If one in this situation
seeks to borrow more than eighty percent o the value of a property,
Lender’s Mortgage Insurance may be necessary in order to be approved for
a home loan. This insurance, payable by the borrower, protects the
lender in the event that a borrower cannot make repayments and the
property does not sell for a price that will cover the loan.

One
should always aim to have as much deposit as possible when buying a
property – yet in reality, and with the current economy and the expense
of daily modern life, this can be very difficult to attain. This is why
it is so highly recommended to enlist the services of superior Perth
mortgage brokers. These professionals can help a buyer traverse the
minefield of loan products and find the perfect loan for each
individual’s circumstances.

Hiring a Mortgage Broker in Brisbane

Posted by admin on August 8, 2015

A mortgage broker is a person who is able to help you secure loans
from various banks and assist you with the buying options from various
lenders. They act as middlemen and negotiate on your behalf thus
increasing your chance of securing the best deals. This article
highlights the benefits of hiring a mortgage broker in Brisbane. Keep
reading to find out how they can assist you.

Mortgage brokers Brisbane provide valuable services
to those who hire them. They make the process of buying a lot easier and
provide the best deals available in the market. Additionally, they
educate their clients by making them understand the terms of loans and
explain the pros and cons of various financial products. With their
help, buyers are able to make informed decisions.

Finance broker
is of great help as they assist in determining the loan amount that you
should seek from lending institutions. Since they are expert in the
field, they can guide you in your decision. These professionals are also
very familiar with the various banks and their policies. Thus, you get
benefited from their knowledge.

Filling out the paperwork while
securing loans are a very critical step in the bank’s lending process.
Mortgage brokers assist the customers in preparing loan applications and
submit it to the lenders. Not only this, after submission of the
paperwork, they follow-up with the banks and monitor the progress by
keeping in touch with the financial institutions. This prevents delays
in the process.

After having discussed the benefits, it is
important to know how to choose the right professional for handling this
service. There are certain factors that need to be kept in mind. You
should always look for a licensed broker who has a good reputation in
the market. In today’s competitive environment, people in Brisbane are
posed with a lot of options. In such a situation, it becomes difficult
for us to choose which broker is the best as there may be some who make
false commitments. So, you have to be cautious from these brokers. A
right individual will ensure that the lending process goes smoothly with
the least possible hassle.

The decision to choose the right broker should never be rushed. You
should always spend a good amount of time in researching the right
person in your area. The internet is also a good source of information.
For instance, if someone is looking to buy a home in East Brisbane, he
should search for mortgage brokers East Brisbane. This will give you
ample of options that can sometimes be overwhelming. So, be careful in
choosing the right professional. You can also ask your friends,
colleagues and family if they can provide recommendations.

Another important thing to look for is his association with the
professional bodies like FOS, COS, MFAA, etc. It is always a good idea
to ask about their educational qualification and then cross check with
the professional body he is associated with. This will give you an idea
about his credibility.

To summarize, there is no second thought
that mortgage brokers in Brisbane provide the best of the services to
meet your current and future needs. However, it is highly recommended
that you look for a qualified broker who has good experience in the
industry and is able to assist you in the right direction.

The Pros and Cons Reverse Mortgage

Posted by admin on July 26, 2015

A lot of us are not aware what a reverse mortgage is all about. The
reverse mortgage is actually the opposite of a mortgage loan. For
instance, in case you have a house for which you have already paid. The
lender pays you money on a regular basis against the market value of
your home. This is a superb option for people who are old and cannot
work. This as result ensures them regular money flow sans any much
effort. HECM Equity Line of Credit Georgia offers a wide array of
schemes which can help senior citizens. HECM basically refers to Home
Equity Conversion Mortgages. This presents money solutions to a wide
array of people. With reverse mortgage schemes you will be able to buy
things which would have otherwise seemed beyond your reach.

Usually a lot of people consider retirement as the end of their life.
But in reality, this is the time when you are free from all your work
responsibilities and can begin to enjoy your life to the fullest. There
are various types of reverse mortgage plans, but in some way or the
other they are similar. You carry on staying in your own home akin to
what happens in a normal mortgage. You even pay the property taxes. You
are accountable for maintenance, house insurance and even repairs of the
property.

At the conclusion of mortgage, you need to pay all
the cash advances together with the interest amount. In case you are
unable to do the same, the lender can easily foreclose your house.

Reverse mortgage comes with a financing fee .This also holds true with a
forward mortgage. The money which you get from a reverse mortgage, you
can use it to pay this fee. These costs are usually supplemented to the
loan balance amount and you must pay them back together with interest
when the loan period comes to an end.

In case you have a good
property, but you are cash poor, then reverse mortgage can make the last
years of your life totally comfortable. The catch that at end of the
mortgage period if you are still alive or you have no money to pay the
loan amount you will end up losing your place of residence as well. This
can be a very scary thing. Many times people fall into debt quagmire
because of resorting to reverse mortgage. So be wary and resort to this
option with caution.