Learning Center » home loan

Buying Cheap Repossessed Homes from Foreclosure Auctions

Isabel Rodrigues — Thu, 05 Apr 2007 11:07:28 +0000

Of late, more and more people are showing an inclination towards buying cheap repossessed homes from foreclosure auctions. This is because this could prove to be a very profitable deal for you, if you bother to conduct adequate research and find out about the property in concern. For a majority of us, buying our own home would never be a possibility had it not been for easily available home loans, also referred to as a mortgage. Banks verify your personal details prior to sanctioning a home loan. However, despite these calculative moves, there are times that we are unable to repay our loans. This could be because of numerous unforeseen reasons, such as job lay-off, illness, divorce and countless other concerns, as such your financial situations compromised and soon the situation could be such that you are unable to repay your monthly mortgage payments. When you default for 3 months continuously, the bank takes action and starts sensing out alerts. Once you are in this situation, it is as good as counting days to your foreclosure unless you can thin of a way to arrange for the money in that period. Nevertheless, it is important to realize that a banks core competency is the money business and not real estate. As such, they opt to let professional realtors handle resale of these foreclosed properties.

Buying cheap repossessed homes from foreclosure auctions is extremely beneficial because it helps you save a substantial amount of money. The truth is banks do not really depend on profits that can be made from foreclosed property deals. As such, they are happy to simply have a property enlisted and see it go off the shelf. As such, they sell homes off at reasonable rates. Banks do not really suffer losses in doing so because in case a certain property is valued at less than the loan amount on it, banks reclaim the balance from the original buyer. Buying cheap repossessed homes from foreclosure auctions is not as easy as it sounds because there are times that such property may have impending dues or loads of renovation that needs to be taken care of. In addition, it is most likely that you are to bear these expenses. This in fact does increase your investment costs.

Another important factor when g buying cheap repossessed homes from foreclosure auctions is to check if the original owner has rights to redeem this property within 120 days. Also make sure that you enquire with the realtors involved regarding nitty-gritty’s of the property so as to ensure an actual profitable deal.

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Refinance Loan Options

Isabel Rodrigues — Wed, 31 Jan 2007 13:16:04 +0000

You have your own property and you have purchased a home loan to finance it. After a few years, you feel that you should shift to a lower rate of interest in order to take advantage of falling rates or you probably have other commitments that need more urgent resources. Looking around for refinance loan options could be the sensible approach in such situations.

Mortgage is a claim of the lender on the property of the borrower or purchaser. The purchase cost of the property is the starting point for computing the loan. Add upfront costs, insurance, title inspection, taxes and maintenance. Now add the interest due to the lender for the term of the loan. This would be the total value of the mortgage and working backwards you would arrive at the monthly outflow of repayments.

Often borrowers buy a home loan and realize after a few years that they could benefit from lower interest rates spurring the retail finance segment. Refinance loan options enable the homeowner to substitute high mortgage outflows with lower ones on account of lower interest rates. Besides, refinancing helps in the following ways:

Ø It is ideal for leveraging the equity in the property. If the value of the property has appreciated significantly, refinancing your mortgage would bring attractive benefits. Your monthly mortgage dues or the term of the loan could be arranged according to your needs.

Ø Besides purchasing property, you probably have other financial objectives too. Lower outflows means freeing of cash that could be invested productively.

Ø It is a good method to consolidate debt and release funds for emergencies like medical expenses, college admissions etc.

Ø It is an ideal protection against inflation. If you saved your cash resources, it would be an inefficient method. On the other hand, higher equity in the property brings more funds into your hands for which you pay in uniform monthly outflows over a long period in the future.

Shopping for refinance loan options calls for adequate homework. Estimate realistically your need for refinance and determine the monetary value. Compare equity in your property as well as your future probable income flows. Now enquire with different lenders and obtain quotes for comparisons. Credit agencies could help you compare refinance loan options and decide on one just suited for you. Do not hesitate to negotiate on the interest rates and other hidden costs.

Refinance Calculators

Isabel Rodrigues — Fri, 26 Jan 2007 05:40:59 +0000

When a person obtains a secured loan with the intention of replacing or consolidating other secured loans procured with the very same assets, the transaction is termed as refinancing. A home mortgage loan refinancing is the most common example of this. Such refinancing is invariably resorted for a few reasons that provide some amount of financial relief to the borrower.

A debtor desiring to get his interest payment costs to be reduced goes in for refinancing. A person who wishes to pay off certain other debts owned by him plans for such refinancing. A borrower who wants to increase the period of repayment in order to reduce the monthly installments paid arranges for a longer-term loan. One who would like to dispose of a portion or the all of the property also resorts to such refinancing.

Interest calculation is one of the most important factors that has to be taken into consideration in refinancing process. There are several refinance calculators that are in practice. An understanding of these refinance calculators will provide the borrower with a clear idea of what he/she is getting into and plan for easy and hassle-free repayment. The effective interest rate is termed as annual percentage rate (APR). The APR also takes into account the total loan amount as well as the one-time fees like processing fee, documentation charges, etc.

Let us consider an example of an effective annual interest rate of 10% to understand refinance calculators. This interest rate can be expressed in more than one way. A lender might say the effective monthly interest rate is 0.7974%. Otherwise, he might mention that the annual interest rate compounded monthly is 9.569%. Alternatively, he might reveal that the advance annual interest rate is 9.091%. It has to be understood that a few lenders would try to express the effective interest rate as 9.1% annual rate in advance, to make the rate look cheaper. In cases where the interest rates are much higher, such a way of mentioning could give the impression of a large difference in the actual rate charged. The borrower should not get led away by this and be very clear about refinance calculators.

To cite a few more examples to clarify this, let us assume that a loan of $100,000 is repaid in 12 monthly installments of $8,771.56. The total amount paid would be $105,258.72. This does not mean that that effective APR is 5.26%, simply because the principal amount was being repaid every month and not at the end of twelfth month.

Further, let us assume that the loan of $100,000 includes a $1,000 processing fee, and that the monthly installments are $946.01 for 240 months at an interest rate of 9.569% compounded monthly. In such a case, the effective APR works out to 10.31% and not 10%.

From the above, it is obvious that a borrower should make a careful analysis of the various interest rates offered by understanding the underlying principle of refinance calculators to arrive at an informed decision.

20 Year Fixed Rate Loan

Isabel Rodrigues — Thu, 25 Jan 2007 05:11:43 +0000

When you acquire a 20 year fixed rate loan, you pay the similar interest rate for the complete life of the loan. Moreover, homeowner’s insurance payments and your property tax will change, and your bank may perhaps require you to put together these payments with the loan payment. Nevertheless, you know what your interest payment and principal will be on condition that you maintain that loan. Nearly all-permanent rate mortgage loans are set for 30 years, even though you can obtain them for 20 years which is also known as 20 year fixed rate loan.

The big disadvantage to 20 year fixed rate loans is that they in general have bigger initial interest rates compared to Adjustable Rate Mortgages. You meet the requirements for a home loan referred to your ability to clear the initial payment amount, so it is more often than not more tricky to acquire a 20 year fixed rate loan.

A 20-year fixed rate loan shields you from hiking costs of money. Keep this in mind, if rates go up, then your payment will remain the same. However, if rates go down, the payment will still remain the same. On the other hand, you can refinance your property and get these lower rates for yourself.

There will be closing costs whenever you refinance, but there will be two major reasons on why this should not worry you very much. Firstly, as noted previously, costs for 20 year fixed rate loans are frequently lower. Secondly, if you have verified to the bank that you are a first-class credit risk and if your loan is excellent for them, the bank will try hard to maintain your business. At this time, the bank wants you. The bank’s business depends on keeping and getting good customers. For that reason, if you refinance your property at the same bank that is your mortgage, you will most likely save a bit of money.

Furthermore, it might be the best, or in other word, least expensive, to acquire Adjustable Rate Mortgages or any changeable rate type loans if you have plan to repeatedly sell and buy your properties. If you plan to furnish and decorate your new home gradually just the way you prefer, and wish to form a relationship with your neighbors – mainly enjoy your pleasure of ownership there for few years, the long-standing security that a 20 year fixed rate loan offers is definitely for you.

30 Year Fixed Rate Home Loan

Isabel Rodrigues — Mon, 15 Jan 2007 18:02:17 +0000

The 30 year fixed rate home loan is probably the most common type of home mortgage loan offered by lenders today. A 30 year fixed rate home loan is popular with both lenders and borrowers because it has stable interest rates and stable periodic payments for the entire term of the loan.

The stability of a 30 year fixed rate home loan is the feature that makes it popular from the borrower’s standpoint. When interest rates in the market constantly change and this causes the home loan payment to change it leaves most consumers hesitant about acquiring a long term commitment such as a home loan. An unwary borrower who gets a fluctuating rate loan at 4% feels pretty good about it until rising interest rates cause the interest payment to be at 5% or 6%. This can add thousands of dollars in interest payments over the course of the loan period, and may make the monthly payments too steep for the borrower, so he ends up losing his home to foreclosure. Especially when interest rates are low, a 30 year fixed rate home loan is very attractive due to its affordability.

There are both advantages and disadvantages to the 30 year fixed rate home loan.

Funds can be borrowed for a long period of time (30 years) without the concern of increasing interest payments. Because the interest and principal are amortized over a longer period of time, the monthly payments are lower, making the loan more affordable to most people.

Conversely, the TOTAL interest cost of the 30 year fixed rate home loan is much larger than over a shorter term loan due to the longer amortization period. Equity builds up very gradually in the home, because early loan payment goes mostly to pay for the interest rather than paying down the principal.

Even the somewhat higher interest rate of the 30 year fixed rate home loan may not forestall borrowers from getting this type of loan, because interest on home loans is deductible on the federal income tax, thus reducing the liability for taxes. This reduction in taxes may even eliminate the potential federal income tax liability.

One other significant advantage to acquiring a 30 year fixed rate home loan is the ability to prepay all or a portion of the principal each month. Because the monthly payment is lower, some borrowers choose to apply the difference between what they would have paid with a fluctuating rate mortgage and the amount they pay with a fixed rate home loan to the principal. Over the life of the loan, this practice of adding perhaps only $50 to $100 monthly to the payment can save literally thousands of dollars in the total cost of the home and shorten the payoff time by several years.

Home Loan Calculators

Isabel Rodrigues — Sat, 13 Jan 2007 09:37:07 +0000

People that plan the purchase of their new home are happier than those that do not. These customers are better prepared to handle the costs associated with the purchase of a new home and know the monthly payment range that they can afford for a pre-determined number of years. They found home loan calculators were very helpful in determining the amount of money they should use as an offer on the home of their dreams.

With the use of home loan calculators, the prospective homeowner is able to experiment with the various calculation factors that would eventually equal the cost of their home mortgage loan, and let them do this in the privacy of their own home.

The factors that they would consider through repeated calculation were the fixed-rate or adjustable rate mortgage figure, the asking price of the home, and the number of months that the loan could be financed through their trusted lender. Knowing the strength of their credit rating will also be a factor they will consider in factoring the home loan amount, but it is not one of the features currently offered on home loan calculators.

Armed with this information, the home buyer could approach realtors at an open house and know what purchase price they could afford beforehand. They can choose to leave the home site before they are engulfed in sales pitches that will take them nowhere. It does not matter how new the home is, how many rooms are inside or the schools that are conveniently located nearby. They already know beforehand, through their careful research, that the listing price of the home is not within their acceptable price range.

What the home loan calculators did prepare the homeowner with was an intelligent counter offer amount that they can make and feel confident that it will be one that they can afford. If the home in question is near the ceiling amount of their predetermined price range, then the home could be readily purchased if the sellers could accept a counter offer that is a few thousand dollars lower than the current asking price.

They sellers could accept or deny the offer, but the figure that is provided has been carefully calculated using home loan calculators. The prospective buyer knows what type of home loan rate they will request on their home mortgage loan because that rate method was selected by the homeowner when they performed their home loan calculations. These home loan calculators identified which payment plan would work best for their family.

Reverse Mortgage

Isabel Rodrigues — Wed, 10 Jan 2007 09:27:42 +0000

Many old Americans are choosing a Reverse Mortgage option to be able to afford things in the remaining years of their life. The Reverse Mortgage is handled in basically the same way as a regular home mortgage purchase would be, and all fees that would normally be paid, such as filing fees, title fees and survey fees will be included in the cost of financing the home loan.

As a home loan matures, there is considerable equity that builds up over a period of time. The Reverse Mortgage option gives the homeowner the opportunity to obtain a home loan in an amount that is relevant to that equity. The home is still retained during the life of the loan and can be repaid anytime. This equity line of credit option is very attractive to elderly homeowners who are struggling on limited incomes with no opportunity to enjoy their life and travel where they want to go.

The homeowner will be required to get credit counseling before the application for a Reverse Mortgage will be processed. This counseling is available at any credit counseling center and it can be done over the telephone for the convenience of the applicant.

This counseling is meant to explore all available avenues that the homeowner can take to avoid the tax consequences of such a real estate sale, and to preserve the property in question for the heirs of the estate, instead of it being used in this manner.

All of the types of Reverse Mortgage loans will be explored to see which program would serve the homeowners best interest and provide the best financial benefit. There are four types of Reverse Mortgages, Home Equity Conversion Mortgage, Fannie Mae Home Keeper, Cash Account “Jumbo Loan” Program, and the Canadian Home Income Plan.

The attractive features of the Reverse Mortgage loan are that the homeowner will not have a monthly payment to make for the mortgage. This stipulation remains in effect for the duration of the loan, as long as the homeowner occupies the residence as their primary home.

The home loan is can be paid off by the homeowner at any time, or, in the event of death of the homeowner, by the heirs of the property that is part of the Reverse Mortgage home loan. This can be done without putting the property up for sale, but it can be sold if needed. The repayment of the home loan obligation can not exceed the homeowners primary home’s value or the sale price, whichever is germane at the time of subsequent repayment.

Home Equity Loan Options

Isabel Rodrigues — Fri, 29 Dec 2006 14:59:26 +0000

What are home equity loan options and how do they work?

A home equity loan option is an option that is open to you when you apply for a home equity loan from either a financial institution or a mortgage company. This is not limited to a second mortgage, a reverse mortgage or a home improvement loan.

The home equity loan options varies and they differ from company to company. They are inclusive of, but are not limited to the following: Payment plans, payment amounts, length of loan, short-term loan or long term loan.

How do I get a home equity loan option?

First you must apply for a home equity loan, or second mortgage from either your bank or your mortgage lender. They will sit down with you and talk you through the process. The home equity loan options will be explained to you at length. This also depends on how current your payments to the lender are and if you have bad credit. If you have been on time and current with payment, then the lender will be more likely to give you the home equity loan options that you want and need.

Are these home equity loan options available for everyone?

Not always. The bank or mortgage lender has to take into account how long you have had the loan, what your payments are, if they were on time, etc. They have to also take into consideration how your credit score is, if you have good or bad credit. They also check and see if you are behind on any bills. This will influence their decisions as far as offering you a loan or to refuse you a loan. This will take time, so be patient. A home equity loan option takes into consideration all the above factors. This will determine the suitability of the loan option and status of said loan.

How long does it take for a decision about home equity loan options?

This depends on who you are going to take the loan out with which could be either your bank or your primary lender. This decision can take up to 30 days depending on the variables that were just mentioned. This is not a fast process at all. If you qualify, then your banker or loan officer will sit down with you and discuss all your home equity loan options.

Useful Tips On Home Loans

Isabel Rodrigues — Fri, 22 Dec 2006 04:18:01 +0000

Buying a home requires lots of investment on part of the homebuyer. It is not everyone’s cup of tea to buy a home with ready cash, as at the end of the day it is a lot of money. Well if you to fall in a similar category then you need an appropriate home loan to pay off your monthly mortgages. Getting home loans is a simple process all you need is a reliable lender who can guide you through the entire process of home loans.

Selecting a home loans lender

Well if you perform a search you will be surprised to see the number of home loans lender on the web. Home loan lenders are basically bankers, investors or even mortgage brokers. Most of them specialize in a specific type of mortgage loan program. However there are many who provide an all round service of different mortgage loan programs. Whether you have a bad credit history or bankruptcy an appropriate search can help you find a home loan lender as per your requirements.

Home loans tips

Here are some useful home loan tips that can help you take corrective decisions:

Once you have decided to purchase your dream home you will be surprised to find the number of extra fees that are waiting to be paid. Apart from the initial deposit you need to take into account all the extra fees you will have to pay while buying a house. Some of the fees you will have to incur are the stamp duty, legal costs, insurance, builders report, loan application fee, registration fee and so on.
If you would like to pay of your home loan as soon as possible then you need to pay additional monthly payments than what is actually required. This is the best way to reduce the interest rate on your loan and also the loan term. If you are confident of paying additional monthly payments every month then its better not to select a fixed rate mortgage. Fixed rate mortgage often have restrictions to make additional payments or they may charge a fee for the same.
If you are earning a professional package say something more than $50,000 per year or even more, then you need to consult your lender about the same. Professionals earning more than $50,000 per year receive a 0.5% discount interest rate on whichever loan you select.

15 Year Fixed Rate Home Loan

Isabel Rodrigues — Thu, 21 Dec 2006 06:16:14 +0000

Buying a house is an important deal in itself. There are so many things one needs to consider while buying a new house. One of the important things you need to consider is whether you need a 15-year fixed rate home loan or a 30-year fixed rate home loan for your monthly payments.

No one likes to be in debts for a long period of time. If you too would like to pay the monthly payments of your home as soon as possible then its better to opt for a 15-year fixed rate home loan. However it is better not to rush into a final decision, as there are many things to be considered while selecting the mortgage rates for your house.

Benefits of a 15-Year fixed rate home loan

A 15-year fixed rate home loan is a perfect option if you would like pay-down benefits of a shorter-term product.
If you are approaching your retirement it’s better to switch to a 15-year fixed rate home loan rather than opting a 30-year fixed rate home loan.
The monthly payment of a 15-year fixed rate home loan is comparatively more than a 30-year home loan or a 40-year home loan. However you will have to pay a relatively lower interest rate for a 15-year home loan as compared to 30-year or 40-year home loan.

15-year fixed rate home loan v/s 15-year adjustable rate home loan

There is a high level of risk involved as far as selecting an adjustable rate home loan is concerned. Interest rate is never static it keeps on fluctuating every now and then. If you would like to apply for a 15-year home loan it is better you opt for a fixed rate loan rather than an adjustable rate loan. Selecting a 15-year home loan means that you are paying more monthly payments as compared to a 30-year loan or a 40- year loan. It would make no sense to opt for a 15-year adjustable rate mortgage if you are not confident about paying your monthly payments.

Selecting an adjustable rate mortgage will mean that you will have to pay a higher interest rate incase of an increase in interest rate for a particular month. If you cannot sustain the ever increasing interest rate on your home loan, then a 15-year fixed rate home loan may be perfect for you.