Investing in Real Estate
Posted on May 18, 2010
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Inside the World of Mortgage-Backed Securities
Posted on May 17, 2010
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Coldwell Banker CEO on Housing Market
Posted on May 17, 2010
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Making Sense of Economic Trends
Posted on May 17, 2010
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Tackling Financial Reform
Posted on May 17, 2010
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Where To Get A Bad Credit Loan Mortgage
Posted on June 6, 2009
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If you have gone through a bankruptcy or have a less than stellar credit history, you may be concerned that you are never going to be able to buy the home of your dreams. It may take a little extra looking, and it may even cost a bit more, but there is such a thing as a bad credit loan mortgage that can help you realize your dream of homeownership even if your credit rating is not as high as you wish it were.
Not everyone is in total control of their credit histories all the time; there are numerous reasons for someone to have bad credit reports. Health issues and the medical bills that go with them, divorce, and job losses are all issues that people face in life, and sometimes those issues can adversely affect your credit history.
Your best bet when searching for a bad credit mortgage may be to consider leaving behind conventional financing and try instead to get a USDA, VA, or FHA loan.
USDA loans may be the right solution for your bad credit loan mortgage if you have very little money to put down and if you want to purchase a home that is in a rural area. They may cover 100% of the cost of the home (sometimes even 102%), which is not as common as it has been in times past. It is also possible to get a fixed-rate loan through the USDA Rural Housing program, and it may not be necessary to carry private mortgage insurance (PMI).
VA loans are available to people currently serving in one of the branches of the armed forces and/or veterans. They are backed by the Veterans Administration, which makes lenders more eager to lend even if you have bad credit. The terms tend to be less costly than traditional mortgages, especially for those with bad credit. These loans are not available for investment property or mobile homes; they are only available for a property in which the borrower is going to live.
FHA loans are loans that are backed by mortgage protection insurance from the Federal Housing Authority. Even with bad credit, you may be eligible for an FHA mortgage loan. The FHA’s goal is to allow as many people as possible to reap the emotional and financial rewards that come with home ownership, and they have been assisting with bad credit loan mortgages for many years. Even if you have good credit, and FHA loan is worth looking into, as the protection offered by the FHA allows lenders to loan money to borrowers who have very little money to use as a down payment on their little piece of heaven.
If you have had past credit difficulties, you should know that you are not alone; you should also know that there may be options available for you. Bad credit loan mortgages can be found and help you realize your dream of owning your own home.
What Is A Jumbo Mortgage
Posted on June 6, 2009
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A jumbo mortgage is, as its name implies, a really big mortgage. To be more specific, a jumbo mortgage is one in which the amount being financed is more than the top amount set by the Government Sponsored Enterprises, or GSE. The GSE is a group of financial companies that is charged with maintaining access to housing loans and reducing the cost of those loans so that consumers are able to realize the goal of home ownership.
As part of their duties, the GSE sets a maximum guideline amount for a mortgage, which has traditionally been about $600,000.00. If a mortgage is for more than that amount, it is called a jumbo mortgage.
Of course, we all know that there are lots of houses that cost more than that, so the need for jumbo mortgages has been increasing as the price of housing has increased. Not all lenders offer jumbo mortgages, but there are certainly plenty of lenders who do. Generally speaking, a jumbo mortgage carries more risk for the lender because the payments are very high and even wealthy buyers may at some time in the future have financial difficulties that make it difficult for them to meet their payments. In addition, high-priced homes generally take longer to sell than do moderately priced houses, so if a homeowner does fall into hardship, it may take quite some time to get out from under the mortgage loan, so they may have to default on the loan.
Because of the increased risk, many lenders will require a large down payment on a jumbo mortgage. The interest rate may be a little higher than they would be for a mortgage that falls below the GSE’s guideline maximum amount.
It is possible for some homebuyers to purchase a home with very little or even no money to use as a down payment, but this does not generally apply to a person who wants to get a jumbo mortgage. For these large loans, most lenders insist on some money down, but in most other ways the process for getting a jumbo mortgage is pretty much the same as getting one for a lesser priced home.
If the house of your dreams is a high priced home in an area of the country that has seen dramatic rises in the prices of homes, just realize that there is likely a jumbo mortgage available to you if you have a good credit history and can show your ability to repay the loan. At the same time, you should be prepared for the fact that the loan is probably going to cost you a bit more than a smaller mortgage would, not just in terms of the amount you are borrowing, but also in terms of what it actually costs you for the privilege of borrowing the funds.
Pros And Cons Of Interest Only Mortgage Loans
Posted on June 6, 2009
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Have you been looking into the prospect of buying a home? If you have, you may have heard about interest only mortgage loans and may be wondering if getting an interest only loan is the right option for you. What exactly are interest only mortgage loans? As the name implies, this type of mortgage is set up so that the borrower (you) pays only on the interest of the loan rather than applying part of the payment to interest and part to principal. Of course, this is not done for the entire life of the loan. When the mortgage is set up, the interest only payment is set up for a set number of years only.
Once that set number of years is up, the borrower “trades in” his interest only mortgage loan for a more traditional one in which he begins to pay down the principal balance as well. Typically, interest only mortgage loans are set up with payments being applied to interest only for the first ten years, and then the loan is changed.
The reason that many folks have been interested in interest only mortgage loans is that they allow the borrower to have a much lower payment for those first ten years. Since you are not paying any principal, the resulting payment is lower than it would be with more conventional financing. If you are buying the house as a home and anticipate having an increased income as time goes on, you may be able to qualify for the interest only mortgage loan because of this lower payment that reduces your debt-to-income ratio. If you are an investor, the interest only mortgage loans allow you to keep more cash flow to make home improvements in anticipation of selling or just to keep more of your money in your pocket if you are interested in selling the property relatively quickly.
There are disadvantages to interest only mortgage loans, as well, however. The major disadvantage is that it is more risky to the borrower. With more traditional financing, you are building equity in your house right from the very start, albeit not a lot at first, as even with traditional loans, the majority of your payments go toward interest in the beginning. With interest only mortgage loans, however, you are building absolutely no equity. Equity comes from paying down the principal, and since you are not paying any principal, you are not building any equity.
What is the problem with not building any equity? Well, you are running the risk of not being able to afford the higher payments when the interest only years come to a close, as these payments will likely be higher than they would have been with a different loan. So, if your career does not bring in the kind of money you expected, you may find yourself unable to meet the payment. Also, you may be unable to sell the house when you are ready to sell if that particular period of time is a buyer’s market. Too, you will be unable to get a home equity loan (refinance) because refinancing is based on the equity in your home, and with interest only mortgage loans, you build no equity.
Hot Mortgage Terms You Need To Know
Posted on June 6, 2009
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Are you considering purchasing a new home? If you are, you should know that this may very well be a very good time to buy a house. The housing market is sluggish, which means that prices tend to be lower and so do interest rates. Also, there are more houses from which to choose. This surplus of houses on the market is good for the buyer; basic laws of supply and demand dictate that the more there is of something (in this case houses), the less it tends to cost.
If you are going to purchase soon, however, it is important that you understand the terminology used regularly in the real estate world. Common mortgage terms include interest rates, length or term of loan, closing costs, variable rate loans, origination fees, document taxes, home equity, acceleration, amortization, conventional financing, down payment, FHA loans, fixed rate loans, points, and private mortgage insurance (PMI).
The interest rate is the amount of money the lender is charging you in order to borrow the loan. This is expressed in terms of percent. Of course, the lower the interest rate, the less the cost of the loan.
The term of the loan is also referred to as the length of the loan. This is how long you will be expected to make payments on the mortgage. In years past, most mortgages were twenty years. Now, thirty years is most common.
Closing costs are any fees associated with the actual transaction of buying and selling a home. These include realtor’s fees, title insurance fees, document stamp taxes, the cost of necessary repairs to the home (if the repair company has agreed to be paid at closing), points, and other miscellaneous costs.
Variable rate loans are the “opposite” of fixed rate loans. With a variable rate loan, the percent you pay in interest can go up and down according to the prime interest rate. With fixed rate loans, the interest percent remains the same throughout the life of the loan.
Points, also called loan discount points, are fees that are charged to the buyer from the lender. These fees are prepaid interest and can add quite a bit of cost to your closing. One point is equal to one percent of the loan amount. If you are borrowing $100,000 and are assessed one point by the lender, you will have to pay $1000 of prepaid interest when all the paperwork is done at your closing.
Private mortgage insurance (PMI) is a type of insurance that allows the buyer to put down a smaller down payment on the home. Many lenders will require that you purchase PMI if you are putting less than twenty percent down.
A down payment is the amount of money you are paying out of your own pocket toward the purchase of your new home. The selling price of the home (plus all fees and other costs) minus the amount of the mortgage is equal to your down payment. Most lenders require you to have a down payment of twenty percent or carry PMI.
Different Mortgage Loan Types Can Make Or Break You
Posted on June 6, 2009
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What mortgage loan types are there for people who want to realize the American dream of home ownership? There are several to choose from, and there are advantages to each. The major mortgage loan types are conventional, FHA, and VA. Conventional mortgage loans are the most simple to understand and the most basic. When you get conventional mortgage financing for your home, you simply borrow a certain percentage of the price of the home (the sale price and fees minus any down payment) and agree to pay it back via monthly payments for a certain number of years.
FHA and VA loans are loans that are backed by the Federal Housing Authority and the Veterans Administration, respectively. These two groups both have the goal of helping more Americans realize the dream of home ownership. They work in cooperation with certain lenders and provide those lenders with mortgage insurance in case you have to default on your loan. Generally, these types of loans have a lower down payment, may have lower interest rates, and may be easier to qualify for. Also, with FHA and A mortgage loan types, the FHA and VA themselves set a lot of the parameters of the loan, such as how much of a down payment is needed, how much interest can be charged, inspections of the property in question, and so on. That is why not all lenders prefer to deal with FHA or VA mortgage loan types. The lenders have more control with conventional mortgage loan types.
Another major difference in types of mortgages is whether the loan is a fixed-rate or variable-rate loan. A fixed-rate loan has one interest rate that is set and remains unchanged throughout the life of the loan. Some people prefer to have a fixed-rate loan, especially during times of a “buyer’s market” such as we have now. Rates as well as housing prices tend to be lower right now, so it makes sense to get the lower rate and keep it forever, as interest rates are more likely to climb in the future, rather than decrease in the future. Also, knowing how much your payment is going to be helps you budget your finances more easily.
However, it can sometimes be more difficult to qualify for a fixed-rate loan, so some folks go with the adjustable mortgage loan type. Adjustable mortgages begin with one interest rate, but it is not necessarily going to remain the same throughout the life of the loan. Periodically, the interest rate can be adjusted to suit market conditions. Depending on what is happening in the economy and on what the prime interest rate is, if you have an adjustable mortgage loan type, your interest rate (and payment) can go up or down.
There are also ways of financing that are known as unconventional mortgage loan types. There are a variety of such types of loans, and they are relative newcomers to the home lending industry. You can find interest-only mortgage loans, balloon mortgages, and even reverse mortgage loan types. When you are searching for financing to make your dream a reality, be sure to look into all mortgage loan types to see which is the best fit for you and your family’s circumstances.
