Monthly Archives: December 2005
Bankruptcy And Buying A Home - 3 Benefits To Buying A Home After Bankruptcy
Posted December 9, 2005 – 10:00 pm in: Foreclosure, Mortgage rates, Mortgage recovery, rating agencies, refinanceIf you have filed bankruptcy recently, you may wonder if you can get approved for a home loan. You may also wonder if buying a home after a recent bankruptcy is a good idea for you.
While a bankruptcy can make getting approved for a mortgage loan more difficult, it is still possible to get approved for a mortgage loan. In fact, there are more and more bad credit loan programs coming out all the time. Subprime lenders are focusing more on helping individuals with poor credit acheive home ownership. This is happening mostly because bankruptcies are still on the rise and there is an increasing number of people with bad credit who are looking for home financing.
Here are some reasons to consider home ownership after a bankruptcy:
1. Increase Your Credit Score - When you make your payments regularly, you improve your credit rating. Once your pre-payment penalty period is over, you should be able to refinance your mortgage loan for a much lower interest rate. After your bankruptcy has been discharged for over 2-3 years, you should have a much easier time qualifying for a lower interest rate mortgage loan.
2. Accrue Equity In Your Home - If you are just making rent payments, you are throwing your monthly payments away. When you own a home, over time, home values increase and you are working toward owning an asset.
3. Take Out An Equity Loan To Consolidate Debt or Get Needed Extra Cash - Once you have bought your house, as soon as 6 months or so later, you might be able to take out an equity loan on your home and consolidate any other debt that you might have since your bankruptcy or debt that could not be included in your bankruptcy. Taxes and student loans will not be discharged in a bankruptcy. You may also want to use the extra cash to invest in a business venture or for needed home improvement.
See my recommended <a href="http://www.abcloanguide.com/lessthanperfectcredit.shtml"> After Bankruptcy Mortgage Lenders</a>. Carrie Reeder is the owner of ABC Loan Guide, which offers help with <a href="http://www.abcloanguide.com">loans for people after bankruptcy</a>.
No Comments | Tags:Fannie Mae And Freddie Mac Mortgage Loans - Conforming Loans Provide Low Interest Rates
Posted December 9, 2005 – 10:00 pm in: Foreclosure, Mortgage rates, Mortgage recovery, rating agencies, refinanceConforming loans provide low interest rates since they are almost guaranteed to be purchased by Fannie Mae or Freddie Mac, which allows more funds to be available for borrowers. However, these corporations have terms, such as maximum loan, that limit how much you can borrow. If you don?t meet their terms, you will need to apply for a non-conventional loan with slightly higher interest rates.
Loan Purchasers
Fannie Mae and Freddie Mac are stockholder owned companies that purchase mortgages, package them into securities, and then resells them to investors. This allows banks and other financing companies to lend to more customers since their capital is not tied up in long-term loans.
Fannie Mae and Freddie Mac have strict requirements for purchasing loans. Basically, they want to reduce their risk level so they put a cap on loan amounts, credit score, income level, and down payment.
Conforming Loan Amounts
Each year Fannie Mae and Freddie Mac create new guidelines for loan amounts. In 2005, a mortgage limit for a single-family dwelling is $359,650. Limits for multiple family dwelling are significantly higher, roughly an additional $100,000 per family. Maximum loan amounts are also 50% higher in Alaska, Guam, Hawaii, and the Virgin Islands since property prices are higher.
Second mortgages also have their limit. In 2005 the limit was $179,825, but the total mortgaged amount of both loans could not exceed $359,650. As with first mortgages, second mortgages can also be 50% higher in designated areas.
Non-Conforming Loans
There are other loan options if you don?t qualify for a conforming loan. If you need to borrow more than the maximum conforming loan amount, then you will want to apply for a jumbo loan. Because these types of loans are handled on a smaller scale, their rates are slightly higher than a conforming loan.
If you have poor credit or little down payment, you can use a subprime lender who specialized in lending to B/C type loans. You can expect to pay higher rates with these lenders, but many offer favorable terms. To find the best deal and to avoid scams, you must research your lender. Compare rates and terms until you find a favorable financing package.
See my recommended <a href="http://www.abcloanguide.com/mortgageloans.shtml">
Home Mortgage Lenders</a> online for the lowest rates possible.
Carrie Reeder is the owner of ABC Loan Guide, which offers help finding the <a href="http://www.abcloanguide.com">best home mortgage loans</a>.
Fixed Rate Mortgage Loans - Understanding The Basics
Posted December 8, 2005 – 10:00 pm in: Foreclosure, Mortgage rates, Mortgage recovery, rating agencies, refinanceFixed rate mortgages are the most common type of mortgage loan for home buyers. With predictable payments, long term homeowners can plan their budgets and guard against rising interest rates. But a fixed rate mortgage is not for everyone with its higher interest rates and a reduction in your buying power.
Fixed Rate Mortgage Features
A fixed rate mortgage features set rates, long term low monthly payments, and low risk. Interest rates are determined during your loan application process. Rates are set by the market. You can also lower your interest rate by paying points up front. This option only makes sense if you stay in your home for several years.
Long term low monthly payments are another benefit of this type of home loan. Over time, inflation will raise the price of everything except your mortgage payment. As your salary increases, your mortgage costs will also take a smaller percent of your income.
The low risk of fixed interest rates also appeals to borrowers. You don?t have to worry about rising interest rates or a balloon payment. You can also repay your loan early, saving money on interest payments.
Mortgage Terms
Traditionally, fixed rate mortgages were 30 or 15 year terms. Now lenders offer a couple of additional options. 30 year loans are still the most popular with their low monthly payments. A 30 year loan also enables you to qualify for more than shorter loans.
15, 20, and 40 year mortgages are also options. 15 and 20 year loans qualify for lower interest rates, but you will have higher monthly payments between 10% and 15% compared to a 30 year mortgage. Shorter loans also save you interest costs, appealing to those who want their loan paid off before retirement or their children go to college. 40 year mortgages are less common, but offer low monthly payments with higher interest costs.
Biweekly mortgage, as the name implies, requires half your mortgage payment every other week. At the end of the year, you have made an extra mortgage payment. You can have your mortgage repaid in 18 to 19 years. Most lenders also allow you to roll over to a 30 year term with no penalties.
Fixed Rate Drawbacks
Even with their benefits, fixed rate mortgages aren?t for everyone. Alternative mortgages enable you to borrow more than with a fixed rate mortgage. If you move in less than 7 years, you will also probably pay more in interest payments than if you went with an adjustable rate mortgage. Most homeowners move within the fist 7 years of living in a house. You are also locked into an interest rate that could drop in the future.
See my recommended <a target="_new" href="http://www.abcloanguide.com/mortgageloans.shtml">Home Mortgage Lenders </a>online. Carrie Reeder is the owner of ABC Loan Guide, which offers help finding the <a href="http://www.abcloanguide.com">best home mortgage loans</a>.
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