Monthly Archives: April 2008
A Better Answer To Debt Management: Debt Consolidation
Posted April 30, 2008 – 9:00 pm in: Foreclosure, Mortgage rates, Mortgage recovery, rating agencies, refinanceHigh interest debts are unwieldy and hard to manage. Nevertheless, the U.S. has more high interest credit card debt today than ever before. Worse still, Americans have little savings and back-up cash to help them pay those large bills. With the economy in an ever-changing state of flux, the need to handle debt though effective means becomes all the more importantâ”critical, in fact, for some.
An End To Debt: Debt Consolidation
The problem with high-interest revolving debt, such as credit card debt, is that it is very difficult to get a handle on just by making payments and paying it down. The interest rates are simply too high, and with that interest always compounding, there is hardly any touching the underlying principal debt. And without making progress on the principal debt, there will never be an end to revolving high-interest debt.
Credit card and high-interest loan debt is the first target for homeowners looking toward a payoff home mortgage or cash out refinance as a tool of debt consolidation, but other loans and debts can be consolidated too in an effort to realign payments and loans and achieve better overall financial management.
The Benefits Of Payoff Home Mortgage Debt Consolidation
Better financial management and manageability are the primary benefits of cash out refinance and payoff home mortgage debt consolidation.However, when you consolidate your debt into your home loan, you also net a number of other advantages, including:
â¢Tax deductible interest (loan interest is not deductible, but in most cases mortgage interest is)
â¢One payment for several debts (easier to manage)
â¢Lower payments (the result is low interest rates and long payment terms)
â¢An end to unmanageable debts
â¢Increased monthly cash flow
â¢Credit score improvement
â¢Less financial stress and worry
These are excellent benefits, and much sought-after advantages of debt consolidation; and benefitting from a cash out refinance is probably easier than you think.
The Process Of Debt Consolidation
It is extremely hard to find a real loan product for debt consolidation without a means of securing the loan (i.e., collateral).The most common method of debt consolidation is through a payoff home mortgage debt consolidation or a cash out refinance where the proceeds are used to pay down the loan and high interest debts.
Very basically, this type of debt consolidation simply refinances your current mortgage, paying it off and putting you into a new home loan. The new mortgage is higher in principal because money is taken to pay off your existing debts.However, with low interest rates sometimes the mortgage payment difference is minimal. It is almost always far lower than what your old mortgage plus debt payments were.
The process of refinancing is easier than applying for a new home loan. Since you already own the home and are making payments, there is less of a burden of proof and more potential for security of the loan, putting you as homeowner in a better position to begin with.
It is also important to note that process is essentially the same for the entire U.S., and that you do not have to work with a local or in-state lender.Your debt consolidation needs will be best served by securing the best rates and terms for your loan.For you, that could be anything from a Kentucky debt consolidation loan to an Alaska debt consolidation loan. Many of the best lenders are operating in Colorado, and so you would be very well served to look at Colorado refinance information before deciding on any one lender.
There are only a few pieces of critical information that you need for any U.S debt consolidation loan; whether you are interested in an Alaska debt consolidation loan, Kentucky debt consolidation loan, or the recommended Colorado refinance information, check to make sure the lender is licensed in your state, that the lender will support you and be a resource for you, and that their terms are favorable and beneficial.You have a whole nation to shop around, so take time to find a dedicated, experienced lender to handle your debt consolidation.
This article is provided by Access National Mortgage, based in Denver Colorado. Access National Mortgage provides progressive and superior financial solutions like a <a href="http://www.accessnationalonline.com/">New Mexico FHA Loan Application</a>, a <a href="http://www.accessnationalonline.com/">Wyoming FHA Mortgage Calculator</a>, debt consolidation loans, information about California FHA refinance benefits and whole host of other mortgage products all across the United States.<br>
No Comments | Tags:When You Need Private Mortgage Insurance
Posted April 10, 2008 – 9:00 pm in: Foreclosure, Mortgage rates, Mortgage recovery, rating agencies, refinanceOne of the biggest loans that most people in the United States take on during their lifetime is a mortgage for their house. Our system generally calls for a down payment of some type followed by a loan to cover the remainder of the house cost. Private mortgage insurance is usually required by the lender when the buyer puts down less than 20% of the sale price of the home he or she may wish to buy.
This insurance protects the lender in the event that the buyer is not able to finish paying off the loan. Once the mortgage is paid down to at least 80% of the home’s value, or possibly when the home’s value appreciates, the Private Mortgage insurance is usually no longer needed.
The sales price of the home is determined by the market value of the home, the area in which the home is located, and the size of the home. These dynamics are factored in when the home’s value is set by the appraiser.
There are several different ways that the Private Mortgage Insurance might be paid. The first option would be for the insurance policy to be paid as escrow is closed on the purchase of the house. This insurance would be for a fixed amount of time. This time frame is determined by when the 80% value will be reached according to the mortgage amortization schedule.
A second option might be that the private mortgage insurance policy payment amount would be combined with the mortgage payment itself, much like property taxes are included with some mortgage payments. Again, this payment would stop at the time when the 80% value is reached and would no longer be part of the mortgage payment.
A third option exists, as well, and many times the buyer may not even know that mortgage insurance exists in their mortgage. Some of the higher interest rates might specify that no mortgage insurance is needed. in actuality, however, the insurance payment has been added to the interest rate quoted on the prepared mortgage payment.
The private mortgage insurance premium is determined by several factors. One important issue is whether or not the home is investment property or whether it is a primary or secondary residence for the borrower. Another item that would be considered is the loan amount against the current appraisal value of the home. Of primary importance would be the borrower’s credit score.
Until 2007, private mortgage insurance premiums were not deductible on the home buyer’s income taxes. It was for this reason that many people who did not have the full 20% down payment would consider a second mortgage. The second mortgage would provide the money for 10 or 15% of the down payment, depending on the need of the borrower.
Now, however, a borrower may deduct premiums for the private mortgage insurance for up to three years on their tax returns. In many cases, this deduction has made it more cost effective to purchase the insurance than to obtain a second mortgage.
According to the Homeowners Protection Act passed in 1998, most private mortgage insurance policies automatically cancel when the 78% loan-to-value is reached. Defaulting on the payments or making late payments will, however, allow the lender to continue to require this insurance. This requires less of the home buyer because of the automatic percentage built into the policy. The savvy home buyer will, of course, want to mark this date on a calendar and check to make sure this is taken care of promptly.
Legally, the lender can hold the borrower liable for the premium on the private mortgage insurance policy until the value of the home reaches 78% of the loan-to-ratio value. Once that obligation has been met, the lender will probably require that the home be appraised again to make sure the insurance is no longer needed.
However, if the home buyer’s credit score is good and all the payments are current, there is another option. He or she may be able to petition to have the private mortgage insurance removed when 20% of the home’s value has been paid by the borrower.
Exceptions to these two allowances for termination of the private mortgage insurance may not be allowed on loans that are considered to be high risk by the lender. Another situation which may influence whether the lender allows for termination of the policy may be the presence of other liens on the land and/or the home.
Many considerations go into the buying of a home. If the home buyer has less than 20% down payment, he or she needs to be prepared for this to be one of those considerations. Just as property taxes and home owner’s insurance are part of the home owner’s future, so private mortgage insurance is part of the home buyer’s assortment of tasks to be dealt with as they look into the details of their new purchase.
Brian Jenkins is a freelance writer who writes about topics pertaining to the mortgage industry such as <a href="http://www.absolutemortgageco.com">Mortgage Company | Home Mortgage Lender</a>
No Comments | Tags:Negotiating A Mortgage Loan
Posted April 10, 2008 – 9:00 pm in: Foreclosure, Mortgage rates, Mortgage recovery, rating agencies, refinanceYou have found the perfect home. You are ready to move â” yesterday. But you have no idea how to go about in the mortgage world. All home owners learn their way through this maze and you are no exception. Take the time to learn â” it is well worth the effort you put into it.
To begin, find out what your credit rating is. There are three credit bureaus in the U.S.A. You are entitled to one free credit report per year and either of the bureaus can provide you with your score. Your credit score will give you a lot of information and it may even help you discover if someone has used your credit or your name without you knowing about it.
Once you know your credit score, then you are in a position to negotiate with your lender. While the interest rate may not be negotiable, several other items relating to your loan may be. You must know what to ask for in the negotiation stage. Remember, to go into escrow to buy a house, you will have points or costs that you must pay toward the loan. Points are actually a charge that the lenders use toward the cost of borrowing the money they will need to finance your loan. Each point equals 1% of total amount you are going to borrow. If you borrow $125,000 and your lender is asking you to pay three points, your total cost to borrow the money is $3,750.00. Ask about lowering the points by a quarter or a half.
In some mortgage loan transactions there are still institutions that charge for their attorneyâs legal work on the loan. Point out that some of the other lenders you have talked to no longer charge for this service and ask for a break on the lawyerâs fees. There are document preparation fees and there are the advertisements of other lenders across town. Use the competitive price system to your advantage. Saving a few hundred dollars in up-front escrow costs are a few hundred dollars you might need to put in that skylight that would look great in your new den.
Learn how the mortgage loan industry works; learn its lingo. When you know what the person on the other side of the desk is talking about, then the terms and phrases that they pull out of their hat are not so scary and you can converse and ask questions with confidence.
Fill out your application and begin to get quotes from three or four different lenders. Sometimes, looking at the bottom line is helpful. However, knowing what the escrow costs are and what the long-term mortgage rate is will help you make an important decision: do you want to pay more up front in order to get a better long-term rate or would you prefer to pay less up front and pay a little more each month? Examine the various offers and make sure you know what each charge is for and what it means. If they are professionals in the business, the lender will not mind helping you to understand â” they want the other business that you might have for them in the future.
Once you have the quotes and you understand what the programs and costs mean, then you are in a position to choose the lender you prefer. Let the lender know that you have gotten other quotes and start asking them to work with you in the places where the other lenders quote might look better.
There are several laws that you also need to be aware of as you begin to search for a loan. The first one is the Equal Credit Opportunity Act. Another is the Fair Housing Act. Both of these prohibit lenders and sellers from discriminating against any buyer/borrower and they make it illegal to charge more for their services to people of a different backgrounds, belief systems, nationalities, etc. These laws are designed to protect you, the buyer and borrower. You need to know your rights as you begin this process.
Even if you have credit problems, there are still ways to negotiate loans. You might need to explain the circumstances of late pay situation, especially if it was due to the loss of a job or an illness. It is especially important to point out to lenders when you have fixed the situation and show them the plan you have in place now to avoid future situations of the same nature.
You need to learn something about interest rates and the different types of interest rates available. Some interest rates appeal because of their stability while others appeal because of their flexibility. Can you work with the flexibility of an adjustable-rate mortgage or do you feel more comfortable with a fixed-rate loan? Those are questions you need to ask and examine with your financial advisor and your lender.
Once you have your questions answered, pursue the dream for purchasing your home for yourself and your family.
Brian Jenkins is a freelance writer who writes about topics pertaining to the mortgage industry such as <a href="http://www.absolutemortgageco.com">Mortgage Company | Home Mortgage Lender</a>
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