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Mortgage Loans Articles

Securing Your Home with Reliable Financing

May 30, 2014 | Mortgage Loans | No Comments

Homeowners often have no intention of going into debt that they cannot handle. However, when they need money to pay off their first mortgage or simply need some cash to get caught up on bills, they may wonder where their best source of financing can be found. Their dilemma may further be confounded if they have bad credit or are working to rebuild their credit scores. When they look for finance companies that specialize mortgages for bad credit loan applicants, however, homeowners can find this source of financing online.

When they visit the website, they can consider the second mortgages that suit their financial needs. For example, if they have an idea of how much money they need to borrow, they can use the website’s calculator and figure out how much they will be paying each month to their lender. They can also use this website to find out the current rates being charged for mortgages. These tools allow people to prepare for this line of financing better.

Because taking out a mortgage can be a hefty decision, people might want questions answered first. They can use the online form to contact the company directly. They can also get a free quote and same day approval by using the online forms for this purpose. When they take out 2nd mortgages with bad credit, people can enjoy homeownership and have the money they need to pay bills, pay for their kids’ educations, and meet other financial obligations in their lives.

HARP Now Helping More Borrowers Refinance their Homes

January 13, 2012 | Mortgage Loans | No Comments

If you are looking to refinance your home but can’t because you are underwater (you owe more than your house is worth), you may be able to now refinance via changes made to the Home Affordable Refinance Program (HARP) announced last October.  

The changes where made by the Federal Housing Finance Agency, Fannie Mae and Freddie Mac with input from lenders, mortgage insurers and other industry participants.

Fannie Mae and Freddie Mac claims they have helped about 9 million families refinance into a lower cost mortgage or a more sustainable mortgage product. About 10% of those helped was via HARP, which allows borrowers to owe more than their home is worth in order to take advantage of low interest rates and other refinancing benefits.

HARP will continue to be available to borrowers with loans sold to the Enterprises on or before May 31, 2009 with current loan-t0-value (LTV) ratios above 80 percent.

The new program enhancements address several other key aspects of HARP including:

  • Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
  • Removing the current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;
  • Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac;
  • Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model) estimate provided by the Enterprises; and
  • Extending the end date for HARP until Dec.

 

A very important feature of these changes is the encouragement, via elimination of certain risk-based fees, for borrowers to use HARP to refinance into shorter-term mortgages.  Additionally, borrowers who owe more on their home than its worth will be able to reduce the loan balance quicker if they take advantage of today’s low interest rates by shortening the term of their mortgage.

For more information view this PDF released by FHFA.gov.

Most Common Mortgage Loans

May 7, 2010 | Education | Mortgage Loans | No Comments

If you are in the market for a mortgage, you’ll soon realize that there are several different types available.  The question is which one is right for you.  (Note. You can use a mortgage calculator to compare loans.)  Some of the most common mortgages are as follows:

Fixed-rate mortgages are the most popular because it protects homeowners from increased payments and is very straightforward.  With this mortgage our monthly payment and interest rate stays the same for the entire term of the loan which makes it easier to budget.  Most loans are taken for 30 or 15 years, however, other fix terms are available.

FHA mortgage loans are fixed-rate mortgages back by the Federal Housing Administration (FHA), which is government agency.  FHA loans maybe a good option for first-time buyers.  FHA loans allow lenders to offer lower down payment options, however, with the lower down payments require mortgage insurance.  Additionally, lower the lower the down payment, the higher your monthly payment will be.  So be careful to review the extra costs when considering a FHA loan.

Adjustable-rate mortgages (ARM) have an interest rate that adjusts periodically, usually every 6 or 12 months. When the loan adjusts, the payment will adjust with market interest rate movement. Most lenders also offer a “hybrid ARM,” also known as a “fixed-period ARM”.  This is a mortgage with an initial fixed period of 1, 3, 5, 7, or 10 years, and has an adjustable rate and payment after the fixed period. Fixed-period ARMs are often named by the length of time the interest rate remains fixed.  

A 3/1 ARM, means the “3” is for a three-year introductory period, during which the interest rate remains fixed. The “1” means the interest rate will adjusts once per year after the introductory period.

Introductory period rates are lower during the introductory period, which can mean a lower starting monthly payment. However, when the introductory period ends, your rate will go up or down depending on the market rate. When considering an ARM, you should carefully consider your ability to handle potential increases to your rate, and consequently, your monthly payment.

ARMs caps are available in 2 options. Adjustment caps limit how much your rate can go up or down in any single adjustment period, which limits how much your loan payment can change when it adjusts. Lifetime caps have a maximum interest rate over the entire life of a loan. You should find out what the caps if you’re considering an ARM, and then determine to see if you can handle rate increases.

Interest-only mortgages (I/O) are mortgages that contain an interest-only payment option during a set period in first years of the loan, often the first ten years. Interest-only mortgage payment options can be available on ARMs or fixed rate loans.  During the I/O period, borrowers can delay making principal payments and make monthly payments that include only the loan’s interest. After the interest-only period ends, however, if interest-only payments were made (you can choose to make regular principal + interest payments during the I/O period) your monthly payments will significantly increase when your required monthly payments start to include principal, plus interest.

Adding any unpaid principal from the first 10 years to the principal due on the remaining years of the loan plus interest due on the remaining portion of the loan can result in what is commonly referred to as “payment shock.” You should carefully consider payment shock when considering an I/O payment option. Interest-only mortgages start with monthly payments that include only the loan’s interest.

After this initial interest-only period ends, however, the monthly payments can significantly increase when these payments then start to include the principal. This is called amortization. When an interest-only loan starts amortizing, the monthly payment amount increases, as you begin repaying principal in addition to interest.

Chase has introduced a unique cash back offer for home mortgage.  If you get a new Chase mortgage or refinance, you can choose either a 1% cash back or a 1% payment against your principal balance annually when you sign up for automatic payments on a new Chase Mortgage.  That’s not a bad deal!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The 1% Mortgage Cash Back works with any new Chase mortgage or refinance.  The cash back is deposited into your Chase checking account OR applied as a payment against your mortgage principal.

At your loan closing, complete your enrollment in our automatic mortgage payment service with your Chase personal checking account. Your monthly mortgage payment is automatically deducted from your checking account.

For more information visit https://www.chase.com/chf/mortgage/mortgage-cash-back.

Get 1% Cash Back or Payment on Your Mortgage

April 7, 2010 | Mortgage Loans | No Comments

Chase has introduced a unique cash back offer for home mortgage.  If you get a new Chase mortgage or refinance, you can choose either a 1% cash back or a 1% payment against your principal balance annually when you sign up for automatic payments on a new Chase Mortgage.  That’s not a bad deal!

The 1% Mortgage Cash Back works with any new Chase mortgage or refinance.  The cash back is deposited into your Chase checking account OR applied as a payment against your mortgage principal.

At your loan closing, complete your enrollment in our automatic mortgage payment service with your Chase personal checking account. Your monthly mortgage payment is automatically deducted from your checking account.

For more information visit Chase.com.

Chase has introduced a unique cash back offer for home mortgage.  If you get a new Chase mortgage or refinance, you can choose either a 1% cash back or a 1% payment against your principal balance annually when you sign up for automatic payments on a new Chase Mortgage.  That’s not a bad deal!

The 1% Mortgage Cash Back works with any new Chase mortgage or refinance.  The cash back is deposited into your Chase checking account OR applied as a payment against your mortgage principal.

At your loan closing, complete your enrollment in our automatic mortgage payment service with your Chase personal checking account. Your monthly mortgage payment is automatically deducted from your checking account.

For more information visit https://www.chase.com/chf/mortgage/mortgage-cash-back.

Inside The Collapse of the Subprime Mortgage Business

March 15, 2010 | Mortgage Loans | Videos | No Comments

Last night 60 Minutes had a very interesting segment about Michael Lewis who is about to release a book (titled “The Big Short : Inside the Dooms Day Machine“) about a handful of Wall Street outsiders who realized the subprime mortgage business was a house of cards and found a way to bet against it. One outsider made over $700MM.  Michael Lewis also talks about the current situation on Wall Street, the large bonuses still being paid and his predictions for the future of the industry. See videos below.

 

Analyzing Current Loan vs. New 15/30 Year Fixed Loan

May 20, 2009 | Mortgage Loans | My Ramblings | 2 Comments
analysis

I’m in the process of refinancing our mortgage.  I’ve debated whether or not to refinance to a 15 vs. a 30 year fixed loan or keep my existing loan.  I ran the numbers and it was hard making a final decision.  There are pros and cons with all three scenarios.  

Fortunately, I’m able to refinance because I have a Freddie Mac loan.  My mortgage company is able to refinance the loan without a formal appraisal, which would have caused problems due to current market value my home.

After some careful analysis I decided to go with a 15 year fixed rate at 4.25%.  I just couldn’t pass on the rate.  My existing loan is a 30 year fixed at 5.625%. My out of pocket cost to refinance the loan will cost approximately $1,187. My mortgage will increase by $147 per month which isn’t too bad.  I expect my property taxes to drop due the value of my home falling which will offset the additional $147 per month.

When I initially purchased the house if I had went with a 15 year fixed it would have increased my mortgage by approximately $350 per month, which I didn’t want to pay at the time.  I have paid 6 years of my existing 30 year mortgage, so now I will have 15 years left.  I suspect we may live in the house for at least an additional 5 years but you just never know what may happen in the next 5 years.

The answer to the question of whether to choose a 15 year fixed, a 30 year fixed or keeping your existing loan is “it all depends”.   Below are some of the things I considered to making my decision:

  • Current personal financial situation
  • Current mortgage interest rates
  • Interest rates falling vs. increasing
  • How long we plan to keep the house
  • Home equity after 3, 5, 10 years
  • Loan interest savings after 3, 5, 10 years
  • Investing/saving the difference in mortgage payments of 30 vs. 15 year loan
  • Interest left on existing loan vs. interest cost on new loan
  • Extra payments on a new or existing 30 year loan (to reduce life of loan and build equity) vs. 15 year loan

 

When I finally looked at the extra cost per month, the interest rate, money saved in loan interest cost, equity built in 3, 5, 10 years, etc., the new 15 year fixed loan at 4.25% is a great deal.

Related Articles: Is it Time to Buy or Refinance Your Home?

What is a Reverse Mortgage?

April 10, 2009 | Education | Mortgage Loans | Videos | No Comments
reverse-mortgage

A reverse mortgage is a type of home loan that lets you convert a portion of the equity in your home into cash. The equity that has built up over the years in your home can be paid to you. Unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. You are still required to pay your real estate taxes, insurance and other conventional payments like utilities.

The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home. The older you are, the more valuable your home is, the lower the interest, the more you can borrow. You can use an online calculator on the AARP website to get an idea of what you may be able to borrow.

You can be paid from a reverse mortgage in 4 ways: 1 – get cash all at once; 2 – a monthly cash advance 3 – a creditline which lets you decide when and how much of your available cash is paid to you; 4 – a combination of these payment methods.

To qualify for a reverse mortgage in the United States, you must be at least 62 years of age.  There are or credit or minimum income requirements, however, there are other requirements that homeowners must make sure they qualify for before they invest significant time or money into the process. You must also reside in the home. Some types of dwellings do not qualify such as mobile homes, however, condominiums and manufactured homes that meet FHA requirements may be eligible.

With most reverse mortgages the money can be used for anything, however, the borrower must pay off any existing mortgage(s) with the proceeds from the reverse mortgage and, if needed, additional personal funds.

Before proceeding with a reverse mortgage, applicants have to seek third party financial counseling from a source approved by the Department of Housing and Urban Development (HUD). The counseling ensures the borrower completely understands what a reverse mortgage is and how it’s obtained.
 
You can contact the Housing Counseling Clearinghouse on (800) 569-4287 for the name and telephone number of a HUD-approved counseling agency and a list of FHA-approved lenders within your area.

For more information visit hud.gov.

Video:  Reverse Mortgage