Top 20 Secrets You Should Know When Getting A Home Loan

31. March 2009 · Comments Off · Categories: Mortgages · Tags: ,
Scott White


If you are planning to apply for a home loan, there are various types of home loans available in today’s financial market and each one comes with its own rules and regulations. Below you will find the top 20 secrets you should know when getting a home loan.

1.Know About Various Types of Home Loans

The competition in the loan market is rising day by day. Nowadays there are numerous loan packages which suit almost every budget. Some of the major loan types include:

One Month ARM’s

Five Year Fixed ARM’s

15 Year Fixed

30 Year Fixed

100% Home Equity Loan

VA Home Loans

Zero Down Payment Mortgage Loans

2.Select the Right Home Loan for You

What a customer needs to do is to research various home loans and know the benefits, interest rates and repayment schedules for individual loan institutions. Make sure you select the right home loan for you as there are so many home loans available on the market today. Don’t apply for a home loan from the first loan company you meet, thinking that they are offering the lowest interest rates. Before applying for a loan, make sure that the loan is appropriate for you needs.

3.Down Payment

As a general rule of thumb, the majority of the loan providers will be seeking contributions from borrowers around 3% to 6% of the total loan value. Make sure that you are selecting the right one. As the competition in the home loan sector is increasing day by day, you can easily negotiate and get the right package for you.

4.Fixed Interest Rates Versus Adjustable Interest Rates

Fixed interest rates means that your interest rates will be fixed until the end of the loan period. On the other hand, adjustable interest rates (also known as variable interest rates), means that your interest rates for home loans will vary (increase or decrease) depending on the existing interest rates in the financial market. Before you apply for a home loan decide on which interest rate is the best one for you, that is whether you need a fixed rate or one which may decrease or increase each month.

5. Annual Percentage Rates (APR)

Annual percentage rates (APR) consist of principle, interests, fees, and all other costs related with the loan. Comparing the APR of various loan providers will help you to select the loan which best suits your budget.

6.Compare Home Loan Features

The majority of home loan customers exclusively compare interest rates, it is essential to compare home loan features as well. Keep in mind that, the more flexible your home loan is the higher the interest rates. A variable interest loan permits one to withdraw against repayments or offset savings against the loan, will also have a higher interest rate when compared with a standard home loan. So make sure that you have compared the home loan features.

7.Think Whether You Need a Redraw Facility

A redraw facility allows borrowers to make additional repayments on a home loan, and then have access to the additional repayments they paid earlier. However, these facilities are normally available only on Standard Variable loans which feature a higher interest rate than ordinary home loans. Think twice before applying for a loan with redraw facility as it is a little more expensive.

8.Loan Amount Qualification (Income)

This can differ according to you, your loan provider, and several other variables. However, as a baseline to decide on how much you can afford to borrow, have a look at two or three times your current household income. This will tell you how much of a loan you qualify for.

9.Loan Amount Qualification (Expenses)

This is another important category which changes from one loan provider to the other. However there are several factors to look at such as housing expenses, like insurance, property taxes, and mortgage and long term debt, like auto loans and credit cards.

To decide upon the loan amount expenses, take the sum of all of the housing expenses and long term debt. Make sure that the expenses don’t exceed 33% to 36% of your total household income. The next step is to examine your housing expenses. Make sure that the expenses do not exceed 25% to 28% of your total household income.

10.Employment

The majority of loan providers need to take a look at your employment history so as to make sure that you have a steady and stable income. If you have a stable income then there will not be any problems in getting the appropriate loan amount.

11.Credit History

This is another factor which can positively or negatively affect your home loan. If you have good credit history you can easily obtain the loan, while if you have bad credit history then you may need to pay a higher interest rate for your loan.

12.Know about Points

Points are one of the major fees charged on the loan and they represent the profit earned by the lending institution. Points are generally tax deductible. One point means 1% of the total loan amount.

13.Select Carefully Between Points and Interest Rates

When choosing a home loan, a borrower has the option of paying additional points in exchange for a lower interest rate. Before making any deal you need to consider a few factors. If you are planning to stay in the house for a longer period of term, at least 6 to 8 years, then choosing the points will be the ideal option, this is because the lower interest rates will save you more in the long run.

14.Consider Sub-Prime Loans

These are loans which are exclusively designed for those people who are burdened with credit and financial difficulties. These loans are also great for those who are looking to reestablish their damaged credit. If you fall under any of these categories it is a good idea to choose sub-prime loans. Though the interest rates of these loans are slightly higher than normal loans, these loans help you to reestablish your damaged credit history, or purchase a new home before cleaning your credit history. Generally these loans are offered on a short term basis like 2 to 3 years.

15.Consider a Portable Home Loan

A portable home loan is one which allows you to sell one property and move to a new one without refinancing your loan, that is, if you pay off the old loan and take on a new loan. This will save you a considerable amount of money, such as no application fees and legal fees. However, most home loan providers insist that the new home loan amount required must be less than the existing loan amount.

16.Get Professional Help

Even though websites offer buyers a large access to home listings, it is still a good option to seek the help of a professional. Look for an exclusive buyer agent who can provide you enough help with your home loan needs.

17.Shop Around

Many people are not aware of the importance of shopping around to find the best home loan. However it is quite essential to shop around as it helps you to know more about the home loan packages and interest rates offered by various home loan providers. This helps you to select the right deal.

18.Get Online Quotes

Nowadays most of the loan companies offer free online quotes. Ask for online quotes from various home loan companies and compare them to know which one suits your needs the most.

19.Read Reviews

Reading reviews of websites which offer home loans will help you to know what their previous borrowers have to say about them. Reviews are quite important as they are posted by those who have previous experience with a loan company. Try to read reviews before you select any loan provider.

20.Search Online

An extensive search online will help you to find the top online home loan providers. Don’t go with the first result displayed by the search engines. Go through a few websites and read their terms and conditions. Spend some time to learn more about the company and its services and then pick up the deal which suits your needs.

You are now aware of the top 20 strategies for searching and applying for a home loan, so what are you waiting for, apply for a home loan today.



What is the interest rate for high credit scores and the differences in rates?

30. March 2009 · 2 comments · Categories: Mortgages · Tags: ,
echo1181


If one is prime rate. Credit score above 780. Are the final interest rates they quote you lower than what is advertise on their website? I am considering using a mortgage broker however their rates seem higher than the bank + the cost seems higher. If the rate is what they advertise, I might just go to the bank directly first and save my time. The mortgage broker seems to be on top of things and most likely have better info on closing etc. which is their only selling point but if the interest rate is higher than the competitor I am reluctant to go with it since they will hit my credit score if I apply. Simply put money is money a little .25% can equal 60K over the life of the loan. Something that could sit in investment generating returns for me.

In general what is the difference in the interest rate for prime/ A credit scores? Are the advertised rates using prime rates or just average rates?

Thanks in advance

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Are education loans effected by our economy problems as well as home loans and car loans?

25. March 2009 · 3 comments · Categories: Mortgages · Tags: ,
sassy sista


I go to school online and I use education loans to pay for my education for the most part. Reporters talk about home forclosures due to loans and vehicle reposessions all the time, but I do not hear anything about education loans. Are education loans also affected by our slowing economy? I am worried if when I graduate, will I be able to afford the loans I took out for my education.

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First Home Owner Grants – First Home Owner Boosts

25. March 2009 · Comments Off · Categories: Mortgages · Tags: ,
Bailey


First Home Owner Grants were introduced on July 1st 2000, the same day the new Goods and Service Tax also took affect. First Home Owner Grants were seen as a way to counteract the impact of the GST. For those who are eligible, and meet the criteria set, a $7000 grant is available, to help individuals buy their very first, permanent, residence. First Home Owner Grants are funded by the revenue offices of the Australian Central Territories, but they’re administered by each individual state’s office. Basic requirements remain true throughout those states, although each office can have particular, additional criteria, which must also be met. First Home Owner Grants are an ongoing scheme, with no current plans to withdraw them. In Fact, an additional grant has recently been introduced and funded by the Australian Government, by way of the First Home Owner Boost Scheme. It is applicable to any home purchase contracts signed for on, and after October 14th 2008, and before of on June 30th2009.

Neither the price of a property, nor the individuals income, affect eligibility for First Home Owner Grants. If you do receive the $7000 grant, you might also be eligible for the First Home Owner Boost. Certain requirements do have to be met, to receive the ‘Boost Payments’. The Boost can be more than double that of First Home Owner Grants. Usually, your eligibility will automatically be considered for ‘Boost Payments’, when making your initial application for the First Home Owner Grant. Because each state has it’s own individual First Home Owner Grants scheme, ‘Boost Payments’ can also vary. Before completing purchase of your First Home, applications should be made through an approved agent, within the appropriate state. First Home Owner Grants are known to be processed within a few weeks, if the correct documentation is provided. If think you might be eligible, you can contact your state revenue office directly. Which state Revenue Office you must apply to, is entirely relevant to where the residence being purchased, or already owned, is.

Most legal residencies should be eligible for the fixed $7000, First Home Owner Grants. However, the type of property, and which state it is in, will affect the amount of the First Home Owner Boost. New homes are eligible for the most, with an extra $14,000 available, in addition to the $7000. On top of that, three thousand dollars is also available, in the form of a First Home Owner Regional Bonus, plus an additional ‘Boost Payment’ of five thousand dollars as a ‘First Home Bonus’, for those who meet criteria. Depending on the state, for a new home, the First Home Owner Boost and other supplements available can add up to almost thirty thousand dollars. In certain cases, a home which has been extensively renovated can be classed as a ‘new home’. If the residence has never been occupied, since those renovations took place. First Home Owner Grants and Boost Payments can amount to tens of thousands of dollars. Of great benefit to new ‘First Home Owners’ all over Australia.

 



What are Mortgage Rates Like in Colorado? are They Different?

24. March 2009 · Comments Off · Categories: Mortgages · Tags: ,
1st American Mortgage


Colorado mortgage shopper may wonder, while they are shopping around for a loan, if there are different mortgage rates in the state? —? higher or lower than the rest of the nation. The basic answer is no, when you compare rates for mortgages in Colorado to elsewhere.

Mortgage rates in Colorado and other states are based on federal standards. But there will be the perception that the rates are higher in areas where the cost of living is higher. For Colorado mortgage rates, this is often the case.

Impact of Jumbo Mortgages on Mortgage Rates in Colorado

Why are there higher mortgage rates in Colorado? Mostly because of the jumbo mortgage. Mortgages in Colorado very often go over the threshold of $417,000 that qualifies ‘conforming’ Colorado mortgage loans. Any Colorado mortgage above $417,000 is considered a jumbo mortgage loan. This is because there are such great homes and properties in Colorado. Better homes mean higher mortgages in Colorado, often necessitating a jumbo mortgage.

Jumbo mortgage rates are above those of standard mortgage rates in Colorado by about a quarter to a half of a percentage. Why? Because there is a higher risk because of a lack of federal backing and the investment’s large size. But this is true not just in Colorado, but of all jumbo mortgages.

The bottom line is that the mortgage rates in Colorado are not higher than normal, but it is the mortgages in Colorado that are higher, because there are more jumbo mortgages in the state, which pairs more Colorado mortgages into slightly higher interest rates.

Impact of Jumbo Mortgages on the Mortgage Buyers in Colorado

For mortgage buyers in Colorado, this means that finding a good Colorado mortgage broker is crucial when you search for a deal.

No matter the size or the classification of the loan, rates will differ between Colorado mortgage brokers. You may be able to obtain a loan from an out-of-state lender instead of an in-state Colorado mortgage broker, but that may be a mistake.

Consider this: Who knows more about Colorado home financing than an in-state Colorado mortgage broker? A broker in another place in the nation will not be as informed about the unique housing market. A Colorado mortgage broker understands the different types of properties and mortgage loans in Colorado. A Colorado mortgage broker offer many types of loans for many different types of homes, from small family homes to large homes requiring a jumbo mortgage, and property uses from investment, vacation, luxury or permanent homes.

Smart shopping is key in the search for a qualified and helpful Colorado mortgage broker. The small differences in loan fees and mortgage rates in Colorado can mean big differences in payments and interest paid during the term of the loan. Choosing a broker for the mortgage in Colorado, though, is not just about rate. Fees and closing costs should be a big factor when deciding on a loan product. An informed borrower ought to have all of this knowledge in their mind when they find a honest and trusted Colorado mortgage broker who can explain to a borrower the different parts of the process, from rates to fees to other options. It’s best that a borrower chooses a Colorado mortgage broker that is the best fits for their finances.



Home Improvement Grants: How To Obtain One

23. March 2009 · Comments Off · Categories: Mortgages · Tags: ,
Bill McCowen


If your home needs updating or has been damaged by a natural catastrophe and you can’t afford the renovation costs, you may be eligible for a number of different home improvement grants. To learn about different grants as well as tips on how to obtain one, keep reading.

Popular Grant Options

Local Resources

One of the first places you should look for home improvement grant programs is locally. Check with your county authorities and state welfare office to determine what kind of home improvement grant or low-interest loan programs they offer.

For example, King County in Washington offers a Housing Repair Program with 0% interest loans to low and moderate income homeowners. These interest-free loans allow homeowners to make their houses more energy efficient, take on major repairs and bring their houses up to code.

Another example is the Neighborhood Housing Services of Chicago that offers 4 different loan programs and a grant program for specific neighborhoods in the Chicago area. Home improvement financing programs like these exist all over the country and in most counties, so locating one in your area may not be so difficult.

National Resources

If your home has been damaged by a natural catastrophe, such as a flood, hurricane, or tornado, you may be eligible for grant programs sponsored by the Federal Government or FEMA. These agencies offer funding for specific areas and disasters. The U.S. Department of Housing and Urban Development (HUD) offers a number of home improvement programs, many of which are tailored specifically to rural areas.

Other national options include non-governmental organizations like Habitat For Humanity. Groups like these build housing for low-income families. To be eligible, you must apply to your local chapter and be willing to invest in the project as well as prove that you’re able to repay the cost of your home. Once in the home, the responsibility to pay off the ongoing mortgage and other expenses will belong with the new owner.

Tips on How to Secure a Home Improvement Grant

1. Read all the related paperwork. Go through every page of the grant documentation and application to make sure that you understand it. If you’re having trouble, don’t be afraid to ask for help by calling the people who are offering the grant or even simply by asking a friend to go over it with you. It is much wiser in the long run to swallow your pride and request assistance to help clearly understand the documents than to go move forward naively assuming all will somehow work out.

2. Pick the right program for you. Some programs are intended for residents of particular areas, income brackets or ethnic backgrounds. So, it’s important to read through the documentation and make sure you meet the qualification requirements.

3. Have your own paperwork ready. Many of these programs require proof of your household income as well as a full and detailed budget of the project. Be prepared in advance by having on-hand copies of your and your spouse’s most recent tax returns plus several months of pay stubs. Also, have a full project budget prepared to submit with your application.



home loans?

19. March 2009 · 1 comment · Categories: Mortgages · Tags: ,
roman_eagle_ma


are no income verification loans, still beig offered for home mortgages? or have they tighted that option up?

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Is there anywhere I can email directly about energy saving questions and ideas that I will get a response?

16. March 2009 · 2 comments · Categories: Mortgages · Tags: ,
Douglas


I was thinking about a financing system for electric companies to make is more affordable for home owners and the electric company to make homes more energy efficient. Such as a government grant.

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Mortgage Loan Approval Sometimes Need a Human Touch

14. March 2009 · Comments Off · Categories: Mortgages · Tags: ,
Kristin Abouelata – Home Loans


In the mid 1990’s, the mortgage industry saw the credit score and its predictive power to assess a borrower’s ability to repay a mortgage step into the limelight as one of the most indicative factors for loan approval. After conducting statistical test after statistical test, Fannie, Freddie and Ginnie, the 3 big lending institutions, mandated that the credit score should be used in conjunction with manual underwriting to assess loan approval. Not too long after, automated underwriting systems (AUS) were developed that expedited and streamlined the underwriting process even further for lenders. A loan officer today simply inputs a borrower’s key information into the preferred underwriting automatic engine, such as his/her credit score, income, amount being borrowed, cash reserves, employment and housing history, and the value of the property. A response is returned by the underwriting engine recommending approval or denial for the loan.

If your loan receives a denial from an AUS, the buck doesn’t necessarily stop there. Life happens to people, and oftentimes it’s going to take a real live person understanding the nuances of a file to make an underwriting decision. That’s when your lender may suggest submitting your file to underwriting for a manual review. After all, not everything in life can be automatic, right?

A perfect scenario for a manually underwritten file would be someone who has no credit scores. No credit scores? Yes, it is possible. I’ve had customers who, being old school and always having paid for everything in cash, had never established traditional credit lines that reported to credit reporting bureaus. In a case such as this one, I had to submit non-traditional lines of credit to underwriting, something a machine can’t assess. This means I had my customer bring in bills he had paid on time for the past year to create a credit history. Typical ones used are car insurance, utility bills, cell phone bills and cable bills. You can expect to have to provide 3-4 different trade lines if you haven’t established a traditional credit history and score.

“The most typical reason we see a file submitted to us for manual underwriting is for either no credit score or an error reported on a credit report,” reflects Patricia Haynes, onsite Government Underwriter at Mortgage Investors Group. “For instance a judgement that doesn’t really belong to the borrower. Maybe it’s really Dad’s judgement reflected on the son’s report because Junior and Dad have the same name. That’s when I can overwrite an AUS decision because I have the documentation to support my decision to do so in front of me.”

Another very common reason to submit a loan for a manual underwrite is when your customer’s credit score is below 620 and gets an AUS denial. If this is the case with your loan, be prepared to provide more than average documentation about your credit history, as well as written explanations as to why your credit score has suffered recently. Maybe two years ago you had a financial meltdown due to a medical illness, but in the last twelve months, you can prove you are back on your game and have been repaying debt. However, your credit scores haven’t exactly caught up with your actions. An underwriter is going to piece together the different aspects of your file and see if it makes sense. Your home lender should be able to review your file and guide you as to what documentation an underwriter will want from you to grant you loan approval.

Naturally, if your credit score is really low and you have very little explanation for your state of credit affairs other than you failed to pay your bills on time, don’t hold your breath for loan approval. An underwriter can see through smoke and mirrors. After looking at files as long as they have, they can basically sniff out a loan that has merit from the ones that are too risky.

So, even as our world gets more and more automated every day, it’s nice to know that you can’t replace genuine common sense, even in the mortgage industry. And it’s nice to know that you can plead your case for credit worthiness to a real live human being.



Did George Bush create a law regarding interest rates for home loans?

08. March 2009 · 3 comments · Categories: Mortgages · Tags: ,
emartel01


Last I heard, George Bush passed a law regarding interest rates for home loans. Can someone explain to me?

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