Basic Home Loan Terms Explained
The wonderful world of home buying can sometimes overwhelm the first time home buyer. They are inundated with information riddled with terms of art. ARMS, points, interest rates, good faith estimates, pay-downs, lock-in dates, so on and so forth... Read More
Everyone would like the best mortgage rate possible. Know some effective ways to lower down your home loan rate by reading this article.
With the hundreds of mortgage brokers, banks and lenders, refinancing today can be quite easy. However, it may be difficult to find the lowest and most favorable home loan rate that you want. It might surprise you to know that you, too, have active participation in determining interest rates on your mortgage. These rates are not pre-determined, and are imposed by lenders depending on individual circumstances.
This simply means that you have the power to turn your home loan rate into your favor. Here are five effective ways to give you a better edge in getting ideal mortgage rates:
Work on getting great financial records and keep them. Your financial records may have a large bearing on how much rate your lender may impose. Underwriters in lending companies and bank will most likely ask you for your most recent pay check stubs, W-2 forms, your bank statements, and so on. Aside from keeping your records favorable for creditors, make sure that you keep them in file. If you do not produce them in time as your creditor wants it, your rate lock may expire and your interest rate may increase.
Pay your monthly mortgage payments on time. This is probably one of the most important advices that you should heed in terms of home refinancing. Making yourself appear like a good borrower will help you most in qualifying for better refinancing rates. The rule of thumb in paying for mortgage is never to allow yourself to be delayed by 30 days. If you keep at this for at least a year, you can qualify for a low home loan rate in as little as 12 to 24 months.
Keep a good credit rating by your bills on time. In relation to keeping your borrower credibility smelling nice for your lenders, paying your regular bills on time will get you a good credit rating. A good credit rating will qualify you better for the lowest mortgage and refinancing rates much easier.
Fix all your past credit problems. If you unfortunately have had credit problems in the past, this does not mean that you already have no chance of getting a good home loan rate. Your credit history will usually show your past financial problems. This can be used against you only if you did worse to respond to it. Therefore, try to come up with a great plan to fix your past problems to increase your chances of getting better mortgage deals.
Make your employment stable and steady. Lenders most often favor those who have steady jobs. They like people who work in the same line of profession and do not shift from one career to another. If it is necessary to shift careers, make sure you do not keep the gaps relatively long, as unemployment periods are frowned upon by most lenders.
Choose from at least three different lenders and select the best one. All lenders promise nothing but the lowest rates, but you can double check their terms for yourself. Choose the one that presents you not only with the lowest home loan rate, but with the best terms they can manage.
To pay your home loan off quickly is what we all want and I will show you a way where this will allow you still live life to the fullest whilst your home is in the process of getting paid off.
Why would you work the hard way to pay off your home when there are easier way's to do it?
I receive so many emails from clients asking me how is this possible?.
You see most people in Australia paying off their home are making extra payments to get the home loan down as fast as possible, and in the process they restrict themselves and family to the pleasures in life, which is the right thing to do if you want to pay off your home, however…you do have options to get your money working smarter for you.
Let's say you took (for this example) $100 a week and put it into holding an investment property.
What we are doing is leveraging, yes you need to start working smart and not hard, remember that.
You purchase an Investment property. Now if we look at the history of property, it has doubled in value every 7-10 years, right?
And we also know that with inflation, capital growth and rental will also go up, but the loan will always stay the same amount. Right?
With this method you need to make sure you're purchasing in a good capital growth area, or an area with potential for greater capital growth.
This is 1 of the 30 criteria's we use when recommending an Investment Property to our clients. (I can refer you to some ideal investments that have great potential for capital growth, when your in a position to invest).
Secret Revealed At Last You pay your normal repayments on your home and hold the Investment Property until it has doubled in value and then sell it to pay your home off - there you go!
You see we can only work so hard and we are only going to get a certain amount of pay per hour, but with an Investment Property we can leverage ourselves.
Your investment might be worth $300,000. If it experiences capital growth of only 5% there is $15,000 profit and it might only have cost you $5,000 for the year to hold it.
What would you say if the bank or your Superfund announced that, what ever you put into your account this year we will pay you the double figure?
You would be screaming " Where do I put my money, right?"
Well tell me what happens if you experience a great year of capital growth and you make 20% capital gain? That's an extra $60,000! You couldn't save that in a year right?
The reason why this is, is because when you deal in big numbers the profit is also big. Don't be afraid of this because remember, you are not responsible for the loan.
You have the tenant paying for almost half of the loan and the tax man paying another 25% of the loan and they are helping you along the way.
But as I always say, when you start with Investing always look at your “comfort-ability level” and don't exceed that.
Start off with one property and once you are comfortable with debt and owning an Investment Property, you can move on to your second and so on.
If you have been putting off deciding whether Property Investment is for you or not, don't..... as there are too many long-term benefits to gain from when it's done properly.
I hear people say, "We are thinking about doing it, but not just yet". I say, what are you waiting for? When is it ever the right time to do Anything?
The only time you move ahead in life is when you decided to do something about it, that's it.
Five years will pass and you will still regret not doing it...
"3 Diseases That Kill Your Success" Do You Suffer From Any One Of These?
Procrastinator: Always putting things off.
Thinker: Just keeps on thinking what to do, like the guy that waits for everyone else to jump in the water before he does.
Detailitis: Needs to have everything in order before he can do anything, Eg- Makes sure all the items on the shelf are pointing in the right direction.
Remember life is too short to think about it and to waste time- I say do it NOW!
I know that you need guts to do it, but like anything, once you have done it, you will wonder why you were so hesitant and wish you had made the move years ago.
The wonderful world of home buying can sometimes overwhelm the first time home buyer. They are inundated with information riddled with terms of art. ARMS, points, interest rates, good faith estimates, pay-downs, lock-in dates, so on and so forth. Though some or all of these terms may seem somewhat foreign to you, do not get overwhelmed, there are simple explanations for each and every one of them.
Let us start with the different types of loans there are. Typically all home loans fall into two basic categories: mortgages and home equity loans. Mortgages are simply a loan against property that is secured with a "mortgage". This "mortgage" is basically a lien against the property until such time that loan is satisfied. So a mortgage is a loan against property that is secured with a lien against it.
A home equity loan is a loan that is also secured with a lien against the property. The home equity loan lien is secondary to the first mortgage on the home. This type of loan is based on the amount of equity in the house. Equity is the difference in dollars between the value of the home and the amount owed on it. Equity can be a positive number (the house is worth more than what is owed) or can be a negative number (negative equity) which means that there is more owed on the house than the house is worth.
A lien is simply a legal term that indicates that someone other than the homeowner has a legal right and interest in the property. So, if the property is ever sold, all liens need to be satisfied - any money owed to anyone with a lien must be paid, otherwise the new owner may become obligated to pay the amount owed. A lien is against property, not a person. Typically in all real estate transactions there will be a title search that will reveal any liens against the property. This title search is basically an examination over anyone and anything that may have some legal interest, obligation or right to the property.
If there are multiple home loans on a property the order they are paid in is the oldest to the newest. This is only a factor if the property is being sold for below what is owed. This is either through a "short sale" where the house is being sold by the homeowner for below the amount that is owed in the house. They will need approval from all lien holders in order to do this. This is also an issue if a house falls into foreclosure.
Within these two types of loans you will want to know the difference between a fixed-rate mortgage and a variable rate mortgage. A variable or adjustable rate mortgage is an ARM. Fixed-rate mortgages have the same interest rate from the first day of the loan to the last day of the loan unless it is refinanced. A fixed rate or variable rate loan will generally start off for a period of time at a specified rate and then after that period ends, if the loan has not been paid off or refinanced then the rate becomes adjustable based on specific conditions set forth in advance - typically tied to the federal interest rate. An ARM loan will have typically a 3 or 5 year period during which the rate is lower than the going rate. This is used to entice would-be borrowers or help borrowers have lower payments for the initial period.
"Points" are often discussed in connection with loan packages and interest rates. You can "pay down" an interest rate by paying points for example. What this means is you can pay for a lower interest rate if you pay a specified number of points. Points are simply one percent of the loan amount. So a $100,000 loan equates to $1000 for every point.
Another term you will often here is PMI, private mortgage insurance. PMI is insurance for your lender when the amount you borrow is more than 80% of the value of the property. In these cases the borrower needs to pay for this insurance policy. The calculation for your monthly PMI payment is 0.5% of your loan amount divided by twelve.
Tied to the calculation of PMI, as well as many other factors of the loan is an appraisal. An appraisal is a determination by a real estate professional of what the value of the property is. They will evaluate the property and similar properties in the area. They will consider market trends, recent sales and other factors to give an estimate on what the property is worth and would sell for.
Another potential add-on to your monthly payments is escrow payments. Escrow is money that is being held typically to pay taxes. Your lender will collect 1/12 of your yearly taxes every month in order to be assured that your taxes are paid. Your lender then makes your required tax payments. Typically your lender will have a cushion in the escrow account of 2 - 3 months in case you fall behind in your payments.
Though there are many more terms you may encounter these are the most often used, misunderstood terms. During the home loan process, however, you should never feel embarrassed or ashamed to ask what a term means. The more you know the better off you will be.
Deciding on a home loan refinance is a major decision. If done right, refinancing can ultimately help you manage your finances well.
Deciding on a home loan refinance may be your best financial decision if done at the right time and with the right circumstances. Simply put, home refinancing is the process of changing your home mortgage to another which suits your needs better. It means that you have to take out on a new loan, and use it to pay your existing home loan.
Home loan refinance is a very promising financial move, but it can only reap about best results when carefully thought of. Through refinancing, you may be able to lock in with a lower, steadier interest rate without having to worry about balloon payments. However in some unfortunate cases, refinancing may cost more than it will save. It is then a decision that should never be taken for granted.
Reasons Why People Refinance
There are many reasons why people choose to refinance their home loans. You may want to get some funds to renovate your home, pay off all your others debts in a quick way, or raise some cash for a major purchase or for a vacation. In a more practical sense, most people opt for a home loan refinance in order to get a cheaper rate to pay. A few also resort to refinancing in order to switched from a fixed rate mortgage terms to a more variable rate, or from a variable to a fixed rate, for one reason or another.
If you are caught in either of the situations given above, you can go for a home loan refinance. Bear in mind that it is best to start with a clear and specific set of goals. Whether you want to cut down on your repayments, improve your home or free up some cash, it is important that you have a target objective. This will make the entire refinancing process smooth and trouble-free.
The process of getting a home loan refinance will usually take some time, effort and money. You should first find out what the approximate fees and charges are for refinancing. Most likely, your lender will charge you for your application fees starting with loan refinancing down to credit checking. On top of this, lenders may also charge you for title search and insurance to cover the cost of property research and policy. Also, loan origination fees may be imposed by your lender as they prepare you a new set of mortgage terms and arrangement. To get the best deal out of your home loan refinance, shop around for good offers provided to you. It is most advisable to do some comparison shopping in terms of services to get the best deal out of your refinancing cost.
The rule of thumb in refinancing states that a home loan refinance will only make sense if your interest rate gets lowered by at least 2 percent. However, know that mortgage terms are not created equal. Before deciding to refinance, make sure that you carefully consider all the aspects of the new mortgage and make sure that you will get a better deal than your previous one.
A good credit history, a stable income and a good home equity balance are three determining factors whether or not you can qualify for home loan refinance. Read on and find out more information on these factors.
Before you can successfully get yourself a home loan refinance, lenders usually need to evaluate whether or not you qualify for the said loan. Expect them to go through your credit records, ask you for supporting documents to prove your financial capability, your income, and your collateral. So, to save yourself time, here are some guidelines to help you determine whether or not you qualify for home refinancing.
Your credit history
You should probably know that your credit history has a lot to do with loan approval. If you intend to get a home loan refinance anytime soon, make sure everything about your credit rating is in order. The better your credit history and rating is, the easier it can be for you to get approved, more so to get a good interest rate. Do not get the wrong idea though. People who have poor credit histories may still get themselves some refinancing, but the interest rates can be relatively steep.
If you are planning for a home loan refinance anytime soon, it should also be a good idea to get a hold of your credit reports. Find out how you stand as of the moment, and look for ways to improve your current records. Try to come up with a means to pay your credit card debts, avoid new loans, and pay off all the smaller debts. Do not open a new credit card account, no matter how tempting it would be, as it can only add more to your financial burden.
Your employment or source of income
Lenders usually favor those who have stable sources of income or employment. Remember that lenders are in the business to get them some income as they offer you some home loan refinance, so they will only bank on those who can religiously pay their dues. It is for this reason that they mostly hesitate on those who shift jobs too much, or impose stricter rates to balance out the risk. A stable income is proof that you will be able to pay off your debt. The higher your income, the higher the loan you will qualify for.
Here is how lenders usually determine whether or not you are a low-risk borrower. They take a good look at your income, and determine just how much of it goes to your monthly payments and other loan payables. If your total debt is more than 38% of how much you earn monthly, then you are considered a potentially good borrower.
Your home equity
Home equity, simply put, is the quantitative difference between your home's assessed value and the balance that you need to pay from your mortgage. As your home equity increases, you are getting closer to being free of your mortgage loan. The lower the remaining balance you need to pay, the higher loan you can borrow for your home loan refinance. Note that lenders usually limit your loan amount to up to 80% of your outstanding balance.
Save yourself and your lender the time it will take for evaluation. Think of your financial circumstances first and keep these three in mind. If you are qualified, then go ahead and get your home loan refinance from a reliable mortgage company.
How to Secure a Construction Loan For a True Modular Home
Construction Loans for Modular Homes
A construction loan for a true modular home built to local and state building codes will offer the same interest rate compared to traditional construction loans. There is no difference in the rate or term of the loan, they are the same. So, you may be asking yourself, what is a true modular home? A true modular home or sometimes referred to a system built home is a custom built home, built in a factory out of the weather compared to a stick-built home constructed on site.
The modular units when completed are delivered to site and assembled in a matter of days. When the work is completed the total balance of your line of credit will be converted to a standard residential mortgage. You may also find a lender of construction loans for Modular Homes who will agree to include the amount of interest you pay during the construction and cover any cost overruns. On average a modular home only takes 90-days to complete, which reduces interest costs dramatically, compared to a stick built home which can take 12-months or longer.
How Construction Loans for Modular Homes are Disbursed
Funds are distributed when certain work on your property has been completed. For example when the foundation is finished the bank will send someone to inspect the job site to verify the foundation is done. Once verified the bank will distribute funds to either the home owner or contractor. As certain property improvements are completed funds are distributed in a timely manner.
Most lenders will fund the cost of the modular home once it arrives at the home-owners property and is inspected. Funds are allocated to the builder or manufacturer and then the modular home builder will start attaching the home to the foundation. Once this work has been completed funds will be distributed for the installation of the home. If you need to ask for additional money above your original construction loan amount your lender may charge you additional fees. When talking with a modular home builder, be sure to clarify when funds will be distributed. Many builders and manufacturers require payment once home has arrived to the job site. Some lenders will not fund at this stage of the game and only fund once the home is completely installed. This lending practice is looked down upon in the modular home industry and many builders will not accept this payment method.
Qualifying for Construction Loans for Modular Homes
Like traditional mortgages, construction loans for modular homes will require you to come up with a 10% to 20% down payment. The chances of this will be higher if you are requesting a very large loan, or don't own the lot on which your home will be constructed. The days of 100% financing are long gone since the economic melt-down in September. With any construction loan you should establish a budget and stick with it. Be aware that the temptation to keep asking for extras as your modular home is being designed, can throw your entire budget for the project out of whack and make it more difficult for you to qualify for a construction loan.
If you're applying for a home loan, it's important that you find the best possible loan available to you. This can prove to be an intimidating task, even for loan veterans. It's important to make sure that all your goals are met and that you stay within your budget. For this, it's important to properly educate yourself on the finer points of home loans. You can always hire an advisor, visit with a financial consultant, or simply learn on your own. But whatever you choose, it's vital that you know what you're getting yourself into. In general, advice on this subject is in plentiful supply. So as long as you decide you want to learn, it shouldn't be hard to obtain the information.
Among the many things to consider is the topic of rates. For example, you may need to know the different between a fixed rate and a variable rate. This will all depend on the particulars, of course. A fixed rate simply means that even if a reserve bank lifts their interest rates, your specific rate will not change, hence "fixed." Conversely, the opposite is true when your bank lowers the rates. Your fixed rate won't allow you to reap the rewards of your bank's changed ways. On the other hand, variable rates fluctuate with the bank's interest levels, both positively and negatively. So, you will most likely see many variants in a variable rate.
You always want to consider things like having a line of credit in your home loan. This acts more like a personal loan that is secured against property you own. There are two basic types of the line of credit loan. The first: a revolving line of credit. It gets its name from the nature of the "revolving door" type of credit that will allow you to borrow and draw down on the line of credit as it's required. On the flip side, reducing the line of credit has a definite end to the cash regardless of your home equity. Depending on your cash flow requirements, it's important to know what you're getting into for this type of loan. You don't want the well to be dry in times of need.
How to Borrow Money by Cashing Out Home Equity
Over the years, you have been a faithful steward of your mortgage. But the time may have come when you need to borrow money now for things you need to purchase. A great way to fund your purchases is to cash out the equity in your home with a home equity loan. Read More
Home Equity Loan - Advantages and Disadvantages
A loan taken out for the purpose of transforming the equity in your house into cash that can be used for other purposes is known as a home equity loan. A loan taken with the equity in your home as collateral can be structured in many ways. It is actually a second mortgage in many ways... Read More
