Tag Archives: home loan

Mortgage Brokers

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When applying for a home loan, it can be difficult to ascertain your options and the best deal out there. Mortgage brokers can help you shop for the best loan for your situation.

Mortgage Brokers

A mortgage broker is an independent professional assisting homebuyers with their mortgage needs. Instead of a loan officer for a bank, a mortgage broker typically works with tens or even hundreds of lenders. This independence lets mortgage brokers hunt for loans that fit the credit history and particular lending needs of a person.

Lets assume you have less than stellar credit when you apply for a loan at ABC Lender. The lender pulls your credit report and determines you dont qualify for any of the loans offered by the lender. The lender is going to drop you like a rock and move onto the next potential borrower.

Now, lets make the same assumption regarding your credit score, but put a mortgage broker in the place of a lender. The mortgage broker is going to look at your credit score, income and overall borrowing circumstance. The broker is then going to give you options and a recommendation regarding the best loan for you. Instead of hoping to get financing, you are now in a situation where you are evaluating the best financing options.

Mortgage brokers can help anyone, but are particularly valuable in two circumstances. The two circumstances are bad credit and document overload.

If you have bad credit, even horrible credit, a mortgage broker is going to be able to hunt down loan options. Many people make the mistake of believing bad credit precludes them from getting a loan. It doesnt. The loan terms may require more points or a higher interest rate, but bad credit doesnt preclude home ownership.

For some borrowers, the monstrous amount of paperwork required in the loan process can be overwhelming. When you use a mortgage broker, the documentation is all taken over by the broker and his staff. In fact, mortgage brokers have people known as processors on their staff who do nothing but compile, organize and process all the documentation needed for loans. The do this everyday and are masters of the process.

The decision to use a mortgage broker is often a good one. A good broker is going to help you get the best loan while making the actual loan process a lot easier than going it alone.

Mortgage Brokers The Nuts and Bolts

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Using a mortgage broker to shop for home loans can make the borrowing process a lot less stressful than doing it yourself. Here are the nuts and bolts on getting a good broker.

Competent Mortgage Brokers

There are a couple of obvious situations where going with a mortgage broker makes perfect sense. If you have less than perfect credit, a mortgage broker is going to be able to open your eyes to numerous loan options a traditional bank would never tell you about. If the idea of handling the mass of paperwork involved in the loan application scares you, a mortgage broker is definitely going to be a savior since they will take on that burden. Still, how do you know if you are talking to a competent broker?

The first issue to address when considering whether to use a mortgage broker is scope. Scope refers to the number of different lenders the mortgage broker works with in home financing. Generally speaking, the more lenders the broker works with, the better mortgage options you will get and, ultimately, the better financing. A good mortgage broker should have at least eight different lenders they work with and be able to go find others should your particular situation call for a special financing package. If the broker identifies only two or three lenders, you need to move on to the next broker.

The second biggest issue is the mortgage brokers knowledge of the lending industry. By knowledge of the industry, the broker should be able to identify multiple lending programs and the various lenders and options for each. For instance, you might ask the broker who he works with and the loan options available for a person with a 580 [poor] credit score. Further, ask the broker if he has arranged funding for such loans before and the specifics of the loans used. If the broker shows a depth of knowledge and starts rattling on about options, youve found the correct broker. If they dont, you havent.

Broker Fees

Mortgage brokers are paid upon performance. If they dont get you a loan, they dont get paid. The positive aspect of this is you can be the mortgage broker is going to bust their tail coming up with a solution for your problem. The negative aspect is you need to make a determination as to whether the options give to you are good loans for your situation. The commission of a mortgage broker is typically paid out of the loan proceeds, but costs such as appraisals are your responsibility. The broker should have no problem telling you their commission rate on the loan.

If you dont trust banks to give you the best deal or have been turned down by a lender, mortgage brokers are a great way to find good deals. Understand the nuts and bolts of what they do and you are on your way to getting a loan.

Mortgage and Home Loans

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The expansion in the real estate market has allowed many Americans to become “equity rich.” They may not have much money on hand, but they may have equity in their homes worth several hundred thousand dollars or more. Unfortunately, this increasing wealth gave birth at home as equity in cases of theft, as more and more thieves increasingly finding creative ways to help owners of their equity, their homes, or both. A clever scam involves new companies that promise to completely “eliminate” an owner of the mortgage. For a fee of a few thousand dollars, these companies claim that the owner can have a free and clear title to their home without repaying the remaining debt. How does this scam?

This scam is a bit more complicated than other scams that often use simple forgery of identity theft. In this “mortgage elimination” swindle, the owner places his home in a climate of trust with the mortgage elimination of society as a trustee. The trustee files a long and tedious, frivolous, a letter of complaint with the mortgage company, giving them a mere 10 days to respond. If the mortgage company does not respond within ten days, and often they do not, the confidence that these claims are then free from the obligation of mortgage. Using a power questionable procedure, and then the confidence files with the share register for a local release of the house of the title. It thus appears that the house is now without a privilege.

The legality of this range of disorders and of questionable outright fraud. It becomes even worse when the liquidator, clearly stating the title of the house, took a home equity loan, the coffers of the audit, and is rapidly disappearing. The disorder often leaves the original owner of a pile of trial, numerous visits from the police and from the obligation to pay two mortgages. This scam is currently underway in some parts of the country, and is not yet widespread. The owners can easily avoid being taken by this scam by simply recognizing a simple truth, you can not simply give up without a mortgage obligation to repay the loan far. Remember, if it seems too good to be true, it is too good to be true.

Mortgage Brokers vs. Banks

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When it comes to searching for the right kind of mortgage to meet your needs, you will probably come across a decision about who you should borrow from: Do mortgage brokers or banks make better lenders?

A mortgage broker is a mediator that facilitates the process of acquiring a mortgage for individuals as well as businesses. Essentially, they are like home loan supermarkets. Their broad access to lenders as well as their wide offering of various programs makes them a convenient source of help for many borrowers. If you have less-than-perfect credit or are in unusual circumstances, mortgage brokers can still find you the type of funding you need. Mortgage brokers will charge a brokers fee, which you should ask about and take into account when calculating your initial payments.

Mortgage brokers will typically originate, process, and pass the loan on to a lender who will subsequently sell it to an investor. They take commission and will have higher closing fees. Beware of gouging, as brokers have full discretion on how much they want to charge the borrower for processing the documents necessary for the loan.

Today, about 20,000 mortgage brokerage operations account for more than 80% of mortgages are issued by mortgage brokers in the U.S. The convenience and resources they offer to borrowers is the key to their popularity.

The term mortgage banker refers either to an individual loan officer who works at a bank or to the bank itself. They specialize in originating mortgages and selling them to investors and continue to service them. Both the origination and servicing processes require fees, which are the two primary sources of income for mortgage banks.

A key difference between mortgage banks and mortgage brokers is that banks have more of a standardized and set approach to setting fees. Bankers are told what fees to charge and are told not to stray away from them. This allows for more stability and prevents the borrower from being surprised when it comes to discovering what the fees for the home loan will be.

Now the question is which is the better option? The answer is quite simple: Whoever gets you the better deal. It should be noted that while some borrowers enjoy the comfort and help of having a mortgage banker see them through the life of their loan (though not all do), while others do not mind either way. This discernment, along with a thorough comparison of deals that you can get from mortgage brokers and bankers, should give you a fairly clear idea of which path to take.

Mortgage Calculator: No More Guesswork

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Do away with the guesswork on your refinance. Use the online mortgage calculator to see how sums will add up towards a 30-year refinance loan term. The accuracy of the mortgage calculator gives you the edge when deciding if you can or cannot afford a refinance at this time.

Informed Decision-Making

It used to be, before the advent of the Internet, that calculating mortgage rates was the work of a qualified accountant or mortgage specialist. Borrowers had no clear idea about the sums involved when they approached a lender for home loan or a refinance. Borrowers were given the explanation as to the workings of their loans for a specified loan term, and they were primed what to expect when they opt for a particular mortgage rate.

Today, its totally different. Borrowers are now armed with the knowledge of the different mortgage rates before approaching any lender for a loan. Like them, you now have at your disposal the service of the online mortgage calculator.

The online mortgage calculator gives a detailed summation and explanation of your mortgage amortization for the different loan terms you check out. Right there and then, you can figure out if you can afford a mortgage. This will save you the trip to the lenders to make inquiries, only to discover that you cant afford a mortgage at present.

What To Expect From A Mortgage Calculator

An online calculator will give you the following information after you have determined the suitable loan term:

1. monthly payment based on the selling price of the home.
2. interest rates.
3. downpayment percentage.

The results are often based on calculations on Private Mortgage Insurance for loans with less than 20% downpayment and town property taxes since these affect monthly payment for the mortgage.

The user-friendly mortgage calculator will require you to input the sale price of the home, percentage of downpayment, length of mortgage, and annual interest rate. Lets say you are getting a mortgage to finance the purchase of a $200,000 home. You can only afford a $10,000 downpayment, and you choose a 30-year loan term at a 7% annual interest rate. The calculator will show you that the amount financed is $180,000 and your monthly payment is pegged at $1,197.54 for the principal and interest only. Click the box for calculation explanation and click calculate.

Immediately you will have the results. You will also be informed that you need to pay PMI or Private Mortgage Insurance. This will add $55 a month for every $100,000 financed. This addition will bloat your monthly payments to $1,296.54.

By this time, youll know if you can afford to get the loan. If you have the 20% cash downpayment for the mortgage amount, you will be saving thousands of dollars on your mortgage. The mortgage calculator will then show a detailed summary of the month number, interest paid, principal paid, and the remaining balance from year one to the present year in detailed precision.

Do not hesitate to use the online mortgage calculator as this is free, so you can now stop the guesswork.

Mortgage Choices That You Have

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When selecting a mortgage, there are many things to think about and wonder about. For anyone that is looking for a way to secure the best loan for their next or first home, they should weigh all of their options, carefully deciding what the right way to go is. With so many different types of mortgages out there, though, this can be relatively difficult for you to do. Take a moment, then, to find the best way to get your mortgage to fit within your life.

Here are some of the mortgage options that you have and you should carefully consider before purchasing your home.

New Timers

If this is your first home loan, you have the advantage in many ways. First of all, you may qualify for a government backed loan. The FHA loan is a commonly used loan that allows for the lenders to offer better interest rates and lower fees. It can help any new homeowner to actually secure the home that they want even when their credit is not that great. This federal government will help to back these loans for you, giving you more of an option in funding it. Also, there are many benefits offered to first time home buyers throughout the states from various cities. Find out if your city offers any benefits to moving here.

The Down Payment

When it comes to having a down payment or not, many of those that bought homes twenty or more years ago, did so with large down payments. Today, many people are buying them without any. Which is the right way to go? If you do not have the funds set aside for a down payment on your home, you should still consider purchasing one. If you do have the funds to put down on a home, do it. This can greatly reduce the amount of money that will need to be financed which means less interest payments on it as well. Carefully consider the amortization schedules that you can get before signing a mortgage to determine if it is a better choice all around.

VA Loans

If you have served in the armed forces of the US, you may qualify for a VA loan. These will allow an individual to secure a loan with federally backed funds. It can help to lower the cost of the homes interest rate too. If you are applying for a mortgage with a home lender, make sure to tell them of this status as it can greatly help you.

With so many options, it pays to do your homework. The good news is that there are tools called loan calculators that you can use to help you to see what your monthly payment will be as well as how much your home will end up costing you with various options like these. Use them and see what the best solution for your needs is. This can be done easily and within seconds right on the web. Also, always ask your mortgage lender to inform you of any and all options that you may qualify for with your home loan.

Mortgage Financing: Signs Of Predatory Lending

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If you’re shopping for a home loan, you can save thousands of dollars by being aware of predatory lending practices, in which you’re charged too much for your loan or are forced to buy services you don’t really need. You can protect yourself by learning to recognize the signs of predatory lending. The Center for Responsible Lending lists seven specific warning signs that consumers should be aware of when applying for a mortgage.

The first warning sign is excessive points and loan origination fees. Since these fees are often financed as part of the loan, it’s easy to hide them. Competitive lenders typically charge 1% or less of the loan amount, but predatory lenders often charge 5% or more, which can add up to thousands of dollars over the course of a home mortgage.

The second sign is a high prepayment penalty. Mortgages don’t have to contain a penalty for paying off a loan early. In fact, only about 2% of loans from competitive lenders include such a penalty. However, some 80% of predatory lenders build them into their loans. Since nonprime borrowers are often motivated to refinance their homes with lower loans once their credit improves, a stiff prepayment penalty–sometimes as much as six months of interest–can generate a substantial windfall when the loan is refinanced.

Another warning sign is if a broker gets a kickback from a lender, in which a real estate broker delivers borrowers to a lender at a higher interest rate than the normally accepted rate. The lender then kicks back a “yield spread premium,” paying the difference back to the broker. This can add thousands to your overall mortgage premiums.

Loan flipping is the fourth sign, in which the borrower is required to refinance the loan, often several times, over the course of the mortgage. The fees can be hefty, and are purely meant to add to the lender’s bottom line. They can also reduce equity and increase monthly payments.

Another warning sign is when you’re told that buying extra services, such as credit life insurance, is mandatory for loan approval. These products are often unnecessary, and can also add thousands of dollars to your overall mortgage payments.

The sixth sign to watch for is mandatory arbitration, in which you’re told that any future dispute over the loan will need to be settled through arbitration, and not through the court. This can severely limit your rights, and sometimes you can be required to appear personally in the lender’s home offices, which could be thousands of miles away.

The final warning sign is if you find yourself being steered toward a less desirable type of mortgage, even if it appears as if you could qualify for a more favorable loan. Fannie Mae estimates than nearly half of nonprime borrowers could have qualified for better loans.

To avoid being a victim of predatory loan practices, learn to recognize the seven warning signs.

Mortgage Interest Rates 101

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Many things affect mortgage rates – which is why they fluctuate. So it pays to understand a little about how mortgage interest rates are generated. The more you know about the economic factors that change rates, the more prepared you are to find the perfect home loan at an interest rate that’s perfect for you as well.

Market Conditions
When the Federal Reserve Board raises or lowers rates, there is usually an impact on the rate you will get for your fixed rate home loan, although it’s not as direct as it may seem. The Federal Reserve adjusts federal funds rate, which is the rate at which banks lend to each other. When federal funds rate decrease, we spend more, which can actually increase inflation. Mortgage rates tend to be longer-term rates that are affected by concerns about inflation, as well as other economic indicators like job growth. So it’s more accurate to say that mortgage rates are indirectly affected by the Federal Reserve Board, and more directly affected by what happens every day in active public markets. The market sets the interest rate, and then a margin is added to the index to determine your final mortgage interest rate.

Timing
Since interest rates change daily, the longer a lender locks in a rate, the higher the risk that the market will move against them. Therefore, you pay more (in points) for a longer guarantee. If interest rates appear to be on an upswing, it makes sense to lock in your rate. If they are steadily dropping, it makes sense to float your interest rate so that you can take advantage of a shorter lock-in period, saving you money.

Points
You can often receive a lower mortgage interest rate by paying extra points – mortgage costs that are up-front rather than built into the interest rate. Each point equals one percentage point of the total amount of the loan. For example, one point on a $100,000 loan is the equivalent of paying $1,000 to ensure you get a lower interest rate that saves you money over the life of your loan.

Credit and Payment History
A less-than-perfect track record may make you seem like a high credit risk, which means you’d only be eligible for higher mortgage interest rate loans. If you find yourself in this position, don’t worry – we have loans that could still help you make your dream a reality.

Credit and Payment History
A less-than-perfect track record may make you seem like a high credit risk, which means you’d only be eligible for higher mortgage interest rate loans. If you find yourself in this position, don’t worry – we have loans that could still help you make your dream a reality. Learn more about Bad Credit Loans.

Debt-To-Income Ratio
Your monthly debt obligations are calculated against your current income. The higher the ratio, the higher the risk which could mean a higher interest rate.

Loan-to-Value
The loan-to-value is the amount you need to borrow versus the value of the home you want to buy. The more equity you have or the more money you give as a down payment decreases a lender’s risk, often resulting in a lower rate for you.

Property Type
Lender risk plays a big part in your rate. For instance, a loan for a single-family home is less risky than one for a multi-family home because there are fewer variables. The less risk, the better the rate.

Occupancy
If you plan on living in your new home, you will probably get a better rate versus a loan on a rental unit, which carries more risk for the lender.

Loan Amount
The amount of money you borrow could affect the interest rate you get.

Mortgage Predatory Lending And How To Avoid It

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There has been a lot of talk lately about predatory lending in the mortgage industry, but not much talk about what it is. Predatory lending covers a lot of area and some of the practices that are used in it are somewhat difficult to understand for the average consumer. Here are a few aspects of predatory mortgage lending that might be of interest.

The first thing consumers should understand is that predatory lending does not begin and end with the lenders themselves. It is true that there are several lenders who are guilty of bad loan practices, but there are others just as guilty. These include appraisers, mortgage brokers, home builders, and home improvement contractors to name a few.

Some of the things that you want to watch out for when you are considering a home purchase include:

Always think twice before working with someone who will sell properties for much more than they are worth by using false appraisals that inflate the value of the home.

Never work with anyone who wants you to lie about your income, expenses, or job history. They may also want you to lie about the amount of cash that you have on hand.

Stay away from lenders who encourage you to borrow more money than you know you can repay. This is one of the fastest ways to foreclosure known.

Some predatory lenders will charge high interest rates to home buyers based solely on their race or national origin. The black community is especially hard hit with this one.

There are also some lenders and other professionals who will charge high fees that are not normally a part of the home buying process. If someone asks you to pay a fee for a product or a service make sure you understand what it is you are paying for.

Be very careful when working with anyone who tries to pressure you into taking a home loan that contains high-risk factors. These include things such as balloon loans, interest only payments, and steep pre-payment penalties.

The elderly seem especially vulnerable to those predators who use high-pressure sales tactics to sell home improvement projects or work and then finance them at very high interest rates.

Lending predators are good at their work. If they were not, there would not be such a problem with them. Some of the cons they use to pull people in include such things as telling a home buyer that they, and only they, are the only ones who will finance the home. They may also try to convince you that the home you are looking at is worth much more than surrounding homes even though there is no physical proof that it is. Many of these folks want home buyers to sign contracts or other documents that have blank spaces. Home buyers should never sign these types of documents.

Another crafty tactic is to hand over a higher than expected bill at closing. They understand that after all you have been through to get to this final stage you are more likely to pay the added charges. Do not pay them unless it is proven that they are legitimate charges.

The best advice is to be careful and to be wary. Take your time and do not allow lenders or others to pressure you or to push you into a contract that you do not fully understand.

Mortgage Refinancing – The Facts

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Mortgage refinancing is when a homeowner gets a new home loan to pay off their existing one. The benefits of doing this are that they may be able to save money by getting lower interest rates or special deals. Refinancing is not the best option for everyone, though. For a person who is facing financial problems refinancing could spell trouble.

It is common for a person to want to save money on their home loan. A home is most likely the biggest purchase a person will ever make, but that does not mean they have to stick with one lender and pay the same high interest rates forever. Home owners have the option of refinancing to cut their home buying costs. Refinancing involves shopping around for a better deal then the one they currently have.

When shopping around it is advisable to approach a few good mortgage brokers that work with a large panel of lenders, not just one or two. This way they can search the market place to find the right deal for you. This is even more advisable if you have a bad credit history. A good broker will have access to a number of specialist adverse or sub prime lenders who will be able to offer you competitive rates. The same is true if you are self employed and have trouble proving your income.

Many times when a person is facing financial problems they see using their home as a way to clear their debts. While that is an option, refinancing to get out of financial problems is not a good idea. One reason is that should the person be unable to make the new loan payment, then their house is now in jeopardy.

Unless a person is truly sure that refinancing their home to get money to pay off debts is something they can afford and will truly solve their problems, then it is not a wise decision.

Some people refinance to change from a variable interest rate to a fixed interest rate. This can be very beneficial. Fixed rates mean that the mortgage payment never changes and is the same form month to month.

With a variable rate the amount of the mortgage can change drastically form month to month as the interest rates fluctuate. However, with a fixed rate a person has to be careful not to lock in on too high of a rate. They would then lose out when interest rates go down, unless they go through mortgage refinance again.

There are also many lenders out there who are not what they say to be. Mortgage refinance scams are common and can really be damaging. To avoid scams a person should always deal with a trusted lender and read every piece of paperwork completely. If a deal does not seem right then it is best to back out before ever signing anything.

Mortgage refinance can be a very good thing if done carefully. There are also many ways in which it can go wrong. Homeowners need to be aware of everything involved in mortgage refinance so they can get the best possible deal that will save them the most money.

They should also always be aware that they are risking their home should they not carrying through with their mortgage obligations. It is important to make sure everything is in place and understood before ever signing the papers.