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Welcome to Brian Nelson's Compendium on home loan mortgages.  This information responds to frequently asked questions about mortgages.

Mortgage information on  financing and refinancing of residential and commercial property mortgages.

     
 

Mortgages, Home Loans, mortgage Rates, VA, FHA, FLEXIBLE APR, ARM, FIXED APR, mortgage lenders etc

Hi, This page is about flexible and fixed  mortgages.  On the internet you find many helpful tools about buying a mortgage. They included mortgage calculators, financial calculators, amortization tables, car loan calculators, and free links to mortgage information. You can also find very low mortgage interest rates from hundreds of mortgage companies across the USA.  When you read about mortgage rates, you will also find articles on refinance news, a mortgage lender directory, live mortgage rates  which will help connect you to local mortgage lenders using words like mortgage interest rates, current mortgage interest rates, mortgage payments, monthly payments, mortgages rates, interest, amortization. Mortgage rates can vary using a calculator, applying  taxes, insurance, home loan rates base on home loan information or refinance data. You will develop skills knowing what it means when you hear VA, FHA, FLEXIBLE APR,ARM AND FIXED APR. Compare mortgage interest rates. Learn how to refinance with mortgage rates, and flexible mortgages or floating interest rates.  You may be able to find yourself making a comfortable business or home loan officer on valuable real estate, using carefully worded loans. A good  real estate broker can help you refinance a home mortgage, countrywide mortgage or advise you on mortgage leads, interests, current mortgage rates, reverse mortgages, using  mortgage payment calculators, including  private mortgages.  Bookmark this page right now.  Read a little at a time until you get very comfortable using all the new vocabulary words printed here.

You can find this site again  by typing in the  Google search engine  the unique word " 1egagtroM "  which is  OR " Mortgage1 " backwards.

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 Brian Nelson, Webpage Marketing Consultant 
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713-467-3025  Fax 713-467-3192  Click: E-mail me

Introduction

Buying a home is probably  the most expensive thing the average person will ever buy. The average person stays in a home about  5 years. If will be very valuable for you to read the information about mortgages and buying a home listed her. Knowing a little about this subject can save you many thousands of dollars. There is more hear than you ever wanted to know. Book mark it for future reference.  I hope you learn something. Let me know if you do.

Brian Nelson
713-467-3025

You are at: http://www.NelsonIdeas.com/mortgage-financing-mortgages/residential-commercial.html  ud 08/29/2009 02:03 PM -0500

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 Factors Affect Your Getting the Best Mortgage Rate

Important variables include the amount of the loan, the length of the loan, adjustable rates, down payment, discount points, closing costs, credit quality, your income level and how long your loan is locked in at a fixed rate.

The amount you loan can increase your interest rate when  the amount financed exceeds the conforming loan limits established by Fannie Mae and Freddie Mac. The conforming loan limit usually changes at the beginning of each year.

Shorter loans, such as 20 year or 15 year note, can save you  many thousands of dollars in interest payments over the life of your  loan, but your monthly payments will always be higher. An adjustable rate mortgage may get you started with a lower interest rate than a fixed rate mortgage, but your payments could get higher when the interest rate changes usually based on governmental policy. .

 When you make a larger down payment – greater than 20% -  you will usually get a better possible rate. When you make down payments of 5% or less you should expect to pay a higher rate as you are starting with less equity as collateral. If you have the cash now and want to lower your payments, you can pay down  on your loan to help lower your mortgage rate In exchange for more money upfront, lenders are willing to lower your  interest rate, cutting the borrower's payments. Closing costs are fees paid by the lender, if you don’t want to pay all of the closing costs, you should expect a higher rate which will pay the lender additional interest over the life of the loan. There is usually no free lunch in mortgages. You get what you pay for.

Credit quality and debt-to-income-ratios do affect the terms of your loan through FICO Score. If you have good credit and your monthly income surpasses your monthly debt obligations, you will usually get approved at a lower interest rate. However, if your monthly income barely covers your minimum debt obligations, even if you have a credit report, you will usually onot receive the lowest available interest rate.

  Keep your eyes on the financial mortgage markets.

 National Average Mortgage Rates

It appears they have increased since Feb. 11, 2005

 30 year  FRM Red, 15 year FRM Green, 5/1 ARM Yellow, 1 year ARM Gray.

This is a very big website with more information than you may want to really know!

 When Should You Pay Points?

One point equals 1% of the total loan amount. It is an upfront fee that reduces your monthly interest rate and total interest due over the life of a loan. This means that a one point loan will usually have a lower interest rate than a no point loan. Paying points is in essence a trade off between paying money now compared to paying more money later.

Deciding whether to pay points depends on how long you think you are going to keep the loan. Most often you  would want to pay points up front if you plan on keeping the loan for at least four years to ensure that you recoup the costs through lower monthly payments.  Consider that if you think that you might move within the next four years or might want to refinance because the market rate might be declining, then you probably would be better off with a no point loan.

Lenders allow you to choose among a variety of rate and point combinations for the same loan product. Therefore, when comparing rates from different lenders, make sure you compare all of  the associated points and rate combinations of the offered program. The published Annual Percentage Rate (APR) is a tool used to compare different terms, offered rates, as well as points among different lenders and programs.

Get Your Hands on Some Cash Refinancing your Mortgage

You can make a refinance work for you when you refinance for more than the balance remaining on your old mortgage. When you have  favorable rates, you may be able to do so without boosting your monthly payment. For example, at 8.5%, the payment on a old  $200,000, 30-year fixed rate mortgage is $1,537. But at 7.5%, that same payment lets you borrow almost  $20,000 in additional cash.

It is a good idea when you use for the extra cash is to pay off high rate loans you may have like on a car loan or credit card debt.  

Mortgage Refinance Costs

When you refinance your mortgage, you usually  will want to pay off your original mortgage and sign a new loan. With a new loan, you again pay most of the same costs you paid in order to get your original mortgage. These can include settlement costs, discount points, and other fees.
Be careful because sometimes you also may be charged a penalty for paying off your original loan early, although some states prohibit this. The total expense for refinancing a mortgage depends on the interest rate, number of points, and other costs required to obtain a loan. To obtain the lowest rate offered, most mortgage companies will charge several points, and the total cost can run between three and six percent of the total amount you borrow.  However, some companies may offer zero points at a higher interest rate, which may significantly reduce your initial costs, although your payments may be somewhat higher.

What Other Mortgage Programs Are There to Consider?

When you are thinking about refinancing your mortgage, be sure to consider other types of mortgages. You might want to look into a 15-year fixed rate mortgage. Your mortgage payments will be  somewhat higher than a longer-term loan, but you pay substantially less interest over the life of the loan and build equity more quickly. (This also means you have less interest to deduct on your income tax return.)

Consider refinancing if you have an adjustable rate mortgage with high or no limits on interest rate increases. Look for a fixed rate mortgage or to an adjustable rate mortgage that limits changes in the rate at each adjustment date as well as over the life of the loan.

If you decide to apply for refinancing with a particular mortgage company, and if you do not want to let the interest rate "float" until closing, You can get a written statement to guarantee the interest rate and the number of discount points that you will pay at closing. If you can get this commitment or "lock in"  it ensures that the mortgage company will not raise these costs even if rates increase before you settle on the new loan.  Also consider requesting an agreement where the interest rate can decrease but not increase before closing. If you cannot get the mortgage company to put this information in writing, choose one that will provide this important information.

Most companies place a limit on the length of time (like 60 days)  where they will guarantee the interest rate. You must sign the loan during that time or lose the benefit of that particular rate. Because many people refinance their mortgages when rates decline, there may be a delay in processing the papers. Contact the company periodically to check on the progress of your loan approval and to see if additional information is needed.

Build Home Equity Faster

Many borrowers use a refinance to shorten the term of the mortgage. Remember that even at low rates, a shorter term means a higher monthly payment. The benefit is that you'll build up equity faster and pay far less in total interest over the life of the loan.

If you can't afford the payments on a 15-year mortgage, your next best means of building equity is to refinance for less than 30 years. To do so, ask your mortgage company to customize your new loan's term to match the years that are left on your old loan -- if you are five years into a 30-year mortgage, for example, ask for a 20 or 25 year loan.

 Credit

Organize Your Files Before Applying For A Mortgage.
How To Get Your Online Credit Report & FICO Credit Score
By: Jeff Ostroff

Can you even afford a house right now?
Assuming you can afford a house, how much can you afford?   These are important questions that many people don't research, focusing on what their mortgage payments will be, ignoring other monthly payments.  This oversight puts many people down the wrong path to bad debt.  For example, your monthly expenditures will be more than just the home loan, there will also be homeowners insurance, flood insurance, mortgage insurance, utilities, garbage, cable TV, groceries, unexpected auto repairs, lunch money, and many other obligations.  They must all be accounted for in your budget spreadsheet. What's that?  You don't have one?  Are you nuts?

Start planning 6 Months before you apply for a home mortgage
You should start planning 6 months before you expect to buy.  You need this time to clean up your credit report, and get funds that are contributed by family into your account long before the lenders go looking for it.   Most lenders do not allow money given to you by family members to count toward a down payment, so you have to bury it early in your account.  You can get your credit report from sites like Equifax Score Power, True Credit and Consumerinfo. If you plan on buying in June and July like many families, you need to start planning your finances in January.  You should get your credit report at least once every year to verify it for accuracy, and make certain your credit score is up to par.  If your credit is clean and you have your down payment ready to go, you won't need as much time to plan.  Buying a home is a very serious investment that must work right on the first try with no mistakes.  Patience and planning wins this game, do not be impulsive. Make sure your credit is clean, and then apply for a home mortgage on the web at online mortgage sites like E-Loan.  

Why is your credit score so important?
Everyone has a credit score calculated at the time your credit report is requested.  It's based on over 100 different proprietary variables and algorithms developed by Fair Isaac (FICO).  The range is 300 to 850. You can get your credit score from Equifax Score Power, True Credit, or Consumerinfo. Most lenders consider people above 650 to be prime borrowers, meaning they will most likely be approved at favorable rates. According to my credit report from Equifax, 71% of the people with a credit score from 500-550 will default on their credit. Another 51% of buyers with a credit score from 550-600 will default on their credit.  That's pretty scary. This is why lenders run your credit report and head straight for your FICO Beacon score.

What A Low Credit Score Means To You
Your credit score is the single most important factor determining whether you'll get approved for a mortgage, car loan, refinance loan, or credit cards, and what your APR will be.  If your score is low, you'll pay very high interest rates, up to 23%.  Most people are also unaware that their credit score also affects how much you'll pay for car insurance rates too. Many insurance companies run a credit check on you before selling you insurance.

The most important factors affecting your credit score.
The most important factor affecting your score is the length of your credit history.   This is why college students have low scores, while us "30 somethings" have high scores.  If you have too many accounts open, this can drag down your credit score also.  Opening up all those department store credit card accounts and excessive financing accounts points you in the wrong direction, so your beacon score takes a hit.   My credit score would have been higher if I did not have the excess luggage of a department store credit card, an appliance store credit card, and 2 different computer store finance cards that I no longer used.  What's worse, one computer store is defunct, yet my account still appeared on my credit report as open.  I called all 4 sources and closed these accounts since I never use them.  It takes about 30 days for it to appear on your credit report.  Once you successfully dispute and remove negative items from your credit report, wait 30-60 days and order another copy of your credit report to verify, and you should also see a higher score.

The house you can afford depends on your current income and debt obligations. You must be able to pay your mortgage, satisfy all your current debt, and still have money leftover each month to put in the bank.  For many people this will actually put them in a lower priced house than they anticipated. Don't play the game of expecting to get raises every year, thinking that eventually you'll be able to afford the higher payments, most raises are 4 % to 7 %.  In bad times you won't get a raise, while inflation overtakes you. What can happen is you'll get laid off and you won't be able to afford your monthly bills.  If you don't have a budget worked out on a spreadsheet, you have a serious debt problem waiting to happen.  If you cannot recite from memory all the creditors you owe and how much you owe them, you have a credit problem.

Before you can apply for a home mortgage and buy a house, you must determine if you are creditworthy.  Don’t think that just because you have a good income and never missed a payment that you will get approved.  Many people with great credit and income are not mortgage worthy and get rejected for a mortgage because they are self employed, or their debt to income ratio is too high for the bank.  For example, if you have a good salary, but lots of credit card debt, chances are you'll get rejected for a mortgage.  It seems like they just look for reasons to reject you.  If you have always been a cash buyer and have not established any credit, good luck getting a mortgage. You must have a credit history or you'll be rejected for a mortgage.  You don't want to have too few credit accounts, or too many on your credit report either, or you'll get rejected.

Where is your down payment coming from?
Most banks don't want you to use money from family as a down payment.  They figure that without that money you can't afford the house.  So if you plan to get money from your family, put it in your bank account at least 6 months before you apply.   This is because most mortgage lenders only check 3 months worth of bank statements, and you'll be hiding below the radar.

When is your income not considered income?
Items that you think will help you get approved will often prevent you from getting approved.   For example, if you derive income from a corporation, many banks will not acknowledge it as an income basis for a mortgage if the corporation has not filed at least 2 years of tax returns.  So if you earned $100,000 from your corporation, it will not count if the corporation is a only year old.  This is because many companies are fly by night and go out of business.  Also, self employed people have a real tough time getting approved, and often must put down 25-35% to be approved for a mortgage. Pay down your credit card debt as low as you can, then get your   Equifax Credit Report.

Being Self Employed Is A Bad Thing To Do To Your Credit.
This is one reason why I recommend that you never list yourself as self employed, it's the worst thing you can do for your credit rating.  Many banks won't even touch you for home or auto loans if you're self employed.  Talk to your tax advisor about this, but I felt better off incorporating, now I'm an employee with a verifiable W2 form, not a self employed person.  This makes all the difference in the world.  Also, if you're self employed, all liabilities flow through to you, but in a corporation, the corporation usually assumes all the liabilities.

Before you plan for your future, you better get in touch with your past.
Your Credit Report is the single most important item. If you're going for a mortgage, don't get the free credit reports or the $8 reports you see on the Internet, they simply do not have enough information for you. The "merged comprehensive reports from the big 3 credit bureaus" are the ones to get, from sites like Equifax Score Power, True Credit, and Consumerinfo. These Credit Reports cost a bit more, but remember you are about to make the biggest purchase of your life and you only get one shot at getting it right, so get a 3 Bureau Online Credit Report, the banks do it and you do it also.

Get The Credit You Deserve.
When you order your Online Credit Report from online sites like Equifax Score Power, True Credit, and Consumerinfo, be sure to also select the option to get your credit score.  Many sites now offer the Fair Isaac score that the banks receive when they check your credit. Knowing your score up front can give you a good idea of your chances of getting approved for a mortgage.  Many people also call this the "Beacon Score".  A score of 660-680 or higher is considered good, and you'll most likely get approved with favorable financing terms.

When you get your credit report, look it over good for errors, and incorrect previous addresses, as well as old revolving credit accounts that you no longer use or have gone out of business.  The beauty of your instant online sites like Equifax Score Power, True Credit, and Consumerinfo is, with your credit score you have the  ability to dispute it online after your credit report appears.  You can check off the accounts that should be closed and dispute any item on there, then submit, and they report back to you within 30 days per federal law.

Tips for obtaining a high credit score.
I'm not just blowing steam, I'm living proof of what works.  Don't open a lot of credit accounts.  All you really need is a couple of credit cards and nothing else.  Stay away from department store cards almost all of which are 21% APR, you already have other lower APR credit cards. The stores entice you with free gifts or 10-20% off your purchase if you sign up, but don't fall for that trick.  Once you sign up they have you and you'll be paying 21% APR, because few people pay their department store bills in full. Don't sign up thinking "I'll just get the free gifts or discounts then close the card."  Most people don't end up closing it.

If you finance a car, a computer, or furniture, make sure the account is marked CLOSED on your credit report when it's paid off.  You don't want any excess luggage lingering around on your report.  Pay all your bills on time, and always pay more than the minimum or it will take you up to 10 years to pay it off.  Try to keep your balances low, especially when you are applying new for credit.  Don't apply for new credit within 6 months after you move to a new address or accept a new job, as you may be rejected.  Many creditors will turn you down if they can't verify your address in the phone book or if you have not been at the same job for 6 months.  Also, don't apply for new credit if you have recently been approved for credit somewhere else. Stick with no more than two credit cards that you opened in college, and don't open new credit cards for no reason.  Pay them on time, and keep them in good standing.  Accounts that have been in good standing for your entire credit history help bring your beacon score up.

What if you find an error or a black mark on your credit report?
Why is my bankruptcy from 5 years ago still on my credit report?
If you have a bankruptcy, it stays on your credit report for 10 years.  Other bad marks like credit card defaults will remain on your report for 7 years.  If these are legitimate, then neither you, nor me, or even God can have them removed.  But if you find mistakes you can contest them, and most people are unaware that federal law requires credit bureaus to give you 100 words of your choosing to appear on your credit report, for example, to refute any bad marks on your credit report.  Also, you can contest any black mark on your credit report, and by law, the credit bureaus have 30 days to respond or they must remove the bad mark. 

 House Buying Tips .  Scam Alert!  

Avoid "Credit Doctors" like the plague!  These companies claim they can erase your bad credit to a squeaky clean history.  Any legitimate black marks like bills you ignored, cannot be removed by anyone accept for your creditor for 7 years.  Some credit doctors illegally convince you to take out new EIN numbers, which are similar to social security numbers to create a new identification with a clean slate.  This is a felony that has landed many unsuspecting bad credit people who did not know any better in jail. Credit doctors charge you $600-$1000 and use the same tricks you can use yourself for free just by making a few phone calls or writing a letter to the credit bureau.  Credit doctors prey on people with bad credit histories, because these poor folks are low on self esteem, and want to believe the rosy promises that credit doctors tell them.

 House Buying Tips Best Odds Paperwork Requirements
When applying for a home loan, you never want to be caught without the paperwork the lender needs to approve your mortgage. Each missing item will delay your home loan approval.  It's better to over deliver with more than you think they will need, and have it well organized and ready to go.  Impress them with your organization and readiness, and your loan approval will go smoothly.  Your strategy is to only have to meet with them once to turnover the paperwork, and not have to field any follow up questions later on, that will cause additional delays with phone tag games.

 Get Your Financing Ducks In A Row
Start a file now with these items, originals whenever possible.

  • Your Credit Report, Banks run their own copy, but you need to get your own Credit Report,to verify that it’s squeaky clean, and fix it if it's not.
  • Bank statements for the last 2-6 months. 3 months is typical.
  • If you had a bankruptcy, collect all the paperwork together.
  • Last 2 consecutive pay stubs. Get 60 days worth, some banks ask for more.
  • Monthly statements or coupon books from loans you are paying off.
  • Last 2 W2 Forms.  Some banks ask for your previous 2 tax filings.
  • Property tax statement from last year if you paid any.
  • If you are a recent graduate, get your transcripts, they will ask for them.
  • A form from your utility company stating that you are current on your bills.  Most utilities have a standard form ready to fax out.
  • Income from divorce, alimony, Social Security, gaming, lawsuits, inheritance.
  • Your drivers license & social security card.
  • Car titles, if you own your car 100%.
  • Retirement plan statements for the last 3 months.
  • Statements from your Stock, Mutual Fund, or IRA accounts.
  • Any other 1099 forms that companies sent you for doing work for them.
  • Your last 3 credit card statements showing nice low balances.  They will check your credit report for this, but have it ready in case they ask for it.
  • If any income is derived from ownership in a corporation, banks ask for the corporate tax return, even though earnings appear on your Schedule K.  They verify income because if your down payment was from an illegal source, the government can seize your house, leaving the bank stranded.

If you are doing a VA (Veterans Administration) Approved Mortgage:

  • A certified copy of your DD Form 214 "Certificate Of Release Or Discharge From Active Duty".
  • Within about 3 weeks VA will send you Form 26-8329 (CG) "Certificate Of Elegibility For Loan Guaranty Benefits.

     If you do not have these items ready to go, do not bother applying for a mortgage at any financial institution until you have it all ready.

 Go Get Financed
Now that you have all the information you need to get qualified, you can go get your pre-approval from either your bank or the online loan sites. Be sure to read the chapter All About Mortgages, Home Loans & Avoiding Scams.  If you just want to refinance your house, read our chapter called All About 2nd Mortgages, Refinancing, and Home Equity Loans. Our useful finance guides to home mortgage refinancing and home equity loans include tips on where to find the lowest mortgage rates, mortgage calculators, where to apply for online mortgages, and mortgage company reviews. You'll also find scams and loan fees to avoid, dealing with mortgage brokers, and tips to increase your approval chances for a mortgage loan or a second mortgage.  We also review some of the top home mortgage web sites to use.
NelsonIdeas.com This page is about  Mortgage, mortgage calculators, financial calculators, amortization tables, car loan calculators, and free links to mortgage information. Find very low mortgage interest rates from hundreds of mortgage companies! Includes mortgage payment calculator, mortgage rate, refinance news, and mortgage lender directory, live mortgage rates help connect you to local mortgage lenders mortgage interest rates, current mortgage interest rates, mortgage payments, monthly payment, mortgage, mortgages, rates, interest, amortization, mortgage rates, calculator, tax, insurance, home loan, home loans, loan information, refinance, va, fha, apr, arm, fixed, compare mortgage interest rates.

Adjustable Rate Mortgages (ARMs)

ARMs ( Adjustable Rate Mortgages)  loans generally begin with an interest rate that is 2-3 percent below a comparable fixed rate mortgage, which will allow you to buy a more expensive home.

Remember that the interest rate changes at specified intervals (for example, every year) depending on changing market conditions. If interest rates go up, your monthly mortgage payment will go up, too. However, if rates go down, your mortgage payment will drop also.

There are also mortgages that combine aspects of fixed and adjustable rate mortgages. This could be items like  starting at a low fixed rate for seven to ten years, for example, and  then adjusting to market conditions. Ask your mortgage professional about these and other special kinds of mortgages that fit your specific financial situation.

Standard ARMS and the Differences

A few options are available to fit your individual needs and your risk tolerance with the various market instruments.

ARMs with different indexes are available for both purchases and refinances. Choosing an ARM with an index that reacts quickly lets you take full advantage of falling interest rates. An index that lags behind the market lets you take advantage of lower rates after market rates have started to adjust upward.

The interest rate and monthly payment can change based on adjustments to the index rate.

6-Month Certificate of Deposit (CD) ARM
This program has a maximum interest rate adjustment of 1% every six months. The 6-month Certificate of Deposit (CD) index is generally considered to react quickly to changes in the market.

1-Year Treasury Spot ARM
This program has a maximum interest rate adjustment of 2% every 12 months. The 1-Year Treasury Spot index generally reacts more slowly than the CD index, but more quickly than the Treasury Average index.

6-Month Treasury Average ARM
This program has a maximum interest rate adjustment of 1% every six months. The Treasury Average index generally reacts more slowly in fluctuating markets so adjustments in the ARM interest rate will lag behind some other market indicators.

12-Month Treasury Average ARM
This program has a maximum interest rate adjustment of 2% every 12 months. The Treasury Average Index generally reacts more slowly in fluctuating markets so adjustments in the ARM interest rate will lag behind some other market indicators.

 Learn About Your Credit and the Mortgage Process


If you have had credit problems, be prepared to discuss them honestly with a mortgage professional.

Understand how a mortgage company views your credit information.

Credit scoring, also known as FICO scoring, is a statistical method of assessing the credit risk of a loan applicant.

A credit profile details your credit history as it has been reported to the credit reporting agencies by lenders who have extended credit to you.
Learn about credit reporting agencies and how to contact them.
Mortgage companies often grade your loan based on certain credit related items such as payment history, amount of debt payments, bankruptcies, equity position and your credit score.

Mortgage companies look at other information besides your credit score and credit profile before deciding whether to approve your mortgage.
Learn about the importance of keeping tabs on your credit rating.
The Fair Credit Reporting Act (FCRA) outlines specifically who can see your credit profile.
You have the right, under the Fair Credit Reporting Act, to dispute the completeness and accuracy of information in your credit file.
It's never fun to be turned down for a loan, but before you think you won't be able to get credit anywhere, there are some steps you can take.

If you had a problem that's been corrected, and your payments have been on time for a year or more, your credit may be considered satisfactory.
Read more about bankruptcy and its affect on qualifying for a mortgage.
What to do to increase your chances of being approved for a mortgage, then establish a good credit history. .
According to one non-profit debt counseling agency, some 40,000 consumers each year are victims of identity theft crime, which is a very serious type of fraud.

 2nd Mortgages, Refinancing and Home Equity Loans

Home-equity debt gives you a way to take out a "personal loan" but maintain the ability to turn the interest you pay into a tax deduction.  People use home-equity debt for various purposes such as home improvements and debt consolidation.  There are 3 major types of home-equity debt which are defined in this section.

Common reasons people refinance their homes:

  • Interests rates dropped so a new mortgage is taken out to replace the older one, which was at a higher rate.

  • Borrow against the equity in the house to pay off credit cards and other debt.

  • Home equity line of credit to make repairs and home improvements.

Definition of Equity
The dictionary defines equity as "The residual value of a property beyond any mortgage thereon and liability therein."  What this really means is that equity is the amount of cash your house is worth if it was sold today, and if the mortgage was paid off, and any other liabilities are paid off.  Naturally, as the property values in your neighborhood increase, so does your equity, because this means that you would be left with more cash after selling the house and paying off a mortgage.  With home equity loans and other home refinancing, you don't sell your house, you just borrow against the equity in it.  This is why banks send an appraiser to determine what your house is worth when you apply for a home equity loan.  Sometimes you pay for this $200-$300 charge, sometimes the bank pays, it all depends how eager they are for new business.

Putting Equity to work for you
Here is a nice financial maneuver that I once pulled off.  I got a mortgage with only 10% down, so I had to take out PMI, which is Private Mortgage Insurance, costing over $70 per month extra in my mortgage payments.  Within 2 years, our property value had gone up enough that I petitioned the bank to send an appraiser to my house to valuate it.  My property value had gone up enough that I was now past the 20% equity mark, and the bank dropped the monthly PMI fees from my payment.  I then kept on sending in the same $70 a month as extra principle, which helped pay off the house even faster.  But just think how many fools out there never think to do this, and pay PMI forever not knowing it could have been removed in a year or two.

Of course, everything in life has a negative attached to it and home-equity debt is no different.  There are a few things that you have to watch out for.

House Buying Tips Buyers Warning

DON'T BORROW MORE MONEY THAN THE EQUITY IN YOUR HOME!
 Unscrupulous lenders keep sending you offers in the mail.  "We'll lend you up to 125% of the value of your home!"  Wow, you just struck oil!  This is dangerous oil however. If you default on the loan, not only do you lose your house, but you still owe the other 25%.   Lenders who offer these risky loans are in it only for their own greed.   Because they are writing higher loan values, they group them together and sell the portfolio to institutional investors, their hands are washed of it and so what if you default, they made their money & moved on to the next group of borrowers. 

Also, you cannot write off interest on the portion of the loan that is in excess of the value of your home.  Which brings up our next point:

Any bank with a conscience will only lend you up to 80% of the equity in your home.  They send out an appraiser to get an accurate value of your house, then they determine how much equity you have in the house, and lend you up to 80% of that value.  This is the safest way to do a home equity loan.  You must evaluate whether an equity loan makes sense for your financial situation. 

If you are using the loan to eliminate debt you have to compare the second mortgage interest rate including loan fees if any against the interest rate APR of the debt you are trying to eliminate.  For example, if you have $20,000 of credit card debt, it's most likely at 19%, but your home equity loan could be between 8% to 12%, depending on market conditions.  In this case, it would most likely make sense to get the second mortgage on your home to payoff those cards and other high interest debt like an old car loan that you might have been ripped off on.  Just make sure you CLOSE THOSE CREDIT CARD ACCOUNTS WHEN YOU PAY THEM OFF! Borrow only enough to payoff the accounts in full.  You might not be able to borrow enough to pay off as much as you can but don't straddle the cash across all your accounts.  Use it to payoff your highest interest rate cards, and close them out.  A great feature of 2nd mortgages is you can usually write off the interest expenses from your taxes, effectively making the APR even lower.  But check with your accountant to make sure your income level allows this.

If you are using the equity debt for home improvements, carefully analyze your finances and make sure you'll be able to handle the additional monthly expense.
Types of Home Equity Debt
The major types of home equity debt are explained below.

Refinancing
Refinancing is basically taking out a whole new mortgage at the currently prevailing interest rates.  Since you have already built up equity in your home you can take out the new mortgage for more than you still owe and use the extra cash for other purposes like home improvements.  During times of falling interest rates, this may be an excellent time to refinance your home and save money that you are now sending in towards bank profits.  If you are thinking about refinancing, you should try online sites like LoanWeb or E-loan to get quotes before checking with your local bank.   Just like with any loan or purchase you make it is a good idea to shop around for the best deal and get quotes from as many sources as possible.  After all, it's free to apply at LoanWeb and E-loan and they just might save you a boat load of cash.

 2nd Mortgage (also referred to as a Home Equity Loan)
Unlike a home equity line of credit, a 2nd mortgage is a fixed amount of money that you borrow against the equity in your home.  A second mortgage does not change the interest rate on the amount still owed on your home.  It is a completely separate loan from your 1st mortgage.  Generally 2nd mortgages carry a higher interest rate than first mortgages regardless of whether they are fixed rate or adjustable rate.  The lump sum cash that you get can be used for many things such as home improvements or debt consolidation.  Just like with a 1st mortgage you should comparison shop for the best rates at sites like LoanWeb, LendingTree or E-loan.

 Home equity line of credit
With a line of credit you apply for an amount which you may borrow against your home value however you do not have to borrow the entire amount at once.  For example, you may receive a $40,000 line of credit but only need $6,000.  In this case you can just take out $6,000 and save the remaining $34,000 (which you are not paying interest on) for a later date when you need it.  Repayment terms are usually pretty flexible and may include interest only payments for a certain period of time.  Online sites like LoanWeb or E-loan offer home equity lines of credit.

 Where To Apply For Home Equity Debt

If you are thinking about applying for any type of home-equity debt, you should first read our chapter Organize Your Files Before Applying For A Mortgage.  It explains everything that you need to do before you apply for home-equity debt including checking your credit report and getting your credit score.  Equifax now offers a credit report that includes your real Fair Issac (FICO credit score) which used to be hidden from you.  This score will really let you know how good (or bad) your credit is.  If your score is not as good as you had hoped, it is probably a good idea to get a merged credit report which has information reported by all 3 credit bureaus.
 Finding a Good Realtor  

 The Key To Success
Your city may be a  busy place on weekends with home buyers looking over the active listings and often facing disappointment when a nice home goes "under agreement" before they've even seen it. It only takes a couple disappointments to realize that the real secret is to have your own realtor at work here ready to call just as soon as the type of home you want comes on the market. It's then up to you to get here ASAP and make an offer before someone else does if it's what you want. Being one of the first to see it is the key to success.

As previously stated, a good realtor will weed out poor choices and alert the buyers to new listing just as soon as they come on the market saving you much wasted effort, and frustration from missed opportunities. In addition, a good realtor will be a great source of local real estate information to help in your decision making and to smooth your path to a successful sale from early showings to closing.
 The Different Kinds of Realtors
Historically speaking, some realtors are great at getting listings, some at working with customers, and some at both. In all cases, the realtor represented the seller who paid the fees, and not the buyer who always thought that nice realtor was working for them. About ten years ago, the "Buyers Agent" was introduced whose sole purpose was to exclusively represent the buyer. It took awhile to take hold as there was much resistence in the industry and still is to a degree, but it is a successful concept. If fact, many realtors have taken the "Buyers Agent" courses and can now offer a prospective buyer the option of representing them as a sellers or buyers agent the same as attorneys have flexibility in how they represent clients.
 

 Should You Use a Buyers or Sellers Agent?
As rigid as the following descriptions sound, a good realtor is a problem solver, a match maker between buyers and sellers. He or she tries to make buyers happy by providing opportunities for them to find the "home of their dreams" and to make sellers happy by finding the right buyer for their home. In both cases, a good Falmouth realtor will see to it that the whole transaction process runs as smoothly as possible. To help you get familiar with it and to read the descriptions of the Buyers and Sellers Agents,
 

 Finding A Good Realtor
Here are a few suggestions: 1. Recommendations from friends or relatives, 2. Leads from newspapers and booklets, 3. Realtors that you met in their offices or while attending open houses during your early home search, 4. Names from the internet especially those realtors with web sites, 5. Recommendations from mortgage brokers when you get pre-approved and from other business sources, and 6. Friends or relatives who are realtors could be considered, but is not always a good idea.

 Tips For Working Successfully With A Realtor*
Here are five excellent tips, created by an unknown realtor, and presented
on "e-PRO Talk" an email forum of the National Association of Realtors.
1. Get pre-approved for a mortgage. Buyers who haven't demonstrated their financial ability to purchase a home won't be a high priority for most top agents. That's why a simple loan pre-approval letter, preferably from a well-respected local mortgage broker, is a must. A pre-qualification letter is helpful, but not nearly as strong a motivator as a pre-approval letter.
2. Be loyal. Agents admit they work harder for loyal buyers. Don't work with multiple agents in one area at the same time. If you decide to switch agents or if you're house hunting with two agents in two distinct areas, disclose the situation to both agents. If you visit an open house, sign the guest book and write in your agent's name and telephone number. If you spot a new for-sale sign or a new listing on a Web site, ask your agent to get the details. If you decide to check it out yourself, mention your agent's name.
3. Know your own priorities. Some agents get frustrated with buyers who seem clueless about what they need and want in their home. Before you start house hunting, make a list of your priorities and discuss each item with your agent. Write down the non-negotiables that you must have and the amenities that you'd like to have, but could forgo if the other minimum requirements were met. When you start touring homes, be as specific and direct as possible in communicating what you like and don't like about each home.
4. Be open-minded. Agents work harder for imaginative buyers who can see beyond dead landscaping and hideous wallpaper. The perfect home for you could be hiding behind a decor you can't stand. Ask your agent what it would take to upgrade, remodel or redecorate an unappealing home that happens to be in the right neighborhood and the right price range.
5. Be ready to act fast. Some buyers want to move into their new home within a couple of months. Others won't be ready to start packing for two years. People who are planning to move sooner rather than later will be a higher priority for most real estate agents. Buyers who aren't encumbered with a home they need to sell also get more attention. If you intend to move quickly, make that intention known to your agent and act on it.

I'd like to add the following:
6. Be responsive. Keep in touch with your realtor. A serious buyer who wants some action should respond to mailings, demonstrate that you appreciate what your realtor is doing. Don't be afraid to contact your realtor every couple weeks to both demonstrate your seriousness and to be kept on top of his or her responsive list. We all have many occasional customers who very seldomly respond no matter how many emails, mailings, or phone calls we make. After so many failed contacts, they are forgotten.

 How to Find a Good Realtor, Lyle Evans

Real estate is a huge market with many agents signing up regularly. Picking the right agent or deciding if you should
use a realtor at all are decisions that can affect yourbottom line.

Things to consider before signing up with a realtor?
Time frame for selling your home can be a determining factor in deciding if you need a realtor or not. If you are in a
hurry to sell because of a change of job, etc., you may want to list with a good agent, after doing your homework. If you
have time to sell your home, you may consider selling ityourself if you need the equity money for a down payment. If
you do decide to sell it yourself, you will want to put even the smallest details into the contract. This will help avoid
problems later.

Doing a little homework to find the right agent can help you sell more quickly and help you have a positive
experience. Always interview several agents before deciding on one. Here is a list of potential questions to ask:

* Where do they do their marketing? How will they get your home the exposure you need to sell? Do they advertise in the
real estate magazines, TV, radio, newspaper or other publications? Ask them to give you specific details and
describe successes they have had with their advertising.

* What is their background? How long have they been an agent? How many houses have they sold?

* How long does it typically take them to sell a home? Whatprice range of homes do they list? Are they generally within
the same price range or do they go after the really high-priced homes in order to make a higher commission? How
many homes do they represent at one time?

* Have they sold homes similar to yours before and what success have they had? Get names and address of satisfied
customers from the agent.

* Is the prospective agent with a reputable agency and amember of the state and national Realtor Associations?

* What is the commission percentage they are willing to accept? See if they will list your home at a lower percentage. (A word of caution to the seller. Don't list with an agent who has really low commission percentages.
They will not focus or give your property the necessary attention to sell it.) Most realtors want six or seven
percent commission. If you can get them to work for a percentage point or two lower commissions, that is money in
your pocket.

* Will they refund part of their commission if you also purchase a home with them? Some realtors will give you up to
one percent of their commission back if you use them for both selling and buying.

The key is to find the agent that will work with you, give you good service and has a good track record. Again beware
that some agents list lots of properties but have a very low success rate.

Tell the prospective agent that you will only sign acontract that gives you the ability to cancel the contract
if you are not satisfied with their progress after a predetermined amount of time. If the agent tells you that
that's not possible, ask whether you can list the property for three or four months instead of a year. Listing the
property for an entire year with one agent is not recommended. If you list for a year with an agent that does
not work your property or get you results, you are locked infor a long period of time. Avoid agents that require you to
lock in for a year. Remember you, the seller, are in control because you are hiring them. There are lots of real estate
agents and you can find one that has good credentials andwill be flexible on the length of time required to list with
them. Also be sure that when you finish listing with an agent that they will release your property so that you can
pursue other options if your property has not sold.

These tips should help you if and when you need a real estate agent. Remember you as a seller call the shots. If
you find the right agent, you will increase your chances of selling your home and should have a good experience.

 

Immigrants Get Mortgage Help
Even those without legal papers have options for home loans

By HOLDEN LEWIS,  BANKRATE.COM

Immigrants are increasingly getting the message: "Welcome to America. Now buy a house."
An immigrant with a scant credit history? Solvable.
A family who wants to pool money to make a down payment? That's just fine.
A borrower who is in the United States illegally? Not an insurmountable problem.
The federal government's policy is to raise the homeownership rate, and the most efficient way to do that is to concentrate on minorities and immigrants.
The white homeownership rate is almost 75 percent.
A little less than half of black and Hispanic households own their homes, and the Asian rate is a bit higher than 50 percent.

For years, mortgage lenders have had programs for minorities, especially blacks, which involve relaxed credit standards and neighborhood outreach. Now those efforts are being tweaked and expanded for immigrants. There's a good reason for that: Immigrants head more than one in three new households, according to the Harvard Joint Center for Housing Studies. More than 1.2 million immigrants have arrived every year since 2000. Immigrants are where the housing growth is.

The nation's biggest mortgage lender, Countrywide, markets aggressively to immigrants.

"The major challenge when we're dealing with multicultural markets is the educational aspects,"says Rodolfo Saenz, Countrywide's executive vice president of multicultural markets. Many immigrants don't know much about this country's banking system. "They don't really know what questions to ask, how to select the best product, what papers and questions will be part of the application," Saenz says.Last year, Countrywide introduced its Optimum Loan program, under which borrower education is just one facet. Optimum combines disparate features of many loan products into one:

  • Allowing low or no down payment;
  • Supplementing the credit record with "non-traditional" credit;
  • Recognizing cash income, and rent from housemates;
  • Permitting the pooling of money for down payment and closing costs.
    Mortgages with low or no down payments are relatively common nowadays. Optimum's three other features are relatively unusual. Take the non-traditional credit records. A lot of immigrants don't have extensive credit histories in the United States, both because they don't have many car loans and credit cards, and because they just haven't been in the country long enough to establish a track record.
    Countrywide and other companies, such as credit scoring titan Fair Isaac, are creating ways to augment meager credit histories with records of utility payments, rent and even money sent to families abroad. They are finding ways to confirm cash income from services such as child care and landscaping.
    Rent paid by long-term boarders is counted as income. Down payment money from multiple sources is allowed. This last item is important for immigrant extended families.

    Most mortgages are for people who can document that they are in this country legally. A few lenders are experimenting with providing home loans to people who have no such documentation. They are called ITIN loans because borrowers use individual taxpayer identification numbers (ITINs). These numbers are provided by the Internal Revenue Service to people who aren't eligible for Social Security numbers, but who pay federal income taxes.

    Colonial is still developing the loan program, which allows the use of non-traditional credit and recognizes cash income. The mortgages are risky because the borrowers are subject to deportation and the loans can't be sold in the secondary market. So they have higher interest rates -- anywhere from half a percentage point to 4 percentage points higher than for a standard, fully documented fixed-rate mortgage. The loans require substantial down payments.

    The program requires borrowers to undergo training in homeownership and budgeting, and they have to have bank accounts, says Gloria Barreto, a Colonial loan officer in Dallas. She says some borrowers have misconceptions about the American banking system.|
    "Sometimes they think they have to stay in the house for 30 years, until they pay the mortgage off," she says. "I say, 'No, you can refinance or sell it.' "
    Undocumented Hispanic immigrants would take out an estimated $44 billion in mortgages if barriers to borrowing were lifted, according to the National Association of Hispanic Real Estate Professionals.

    		•
     What Should You Do When You Can't Pay?

    From: http://loan.yahoo.com/m/cm_nopay.html

    Q: "I lost my job and have been making my mortgage payment from savings. At some point, I will run out of savings. What should I do?
    A: Some variant of this letter is appearing in my mailbox with increasing frequency. The problem is probably going to get worse before it gets better.

    Many homeowners faced with this situation do nothing, allowing the problem to overwhelm them when it hits. That is not smart. When you know a tidal wave is coming, you should minimize the damage by preparing for it the best way you can.

    Understanding the Lender

    A good place to start is by understanding the position of the lender. A game plan for survival should be based on a realistic view of what the lender is likely to be willing to do.

    When a borrower is unable to pay but the problem is temporary, the lender has an interest in finding a way to help the borrower ride it out. A tool for this purpose is a forbearance agreement combined with a repayment plan.

    A forbearance agreement means that the lender suspends and/or reduces payments for a period, usually less than 6 months, although it can go longer. At the end of the period, the repayment plan kicks in. The borrower agrees to make the regular payment plus an additional agreed-upon amount that will cover all the payments that were not made during the forbearance period. The repayment period is usually no longer than a year.

    When successful, the borrower is brought current after a lapse, and the lender suffers no loss. However, a lender will only consider this approach if convinced that the borrower's problem is temporary. The burden of proof is on the borrower.

    If the borrower’s problem is not temporary, the lender’s objective is to minimize loss. The ultimate remedy is foreclosure, where the lender goes through a lengthy legal process to acquire possession of the house. The lender then sells the house to recover the loan balance, unpaid interest and expenses -- provided there is sufficient equity in the property to cover it all.

    Lenders often do not come out whole on a foreclosure, and they do not like forcing people out of their homes. They look for alternatives to foreclosure that will cost them less, but they don’t want to be scammed by borrowers in the process.

    If a borrower’s income has been reduced to the point where she can’t pay the current mortgage but could pay a smaller amount, the lender might consider a loan modification. This could be a lower interest rate, longer term, a different loan type, or any combination of these. Unpaid interest may be added to the loan balance.

    A lender is likely to be most receptive to a loan modification where the borrower has little equity in the house, but wants to keep living there. With no equity, foreclosure would be costly. But the lender must be convinced that the borrower’s inability to pay is completely involuntary.

    If the borrower’s inability to pay is long-term and the borrower is resigned to giving up the house, the lender will consider several alternatives to foreclosure. If the borrower has a qualified purchaser who will take title in exchange for assuming the mortgage, the lender may allow it. This is called a workout assumption.

    Alternatively, the lender might allow the borrower to put the house on the market and accept the sale proceeds as full repayment, even though it is less than the loan balance. This is called a short sale.

    If the borrower is unable to sell the house, the lender might accept title to the house in exchange for discharge of the debt. This is called a deed-in-lieu of foreclosure.

    Knowing what a lender can do is useful, but it does not tell you what a particular lender will do in any specific situation. Lenders differ in how they respond to payment problems. It may depend on whether they own the loan or merely service it. It may also depend on who takes your call.

    I have always advised borrowers having payment problems to approach the lender before they become delinquent. Some have written back, however, to say that their lender won’t talk to them until after they become delinquent. This is a way that some lenders keep their servicing costs down. The impact on the borrower’s credit rating is not a consideration. It means that the borrower in trouble may have to press his case further up the corporate ladder.

     Developing A Game Plan

    Borrowers in trouble should develop a game plan before they become delinquent. Step one in that process is to develop a realistic understanding of the position of the lender, as discussed above. While some actions you can take on your own, such as selling your house, other actions have to be negotiated with the lender. You do better in any negotiation if you know where the other party is coming from.

    Step two is to document your loss of income. This will position you to demonstrate to the lender that your inability to pay is involuntary, should this be necessary later on.

    Step three is to estimate your equity in the house. Your equity is what you could sell it for net of sales commissions, less the balance of your mortgage. This will help you develop a strategy for dealing with the lender.

    Step four is to determine realistically whether your financial reversal is temporary or permanent. A temporary reversal is one where, if you are provided payment relief for up to 6 months, you will be able to resume regular payments at the end of the period, and repay all the payments you missed within the following 12 months. You must document the case for the reversal being temporary. If you cannot make a persuasive case that the change in your financial condition is temporary, the lender will assume it is permanent.

    Your game plan should take account of whether or not you have substantial equity in the house, and on whether the change in your financial status is temporary or permanent.

     Substantial Equity

    If you have substantial equity in your house, the least-costly action to the lender may be foreclosure. While foreclosure is costly, the lender is entitled to be reimbursed from the sales proceeds for all foreclosure costs plus all unpaid interest and principal.
    While foreclosure makes the lender whole, it is a disaster for you. Your equity is depleted, you incur the costs of moving, and your credit is ruined. Hence, you must avoid foreclosure, if necessary by selling your house.
    If your financial reversal is temporary    , and you can persuade the lender of this, the lender may be willing to forbear -- suspend payments for a period, followed by a repayment plan. The lender will probably prefer to keep your loan, rather than foreclose on it, but only if convinced it is a good loan. The burden of proof is on you in this situation to demonstrate that the temporary payment relief will really work.
    If your financial reversal is permanent    , sell the house before you begin accumulating delinquencies. This way, you at least retain your equity and your credit rating.
    Obtaining full value for your home may take some time -- you don’t want to be forced into a fire sale. If delinquency is looming, take out a home equity line of credit to keep your payments current.

     Little or No Equity

    If you have little or no equity, your bargaining position is actually stronger because foreclosure is a sure loser for the lender.

    If your financial reversal is temporary, and assuming you want to remain in your house, it will be easier to persuade the lender to offer payment relief than if you have equity.

    If your financial reversal is permanent, but not major, the lender may be favorably disposed to a contract modification that will permanently reduce the payments.

    If your financial reversal is permanent and major, the lender probably will be willing to accept either a "short sale" or a "deed in lieu of foreclosure". In the first, you sell the house and pay the lender the sales proceeds while in the second the lender takes title to the house. In both cases your debt obligation usually is fully discharged. They do appear on your credit report, but are not as bad a mark as a foreclosure.

    The lender will turn a wary eye on borrowers with negative equity who have the means to continue making payments but would like to rid themselves of their negative equity through short sale or deed-in-lieu. While these options are less costly to the lender than foreclosure, lenders view borrowers as responsible for their debts, regardless of the depletion of their equity. How they respond depends on how convinced they are that the borrower's problems are truly involuntary, and on the likelihood of success in collecting more if they go after the borrower for the deficiency.

     5 Mortgage Tips

     Savings Tip #1 = Make Bi-Monthly Payments

    By simply changing your payment frequency from once a month to half a payment every two weeks through an automatic process!

    By converting a monthly mortgage payment of $1,000 to $500 on a Bi-Weekly basis, you'll make 26 one half payments over a year's time. That's the equivalent of 13 monthly payments.

     This is a guaranteed simple way to save tons of interest. Not all mortgage companies will accommodate this request but it doesn't hurt to ask.

     Savings Tip #2  Consider a 15 year mortgage rather than a 30 year mortgage

    Although your monthly payment may be higher, you can save tens of thousands of dollars in interest charges by shopping for the shortest-term mortgageyou can afford. On a $100,000 fixed-rate loan at 7% annual percentage rate(APR), for example, you will pay over $75,000 less in interest on a 15-yearmortgage than on a 30-year mortgage.

    You can save thousands of dollars in interest charges by shopping for the lowest-rate mortgage with the fewest points. On a 15-year $100,000 fixed-rate mortgage, just lowering the APR from 7% to 6.5% can save you more than $5,000 in interest charges, and paying two points instead of three
    would save you an additional $1,000.

    If your local newspaper does not periodically run mortgage rate surveys,call at least six lenders for information about their rates (APRs), points,and fees.

     Savings Tip #3 = Mortgage Refinancing

    Consider refinancing your mortgage if you can get a rate that is at least one percentage point lower than your existing mortgage rate and plan to keep the new mortgage for several years or more.  Don't forget that there will be  points, fees and closing costs but in the long run, it will cost less than your current mortgage.

     Savings Tip #4 = Buy down the rate

    The seller or builder, or through innovative pricing, can help you buy down your mortgage rate for one, two, or three years.

     Savings Tip #5 = Consider an ARM If you do not   plan on being in the home for more than 5 years.

    When you start shopping, take a look at how long you expect to be in the house, or have that particular mortgage. Maybe you expect to move-up after you've built some equity in the house. Maybe you plan to refinance in coupleof years to pull out some equity to help pay for college tuition, or a new car.

    Think beyond the 30-year, fixed-rate loan.  Most people buy a fixed-rate for 30 years of stability, and never use more than a few years of it.
     
    An adjustable-rate mortgage (ARM) starts with a considerably lower interest rate, but then adjusts every year. This type of loan moves a little bit of the risk away from the lender, and the lender rewards you with a lower rate. ARMs are capped to rise not more than two percent in any year, and not more than five or six percent for the life of the loan.

     Reverse Mortgage
    Be very careful with this type of mortgage! This is generally a type of loan that is used by elderly property owners who have their property paid off. It is a way to "unlock" the equity that they have built up in that property. A reverse mortgage is where the lender will pay you either a lump sum amount, or make monthly payments to you. The amount that you owe the lender increases over time, and no payment is due until the term of the loan is up. When the loan becomes due, the total amount paid to you, plus the interest on that amount becomes due in full. This lump sum payment is usually paid for by selling the property.

     Pros
    You are able to derive income from the equity of the property that you are living in. Enhance the monthly income for retired people who plan on selling the property when (or even before) the loan term is up. Monthly income derived from this type of mortgage is tax free.

     Cons
    If the value of the house decreases, you may be responsible for more debt than the house is worth. The lump sum amount that is due when the loan term is up, is generally paid for by selling the property. Once again, this is a very specialized type of mortgage and should not be entered into unless you know exactly what your doing!

     
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    Mortgages, Home Loans, mortgage Rates, VA, FHA, FLEXIBLE APR, ARM, FIXED APR, mortgage lenders etc

    Hi, This page is about flexible and fixed  mortgages.  On the internet you find many helpful tools about buying a mortgage. They included mortgage calculators, financial calculators, amortization tables, car loan calculators, and free links to mortgage information. You can also find very low mortgage interest rates from hundreds of mortgage companies across the USA.  When you read about mortgage rates, you will also find articles on refinance news, a mortgage lender directory, live mortgage rates  which will help connect you to local mortgage lenders using words like mortgage interest rates, current mortgage interest rates, mortgage payments, monthly payments, mortgages rates, interest, amortization. Mortgage rates can vary using a calculator, applying  taxes, insurance, home loan rates base on home loan information or refinance data. You will develop skills knowing what it means when you hear VA, FHA, FLEXIBLE APR,ARM AND FIXED APR. Compare mortgage interest rates. Learn how to refinance with mortgage rates, and flexible mortgages or floating interest rates.  You may be able to find yourself making a comfortable business or home loan officer on valuable real estate, using carefully worded loans. A good  real estate broker can help you refinance a home mortgage, countrywide mortgage or advise you on mortgage leads, interests, current mortgage rates, reverse mortgages, using  mortgage payment calculators, including  private mortgages.  Bookmark this page right now.  Read a little at a time until you get very comfortable using all the new vocabulary words printed here.
     

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