Archive for the ‘Mortgage’ Category

What You Need To Know About Mortgage Loans

Many people think about owning a home, a dream which can be actualized by applying for mortgage loans. This is the transfer of an interest or charge to property to a lender as security for the credit awarded. While the mortgage in itself is not a debt, it is usually the security for a loan which the lender makes to a borrower. They pose a lot of benefits to individuals wishing to on their own homes. However, with many service providers around, consider these factors before applying.

The first factor that many people consider is the amount of interest rate payable to that loan. The interest rate, although an extremely important factor, is not the only factor that matters since there are other variables that determine the overall cost. It plays a huge role in determining how costly that loan is. When shopping around, ask from at least five service providers so as to get one who offers competitive rates.

Another crucial factor is the term of that loan. This is the number of years or months that you are expected to fully service it. The duration plays a role in determining how much money will be paid as monthly installments. Shorter loans will mean that you will have to pay more each month while longer terms mean that the installments will be rather lower.

Check the expected amount of monthly installments and determine if you will be comfortable with it. Although a higher amount of monthly installments will enable you finish your mortgage earlier, it should not pose a negative impact on your finances. Interview a number of lenders to check if an affordable alternative can be found.

When shopping around for mortgages, pay attention to closing costs. Many borrowers fail to consider closing costs and end up paying several dollars after being approved for a loan. These costs are subject to negotiation and they hence vary from lender to lender. Avoid sealing the deal before knowing the amount of down payment you are supposed to pay so as to acquire that loan.

There are many financial institutions which offer mortgage loans and information related to the same. Earlier on, thrift associations seemed to be the favorite financiers but things have nowadays changed in favor of banking and building financial institutions. These institutions also offer advice to prospective buyers so as to help them make informed decisions.

Many people often wonder how they can get access to these products. People who have good credit scores obviously stand a good chance of getting them on better terms. Such persons can be awarded a full loan that will even cover the total house cost. However, if you have a bad credit score, you can still obtain the same but under different terms. All you need to do is shop around for the most suitable lender.

The fact that the market offers many mortgage loans lenders, it should not be difficult to find one who offers the better deal. Compare their loan terms, interest rates, penalties and the amount of monthly installments so as to make an informed decision.

Make Your Mortgage Tax-Deductible

Of course, for most of us, life is not like that. Occasionally, we have to borrow money. We borrow it to buy our cars and pay for our vacations – and we borrow it to buy our homes. When we do, we pay for it dearly. Even at today’s bargain-basement mortgage rates, a $200,000 home costs more than $400,000 over the 25-year term of a mortgage. Toss in the fact that most middle-income earners are paying half of what they earn to the government in the form of taxes, and our struggling homebuyer is forced to earn in excess of $800,000 in order to pay off his or her $200,000 loan.

But what can you do? That’s the way the world works, so most of us knuckle down, make our payments and dream about the day we actually “own” our home. At the end of the process, we find ourselves house-rich, cash-poor and desperately behind in our retirement savings plans.

Is there another way? Fraser Smith, a retired financial adviser living in Saanichton, B.C., and author of a little book entitled The Smith Manoeuvre, says there is. All you have to do is make your mortgage tax-deductible. This will do two things:

  1. free up capital you can use to pay down your mortgage faster, and
  2. allow you to supercharge your retirement savings program. Here’s how it works.

In Canada, banks will typically lend you 75% of the value of your home. If you own a free and clear home worth $100,000, the bank may lend you $75,000 to invest in something else. If you have a mortgage outstanding, it will be 75% less whatever you owe. For example, if you still owe $75,000 on the mortgage, then you’re at break even. However, if you only owe $74,000, there’s $1,000 sitting in your home you could borrow to invest.

And, according to Smith, that’s precisely what you should be doing. Borrowing it and using it to buy interest-bearing investments for your retirement. But wait a minute, you say, isn’t that just robbing Peter to pay Paul? No, and here’s why.

In Canada, when you borrow money to invest, the interest on the loan is tax-deductible, a bonus that gets you a tax refund cheque if you’re employed or reduces your taxes if you’re self-employed. You then take that refund or excess income and plunk it down on your mortgage.

This has the virtue of increasing the equity in your home, equity you can then capitalize on by borrowing on it and using the money to buy more investments. Once again, the interest is tax-deductible, generating an even bigger refund cheque next year or reducing your taxes even further, allowing you to pay off your mortgage that much faster. And so it goes.

At worst, this plan reduces the time it takes to pay off your mortgage by about 2.5 years, while at the same time getting you started on the road to retirement savings.

Poor Credit Second Mortgage Loans

When bills start to pile up too high, it can be difficult to keep up with payments. One option to solve the issue of having too many bills is to seek a second mortgage loan. However, if your credit is less than desirable to lenders for obtaining a loan, be assured that hope is not out of reach. By searching for different resources, you may find that you qualify for a poor credit second mortgage loan.

Poor credit second mortgage loans can be the saving grace to what could may currently feel like a financial disaster. By refinancing your home and cashing out on its value and its equity, you can receive funds to pay off high interest credit card bills, consolidate all other debt such as smaller loans, pay for a child’s college education, finance a business, and more.< no matter how severe, can receive a poor credit second mortgage. Even individuals or couples with a history of bankruptcy more than ten years ago can qualify for such a loan. Your credit rating and scores will play a vital role in qualifying for the poor credit second mortgage loan, and your interest rate will be configured with your scores. Generally speaking, according to Platinum Concepts, Inc. in Madison, Wisconsin (www.platinumconcepts.net), a loan is obtainable with a credit score of 550 or higher.

Pros of Obtaining a Poor Credit Second Mortgage Loan

1. Poor credit second mortgage loans offer people with low credit ratings and scores the opportunity to qualify for a loan and obtain funding when they would not otherwise qualify for a conventional loan.

2. A poor credit second mortgage can offer a way to consolidate debt and pay off outstanding bills, while at the same time, offer a lower, more affordable monthly payment. Considering the reasons why credit scores are low, extravagant purchases are not recommended on poor credit second mortgage loans. Using the money wisely will help you rebuild your credit.

3. Reducing debt and paying the monthly installment on time for a poor credit second mortgage loan can offer an individual the opportunity to improve credit ratings.

4. A poor credit second mortgage loan often offers flexibility in regards to interest rates, payment options, and the term of the mortgage.

5. The interest for most poor credit second mortgage loans is tax deductible.

Cons of Obtaining a Poor Credit Second Mortgage Loan

1. If the poor credit second mortgage loan is not paid or defaults, you are at risk of losing your home. Payments need to be made consistently and on time.

2. The interest rate is usually higher for a poor credit second mortgage loan than for a first mortgage or other conventional second mortgage loan.

3. You are at a much higher risk of worsening your credit situation if the monthly loan installments for the poor credit second mortgage are not paid on time or are missed.

Poor credit second mortgages can be obtained from lenders specializing in loans for individuals and couples with poor credit. Research lenders carefully, and before signing on a loan, read everything, including the fine print. Make sure you understand everything entirely, and that there are no hidden costs involved. If you’re having problems finding a lender, a mortgage broker may be able to offer assistance in getting a poor credit second mortgage loan. Mortgage brokers, such as Platinum Concepts, Ditech, E-Loan, Lending Tree, and others, generally work with hundreds of different lenders. A broker will “shop around” on your behalf, and find a lender that offers the lowest possible interest rate based on your particular credit situation.

Mortgage brokers are available locally and nationally, and can be found in your local yellow pages, as well as on the world wide web. Choose a broker carefully, though. If you know of another individual who has used one, or know of one that you could meet with personally and check their references, this is a great precaution to consider. Examine a mortgage broker in the same way you would any other lender, and make sure that your loan needs will be met with the loan. Don’t settle for something that just doesn’t seem right.

After obtaining a poor credit second mortgage, use your money wisely. Consider the loan an extremely fortunate “fresh start” with your finances. Budget your income carefully so that loan payments can be made on time.

Falling behind on even one payment will drop your credit scores significantly, and this poor credit second mortgage loan is meant to do just the opposite, namely, offer you the opportunity to rebuild your credit and increase your credit scores. Make your payments on time, and don’t miss any payments or your home ownership may be at risk.

To avoid this risk, change your financial future with the poor credit second mortgage. Don’t overspend, and don’t make any purchases unless the item is necessary.

If you have credit cards, destroy all but one, and use that one card only for emergencies, such as unexpected auto repairs, and pay off the card in full before using it again. Start saving money with each paycheck you receive, and don’t touch the money that you deposit into the savings account. Even if it’s just a few dollars a week, strive to build your savings and leave that money alone except in the event of an emergency.

Mortgage Refinance And Why You Should Get it

In today’s economically stricken world, people are looking for every possible way to enjoy life without going bankrupt. The situation is such that loaning and mortgaging is actively being executed all over the world. However, many homeowners are finding relief by refinancing mortgage. If you are new to the term “refinance mortgage”, you will soon realize its many benefits and how you can use it to stay afloat your debts.

Home mortgage refinancing has several benefits of which most people are unaware. In order to make use of this facility, it is important to know the basics of the procedure. To refinance mortgage is to exchange the conditions of your existing debts for new conditions. If you are looking to boost your credit rate or want to extract equity to consolidate investments, then refinancing home mortgage can help. It offers a great way to cut down your monthly expenditure and interest rates.

Home mortgage refinance is primarily used to reduce monthly expenditure and offer security against financial risk. If the rate of interest has fallen since the previous mortgage loan you obtained, it is highly probable that you will be eligible to refinance at a reduced interest rate the second time. In addition, loan expenditure that are big enough for you to repay with ease enables you to refinance the period of the mortgage. This allows you to raise the time period of the loan in order to lower your monthly expenditure.

Refinancing loan is also a great way for homeowners to switch their mortgage from an inconsistent to a set rate. This is highly advantageous as you can continue to pay lowered rates even in the interest rates rise.

If you own a poor credit history, it may be difficult to refinance home mortgage as you will need to pay lenders high interest rates. However, it is possible to find good mortgage loaners to assist you refinance your mortgage despite poor credit record.

It is important to verify the credibility of the loan lender. If you have poor credit rates does not mean you have to accept a bad loaner. Before you refinance, ensure that the lender is recognized by an accrediting agency.

Many benefit greatly from mortgage refinance. It helps in rebuilding your credit history and helps you maintain your debts. If you have heavy payments to make, such as college or medical expenses, refinancing is a good way to accomplish your financial needs.

Business Property – A Look At The Advantages And Disadvantages Of Buying

Nearly every type of business needs a premise from which to operate – In the case of a small business it may be possible to work from home however as most things do eventually grow and expand, it may be necessary to obtain larger working facilities.

The majority of businesses will require their own premises and are generally faced with the option of either renting or buying. The obvious choice for many would be to buy, finance allowing however there are advantages and disadvantages to both sides.

Advantages Of Buying

Retention of ownership – most businesses will need to take out a loan in order to purchase property. In the case of taking out a mortgage, the business is able to raise the capital without resorting to selling a share in the company, either to an interested party or by way of issuing shares. In this case the original owners will have retention of both ownership and control. The mortgage lender will have the right to charge interest on the loan amount outstanding however it will have no interest to a share in the business or its profits. The lender has an interest solely in the property and is only permitted to call in the loan in the event of borrower default.

Taxation – Businesses are permitted to make mortgage interest payments with pre-tax money that is deductible for tax purposes as expenses.

Cost and cash flow management – A commercial mortgage allows a business access to finance that would not usually be available. They can offer a degree of flexibility in designing a repayment scheme to suit the needs of the business, which may include fixing the repayments for a set period of time. Mortgage repayments tend to work out lower than rental payments and the borrower in this case will know what the payments will be in advance – this fixed payment can often aid the business with cash flow and managing costs. Businesses that rent a premise can be exposed to market conditions which could result in payment fluctuations on review.

Security of tenure – Businesses and individuals that rent have very few guarantees beyond the end of the current agreement.

Asset appreciation – This of course is by no means guaranteed however property has long been viewed by many as a very sound investment. The business or individual will have an asset which can potentially grow in value, just like residential property – this could subsequently increase the value of the business.

Financial flexibility – Taking out a loan by way of a mortgage to buy a business premises can free up money held in the business for other purposes. Borrowing money outside of a mortgage could prove to be more costly. It may also be possible to remortgage in order to raise finance in the future by using the available equity.

Retirement – Many people decide to hold property in a pension plan which can offer a tax-efficient way of buying the premises and boosting pension benefits.

Disadvantages Of Buying

Financial difficulty – Like any other mortgage, the mortgage lender will hold a legal charge over the property. Nearly all businesses meet financial difficulties at some stage which could potentially result in mortgage payments being missed. In the event of default the lender may take steps to repossess the property – if this happens then it would leave the business with nowhere to operate from.

Relocation – In the event a business needs to relocate, it is relatively easy to terminate a rental agreement. In the case of an owner occupier, the process is of course far more complex.

Flexibility – A business that rents has a far greater amount of flexibility that a business that is tied to a mortgage. Buying would only make sense if the business is confident over its future which encompasses two main factors – relocation & business expansion.

Drain on Capital – When it comes to getting a deposit, this can mean a huge drain on the business capital as this is usually taken from the profits or reserves.

Maintenance and upkeep – The owner of a property has management responsibilities that a tenant would not usually have – maintenance and upkeep of a property is a constant process and can prove to be very expensive.

All About Mortgage Broker Services For All Your Needs

At this time one can find a number of different types of mortgage broker. The services which are provided by them are not always being same. So in this article I am trying to clarify the difference between them which will help you in finding the best mortgage deal for your property. The law changes makes mortgage into three main categories. So you need to be cleat that form which category you need to go for best deal.

The first service on which you will find the most limited type of broker is known as Tied services. If you will go for such type of services, you may find very less number of mortgage brokers in it. The brokers who offer such type of services can only advice you on some specific mortgage. A bank or a building society is the example of it. If such type of brokers advices you best mortgage they have it means there is another better option is available which is not recommended by these service provider because such type of deals is not came under his belt. So if their company is not getting any benefit why he will share that thing to you. In this case you need to search for an alternative.

The second category which is provided by these brokers is known as Multi-Tied. Such type of service providers provide you wider services in respect to first one but still there are limited range of mortgage companies are offering such type of services. Many real estate agents works as a multi-tied and offers deals from a panel of lenders from which they have agreed to deal with. But instead of getting better service in comparison of Tied service provider it may be possible that you are not getting the whole picture. It possible that you miss out the best deal as the panel they work with is representative of all lenders.

The most demanded and recommended type of mortgage services which is in use is known as ‘whole of market’ broker. In such type of services the service providers are well experienced and they can easily give you the best deal according to your situation and they have also the access of the whole market. That is why they can offer you a full range of potential deal according to you and your situation. The service provider of this category are not tied with anyone. That is the reason that they often give you the deal which is generally not been offered by some mortgage provider. So I think the provider who providing such type of service can give you best deal.

Whichever level of broker you choose for your deal be sure about the fee and also that how he will take the fee amount. I will suggest you to visit an independent mortgage broker instead of choosing any type. Some brokers take their fees via commission while some take commission as well as fees. So, firstly understand all the things and then go for anyone.

The 3 Types Of Mortgage Loans

Currently on the market, there are many varieties of mortgage loans available. Sometimes it can be difficult to tell which mortgage loan is suitable and applicable to you.

I will discuss the 3 main types of mortgage loans on the market. Most banks and lenders offer mortgage loans that belong to one of these categories.

1. Fixed Mortgage Loan

Fixed mortgage loans are the most popular and common among the three types of mortgage loan.

You take out a mortgage loan with a lender and you pay a certain repayment amount for a fixed period of time. Most people usually choose 30 year fixed mortgage loans as the monthly repayment amounts are low and the interest rates usually evens out in a 30 year period.

One disadvantage of 30 year fixed mortgage loan is you have to repay more for your mortgage loan in total compared to someone who takes up a 15 or 5 year loan.

There are also shorter time periods such as 5 year, 10 or 15 years fixed mortgage loans. It allows people who want to pay off their house in a shorter period of time. Of course, you have to make sure you have the financial capability to repay higher monthly repayments.

There is also another sub-category of mortgage loan called adjustable rate mortgage loan or ARM. Usually, you will start off with a lower interest rate compared to a 30 year fixed mortgage loan. So you ended up paying less each month for your mortgage repayment.

However take note that ARM is highly fluctuating depending on interest rates. In other words, you pay less for monthly repayment when interest is low and pay more when interest rates is high.

2. Convertible Loans

Convertible loans are becoming more popular as it allows people to keep their mortgage loan options open allowing for more flexibility.

If you find interest rates are too high, you can convert to a fixed rate mortgage loan. If interest rates are low, you can also convert to ARM based mortgage loans.

There are too many varieties of convertible loans under this category. However I list one type of convertible loans I dealt with.

Balloon Loan

A balloon loan is a fixed rate convertible loan. Usually, you start off by repaying small monthly repayments for a period of years, usually 5 or 7 years. At the end of that period, you will need to repay the loan in one lump sum.

So what’s the advantage of a balloon loan? It is mostly used by investors or property dealers who are looking to sell the house in a short period of time. They can take advantage of low interest rates without locking their money on a house. Since they will have a large sum of money when they sell the house, it will not be a problem to return the lump sum.

3. Special mortgage loans

These are mortgage loans that are only being offered to a group of people. For example the FHA mortgage loans are only available for first time home buyers or people with bad credit.

Another one is the veteran affairs mortgage loan. They are only offered to widows of the US armed forces.

The best way to know whether you qualify or is suitable for a mortgage loan is to speak to a professional mortgage consultant before you decide to take up any mortgage offer

Mortgage Refinance The smart Choice

As the market shows lower rates many are thinking of refinancing their home loans thus saving thousands of dollars in interests. However in order to decide whether a refinance is the right option for you, you need to know the process of mortgage refinance and which lenders and which loans are right for you.

Mortgage Refinance Definition

Mortgage refinance implies getting a loan in order to pay off an outstanding loan. Both loans will be secured with the same asset thus the repayment is done immediately and the loan amount can not be used for other purposes, unless of course there is cash remaining after the previous loan is cancelled. The new loan can be obtained from the same institution or from another.

Uses of Refinance

There may be other reasons why you would like to refinance; you may want to make home improvements, reduce the monthly payments, convert an adjustable rate into a fixed rate, etc. If you want to make home improvements you can apply for a refinance with a higher amount than the remaining of the outstanding loan, this way you will have extra cash to undertake any improvements you where longing to carry out.

Reducing Monthly Payments

In order to reduce the monthly payments you can extend the loan repayment period. You will apply for a loan with similar rates but longer repayment periods; consequently the monthly installments will be substantially reduced. Even if the interest rate is a bit higher, you can still reduce your monthly payments by extending the loan length. However, make sure to balance these two variables (length and interest rate) so you do not end up overpaying just because you want to use your income for other non essential purposes.

Opting for fixed or Variable rates

If you fear that interest rates may raise in the future you can refinance your home loan and opt for a fixed rate in exchange for the variable rate of the outstanding loan. This way you will be safe from future rates variations as the amount of your monthly payments will remain as settled in the contract. You can also opt for a variable rate if you feel that you can take advantage of lower interest rates that are usually implied by variable rate loans.

Finding the right lender

As you can see, refinancing your home loan is an excellent option when done taking into account all of the above. You can take advantage of better market conditions and end up in a better financial position with a very simple financial transaction. The key to be successful is to find the right lender, you can find the best options by applying online, and you will be able to compare rates, periods and other conditions.

Nevertheless, refinancing ought to be taken seriously; the new loan will be a burden you will have to carry for many years, so make sure to get it as weightless as possible so you do not have to make sacrifices in order to meet the monthly payments. This kind of financial transactions, due to the length an amount, will determine your future financial situation for many years.