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Archive for the ‘Mortgages’ Category

Introduction.

If you’re in the process of selling and buying homes you won’t need telling how stressful it can be. For everyone those stresses include: finding the new place you want to buy, negotiating on the price, arranging a new mortgage and then finally organizing the move itself. As if all that isn’t stressful enough – what if you need to actually buy the new property ahead of selling your old home? You can’t afford to take out two mortgages at once – so how are you going to pay for the new home ahead of selling the one you’re in now? The solution to both those questions is – you need a bridging loan.

A bridging loan could be the missing piece in the jig-saw to helping you move home?

What is a bridging loan?

A bridging loan is simply a loan that can be arranged for you to provide you with immediate cash to complete a property transaction. Bridging loans are only intended as short-term loans, normally lasting a few weeks at most. However, they will be secured loans against the value of the property you’re currently about to sell. A bridging loan is a very formal way to borrow money and will require you to complete several forms and have a good credit rating. So, on that basis you are recommended to find a reputable online loans advisor or mortgage broker to guide you through the process. There are two types of bridging loan that you can apply for – closed and open.

Closed bridging loans.

A closed bridging loan is for home owners that need to buy their new property ahead of completely selling their existing one. To enter into a closed bridging loan agreement you will already have to have someone committed to buying your current home with a formalized sales contract between you. Closed bridge loans are the easiest type to get, especially through a recognized bridging loans broker and are usually for a specific and very short period of time.

Open bridging loans.

An open bridging loan is a higher risk one for the lender and so will often have a higher interest rate than a closed bridging loan. This is because they can be applied for ahead of there being any agreement between you and a potential buyer for your existing property. With no potential buyer in place this type of bridging loan has no specified loan period – making it an ‘open’ agreement.

Introduction.

Following months of uncertainty regarding the economy, the general consensus of opinion now seems to be that it is finally time to start buying again. We’re not talking here about things like electrical goods for the kitchen, furniture or TVs etc – but the bigger items that we tend only to buy when we think our jobs are secure, our finances are sound and the national economy is stable. Such bigger items are things like a new car or home, things most of will need to take out a loan for like an auto loan or a mortgage.

Are you ready to start buying again?

Having gone through an economically unstable period you’re probably one of the millions of American’s that haven’t been spending money of things that were not seen as essential. Instead, and rather than banking spare cash with the interest rates having been so poor, that was the time to pay off debts like credit cards and personal loans so that now the economic climate is brighter – you’re no longer saddled with those old debts and can start applying for new loans confident that your credit score is good. However, when starting to spend money again on big items – should you protect yourself against another downturn in the economy?

Protecting your new purchases.

Look for redundancy insurance cover online.

Let’s face it nothing could be worse than starting to pay for something like a new car only to lose your job, fall behind with the payments and end up having the auto repossessed. The solution to this is to take out redundancy cover on an auto loan or new mortgage – to make sure that if your job does fold your payments will be covered. When taking out redundancy cover do make sure the contract you sign is exactly what you need and take special care to check with your boss that your job is safe. The reason for this is that quite often redundancy cover insurance can be ruled invalid if, at the time of taking out the cover, your job was under threat. Also, be aware that mortgage redundancy cover will rarely pay off the whole mortgage if you should lose your job, but will more likely agree to pay your mortgage for a fixed period giving you breathing space to find a new job.

Introduction.

As the money markets start to get themselves back into gear – what chance do first time buyers have of getting a good mortgage deal? Whereas before the credit crunch getting a 100% or even better than a 100% first time mortgage was as easy as a trip to the supermarket, post credit crunch all of the great deals simply melted away. The situation now is that without a big wad of money to put down as a deposit getting any sort of a mortgage is still tough for the first time buyer.

Things are improving.

Ready to move into your own home - get an online for a first time buyer’s mortgage.

The good news is that, even compared to six months ago, things are starting to look up in the mortgage markets, especially the highly competitive online mortgage deals. You’ll still not find that 100% or better mortgage offer, but the days of being asked for a whopping great 25% or even 30% deposit do seem to be over and deposit requests are falling and seem to be settling around 10%. Of course even a 10% deposit is still a hefty sum to find, a fairly modest apartment in most places will be $150k, so finding $15,000 as a deposit is still a big ask. So, is anyone out there prepared to offer 95% mortgage loans reducing the deposit requirement? Well, yes you will find online 95% mortgage offers for first time buyers, but the catch is that they will carry a higher rate of interest on the mortgage.

Loan to value calculations.

If you’re struggling to make a big deposit for the dream home you want to buy and so are looking for a 95% mortgage, the company making the loan will make a loan-to-value calculation to determine exactly what mortgage deal to offer you. To get the very best mortgage deals at present you still need to offer at least a 23.2% deposit, a lot yes but better than last year when it was 24.3%. So, without wishing to be too over-simplistic; if you can make their full deposit target you’ll get the best interest rate - let’s say 3.5%. If you can’t make that full deposit – you will still get your first time mortgage but with interest rates to penalize you, which on a 95% mortgage could easily exceed 5%.

Introduction.

With unemployment back up to 10% at the start of this year the so called signs of economic recovery and, therefore, many folk’s personal finances, seem to be emulating the weather at the moment. Paychecks and money are either melting away with the snow or being frozen solid as we dare not touch them, for fear of what might happen to our jobs in the near future. One thing that will surely happen as a result of the unemployment figure going up again is that there will be more foreclosures on mortgages.

Foreclosures can mean investment opportunities.

Not wishing to sound heartless but it’s a fact that “one man’s loss in another man’s gain”; and the same is true when it comes to someone having their mortgage foreclosed. If you have some foresight, why not plan ahead and buy a foreclosed property for less than its true market value? Of course mortgage companies will always offer a re-finance mortgage to try and help avoid the foreclosure, but sometime folk have simply over-stretched themselves in terms of the mortgage they could afford. The net result of this in a time of economic recession is that the property market can be become flooded with properties, ostensibly owned by the mortgage companies carrying out the foreclosure. However, they don’t want to hold on to these properties until the economy heats up again and so auction them off to recoup their money. This is where a foreclosed property can turn into an investment opportunity for someone else.

You could turn a new mortgage into a second home investment.

Buying a property at an auction.

Obviously, if you haven’t got the cash to buy with you’ll need to secure a new mortgage before making a bid. Buying a property at an auction you will get it for tens of thousands of dollars less than if it was worth on the open market. Even better, you can make an offer directly to the vendor ahead of the auction or, even better still, if a property doesn’t sell at an auction you can make them an even lower offer after the auction – which if they’re keen to sell will probably accept. Buying a foreclosed property is one way that you can secure a property for a family member, as a dream second home or simply as an investment for the future.

Introduction.

One of the most frequently asked questions by many mortgage holders these days is whether or not they should re-finance their mortgage. Of course there is no one single answer to that question; and each case needs considering on its own merits. However, hopefully you’ll find the following information about refinancing mortgages helpful when considering whether to refinance or not.

Fixed and adjustable mortgages.

Mortgages come in a range of financial products but are essentially either at a fixed rate, where you pay one percentage interest rate throughout the life of the mortgage or an adjustable rate mortgage, where the interest rate will vary as the prime index one does. Fixed rate mortgages tend to be lower, across the life of the mortgage, but are usually only available to people with top credit scores who are unlikely to default on any payments. Conversely, if you have a poor credit score chances are you’ll have been offered an ARM, which although usually working out at an overall higher interest rate over the life of the mortgage, it will have a cap on how far it can rise at any one time and could, if the markets are right, fall below the interest rates paid on fixed mortgages. The question regarding re-financing really applies to switching ARMs, or if possible switching from an as ARM to a fixed mortgage, as with a fixed mortgage you can budget and plan ahead better for repaying it. There are a number of hybrid fixed-adjustable mortgages too, offering deals like a fixed rate for 5 years followed by a return to adjustable rates.

Is it worth it?

Securing your home with a refinance mortgage could be important for all of your family's sake.

To decide whether or not to refinance your mortgage simply ask yourself – is it worth it or not? Determining the answer to that question isn’t just to do with whether or not your monthly mortgage repayment drops or not. You also have to find out if it will cost you anything to switch mortgage companies in application fees, loan origination fees etc. If it does then refinancing mortgages rarely pays off in the long run. However, a mortgage refinance package that would be good right now is an ARM one so you can get a lower interest rate now or better still a hybrid one – giving you a few years at the current low rates, to help you through what is generally a depressed time economically.

Introduction.

Hitting the headlines this week is news that the Government is set to back mortgage bonds through Ginnie Mae – the Government National Mortgage Association agency. Although it plays a similar role to Freddie Mac and Fannie Mae, who nearly went under during the crash back in 2008 and are now government owned, Ginnie Mae isn’t publicly traded; hence the government guarantees mortgages being processed by Ginnie Mae.

Will Ginnie Mae give me a mortgage?

In the simplest of terms Ginnie Mae is able to offer mortgage backed securities where the loan is either guaranteed or insured by the Federal Housing Administration or the Veterans Administration. So, under there conditions for raising a mortgage, you’ll still need to be able to raise at least 3.5% of the loan amount, in order to be able to apply for a mortgage loan. Which is fine if you can raise that sort of money as a deposit for a mortgage, but with the economy the way it is saving simply isn’t that easy anymore.

Commercial mortgage lenders.

Don't despair if you need a new mortgage loan or mortgage refinance - help is only an internet click away.

 Although it is fair to say that the commercial mortgage loan market is still suffering under the current conditions, mortgage defaults in June 2009 totaled some $2.2 billion; you can still find some great mortgage offers out there – especially through online mortgage brokers. Although being able to place a deposit, no matter how small, on a property before taking out a mortgage is preferable – 100% mortgage offers are still available. Also, commercial mortgages still outstrip government backed ones by far and even in applications for new mortgages – commercial mortgage lenders remain more popular than ‘government’ ones. If you need to re-finance your home, or are looking for a home equity mortgage, then using a commercial mortgage lender will pretty well be your only avenue to explore.