Posts tagged with Mortgage Payment

Tips for Mortgage Refinancing and Debt Consolidation

  • Posted on February 7, 2011 at 11:26 am

Many people discover that their credit card debt is out of control when they get their monthly bank statement. Mortgage payment, everyday spending, services and occasionally getaways or dining out can bring your balance over-the-limit fees. Its time to consider debt consolidation to save your money – credit card balance transfer, home equity loan or mortgage refinancing.

One of the best ways to obtain debt relief is by consolidating your debts with a mortgage refinancing if the timing is right. Refinanced mortgage is a form of debt help for the borrower, who will be able to pay down the old mortgage with the money of a new loan. The benefit of mortgage refinance is based in not only debt consolidation of other debt, but in getting a lower interest rate, lower pay off, and taking cash out of the home equity. Although every borrower may have their particular reason for applying for a new loan, all of them share the desire for debt relief by reducing their mortgages’ interests rates and liquidating cash from their home equity when possible. Mortgage refinancing usually costs a couple of thousand pounds in closing cost besides the time you spend on research, application etc. Debt advice on home mortgage can easily be obtained through the mortgage lender, mortgage broker, financial institutions and Government Consumer Protection Offices.

Because secure loans and mortgages are backed up by collateral property or a guarantee for any other sort of asset, lowering the rates means more savings and debt relief. Mortgage refinancing could quickly reduce your debt if done properly. Mortgage refinancing lets you cash out your equity to be applied for debt relief purposes, and allow you to qualify for lower rates than a home equity loan. A single mortgage is often considered less risky than having two loans.

Taking a shorter term in your mortgage refinancing may further lower the interest rate. For instance, if your original mortgage is a 30-year loan, you may consider a 15-year mortgage while refinancing the loan. The monthly payment of a 15-year loan is about 20-30% higher than the one of a 30-year mortgage, not as high as out intuition tells us.

Genuine debt help comes when you weigh the pros and cons of debt consolidation. Obtaining a mortgage refinance may be the best option for debt relief, remembering that you will have to follow a similar process like the first time application so make sure to keep a good credit history before you apply. Be sure to get mortgage quotes from at least three mortgage lenders before you commit. Weight the pros and cons of your current mortgage, and compare the actual interest rates you are paying off in comparison to those resulting from your new debt management perspective, considering collateral involved in the debt and possible future risks as well. Your financial adviser can offer valuable advice for your debt relief.

Continue reading Tips for Mortgage Refinancing and Debt Consolidation

Take the Stress out ot Obtaining a California Mortgage Home

  • Posted on January 24, 2011 at 11:26 am

Take the Stress out ot Obtaining a California Mortgage Home Loan

California Home loans make the process of buying a new home in California more affordable than ever. As you may already know, these types of loans give you many opportunities that wouldnt be possible without them. When you buy a home, you should understand as much as you can about the process, as well as the questions you will be answering. This way, youll be familiar with how things work and youll find the entire process to go much smoother.

When you look towards a California home purchase loan, youll need to fully understand the interest rates. They are never the same and will vary among the different financial institutions, as well as from time to time. In many cases, home loans can change on a frequent basis, with little to no notice. When you buy a home, it is very important that you keep up with the economy. Any change in interest rates for a home loan can either increase or decrease the amount you pay back.

When getting a California home loan, youll also need to understand the terms and the length of the loan. Almost all financial institutions and lenders have a variety of different plans or periods for you to choose from. If you choose a longer period, in most cases your interest rate will drop. You can find this out yourself by using a mortgage calculator. This way, youll know how much your CA mortgage payment will be before you decide to further pursue the loan.

As you probably already know, your ability to pay the loan back is very important. Some lenders require that you keep your loan full term, while others may provide you with the option to pay it off any time you wish. Home loans that give you the option to pay it off early will normally save you quite a bit of money in the end. If you are able to pay your loan off several years early, youll save a lot of money in the long run.

Even though the early payoff option is great to have, it can also come back to haunt you if you end up defaulting on the home loan. Or, if you decide to sell your home in the future, the early payoff can haunt you as well. For those very reasons you should always consult with a specialist before you commit to any type of home loan.

For the potential home buyer, California home loans offer several different opportunities. Before you rush out and get a home loan, you should always know what you are agreeing to. You should also look into the company you are thinking of getting the California loan from as well, so that you Can better prepare yourself when you go through their process of getting your loan.

Continue reading Take the Stress out ot Obtaining a California Mortgage Home

Keeping your Home Despite a Job Loss

  • Posted on November 29, 2010 at 11:26 am

Job loss is a grim specter for a mortgage holder. For most of us, that mortgage payment is at the top of the monthly bill payment list. You can talk almost any creditor into short term relief and even long term restructuring the phone company, your car loan(s), credit card companies; they deal with delinquent payment plans daily. Mortgage companies get nervous much more quickly, but most are willing to consider at least one skipped payment if your unemployment is for a short period.

Mortgage Insurance?

You may not remember this in the flurry of documents and signing sessions that accompanied your home purchase, but you may well have an insurance policy that protects your lender against mortgage default. If you have a loan that is more than 80% of the homes value when purchased, you probably are also paying for mortgage insurance. Its incorporated into that list of particulars you pay on every month: principal, interest, taxes, homeowners insurance and mortgage insurance. Its meant to protect the lender; see what protection it provides for you.

Talk to your Lender

It is important to talk to your mortgage lender. Job upheaval is sufficiently commonplace in this country that many mortgage holders have become flexible about restructuring loans, as long as you are prompt in informing them and honest about your job prospects.
A typical restructuring will allow for lesser payments until your income is reestablished, at which point the bank will again restructure to get you back on schedule. Keep in mind that prospective new employers are almost as likely to check your credit rating as prospective lenders.

Before you enter into discussions with your lender on this prospect, decide what you can afford. Dont be grateful for whatever is offered, and agree to a financing plan that you cant meet. Tell your lender that your maximum temporary mortgage payment has to be 60% of the norm, not the 75% they are proposing. If you lose the house, it costs them money too.

Bankruptcy The Poison Pill

The long term answer to keeping your home while unemployed is filing for bankruptcy. The unattractive fallout from exercising this option is known to most of us, although the hard and fast rules have changed somewhat. What used to be seven years of no credit at all has become credit card eligibility after two years. Depending on the circumstances of your bankruptcy, you may be eligible for high risk auto loans and other debt within two to three years after bankruptcy. That assumes, of course, that you have regained employment status and are once again making mortgage payments. Also, bankruptcy has become so common that the Federal Government is on the verge of making it a much less attractive option for consumers.

Near Term Borrowing

With near-term unemployment and an unclear future, many people have put mortgage payments on their credit cards until the limits on those cards are reached. It may blow holes in your credit rating, but it will keep you current on the mortgage and stave off bankruptcy. You can attempt to obtain a home equity loan to fill the hole in your monthly budget, but those are much harder to come by when youre unemployed. If there are others in the household who are employed, the home equity loan may be a viable option.

Continue reading Keeping your Home Despite a Job Loss

Interest Only Mortgages

  • Posted on November 15, 2010 at 11:26 am

These days, as people scramble for new and more creative ways to finance buying a home, the interest only mortgage is becoming more common and well known. An interest only mortgage is one in which you have the option of paying only the interest (or just the interest and a portion of the principal) each month in the early years of the mortgage loan. Interest only periods may be applied to adjustable rate mortgages, or 30 year fixed rate mortgages, depending on the lender.

In a traditional mortgage, each month your mortgage payment is divided in two parts – one part is paid on the interest charge, the other on the principal of the loan. The main feature of an interest only mortgage loan is that during a specified initial period of time – usually three, five, seven or ten years – you may choose to make a payment of the interest portion of the loan only. The option is flexible. One month you may choose to make an interest only payment, another you may choose to make an interest-plus-part-of-the-principal mortgage payment, or a full, standard monthly mortgage payment. Needless to say, an interest-only payment will be significantly less than a traditional mortgage payment.

The flexibility of an interest-only mortgage allows you to adjust your mortgage cost on a month by month basis, giving you more control over your monthly cash flow. In any given month during the interest-only period, you have the flexibility to pay as much or as little on your mortgage as you can.

Interest only mortgages aren’t right for everyone. While you have the option of paying interest only each month during the early years, the principal repayment on your mortgage loan is accumulating. At the end of your interest only period, your mortgage payment will take a dramatic jump. Financial experts recommend interest only mortgages for specific types of borrowers: those whose income is supplemented by large commissions or bonuses throughout the year, those who can reasonably expect to be making considerably more income in a few years than they are now, and those borrowers who actually WILL invest the difference between their interest-only payment and their full mortgage payment in profitable investments.

The power of an interest-only loan, according to most experts, is that you can ‘afford to buy more house’. Because you’ll have the choice during the early years of paying only the interest each month, you can effectively afford the monthly payments on a house that’s as much as 30% more expensive than you could with an amortizing (typical) mortgage payment.

You also, however, have the choice each month of paying the interest plus as much on the principal as you wish. If you’re a salesman, for instance, whose standard income is supplemented quarterly and semi-annually by large commissions or bonuses, you could pay interest-only during lean months, saving yourself up to $350 in those months. In the months that you get a large commission though, you could choose to pay down several thousand dollars on the principal.

An interest only mortgage also makes sense if you have a solid investment plan. If a typical mortgage payment would be $900 monthly, and your interest-only payment for the month is $625, then the best financial strategy according to many financial experts is to invest the remaining $275 in a solid, money-making stocks program.

Interest only loans are not for everyone, but they can be a valuable financial tool that can help you control your spending and give your investment power some added oomph. Don’t rush blindly into an interest only mortgage, but do speak to a financial expert or loan officer about whether an interest only loan may be right for you.

Continue reading Interest Only Mortgages

Cash Saving Mortgage Tips And The Mortgage Crunching Secret Weapon

  • Posted on July 5, 2010 at 11:26 am

Cash Saving Mortgage Tips And The Mortgage Crunching Secret Weapon Banks Don’t Want You To Know

Buying a house is a great long term investment. If you’ve never had a mortgage payment it simply means you’ll have to be more careful regarding the management of your finances. The first step before venturing into a mortgage if youre not already in one is to consider your financial situation. Then decide to buy a home where the mortgage and down payments are according to your financial situation so that you can enjoy life and have a roof over your head at the same time. If you have no idea what your monthly budget can afford then you should take some advice from a finance professional first.

Regardless of your situation here are several ways to reduce your monthly mortgage payments:

As interest rates keep on changing you should keep track of changes and consider refinancing at the right time. This would reduce your expenditures. Do the calculations to know your savings after paying costs and other expenditures.

Find out which bank offers the lowest homeowner insurance rates. You might be able to reduce either your insurance or tax payments.

Check your calculations properly and regularly to make sure that all adjustments are made correctly, even though it’s a bank sometime they make mistakes.

Choose a mortgage that offers flexibility. You want a mortgage that allows you to pay in an easy way according to your earnings.

Consider biweekly payments or accelerated equity plans. This will give you an additional payment each year and begins to reduce your mortgage quickly right from the start.

Try short term loans or variable interest.

Consolidate all your loans into a single one with lower payments. Make a table and analyze all your loans; education, car, home and bank loans for example. Study your expenditures. Try to consult a mortgage specialist, ask him about consolidations and how much it can reduce your monthly payments.

And last but not least, the mortgage crunching secret weapon:

Change a short term mortgage into a long term mortgage – go for a 30 mortgage. This will allow you to pay lower monthly payments which will lower the amount of interest you pay. Now, check with your bank for their rules and regulations but the next step is to pay way more each payment than the minimum payment. Each time you do this you’ll be smacking down the cash on the principle of your mortgage. This is the big mortgage early payout secret and it’s been known in many cases to eat a mortgage really easily in under 10 years.

A mortgage or home loan is a long term debt but it doesn’t have to be a burden. You are advised to pay it off as soon as possible but arrange your budgets tactfully by keeping an eye on insurance, loan disbursements and their interest rates. Enjoy your new home; hopefully with a few of these tips it will be all yours sooner than the banks desire. If it’s paid for it’s yours, if it’s a loan or mortgage it’s still theirs in my opinion.

Continue reading Cash Saving Mortgage Tips And The Mortgage Crunching Secret Weapon

ARM Adjustable Rate Mortgages

  • Posted on May 24, 2010 at 11:26 am

Traditionally, homebuyers could look to two forms of mortgages fixed rate and adjustable mortgages. While there are now many more options, this article takes a look at the adjustable rate mortgage.

What is an ARM Loan?

An adjustable rate mortgage [ARM] is a basic mortgage with one important exception. With an ARM, your interest rate will start low but typically move up throughout the link of the loan. The timing of the movements is dictated by the terms of the loan. The rate may be adjusted every month, but more typical periods are every six or twelve months. Most adjustable rate mortgages also have a cap on the amount the interest rate can be raised in a particular period.

ARM Yourself?

A homebuyer has to be very careful when selecting an adjustable rate mortgage. Buying a home necessarily involves budgeting out how much of a monthly mortgage rate you can afford to pay. With an ARM, you have to keep in mind that your monthly payment amount will go up if the interest rate does the same. While you may be able to afford the loan now, what happens if the rate jumps two percent over the next two years?

In the current real estate market, potential rate increases are a troubling issue. In areas where the real estate market is dramatically appreciating, homebuyers are using ARM loans to get into homes. Put another way, they are using ARM loans to get a mortgage payment they can afford without giving real consideration to rate increases in the future. Mortgage interest rates have been at historic lows for the last few years. What is going to happen to all of these people when rates rise? It could make the savings and loans crisis of the late 80s look like small potatoes.

If you are considering an adjustable rate mortgage, make sure you do the research. Find out how often the rates can increase and by how much. Try to determine whether you can afford payments if the rates go up significantly over the next few years. With Greenspan retiring, now is the time to be very careful when taking on mortgage debt.

Continue reading ARM Adjustable Rate Mortgages

Adjustable Rate Mortgages vs. Fixed Rate Mortgages

  • Posted on May 17, 2010 at 11:26 am

Buying a home can be an exciting and stressful time for anyone. While you may be excited at the prospect of owning your own home, especially if it is your first home purchase, the idea of choosing between all of the many different types of mortgages may leave you feeling confused and apprehensive.

Two of the most common choices youll find in the mortgage market are adjustable rate mortgages and fixed rate mortgages. Fixed rate mortgages are the most traditional type of home mortgage, offering a fixed interest rate that does not change throughout the life of your loan. There are a number of important advantages associated with this type of mortgage. First, if you are budget conscious, this type of mortgage will give you the peace of mind in knowing that your monthly mortgage amount will not change. You can budget the remainder of your financial obligations without worrying about a changing mortgage payment to throw things off.

An adjustable rate mortgage works differently. With this type of mortgage you may be able to obtain a lower interest rate than would normally be available with a fixed rate mortgage; however, the interest rate is not fixed. This means that your monthly mortgage rate may change as interest rates change. With such a mortgage you may not be able to regularly plan your budget due to such fluctuations. While there is usually a cap that will keep the interest rate from fluctuating too much, even a little fluctuation can be too much for some homeowners. Of course, there is also the possibility that interest rates will drop and if that is the case, because your mortgage is adjustable, your monthly payments will drop right along with the interest rate.

When deciding whether a fixed rate or adjustable rate mortgage is your best choice, you need to give thought to several factors. Ask yourself whether it is more important to be able to plan your monthly budget without wondering whether your mortgage will fluctuate or whether you would prefer to receive a lower interest rate in the beginning of your mortgage.

Remember that if you decide you would like to obtain the advantages of both you do have other options available to you. For example, if you feel the interest rate offered to you on a fixed rate mortgage is too high but you want the security of not having to worry about a fluctuating interest rate you can always buy down your interest rate by purchasing points. This will mean more up front costs for your mortgage; however, it may be worth it to decrease the interest rate, especially if interest rates are currently high.

If you do elect to go with an adjustable rate mortgage make sure you understand exactly how high the rates may go as well as ensure you have enough wiggle room in your monthly budget to cushion increases if they occur. This may help to keep you out of a tight spot and possibly losing your home due to rising interest rates.

Continue reading Adjustable Rate Mortgages vs. Fixed Rate Mortgages

Adjustable Rate Mortgages and Negative Amortization

  • Posted on May 10, 2010 at 11:26 am

For many borrowers, adjustable rate mortgages are an attractive means of qualifying for a home. Fewer borrowers realize the potential negative amortization problems these loans can create.

Adjustable Rate Mortgages

Adjustable rate mortgages are very popular with home buyers. The popularity arises from the fact the initial interest rate on such loans is typically much less than one finds with fixed rate loans. As a result, home owners can squeeze into homes that they might not otherwise be able to afford with fixed rate mortgages.

The potential risk with adjustable rate mortgages is well known. A borrower runs the risk the interest rates will increase over the years, resulting in financial hardship when month mortgage payment amounts go up. If the rates and payments go up to much, the borrower can run into serious problems trying to make payments and may even lose the home.

To overcome the fear of rising rates, many lenders use caps on rate increases to entice home owners. These caps essentially limit the amount the monthly payment can increase for any fixed time period. For many loans, the period is one year and the rate increase is one percentage point. While this makes borrowers feel more secure, there is one little thing lenders fail to point out.

Negative Amortization

On many adjustable rate mortgages, the caps apply only to the monthly payments due on the loan. The caps do not apply to the actual interest rate being charged on the loan. This situation leads to a financial disaster wherein you are making the monthly payments, but actually seeing the principal of your loan increase. This situation is known as negative amortization and should be avoided at all costs.

Negative amortization is best explained using good old credit cards for an example. If you have credit card debit, and everyone does, you know that making the minimum monthly payment may not make a dent in the total balance. In fact, it may be less than the interest charged for the month. This becomes apparent when you receive the next bill and your balance has increased! Welcome to the world of negative amortization.

On an adjustable mortgage, you need to read the fine print to full understand how any caps apply to your loan. Whatever you do, try to stay away from negative amortization whenever possible.

Continue reading Adjustable Rate Mortgages and Negative Amortization