The thought of changing your home loan could sound like a fantastic idea but you should be careful and remember that it is not as easy as it sounds. You need to always do your research and compare all the results that your research produces. Changing a home loan is something that is done frequently by many home owners. People do it for a variety of reasons; it could be to consolidate all your debts in order to be able to pay one creditor instead of many of them. Or it could even be that you want to see if you will be able to get a better rate from another institution.As with many other financial decisions you make, the key is to take your time. It is important to choose an option which is beneficial to you both on a long term and on a short term basis. It is as important as choosing the initial home loan agreement do not take it for granted.The most obvious thing to do that people often over look is to ask your current lender to negotiate the current rate before considering changing to another lender. This is a good idea because if you have a good track record you will be in a good bargaining position; chances are that the lender will be willing to negotiate a different rate with you. This is good because you will be able to save on what are known as exit fees and any penalties that were in your original agreement. You can save quite a lot of money if you decide to do this.In the event that you decide that it will be better to change your lender, your current lender will have to provide you with a letter of consent which will give you the go ahead to change your home loan. Without this letter you will not be able to begin the process of looking for a new loan because this letter contains all your particulars and the outstanding amount on the existing loan and your repayment history. Basically it contains all the information that a potential lender would need to know.Changing loans will cost you money. This is because lenders make their money from the interest they charge on loans. There is a long list of fees that you will have to pay when you want to change your home loan to a different lender. These fees include: the fees associated with the transfer, fees for the change itself, exit fees, a penalty known as early repayment, legal fees and the standard required application fees. This long list of fees is the reason that it is recommended that you should seriously consider renegotiating the current loan with your current lender but this only applies if you are looking at it from a short term point of view. However under normal circumstances, in the long run, the sum total of the fees you will pay should and will be much less than the savings that you make at the end of the repayment period.
Basics of Home LoansThree fundamental pieces of knowledge for obtaining and maintaining a home loan include the application, rates, and repayment habits.Home Loan Application Process – Filling out home loan applications can be time consuming, and overly detailed. Before beginning, get yourself organized by finding all of the paperwork you will need to complete your application. Once you have everything located and in front of you, you’ll find the application process to go very smoothly.Rates Change – Keep an eye on home loan rates for major changes, particularly changes of the downward version. Refinancing is inexpensive in comparison to the amount of money you can save if you obtain the right low interest home loan. Developing a good relationship with your mortgage broker may result in him or her calling you when the rates drop!On Time Payments – There is nothing that can hurt or help your credit rating more than your payment habits on your home loan. Make payments on time and your credit score will raise quickly. Alternatively, pay late and you’ll do long term damage that is difficult to repair.Quick Home Mortgages Online – SafeWhy should you shop for home mortgages online?1) Obtain mortgage quotes from a reputable lender and your information will be secure. Don’t check with every no-name mortgage company online, stick with names you can trust, as their online security will be top notch.2) Fast Processing – Mortgage companies who operate online aren’t bound by the same home loan processes as large local banks, and can process applications faster.3) Low Rates – With so many lenders from which to choose from, online mortgage brokers and home loan specialists are bound to find a program that’s right for your budget and home loan needs.How to Compare Various Home LoansYou’ve heard the saying “You can’t compare apples to oranges”, right? When you’re shopping for a home loan, you need to make comparisons among the same types of loans. When you compare a 30 year fixed home loan with 7% interest to an adjustable rate mortgage with 3.2% interest, you’re comparing apples to oranges- unless you know the specifics to each type of loan.1)Loan Term – The term of a loan is the length of time you will be repaying on the loan Many mortgages are 30 year terms, but some are shorter, 10, 15, and 20 year terms are common. The longer the term of your loan, the lower you pay each month, but the higher you’ll pay in interest!2)Interest Rate – An adjustable interest rate is one that can change from time to time, while a fixed rate interest means it remains the same for the entire term of your loan. To compare a fixed rate with an ARM loan, use an online mortgage calculator (they’re free!) to compare your future payments as well as current payments.3) Closing Costs – There are many things that are factored into closing costs, including lenders, closing agents and attorneys. Choose a lender with the fewest junk fees or a lender that pays for your closing costs out of their revenues.Home Mortgage PrepaymentIt’s not often that people stay in their home for thirty years. A thirty year mortgage probably seems like forever to most borrowers! Since no one would want to pay a mortgage forever, there are a few tricks that can save you a lot of money:1)Make use of free home mortgage calculators online to see how much of a difference one or two extra payments on your mortgage will make on your amortization schedule. Sometimes, as little as $20 extra on each payment can reduce the term of your loan a year or more! Many people never actually take advantage of paying one additional payment per year in order to shorten their 30 year mortgage term by up to ten years- because they have not educated themselves on prepayment.2) You can shorten your mortgage term by up to 20 years if you’re able to make double payments. While it may seem that you should only be able to reduce your mortgage payment in half by doubling your payments, the fact is the extra payment goes towards the principal and saves you interest, so it reduces the amount owed much faster than if you only send the minimum payment each month.Consolidating Home Loans to Save MoneyIf you have a refinance loan and your original home loan, you may want to consolidate them into a single loan. This may sound complicated, but should be a painless process for you.Find all of your current home loan information, including account numbers, bank name, initial loan amount, date of the loan, and any other documents you’ve obtained through the loan processes. Find out how much equity you have in your home, to determine whether or not refinancing and consolidating your second mortgage is feasible. Finally, go to your mortgage specialist to get a more specific and accurate portrayal of the options that are available to you.
Especially lately, information about mortgage refinancing is heard everywhere. Mortgage rates are at a near all time low across the country and look to stay pretty much the same throughout 2009. A lot of homeowners stand to save hundreds per month, or thousands over the course of the mortgage, by taking advantage of these record low rates. As long as you make smart financial decisions and do not get too risky, there is never a bad reason to refinance a home mortgage loan.Generally, the most popular reason to refinance is to change your existing rate into a new rate which is lower. Even refinancing into a loan that is just 1% (Ideally more) lower can save you a lot of money. Another popular reason is to get out of an ARM loan (adjustable rate mortgage) and into a more stable fixed rate mortgage. As I said with mortgage rates at near or all time lows all over the country, it is very probable that you will save a sizable amount of money you saved from not paying unnecessary interest rates.A home loan refinance is also done to free up extra cash from the equity in your home to make a sizable purchase or expense. A home equity loan however is typically an adjustable type of loan, which many people should be wary of. However, it is possible to refinance into say a longer term mortgage, and walk out of the refinance with the difference in cash, in your pocket. You should use any money gotten from a refinance to pay off other debts or things with interest payments. This will save you additional money every month while rebuilding your credit. You can use the money for whatever you wish, it is just recommended to use the money in a financially wise way.There are some homeowners seeking a refinance in order to remove a name from the mortgage. In divorce for example, if one of the parties gets the house, they may want to refinance in order to remove their ex does not have any kind of ownership of the home. Or, if the home remains in both peoples name, but only one person lives there and cant pay, both people will pay the price in the longer run. It is usually a safe, wise decision to refinance in this case as to not be liable for your former spouses expenses or debts.Refinancing the correct way can really save you a lot of money. This is extra money that you would have been otherwise spending every month on interest. Start your search for a quote with your current lender, get a written quote and shop that quote around to potential mortgage lenders. Often, they will match or beat the offer in some way to gain your business.-M Petrone
If you’re thinking of getting a home equity loan or credit line, then congratulations; you’ve already decided to take advantage of the potential you have in the value of your home. I will outline the different options you have; and briefly touch on the risk of using the equity in your home to back a loan.Banks and finance companies are only too happy to extend loans to homeowners as the collateral is the home itself. Financial institutions don’t see much risk in extending credit when they know they can always put a claim on the house. But of course, a person’s credit rating is still important.There are two main types of homeowner credit offerings:1) a fixed-rate home loan is offered at a set interest rate, and is a lump sum payment to the borrower. The borrower repays the loan over a set time period.2) a home equity line of credit, or HELOC, is a variable-rate loan that works much like a credit card and sometimes comes with one. Borrowers are pre-approved for a certain spending limit and they can withdraw money when they need it, using a credit card or special checks. The monthly payments can change; based on the amount of money borrowed and current interest rates.Both of the above types of credit are available with terms that typically range from five to 15 years, and both have to be repaid fully if the home on which they are borrowed is sold.One of the best reasons to get a home equity loan or line of credit is to put money into home improvements. This can pay off handsomely if its well thought out. Other uses of home loans should always be planned cautiously, especially if you also have a mortgage. The equity in one’s home is the greatest asset most people have, and you don’t want to risk it unnecessarily. Make sure you are confident of your ability to repay what you borrowed without risking your house.
Many people face great financial difficulties when it comes to funding college education. A feasible option for such people is college loans. Individuals in the U.S. have been given a chance to continue with their studies, with the help of college loans, even if their earnings are modest.It is advisable for people to give due consideration to their expenses if they are interested in covering them with college loans. There are various kinds of college loans available. However depending on their expenses, they will have to choose a loan that suits them the best. A majority of students take college loans to pay their tuition and course fees. Part of this loan can also be used to pay for room rent, supplies, and books.People can opt for federal student loans, which is the most usually used and can be of two types, subsidized and unsubsidized. In case of subsidized loan, the government, not students, pays interest on the loan. However, these loans are granted to only those individuals who are already facing huge debts. In case of unsubsidized loans, interest is paid by students and is not delayed until after the student graduates.Private student loans are another type of college loan that can be provided to any person who has a good credit score; it can be used for any expenses. It is important for students to know that this type of loan is unsecured. This implies that it needs no collateral, but instead has very high interest rates.Parent loans are also a type of college loan, which can be obtained by parents, and since they have good credit, the payoff and the interest rates are reasonably lower.College loan consolidation is made use of to consolidate all student loans. With the help of college loan consolidation, individuals can pay off to only one lender. Students can opt for consolidation regardless of their credit rating. When applying for a college loan consolidation, it is very necessary for students to research and then choose a reliable company to handle their monetary troubles.If students are not able to pay their monthly installments, they can also consider a college loan deferment. This means that they get a suspension of payments under special circumstances, such as if they are unemployed or suffering from financial hardship.
Refinancing means taking a loan to repay one of your existing loans and finance the same with the new loan. Refinancing home loan is for repaying the home loan you have already taken and finance the rest with this new loan. There are several reasons why people go for refinance. These are as follows:o You need to use your Home equity which has been used as collateral.o You may need to consolidate debts.o To get a flexible loan.o To get added features in the loan.o To get a loan on better interest rates.o To move from fixed to variable rate in home loan.Home loans are offered by different banks and financial institutions. There are so many players in the market that these players are offering loans at very competitive rates to attract customer attention. A layman would get confused with everybody offering so many features all the loans look beneficial and the best one to fulfill their need.But choosing a refinance scheme is not so easy. So better be careful and compare the entire borrower’s offer that is there in the market. Read their offers carefully and look for hidden clauses as most of them have it. A refinance is costly as it involves the following expenses:o A new loan entails the establishment and application fee.o The fee that is charged by the borrowers for early settlement in case of existing loan.o Then there is also a discharge fee on the current loan.o Some of the lenders also require Valuation fee.o The legal fees that are charged by some of the lenders.Refinance Home loanGo for refinance only if you need it. It requires a lot of detailing. Before taking the decision consider these things.o Has your income changed? Or have your liabilities changed. Only if these two have changed consider refinancing.o Are the features in your existing loan in tandem with the ones offered in the market and are they satisfactory.o Are the services of your existing lender up to the mark?Some of the companies also show you the comparison rates. These are very helpful when it comes to comparing features of all the loans that are being offered in the market. The rates will obviously not be very different but will differ closely. Choose the one offering loans at the least rate even if is only 0.8%.One should always put in a lot of thought and do a lot of research when it comes to money matters. That is why in case of refinancing first see if you really need it. Refinancing home loans involve a lot of expenditure. Consider them and take your decision.
Owning your own home is a significant symbol of your independence and success in life. If you find yourself planning to buy your own home, this page will provide you with home loan FAQs. Achieve your dream by choosing the best type of loan and get advice on how to circumvent bad credit or rejected loan applications.Will I Be Able to Buy Any House I Wish with a Home Loan?That depends on two things: what type of house you want and how much money a mortgage company is willing to lend you. In general, the bigger the house, the more money and income you will need. Secondly, the maximum amount of money a mortgage company will lend you depends largely on your credit rating.Credit Rating? What Credit Rating?Your credit rating or score is found in your credit report. A credit report is a document filed by a credit bureau that provides details about your credit and payment history. A good credit score can actually help you qualify for a loan. Therefore, the higher your credit score, the better.What If I Have Bad Credit?Don’t despair if you have bad credit; there’s still hope for your home loan. But first, you need to fix your bad credit. You can fix your bad credit alone or with the help of a credit repair company. It’s up to you which one you think is right for your needs.What Type of Home Loan Should I Get ? Fixed or Variable Rate?You should only get a fixed rate home loan if the interest rate you and the mortgage company have agreed upon is fair and something you can easily afford even during times when money is tight. A variable rate mortgage is better if you wish to enjoy lower rates for the time being, but it is important to remember that you will be charged higher rates once the initial repayment period has passed, so you will need to have more money on hand once this happens.
Tapping your home’s equity to pay college expenses, consolidate credit card debt or even to buy a new car or boat is common place. Many economists attribute the additional buying power afforded consumers through home equity debt as a primary reason the nation’s economy has been able to emerge from the recent recession. Yet, aside from simply allowing consumers to spend more, the flexibility and efficiency of a home equity line of credit (HELOC) can provide the financially savvy person with the means to save money, make money or simply take advantage of opportune situations he or she might otherwise miss out on. Here are five tips to show you how:Tip 1: Take Advantage of Higher Insurance Deductibles! You probably know that raising deductibles on auto and homeowners insurance policies can mean big savings on insurance premiums. If you increase the deductible on a homeowner’s policy from $500 to $1,000, you’ll cut your premium by as much as 25%! Yet many people don’t do this because they fear they may not have the necessary cash available in the event of a loss. With low-interest cash readily available through a home equity line of credit you’ll have the security and confidence you need to raise your deductibles and reap the savings!Tip 2: Lock In Big Savings! Credit card companies (e.g. the GM card) frequently have shopping programs with names like “Main Street Savings” on a 30-day free trial basis. These programs allow you to buy discounted gift cards (20% discount) for major national retailers like Target, Sears, and Home Depot. The flexibility afforded by a home equity line of credit can allow you to purchase (during the free trial period) a large amount of discounted gift cards for major retailers you frequent. Then use these cards instead of cash or credit when you purchase everyday items (The cash you would have spent can be used to pay down the HELOC).Although you pay low interest on the home equity credit line, you receive a front-end discount of 20% on everything bought. When combined with store coupons and sales, you can realize total savings of 70% or more! In short, a HELOC provides the low interest cash availability to take advantage of bargains like this that you might otherwise have to pass on.Tip 3: Take Advantage of 0% Balance Transfer Offers! We’ve all seen no-fee credit card offering “0% APR” on balance transfers for 6, 12, and even 18 months. If you have a balance on your HELOC, you may be able to take advantage of these offers. Here’s an example of how: last year I accepted such an offer and promptly transferred $10,000 from my home equity credit line balance (which had a 4.25% rate). Then I cut up the card! For the next eleven months, I paid the monthly minimum credit card payment (3% of the outstanding balance) by writing a check from my home equity line of credit. In the twelfth month, prior to the expiration of the 0% offer, I paid off the remaining balance with another home equity credit line check. During the 12 months, I also made sure to continue my regular payment towards the HELOC at the same level, meaning that more of each went to pay down principal and less went to interest.Net result: interest savings of over $350.00, lower principal balance on my HELOC, and a positive addition to my credit repayment history!Tip 4: First Pay With a Rewards Credit Card! If you’re contemplating using your HELOC for a major purchase, you should consider whether or not the merchant your dealing with accepts credit cards. Why? Because it makes a great deal of sense to pay first with a rewards credit card and then pay off the card with your HELOC check. On a recent $14,000 bathroom remodel, I was able to charge plumbing services, cabinets, and almost everything else to my Fidelity/MBNA 529 College Rewards Mastercard. This card pays you back by putting 2% of everything charged into a 529 college savings plan. Result: $280.00 in college savings that would have been missed if I paid the bills directly with home equity credit line checks! Whatever rewards credit card you favor, it’s sensible to pay first with the card whenever possible. Keep in mind, though, you must promptly pay off the balance and not incur finance charges.Tip 5: Replace Your 1st Mortgage with a HELOC! According to Money Magazine, if you have more equity than debt and plan to stay in your home for 3 years or less, you should consider replacing your first mortgage with a home equity line of credit. HELOCs are currently available around the country at rates of 4% or lower. Even if rates increase a full percentage point each year, they’ll still be low when you pay off the loan. Best of all, there are no closing costs with most HELOCS so you won’t have to worry about recouping them through interest savings as you do with a traditional mortgage refinance. A savvy person – using tip 3 in conjunction with tip 5 – might even move a portion of his mortgage to a 0% credit card thanks to the flexibility of a home equity line of credit.
The credit information report, CIR as it is termed is the history of the client’s spending habits over the past months. This is considered as one of the most important documents during the processing and approval of home loans. Maintaining a good credit history would help facilitate the process of application and approval of home loan.What does CIR mean? It is an account of your salary amount, take away per month. This indicates your total salary as well as for application of loan even the other earning spouse’s salary is also considered. The total expenditure incurred during the previous months and the remaining part of the amount as savings. Also whether the client has repaid on time or defaulted counts during the approval of the loan. Hence if the borrower has to apply for a loan one has to be thorough with financial matters. All bills and taxes must be paid on time. The credit card amount has to be paid on every monthly basis. Expenses have to be curtailed leaving a substantial amount remaining as savings. Many different types of loans like vehicle loan, personal loan and so on indicate that you have compulsory repayment schedules and this may affect negatively your chances of loan approval. If many applications for loans have been applied then this would also indicate that the amount of repayment may become a big one every month and this may be considered as a negative point from the side of the lender.Having the credit card and not spending much is the best as this shows that you are financially secure and all your expenses are handled without the use of credit card. Also one must remember that there is always a high amount of interest rate applied to this amount used as credit.
Home equity loans are quite useful, and have several advantages over other types of loans, such as credit card loans or more traditional secured loans. The biggest advantage is that the interest on home equity loans is tax deductible. The interest rates on home equity loans are already pretty competitive, but the addition of the tax deduction makes them pretty hard to beat. But do you have to use a home equity loan to improve your home in order to qualify for the tax deduction?The money provisions are the trend setters in the consumer credit market. Home equity loans are becoming popular since of the interest rate deduction for customer repayment debt but retained it for some home mortgage loan interest. To measure accurately the consumer indebtedness, these equity loans must be examined along with other forms of consumer installment debt.Home equity loans are risk less loans. The lenders use the borrower’s home as collateral security. Equity of the home allows users to access funds depending upon the borrower’s requirements in varying amounts up to their credit limit. The order to provide for loans rises for two reasons. On the order of the house owners desire to take benefit of the tax assumption. Second, the interest rate on home equity loans is lower since home equity loans represent secured credit. Home equity loan as a substitute for conventional borrowing such as personal, car and education loans.Having chosen the right loan provider, the borrower is ready to apply. There are many lenders available online and offline, however processing online is preferred these days. Online application is a relatively newer trend in the financial markets. Through an online application, borrowers can conveniently submit his/ her details from his home or office on a secure internet connection. Candidates get the financial result without wasting their precious time.