Home Equity Mortgage Loans Q&A

Home equity mortgage loans can be very helpful when you need a lot of money to pay for things like a unexpected medical expenses, college tuition or any other large expense. This type of loan is often confused with other more common types of loans, so we will try to demystify it by answering some common questions.Question: Are there any other names for this type of loan?Answer: Yes. They are often known as home equity loans, and sometimes as second lien loans.Question: How does this type of loan work?Answer: They are made against the equity of your home, reducing the equity in your home. They are always made by the same lender who holds your first mortgage lien.Question: Do I have to make separate payments for these loans?Answer: Not necessarily. Second lien loans can be bundled with your first lien payments. Any amount over your first lien payment will automatically be applied to your second lien.Question: What kind of qualifications are there for this type of loan?Answer: You must have a good credit history and a reasonable amount of equity in your home to be approved for this type of loan.Question: How are these loans different from other types of loans?Answer: These loans come in two varieties. The first is a closed end loan, where you receive a single payment similar to a regular loan. The second variety is an open end loan and acts more like a credit line. You can borrow money at any time up to the limit of the equity in your home.Question: What are the specifics about a closed end loan?Answer: You receive one payment after the loan is closed, and no more. The maximum amount you can borrow is 100% of your equity, or more if your lender offers you an over equity loan. This will be determined by your lender based upon your income level, credit history and how much equity you have in your home. The interest has a fixed rate that can be amortized up to 15 years. Depending upon the loan conditions determined by the lender, it may be possible to make balloon payments to reduce the amortization.Question: What are the specifics of the open end loan?Answer: Open end loans are sometimes referred to as home equity lines of credit. In essence, you have full control over when and how much you borrow from the loan. The credit limit is usually limited to 100% of your home equity and is computed similar to closed end loans. The interest has a variable rate, and the term may be extended up to 30 years.Question: Are there any special costs associated with this type of loan?Answer: Yes. Lenders will commonly add processing fees to home mortgage equity loans.

What Do Home Appraisers Look For When Doing an Appraisal For a Mortgage Refinance?

When undergoing a mortgage refinance, one step in the process is acquiring an appraisal of your home. An appraisal is a written estimate of the market value of your property. Mortgage lenders will use an appraisal to determine the amount one qualifies for the mortgage. The appraisal will also establish how much equity there is in a home. It gives an estimate of the price that can be obtained by selling the property. An appraisal is a necessary step when refinancing existing mortgage because it assures the lender or bank that the property will sell for at least the amount which they will be providing as a home loan. This protects them in the event of a mortgage default by ensuring they will get their money back if they have to repossess the house and sell it.The mortgage lender will normally arrange for the appraisal. It often depends on the mortgage company’s policy for obtaining appraisals. A home appraisal is different from a home inspection. Appraisers look for value in a home. Lenders need to know the home is worth what you want to borrow. The appraiser is a licensed professional that will do a market analysis of the sale price of a home. The appraisal will require a thorough inspection of your home inside and out. The appraiser will look for problems in the property.Appraisals generally include: evaluating the condition of your home, details of the property, a comparison of the property with other properties in the area, an evaluation of the real estate market in the area, the type of area where the property is located, and an estimate of how long it will take to sell. Although it may vary among appraisers, generally speaking, they take home sales within about a 1/4 mile within the last 4 – 6 months and average them per square foot. They then multiply that number by the square footage of the home being appraised.The appraiser will assess the actual home. He or she will measure the outside of your home, look at the inside, take pictures of both the outside and inside and determine a market price for your home based on the most current previous sales of nearby homes. Such aspects that affect a home value include: kitchen, number of bedrooms, size of rooms, finished basement, new roof, number of bathrooms, new windows, and a solid foundation. They will also measure the property line to get the amount of square feet on the outside. They will then notify the lender or person who requested the appraisal. The lender uses all of the information to determine the amount of the refinance loan.The appraiser’s assessment of a home is an extremely important part of refinancing a mortgage. It is important to inform the appraiser of any new additions such as a garage or patio deck. Before an appraiser arrives, make sure that you have all repairs completed that can affect the value of your home. Factors that can affect the value can include poor upkeep of the property and any damage to the home. Because of the low interest rates being offered by banks and other lenders, this is a great time to refinance. Knowing what appraisers look at when assessing a home and neighborhood will increase the likelihood that you will get a great refinance loan.

Second Debt Consolidation Mortgage Loans – A Good Debt Consolidation Solution

If you are in deep financial problem with lots of debts to deal with and if you have not taken a second debt consolidation mortgage loans then you are doing a financial blunder.What is a second debt consolidation loan?A loan which can be taken after your first mortgage loan is known as second mortgage loan. Basically a home equity line of credit (HELOC) and a fixed rate home equity loan are the most common type of second mortgage loans. And both types of loans provide you a best solution for you to consolidate your current high interest credit card or other bigger loans.Due to following reasons these loans are the good for you:A lower Interest: These loans have substantially low interest rate than a credit card debt.More flexibility: A home equity line of credit works like a credit card which you can use any time with your own convenience and requirement and no one knows when the emergency cash will be required. However, a fixed rate home equity loan will force you to take a disciplined action to payoff all your loans in time.Tax benefit: Being a mortgage loan, you can claim tax deduction on the interest you are paying. So, in a manner you will get benefit for even paying your credit card bills.If you are dealing with large debts then you should not delay and should opt for a second debt consolidation mortgage loan as soon as possible. However, after getting this loan you should also make a good budget for yourself and plan your expenditures and expenses in an effective manner.

Can I Change My Home Loan?

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.

Foreclosures With Home Equity Credit Lines Too

More people in America are missing payments on their home equity loans than at any time in this decade, Moody’s Investors Service said on Dec 13th, showing how the U.S. housing crisis has spread to many loans that were once generally considered safe.Moody’s U.S. Home Equity Index Composite showed that the number of loans at least 60 days past due or that have entered the foreclosure process was 16.53% in September 2007. That’s more than double the 7.93% rate one year ago, and more than triple the 4.99 percent level in June 2005. A recent comparison was 15.23% in August 2007.Moody’s announced their results the same day RealtyTrac Inc., a real estate data firm, said U.S. home foreclosures in October soared 94 percent from a year earlier to 224,451 units, although the total was 8 percent below the 243,947 foreclosures mark set in August.To gain a better understanding of what is happening with so many people, let us look at what a home equity line of credit is. It is a financing instrument used by homeowners who want to borrow against the equity in their home. There are several different types of home equity lines of credit. These differences are frequently based on the interest rate charged the homeowner.Sometimes a home equity line of credit will have variable interest rates and usually this is the part that most homeowners did not understand or anticipate. With variable interest rates the normal rate can vary between 4.25% to 17.0%. With this variance, the homeowner cannot know for sure from month to month what the interest payment will be. The interest rate on the loan can vary based on a certain index.In some cases the home equity line of credit offers a low introductory “teaser” interest rate. Lenders and loan officers alike offer the product with ads that read like this: Borrow $100,000.00 on your home and pay $395.83 per month with an interest rate of 4.75%. These rates sound attractive, but they generally do not emphasize the fact that the homeowner will later be responsible for a considerably higher rate. That start rate could actually be between 6% – 11% above the prime rate in any given month, given the borrower’s index. Most homeowners never read the loan materials carefully, so they never understood exactly what the payments could be and now their family’s home could be in jeopardy.Another concern has been the costs of the application process. Some offers of a home equity line of credit come with a large one-time fee, many times $1000 to $3,500. So just by obtaining the loan, besides the interest charges, that deficit has to be repaid.If the differences in the various types of home equity lines of credit confuse the homeowner, then it may be better to consider alternatives to the home equity line of credit. Other options include: a fixed rate second mortgage or a credit line that does not use a person’s home for collateral.Misunderstandings, compounded with a tougher real estate market has left many in foreclosure and now they are forced to find a new place to live.

Refinance Home Mortgage Loans – What are “No Doc” Loans?

If you are looking to refinance your current mortgage, there are
several options available to you. Homeowners refinance their mortgage for
many reasons. These include eliminating private mortgage insurance,
receiving cash out at closing, obtaining a fixed rate, and so forth.
Refinancing a home loan involves getting a new mortgage. Thus, you are required
to present the mortgage company with various documentations. However,
if you prefer privacy, there are ways to obtain a loan with minimal
documents.No Doc Mortgage Refinance Loans vs. Low Document Refinance LoansIf you have good credit, you may be able to obtain a no doc refinance
loan. Each lender is different. Some lenders are willing to grant a
refinance with no documentations, whereas other lenders are not as eager to
take a chance. The process of attaining a no doc loan is simple. With
these loan applications, the homeowner provides their social security
number and loan amount. The lender will base loan approval solely on
credit scores. To obtain a no doc loan, you must have a very high credit
score.Low document loans are different from no document loans. With low
document loans, the applicant is required to state income and employment
history. In this situation, the applicant may supply recent paycheck stubs
or income tax returns for the past two years. These loan programs are
advantageous for self-employed or contract workers. Moreover,
individuals who receive cash payments can get a low document refinance loan.Benefits of No Document Refinance LoansObtaining a no document refinance loan is ideal for individuals who
want to maintain their privacy. Some people are hesitant to offer lenders
detail information about their employment, income, and finances. While
lenders are not always thrilled to approve loans with little or no
documentation, they reason that an applicant with an excellent credit
history is less likely to tarnish their perfect record. Thus, they become an
ideal candidate for a no doc loan.Pitfalls of No Doc Refinance and Mortgage LoansWhile no doc and low doc mortgage loans involve a speedier process, be
prepared to pay a higher interest rate on your home loan. If privacy
and speed is a main factor, a higher rate may not be a major drawback.
However, if your primary reason for refinancing is to obtain a lower
interest rate on your mortgage, a no doc refinance may not be the best
option. Before refinancing, get a quote from a lender and compare the no
document refinance rate with your current interest rate.

Student Loans and the Financial Crisis

With the financial crisis nowhere in sight to get better would eventually hurt or jeopardize how you can borrow money for your education. Student loans from some sectors would feel the effects of this global financial crisis. With the ongoing finance and economic crisis and the Federal Reserve pumping out billions or probably trillions of dollars into Wall Street, it is bound to affect student loans and how you can borrow money for your education. The financial sector was hit the hardest since the mortgage collapse and money going in or out of these financial institutions is out of the normal.The crisis or the recession started with the housing and mortgage collapse leaving many people to file for foreclosures and bad mortgage loans. You really do not need to be a rocket scientist to know that the effects are paramount and gargantuan in scope. It affects the entire world. And to avert further crisis and get the big finance companies afloat the federal reserve infused an initial seven hundred billion dollars to stave off a nose diving economy. The US government address the crisis by enacting a bail out for the troubled banks and finance companies.Because these banks are the issuer of most of these student loans it may have some ramifications. The banks that are in trouble are the ones doling out these student and educational loans to students. So there is the potential that this could affect how you can obtain student loans for your books and tuition fees. But luckily for some, there is good news as the Stafford Loans under this program will not be affected because it is guaranteed by the governments education department. This is welcome news as most people and parents who wanted to borrow money for their children to go to college will not be affected.But some other forms of educational borrowing may get affected as these banks are having more stringent policies on who can apply and qualify. One case in point is those foreign students who may have a hard time with their budget and cash flows. The rising cost of fuel and food make it harder for foreigners to cope money wise.In some parts of the world the financial crisis does have some effects on student loans. For instance, in Canada they have a program called CanHelp which is a financial aid group that helps Canadians who would like to obtain college loan. The problem with CanHelp is that it is backed by the troubled bank Wachovia Corporation from North Carolina. This bank was eventually taken by Wells Fargo. Needless to say the funds that was flowing to this program suddenly stops. So you can see that this financial crisis has effects on student loans.On the brighter side of things, the US congress enacted the Ensuring Continued Access to Student Loans Act of 2008. This will effectively protect many families to have access to federal student loans during this economic and financial chaos. This would make all these families and students seeking educational financing more at ease. It also means that you can have access to federal loans without worrying about any impediments and hassles. You have to be aware though that federal loans like Perkins, Stafford and PLUS loans are capped so you need some borrowings from private lenders.

Refinancing Your House – How to Know Whether to Refinance or get a Second Mortgage

Refinancing your house’s mortgage is not the same thing as getting a second mortgage. While both allow you to cash out your home’s equity, terms and rates differ between the two types of loans. To know which financing option is best for you, learn each loan’s features and pick the one that best meets your needs.Refinancing Your MortgageTraditional refinancing is basically replacing one mortgage loan with another. Typically, refinancing lowers mortgage payments through lower interest rates or longer loan terms. You can also cash out part or all of your home’s equity while refinancing.Refinancing requires paying closing fees. To recoup these costs, you usually need to stay in the house for a couple of years. However, you will save money with better terms than if you choose a second mortgage.Second Mortgage OptionSecond mortgages, also known as home equity loan, have slightly higher rates than mortgages, but you have less or no closing costs. Second mortgages also only charge interest on the amount you borrow, not the total amount you are approved for. You can take out your equity over the course of several months or years. Terms vary widely between second mortgage lenders, so watch out for balloon payments or repayment fees.If you want tap into your equity to make some home improvements but plan to sell soon, then a second mortgage would be better than refinancing your mortgage. Second mortgages also are a better choice when your current mortgage interest rate is lower than those being offered by refinancing lenders.Factors To ConsiderWhen deciding which financing option to choose, consider the purpose of the loan. If you want to reduce monthly payments, then refinance. If you simply want to tap into your home’s equity, then apply for a second mortgage.Also, consider how long you want to stay in your house. You can lose money refinancing your mortgage if you don’t stay in your home. However, if you sell your home or refinance, you will have to pay off your second mortgage.Remember, only you know which loan best fits your financial needs.To view our recommended sources for refinance mortgage loans online, visit
this page: Recommended
Refi Mortgage Lenders Online.

New Government – Refinance Home Loans to 125% of Value!

It seems that the decision makers running the Fannie Mae and Freddie Mac government refinance programs did not learn anything from the current, and continuing, housing bust.  If bad loans got us into the current mess, why do Fannie and Freddie think that more bad loans will get us out? In a recent press release it was announced that the two government-owned agencies will now refinance loans up to 125% of the current home’s value! Does this spell trouble for the FHA home loans? All facts from the mortgage industry and government point to the fact that mortgage default rates take a huge spike upwards with high loan to value loans.I would venture to say that many of the mortgage debtors (in trust deed states) may not realize that by refinancing through this program, they will be going from a non-recourse loan to recourse refinancing, in many cases.My bet is that actions like this will give a false sense of recovery for awhile, only to have us fall further in the future, much like the stimulus money is currently doing.In his statement FHFA Director Lockhart said, “The higher LTV refinancing will allow more homeowners to strengthen their finances.” Do you really believe this? If the government really wanted people to stay in their houses, they would allow them to go into foreclosure and help them find alternative housing. Moving them into a 125% LTV recourse loan is setting them up for disaster and setting taxpayers up to take on the resulting new losses.Perhaps the government is not being 100% honest in their touting this 125% refinancing program as a way to help people stay in their houses. In reality, it may actually be a way to help banks keep from writing down assets while they earn enough money to increase their capital base.Some folks like to say that where California goes, so goes the rest of the country. The “tax and spend” government in California did not yet come up with a comparable plan and have been beat to the punch by the Feds. California’s 26 billion (or more) deficit, the absence of a viable budget, and the need for issuing IOU’s rather than cash payments, is no excuse. Only a few months ago California tossed out $100 million towards a credit to new home buyers for 5% of the purchase price (up to $10,000). Now that the first pot of money is depleted, there are two new bills pending in Sacramento proposing to double or triple the original $100 million.

Refinance After Bankruptcy

Refinancing your mortgage after bankruptcy is actually the same as replacing it with an entirely new mortgage. The most common reason for refinancing your mortgage after bankruptcy is to get a lower interest rate and save money over the length of your mortgage. It is possible for you to lower your payments and save money each month and there has never been a better time to refinance. Mortgage lenders will consider refinancing your mortgage after bankruptcy because the risks involved in refinancing an existing mortgage are extremely low.You can receive quotes from multiple lenders who are competing for your business, even if you have filed bankruptcy in the past. A quick online application will put you in touch with lenders who are experts in refinancing mortgages after bankruptcy. You can be pre-qualified in just minutes and the application is quick and easy. Refinancing your home, even after bankruptcy, can lower your payments and even give you extra cash for that well-deserved vacation, to consolidate bills, or to fund your child’s college education.If you thought refinancing your mortgage after bankruptcy was impossible, you will be pleased to learn that you can refinance and dramatically lower your monthly payments with one short online application. Lenders who are anxious to help you find the best refinancing package available for your special circumstances will contact you within as little as 24 hours after receipt of your application. A bankruptcy does not have to mean you are stuck with a high interest rate and less than desirable mortgage terms. Mortgage lenders have hundreds of loan programs that will help you meet your financial goals.If you have been through bankruptcy and are wondering if it is possible to refinance your mortgage, complete a short online application today and learn how much money you can save each month and over the entire length of your mortgage. The difference could mean thousands of dollars in your bank account over time. Get the information you need and learn how you can lower your monthly payments and get the cash you need for bills or unexpected expenses. Refinancing your home is the best way to take advantage of the lowest interest rates in many years.Refinancing your mortgage after bankruptcy is not impossible. Get free quotes today from multiple lenders with one simple online application. You have nothing to lose and you will find that mortgage lenders are prepared to offer you better terms than you thought possible. Lowering your mortgage payments and consolidating bills can make all the difference in your financial situation. You can be on your way to financial freedom when you contact mortgage lenders who will give you expert advice and offer you numerous choices in refinancing your home, even after bankruptcy.To view our list of recommended refinance lenders online who specialize in bad
credit mortgage loans, visit this page:
Refinance Lenders for People With Bad Credit or Bankruptcy.