There are the honest lenders and then there are the unscrupulous bad ones. While the prospect of owning your home may prompt you to make timely and accurate payments towards the home mortgage refinance payment, even the lender will try to keep your current mortgage strong enough. After all, he wouldn’t want to lose out on your money! Nothing in life is certain – employment conditions change, your place of stay may change unexpectedly and you may have the bad luck to be dealing with an unscrupulous lender out to get your hard earned money!
Insufficient funds
Many people face this problem especially when they are suddenly out of work or have been laid off. This can significantly impact the payment towards your home mortgage refinance and then it becomes very difficult to get out of this vicious cycle. One of the best things you can do in order to avoid this situation is to assess if you either have a secure job or whether you have set aside sufficient funds for crisis situations in future. Therefore it’s best to go for a home mortgage refinance only when you are absolutely sure that your job is secure enough to support you for a long time. After all mortgage payments are typically made over several years. Settle for a home mortgage refinance only when you’re sure of these conditions.
Change of place
There maybe times when you might have to move out of your existing home. It could be because of a transferable job, a bitter divorce or some other condition. Usually in the case of a situation like a divorce, once one partner has moved out, the other one is forced to pay all the bills. This can really eat into the income levels of that person. That means the home mortgage refinance payment too takes a beating. There might even be legal consequences of not being able to make payments on time and within the due date. There is certainly no guarantee on the strength of a relationship but when going for a home mortgage refinance it’s best to go for it only when the couple is committed to each other for long term.
Getting a raw deal
There maybe situations when you’re caught in a home mortgage refinance deal that’s actually costing you more, rather than helping you save! This could be due to scams and other such false promises on the part of lenders. In such situations it is in one’s best interest to get a home mortgage refinance from a bank with whom one has an account for several years. This is because over a period of time a relationship of trust is formed and hence the bank will be more willing to offer a better rate on the home mortgage refinance.
9 Eylül 2007 Pazar
Home Mortgage Refinance: Choosing the Best Deal
Here’s a quick guide on choosing the best home mortgage refinance deal!
Questions to be asked
As a borrower, there are chances you maybe taken advantage of by unscrupulous lenders. To avoid this you need to ask a few basic questions first and even do a comparison check:
• What is the type of mortgage being offered? Find out if the interest rate is fixed, adjustable, FHA or conventional.
• What is the minimum deposit or down payment needed on the home mortgage refinance? Knowing this will help you plan finances better.
• What is the duration or length of the loan? This will affect the monthly payment on the mortgage.
• What is the Annual Percentage Rate? This is quite a competitive differentiator these days and can help you select the best lending home mortgage refinance company.
• What will be the monthly payment? This will be important in terms of planning your budget and finances etc.
• What are the various applicable fees? There are several kinds of fees being charged by lenders these days and each lender has their own name for it. Some examples of home mortgage refinance fees include:
o application fee also known as loan processing fee
o Lender fee or funding fee
o Appraisal fee
o Attorney fee
o Document preparation and recording fee
o Credit report fee
o Origination or underwriting fee etc.
• What will be the closing fees? There maybe chances that you wish to close or settle your home mortgage refinance. In such cases you need to know applicable fees at the time, so it doesn’t shock you then. Some of the closure fees include:
o State and local taxes
o Flood determination
o Surveys and home inspection fees
o Prepaid amounts towards interest, hazard insurance, taxes, etc.
o Prepaid private mortgage insurance or PMI
• Is there any prepayment penalty involved?
• Is the agreement for lock-in provided in writing by the home mortgage refinance lender?
Interest rates applicable
It also helps to get a free, no obligation quote from your home mortgage refinance lender. Also check with them if the rate quoted is the lowest for that day or the whole week. Check if the interest rate is fixed or adjustable in nature. In case it is the adjustable variety, find out from the lender how the payments will differ. Also be sure to check on the points. These are fees paid to the lender and are strongly linked to the current interest rate. The more points paid, lower the interest.
Negotiate
Once you have zeroed in on a specific home mortgage refinance lender, you need to try and negotiate the terms of the contract. Ask your home mortgage refinance lender to write down all associated costs and fees and then start negotiating on some of the fees.
Questions to be asked
As a borrower, there are chances you maybe taken advantage of by unscrupulous lenders. To avoid this you need to ask a few basic questions first and even do a comparison check:
• What is the type of mortgage being offered? Find out if the interest rate is fixed, adjustable, FHA or conventional.
• What is the minimum deposit or down payment needed on the home mortgage refinance? Knowing this will help you plan finances better.
• What is the duration or length of the loan? This will affect the monthly payment on the mortgage.
• What is the Annual Percentage Rate? This is quite a competitive differentiator these days and can help you select the best lending home mortgage refinance company.
• What will be the monthly payment? This will be important in terms of planning your budget and finances etc.
• What are the various applicable fees? There are several kinds of fees being charged by lenders these days and each lender has their own name for it. Some examples of home mortgage refinance fees include:
o application fee also known as loan processing fee
o Lender fee or funding fee
o Appraisal fee
o Attorney fee
o Document preparation and recording fee
o Credit report fee
o Origination or underwriting fee etc.
• What will be the closing fees? There maybe chances that you wish to close or settle your home mortgage refinance. In such cases you need to know applicable fees at the time, so it doesn’t shock you then. Some of the closure fees include:
o State and local taxes
o Flood determination
o Surveys and home inspection fees
o Prepaid amounts towards interest, hazard insurance, taxes, etc.
o Prepaid private mortgage insurance or PMI
• Is there any prepayment penalty involved?
• Is the agreement for lock-in provided in writing by the home mortgage refinance lender?
Interest rates applicable
It also helps to get a free, no obligation quote from your home mortgage refinance lender. Also check with them if the rate quoted is the lowest for that day or the whole week. Check if the interest rate is fixed or adjustable in nature. In case it is the adjustable variety, find out from the lender how the payments will differ. Also be sure to check on the points. These are fees paid to the lender and are strongly linked to the current interest rate. The more points paid, lower the interest.
Negotiate
Once you have zeroed in on a specific home mortgage refinance lender, you need to try and negotiate the terms of the contract. Ask your home mortgage refinance lender to write down all associated costs and fees and then start negotiating on some of the fees.
Home Mortgage Refinance: Sub Prime Market Trends
Are you part of the sub-prime home mortgage refinance scenario? Then it’s time to take a good hard look at current trends.
Rising real estate costs
The real estate market has seen a steep rise in the price of houses - with the result that the average home buyer cannot afford to spend such a high sum on owning a new home. Even those persons who are making monthly payments towards the home mortgage refinance are finding it increasingly difficult to cope with rising prices. Interest rates have shot up, further tipping the scales against the homeowner’s favor.
Why the sudden rise?
There are many reasons why interest rates and associated real estate expenses have escalated. For starters, the sub prime market borrowers typically comprise those who have already been rejected as per other more stringent eligibility criteria in the prime market. This means the sub prime home mortgage refinance lenders offer them loans at relatively easier criteria – some of them may even imply lesser documentation and background checks on the borrower. Even those borrowers who have a relatively lower credit score maybe approved under the sub prime market home mortgage refinance lending process.
The real estate segment is hurting
Delinquencies and default patterns are at an all time high. Foreclosure and Real Estate Owned is a common phenomenon these days in the home mortgage refinance scenario. Why this is happening can be predominantly attributed to the re-adjustment in rates. Usually the sub prime home mortgage refinance lenders attract borrowers with a low promotional rate. When this rate shoots up after the promotional stage, it’s a nightmarish situation for borrowers and lenders. The borrower finds it impossible to pay up and the lender finds it virtually impossible to recover the money. This is also known as predatory lending – it’s quite similar to hunting for a prey by luring with attractive rates of interest. Once the unsuspecting customer has been caught in the web, there’s no escape and the home mortgage refinance lender extract every possible penny from the borrower. What this means from a long term perspective is that investors lose trust in the home mortgage refinance lending company. This can affect the prime market and potentially qualifying borrowers may not qualify in the prime market. This way home sales deteriorate and real estate suffers.
Growing competition
With the recent decline in home sales, most home mortgage refinance lenders are skeptical on future profit margins. They prefer to be less optimistic about the future trends in the sub prime market. However this has not stopped lenders from fiercely competing with each other. In fact, competition has now escalated because in the dwindling home mortgage refinance market, every lender wants to make a quick buck or two.
Rising real estate costs
The real estate market has seen a steep rise in the price of houses - with the result that the average home buyer cannot afford to spend such a high sum on owning a new home. Even those persons who are making monthly payments towards the home mortgage refinance are finding it increasingly difficult to cope with rising prices. Interest rates have shot up, further tipping the scales against the homeowner’s favor.
Why the sudden rise?
There are many reasons why interest rates and associated real estate expenses have escalated. For starters, the sub prime market borrowers typically comprise those who have already been rejected as per other more stringent eligibility criteria in the prime market. This means the sub prime home mortgage refinance lenders offer them loans at relatively easier criteria – some of them may even imply lesser documentation and background checks on the borrower. Even those borrowers who have a relatively lower credit score maybe approved under the sub prime market home mortgage refinance lending process.
The real estate segment is hurting
Delinquencies and default patterns are at an all time high. Foreclosure and Real Estate Owned is a common phenomenon these days in the home mortgage refinance scenario. Why this is happening can be predominantly attributed to the re-adjustment in rates. Usually the sub prime home mortgage refinance lenders attract borrowers with a low promotional rate. When this rate shoots up after the promotional stage, it’s a nightmarish situation for borrowers and lenders. The borrower finds it impossible to pay up and the lender finds it virtually impossible to recover the money. This is also known as predatory lending – it’s quite similar to hunting for a prey by luring with attractive rates of interest. Once the unsuspecting customer has been caught in the web, there’s no escape and the home mortgage refinance lender extract every possible penny from the borrower. What this means from a long term perspective is that investors lose trust in the home mortgage refinance lending company. This can affect the prime market and potentially qualifying borrowers may not qualify in the prime market. This way home sales deteriorate and real estate suffers.
Growing competition
With the recent decline in home sales, most home mortgage refinance lenders are skeptical on future profit margins. They prefer to be less optimistic about the future trends in the sub prime market. However this has not stopped lenders from fiercely competing with each other. In fact, competition has now escalated because in the dwindling home mortgage refinance market, every lender wants to make a quick buck or two.
How Mortgage Brokers Qualify
Qualified mortgage brokers must undergo a series of exams and receive some on-the-job training and experience.
Because all financial advice in the UK is regulated by the Financial Services Authority (FSA), mortgage brokers fall under the stewardship of the regulator. The FSA has determined that mortgage brokers must complete one of the approved qualifications and receive training and guidance from other qualified advisors before becoming authorised mortgage brokers.
Once mortgage brokers are authorised, they may advise their clients in all matters relating to mortgages within a bank or building society, a mortgage brokerage, an estate agency, or they may establish their own practice and work on a self-employed basis.
The first step to becoming a mortgage broker is to pass one of several qualifications that are recognized by the FSA. They include the Certificate in Mortgage Advice from the Chartered Insurance Institute, the Certificate in Mortgage Advice and Practice from the Institute of Financial Services, or the Mortgage Advice and Practice Certificate from the Chartered Institute of Bankers in Scotland (Scotland only).
If the individual is already working for a financial institution their employer may cover the costs of the qualifications. The study involved in passing the subjects for each qualification can normally be completed via distance learning or through private training institutions.
Several post-graduate courses are also available that can bolster the credentials of mortgage brokers. They include the Advanced Certificate in Mortgage Advice and Practice and a qualification in lifetime mortgages.
Mortgage brokers may also use their qualifications and experience as a base to launch a career in financial advising. This will involve passing several more exams and gaining some experience as a financial advisor.
In order to maintain their qualification, mortgage brokers must participate in continuing professional development. This usually involves keeping up with the mortgage industry through some form of structured, ongoing learning.
There are no entry requirements for undertaking the mortgage broker qualifications. Therefore a finance related degree is not necessary. While some employers may consider industry experience to be beneficial, people skills and high levels of motivation are also highly regarded.
Working conditions will vary considerably depending upon whether the individual works on an employed or self-employed basis. Conditions will also vary between mortgage brokerages.
Because all financial advice in the UK is regulated by the Financial Services Authority (FSA), mortgage brokers fall under the stewardship of the regulator. The FSA has determined that mortgage brokers must complete one of the approved qualifications and receive training and guidance from other qualified advisors before becoming authorised mortgage brokers.
Once mortgage brokers are authorised, they may advise their clients in all matters relating to mortgages within a bank or building society, a mortgage brokerage, an estate agency, or they may establish their own practice and work on a self-employed basis.
The first step to becoming a mortgage broker is to pass one of several qualifications that are recognized by the FSA. They include the Certificate in Mortgage Advice from the Chartered Insurance Institute, the Certificate in Mortgage Advice and Practice from the Institute of Financial Services, or the Mortgage Advice and Practice Certificate from the Chartered Institute of Bankers in Scotland (Scotland only).
If the individual is already working for a financial institution their employer may cover the costs of the qualifications. The study involved in passing the subjects for each qualification can normally be completed via distance learning or through private training institutions.
Several post-graduate courses are also available that can bolster the credentials of mortgage brokers. They include the Advanced Certificate in Mortgage Advice and Practice and a qualification in lifetime mortgages.
Mortgage brokers may also use their qualifications and experience as a base to launch a career in financial advising. This will involve passing several more exams and gaining some experience as a financial advisor.
In order to maintain their qualification, mortgage brokers must participate in continuing professional development. This usually involves keeping up with the mortgage industry through some form of structured, ongoing learning.
There are no entry requirements for undertaking the mortgage broker qualifications. Therefore a finance related degree is not necessary. While some employers may consider industry experience to be beneficial, people skills and high levels of motivation are also highly regarded.
Working conditions will vary considerably depending upon whether the individual works on an employed or self-employed basis. Conditions will also vary between mortgage brokerages.
Pushing the Boundaries of Buy-to-let Mortgages
Traditionally, buy-to-let properties were purchased by financially astute individuals or professional landlords with more than just a few properties in their portfolios by using a combination of cash and funds from buy-to-let mortgages.
However, as the popularity of buy-to-let property investing has increased, more and more people are using it as an investment vehicle to supplement their income and provide for their retirement. Many individuals who have joined the craze are not financially sound and have little knowledge of business or investing.
This has created a large shift in the lending criteria of buy-to-let mortgages because less financially savvy people do not usually have the means to fund a deposit on an investment property.
The result is that loan-to-values have risen considerably and lenders are now more willing to approve buy-to-let mortgages to individuals with impaired credit histories. It is now common to see buy-to-let mortgages advertised with loan-to-value ratios of 90% or more.
Rental cover ratios have also dropped meaning that many investment properties are running at a cash loss even with a historically low rate of interest on their buy-to-let mortgages. If this occurs the investor must be able to pay for the loss with other funds, and it is doubtful they could if they cannot afford a deposit.
While interest rates remain low and occupancy rates high, the relaxed lending criteria of buy-to-let mortgages has not yet resulted in a major increase in defaults and repossessions.
However it remains to be seen whether this will continue when the good times are over, the economy tightens, and variable interest rates on buy-to-let mortgages increase.
If lenders relax their criteria too far many people will enter the property investment arena who cannot cope with an extended period of cash flow losses. If this happens, and the repossession rate rises considerably, buy-to-let investing will lose the stigma of being a financially safe and secure investment.
Additionally, buy-to-let mortgages will suffer as lending criterion will also tighten. This may not necessarily be a negative affect however, as it is doubtful that many financially unsound individuals who are currently being issued buy-to-let mortgages should be in the first place.
A tightening of lending criteria on buy-to-let mortgages may realign the property investment market to a more acceptable situation.
However, as the popularity of buy-to-let property investing has increased, more and more people are using it as an investment vehicle to supplement their income and provide for their retirement. Many individuals who have joined the craze are not financially sound and have little knowledge of business or investing.
This has created a large shift in the lending criteria of buy-to-let mortgages because less financially savvy people do not usually have the means to fund a deposit on an investment property.
The result is that loan-to-values have risen considerably and lenders are now more willing to approve buy-to-let mortgages to individuals with impaired credit histories. It is now common to see buy-to-let mortgages advertised with loan-to-value ratios of 90% or more.
Rental cover ratios have also dropped meaning that many investment properties are running at a cash loss even with a historically low rate of interest on their buy-to-let mortgages. If this occurs the investor must be able to pay for the loss with other funds, and it is doubtful they could if they cannot afford a deposit.
While interest rates remain low and occupancy rates high, the relaxed lending criteria of buy-to-let mortgages has not yet resulted in a major increase in defaults and repossessions.
However it remains to be seen whether this will continue when the good times are over, the economy tightens, and variable interest rates on buy-to-let mortgages increase.
If lenders relax their criteria too far many people will enter the property investment arena who cannot cope with an extended period of cash flow losses. If this happens, and the repossession rate rises considerably, buy-to-let investing will lose the stigma of being a financially safe and secure investment.
Additionally, buy-to-let mortgages will suffer as lending criterion will also tighten. This may not necessarily be a negative affect however, as it is doubtful that many financially unsound individuals who are currently being issued buy-to-let mortgages should be in the first place.
A tightening of lending criteria on buy-to-let mortgages may realign the property investment market to a more acceptable situation.
Bad Credit Mortgages and Ivas
In times of rising interest rates and spiralling household debts, some people are left with no option other than to reorganise their finances in order to avoid bankruptcy.
One of the most popular methods of gaining relief from unmanageable debt is through Individual Voluntary Arrangements (IVAs).
The popularity of IVAs increases after long periods of low interest rates and excessive borrowing that are followed by periods of rapidly increasing interest rates. This is because the cost of the money previously borrowed will increase.
When this situation occurs, people who have over borrowed are forced to find solutions to their debt problems as they can no longer afford to keep up with their loan repayments.
An IVA is one of several ways of reorganising debts and using any surplus household funds to make repayments each month. IVAs are not an easy way out of debt and the rules are strict.
An alternative to IVAs is a debt consolidation loan. A debt consolidation loan is also called a bad credit mortgage and is secured against the borrower’s home.
A bad credit mortgage allows for individual debts to be consolidated into one loan and the amount that can be borrowed will be based on the equity value of the applicant’s home.
A bad credit mortgage can make the repayment regime of various individual debts more manageable as their will only be one monthly repayment amount to pay each month. This can help considerably with household budgeting.
When credit cards, personal loans, store cards, and other debts are consolidated into one bad credit mortgage, the loan products that originally had a shorter term will now have the same term as the bad credit mortgage. This means that although the amount of the monthly payments reduces, more money is repaid in the long term.
Neither an IVA nor a bad credit mortgage represents an easy way out of financial difficulties.
If you are facing debt problems, advice should be sought from debt counsellors and independent mortgage brokers in order to discover whether an IVA, a bad credit mortgage, or a different option altogether is the best solution to your debt problems.
One of the most popular methods of gaining relief from unmanageable debt is through Individual Voluntary Arrangements (IVAs).
The popularity of IVAs increases after long periods of low interest rates and excessive borrowing that are followed by periods of rapidly increasing interest rates. This is because the cost of the money previously borrowed will increase.
When this situation occurs, people who have over borrowed are forced to find solutions to their debt problems as they can no longer afford to keep up with their loan repayments.
An IVA is one of several ways of reorganising debts and using any surplus household funds to make repayments each month. IVAs are not an easy way out of debt and the rules are strict.
An alternative to IVAs is a debt consolidation loan. A debt consolidation loan is also called a bad credit mortgage and is secured against the borrower’s home.
A bad credit mortgage allows for individual debts to be consolidated into one loan and the amount that can be borrowed will be based on the equity value of the applicant’s home.
A bad credit mortgage can make the repayment regime of various individual debts more manageable as their will only be one monthly repayment amount to pay each month. This can help considerably with household budgeting.
When credit cards, personal loans, store cards, and other debts are consolidated into one bad credit mortgage, the loan products that originally had a shorter term will now have the same term as the bad credit mortgage. This means that although the amount of the monthly payments reduces, more money is repaid in the long term.
Neither an IVA nor a bad credit mortgage represents an easy way out of financial difficulties.
If you are facing debt problems, advice should be sought from debt counsellors and independent mortgage brokers in order to discover whether an IVA, a bad credit mortgage, or a different option altogether is the best solution to your debt problems.
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