Showing posts with label Mortgage Article. Show all posts
Showing posts with label Mortgage Article. Show all posts
Monday, May 2, 2011
Top 8 things to know about a mortgage
Deciding what type of home loan is best for your needs is an integral part of the home-buying process. But it’s not always easy. Here are the most important factors you should compare when shopping for a mortgage.
1. The principal
Your mortgage principal is simply the amount you are borrowing to buy your house. In other words, it’s the price of your new home minus your down payment. When you shop for a mortgage, each bank will tell you how much it is prepared to lend you based on your income and your credit score. This will help you determine how much house you can afford.
2. The type of mortgage
Traditionally, mortgages fall into two broad categories: Those with a fixed interest rate and those with an adjustable rate. With a fixed rate mortgage, you usually pay the same amount each month for as long as you carry the loan. These mortgages can mean less risk and less worry about the future, but typically have a slightly higher interest rate than the initial rates offered by adjustable rate mortgages. Adjustable rate mortgages (ARMs) usually provide you with a lower initial interest rate, but their rates change with the market, so there is always the risk that your payments will increase.
Lenders also offer other options, some of which combine the features of both traditional mortgage types. Some begin with a fixed rate for three or more years and then convert to an ARM. Others let you choose how much you pay each month. When you discuss these mortgage types, make sure you understand the pros and cons of the loan and that your lender understands both your risk tolerance and your level of financial discipline.
3. The interest rate
Interest rates are the most visible part of any mortgage advertisement, but finding the best deal isn’t as simple as looking for the lowest posted rate. A loan with a lower rate but higher closing costs -- more on those later -- may end up being more expensive. The best way to understand the overall cost of a mortgage is to look at its annual percentage rate (APR), which takes into account the interest rate and the loan’s other costs.
If you choose an adjustable rate mortgage, you also have to understand how your interest rate may change. ARMs are usually adjusted according to an index, which is a published interest rate set by a third party, such as the federal government. The lender then adds a “margin” to determine the interest rate on your loan. For example, if the index is at 5.5 percent and your margin is 1.5 percent, your rate will be 7 percent. Many ARMs have caps to protect you against drastic increases from year to year.
4. The monthly payment
One of the most important things when choosing a mortgage is to make sure you can comfortably afford the monthly payment. However, it’s not enough to simply choose the loan that provides you with the lowest payment. Interest-only mortgages, for example, carry the lowest possible monthly charges, but they do nothing to reduce your principal -- even after years of payments, you’ll still owe as much as you did at the outset. Also, because your payments on an interest-only loan may rise later, you should make sure you can afford the higher payments. In most cases, you’ll want a mortgage that also helps you build equity in your home. (Equity is the market value of your home minus any outstanding mortgages or liens.) If you don’t build equity, you may not be able to refinance if your house decreases in value. And, when you want to move to a new house, you can put the equity of your current home towards the down payment of your next home.
5. The term
The mortgage term is the number of years your loan will be active. Mortgages with shorter terms carry higher monthly payments, but they can save you a lot of interest over the long term. For example, if you borrow $150,000 at 6 percent with a 30-year term, your monthly payment will be $900. The same loan with a 15-year term will cost $1,265 a month, but you’ll pay almost $96,000 less in interest and you’ll own your home twice as fast.
6. Discount points
Lenders may offer you the chance to pay discount points to lower the interest rate of your mortgage. One point is equal to 1 percent of the principal, so on a $150,000 loan, each point costs $1,500. Generally, for each point you purchase you can lower your rate by about 0.25 percent. Whether this is a good deal depends on how long you plan to keep your home -- the longer you plan to stay, the more it makes sense to buy points. The LendingTree Discount points calculator can help you determine if it makes sense to pay points upfront when taking out a mortgage.
Your mortgage principal is simply the amount you are borrowing to buy your house. In other words, it’s the price of your new home minus your down payment. When you shop for a mortgage, each bank will tell you how much it is prepared to lend you based on your income and your credit score. This will help you determine how much house you can afford.
2. The type of mortgage
Traditionally, mortgages fall into two broad categories: Those with a fixed interest rate and those with an adjustable rate. With a fixed rate mortgage, you usually pay the same amount each month for as long as you carry the loan. These mortgages can mean less risk and less worry about the future, but typically have a slightly higher interest rate than the initial rates offered by adjustable rate mortgages. Adjustable rate mortgages (ARMs) usually provide you with a lower initial interest rate, but their rates change with the market, so there is always the risk that your payments will increase.
Lenders also offer other options, some of which combine the features of both traditional mortgage types. Some begin with a fixed rate for three or more years and then convert to an ARM. Others let you choose how much you pay each month. When you discuss these mortgage types, make sure you understand the pros and cons of the loan and that your lender understands both your risk tolerance and your level of financial discipline.
3. The interest rate
Interest rates are the most visible part of any mortgage advertisement, but finding the best deal isn’t as simple as looking for the lowest posted rate. A loan with a lower rate but higher closing costs -- more on those later -- may end up being more expensive. The best way to understand the overall cost of a mortgage is to look at its annual percentage rate (APR), which takes into account the interest rate and the loan’s other costs.
If you choose an adjustable rate mortgage, you also have to understand how your interest rate may change. ARMs are usually adjusted according to an index, which is a published interest rate set by a third party, such as the federal government. The lender then adds a “margin” to determine the interest rate on your loan. For example, if the index is at 5.5 percent and your margin is 1.5 percent, your rate will be 7 percent. Many ARMs have caps to protect you against drastic increases from year to year.
4. The monthly payment
One of the most important things when choosing a mortgage is to make sure you can comfortably afford the monthly payment. However, it’s not enough to simply choose the loan that provides you with the lowest payment. Interest-only mortgages, for example, carry the lowest possible monthly charges, but they do nothing to reduce your principal -- even after years of payments, you’ll still owe as much as you did at the outset. Also, because your payments on an interest-only loan may rise later, you should make sure you can afford the higher payments. In most cases, you’ll want a mortgage that also helps you build equity in your home. (Equity is the market value of your home minus any outstanding mortgages or liens.) If you don’t build equity, you may not be able to refinance if your house decreases in value. And, when you want to move to a new house, you can put the equity of your current home towards the down payment of your next home.
5. The term
The mortgage term is the number of years your loan will be active. Mortgages with shorter terms carry higher monthly payments, but they can save you a lot of interest over the long term. For example, if you borrow $150,000 at 6 percent with a 30-year term, your monthly payment will be $900. The same loan with a 15-year term will cost $1,265 a month, but you’ll pay almost $96,000 less in interest and you’ll own your home twice as fast.
6. Discount points
Lenders may offer you the chance to pay discount points to lower the interest rate of your mortgage. One point is equal to 1 percent of the principal, so on a $150,000 loan, each point costs $1,500. Generally, for each point you purchase you can lower your rate by about 0.25 percent. Whether this is a good deal depends on how long you plan to keep your home -- the longer you plan to stay, the more it makes sense to buy points. The LendingTree Discount points calculator can help you determine if it makes sense to pay points upfront when taking out a mortgage.
7. Lock-ins
When you apply for a mortgage, lenders will quote a specific interest rate and a certain number of discount points. However, the market can change while you are looking for your new home, causing rates to go up or down. That’s why it’s a good idea to ask your lender to lock in these rates for a specified period, often 30 to 60 days. If you want to lock in your rate, ask whether there will be a fee, if it is refundable, and get the agreement in writing.
8. Closing costs
Lenders charge several fees when closing mortgage deals which can add thousands of dollars to your borrowing costs. Depending on the lender and where you live, the fees go by different names and can often be confusing -- origination fees, appraisal fees and prepaid interest are among the terms you may encounter. The best advice is to ask your lender for a good faith estimate of these costs (lenders are required by law to give you one) and ask for an explanation of any charge you do not understand.
When you apply for a mortgage, lenders will quote a specific interest rate and a certain number of discount points. However, the market can change while you are looking for your new home, causing rates to go up or down. That’s why it’s a good idea to ask your lender to lock in these rates for a specified period, often 30 to 60 days. If you want to lock in your rate, ask whether there will be a fee, if it is refundable, and get the agreement in writing.
8. Closing costs
Lenders charge several fees when closing mortgage deals which can add thousands of dollars to your borrowing costs. Depending on the lender and where you live, the fees go by different names and can often be confusing -- origination fees, appraisal fees and prepaid interest are among the terms you may encounter. The best advice is to ask your lender for a good faith estimate of these costs (lenders are required by law to give you one) and ask for an explanation of any charge you do not understand.
Ref: lendingtree.com/mortgage-loans/advice/getting-the-best-loan/things-to-know-about-mortgages/
Thursday, September 24, 2009
FHA Reserves Look Shaky – Is Another Bailout Pending?
The Federal Housing Administration (FHA) once considered one of the safest agencies backing mortgage loans now has many worried that its reserves may have dipped below the Congressionally-required level.
The FHA was designed to help first-time homebuyers and those with less-than-perfect credit. During the housing boom, the popularity of FHA loans waned as the standards and documentation requirements remained high and many other loans required few hoops to jump through. In 2006, FHA loans made less than 3 percent of the all U.S. Mortgage loans. As of the second quarter of 2009, the market share has skyrocketed to 23 percent.
This is largely because the FHA did not suffer the same losses as many other lenders and agencies during the housing bust and became one of the last remaining options for new and lower-income buyers.
Yet as its market share has grown, so has its loan delinquency rates. In June 7.8 percent of FHA-backed loans were 90 days late or more, up from 5.4 percent last year at the same time. And because the FHA requires only a 3.5 percent down payment on its loans, as home values have plunged in the past few years, many FHA borrowers are now underwater in their loans. This situation often leads people to walk away from their monthly payments and give in to foreclosure.
The FHA is required to have reserves that are equal to 2 percent of all the loans it insures. As of last year, the reserves were down to 3 percent, a huge drop from the 6.4 percent it had in 2007.
While FHA officials maintain that the agency will not need a government bailout, that doesn’t keep people from worrying about it based on the numbers. The current value of the FHA’s reserves will be made public on September 30 in the agency’s annual review.
ref: blog.mortgage101.com/2009/09/04/fha-reserves-look-shaky-–-is-another-bailout-pending
Thursday, September 17, 2009
When is refinancing not a good idea?
You’ve had your mortgage for a long time.
The amortization chart shows that the proportion of your payment that is credited to the principal of your loan increases each year, while the proportion credited to the interest decreases each year. In the later years of your mortgage, more of your payment applies to principal and helps build equity. By refinancing late in your mortgage, you will restart the amortization process, and most of your monthly payment will be credited to paying interest again and not to building equity.
Amortization of a $200,000 loan for 30 years at 5.9% |
Your current mortgage has a prepayment penalty
A prepayment penalty is a fee that lenders might charge if you pay off your mortgage loan early, including for refinancing. If you are refinancing with the same lender, ask whether the prepayment penalty can be waived. You should carefully consider the costs of any prepayment penalty against the savings you expect to gain from refinancing. Paying a prepayment penalty will increase the time it will take to break even, when you account for the costs of the refinance and the monthly savings you expect to gain.
You plan to move from your home in the next few years.
The monthly savings gained from lower monthly payments may not exceed the costs of refinancing--a break-even calculation will help you determine whether it is worthwhile to refinance, if you are planning to move in the near future.
ref: federalreserve.gov/pubs/refinancings/default.htm
Mortgage Refinancing - What You Need To Know About Refinancing Your Mortgage
by: Anthony Russell
When you go for mortgage refinancing loan you should know the following things in nutshell
Mortgage refinance is like taking second loan to repay your first mortgage loan. Reason to go in for such a loan is that your first mortgage loan tenure is long, and the associated interest rates are very high. Now the interest rates have reduced heavily in the market. Before planning to take a mortgage refinancing loan be careful while doing online research, compare the interest rates and tenures of different lenders, and analyze the best option suitable for you. While taking second loan, do analyze how much cash you can avail after paying your first mortgage loan, which will help you in finishing off other expenses or liabilities you have in hand. Mortgage refinance loan is normally taken to replace the existing loan with a new loan with better terms and conditions as compared to the first one, which can help you save time and concentrate on your career. People basically go for a refinance mortgage loan for few reasons.
# To minimize existing interest rate on their existing mortgage loans, and lowering their monthly mortgage
expenses.
# To get some money out of their mortgage or home loans for a house improvement project, to combine debts and pay them off.
There are other terms you need to consider when you go for refinance mortgage loans. What are the loan types and down payment penalties? It's important to avail refinance loan quotations from lenders and make the correct decisions. The other reasons you may opt for mortgage refinance loan could be to get a sort-term mortgage loan of 10 or 20 years, which will help you to pay off your mortgage loan. You may like to switch from fixed rate mortgage to adjustable rate mortgage loans depending on which one is more beneficial to you. Following mistakes should be avoided while going for home mortgage refinance loan.
# Don't take your county assessor's value as a basis for refinance; try to find out the exact market value which could be higher than the county assessor's value. If you consider the market value, you would get a higher value of mortgage loan which can help you in paying other debts.
# Not providing documentation promptly, can get your loan process delayed, which can result in your loan not being approved at the lower interest rates which you have agreed.
Even if you have a bad credit history you can easily get the bad credit home refinance from us. With a poor credit rating there can be a financial hindrance to many things we do in our life. When you have a bad credit rating you may not be able to buy a car, obtain a credit card, get a student loan, and, in some cases, even get certain jobs. You can, however refinance your home with bad credit mortgage refinance even if you have a bad score. You should normally know what your credit history and the actual score contains. It's recommended you get the reports from all agencies and check the facts, if the reports contain wrong information then get the error corrected with the agencies, and get it rectified before applying for bad credit mortgage refinancing.
When you have bad credit history and you are applying for home mortgage refinance, care should be taken that the interest rates should be very low than the current home mortgage loans. A difference of 0.50 to 1% difference is not enough. There should be a difference of 2 to 3% in interest rates, when you apply for mortgage refinancing loan. Your new mortgage refinance loan interest rates should be lower than the existing ones. This can help you in getting more money in hand, and you can pay off your debts and have enough money in hand for redeeming other liabilities. When going for home mortgage refinance loan with bad credit or bad history be careful that the second mortgage refinance loan you take does not have a clause of pre-payment penalty ranging from 6 month to 2 years. That means if you want to end your home mortgage refinancing loan early, you can't make any pre-payments as it will carry penalties.
You can apply through us for bad credit home refinancing if you have a bad credit history, you can fill our online form and we will get in touch with you as soon as possible to solve your queries.
# To minimize existing interest rate on their existing mortgage loans, and lowering their monthly mortgage
# To get some money out of their mortgage or home loans for a house improvement project, to combine debts and pay them off.
There are other terms you need to consider when you go for refinance mortgage loans. What are the loan types and down payment penalties? It's important to avail refinance loan quotations from lenders and make the correct decisions. The other reasons you may opt for mortgage refinance loan could be to get a sort-term mortgage loan of 10 or 20 years, which will help you to pay off your mortgage loan. You may like to switch from fixed rate mortgage to adjustable rate mortgage loans depending on which one is more beneficial to you. Following mistakes should be avoided while going for home mortgage refinance loan.
# Don't take your county assessor's value as a basis for refinance; try to find out the exact market value which could be higher than the county assessor's value. If you consider the market value, you would get a higher value of mortgage loan which can help you in paying other debts.
# Not providing documentation promptly, can get your loan process delayed, which can result in your loan not being approved at the lower interest rates which you have agreed.
Even if you have a bad credit history you can easily get the bad credit home refinance from us. With a poor credit rating there can be a financial hindrance to many things we do in our life. When you have a bad credit rating you may not be able to buy a car, obtain a credit card, get a student loan, and, in some cases, even get certain jobs. You can, however refinance your home with bad credit mortgage refinance even if you have a bad score. You should normally know what your credit history and the actual score contains. It's recommended you get the reports from all agencies and check the facts, if the reports contain wrong information then get the error corrected with the agencies, and get it rectified before applying for bad credit mortgage refinancing.
When you have bad credit history and you are applying for home mortgage refinance, care should be taken that the interest rates should be very low than the current home mortgage loans. A difference of 0.50 to 1% difference is not enough. There should be a difference of 2 to 3% in interest rates, when you apply for mortgage refinancing loan. Your new mortgage refinance loan interest rates should be lower than the existing ones. This can help you in getting more money in hand, and you can pay off your debts and have enough money in hand for redeeming other liabilities. When going for home mortgage refinance loan with bad credit or bad history be careful that the second mortgage refinance loan you take does not have a clause of pre-payment penalty ranging from 6 month to 2 years. That means if you want to end your home mortgage refinancing loan early, you can't make any pre-payments as it will carry penalties.
You can apply through us for bad credit home refinancing if you have a bad credit history, you can fill our online form and we will get in touch with you as soon as possible to solve your queries.
ref: sooperarticles.com/finance-articles/mortgage-articles/mortgage-refinancing-what-you-need-know-about-refinancing-your-mortgage-7232.html
Money-Back Guaranteed? Maybe or Maybe Not
Have you ever bought a high-ticket item like a TV and then when you are browsing through the Sunday sale ads you see the same exact TV for $300 less? Some stores will allow you to bring the store receipt of your purchase along with the sale ad showing the cheaper price, and as long it has been within 30 days of your purchase, will refund you the price difference.
Some mortgage lenders have the same “price guarantee” offer when it comes to your closing costs. if you can show them that you paid less in closing costs with another lender, they will refund you the difference? You may be asking yourself is this for real? More importantly, you should be asking yourself what is the catch.
First, you have to be able to provide the mortgage lender with a detailed copy of the Good Faith Estimate (GFE) and the Truth-In-Lending (TIL) statement provide to you from the lender that you are using that is beating their pricing. That may not seem too hard, but this also must reach them within a 24-hour period of you receiving it. Again, this is not the end of the world. Usually you receive these items within a few days of applying for the loan. The real catch is that the Good Faith Estimate (GFE) is just that – an estimate. These are not your final costs, nor are these costs set in stone.
Until you can show the lender what your final costs were and are able to prove the total costs were lower than what they were offering you, and then they will not fork over the cost differential to you. Think about it. The time that lapses between you receiving the GFE and TIL and actually closing on the loan could be anywhere from two weeks to a whole month. Do you know how many things could change in the mortgage industry in a 14 to 30-day period that could affect your mortgage costs? The answer is a lot could happen.
So while it may seem like a great idea to earn yourself a little money-back guarantee, it probably isn’t something that you should hang your hat on.
Related Resources
Some mortgage lenders have the same “price guarantee” offer when it comes to your closing costs. if you can show them that you paid less in closing costs with another lender, they will refund you the difference? You may be asking yourself is this for real? More importantly, you should be asking yourself what is the catch.
First, you have to be able to provide the mortgage lender with a detailed copy of the Good Faith Estimate (GFE) and the Truth-In-Lending (TIL) statement provide to you from the lender that you are using that is beating their pricing. That may not seem too hard, but this also must reach them within a 24-hour period of you receiving it. Again, this is not the end of the world. Usually you receive these items within a few days of applying for the loan. The real catch is that the Good Faith Estimate (GFE) is just that – an estimate. These are not your final costs, nor are these costs set in stone.
Until you can show the lender what your final costs were and are able to prove the total costs were lower than what they were offering you, and then they will not fork over the cost differential to you. Think about it. The time that lapses between you receiving the GFE and TIL and actually closing on the loan could be anywhere from two weeks to a whole month. Do you know how many things could change in the mortgage industry in a 14 to 30-day period that could affect your mortgage costs? The answer is a lot could happen.
So while it may seem like a great idea to earn yourself a little money-back guarantee, it probably isn’t something that you should hang your hat on.
Related Resources
- TIL: Truth in Ledning [PDF] (occ.treas.gov)
- GFE: Good faith estimate (wikipedia.org)
Wednesday, September 16, 2009
The Winners and Losers of the Housing Crash
To say that the current state of the US housing market is a little shaky would be an understatement. The waves of recent mortgage statistics are at best conflicting and in many cases misleading as to the true nature of the property economy. Some experts are clinging to the fact that a recent boom in first time buyers being accepted for mortgages (in light of the $8000 tax credit) is a sign that the industry has turned a corner. Others, meanwhile, see the glimmer of hope as more of a mirage in a still arid housing landscape. Indeed, recent reports show that the Philadelphia Housing Market Index has fallen to its major support level of 225; Toll Brothers (a major US luxury home builder) has seen a 33% drop in order during the second quarter and mortgage lender Ameriquest is downsizing and laying off 3500 workers.
Wealthy Housing Opportunities
In the wake of this uncertain housing climate there has risen a sharp contrast between the poorest and the wealthiest people in the country. The current situation has provided a stark reminder of the money gap between the haves and the have-nots in America. Moreover, where one demographic sees opportunity the other sees long-term financial uncertainty. The old saying “one man’s trash is another man’s treasure” is particularly pertinent at the moment as the rich are seeing the drop in house prices as a chance to increase their portfolios. One of America’s most exclusive housing markets, the Hamptons, felt the bite of the recession more than most with the uptake on many multimillion dollar Long Island properties being extremely low. In recent months though, high-end real estate developers have seen a sharp rise in sales as the price of housing has fallen. Alan Schurman, a real estate developer, points out that those that can afford the million dollar price tags “made a decision that the market hit a point and was forming a bottom. Now they want to get in on the values that are out there.”
Luxury property prices have been slashed by around 20% in the area and this has attracted a glut of buyers back to the area keen to snap up a bargain ready for when the market begins to rejuvenate itself. This flood of multimillion dollar spending provides a striking juxtaposition to the financial difficulties facing many “average income” homes. Across the country the rate of foreclosures has risen and more and more homes are seeking the help of programs like the one in operation in Louisville, designed to be the final lifeline for those facing foreclosure. The number of people struggling to make their mortgage repayments has risen to over 13% and more than 4% of all borrowers are in foreclosure. The rising jobless figures are the major contributing factor to the situation, and while government incentives such as the $8000 tax refund are aiming to help the average buy, the problem is continuing to escalate.
The Great Divide
In times of financial crisis the wealth divide is always more prevalent, and while Middle America struggles to retain possession of its homes; the wealthy can’t wait to expand theirs. Nobody is clear just how much longer the current economic climate will last and for the average American the future isn’t looking like a bed of roses. Recent reports over whether the situation is improving or not is much like the discrepancy between those at the top and bottom of the housing chain; on the one hand someone is a winner but on the other, someone always ends up a loser.
ref: blog.mortgage101.com/2009/09/09/the-winners-and-losers-of-the-housing-crash
Tuesday, September 15, 2009
Dubai Mortgage Market
With ever growing prices of property in Dubai, it is becoming increasingly difficult for a normal buyer to pay the entire amount in one go. Mortgage facility comes in handy for such buyers. In mortgage loan, creditor possesses the title of purchased property till the debt amount, along with interest is paid off. In case the debtor fails to repay, creditor can retain the property. In Dubai, mortgage market is all set for an upsurge. Some important features of Dubai mortgage market are discussed below.
Growth Potential:
Dubai mortgage market is on the rise since 2002 but according to the experts and research reports, we still have to witness the real expansion boom. EFG-Hermes has predicted a growth of up to 10 times by 2012 in a recent research report. Dr Sabahuddin Azmi, an Islamic finance expert reaffirmed, while speaking to a summit held by the support of Shaikh Saud Bin Saqr Al Qasimi, the Crown Prince and Deputy Ruler of Ras Al Khaimah. The growth trend by far has been parallel to real estate market.
Shariah Compliant:
Amlak Finance and Tamweel, the leaders of Dubai mortgage market, with 60% market share collectively, are both shariah compliant. Given that the majority of the Dubai residents are Muslims, and Islam prohibits any kind of interest on loans, shariah compliant lenders are likely to capture the larger market share in future as well. Some people argue that Islamic mortgage is high-priced. The fact is that you may be paying a bigger amount as “down payment” compared to conventional mortgage, but you are also getting a better payment plan afterwards. This is the reason that non-Muslims are also getting increasingly interested in this type of home finance.
Interest Rates:
Interest rate (or profit rate in case of shariah compliant mortgage) is slightly higher when compared to rest of the world, but with competition getting bigger and intense, soon one company or other will be cutting its interest rate to gain competitive advantage over it's competitors. Commercial bank of Dubai has already slashed its interest rates, soon other banks will have to catch up with similar reductions or they will loose their business to CBD in no time.
Dubai real estate market along with its mortgage market is getting larger day by day. With expatriates and foreigners taking more interest in buying property, competition in Dubai mortgage market is heating up. This competition will surely help in resolving issues like processing delays and making it more consumers friendly.
Growth Potential:
Dubai mortgage market is on the rise since 2002 but according to the experts and research reports, we still have to witness the real expansion boom. EFG-Hermes has predicted a growth of up to 10 times by 2012 in a recent research report. Dr Sabahuddin Azmi, an Islamic finance expert reaffirmed, while speaking to a summit held by the support of Shaikh Saud Bin Saqr Al Qasimi, the Crown Prince and Deputy Ruler of Ras Al Khaimah. The growth trend by far has been parallel to real estate market.
Shariah Compliant:
Amlak Finance and Tamweel, the leaders of Dubai mortgage market, with 60% market share collectively, are both shariah compliant. Given that the majority of the Dubai residents are Muslims, and Islam prohibits any kind of interest on loans, shariah compliant lenders are likely to capture the larger market share in future as well. Some people argue that Islamic mortgage is high-priced. The fact is that you may be paying a bigger amount as “down payment” compared to conventional mortgage, but you are also getting a better payment plan afterwards. This is the reason that non-Muslims are also getting increasingly interested in this type of home finance.
Interest Rates:
Interest rate (or profit rate in case of shariah compliant mortgage) is slightly higher when compared to rest of the world, but with competition getting bigger and intense, soon one company or other will be cutting its interest rate to gain competitive advantage over it's competitors. Commercial bank of Dubai has already slashed its interest rates, soon other banks will have to catch up with similar reductions or they will loose their business to CBD in no time.
Dubai real estate market along with its mortgage market is getting larger day by day. With expatriates and foreigners taking more interest in buying property, competition in Dubai mortgage market is heating up. This competition will surely help in resolving issues like processing delays and making it more consumers friendly.
Article Source:
bestmanagementarticles.com
mortgage.bestmanagementarticles.com
mortgage.bestmanagementarticles.com
The Winners and Losers of the Housing Crash
To say that the current state of the US housing market is a little shaky would be an understatement. The waves of recent mortgage statistics are at best conflicting and in many cases misleading as to the true nature of the property economy. Some experts are clinging to the fact that a recent boom in first time buyers being accepted for mortgages (in light of the $8000 tax credit) is a sign that the industry has turned a corner. Others, meanwhile, see the glimmer of hope as more of a mirage in a still arid housing landscape. Indeed, recent reports show that the Philadelphia Housing Market Index has fallen to its major support level of 225; Toll Brothers (a major US luxury home builder) has seen a 33% drop in order during the second quarter and mortgage lender Ameriquest is downsizing and laying off 3500 workers.
Wealthy Housing Opportunities
In the wake of this uncertain housing climate there has risen a sharp contrast between the poorest and the wealthiest people in the country. The current situation has provided a stark reminder of the money gap between the haves and the have-nots in America. Moreover, where one demographic sees opportunity the other sees long-term financial uncertainty. The old saying “one man’s trash is another man’s treasure” is particularly pertinent at the moment as the rich are seeing the drop in house prices as a chance to increase their portfolios. One of America’s most exclusive housing markets, the Hamptons, felt the bite of the recession more than most with the uptake on many multimillion dollar Long Island properties being extremely low. In recent months though, high-end real estate developers have seen a sharp rise in sales as the price of housing has fallen. Alan Schurman, a real estate developer, points out that those that can afford the million dollar price tags “made a decision that the market hit a point and was forming a bottom. Now they want to get in on the values that are out there.”
Luxury property prices have been slashed by around 20% in the area and this has attracted a glut of buyers back to the area keen to snap up a bargain ready for when the market begins to rejuvenate itself. This flood of multimillion dollar spending provides a striking juxtaposition to the financial difficulties facing many “average income” homes. Across the country the rate of foreclosures has risen and more and more homes are seeking the help of programs like the one in operation in Louisville, designed to be the final lifeline for those facing foreclosure. The number of people struggling to make their mortgage repayments has risen to over 13% and more than 4% of all borrowers are in foreclosure. The rising jobless figures are the major contributing factor to the situation, and while government incentives such as the $8000 tax refund are aiming to help the average buy, the problem is continuing to escalate.
The Great Divide
In times of financial crisis the wealth divide is always more prevalent, and while Middle America struggles to retain possession of its homes; the wealthy can’t wait to expand theirs. Nobody is clear just how much longer the current economic climate will last and for the average American the future isn’t looking like a bed of roses. Recent reports over whether the situation is improving or not is much like the discrepancy between those at the top and bottom of the housing chain; on the one hand someone is a winner but on the other, someone always ends up a loser.
Wealthy Housing Opportunities
In the wake of this uncertain housing climate there has risen a sharp contrast between the poorest and the wealthiest people in the country. The current situation has provided a stark reminder of the money gap between the haves and the have-nots in America. Moreover, where one demographic sees opportunity the other sees long-term financial uncertainty. The old saying “one man’s trash is another man’s treasure” is particularly pertinent at the moment as the rich are seeing the drop in house prices as a chance to increase their portfolios. One of America’s most exclusive housing markets, the Hamptons, felt the bite of the recession more than most with the uptake on many multimillion dollar Long Island properties being extremely low. In recent months though, high-end real estate developers have seen a sharp rise in sales as the price of housing has fallen. Alan Schurman, a real estate developer, points out that those that can afford the million dollar price tags “made a decision that the market hit a point and was forming a bottom. Now they want to get in on the values that are out there.”
Luxury property prices have been slashed by around 20% in the area and this has attracted a glut of buyers back to the area keen to snap up a bargain ready for when the market begins to rejuvenate itself. This flood of multimillion dollar spending provides a striking juxtaposition to the financial difficulties facing many “average income” homes. Across the country the rate of foreclosures has risen and more and more homes are seeking the help of programs like the one in operation in Louisville, designed to be the final lifeline for those facing foreclosure. The number of people struggling to make their mortgage repayments has risen to over 13% and more than 4% of all borrowers are in foreclosure. The rising jobless figures are the major contributing factor to the situation, and while government incentives such as the $8000 tax refund are aiming to help the average buy, the problem is continuing to escalate.
The Great Divide
In times of financial crisis the wealth divide is always more prevalent, and while Middle America struggles to retain possession of its homes; the wealthy can’t wait to expand theirs. Nobody is clear just how much longer the current economic climate will last and for the average American the future isn’t looking like a bed of roses. Recent reports over whether the situation is improving or not is much like the discrepancy between those at the top and bottom of the housing chain; on the one hand someone is a winner but on the other, someone always ends up a loser.
ref: blog.mortgage101.com/2009/09/09/the-winners-and-losers-of-the-housing-crash
Monday, September 14, 2009
Loan Modification Companies - Scammers or Saviors?
Okay let's cut right to the chase. This new vehicle that promises to help homeowners who are in financial trouble avoid foreclosure and save their homes -- known as loan modification -- sound like it might be the real deal.
And it makes sense. It basically plays off the fact that the banks are completely desperate to avoid foreclosing on properties, and they're willing to work with people who are having trouble, or may have trouble in the near future, meeting their mortgage obligation.
It makes sense for the banks, it makes sense for the homeowner, and it makes sense for the economy.
So if loan modification makes sense, why is everybody going out and having success doing it?
Now I don't know for sure, but I think that one of the reasons is probably because a lot of homeowners are trying to do this on their own with out the help of a professional -- someone who knows what they're doing.
And I think this is because a lot of people have been scared off of hiring a lone modification specialist, because if you morons in the news media have gotten the story all wrong. Here's what I mean...
Back before the economy totally hit bottom, a few people tried loan modification with their bank. Now, because things weren't nearly as bad then as they are now, the banks were far less willing to work with people and to really substantially lower their rate.
So what did you get? You got people who said they were successful in getting a loan modification, but who in reality only got a very very slight reduction on their payment. So of course it wasn't going to help them very much.
In recent months, lots of loan modification companies have sprung up. And this is sparked all new round of controversy. The problem is, that a lot of these companies are simply rehashed mortgage hacks looking to replace their lost income since no one is looking for a new mortgage anymore.
And these know nothings are giving the legitimate companies in the industry a bad name. Here's what I look for when choosing a loan modification company. You're free to do what you want but these are the criteria I would hold anyone I hired to:
Make sure they do loan modifications and only loan modifications. You want someone who specializes in this day in and day out. Who knows how to negotiate with the banks and who knows how to get you a true reduction. Don't hire a divorce lawyer to do a loan modification.
Make sure they're a lawyer. I mentioned tired old mortgage hacks above. Don't hire the same guys that got us in this mess to get you out. It's like asking the fox to guard the henhouse. Enough said.
Get a guarantee. Anyone who does business, no matter what that business is, will offer a guarantee if they stand behind their product or service at all. If the loan modification company you're talking with doesn't offer a guarantee, go with someone else.
Get proof. Again, anyone who's been successful in getting loan modifications for their clients will have a paper trail. Ask to see it. Not only should they show it to you, they should offer to show it to you before you even ask. This is the mark of someone who is not afraid for you to look at the results they've already gotten.
I hope all this helps.
And it makes sense. It basically plays off the fact that the banks are completely desperate to avoid foreclosing on properties, and they're willing to work with people who are having trouble, or may have trouble in the near future, meeting their mortgage obligation.
It makes sense for the banks, it makes sense for the homeowner, and it makes sense for the economy.
So if loan modification makes sense, why is everybody going out and having success doing it?
Now I don't know for sure, but I think that one of the reasons is probably because a lot of homeowners are trying to do this on their own with out the help of a professional -- someone who knows what they're doing.
And I think this is because a lot of people have been scared off of hiring a lone modification specialist, because if you morons in the news media have gotten the story all wrong. Here's what I mean...
Back before the economy totally hit bottom, a few people tried loan modification with their bank. Now, because things weren't nearly as bad then as they are now, the banks were far less willing to work with people and to really substantially lower their rate.
So what did you get? You got people who said they were successful in getting a loan modification, but who in reality only got a very very slight reduction on their payment. So of course it wasn't going to help them very much.
In recent months, lots of loan modification companies have sprung up. And this is sparked all new round of controversy. The problem is, that a lot of these companies are simply rehashed mortgage hacks looking to replace their lost income since no one is looking for a new mortgage anymore.
And these know nothings are giving the legitimate companies in the industry a bad name. Here's what I look for when choosing a loan modification company. You're free to do what you want but these are the criteria I would hold anyone I hired to:
Make sure they do loan modifications and only loan modifications. You want someone who specializes in this day in and day out. Who knows how to negotiate with the banks and who knows how to get you a true reduction. Don't hire a divorce lawyer to do a loan modification.
Make sure they're a lawyer. I mentioned tired old mortgage hacks above. Don't hire the same guys that got us in this mess to get you out. It's like asking the fox to guard the henhouse. Enough said.
Get a guarantee. Anyone who does business, no matter what that business is, will offer a guarantee if they stand behind their product or service at all. If the loan modification company you're talking with doesn't offer a guarantee, go with someone else.
Get proof. Again, anyone who's been successful in getting loan modifications for their clients will have a paper trail. Ask to see it. Not only should they show it to you, they should offer to show it to you before you even ask. This is the mark of someone who is not afraid for you to look at the results they've already gotten.
I hope all this helps.
Article Source:
bestmanagementarticles.com
mortgage.bestmanagementarticles.com
Sunday, September 13, 2009
Home Repossession a Cruel Fate
By: Gary Terrazas
Home repossession is one of the worst predicaments fate can throw anyone's way. Yet home repossession is a reality many people are having to live through, what with the current hard financial times which have caused many people to fall behind in their mortgage repayments. Nonetheless, faced with the gloomy prospect of home repossession, one need not throw their hands in the air in despair. There are some steps which one can take, to stop repossession, and save oneself the stresses that come with the forceful eviction which is likely to result from the home repossession, or at least ensure that they get a reasonable (market) price for their house.
Faced with the prospect of home repossession, many people panic, not knowing that there are companies that are established for the specific purpose of helping people in their predicament. These are companies which, approached with a client who is faced with repossession, can buy the house in question on short notice and at the going market prices or near offers. The money you get from selling the house to these sellers can then be used to repay the mortgage balance, and the balance might possibly be enough to pay the deposit on another home, thus saving the home from the sad prospect of destitution. If you can, selling your house to these companies is almost always better than letting it get repossessed. If your house is repossessed, it means that you have essentially sold your home for the balance on your mortgage - or whatever debt might be in question, and this is more likely than not to be a pittance compared to the market value of the house.
You might also consider refinancing your mortgage in a bid to forestall home repossession. If all that has happened is that you have fallen behind in your mortgage repayments, and your credit history is otherwise good, you might be surprised with the ease with which you can get a financier to refinance your mortgage. Of course refinancing the mortgage is just a short-term measure, but it can help you avoid the horrors of home repossession, especially if you (objectively speaking) see your finances improving somewhere in the future. Additionally, refinancing you mortgage is also likely to save you from the ruin to your credit history that letting your mortgaged house get repossessed is likely to cause you.
Then there is the albeit dim possibility of talking with the creditor who is threatening to repossess your home into delaying the repossession. Generally speaking, creditors don't like the messy idea of home repossession and they only do it when the probability of your repaying what you owe them seems very small indeed - which they largely deduce from your attitude. Renegotiating the repayment period with the creditor might just buy you the time you need to put your finances in order, giving you the chance to service your mortgage or whatever debt it might be in time. Even when the prospects seem dark; you can still talk to your creditor and see what they have to say about the possibility of a renegotiated payment. By doing so, you have nothing to lose, and you have a home to possibly spare.
Of course in order to be able to stop repossession through any of these ways, you will have to avoid falling into a panic and get acting instead. Remember, the faster you act, the more options you have, as these things take time. And conversely, the more you delay, the more you cut your options.
Faced with the prospect of home repossession, many people panic, not knowing that there are companies that are established for the specific purpose of helping people in their predicament. These are companies which, approached with a client who is faced with repossession, can buy the house in question on short notice and at the going market prices or near offers. The money you get from selling the house to these sellers can then be used to repay the mortgage balance, and the balance might possibly be enough to pay the deposit on another home, thus saving the home from the sad prospect of destitution. If you can, selling your house to these companies is almost always better than letting it get repossessed. If your house is repossessed, it means that you have essentially sold your home for the balance on your mortgage - or whatever debt might be in question, and this is more likely than not to be a pittance compared to the market value of the house.
You might also consider refinancing your mortgage in a bid to forestall home repossession. If all that has happened is that you have fallen behind in your mortgage repayments, and your credit history is otherwise good, you might be surprised with the ease with which you can get a financier to refinance your mortgage. Of course refinancing the mortgage is just a short-term measure, but it can help you avoid the horrors of home repossession, especially if you (objectively speaking) see your finances improving somewhere in the future. Additionally, refinancing you mortgage is also likely to save you from the ruin to your credit history that letting your mortgaged house get repossessed is likely to cause you.
Then there is the albeit dim possibility of talking with the creditor who is threatening to repossess your home into delaying the repossession. Generally speaking, creditors don't like the messy idea of home repossession and they only do it when the probability of your repaying what you owe them seems very small indeed - which they largely deduce from your attitude. Renegotiating the repayment period with the creditor might just buy you the time you need to put your finances in order, giving you the chance to service your mortgage or whatever debt it might be in time. Even when the prospects seem dark; you can still talk to your creditor and see what they have to say about the possibility of a renegotiated payment. By doing so, you have nothing to lose, and you have a home to possibly spare.
Of course in order to be able to stop repossession through any of these ways, you will have to avoid falling into a panic and get acting instead. Remember, the faster you act, the more options you have, as these things take time. And conversely, the more you delay, the more you cut your options.
Article Source:
bestmanagementarticles.com
mortgage.bestmanagementarticles.com
mortgage.bestmanagementarticles.com
4 Rules of Marketing for FHA Streamline Refinances
by: Scott Tucker
The FHA or Federal Housing Administration has used the FHA Streamline as a primary tool to provide insured mortgages for families to purchase or refinance homes or properties.
The Streamline(K) is a simplified version of the 203(K) to address specifically to smaller needs of individuals in terms of repairing homes and properties. Understanding the features and characteristics will help marketing for FHA Streamline refinances easier and more effective.
Basic Requirements
1. Get The Necessary Items.
The streamline pertains to the amount of underwriting and documentation to be processed by the mortgage company, costs may still be involved. Some of the needed items include the FHA-insured mortgage to be refinanced, current (not delinquent) mortgage to be refinanced, no cash taken out on mortgages refinanced via the streamline refinance process and the refinance leading to a lower borrower's monthly principle and interest payments.
2. Learn How Refinancing Is Offered.
Streamline refinances may be provided by companies differently. Some offer "no cost" refinances which do not require out-of-pocket expenses from the borrower. A higher interest rate on the new loan however, may be charged compared if the borrower paid or financed the closing costs in cash. All closing costs incurred during the transaction are paid by the company with this type of premium.
Closing costs may also be included into the new mortgage amount for some companies marketing for FHA streamline refinances. This is possible if an appraisal confirms that there is sufficient equity in the property. Streamline refinances can be done without the use of appraisals, but the new loan amount cannot go beyond the currently owed amount.
Investment properties or properties which the borrower does not consider as a principal residence can be refinanced without an appraisal required. Closing costs, in effect, may not be included in the new mortgage amount.
The "no cash-out" loan can be used to buy out the equity of an ex-spouse as long as it is documented in the divorce papers. The equity is considered indebtedness. Properties purchased not more than one year ago and are not FHA loans can lead to the amount being the appraised value plus closing cost, or the original sales price plus closing cost.
Searching for Benefits
3. Identify The Advantages.
FHA refinancing programs include repairs completed after closing with loan proceeds. It offers low down payment with a minimum investment of only 3%. Other advantages include loan fees that may be financed, the mortgage being FHA-insured, no inspection required, no general contractor required, being a great tool for REO or Real Estate Owned properties, mortgage amount may be increased when combining Streamline(K) with EEM or Energy Efficiency Mortgage and having a single loan amount for the purchase, refinance and repairs.
FHA streamline is not for purchase transactions only but can also be used for the refinance of an existing loan or purchase or HUD REO property. The owner or homebuyer is responsible for all repairs from the proceeds of the loan. The repairs can start after the loan is closed.
Since the repairs are only minor, a general contractor is not required. You can hire one or perform the tasks yourself, provided you present to the lender your ability to perform the needed refinancing properly. An FHA inspector is not required provided that the homebuyer can show receipts or proof of satisfactory completion.
4. Identify the Necessary Repairs.
Marketing for FHA streamline refinances require you to know the type of items eligible for repairs. Inclusions are replacement or repair of roofs, gutters and downspouts, HVAC system upgrade or repair, plumbing and electrical system repair, replacement or upgrade, repair or replacement of existing flooring, minor remodelling, exterior and interior painting, weatherization like storm doors and windows and insulation, appliances not exceeding $2,000 in total after the required minimum of $3,000 of eligible items for repair are satisfied, non-structural improvements for disabled person accessibility and basements and exterior decks.
Items that require structural modification or major rehabilitation are not included. If major repairs are needed, the homebuyer should opt for the regular FHA 203(k) program. A maximum of 2 payments may be made to the homeowner or contractor during refinancing.
Any FHA-approved lender can process the mortgage loan.
Most of the loan fees like title update costs, permit costs and origination can be financed in to the loan. Always point these out when marketing for FHA streamline refinances.
The Streamline(K) is a simplified version of the 203(K) to address specifically to smaller needs of individuals in terms of repairing homes and properties. Understanding the features and characteristics will help marketing for FHA Streamline refinances easier and more effective.
Basic Requirements
1. Get The Necessary Items.
The streamline pertains to the amount of underwriting and documentation to be processed by the mortgage company, costs may still be involved. Some of the needed items include the FHA-insured mortgage to be refinanced, current (not delinquent) mortgage to be refinanced, no cash taken out on mortgages refinanced via the streamline refinance process and the refinance leading to a lower borrower's monthly principle and interest payments.
2. Learn How Refinancing Is Offered.
Streamline refinances may be provided by companies differently. Some offer "no cost" refinances which do not require out-of-pocket expenses from the borrower. A higher interest rate on the new loan however, may be charged compared if the borrower paid or financed the closing costs in cash. All closing costs incurred during the transaction are paid by the company with this type of premium.
Closing costs may also be included into the new mortgage amount for some companies marketing for FHA streamline refinances. This is possible if an appraisal confirms that there is sufficient equity in the property. Streamline refinances can be done without the use of appraisals, but the new loan amount cannot go beyond the currently owed amount.
Investment properties or properties which the borrower does not consider as a principal residence can be refinanced without an appraisal required. Closing costs, in effect, may not be included in the new mortgage amount.
The "no cash-out" loan can be used to buy out the equity of an ex-spouse as long as it is documented in the divorce papers. The equity is considered indebtedness. Properties purchased not more than one year ago and are not FHA loans can lead to the amount being the appraised value plus closing cost, or the original sales price plus closing cost.
Searching for Benefits
3. Identify The Advantages.
FHA refinancing programs include repairs completed after closing with loan proceeds. It offers low down payment with a minimum investment of only 3%. Other advantages include loan fees that may be financed, the mortgage being FHA-insured, no inspection required, no general contractor required, being a great tool for REO or Real Estate Owned properties, mortgage amount may be increased when combining Streamline(K) with EEM or Energy Efficiency Mortgage and having a single loan amount for the purchase, refinance and repairs.
FHA streamline is not for purchase transactions only but can also be used for the refinance of an existing loan or purchase or HUD REO property. The owner or homebuyer is responsible for all repairs from the proceeds of the loan. The repairs can start after the loan is closed.
Since the repairs are only minor, a general contractor is not required. You can hire one or perform the tasks yourself, provided you present to the lender your ability to perform the needed refinancing properly. An FHA inspector is not required provided that the homebuyer can show receipts or proof of satisfactory completion.
4. Identify the Necessary Repairs.
Marketing for FHA streamline refinances require you to know the type of items eligible for repairs. Inclusions are replacement or repair of roofs, gutters and downspouts, HVAC system upgrade or repair, plumbing and electrical system repair, replacement or upgrade, repair or replacement of existing flooring, minor remodelling, exterior and interior painting, weatherization like storm doors and windows and insulation, appliances not exceeding $2,000 in total after the required minimum of $3,000 of eligible items for repair are satisfied, non-structural improvements for disabled person accessibility and basements and exterior decks.
Items that require structural modification or major rehabilitation are not included. If major repairs are needed, the homebuyer should opt for the regular FHA 203(k) program. A maximum of 2 payments may be made to the homeowner or contractor during refinancing.
Any FHA-approved lender can process the mortgage loan.
Most of the loan fees like title update costs, permit costs and origination can be financed in to the loan. Always point these out when marketing for FHA streamline refinances.
Article Source:
bestmanagementarticles.com
mortgage.bestmanagementarticles.com
mortgage.bestmanagementarticles.com
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