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Mortgage Loans and the fear

August 26th, 2008    Subscribe To Our Feed

The Current negative sentiment covering home loans and mortgages is certainly well covered by the News Media. There are many reports of people having trouble making their payments. But is it warranted?

Not all mortgages are causing homeowners problems, it is just a handful loan types that are doing the damage. The loan that has so many people in trouble is the adjustable rate mortgage.

Adjustable mortgages are a problem because they often start low, but then conditions change and all of a sudden the interest rate has increased. Some times, rarely the rates go down but most often they rise.

Most people who get caught up in adjustable rate mortgages are those who would have trouble getting a home any other way based on their credit and first time home buyers as they lack the experience to see the red flags.

What To Do If You Are Stuck

If you were one of the ones who for one reason or another signed for one of those adjustable rate mortgage loans, you still can have some hope. If you are yet to reach the point where your interest rate changes, start saving money now. It is a very good chance that your payments are going to increase and you must be prepared to pay that entire dollar amount as some people have seen their payments double.

When you do have these types of loans it is best not to bet that you will have a decrease because the loans are market based this is mostly wish full thinking.

Start looking into your other options right away and start thinking about refinancing into one of the mortgage loans that offer a fixed rate for the entire term of the loan. If you are worried about doing the refinance because of a repayment penalty, consider how much you will pay out with your payments increasing by several hundred each month, and then the cost of attorney fees from a foreclosure if you are unable to meet your monthly. Then maybe, after thinking about that, the one thousand or so prepayment penalty will not sound so bad.

Barry Jackson writes for Make You Rich A website dedicated to making you and saving you money

Fixed Rate Home Mortgage Loan Options

January 11th, 2008    Subscribe To Our Feed

Fixed Rate Mortgage Loans

Fixed rate mortgage loans are for consumers who want financial consistency and stability. Your interest rate will not change over the life of the loan, unlike other adjustable mortgage loans that change in accordance with a market index. There are many fixed rate mortgage options available and several of the most common ones are listed below:

1. New Home Loan

Your family has found the perfect home and now it is time to finder a lender. LCD will help you figure out how much you can afford by calculating your debt and other monthly expenses and subtracting them from your gross income. By submitting our quick and easy application, one of our mortgage specialists will be in contact with you to discuss which option is best for you.

2. Refinance Your Current Mortgage

Refinancing allows homeowners to pay off an existing home loan with the proceeds of another loan using the same property as collateral. These loans are often easy to obtain and offer substantial savings to most homeowners by offering a lower rate that will in turn lead to lower monthly payments. Also, if you include debt consolidation, you can save even more money on your monthly bills by disposing of those high interest credit cards, student loans and/or car loans. To find out if you qualify for fixed rate refinancing, simply fill out our online mortgage application or give us a call.

3. Second Mortgage Loans / Home Equity Loans

Second Mortgages (also known as home equity loans) are secured against the same property as your primary mortgage and are based on the amount of equity (the difference between the market value of the property and any outstanding loan balance) you have. For example, if you own a home worth $100,000, and it does not have a lien (a form of security interest placed over real estate to secure the payment of a loan) on it, you may be eligible to take an equity loan at an 80% loan to value ratio (LTV), or $80,000 in cash in exchange for a lien on your home. If you have two properties, you can try to use the equity in both. Your household income could also determine how much money you will qualify for in comparison to the amount of equity you have on your home.

Fixed rate mortgages can be beneficial in many ways and are great for consumers who rely on a fixed income because there are no surprises with the monthly payments. Locking in a fixed rate can offer substantial savings over an adjustable rate mortgage, especially in times when the market index is high. LCD offers a variety of programs for our customers looking for a fixed rate and we offer a variety of loan terms to fit your needs.

We highly suggest you seek the advice of a qualified financial consultant before deciding on a fixed rate mortgage loan. A professional consultant is always available at Loan Choice Direct, so please call us (1-888-523-8523) today to find the best solution for your needs.

You can also apply with our quick and easy application and one of our financial consultants will get in touch with you shortly.

Martin Hayes is a Customer Service Specialist with Loan Choice Direct.

For mortgage refinance help including many more articles like this one, please head over to http://www.loanchoicedirect.com to receive your free mortgage refinance quote.

45 Mortgage Terms You Should Know Before Seeking a Home Loan

December 1st, 2007    Subscribe To Our Feed

Following is a list of 45 mortgage terms that you should become familiar with if you plan to buy a home. Evaluating home mortgage loan options can be quite confusing. Educating yourself in the language used by lenders will help you to find the loan that is right for you.

Amortization: repayment of a mortgage loan through monthly installments of principal and interest; the monthly payment amount is based on a schedule that will allow you to own your home at the end of a specific time period (for example, 15 or 30 years)

Annual Percentage Rate (APR): calculated by using a standard formula, the APR shows the cost of a loan; expressed as a yearly interest rate, it includes the interest, points, mortgage insurance, and other fees associated with the loan.

Application: the first step in the official loan approval process; this form is used to record important information about the potential borrower necessary to the underwriting process.

Appraisal: a document that gives an estimate of a property’s fair market value; an appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property.

ARM: Adjustable Rate Mortgage; a mortgage loan subject to changes in interest rates; when rates change, ARM monthly payments increase or decrease at intervals determined by the lender; the Change in monthly -payment amount, however, is usually subject to a Cap.

Borrower: a person who has been approved to receive a loan and is then obligated to repay it and any additional fees according to the loan terms.

Budget: a detailed record of all income earned and spent during a specific period of time.

Cap: a limit, such as that placed on an adjustable rate mortgage, on how much a monthly payment or interest rate can increase or decrease.

Cash reserves: a cash amount sometimes required to be held in reserve in addition to the down payment and closing costs; the amount is determined by the lender.

Certificate of title: a document provided by a qualified source (such as a title company) that shows the property legally belongs to the current owner; before the title is transferred at closing, it should be clear and free of all liens or other claims.

Closing: also known as settlement, this is the time at which the property is formally sold and transferred from the seller to the buyer; it is at this time that the borrower takes on the loan obligation, pays all closing costs, and receives title from the seller.

Closing costs: customary costs above and beyond the sale price of the property that must be paid to cover the transfer of ownership at closing; these costs generally vary by geographic location and are typically detailed to the borrower after submission of a loan application.

Conventional loan: a private sector loan, one that is not guaranteed or insured by the U.S. government.

Credit history: history of an individual’s debt payment; lenders use this information to gauge a potential borrower’s ability to repay a loan.

Credit report: a record that lists all past and present debts and the timeliness of their repayment; it documents an individual’s credit history.

Credit bureau score: a number representing the possibility a borrower may default; it is based upon credit history and is used to determine ability to qualify for a mortgage loan.

Debt-to-income ratio: a comparison of gross income to housing and non-housing expenses; With the FHA, the-monthly mortgage payment should be no more than 29% of monthly gross income (before taxes) and the mortgage payment combined with non-housing debts should not exceed 41% of income.

Deed: the document that transfers ownership of a property.

Down payment: the portion of a home’s purchase price that is paid in cash and is not part of the mortgage loan.

Earnest money: money put down by a potential buyer to show that he or she is serious about purchasing the home; it becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal.

Equity: an owner’s financial interest in a property; calculated by subtracting the amount still owed on the mortgage loon(s)from the fair market value of the property.

Escrow account: a separate account into which the lender puts a portion of each monthly mortgage payment; an escrow account provides the funds needed for such expenses as property taxes, homeowners insurance, mortgage insurance, etc.

Fair market value: the hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.

Fixed-rate mortgage: a mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.

Foreclosure: a legal process in which mortgaged property is sold to pay the loan of the defaulting borrower.

Homeowner’s insurance: an insurance policy that combines protection against damage to a dwelling and Is contents with protection against claims of negligence )r inappropriate action that result in someone’s injury or )property damage.

Interest rate: the amount of interest charged on a monthly loan payment; usually expressed as a percentage.

Lease purchase: assists low- to moderate-income homebuyers in purchasing a home by allowing them to lease a home with an option to buy; the rent payment is made up of the monthly rental payment plus an additional amount that is credited to an account for use as a down payment.

Lien: a legal claim against property that must be satisfied When the property is sold

Loan: money borrowed that is usually repaid with interest.

Loan-to-value (LTV) ratio.- a percentage calculated by dividing the amount borrowed by the price or appraised value of the home to be purchased; the higher the LTV, the less cash a borrower is required to pay as down payment.

Lock-in: since interest rates can change frequently, many lenders offer an interest rate lock-in that guarantees a specific interest rate if the loan is closed within a specific time

Mortgage: a lien on the property that secures the Promise to repay a loan.

Mortgage banker: a company that originates loans and resells them to secondary mortgage lenders like :Fannie Mae or Freddie Mac.

Mortgage broker: a firm that originates and processes loans for a number of lenders.

Mortgage insurance: a policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan; mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home’s purchase price.

Mortgage insurance premium (MIP): a monthly payment -usually part of the mortgage payment - paid by a borrower for mortgage insurance.

Offer: indication by a potential buyer of a willingness to purchase a home at a specific price; generally put forth in writing.

Pre-approve: lender commits to lend to a potential borrower; commitment remains as long as the borrower still meets the qualification requirements at the time of purchase.

Pre-foreclosure sale: allows a defaulting borrower to sell the mortgaged property to satisfy the loan and avoid foreclosure.

Pre-qualify: a lender informally determines the maximum amount an individual is eligible to borrow.

Principal: the amount borrowed from a lender; doesn’t include interest or additional fees.

Title insurance: insurance that protects the lender against any claims that arise from arguments about ownership of the property; also available for homebuyers.

Title search: a check of public records to be sure that the seller is the recognized owner of the real estate and that there are no unsettled liens or other claims against the property.

Underwriting: the process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower’s credit history and a judgment of the property value.

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