It's very simple. Home equity loan is a loan that you take from a financial institution and the money is borrowed using your house as collateral. Your home is the security against which the money is lent to you. The equity will be the difference between the market value of the house minus any outstanding debt, mortgage or loans against the property. That is the amount that can be borrowed. It is for this reason these loans are commonly referred to as second mortgages.
The amount borrowed can be charged a fixed or variable rate of interest. One of the benefits of home equity loan is the interest you pay is tax deductible at the end of the year when you file your tax returns.
Home equity loan is often used for purposes like debt consolidation purposes whereby you pay off high interest rates personal loans like credit card debt, medical debt, or education loans. It is also popular for home improvement financing.
There may be a number of ways of availing this kind of a loan. But the net result is always productive as you get a lump sum which attracts a fixed interest rate with fixed monthly repayments. The low monthly payments and affordable interest rates make it very popular.
Home Equity Loans are absolutely attractive mortgage agreements and because of their capability not only to operate as a safety net, they have seen an increase with many homeowners taking up these loans.
Finally it is wise to remember that your home is the collateral which means, in case you are unable to pay the loan you stand to have the house sold by the lender. So it is important to make your repayments constant and timely.
If you are looking for home improvement financing then understanding how a home equity loan works is crucial in helping you decide if this is the type of loan you should get.
Subprime Mortgage Lending : What’s Good About It?
In recent months, the media would lead us to believe that the risks and damages possible in subprime lending have ruined everyone who has chosen this kind of mortgage. While there have, indeed, been many catastrophes in this area, not all cases of subprime lending fall into this category. Some subprime lending benefits do exist.
Someone who borrows at a subprime rate pays a higher rate of interest than the “prime,” or currently normal, rate of interest. Often, the only way people with a poor credit score (FICO, or Fair Isaac Corporation score) can obtain a mortgage is by borrowing at a subprime rate. But perhaps your credit history is compromised because of a past circumstance that is behind you. Maybe temporary unemployment, a divorce, or some illness in the family that ran up your bills was the cause of your credit problem. You are, nevertheless, still considered to be a subprime borrower.
However, here is some information on how you may still reap the advantages of subprime lending, even if your past credit history hasn’t been the best. You, too, can get a mortgage and become a homeowner. People whose credit ratings indicate past problems are classified as subprime borrowers, simply because the risk to the lender is perceived as higher than normal. But subprime lending is sometimes called “second chance” lending, and that’s because subprime lenders give responsible individuals a second chance to improve their credit. The most important thing to remember if you are one of those individuals is: do not buy a house you cannot afford! You may be told that you “qualify” for a higher mortgage on a more expensive house. Pay no attention to that information. Buy the house whose costs you know you will be able to handle.
Let’s look at an example. You are currently renting a house at an amount with which you are comfortable – say, $1,000 a month. With that rental payment, you have still been able to put something away monthly toward a modest deposit on a new home. You have a rather poor FICO score, and so are classified as a subprime borrower. When you meet with a lender to discuss a mortgage, you’re told that you “prequalify” for a mortgage of $300,000. Consider what buying a house in the range of $300,000 would mean to you. Besides the mortgage, there will be property taxes and homeowners insurance to pay. You’ll probably want to consider a fixed-rate 30-year mortgage: what will the subprime rate on such a loan be monthly? You’ll find it significantly exceeds the $1,000 you are presently paying, which is within your budget! The smart thing to do is to forget about that maximum amount for which you qualify. Don’t let a broker convince you to purchase a bigger, more expensive home than you could afford. You will be able to find plentiful bargains in the present real estate market. Look for those, do the math, and find something that’s not going to cost you much more than what you pay now in rent. Budget carefully, and always keep that budget in mind when you’re looking at houses.
Subprime lending does have its risks, that’s true. But there are benefits as well, especially for people whose credit may have been compromised. Make absolutely sure you understand everything you sign, keep focused on your budget, and you’ll be one of the folks who gets a second chance through subprime lending!
Someone who borrows at a subprime rate pays a higher rate of interest than the “prime,” or currently normal, rate of interest. Often, the only way people with a poor credit score (FICO, or Fair Isaac Corporation score) can obtain a mortgage is by borrowing at a subprime rate. But perhaps your credit history is compromised because of a past circumstance that is behind you. Maybe temporary unemployment, a divorce, or some illness in the family that ran up your bills was the cause of your credit problem. You are, nevertheless, still considered to be a subprime borrower.
However, here is some information on how you may still reap the advantages of subprime lending, even if your past credit history hasn’t been the best. You, too, can get a mortgage and become a homeowner. People whose credit ratings indicate past problems are classified as subprime borrowers, simply because the risk to the lender is perceived as higher than normal. But subprime lending is sometimes called “second chance” lending, and that’s because subprime lenders give responsible individuals a second chance to improve their credit. The most important thing to remember if you are one of those individuals is: do not buy a house you cannot afford! You may be told that you “qualify” for a higher mortgage on a more expensive house. Pay no attention to that information. Buy the house whose costs you know you will be able to handle.
Let’s look at an example. You are currently renting a house at an amount with which you are comfortable – say, $1,000 a month. With that rental payment, you have still been able to put something away monthly toward a modest deposit on a new home. You have a rather poor FICO score, and so are classified as a subprime borrower. When you meet with a lender to discuss a mortgage, you’re told that you “prequalify” for a mortgage of $300,000. Consider what buying a house in the range of $300,000 would mean to you. Besides the mortgage, there will be property taxes and homeowners insurance to pay. You’ll probably want to consider a fixed-rate 30-year mortgage: what will the subprime rate on such a loan be monthly? You’ll find it significantly exceeds the $1,000 you are presently paying, which is within your budget! The smart thing to do is to forget about that maximum amount for which you qualify. Don’t let a broker convince you to purchase a bigger, more expensive home than you could afford. You will be able to find plentiful bargains in the present real estate market. Look for those, do the math, and find something that’s not going to cost you much more than what you pay now in rent. Budget carefully, and always keep that budget in mind when you’re looking at houses.
Subprime lending does have its risks, that’s true. But there are benefits as well, especially for people whose credit may have been compromised. Make absolutely sure you understand everything you sign, keep focused on your budget, and you’ll be one of the folks who gets a second chance through subprime lending!
4 Real Estate and Mortgage Fraud Tips
In recent years with the advent of technology and the internet there has been increased focus of privacy and identity theft but this is nothing new. Theft and fraud has always been a constant threat but especially in our society where your credit is everything and everything can be bought on some form of credit. And the largest form of credit most people have is their home mortgage. But what if the mortgage you have is not even yours and on a property you did not know even existed. This is mortgage fraud and it can happen to anyone.
There are many different types of real estate and mortgage fraud. Basically you can identify them as either a fraud to make a profit, or a fraud to get the property. Regardless of which it is a fraud is committed when falsifying of records occur in some way. In this article we will take a look at a few of the different types of real estate and mortgage frauds.
One of the most common types of fraud committed in the real estate and mortgage industry is on the loan application itself. It is not unusual for the applicant to increase their income or lie about their job.
They might even lie about where they got the down payment. It is not unusual for the down payment to actually come from the person selling the home themselves. These are all examples of loan application fraud.
One area where fraud can be committed and is hard to prove is on the appraisal itself. You could have two different appraisals just from the appraiser themselves.
There are so many things that are subject to interpretation on an appraisal. The problem can come because the appraiser themselves feels pressure from the buyer, seller, and the real estate agent trying to come up with a number that satisfies everyone can create a fraud situation.
Today there are so many different levels of credit that it can become imperative to a buyer that they obtain a fake credit report. Trying to clean up their credit report can be the difference in qualifying for mortgage loan or not.
On the loan it self there could be various things that are not true. Another area that can really affect the approval loan is the income level of the applicants. It's not uncommon to list false income and even come up with documents to back that up when in fact, they really are not true. This is creating fraud against the mortgage company.
One thing that is used to document income is tax returns and today these are very easy to forge as well. The Internet makes it simple to go in and doctor your tax returns to come up with a different copy than what was actually sent to the IRS.
There are many other different types of real estate mortgage fraud. Some of these have been flipping situations, equity skimming, and the pretend homeowner loan. Regardless of how it's done real estate and mortgage fraud is illegal, and can be punishable by large fines and prison time.
There are many different types of real estate and mortgage fraud. Basically you can identify them as either a fraud to make a profit, or a fraud to get the property. Regardless of which it is a fraud is committed when falsifying of records occur in some way. In this article we will take a look at a few of the different types of real estate and mortgage frauds.
One of the most common types of fraud committed in the real estate and mortgage industry is on the loan application itself. It is not unusual for the applicant to increase their income or lie about their job.
They might even lie about where they got the down payment. It is not unusual for the down payment to actually come from the person selling the home themselves. These are all examples of loan application fraud.
One area where fraud can be committed and is hard to prove is on the appraisal itself. You could have two different appraisals just from the appraiser themselves.
There are so many things that are subject to interpretation on an appraisal. The problem can come because the appraiser themselves feels pressure from the buyer, seller, and the real estate agent trying to come up with a number that satisfies everyone can create a fraud situation.
Today there are so many different levels of credit that it can become imperative to a buyer that they obtain a fake credit report. Trying to clean up their credit report can be the difference in qualifying for mortgage loan or not.
On the loan it self there could be various things that are not true. Another area that can really affect the approval loan is the income level of the applicants. It's not uncommon to list false income and even come up with documents to back that up when in fact, they really are not true. This is creating fraud against the mortgage company.
One thing that is used to document income is tax returns and today these are very easy to forge as well. The Internet makes it simple to go in and doctor your tax returns to come up with a different copy than what was actually sent to the IRS.
There are many other different types of real estate mortgage fraud. Some of these have been flipping situations, equity skimming, and the pretend homeowner loan. Regardless of how it's done real estate and mortgage fraud is illegal, and can be punishable by large fines and prison time.
Three Barriers to Solving the Mortgage Crisis
In late 2006 the economy was showing indicators that pointed to a looming mortgage crisis that would ultimately disrupt the flow of business in the secondary market. Investors, who are essential to the flow of money, basically ignored the warning signs but began trading more cautiously. What they ignored was the “perfect storm” as it relates to our secondary mortgage market. The housing bubble burst, sub-prime loans began adjusting, investors stopped trading, and mortgage companies were left holding mortgages that were not worth what they paid for them.
A by-product of the housing boom was an addiction to credit largely funded by the rising equity in our homes. A large portion of our economy was deeply invested in this boom. The chain of industries that profited from and helped propagate the boom is endless: builders, real estate brokers, investors, appraisers, surveyors, paint stores, home supply chains, lumber companies, marketing companies, architects and of course mortgage companies. In a financial game of musical chairs it was the mortgage companies who were the ones left standing.
The mortgage companies, fueled by their own greed and an economy that demands the continuous flow of goods and services, invented new ways to “move money” to a larger segment of the public. As competition between banks escalated, new lending products were invented to capture a larger share of this market until they were basically handing out loans to anyone that could fog a mirror. Banks, who had an endless supply of money via their investors on Wall Street, sold the loans for a profit only to reload to do it again. The problem was that these loans were ticking time-bombs with short fuses, each dependant on rising house values.
As we all know that ship has sailed, leaving our economy in shambles in its wake. The problem that we are faced with is not “who’s to blame”, but rather, who can fix it. The most obvious answer is our legislative group and the banking industry. Unfortunately, those who would be involved with the recovery have either a political agenda or are just trying to stay afloat but it is the public that’s suffering. The writers at Lendfast.com, a nationwide home loan services company, have come up with what they feel are the three main reasons we can’t solve the current mortgage crisis:
1) Politics – In an election year, neither side is willing concede a point of view that could possibly allow the other side to claim victory in solving the crisis. The “haggling” approach to passing legislation allows each side to claim victory on the local news; however the “local news” in an election year is now the national news. If a bill is passed, it is likely to be an ineffective and will have to be revisited in the future by the judicial branch.
2) Lobbyists – Legislators are supposed to be representing their constituents, meanwhile the lobbyists are representing the banking industry. Throw millions of dollars into the equation and a hand-full of representatives that spell mortgage c-o-u-n-t-r-y-w-i-d-e and the chances of getting real help for the “average Joe” is either impossible or a long time away.
3) “Baby with the Bath-water” – It is almost certain that a bill will pass this year, and as mentioned earlier it will probably be ineffective or an over-regulated nightmare. It is politically convenient to punish the “unscrupulous” lenders by enforcing regulations that sound good on paper. However, like most people, the extent of most legislators’ knowledge of the mortgage industry was learned at the closing table. It is pointless to pass regulations that restrict banks from lending money to the very community they’re trying to help.
America must solve this crisis by holding our representatives in Washington accountable for their actions or lack of actions. There is one advantage to the election year, and that is we get to vote. We can throw the “babies out with the bath-water” as well. If you want real change look past Democrats or Republicans and vote for the best candidate to help you.
A by-product of the housing boom was an addiction to credit largely funded by the rising equity in our homes. A large portion of our economy was deeply invested in this boom. The chain of industries that profited from and helped propagate the boom is endless: builders, real estate brokers, investors, appraisers, surveyors, paint stores, home supply chains, lumber companies, marketing companies, architects and of course mortgage companies. In a financial game of musical chairs it was the mortgage companies who were the ones left standing.
The mortgage companies, fueled by their own greed and an economy that demands the continuous flow of goods and services, invented new ways to “move money” to a larger segment of the public. As competition between banks escalated, new lending products were invented to capture a larger share of this market until they were basically handing out loans to anyone that could fog a mirror. Banks, who had an endless supply of money via their investors on Wall Street, sold the loans for a profit only to reload to do it again. The problem was that these loans were ticking time-bombs with short fuses, each dependant on rising house values.
As we all know that ship has sailed, leaving our economy in shambles in its wake. The problem that we are faced with is not “who’s to blame”, but rather, who can fix it. The most obvious answer is our legislative group and the banking industry. Unfortunately, those who would be involved with the recovery have either a political agenda or are just trying to stay afloat but it is the public that’s suffering. The writers at Lendfast.com, a nationwide home loan services company, have come up with what they feel are the three main reasons we can’t solve the current mortgage crisis:
1) Politics – In an election year, neither side is willing concede a point of view that could possibly allow the other side to claim victory in solving the crisis. The “haggling” approach to passing legislation allows each side to claim victory on the local news; however the “local news” in an election year is now the national news. If a bill is passed, it is likely to be an ineffective and will have to be revisited in the future by the judicial branch.
2) Lobbyists – Legislators are supposed to be representing their constituents, meanwhile the lobbyists are representing the banking industry. Throw millions of dollars into the equation and a hand-full of representatives that spell mortgage c-o-u-n-t-r-y-w-i-d-e and the chances of getting real help for the “average Joe” is either impossible or a long time away.
3) “Baby with the Bath-water” – It is almost certain that a bill will pass this year, and as mentioned earlier it will probably be ineffective or an over-regulated nightmare. It is politically convenient to punish the “unscrupulous” lenders by enforcing regulations that sound good on paper. However, like most people, the extent of most legislators’ knowledge of the mortgage industry was learned at the closing table. It is pointless to pass regulations that restrict banks from lending money to the very community they’re trying to help.
America must solve this crisis by holding our representatives in Washington accountable for their actions or lack of actions. There is one advantage to the election year, and that is we get to vote. We can throw the “babies out with the bath-water” as well. If you want real change look past Democrats or Republicans and vote for the best candidate to help you.
Top 3 Financial Issues Americans Face Today
Times are tough for many Americans today. Some financial experts suggest we are teetering on the verge of a modern day recession.
Whatever the case one thing is true, we as Americans, are not financially prepared for the future. What is the definition of really being financially prepared? I believe financial preparedness is the result of having the following aspects in place:
To be DEBT FREE, a strategic plan to have all major debt reduced to nil come time to retire, mortgage(s)included
To have a working RETIREMENT plan, a strategically funded investment, designed to allow you to retire with all the money you need to continue your life style as you see fit, particularly a tax free plan not a 401K.
To have adequate INSURANCE protection, a whole life or fixed universal life policy in place to not only protect the family from the impending reality of life, but to also serve as the vehicle for retirement investments.
You see, most Americans today simply do not have a plan in place to achieve these goals and therefore are in real danger of finding themselves working as greeters at WalMart, in those most precious golden years. A harsh but realistic consequence for not planning properly.
I need to point out, that this is the mindset we are brought up with. Think about it, why is it that the richest 3% know so much more about finance than the other 97% of us? Is it the Ivy League educations or are they mostly just born into wealth or could it be that only those who pay for it, get access to it?
Maybe its only meant to be taught to the priveledged and not the rest of us, the truth is America makes a lot of money on our general ignorance. The banks know how to make and invest money, we all use banks, we pay their interest on their terms. We pay taxes and are told to invest money into our government designed retirement accounts such as 401K's, etc. Why not, its to their advantage that we use these vehicles for our retirement investment as they take nearly half of it from taxation when its time to retire.
We are conditioned to do things a certain way, to trust the establishment, be good citizens, follow the leaders and live out our happy lives, quitely.
Consider, why we do not have classes in elementary or high school that teach our youth about the concepts of investing or retirement for their own benefit or perhaps world economics so we graduate international leaders who can actually solve our economic problems.
If our children understood finance and the dicipline of earning it and turning it into more through basic investment principles, perhaps there would be less crime and poverty, perhaps children would see a future for themselves that is not apparent to them today.
Only by first building a country where our children are brought up understanding the concept of finance and how it relates to their lives, can we fully begin to heal the damage generations of failed trust in relying on the establishment to do it for us.
Think about this, how many of us actually become engineers or physicists? We are forced to learn geometry, trigonometry, things that the majority of us will never use in real life. I personally, have been a mortgage planner my whole life and have not applied geometry or trigonometry once as an adult. But If I knew then financially, what I have come to learn though experience, wow would I have had a better head start on my own retirement plan.
Consider this scenario, Jon and Rebecca Smith decided to start an investment fund for their son Michael. They open a simple, but strategic, permanent life and tax free investment policy when Michael reaches the age of 10 years. They decide to use their annual tax return as the primary funding source for this policy and they maintain the monthly premium just as they would a regular bill (always consult your trusted insurance professional).
They then continue to build this investment until Michael reaches the age of 18 or graduates from college.
By then they have taught Michael about the purpose of this investment and what it means to his future, he then responsibly takes over the investment and manages it on his own from there.
If we teach our children about the value of saving money and what it can do for their future, it doesn't take them long to grasp the concept. I'm suggesting raising a trust fund child, referring to a wealthy child with no real respect for the concept of earning money, but raising a child with the understanding that they, with proper discipline, can see a viable retirement a decade sooner than we ever could imagine for ourselves today.
Michael has a excellent chance of having all the money he would need to raise a family, build a life for himself and retire tax free because of a simple thing his parents decided to do for him all those years ago.
What would the world be like now, if our parents were encouraged to do this for us?
It would mean that we would have a nation where the majority of us were financially fit and healthy and no one would care for or about social security issues.
We would be self sufficient. We could even help to supplement our parents needs in those later years. Helping them retire to enjoy the remainder of their years. Not scraping away working at a WalMart.
I think the next thing worse than watching our parents retire in poverty is thinking of our children suffering the same fate. The only way to stop the cycle is to make sure, that we do not burden our children, all the while teaching them the principles that they can pass onto their children!
It all starts with us.
This is an interesting commentary and might provoke some thought from its readers, some of you might be saying, well, its too late for me to fix things, I am in my 40's, 50's or beyond.
Folks, its never too late to benefit from the same financial concepts banking institutions gain from. Its never too late to plan for a better future!
Learn as much as you can about how proper insured protection can be there to ease the things that happen to us all eventually. Talk to your financial advisor and insurance professional for more information on this subject and make sure your family is protected!
Live life with Abundance!
Whatever the case one thing is true, we as Americans, are not financially prepared for the future. What is the definition of really being financially prepared? I believe financial preparedness is the result of having the following aspects in place:
To be DEBT FREE, a strategic plan to have all major debt reduced to nil come time to retire, mortgage(s)included
To have a working RETIREMENT plan, a strategically funded investment, designed to allow you to retire with all the money you need to continue your life style as you see fit, particularly a tax free plan not a 401K.
To have adequate INSURANCE protection, a whole life or fixed universal life policy in place to not only protect the family from the impending reality of life, but to also serve as the vehicle for retirement investments.
You see, most Americans today simply do not have a plan in place to achieve these goals and therefore are in real danger of finding themselves working as greeters at WalMart, in those most precious golden years. A harsh but realistic consequence for not planning properly.
I need to point out, that this is the mindset we are brought up with. Think about it, why is it that the richest 3% know so much more about finance than the other 97% of us? Is it the Ivy League educations or are they mostly just born into wealth or could it be that only those who pay for it, get access to it?
Maybe its only meant to be taught to the priveledged and not the rest of us, the truth is America makes a lot of money on our general ignorance. The banks know how to make and invest money, we all use banks, we pay their interest on their terms. We pay taxes and are told to invest money into our government designed retirement accounts such as 401K's, etc. Why not, its to their advantage that we use these vehicles for our retirement investment as they take nearly half of it from taxation when its time to retire.
We are conditioned to do things a certain way, to trust the establishment, be good citizens, follow the leaders and live out our happy lives, quitely.
Consider, why we do not have classes in elementary or high school that teach our youth about the concepts of investing or retirement for their own benefit or perhaps world economics so we graduate international leaders who can actually solve our economic problems.
If our children understood finance and the dicipline of earning it and turning it into more through basic investment principles, perhaps there would be less crime and poverty, perhaps children would see a future for themselves that is not apparent to them today.
Only by first building a country where our children are brought up understanding the concept of finance and how it relates to their lives, can we fully begin to heal the damage generations of failed trust in relying on the establishment to do it for us.
Think about this, how many of us actually become engineers or physicists? We are forced to learn geometry, trigonometry, things that the majority of us will never use in real life. I personally, have been a mortgage planner my whole life and have not applied geometry or trigonometry once as an adult. But If I knew then financially, what I have come to learn though experience, wow would I have had a better head start on my own retirement plan.
Consider this scenario, Jon and Rebecca Smith decided to start an investment fund for their son Michael. They open a simple, but strategic, permanent life and tax free investment policy when Michael reaches the age of 10 years. They decide to use their annual tax return as the primary funding source for this policy and they maintain the monthly premium just as they would a regular bill (always consult your trusted insurance professional).
They then continue to build this investment until Michael reaches the age of 18 or graduates from college.
By then they have taught Michael about the purpose of this investment and what it means to his future, he then responsibly takes over the investment and manages it on his own from there.
If we teach our children about the value of saving money and what it can do for their future, it doesn't take them long to grasp the concept. I'm suggesting raising a trust fund child, referring to a wealthy child with no real respect for the concept of earning money, but raising a child with the understanding that they, with proper discipline, can see a viable retirement a decade sooner than we ever could imagine for ourselves today.
Michael has a excellent chance of having all the money he would need to raise a family, build a life for himself and retire tax free because of a simple thing his parents decided to do for him all those years ago.
What would the world be like now, if our parents were encouraged to do this for us?
It would mean that we would have a nation where the majority of us were financially fit and healthy and no one would care for or about social security issues.
We would be self sufficient. We could even help to supplement our parents needs in those later years. Helping them retire to enjoy the remainder of their years. Not scraping away working at a WalMart.
I think the next thing worse than watching our parents retire in poverty is thinking of our children suffering the same fate. The only way to stop the cycle is to make sure, that we do not burden our children, all the while teaching them the principles that they can pass onto their children!
It all starts with us.
This is an interesting commentary and might provoke some thought from its readers, some of you might be saying, well, its too late for me to fix things, I am in my 40's, 50's or beyond.
Folks, its never too late to benefit from the same financial concepts banking institutions gain from. Its never too late to plan for a better future!
Learn as much as you can about how proper insured protection can be there to ease the things that happen to us all eventually. Talk to your financial advisor and insurance professional for more information on this subject and make sure your family is protected!
Live life with Abundance!
Home Equity Line of Credit: When A House is Not Only Your Home
In the social environment today, there are many pressures that require quite a sum of cash to keep up with. Education can be quite expensive, hospital and medical bills are far from cheap, not even home improvements are easy on the pocket. Among many others, these reasons keep home equity line of credit an option to many people who have invested in residential properties.
Home equity line of credit is a pre-approved loan-able amount using a residential property as collateral. It's like having a ready fund that one can withdraw from when in need of cash. Many people consider their houses the largest of their assets. However, because it is the borrower's home that is used as collateral, this fund is normally utilized for major expenses and not for daily cash requirements only.
This is how it works. In a nutshell, an applicant for this type of credit will need to have his home appraised or valued at current market rates. A portion, or percentage, of the total appraised value can potentially be approved as 'creditable' under the plan. This means that the borrower can loan a maximum amount based on the allowable 'credit line'. For example, if the property is valued at $1,000,000, 75% of that value can possibly be approved as potential credit line. Unless there are other mortgages involved in the property, $750,000 can be loaned by the homeowner, once approved.
Needless to say, it is not only the value of the residential property that is taken into consideration in an application for a home equity line of credit. The following points concerning the applicant are also considered by the approving officer:
- Capability to repay the loan
- Current income
- Existing debts / loans and other financial commitments
- Historical credit disciplines
Once approved, a 'draw period' is set, say, a fixed period of 10 years. During this time, the borrower can take money out within the credit line any time he requires. At the end of the period, depending on the plan, the borrower may either renew the credit line, pay back the full value of the loan or begin the 'repayment period'. The repayment period is a fixed measure of time, say, another 10 years, when the borrower can return the borrowed money within the duration of the period.
If you are considering this type of financial credit, do take note of some necessary costs that will be incurred in relation to the Home Equity Line of Credit.
- Property appraisal fees
- Application fees, possibly non-refundable regardless of approval result
- Costs for closing - payment for lawyers, title works and taxes
- Annual fees and transaction fees during the loan term
These fees are another reason why borrowers utilize this credit line for major expenses only.
Remember, the flipside of the advantages and convenience of the home equity credit line
is the possibility of losing your home when you are unable to pay back the loan. So, be careful in your loan decision.
Home equity line of credit is a pre-approved loan-able amount using a residential property as collateral. It's like having a ready fund that one can withdraw from when in need of cash. Many people consider their houses the largest of their assets. However, because it is the borrower's home that is used as collateral, this fund is normally utilized for major expenses and not for daily cash requirements only.
This is how it works. In a nutshell, an applicant for this type of credit will need to have his home appraised or valued at current market rates. A portion, or percentage, of the total appraised value can potentially be approved as 'creditable' under the plan. This means that the borrower can loan a maximum amount based on the allowable 'credit line'. For example, if the property is valued at $1,000,000, 75% of that value can possibly be approved as potential credit line. Unless there are other mortgages involved in the property, $750,000 can be loaned by the homeowner, once approved.
Needless to say, it is not only the value of the residential property that is taken into consideration in an application for a home equity line of credit. The following points concerning the applicant are also considered by the approving officer:
- Capability to repay the loan
- Current income
- Existing debts / loans and other financial commitments
- Historical credit disciplines
Once approved, a 'draw period' is set, say, a fixed period of 10 years. During this time, the borrower can take money out within the credit line any time he requires. At the end of the period, depending on the plan, the borrower may either renew the credit line, pay back the full value of the loan or begin the 'repayment period'. The repayment period is a fixed measure of time, say, another 10 years, when the borrower can return the borrowed money within the duration of the period.
If you are considering this type of financial credit, do take note of some necessary costs that will be incurred in relation to the Home Equity Line of Credit.
- Property appraisal fees
- Application fees, possibly non-refundable regardless of approval result
- Costs for closing - payment for lawyers, title works and taxes
- Annual fees and transaction fees during the loan term
These fees are another reason why borrowers utilize this credit line for major expenses only.
Remember, the flipside of the advantages and convenience of the home equity credit line
is the possibility of losing your home when you are unable to pay back the loan. So, be careful in your loan decision.
Debt and Fraud Cause Repossessions to Soar
House repossessions have soared from the beginning of 2008, people who are hit hardest by these repossessions are borrowers who have borrowed more than they can afford against their property. Other causes that have emerged are fraudulent activity by property developers.
Despite the recent 0.25% cut in base rates, which will reduce a typical £100,000 mortgage by £16 per month, people who are struggling will still feel the pressure. Banks are tightening their lending criteria amid the credit crunch, anyone who has existing large debts will see the cost of credit rising for them, instead of reductions in home loan bills they will feel the pinch even more.
Last year more than 27,000 houses were repossessed by banks and building societies last year, this is the highest number seen since 1999 when 30,000 houses were taken back by institutions.
The Council of Mortgage Lenders (CML) wants to highlight that this number is only a small fraction of the 75,500 people who saw their homes repossessed at the height of the UK’s last property recession. Despite this the CML is expecting to see this figure rise in 2008 as the economy continues to slow, fraudulent deals increase and the credit crunch tightens.
Despite the fact that the housing market has slowed from the end of 2007 there is still much activity below the surface. Usually house repossessions only rise when the market has been inactive for over a year, and anyone who has serious debts have to sell their way out of their debts.
House sales remained steady throughout most of 2007 and only tailed off towards the very end of the year, house sales in December are expected to be 1.05 million, which is only a very slight decrease from 2006’s 1.1 million. Halifax found that house prices in 2007 finished the year up 9.4%, this has been attributed to Scotland’s successful market.
Charcol mortgage broker, Ray Boulger said: "Despite recent interest rate rises, most home buyers are not currently at any risk of losing their homes. I suspect that those getting into difficulty now fall into a few groups who have over-committed themselves.
"There is also evidence of fraudulent activity, particularly in the area of new developments. It would take house prices to seriously dive before the bulk of the market has anything to worry about."
Those who are most at risk of repossession are people who have excessive debts, lenders will repossess people’s homes if their debts are larger than the value of their property. As a result of swiftly increasing house prices over the last few years many people will not face this problem.
However, those who took a 100% mortgage and have fallen behind with payments remain in trouble, other people who many be in trouble are borrowers who began with modest loans and then took advantage of the equity in their property to fund car purchases, holidays or lifestyle choices.
According to the CML 129,000 borrowers have fallen more than three months behind with payments. Any borrowers with poor credit histories who are coming to the end of their affordable credit deals, may find it impossible to replace these agreements. This will mean they see payments increase and may struggle to meet these demands.
Despite the struggling market, mortgage deal demands from customers are still high, mortgage leads companies are still booming.
Many new properties have been overpriced and this has become apparent as the market has softened and the prices have tumbled, and fraudulent backgrounds to these price hikes have been revealed.
If a developer discounted a property by £50,000, for example, off a property selling for £200,000, the flat was still registered with the Land Registry for £200,000 even though the price paid was £50,000 less. This gave new buyers a false impression of the value of properties.
Despite the recent 0.25% cut in base rates, which will reduce a typical £100,000 mortgage by £16 per month, people who are struggling will still feel the pressure. Banks are tightening their lending criteria amid the credit crunch, anyone who has existing large debts will see the cost of credit rising for them, instead of reductions in home loan bills they will feel the pinch even more.
Last year more than 27,000 houses were repossessed by banks and building societies last year, this is the highest number seen since 1999 when 30,000 houses were taken back by institutions.
The Council of Mortgage Lenders (CML) wants to highlight that this number is only a small fraction of the 75,500 people who saw their homes repossessed at the height of the UK’s last property recession. Despite this the CML is expecting to see this figure rise in 2008 as the economy continues to slow, fraudulent deals increase and the credit crunch tightens.
Despite the fact that the housing market has slowed from the end of 2007 there is still much activity below the surface. Usually house repossessions only rise when the market has been inactive for over a year, and anyone who has serious debts have to sell their way out of their debts.
House sales remained steady throughout most of 2007 and only tailed off towards the very end of the year, house sales in December are expected to be 1.05 million, which is only a very slight decrease from 2006’s 1.1 million. Halifax found that house prices in 2007 finished the year up 9.4%, this has been attributed to Scotland’s successful market.
Charcol mortgage broker, Ray Boulger said: "Despite recent interest rate rises, most home buyers are not currently at any risk of losing their homes. I suspect that those getting into difficulty now fall into a few groups who have over-committed themselves.
"There is also evidence of fraudulent activity, particularly in the area of new developments. It would take house prices to seriously dive before the bulk of the market has anything to worry about."
Those who are most at risk of repossession are people who have excessive debts, lenders will repossess people’s homes if their debts are larger than the value of their property. As a result of swiftly increasing house prices over the last few years many people will not face this problem.
However, those who took a 100% mortgage and have fallen behind with payments remain in trouble, other people who many be in trouble are borrowers who began with modest loans and then took advantage of the equity in their property to fund car purchases, holidays or lifestyle choices.
According to the CML 129,000 borrowers have fallen more than three months behind with payments. Any borrowers with poor credit histories who are coming to the end of their affordable credit deals, may find it impossible to replace these agreements. This will mean they see payments increase and may struggle to meet these demands.
Despite the struggling market, mortgage deal demands from customers are still high, mortgage leads companies are still booming.
Many new properties have been overpriced and this has become apparent as the market has softened and the prices have tumbled, and fraudulent backgrounds to these price hikes have been revealed.
If a developer discounted a property by £50,000, for example, off a property selling for £200,000, the flat was still registered with the Land Registry for £200,000 even though the price paid was £50,000 less. This gave new buyers a false impression of the value of properties.
Northern Rock Might be the Place to Borrow
State-owned Northern Rock is set to offer great deals for savers in the coming months, however it is the bank’s existing 800,000 mortgage customers who are the bone of contention.
The main cause of Northern Rock’s swift demise was the home loans offered by the bank, it has been suggested that the bank has too many mortgage holders which needs to be drastically reduced to turn the bank around and get it back to its former glory days.
Northern Rock will no longer be offering its Together Mortgage, a product which has got much negative criticism from the industry, the loan allowed 125% mortgage lending for home buyers. These types of loans are high risk, and at the current height of the credit crunch could be risky from lender’s point of views. It involves a 95% mortgage with a 30% unsecured loan offered on top of this mortgage loan, however any default on payments would be greatly detrimental to the lender.
A Northern Rock spokesman has highlighted that the bank will be conducting business as usual for its existing home loan customers, he said: "The government has confirmed that the company will remain fully open for business, working normal hours and operating as usual, and that customers will not be affected. All branches, call centres and other operations remain open for business."
However customers may hit problems when the tracker deals’s introductory offers or discounted rates they have on their loans come to an end. It is looking likely that the bank will not offer its customers another deal which is anywhere near as competitive as their original deal, this may encourage a number of customers to look to transfer their loans to other providers, which will help lenders, advisers and mortgage lead companies.
Director of Savills Private Finance, Melanie Bien, believes Northern Rock are hoping customers will transfer their debt to other providers. She said: "When you come to remortgage, Northern Rock will be keen to move the business to another lender, so any rate they choose to offer is likely to be uncompetitive."
For many of Northern Rock’s existing mortgage-holders it won’t be a problem for them to re-mortgage their property with another provider. However, customers who took out a Together home loan, borrowing up to 125% of the value of the property may have some trouble finding another lender to take on their debt. The 125% is no longer available from the majority of providers, and many have tightened their criteria as a result of the credit crunch.
Bien gave some advice to Northern Rock’s 200,000 Together mortgage holders, she said: "Your loan-to-value [your mortgage expressed as a percentage of your home's value] should have fallen during the time you have had the loan because house prices have risen, so you have more equity in the property.
"If you are coming to the end of a two-year deal, for example, your home will be worth more than you paid for it, so the LTV will have reduced. This may enable you to shop around for another lender offering a competitive rate of interest. If you can pay down the unsecured element, this will also help."
The Together loan customers also need to consider, they will probably not have build up much, if any, equity, and when the term of their original deal comes to an end, they will be switched to Northern Rock’s SVR product, which is one with the highest interest rates in the market at 7.59%.
Some think that Northern Rock is the last place they want to have their loans with, but on the plus side, every move is being closely scrutinised and any questionable practices will not occur.
The main cause of Northern Rock’s swift demise was the home loans offered by the bank, it has been suggested that the bank has too many mortgage holders which needs to be drastically reduced to turn the bank around and get it back to its former glory days.
Northern Rock will no longer be offering its Together Mortgage, a product which has got much negative criticism from the industry, the loan allowed 125% mortgage lending for home buyers. These types of loans are high risk, and at the current height of the credit crunch could be risky from lender’s point of views. It involves a 95% mortgage with a 30% unsecured loan offered on top of this mortgage loan, however any default on payments would be greatly detrimental to the lender.
A Northern Rock spokesman has highlighted that the bank will be conducting business as usual for its existing home loan customers, he said: "The government has confirmed that the company will remain fully open for business, working normal hours and operating as usual, and that customers will not be affected. All branches, call centres and other operations remain open for business."
However customers may hit problems when the tracker deals’s introductory offers or discounted rates they have on their loans come to an end. It is looking likely that the bank will not offer its customers another deal which is anywhere near as competitive as their original deal, this may encourage a number of customers to look to transfer their loans to other providers, which will help lenders, advisers and mortgage lead companies.
Director of Savills Private Finance, Melanie Bien, believes Northern Rock are hoping customers will transfer their debt to other providers. She said: "When you come to remortgage, Northern Rock will be keen to move the business to another lender, so any rate they choose to offer is likely to be uncompetitive."
For many of Northern Rock’s existing mortgage-holders it won’t be a problem for them to re-mortgage their property with another provider. However, customers who took out a Together home loan, borrowing up to 125% of the value of the property may have some trouble finding another lender to take on their debt. The 125% is no longer available from the majority of providers, and many have tightened their criteria as a result of the credit crunch.
Bien gave some advice to Northern Rock’s 200,000 Together mortgage holders, she said: "Your loan-to-value [your mortgage expressed as a percentage of your home's value] should have fallen during the time you have had the loan because house prices have risen, so you have more equity in the property.
"If you are coming to the end of a two-year deal, for example, your home will be worth more than you paid for it, so the LTV will have reduced. This may enable you to shop around for another lender offering a competitive rate of interest. If you can pay down the unsecured element, this will also help."
The Together loan customers also need to consider, they will probably not have build up much, if any, equity, and when the term of their original deal comes to an end, they will be switched to Northern Rock’s SVR product, which is one with the highest interest rates in the market at 7.59%.
Some think that Northern Rock is the last place they want to have their loans with, but on the plus side, every move is being closely scrutinised and any questionable practices will not occur.
Refinance Home Loan - Overview
The choice to refinance home loan is a major decision for most people. There can be many reasons for restructuring the home mortgage--the details are unique to each individual borrower. Certain common things apply to all home loans--refinanced or original loans. These aspects of the prospective loan should be review and thoroughly understood by the borrower and should be made clear by the lender or broker who is handling the details of the loan. Look for answers to these questions and make certain to get them answered satisfactorily before proceeding with the refinance.
What can the proceeds of the loan be used for?
If you arrange for cash out when you refinance home loan, the cash can be used for any legal purpose. Homeowners often decide to do extensive remodeling or renovation to the home. The funds may be used to send a child to college, or to pay heavy medical expenses. Sometimes cash is used to reduce the amount of unsecured debt, particularly debt with high interest rates attached. Funds have been used to start a business or to invest in interest bearing vehicles that will yield enough income to offset the cost of the loan interest and fees.
How long does the processing take?
The length of time to allow for the home loan refinance to be completed can range from days to weeks. Generally speaking, the longer it takes to process the loan, the less likelihood of the loan going through. Sometimes less than scrupulous lenders will drag out the process for an inordinate period of time so that they will be able to collect the loan finder’s fee. The important thing is to try to prepare as thoroughly as possible before beginning the process. This can include researching lenders, correcting a credit report and assembling needed documentation.
How much can I borrow?
The amount that you can borrow depends on the market value of the house, the type of loan that you apply for and the equity that is available. The refinance home loan amount can also be affected by your credit score, the general economy of the region and the nation and by other factors beyond your control. It is true that almost anyone can be financed these days, but the question remains whether you want or should borrow as much as you are eligible to borrow.
Borrowing more than 80% of the value of the home can result in you being charged Private Mortgage Insurance (PMI) as a higher risk loan.
How do I find a lender?
Dozens of lenders for refinance home loan can be found in any large telephone directory and even more if you look online. It is important to be cautious about selecting a lender. Look for one that is experienced and knowledgeable in the type of loan that you will be requesting. A lender that has a good reputation with other clients and with professional organizations such as the Better Business Bureau is a good choice in many instances. If you get a referral from a family member that you trust, that is also a great recommendation.
What can the proceeds of the loan be used for?
If you arrange for cash out when you refinance home loan, the cash can be used for any legal purpose. Homeowners often decide to do extensive remodeling or renovation to the home. The funds may be used to send a child to college, or to pay heavy medical expenses. Sometimes cash is used to reduce the amount of unsecured debt, particularly debt with high interest rates attached. Funds have been used to start a business or to invest in interest bearing vehicles that will yield enough income to offset the cost of the loan interest and fees.
How long does the processing take?
The length of time to allow for the home loan refinance to be completed can range from days to weeks. Generally speaking, the longer it takes to process the loan, the less likelihood of the loan going through. Sometimes less than scrupulous lenders will drag out the process for an inordinate period of time so that they will be able to collect the loan finder’s fee. The important thing is to try to prepare as thoroughly as possible before beginning the process. This can include researching lenders, correcting a credit report and assembling needed documentation.
How much can I borrow?
The amount that you can borrow depends on the market value of the house, the type of loan that you apply for and the equity that is available. The refinance home loan amount can also be affected by your credit score, the general economy of the region and the nation and by other factors beyond your control. It is true that almost anyone can be financed these days, but the question remains whether you want or should borrow as much as you are eligible to borrow.
Borrowing more than 80% of the value of the home can result in you being charged Private Mortgage Insurance (PMI) as a higher risk loan.
How do I find a lender?
Dozens of lenders for refinance home loan can be found in any large telephone directory and even more if you look online. It is important to be cautious about selecting a lender. Look for one that is experienced and knowledgeable in the type of loan that you will be requesting. A lender that has a good reputation with other clients and with professional organizations such as the Better Business Bureau is a good choice in many instances. If you get a referral from a family member that you trust, that is also a great recommendation.
Beat the Mortgage Crunch
Beating the mortgage crunch may seem like an uphill task for many homeowners but industry sources insist that it always pays to seek independent advice from a mortgage broker as they can advise on products from the whole of the market.
Currently, homeowners and lenders are raising their rates in the wake of Bradford & Bingley crisis as the mortgage market continue to suffer a clampdown.
Market experts forecast that total mortgage lending could be halved over the year.
This week has seen both Alliance & Leicester and Nationwide have increased their fixed rate mortgages by up to 0.25% and 0.3% respectively. Coupled with a high LIBOR, the rate at which banks lend to one another means that the future is poor for the estimated 1.4 million people whose fixed-term deal will draw to a close this year. It seems that April's interest rate cut has done little to allay their fears.
The average homeowner with a £150,000 mortgage will now have to pay between £60 and £120 a month extra for a new deal. For this reason, analysts believe that it is the best time for people to organise their finances.
However, it is not all gloom, according to market analysts; there are still some good deals out there. HSBC is currently extending its Rate Matcher mortgage to all UK homeowners. For borrowers and properties that meet the lender's criteria it will match any expiring fixed rate above 4.54%.
The arrangement fee the customer pays will depend on the rate and the size of the loan. However, the deal is only available directly and not through brokers.
Market analysts are suggesting that in order for borrowers to improve their chances of getting a good mortgage deal, they will need to reduce their loan-to-value (LTV) ratio as much as possible. Reports show that many lenders are now only offering their best rates to people borrowing less than 75% of the property's value.
First-time buyers would be well advised to ask their parents for help with building a deposit and put down as much as possible. On the other hand, those who are remortgaging and have savings may need to plough some of them into your mortgage to reduce the LTV.
According to industry sources, first-time buyers who typically need to borrow a higher proportion of their property's value than remortgagers, are currently finding that good deals are more difficult to secure than ever, with many 100% loans disappearing in recent weeks.
However, the good news is that some lenders will still lend 100% of a property's value if a parental guarantor steps in to help. This will enable a borrower to take on a bigger mortgage because the lender takes their parents' income into account when deciding how much they can borrow. The parent can then be called upon to repay the debt if their offspring defaults.
Market experts further recommend that homeowners who are set to remortgage this year should start thinking about it now as some lenders will allow a product to be reserved for up to six months in advance.
Other measures that could help homeowners include taking advantage of the Government's Rent-A-Room scheme which means they can receive up to £4,250 in rent each year before paying any tax on this income. In other words, homeowners with spare rooms in their property should consider taking in a lodger as it will boost their finances.
Additional suggestions for homeowners whose mortgage repayments look set to shoot up when their fixed deal expires, is to cut down on their spending.
Experts also recommend that homeowners take time to log on to a comparison site such as uSwitch or Moneysupermarket to make sure that they are getting the best deal possible on energy, phone and broadband bills.
It also pays to make a budget and stick to it, they add, “you'd be surprised how much you can save by cutting out takeaway coffees, unused gym subscriptions and unnecessary taxi journeys.”
In conclusion, they add that in order to secure a competitive mortgage deal, a good credit record is vital because lenders are getting fussier about who they lend to in the wake of the credit crunch.
Alternatively, homeowners could opt for mortgages where repayments go up or down in line with changes to the Bank of England base rate, also known as trackers.
Currently, homeowners and lenders are raising their rates in the wake of Bradford & Bingley crisis as the mortgage market continue to suffer a clampdown.
Market experts forecast that total mortgage lending could be halved over the year.
This week has seen both Alliance & Leicester and Nationwide have increased their fixed rate mortgages by up to 0.25% and 0.3% respectively. Coupled with a high LIBOR, the rate at which banks lend to one another means that the future is poor for the estimated 1.4 million people whose fixed-term deal will draw to a close this year. It seems that April's interest rate cut has done little to allay their fears.
The average homeowner with a £150,000 mortgage will now have to pay between £60 and £120 a month extra for a new deal. For this reason, analysts believe that it is the best time for people to organise their finances.
However, it is not all gloom, according to market analysts; there are still some good deals out there. HSBC is currently extending its Rate Matcher mortgage to all UK homeowners. For borrowers and properties that meet the lender's criteria it will match any expiring fixed rate above 4.54%.
The arrangement fee the customer pays will depend on the rate and the size of the loan. However, the deal is only available directly and not through brokers.
Market analysts are suggesting that in order for borrowers to improve their chances of getting a good mortgage deal, they will need to reduce their loan-to-value (LTV) ratio as much as possible. Reports show that many lenders are now only offering their best rates to people borrowing less than 75% of the property's value.
First-time buyers would be well advised to ask their parents for help with building a deposit and put down as much as possible. On the other hand, those who are remortgaging and have savings may need to plough some of them into your mortgage to reduce the LTV.
According to industry sources, first-time buyers who typically need to borrow a higher proportion of their property's value than remortgagers, are currently finding that good deals are more difficult to secure than ever, with many 100% loans disappearing in recent weeks.
However, the good news is that some lenders will still lend 100% of a property's value if a parental guarantor steps in to help. This will enable a borrower to take on a bigger mortgage because the lender takes their parents' income into account when deciding how much they can borrow. The parent can then be called upon to repay the debt if their offspring defaults.
Market experts further recommend that homeowners who are set to remortgage this year should start thinking about it now as some lenders will allow a product to be reserved for up to six months in advance.
Other measures that could help homeowners include taking advantage of the Government's Rent-A-Room scheme which means they can receive up to £4,250 in rent each year before paying any tax on this income. In other words, homeowners with spare rooms in their property should consider taking in a lodger as it will boost their finances.
Additional suggestions for homeowners whose mortgage repayments look set to shoot up when their fixed deal expires, is to cut down on their spending.
Experts also recommend that homeowners take time to log on to a comparison site such as uSwitch or Moneysupermarket to make sure that they are getting the best deal possible on energy, phone and broadband bills.
It also pays to make a budget and stick to it, they add, “you'd be surprised how much you can save by cutting out takeaway coffees, unused gym subscriptions and unnecessary taxi journeys.”
In conclusion, they add that in order to secure a competitive mortgage deal, a good credit record is vital because lenders are getting fussier about who they lend to in the wake of the credit crunch.
Alternatively, homeowners could opt for mortgages where repayments go up or down in line with changes to the Bank of England base rate, also known as trackers.
Bradford & Bingley Shocking Debt Woes
Today’s announcement that Bradford & Bingley, Britain’s biggest buy-to-let mortgage lender had already suffered huge losses in the first few months of the year caught many by surprise.
However, it is the lender's bad debt figures, located towards the back of its 11-page announcement, which was a point of concern.
Reports indicate that the buy-to-let mortgage lender is being crippled by the more than £400m worth of loans which it bought within the past 18 months along with just over £600m of potentially failing loans it made itself.
However, Bernard Clarke of the Council of Mortgage Lenders [CML] said, “It's hardly surprising to see a higher default rate with lending to riskier customers,”
With the current slump in house prices and growing unemployment lenders and brokers can no longer hide the fact that borrowers who are not credit worthy ended up with the loans that is now costing the lending market.
According to their records, 4.47% of the mortgages that were bought up are now in arrears. Their value is even greater, at just over 5% of the total sum lent by GMAC and Kensington.
However, in what seems to be a total contrast to popular belief, the buy-to-let loans on the B&B’s books is in fact some of the most secure. Among those bought by the bank, 3.52% are in arrears, along with just 1.3% of those lent by the B&B itself.
But of the self-certificated loans that have been bought, 4.3% are now three or more months behind with repayment.
In addition to that, another 1,006 mortgages lumped into the B&B's "other" category, presumably comprising even riskier loans, are 5.69% in arrears.
By the end of April, 2.16% of all of the B&B's mortgage customers were either in arrears by three months or more, or had been repossessed.
That was up sharply from the position at the end of last December when only 1.63% of mortgage customers were in that position. The figure was significantly worse than the industry average, which stood at just 1.1% in the second half of last year.
In 2006 B&B decided to expand its lending by the simple method of buying existing stocks of loans from other lenders.
In December 2006 it agreed to buy up to £12bn worth of mortgages, spread over the next three years, from GMAC, the finance arm of General Motors that specialised in buy-to-let mortgages, the B&B's own favourite type of loan.
Reports further show that a few months later it bought a further £2bn of loans from another lender, Kensington, to be spread over two years.
These too were buy-to-let mortgages, as well as “prime self-certificated” loans where borrowers did not have to provide much evidence of their earnings, or their ability to repay their loans, to get the mortgage in the first place.
Initially, during the time of its deal with Kensington, the B&B said it would take the loans in monthly tranches, after scrutinising them to make sure they were “in line with strict credit parameters.”
However, their level of scrutiny for loan applications appears questionable after the B&B revealed that arrears among the acquired loans, especially those from GMAC, have turned out to be far worse than expected.
The B&B says it is now going to counteract this emerging problem by reducing the number of mortgages it will buy from GMAC to the legal minimum required by its deal.
This year has seen many mortgage lenders hit hard by the credit crunch because the continued slowdown in the economy, and higher household bills, has affected quickly the ability of home owners to repay their mortgages.
However, it is the lender's bad debt figures, located towards the back of its 11-page announcement, which was a point of concern.
Reports indicate that the buy-to-let mortgage lender is being crippled by the more than £400m worth of loans which it bought within the past 18 months along with just over £600m of potentially failing loans it made itself.
However, Bernard Clarke of the Council of Mortgage Lenders [CML] said, “It's hardly surprising to see a higher default rate with lending to riskier customers,”
With the current slump in house prices and growing unemployment lenders and brokers can no longer hide the fact that borrowers who are not credit worthy ended up with the loans that is now costing the lending market.
According to their records, 4.47% of the mortgages that were bought up are now in arrears. Their value is even greater, at just over 5% of the total sum lent by GMAC and Kensington.
However, in what seems to be a total contrast to popular belief, the buy-to-let loans on the B&B’s books is in fact some of the most secure. Among those bought by the bank, 3.52% are in arrears, along with just 1.3% of those lent by the B&B itself.
But of the self-certificated loans that have been bought, 4.3% are now three or more months behind with repayment.
In addition to that, another 1,006 mortgages lumped into the B&B's "other" category, presumably comprising even riskier loans, are 5.69% in arrears.
By the end of April, 2.16% of all of the B&B's mortgage customers were either in arrears by three months or more, or had been repossessed.
That was up sharply from the position at the end of last December when only 1.63% of mortgage customers were in that position. The figure was significantly worse than the industry average, which stood at just 1.1% in the second half of last year.
In 2006 B&B decided to expand its lending by the simple method of buying existing stocks of loans from other lenders.
In December 2006 it agreed to buy up to £12bn worth of mortgages, spread over the next three years, from GMAC, the finance arm of General Motors that specialised in buy-to-let mortgages, the B&B's own favourite type of loan.
Reports further show that a few months later it bought a further £2bn of loans from another lender, Kensington, to be spread over two years.
These too were buy-to-let mortgages, as well as “prime self-certificated” loans where borrowers did not have to provide much evidence of their earnings, or their ability to repay their loans, to get the mortgage in the first place.
Initially, during the time of its deal with Kensington, the B&B said it would take the loans in monthly tranches, after scrutinising them to make sure they were “in line with strict credit parameters.”
However, their level of scrutiny for loan applications appears questionable after the B&B revealed that arrears among the acquired loans, especially those from GMAC, have turned out to be far worse than expected.
The B&B says it is now going to counteract this emerging problem by reducing the number of mortgages it will buy from GMAC to the legal minimum required by its deal.
This year has seen many mortgage lenders hit hard by the credit crunch because the continued slowdown in the economy, and higher household bills, has affected quickly the ability of home owners to repay their mortgages.
How To Pay For That Next Home Improvement Project
How To Pay For That Next Home Improvement Project
Most home owners will tell you that there the work on a house is never done, whether you've just moved in or whether you've been living there for forty years. Almost all home owners have a list of home improvements they'd love to accomplish but a lack of money to pay for these improvements often means that projects are put on hold for years.
That's a problem, especially when it comes to home improvements that are necessary such as replacing a new roof, repairing or replacing plumbing or electrical work or simply putting in better windows and door.
Here are a few ways you can borrow or raise the money you need to pay for those home improvements.
Home Equity Line of Credit - Known as a HELOC this is a "secure" loan from a bank or credit union, which means you are using your home as collateral on the loan. If you bought your home for $100,000 five years ago but now you could sell it for $150,000 then you essentially have $50,000 in equity in your home. A bank might give you a Home Equity Line of Credit for that $50,000. You can then write checks for some or all of that money and pay the money back over time with interest.
Home Equity Loan - Similar to a Home Equity Line of Credit, a Home Equity Loan is usually for a fixed amount of money and is given all at once. The interest rates on Home Equity Loans and Home Equity Lines of Credit often differ so a banker or loan officer can tell you which one is best for you.
Hardware Store Credit Cards - I know, opening another credit card isn't always the best thing to do, but many large hardware stores offer zero percent interest rates and even discounts on purchasing home improvement products when you use their hardware store credit card. If you're going to use this method, you should probably have your project planned out in advance and have a pretty good idea of how you're going to pay it off. The discount is often only good on the first purchase and the low interest rate doesn't late forever.
Sell Old Home Improvement Materials - If you're remodeling your bathroom you could almost definitely sell those old cabinets and maybe even that old tile to raise some money which could help pay for your new bathroom features. Remember that what is old to you may be new to someone else. I have some neighbors who actually did this together. One neighbor tore out all his kitchen cabinets and then sold them to another neighbor who installed them all in his garage. The seller got some money for what he would have thrown away and the buyer got some great cabinets for his garage at a fraction of the cost of what new cabinets would have cost.
Be smart when pricing out and paying for home improvements. With a little creativity and the proper knowledge you can finance those home improvement projects and fix up your home without breaking the bank!
Most home owners will tell you that there the work on a house is never done, whether you've just moved in or whether you've been living there for forty years. Almost all home owners have a list of home improvements they'd love to accomplish but a lack of money to pay for these improvements often means that projects are put on hold for years.
That's a problem, especially when it comes to home improvements that are necessary such as replacing a new roof, repairing or replacing plumbing or electrical work or simply putting in better windows and door.
Here are a few ways you can borrow or raise the money you need to pay for those home improvements.
Home Equity Line of Credit - Known as a HELOC this is a "secure" loan from a bank or credit union, which means you are using your home as collateral on the loan. If you bought your home for $100,000 five years ago but now you could sell it for $150,000 then you essentially have $50,000 in equity in your home. A bank might give you a Home Equity Line of Credit for that $50,000. You can then write checks for some or all of that money and pay the money back over time with interest.
Home Equity Loan - Similar to a Home Equity Line of Credit, a Home Equity Loan is usually for a fixed amount of money and is given all at once. The interest rates on Home Equity Loans and Home Equity Lines of Credit often differ so a banker or loan officer can tell you which one is best for you.
Hardware Store Credit Cards - I know, opening another credit card isn't always the best thing to do, but many large hardware stores offer zero percent interest rates and even discounts on purchasing home improvement products when you use their hardware store credit card. If you're going to use this method, you should probably have your project planned out in advance and have a pretty good idea of how you're going to pay it off. The discount is often only good on the first purchase and the low interest rate doesn't late forever.
Sell Old Home Improvement Materials - If you're remodeling your bathroom you could almost definitely sell those old cabinets and maybe even that old tile to raise some money which could help pay for your new bathroom features. Remember that what is old to you may be new to someone else. I have some neighbors who actually did this together. One neighbor tore out all his kitchen cabinets and then sold them to another neighbor who installed them all in his garage. The seller got some money for what he would have thrown away and the buyer got some great cabinets for his garage at a fraction of the cost of what new cabinets would have cost.
Be smart when pricing out and paying for home improvements. With a little creativity and the proper knowledge you can finance those home improvement projects and fix up your home without breaking the bank!
Brits Lose Interest in Property
Two thirds of people in Britain will not buy property in the next 12 months, according to a new survey.
The poll by myfinances.co.uk suggests that falling house prices and the weakening economy has hit would be homebuyers. The study further shows the scale at which Brits have now lost their appetite for property.
Just 9% of those polled said they were planning to buy in the coming year, while a quarter were unsure. Of prospective first-time buyers, those either renting or living with their parents, only 5.6% said they would buy in the coming 12 months.
Some 11% of first-timers said they were unsure and two-thirds said they would not buy.
Homeowners, however, were more circumspect about the chances of moving up the property ladder.
However, a poll commissioned earlier by the BBC discovered that more people want house prices to fall instead of rising. The ICM survey revealed that only one fifth of people want house prices to rise - fewer than the number of people who want them to fall.
The poll of 1,005 people found that only 22% said they wanted prices to go up while 28% said they wanted house prices to fall, however, figures from the survey also show that 46% of people who responded to the poll said they wanted house prices to stay the same.
But in the study by myfinances.co.uk, 42% of homeowners said they would not buy in the coming year, 22% said they were not sure, and 16% said they buy.
When quizzed on where they felt house prices were heading, just 6% thought property values would hold steady, while all others joined the consensus of experts that house prices will fall.
A third of people polled expected house prices to fall up to 5%. The poll shows that 27% of those who took part in the study believed house prices would drop between 5% and 10%, while 24% expect property values to fall between 10% and 15%.
At the same time 9% of respondents expected house price to fall over 20%. The findings by the BBC poll however, cast doubt on whether the political and economic damage done by falling prices is as serious as has been feared.
In the BBC survey, respondents were asked if a fall in house prices of more than 10% would make them more likely to cut back on household spending such as clothes, leisure and groceries.
More than 60% of people said it would either make no difference or would make them likely to spend more. Only a minority 38% said it would make them more likely to cut back.
The BBC survey also found that nearly a third of homeowners have no mortgage on their homes, meaning no risk of negative equity. The poll was commissioned after makers of a new BBC2 TV series The Truth about Property came across a surprisingly large number of people who wanted house prices to drop.
The first part of the series investigates the extent to which Britain's homeowners are “crashproof”- meaning they could withstand or even benefit from price falls.
Economists are concerned that if prices fall too quickly it may knock consumer confidence, already at its lowest for 15 years, leading to reduced spending that could worsen the current economic slowdown.
The poll by myfinances.co.uk suggests that falling house prices and the weakening economy has hit would be homebuyers. The study further shows the scale at which Brits have now lost their appetite for property.
Just 9% of those polled said they were planning to buy in the coming year, while a quarter were unsure. Of prospective first-time buyers, those either renting or living with their parents, only 5.6% said they would buy in the coming 12 months.
Some 11% of first-timers said they were unsure and two-thirds said they would not buy.
Homeowners, however, were more circumspect about the chances of moving up the property ladder.
However, a poll commissioned earlier by the BBC discovered that more people want house prices to fall instead of rising. The ICM survey revealed that only one fifth of people want house prices to rise - fewer than the number of people who want them to fall.
The poll of 1,005 people found that only 22% said they wanted prices to go up while 28% said they wanted house prices to fall, however, figures from the survey also show that 46% of people who responded to the poll said they wanted house prices to stay the same.
But in the study by myfinances.co.uk, 42% of homeowners said they would not buy in the coming year, 22% said they were not sure, and 16% said they buy.
When quizzed on where they felt house prices were heading, just 6% thought property values would hold steady, while all others joined the consensus of experts that house prices will fall.
A third of people polled expected house prices to fall up to 5%. The poll shows that 27% of those who took part in the study believed house prices would drop between 5% and 10%, while 24% expect property values to fall between 10% and 15%.
At the same time 9% of respondents expected house price to fall over 20%. The findings by the BBC poll however, cast doubt on whether the political and economic damage done by falling prices is as serious as has been feared.
In the BBC survey, respondents were asked if a fall in house prices of more than 10% would make them more likely to cut back on household spending such as clothes, leisure and groceries.
More than 60% of people said it would either make no difference or would make them likely to spend more. Only a minority 38% said it would make them more likely to cut back.
The BBC survey also found that nearly a third of homeowners have no mortgage on their homes, meaning no risk of negative equity. The poll was commissioned after makers of a new BBC2 TV series The Truth about Property came across a surprisingly large number of people who wanted house prices to drop.
The first part of the series investigates the extent to which Britain's homeowners are “crashproof”- meaning they could withstand or even benefit from price falls.
Economists are concerned that if prices fall too quickly it may knock consumer confidence, already at its lowest for 15 years, leading to reduced spending that could worsen the current economic slowdown.
Bank Owned Foreclosures
Did you know some smart people are raking money from bank owned foreclosures? That is exactly true. Foreclosures are at all time high due to the US subprime mortgage meltdown. If you know how to find these properties that have been foreclosed, then chances are you could also do the same. As the news indicates, there are so many home and real estate properties being foreclosed both by the private sector and the government.
To find these properties, the easiest way is to go online and search for these sites that offer such services. Some of these are even free and you can apply to receive a steady stream of listings where you can find and choose which state or county you are interested in. But knowing some basic steps can get you going smoother on your searches. It is unfortunate that some people are making money out of other peoples misery or financial misfortune.
Some steps you may need to do are to contact a broker and try to ask several questions on how to avail of and purchase a foreclosed property. You may need to make some relationships with an REO broker and these lists of brokers can be found thru your local board of realtors. Another thing you need to know is to locate properties that need some works as banks would give big discounts. And the best thing is to inform your broker that you would appreciate a quick call is something comes up.
The other way of doing this is to go directly to your local bank branch and ask for any foreclosed properties that are for sale. Sometimes banks sell directly to individual buyers even without a broker. They are not mostly done at the branch but an accounts executive could refer you to the main corporate head office where you will get proper directions. If this option is not promising, you can contact the main corporate head office and locate the officer in charge of selling foreclosed properties in your area.
So finding these properties is not always easy but going online to search these listings of properties can be fruitful. There are many sites who offer listing services that you can avail of. Bank owned foreclosures or what they commonly call REO can get you the best deal if you are in the market for a home.
These are properties that have been returned to the lender because of nonpayment of their mortgage. The banks or lending institutions are not realtors and the cost of maintaining and holding these properties is costly.
If you want to be like those smart people who invest on bank owned foreclosures, it is not hard to do. All you have to do is locate or find the listings for your area start the process. Foreclosed properties are both good as a home to live and as an investment.
To find these properties, the easiest way is to go online and search for these sites that offer such services. Some of these are even free and you can apply to receive a steady stream of listings where you can find and choose which state or county you are interested in. But knowing some basic steps can get you going smoother on your searches. It is unfortunate that some people are making money out of other peoples misery or financial misfortune.
Some steps you may need to do are to contact a broker and try to ask several questions on how to avail of and purchase a foreclosed property. You may need to make some relationships with an REO broker and these lists of brokers can be found thru your local board of realtors. Another thing you need to know is to locate properties that need some works as banks would give big discounts. And the best thing is to inform your broker that you would appreciate a quick call is something comes up.
The other way of doing this is to go directly to your local bank branch and ask for any foreclosed properties that are for sale. Sometimes banks sell directly to individual buyers even without a broker. They are not mostly done at the branch but an accounts executive could refer you to the main corporate head office where you will get proper directions. If this option is not promising, you can contact the main corporate head office and locate the officer in charge of selling foreclosed properties in your area.
So finding these properties is not always easy but going online to search these listings of properties can be fruitful. There are many sites who offer listing services that you can avail of. Bank owned foreclosures or what they commonly call REO can get you the best deal if you are in the market for a home.
These are properties that have been returned to the lender because of nonpayment of their mortgage. The banks or lending institutions are not realtors and the cost of maintaining and holding these properties is costly.
If you want to be like those smart people who invest on bank owned foreclosures, it is not hard to do. All you have to do is locate or find the listings for your area start the process. Foreclosed properties are both good as a home to live and as an investment.
Mortgage Refinancing Advantages and Info
One of the advantages you may find in a Connecticut mortgage refinancing is tax savings. Searching or looking for the right mortgage is done in a multi step process. What you need to do first is to decide and be firm on what your objective is. After that you need to familiarize yourself with the different types of mortgage rates, mortgage loans and the tax consequences of home ownership. Connecticut mortgage refinancing can lead to tax bill savings.
Some people prefer to independently do it themselves but if you want to it easier on yourself, you may choose to avail the services of a mortgage professional. Some of these agencies offer free quotes and calculators online. A mortgage professional can help you every step of the way including an in depth information and all the necessary and useful mortgage calculators. Doing it yourself entails a lot of paper work as well as hard work. You may also need to review all the documents.
When you own a piece of property or home in Connecticut, it can lead to tax bill savings. This is possible because the IRS allows you to deduct the interest and points paid on mortgage debt plus property taxes. Most of the time you will be getting the highest deductions during the first years of home ownership. But you have to remember that points paid a purchase mortgage can be deducted upfront but points paid on a refinance are handled differently. These will be deducted over the life of the loan.
By virtue of the fixed mortgage rate, you are secure in the knowledge that the interest rate is going to stay on unchanged for the duration of the fixed rate mortgage. A fixed rate mortgages in Connecticut are suitable for borrowers that are in need of a laid back structure of mortgage. As the name implies, a fixed rate mortgage is one on which the interest rate is fixed and set for the duration of the loan.
If you refinance for a lower rate but it is adjustable, you could wind up paying more. You should only do this if you carry a lower fixed rate on your mortgage loan refinancing. Simply stated, home equity is the difference between how much your home is worth and how much you owe. Look for the lowest payment, but be cautious about interest-only mortgages and option ARMs. If, after funding, you rely too much on the lowest payment option, you'll delay repayment of the debt. This can lead to higher interest costs and a slower build-up of home equity.
It is best for you to seek the help of Connecticut mortgage companies as they specialize in the state realty sector. So for your Connecticut mortgage refinancing, you may try and consider seeking professional help instead of doing yourself.
Some people prefer to independently do it themselves but if you want to it easier on yourself, you may choose to avail the services of a mortgage professional. Some of these agencies offer free quotes and calculators online. A mortgage professional can help you every step of the way including an in depth information and all the necessary and useful mortgage calculators. Doing it yourself entails a lot of paper work as well as hard work. You may also need to review all the documents.
When you own a piece of property or home in Connecticut, it can lead to tax bill savings. This is possible because the IRS allows you to deduct the interest and points paid on mortgage debt plus property taxes. Most of the time you will be getting the highest deductions during the first years of home ownership. But you have to remember that points paid a purchase mortgage can be deducted upfront but points paid on a refinance are handled differently. These will be deducted over the life of the loan.
By virtue of the fixed mortgage rate, you are secure in the knowledge that the interest rate is going to stay on unchanged for the duration of the fixed rate mortgage. A fixed rate mortgages in Connecticut are suitable for borrowers that are in need of a laid back structure of mortgage. As the name implies, a fixed rate mortgage is one on which the interest rate is fixed and set for the duration of the loan.
If you refinance for a lower rate but it is adjustable, you could wind up paying more. You should only do this if you carry a lower fixed rate on your mortgage loan refinancing. Simply stated, home equity is the difference between how much your home is worth and how much you owe. Look for the lowest payment, but be cautious about interest-only mortgages and option ARMs. If, after funding, you rely too much on the lowest payment option, you'll delay repayment of the debt. This can lead to higher interest costs and a slower build-up of home equity.
It is best for you to seek the help of Connecticut mortgage companies as they specialize in the state realty sector. So for your Connecticut mortgage refinancing, you may try and consider seeking professional help instead of doing yourself.
The Value of a Home Appraisal
Unless you are a professional real estate broker with a degree, you may only have a small idea about what happens in a typical real estate exchange. A person could get really confused when a realtor starts throwing out terms like "terms of loans", "exchange process", "investments", "ARM's" and the processes that come with buying or selling a home. A homeowner or home buyer who is researching these and many other terms may forget a key element in the selling or buying process. And that is making sure you get an accurate appraisal. This article will outline the key elements and the importance of an accurate appraisal process. Maybe it will help you find the right market for your home.
First off, an appraisal is basically a trained opinion about a property. Remember, everyone is trained differently so the appraisal decision can vary substantially. Some people are color-blind, which makes them see things differently than others. With an appraisal, several factors determine what that opinion ultimately is. In the end, the appraisal will conclude (hopefully accurately) what the market value is of your property. Sometimes the final figure is not well-defined. A well-trained appraiser will know where to find someone who can judge accurately different parts of the proper to make an accurate determination and opinion of what the property value is in your market area. This is where a home inspector enters the equation. This professional is trained to unveil areas that have been, shall we say, swept under the rug.
Every mortgage company requires an appraisal before they decide terms of a pending loan. Sometimes an appraisal may even be required during the property insurance process. An appraiser will view several external factors that relate to the property in his quest to determine his most accurate opinion.
Various factors affect the housing market and an appraiser's estimates will most likely be based on these factors. An appraiser will take into account the neighborhood and recent home sales of properties similar to yours.
By receiving an accurate appraisal, you will gain valuable information in knowing the value of your home, the outside factors that determine that value, and your own needs. This opinion will help you find ways of increasing that value plus it will help you determine when it may be a good time to sell.
First off, an appraisal is basically a trained opinion about a property. Remember, everyone is trained differently so the appraisal decision can vary substantially. Some people are color-blind, which makes them see things differently than others. With an appraisal, several factors determine what that opinion ultimately is. In the end, the appraisal will conclude (hopefully accurately) what the market value is of your property. Sometimes the final figure is not well-defined. A well-trained appraiser will know where to find someone who can judge accurately different parts of the proper to make an accurate determination and opinion of what the property value is in your market area. This is where a home inspector enters the equation. This professional is trained to unveil areas that have been, shall we say, swept under the rug.
Every mortgage company requires an appraisal before they decide terms of a pending loan. Sometimes an appraisal may even be required during the property insurance process. An appraiser will view several external factors that relate to the property in his quest to determine his most accurate opinion.
Various factors affect the housing market and an appraiser's estimates will most likely be based on these factors. An appraiser will take into account the neighborhood and recent home sales of properties similar to yours.
By receiving an accurate appraisal, you will gain valuable information in knowing the value of your home, the outside factors that determine that value, and your own needs. This opinion will help you find ways of increasing that value plus it will help you determine when it may be a good time to sell.
Consider a Current Account Mortgage
Buying a property is one of the most stressful and arduous tasks one can ever encounter, it does come with some huge blessings and an unquestionable sense of achievement. All positive emotions and sentiments fostered may become overshadowed in the event of making a wrong choice. If you have gone with your whimsical nature and taken out the first mortgage that came your way you may find you are paying well over the odds for the privilege of borrowing from a particular lender.
These are all the things that need to be taken into consideration prior to your purchase, that way they can be dealt with sooner rather than later and any nuances can be successfully ironed out before you make a huge financial commitment to both a mortgage and a home. When taking out any form of a mortgage it really is important to remember that it is a purchase and not simply a means to an end. If you don't take the time to ensure that the product is in fact the one that you want and that it is the right one for you it will simply be a means to your end, financially speaking that is.
The credit crunch has had a number of affects, for some it has forced them to ponder on whether the purchase of a property at the moment is financially viable. After careful consideration, this group have opted not to take out the massive loan that is a mortgage and have chosen to put off moving up the property ladder, others in this group have opted to continue renting rather than placing their foot on the property ladder.
Others have seen the ripples of the credit crunch as the beginning of the end for them and their dream of owning their patch of UK land, it is as if these individuals believe the ability to own is slipping out of their fingers and if they don't grab at the opportunity now they will never get another chance to do so. This group of home-hungry-hunters have their eyes on the prize and are determined by hook or by crook to get it.
This may be an admirable trait for marathon runners who need the steely determination to complete the task at hand, not so admirable when it comes to making large purchases. Being blind-sighted by home-ownership can land you in some serious financial hot water, rather taking into consideration your needs, your desires and your limitations you can still reach the goal of home-ownership without it costing you more than you can afford.
One type of mortgage that received a lot of publicity a few years ago but has since drifted into relative obscurity is the current account mortgage. This type of mortgage allows you to combine your mortgage loan with your current account allowing you more freedom with payments. In essence it is a huge overdraft with all the benefits attached. If you want to make more payments one month and less another that is allowed without penalisation.
This type of mortgage comes as a blessing to those that have a relatively low income but regularly receive commission that hugely increases their take-home wage. As most mortgage lenders don't take your ‘potential’ income into consideration and only that which is stipulated in your contract it can be hard for such individuals to source a mortgage with the flexibility they need.
With a mortgage of this kind it might be horrific when you look at your statement as if your mortgage is £130,000 and you have just been paid to the amount of £1,233 then your balance will show -£128,767! As long as your heart doesn't keep skipping a beat each time you receive your monthly statement you’ll appreciate all the benefits of such a mortgage.
These are all the things that need to be taken into consideration prior to your purchase, that way they can be dealt with sooner rather than later and any nuances can be successfully ironed out before you make a huge financial commitment to both a mortgage and a home. When taking out any form of a mortgage it really is important to remember that it is a purchase and not simply a means to an end. If you don't take the time to ensure that the product is in fact the one that you want and that it is the right one for you it will simply be a means to your end, financially speaking that is.
The credit crunch has had a number of affects, for some it has forced them to ponder on whether the purchase of a property at the moment is financially viable. After careful consideration, this group have opted not to take out the massive loan that is a mortgage and have chosen to put off moving up the property ladder, others in this group have opted to continue renting rather than placing their foot on the property ladder.
Others have seen the ripples of the credit crunch as the beginning of the end for them and their dream of owning their patch of UK land, it is as if these individuals believe the ability to own is slipping out of their fingers and if they don't grab at the opportunity now they will never get another chance to do so. This group of home-hungry-hunters have their eyes on the prize and are determined by hook or by crook to get it.
This may be an admirable trait for marathon runners who need the steely determination to complete the task at hand, not so admirable when it comes to making large purchases. Being blind-sighted by home-ownership can land you in some serious financial hot water, rather taking into consideration your needs, your desires and your limitations you can still reach the goal of home-ownership without it costing you more than you can afford.
One type of mortgage that received a lot of publicity a few years ago but has since drifted into relative obscurity is the current account mortgage. This type of mortgage allows you to combine your mortgage loan with your current account allowing you more freedom with payments. In essence it is a huge overdraft with all the benefits attached. If you want to make more payments one month and less another that is allowed without penalisation.
This type of mortgage comes as a blessing to those that have a relatively low income but regularly receive commission that hugely increases their take-home wage. As most mortgage lenders don't take your ‘potential’ income into consideration and only that which is stipulated in your contract it can be hard for such individuals to source a mortgage with the flexibility they need.
With a mortgage of this kind it might be horrific when you look at your statement as if your mortgage is £130,000 and you have just been paid to the amount of £1,233 then your balance will show -£128,767! As long as your heart doesn't keep skipping a beat each time you receive your monthly statement you’ll appreciate all the benefits of such a mortgage.
If You Wanna Die Broke, Get a Reverse Mortgage
A disturbing trend is occurring today in the area of reverse mortgages. These instruments originated with what some might consider predatory lenders, but have gradually moved over to the mainstream lenders. Credible companies like Wells Fargo are now moving into this area.
As a Professor of Personal Finance at Eastern Michigan University, I have spent the last 16 years of my professional career helping young people make wise decisions regarding their finances. From credit card scams to payday lenders, the road of Personal Finance is filled with potholes and speedbumps. Reverse mortgages are just one more of those speed bumps..
First let us look at how a reverse mortgage works. Essentially, a borrower who has a considerable amount of equity in his or her home contacts a lender who offers such a loan. The lender will then make an estimate of how much equity the borrower has in the home and will offer a reverse mortgage loan for a percentage of that equity. Then, instead of issuing the borrower a lump sum payment, as is the case with a traditional home equity loan, the lender will pay the borrower in incremental monthly payments. So what's wrong with this picture?
Here's the problem. Depending upon the amount of equity the borrower has in the property, it is highly likely that the lender will eventually end up owning it. For example, with a monthly payment of $ 750 per month a significant amount of equity is going to be consumed in five or ten years. Another problem is that reverse mortgages are not interest free loans, so the rate of interest the lender charges is going to accelerate consumption of the equity. Unfortunately, the currently stagnant real estate market has made these instruments even more popular. It's a really great deal for the lender, since the borrower is a much better credit
risk than first time buyers who have been the primary victims of the recently soaring default rate.
Who is likely to be most negatively affected by the reverse mortgage; decent hard working people who have spent most of their lives working hard and paying their bills with the ultimate hope of owning a lien free property before they die. The reverse mortgage will insure that does not happen. If you want to die broke, get a reverse mortgage and get one fast!
As a Professor of Personal Finance at Eastern Michigan University, I have spent the last 16 years of my professional career helping young people make wise decisions regarding their finances. From credit card scams to payday lenders, the road of Personal Finance is filled with potholes and speedbumps. Reverse mortgages are just one more of those speed bumps..
First let us look at how a reverse mortgage works. Essentially, a borrower who has a considerable amount of equity in his or her home contacts a lender who offers such a loan. The lender will then make an estimate of how much equity the borrower has in the home and will offer a reverse mortgage loan for a percentage of that equity. Then, instead of issuing the borrower a lump sum payment, as is the case with a traditional home equity loan, the lender will pay the borrower in incremental monthly payments. So what's wrong with this picture?
Here's the problem. Depending upon the amount of equity the borrower has in the property, it is highly likely that the lender will eventually end up owning it. For example, with a monthly payment of $ 750 per month a significant amount of equity is going to be consumed in five or ten years. Another problem is that reverse mortgages are not interest free loans, so the rate of interest the lender charges is going to accelerate consumption of the equity. Unfortunately, the currently stagnant real estate market has made these instruments even more popular. It's a really great deal for the lender, since the borrower is a much better credit
risk than first time buyers who have been the primary victims of the recently soaring default rate.
Who is likely to be most negatively affected by the reverse mortgage; decent hard working people who have spent most of their lives working hard and paying their bills with the ultimate hope of owning a lien free property before they die. The reverse mortgage will insure that does not happen. If you want to die broke, get a reverse mortgage and get one fast!
Becoming a Commercial Loan Broker
Searching for information on becoming a commercial loan
broker? There are a few things you need to be very good at in order to make it as a commercial loan broker. 1. You have to be very good at reviewing loan packages. 2. You need a strong lender network. 3. You need multiple, reliable sources of leads. Becoming a commercial mortgage broker is really not that difficult and it certainly isn’t brain surgery. But like all businesses you need to get to the point of really knowing what you are doing and why.
A lot of time and energy goes into all deals. Knowing how to examine a potential deal is critical. You need to be able to sit down with a package and in 20 minutes figure out if you will work on it or pass. It’s very easy to waste hours on a loan that doesn’t have a single chance of closing.
Having a strong lender network in place is just as important and goes into qualifying a loan request. Number one you have to know their programs inside and out. You need to know what they really like, beyond what shows up on their matrix. Also you need solid relationships with the individuals you work with. You need quick, thorough decisions. Having your files on top of their pile is important.
Becoming a commercial loan broker is all about having a solid influx of deals. You need to compete on a lot of commercial mortgages in order to find doable deals and ones in which you can have control over. There are a lot of marketing methods out there and most of them will work in this business.
The traditional method of developing relationships with the local investors, commercial real estate brokers, CPA’s, attorneys, bank representatives, etc is still a very good method. This still maybe the best route to go, though it takes a lot of time and effort to build a name in your market. Newer methods include mailers, email campaigns, ads in newspapers, etc. Regardless of which route you feel more confident about you need some type of program that gets your phone ringing and keeps it ringing. Be patient and survive the “green” period in your quest to become a commercial loan broker.
broker? There are a few things you need to be very good at in order to make it as a commercial loan broker. 1. You have to be very good at reviewing loan packages. 2. You need a strong lender network. 3. You need multiple, reliable sources of leads. Becoming a commercial mortgage broker is really not that difficult and it certainly isn’t brain surgery. But like all businesses you need to get to the point of really knowing what you are doing and why.
A lot of time and energy goes into all deals. Knowing how to examine a potential deal is critical. You need to be able to sit down with a package and in 20 minutes figure out if you will work on it or pass. It’s very easy to waste hours on a loan that doesn’t have a single chance of closing.
Having a strong lender network in place is just as important and goes into qualifying a loan request. Number one you have to know their programs inside and out. You need to know what they really like, beyond what shows up on their matrix. Also you need solid relationships with the individuals you work with. You need quick, thorough decisions. Having your files on top of their pile is important.
Becoming a commercial loan broker is all about having a solid influx of deals. You need to compete on a lot of commercial mortgages in order to find doable deals and ones in which you can have control over. There are a lot of marketing methods out there and most of them will work in this business.
The traditional method of developing relationships with the local investors, commercial real estate brokers, CPA’s, attorneys, bank representatives, etc is still a very good method. This still maybe the best route to go, though it takes a lot of time and effort to build a name in your market. Newer methods include mailers, email campaigns, ads in newspapers, etc. Regardless of which route you feel more confident about you need some type of program that gets your phone ringing and keeps it ringing. Be patient and survive the “green” period in your quest to become a commercial loan broker.
Euro Mortgages a British Nightmare
Hundreds of thousands of British homebuyers who opted for foreign currency mortgages with lower interest rates are the latest victims of the property crunch.
Latest statistics now show that the euro has soared by nearly 20% against sterling during the last year.
The euro has climbed more than 19% against the pound since this time last year, meaning that borrowers whose earnings are denominated in sterling must dig deeper to make their repayments.
Reports also suggest that many Britons driven by their determination to buy their dream home have ended up borrowing more to cope with the shriveled purchasing power of sterling.
Katy Hepworth, overseas mortgage manager at broker Assetz Finance, said: “Those buying in France would have typically borrowed 80% of the value of their home, with the remaining 20% coming from the UK in sterling and being converted into euros.
“But this now costs you much more in sterling to get the equivalent amount in euros. We are now finding that people are asking for a 95% loan or 100% loan instead so that they do not have to bring over their money from the UK.”
Unlike Britain, where many banks and building societies have tightened their lending criteria, many continental European lenders are keen to gain a greater share of the market and are increasing their loan to value (LTV) ratios.
Hepworth further explained: “People are asking for higher LTVs not because they can’t afford the property, but because they are waiting for sterling to strengthen before moving their money to Europe to pay off their loan.”
Exactly the same strategy can be used for someone who already has a property in France and wants to benefit from the rise in the euro. For example, if you have an LTV of between 50% and 60% on a French property and you increase this to 80% by remortgaging, you could bring back that 20% to the UK.
These euros could buy more sterling today than they would have done in the past - but remember that currency speculation is a high-risk game where you could lose a great deal of money.
However, market experts have said that euro-denominated mortgages are not restricted to people buying holiday homes in Spain, France or Italy - some brokers marketed them to “sophisticated buyers” in Britain.
They say that the effect of the weakening pound on a typical euro mortgage over the past year has been to increase costs by £135 a month.
For example, a borrower with a mortgage of €150,000 (£118,000) shells out £760 a month on their repayments today compared to £625.50 a month this time last year, assuming a typical euro mortgage rate of 5.35%.
Euro-based mortgages have long been tempting for British borrowers because interest rates are often between points 1% and 1.25% lower than those available on sterling-based mortgages.
For example, French lenders offer euro mortgages which are fixed for three years from 4.15%. At the same time, one of the most competitive rates offered in the UK is from Woolwich, which has a two-year deal at 5.49% with a £995 arrangement fee – and this is only available to those who are borrowing up to 60% of the value of their home.
However, experts also believe that foreign exchange mortgages can help reduce monthly payments because lower interest rates are available, but at the same time, they are also more risky because the value of sterling can fluctuate which could mean that payments can rise sharply.
Most experts agree that, for this reason, it is best for homebuyers to have their mortgage in the same currency as their earnings. According to the experts, the only exception would be if the property was for rental in which case homebuyers should consider having the mortgage in the same currency as their rental income.
However, most lenders in the eurozone will only offer euro-based mortgages and so this may leave little choice for homebuyers who do not wish to raise a mortgage against their British home to buy abroad.
Alternatively, UK buyers who have already burned their fingers with foreign currency loans may wish to convert back into sterling or remortgage, but this could prove expensive, warn experts.
Miranda John, international manager at Savills Private Finance, said: “To switch your euro-denominated mortgage is costly because this is not common practice.”
She suggests delaying paying off your euro-based mortgage for as long as possible.
“It is not a good time to pay off your euro mortgage because comparatively your pound is not buying as much as it was this time last year.”
Latest statistics now show that the euro has soared by nearly 20% against sterling during the last year.
The euro has climbed more than 19% against the pound since this time last year, meaning that borrowers whose earnings are denominated in sterling must dig deeper to make their repayments.
Reports also suggest that many Britons driven by their determination to buy their dream home have ended up borrowing more to cope with the shriveled purchasing power of sterling.
Katy Hepworth, overseas mortgage manager at broker Assetz Finance, said: “Those buying in France would have typically borrowed 80% of the value of their home, with the remaining 20% coming from the UK in sterling and being converted into euros.
“But this now costs you much more in sterling to get the equivalent amount in euros. We are now finding that people are asking for a 95% loan or 100% loan instead so that they do not have to bring over their money from the UK.”
Unlike Britain, where many banks and building societies have tightened their lending criteria, many continental European lenders are keen to gain a greater share of the market and are increasing their loan to value (LTV) ratios.
Hepworth further explained: “People are asking for higher LTVs not because they can’t afford the property, but because they are waiting for sterling to strengthen before moving their money to Europe to pay off their loan.”
Exactly the same strategy can be used for someone who already has a property in France and wants to benefit from the rise in the euro. For example, if you have an LTV of between 50% and 60% on a French property and you increase this to 80% by remortgaging, you could bring back that 20% to the UK.
These euros could buy more sterling today than they would have done in the past - but remember that currency speculation is a high-risk game where you could lose a great deal of money.
However, market experts have said that euro-denominated mortgages are not restricted to people buying holiday homes in Spain, France or Italy - some brokers marketed them to “sophisticated buyers” in Britain.
They say that the effect of the weakening pound on a typical euro mortgage over the past year has been to increase costs by £135 a month.
For example, a borrower with a mortgage of €150,000 (£118,000) shells out £760 a month on their repayments today compared to £625.50 a month this time last year, assuming a typical euro mortgage rate of 5.35%.
Euro-based mortgages have long been tempting for British borrowers because interest rates are often between points 1% and 1.25% lower than those available on sterling-based mortgages.
For example, French lenders offer euro mortgages which are fixed for three years from 4.15%. At the same time, one of the most competitive rates offered in the UK is from Woolwich, which has a two-year deal at 5.49% with a £995 arrangement fee – and this is only available to those who are borrowing up to 60% of the value of their home.
However, experts also believe that foreign exchange mortgages can help reduce monthly payments because lower interest rates are available, but at the same time, they are also more risky because the value of sterling can fluctuate which could mean that payments can rise sharply.
Most experts agree that, for this reason, it is best for homebuyers to have their mortgage in the same currency as their earnings. According to the experts, the only exception would be if the property was for rental in which case homebuyers should consider having the mortgage in the same currency as their rental income.
However, most lenders in the eurozone will only offer euro-based mortgages and so this may leave little choice for homebuyers who do not wish to raise a mortgage against their British home to buy abroad.
Alternatively, UK buyers who have already burned their fingers with foreign currency loans may wish to convert back into sterling or remortgage, but this could prove expensive, warn experts.
Miranda John, international manager at Savills Private Finance, said: “To switch your euro-denominated mortgage is costly because this is not common practice.”
She suggests delaying paying off your euro-based mortgage for as long as possible.
“It is not a good time to pay off your euro mortgage because comparatively your pound is not buying as much as it was this time last year.”
House Prices Continue to Fall
The crisis in the housing market deepened today after mortgage lender Halifax reported a dramatic slump in prices and Bellway became the latest builder to issue a profits warning.
Halifax said the average price of a house in Britain fell 2.4% in May alone to £184,111. The slump left prices £12,525 lower than in the same month last year - an annual fall of 6.4% and the biggest drop since February 1993.
Bellway warned ‘there has been no sign of the normal spring selling surge’ in yet another grim warning to the City from the housebuilding sector.
The warning came as the Bank of England met to set interest rates for June. It looked likely to leave rates unchanged at 5% despite the slowdown in the housing market and the wider economy. The Bank, led by Governor Mervyn King, is concerned about the threat of rising inflation, which is heading towards 4%.
Halifax chief economist Martin Ellis said: “The decline in prices is caused by the difficulties created for potential house purchases by the rapid rise in house prices in the last few years, a squeeze on spending power and the reduction in credit availability. These factors have curbed housing demand.”
Bellway said: “The restricted mortgage supply, combined with a sapping of consumer confidence, is leading to further market weakness.”
Reservations have tumbled by 31% since February and Bellway now expects to sell 10%-15% fewer homes this year than the 7,638 it sold last time around. The company had previously forecast sales to fall between 5% and 10%.
The warning was the latest in a series led by Persimmon, Britain's biggest housebuilder, and shares in the sector have tumbled since early last year. UBS and JPMorgan this week warned the downturn would continue for sometime and suggested that many housebuilders were now pondering rights issues to raise funds.
Bellway shares have crashed from 1675p in April last year to a five-year low of 594p last night. They fell another 9½p to 584½p in early trading today. However, Yolande Barnes, the head of research at the Savills estate agency expects property prices to fall 8% this year and just 2% in 2009.
Jonathan Loynes, chief UK economist at research house Capital Economics argues that many people think the worst of the market outlook.
He says: “We’re a quarter of the way there already but the ratio of house prices to incomes is still higher now than in the past. For that ratio to get back to its long-term average you’d be looking for 40% and you’re assuming that it does not overshoot on the downside.”
But after a decade of booming prices, the housing bubble has been shattered by a change in sentiment as well as economics. Many analysts have warned that prices will continue falling even if they argue about how far.
Experts also believe that because less people would be willing to buy property in the current market, turnover is expected to be substantially down perhaps 40%.Loynes added. “If it doesn’t matter whether you buy now or in six months, I’d say wait.” But he and Barnes differ over whether to blame the weak demand or the limited supply of funds.
Savills’s Barnes says: “We do not see this as an affordability crisis.” In 1989, when prices last started falling, high mortgage costs left owners with no spare disposable income to pay more, she says. “This is much more like 1974: it’s all about the withdrawal of credit and mortgage rationing. That affects turnover and means deals cannot be done.”
Loynes concedes the credit crunch is hitting mortgage lenders but asks: “Does it matter that supply is being constrained? There is no demand anyway. However, if demand turned round quickly, the constraints on the supply side would bite.”
Halifax said the average price of a house in Britain fell 2.4% in May alone to £184,111. The slump left prices £12,525 lower than in the same month last year - an annual fall of 6.4% and the biggest drop since February 1993.
Bellway warned ‘there has been no sign of the normal spring selling surge’ in yet another grim warning to the City from the housebuilding sector.
The warning came as the Bank of England met to set interest rates for June. It looked likely to leave rates unchanged at 5% despite the slowdown in the housing market and the wider economy. The Bank, led by Governor Mervyn King, is concerned about the threat of rising inflation, which is heading towards 4%.
Halifax chief economist Martin Ellis said: “The decline in prices is caused by the difficulties created for potential house purchases by the rapid rise in house prices in the last few years, a squeeze on spending power and the reduction in credit availability. These factors have curbed housing demand.”
Bellway said: “The restricted mortgage supply, combined with a sapping of consumer confidence, is leading to further market weakness.”
Reservations have tumbled by 31% since February and Bellway now expects to sell 10%-15% fewer homes this year than the 7,638 it sold last time around. The company had previously forecast sales to fall between 5% and 10%.
The warning was the latest in a series led by Persimmon, Britain's biggest housebuilder, and shares in the sector have tumbled since early last year. UBS and JPMorgan this week warned the downturn would continue for sometime and suggested that many housebuilders were now pondering rights issues to raise funds.
Bellway shares have crashed from 1675p in April last year to a five-year low of 594p last night. They fell another 9½p to 584½p in early trading today. However, Yolande Barnes, the head of research at the Savills estate agency expects property prices to fall 8% this year and just 2% in 2009.
Jonathan Loynes, chief UK economist at research house Capital Economics argues that many people think the worst of the market outlook.
He says: “We’re a quarter of the way there already but the ratio of house prices to incomes is still higher now than in the past. For that ratio to get back to its long-term average you’d be looking for 40% and you’re assuming that it does not overshoot on the downside.”
But after a decade of booming prices, the housing bubble has been shattered by a change in sentiment as well as economics. Many analysts have warned that prices will continue falling even if they argue about how far.
Experts also believe that because less people would be willing to buy property in the current market, turnover is expected to be substantially down perhaps 40%.Loynes added. “If it doesn’t matter whether you buy now or in six months, I’d say wait.” But he and Barnes differ over whether to blame the weak demand or the limited supply of funds.
Savills’s Barnes says: “We do not see this as an affordability crisis.” In 1989, when prices last started falling, high mortgage costs left owners with no spare disposable income to pay more, she says. “This is much more like 1974: it’s all about the withdrawal of credit and mortgage rationing. That affects turnover and means deals cannot be done.”
Loynes concedes the credit crunch is hitting mortgage lenders but asks: “Does it matter that supply is being constrained? There is no demand anyway. However, if demand turned round quickly, the constraints on the supply side would bite.”
The Number of Mortgage Deals Dropping
Industry figures have shown that the number of new mortgage applications approved by the major banks fell again in December. British Banker’s Association (BBA) members approved 42,088 new mortgage loans last month, the lowest figure that has been seen since 1997 when the data started to be collected.
Analysts think that the easiest way to solve this problem is for the Bank of England to cut its interest rates, although this proposition is meeting opposition as well as support as the market is already in turmoil and this is almost an admission of defeat. The amount of money advanced for home purchases dropped to £15.1bn, a figure last seen in September 2005, and 10% less that December 2006.
The BBA’s figures are in agreement with recent data from the Council of Mortgage Lenders (CML), who said that gross lending fell 25% in December to £22.6bn, the lowest monthly figure since May 2005. David Dooks, BBA’s statistics director said: "Mortgage lending weakened notably in the second half of 2007 as the credit crunch impacted on banks' ability to lend, at the same time, demand for mortgages also softened in the face of increased borrowing costs and lower disposable income.
"The combination of these factors is resulting in the marked market slowdown and weakness in house prices we are now seeing," he concluded.
Among the news of reductions and falling approvals, there is some good news; the figures showed that net lending increased slightly in December, this is after redemptions and repayments have been deducted. There was also a small jump in the number of loans approved for re-mortgaging customers, with 62,771 new loans given the go ahead, compared to 59,628 in November 2007. Although if examined more closely this is not necessarily good news, people borrowing against their property is a desperate measure, one which is likely to be caused by the credit crunch and the strict measures in place to regulate unsecured lending.
The chief UK and European economist at Global Insight, Howard Archer, commented on this, saying: “The December BBA mortgage data provide yet further evidence that housing market activity is now being substantially undermined by both stretched affordability and tightening lending practices. This adds to the already intense pressure on the Bank of England to cut interest rates in February, and to enact significant further reductions thereafter."
Despite that fact that Britain’s house prices ended 2008 5-8% higher than when the year began, prices started falling during the second half of the year, under the pressure of higher interest rates. The Bank of England held its interest rates in January 2008, predictions of a February rate cut are prevalent. However Mervyn King, the Bank’s governor remarked that inflation concerns may prevent this from happening.
The competition from brokers and adviser to purchase mortgage leads from other companies is red hot at the moment because the demand for mortgage deals is falling. The lower number of customers who are actively looking for a mortgage deal, results in brokers fiercely competing for business against one another.
BBA figures showed that unsecured lending from banks remained subdued in December, while the amount of outstanding debt on credit cards rose by only £200m, a lower figure that expected because customers were repaying more than they spent.
An increase of £400m in the borrowing through loans and overdrafts was also seen in December, and consumers also stashed £1.9bn in saving accounts or investment schemes. This was a £200m increase on November, but was less than the amounts deposited during September and October into banks and building societies.
Analysts think that the easiest way to solve this problem is for the Bank of England to cut its interest rates, although this proposition is meeting opposition as well as support as the market is already in turmoil and this is almost an admission of defeat. The amount of money advanced for home purchases dropped to £15.1bn, a figure last seen in September 2005, and 10% less that December 2006.
The BBA’s figures are in agreement with recent data from the Council of Mortgage Lenders (CML), who said that gross lending fell 25% in December to £22.6bn, the lowest monthly figure since May 2005. David Dooks, BBA’s statistics director said: "Mortgage lending weakened notably in the second half of 2007 as the credit crunch impacted on banks' ability to lend, at the same time, demand for mortgages also softened in the face of increased borrowing costs and lower disposable income.
"The combination of these factors is resulting in the marked market slowdown and weakness in house prices we are now seeing," he concluded.
Among the news of reductions and falling approvals, there is some good news; the figures showed that net lending increased slightly in December, this is after redemptions and repayments have been deducted. There was also a small jump in the number of loans approved for re-mortgaging customers, with 62,771 new loans given the go ahead, compared to 59,628 in November 2007. Although if examined more closely this is not necessarily good news, people borrowing against their property is a desperate measure, one which is likely to be caused by the credit crunch and the strict measures in place to regulate unsecured lending.
The chief UK and European economist at Global Insight, Howard Archer, commented on this, saying: “The December BBA mortgage data provide yet further evidence that housing market activity is now being substantially undermined by both stretched affordability and tightening lending practices. This adds to the already intense pressure on the Bank of England to cut interest rates in February, and to enact significant further reductions thereafter."
Despite that fact that Britain’s house prices ended 2008 5-8% higher than when the year began, prices started falling during the second half of the year, under the pressure of higher interest rates. The Bank of England held its interest rates in January 2008, predictions of a February rate cut are prevalent. However Mervyn King, the Bank’s governor remarked that inflation concerns may prevent this from happening.
The competition from brokers and adviser to purchase mortgage leads from other companies is red hot at the moment because the demand for mortgage deals is falling. The lower number of customers who are actively looking for a mortgage deal, results in brokers fiercely competing for business against one another.
BBA figures showed that unsecured lending from banks remained subdued in December, while the amount of outstanding debt on credit cards rose by only £200m, a lower figure that expected because customers were repaying more than they spent.
An increase of £400m in the borrowing through loans and overdrafts was also seen in December, and consumers also stashed £1.9bn in saving accounts or investment schemes. This was a £200m increase on November, but was less than the amounts deposited during September and October into banks and building societies.
Loans - a Guide to Student Finance
Students now make up 4% of the UK population, this equated to roughly 3.5 million in 2006. According to recent figures each of these students will leave university with almost £13,000 worth of debt!
Although this is a staggering figure, unless all tuition and accommodation fee’s can be paid for by some other means then there is no way of attaining a degree without incurring a certain level of debt.
There is however, countless ways in which the amount you will owe at the end of your education can be reduced, which are discussed in the second part of this guide; firstly let’s take a closer look at how these loans work.
For most students, their loan will comprise of tuition fees, which covers the cost imposed by the institution for the education you receive and secondly, a maintenance loan, which covers basic living expenses.
Tuition fee loans are (partly) non-financially assessed loans and are usually payable to the Higher Education provider. The maximum amount for this loan is either the amount of the tuition fees or £3,070, whichever is less.
It's worth noting that this figure changes and the amount stated here is correct for courses started in 2007 or starting in 2008.
The reason behind the “partly” above is that everyone on an eligible course qualifies for 75% of the maximum loan amount; anything above 75% though is calculated using a sliding scale. This means that applicants from lower income households or single parent situations will be eligible for a larger loan.
Loans for those wishing to study part time work a little differently, to begin with they are officially known as “Part-Time Fee Grant’s”. In order to qualify for this grant the course must last at least a year but take no longer than twice the time it would take to study the same course full time. Unlike conventional tuition loans, part time grants are wholly based on income and the intensity of study.
Students loans work out as a much more affordable means of finance than traditional personal loans, and as mentioned are the only way many students are able to secure a place at a university. As well as loans though, some students may be eligible for bursaries or targeted support schemes.
Although this is a staggering figure, unless all tuition and accommodation fee’s can be paid for by some other means then there is no way of attaining a degree without incurring a certain level of debt.
There is however, countless ways in which the amount you will owe at the end of your education can be reduced, which are discussed in the second part of this guide; firstly let’s take a closer look at how these loans work.
For most students, their loan will comprise of tuition fees, which covers the cost imposed by the institution for the education you receive and secondly, a maintenance loan, which covers basic living expenses.
Tuition fee loans are (partly) non-financially assessed loans and are usually payable to the Higher Education provider. The maximum amount for this loan is either the amount of the tuition fees or £3,070, whichever is less.
It's worth noting that this figure changes and the amount stated here is correct for courses started in 2007 or starting in 2008.
The reason behind the “partly” above is that everyone on an eligible course qualifies for 75% of the maximum loan amount; anything above 75% though is calculated using a sliding scale. This means that applicants from lower income households or single parent situations will be eligible for a larger loan.
Loans for those wishing to study part time work a little differently, to begin with they are officially known as “Part-Time Fee Grant’s”. In order to qualify for this grant the course must last at least a year but take no longer than twice the time it would take to study the same course full time. Unlike conventional tuition loans, part time grants are wholly based on income and the intensity of study.
Students loans work out as a much more affordable means of finance than traditional personal loans, and as mentioned are the only way many students are able to secure a place at a university. As well as loans though, some students may be eligible for bursaries or targeted support schemes.
Commercial Mortgage Lending - Green Projects Get Funded
Like it or not, environmentally conscious, or “green” principles have come to dominate the field of commercial real estate development and commercial mortgage lending. Green building and sustainable design are now the standard in new commercial construction and residential developments. And, with local and national governments getting greener all the time, look for energy and resource efficiency to become mandatory, with green mandates being placed directly into building codes. Funding sources such-as banks, Wall Street brokers, insurance companies and hedge funds, are following suite and these principles are rapidly becoming a part of the commercial mortgage industry.
The US Department of Energy’s Center for Sustainable Development recently reported that 40% of the entire world’s energy supply is used by buildings. That’s a huge number. And, in the United States, construction accounts for our largest manufacturing sector, representing a staggering 13% of US GDP and nearly 50% of total wealth creation. Even tiny percentage gains in efficiency can amount to massive over-all energy savings.
Both institutional and private lenders as well as the REIT, (Real Estate Investment Trust) hedge fund and private equity
industries have all embraced the environmental building movement. Green is the color of money and green is the color of commercial mortgage construction lending now and into the future. Lenders love green construction because good for profits as-well-as being good for the planet. Energy costs money, resources cost money and cleaning up messes’ costs money. Saving energy, saving resources and sustaining a site all save money, during construction and throughout the operational life of the property. Lenders know that green means efficient and, when they evaluate a project for financing they want to be assured that the funds they invest will be used cost-effectively and that the building will be economically viable.
Environmentally sound buildings can cost substantially less to operate than comparable buildings that disregard such efficiencies and tenants and their clients report higher customer satisfaction rates when doing business in them. To a lender, whose capital is secured by the building, this translates into higher quality collateral and makes their investments more secure.
As a commercial real estate investment banking professional, I can attest to the fact that developers who choose designs that are not green will find it very difficult to raise capital or secure loan approvals for their projects. We are in the midst of a sever liquidity crisis; construction money is in short supply. Lenders are giving priority to green development leaving very little capital available for conventional construction.
The Federal Government’s LEED (Leadership in Energy & Environmental Design) rating system awards silver, gold and platinum certification to buildings that reduce waste and save energy and lower costs. LEED certification is almost (although not officially) a mandatory requirement in-order-to get a big construction project funded today.
Being green is no longer just the passion of the activist anymore; it is the new emerging standard in commercial construction as-well-as commercial real estate finance. Investors and developers who need commercial mortgages will do well to pay attention to this trend.
The US Department of Energy’s Center for Sustainable Development recently reported that 40% of the entire world’s energy supply is used by buildings. That’s a huge number. And, in the United States, construction accounts for our largest manufacturing sector, representing a staggering 13% of US GDP and nearly 50% of total wealth creation. Even tiny percentage gains in efficiency can amount to massive over-all energy savings.
Both institutional and private lenders as well as the REIT, (Real Estate Investment Trust) hedge fund and private equity
industries have all embraced the environmental building movement. Green is the color of money and green is the color of commercial mortgage construction lending now and into the future. Lenders love green construction because good for profits as-well-as being good for the planet. Energy costs money, resources cost money and cleaning up messes’ costs money. Saving energy, saving resources and sustaining a site all save money, during construction and throughout the operational life of the property. Lenders know that green means efficient and, when they evaluate a project for financing they want to be assured that the funds they invest will be used cost-effectively and that the building will be economically viable.
Environmentally sound buildings can cost substantially less to operate than comparable buildings that disregard such efficiencies and tenants and their clients report higher customer satisfaction rates when doing business in them. To a lender, whose capital is secured by the building, this translates into higher quality collateral and makes their investments more secure.
As a commercial real estate investment banking professional, I can attest to the fact that developers who choose designs that are not green will find it very difficult to raise capital or secure loan approvals for their projects. We are in the midst of a sever liquidity crisis; construction money is in short supply. Lenders are giving priority to green development leaving very little capital available for conventional construction.
The Federal Government’s LEED (Leadership in Energy & Environmental Design) rating system awards silver, gold and platinum certification to buildings that reduce waste and save energy and lower costs. LEED certification is almost (although not officially) a mandatory requirement in-order-to get a big construction project funded today.
Being green is no longer just the passion of the activist anymore; it is the new emerging standard in commercial construction as-well-as commercial real estate finance. Investors and developers who need commercial mortgages will do well to pay attention to this trend.
Operation Malicious Mortgage Attacks!
Between March and June 2008, 406 people have been charged with mortgage fraud through 'Operation Malicious Mortgage'. The foreclosure crisis has caused some kinds of fraud to skyrocket and the Justice Department has taken notice. There are three main scams that OMM is targeting: lending fraud, foreclosure rescue scams and mortgage bankruptcy scams.
Lending fraud:
There are several types of lending fraud, but we're going to look at one that is responsible for a lot of foreclosures. This is perpetrated on low-income and vulnerable demographics, such as seniors and families trying to get ahead. The person buying the home is offered an exceptionally good rate on interest, but is then hit with exorbitantly high fees and bogus taxes. What started out as a great deal becomes crushing debt. One nasty note on this kind of fraud is that about half of the people fleeced by these people could have gotten a regular loan through a reputable lending institution. They just didn't check to see what their options were.
Foreclosure rescue scams:
Say you're in a foreclosure situation, but someone steps in and says, "Hey, we can help you! Just sell your house to us for a nominal sum, we'll keep it for you and you can rent-to-own it back until you get on your feet!" You say, "Where do I sign?" The problem is, the 'kindly stranger' ends up selling your house out from under you, at a huge profit. After all, you legally transferred ownership. Too bad that your family has nowhere to live and that you're out thousands of dollars. This scam is often perpetrated against the elderly, leaving seniors without their homes or money to live.
Mortgage bankruptcy scams:
"Hey, I see you're in trouble. Let me help you with that. Just pay what you're paying to me and I'll see you straightened out!" Instead of "straightening you out", the scamster instead goes and pockets all of your payments. Sometimes a bankruptcy will be filed in your name without your knowledge. It stops foreclosure proceedings, but not for long. What a surprise you'll get when you realize that your home has been foreclosed after all! By the time many home owners realize what has happened, they are months behind on the mortgage, the scammer is gone, along with thousands of the home owner's dollars, and the bank is knocking on the door.
The key to avoiding all of these scams is to read anything you sign carefully and get a real estate lawyer to check that what you're signing doesn't make you a target for unscrupulous fees or added interest. If you already have a mortgage and are in trouble (or heading there), bypass "foreclosure services" and go directly to your lender or mortgage broker. Do not pass GO and do not collect $200 (you'll probably need it for the insurance).
Lending fraud:
There are several types of lending fraud, but we're going to look at one that is responsible for a lot of foreclosures. This is perpetrated on low-income and vulnerable demographics, such as seniors and families trying to get ahead. The person buying the home is offered an exceptionally good rate on interest, but is then hit with exorbitantly high fees and bogus taxes. What started out as a great deal becomes crushing debt. One nasty note on this kind of fraud is that about half of the people fleeced by these people could have gotten a regular loan through a reputable lending institution. They just didn't check to see what their options were.
Foreclosure rescue scams:
Say you're in a foreclosure situation, but someone steps in and says, "Hey, we can help you! Just sell your house to us for a nominal sum, we'll keep it for you and you can rent-to-own it back until you get on your feet!" You say, "Where do I sign?" The problem is, the 'kindly stranger' ends up selling your house out from under you, at a huge profit. After all, you legally transferred ownership. Too bad that your family has nowhere to live and that you're out thousands of dollars. This scam is often perpetrated against the elderly, leaving seniors without their homes or money to live.
Mortgage bankruptcy scams:
"Hey, I see you're in trouble. Let me help you with that. Just pay what you're paying to me and I'll see you straightened out!" Instead of "straightening you out", the scamster instead goes and pockets all of your payments. Sometimes a bankruptcy will be filed in your name without your knowledge. It stops foreclosure proceedings, but not for long. What a surprise you'll get when you realize that your home has been foreclosed after all! By the time many home owners realize what has happened, they are months behind on the mortgage, the scammer is gone, along with thousands of the home owner's dollars, and the bank is knocking on the door.
The key to avoiding all of these scams is to read anything you sign carefully and get a real estate lawyer to check that what you're signing doesn't make you a target for unscrupulous fees or added interest. If you already have a mortgage and are in trouble (or heading there), bypass "foreclosure services" and go directly to your lender or mortgage broker. Do not pass GO and do not collect $200 (you'll probably need it for the insurance).
Need Extra Cash? Have Bad Credit?
If you are in need of extra cash and you have too much outstanding debt or you are having difficulties repaying personal loans and credit card balances, even if you have bad credit, you can get funds by refinancing your mortgage. You can request a cash-out refinance loan and get the extra money you need in the blink of an eye.
It can be really difficult to get finance when your credit is less than perfect. Having large personal loans and credit card balances that have became too much of a burden is not an uncommon situation. Many soon end up being unable to meet the monthly payments of the loans and the minimum payments on the credit card balances. Then, penalty fees start making your debt even bigger and unless stopped at some point this can easily lead to bankruptcy.
However, if your credit is bad due to past delinquencies or credit problems, even if you have your debt under control, you won’t be able to get finance through an unsecured personal loan easily. Bad Credit implies too much of a risk to lenders which can only be overcame by providing a security, some sort of collateral. You probably already knew that but you may object that your property is already securing your mortgage. That’s when cash-out refinance loans come in handy.
Cash-Out Refinance Loans
A cash out refinance loan can solve your lack of cash problems because it will provide a considerable amount of money you’ll be able to use either to meet your current needs or for reducing your current debt. You can even get the money you need and save money at the same time. We’ll explain this later.
Basically, a cash out refinance loan is a mortgage loan that will be used to repay the outstanding mortgage loan. However, since the refinance loan will be requested for a higher amount than the original loan, the remaining amount can be used for whatever purpose you want.
If you are in a hurry, use it to fulfill the needs you couldn’t meet due to the lack of funds. But if it isn’t an emergency and you have some time, you can use the money to reduce your outstanding debt. The money you obtained from the refinance loan is cheap finance, if you use it to pay off expensive financing like unsecured personal loans, pay day loans, and credit card balances, this will enhance your credit stance and improve your credit score. You’ll then be able to get cheaper finance from other sources and use the money for whatever you originally needed.
Moreover, refinance home loans can be obtained at a lower interest rate than the original mortgage loan. If there is not much difference between your credit situation when you requested the mortgage loan and your current credit situation, or if your current situation is better, you’ll probably be able get a refinance loan for a lower interest rate than your previous mortgage. You can also get a lower rate by shortening the loan term. This may increase your mortgage installments slightly but will definitely get you a lower rate and you will save thousands of dollars over the whole life of the loan.
It can be really difficult to get finance when your credit is less than perfect. Having large personal loans and credit card balances that have became too much of a burden is not an uncommon situation. Many soon end up being unable to meet the monthly payments of the loans and the minimum payments on the credit card balances. Then, penalty fees start making your debt even bigger and unless stopped at some point this can easily lead to bankruptcy.
However, if your credit is bad due to past delinquencies or credit problems, even if you have your debt under control, you won’t be able to get finance through an unsecured personal loan easily. Bad Credit implies too much of a risk to lenders which can only be overcame by providing a security, some sort of collateral. You probably already knew that but you may object that your property is already securing your mortgage. That’s when cash-out refinance loans come in handy.
Cash-Out Refinance Loans
A cash out refinance loan can solve your lack of cash problems because it will provide a considerable amount of money you’ll be able to use either to meet your current needs or for reducing your current debt. You can even get the money you need and save money at the same time. We’ll explain this later.
Basically, a cash out refinance loan is a mortgage loan that will be used to repay the outstanding mortgage loan. However, since the refinance loan will be requested for a higher amount than the original loan, the remaining amount can be used for whatever purpose you want.
If you are in a hurry, use it to fulfill the needs you couldn’t meet due to the lack of funds. But if it isn’t an emergency and you have some time, you can use the money to reduce your outstanding debt. The money you obtained from the refinance loan is cheap finance, if you use it to pay off expensive financing like unsecured personal loans, pay day loans, and credit card balances, this will enhance your credit stance and improve your credit score. You’ll then be able to get cheaper finance from other sources and use the money for whatever you originally needed.
Moreover, refinance home loans can be obtained at a lower interest rate than the original mortgage loan. If there is not much difference between your credit situation when you requested the mortgage loan and your current credit situation, or if your current situation is better, you’ll probably be able get a refinance loan for a lower interest rate than your previous mortgage. You can also get a lower rate by shortening the loan term. This may increase your mortgage installments slightly but will definitely get you a lower rate and you will save thousands of dollars over the whole life of the loan.
The Truth About Credit Repair Services
Credit repair services advertisements are everywhere you look making amazing claims about how they can fix your credit and recover your ability to get finance. However, most of these claims are nothing but false advertising and many of these services are nothing but scams. Learn how to recognize legit companies and how to protect yourself.
Advertisements from credit repair companies can be found on local newspapers, TV, radio, internet, and fliers on the mail and on the streets claiming that if you have credit problems they can help you, that they can remove your bad credit, that they can get you a new credit identity or that they can remove stains like bankruptcy, judgments, liens, late payments, missed payments, and even unpaid loans or credit card balances.
Avoid Being Taken In
Truth is that all the above claims are nothing but false advertising, no one can remove those marks from your credit report unless the information is false or inaccurate. If you are actually responsible for those delinquencies, only time and a continued proper credit behavior can improve your credit report.
If these companies promise you they can fix your credit so you can get a new loan, credit card, store card, etc. right away, they are lying and you are probably facing a scam. Save your money and time and avoid paying for these companies’ services. Only legitimate companies that state that credit repairing can take some time are saying the truth and can help you to repair your credit by teaching you budgeting, how to refinance your loans, how to consolidate your debt, etc.
Avoid Legal Problems
Moreover, being ripped off is not the only problem you may face. If you follow some of these companies’ advice and try to invent a new credit identity and a new credit history by using an employer identification number instead of the social security number or by faking documentation, you may be charged with fraud and face serious legal consequences.
Don’t pay attention to companies that want you to claim that information on your credit report is false if it isn’t or any other practices that you think are clearly illegal or immoral. Don’t lie when submitting forms or other documentation nor when answering questions to lenders by phone. The conversations may be taped, the documents kept and used as proof to prosecute you for fraud.
The Truth About Credit Repairing
No one, in any way can remove correct information from your credit report in a legal way. Thus, if it isn’t a scam, it’s a crime. What can actually be done in order to repair your credit is to show a continued positive credit behavior. Some companies can teach you to do that and provide you with documentation and all the necessary tools for achieving your goals. It may take some time but it can be done with little sacrifices. However, there are no such things as magic solutions to your credit problems.
Legit Credit Repair companies will teach you how to repair your credit by yourself. What they can actually do is to provide you with information that you’d be able to find for yourself but is spread all over the net and on different government agencies. They have all this information, forms and documents packed and easily explained so you can save yourself time and probably money too.
Advertisements from credit repair companies can be found on local newspapers, TV, radio, internet, and fliers on the mail and on the streets claiming that if you have credit problems they can help you, that they can remove your bad credit, that they can get you a new credit identity or that they can remove stains like bankruptcy, judgments, liens, late payments, missed payments, and even unpaid loans or credit card balances.
Avoid Being Taken In
Truth is that all the above claims are nothing but false advertising, no one can remove those marks from your credit report unless the information is false or inaccurate. If you are actually responsible for those delinquencies, only time and a continued proper credit behavior can improve your credit report.
If these companies promise you they can fix your credit so you can get a new loan, credit card, store card, etc. right away, they are lying and you are probably facing a scam. Save your money and time and avoid paying for these companies’ services. Only legitimate companies that state that credit repairing can take some time are saying the truth and can help you to repair your credit by teaching you budgeting, how to refinance your loans, how to consolidate your debt, etc.
Avoid Legal Problems
Moreover, being ripped off is not the only problem you may face. If you follow some of these companies’ advice and try to invent a new credit identity and a new credit history by using an employer identification number instead of the social security number or by faking documentation, you may be charged with fraud and face serious legal consequences.
Don’t pay attention to companies that want you to claim that information on your credit report is false if it isn’t or any other practices that you think are clearly illegal or immoral. Don’t lie when submitting forms or other documentation nor when answering questions to lenders by phone. The conversations may be taped, the documents kept and used as proof to prosecute you for fraud.
The Truth About Credit Repairing
No one, in any way can remove correct information from your credit report in a legal way. Thus, if it isn’t a scam, it’s a crime. What can actually be done in order to repair your credit is to show a continued positive credit behavior. Some companies can teach you to do that and provide you with documentation and all the necessary tools for achieving your goals. It may take some time but it can be done with little sacrifices. However, there are no such things as magic solutions to your credit problems.
Legit Credit Repair companies will teach you how to repair your credit by yourself. What they can actually do is to provide you with information that you’d be able to find for yourself but is spread all over the net and on different government agencies. They have all this information, forms and documents packed and easily explained so you can save yourself time and probably money too.
Solutions for Housing Problem: the Malaysian’s Style
Housing property policy in Malaysia had evolved over the years through their national development plans. Malaysia housing property programme implementing the policy are subject to much of the same administrative regulations applied to land policy. Their objective with the policy is to provide affordable and adequate housing to the low income group for their local residence; the Malays. The main issue confronting the implementation of this Malaysia property policy is by the absence of a coherent framework for the allocation and development of land for the low income group. In request of private sector(s) to take the initiative in providing such housing the government has yet to provide a complete “enabling framework” for implementation.
Malaysia real estate
Malaysia’s real estate Housing problem revolves around the issue of inadequate provision of affordable housing. The demand for housing in Malaysia had increased in recent years as a result of the healthy economic growth. This has been supported by decreasing mortality rates, the number of persons per household and the growth of nuclear families as against extended families brought about by economic development and increasing employment rate. This increase of demand, has somewhat outpaced the capability of both the public and private sector. The situation becomes exacerbated by the fact that housing normally assumes a lower position in the list priorities for resource allocation.
Banks and other financial institutions have different packages of home loan to assist house buyers in their purchase. Pursuant to a recent Bank Negara guideline, house buyers can now only obtain housing loan of up to a maximum of 60% of the purchase price for the purchase of a second or subsequent house and Aided with their Home Loan Calculator for better budgeting.
Other than financing from a bank or financial institution, the Employees Provident Fund (EPF) currently provides two schemes of withdrawal for its depositors prior to attaining the age of 50:
* For purposes of buying or building a house or a shop house consisting of a residential unit, depositors can withdraw the difference between the purchase price and the loan obtained plus 10% of the purchase price, or 30% of the total amount deposited in the EPF whichever is lower;
* For purposes of reducing or setting housing loans, depositors can withdraw 30% of the total amount deposited in the EPF, or the amount of the housing loan remaining outstanding, whichever is lower.
Malaysia real estate
Malaysia’s real estate Housing problem revolves around the issue of inadequate provision of affordable housing. The demand for housing in Malaysia had increased in recent years as a result of the healthy economic growth. This has been supported by decreasing mortality rates, the number of persons per household and the growth of nuclear families as against extended families brought about by economic development and increasing employment rate. This increase of demand, has somewhat outpaced the capability of both the public and private sector. The situation becomes exacerbated by the fact that housing normally assumes a lower position in the list priorities for resource allocation.
Banks and other financial institutions have different packages of home loan to assist house buyers in their purchase. Pursuant to a recent Bank Negara guideline, house buyers can now only obtain housing loan of up to a maximum of 60% of the purchase price for the purchase of a second or subsequent house and Aided with their Home Loan Calculator for better budgeting.
Other than financing from a bank or financial institution, the Employees Provident Fund (EPF) currently provides two schemes of withdrawal for its depositors prior to attaining the age of 50:
* For purposes of buying or building a house or a shop house consisting of a residential unit, depositors can withdraw the difference between the purchase price and the loan obtained plus 10% of the purchase price, or 30% of the total amount deposited in the EPF whichever is lower;
* For purposes of reducing or setting housing loans, depositors can withdraw 30% of the total amount deposited in the EPF, or the amount of the housing loan remaining outstanding, whichever is lower.
Freedom Loan From Benchmark Lending
When you think of mortgages that enable thousands of people to acquire homes every year, you are thinking of the Benchmark Lending group which has provided much needed finances to get new homes or refinance the existing homes to many families for over ten years. They offer tailor made mortgages to suit the needs of customers ensuring that you can afford it. They make this happen by considering the cash flow of every customer. They also consider the repayment period, investment opportunities and your equity plans. The Benchmark lending group was founded by Barney Aldridge in 1995 as a primary mortgage lending bank and it continues to grow. Customers can expect no hassles and there are no middlemen. The headquarters are located in Northern California and their culture is to provide a good service with dedication and passion.
When you need to apply for a loan, the company assures you that the process is easy and, you do not have to worry about complications. You will have a loan officer guide you through the whole process briefing you on all vital issues on credit until you have a satisfactory end. At Benchmark lending group, the management consists of people who have mastered the industry and proved that they can deliver what it takes to progress the business. It consists of the President who is the Chief Executive officer. His name is Jason Ehrlicher and he began as a loan officer in the company and years have seen him become capable and able to lead owing to his rich experience and dedication to the company since it began.
The others in the management team include the Director of Human Resources, Vice President of Sales and the Sales Manager. The first kind of loan they offer is the Fixed Rate Loan where the rate does not change and one can get a loan to repay in 10, 15, 20 and 30 years. People who go for such a loan must be planning to keep their house for more than 10 years and, for those who do not plan to use their home equity for the period of the loan. The other kind of mortgage the Benchmark Lending group offer is the adjustable rate mortgage. This loan is for people who plan to keep their house for up to 10 years or less. The duration for this kind of mortgage is usually 3, 5, 7 and 10 years.
A freedom loan from Benchmark Lending is the most popular because it is an adjustable loan that enables you to choose from 4 different payment methods according to your convenience every month. The loan is tailor made for people who do not have a regular or stable cash flow and for people who want to make other investments. Another loan suitable for people with fluctuating incomes is the Better Half loan and, it will help people with unstable monthly income realize their dream of owning a home. There are very many other options to choose from and, you can even apply online on their site. There are other resources that you will find very helpful. Before you take any mortgage, it is good to consider your income and your flexibility and ability to repay given the many options of repayments. Get a good system that will help you realize your dream for a good home.
When you need to apply for a loan, the company assures you that the process is easy and, you do not have to worry about complications. You will have a loan officer guide you through the whole process briefing you on all vital issues on credit until you have a satisfactory end. At Benchmark lending group, the management consists of people who have mastered the industry and proved that they can deliver what it takes to progress the business. It consists of the President who is the Chief Executive officer. His name is Jason Ehrlicher and he began as a loan officer in the company and years have seen him become capable and able to lead owing to his rich experience and dedication to the company since it began.
The others in the management team include the Director of Human Resources, Vice President of Sales and the Sales Manager. The first kind of loan they offer is the Fixed Rate Loan where the rate does not change and one can get a loan to repay in 10, 15, 20 and 30 years. People who go for such a loan must be planning to keep their house for more than 10 years and, for those who do not plan to use their home equity for the period of the loan. The other kind of mortgage the Benchmark Lending group offer is the adjustable rate mortgage. This loan is for people who plan to keep their house for up to 10 years or less. The duration for this kind of mortgage is usually 3, 5, 7 and 10 years.
A freedom loan from Benchmark Lending is the most popular because it is an adjustable loan that enables you to choose from 4 different payment methods according to your convenience every month. The loan is tailor made for people who do not have a regular or stable cash flow and for people who want to make other investments. Another loan suitable for people with fluctuating incomes is the Better Half loan and, it will help people with unstable monthly income realize their dream of owning a home. There are very many other options to choose from and, you can even apply online on their site. There are other resources that you will find very helpful. Before you take any mortgage, it is good to consider your income and your flexibility and ability to repay given the many options of repayments. Get a good system that will help you realize your dream for a good home.
Adverse Credit Remortgage
So many people with a bad credit history do not like to take chances and see whether things will work better when they borrow again. This is the case for people with adverse credit on mortgage and this could happen because of interest rates that are not suitable for them or a mortgage plan that does not suit them. However, you do not have to worry because, you can take an adverse credit remortgage comfortably. Your adverse credit situation may be brought by missed payments, defaults, loan arrears, bankruptcy and others. Every case is considered individually to help in the process of issuing an adverse credit remortgage. Usually you must be prepared to pay a higher interest owing to your bad history and depending on your arrangement, it will take into consideration all the important factors about your situation.
There are many players in the remortgage sector, and this has ultimately led to a high competition for clients and in turn you will get a better deal. It is only through finding out the various deals available that you can judge which best fits you. You can go for fixed rates, discounted rates and also variable rates because the options are many and there will be an adverse credit remortgage for you. Some people might be unemployed or self employed with no evidence of income. The bottom line is to have some income which can be regularly paid. Therefore, if you do not have proof of income but, you do receive some income, you can get an adverse credit loan through companies who are dedicated to do exactly this.
There are very many companies that you can access online and read all the information they have to offer. You can even apply online and follow all the necessary steps you need to get the remortgage. You need to know exactly which lenders are willing to give you the remortgage. Street lenders consider people with adverse credit as risky and therefore do not consider them. But, this is just the appearance and many lenders have given the credit seekers a second chance to the amazement of a booming market. Therefore bad history should not write somebody of and, it might have happened without contemplation or unavoidable circumstances. Some of the people who stick to the adverse credit remortgage plan end up rising and investing in so much more.
Something that is related to adverse credit remortgage is the poor credit mortgage. It is for people whose mortgage applications have been turned down by mainstream lenders because of defaults that have occurred due to mistakes. These people will have to find poor credit mortgages. Lenders of such mortgages do not dwell on the history but look to the possibilities in the future. Therefore, when you find yourself in a bad credit situation, you can gather some confidence and know that you can start again. You need to search for a plan that is fair and will suit your budget. Sometimes, lenders of the poor and adverse credit remortgages may take advantage of your situation and offer very high interest rates that will not be suitable for you. Find a lender who will have a tailor made plan for you and you can look forward to a brighter future.
There are many players in the remortgage sector, and this has ultimately led to a high competition for clients and in turn you will get a better deal. It is only through finding out the various deals available that you can judge which best fits you. You can go for fixed rates, discounted rates and also variable rates because the options are many and there will be an adverse credit remortgage for you. Some people might be unemployed or self employed with no evidence of income. The bottom line is to have some income which can be regularly paid. Therefore, if you do not have proof of income but, you do receive some income, you can get an adverse credit loan through companies who are dedicated to do exactly this.
There are very many companies that you can access online and read all the information they have to offer. You can even apply online and follow all the necessary steps you need to get the remortgage. You need to know exactly which lenders are willing to give you the remortgage. Street lenders consider people with adverse credit as risky and therefore do not consider them. But, this is just the appearance and many lenders have given the credit seekers a second chance to the amazement of a booming market. Therefore bad history should not write somebody of and, it might have happened without contemplation or unavoidable circumstances. Some of the people who stick to the adverse credit remortgage plan end up rising and investing in so much more.
Something that is related to adverse credit remortgage is the poor credit mortgage. It is for people whose mortgage applications have been turned down by mainstream lenders because of defaults that have occurred due to mistakes. These people will have to find poor credit mortgages. Lenders of such mortgages do not dwell on the history but look to the possibilities in the future. Therefore, when you find yourself in a bad credit situation, you can gather some confidence and know that you can start again. You need to search for a plan that is fair and will suit your budget. Sometimes, lenders of the poor and adverse credit remortgages may take advantage of your situation and offer very high interest rates that will not be suitable for you. Find a lender who will have a tailor made plan for you and you can look forward to a brighter future.
Are New Tracker Mortgages Good or Bad?
Over the last few months and again today I've seen new tracker mortgages being pushed by lenders here in the UK and it got me thinking about the current mortgage market and if these products are a good or bad thing if I had to remortgage right now?
I'll use an example of a 2 year base rate tracker mortgage, this is an actual mortgage on offer in the UK but I won't say which lender it is. The interest rate tracks the Bank of England base rate (at the moment this is 5 per cent) and you pay +0.98 per cent on top. So if you took out this mortgage today you'd be paying 5.98 per cent interest.
CUstomers can borrow up to 75 per cent of the value of their property and there is a £999 arrangement fee, which is fairly cheap in comparison with other fees around.
Firstly I must say it's good to see a fairly competitive interest rate with the added benefit of a reasonable product arrangement fee. I say 'reasonable'; personally I think mortgage fees are a rip off becuase the lender is providing mortgages to people every day, at the very least I think there should be a cap on mortgage fees. However, in today's market a fee under £1,000 is a good start.
It's also quite a warning sign for me that all the tracker mortgages seem to have competitive interest rates and low fees at the moment, compared to fixed rate mortgages. I say this because industry experts are predicting interest rate rises in the coming months, on-one knows when exactly of course but I'd say interest rates will rise again before the end of 2008.
This means that everyone taking out a tracker mortgage now will end up with higher monthly payments by the end of the year. It seems like lenders may be trying to attract new customers with the low fees and relatively low interest rates of a tracker mortgage rather than a fixed rate mortgage. No wonder the fees and interest rates of fixed rate mortgages are increasing - lenders don't want people to take out these products so they're pricing consumers out.
One thing is for sure though, everyone has a choice when it comes to mortgages.
I'll use an example of a 2 year base rate tracker mortgage, this is an actual mortgage on offer in the UK but I won't say which lender it is. The interest rate tracks the Bank of England base rate (at the moment this is 5 per cent) and you pay +0.98 per cent on top. So if you took out this mortgage today you'd be paying 5.98 per cent interest.
CUstomers can borrow up to 75 per cent of the value of their property and there is a £999 arrangement fee, which is fairly cheap in comparison with other fees around.
Firstly I must say it's good to see a fairly competitive interest rate with the added benefit of a reasonable product arrangement fee. I say 'reasonable'; personally I think mortgage fees are a rip off becuase the lender is providing mortgages to people every day, at the very least I think there should be a cap on mortgage fees. However, in today's market a fee under £1,000 is a good start.
It's also quite a warning sign for me that all the tracker mortgages seem to have competitive interest rates and low fees at the moment, compared to fixed rate mortgages. I say this because industry experts are predicting interest rate rises in the coming months, on-one knows when exactly of course but I'd say interest rates will rise again before the end of 2008.
This means that everyone taking out a tracker mortgage now will end up with higher monthly payments by the end of the year. It seems like lenders may be trying to attract new customers with the low fees and relatively low interest rates of a tracker mortgage rather than a fixed rate mortgage. No wonder the fees and interest rates of fixed rate mortgages are increasing - lenders don't want people to take out these products so they're pricing consumers out.
One thing is for sure though, everyone has a choice when it comes to mortgages.
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