Abolishing the need to pay mortgage insurance is a major problem that all of us need to tackle. Mortgage insurance is required or included for any loan having less than 20% down payment. Mortgage insurance can be incorporated in the rate or it can appear as a separate item. Whatever may be the case, it is still compulsory to pay mortgage insurance. When it is included in the rate it is called the LPMI or Lender Paid Mortgage Insurance. The best way of getting rid of paying mortgage insurance if you choose to pay less than 20% down payment, is to finance all your purchases with two different loans. Always have two mortgages, the first mortgage and the second one. Both these mortgages can be obtained from the same lender but it would be a better idea to get the second mortgage from a lender that deals in second mortgages. It is possible to receive better rates on the second mortgage from this lender. This can be made easier by hiring an independent loan broker.
Both the first and second mortgages generally close around the same time and both the lenders know of each others existence. To make matters simpler, it would be better to combine both the loans in the same deed and sign them at the same time. It is not advisable to use two mortgages to get a full financing or no down payment contract. There are ways to do this but it is not recommended. The first mortgage will typically have a lower rate of interest than the second mortgage. There exist some home equity lines of credit or HELOCs with interest rates that are only a tiny proportion above the main rate of interest. You are eligible to apply only if your credit scores are good. Having good credit scores can only be advantageous to you as the offers that these HELOCs provide can be very attractive. The only problem with a HELOC, which is based on the main rate, is that the rate should not go too high before it is paid off, as this could be disastrous. Since the early eighties, the main or prime rate can go up sky high. It happened in the eighties, it could take place again.
Different lenders give out different interest rates when it comes to second mortgages and the difference in these rates can be very vast. Certain mortgage programs require ideal conditions when it comes to credit, income and assets. So if you are not qualified for a program, you may find it difficult to find a good rate of interest. An independent loan broker is the ideal person to help you out if you come across any difficulties. These brokers check for all the various options regarding interest rates. Good brokers generally compare 4 to 5 different mortgage programs.
When using two different loans, always look for an interest only loan or a minimum payment loan when it comes to the first mortgage. In this way, you can pay attention to paying off the prime amount on the second mortgage over a period of 5 years. If this is not affordable, then acquire a second mortgage that has a 5 year fixed period and an interest only option. This way you can make payments that are very low for a period of 5 years continuously.
All About Mortgage Credit Repair
Mortgage credit repair is one of the most damaging things you may have to undertake because your mortgage is on the line. In order to learn more about this, you should learn about mortgages first and the effect that they can have on your overall credit rating and vice versa. Your credit rating bears a heavy standard on your mortgage possibilities, so mortgage credit repair is vitally important if you have a bad credit rating and are looking for a good mortgage rate. You may find yourself in a difficult situation if you cannot properly repair your credit rating.
A mortgage is a method of using property to serve as security for the repayment of a loan. Arranging a mortgage is basically seen as the standard practice by which people can purchase land or commercial/residential real estate. This is because it presents the buyer with the option to not pay the full value immediately and rather take out a mortgage instead to cover the costs. You would need mortgage credit repair if you were in a situation in which you required a mortgage but if your credit was not good enough to support the agreement.
The Basics Of Credit In Regards To A Mortgage
Mortgage credit repair, as mentioned, is needed if your credit is in a bad place and you are unable to borrow against the property. You would find this information out with a credit report. A credit report is a report from a credit bureau that contains detailed information in regards to your credit-worthiness and your credit history. From this document, companies can decide if you are worthy of credit or make determinations based on your credit history and decide on your mortgage rate or whether or not to even grant you such a loan with terms.
A credit report contains personal information, information from public records, information from collection agencies, information from various creditors, and information from inquiries. When you obtain your credit reports, a major step to take in mortgage credit repair is to check for errors. There are often errors in credit reports and these errors can cost you a lot of time and money in waiting for the right loan agreement because of the incorrect data in your report. Always be diligent in checking reports and search for errors that may be hindering the process of taking out a loan for your family.
A mortgage is a method of using property to serve as security for the repayment of a loan. Arranging a mortgage is basically seen as the standard practice by which people can purchase land or commercial/residential real estate. This is because it presents the buyer with the option to not pay the full value immediately and rather take out a mortgage instead to cover the costs. You would need mortgage credit repair if you were in a situation in which you required a mortgage but if your credit was not good enough to support the agreement.
The Basics Of Credit In Regards To A Mortgage
Mortgage credit repair, as mentioned, is needed if your credit is in a bad place and you are unable to borrow against the property. You would find this information out with a credit report. A credit report is a report from a credit bureau that contains detailed information in regards to your credit-worthiness and your credit history. From this document, companies can decide if you are worthy of credit or make determinations based on your credit history and decide on your mortgage rate or whether or not to even grant you such a loan with terms.
A credit report contains personal information, information from public records, information from collection agencies, information from various creditors, and information from inquiries. When you obtain your credit reports, a major step to take in mortgage credit repair is to check for errors. There are often errors in credit reports and these errors can cost you a lot of time and money in waiting for the right loan agreement because of the incorrect data in your report. Always be diligent in checking reports and search for errors that may be hindering the process of taking out a loan for your family.
Private Mortgage Insurance vs. Credit Insurance
Do you want to buy a house but are worried about how you will pay for it? Of course you are and as scary as the cost of loans are at the moment there is no need to worry because your loans are protected. When you start looking into mortgage or personal loans you will discover the term "credit insurance". Credit insurance protects the loan on the chance that you can't make your payments but it is usually optional.
There are four forms of credit insurance: credit life, credit disability, involuntary unemployment, and credit property. Credit life insurance means that all of your loan will be paid off if you were to die. Credit disability insurance will make payments for you if you were injured or become ill. Involuntary unemployment insurance makes your payments if you were to loose your job - if you are not at fault. Credit property insurance protects your personal belongings if stolen or destroyed in an accident.
As great as this all sounds you really must be very careful before buying, make sure you are getting what you want and it really does cover what you need covered. keep asking questions until you get all the answers you need and please make sure you get it in writing. Credit insurance is normally very expensive so before you make a decision ask what the premiums are. Fine out if it will financed as part of the loan, can you can make monthly payments instead of financing the entire premium. You really need to find out if out if the credit insurance will cover the full length and full amount of the loan. Finally find out if there are any refund or cancellation policies for the credit insurance.
Want to buy a house but you can only put 20 percent or less down? Thats okay there is help at hand most home loan lenders will require you to have a Private Mortgage Insurance (PMI). If you were to default on the loan the PMI protects the lender. In 1998 the Homeowners Protection Act (HPA) had rules for automatic termination and borrower cancellation of PMI on home mortgages. But these rules only apply to those who purchased a house after 1999. The regulations under the HPA do not cover FHA or VA loans.
If you bought a house after August 1999, you should have terminated your PMI when you reached 22 percent equity of the original property value. Your PMI can also be canceled when you reach 20 percent, if your mortgage payments are made on time. There are a few exceptions to the PMI. If your loan is classed as "high-risk" your PMI may continue. Should your payments on the mortgage not be current and if you have a lien on your property, your PMI may continue. But again these rules are only applicable if you purchased your home after August 1999.
Say your loan was for $100,000 and your put ten percent down, $10,000 then your PMI monthly payment would be around $40. If you cancel your PMI, you could save up to $500 dollars in a year and thousands of dollars over the loan.
At the closing of the loan as well as every year, new borrows should be informed about their PMI termination and cancellation rights. In addition the borrower should receive a phone number to call for more information about their PMI.
There are four forms of credit insurance: credit life, credit disability, involuntary unemployment, and credit property. Credit life insurance means that all of your loan will be paid off if you were to die. Credit disability insurance will make payments for you if you were injured or become ill. Involuntary unemployment insurance makes your payments if you were to loose your job - if you are not at fault. Credit property insurance protects your personal belongings if stolen or destroyed in an accident.
As great as this all sounds you really must be very careful before buying, make sure you are getting what you want and it really does cover what you need covered. keep asking questions until you get all the answers you need and please make sure you get it in writing. Credit insurance is normally very expensive so before you make a decision ask what the premiums are. Fine out if it will financed as part of the loan, can you can make monthly payments instead of financing the entire premium. You really need to find out if out if the credit insurance will cover the full length and full amount of the loan. Finally find out if there are any refund or cancellation policies for the credit insurance.
Want to buy a house but you can only put 20 percent or less down? Thats okay there is help at hand most home loan lenders will require you to have a Private Mortgage Insurance (PMI). If you were to default on the loan the PMI protects the lender. In 1998 the Homeowners Protection Act (HPA) had rules for automatic termination and borrower cancellation of PMI on home mortgages. But these rules only apply to those who purchased a house after 1999. The regulations under the HPA do not cover FHA or VA loans.
If you bought a house after August 1999, you should have terminated your PMI when you reached 22 percent equity of the original property value. Your PMI can also be canceled when you reach 20 percent, if your mortgage payments are made on time. There are a few exceptions to the PMI. If your loan is classed as "high-risk" your PMI may continue. Should your payments on the mortgage not be current and if you have a lien on your property, your PMI may continue. But again these rules are only applicable if you purchased your home after August 1999.
Say your loan was for $100,000 and your put ten percent down, $10,000 then your PMI monthly payment would be around $40. If you cancel your PMI, you could save up to $500 dollars in a year and thousands of dollars over the loan.
At the closing of the loan as well as every year, new borrows should be informed about their PMI termination and cancellation rights. In addition the borrower should receive a phone number to call for more information about their PMI.
Fixed Rate Mortgages More Popular Than Ever
The Council of Mortgage lenders recently reported that an amazing 71% of all mortages and remortgages in April 2006 were arranged on fixed rate terms, that's 17% higher than the same period last year. The increasing attraction of fixed rate deals is a product of the attractive offers being made by lenders together with a desire by consumers to lock-in to the current low rates for as long as possible.
The balance shifted slightly towards new mortgages and away from remortgages, possibly a symptom of lenders making the benefits of remortgaging less attractive to existing borrowers - the recent increases in exit fees almost certainly a factor here. (That increase is currently under regulatory investigation by the way) First-time buyer mortgages grew in size slightly to an average of £106,400, that's almost £12,000 higher than April last year. First buyers are now borrowing an average of 3.21 times their earnings, which is also slightly up on last month. The average mortgage payer now spends 16.2% of their income repaying their mortgage, slightly less than previously and probably caused, the Council says, by the increased take up of fixed rate deals.
There has also been a crop of new fixed rate mortgage deals where lenders are offering to fix rates for as long as 15 years. That sounds crazy until you work out that it indicates supreme confidence in the stability of the money markets lokking forward. Heartening information for all of us.
In my opinion all these mortgage factors are reaching worrying levels with people borrowing not only more and for longer, but are also committing to repayment figures that are higher proportions of their income than ever before. All this is driven by the spiralling increase in house prices over recent years and a general worry by some people that if they don't get on the housing market now, they never will.
The balance shifted slightly towards new mortgages and away from remortgages, possibly a symptom of lenders making the benefits of remortgaging less attractive to existing borrowers - the recent increases in exit fees almost certainly a factor here. (That increase is currently under regulatory investigation by the way) First-time buyer mortgages grew in size slightly to an average of £106,400, that's almost £12,000 higher than April last year. First buyers are now borrowing an average of 3.21 times their earnings, which is also slightly up on last month. The average mortgage payer now spends 16.2% of their income repaying their mortgage, slightly less than previously and probably caused, the Council says, by the increased take up of fixed rate deals.
There has also been a crop of new fixed rate mortgage deals where lenders are offering to fix rates for as long as 15 years. That sounds crazy until you work out that it indicates supreme confidence in the stability of the money markets lokking forward. Heartening information for all of us.
In my opinion all these mortgage factors are reaching worrying levels with people borrowing not only more and for longer, but are also committing to repayment figures that are higher proportions of their income than ever before. All this is driven by the spiralling increase in house prices over recent years and a general worry by some people that if they don't get on the housing market now, they never will.
Beg, Borrow Or Steal, Make That Mortgage Payment
One of the most common things I hear when a prospective client contacts us for a mortgage refinance is "I just missed a mortgage payment and I want to refinance before it's too late". When I ask them about their credit, most of them reply "Oh I pay everything on time, I just got behind this one month on the mortgage".
It breaks my heart to tell them that in many cases, it already is too late. The reason is simple if you really think about it: If your home is your biggest investment, your greatest potential asset and your largest current liability, there is nothing more important than showing that you are able to make the payment on it every month. If you are in a cash crunch, you're better off missing or underpaying almost any other payment, such as a credit card bill, even your utility bill, instead of missing or even delaying your mortgage payment, because missing one mortgage payment can cost you tens of thousands of dollars over the years.
When you miss a mortgage payment, your credit score may not go down dramatically. But your mortgage credit quality will take a serious beating, and you'll carry it around for years. When you start out with a mortgage, regardless of what your FICO credit score is, you are rated an "A", meaning you make your mortgage payments on time. If you miss a payment, and even if you're just late enough to qualify as 30 days late, the lateness is recorded and you will become an "A-" or a "B". Just one mortgage lateness can keep you out of the refinance market for up to two years by automatically locking you out of the lowest payment programs such as Option ARMs or low-rate fixed mortgages, and you can forget about stated income programs, you will now have to prove where every penny comes from and you'll need more of them too. If it sounds a bit like high school, it is, but this time its for keeps. Keep missing or delaying payments, and you'll quickly see your mortgage quality decline to a "C" or "D", which could prevent you from refinancing entirely by eliminating your eligibility from even standard rate programs. I have seen customers who started out at 6% wind up at 10% or more solely because they chose making payments on cars or credit cards over making their mortgage payment on time.
This hurts the most when you refinance or are ready to buy a new house, because you are usually borrowing more money than you were previously, either to pay off bills or make home improvements, or because you're getting a bigger house. So not only are you moving to a higher balance, but your now derogatory mortgage credit will force you into a high rate. If you need the cash to pay off bills and improve your credit urgently, or to purchase a home in a new area because you are relocating for work, you can wind up in a horrible Catch 22, very often disqualified for financing entirely, or with financing so unaffordable that you would rather not.
So what can you do about this? If you do better with automatic payments, sign up for direct debit payment with your lender, or arrange for your bank to automatically pay your mortgage every month on a specific date which far enough ahead of the due dates for your other bills that you won't be tempted to pay something else. The day after payday is a great day to do it. And the date should be far enough ahead of your due date that the bill is paid and posted on time. It might hurt that first month, but it will even out once you get used to the new schedule.
And if you are even thinking that you might miss a mortgage payment, call up a loan officer, and not one who works for your current lender, and get refinanced today. Not only will this put a little extra cash in your pocket and help you pay off your other bills, but it will usually allow you to go a few extra weeks without making another payment out of pocket. In fact, for qualified borrowers, we even have Zero Payment & Zero Interest for 90 Day loans which are perfect for people who are at risk of missing their next payment. Because there are no payments for up to 90 days, this is a very popular product amongst our customers. Option ARMs and Fixed-Rate Option ARMs (Hybrids) are also excellent products for people who are having trouble making ends meet temporarily, but expect to get back on their feet within a few month sor a few years, respectively. Loans generally take 15 days to close, so you really need to think ahead a little bit, which is hard for all of us. But instead of freezing up, or scrambling around looking for money, call up an experienced professional and get out of that jam before you get into trouble. You're better off dealing with the issue in the present instead of regretting the past. And no matter what, make sure you satisfy your mortgage payment obligation. Everything else on your credit report can be repaired, negotiated, but not your mortgage lates. Don't wind up in a situation like many of my callers are in, ready to dance but too late to the party, plan ahead and as always, protect your financial future today!
It breaks my heart to tell them that in many cases, it already is too late. The reason is simple if you really think about it: If your home is your biggest investment, your greatest potential asset and your largest current liability, there is nothing more important than showing that you are able to make the payment on it every month. If you are in a cash crunch, you're better off missing or underpaying almost any other payment, such as a credit card bill, even your utility bill, instead of missing or even delaying your mortgage payment, because missing one mortgage payment can cost you tens of thousands of dollars over the years.
When you miss a mortgage payment, your credit score may not go down dramatically. But your mortgage credit quality will take a serious beating, and you'll carry it around for years. When you start out with a mortgage, regardless of what your FICO credit score is, you are rated an "A", meaning you make your mortgage payments on time. If you miss a payment, and even if you're just late enough to qualify as 30 days late, the lateness is recorded and you will become an "A-" or a "B". Just one mortgage lateness can keep you out of the refinance market for up to two years by automatically locking you out of the lowest payment programs such as Option ARMs or low-rate fixed mortgages, and you can forget about stated income programs, you will now have to prove where every penny comes from and you'll need more of them too. If it sounds a bit like high school, it is, but this time its for keeps. Keep missing or delaying payments, and you'll quickly see your mortgage quality decline to a "C" or "D", which could prevent you from refinancing entirely by eliminating your eligibility from even standard rate programs. I have seen customers who started out at 6% wind up at 10% or more solely because they chose making payments on cars or credit cards over making their mortgage payment on time.
This hurts the most when you refinance or are ready to buy a new house, because you are usually borrowing more money than you were previously, either to pay off bills or make home improvements, or because you're getting a bigger house. So not only are you moving to a higher balance, but your now derogatory mortgage credit will force you into a high rate. If you need the cash to pay off bills and improve your credit urgently, or to purchase a home in a new area because you are relocating for work, you can wind up in a horrible Catch 22, very often disqualified for financing entirely, or with financing so unaffordable that you would rather not.
So what can you do about this? If you do better with automatic payments, sign up for direct debit payment with your lender, or arrange for your bank to automatically pay your mortgage every month on a specific date which far enough ahead of the due dates for your other bills that you won't be tempted to pay something else. The day after payday is a great day to do it. And the date should be far enough ahead of your due date that the bill is paid and posted on time. It might hurt that first month, but it will even out once you get used to the new schedule.
And if you are even thinking that you might miss a mortgage payment, call up a loan officer, and not one who works for your current lender, and get refinanced today. Not only will this put a little extra cash in your pocket and help you pay off your other bills, but it will usually allow you to go a few extra weeks without making another payment out of pocket. In fact, for qualified borrowers, we even have Zero Payment & Zero Interest for 90 Day loans which are perfect for people who are at risk of missing their next payment. Because there are no payments for up to 90 days, this is a very popular product amongst our customers. Option ARMs and Fixed-Rate Option ARMs (Hybrids) are also excellent products for people who are having trouble making ends meet temporarily, but expect to get back on their feet within a few month sor a few years, respectively. Loans generally take 15 days to close, so you really need to think ahead a little bit, which is hard for all of us. But instead of freezing up, or scrambling around looking for money, call up an experienced professional and get out of that jam before you get into trouble. You're better off dealing with the issue in the present instead of regretting the past. And no matter what, make sure you satisfy your mortgage payment obligation. Everything else on your credit report can be repaired, negotiated, but not your mortgage lates. Don't wind up in a situation like many of my callers are in, ready to dance but too late to the party, plan ahead and as always, protect your financial future today!
More Canadians Purchasing Second Homes
More Canadians than ever are purchasing second homes. No longer the purview of the wealthy, second home ownership has gone mainstream. For many Canadians, it's the dream of a summer cottage, golf retreat or a winter chalet.
For others, career or family demands fuel the desire for a second home: for business stays, or to shelter the university student studying in a distant community.
Now that the Canada Mortgage and Housing Corporation(CMHC) has introduced a Second Home program - helping Canadians borrow up to 95% of the home's value - the purchase of a second home is easier than ever. And the attraction of the real estate investment is just as compelling with your second home as it is with your first. Not only can it be a good financial investment, but it's an important
emotional investment too. Here are some things to keep in mind when you finance a second home:
Can You Afford It?
This is the most important question you have to ask yourself. If you are planning to purchase a second home, you'll want the best possible financing for your new real estate investment. There's no question that financing is easier than ever. But a mortgage broker can help you figure out exactly how much second home you can
comfortably afford. It's a great time to begin that conversation;
market conditions are in your favour, and mortgage interest rates are still at a near all time historical low.
What Are Your Financing Options?
The CMHC Second Home program has been the big breakthrough for Canadian second-home buyers CMHC will insure a property purchased
for a family member attending college or university away from home. And the program is very popular as a means of purchasing a vacation property. There are a few provisos here: either the borrower must occupy the property for at least some part of the year, or a family member must occupy the property on a rent-free basis. The property must be winterized, and be accessible for year-round occupancy.
And it must be located in Canada. Be careful with island properties; they should have year-round bridge or ferry access. Note, too, that program can't be used to purchase time-shares or similar rental pools.
What Do The Mortgages Look Like?
By far your best bet here is to talk to an independent Ontario mortgage broker with access to a wide range of lenders. The mortgages for second homes can vary widely in the rates and requirements.
Can I Leverage My Existing Equity In My Primary Home?
This is an option that your mortgage broker can help you look at. This involves a cash-out refinancing of your existing primary home mortgage with a higher borrowed amount. Instead of waiting and saving years for a second home, you can access money based on the value of your primary residence and your present financial profile to help you finance a second property.
A Second Mortgage For A Second Home?
Is this the right option for you? A second mortgage is the most common way to use your home equity. No need to wait until you've saved a down payment for a second home investment, but you must
have the funds and cash flow to comfortably make both mortgage payments. Your broker will work out the best terms for you.
It's your second home. That means that it's primarily for your own or your family's use (although you may rent it out casually and temporarily). If you're looking to purchase an investment property, your mortgage broker can help with that too... but it's not the same as purchasing a second home.
If there's a family cottage in your dreams or a student condo in your plans, this is the time to get serious about a mortgage plan to make it happen.
For others, career or family demands fuel the desire for a second home: for business stays, or to shelter the university student studying in a distant community.
Now that the Canada Mortgage and Housing Corporation(CMHC) has introduced a Second Home program - helping Canadians borrow up to 95% of the home's value - the purchase of a second home is easier than ever. And the attraction of the real estate investment is just as compelling with your second home as it is with your first. Not only can it be a good financial investment, but it's an important
emotional investment too. Here are some things to keep in mind when you finance a second home:
Can You Afford It?
This is the most important question you have to ask yourself. If you are planning to purchase a second home, you'll want the best possible financing for your new real estate investment. There's no question that financing is easier than ever. But a mortgage broker can help you figure out exactly how much second home you can
comfortably afford. It's a great time to begin that conversation;
market conditions are in your favour, and mortgage interest rates are still at a near all time historical low.
What Are Your Financing Options?
The CMHC Second Home program has been the big breakthrough for Canadian second-home buyers CMHC will insure a property purchased
for a family member attending college or university away from home. And the program is very popular as a means of purchasing a vacation property. There are a few provisos here: either the borrower must occupy the property for at least some part of the year, or a family member must occupy the property on a rent-free basis. The property must be winterized, and be accessible for year-round occupancy.
And it must be located in Canada. Be careful with island properties; they should have year-round bridge or ferry access. Note, too, that program can't be used to purchase time-shares or similar rental pools.
What Do The Mortgages Look Like?
By far your best bet here is to talk to an independent Ontario mortgage broker with access to a wide range of lenders. The mortgages for second homes can vary widely in the rates and requirements.
Can I Leverage My Existing Equity In My Primary Home?
This is an option that your mortgage broker can help you look at. This involves a cash-out refinancing of your existing primary home mortgage with a higher borrowed amount. Instead of waiting and saving years for a second home, you can access money based on the value of your primary residence and your present financial profile to help you finance a second property.
A Second Mortgage For A Second Home?
Is this the right option for you? A second mortgage is the most common way to use your home equity. No need to wait until you've saved a down payment for a second home investment, but you must
have the funds and cash flow to comfortably make both mortgage payments. Your broker will work out the best terms for you.
It's your second home. That means that it's primarily for your own or your family's use (although you may rent it out casually and temporarily). If you're looking to purchase an investment property, your mortgage broker can help with that too... but it's not the same as purchasing a second home.
If there's a family cottage in your dreams or a student condo in your plans, this is the time to get serious about a mortgage plan to make it happen.
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