Equity Interest Rates

Saturday, December 1, 2007

Beware of No-Equity Home Loans

Over the last few years, we’ve enjoyed continually rising home values and extremely low interest rates. Many homeowners have taken advantage of these very favorable conditions and tapped into the equity of their homes. They’ve used this inexpensive money to accomplish a number of good things, such as pay off high-interest debt or finance home improvements. But using a portion of one’s home equity is one thing; exceeding your equity completely is quite a different matter. A large number of people have fallen victim to the lure of the no-equity home loan.

A no-equity home loan is simply a more attractive name for a high loan-to-value (LTV) home equity loan, in which the loan amount of the mortgage actually equals or even exceeds the value of the property, sometimes by as much as 25 percent. This actually creates a combination secured/unsecured loan. Not surprisingly, these very risky and expensive loans are aimed at those who desperately need a quick cash infusion. And, unfortunately, that's a booming market. Indeed, loan originations in the subprime market have grown from $25 billion in 1993 to over $180 billion today.

The problems with these loans are many. To begin with, the interest rates are extremely high. They’re generally two- to six percentage points higher than traditional home equity rates. Then there are the fees, which are also higher than those for standard home equity loans. Of course, the total cost of the loan can vary greatly, depending upon your credit rating, the lender, market interest rates, and the structure of the loan. What’s more, you’ll also be required to purchase Private Mortgage Insurance (PMI), which typically adds an additional one-half- to one percent onto your loan balance. You’d need the PMI to cover the amount of the loan that’s greater than 80% of your home's value, but doesn't yet exceed 100%. In other words, you'll need PMI on 20% of the secured part of your loan.

You’ll also have to consider the tax implications of a 125% home loan. Home equity loan interest is tax deductible up to a maximum of $100,000 ($50,000 if you're married filing separately). But those rules are slightly different with high LTV loans. Any interest paid on the amount of the loan which exceeds your home's value is not tax deductible. So be sure to consult your tax advisor before committing to any of these loans.

Selling your home may also pose a problem. If you needed to quickly sell your $100,000 home that you owe $125,000 on, it’s pretty likely that you’ll have quite a dilemma. If you couldn’t come up with the full amount that you owed when you sold the home, your loan would be in default. And at that point you're probably looking at foreclosure and possibly even bankruptcy.

Don't get caught by the slick advertising for these loans. If you need to borrow more than the equity that you have in your home, it would probably be more advantageous for you to combine a traditional home equity loan with an unsecured personal loan rather exposing your dwelling place to such a high risk.

By: www.finweb.com

Getting a Home Loan After Bankruptcy

If there is a past bankruptcy showing on your credit report you may think that you won t be able to buy a new home with the assistance of a mortgage loan. However, there are bad credit home loans available for those who have undergone a bankruptcy and qualification is not that difficult. There are two issues that will be taken into account by the lender, they ll verify your income and probably request a down payment.

Waiting period

There is a waiting period you ll have to face after bankruptcy has been discharged. Most lenders will require that 3 years have gone by since the discharge before even considering granting you a loan. During this time you should make sure your bills are paid on time and you don t fall behind payments, so when you finally apply for a loan your credit will have improved considerably and you ll be able to get a home loan without the need of money down.

Down PaymentIf you intend to get a mortgage loan before this waiting period, you ll need to meet very strict requirements. You ll have to show that you haven t missed a single payment nor you have late payments at all. You ll also be required to provide a down payment in order to get approved. You ll have to put as much as 10% of the property value down. If you can t provide a down payment it is quite difficult to get approved but there are still other options.

You can always borrow the money from family or friends. You can always repay them since when you get the home loan you ll be able to request a home equity loan as you ll by then own the property. Bear in mind though, that some lenders are reluctant to accept down payments not raised directly by the applicant and you are obligated to reveal this information, so you might as well ask the lender before making such a move

There are programs that can help you with down payment too. These basically provide the seller the ability to help the buyer with the down payment which is otherwise strictly prohibited. You can ask your real estate agent for this information as they are surely able to provide it. Some lenders are also reluctant to accept this kind of transactions, but you can always try.

Another option is to apply for government grants, there are grants specially designed for helping people in this kind of situations. Consult with local offices and with your real estate agent weather you qualify or not for such aid. As opposed to the previous options, government grants do not need to be repaid so they should be the first solution to consider as you could save thousands not only by not paying back the principal but also by avoiding interests.

Bryan Quinn

Home Equity Loan: ensures against your heavy expenses

Home when acts as collateral in home equity loan helps the borrower to manage their heavy weigh expenses at cheaper rates for the larger loaned amount. Borrower can easily overcome their needs or desires with home equity loan that demands larger amount in a smooth and easy way.

Home equity loans are secured loans where borrower's home acts as collateral for the loaned amount. While talking about home equity loan, it relates to the fact that present equity in the home by deducting the previous debts amount which is considered on the behalf of borrower's home.

While availing home equity loan, the lender is at low risk as to equalize lender's risk home places a vital role in determining better terms. Like in Home Equity Loan lower interest rate is offered with flexible repayment option. The loaned amount is purely depended upon the value of equity; larger the equity value larger the loaned amount sanctioned. Usually, borrower avails the amount ranging from £5000-£75,000 for easy time tenure ranging up to 25 years. Borrower must get his home evaluated from dealers so that he knows about the exact figure that his home can fetch him.

Besides the best offered terms home equity loan ensures hurdle free approval for imperfect credit holders like CCJ's, IVA, arrear, defaulters, bankrupts etc. Though, they too enjoy best offers for their needs as they secure the lender with some valuable collateral which can equalize their risk.

Home equity loan can be accessed through online source; online is proved to be boon for the online borrowers as while sitting at home or office they can avail the loan. Therefore, while searching for the home equity loan borrowers must compare and contrast the quotes of the different lenders. So that he sets the best deal for his needs. Besides that borrowers can access for home equity loan from banks, financial institutions or leading lenders.

by Johns Tiel

Home Financing 101: The FHA Streamline Loan

If you need a quick and straightforward way to refinance your exciting FHA loan, you might want to consider applying for an FHA streamline Loan. This article presents FHA Streamline Loan information and advice on how to apply.

FHA Streamline Loan Information - What Is It?

An FHA Streamline Loan is used when refinancing a loan on a current property. FHA developed the Streamline loan so that customers could refinance more quickly and with less hassle. The term "streamline" simply refers to the kind of refinancing plan you are using. With an FHA Streamline Loan, information requirements are simplified which results in reduced paperwork, underwriting, and documentation. The trade off with an FHA streamline refinance is higher restrictions, but if your aim is simply to reduce your terms and/or payments, you should give serious consideration to an FHA Streamline Loan. Information on qualifications and restrictions are included below. For FHA Streamline Loan application information specific to your situations, you can talk to an FHA lender.

FHA Streamline Loan Information - Will My Costs be Reduced?

With a successful FHA Streamline Loan application, your monthly costs and/or overall mortgage costs over the life of the loan will reduce, but a Streamline FHA loan is not cost free - closing costs either need to be:
- Paid out-of-pocket - Included in the loan amount - Exchanged for a higher interest rate (yet one that is still lower than the current rate)

Depending on the details of your situation and your FHA Streamline Loan application, you may be able to obtain a streamline refinance without paying any out-of-pocket fees.

FHA Streamline Loan Information - Who Qualifies?

Successful FHA Streamline Loan application requires:
- The mortgage to be currently insured by the FHA - The mortgage to be current--not in default, no late payments - The refinanced loan to result in lower monthly payments (principal and interest) for the borrower - Subject loan to be more than 6 months old In addition, the FHA Streamline Loan application is subject to other restrictions. For example, cash-out is not an option and there are limits on the term lengths relative to the current situation. Essentially, the new arrangement cannot significantly increase the life of the loan for loans that have been paid down a whole lot, and a 15 year mortgage cannot be changed to a 30 year term. Clarifying what you are able to accomplish will require more specific consideration of your specific FHA Streamline Loan information with the aid of a qualified FHA lender.

FHA Streamline Loan Information - How Do I Apply?

In order to process an FHA Streamline Loan Application, you will need the help of a qualified FHA lender. If you feel that an FHA Streamline Loan is right for you, you should contact an FHA lender to discuss terms and rates. You will have a short FHA Streamline Loan Application to fill out, and the lender will give you more FHA Streamline Loan information regarding the process, your options, and what to do to move forward.
The focus of the FHA Streamline Loan Application is to make your home's mortgage more affordable and more manageable for you. If you've had your current loan for a good amount of time, improved your credit standing, or increased equity in your home, it may be a good time to contact your FHA lender for more information and to complete an FHA Streamline Loan application.

This article is provided by Access National Mortgage, based in Denver Colorado. Access National Mortgage provides progressive and superior financial solutions like a New Mexico FHA Loan Application, a Wyoming FHA Mortgage Calculator, debt consolidation loans, information about California FHA refinance benefits and whole host of other mortgage products all across the United States.

by accessnational@gmail.com

Keep Yourself Together with a Split Home Loan In 3 Simple Steps

When you are selecting a split loan, you can customise the loan and take advantage of the various features that different financial loans have to provide. The features available with this type of debt make it particularly attractive for first time borrowers.

If you speculate about interest rates going up, but don�t want to be stuck in a fixed interest loan, a split loan may be the best result for you. Also known as a combination financial loan, a split home debt marries the flexibility of a variable rate financial loan with the stability of a fixed rate debt.

Most borrowers choose to divide their financial loan equally, having 50% fixed and 50% variable, but the debt can be divide in other ways, such as 60% fixed and 40% variable.

When deciding whether a split rate loan is proper for you, it�s important to consider the advantages of both fixed rate and variable rate financial loans, and how these fit in with your current financial situation.

If you need the flexibility of a debt that will allow you to make extra repayments, a variable rate financial loan may be best for you; but if you need to know exactly how much to budget for your repayments every month, you should consider a fixed rate loan. If you want the best of both worlds, a split financial loan may be perfect. Speak to your financial broker to find out whether a split loan would work for you.

Split debts are especially popular in times of economic uncertainty, for example, when interest rates are increasing. By splitting a financial loan, borrowers can be protected against the risk of higher rates by having part of their loan at the devalue fixed rate.

Borrowers with split loans generally have the option to choose a different repayment method for each part of the split. How does this work? Well, if interest rates are going up, you are safe in the knowledge that the fixed part of your financial loan is safe from movement. On the other hand, if interest rates don�t change, or even go down, then you can make the most of the variable portion of your debt and pay off that part faster.

By:Evelyn Miller

Life after Filing Bankruptcy

Filing for bankruptcy will undeniably have a great impact on your credit but sometimes it becomes the only option. It is important to evaluate the budgeting and financial mistakes that helped lead you to this direction. While we realize you didn t get there on purpose you should self examine your spending habits and start working on ways to rebuild your credit. Yes you heard us right; you can still work on rebuilding your credit even AFTER filing a bankruptcy. But, it will take time and perseverance on your part.

Below are some tips to help you reestablish your credit after filing for bankruptcy.

1. Learn to live within your financial means. Spend your money wisely and do not buy luxury items that are not a necessity for living! This is an important lesson to learn and it will be hard to talk yourself out of some of those luxury purchases but you will thank yourself later.

2. Apply for a secured credit card and be sure to repay on time! This will reflect positively on your credit report and help you to start a new and on time paying credit history. Try not to jump right back in and get a card with a high deposit amount, start out small and progress forward.

3. Open a new checking and/or savings account. Lenders will take this into consideration when determining if you are responsible enough to lend money too.

4. This one can be trick, but see if you have a friend or relative that will cosign on a credit card or small loan with you and then be sure to make all the payments on time. This will help to reestablish good credit and an on time payment history.

5. When applying for new credit, try to start with a gas card or store credit card these are items you would normally pay for in cash but now you can pay the bill monthly to reestablish credit. This may be a wise choice as to not give yourself extra credit on items you may not need right now!

6. Payday loans should always be a last resort and avoided at all costs if at all possible! The interest rates are extremely high and they can easily become a bad credit trap after all your hard work.

7. Lastly, pay all your credit card and utility bills on time!

These few small tips will help you to reestablish your credit history after surviving your bankruptcy. Don t give up hope, it is possible but it will take time, effort and a lot of hard work and determination.

Author-Bio: Sam Argon is a retired banker who loves to contribute to financial message boards in his spare time. In addition, Sam has written information about filing bankruptcy here:

http://www.filingforbankruptcyonline.com/

Loan Philosophy: The Difference Between Lenders and Investors

As a mortgage broker, I have the pleasure of seeing quite a number of potential loan transactions. I used the word "potential," because not all of them work out. Actually, there are quite a few turkeys in with the swans!

A common scenario is a refinance or a purchase where the investor comes to me with something like: "Man, this is the BEST property in the area, it's worth $5 Million Dollars, and I'm buying it for $3 Million! I need a 90% loan and I need it NOW!" OK ... so I've exaggerated just a bit. In reality the value of the property will probably be accurate for the market, but I'll still get the request for the high loan to value.

Until recently, I probably couldn't have gotten a 90% loan on a commercial property except in the limited case of a Small Business Administration guaranteed acquisition loan. First, because no one offered a 90% loan on commercial property and second, because the property most likely wouldn't have supported the debt service.

The big change in that scenario has been the advent of the "small balance commercial lender" in the last couple of years. They blend commercial and residential underwriting methods to get higher LTVs. I'll save an article on this kind of lender for later because I want to focus on the reason why a conventional commercial lender doesn't really care how great of a deal the investor is getting in a particular property. It's because there is a very basic difference in philosophy between lender and investor.

An investor is concerned with maximizing the return on his equity. Whether through leverage, adding value by making improvements, or adding value through improving a property's cash flow, the goal is to make as much money on the equity investment as possible. The return he receives is commensurate with the risk he takes with his equity investment

A lender is concerned with something entirely different: Getting paid back! A lender approaches a loan as an "investment," as well. In fact, in the loan business we often call our lenders "investors." But these investors approach their investment from the standpoint of managing their risk in return for an acceptable rate of return: The note rate on the loan. The property that the investor views as a growing asset the conventional lender views solely as security for the loan. (Again, I'm not talking about private lenders who might have other motivations).

So when you hear an investor say something like: "I don't understand why they didn't give me the loan! The property is worth SO much and they can always take it back if I don't pay!" Well, the reality is that the lender doesn't want the property back ... they just want their money back, as agreed.

Craig Higdon