Feb 23
adminCheap Mortgages
During the past five years lenders have seen a boom in the demand for second mortgages as borrowers look to capitalise on the equity in their home. The low cost of borrowing coupled with the spiralling value of homes in the UK has led to a substantial strengthening of the equity position of many a homeowner. The equity position of some homeowners is in fact so strong that they now find themselves in the fortunate position of having more equity in their home than they have debts secured against their home on first mortgages and other loans.
Buoyed by the healthy state of positive property equity confidence is running high when it comes to homeowners committing to further borrowing. Many are taking the opportunity to secure second and even third charge loans against the equity in their property in order to release cash funds. Even the more conservative borrowers are now beginning to see the light, despite experts predicting of an imminent slowdown in the housing market.
If you’re thinking about releasing equity in your home through a second mortgage, here are some things you’ll need to consider before you take the plunge: -
Interest rates on second mortgages
The interest rates charged on second mortgages are often higher than those that are levied on first mortgages. This is because lenders see second mortgages as a higher risk than first mortgages and so compensate for this risk through fixing higher interest rates on second mortgages.
The increased risk factor on a second mortgage is down to the fact that these types of mortgages are a second charge on the property. That is to say that in the event of you defaulting on repayment to the point that your home is repossessed, the first mortgage lender legally gets first bite of the cherry when it comes to recovery of the loan. For second loans secured against the property, the lender has to wait its turn, running the risk that it may recover only part of the loan advanced or in some cases none of the loan advanced.
Lending criteria
Different lenders have different lending criteria for second charge mortgages. Whilst all lenders are likely to assess applicants for a second mortgage on the value of their home, their ability to repay the loan and their current income to debt ratio, not all lenders will give the same weight to these factors in the final analysis. This is why you may be rejected by one lender but accepted by another on an almost identical second mortgage offer.
Can you afford the repayments?
For a lender to be convinced that you are able to meet the repayments on a second mortgage, you’ll need to be sure how you’re going to repay the loan. You should never take on a second mortgage without first planning how you will pay the money back.
Different types of second charge mortgages
There are several different types of second charge mortgages to choose from. Be sure to get information on all your options and select the type of second mortgage that is most suitable for your circumstances. It is advisable to never borrow more than the current equity value in your home.
Feb 16
adminCheap Mortgages
In these times of rising interest rates, second mortgages or first mortgage refinancing might be just the thing to keep your housing costs from going through the roof. In a recent article in Parade magazine, How To Save on Your Mortgage, Lynn Brenner considered the question,
Will Your Mortgage Rate Go Up?
If you have a fixed-rate mortgage, you have nothing to worry about. But millions of home owners are sitting on a financial time bomb: Their monthly payments are preset to skyrocket sometime in the next 18 months. These owners have hybrid adjustable rate mortgages (ARMs), which start with a fixed rate for three to 10 years but later are adjusted annually.
Lets say you bought a house in 2003 with a 200,000 three-year hybrid ARM. For the first three years, your rate was about 3.8% and your monthly payment was 930. But this year, your rate could be reset to 7.3%, says Greg McBride, senior analyst at Bankrate.com, a personal finance site. That means your monthly payment could jump to 1,334.
Brenner goes on to recommend that, If you have an adjustable rate mortgage thats due to adjust this year or in 2007, consider refinancing. Taking out a new loan with different terms and paying off the old one can save you money. Refinancing does not make sense for everyone, however. If you intend to move in a year or two, for example, you may not save enough to recoup the costs of refinancingusually about 1.5% to 2% of the loan.
If you plan to stay in your house 10 years or longer, a fixed-rate mortgage is worth the extra cost to avoid rate increases. A hybrid ARM is a little less expensive, but you are vulnerable to future rate hikes, so look for one whose fixed rate lasts as long as you expect to stay in the house.
Benefits of Fixed-Rate Second Mortgages
Fixed-rate second mortgages can be less expensive than refinancing first mortgages. They usually have lower annual percentage rates (APR) than other forms of borrowing and they can save on taxes because the interest on mortgages is deductible. Second mortgages are also easier to get than unsecured loans or lines of credit.
Like a first mortgage, a second mortgage payment consists of principal and interest. Unlike a first mortgage, nothing is put into escrow to cover expenses such as homeowner insurance, property taxes and Private Mortgage Insurance.
Applying for a second mortgage is often faster than refinancing a first mortgage and requires a lot les paperwork. Its safe and secure to apply online from the convenience of your own home.
Mortgages as Products
Mortgages are products, just like automobiles or new living room furniturejust a whole lot more expensive. A home is often the largest financial transaction people ever undertake. Before signing the loan papers, get information from several lenders. Compare all the important information such as interest rates, discount points, closing costs, legal fees, title and insurance, etc.
If you have bad credit, you will be charged a higher interest rate, but according to The Equal Credit Opportunity Act, you cannot be denied a loan on the basis of race, color, religion, national origin, sex, marital status or age.
To get current rates on mortgage refinancing, visit www.easysecondmortgages.com. For a competitive second mortgage quote, check out www.easymortgagerefinancing.com.
Feb 09
adminCheap Mortgages
Reverse Mortgages – Get The Money You Need – Part 1 Of 4
Reverse Mortgages are loans that allow you to borrow back the equity in your home. Just as you once paid the bank, the bank now pays you. Isn’t that a nice change?
If you are 62 years of age or older, they are a way to borrow against the equity in your home (the value of your home minus any mortgage debt you now have) to provide you with tax-free income. Seniors struggling because of falling retirement account balances and increases in the cost of medical care are looking for new sources of cash to maintain their standard of living.
The amount you can borrow depends on your age, the value of your home and interest rates.
Fortunately, you continue to own and live in the home for the life of the loan. There are no loan payments until you sell the house, die or move out for a period of a year or longer.
You can get the money as a line of credit, a monthly payment, a lump sum, or a combination of all of these. A monthly payment is a guaranteed of income for as long as you live in your residence, whereas; a lump sum could be used as you wish, such as to purchase an annuity that could provide you with a life long income. With a line of credit, you don’t have to pay interest on money you haven’t withdrawn and your money will earn interest while it’s waiting to be used by you.
A Reverse Mortgage might be worth considering if:
-You plan to stay in your home.
-You want to enhance your lifestyle and enjoy your golden years.
-You want funds for major expenses such as medical bills, or for major home repairs.
-You need additional income to live on and your only significant asset is your home.
-You want the peace-of-mind that comes from knowing your financial needs are taken care of.
-You own your home free and clear, or you have a small first mortgage.
-You don’t plan to leave your home to your heirs.
What are some of the potential advantages of Reverse Mortgages?
-It can help you maintain your financial independence or improve your quality of life.
-You can stay in your home and keep title to the property.
-The money you receive is tax-free and is not usually considered income.
-You make no payments until the loan ends or the house is sold.
-Your income is not a consideration in obtaining the loan since there are no payments until the loan ends.
-You cannot owe more than the value of the home at the end of the loan.
If you’re a senior, I hope you can see the benefits of taking advantage of this income source, if you need it.
This is a four part series, one each week right here, same location. In Part 2 next week, we’ll explore much more, including the drawbacks of a reverse mortgage and what types are available.
Feb 02
adminCheap Mortgages
Reverse mortgages can be a great solution for seniors who wish to remain in their home but are having difficulty making their monthly payments and meeting other financial obligations. If you are over age 62 and own your own home, the bank will actually pay you money so you can stay in your home, rather than the other way around. It is important to collect as much reverse mortgage information as possible before deciding whether to take out the loan.
Anyone is eligible for a reverse mortgage loan, even if they have no income. Your home must be a single family residence in a one to four unit dwelling, a condominium or some type of manufactured home. Cooperatives and most mobile homes are not eligible. The home must be at least one year old and you have to first meet with an authorized counselor.
You can obtain the loan as a lump sum payment, a fixed monthly amount or as a line of credit that you use whenever you need it. The money can be used for just about any purpose. This can include paying property taxes or medical bills, home repairs and improvements, paying off credit cards or just daily living expenses. The amount of money you receive depends upon your age, the amount of equity in the home, its appraised value and current interest rates. The reverse mortgage loan does not have to be repaid until you sell the home, permanently move out, or pass away. Your loan could also become due if you allow the property to deteriorate, you fail to pay property taxes or hazard insurance, or if the last surviving borrower does not occupy the home for 12 months in a row due to illness.
There are some fees involved with a reverse mortgage loan, similar to those you would incur with a regular mortgage. These include origination fees which cover the lenders operating expenses and are currently capped at the greater of 2,000 or 2% of the maximum FHA loan limit. In addition you will be required to take out mortgage insurance and pay an appraisal fee which ranges between 300 – 400. Other closing costs include fees for a credit report (usually under 20), flood certification, closing and title search, document preparation, recording, courier, pest inspection and a land survey. In addition, a monthly service set-aside fee of 30-35 per month will be charged.
When you meet with your counselor, you should be able to obtain all the reverse mortgage information you require before you make your final decision. It will be nice to have the option of staying in your own home if that is what you desire.
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