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Mortgage rates » Mortgage

Home buying made easy with decrease in mortgage rate in the United States

With the decline in mortgage rates in the United States, more and more people have decided to purchase home. It’s not at all an easy task to search for the right kind of home with such tough competition in the mortgage market. You will have to be very careful when shopping around for home. Checking the mortgage rate is of utmost importance if you want your home buying process to be a successful one. Previously, the mortgage rate was so high that most people could not afford to purchase home. However, the mortgage rate has fallen down at present. The rate for 30 year fixed mortgage is 2.75% while the rate for 15 year fixed mortgage is 2.25% till date. As such, homebuyers who are searching for homes can avail the advantage of this reduction in mortgage rate and purchase their abode without difficulty. Continue Reading…

A clear insight into the key mortgage industry hiring trends in 2013

An expanding national recruiting and strategic growth firm for the financial service industry; Hammerhouse LLC has released an annual outlook on the key hiring trends that will have an effect on the mortgage industry, 2013. According to the aforementioned firm, the mortgage industry will evolve gradually and the job of the originators will gradually become more professional. The mortgage hiring industry will continue to stabilize and all those mortgage lending companies that are well-structured with strong leaders, balanced production, geographically oriented and financially strong. 2013 will certain be the year to outshine among the peers. Check out the mortgage industry hiring trends in the year 2013. Continue Reading…

It’s been a while

I haven’t written for a while because I was on vacation. I visited Greece this autumn. Greece is very nice and for everybody’s pockets. I also took one day and sailed around Athos mountain. Really nice views. A lot of monasteries where built in that blessed place. I have also visited Thessaloníki. Great city, with a lot of beautiful girls. Well, that being said, let’s get back to business.

I am preparing for the next period a section where mortgage lenders can submit their information, a sort of directory for them. I am planning to first build this for the US mortgage lenders, and after a while, to integrate this worldwide. I hope this will ease up the process of finding a mortgage lenders for those in need.

That is all for now.

Best wishes

Bad Credit Loan Mortgage

Credit and Credit Reputation

Credit – everyone has it. It is rising fast in popularity that almost everybody you know, including yourself has credit. Credit, in layman’s term, is using someone else’s money in order for you to make ends meet, or simply to purchase properties that you want. Credit nowadays can get you either anywhere or nowhere at all. The determining factor of your power to get credits from a store, bank or credit card company is how clean your credit reputation is.

Synonymous to credit reputation is credit history. Every time you fill out a credit application, your information is forwarded to a credit bureau that keeps track of your credit accounts which includes the amount you owe, how often or how prompt you pay the amount, and other personal information. This composes your credit history, which consequently, reflects your credit worthiness, or how good or prompt you are in paying your debts.

Bad Credits

Women with a headacheWhen your credit history is being cramped with defaulted payments on previous loans, or when you are simply being a bad creditor, you are then tagged as a person with bad credit. Bad credit is known to the industry as a negative credit rating. Most lenders would try to avoid bad creditors as much as possible, and for this, you can never blame them. Who would want to lend someone with bad credit reputation? What if the debtor would never choose to pay? These are just of the things that bother lenders when it comes to dealing with people who have bad credits.

Anyone can get involved in a bad credit. Missing to pay a loan on time for various reasons like you cannot afford to at the moment will stain your credit history. Your credit report can get flagged by these missed payments thus giving you a hard time when you decide to apply for a new loan.

Bad Credit Loans

Credit score, credit reputation, credit history – they are all the same and it doesn’t really matter how you call it. What matters most is that your credit score will hound you even if you go as far as to the ends of the earth to escape it. There is just no escaping one’s credit past and being a bad creditor would bring about a continual struggle when it comes to getting yourself a loan.

It is only sensible that having a bad credit on your record would require you not to take on any more debt. More debt would increase the chances of worsening your already adverse credit history. But there are some circumstances where you need to loan more money especially when there is an urgent need for you to purchase a house or get a mortgage. And no matter what history your credit is like, you should be able to avail of any mortgage or buy a house that you wish for. Though lenders would most likely shun away from your loan applications, there are some who are willing to get you your new house through bad credit loan mortgage.

Bad Credit Loan Mortgage

Bad credit loan mortgage is made to help people, who have a troubled credit history, secure a property or refinance to pay off other debts. With the increase in the number of people getting knee-deep with debts and giving themselves bad credit history, the popularity and the market for bad credit mortgage loan has also, consequently, increased.

myFICO® is a consumer division of Fair Isaac, the pioneer of credit risk scoring for lenders. They provide informative and useful credit information that helps everybody keep their credit reputation untainted or simply to keep them informed and aware of how the credit industry works. myFICO® insists that, although credit score is a determinant of whether or not you can get loans, it is NOT the only factor.

Most lenders would try to avoid bad creditors as much as possible, but this decision does not solely depend on your credit history. Most lenders check all other information such as the amount of debt that they think you can handle with your income and your employment history. Mortgage specialists insists that if you convince lending companies that you are financially stable as of the moment, they can consider lending you a considerable amount of money.

When planning to settle on a bad credit mortgage loan, Corey Senn tells us to choose to be honest to the lending companies. Do not attempt to hide your bad credit history or tainted credit reputation. Most likely, the lenders have heard your story before. Corey Senn is a senior partner of a California-based lending company that focuses on bad credit loans of all kinds. He also adds that people should be wary of money lenders that put a conspicuously high interest rate of the loan you plan to apply for. There are also some companies that have very strict policies that you might not be very comfortable with.

Carrie Reeder, the owner of the informative site on mortgage loans http://www.abcloanguide.com, advises people with bad credit history or poor credit score to choose carefully before closing a deal with mortgage lenders. Do not jump in at the first approval recklessly. As soon as you get your loan approved, ask your lender if there is a pre-payment penalty. Find out how much it costs and, Reeder says, if the pre-payment penalty costs more than a year’s worth, it is not worth it. Also ask what the interest rates will be, and don’t settle for estimate. Try to lock down exact figures and negotiate a lower interest rate as much as possible.

Bad credit mortgage loans have considerably higher interest rates compared to their standard counterpart, and this is understandably so. To get the most out of your bad credit mortgage loan, do not focus on its high interest rates, Carrie Reeder adds. Instead, focus on how these kinds of loans can help you improve your credit reputation and rating.

Liam Griffon, who has been working in the mortgage field for several years, suggests starting a credit repair while applying for bad credit home loans at the same time. If you pursue repairing your credit history and strengthening your credit reputation with steady progression, your future loans will have more chances of getting approved in case your current loan application fails. When your loan gets denied, you will simply apply for another one in other companies that offer bad credit mortgage loans.

Before settling down on a bad credit mortgage loans, there are several crucial things that you need to remember. Ron Stone who is a mortgage specialist that focuses on helping people with bad credit reputations purchase their dream homes, has formulated helpful steps to buying a home even with an adverse credit and no hard money.

First thing to do, Stone says, is to get a copy of your credit report in the three bureaus. This can easily be done by yourself or have someone professional like a broker do it for you. Study your credit report and make sure that all the information that can be found there are accurate. If you spot any errors, have them corrected through each bureau’s website, or the broker’s credit reporting company. There may be a little charge for every change, but an accurate credit report is sure well worth it.

The next step is to start building a good credit reputation. Don’t let yourself dig a deeper hole in debts. Improving your credit as soon as possible would consequently mean that you will be able to refinance as soon as possible.

Spend a considerable time researching options in your area. Try to find sub prime mortgage loans that you are comfortable with. While shopping for a lender, Brandon Cornett, publisher of Home Buying Institute, warns people to be wary of predatory lenders that are out to take advantage of people with bad credit history. Discuss with your broker your options as well as your credit, your rental history, your employment records, how much mortgage you actually qualify for, etc.

After discussing with your broker several valuable information and things that you need to know, find a realtor that you can trust. Search the market thoroughly and carefully. Be a wise buyer and make sure you let your realtor give you home choices that fit your needs and current credit worries. Consider the mortgage balance, which should be low, and of good value.

Corey Senn, who works in providing quality private California-based bad credit mortgage loans, gives bad creditors an uplifting message – the thing to be reminded most of when dealing with bad credit mortgage loans is that there is nothing you can lose if you play your cards well. Even if you don’t qualify in your first try, at least you would learn strategies that can help you apply for another sometime later.

15 year Mortgage Rate Discussion

Purchasing a house can be a bit daunting for first time buyers. Often times, they are not financially equipped to do so. They still possess a lot debts and liabilities that are draining away their monthly paycheck. And regrettably, quite a few of them do not have much of anything for an egg’s nest let alone to afford a mortgage payment.

Given this situation, they try to engage in ingenious tactics with their mortgages in order to win the pursuit of their dream house. This is the typical scenario in the game called mortgages and home loans under the umbrella of personal finance.

Mortgages may be largely classified into two:

1. Fixed Rate Mortgage (FRM) and Adjustable Rate Mortgage (ARM)

2. Fifteen and Thirty Year Terms

Fixed Rate Mortgage

The FRM, as the name implies, has the characteristic of a constant and stable interest rate throughout the life of the loan. This option gives protection to the borrower in the event of fluctuating rates particularly when the experts predict (or your gut tells you) that an inevitable spike will occur in the coming months. This is a well-adopted alternative for a middle class American family – conventional and concise figures devoid of hidden rate escalations.

From the inception of the loan up to the completion of the obligation, you will know the fixed amount that will be paid during the entirety of the term. An amortization schedule will be provided to guide the borrower on when the payment will be due. (See Table B and C)

With regards to the interest rate that a homeowner will receive, such will be established by looking into variables like credit scores, loan amount to house value ratio, and debt to income ratio. Each lender’s guidelines differ but the average fractions and requirements are: having at least a 580 FICO score, not exceeding 80% loan to value (LTV), and not more than 50% debt to income ratio. Rates oscillate on a daily basis, sometimes even 3 to 4 changes within the same day. Nonetheless, rates are anywhere between 5% – 7%.

Adjustable Rate Mortgage

With the ARM, there is the chance that one’s monthly payment swells or dives depending upon the motion of the rates whether it be upward or downward. This is usually coupled with fixed rate for the initial duration of the term, normally 3 to 7 years. And from there, it will adjust to the current and existing market rate. A borrower will likely see 3/1, 5/1, and 7/1 ARMs. The first number represents the introductory period with fixed rate while the second number corresponds on how often the rates may change each year thereafter. Taking the 3/1 as an example, the interest will be fixed for the initial 3 years and same is subject to change every year from then on.

More often than not, ARM can be very tempting because of the lower interest rate. Take note that the shorter the initial fixed period, the lower the interest rate is. Another attribute that makes ARM enticing is that the risk is mitigated by caps or ceilings. These caps are generally of two types; there is the periodic adjustment cap, which confines the amount that the interest rate can be adjusted between two predetermined periods. And the other is the lifetime cap, which defines the amount that the interest rate cannot exceed under any given situation.

Terms

It is safe to say that most people realize that getting mortgages with adjustable rates and 50 year mortgages are generally not a good idea because attached to these are lofty interest rates and costs that will create further damage in their pocket. One main thing to remember with regards to mortgages is that the quicker you pay such debt, the less interest you’ll have to pay. With this said, a 15 year mortgage rate sounds better than its 30 year counterpart. However, the shorter the term, the higher the monthly payments are.

Now, how will you choose the ideal mortgage term? This will be answered as we go along the discussion. Let’s take this as an example: $300,000.00 is the full amount of the loan and 10 percent has already been paid as down payment.

Table A

Thirty Year Loan

Fifteen Year Loan

$270,000.00 Balance

$270,000.00 Balance

5.63% Interest Rate (Bankrate.com: April 9, 2008)

5.22% Interest Rate (Bankrate.com: April 9, 2008)

$1,555.12 Monthly Payment

$2,166.21 Monthly Payment

$559,843.20 Total Payment After 30 Years

$ 389,917.80Total Payment After 15 Years

$289,843.20 Total Interest Paid

$119,917.8 Total Interest Paid

Interest Savings: 169,925.40

If you want to know how to compute for the monthly payment of your remaining balance, here’s how.

270,000.00 (remaining balance to be paid in the span on 30 years)

x .0563 (annual interest rate for a 30 year loan)

15,201.00 (annual interest amount)

/ 12 (months in a year)

1266.75

Amortization on the first year for a 30 year loan

Table B

Month

Principal

Interest

Total

Remaining Balance

0

270,000.00

1

288.37

1266.75

1555.12

268,444.90

2

289.72

1265.40

1555.12

266,889.80

3

291.08

1264.04

1555.12

265,334.60

4

292.45

1262.67

1555.12

263,779.50

5

293.82

1261.30

1555.12

262,224.40

6

295.20

1259.92

1555.12

260,669.30

7

296.58

1258.54

1555.12

259,114.20

8

297.97

1257.15

1555.12

257,559.00

9

299.37

1255.75

1555.12

256,003.90

10

300.78

1257.34

1555.12

254,445.80

11

302.19

1252.93

1555.12

252,890.70

12

303.61

1251.51

1555.12

251,335.60

Amortization on the first year for a 15 year loan

270,000.00 (remaining balance to be paid in the span on 15 years)

x .0522 (annual interest rate for a 15 year loan)

14,094.00 (annual interest amount)

/ 12 (months in a year)

1174.50

Table C

Month

Principal

Interest

Total

Remaining Balance

0

270,000.00

1

991.71

1174.50

2166.21

267,833.80

2

996.02

1170.19

2166.21

265,667.60

3

1000.36

1165.85

2166.21

263,501.40

4

1004.71

1161.50

2166.21

261,335.20

5

1009.08

1157.13

2166.21

259,169.00

6

1013.47

1152.74

2166.21

257,002.70

7

1017.88

1148.33

2166.21

254,836.50

8

1022.30

1143.91

2166.21

252,670.30

9

1026.75

1139.46

2166.21

250,504.10

10

1031.22

1134.99

2166.21

248,337.90

11

1035.70

1130.51

2166.21

246,171.70

12

1040.21

1126.00

2166.21

244,005.50

In the figures above, one will clearly see the yawning gap between the total payment for a 30 year rate as against the 15 year rate. Also, the additional payment for a 15 year loan may prove its worth in the long run.

Pros and Cons

To reiterate, the goal in game of mortgage is to be able to pay off the loan as quickly as possible without straining your current financial standing – meaning you can comfortably pay the monthly bills and the mortgage. And as stated in the previous paragraphs, the shorter the term, the higher the monthly payments are. And unless you were able to acquire a fixed rate mortgage, you must be certain that you can cope up with the changing interest rates particularly when it swells. The last thing you want is to have to default on it. And if such activity continues, it may even lead to foreclosure.

Often times, frugal individuals choose the 30 year mortgage. However, they fail to see the whole picture. They only see the monthly figures, which is considerably less than the 15 year loan, and not the interest that is coupled with said mortgage. While logic directs that lower interest rates connote lower monthly payments, it appears that certain aspects of the loan have been overlooked. In a span of 30 years, will this be still applicable? If you’re looking to save, then you’re better off with a 15year loan.

You need to ask yourself, will the amount of interest be reasonable after 30 years? How about after 15 years? Here enters the benefit of having a 15 year loan—diminishing the total amount of mortgage cost. As shown in Table A, the interest difference between a 30 year and a 15 year loan amounts to $169,925.40. This only demonstrates the hefty weight of paying a loan with a term of 30 years.

If you opted for a 15 as against a 30 year loan, you will have the benefit of owning your property in half the time due to the fact that you were able to pay off without incurring any default. Another benefit for having a 15 year loan is that even though the term is 15 years, one can still put additional payments if one wishes to do so. If your finances dictate that you can still place a little amount to pay for the mortgage, then by all means go. If you keep this up, you’ll be able to pay off your loan ahead of time. Just make sure that you leave a note saying that the additional be applied in the principal and not the interest.

However, even with these benefits, a 15 year loan also has its downside, which is primarily the higher monthly payment. With this stated, a huge chunk of your monthly paycheck or disposable income will be allotted to mortgage alone. When the inevitable happens or an emergency occurs, one may have no other option but to incur delay or worse default. And everyone knows that failure to pay results to devastating consequences.

A bigger payment may prove to be burdensome for an individual who has not sufficiently prepared oneself for larger payments. Do not force yourself to pay an amount that is clearly beyond your financial means. Unexpected things may transpire. It is better to be financially prepared and take the long term than being barely able to make ends meet with the additional burden coming from a 15 year mortgage.

Generally, with mortgages, the shorter the term, the better. But it is better that you choose a program that matches your financial capacity. Purchase what you can afford with ease, don’t stretch your budget too much to the extent that it puts you in an awkward position or in a financial crisis.