Home Equity ? Is it Time to Cash Out and Move?
October 6, 2008
During the last five years, home prices have increased nationwide. In some parts of the country, notably California, home prices have doubled or even tripled. The median price of a home in the Los Angeles area is now nearly $450,000 and in the San Francisco area, the price is approaching $600,000. As the economy continues to improve, the price of housing continues to rise in California and elsewhere. Many people who have owned their homes for more than three years are suddenly finding themselves with hundreds of thousands of dollars in equity. Of course, equity is only a theoretical gain, and if the price of housing goes down, equity can go away. You only get to keep your equity as cash if you sell your home. Many homeowners are doing just that.
Making Sense of Mortgage Speak
October 3, 2008
Applying for a home loan can be overwhelming. You will need to contend with mountains of papers, contracts, documents; and do lots of planning and coordination. Add to that a whole language unique to the mortgage loan process and you have the makings of an experience unlike any other.
Agreeing to the terms of your home loan is no small matter. It is important to understand every word of the contract and terms to which you are agreeing. Although it may be easy to ignore terms you don’t understand now, you may be haunted by what you did not know when you are ready to sell or refinance.
Eliminate the mystery by taking the time to familiarize yourself with the terms that are common among lenders. Following are explanations of some of the most common terms used in the home loan process. Also, don’t be afraid to call on the expertise of your credit union representative. They are happy to answer any questions that you have.
Adjustable Rate Mortgage: The amount of interest the lender charges on your principal varies. ARM’s generally carry provisions for minimum and maximum interest rates. If you choose an adjustable rate mortgage, you can expect to make higher payments when interest rates move closer to the maximum and lower payments when rates hover nearer the minimum.
Mortgage ? What, Why, When, and How?
October 1, 2008
What is a mortgage? Here’s what The New Merriam ? Webster Dictionary definition is: "a transfer of rights to a piece of property usu. as security for the payment of a loan or debt that becomes void when the debt is paid." That’s as plain and simple as it gets, you pledge the property that you’re buying to the lender until your home loan is paid off then the mortgage is released and you own the property free and clear. The term "Mortgage Loan" usually pertains to the loan used to purchase a home.
Why and when would you need a mortgage loan? If you’re going to enter into a real estate purchase transaction (land, residence, or commercial) and you don’t have the funds available then chances are you’ll need a mortgage loan. In times when mortgage rates are low and return on your investments are high; you might consider a mortgage loan to pull the equity from your home to invest. If you’re paying a higher mortgage rate than what’s available on the market you might consider using a new mortgage loan to pay off your old mortgage loan therefore lowering the amount of time to pay off your home or lower your monthly mortgage payment. Maybe you need to take cash out of your home for reasons that are nobody else’s business a new mortgage loan would be a great tool for accomplishing this.
Interest-only Mortgages Have Their Pitfalls
September 29, 2008
Rising home prices, particularly on the East and West coasts have put the costs of home ownership seemingly beyond the reach of many. And yet, home ownership is up nationwide, and the percentage of Americans who own their homes is the highest it has ever been. How is this possible?
There are more different types of mortgages available to home buyers than ever before, and one that is growing in popularity is the interest-only mortgage. With an interest-only mortgage, the buyer pays no principal for the first few years of payments. The period of time varies, and is typically anywhere from one to five years. At that time, the principal is added to the mortgage payments and the amount of the payment increases. By keeping the payments lower for the first few years of the mortgage, the interest-only mortgage allows buyers to obtain a more expensive home than they otherwise might. The buyer’s income will probably increase over time, making it possible to afford the higher payments that will come when the principal is finally added to the payments.
Change in Texas Law May Make Reverse Mortgages More Popular
September 26, 2008
Texas was one of the last states to allow homeowners to take out home equity loans. Laws going back to the nineteenth century strictly prohibited home equity lending, as legislators feared that unscrupulous lenders would take advantage of homeowners for the purpose of seizing their homes through foreclosure. This made it impossible for citizens of the Lone Star State to use their equity for home improvements, debt consolidation or paying medical bills, as homeowners in other states may do.
In 1997, the Texas constitution was amended to allow homeowners to borrow against their home equity. The amendment allowed for traditional term loans, lines of credit, and reverse mortgages, but did not allow a line of credit on a reverse mortgage.
How to Use a Home Equity Line of Credit Calculator
September 24, 2008
Most home owners know that the lower the interest rate, the lower the monthly payments. But then the process may get a bit fuzzy. While your monthly payments may be the same every month, you are not applying the same amount to the principal of the loan. Your amortization will vary month to month. So, you will have to use a little math to determine how much equity you are actually gaining. Are you confused yet? If you are, don’t worry. There is luckily a very helpful tool that will take the guess work out of home equity loans. Before you commit to anything, you should play around with a home equity loan calculator to determine how much you can borrow. There are many sites available online that give you free access to a wealth of tools and calculators.
What is a home equity loan calculator? Basically, it is a mathematical program that will ask for a few key pieces of information. It will then calculate how much you can borrow, and show you an example of what your amortization schedule would look like. Your lender may use a similar program to determine the amount that you can borrow against your home.
Home Equity Loans Company ? 7 Key Questions to Help You Choose One
September 22, 2008
Choosing the right home equity loan can be tricky; you have to consider interest rates and repayment schedules, among others. Choosing the right lender, however, does not have to be a difficult task. If you ask the right questions, you can pick the best lender for your needs. The following is a list of seven essential questions that you should ask any potential lender.
1. What are the terms? This will include interest rates and the length of the loan. Some lenders may require you to carry private mortgage insurance or to pay your mortgage through ACH deposit. Get the terms in writing, so that you can compare them with other lenders.
2. How about my credit? Your credit score may play a huge factor in deciding which lender to go through. If you have bad or no credit, many lenders may not be able to help you. So you will want to find a lender that offers sub-prime loans for borrowers of your credit status. Bad credit does not necessarily disqualify you for a loan, but it will make the process a bit more difficult.
Online Home Equity Loans: A Basic Glossary
September 20, 2008
Home equity loans can be a great idea for individuals looking to get out of debt or make necessary repairs on their homes. During the process, you will come across a variety of terms and acronyms. We have gathered together some of the basic terms that you come across during your home equity loan. If you have any questions about any of these terms, make sure to consult with your mortgage lender.
Adjustable Rate Mortgage (ARM): This type of mortgage has an interest rate that will change over time. Typically the interest rate will be lower than fixed mortgage products.
Amortization: Loan payments that will cover both principle and interest in one payment. Your lender will likely give you an amortization schedule outlining your payment schedule.
Annual Percentage Rate (APR): This is the cost of credit on a yearly basis.
Appraised Value: An appraiser will determine the value of your home based on experience, market data, and other information.
Cap: This is the limit on how much an interest rate can increase over the life of your loan.
Stock Market, Bonds, Deposit Account, Cash, Equities, Unit Trusts - Few, Just Few of the Ways of Sav
September 18, 2008
Man has been known for continually simplifying things in his own interest. First he devised mortgages then several sub categories under it like buy to let mortgage, council right to buy, reverse mortgage. Then we devised remortgage. Then as the intricacies increased and the payment of interest and the loan amount became difficult, he devised interest only mortgage. Interest only mortgage is a very attractive term for someone who is just contemplating mortgage. Interestingly and very significantly an interest only mortgage requires you to pay the loan amount eventually. Individual savings account mortgage is a kind of interest only mortgage. Here the monthly payment is used to pay the interest and to build an individual savings account which is finally used to pay off the mortgage.
Individual saving account mortgage is a relatively new category of interest only mortgage. The individual saving accounts is paid to build the capital lump sum which is used to pay the mortgage. This is an interest only mortgage with an individual savings account. ISAs are tax efficient way of investing because the income from the investment is tax free. The former name of ISAs was PEPs ? Personal Equity Plans upto 1999. You are not required to pay tax on the income you have through these policies or on the profit you make when you sell them.
Mortgage Glossary of Terms
September 16, 2008
A brief list of some of the most common Mortgage terms.
Adverse Credit The term used if the borrower has a poor credit history. This could include previous mortgage or loan arrears, bankruptcy or CCJ’s. Other terms used to describe an adverse credit mortgage include:
- Bad credit mortgage
- Poor credit mortgage
- Non status mortgage
- Credit impaired mortgage
- No credit mortgage
- Low credit score mortgage
APR (Annual Percentage Rate) The interest rate reflecting the cost of a mortgage as a yearly rate. The APR provides home buyers with the ability to compare different types of mortgages based on the annual cost of each.
Arrangement Fee The fee you pay your Lender in return for them providing you with a mortgage. Usually paid on completion or with your application, these fees usually apply when you take out a fixed rate, discount or cashback mortgage.
AST (Assured Shorthold Tenancy) A form of tenancy that gives the landlord the right to repossess their property after a set amount of time laid out in the tenancy agreement. New tenancies are automatically ASTs unless otherwise stated.
