Colorado | Home Loan | Mortgage | Refinance

Archive for January, 2010

A new consumer access project will allow South Dakotans to view information about state-licensed mortgage companies, branches and individuals currently licensed through the Nationwide Mortgage Licensing System and Registry. The NMLS Consumer Access …
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The last two of six alleged co-conspirators denied Thursday at Suffolk County court their involvement in a nearly $6 million mortgage fraud scheme. Luis Lino, 46, of Hauppauge, and 38-year-old Martha Huezo of Mastic Beach, both pleaded not guilty and …
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When Peter and Neal discover that an estate judge committing mortgage fraud is also connected to Fowler, they devise a plan to bring them both down.
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The Congressional Budget Office says the budget will top $1.3 trillion this year. We look at a unique mortgage loan workout program in Chicago and at Japan’s deflation problem.
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Have you been looking into the prospect of buying a home? If you have, you may have heard about interest only mortgage loans and may be wondering if getting an interest only loan is the right option for you. What exactly are interest only mortgage loans? As the name implies, this type of mortgage is set up so that the borrower (you) pays only on the interest of the loan rather than applying part of the payment to interest and part to principal. Of course, this is not done for the entire life of the loan. When the mortgage is set up, the interest only payment is set up for a set number of years only.

Once that set number of years is up, the borrower “trades in” his interest only mortgage loan for a more traditional one in which he begins to pay down the principal balance as well. Typically, interest only mortgage loans are set up with payments being applied to interest only for the first ten years, and then the loan is changed.

The reason that many folks have been interested in interest only mortgage loans is that they allow the borrower to have a much lower payment for those first ten years. Since you are not paying any principal, the resulting payment is lower than it would be with more conventional financing. If you are buying the house as a home and anticipate having an increased income as time goes on, you may be able to qualify for the interest only mortgage loan because of this lower payment that reduces your debt-to-income ratio. If you are an investor, the interest only mortgage loans allow you to keep more cash flow to make home improvements in anticipation of selling or just to keep more of your money in your pocket if you are interested in selling the property relatively quickly.

There are disadvantages to interest only mortgage loans, as well, however. The major disadvantage is that it is more risky to the borrower. With more traditional financing, you are building equity in your house right from the very start, albeit not a lot at first, as even with traditional loans, the majority of your payments go toward interest in the beginning. With interest only mortgage loans, however, you are building absolutely no equity. Equity comes from paying down the principal, and since you are not paying any principal, you are not building any equity.

What is the problem with not building any equity? Well, you are running the risk of not being able to afford the higher payments when the interest only years come to a close, as these payments will likely be higher than they would have been with a different loan. So, if your career does not bring in the kind of money you expected, you may find yourself unable to meet the payment. Also, you may be unable to sell the house when you are ready to sell if that particular period of time is a buyer’s market. Too, you will be unable to get a home equity loan (refinance) because refinancing is based on the equity in your home, and with interest only mortgage loans, you build no equity.

Marcilio David is a Cardiologist and Internet Entrepreneur. Learn more tips and tricks about choosing the best mortgage, and a FREE Mortgage Ebook download at The Mortgage Guide

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Pay off Your Mortgage fast with these simple tips and techniques. Are you horrified at the thought of paying off your mortgage for 30 years? Get rid of the home loan fast.

Finance doesn’t have to be this expensive. The key is to get rid of it quickly. Home loans have a purpose: To help you buy a house. Once you own the house, it’s time to get rid of the mortgage. Here’s how:

1. The weekly/monthly rule. If your mortgage payments are monthly, ask if you can change them to weekly. The bank will probably adjust your weekly payment to reflect the exact monthly payment. To pay the bank’s revised payment will remove the advantage. Instead, do this: Take the previous monthly payment and divide it by 4. Make the result your new weekly payment. It will be more than the bank’s figure and this will help get rid of the home loan faster.

2. Big interest savings are made by paying larger payments, so, just like the weekly monthly rule think about what you could add to your payment without causing hardship. Add that amount to your payment and make the payment come out of your account or from your pay automatically, so you don’t have to do anything to make it keep happening.

3. Resolve to put any windfall money (like a tax refund for instance) into your home loan and always do this.

4. Create a windfall by having a garage or yard sale and get rid of unwanted stuff, and pay the proceeds off your home loan.

5. If you have 2 incomes in your household, is it possible to live on one and pay the other entirely off the loan?

6. Take advantage of offset accounts etc.

One final thing, review the payments every 6 months and check if you can increase them. The sooner the loan is gone, the sooner that entire payment belongs to you!

If you follow all of these strategies, your home loan should start to drop much much faster than the planned rate. You’re on your way to getting rid of the mortgage.

Graham Couper-Smith

co-author of ‘Recession Proof Yourself’

The book and more tips and tools to help get rid of debt are available on our website at: http://www.manageyourfinance.com.au

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One of the most important decisions a homeowner will have to make when deciding to re-finance their home is whether they want to refinance with a fixed mortgage, an adjustable rate mortgage (ARM) or a hybrid loan which combines the two options. The names are pretty much self explanatory but basically a fixed rate mortgage is a mortgage where the interest rate remains constant and an ARM is a mortgage where the interest rate varies. The amount the interest rate varies is usually tied to an index such as the prime index. Additionally there are usually clauses which prevent the interest rate from rising or dropping dramatically during a specific period of time. This safety clause provides protection for both the homeowner and the lender.

Advantages of a Fixed Option

A fixed re-financing option is ideal for homeowners with good credit who are able to lock in a favorable interest rate. For these homeowners the interest rate they are able to retain makes it worthwhile for the homeowner to re-finance at the new interest rate. The major advantage to this type of re-financing options is stability. Homeowners who re-finance with a fixed mortgage rate do not have to be concerned about how their payments may vary during the course of the loan period.

Disadvantages of a Fixed Option

Although the ability to lock in a favorable interest rate is an advantage it can also be considered a disadvantage. This is because homeowners who re-finance to obtain a favorable interest rate will not be able to take advantage of subsequent interest rate drops unless they re-finance again in the future. This will result in the homeowner incurring additional closing costs when they re-finance again.

Advantages of an ARM Option

An ARM re-finance option is favorable in situations where the interest rate is expected to drop in the near future. Homeowners who are skilled at predicting trends in the economy and interest rates may consider re-financing with an ARM if they expect the rates to drop during the course of the loan period. However, interest rates are tied to a number of different factors and may rise unexpectedly at any time despite the predictions by industry experts.

A homeowner who can predict the future would be able to determine whether or not an ARM is the best re-financing option. However, since this is not possible homeowners have to either rely on their instincts and hope for the best or select a less risky option such as a fixed interest rate.

Disadvantages of an ARM Option

The most obvious disadvantage to an ARM re-financing option is that the interest rate may rise significantly and unexpectedly. In these situations the homeowner may suddenly find themselves paying significantly more each month to compensate for the higher interest rates. While this is a disadvantage, there are some elements of protection for both the homeowner and the lender. This often comes in the form of a clause in the terms of the contract which prevents the interest rate from being raised or lowered by a certain percentage over a specific period of time.

Consider a Hybrid Re-Financing Option

Homeowners who are undecided and find certain aspects of fixed rate mortgages as well as certain aspects of ARMs to be appealing might consider a hybrid re-financing option. A hybrid loans is one which combines both fixed interest rates and adjustable interest rates. This is often done by offering a fixed interest rate for an introductory period and then converting the mortgage to an ARM. In this option, lenders typically offer introductory interest rates which are extremely enticing to encourage homeowners to choose this option. A hybrid loan may also work in the opposite way by offering an ARM for a certain amount of time and then converting the mortgage to a fixed rate mortgage. This version can be quite risky as the homeowner may find the interest rates at the conclusion of the introductory period are not favorable to the homeowner.