Recent Posts
By On July 8, 2010
No Comments
With all the talk of falling interest rates and what that means to U.S. home buyers it’s important to know what’s being spoken about on the nightly news. When the anchor mentions interest rates, is he talking about mortgage interest? He might be. But he might also be referring to the Prime Rate or the Discount Rate. What these three interest rates are, and how they relate to home buyers, is good knowledge to have if you’re planning on a mortgage application any time soon.
Discount Rate
Commercial banks are required by law to maintain a certain amount of liquid assets in the form of cash reserves. These cash reserves are meant to cover loans and withdrawals at times when they exceed revenues. If a bank is short on cash reserves it can borrow money from the Federal Reserve and pay interest just like the average consumer. The interest charged by the Fed to a commercial bank is known as the Discount Rate, which currently stands at .75 percent.
Prime Rate
The Prime Rate, also known as the Reference Rate or Base Lending Rate, is the rate of interest banks charge their best commercial clients. Businesses and institutions are routinely given a credit rating which then affects their individual interest rates; put the Prime Rate is the general yardstick by which commercial rates are determined. Those with the highest credit rating will get the Prime Rate, while those with lesser credit ratings will pay more. As a general rule, banks routinely adjust their Prime Rates at the same time and level.
Mortgage Rate
Obviously, the Mortgage Rate is the rate of interest a bank charges to the average consumer when buying a home. Mortgage rates fluctuate according to a variety of factors, but their movement tends to be more gradual in either direction rather than being prone to big jumps or drops. Mortgage rates are often used as an indicator of the overall health of the nation’s economy.
The relationship between the three types of rates is rather simple. As the Discount rate goes up that cost is passed on to the bank’s borrowers in several ways, one of which is an increase in the Prime and Mortgage rates. An increase in the Prime Rate usually tends to dampen business activity which in turn, puts further pressure on Mortgage rates. Likewise, a reduction in the Discount Rate has the same effect in helping reduce the other two.
By On May 10, 2010
No Comments
Buying a house is one of the biggest steps that most people will make in their lifetime. A mortgage is something that most people have when they are starting out in life. There are some things that you should know about mortgages before you enter into this lengthy financial transaction.
Locking in your mortgage rate is a good way to ensure that you keep a good interest rate for your mortgage for the entire length of the loan. While a locked in mortgage rate will save you a great deal of money over the length of the loan, not all lenders provide a locked in mortgage rate to every customer. Use caution when you get your quote from the mortgage lender at the time you apply for your loan. The amount that you are quoted could change by the time the loan is prepared and ready for you to sign. It is important that consumers use care when reviewing the final information from the mortgage lender and ensure that the mortgage rate is locked in.
A fixed rate mortgage will cost more in interest, but it may be worth the extra expense to know exactly what your payments will be for the entire length of the mortgage. Be wary of variable rate mortgages that may change over the course of the term. These mortgages could adjust higher than the original amount and cause monthly payments to skyrocket. These mortgages are right for some home buyers, but you should consider whether these mortgages very carefully before signing on the dotted line.
Some borrowers may choose an adjustable rate mortgage in the beginning to take advantage of the low rates and reserve the option to switch to a fixed rate mortgage later. However, make sure that your mortgage allows you to make this change if you are planning on taking a variable rate mortgage.
When a new home buyer is shopping for a mortgage, it is important that they research several lenders before making any final decisions. Make sure that the lender you choose has the rates that you can afford for your new home. While the decision to buy a home is an exciting one, you must keep a cool head when it is time to find financing. A fixed mortgage rate will give you the peace of mind to know that your payments will not go up as the interest rate rises.
By On April 20, 2010
No Comments
There are many homeowners who are still in the burden of high monthly mortgage payments, and wish to lower their monthly payments. They would love to take advantage of the reduced interest rates which can make their payment affordable. Since the interest rates are low right now, and may rise in future, it is the right time to take advantage of lower interest rates with a mortgage refinance. To get a refinance, the process that has to be followed is similar to the original loan process, the only different thing is that you will try to seek a ‘change’ in terms of the loan rather than obtain one.
People choose to refinance their mortgage for many reasons. One of the biggest motives is to reduce the amount of money that they are paying by reducing their interest rates. You may have got a loan at a higher interest rate due to a bad credit situation or prevailing market conditions; the refinancing option gives you a financial relief by reducing your monthly expenses. People can seek refinancing from their lenders or they can shop around to find a suitable lender with better terms and competitive interest rates.
There are some who want to change the original terms of their home loans so that they can get cash to build equity in their homes at a particular rate. You can also choose mortgage refinance to switch to a particular type of rate. Moving from adjustable to fixed rate mortgage or vice-versa has a varied set of benefits that can boost their personal finance. Mortgage refinance can also be done to change the term of loan, for instance, someone can choose to extend the payment term of the loan while some others may just decide to do the opposite and reduce their payment term so that they can pay the loan faster at the existing rate.
To obtain mortgage refinance at a very good rate, homeowner should be willing to go through a review process with a lender that he opts for. This lender can be the current one whom he is already dealing with or someone from a different company. Consumers should take into consideration how much the alteration in the loan term will affect their finances on a short-term and long-term basis. Here are some of the points you can consider while refinancing your mortgage
• Loan to Value: Lenders look at the cash equity in your home to find how much flexibility they can give you. So if you have more equity, the better is the interest rate offered. If your loan to value mortgage is high, it is not a problem because lenders will still help you out. But you have to make sure that you are able to meet other conditions that the mortgage lenders put.
• Credit score: Credit score is also a factor that is considered by mortgage refinancing. Your credit score should be ideally more than 620. There are bad credit mortgage available, so you may want to check with bad credit mortgage brokers for the latest rates.
• Income: If you have a stable job or business and can prove it, you stand a better chance to get refinancing. Depending on the amount of equity you can show to your lender and your credit score, it is possible to access mortgage without proving your income.
• Interest rates: Currently the interest rates are low, which is why it is good to refinance now. If you are going to refinance through Home Affordable Refinance Program by the Obama administration, you still have time till June 2011, but they still have their own set of conditions to be met. Since interest rates are going to head northward, it is better to take advantage of refinancing now.
By On March 28, 2010
No Comments
Settling financial affairs after the death of a loved one can be quite stressful if you are not sure that if he had an insurance policy or not. The insurance policy of the deceased person will help the nominee to claim the money. Here are some ways through which you can come to know if the deceased person had a life insurance policy or not.
1. Collect all the necessary documents like will and death certificate to find about the insurance policy of the deceased.
2. Go through all the latest bills and financial details such as monthly bills and bank statements to see if the deceased had made any payment to the insurance company.
3. Ask banking and credit card companies of the deceased to provide you with financial details. If the deceased had used these ways to make payments for insurance premium, you will easily come to know about it.
4. You can also go through the safe deposit boxes to search for important information and details on insurance policy.
5. Check the tax records to find out if he paid yearly interest on an insurance policy.
6. Contact the current and former employers of the deceased to know if he purchased any insurance policy from the company as benefits package.
7. If the deceased had hired the services of a lawyer, he may have taken help from the lawyer to avail an insurance policy.
8. Get in touch with close friends and relatives of the deceased to find out if they are aware of a possible insurance policy.
9. Whatever research you have done to find out if your loved one had an insurance policy or not, you should keep track of it to make sure you are organized and you get new information and not the same old information again.
10. Go to the court and search through the probate court records to find out more information about the estate of the deceased. If the estate is in probate, the insurance policy may be mentioned as an asset
11. Medical Information Bureau (MIB) has a huge database of information that can help you access the medical records of the deceased. It can also help in finding the insurance policy details of the deceased.
12. Search for a service or a professional that can assist in contacting various insurance companies to find out if they have any information of life insurance policy of the deceased.
13. If you know the email address and password of the email accounts of the deceased, you can login and find out if there is any mail from the insurance company because most companies send out emails related to insurance policy on a regular basis.
14. You can also hire the services of a private investigator to assist you in finding necessary information on insurance policy of the deceased which may seem difficult for you to find out.
15. Notify your mortgage servicer of the death if the party is on the mortgage agreement. You are not required to refinance your loan, should your partner pass away.
By making use of the above mentioned tips, you will surely succeed in finding out the details of the insurance policy of the deceased.
By On March 5, 2010
No Comments
These are financially unpredictable times and the real estate market is facing a great deal of indecision. As such, it is difficult to see where home financing is headed. As a homeowner, if one actually does qualify for a loan, one is going to be looking for the best rates possible. Many people get themselves into financial difficulties though because they don’t really understand what home financing is all about. It’s hard to blame them. It’s not the easiest of topics to wrap one’s mind around.
Home financing documents can appear to be nothing more than a jumbled mass of definitions and numbers. One of the most important things to look for is the APR rate. This is the actual rate that one will be paying, from start to finish, if one pays the loan off without making any changes or refinancing. Unfortunately, this is usually lost in a field of numbers and the rate that is most prominently displayed is not this one. Look for it. It’s a very important thing to know. The APR is essentially an amalgamation of all the fees which the lender charges. This in turn affects the interest rate of the loan. It is the interest rate which can make or break a budget so compare the APRs of the different mortgage companies to see which one offers the best deal.
The rates of a home financing loan can vary depending on the type of loan it is. For example, the monthly payments will typically be smaller the longer one takes the loan for. However, when everything is calculated, one will actually be paying a lot more than what one borrowed. In extreme cases it might even be as much as double the initial loan amount.
Another type of home financing is the adjustable rate mortgage (ARM). The monthly fees on this can be lower but there is a down side as well. What happens if interest rates skyrocket? Since the monthly payments are tied in to this, they will go up as well. Unless the interest rates stay consistent this type of home financing is more suited for those who plan on paying off the loan quickly.
Just as there are many different types of home financing loans, there’s also a lot of information out there to help one make a good decision when it comes to what type of mortgage to choose. Take the time to take advantage of all the resources available before making any final decisions.
By On February 15, 2010
No Comments
Your credit report is the basis on which lenders give you loans or credit. Whenever you apply for credit, lender will run a check through your credit report. The credit rating is a score given by credit bureaus after finding how well you are with your payments towards credit. If you make prompt payments, you get a positive rating and your credit score is increased. But if you make late payments, miss payments and go over the credit line, you are impacted with negative score. All of your financial credit related activities are recorded in the credit history.
Your credit score is an assessment of credit score. It is this score which will enable the creditor to understand if a particular person is a credit risk or not. Fair Isaac Corp computes the credit score by using 22 pieces of information from three major credit bureaus, viz; TransUnion, Experian and Equifax. While 300 is the lowest credit score, 850 is the highest credit score. So when you apply for credit, lenders will check your credit ratings. If your credit score is between 700 and 850, you have a very good credit score, and you are entitled to a loan quickly, be it for a personal loan, credit card or for a home. Also they get flexible repayment terms and low interest rate. If your credit score is between 500 and 619, there is a low chance of getting you loan application approved. If they do get approved, they are termed as ‘loan against bad credit’. This implies that you may have to put collateral as a security for these also. You also get these loans on stricter repayment conditions and a higher interest rate.
Whenever you apply for credit, the information shows up on your credit report as a ‘hard inquiry.’ This has a negative marking on your credit report. So it is important to know that you cannot go on casually asking for credit because they can impact your credit score. A lot of people are not aware of this fact. There is also something called ‘soft inquiry’ which is related to asking a copy of our credit report. Soft inquiries do not impact your credit score, so it is perfectly fine to ask for credit reports. Besides, it is very good to go through your credit report so that you can bring it to the notice of the credit unions concerned. By law, credit unions are required to hand out a free copy of the credit report to an individual with the latest updated credit score. You can even download them from the official websites of credit rating agencies like Equifax and TransUnion. So make sure that you have an updated credit report on your hand, and take time to run though it, so that you can have any discrepancy corrected, if needed.
By On February 4, 2010
No Comments
Simply said, a mortgage is a loan in which the property is kept as collateral. The mortgage markets have gone through lot of economic crises lately, so much that it pulled the world economy in near dumps. The situation is improving now and if the economic reforms and their implementation are done in the right manner, we should be able to surge ahead in the market again. Here are tips on how you can zero onto the best mortgage loan
• The most conventional form of mortgage loan is the fixed rate mortgage. In this type of mortgage, the borrower decides the length of time or the tenure in which she or he will pay the mortgage along with the interest rate. The payback period is anywhere between 10 and 30 years. The interest remains the same for the life of the loan
• Adjustable Rate Mortgage is the same as Fixed Rate Mortgage with respect to the interest rate and the length of time in which you will pay back the money. The difference lies in the fact that the interest rate in Adjustable Rate Mortgage changes during the period of the loan. In according with the primary lending rate. So you can expect the lender to lower or increase the loan rate
• A VHA mortgage loan is ideal for first time home buyers. These loans are procured through a regular mortgage lender but they have the backing of the US government. It is easy to qualify for an FHA loan compared to other mortgage loans because lenders know that the loan is secured by government funding
• V.A. Loans are given to the veterans of the US military; they are a privileged lot to have an extra option in mortgage buying. The sweet part is that these people do not have to pay down payment for these loans. The rest of the conditions remain similar to other loans.
Apart from the above four types of mortgage loans, you can get many versions of mortgage loans, promoted strategically with a good mix of features so much that they look like a different set of mortgage loans altogether. You will be impressed with the flexibility offered in paying the loans and may be tempted to take them. However, do not choose anything blindly and on the basis of hype. Take time to read through the fine print to fully understand the exclusions, terms and conditions. There are many loans that need you to make balloon payments in the name of ‘flexible payments’. In balloon payments, you need to come up with a huge sum of money where you have to pay most of the parts of the payment in one go.
If you think that the interest rate in a particular mortgage is not so low as you want, you can have the rate changed. Lenders permit you to pay points so that the interest rate can be lowered. A point is a percentage of the loan amount, typically 1%. When you pay points, you will be able to reduce the interest rate. This comes quite in handy for fixed rate loans.
Finding a good mortgage loan is simple these days. If you check online, you will see that there are quite a few mortgage lenders doing great business online. Make sure you do good research, find out what kind of mortgage suits you and you will definitely find a mortgage deal of your choice.
By On January 17, 2010
No Comments
If you are thinking about making it big in commercial real estate business, you should make sure that you always follow the fundamentals. Without following the basics, we can run into various hurdles because of which we may even come to think that real estate business is not my cup of tea. Here are fundamentals of commercial real estate that you need to keep in mind in order to achieve success:
1. Stop being lazy
Many of us start off our day late and reach late to work. Moreover, we do not dress up professionally. We need to change ourselves and throw off our lazy attitude and start behaving like a professional by being punctual and dressing up professionally.
2.Stay in touch with your clients
In order to achieve success, you need to stay in touch with all your clients. Even though you may come across a situation wherein you may need to filter the important ones from the lesser important ones, you should make all efforts to stay in touch with all your clients and maintain a healthy relationship with them.
3. Return all your calls
In the commercial real estate business, it is very important to return all your calls. Do not ignore calls by having an inclination that if the call was important, the caller will ring you up again. When you return all your calls, you will never miss out on business opportunity. Make sure you do not return calls just for the sake of it but deal with every call with smile and pleasant and professional tone. It would be very good if you can call back on your own, if you can’t then you can appoint your assistant to do so.
4.Have a plan of action everyday
You should start off your day by having a list of work that you will perform before the end of the day. Make every effort to strike off all the work that you have listed. This way you will also learn the act of time management. You will never waste time but always work in a way that will only lead you to the path of success in your business.
5. Have an attitude that you are never perfect
At start, when we do not have much experience in the field, we put efforts to take any sort of risks in the business. However, when we inch towards success, we become more controlled and may fear to take action steps thinking that it is not perfect. Do not let this happen to you, always think about doing better whenever you do anything related to your business such as writing newsletters or taking in suggestions from others. At every stage of life, we learn from the mistakes we make, so we should have a healthy mind to accept our faults and take initiatives to correct them.
By On November 27, 2009
No Comments
Home sales jump as fixed mortgage rates improve, helping both the real estate and mortgage industry in the month on November. The challenges facing the housing markets have been well documented and there has been a full court press to try and bring some stability to home prices across the country. The high end market has been under pressure for the last two years as they face multiple challenges including a lack of move up buyers and limited financing options for consumer with jumbo home loans. This has resulted in a grid lock of high value properties sitting on the market, waiting for the real estate eco system to begin to function normally again.
The backlog of foreclosed homes in the real estate inventory has been a large challenge for the real estate markets. Home foreclosures tend to sell at values between 25-50% lower than comparable resale homes. This has triggered a dramatic slide in home prices across the country, forcing home owners who would have wanted to purchase a larger home out of the market. Combining the limited equity with a shortage of financing for loan amounts greater than $417,000 has put the upper end markets on ice.
The market may be starting to turn the corner and help position the upper end marketplace. Home sales have steadily improved over the past four months, spurred by first time home buyers taking advantage of up to $8,000 in government tax rebates. These buyers have entered into the greatest buyers market in the last fifty years as depressed home values and historically low mortgage rates are making house payments extremely affordable. The opportunity to purchase depressed real estate sent both existing and new home sales surging in the month of October. As buyers enter into the market at the lower price points, the supply/demand balance of inventory begins to improve. This factor will play a critical role in helping to stabilize prices and allow for move up home buyers to start purchasing larger homes.
The rebalance of home inventory is a long ways from ideal for the market. There is still a large inventory (and growing) of foreclosed and bank owned homes on the market. The upper end markets are also desperately awaiting a return of private investors into the secondary mortgage market to return some financing options for jumbo home loans. There remains a significant shortage of investors aside from the Federal Reserve purchasing mortgage bonds, which greatly limits options for larger loans and places a significant pressure on the pricing of these loans, which has a negative impact on this market.
By On October 8, 2009
No Comments
The month of October has been a roller coaster ride for the markets. The volatility within the economy has helped to drive home mortgage rates to their lowest levels in the past eight months. October mortgage rates dropped approximately a quarter of a percent from mid September, primarily as investors began growing more concerned that the U.S. stock market may have peaked for the year when it nearly surpassed the 10,000 point level. The rapid rise in the broad markets have not worked to drive up long term interest rates this year. This non traditional market pattern is one of the key reasons interest rates have been so attractive for homeowners to take advantage of.
Most national lenders were offering conventional home loans at or around the five percent range, a drop of almost one percent from its peak in June. The market for Jumbo home loans remains quite challenged as lenders are still having difficulty selling and packaging these mortgage loans into the secondary marketplace. Jumbo home loans remained well above six percent and most national lenders were only offering programs that were eligible under Fannie Mae’s extended guidelines. The days of applying for Super Jumbo loans appear to be a distant memory and may not exist again for some period of time. The lack of demand for mortgage backed loans that are not written to guidelines from Fannie Mae, Freddie Mac or FHA has essentially collapsed the key element in creating secondary financing outlets. To date, most consumers who need a non conventional jumbo home loan will have to turn to a credit union or local bank that is willing to portfolio this mortgage on its balance sheet. There are numerous institutions who still offer this service, but their will be a wide spread with interest rates and fees for these types of mortgages, making the process of obtaining the best rate a bit of a challenge.
There appears to be strong likelihood that rates will remain at attractive levels for the balance of the month for conventional home loans. Comparatively interest rates for jumbo mortgage loans remain attractive to historic rate trends. There is a strong chance we will begin to see conventional home loan rates increase in 2010 and the gap narrow between conventional and jumbo loan financing rates. Homeowners who have the opportunity to refinance can lock in substantial savings with the current market rates and home buyers who have yet to lock into a purchase, can secure a great payment for the life of their loan if they are able to close in the upcoming months with today’s historically low fixed mortgage rates.