Refinance Home Loan » Home Mortgage Loan

Understanding Home Mortgage Loans

admin — Thu, 29 Apr 2010 00:11:01 +0000

The price of houses keeps rising across the US. Since most require a down payment that is more than a renter can afford, how do you become a home owner when you don’t have the savings to cover the down payment? The answer is a home mortgage to purchase your house.

A home mortgage is different from a home loan. A mortgage is a contact that is required for you to obtain a loan from a banking institution or lending company. The actual loan is the money the lender provides.

In recent years, the types of home mortgages available to the public have increased dramatically. I remember purchasing my first home when most loans required a twenty percent down payment. Today, loan terms and the rate status are different with home mortgages and is applied depending on the financial situation at the time of the loan. Some home mortgages offer better terms when the interest rates are low and others rise with high home mortgage rates.

With a fixed rate home mortgage, the interest rate remains the same for the duration of the loan. Therefore, your monthly payment remains the same, even when interest rates rise. This type of home mortgage usually extends for a term of 15 or 30 years.

The amortization period for 30-year fixed rate home mortgages is longer and the monthly payments are lower. Although you can borrow money on a long-term basis, it comes with a high interest bill and builds equity very slowly.

With a 15-year fixed rate home mortgage, the amortization period is shorter allowing equity to build quickly with interest bills much lower. Expect to pay higher monthly payments with this type of home mortgage loan period.

Adjustable rate home mortgages have lower interest rates. Keep in mind, this low interest rate is only for a short time. Usually after the first year, the new interest rate will rise or fall, depending on the movement of the lending company’s prime rate.

If you’re considering an adjustable rate home mortgage, make sure the interest rate is low enough to be an advantage. Your monthly payment will remain low when the interest rate is low, but when interest rates rise, you may be left with a monthly payment you are unable or unwilling to pay.

Once you’re in the home of your desire, your property begins to accumulate equity with the rise in home prices. If you find yourself in need of quick cash, you can always take out the equity with a home equity loan. The home mortgage rates for home equity loans have always been thought to be higher than the home mortgage rates of other loan types. If you plan to stay in the home for many years, this may be a good option for you, otherwise don’t sacrifice the equity unless you absolutely must.

Once you understand the types of home mortgages that are available, you will need to decide what you must have in your new home and what you consider as an “extra.” You’ll want to find the best interest rate, but you’ll also find that homes in your price range may not include everything you want. So be prepared to negotiate and willing to sacrifice if you find a great deal. Once you’re in your home, you can always upgrade in a few years, using the equity you’ve built up in your property.

By: Gail Anderson-Metcalf

Mobile Home Loan Default – Repossession Or Foreclosure?

admin — Thu, 22 Apr 2010 08:19:11 +0000

Scenario:

My mother has taken a mobile home loan for a property in Florida. She has another home in South Carolina. Her husband has passed away last summer and for the past 3 months she hasn’t been able to afford the payments. What will happen if she’s unable to pay off the mobile home loan and allows the home to be repossessed? What’s the difference between a repossession and foreclosure? Can the mortgage company put a lien on the other house? What if she sells the other house first? Can they go after the proceeds? Can the company go after her social security money and retirement savings?

Solution:

If the mobile home is a personal property bought from a dealer, and the owner is unable to pay off the mobile home loan (personal property loan), then the dealer (or creditor) will simply repossess property. Repossession means that the creditor will take over the ownership and sell off the home at a public auction.

If the sale price isn’t enough to cover the unpaid debt, then the mobile home owner has to pay it off as he owes the debt. Now, in the situation stated above, your mother has taken out a mobile home mortgage loan and not a personal property loan. So, the home will not be repossessed, rather it will be foreclosed if she is unable to pay off the mobile home loan and doesn’t qualify for a workout plan.

Since your mother couldn’t pay for the past 3 months, therefore she should have a straight talk with the mortgage company. I suppose the company hasn’t contacted her yet with a Notice of Default, so there’s still some time left for her to send a hardship letter and request for an alternative payment plan.

However, if your mother gets a Notice of Default and fails to repay the dues within the specified time period, then company may declare a foreclosure. If your mother fails to negotiate with the company for a workout plan, then the latter will sell off the mobile home through foreclosure sale. And, if the company is not able to recover enough proceeds from the sale, then it may ask for payment of the deficiency amount.

If your mother fails to pay the deficiency amount, the company may file a deficiency judgment and get an order issued by the court. If she still doesn’t pay it or is unable to pay it, then a lien may be placed on the property in South Carolina (SC). But in order to place this lien, the mortgage company will have to seek a sister-judgment. This means that the company will try to get a judgment in SC based on the Florida judgment even though it may not have a license in SC.

If your mother sells the SC property first, there’s a chance that the mortgage company may come after the proceeds provided the latter receives the sister-judgment from that state. The mortgage company cannot place a lien on your mother’s Social Security (SS) check as SS is protected from such liens. As for the retirement savings, the mortgage company may ask your mother to liquidate the entire savings in order to repay the loan but this depends upon the laws in the state of Florida.

By: Samantha T

Poor Credit Home Mortgage Loans – The Role of the FICO Score

admin — Fri, 02 Apr 2010 18:10:45 +0000

If you have bad credit history and are looking to get a home mortgage loan, then chances are you are going to need to know all about how the FICO credit scoring system works.

FICO – Fair ISAAC & Company – is the leading credit reporting agency that lenders turn to when it comes time to credit scoring your home loan mortgage application; so if you do have bad credit history, these guys will know.

The formula used by FICO cannot be disclosed because of a decision made by U.S. Congress. There are some things generally known about FICO which that could help you understand why and how you can get approved:

1. The higher your FICO score, the better chance you have of getting that home mortgage loan. Also, the higher your score, the more room you have to negotiate a lower interest rate.

2. If you have a FICO score lower than 500, there is very little chance you’ll be getting a mortgage home loan.

That said, if you have a score of:

500 – 600 you should be able to get a home mortgage loan, provided you are willing to make a down payment.

600 – 640 You should get a 100% home loan financing. Thats right, with no money down.

640 – 700 You should be able to be approved for a 125% home mortgage loan.
700+ You’re in the drivers seat! You should be able to get an excellent rate with excellent terms.

3. FICO depends on each credit report, so before you apply for a home mortgage loan, if you have bad credit history, get a copy of your credit report and make sure there is nothing on there that shouldn’t be there. If there is, get it changed before you apply for the home mortgage loan.

4. Wait until after you have purchased or refinanced your home before you buy anything additional on credit. More loans or higher balances can have a dramatic effect on your mortgage approval, regardless of whether or not you had over a 600 FICO score before you bought on credit.

5. Remember, the FICO score is only a part of your home mortgage loan application, so if at first you don’t succeed in getting your home loan mortgage, don’t give up. Some lenders may still be willing to lend to you!

People with bad credit often don’t understand how the credit scoring system works. It is beneficial to find out more about it when looking to get a home loan with less than perfect credit to bad credit or when dealing with sub prime mortgage lenders.

To view our list of recommended bad credit mortgage lenders online, visit this page: Recommended Bad
Credit Mortgage Lenders

By: Carrie Reeder

Home Loans – Facts About ARM Loans

admin — Mon, 22 Mar 2010 09:43:01 +0000

An adjustable rate mortgage is exactly what the name implies; a home mortgage loan with an interest rate that gets adjusted during the life of the loan.

Adjustable rate mortgages gained popularity in the high interest loan market of the 1980’s. With rates as high as 16% quoted for even those with high credit scores, obtaining a mortgage loan with affordable monthly payments became difficult. At that time, ARM’s provided rates that began far below the market rates and home buyers planned to replace the adjustable with fixed rate loans when the economy improved. It was a great option for many buyers and worked extremely well. Those loans did adjust but the better lenders had tight caps on how much the interest rate could rise per year and often there was a two year period before a new loan adjusted at all.

Lenders usually associate two numbers with these loans. You may see 5:1, 1:1 or 3:2. The first number is the number of years the ARM will stay at the initial interest rate before reaching its first adjustment period. The second number is the length of time between adjustments after the first occurs.

A 5:1 indicates the original rate is guaranteed for the first five years of the loan. the 1 means the rate will be reviewed and perhaps adjusted yearly after that initial five year period.

The most common combination some years ago was 1:1 or 2:1. In recent years, the 5:1 option has attracted buyers and for some loans adjustments after the beginning rate time period may be made every 6 months. This second type carries much higher risk for the borrower over the long term. It was used primarily by those who planned to live in the home for only a few years. Unfortunately, the collapsing housing market resulted in a glut of homes for sale and some homeowners are facing huge increases in monthly payments because they are unable to sell their property.

Before choosing an adjustable rate mortgage, it is important to understand that they have both advantages and disadvantages and the choice of which type of mortgage is best for you will be largely determined by the current market as well as your own situation.

The advantage of ARM’s is the ability of the lender to offer a lower percentage and it may still be a good option for those who buy for the short term – but only if they live in an area not highly affected by the eroding market. As long as the buyer has the credit rating and ability to obtain a better mortgage if needed, it’s a useful buying tool. In a period of high rates, these loans are practical options.

The disadvantage is, of course, the risk involved for the home buyer. The success of the purchase depends on the financial market volatility, whether interest goes up or down, home valuation, etc. Those averse to risk are advised not to consider an adjustable rate mortgage under any conditions.

By: Trace Morgan

FHA Mobile Home Mortgage Loans – How Do They Work?

admin — Tue, 16 Mar 2010 22:30:59 +0000

If you are looking to buy a mobile home and you have a limited amount of money to put down towards your purchase, you may want to consider a FHA mobile home loan. FHA stands for Federal Housing Administration and it’s responsible for Housing and Urban Development (also known as HUD). How does this help you? FHA insures your mortgage loan so that lenders will give you a good deal, even though you do not have a sizable down payment.

Under the FHA mobile home loan umbrella there are two types of programs. One is for people who already own land to put the mobile home on and the other is for people that choose to locate their mobile home in an established mobile home park.

When lenders consider applicants for FHA-backed mobile home loans, they must follow certain eligibility requirements. These requirements include considering the applicant’s credit rating, the income and the ability to repay the debt.

A Title 1 loan can be used to buy a mobile home, a lot on which to place a mobile home, or both. The home must be the primary residence of the person or persons obtaining the loan. There are maximum loan amounts as well as loan terms that must be adhered to, as follows. For a mobile home only, the maximum is $48,600. For a piece of land or lot, the maximum is $16,200, while the maximum for a combination of the two is $64,800. Maximum loan terms for FHA mobile home loans are: 20 years for a mobile home or a single section mobile home and lot, 15 years for a lot, and 25 years for a multi-section mobile home and lot.

Most of the time when you buy a mobile home, you will also have the opportunity to finance your purchase at the mobile home dealer in which you make your purchase. Sometimes these dealers will not offer FHA-backed loans. If they do not, ask them for a referral to a lender who will use FHA. Or you could consider finding a lender online.

To qualify for a FHA-backed mobile or manufactured home mortgage loan, you must meet some minimum criteria. You must be able to provider five percent down payment (although there are additional programs to help if you do not have this amount), proof of income and a suitable place to locate your mobile home (this may be on your own land or in a mobile home park).

By: Milt Wapner