By Greg Wadel
Many homeowners that are refinancing their home for the first time or even the second time or third time should completely check out all of the available choices to guarantee the best possible interest rate and the terms are secured. Now homeowners are sometimes a little lazy when it comes to refinancing there homes. There may a huge drop in interest rates or a change in the financial situation which requires a refinance. But the homeowner may be aware that a refinance is necessary, the homeowner may not be aware that it sometimes takes a great deal of work to find the best possible interest rates and terms.
Now homeowners are often drawn to refinance with the same lender or bank who gave the first original mortgage loan or with the same lender or bank who took care of there previous refinances. The reason behind this is along the same lines as, if its not broke, leave it alone. These homeowners figure their current mortgage is just fine and they are happy with the current bank or lender so there is no need to check for further options. However, this easy attitude can cost the homeowners alot of money in the long run.
1. You Should Try All the Options, and weigh the Good and the Bad.
Many homeowners who are thinking about refinancing their home should get a hold of many lenders and receive rate quotes from each and every one of them. When getting quotes the homeowners should think about all of their available options but should limit these options to gain a good lender. While a different lender may be giving you great rates and loan terms it is considered high risk to go with this type of bank or lender as opposed to a more well known lender.
Homeowners who wish to further investigate smaller lenders who do not have an established history should proceed with caution. Unless the lender has trusted friends or family members who are willing to vouch for the lender, the homeowner should investigate these smaller lenders carefully. Visiting a website address is not the best way to ensure credibility. Designing a professional looking website is a fairly simple process. Most website designers could design and upload such a website in less than a day.
2. Theres Nothing Wrong With Friendly Competition.
When checking for the most favorable rates, homeowners should make it very well known that they are checking around for rate prices and are not making a decision right away. Lenders that know they have some other competition may be more wiling to offer you a lower interest rate than they would if they did not know or think the homeowner was checking other options. In many cases this may not seem to be fair to the lender, the business of refinancing is a very competitive business. Just like a builder just might offer his most competitive rate if he knows the homeowner has other estimates from a number of different contractors, lenders are probably going to do the same. They also make their money from homeowners and having you refinance your mortgage does not help them out at all financially.
Some banks and lenders may think the homeowner is just playing games and may not give the best rate right off the bat. However, if the homeowner turns down the offer and says they have a much better offer with another bank or lender, the first lender may be willing to offer an even lower interest rate just to see if they can sway you the homeowner. Many times cost is certainly important, it is not the only decision to think about. Some homeowners might refinance with a bank or lender who gives a little higher rates if the homeowner feels as if this bank or lender is more prone to his needs.So a good service can factor into the equation also. You can find some great advice at the site on all types of mortgages and refinancing.
http://EzineArticles.com/?expert=Greg_Wadel
2007-09-13
Mortgage Refinance-The Easy Way To Get The Adjustable Rate Monkey Off Your Back
by Albert Alexander
The biggest benefit to refinancing your house is that it allows you to get a lower interest rate resulting in you paying less money per month than you currently do. Mortgage refinance has developed into an exceptionally popular way to go in today's age with the obstacles of home finance.
Mortgage refinance, or home mortgage refinance, works on the fundamental attitude of getting a second loan on the property that substitutes any previous loan on the home. In addition to a lower interest rate, refinancing your house can also be a great way to cut the term of your loan repayment, even while you still lower your mortgage payment. For the majority of people, however, it's merely an approach to help you get back on your feet even as it improves your monthly cash flow.
For someone with an adjustable rate mortgage, the inevitability of a refinance sometime is a fact. Even though refinancing a fixed rate mortgage is usually only recommended in the event that interest rates fall, there is the chance to save money off your current fixed rate too. This can be accomplished because of the better rate or by actually extending your loan terms.
For individuals locked into either an adjustable rate (ARM) or a fixed rate mortgage, rates are nonetheless at relative lows and most homeowners will benefit from a refinance whether it's for the purposes of cash out, debt consolidation or to change from an ARM to fixed rate.
While refinancing doesn't always save you that much money, the opportunity for improved loan terms, and weighing the potential benefits of debt consolidation make it without a doubt worth considering. In addition to the advantages of lower interest rates or shorter loan payoff times, a lot of homeowners use refinancing as a means to use the money to buy a new car or even a second home.
Many of the mortgage refinance rates that you will get, just like your initial home loan, are going to depend upon multiple market factors in addition to your overall credit risk as a borrower. The amount of equity in your home is a top factor. Keep in mind, equity is the difference between the remaining home loan balance and its current market value. So what can of rate is possible?
All of the mortgage providers have access to comparable rates in the market. On account of this, the answer is to work with a provider who has a name you recognize and not a small-time operation. For people who don't necessarily have to refinance to increase cash flow, they have the additional benefit of refinancing to shorten the loan terms from 30 years to 15 years and the ability to build equity in your home at a considerably faster rate.
Refinancing your mortgage can be a financially advantageous move, especially for those who need to go from an ARM to a fixed interest rate. Refinancing your home presents a straightforward approach to cash out or consolidate debts with high interest rates. Though it's not something to be done annually, refinancing your home is one of the most important things you should think about, at least ever few years, experts say.
http://www.loanthemoney.com/
The biggest benefit to refinancing your house is that it allows you to get a lower interest rate resulting in you paying less money per month than you currently do. Mortgage refinance has developed into an exceptionally popular way to go in today's age with the obstacles of home finance.
Mortgage refinance, or home mortgage refinance, works on the fundamental attitude of getting a second loan on the property that substitutes any previous loan on the home. In addition to a lower interest rate, refinancing your house can also be a great way to cut the term of your loan repayment, even while you still lower your mortgage payment. For the majority of people, however, it's merely an approach to help you get back on your feet even as it improves your monthly cash flow.
For someone with an adjustable rate mortgage, the inevitability of a refinance sometime is a fact. Even though refinancing a fixed rate mortgage is usually only recommended in the event that interest rates fall, there is the chance to save money off your current fixed rate too. This can be accomplished because of the better rate or by actually extending your loan terms.
For individuals locked into either an adjustable rate (ARM) or a fixed rate mortgage, rates are nonetheless at relative lows and most homeowners will benefit from a refinance whether it's for the purposes of cash out, debt consolidation or to change from an ARM to fixed rate.
While refinancing doesn't always save you that much money, the opportunity for improved loan terms, and weighing the potential benefits of debt consolidation make it without a doubt worth considering. In addition to the advantages of lower interest rates or shorter loan payoff times, a lot of homeowners use refinancing as a means to use the money to buy a new car or even a second home.
Many of the mortgage refinance rates that you will get, just like your initial home loan, are going to depend upon multiple market factors in addition to your overall credit risk as a borrower. The amount of equity in your home is a top factor. Keep in mind, equity is the difference between the remaining home loan balance and its current market value. So what can of rate is possible?
All of the mortgage providers have access to comparable rates in the market. On account of this, the answer is to work with a provider who has a name you recognize and not a small-time operation. For people who don't necessarily have to refinance to increase cash flow, they have the additional benefit of refinancing to shorten the loan terms from 30 years to 15 years and the ability to build equity in your home at a considerably faster rate.
Refinancing your mortgage can be a financially advantageous move, especially for those who need to go from an ARM to a fixed interest rate. Refinancing your home presents a straightforward approach to cash out or consolidate debts with high interest rates. Though it's not something to be done annually, refinancing your home is one of the most important things you should think about, at least ever few years, experts say.
http://www.loanthemoney.com/
The Time is Right for Investment Property Mortgage Refinance
Terry Edwards
If you own investment properties, then you may want to consider refinancing them and get a lower interest rate. This may lower your payments, which can mean more money in your pocket. Even though the housing market may be in a slump right now, it is still a good time to refinance while interest rates are still low. Read on to discover how to get the most from your investment property mortgage refinance.
The first thing you should do is to shop around for a good mortgage broker. They are the professionals when it comes to financing matters. A good mortgage broker can hook you up with the right lender to help you get the best loan for your circumstances.
A very important point to remember is to do your research before you do anything. Learn everything that you can about the loan refinance process and interest rates. Make sure that you check out the mortgage broker thoroughly before committing to anything. Most are honest, but as with any business, there can be a few unsavory characters out there.
If you go into this venture knowledgeable and fully prepared, the process will go a lot smoother and you have less of a chance of being taken advantage of. The goal is to get the best interest rate that you possibly can. Make sure that you are keeping current on the changing interests rates.
Another good idea is to buy down. What this means is that, if the current interest rate on your mortgage is 7%, you could pay a few thousand at closing and end up with a 6.5% interest rate. This is sometimes known as paying points. It is a good way to save thousands of dollars over the term of your loan and end up with a lower monthly payment to boot.
Never be afraid to walk away from a deal if you can't get the interest rate that you want. If you have studied the market and you know what the current rates are, then you have the ammunition that you need to negotiate a great deal.
There is nothing that says you can't use more than one mortgage broker or more than one lending service. Don't be shy about using them against each other for competition. If ABC mortgage broker says he can give you a 7% interest rate, call up XYZ mortgage broker and ask them if they can beat it. You may be surprised at the results.
The bottom line is to never go into any type of business deal blind. Research, research, and then research some more. Become familiar with the investment property mortgage refinancing business. Then, negotiate for the best interest rates. Pay down your points and come out a winner!
www.HomeRefinancingA-Z.com
If you own investment properties, then you may want to consider refinancing them and get a lower interest rate. This may lower your payments, which can mean more money in your pocket. Even though the housing market may be in a slump right now, it is still a good time to refinance while interest rates are still low. Read on to discover how to get the most from your investment property mortgage refinance.
The first thing you should do is to shop around for a good mortgage broker. They are the professionals when it comes to financing matters. A good mortgage broker can hook you up with the right lender to help you get the best loan for your circumstances.
A very important point to remember is to do your research before you do anything. Learn everything that you can about the loan refinance process and interest rates. Make sure that you check out the mortgage broker thoroughly before committing to anything. Most are honest, but as with any business, there can be a few unsavory characters out there.
If you go into this venture knowledgeable and fully prepared, the process will go a lot smoother and you have less of a chance of being taken advantage of. The goal is to get the best interest rate that you possibly can. Make sure that you are keeping current on the changing interests rates.
Another good idea is to buy down. What this means is that, if the current interest rate on your mortgage is 7%, you could pay a few thousand at closing and end up with a 6.5% interest rate. This is sometimes known as paying points. It is a good way to save thousands of dollars over the term of your loan and end up with a lower monthly payment to boot.
Never be afraid to walk away from a deal if you can't get the interest rate that you want. If you have studied the market and you know what the current rates are, then you have the ammunition that you need to negotiate a great deal.
There is nothing that says you can't use more than one mortgage broker or more than one lending service. Don't be shy about using them against each other for competition. If ABC mortgage broker says he can give you a 7% interest rate, call up XYZ mortgage broker and ask them if they can beat it. You may be surprised at the results.
The bottom line is to never go into any type of business deal blind. Research, research, and then research some more. Become familiar with the investment property mortgage refinancing business. Then, negotiate for the best interest rates. Pay down your points and come out a winner!
www.HomeRefinancingA-Z.com
Home Mortgage Refinance: Problems That Arise
Alan Lim |
Common problems
There are the honest lenders and then there are the unscrupulous bad ones. While the prospect of owning your home may prompt you to make timely and accurate payments towards the home mortgage refinance payment, even the lender will try to keep your current mortgage strong enough. After all, he wouldn’t want to lose out on your money! Nothing in life is certain – employment conditions change, your place of stay may change unexpectedly and you may have the bad luck to be dealing with an unscrupulous lender out to get your hard earned money!
Insufficient funds
Many people face this problem especially when they are suddenly out of work or have been laid off. This can significantly impact the payment towards your home mortgage refinance and then it becomes very difficult to get out of this vicious cycle. One of the best things you can do in order to avoid this situation is to assess if you either have a secure job or whether you have set aside sufficient funds for crisis situations in future. Therefore it’s best to go for a home mortgage refinance only when you are absolutely sure that your job is secure enough to support you for a long time. After all mortgage payments are typically made over several years. Settle for a home mortgage refinance only when you’re sure of these conditions.
Change of place
There maybe times when you might have to move out of your existing home. It could be because of a transferable job, a bitter divorce or some other condition. Usually in the case of a situation like a divorce, once one partner has moved out, the other one is forced to pay all the bills. This can really eat into the income levels of that person. That means the home mortgage refinance payment too takes a beating. There might even be legal consequences of not being able to make payments on time and within the due date. There is certainly no guarantee on the strength of a relationship but when going for a home mortgage refinance it’s best to go for it only when the couple is committed to each other for long term.
Getting a raw deal
There maybe situations when you’re caught in a home mortgage refinance deal that’s actually costing you more, rather than helping you save! This could be due to scams and other such false promises on the part of lenders. In such situations it is in one’s best interest to get a home mortgage refinance from a bank with whom one has an account for several years. This is because over a period of time a relationship of trust is formed and hence the bank will be more willing to offer a better rate on the home mortgage refinance.
http://www.articlesbase.com/mortgage-articles/home-mortgage-refinance-problems-that-arise-210267.html
Common problems
There are the honest lenders and then there are the unscrupulous bad ones. While the prospect of owning your home may prompt you to make timely and accurate payments towards the home mortgage refinance payment, even the lender will try to keep your current mortgage strong enough. After all, he wouldn’t want to lose out on your money! Nothing in life is certain – employment conditions change, your place of stay may change unexpectedly and you may have the bad luck to be dealing with an unscrupulous lender out to get your hard earned money!
Insufficient funds
Many people face this problem especially when they are suddenly out of work or have been laid off. This can significantly impact the payment towards your home mortgage refinance and then it becomes very difficult to get out of this vicious cycle. One of the best things you can do in order to avoid this situation is to assess if you either have a secure job or whether you have set aside sufficient funds for crisis situations in future. Therefore it’s best to go for a home mortgage refinance only when you are absolutely sure that your job is secure enough to support you for a long time. After all mortgage payments are typically made over several years. Settle for a home mortgage refinance only when you’re sure of these conditions.
Change of place
There maybe times when you might have to move out of your existing home. It could be because of a transferable job, a bitter divorce or some other condition. Usually in the case of a situation like a divorce, once one partner has moved out, the other one is forced to pay all the bills. This can really eat into the income levels of that person. That means the home mortgage refinance payment too takes a beating. There might even be legal consequences of not being able to make payments on time and within the due date. There is certainly no guarantee on the strength of a relationship but when going for a home mortgage refinance it’s best to go for it only when the couple is committed to each other for long term.
Getting a raw deal
There maybe situations when you’re caught in a home mortgage refinance deal that’s actually costing you more, rather than helping you save! This could be due to scams and other such false promises on the part of lenders. In such situations it is in one’s best interest to get a home mortgage refinance from a bank with whom one has an account for several years. This is because over a period of time a relationship of trust is formed and hence the bank will be more willing to offer a better rate on the home mortgage refinance.
http://www.articlesbase.com/mortgage-articles/home-mortgage-refinance-problems-that-arise-210267.html
2007-09-12
Lock And Load With The Best Mortgage Refinance Rates
by Rony Walker
Cashing in on the decline of interest rates can give you the best mortgage refinance deals, but can this happen all the time?
Lock and luck
The interest rates of mortgages saw a decline in four successive weeks in August of 2007. If you were waiting to lock in your interest rate for your mortgage refinance loan, this was the best time to do it. Bear in mind that the market will always be fickle and there is no singular best mortgage refinance interest rate.
If you are home buyer and already purchased a house, you're just in time to cash in for the lock. You would have gotten savings with the best mortgage refinance interest rate for as much as 5.81%, which is lower by .53% than last year's average high of 6.34%. The borrowers were in luck to lock their interest rates at that very opportune time and if that fates smile down on you, you just might be next. You could lock in a low interest rate during the first 30-45 day period of your mortgage refinance loan, only to find out there is a much lower rate the next month. Currently, the trend is showing a decline but market analysts are predicting a rise after 12 months.
What good is locking in?
A rate lock guarantees the borrower that his or her mortgage will have a definite interest rate, set points, and other preset fees. If you were unable to purchase your new home during the period, you are going to pay the higher rate when the interest rises. Borrowers are then advised not to lock in immediately after a week of the loan if they haven't found a property yet. They must know that the 30-45 days provided for allows for additional processing, contingencies, and some settlements, so take your time before you lock in.
Fortunately, there are lenders who automatically extend the lock. But some charge a fee to extend the period and the rate lock costs are not uniform. The fees are either charged up front, or added to the loan rate; the longer the lock period, higher fees will be applied.
To protect your interests, have the locking agreement in writing. A verbal one may not hold water and you cannot present any proof when the time comes. For the lock contract, have all the specifics outlined. The first lock date, the lock period, lock cost and fees, and the post lock details should also be specific in the document. Most documents include interest rate and points at best. Mortgage refinance companies will also allow you to put a lock to your application when the things are looking bleak.
Looking for the best mortgage refinance deals?
The main reason why you are looking for the best mortgage refinance deal is to save money. So look around to see what the lending companies have to offer. Work out the math before signing the loan application because some unscrupulous lenders may spring some nasty surprises despite their advertisements of low interest rates.
Picture this, if your present debts are wiping you out at 20% each year, the best mortgage refinance package will cost you little at 6% if you just know how to maneuver your way through the jargon and the figures. Get a money counselor to walk you through the maze. Who says you need to make a go at it alone?
http://www.whataboutloans.com/mortgage/mortgage-refinance-loans.html
Cashing in on the decline of interest rates can give you the best mortgage refinance deals, but can this happen all the time?
Lock and luck
The interest rates of mortgages saw a decline in four successive weeks in August of 2007. If you were waiting to lock in your interest rate for your mortgage refinance loan, this was the best time to do it. Bear in mind that the market will always be fickle and there is no singular best mortgage refinance interest rate.
If you are home buyer and already purchased a house, you're just in time to cash in for the lock. You would have gotten savings with the best mortgage refinance interest rate for as much as 5.81%, which is lower by .53% than last year's average high of 6.34%. The borrowers were in luck to lock their interest rates at that very opportune time and if that fates smile down on you, you just might be next. You could lock in a low interest rate during the first 30-45 day period of your mortgage refinance loan, only to find out there is a much lower rate the next month. Currently, the trend is showing a decline but market analysts are predicting a rise after 12 months.
What good is locking in?
A rate lock guarantees the borrower that his or her mortgage will have a definite interest rate, set points, and other preset fees. If you were unable to purchase your new home during the period, you are going to pay the higher rate when the interest rises. Borrowers are then advised not to lock in immediately after a week of the loan if they haven't found a property yet. They must know that the 30-45 days provided for allows for additional processing, contingencies, and some settlements, so take your time before you lock in.
Fortunately, there are lenders who automatically extend the lock. But some charge a fee to extend the period and the rate lock costs are not uniform. The fees are either charged up front, or added to the loan rate; the longer the lock period, higher fees will be applied.
To protect your interests, have the locking agreement in writing. A verbal one may not hold water and you cannot present any proof when the time comes. For the lock contract, have all the specifics outlined. The first lock date, the lock period, lock cost and fees, and the post lock details should also be specific in the document. Most documents include interest rate and points at best. Mortgage refinance companies will also allow you to put a lock to your application when the things are looking bleak.
Looking for the best mortgage refinance deals?
The main reason why you are looking for the best mortgage refinance deal is to save money. So look around to see what the lending companies have to offer. Work out the math before signing the loan application because some unscrupulous lenders may spring some nasty surprises despite their advertisements of low interest rates.
Picture this, if your present debts are wiping you out at 20% each year, the best mortgage refinance package will cost you little at 6% if you just know how to maneuver your way through the jargon and the figures. Get a money counselor to walk you through the maze. Who says you need to make a go at it alone?
http://www.whataboutloans.com/mortgage/mortgage-refinance-loans.html
2007-09-11
Home Refinancing - What You Should Know
by Terry Edwards
If you own a home and are drowning in credit card or medical bills, home refinance may be a good idea for you. Maybe your home needs some repairs or upgrades and you don't have the cash. Consider a home refinance to get the cash that you need to improve your home. Read on and discover why refinancing your home may be the answer to your cash flow problems.
First of all, examine what type of home loan you currently have. Do you have a fixed rate or an adjustable rate mortgage? If you have an adjustable rate mortgage, it would probably be a good idea to refinance with a fixed rate mortgage. The market is very volatile right now and you really don't know what is going to happen with adjustable rate mortgages.
The next decision you have to make is how long you want the term of your home refinance loan to be. This is where you need to examine your budget and run the numbers to see if you can swing a mortgage payment on a 15 year loan or if you will have to go 30 years to be able to make the payment.
Obviously the faster you are able to pay off your mortgage the less you will pay in interest. But be careful and don't lock yourself into a monthly payment that is going to be difficult to make. You don't want to refinance your home and then risk losing it to foreclosure.
Once you have decided on the type and length of your refinance loan, don't forget to take a close look at your interest rate. You want to make sure that the interest rate on your home refinance is lower than the original mortgage loan. If it's higher don't commit to this loan. You are trying to put yourself in a better position, not get yourself deeper into debt.
Do some shopping around. Find a company that is reputable and willing to give you a great home refinance loan at a great interest rate. But beware of predatory lenders. These types of lenders will promise you a great deal, but when it comes down to it, they will pull the rug out from under you.
Predatory lenders will not give you a good interest rate based on your credit, they will loan you money based on the equity of your home and not your ability to pay and they will add excessive fees and roll them into the loan, increasing the amount that you owe. Many people who have been the victims of predatory lending have lost their homes to foreclosure.
The most important thing to remember is if you refinance your home to get cash to pay off those high interest bills, do it. Don't use the cash for something else. The goal is to take care of the bills that are draining you dry and to have extra money left over at the end of the month. Don't give into the temptation to use the money for something frivolous.
www.HomeRefinancingA-Z.com
If you own a home and are drowning in credit card or medical bills, home refinance may be a good idea for you. Maybe your home needs some repairs or upgrades and you don't have the cash. Consider a home refinance to get the cash that you need to improve your home. Read on and discover why refinancing your home may be the answer to your cash flow problems.
First of all, examine what type of home loan you currently have. Do you have a fixed rate or an adjustable rate mortgage? If you have an adjustable rate mortgage, it would probably be a good idea to refinance with a fixed rate mortgage. The market is very volatile right now and you really don't know what is going to happen with adjustable rate mortgages.
The next decision you have to make is how long you want the term of your home refinance loan to be. This is where you need to examine your budget and run the numbers to see if you can swing a mortgage payment on a 15 year loan or if you will have to go 30 years to be able to make the payment.
Obviously the faster you are able to pay off your mortgage the less you will pay in interest. But be careful and don't lock yourself into a monthly payment that is going to be difficult to make. You don't want to refinance your home and then risk losing it to foreclosure.
Once you have decided on the type and length of your refinance loan, don't forget to take a close look at your interest rate. You want to make sure that the interest rate on your home refinance is lower than the original mortgage loan. If it's higher don't commit to this loan. You are trying to put yourself in a better position, not get yourself deeper into debt.
Do some shopping around. Find a company that is reputable and willing to give you a great home refinance loan at a great interest rate. But beware of predatory lenders. These types of lenders will promise you a great deal, but when it comes down to it, they will pull the rug out from under you.
Predatory lenders will not give you a good interest rate based on your credit, they will loan you money based on the equity of your home and not your ability to pay and they will add excessive fees and roll them into the loan, increasing the amount that you owe. Many people who have been the victims of predatory lending have lost their homes to foreclosure.
The most important thing to remember is if you refinance your home to get cash to pay off those high interest bills, do it. Don't use the cash for something else. The goal is to take care of the bills that are draining you dry and to have extra money left over at the end of the month. Don't give into the temptation to use the money for something frivolous.
www.HomeRefinancingA-Z.com
The Truth About the Mortgage Market
by Kim Curtis
By Kim S. Curtis, Partner, CMP, Life Agent Mortgage One Lending California Mortgage Loans
SAN DIEGO, CA - Subprime mortgages have now been credited for bankrupting well over 110 lenders and seriously damaging operations at many major mortgage firms. They've reportedly wiped out five hedge funds, tens of thousands of jobs, and have led to millions of foreclosures with millions more on the way. And, as if that weren't enough, subprime mortgages are also blamed for massive volatility in the stock, bond, credit, futures, and real estate markets here in the US and around the globe. Some say losses in the mortgage securities market alone could reach hundreds of billions of dollars this year.
This means that, for any Americans looking to buy, sell, or refinance a home, they are confronting a very different market from the one that existed just 6-12 months ago.
How did this happen? The recent real estate boom was fueled by a period of record home appreciation and historically low interest rates. Banks, in order to compete, loosened guidelines and began offering more funding to more borrowers through riskier, non-conforming or "exotic" mortgages.
These ideal lending conditions persisted for several years, supported by high demand, historical real estate data, home prices, and massive trading volume/profits on mortgage-backed securities and other financial instruments on Wall Street.
Then, in 2006, a slowdown in real estate led to a deterioration of home values, an increase in inventories, and ultimately to today's tightening of credit guidelines, leaving many investors unable to sell or refinance out of their existing positions. Many Americans who had tapped into their equity were suddenly tapped-out and overextended as home values fell. Foreclosures followed in record numbers and a re-valuation of mortgage bonds and other financial instruments created the credit/liquidity domino effect we're now experiencing.
Unfortunately, it's going to get a lot worse before it gets better. According to the latest estimates, over 2 million subprime and Alt-A adjustable rate mortgage (ARM) holders will face payment increases of up to 30%-100% when their loans reset in the next 2 to 18 months. These loans make up less than 40% of the total mortgage market, but the negative effects, as we have seen, of increased foreclosure activity can have a ripple effect throughout the industry and around the globe.
What does this mean to you and your mortgage?
Sellers: If you're planning on selling your home, be prepared for an even smaller pool of qualified buyers. While some experts predict a settling of this credit crisis over the coming year, tightened credit guidelines and diminishing mortgage products could knock out as many as 15%-30% of potential qualified buyers. Now is not the time to sit and wait for the best possible price. Have a serious talk with your real estate agent. Having experienced buying/selling transactions in your area, he or she can help you price your home accordingly. He or she can also help ensure that your buyers are pre-approved and stay pre-approved throughout the entire transaction.
Buyers: Get pre-approved by your California mortgage broker. While there are a lot of great deals out there, getting credit is becoming tougher and tougher, and it's taking longer and longer to complete a transaction. Remember, what you qualify for today could change tomorrow in a volatile market. For those looking to refinance, keep this in mind. There is no time to delay! Communicate with your lender. Don't do anything that could negatively affect your credit, and make sure you get all your documentation in on time.
ARMs Borrowers: If your ARM is scheduled to reset in the next 2-18 months, you need to schedule an appointment and consider mortgage refinancing right away. Whether your ARM is subprime, Alt-A, or even if you have a pre-payment penalty, don't let a default or foreclosure situation sneak up on you. Did you know that your monthly payments can increase anywhere from 30% to 100% once your loan resets? At the very least, give yourself the peace of mind of knowing what your adjusted payment will be.
Borrowers with less-than-perfect credit: Each week it seems lenders are shedding more and more mortgage products making bad credit mortgage refinancing nearly impossible. Many lenders have stopped offering No-Doc loans and are reducing all forms of Stated-Income loans. While it might be challenging, borrowers with credit issues need to see a loan expert. Often they have credit repair resources and other strategies to help you reach your financial goals.
Finally, there's an important concept to embrace: all markets, while cyclical in nature, are self-correcting, be it credit, real estate, stocks, or bonds. For the last 6 or 7 years, real estate was booming and riding high. The correction we're experiencing now - while it seems harsh and could get much worse - is, in a sense, "natural" and directly related to the extremely loose guidelines and perhaps overzealous lending and leveraging during the boom cycle.
http://www.goarticles.com/cgi-bin/showa.cgi?C=610765
By Kim S. Curtis, Partner, CMP, Life Agent Mortgage One Lending California Mortgage Loans
SAN DIEGO, CA - Subprime mortgages have now been credited for bankrupting well over 110 lenders and seriously damaging operations at many major mortgage firms. They've reportedly wiped out five hedge funds, tens of thousands of jobs, and have led to millions of foreclosures with millions more on the way. And, as if that weren't enough, subprime mortgages are also blamed for massive volatility in the stock, bond, credit, futures, and real estate markets here in the US and around the globe. Some say losses in the mortgage securities market alone could reach hundreds of billions of dollars this year.
This means that, for any Americans looking to buy, sell, or refinance a home, they are confronting a very different market from the one that existed just 6-12 months ago.
How did this happen? The recent real estate boom was fueled by a period of record home appreciation and historically low interest rates. Banks, in order to compete, loosened guidelines and began offering more funding to more borrowers through riskier, non-conforming or "exotic" mortgages.
These ideal lending conditions persisted for several years, supported by high demand, historical real estate data, home prices, and massive trading volume/profits on mortgage-backed securities and other financial instruments on Wall Street.
Then, in 2006, a slowdown in real estate led to a deterioration of home values, an increase in inventories, and ultimately to today's tightening of credit guidelines, leaving many investors unable to sell or refinance out of their existing positions. Many Americans who had tapped into their equity were suddenly tapped-out and overextended as home values fell. Foreclosures followed in record numbers and a re-valuation of mortgage bonds and other financial instruments created the credit/liquidity domino effect we're now experiencing.
Unfortunately, it's going to get a lot worse before it gets better. According to the latest estimates, over 2 million subprime and Alt-A adjustable rate mortgage (ARM) holders will face payment increases of up to 30%-100% when their loans reset in the next 2 to 18 months. These loans make up less than 40% of the total mortgage market, but the negative effects, as we have seen, of increased foreclosure activity can have a ripple effect throughout the industry and around the globe.
What does this mean to you and your mortgage?
Sellers: If you're planning on selling your home, be prepared for an even smaller pool of qualified buyers. While some experts predict a settling of this credit crisis over the coming year, tightened credit guidelines and diminishing mortgage products could knock out as many as 15%-30% of potential qualified buyers. Now is not the time to sit and wait for the best possible price. Have a serious talk with your real estate agent. Having experienced buying/selling transactions in your area, he or she can help you price your home accordingly. He or she can also help ensure that your buyers are pre-approved and stay pre-approved throughout the entire transaction.
Buyers: Get pre-approved by your California mortgage broker. While there are a lot of great deals out there, getting credit is becoming tougher and tougher, and it's taking longer and longer to complete a transaction. Remember, what you qualify for today could change tomorrow in a volatile market. For those looking to refinance, keep this in mind. There is no time to delay! Communicate with your lender. Don't do anything that could negatively affect your credit, and make sure you get all your documentation in on time.
ARMs Borrowers: If your ARM is scheduled to reset in the next 2-18 months, you need to schedule an appointment and consider mortgage refinancing right away. Whether your ARM is subprime, Alt-A, or even if you have a pre-payment penalty, don't let a default or foreclosure situation sneak up on you. Did you know that your monthly payments can increase anywhere from 30% to 100% once your loan resets? At the very least, give yourself the peace of mind of knowing what your adjusted payment will be.
Borrowers with less-than-perfect credit: Each week it seems lenders are shedding more and more mortgage products making bad credit mortgage refinancing nearly impossible. Many lenders have stopped offering No-Doc loans and are reducing all forms of Stated-Income loans. While it might be challenging, borrowers with credit issues need to see a loan expert. Often they have credit repair resources and other strategies to help you reach your financial goals.
Finally, there's an important concept to embrace: all markets, while cyclical in nature, are self-correcting, be it credit, real estate, stocks, or bonds. For the last 6 or 7 years, real estate was booming and riding high. The correction we're experiencing now - while it seems harsh and could get much worse - is, in a sense, "natural" and directly related to the extremely loose guidelines and perhaps overzealous lending and leveraging during the boom cycle.
http://www.goarticles.com/cgi-bin/showa.cgi?C=610765
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