Wednesday, November 28, 2007

All The Best Loans For You

Life is like one big roller coaster ride, with its highs and lows, leaving the human kind exhausted and definitely not looking for bumpy ups and downs. The main force driving the workforce and the economy is money, and there are no two minds about it. At any given point of time, every person, no matter where he is, is thinking about how to earn or make that extra, to meet his demand, and that of his families. Demand is equal to supply only in theoretical terms. The demand and supply of funds is never equal in anybody's life. To fulfill this deficiency, loans are used or taken. A loan can be defined as the transfer of funds or monetary assets from the borrower to the lender. The opportunity cost of the lender for parting with the resource is termed as the interest. A loan can also be defined as a contract between two people, in which the borrower promises to repay the money taken form the lender along with the interest. Best loan has no fixed and regular definition. It can be explained in layman's terms, as a loan in which both the parties to the loan contract are happy with the terms of the deal and have a feeling of security. Therefore, what may seem to be a best loan for a borrower "x" may not be a best loan for borrower "y". Thus best loan varies form person to person and their needs.

Best loan can however be distinguished based of the following factors:

Rate of interest: the arte of interest should not be very high. There is a particular cut off rate of interest given by the apex governing body of the country and no lender is supposed to charge rates higher or lower then it. Hence rates are between the two boundary lines. A best loan will have a rate of interest which is closer to the lower boundary line. A borrower should shop for rate of interest thoroughly and get the best marginal rate that is easy on his pocket.

Processing time:

A best loan should take less time to get processed. Loans which have tons of formalities and consume a month's time just to get processed are tiring. Once the documents are furnished by the borrower, the lending authorities should investigate, verify and process the loan fast, so that the borrower gets the money in time.

Terms of repayment:

A best loan should have terms of repayment which is easy on the borrower. If the amount to be repaid in every installment is hefty, the borrower will be stressed, and at some point of time or the other he will have to borrow more to settle of the repayment. Thus, when a borrower is judging a loan he should keep in mind the repayment amount, and compare it with his incoming money sources.

These are the basic points which the borrower should keep in mind, so that the loan he chooses gets him the best. Best loan can be shopped for easily, only that it requires a little bit of homework. It is best to compare the deals of many lenders and also read various schemes and programs offered by them. A lot of information can be got form the internet and it is extremely helpful. One can also find lenders on the net who give attractive loan offers. The borrower must know what he wants and place his priorities right. Lenders too offer a lot so that the borrower is satisfied with the loan.

Source: ArticlesBase

Monday, November 26, 2007

Mortgage Advice For Modern Man

Mortgage advice, loans, pensions, tax, investments and savings. All a relative minefield for todays average person looking to secure the future for themselves and their offspring. But this is clearly no new predicament.

Honey, Im pregnant - again - for the eigth time! Not the sort of welcome home many men wish to hear these days but imagine going back a few thousand years to that homecoming. Fine dear, let me count the spare camel, sheep, chickens bags of grain, limbs etc. I can swap for a bigger property!

Man has, since the beginning of time, found ways of dealing for profit and gain long before money was invented. From grain, tools and tobacco through to Cowrie shells from the Indian Ocean which were still used until recent times. Even today, within the households of the mind blowingly rich around the world, gold bullion is preferred as a tangible commodity.

The royal palaces and temples of ancient Mesopotamia may well have had no idea just what they were starting when they initially provided secure places for the safe keeping of commodities such as grain. But they did modern day man a huge favour with the Code of Hammurabi - the first official laws regulating banking operations.

Long gone are the days of hauling around shed loads of grain to buy a house with. For the average person in need of protection from loan sharks gold bullion is not a realistic option and neither is hiding your hard earned savings under the mattress. Hence, the fast growing popularisation of electronic banking.

With all our assets tied up in banks and building societies can we always be sure of getting the most from our money? After all, they are all money making organisations out for their own interests ahead of the consumers. This is where mortgage advisors and mortgage brokers come into their own.

Recent years saw a huge upsurge in people wanting to jump on the investment bandwagon of buying to let. Probably fuelled by a trend in TV programmes relating to property renovation and making people feel this get rich quick scheme was accessible to even the most inexperienced developer.

Banks have cashed in on this trend with a push of their mortgages for buy to let schemes. However, according to the Council for Mortgage Lenders, UK house repossessions for 2006 totalled 17,000 - a massive 65% increase on the previous year. So, are individual banks doing whats right for the consumer?

A wise decision for any prospective purchaser or investor is an independent mortgage advisor. Regulated to protect the consumer, they are able to advice on a much broader range of products that can be tailored to the individual. Although still working for a commission (no grain!), they are not obliged to draw customers to one organisation or another.

Mortgage advisors are there to find you the very best deals in mortgages - whether it be investment, endowment, pension or repayment. They can advice on overpayment, underpayment, payment holidays, variable rates, fixed, discounted tracker and capped rates.

All financial concerns can be discussed with your personal mortgage advisor, including the buy to let mortgage, for everyone from the commercial developer to the first time buyer, from self build project managers to those looking to re-mortgage or buy a second home. They can even advice on the raising of finance for house boats, mobile homes or the more unusual property.

Your mortgage advisor will be able to help deal with problems such as CCJ's, bankruptcy and repossessions to get you back on that property ladder as well as imparting his vast financial advice of insurances, pensions, savings taxes and will writing.

So, with that next child on the way, a retirement looming or an unexpected accident or illness there is no need to panic, or round up the wildlife, just get advice from a mortgage broker.

Source: ArticlesBase

Friday, November 23, 2007

How To Pre-Qualify For An FHA Home Loan

FHA home loans are mortgages that are insured by the United States government, more particularly the Federal Housing Administration. FHA in itself does not make the loans. What they do is that they insure the loans that were in turn, given out by their qualified group of commercial lenders.

With the introduction of the FHA home loan, a lot of low-income Americans were able to secure a loan to purchase their homes. FHA home loans are conceptualized in 1930's during the time of the Great Depression. The government acted to subsidize loaning programs through FHA in response to the growing rate of defaults and foreclosures.

The good news is that FHA is for every American. But they have to follow the set guidelines in applying for it. To know if you qualify for an FHA home loan, here is a checklist that you can use. See for yourself if you can take advantage of FHA's easy mortgage loan plans.

1. First and foremost, you should have a steady employment history. By this, you should be able to prove to the agency that you have at least two years of service with your current employer. Stability of job and income is the main factor. That's the primary requirement of FHA.

2. You should have an increasing income, or at least, a consistent one. So that FHA can correctly assess your capability to pay, you should show them that in your current job, you are earning a fixed amount. And if in case it is not the case, your income should follow a steady rising pattern, not a fluctuating one.

3. You should be able to boast about your credit history. Your credit report definitely says a lot about your financial status. It is FHA's requirement that all their applicants are in good credit standing. And not only that, they also require that there is not a single payment over due for more than a month within the last two years in their credit reports.

4. You should also show that you've got no history of bankruptcy. Or even if you had, it should be at least two years before. You should also show and that you already had regained financial stability for the past two years. You should be in a good credit standing for two consecutive years.

5. Your foreclosures, if any, should be three years old at the very least. This one follows the same principle as the bankruptcy rule stated above. It is a must that for the past three years, what you have is a good credit standing.

6. You can only apply for a loan that is 30% of your total monthly income. If you have everything else worked out, remember this last important detail: FHA will approve you a loan corresponding to your gross income. So, do not apply for one that exceeds 30%. Your application will just be denied. Look and settle for a house that is just within the set limits.

These are the different points to consider when applying for an FHA loan. You should qualify in the every step stated here. These are the exact guidelines that FHA is currently following.

But you have to know that pre-qualifying for the loan is just the first step. It is not a guarantee of anything. All it means is that FHA will merit a review of your application and proceed from there. Your dream of buying the perfect house is still in the cooking stages, so to speak.

Pre-qualification is the first step to getting a loan, though. Needless to say, it is an important step altogether. If you don't pass the pre-qualification stage, there is no way that you will be able to purchase the house that you always wanted, at least not through FHA.

What the pre-qualification step really does is that it assesses your income, your assets, and your ability to pay. After which, you are to show it to the lender waiting on the wings. Then they further study your case. You'll get the loan once they see that you are indeed, financially stable.

With all these said, go ahead and start evaluating yourself for an FHA home loan. Take advantage of what they are offering today. This is your chance to own the house of your dreams. Take it while it is still there.

Source: ArticlesBase

Sunday, November 18, 2007

Can’t Pay the Mortgage? This is How you Can Save your Property and Avoid Repossession

It is sad see that there are many property investors and home owners that can’t pay their bonds due to the recent interest rate increases. To add to the trauma, many have refinanced properties to the extent that getting a quick sale in the open market is close to impossible as there is no equity left to make the deal attractive to another investor.

This makes the situation very unpleasant and dangerous for the credit records of such persons. These incidents seem to leave the property investor or homeowner stuck, panicked and very emotional about the situation.

There are however a few solutions that come from the most unexpected place – the banks.

Even though the banks are harsh and procedural and have deep pockets to easily and swiftly take legal action, they are also interested in solving problems. It is costing the bank money to take legal action and repossess a property, not to mention the time, which in corporate terms equals money.

Though more properties in execution are on the banks lists and some people have not found solutions, we are hoping that this article will give some ideas on how to go about getting help from the lenders themselves.

One may find that the banks are willing to help some bond holders experiencing temporary financial problems. Above all, property investors and homeowners must remember that the banks are smart and fully aware of the fact that rising interest rates have a negative impact on repayments.

But it is not that easy to get help from the bank. May factors needs to be taken into consideration, including factors that are part of the willingness profile of the borrower. The banks job is to keep the bank in business and will not extend help to just anyone asking for help, instead they would rather evaluate each case on its’ merits.

Before we dive into some solutions that the banks may provide, lets look at some guidelines that one needs to remember if approaching the bank for help.
The borrower should contact the bank as soon as they see a problem on the horizon. The issue here is simple. Most borrowers wait far too long before acting on a problem or even informing the bank that a problem exists. This is true for all credit forms not only mortgage bonds.

There are two main reasons for this that are purely emotional:

1) Borrowers are afraid to approach the bank. The bank is big and powerful and seems non-emotional and very threatening. When faced with this fear, one always must remember that humans work in the banks, not monsters or aliens. When talking to a bank, one is actually talking to a person. Though not all people are nice, most can be understanding, as they are also human.

2) Living in denial. This reason is the worst possible as no one can help a person that does not believe a problem exists. In this case, it is very likely that the borrower may be repossessed and never know what hit them.

The borrower should show willingness to find solutions to their problem. In other words, when calling the bank, screaming and yelling doesn’t help. It is not their fault you are in this situation. If you are frustrated, you must be emotionally intelligent enough to be nice and polite and kick your punching bag afterwards to let your frustrations out.
It is very important to remember the points above before even looking at the solutions that the banks may be able to extend. If the borrower manages to upset people at the bank, they won’t even get to a person willing to help, which could make things even worse.
Now we will discuss some ways in which you may find that a bank may be willing to help a financially struggling property investor or homeowner, if the case merits such help.

When falling behind on payments, each bank has certain procedures, however most of them are similar in nature and each case will be evaluated on merit.

All the banks have something called a Collection and Recoveries Department and a Customer Debt Managing Department some also call these Voluntary Restructuring or Loan Modification or Moratorium.

Here are the procedures of what will happen if a borrower falls in arrears:
Pre Legal Section: 0 - +/- 6 payments in arrears. The borrower will get a call whereby they will try and get a promise to pay and arrangements can be made. If these arrangements are broken 3 times in a row, it will be handed to another dept, some call it ICU. Yes, like in hospital. The borrower will be called again and be given +/- 30 days to rectify his/her promises. If nothing happens, its over to the Legal department.

Legal Dept: This is where the borrower will get the option to sign a Power of Attorney to the bank to market/sell his property through listed agents or he or she can arrange to list the property independently.
Depending on each bank these departments may have the following options for arrangements to help a struggling borrowers:
Extension of loan term, 20 to 30 years. Not favourable for homeowners at all, because the savings are not really that much compared to the additional interest. The opposite may be true for a property investor that receives rental income. This option can spell “heaven” as the interest is paid by the income received and the cash flow improves. Many investors choose this option regardless of any financial difficulties, just to boost the cash flow.

The borrower must ask or apply for a Breather Period (this is often called “Holiday”) and it entails no payment for a period of 3 to 6 months. The period would depend on the borrowers profile.

The borrower also has the option of asking for a reduction in payment, usually not less than 50% but it is negotiable.
To conclude, the borrower has to call the bank, and explain the situation in detail and they will offer some options based on personal profile. But remember, the borrower has to call the bank; not any other 3rd party.

This whole process can take quite a bit of time, and by the time, all avenues have been tried and exhausted, one can be sure that once a property is being sold on auction the bank has tried everything.

As a last word for closing. Many people listen to hear say. They have either heard or been close to person that has had a run in with a bank and lost their home. As a result of this they have already judged the bank and hold a perception that the bank is the problem and the enemy. For such people, one can only ask that they put such stories and perceptions aside. Each case is judged individually upon its' merits, it is worthwhile to giving the bank the benefit of the doubt and working with them. Your case always stands a good chance of having a completely different and perhaps better outcome than those you have heard of.

Source: ArticlesBase

Friday, November 16, 2007

Credit History & Secured Loans

With a great percentage of UK residence now in some degree of debt, consolidation is becoming more and more popular.

One of the most common methods of loan consolidation is to roll all outstanding debts into one monthly payment in the form of a secured loan. This amount is then secured against the value of the borrower’s home.

Due to the nature of secured loans, an applicant’s credit history has less of a bearing on things than it would if an unsecured personal loan was being applied for. However, it’s important to note that one’s past credit history does still play a role.

Nine times out 10 an applicant with a fairly good credit rating will get a better deal, usually in the form of lower interest rate than a lower credit applicant would. The following is a guide to what can be expected in terms of poor to excellent credit rating.

Poor Credit History

Individuals, who in the past may have defaulted on loans, have outstanding arrears or CCJs will usually not find it too difficult to get approved for a secured loan. They may however, find themselves paying a slightly higher interest rate. In most cases this does not exceed 15% and the average is around 10%. Some lenders may be willing to go as low as 7% though.

Fair Credit History

Individuals within this category will often find that they will have to pay around 7% interest, sometimes though rates of 10% may be applied. When compared to unsecured loan rates, which average about 15%, the secured loan route is generally much more appealing.

Excellent to Good Credit History

Individuals who have never defaulted on past loans and have always repaid on time are likely to find themselves within this group. With an excellent/good credit history come the best secured loan offers. Expect to pay around 6 to 7% interest, with rates rarely lower than 6%.

Source: ArticlesBase

Wednesday, November 14, 2007

What to Put Down To Get A Good Mortgage?

Typical advice given to middle age people would be to reflect on their increasing cash liquidity, safety, rate of return and tax deductions and also planning for retirement. Perhaps they should sit down with a finnancial planner to discuss their total investments.

Before applying for a you should work on eliminating a good majority of consumer debts to lower your debt-to-income ratio, improve your credit score, and increase your cash flow.

If you saved enough to put down a large down payment, let's say 20 percent, you should first check how much you could afford in monthly payments. The reason behind this is to leverage and keep funds liquid for other purposes.

Remember there is no rate of return in equity. The least amount you put as a down payment the higher the rate of return will be. Usually it is good advise to tell clients never to put a big down payment if they can afford a higher loan amount.

Typical advice given to young couples varies depending on how much money you have to contribute and the type of financing you obtain. Some lenders want you to put down 20 percent or you may qualify for 0 percent financing, requiring you to cover only closing costs and incidentals.

Five percent down is the minimum many lenders will accept. Don't have that much? You could borrow that money from someone, but that means more money to pay back and great overall cost because you pay interest on that also. If you don't put down a minimum down payment the lender considers you a risk.

However, they will give you the loan if you will pay your own insurance. Typical advice given to those without money to put down is, well; you most likely can get a zero percent down loan. Think twice before doing it and here are some of the reasons.

You are more likely to lose your home because you didn't have the financial discipline to save or are not making enough money for your home. The less you put down, the higher your monthly payments will be making the entire matter worse.

If you put nothing down that means you will have to settle with a smaller home and soon out growing it. Also, it will be more difficult to find lenders because of the risk they will be taking on. In the end it is a personal choice and the money that you have saved.

If I had it all, I would put a large amount down to have a smaller monthly payment and qualify to receive a lower interest rate. Therefore, be able to put more into personal savings monthly and reach my goals by keeping my funds liquid and plan for a richer retirement. Well, I can dream!

Source: ArticlesBase

Friday, November 9, 2007

Mortgage Approvals Down Fuelling Housing Gloom

Fears over the state of the UK housing market are on the rise, prompted by the announcement from the British Bankers’ Association that mortgage approvals for September fell 14% compared to August.


Total mortgage approvals for the month of September 2007 for BBA members were tallied at 52,685, significantly down on the 61,051 recorded in August, and weighing in at 27% lower than the same month last year. Indeed, the number of September approvals was at its lowest since 2000. Much importance is placed on the number of UK mortgages advanced in a month as they are a key indicator of the state of the market; a decline suggests that house prices will soon follow the downward trend.

The director of statistics for the BBA, David Dooks said: “Lower amounts of new mortgage lending combined with fewer approved house purchase loans signal a weaker outlook for the mortgage market, especially if loan supply is reduced following the recent financial market difficulties and costs of borrowing remain at current levels.

“There was a small increase in net borrowing during September, alongside a similar increase in overdrafts and loans, but overall demand for unsecured lending continues to remain weak.” He added.

In support of the BBA statistics, a recent survey by the Royal Institute of Chartered Surveyors has highlighted prices falling at their fastest rate in two years. This comes on top of comments from Bank of England Monetary Policy Committee member Kate Barker suggesting that the housing market is overvalued, and could be affected by a shift in people’s perceptions of the market, borne out by the uncertainty in the buy-to-let sector.

Lehman Brothers mortgage expert Peter Newland is anticipating a decline in overall demand for mortgage approval to be reflected in the official figures published by the Bank of England in early November. He expects a drop from the August figure of 109,000 to around 100,000 for the whole market in September. He said: “We expect mortgage demand, as well as other indicators to reflect a further slowing of the housing market in the coming months, to be followed by a sharp slowdown in house price inflation in 2008.

“If we compare mortgages granted in September 2007 to the same time last year, then the amount of mortgages approved has significantly declined, but whether it is just a short-term dip or whether it will bounce back depends on a number of factors, including overcoming uncertainty over house price inflation.”

Source: ArticlesBase

Sunday, November 4, 2007

Key Documents for a New Home Mortgage

Trying to have all the particulars lined up is a key to a smooth transition into your new home.

Income

In most cases, your income and employment history are a key aspect in receiving a new home mortgage. In most cases your taxes will do but a letter verifying employment will definitely help the new home mortgage process along. Make sure your spouse or significant others records are available if their names are going to be even remotely associated with the new home mortgage. In many cases these records are not needed but having them available will reduce stress.

Savings


After the recent issues of sub-prime mortgages, lenders are a bit more concerned with how much savings you have in reserve. A home mortgage now requires a look at how many payments you can make if all potential income was lost. In most instances two payments are required. If your particular circumstance has be less-then-perfect, you may be required to demonstrate even more for your new home mortgage.

Down payment

The power of a good sized down payment is often underestimated in mortgage deliberations. The more you can demonstrate you are willing to put on the mortgage, the more clout you have as the lender goes about talking new home mortgage conditions.

Utilities

They may seem like small little bills that don’t carry much weight in new home mortgage consideration but they actually do. They are bills that will be associated with the future running of the home in question. Have at least a six month record of on time payments to show. In the event that they don’t ask for them that’s ok but at least they are there if they are called for.

Inspections, insurance and title

Making sure that the history of the home is documented is up to you. Having an inspection and title search can often be set up though your realtor but the ultimate responsibility is yours. Making sure the title search is complete is perhaps one of those items that should be paid the most attention to in a new home mortgage situation. In-of-itself the title search is really no big deal. If, however, there is an issue that pops up at the very last minute that you didn’t see coming it is the title clearance. For a new home mortgage these documents will need to be in the file.

As you go about pulling these documents together, take the opportunity to do a reality check one last time. You can always decide not to take the step up to the point you sign but as you survey the documents make the mental choice for yourself.

Source: Articles Base