Buying a house and making it your home is a dream almost everyone cherishes, irrespective of the geographical boundaries. The American Dream refuses to diminish in sheen and size despite the lingering subprime dark clouds. However, the current situation is a goldmine of opportunity of a smart and savvy first time home buyer or investor.
First time home buyers can now opt for first time home buyers loans and buy their choice of home more easily. Moreover, simply because you are buying a home for the first time doesn't mean you need to opt for this type of loan. Most of these loans come with restrictions as well as strings attached. While these loans are perfect for some, they are a bad choice for most others.
First Time Home Buyer Loan - What is it?
Buying the first home is always a big deal. Not only does it take time and energy, it also requires hard work and money. Crossing the money hurdle is often the biggest bane for first time home buyers and for them, first time home buyers loan is god sent. The basic premise of this loan is to give financial help to qualified borrowers by:
1. Allowing for very low or no down payment at all
2. Fund the interest cost by paying part or all of it
3. Offer grants
4. Forgive loans
5. Cap the fees that lenders usually charge
6. Reschedule payments
Note: These loans that are available in your specific are may offer you one or all of the benefits listed.
First Time Home Buyer Loan - Who is eligible?
First time home buyer loans are usually dispensed to people who have never owned a house ever. But some loan programs also offer this loan to those who may not have bought a home in the past 3 years. However, you must check what loan is available for you specifically. It's possible that you may also have to qualify some income restrictions to become eligible for the loan. Typically, these loans are meant for people who belong to low and medium income groups. If you are well-to-do individual you simply won't be eligible.
First Time Home Buyer Loan - What are the restrictions?
Most first time home buyer loan programs have a capping on the price of the property you can buy. Essentially, you can't buy a very expensive property with the money you get from your first time home buyer loan. You will have to invest in a property that falls in the lower strata of the property market. This rule is to prevent misuse of this loan by those who are already moneyed. That's not all. You'll also have to make that property your main residence, and renting is completely out of question. Also, the property you buy must be in prime condition and without safety concerns.
Finally, it can be said that first time home buyers are perfect for some people as it gives them a chance to own a home and realize their lifelong dream.
For further reading about First Home Loan, Please visit Best First Home Loan
Article Source: http://EzineArticles.com/?expert=Hayi_Mansoor
Tuesday, May 27, 2008
When To Choose Mortgage Refinance - Know The Break Even Point
Mortgage refinance makes good sense when it reduces your overall debt - plain and simple.
Instead of targeting a specific interest rate you wish to refinance into, it is better to know the break-even point when deciding to choose to refinance or not.
The break-even point in a mortgage refinance is the length of time it will take your overall savings to compensate for the cost of doing the refinance. The cost here would be the "closing costs" the broker charges you to refinance the loan.
Here's an example.
Your current loan amount you want to finance is 250,000 at 8% - monthly payment of $1834.
You are considering a 6% loan, which would bring your monthly payment down to $1580.
This will save you $254 per month.
Keep in mind the closing costs to refinance this loan were $2000.
So, break-even calculated as such...
Cost of Refi divided by savings per month= months until breakeven...
Or
2000/254=7.8 months, which we round up to 8 months.
So it takes 8 months of paying at the new 6% interest rate to cover the cost of the refinance. After 8 months you are truly getting the full $254 savings for the life of the loan. A very smart choice if you like the house and plan on living there.
This is assuming you paid up front for the refi - that is - paid the $2000 out of pocket with cash at the time of closing. But what if you don't have the cash?
If you roll the $2000 into the cost of the loan you would be financing $252,000 at 6.5% and paying a little more per month - $1592. Still a nice savings of $242 per month from the $1834.
Plus there's no breakeven to worry about! You realize a savings as soon as you refinance because you paid no upfront closing fee - you added it to the loan.
What's the catch?
You will pay more in overall interest on the entire loan ($4320 more), by rolling the closing costs into the refinance.
Is this a big deal? Probably not...you've still reduced your monthly payment by $242, right off the bat. Improving your short term cash flow is usually the most important consideration in a refinance situation.
For 15 years Leslie Collins has been helping all types of borrowers get the loan information they need to make the best home buying decision . Please visit the easy to use mortgage calculator before you talk to banks or loan officers.
Article Source: http://EzineArticles.com/?expert=Leslie_Collins
Instead of targeting a specific interest rate you wish to refinance into, it is better to know the break-even point when deciding to choose to refinance or not.
The break-even point in a mortgage refinance is the length of time it will take your overall savings to compensate for the cost of doing the refinance. The cost here would be the "closing costs" the broker charges you to refinance the loan.
Here's an example.
Your current loan amount you want to finance is 250,000 at 8% - monthly payment of $1834.
You are considering a 6% loan, which would bring your monthly payment down to $1580.
This will save you $254 per month.
Keep in mind the closing costs to refinance this loan were $2000.
So, break-even calculated as such...
Cost of Refi divided by savings per month= months until breakeven...
Or
2000/254=7.8 months, which we round up to 8 months.
So it takes 8 months of paying at the new 6% interest rate to cover the cost of the refinance. After 8 months you are truly getting the full $254 savings for the life of the loan. A very smart choice if you like the house and plan on living there.
This is assuming you paid up front for the refi - that is - paid the $2000 out of pocket with cash at the time of closing. But what if you don't have the cash?
If you roll the $2000 into the cost of the loan you would be financing $252,000 at 6.5% and paying a little more per month - $1592. Still a nice savings of $242 per month from the $1834.
Plus there's no breakeven to worry about! You realize a savings as soon as you refinance because you paid no upfront closing fee - you added it to the loan.
What's the catch?
You will pay more in overall interest on the entire loan ($4320 more), by rolling the closing costs into the refinance.
Is this a big deal? Probably not...you've still reduced your monthly payment by $242, right off the bat. Improving your short term cash flow is usually the most important consideration in a refinance situation.
For 15 years Leslie Collins has been helping all types of borrowers get the loan information they need to make the best home buying decision . Please visit the easy to use mortgage calculator before you talk to banks or loan officers.
Article Source: http://EzineArticles.com/?expert=Leslie_Collins
Top Tips To Help You Secure A Mortgage Loan
The American dream is to own a home someday. We all have this passion deep down in side. Most Americans don't have the money to pay cash, so they turn to lender to assist with the purchase of there first or second home. With all the new guidelines in banking I will give you exactly what you need to do to secure a mortgage. I know everyone's situation is different, but there are some steps you can take so you will not have problems in today's lending market. This will also help you regardless of what the lending market is doing.
Know what's on your credit report
Most people have not idea what is on thier credit report. They also have not idea what their credit scores are. This is amazing to me, since the way to financial freedom is to manage your credit health. Otherwise you are probably paying too much in the way of terms and rates. Get a copy of your credit report with credit scores regularly to mange your scores.
Pay all your bills on-time
If you think paying a bill late every once in a while is ok, you might want to rethink that logic. A single late payment on any obligation will lower your credit score between 100 and 150 points. So if you had a credit score of 750, now it's a 600 score. If you are having financial problems and think you might be late, call the creditor to make arrangements. Make sure once you work out something, that you get something in writing stating they will not report any payments late with the arrangement. So the idea is to not be late on anything. Lenders don't like to see you late on anything, because this looks like you are having financial problems. This ultimately means you are not ready to buy in a underwriters eyes.
Save your money
When applying for a mortgage, having savings is a big plus. This shows you have stability and the ability to save money for emergencies. Most loans are run through a automated underwriting engine, and with savings in the bank could mean the difference between a approval or a denial. A good goal to have is 6 months worth of mortgage payment in the bank. If you are buying a house around $200,000 six months payment would be $12,000 in savings.
Pay your Rent on-time, and don't break a lease.
Being able to pay rent for at least 12 months on-time is a plus. It looks better to pay rent and all your utilities on time for 12 to 24 months. This shows a underwriter you are able to handle responsibility. Lease agreements are one of those contract deals that if you break it and don't pay the fee to break the lease it can show up on your credit report, plus the apartment complex typically will not give a good verification for rent due to the lease being broken.
About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, Internet identity theft software, secure credit cards, and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.
Article Source: http://EzineArticles.com/?expert=Mike_Clover
Know what's on your credit report
Most people have not idea what is on thier credit report. They also have not idea what their credit scores are. This is amazing to me, since the way to financial freedom is to manage your credit health. Otherwise you are probably paying too much in the way of terms and rates. Get a copy of your credit report with credit scores regularly to mange your scores.
Pay all your bills on-time
If you think paying a bill late every once in a while is ok, you might want to rethink that logic. A single late payment on any obligation will lower your credit score between 100 and 150 points. So if you had a credit score of 750, now it's a 600 score. If you are having financial problems and think you might be late, call the creditor to make arrangements. Make sure once you work out something, that you get something in writing stating they will not report any payments late with the arrangement. So the idea is to not be late on anything. Lenders don't like to see you late on anything, because this looks like you are having financial problems. This ultimately means you are not ready to buy in a underwriters eyes.
Save your money
When applying for a mortgage, having savings is a big plus. This shows you have stability and the ability to save money for emergencies. Most loans are run through a automated underwriting engine, and with savings in the bank could mean the difference between a approval or a denial. A good goal to have is 6 months worth of mortgage payment in the bank. If you are buying a house around $200,000 six months payment would be $12,000 in savings.
Pay your Rent on-time, and don't break a lease.
Being able to pay rent for at least 12 months on-time is a plus. It looks better to pay rent and all your utilities on time for 12 to 24 months. This shows a underwriter you are able to handle responsibility. Lease agreements are one of those contract deals that if you break it and don't pay the fee to break the lease it can show up on your credit report, plus the apartment complex typically will not give a good verification for rent due to the lease being broken.
About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, Internet identity theft software, secure credit cards, and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.
Article Source: http://EzineArticles.com/?expert=Mike_Clover
Advantages Of A Commercial Second Mortgage
A commercial second mortgage is an important commercial real estate tool.
Commercial second mortgages are often used in conjunction with a new first commercial mortgage loan. Typically, the commercial second mortgage will have a term of one to five years with interest only payments. While commercial second mortgages can be critical in some financing scenarios, consideration must be given as to whether or not you have the ability to service both loans.
There are some clear advantages to this type of creative financing. The most frequent use is that a commercial second mortgage reduces the LTV (loan to value) of the first mortgage in order to allow you to more easily qualify for the first mortgage. An example would be where the primary lender (first mortgage holder) will only lend 70% LTV and you only have a 20% (or less) down payment. A commercial second mortgage can be used to make up the difference.
Other uses for a commercial second mortgage are to finance business expansion and construction, working capital, to consolidate debts, pay tax arrears (lets face it, this does happen), or for renovations.
There are a variety of options available to you such as: interest only payments, annual payments, exit fees, etc. that will help keep your immediate payments down and defer the costs of the commercial second mortgage. The idea is to give the property time to appreciate and thereby allow you to refinance and consolidate both the first and second mortgages at a later date at a then lower LTV.
Visit http://www.donnasmortgages.com/ for more information on our services or to contact me.
Donna Lewczuk
Article Source: http://EzineArticles.com/?expert=Donna_Lewczuk
Commercial second mortgages are often used in conjunction with a new first commercial mortgage loan. Typically, the commercial second mortgage will have a term of one to five years with interest only payments. While commercial second mortgages can be critical in some financing scenarios, consideration must be given as to whether or not you have the ability to service both loans.
There are some clear advantages to this type of creative financing. The most frequent use is that a commercial second mortgage reduces the LTV (loan to value) of the first mortgage in order to allow you to more easily qualify for the first mortgage. An example would be where the primary lender (first mortgage holder) will only lend 70% LTV and you only have a 20% (or less) down payment. A commercial second mortgage can be used to make up the difference.
Other uses for a commercial second mortgage are to finance business expansion and construction, working capital, to consolidate debts, pay tax arrears (lets face it, this does happen), or for renovations.
There are a variety of options available to you such as: interest only payments, annual payments, exit fees, etc. that will help keep your immediate payments down and defer the costs of the commercial second mortgage. The idea is to give the property time to appreciate and thereby allow you to refinance and consolidate both the first and second mortgages at a later date at a then lower LTV.
Visit http://www.donnasmortgages.com/ for more information on our services or to contact me.
Donna Lewczuk
Article Source: http://EzineArticles.com/?expert=Donna_Lewczuk
Use A Mortgage Calculator To Calculate Your Mortgage Monthly Payments
If you use a mortgage calculator you will be prompted to insert the sale price of home, the percentage down, length of mortgage and annual interest rate. The annual interest rate it's different for each bank, in US, the average interest rate is 7%. You should know the interest rate for your bank before using mortgage calculator. If the percentage down is less than 20%, you will pay Private mortgage insurance, which tends to be about $55 per month for every $100,000 financed (until you have paid off 20% of your loan). If you check the "Explain Calculations" box you will get a lot of additional information and the amount paid every month for the whole duration of the loan.
After you complete all fields, you will get the results. First you will get monthly payment with principal and interest only, where we add private mortgage insurance, and residential (or property) taxes. The average residential tax rate seems to be around $14 per year for every $1,000 of your property's assessed value.
The amount you must pay every month after all taxes and insurances is shown in the "TOTAL Monthly Payment" section. In the next section is shown how this calculator got those values.
If you checked the "Explain Calculations" box, you will see how much you will pay every month in every year of the duration of the mortgage, with amortization explained. Also, for every month you will know how much you will pay for principal, for interest, and after every month you will get the remaining balance.
Mortgage Calculator
Article Source: http://EzineArticles.com/?expert=Lucian_Apostol
After you complete all fields, you will get the results. First you will get monthly payment with principal and interest only, where we add private mortgage insurance, and residential (or property) taxes. The average residential tax rate seems to be around $14 per year for every $1,000 of your property's assessed value.
The amount you must pay every month after all taxes and insurances is shown in the "TOTAL Monthly Payment" section. In the next section is shown how this calculator got those values.
If you checked the "Explain Calculations" box, you will see how much you will pay every month in every year of the duration of the mortgage, with amortization explained. Also, for every month you will know how much you will pay for principal, for interest, and after every month you will get the remaining balance.
Mortgage Calculator
Article Source: http://EzineArticles.com/?expert=Lucian_Apostol
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