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Basic Credit Union Mortgage Glossary

admin — Sun, 18 Apr 2010 19:54:21 +0000

Are you familiar with the mortgage glossary? Do you know what you will be dealing with? Even if you hire a professional to do the job for you, you need to be able to evaluate and assess a potential danger or prospective benefits. Unless you are familiar with the basic terminology, you will have a hard time to figure out if a Redstone federal credit union mortgage is beneficial or not.

Mortgage:
when referring to mortgages we refer to loans you can obtain so as to pay for your future house. Both the building and the land are used as collaterals, since the mortgage is a secure loan. This practically means that if you fail to make the payments on time, the lending institution can apply for foreclosure, taking the house away from you.

Collateral:
An asset used so as to secure the loan. In the case of a UT mortgage, the collateral is the house itself.

Interest:
Interest is the additional amount of money that lenders charge as a fee for using the money. The interest rates are determined based on international indicators and local terms. Interests can be different among lenders, depending on offers and plans. Since the UT mortgage is usually a big amount of money, the interest is applied in percentages and added to monthly installments.

Loan’s term:
The amount of time needed so as to pay off the mortgage.

Debt amortization:
Amortization is a process based on which lenders calculate and divide interest rates. The payments are usually higher early in the loan and lower towards the end, as the amount owed is less.

Fixed rate:
A fixed rate is the percentage of interest applied to the loan. It is called fixed because it cannot change and is a subject of agreement between the lender and the borrower prior to the beginning of the process.

Adjustable rate:
The adjustable rate is the opposite of the fixed rate. It doesn’t remain the same during the loan’s term and it can be influenced by the international and local circumstances and indicators.

Equity:
Equity is a term referring to the difference between the commercial and official value of your property. For instance, many houses are sold in much higher prices than the officially announced one. The equity grows as the amount in debt lessens.

By: Chris Cornell

Mortgage Rates Forecast

admin — Fri, 12 Mar 2010 10:39:57 +0000

Any mortgage rates forecast must take into account the fall-out from the sub-prime crisis – now poorly named, because the rot has spread from the high-risk sub-prime sector to even the prime mortgages underwritten By Freddie Mac and Fannie Mae.

There are several ways in which the sub-prime crisis affects mortgage rates forecasts.

1. Each Mortgage Rates Forecast Rises Due To Increasing Risk

When house prices plummet as a result of forced sales, it makes mortgage lending in general more risky. Even a 20% deposit has not been enough to prevent some home owners from defaulting on their mortgages and being unable to sell for a high enough price to cover the loan. Mortgages classified as “prime” are now showing up as losses on the books of some banks. The investor’s response to increased risk is always to require a higher return – in this case, a higher return means a higher interest rate on mortgages. Interest rate predictions must be for higher interest rates as a result of the mess in the residential real estate markets across the country.

2. Any Mortgage Rates Forecast Rises Due To Falling Supply And Rising Demand

Mortgage interest rates, like all retail interest rates, depend on the general interest rate in the wider economy – the rate at which banks and other financial institutions can borrow funds. This is usually benchmarked by the 90 day bank bill rate. Generally, lenders only have 10% of the funds they lend out as mortgages in deposits – the rest is borrowed. This is why having too many defaults on mortgages can get a bank into big trouble – they can no longer afford to pay their own debts then!

The sub-prime crisis greatly reduced the willingness of other organizations with money to lend it to banks for the purpose of mortgages. This means that the supply of credit has markedly reduced. A low supply and a steady demand will always cause prices to rise, and in this case, the price of money is the interest rate.

The credit squeeze is putting upward pressure on the mortgage rates forecast, and all interest rates in general.

3 Our Mortgage Rates Forecast Rises Due To The Falling US Dollar

As a result of the sub-prime crisis, ant its spread to the prime mortgage market, the entire US financial system is regarded by the rest of the world as unstable. This is resulting in a flight of mobile capital from the US. The only way to entice this capital to remain in the US, and thus halt the slide in the US dollar, is to pay a higher return, which means having a higher general interest rate within the US, including for mortgages.

The government bail-out of Freddie Mac and Fannie Mae, while necessary to stabilize the property market within the US, will further erode the confidence of international money managers in the US economy, putting further downward pressure on the US dollar.

Until the US dollar stabilizes, there will be significant upward pressure on any mortgage rate forecast, and interest rates in general.

While some are still arguing about the causes of the sub-prime crisis, there is no doubt that its effects are significant and far-reaching. The instability of property prices, the credit crunch, and the loss of confidence in the greenback will take several years to restore to what was previously considered “normal” – and there is a very real possibility that we will never see the US dollar as strong on the global stage again.

For this period, possibly up to a decade in length, the mortgage rates forecast is in one direction only – upward. If you can, fix your mortgage now for 30 years, because you may not see mortgage interest rates this low again for decades.

By: Mark Bennett

The 6 Ways to Pay Off Your Mortgage Early

admin — Mon, 08 Mar 2010 13:01:30 +0000

I know, you wish you didn’t have to put that mortgage payment in the mailbox each month, so what if you could take that mortgage payment and put it into your pocket instead? Well you can and I’ll show you how. The bottom line is this, if you aren’t trying to pay off your mortgage early or adjust your mortgage payment you’re leaving MEGA-BUCKS on the table.

There are really only 6 ways that you can make a mortgage payment that will help you pay off your mortgage early. Some are good, some are not. It really just depends on your financial situation and how much you’re willing to sacrifice.

Regardless of your situation there is ALWAYS a method or two that will work perfectly for you. So here are your options:

The 6 Ways To Pay Off Your Mortgage Early:

1 – Take advantage of the ‘mortgage payment loop hole’ that has recently been uncovered (free report below)

2 – Use a biweekly mortgage payment plan (doesn’t seem like much but works well)

3 – Make an additional mortgage payment to the principle each month (3% rule)

4 – Refinance (I know you probably have a million lenders calling you EVERY day about this one) at a lower rate and keep the monthly mortgage payment the same

5 – Make a lump sum mortgage payment to the principle (maybe with a salary bonus you get)

6 – Refinance to a 15 year mortgage (the mortgage payment increases but it gets the job done)

The most important thing to remember about choosing a mortgage payment to pay off your mortgage early is to understand what it will do for you financially in the future, and then to be able to compare that to what the mortgage payment method is doing to you financially right now.

Often, making the decision on which mortgage payment method to use comes down to your family and lifestyle. Ask yourself the following questions before deciding which mortgage payment method makes the most sense for you.

Do you have a retirement set aside?

Do you have a college fund for your kids?

Do you need/want a new car?

Does your spouse want to go on a vacation?

How much money do you want to save and how badly do you want to pay off your mortgage early?

It may seem hard to choose which one of these mortgage payment options will work best for you, but if you’re truly serious about taking control of your financial life it won’t be tough.

By: Ben Smecklee

More Than One Mortgage Company Filing Foreclosure at Once

admin — Wed, 24 Feb 2010 07:06:11 +0000

“When it rains, it pours.” Homeowners with more than one mortgage who have fallen behind on all of them know that old cliche possibly more than anyone else. When a financial hardship comes up, and there is not enough income to make all of the mortgage payments, more than one of the lenders may initiate foreclosure proceedings in the county court at roughly the same time. In fact, if one starts the process of filing paperwork in the court system, all of the others may also file as soon as they are aware of the first foreclosure, and that the homeowners are behind on all of their bills. This situation can be somewhat confusing for homeowners, though, if the second mortgage files first, followed by the first; or the HELOC holder filing first, followed by the first and then the second.

But, to put it in as simple terms as possible, filing foreclosure is simply one creditor, who has had the house pledged as collateral for a mortgage loan, asking the appropriate local court to sell the house, in order for the mortgage company to regain any losses experienced on the nonpayment of the loan. The fact that more than one lender is claiming losses at once, when all of the lenders are behind on payments, should not be surprising at all.

It will be the court itself that orders the sheriff sale of the property, as long as the plaintiff in the case, the bank, can prove that the loan is in default and that the property is collateral. This, of course, is usually quite easy to prove, and, far too often, homeowners do not even make an appearance at the foreclosure hearing to make an answer or request more solutions outside of the legal foreclosure process. However, in any case, it does not matter if one mortgage company or lienholder files foreclosure paperwork first or second, as the proceeds from the eventual foreclosure auction will be paid out the same way. The order of payments is determined far in advance, even before the house is sold to the foreclosure victims to begin with.

At the sheriff sale, any back property taxes will be paid off first. Then, the first recorded mortgage will be paid off. After that, any other parties will be paid off in order of when their lien was filed with the county recorder. The only exception would be for a mechanics lien, which may not be recorded at the time of the foreclosure or auction, but the creditor may be able to collect a portion of the proceeds before an earlier-recorded lienholder. This is a somewhat more uncommon event, though, and most homeowners in foreclosure will not experience it. It is also a broader topic than can be discussed fully in this post.

It is the order in which the parties had filed their liens, for the most part, that will determine who is paid off with the proceeds from the auction first, second, third, and so on. Not surprisingly, county property taxes are always paid off first, since the government needs to make sure it gets its share before anyone else. Also, this prevents the new purchaser from having to pay off the back taxes or worry about a tax foreclosure if the transfer does not take place quickly. County property taxes are almost always paid to a current status or otherwise settled in any sale of real estate, whether through foreclosure or otherwise.

Thus, the payment of proceeds from a sheriff sale is not determined by which lienholder files for foreclosure first; rather it is decided solely by the recorded date of the lien. Any lien is counted in the determination of order, whether it is a first mortgage, second mortgage, judgment lien, income tax lien, or other assessment.

This is also a major reason that second mortgage companies are often far more willing to work with homeowners in setting up a repayment plan or taking less money on a short sale they know that, in a foreclosure auction, they will probably not be paid any of the proceeds after the taxes and first mortgage are paid. Other liens beyond the second mortgage often have even less of a chance of getting any real benefit from forcing a sale of a property through foreclosure.

However, any lienholder who has had the property pledged as collateral for a loan can initiate foreclosure proceedings. Even second mortgage companies will start the process if the homeowners are not in contact with the bank and have not expressed an interest in getting the monthly payments back on track. They may hesitate to file for foreclosure, but no response by the owners will eventually force them to take action in the courts. Homeowners will most likely be facing only one foreclosure action against them by a first mortgage company, but this does not preclude the possibility of facing more than one foreclosure lawsuit at a time.

By: Nick Adama

Creative Real Estate Investing Mortgage

admin — Fri, 08 Jan 2010 18:30:11 +0000

When I bought my first property back in the 80′s you basically had to have about 20% down in cash and get a mortgage from the bank for the other 80%. Of coarse you could put more than 20$down if you had it but that was about the minimum banks and insurance companies would settle for.

Most people though couldn’t get the 20% down payment so lenders had to become a little more flexible over the years and so now things are quite different indeed.

Today, whether you’re going for your first home or looking at an investment property there are more creative options for buying real estate.

Flipping

If you’re strictly thinking investing for a quick profit, then the fastest method is a quick flip. This requires you hunting around for a great deal, buy it, get the contract and sell it immediately at fair market value. The profits will depend on how big of a discount you were able to get on it, but making $2,000 to $10,000 is doable in many markets.

Pre-construction

If you look at new developments such as planned communities and condos many builders will fund a loan for 5% of the total asking price. Here the deal isn’t in the price but in the financing.

Second mortgage

A more common method is to get yourself a second mortgage on your existing property. This way you can come up with 5% of a down payment and the bank lends you the other 15% using the equity on your property. This second mortgage will have a higher interest rate than your first.

Also keep in mind in this second mortgage case you need to buy private mortgage insurance since the 20% down payment was not all yours. This can be removed in the future when your second property goes up in value. This is called your loan-to-value ratio, meaning when you are at 80-20 again (you now would own 20% of the properties actual value because it’s market value increased over the last year or 2).

Subject-to

There’s many variations with a subject-to deal. In a typical one the seller deeds you the property leaving his existing mortgage in place, meaning you don’t legally assume the loan because it’s still in his name. Nevertheless, you are making payments and the property is in your name so this can work. He is covered too because if you default it’s not his house that will be foreclosed, it’s yours.

Limited partnership

Create more wealth for yourself by investing with someone else. Half of something is better than nothing, and for someone who may be struggling to get that first purchase a partnership may be the only way to get your foot in the door.

Government loan programs

There are various government loan programs the general public is not always aware about, but these are for low income families and military service people and are usually limited for families intending to use the property as their personal residence.

Credit

Secure a credit line from your bank. This is easy if you have built up some equity on your existing property. The interest rate on a credit line is usually much lower than a credit card.

It’s possible to buy a property with credit cards. The downside to this method is the substantially higher interest rates, lenders look at all outstanding debt when deciding to grant a loan on the remaining balance. Taking out a cash advance to cover a shortfall between the needed 5-20 percent down will usually get you turned down.

Family money

If you can get money from family members you will need to convince the bank that it’s a gift and not a loan, otherwise they view it as more debt, decreasing the amount they will qualify for you.

Interest only mortgage

A creative real estate investing mortgage idea that has become popular over the last few years is a interest only mortgage. There are some pro and cons with this one. Your payments are only covering the interest on the loan and nothing toward the principle. This can be great for short term situations.

By: John Ferreira

Helpful Tips On How To Refinance A Second Mortgage

admin — Thu, 26 Nov 2009 00:47:46 +0000

Today, home refinance has been a hot area for lenders and homeowners alike. With much lower interest rates, it only makes sense to refinance a home mortgage that you’ve been paying on at 10% interest. These lower rates are also ideal for many to refinance a second mortgage. Here are some tips and things to consider with a second mortgage refinance.

Why Consider Refinancing a Second Mortgage?

Of course, getting a lower interest rate is a big part of it, but there is another important reason as well. You will find that in most instances you can refinance your second mortgage for the same monthly payment you currently have, but for a much shorter loan period.

Getting a 10 year second mortgage for what you were paying on a 15 year loan makes good financial sense. Refinancing a high interest rate second mortgage will save you a lot of money over time.

One of the keys in to successfully refinance a second mortgage is finding the right lender or mortgage broker. Look for a lender that will take the time to explain all the details to you. This is in addition to finding a lower interest rate and much more favorable loan terms.

Finally, know upfront what you can expect in refinance closing costs. The last thing you want at your loan closing is a huge surprise in unexpected fees or costs. A good lender will go over all costs with you before closing. And if they don’t, start looking for a new one.

You can find lenders who specialize in second mortgage refinancing online at many different websites. You’ll also be able to find out much more information about any potential lender so you can know that you are making your best decision.

By: Terry Edwards

Second Mortgage Loans Vs Home Equity Loans

admin — Wed, 18 Nov 2009 11:02:04 +0000

It’s not surprising that some homeowners confuse the terms “second mortgage” and “home equity loan.” After all, a second mortgage is a type of home equity loan. But more often than not, home equity loan is used to describe a home equity line of credit, or HELOC. If you want to take advantage of the equity that you have built up in your home, you will need to decide if a HELOC or a true second mortgage is best for you.

Make a list of what you want to know, what you need to know, and what you already know about this subject.

Before agreeing which might be better for your purposes, let’s look at some of the basics of each. A second mortgage pays out a permanent sum of money to be reclaimed on a set schedule, like your opening mortgage. Different refinancing, the second mortgage does not supplant the first mortgage. Moment mortgages are typically 15- to 30-year loans with a permanent ratio of profit. Like the opening loan, the ratio of profit and points (if any) will be based on your credit chronicle, the estimate of the home, and the flow profit ratio. While the profit ratio on a second mortgage may be a little advanced, the fees are normally poorer. Should You Pay Points?

A HELOC, however, is parallel to a credit license, and it may even involve a credit license to make purchases. Like credit licenses, profit is emotional, and the quantity you can sponge is based on your creditworthiness.

To shape the perimeter of your HELOC, lenders will look at the appraised appraise of your home and begin their calculations at 75 percent of that appraise. They then withhold the outstanding tally allocated on the mortgage. If your home was appraised at $200,000, the lender would typically look at a greatest of $150,000 or 75 percent. If you had salaried off $100,000 of your $180,000 loan, the lender would then withhold the lasting $80,000, which would mean you would have a greatest of $70,000 offered on a HELOC if you had a very good credit chronicle. Learn how to Evaluate Your Creditworthiness.

As we take a closer look, keep in mind all of the useful and important information that we have learned so far.

Your flow fiscal desires will help shape which type of loan is right for you. If you need money for a one-time price, such as edifice a new deck or paying for a wedding, you would doubtless opt for the permanent-ratio second mortgage.

But if you forecast a habitual need for further money, such as teaching payments, you may favor a HELOC. A line of credit allows you to sponge when you need the money and, if you pay back the quantities you sponge rapidly, you can store money over a second mortgage. You also need to respect your expenses routine. If having another credit license in your wallet would tempt you to waste more often, then you are not a good contender for a HELOC.

Once you make an opening determination about which loan might be right for you, you will need to argue the niceties with your lender. While second mortgages typically operation in the same mode as your opening mortgage, ranks of credit are different. Because they aspect monthly payments, you will need to analysis the keen typeset charily.

There is no famine of lenders and offers for loans and ranks of credit. Deem your desires, then store around for a lender you can faith.

If you have found our database of information on this subject useful, read some of our other topics as well.

By: Amy Shan