Financial Utopia – Help with credit cards, debt savings and loans.

Sub-Prime Mortgage Loan – How Sub-Prime Loans Differ From Conventional Loans

Sub-prime mortgage loans offer more flexibility than their conventional mortgage loan cousins. With terms determined by Freddie Mac and Fannie Mae, conventional loans have strict guidelines on loan amounts, terms, and PMI requirements. With sub-prime mortgages, lenders can provide more choices with an increase in rates.

The Limits Of A Conventional Loan

Conventional loans are often sought for their low rates. But those low rates come with limitations. Freddie Mac and Fannie Mae buy mortgages after they have been processed by a financial company. This frees up money for the lender to make more loans. However, Freddie Mac and Fannie Mae have tight guidelines on what types of loans they will purchase.

Among these limitations are caps on loan amounts. In 2006 the limits were set at $417,000 for a single family house. Every year these caps are reevaluated. Conventional home loans also require you to carry private mortgage insurance if you borrow more than 80% of the homes value.

To qualify for a conventional mortgage, you must have good credit, cash assets, and steady employment history.

The Options Of A Sub-Prime Loan

Sub-prime home loans provides financing for those with poor credit or unusual application terms. This can include jumbo loans, exceeding the limits of a conventional loan. People with unusual or unpredictable jobs may also find an easier time getting financing with a sub-prime lender.

Sub-prime mortgage terms are determined by the individual lender. So you can get a zero down loan with a poor credit score. You can also find near market rates by placing a large down payment at closing. Private mortgage insurance is not required with a sub-prime mortgage, potentially saving you hundreds a year in premium costs.

Getting The Right Mortgage For You

Most financing companies handle both types of loans, so you can easily get quotes for both types. To find the right mortgage, you have to take the time to crutch the numbers.

Look at the APR to determine the total cost of the loan. But also factor in any plans to move or refinance in the future. By turning over your home loan in a few years, you dont want to pay out large application fees for low rates that dont have time to save you money

Refinance Your Fha Home Mortgage Loan – Refinancing With The Streamline Process

You can now refinance your FHA loan with their streamlined process. With reduced paperwork, your lender can process your mortgage much quicker. There are some unique requirements to refinance your FHA loan, but you continued to be backed by the FHA through this process.

Basic Requirements

In addition to having a good credit record to refinance your home, the FHA also requires you to already be FHA insured and be current on your mortgage. Refinancing also has to lower the borrowers monthly payment, and no equity can be withdrawn.

Refinancing Packages

Financing companies offer a couple of different refinancing packages for FHA mortgages. A common package offers no up front payment to refinance. Often these types of mortgages are touted as no cost, but you pay higher interest rates for this option.

Another type of refinancing package allows closing costs to be included as part of the mortgage amount. This option is only available if there is enough equity in the property, which is determined by a FHA appraiser.

You can also choose a traditional refinancing package where you pay loan fees and points up front. This option will give you the best rates.

Mortgage Terms

In addition to low interest rates, you can save money and build up your equity faster by choosing a short term loan rate. By converting from a 30 to 15 year mortgage, you qualify for a lower rate and reduce you overall interest payments by at least half.

If you have an adjustable rate mortgage, you can also save on interest rates in the long term by locking into a fixed rate mortgage. However, if you think interest rates will fall in the future, stick with an ARM.

FHA Lenders

Only HUD approved lenders can refinance FHA loans. Fortunately, most lending companies are HUD approved. You should also compare rates and fees of these lenders to be sure that you find the lowest rates and fees.

To save time, use an online mortgage broker to request quotes. Within a matter minutes you can have a list of lenders with their rates to compare. From this list you can request more information from lenders or apply online for speedy processing. Online lenders will also offer discounts since they have less overhead costs than traditional financing companies.

Lower Bills With Debt Consolidation Refinancing Vs Home Equity Loan

Consolidating your debt can help you lower your monthly bills and interest rates. While refinancing and home equity loans can both help you pay off accounts, they have their own benefits. The best choice depends on your current mortgage terms and future financial goals.

The Goal Of Debt Consolidation

The goal of debt consolidation is to pay off your current debt with a new, lower rate loan. The lower your rates, the more of a savings your pocketbook will see each month. But loan fees can eat into those savings.

Extending your loan term can also lower your monthly payments. But your interest costs will be higher over the life of the loan than if you choose a shorter term.

For debt consolidation to be most affective, plan on paying off and closing accounts as soon as your receive your loan amount. That way you wont be paying interest on two account or be tempted to use your credit.

Refinancing Your Mortgage For Debt Consolidation

Refinancing your mortgage to cash-out your equity for debt consolidation purposes will qualify you for lower rates than a home equity loan. Having one mortgage is seen as less risky by lenders than by having two loans.

But you also have to consider overall rates. If you currently have a low rate mortgage, then refinancing for a slightly higher rate doesnt make sense.

For example, if you have a $200,000 mortgage at 5% for 30 years, your interest costs $186,513.24. Say you refinance for an additional $10.000, but now your rate jumps to 6%. Your interest costs jumps to $231,677.04 an increase over $45,000. It would have been better to go with a home equity loan.

Using A Home Equity Loan

A home equity loan allows you to use your equity without affecting your current mortgage rate. In some cases, it can also protect you from having to provide private mortgage insurance, an additional cost.

However, home equity loans, also known as second mortgages, have higher rates than if you refinance your mortgage. This is only an issue if you have a high rate mortgage. In this case, the better choice is to combine the cash-out with a refinance.

In the end, you need to compare numbers to find what is your best option. Luckily, lenders offer free online quotes to make this easy.

Getting rid of the mortgage early is something that many home owners in the UK aspire to achieve. Being free of the principal financial debt in most people’s lives at the earliest stage possible offers financial security and peace of mind for later on in life. Paying off the mortgage early is no pipe dream though. In 2003, the average age of outright home ownership was 56, by 2004 the average age had fallen dramatically to just 48!

How home owners pay off their mortgages early

The secret to paying your mortgage off early lies in choosing the right type of home loan, and this is where flexible mortgage loans and offset mortgage loans step in.

Flexible mortgage loans, as their name suggests, offer flexible mortgage repayment terms where overpayment of mortgage is allowed by the home owner without incurring a penalty. Some flexible mortgage loans allow overpayment of a limited amount, such as 10% of the mortgage value, while other flexible home mortgage loans cater for unlimited overpayment by the home owner.

The advantage of flexible home mortgage loans is that as well as allowing you to overpay, you can also underpay, so taking a ‘payment holiday’ if finances become a little thin. Underpayment is of course subject to the terms of the mortgage, and will normally only be allowed if it amounts to less than the funds that have been overpaid.

Overpayment via flexible home mortgage loans means that you get to reduce your mortgage capital as well as pay off interest accrued on the capital each month. For each successive month that you make an overpayment the amount of interest paid on the overall mortgage is therefore reduced. An overpayment of just 65 on an 80,000 mortgage with the interest rate at 6.0%, will see mortgage loans paid off 5 years early, amounting to a total saving of some 15,000.

Offset home mortgage loans

Offset home mortgage loans were unveiled to the home owner in 1998, and have gained a great deal of respect from home owners since that time. Offset mortgage loans help to pay off a mortgage early by using what is known as a ’sweeper’ system. Providing that the home owner has their current and/or savings account with the mortgage loans provider, their available balance is ’swept’ across to their mortgage account each day to offset/reduce the amount of mortgage capital subjected to interest.

To illustrate the advantages of offset mortgage loans, take a mortgage of 100,000 and a balance of 10,000 in your current account and/or savings account. Instead of the interest rate being applied to the 100,000 every day or every month, the interest rate would be applied to your mortgage balance less the balance in your current account / savings account. This means that interest would only be applied to 90,000 of your mortgage, effectively making 10% of your mortgage interest-free!

Fixed rate mortgages are the most common type of mortgage loan for home buyers. With predictable payments, long term homeowners can plan their budgets and guard against rising interest rates. But a fixed rate mortgage is not for everyone with its higher interest rates and a reduction in your buying power.

Fixed Rate Mortgage Features

A fixed rate mortgage features set rates, long term low monthly payments, and low risk. Interest rates are determined during your loan application process. Rates are set by the market. You can also lower your interest rate by paying points up front. This option only makes sense if you stay in your home for several years.

Long term low monthly payments are another benefit of this type of home loan. Over time, inflation will raise the price of everything except your mortgage payment. As your salary increases, your mortgage costs will also take a smaller percent of your income.

The low risk of fixed interest rates also appeals to borrowers. You dont have to worry about rising interest rates or a balloon payment. You can also repay your loan early, saving money on interest payments.

Mortgage Terms

Traditionally, fixed rate mortgages were 30 or 15 year terms. Now lenders offer a couple of additional options. 30 year loans are still the most popular with their low monthly payments. A 30 year loan also enables you to qualify for more than shorter loans.

15, 20, and 40 year mortgages are also options. 15 and 20 year loans qualify for lower interest rates, but you will have higher monthly payments between 10% and 15% compared to a 30 year mortgage. Shorter loans also save you interest costs, appealing to those who want their loan paid off before retirement or their children go to college. 40 year mortgages are less common, but offer low monthly payments with higher interest costs.

Biweekly mortgage, as the name implies, requires half your mortgage payment every other week. At the end of the year, you have made an extra mortgage payment. You can have your mortgage repaid in 18 to 19 years. Most lenders also allow you to roll over to a 30 year term with no penalties.

Fixed Rate Drawbacks

Even with their benefits, fixed rate mortgages arent for everyone. Alternative mortgages enable you to borrow more than with a fixed rate mortgage. If you move in less than 7 years, you will also probably pay more in interest payments than if you went with an adjustable rate mortgage. Most homeowners move within the fist 7 years of living in a house. You are also locked into an interest rate that could drop in the future.

First Time Home Buyer Loans – How To Apply For A Mortgage Loan

For a first time home buyer, applying online for a mortgage loan makes the experience easy. You have plenty of time to compare rates and terms to find the best financing for your situation. With just a few steps, you can secure financing for your home with the lowest possible rates.

1. Select Your Terms

Mortgage terms affect both your interest rate and payment. With a large amount of flexibility, lenders allow you to tailor your loan to fit your budget needs. So if your goal is to purchase the most with your income, look into an adjustable rate mortgage with initially low payments.

For security, fixed rates can also have reasonable rates. For even lower rates, you can purchase reductions by paying points at closing. One point equals one percent of the principle. Paying points is affective if you keep your mortgage for at least seven years in order to recoup the cost of buying the rate reduction.

The length of the loan will also affect your rates and payments. 15 year mortgage provides you with a cheaper loan, but payments are about a third higher than a 30 year mortgage.

2. Research Your Lender

Even a difference of an eighth of a point in rates can save you thousands of dollars. The easiest way to save money on your homes purchase is by finding the lowest costing loan.

With online mortgage companies, in just a few minutes you can request loan quotes without hurting your credit report. Every time a potential creditor accesses your report, it temporarily hurts your score.

Rates are one way to evaluate loans. But closing costs can also add up to thousands. Thats why the APR number is important. It gives you the total cost of the loan. But if you plan to move or refinance, focus on low closing costs rather than low rates.

3. Apply Online

When you have found the right lender, you can start your home loan application online. Even if you havent found the right house, you can still get pre-approved and lock in your rates.

With online financing companies, your paperwork is expressed mailed to you. You complete the forms with a notarys seal. Working with your real estate agent, escrow company, and seller, the date of sale can then be finalized.

Debt Consolidation Loans

Wouldnt it be nice to make just one payment per month instead of several? Most of us not only have a mortgage payment. We have car payments, credit card payments, student loans, etc.

If you have been living in your home for a reasonable amount of time and you have acquired enough equity, you might want to consider a debt consolidation loan.

A debt consolidation loan is using the equity you have acquired in your home from monthly payments and appreciation to pay off all of your outstanding debt, leaving you with one monthly payment instead of several.

Consolidating your debt has the potential to save you a lot of cash on a monthly basis if you have accumulated a lot of debt.

The interest rates on credit cards alone are considerably higher than that which you would receive on a mortgage.

Another benefit is the interest you pay on your debt consolidation loan is tax deductible, unlike your other debt.

Consolidating your debt is a great way to save money, but dont just dive in. Take the time to educate yourself about the mortgage industry and definitely shop around for the best deal. The mortgage industry is very competitive, so let them compete for your business.

Another benefit to consolidating your debt is that it will help your credit score go up.

The accounts you have outstanding that you owe money to are called open trade lines, by paying these off and than closing a few of them to keep your debt under control, you will be effectively increasing your credit score over time, which is how lenders determine your payment history.

Jennifer Hershey has more than twenty years of experience in the Mortgage Industry as a loan officer. She is the owner of http://www.explainingmortgages.com/, a mortgage resource site devoted to making mortgage terms and products easy to understand.