Monday, January 26, 2009

Home Mortgage

The Secret Of Home Mortgage Refinancing

Refinancing your home mortgage comes with numerous advantages. Primarily, home mortgage refinancing could save you a lot of home on your payment. It can also allow you to pay off the full home mortgage faster, especially when you have feasible terms.

When you’re planning to refinance your home mortgage loan, make sure to consider these four important things to ensure it will not cause any problems afterwards:

* Learn the terms of your original mortgage

Before shopping around for the appropriate home mortgage lender, ensure that your original mortgage does not have pre-payment penalties or any kind of early payoff penalty.

Many people refinance their home mortgage not knowing that they will be charged for a pre-payment penalty. These penalties usually range from six months up to three years, plus another penalty for early payoff.

Although penalty amount varies, the average pre-payment penalty amounts to a six-month worth of mortgage interest. In order to justify refinancing mortgage loans with pre-payment penalties, you need to have significant payment and interest savings.

* Maximize your options

In order to ensure you’re getting the lowest rate in the market, apply for pre-approvals to several different lenders. However, make sure that the lender is not pulling out your credit history during an initial pre-approval application.

Be aware that every time your credit history is pulled, it slightly reduces your credit score. When your credit history has too many inquiries, this may prevent you from refinancing your mortgage loan with a low rate.

In addition, assess different lender offers concerning interest rate offerings and closing costs. Remember that these two factors will largely affect your lender choice. Choose a lender with feasible rates to maximize your mortgage refinancing benefits.

* Choose your lender

Once you have compared different lenders, you can now allow your choice of lender to pull your credit history. Then, make sure to get the interest rates and closing costs into writing. Ask your lender to provide you with a quotation in advance of all possible costs involved with your loan.

Ask for information about whether the refinancing loan, which you will be getting, has pre-payment penalties. Most lenders leave this important information out, knowing they might scare consumers away.

In refinancing home mortgage, make sure you shop around and assess different lending options. Do not grab the first opportunity that comes before you. Be a smart consumer and refinance your home mortgage with the lowest rate possible.

Friday, January 16, 2009

The FCRA And Credit Rating

You may be a person that is currently having financial difficulties and are looking for a temporary solution to your present troubles. Loans are some of the more popular and oft used methods to address this problem. There are presently many different types of loans, including pawning jewelry and valuables at a pawnshop, asking a foundation to lend you some money, corporate loans, and more.

Home mortgage

One type of loan, especially those looking to pay larger debts than usual, is a home mortgage. A home mortgage (usually involving a bank but not limited to it) is simply a pledge or commitment in which a home owner offers the title of his property as a form of security for a loan – you place your home as the collateral. When you get your loan, you are required to pay a certain amount at different intervals, depending on what is agreed upon, and if you don’t, you could potentially lose your home.

However, not everyone can easily get a loan, especially from big banks and financial centers. Think about it – you yourself would be hesitant if a complete and total stranger came to you and asked to borrow some money, right? That is right about the same case when it comes to borrowing money from a bank or lender.

How do you go about securing a loan? You have to apply for it, which is no guarantee that it will be granted. Banks, financial companies, and other lenders will have to consider carefully your profile, particularly something called a credit rating.

Credit rating

A credit rating is something that is drawn up from credit reports, which details your credit activities such as borrowing, debt, payments, etc. Basically, the credit rating details the amount of credit which can be lent to a person without unwarranted risk. This essentially means that the higher your credit rating, the higher the loan amount you can get.

To get a good credit rating, which entails that the chances for you getting a loan (including the amount you need) are much higher than normal, you simply need to pay your bills and loans on time, as well as other financial obligations. A good credit rating is obviously much better than a lower one, since your financial opportunities are much wider than when compared to having a low rating, which severely limits what you can do financially.

Credit reports

It was mentioned that the credit rating comes from credit reports, so you might be asking, what are credit reports? They are actually the ones where your credit activities are recorded – including loans, balances, unpaid debts, along with a little bit of background information. These credit reports are gathered by credit bureaus, also known as a consumer reporting agency.

You might be wondering why such agencies exist – basically they are there to stabilize the financial market. Also, there is no need for you to worry as they exist legally, with the knowledge of the government, including what they do. In fact, there is a law called the Fair Credit Reporting Act (FCRA).

Fair Credit Reporting Act

This law is a federal law which regulates consumer credit information. By regulating this consumer credit information, credit ratings can then be properly given out with most, if not all, of the information at hand. There are certain rules and regulations which the consumer reporting agencies have to follow, which are found in this particular federal law.

This law is actually beneficial to the consumers, the consumer reporting agency, and the lenders. This law makes clear some of the potential problems that may arise between consumers and their credit rating, and tries to prevent that from occurring. Consumers themselves are entitled to one free credit report per year, thanks in part to the Fair Credit Reporting Act.

In summary, you may probably want or need to get a loan via a home mortgage. If that is the case, it would be to your best interest that you have a good credit rating which is reflected on a very positive credit report. Since the credit rating and credit report are taken into great consideration when applying for a loan, the amount of credit rating you have proves to the lender how good you are when it comes to dealing in finances.

Sunday, January 11, 2009

Saving For Your Home Mortgage Down Payment

If one is faced with monetary constraints when buying a house, he will be forced to avail of a home mortgage plan. A home mortgage plan allows a person to pay up for a house for a longer period of time. A house can be paid up for by a buyer on an extended period, paying a certain percentage of the whole amount every paying period with some interest payment.

Depending on the agreement of the lender and the borrower, one can choose the amount of down payment that you would like to pay for the initial period. One can choose different amounts for the down payment.

What are some things to consider when choosing an amount to pay for the down payment of a home mortgage plan? Always remember that mortgage payments are always affected by interest rates. Interest rates can add up if it takes you longer to pay up for the principal payment.

The longer it takes you to pay, the more you pay. Also, remember that if you can minimize the principal payment amount as you make a larger down payment, then it will always be better. It all depends on the amount of money that one has in his pocket today and how much he expects to make tomorrow.

How does one save for the down payment for a home mortgage? A house is one of the most important and probably one of the most expensive investments that one will get in his whole life, and paying the down payment can really dig a hole in one’s pockets. Saving is one of the most important things to consider when buying up a house.

There’s one rule that many people don’t realize about how they should save. For most people, savings is the leftover money after all the daily (and miscellaneous) expenses have been covered. The truth about savings is that it should be the first “expense” that should be made.

Calculate the amount of money that you already have in your bank account that you are willing to allot to the down payment and divide the remaining balance of the down payment amount by the number of months that is left for you to pay the down payment. Save the said amount each pay day by prioritizing it as a first expense.

Following the step above is the only sure way to save for a home mortgage down payment. Make sure that you follow it before you seriously consider buying a house.

Tuesday, January 6, 2009

Mortgage Tips For First Time Home Buyers

Everyone wishes to live in the dream house they always picture in their minds when they were kids. If you have saved up and worked hard throughout the years, then you are just a few steps away from that dream. But reality bites, home buying needs a lot of serious preparation to ensure that everything would come out right.

If you are excited to buy that house you always wanted, be prepared and read through these mortgage tips:

Pay your debt

Instead of saving up for your house, why not pay off your debts first? This is the more sensible thing to do than saving thousands of dollars in your bank. Debts, including credit card debts, actually limit your capability to save. Also, when applying for a home loan, lenders would always look at your credit card record as a reference on how much you can borrow from them.

Evaluate how much money you can afford

There are two things you need to know before buying a home: How much you are willing to cash out as down payment and how much you are willing to borrow. Your mortgage loan, on an annual basis, should never reach 30% of your annual gross income.

Understand Loan Types

There are government-sponsored institutions (Freddie Mac and Fannie Mae) that can offer home loans at a very affordable price. You can also head to who offer a great package for first-time homebuyers. Going to your bank and applying for a mortgage loan is also a sound option.

Real estate shopping

If you got all your finances all figured out, then you can start shopping for you house. The first thing to do is to get in touch with a reliable real estate agent that can show you a number of options. It is important to choose the right neighborhood for you and your family. Make a quick wish list of the things you want and use this as a reference before you purchase a property. It is important that you personally inspect each house that you are looking at buying.

Making an offer

If you already decided which house to buy, discuss it with your real estate agent and make your offer. Negotiate with the seller with regards to pricing and other terms and conditions. Remember to put everything you settled and agreed on in writing. Be sure to read and reread all the statements in any contracts before you sign them.