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Mortgage Refinance Tips And Advice – Part1

admin — Wed, 06 Jan 2010 22:36:56 +0000

For the average person who does not work in the mortgage industry, the mortgage jungle is very overwhelming. Mortgages are complicated! This article is a small collections of tips and advice of what an average person should know when looking for a mortgage. We kept it simply, but informative.
Reverse Mortgage Funding
As we grow older, living expenses seem to increase drastically, it is for this reason a great number of elders choose to seek a reverse mortgage to provide help with these expenses. This option typically works well for those who have fully paid for their home, and have no mortgage upon it. Simply speaking, when you take advantage of a reverse mortgage you will receive a monthly stipend from the equity that your home carries. This is especially useful to the elderly, sometimes securing a reverse mortgage aides them with living expenses, that alone could help in allowing them to remain within their own home. It is wise to request to a mortgage broker that the cost of closing should be paid out of the money received from the reverse mortgage loan. Essentially meaning, no expenses directly out of pocket.
Mortgage Options – Interest Only
Interest only mortgages are specifically designed to substantially decrease your payment amount over the first years of the mortgage term. The way this program works is that for these first few years you are only making payments towards the interest of the mortgage. This keeps the mortgage payments lower than other mortgage options because you are not required to pay on the principal of the loan. Eventually the time will come that you will be required to pay both the interest and the principal. It is wise to fully investigate this mortgage option prior to choosing it. Very carefully make some calculations and determine rather or not you will be able to afford the payments once both interest and principal are required.
The Right Mortgage Broker for you.
With the vast presence of the internet, obtaining the proper mortgage broker has never been easier. Additionally the internet allows you to locate mortgage brokers from all over your area. You are not limited to using a local broker or company in any way. The mortgage brokers you can find on the internet are in great competition with each other. What does this mean for you? It is simple because they are so competitive, you will win with excellent program and competitive rates. To choose the proper mortgage broker for you, you first must be comfortable in choosing them. Choose a mortgage broker that gives you confidence in their guidance. Take your time in finding the perfect mortgage broker for you; make sure their goals and your goals match, thoroughly research all your options before making a choice.
Obtaining a Mortgage Loan the Fast way.
Obtaining a mortgage loan through the internet is easier than ever before. The benefit of an online mortgage broker is that generally, they have a wider spectrum of lenders and various programs that a typical mortgage broker might have. More often than not, they have the ability to process request more quickly, as well. Online mortgage brokers can even aid you if there is urgency because of a fast approaching closing date or you are in need of speedy refinancing. All of this is thanks to the technology of automated credit checks, verification of income and online loan applications. You can find mortgage brokers through various measures such as using a popular search engine like Google, simply type in mortgage broker and you will be amazed with the results. A better option is to search for reviews about the mortgage broker or seek the advice and referrals from your friends and family. The best mortgage broker will possess the seal of the Better Business Bureau.
Adjustable Rate Mortgage and What you should know about it.
If you opt for an adjustable rate mortgage ensure that you are fully aware of these facts , this will help you be ready when the time comes for your fixed rate mortgage ceases.
1. You should know when the first rate adjustment will occur and how much the adjustment will be. Knowing the specific date will prepare you for the event.
2. You should know that the adjustable mortgage rate fluctuates with the changes of interest rates. Find out what index your rate is associated with, so you can investigate the interest rates on your own.
3. Know all of your options when it comes to refinancing. If a adjustable rate mortgage proves to be unbeneficial for you, you have the option of refinancing with a fixed rate mortgage. To get a good interest rate on a fixed mortgage you should watch the rates closely and if you choose to refinance, do so when the rates are comfortable to you.
Obtaining Flexible Interest Only Mortgages
For those that practice self-discipline, a flexible interest only may be practical. This option provides a payment arrangement that is flexible in regards to the payments that you make. This does not mean they are flexible on the timely manner in which you pay them, this simply means when your payment date arrives you are required to make a minimum payment of at least an amount towards the interest on the loan. However, with this flexible option you can opt to pay an additional amount towards the principle of your mortgage. Generally, your flexible interest only coupon book will include an area that determines the amount needed to be applied towards the principle if you should choose to do so. This is where that self-discipline comes in handy, it is wise to apply as much as possible towards the principle, bringing the amount down and coming that much closer to paying off your mortgage.

The Newest, Latest, Greatest, Fastest, Cheapest, Most Revolutionary Mortgage

admin — Sat, 02 Jan 2010 20:34:28 +0000

There’s a new kind of mortgage, and it’s taking the refinance world by storm. The promoters of this new kind of loan claim that you can pay it off in full in eight years without changing your budget at all! This sounds like it would be ideal for any homeowner. Let’s take a look at this mortgage and see if we can figure out if it is really all its cracked up to be.
This new kind of mortgage is commonly referred to by many different names, but because its purpose is to accelerate the paying off of a mortgage, we will refer to it as an accelerating mortgage. This accelerating mortgage makes use of compounded daily interest, instead of, monthly interest. It also makes use of the fact that the borrower and co-borrower deposit their entire paychecks into a mortgage account each time they get paid. Then, they actually use their mortgage account as their checking account and pay their regular monthly expenses by writing checks against the mortgage account. The process of depositing money into the mortgage account before using it for everyday expenses saves interest because of the daily compounding used by the accelerating plan.
What the advertisers for this mortgage don’t mention is, in order to pay off the mortgage very quickly, like in 8 years or so, each month you need to leave more money in the mortgage account than the amount the regular 30-year mortgage payment would be. The mortgage writer or broker will refer to this as your monthly savings and ask if you put aside 10, 15, 20, 25 or more percent for your savings on a monthly basis. The amount you tell him will be the extra amount you will be expected to leave in your mortgage account each month.
I see three problems with this type of mortgage financing. First, the majority of people close on their new houses in a tapped out condition. They save for years to accumulate their down payments and then they buy the most expensive houses they are able to make payments on. To them, their savings is the equity in their houses.
Second, if you have the ability to pay in an extra 10, 15, 20 or 25 or more percent of your salary toward any mortgage, you will pay it off a whole lot sooner than 30 years. For instance, it will take 30 years to pay a $200,000 mortgage at 6% if you are paying the scheduled monthly amount of $1199. 10, but if you add $800 to this payment each month, your mortgage will be paid in 11 and one-half years.
It is true, that when comparing an accelerating mortgage with a regular 30-year fixed mortgage, that has the same parameters (principal, interest and term); the accelerating mortgage will reach 0 more quickly than the 30-year mortgage will. However, it would be a matter of several months sooner, not 22 years as some of the advertisements for the accelerating mortgage would lead you to believe.
So, what’s wrong with paying the same amount into a mortgage account, and still getting it paid off sooner? Nothing! But here’s problem number three: an accelerating mortgage uses a HELOC. (Home Equity Line of Credit) there are some things you should know about HELOCs. First their interest rates are usually higher than a conventional 30-year mortgage interest rate. Second, they are adjustable-rate mortgages. On top of that, they have no cap and they adjust every month. What this means is that if you find a fixed rate 30-year mortgage at six percent, you know that in four years that mortgage’s interest rate will be six percent. With a HELOC, you may find one at six percent but in four years you could be paying thirteen percent. So much for paying your mortgage quickly, because as you know, when interest rates rise, so does the monthly payment.
We are now in a time in American history, where interest rates are relatively low. With inflation under control, it looks as though interest rates are trending downward. It may well be that the current interest rate downtrend will continue well into 2008 when it will test the post-1960′s low of 4. 75 percent. After that, you never know what the future will bring.
In January 2009, the U. S. will be inaugurating a new president. Many of the candidates running for the high office would like to reverse the free trade policies of the last three presidents. These free trade policies have in large part, brought us the robust economy along with the low interest rates we have enjoyed since the mid ’90s. These candidates also want to end the George Bush tax cuts. These tax cuts have had a tendency to cancel the inflationary effects of higher oil product prices. Some of these candidates also want to institute national health-care. It has been proven that private industry is more efficient than government run entities. Private industry money gets reinvested and creates more money. When money goes to the government as in government run health-care, it is being sent down a one-way dead-end street. This is a very inflationary scenario, and inflation means high interest rates.
Not long ago, I wrote an article about biweekly mortgages. In this article, I called the biweekly plan a scam. I don’t feel the same way about the accelerating plan. I think the accelerating plan is creative and in true mathematical terms, it would pay your mortgage off a little sooner than a regular mortgage, if rates stayed flat. The problem is, at least, the way I see it, there is a potentially unstable interest rate environment on the horizon. I also see some of the promotions for this mortgage as misleading and this makes me worry. Throw in the fact that I have never known anyone to institute an accelerating plan and then pay it off in the prescribed short term, and this makes me see the accelerating plan as speculative. Therefore, I’ve got to believe that for the time being, a fixed-rate mortgage is the best way to go.

Houston Refinance Mortgage Information

admin — Thu, 31 Dec 2009 19:34:13 +0000

There are three main reasons that consumers consider a Houston refinance mortgage. They are lower rate, cash out (or debt consolidation), and converting from adjustable to a fixed rate.

For a rate refinance an important consideration is the closing costs to be paid. If there are typical closing costs it is usually advisable to refi if you can save ฝ percent on your rate or more. With a “no closing cost” loan it can make sense to refi with 1/8 percent savings or more. The no closing cost option is not always the best choice. If a mortgage with some closing costs is available at a better rate you should consider the payback time. This is a calculation of how long it would take a rate savings to recover the closing costs. If the payback is 4 years and you plan on having the loan longer than that it may be the better deal.

For cash out refinancing there are rules that are commonly called “Texas cash-out” rules. The key part of this is that the loan may not exceed 80% of your homes appraised value. For example if your home is worth $100,000 and you currently have a $50,000 mortgage, the maximum cash out would be $30,000 (less closing costs). It is usually not advisable to do a cash out refi if it would result in a higher rate than you currently have. If you can’t get a equal or better finance rate it may be better to do a second mortgage or home equity line of credit instead (HELOC). Ask a good loan officer or mortgage broker to show you options and explain the differences.

It is usually advisable to convert from an adjustable to a fixed rate mortgage only if the fixed rate is equal or better. Some adjustable rate loans have a prepayment penalty the first two or three years. In some cases it can be best to wait until after the penalty clause expires to refinance.

For all refinance mortgages it is important to get the best possible rate and terms. Your credit, income, and loan to value ratio will be factors for your rate and terms. Your goal should be to get the best program that you qualify for. There are a lot of mortgage programs available in the marketplace. In general the best include some Fannie Mae/ Freddie Mac programs, and VA conforming loans. Next might be other conventional “A” mortgages or FHA loans which are very good. Alternate A loans are next, these are loans that don’t quite fit the top tier because they are very large (jumbo), or for another reason like not documenting your income. Next could be Fannie/Freddie programs that are for those with less than perfect credit (sometimes called A- mortgages”). Next to last would be “sub-prime” loans. These are for consumers with more difficult to finance mortgages because of credit or other reasons. The lowest category could be called “hard-money” loans. Some lenders will do this type of mortgage at a high rate regardless of severe problems if there is a large amount of equity.

I suggest dealing with a lender that has a large variety of programs to select from. If you shop a lender that only does one type of mortgages you will probably be turned down if you don’t fit their program. When you shop a lender that doesn’t do FHA loans, they may suggest a lower category mortgage with a higher rate. And it is better when a lender offers a choice of programs, rather than just one.

Texas residents can visit our Houston refinance mortgage site for more information. You can also call my office at 281-537-7800.

Mortgage Rate Calculators – Valuable Tools For Getting The Best Loan

Are you looking for some inside information on refinance mortgage rate calculators? Here’s an article that can help provide information for you to find the best rates for your mortgage.

Refinancing is a smart move if you want to lower your monthly payment and overall interest on your bills. With refinance mortgages, you are also able to change the term of the loan to a shorter one so you can pay off the loan earlier and save more on interest.

There are actually several reasons why people want to take a refinance mortgage. This is also why refinance mortgage rate calculators are important. Refinance mortgage rate calculators help consumers determine the amount of savings they can make on their chosen loan type. Refinance mortgage rate calculators also aid you in finding out how much is your monthly payment for your refinancing loan.

The Internet refinance mortgage rate calculators show you the monthly payments you need to make for your mortgage. Aside from that, these refinance mortgage rate calculators also show you the total interest rate. If you’re more concerned on how much saving you will be able to make with a refinancing loan, refinance mortgage rate calculators will also help you on that.

It seems like new information is discovered about something every day. And the topic of refinance mortgage rate calculators is no exception. Keep reading to get more fresh news to help you make a wise financial decision.

The refinance mortgage rate calculator will ask you for your current loan information. For instance, on the refinance mortgage rate calculator, a field labeled Principal Balance will be provided along with the Monthly Payment and Annual Interest Rate fields. You need fill these up in order to start using the refinance mortgage rate calculator.

To complete the process, the website’s refinance mortgage rate calculator will also ask for your new loan information. Another three fields will be provided in the refinance mortgage rate calculator. The refinance mortgage rate calculator fields are: Annual Interest Rate, Term, and closing Costs. By checking on the Finance Closing Costs at the bottom part of the refinance mortgage rate calculator and then hitting the Calculate button, you can determine how many months it will take for your loan to break even on the closing costs.

For example, for the Principal Balance field on the refinance mortgage rate calculator, you put in $150,000 (Take note that the amount you place in this refinance mortgage rate calculator field represents the remaining pay-off balance). The Interest Rate of your current loan is 6% and the data you put in the refinance mortgage rate calculator Monthly Payment field is $899. 30.

For the New Loan Information portion of the refinance mortgage rate calculator, you place the following data: 5% Annual Interest Rate, 30-year Term, and $0 for Closing Costs. Make sure that you check the box for Finance Closing Costs at the bottom of the refinance mortgage calculator before hitting the Calculate button.

The results of the refinance mortgage rate calculator would show you that your new monthly payment would be $805. 23, $93. 77 short of your current loan monthly payment. The refinance mortgage rate calculator would also display the difference in the interest rates of both loans. With the refinance mortgage rate calculator, you will be able to find that the total interest of your current loan would be $173,757. 28 while your new interest after refinancing would be $139,883. 68. This allows you to save $33,873. 61 on interest.

As your knowledge about mortgage calculators continues to grow, you will begin to see how easy it is to get the best loan available. Knowing how these type of tools work is important when making large financial decisions.

Mortgage Lead Buying Guide

admin — Wed, 30 Dec 2009 01:36:50 +0000

A Complete Guide to Internet Mortgage Leads:The Internet has revolutionized the way consumer’s evaluate, compare and choose mortgage products and services. Every day more and more mortgage shoppers utilize the Internet to study and purchase home mortgages. As a mortgage broker you must recognize this industry shift and learn to utilize this tool. Each day thousands of mortgage seekers fill out forms on thousands of mortgage leads generation websites requesting more information on mortgage loans or quotes from mortgage lenders. These mortgage leads are made available to you by an array of internet mortgage leads generation brokers. The BIG question is, are these internet mortgage leads worth your effort and money? Will the return on investment be there? In this article we will discuss the in and outs, do and don’ts and questions you should ask when purchasing internet mortgage leads. Careful consideration must be given to purchasing internet mortgage leads. In this mortgage lead guide we will discuss: What makes a quality Internet Mortgage Lead?What you should expect from an Internet Mortgage Lead?Closing the sale to your Internet Mortgage LeadQuestions to ask before purchasing Internet Mortgage Leads Quality Internet Mortgage Leads: What makes a quality internet mortgage lead? A lead that CLOSES. Not necessarily. We all know that not all leads will close. In fact if I was able to close between 8% and 14% of the mortgage leads I purchase on the internet, I would be happy. I consider a mortgage lead to be a high quality lead if it meets the following criteria:-The Lead is Fresh -It is critical to find out how quickly mortgage lead brokers turns the lead around and delivers it to you. Best case scenario, the lead is delivered instantly (a real-time mortgage lead) and it is an exclusive mortgage lead (only delivered to you). At a minimum you want to make sure the lead is delivered in less than 48 hours. Otherwise, the lead is less valuable and should not be sold at the same premium as a real-time mortgage lead. The more time that passes from the time the user requested information, the less your chances of closing the sale to this lead. I’ve seen many cases where users deny even requesting information. The quicker you contact them, the less likely this is to happen. Hit while the iron is hot. -The Lead is AccurateOne of the biggest challenges mortgage lead generation companies face is obtaining accurate data from users. No matter what type of technology a mortgage lead company claims to have, no company can completely stop users from entering inaccurate data. A recent example of technology to improve data accuracy is telephone number/location verification. Companies use software to make sure the area code in the phone number matches the state. This is a nice feature because chances are if a user is going to enter a bogus phone number they will not enter the correct area code. What you must do is evaluate mortgage lead generation companies and decide who has the best solution to fit your needs. -The Lead is a True LeadWhat do I mean by a true lead? I consider a true lead to be a lead that was actually generated by someone that is truly interested in obtaining a mortgage. You have to be careful that the lead is not an ‘Incentivized Lead’. For those of you that aren’t familiar with this new term I will explain. Many websites today offer users incentives to fill out forms. In exchange for filling out these forms users are given points towards the purchase of merchandise or even money. Make sure you stay away from companies that have anything to do with incentivized leads. These leads are worthless !!! What you should expect from an Internet Mortgage Lead? This is simple. Don’t set your expectations to high. Like I said earlier it would be great to close at a rate 8% – 14%. Remember that you are buying leads, not sales. Expect accurate data 80% of the time and try to close at least 8% of these leads and you should be doing very well for yourself. Closing the sell to your Internet Mortgage Leads Again, this is a simple concept. The quicker you contact the lead, the better the chance of closing the sale. The first thing you should do is make contact. Once you have made contact with the lead ask questions and find out what they are looking for. After this initial contact you can follow up with a quote and answers to their questions. Quick response, quick response, quick response !!!! Questions to ask your Mortgage Lead Generation Company These are the not so obvious but very important questions to ask. What is your lead return policy?It is vital that you find this out before purchasing Internet Mortgage Leads. Bad leads are worthless to you and at approximately $50 each, this can get expensive quick. No batch of leads will be completely accurate, but you want to make sure that the percentage that is bad is not greater than 10% – 15%. Tip:Ask the company what makes a lead returnable. What makes the lead invalid? Different companies will have different policies on what constitutes a bad lead. How many times are your leads sold?When purchasing leads you must make sure those companies aren’t overselling the leads they generate. The best lead is an exclusive mortgage lead, meaning you are the only person the lead was sold to. Exclusive mortgage leads are more expensive but you are ensured that you should be the only person receiving the lead. If the lead isn’t exclusive find out how many other times the lead has been sold. The more mortgage brokers that receive the same lead the less chance you have of closing the sale. What filters are available for your leads?Filters allow you to set criteria for the mortgage leads you receive. Example: You could specify that you only want leads for mortgage seekers that have a ‘Good’ credit rating or better or you could specify that you only want leads from ‘Colorado’. How are the leads delivered?Find out what format the leads are delivered. Leads may be delivered in text format, Microsoft Excel, email, etc. Make sure it is a format you are able to work with. How do you generate your leads?Find out what method the company uses to generate Internet Mortgage Leads. Make absolutely sure there is NO INCENTIVIZING. -Mortgage Lead Guide- For more information about how to develop a successful mortgage lead campaign please call Smart Leadz at: 585-478-3335 and speak with one of our lead specialists. We can custom tailor a campaign to meet your exact needs and budget.

6 Credit Repair Steps to Close More Mortgage and Mortgage Refinancing Deals for Your Clients

admin — Mon, 28 Dec 2009 21:33:28 +0000

Even people that know virtually nothing about finance and Wall Street are talking about the serious impact the subprime mortgage catastrophe has had on our economy. While the incredible number of failed subprime mortgages may have started the economic tumble, the continued financial problems and people’s inability to obtain a mortgage or mortgage refinancing of their home is exacerbated by poor credit scores.

To make matters worse, with the horrifying increase in foreclosures across the country, the mortgage, and mortgage refinancing problem for mortgage brokers is just going to grow.

When an individual’s credit score goes down, so does their choices for mortgages and mortgage refinancing options. Also, tell your clients to beware of untrustworthy credit repair companies and other scams in the marketplace today promising to “repair bad credit”.

Good credit is an absolute must for a loan originator to be able to put through most reasonable mortgage and mortgage refinancing deals, and with the problem not going away anytime soon, it behooves the loan originator the help their clients with ideas for the credit repair process of improving their credit scores.

This type of credit repair advice is the way that a mortgage broker can turn a potential client into the “real deal” and close their mortgage or mortgage refinancing deal. Also, if done properly, more often than not, the process can take place in a relatively short time span.

Step 1

Realize that rebuilding an individual’s credit score is an ongoing process and requires thoughtful preparation to successfully rebuild his or her credit to an acceptable level to obtain a well structured mortgage or mortgage refinancing product.

Encourage your client to be conservative on any new monthly credit score building budget that they will be able to make the payments and never be late on anything. Caution your client not to structure a program with monthly payments that they cannot comfortably make, because being late on any payments will further reduce their credit score and may make a new mortgage or mortgage refinancing of their home impossible.

If there are extenuating circumstances such as divorce, insist that they review their credit program with their attorney before agreeing to anything.

Step 2

If your client’s credit card companies have not reported or have understated their credit limits on their credit cards, it can hurt their credit score. For this reason, have your client determine if their credit card companies are understating their credit limits on their cards. Often credit limits are reported as lower than they actually are and frequently may not be reported whatsoever.

While we are on the subject of credit cards, make sure that your client has a minimum of three credit cards or other sort of revolving credit. Many people mistakenly believe that if they have credit cards it actually hurts their credit score and because of this, they cancel some or all of their cards. Their credit score can be more harmed and the possibilities of not obtaining new mortgage refinancing on their home or a new mortgage is greater by simply canceling existing credit cards.

Furthermore, if they do not have any credit cards, have them obtain at least three. If they have trouble with getting typical cards like Visa, Master Card, Amex etc, tell them to try a local department store, or a Home Depot or Lowes. Quite often these types of stores are more lenient in granting revolving charge accounts.

Step 3

Make sure that your client reduces any outstanding credit card balances to under 30% of their credit limit on each of the individual cards. Some people mistakenly think that the 30% figure is based on their overall revolving credit card balance, but this is false. A single card over the 30% balance can nullify the benefit of the effort of having the revolving credit cards in the first place.

If your client has one card over the limit and several others under the limit, if they are limited on cash and cannot pay down the high card, have them see it they can transfer some of the higher card’s balance to the lower cards. Have them check first before doing this to see if this type of transfer creates a higher interest rate or any other adverse effects on their credit.

Thus, if an individual has 3 credit cards with a total of $12,000 credit, but two of them have a $2,000 limit and the other has an $8,000 limit, make sure that they keep the $2,000 limit cards under $600 each and the $8,000 card to under $2,400.

Implementing this simple process will cause credit scores to rise, along with the possibility of obtaining that desired mortgage or mortgage refinancing program.

Step 4

When helping your client to raise their credit scores, make it a point to frequently pull their credit reports for them to determine their status as well as any errors on their reports.

Errors are so common on credit reports that over 75% of all credit reports have a minimum of one or more mistakes on them. Just by their being diligent and carefully insuring that any incorrect reporting information is removed, their credit score will quite often go up incredibly. This is certainly one of the easiest and most effective things that your client can do immediately to improve their score dramatically along with the possibility of them obtaining a new mortgage or mortgage refinancing of their existing mortgage.

Step 5

If your client’s credit has been damaged to the point of having been sent to a collection agency, they probably will not want to immediately pay off the credit card debt. As incredible as it may seem, this situation can actually be more harmful than having credit card debt sent to a collection agency on their credit record.

When one of your clients have been sent to a credit collection agency, the effect on their credit is low after about two years and is virtually wiped out after four years.

Insure that your client receives a written promise from the collection agency for a “letter of deletion” before they do anything toward satisfying the old credit card debt, because without a letter of deletion, they may hurt their credit problem more than help it. Stress to your client that they should not pay anything on the bill until they receive in writing the agreement for the letter of deletion from the collection agency.

Most people trying to improve their credit to obtain a mortgage or mortgage refinancing on their home think that they need to pay off everything as quickly as possible, but this is one case that paying before you obtain the proper documents protecting your situation can actually seriously hurt your credit. People have in reality completely paid off a debt or negotiated a settlement to learn to their dismay that they now have no leverage to get the collection agency to send the letter of deletion.

Step 6

Finally, if your client does not make paid installments on a car or a boat, have them take out some sort of installment loan with someone like Best Buy or Sears on some needed appliance or with Staples or Office Depot for some business equipment. Credit bureaus look carefully not only at the fact that you have credit, but also the blend of the types of credit that you have. Having just credit cards only is not as advantageous as having credit cards and some sort of installment payment loan.

Be sure that your client watches out for the rates on their new installment loan. Some of these rates can be “out of the roof” and create undo stress on the monthly budget.

Also, unlike the credit cards which you should keep in perpetuity, obviously, revolving credit comes to some point at which the loan is satisfied and the monthly payment ceases. Your client should not buy just for the sake of buying, but if they are trying to improve their credit scores, planning a purchase that they might have paid in full with cash, would be better if they put a substantial amount down in cash and then financed the balance on an installment loan. Financing a smaller amount can actually lower loan interest payments thus lowering the monthly payment; all of which makes your client more likely to improve their credit score and get a new mortgage or mortgage refinancing of their home.

Mortgage Broker Or Mortgage Lender: Which Should You Use?

admin — Mon, 28 Dec 2009 15:14:05 +0000

It is recommended that you work with a mortgage broker or a mortgage lender before you shop for a house. You don’t want to end up falling in love with a home and then finding out you can’t afford it. Getting pre-qualified or pre-approved for a loan can help you decide what price range fits your situation. So what’s the difference between a mortgage broker and a mortgage lender?

A mortgage broker is basically a retail seller of a loan. They get paid a commission from the lender and a service fee from you. The service fee can include an origination fee, a processing fee, a closing fee, and/or points on the loan. The fees will be listed on the documents you sign at the title company, on the day of closing. The advantage of using a mortgage broker is that they have information on a wide range of lenders and loans that can fit your needs. A mortgage broker’s obligation to his/her customer is to find the best rate possible and make sure all the documents are prepared by the closing date. To do otherwise could cause the mortgage broker to lose customers and tarnish their reputation with other real estate professionals.

A mortgage lender is the actual institution servicing your loan. A lender could be a bank, a credit union, or a quasi-government company like FNMA or “Fannie Mae”. Sometimes a lender will sell the loan to the open market, but still continue to service it. The fee of a lender is typically less than that of a mortgage broker. The mortgage broker, however, might find you a better rate because they are not bound by the policies of one institution. It is, therefore, debatable that going directly to the mortgage lender for a loan will save you money.

Then who should you use? The answer is easy. Find the one who gives you the best deal. All mortgage brokers and mortgage lenders should tell you their fees upfront, so shop around. It is also a good idea, in some instances, to use a lender referred to you by your realtor. Realtors work with lenders all the time and yours might have a good feel for one that is reliable and honest. In the end, though, you should use the mortgage broker or mortgage lender that is right for you.

By: Michael Stazko

Mortgage Broker: a New Home for Your Skills?

admin — Mon, 28 Dec 2009 03:22:20 +0000

A mortgage broker is the advisor assigned to a customer in order to find the right mortgage product. It is mostly an advisory role, explaining complex mortgage options and products to an existing client or a first time buyer. The job also requires a mortgage broker to deal with estate agents, surveyors and mortgage lenders. This means that a mortgage broker needs to be constantly up to date with new or changing guidelines set out by the Financial Standards Agency (FSA) as they would need to communicate these changes to their clients. The mortgage broker job is often pressurised to meet sales targets but this is rewarded with high bonuses called ‘On Target Earnings’. A mortgage broker job can also come with a company car as well as special pension and insurance benefits.

As mortgages are offered in nearly all high street banks and building societies, they are the most obvious place to look for a mortgage broker job. Often mortgage brokers have worked their way up through the company, most often starting in customer services. This form of training will be tailor made to the company that is doing the training as they will only be able to offer in depth teaching on their own way of offering particular mortgage packages, so it is important to consider how you, as a trainee, understands other lender’s packages. However, there are other ways to train for the mortgage broker job. Employers usually run apprentice training schemes where on the job learning is paid for. On the job training schemes also start new employees on different jobs in areas such as insurance to learn all aspects of the mortgage market. Online learning is also becoming an increasingly popular way to study for qualifications and there are several accredited schemes available on the web. As the FSA’s standards on qualifications have become more stringent, it is important that new trainees quickly establish themselves in a particular area of mortgages to specialise in as this will increase employment opportunities.

To train as a mortgage broker, you will need to have gained industry recognised qualifications such as a CeFA (School of Finance Certificate for Financial Advisors) or Certificate and Diploma in Financial Planning. Once these qualifications are gained then a trainee mortgage advisor has an averaging basic salary of £18,000 per year, without commission or bonuses. To be classed as a fully trained mortgage broker, the trainee will need to have undergone further on the job training with supervised meetings with clients in order for employers to assess the progress of the trainee. Once the trainee has successfully underwritten the desired amount of mortgages and tasks, they will then be fully trained and offered promotion or a higher salary. In mortgage broker jobs employers do not select new recruits based on ‘A’ level or degree results, often it is personal motivation, previous customer service experience and most importantly on people skills as the job requires a lot of one on one meetings with a broad range of clients. As the mortgage broker job is people orientated, like any sales related work, the hours are often long with shift work at weekends as well as some evening work (especially if you take an independent, self employed mortgage broker job). Further qualifications are available as the mortgage broker job can lead on to becoming a financial advisor.

By: Aaron Hill

Types of Mortgages Offered by Banks in Turkey

admin — Sun, 27 Dec 2009 17:37:26 +0000

With the new mortgage bill that became effective on March 2007, banks in Turkey started to ofer a variety of mortgage products to their customers, tailored to each individual’s needs. These products and the rates differ widely from bank to bank when you include loan duration, down payment, commission fees, prepayment options and fees etc. All of these variables make decision making much more confusing to the customer. In addition, when you add foreign currency based lending, different closing costs for each bank, expertise fees, etc, choosing the best mortgage product suitable for the customer turns into a multivariate optimization problem. Therefore, the role of the mortgage broker becomes critical. To better assist his clients and find the best mortgage product and the rate, a broker must have many years of experience in their fields, in finance, and in real estate business. In addition, it is vital that a mortgage broker must be equipped with the top of the line financial calculators and mortgage software, and access to up-to-date rates and products offered by banks.

Mortgage types being offered in Turkey can be classified as follows:

1. Fixed Rate Mortgages:

This is the most common mortgage type offered and given by all of the banks. The loan duration and the monthly payments are fixed and thus do not change through out the life of the mortgage. The borrower can payoff the entire loan with a prepayment option, however there is an early closing fee, which could be up to 2% of the loan amount.

2. Variable Rate Mortgages:

This type of mortgage is based on a variable rate specified by the bank and the federal bank and changes with the rate changes in the markets. Borrowers should pay attention to setting a ceiling rate when negotiating with the bank so that when the rates change their payments do not go above a certain rate. The early closing fee that exists in fixed rate mortgage does not exist in this type of mortgage.

3. All Inclusive Mortgage:

If the borrower wants to include all the fees associated with the purchase of his home and the mortgage in the mortgage, this type of mortgage would be the most ideal one. These fees are are realtor commision, life and porperty insurance premiums, disaster insurance, moving fees, closing fees, expertise fees, etc. The amoun of these fees depend on the property and the lender. However, all of these fees could be included in the mortgage and be bundled as the mortgage package.

4. Discounted Commision based Mortgage:

If the borrower is interested in low monthly payments, he/she then can choose to pay a commision up front which consists of a percentage of the interest that needs to be paid. After subtracting this amount from the loan, the monthly payments would be lower. These types of mortgages have higher closing fees than other types, however. The early closing fee aplies to this mortgage as well.

5. Mortgage with payments specified at different months:

If the borrower is interested in making payments on only certain months, then this type of mortgage would be the most ideal one.

6. Zero Down Mortgage:

For those who has another property, this property can be used as a collateral to finance the purchase of the next property. If the other property has a higher value, then the collateral could cover the entire mortgage of the new house, thus making it a zero down mortgage payment. One thing that the borrowers should pay attention to is that most banks give mortgages up to 80% of the value of the property.

7. Foreign Currency Indexed Mortgage:

In addition to mortgages given in YTL (New Turkish Lira) currency, banks started to give out mortgage loans in other currencies as well. Some of these currencies are USD, EUR, GBP, CHF, and JPY. These types of foreign currency indexed mortgages can be obtained both as fixed rate and variable rate mortgages.

8. Refinance Mortgage:

The refinance option is now available as well. In case borrowers are interested in refinancing their mortgages with lower interest rates, they can change the mortgage either through the bank that they obtained the mortgage of through any other lender. The only caviat in applying for refinance in Turkey is that if your mortgage was applied prior to March 6th 2007, there will not be an early closing fee. However, if it started after that date, then there will be an early closing or early prepayment fee applied which could be up to 2% of the loan amount. The borrower also needs to pay for all associated fees related to the new mortgage.

9. Home Equity or Personal Loan Mortgage:

If the borrower is in need of additional finances, he/she can choose to get a loan by using his/her property as a collateral. This loan could be applied to home improvement as well as any other personal need. They are usually given at a higher interest rate than other types of loans but less than regular personal loans.

An a – Z (almost) of Mortgages, Part 1

admin — Sat, 26 Dec 2009 20:34:33 +0000

100% Mortgage â This is when you borrow the full property value from a mortgage broker. This type of mortgage requires no deposit or down payment, and is therefore popular with first-time buyers. However, because of the credit crunch, 100% mortgages are hard to come by.
Adverse (or bad) Credit Mortgages â These are, as the name suggests, available to people with a low, or nonexistent, credit score. These are increasingly hard to come by, and usually have a very high interest rate attached. It’s better to rent and work on improving your credit score before applying for a mortgage. They are also known as sub-prime mortgages.
Base Rate Tracker â Interest rates on all mortgages fluctuate, but a Tracker mortgage will vary depending on the base rate set by the Bank of England. For example; if the deal you find offers base rate plus 0. 75% for life, you will always pay exactly 0. 75% over the base rate, whatever it is. The advantage of this is that if the base rate goes down, so do your repayments, and quicker than with a standard variable mortgage (covered below).
Capped Rate Mortgage â Another rare deal, the capped mortgage guarantees that you will not pay more than a pre-determined amount of interest on your repayments over a set period of time, no matter how much they go up. The admin fees on this type of mortgage are usually higher than on more standard deals, but there is the advantage of knowing, at least for a few years, that your payments won’t rise above a certain level.
Current Account Mortgages â Relatively new on the mortgage market, this type of mortgage, often called a combined mortgage, works like a bank account. You get a fully functioning bank account with direct debit facilities, chequebook and statements, and your earnings are paid into this account. The amount of the mortgage is also paid into this account, and it works like a big overdraft â you can borrow money from it to pay for holidays etc, but this theoretically gets repaid as your wages are paid in. the temptation is to borrow a little too much when faced with such a large amount of cash, so this is only really good for those who can manage their money well!
Divorced Mortgages â Some lenders recognise that a couple in the midst of divorce, or a newly divorced homeowner, may need special assistance. Therefore, certain mortgages come with a fixed interest rate for up to 5 years, with an interest free period for the first few months. For the new divorcees buying a home, alimony payments can be calculated into the income when determining a mortgage limit. These mortgages are often 100% deals, and are only offered to divorcees.
Endowment Mortgage â These mortgages are linked to the Stock Market. Often called an ‘interest-only’ mortgage, your monthly repayments only cover the interest due; the idea being that your investments will do well enough to pay off the whole capital at the end of the term. Of course, if your investments fail to make you money, you could be faced with a huge debt at the end of the term.
Fixed Rate Mortgage â Like all mortgages, this has good and bad points. You get a fixed monthly payment amount for a set term â usually between 1 and 5 years â and during this time you are guaranteed to pay that amount no matter what happens to interest rates. It’s good because you know exactly what you’ll be paying for that term but at the end, you might be in for a nasty shock if rates have risen substantially. In addition, if rates drop below the rate you’re paying during your fixed term, you’ll be paying more than you would on a different type of mortgage.
Flexible Mortgage â This type of mortgage deal has massive benefits as it allows you to vary your mortgage payment amounts, under- or over-pay as needed, and even miss payments altogether if you need cash for a holiday or Christmas. Potentially you could save thousands in interest if you pay off this type of mortgage early, as there are no repayment penalties as with other deals. But again, you need to be responsible with this as the interest will keep mounting up during a payment holiday.
Guarantor Mortgages â A guarantor is a person who acts as a kind of financial backup for a borrower. In the case of mortgages, the guarantor would be responsible for repayments should the borrower default. It’s a huge responsibility which involves a lot of trust on both sides, but for a first-time buyer it can be a good solution to a first mortgage. A guarantor needs to prove that they could afford your repayments as well as their own commitments in the event of a default. Most lenders will look favourably on an applicant with a guarantor, so it’s worth securing one even if you don’t foresee any problems.
This concludes part one of the mortgages guide. Part two will cover more mortgages such as offset mortgages and the classic repayment mortgage.

Mortgage Broker Marketing Made Simple

admin — Sat, 26 Dec 2009 16:09:50 +0000

Looking for a way to change up your mortgage broker marketing? Probably the easiest way to deliver an efficient, cost effective marketing is with the use of a simple post card.

Most mortgage brokers have used post card marketing at some point, but their message is frequently diluted because they deliver the simply rate sheets. The postcard doesn’t capture the attention of the reader, and as a result, doesn’t yield much return for the mortgage broker.

There’s a far better way to use postcards as a marketing tool – one that delivers a great return for the broker.

Postcards are effective for the following reasons:

They are easy to mass-produce and affordable to print.
Postcards are inexpensive to mail.
Postcards demand little time and attention. The reader can read through the postcard in a few minutes.
Postcards are easy to keep around – your reader is far more likely to keep a postcard up on their refrigerator or on their desk for future action than a letter that will get misfiled or put away.

But postcards are only effective when used well. Your mortgage postcard has to be more than a mere introduction to a product or a current rate. You can pack a lot of information into a postcard. The front of the postcard can contain an attention getting article of several paragraphs. The back can fit a smaller article, but still enough information to keep the reader interested.

When you gear you postcards to solving client’s problems, not just introducing a product, you are far more likely to get their attention. And, because the content is simple and specific, it delivers even more impact.

All postcards should contain a call to action, something that encourages the reader to call you for more information.

While postcard are great tools for their size and expense, that doesn’t mean they don’t require foresight and planning. Fortunately, there are some great tools that make postcard marketing easy. You’ll find that there are some great postcards services – companies that develop intriguing content that is time-sensitive. Not only are you able to get a postcard that is tailored to your business needs, but you can also use the service to send out the postcards. You approve the postcard, the company takes care of the printing and mailing of the card to your database.

Postcards can be one of the most effective tools in a mortgage broker marketing plan. Don’t overlook these simple, yet productive tools that bring a steady stream of clients with a minimum of effort.