MORTGAGE LOANS

New Home Purchase

How much money do you spend every year as home rental? If you check thoroughly you can see that your monthly rent is equal to or slightly less than the monthly payment you pay your home loan lender for a 30 year loan! Buying a home is an exciting and wise investment decision. A detailed analysis will help you to select a mortgage plan that you can afford.

Some of the aspects to consider are:

• How to choose a lender
• Types of loans available
• Interest rates
• Repayment methods

Fixed rate and variable rate loans are available today. The interest rate for a fixed rate loan is set for the life of the loan and for adjustable rate loan, it varies with time according to the factors set within the loan. Before finalizing a purchase, it is better to get approved for the loan. Once the loan has been approved, you may change the loan amount and repayment schedule to match the particulars of the purchase transaction.

Features of loan offered include:

• Choice among 10, 15, 20, 25 and 30 year repayment terms
• Bad credit or past bankruptcy are ok (but at higher interest rates)
• Rate lock system
• VA and FHA loan programs
• 100% financing

Home Equity Loans

A home equity loan is a type of loan in which the borrower uses the equity in their home as collateral. These loans are sometimes useful for families to help finance major home repairs, medical bills, consolidate debts or college educations. A home equity loan creates a lien against the borrower's house.

Home equity loan interest rates are comparatively low, because they are secured against the value of the property, and are referred to as Second Mortgage. Pulling out the equity in ones a home is a wise financial move, especially when interest rates are low.

Main features of home equity loans are -

• Fast approval
• Fixed rate
• Low monthly payments
• Loan amount is up to 125% of the appraisal value of the homes
• Low interest rates
• Interest amount is tax deductible

In majority of cases the interest on the loan is tax deductible. As long as the home equity debt is $100,000 or less and the total debt on the home is less than or equal to the properties face value - that makes this loan an excellent choice among mortgage loans when a loan need arises.

Home equity loans come in two types, closed end and open end and are most commonly second position liens, although they can be held in first or, less commonly, third position.

Mortgage Refinance

Refinancing a mortgage typically involves allowing a loan company to pay off the original home loan in return for the customer signing a loan contract with them. With falling interest rates, home loan customers can save thousands of dollars by opting for mortgage refinance. The main advantages of mortgage refinance are

• Reduce Monthly Mortgage Payments
• Security of a Fixed Rate Home Loan
• ARM (Adjustable Rate Mortgage) Savings
• Take Cash Out
• Eliminate Mortgage Insurance

Factors that need consideration when one is opting for a mortgage refinancing loan are -

• Penalty costs of paying off the mortgage or loan
• Cost to appraise the home & related legal costs
• Closing costs
• Settlement fees

Following are the various circumstances where refinancing mortgage can actually save money

• Refinancing the higher interest rate loans with lower interest rate loans if the terms of the loans are similar and the new rate is lower than the existing rate.
   
• Refinancing the secured debts such as mortgage or car loan if the new loan is for the same term or shorter than the old one and the interest rate on the new loan is considerably lower than the interest rate on the present loan.
   
• Refinancing the home to eliminate the expensive car loans or credit cards.

Debt Consolidation Loan

Debt consolidation loans are one of the popular solutions that can decrease debt; it entails taking out one loan to pay off many others. Debt consolidation can simply be from a number of unsecured loans into another unsecured loan, but more often it involves a secured loan against an asset that serves as collateral, like a property.

Considered as a personal loan with low rate interest and reasonable monthly payment plans, they are designed not to adversely affect your credit score, and offers a consumer high interest debt balance. It is helpful to people who are finding it difficult to make repayment with high interest rates.

Commonly used to consolidate the following debt -

• Credit card bills
• Medical bills
• Department store cards
• Personal loans
• Student loans
• Bounced checks

Debt consolidation loans are paid off over a longer time period, so the monthly loan installment is small, even up to 50% of the previous payments. Approaching creditors through agents is a good way to eliminate penalties and late fees, and secure the best deal - there are many agencies that offer free consultation.

Advantages of debt consolidation loan are -

• Low monthly bills and interest rates
• Small amount repayments
• Single payment plan helps to budget efficiently
• Reduce total monthly payments
• Helps to manage existing debts
• No more direct contact with the creditors