Texas Mortgage Loans- What Kind Of Options Exist?

By admin on July 19, 2011

Texas Mortgage Loans are in plentiful supply due to the fact that the Texas marketplace has not gone through the dramatic swings the west and east coast markets have. Areas like Dallas- Ft Worth, as an example, still offer some of the most affordable housing costs of any major metropolitan area of the United States.

There has been a proliferation of loan products to serve the consumer- and almost all are available in Texas. What really is important to the consumer is to work with a Mortgage Company who asks you the right questions and then tailors the loan program for your particular financial needs. Some of the questions that should be asked by a mortgage professional regardless of whether it is a purchase or refinance are:

*How long do you plan on staying in this home?
*What other financial objectives are important to you?
*Do you have any other consumer debt?
*What are your retirement plans and how are you preparing for that?
*What are your plans in terms of family expansion or contraction in your home? (increasing family size or contracting family size due to children going off on their own)
*What is the most important thing to you- a lower payment or lower closing costs?

You see, the key is to have a mortgage professional tailor your loan to your particular financial objectives to insure that the loan is the best fit for your overall financial needs. There can be significant savings and specific benefits to any home owner or buyer to insure that their own specific financial needs are taken care of. Unfortunately, there are not that many mortgage professionals who understand and embrace this fact. For instance, there can be closing costs savings by raising the rate on a loan and the lender helping with paying some closing costs.

Likewise, there can be savings for new buyers to have advice prior to buying to structure a loan where the seller pays the closing costs- or a significant portion of the costs. Another strategy might be to not take a 30 year fixed rate loan if you do not plan on being there more than 3,5, or 7 years. Lots of options- and you should be able to trust your mortgage professional to advise you on these.

Bottom line is this- each and every mortgage loan should be tailored to the individual- and not a “cookie cutter” approach. There is a lot more to it than asking “what is your interest rate”. Make sure that you go with a professional who can explain all your options to you and understands that it is important to tailor a loan to your particular financial needs.

And remember- a home loan is an important part of your overall financial plan- and not just a home loan. You should definitely do an annual “Mortgage Fitness Check Up” tm to see if your mortgage loan is working the best for you.

Chad Bates is the Founder and President and CEO of Legacy Financial, Inc.

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What Options Do First Time Buyers Have In The Current ‘Credit Crunch’ Market?

By admin on July 19, 2011

The average cost of a house in the UK is now 130,000 this can be a pretty daunting figure for first-time buyers. But there are still options for first time buyers in the current market.

The first option may or may not be suitable for you, but it’s something worth considering. In the North of England, the average house is price considerably lower than in the south, especially compared to the southeast. The gap is nowhere near as great as it used to be, but 5% deposit on 90,000 may be an easier option, with lower monthly mortgage payments.

Under new tax rules, there is a tax exemption scheme known as ‘Rent-a-Room’, which will allow you to earn 4,600 each year by renting out one room in your home. This additional income is often taken into account when lenders are considering giving you a mortgage. They may allow you up to four times that income, which would add nearly 20,000 to the size of the mortgage you could obtain.

Another common practice is to buy a property jointly with a friend, or maybe your brother or sister. This requires a legal agreement properly drawn up which takes into account how much cash each person is investing in the property. This is in terms of amounts of cash deposit, and also if the mortgage payments are equally split or not. This is essential to avoid arguments, should you have a disagreement or when you sell the property.

If you’re fortunate and your family have a little money set aside. You may be able to ask them to contribute towards the deposit amount. Another way they could assist you is by acting as guarantor for your loan. But this would mean that if you cannot make the payments they would become obliged to make them for you.

One of the better options for first time buyers in the current market could be to purchase a brand new property. The advantage of a new property is that it comes with all new fixtures and fittings. And will be in good condition, requiring little maintenance. Many builders will now give very generous deals for first-time buyers.

Properties previously owned by the local council are usually of very solid construction with good size rooms. They potentially offer excellent value for money in comparison to houses that have always been private.

Shared ownership schemes are now becoming popular, and are run by housing associations all over the country. They are set up to help people on lower incomes who want to become property owners. Under this type of scheme, you only buy a share in the house of for example, 50%. You then only need a mortgage for 50% of the value of the property.

You will also have to pay rent on the other half of the house, but this is usually set at a much reduced rate. Over time you can buy more shares in your house up to the full 100%. When the house is sold you are entitled to your share, for example 50%, including half of the profit.

Auctions can provide interesting options for first time buyers in the current market. Properties that are sold via auction very often sell for far less than if the same house was sold by the local estate agent. It will be possible for you to view properties before they are auctioned. It is necessary to arrange a mortgage before bidding, and you will be required to put down a deposit if you are the successful bidder of around 10%.

The usual amount of the deposit required by banks and building societies is a minimum of 5%. They require this not so much because they want you to have the money to put down. It is more a case of you proving that you can put by a regular amount of money every month for a couple of years. That says to them that you are both disciplined and serious about your mortgage commitment.

Not all options for first time buyers in the current market require a deposit, someone lenders will now offer 100% mortgages to first-time buyers. Interest rates tend to be, slightly higher than if you had put down a deposit.

There are even a handful of lenders that may allow the first-time buyer slightly more than 100% of the value at the house. This is to cover such things as legal fees. On the surface this can be a good deal, the only drawback is that some companies will impose what are known as, indemnity premiums, which can be quite high.

As you can see from everything above, there are still options for first time buyers in the current market. And a capable broker should be in a position to assist you to find a suitable mortgage, depending upon your situation.

Joe Kenny writes for Glitec.org, offering loans in the UK, visit them today for mortgages or for US residents, Rebuild for mortgages

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Finding The Right Mortgage Loan

By admin on July 17, 2011

There are several types of mortgage (home-buying) loans offered by lending institutions today and it can be a bit daunting, especially if you’ve never purchased a house before. Other than choosing your property, the type of loan that you get is the most important decision involved in buying a home. A mortgage loan is merely the remaining balance of the property, minus the down payment, that you will borrow and repay.

Depending on your circumstances and the economic climate, your choices are between a fixed-rate loan and an adjustable rate mortgage. The latter are frequently referred to as variable rate, or the more commonly known term ARM.

A fixed rate mortgage is one that charges a certain amount of interest, say 6%, and no matter how high or low the national interest rates throughout the period of your loan, your interest rate never changes.

Of course, the lender will add a few points onto your interest charge when issuing the loan to adjust for their own losses should the interest rate fall during the life of the mortgage. Your major advantage is knowing exactly how much interest is being added to your monthly payment; your payment will remain the same for the life of the mortgage no matter how interest rates fluctuate.

An ARM mortgage, on the other hand is not consistent . An adjustable rate mortgage begins with a very low interest rate for the first few years then begins adjusting the interest depending on the average interest rates of the day. Your house payment will rise and fall monthly, with no floor or ceiling and no way to predict which direction it will go.

After the initial ‘reward’ period of below-average interest, your budget is at the mercy of interest rates. The average interest rate paid by a homeowner with an ARM is generally lower over the long term than if they had gotten a fixed rate. The fluctuation of payments, however, is a strong incentive to have a reserve of funds in the event the interest rate substantially rises. In the late 70′s and early 80′s, mortgage rates were as high as 14-16%!

A third type of mortgage loan is a Reset Loan, sometimes referred to as a balloon loan. Like a fixed rate mortgage, a balloon loan has an initial fixed rate of interest (generally the first 3, 5 or 7 years).

The rate on a balloon loan, unlike the fixed rate loan, are about as low as those of an ARM. The drawback of a Reset Loan is the term of the loan; after the initial period of low interest you must repay the entire balance of the loan. There are obvious drawbacks to this type of mortgage loan and homeowners typically refinance their balloon loans when they approach the time of repayment.

As you can see, you have many options when it comes to financing your property. Research, good financial advisors and an honest self-appraisal of your financial health are essential to choosing the right type of mortgage for your new home.

Joe Kenny writes for Glitec.org, offering best loans in the UK, visit them today for mortgages or for US residents, Rebuild for mortgage loans

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Important Points When Refinancing Your Mortgage

By admin on July 15, 2011

There are times when it’s a good move to refinance your mortgage. Simply put, refinancing means you borrow the money to pay off your current mortgage. This is generally done in order to lower mortgage payments and/or take advantage of lower interest rates.

If you have an adjustable rate mortgage (ARM) it will save you a considerable sum to refinance during periods of rising interest rates. You can choose to refinance to a fixed rate mortgage, which guarantees that the rate you finance at stays the same no matter how high interest rates rise.

If you already have a fixed rate mortgage but interest rates have fallen below what you’re presently paying, it might be a good idea to look into refinancing. However, if you’re planning to sell your home within the next couple of years it would not pay to refinance.

There are many factors that determine the cost of refinancing. One of these is points, which are prepaid fees. Each point is one percent of the amount that you are borrowing and these points are subtracted from the mortgage proceeds that you receive.

Most lenders will charge a point as a fee for the loan. They may also charge points if your loan’s interest is less than the current market rate. This is how the lender makes a bit more money and you get lower interest. If you plan to stay in your home for a long time and can afford to pay more points in the beginning, this may actually save you money over the long term and allow you to get a better interest rate.

There are other costs involved in the refinancing process. Private mortgage insurance (PMI) premiums will be added into your payment to insure that the lender is recompensed should you default on the loan. PMI is tacked on when the loan amount is more than eighty percent of the property’s value.

Other refinancing fees include having your home appraised, a title search, county recording fees and various processing fees. All these costs must be taken into account when you are decided whether to refinance your home. You should also consider any tax savings you may lose if you refinance. By paying less interest on your mortgage you will have less of a deduction on your yearly tax return.

So will it pay you to refinance? You can determine this by dividing the total of the points and all fees and closing costs involved in refinancing by the monthly savings that the new loan affords you. The final monthly savings is your reduction in interest less any tax advantage losses and the PMI premiums your new loan may involve. If the final figure actually does save you money, it may be a good idea to refinance.

There are lenders who offer to roll the points and closing costs into your new loan. While this may seem like a good deal at first, it would be better to pay the costs up front rather than pay interest on that amount for the life of the loan.

As always, there are unscrupulous lenders who are always on the lookout for people to rip off. Most mortgage lenders will charge document and administrative fees separately but the mortgage origination fee should cover these. Be sure to ask your lender to waive, or forego, these charges up front.

Your lender will obtain a credit report, which will cost between $6-12 and perhaps involve $20 in courier fees. However, you can be charged as much as $200 for this! Be sure that you are aware of what your lender will charge you for getting a credit report and negotiate if the amount seems exorbitant.

Some lenders advertise refinancing with no points or closing costs. If you choose to take advantage of such an offer, be sure to read every word of the contract and ask questions if something seems untoward. A no-cost refinancing often hides the costs you generally pay in other fees added to the mortgage and actually do cost you as much as paying the points and closing costs up front. You may end up paying for them for the life of your loan.

Joe Kenny writes for Glitec.org, offering mortgages or visit Rebuild.org for great mortgage loans and also refinance quotes.

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Subprime Woes: Are We Out of the Woods Yet?

By admin on July 13, 2011

In the last week, many encouraging signs have been on the economic radar: The Bush administration has stated that a consensus has been reached about the impending $145 billion economic stimulus package, the Federal Reserve has cut their most important interest rate by the largest margin in a quarter century, and bond insurers are to receive government help in order to guarantee that banks will be able to avoid further damaging losses. But are these steps enough to curb a recession in the global economy, or even the US? It would appear that investors are optimistic. The 22nd and 23rd of January both saw rallies, first in emerging economy markets and later in the US, with the Dow finishing up a stunning %2.5 in a single day. Encouraging, yes. Guaranteed to succeed. hardly. Let’s go over the effectiveness of each of these strategies individually, and then assess them together.

First, the Bush tax break: $300 per household, allowing up to $1,200 if you have four children. Due to Democratic pressuring, the rebates even go to poor people who can’t pay taxes (re: sub-prime mortgage holders). And because Republicans need something for their constituency as well, the rebates are good for couples with income up to $150,000 a year (so that their spending will trickle down into the greater economy, thus providing enormous benefit to all related industries). This represents a meager sum when compared to the average mortgage payment, which on sub-prime loans tends to roughly double once the adjustable rate kicks in. Moreover, the deficit is sure to be off the charts next year as a result of what amounts to pulling money out of thin air.

Now for the Federal Reserve cut. While it took most everyone by surprise, it didn’t keep the Dow from ending down %1 the day it was announced (Jan. 22nd). While the stock market made substantial gains over the next couple of days, volatility is the name of the game these days, and cutting the interest rate cut so suddenly on the heels of MLK Day’s depressing Asian market performance looked to many like a panic move. The Fed have the unenviable task of attempting to appear composed when they may not always be, and minimizing the impression that they aren’t responsive to falling consumer confidence. As no other central bank saw fit to act in concert with the Fed, (save Canada, whose meeting was scheduled and whose cut was a mere quarter-point) many analysts speculate that their motives are driven by short-term need for stability in financial markets, and less by the still-ominous sub-prime threat.

Finally, the bond insurance bailout. If it weren’t for this action, few would doubt that the US is headed for imminent recession of a particularly painful variety. But if the mechanics of the financial system, much of which depends on companies being able to confidently lend money (insured with solid capital) to one another, is allowed to grind to a halt? The sub-prime crisis would pale in comparison to the amount of profits that would instantly be lost, which some speculate would be in the hundreds of billions. This is clearly unacceptable, but an inherent danger still exists: Without the course correction on housing prices (and the debt which was transferred to major banks, and then to their, we may be doomed to something similar to the Japanese housing bubble of the 1990′s wherein bank managers actively colluded with policy makers to obscure their collateralized debts in a similar fashion to the structured investment vehicles of today’s credit crunch.

Taken together, these factors would probably lessen a recession if it were impending. But unless people are able to get more credit, exacerbating existing problems, the downturn the US is now experiencing will likely be long and harsh. The kinks have to be worked out, and the unfortunate aspect of this reality is that those who have the least must pay the most.

Escapeso is an Austin realty company. Their site is filled with information about Austin real estate along with a free search of the Austin MLS.

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Northern Rock Is Nationalised – What Does This Mean ?

By admin on July 11, 2011

Northern Rock plc was nationalised by the UK government and the shares suspended on 18 February 2008.

There are several groups of interested parties in Northern Rock. They are the shareholders, depositors and mortgage holders.

Shareholders

Nationalisation is devastating news for shareholders. There were several options for a rescue plan, and the City considered the Virgin bid, by Sir Richard Branson, to be the front runner. Sir Richard unashamedly lobbied Gordon Brown during the visit to China in January, and many financial reporters thought a deal was in the bag.

When shares were suspended, they were trading at 90 pence. Around 420 million shares are in issue, so this values the company at GBP 378 million. The price of 90 pence is a dramatic reduction from the price in January 2007, which was GBP 12. At that time the company was valued at GBP 5 billion.

Due to the way that the Government intends to work out the compensation for shareholders, it is quite possible that they will receive very little indeed for their shares. This is because the government has directed that the valuation takes account of the fact that the company is unable to continue as a going concern, and is in administration, that is, effectively bankrupt.

These terms of reference dictate that any valuation will determine that the shares are worthless. However, on the contrary, it is clear that the company remains a going concern as it continues to accept deposits and is offering mortgages to borrowers.

Shareholders are very likely to mount a legal challenge, although they will need to await the official valuation before commencing legal action.

Depositors

Savers with Northern Rock enjoy the best security of any UK Bank or Building Society. Savers with other institutions are only given a guarantee for the first GBP 35,000 of any holding, yet Northern Rock savers can invest unlimited funds and have the assurance of UK government support.

At the same time, the rates of interest enjoyed by depositors are among the highest available. There is a Tracker Online account which pays 6.49% plus a 1.24% bonus. This is just one of the attractive products being offered by Northern Rock.

The problem is that other financial institutions in the UK have already started complaining to the government about unfair competition. The combination of high interest rates for savers, backed by a government guarantee, is an unbeatable package which no other bank or building society can match.

The Governor of the Bank of England has met with senior bankers on several occasions in order to assuage fears and complaints about unfair competition.

Mortgage Holders

As with savers, it is business as usual. However, in order to reduce taxpayers’ funding of Northern Rock, the book value of mortgages will have to shrink dramatically. It is estimated that the UK government have advanced some GBP 35 billion to Northern Rock since it encountered funding difficulties.

The total value of mortgages outstanding is some GBP 115 billion. This means that the mortgage book needs to be reduced by around 30%.

The clear implication is that existing borrowers will face sharp increases in the costs of borrowing. These increased costs will take effect as soon as possible, and there will be no extension on ‘sweetners’ enjoyed by new mortgage customers. Mortgage holders will be charged interest rates of up to 7.9% in the near future.

Northern Rock have already suggested that mortgage holders seek alternative mortgage products and have indicated that independent financial advice may be appropriate.

This policy is bound to cause distress to mortgage holders. Northern Rock had a scheme whereby some 125% of the value of a property could be used for the purpose of a mortgage advance. In other words, the value of the mortgage greatly exceeded that of the property. New mortgage holders would be in a negative equity situation.

Many Northern Rock mortgage holders will have great difficulty finding alternative lenders. This is due to the current market conditions in which lenders are reigning in on attractive mortgage offers, and are expecting customers to increase their own level of deposit.

Some customers who currently enjoy 125% mortgages from Northern Rock may be horrified to learn that other mortgage lenders may only offer around 90% of a property valuation.

In addition, property valuations are moving downwards in line with the depressed state of the UK housing market. This means that many Northern Rock customers will be penalised by increased lending costs from the company and will also be unable to find an alternative mortgage lender.

We will soon face the prospect of Northern Rock mortgage holders defaulting on their repayments and risking re-possession. What will make this different from foreclosures in the US subprime mortgage market is that the mortgage lender is the UK government, and moreover, a Labour government committed to helping families on low incomes and those experiencing financial hardship.

The prospect of repossessions must be a nightmare for the Labour government. Not only would it antagonise traditional Labour Party supporters, but it would remove any vestige of economic competence from Gordon Brown.

Mr Brown has consistently sought to take credit for the economic prosperity enjoyed by the UK during the Blair years. He has been put to the test by Northern Rock. By any yardstick, he has failed. Government incompetence has also damaged the international reputation of the City of London.

Further bad news is expected.

Leslie Hardy is a noted writer on North Cyprus Investments
and the UK Chairman of Wellington Estates Ltd. Read more aboutNorthern Rock

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Liquidity: Why So Important in the Real Estate Market?

By admin on July 9, 2011

In recent days, the Federal Reserve, the European Central Bank, the Bank of Canada, the Bank of England, and the Swiss National Bank have teamed up to auction $110 billion off to world money markets in order to ease the recent liquidity crisis. But what is liquidity? Why should banks auction off money to deal with it? And how does inflation play into this phenomenon?

Well, for starters, liquidity refers to the amount of money available in a given market that can be loaned from one entity to another. If an economy is looked at as a machine, with thousands of interconnected parts, then liquidity functions like oil, keeping all the moving components lubricated. If there is not enough liquidity in the market, loans become more expensive and time-consuming, and economic growth is inherently restricted because banks are less willing to lend to each other, in case they are unable to cover their deposits.

The Northern Rock bank runs in England are a perfect example of what happens when a bank cannot make good on their deposits. In today’s globalized economy, banks depend on lighting-fast transactions of large sums through all parts of the world. If they are wary of lending to each other, as recent events have shown, currency supplies start drying up.

With this in mind, the sub-prime crisis of recent months seems poised to further restrict growth, especially in the US. The central bank’s decision to add money into the economy is designed to keep cash-flow consistent in markets, which will also hopefully help boost investor confidence. Unfortunately, the sub-prime debt still exists, and banks are unlikely to lower the inter-bank borrowing rates much until all the debt is declared on balance sheets. And with 2 million more defaults likely to occur within the next year, the crisis is far from over.

This injection of cash implies that central banks are trying to stem a problem they recognize to be quite severe, as they have never taken such concerted, coordinated action before.

But their course will certainly impact the other primary concern, that which central banks must balance liquidity with: inflation. This refers to price increases, which make currencies less valuable. If it takes $10 tomorrow to buy a Big Mac, then the US dollar has lost about 40 all at once, likely the outcome would be different. Only time will tell whether the huge cash injection will be enough to help banks lower their rates back to more growth-friendly levels.

Working as a realtor in Austin Texas Ki runs a site about Austin Texas real estate which provides users a map based Austin MLS search. Also if you are looking for in depth commentary on real estate market Ki has a blog covering Austin real estate.

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