This financial product is designed specifically for the older householder with small amounts of outstanding secured home debt. There are no other stipulations to be met before getting their hands on all that value tied up their ‘bricks and mortar’. So there are no medicals, no credit checks and no income verification. The lifetime mortgage provides a life-enhancing cash flow regardless of the homeowners’ current cash circumstances.  It’s not really about the kids’ inheritance but rather a question of peace of mind at time of life when it is deserved. The reverse mortgagees can go ahead and make those improvements to their home, their standard of living, their healthcare or simply have a ‘just in case’ lump sum available for emergencies.As long as the ‘reversers’ continue to live, in the main, in their property it means the end of repayments.

This aspect of reverse mortgages is what makes them unique among the secured loan products. The ‘skiers’ continue to hold the title deeds of the property and not the bank or building society. If the householder survives beyond the mortgage term the lender can neither take further payments nor take possession. What is more the householder is limited to borrowing up to the value of the property. The obligation to repay the loan amount is held in abeyance until the house is sold on, the homeowner passes away or they take up a different primary residence.The cash sum a homeowner can get from the reverse mortgage varies with individual circumstances but as general rule of thumb it rises in line with both age of the borrower and property value.Local taxes and all utilities remain the responsibility of the reverse mortgagee. Bundled in with the loan amount that is repaid at the end of the term are all the costs of arranging this mortgage. There is always an arrangement fee, a one off opening fee, a termination fee (for the loan, not the homeowner), the ubiquitous insurance and finally a service charge, which is normally on a per month basis.

The interest rates on reverse mortgages are variable in line with the base rate. As and when the homeowner sells the property in question, or indeed dies, then they, or the trustees of their estate, repay the outstanding promised amounts. Any remaining equity becomes part of the estate for the heirs or remains in the hands of the borrower.There is wide range of choice of method by which the householder receives the money from this inverted mortgage deal. It is up to the householder to pick the method best suited to their needs. So for example if the mortgagee wants a monthly lump sum payment then they can choose a ‘tenure’ scheme, which will do just that for as long as the property is their primary residence.Alternatively the mortgagee can choose a ‘term’ scheme where they take an agreed number of payments of a set amount each month.

More flexible is a ‘line of credit’ type contract. With this the borrower chooses how much to receive and when to receive it up until the agreed loan amount is used up.Other choices are really variations on these three themes. Thus there is the ‘modified tenure’ where a monthly amount accrues to the borrower as long as they are in residence, along with a line of credit. Or a ‘modified term’ that also mixes a line of credit with the set number of monthly amounts.Reverse mortgages are the perfect solution to financial worries of the older homeowner. They give freedom to people to do as they wish at a point in their lives where they have the time to enjoy life to the fullest.

Mr. and Mrs. Owin finally realized the dream of owning their own home in July 2005. They took on a home loan secured against their house in the amount of half a million dollars. It was hard, but they could make the monthly debits on this home loan and they did just that for two whole years. The monthly amount was twelve hundred and fifty dollars because the interest rate for the first two years was a very low 3%. Now the Owins are good honest people but they were miss- sold this mortgage. They didn’t pay much attention to the small print in the contract where it said the interest rate would be altered upwards in July 2007 by nearly double. Their new monthly payments would become nearly two thousand four hundred dollars. Which is a good six hundred dollars beyond the Owins’ budget.

They only half saw it coming. It was too late to sell up when the full extent of the money owing struck them. They would like to sell now but they can’t find a buyer and the property is valued at less than four fifths of their half million dollar debt. So now they are between the proverbial rock and a hard place. They can’t sell but neither can they afford the arrears. Repossession is bearing down on them like an express train.The only way out for Mr. and Mrs. Owin is a quick sale of their dream home. This is where someone pays bottom dollar for a home in advance of it being repossessed by the lending company.

So the Owins, or we should say the bank gets three hundred and seventy five thousand dollars for the house and then writes off the remaining $120,000. Unfortunately the Owins’ difficulty does not end there because the federal government sees this write off as unearned income and wants their share of it. So the Owins have no home, no money, a poor credit rating and an internal revenue bill.

This is an all too familiar picture in America in 2008. With many more people in the rate hike pipeline, facing the upward ratcheting of their home loan payments, the George W. Bush administration rushed through a package of helpful legislation. The ‘Mortgage Relief Act’came in to force just in time for Christmas last year. The aim of this act was to stem the tide of foreclosures, prop up the US economy and help people like the Owins to escape from between the rock and the hard place. It is rightly called a national homeowner crisis because people like the Owins could never earn enough to pay back the amount they were bamboozled into taking on.

This new law now changes the Federal taxation requirements so that when people have been let off the home loan, anything up to $2,000,000, they are no longer to be taxed on it. So it is much needed good news for people like the Owins.This new act is also good for the economy as a whole because it benefits two key sectors in it. These are the banks and savings & loans and the first-time homebuyers. The effect of the Act is to multiply the number of pre repossession sales and to motivate banks to market the real estate on their books aggressively.

This means millions of houses and condominiums are coming down in price. The banks make profits on lending so they are being very accommodating to anybody who comes to them with a good credit history and a desire to borrow money. Thus, this is boosting the first time buyers and thereby the economy.First time homebuyers are the engine of the whole housing market. They now are faced with an over-supply of affordable properties and very approachable lending institutions. They can negotiate inexpensive home loans for places that just last year were beyond their budgets. There are also a number of federal and local ‘easy finance programs’ available to qualifying first-timers. It is believed that with all these initiatives together the American economy will soon bounce back from its’ self-inflicted sub-prime debacle. 

Refinancing is simply the substituting of one loan deal for another where the collateral asset is the same. It is most commonly associated with home loans but can be done by individuals and businesses with any line of credit secured against an asset, such as a car, a factory, or corporate shares. A typical example would be a homeowner moving their business to a different bank by paying up their outstanding mortgage and taking out a new one with the new bank.Homeowners can tell if they are ripe for refinancing if they can answer yes to three questions:

1. Are market interests rates one point or more, below what you are currently contracted to pay?
2. Have you been making on-time payments on your current home loan for at least two years?
3. Are you sure that you will reside in the mortgaged property for at least two more years?

If your replies are yes, yes and yes then you need to get on to a specialist remortgage broker today. What will refinance do for you? It will reduce your monthly home loan payouts significantly and in two ways. Firstly it will mean you pay a reduced interest level on your loan and secondly it will spread your repayments out over a longer period of time. If you so choose you could continue paying at your present amount and put the extra toward bringing down your principle loan amount and thereby get a further reduction.These are unstable times and substituting a stable interest rate home loan for flexible one can give you freedom from worry over spiraling repayments.

Swapping unsecured debt such as credit card balances, for secured home loans can also give you lower repayments and even save you tax. This is because home loans are tax deductible where normal debt is not.  Property values have been inflating for years at a time so you probably have a much greater proportion of equity in your home than when you first bought it. Refinancing can free up some of that cash for your use.Sounds like a good deal doesn’t it?

So before dashing off to your mortgage broker do some groundwork to ensure success. Get your credit rating or FICO score up to a good level if it isn’t there already. You can do this by always paying bills on time and reducing the number of credit cards that you hold. Find a zero interest one and transfer balances to use it to the full. Pay up small outstanding amounts and cancel those cards. Forward planning and effective execution of those plans are the prerequisites to rewarding refinance.

When shopping around the mortgage brokers for a change of lender and home loan contract please do not be mesmerized by the price. By price we mean of course the rate of interest. These are nearly rock bottom at this time and therefore very tempting but there are three other important factors that you must take into account before committing yourself to this major money product.

Know, in detail, your aims with regard to money over the next year, two years and through the next life stage that you are coming to.Could a adjustable rate  mortgage be for you? Because the bank rates are so low, most refinance shoppers want to nail down their repayment with a set interest rate. But remember that while these deals are ‘fixed’ they are not permanent and there will come a time when they will be reviewed and changed, probably upwards.

Ask yourself whether you are likely to sell your property within the timeframe of this review. If your answer is yes or probably then you could reduce your monthly repayments with around .25% less on the interest rate of a variable loan.   If you can answer ‘no I’m staying put for the foreseeable future’ then a second refinance option is something for you to consider. ‘Pay Points’ buy not only a lower rate but also are a tax deduction. The price of pay points is between 1 and 2 percent of your full home loan.The days of one mortgage in a lifetime are long gone.

The wise homeowner is prepared to remortgage when the conditions are ripe for it. With this in mind the third factor to weigh up when refinancing is the penalty payments for early termination. Think about a mortgage that does not have any termination charges. They are available but will attract slightly higher interest rates. Looking past this drawback you will keep more of your capital gain when you come to sell your property or remortgage the next time. Refinancing your major asset is not as simple as just comparing interest rates. Know your own circumstance and future intentions and select the best deal to meet your individual needs.

If I were a carpenter and you were a lawyer, we would have a good life with steady money coming in and the phone ringing all the time for us to do stuff for all our clients. We would have a house or an apartment, three children at school, two cars, and a dog. We would pay out every month, and thank the lord for automatic transfers, for our mortgage, our car, tuition fees, social security, pension, health insurance and the list goes on and on and on. It’s absolutely vital that we keep on doing what we do best.

We do not have time to learn a whole new language and the ins and outs of something that we will do perhaps once or twice every ten years or so. Swapping a mortgage contract and or the lender is just such a thing; important that it is done, in order to save money for all the other commitments, but not urgent; difficult to understand, complex and easy to get wrong. So who are we to call? A specialist that’s who.

A mortgage refinance expert in the Rolodex under ‘M’ for must manage mortgage money!   A good broker can take the whole burden of finding and getting a new secure home loan. A good broker will save you multiples of the fees they charge but there are ways to use a broker without paying them. A good broker will search the whole financial product scene to find the most suitable mortgage for their client. A good broker specializes in doing nothing else. A good broker has innumerable contacts within the esoteric world of mortgages.  We all put our health in the hands of specialist medics and it’s scary. It can be scary to put our financial health and all our personal data in the hands of the mortgage broker.  

All specialists in the mortgage/finance sector are constrained by state laws that are there to protect the lay customer. The Federal government leaves it to the states to monitor individual mortgage specialists so before using the service check their bona fides just as you would with your doctor. There may well be a license requirement and this will be the first thing a broker will show you.Use your valuable time to find a reputable specialist mortgage broker then sit back and let them do their work in three stages. They will begin by analyzing your money status and needs. They will go on to searching the mortgage products available and linking your need to the most appropriate solution. They will then manage the implementation of your refinancing deal leaving you free to go on with your life.  There will be no need for you to learn the jargon or struggle over the standard application forms.  The specialist will do it all for you.

A good broker will interpret and translate all of the complex terms and procedures involved in this largest of finance transactions.  An alternative refinance route could be to go to an institution and liaise with a loan officer who would do the same service as a mortgage broker but who would be working more for the organisation than for the client.  So you need to refinance and get on with your life.  The best way to do this is to find and use a specialist as they will do when they want a new set of bedroom cupboards.

The major benefit that any mortgage loan will give you as a homeowner is the advantage of tax deductions. Be it a primary mortgage, a second mortgage or a mortgage that you have refinanced, the tax deductions are yours for the taking! As a homeowner, you get three main kinds of tax deductions with your mortgage:

i)                    Tax deductible mortgage interest payments

ii)                  Property Taxes

iii)                Points paid on mortgage refinance

These three categories are discussed in detail below.

Tax deductible Mortgage Interest

In most cases, the interest payments on any mortgage are completely tax deductible. The only exceptions occur in cases wherein homeowners want to tap into their home equity to fund other financial needs like college education etc. In these refinancing cases, there is a limit to the interest payments which will be tax deductible i.e., interest on a maximum equity debt of $100,000.

Let’s illustrate the above limitation with an example. Homeowner XYZ had an original mortgage of $125,000. He refinances his mortgage for $300,000. The additional $175,000 is used for buying new cars, vacations and other such discretionary spending. In such a case, the entire interest related to the original $125,000 of the primary mortgage will of course be tax-deductible, and so will $100,000 of the refinanced equity debt. However, there will be no tax deductions on the interest payment of the remaining $75,000 which has been refinanced.

Property Taxes

In the year property taxes are paid to the collector of property tax, they are tax deductible. Future real estate taxes cannot be immediately deducted at the time of mortgage, but are deductible in the same financial year that the property tax becomes liable for payment.

Points Paid on refinance mortgage

Usually the points paid on a mortgage –primary or refinanced, are proportionately deducted over the entire tenure of the loan. However, if the refinance is being used for funding home improvements, all the points might be fully deductible in the first year itself. Your tax advisor will be better able to guide you regarding whether you meet the requirements for such a deduction.

So, consult a qualified tax advisor and discuss the specifics of the deductions that you can avail!

Visit www.myloanexpert.com/refinance-mortgage.html to get started.

In the final analysis, what you save in terms of interest you pay as taxes when you go in for refinancing your mortgage. Thus, you might want to do a tax code cram session before deciding how to refinance. It is better to know the nitty-gritty of it before you get caught unawares when you file your next tax return.  To get a great refinance quote, visit our home page www.myloanexpert.com.

Comparison is the name of the game. Never settle for the first offer. Always compare rates from at least four lenders for refinance.  Generally, the cost of home refinancing will be lower than your original loan, but the fact remains that refinancing a mortgage loan involves closing costs. There are some fees that don’t apply to refinancing; but the closing costs can still be substantial. So, it is prudent to confirm the fees that your lender will charge this time around.

You may want to consider the roll-in financing option that some mortgage lenders offer. This gives you the freedom to roll the refinancing closing costs into the loan itself. Thus, you won’t be required to pay any up-front costs, but, remember, this will result in somewhat higher monthly payments, because your loan balance is higher. You will obviously want to know how much you can save by lowering the interest rates. After all, that is the primary reason why go in for refinance in the first place. You can use the amortization calculator to see how much you can save through better rates alone.

All you have to do is just enter the loan amount, interest rate, and the length of the loan to see how much interest and principal you’ll be paying each month.You must know that even a couple of percentage points can make a big difference and swing the percentage any which way. For example, you can save $300 a month by switching your $180,000, 30-year loan from a rate of 9 percent to 7 percent. That’s quite a lot, isn’t it? On the other hand, if you take a home loan mortgage refinancing for a lower rate, it will cut down tax deduction, which means you will have to pay higher income taxes. Now, this is something you were totally unaware of. But, it is a big factor in considering the cost of refinancing. You know your tax bracket. So, you can figure out the impact it will have on your tax return. For instance, if you’re in the 25 percent tax bracket, and a mortgage refinance will lower your monthly interest payment by $200, taxes will claim $50 of that savings.

As a result, your true savings will be $150 a month.  If the value of your home increases over time, then you will regret your decision of refinancing, because you will lose those pesky PMI payments. However, you have the freedom to end your PMI payments as long as the new loan amount is lower than 80 percent of the property value. In order to find out how much PMI is costing you, you need to check your current mortgage statement.In the ultimate analysis, refinancing is a welcome option when you’re stuck in a high-interest loan. It can considerably lower your rate even if it is less by just a couple of percentage points. You can recoup the closing costs in a matter of months. However, you must look at the numbers before you leap. That will help you save a lot and you need not worry about unanticipated surprises. 

A few years ago, there was a boom in the mortgage refinance sector due to lowered interest rates.  The significantly low rates made homeowners refinance without a second thought, Now that interest rates are going up, the decision to refinance may be tricky. However, there are still significant benefits to be reaped by refinancing your mortgage.The mortgage on your home forms a significant part of your financial picture. Refinancing the mortgage can actually help you stabilize your financial outlook by providing you with appreciable savings over the life of your loan. Here’s a look at the top four benefits that refinancing your mortgage can yield.

1. Lower your interest rate

Traditional wisdom says it is time to consider refinancing if the market rate is two percentage points lower than the rate of your mortgage. However, in today’s competitive scenario, lenders are willing to offer deals on closing costs especially to homeowners with a good credit rating. You can take advantage of this scenario and refinance even for a smaller difference in interest rates. A lowered interest rate will mean a lower monthly mortgage payment which is the most common reason people opt for refinancing.

2. Lock-in your interest rate

An ARM or an adjustable-rate mortgage can sound very attractive initially in a low interest market but over a period of time, especially with rising rates, it can be counter-productive. You may have gone in for an adjustable-rate mortgage when you bought your home. But you are wiser with time and experience. Refinancing is one way to get out of an ARM and opt for the more sensible fixed-rate mortgage.

3. Lower other interest costs

Refinancing your home mortgage can provide a way of streamlining your other, more expensive debts like unsecured credit card debts. Credit card debt is significantly more expensive than mortgage debt. By refinancing, you can take the pressure off the credit card debts that may be choking your monthly cash flow situation. By opting for this, you can lower your overall interest cost and ensure a smoother monthly cash outflow.

4. Restructure your mortgage term

Even if you have carefully planned your initial mortgage, it is likely that your situation may have changed over time. Refinancing can allow you to adjust for such changes by changing the term of your payment. Loan length is usually determined by two variables: how much monthly payment you can afford and how long you plan to own your home. If you have a generous cash flow, you may choose a smaller mortgage period e.g., 15 years and save on the total interest. On the other hand if you intend to sell the house soon, you may not want to lock up too much cash and may choose a longer term. Whatever your considerations, the changed situation may warrant a new mortgage term that suits your new cash flow and plans better.

Check out the above list to determine if refinancing can benefit you in any way. Refinancing can truly ease your financial woes and allow you more money in the pocket.

Investors in real estate make mega bucks by using the “Fix and flip” routine. Quite simply “fix and flip” refers to a three step procedure in handling real estate deals. Buy—renovate—sell for profit. In the basic “fix and flip” scenario, you buy a house, fix it up, and then sell it immediately for profit. Profit means your selling price must be higher than your buying price and the cost of renovation put together.

So, what happens to the investment if there’s a slump in the market? Some investors can lose out on the “flip” in a slowing market. However, with some smart thinking, there are always ways to make money with “fix and flip” in any kind of real estate market.

Estimate “Fixing” costs accurately

One of the key elements of your “fix and flip” profit will depend on an accurate estimation of what it will cost you to renovate the house. Renovation projects typically run over the schedules and over the budget. So keep a generous margin of safety while budgeting.

Estimate “Flip” time accurately

The other key element to assess is the condition of the real estate market. You can make money by “fix and flip” even in a slowing market as long as you can hold on to the property for a while. Remember not to set yourself very restrictive timelines for selling the house. If you can hold on long enough, you will end up with a profit.

Lease with option to buy

In this case, you’ll amend the typical “fix and flip” so you lease the property with an option to buy. Obviously, it’s important to ensure that your monthly mortgage payment is being covered by the rent accrual. At the time of selling, you don’t have to pay any brokerage fees to a real estate agent since your renter is your automatic buyer also.

Many lenders will be able to help you finance a “fix and flip” property. These offers typically finance both the buying price and the funds required for renovations. But making money on the deal is your baby. If you have accurate cost and time estimates, the returns can be well worth the effort!

Mortgage loans offer two options: a FRM (fixed-rate mortgage) or an ARM (adjustable-rate mortgage). Fixed rate mortgages provide security and predictability. On the other hand, adjustable rate mortgages can offer the potential for savings, especially if interest rates go down. How do you decide which of these options is best for you? A coin toss may not be the way to take such an important decision. Read this article to dispel the uncertainty about ARMs and FRMs so you can take an informed decision and streamline your financial outlook.

Fixed rate mortgages vs. Adjustable rate loans

Fixed rate mortgages have the same fixed interest rate for the entire duration of the loan. Whether the interest rates go up or down, you don’t have to worry because your rate will remain the same throughout the tenure of your loan and you can plan your cash flows better. On the other hand, adjustable rate mortgages are tied to a benchmark index. As the market rates fluctuate, the benchmark changes and if affects the rate you have to pay every month. There are many ways in which ARMs can vary, but the most important variables are:

·         The tenure of the initial rate

·         The frequency and range of adjustment of the interest rate

Predictability vs. savings

Adjustable rate mortgages often offer a low opening rate that can remain in place for three to seven years. On the other hand, fixed rates offer you the security of knowing that your monthly outflow will never change, whatever happens to the market interest rates. In order to decide which option works best for you, consider the following factors:·         Your risk-taking appetite·         Your planned duration for owning your homeHere’s how it works. If you are buying a home for the long haul, fixed rate may be better for you. For someone planning to sell their home in lets day five years, the adjustable rate option can offer a low opening rate and they can sell before the rate is revised. It is possible to calculate what your ARM and FRM refinance rates and payments will be by using an online calculator.However, the factor that will ultimately outweigh any other considerations if your appetite for risk. Even if you are fairly certain that you intend to sell or refinance in a few years, there is a risk involved in the ARM option. You may prefer to pay a little more in the FRM option for the predictability, security and peace of mind it affords. Bottom-line, you don’t need to flip a coin to decide which option suits you best! While FRM and ARM offer their own set of advantages, you probably know which is the clear winning option for you!

Want to qualify for a higher loan amount to fund energy improvements in order to bring down overall living expenses? Talk to the federal government. Its time to consider FHA’s Energy Efficient Mortgage (EEM) Program if you are remodeling your home.Rising energy prices are pinching everybody and taking the cost of living up and away. Reduce your energy and utility bills by remodeling your house, like replacing leaky pipes and making windows more energy efficient. Making such an investment is easier than you think with the assistance of the Federal Government.

What is EEM or Energy Efficient Mortgage?

Fund energy efficient improvements in all aspect of your home with Energy Efficient Mortgage also known as EEM in short. There are multiple ways of doing this with varying qualification terms. If you choose federal backing, the improvements can be insured by the Federal Housing Authority (FHA). Alternately, approach the Veterans Administration (VA).  These improvements could be made using the EPA (Environmental Protection Agency) program called ENERGY STAR or other standard channels.

Qualifying for EEM

Installing energy efficient windows, making the heating and air conditioning system efficient, upgrading water heating system to more efficient ones, upgrading the ducting systems to prevent energy leaks are few of the standard improvements that lead to substantial cost saving in the long run.The objective of all EEM programs is to save utility costs in the long run. An important criteria of funding improvements is that the overall savings should be higher the amount invested upfront. To help you in determining the viability, the HERS or the Home Energy Rating System carries out a cost benefit analyses by measuring the current energy consumption and the possible savings. If the numbers are favorable, the house qualifies for an EEM.

Advantages of EEM

The key benefit of EEM stems out of the fact that an energy efficient house decreases costs of living and provide for better savings, hence an increased borrowing capacity. In the VA and FHA run programs, you could negotiate betters terms for the mortgage. Energy Efficient systems automatically increase the value of your property besides providing you with a better quality of life.

What Next?

The first step in acquiring an EEM would be to order an HERS survey and report thus ensuring the kind of refinancing scheme that you would qualify for. Shopping for EEM Refinancing scheme is very similar to conventional housing finance. It would do you good to with a lender who is experienced in such refinancing schemes. Call for a few proposals and choose the one that suits your best.Converting your home to a more energy efficient place could be quite an eye opener even prompting you to re-look at your trading in your car for a more efficient hybrid model.

Using Option ARM to finance your home may have offered the benefit of very low monthly payments in the beginning but will certainly increase the burden of payments as time goes by landing the homeowner in a financial crisis. A way out of the risks of Option ARMs is to use Mortgage Refinance.The terms of Option ARMS allow the homeowner to choose from various repayment options depending on the homeowner’s liquidity, each month. In such a scheme, the homeowner payments could range from paying a major portion of the amount upfront or smaller and smaller payments, if the monthly budget is tight. Generally, one of the following broad options are chosen by Option ARMS consumers:

• The largest monthly payment option: Short loan mortage tenure (a 15 year period).

•   Smaller payment option: Long term tenure (a 30 year period)

•   Interest payment only, without touching principal repayment

•   Smallest payment option: Enabling part payment of the interest without principal payment

Option ARMs: Advantages and Disadvantages

Option ARMS provides such huge flexibility primarily addressing people with irregular income such as sales representatives awaiting there commissions, part time workers, students about to graduate and expecting lucrative jobs etc. Allan Greenspan, the former Federal Reserve chairman and such other experts have commented that quite a few consumers use such facilities to buy homes that they could not normally afford and end up in huge financial mess.Financial woes start when negative amortization sets in. This means your principal debt starts increasing. Option ARMs do provide great payment flexibility but on the down side, the floating interest rates on the loan could change. Given that the interest rates have been increasing in the past two years, the monthly loan payout could, in some cases, double in a matter of weeks or months. This dramatic increase in outflow spells financial crisis for the borrower.

How refinancing your Mortgage can help

The recent housing boom saw a dramatic rise in borrowers opting for Option ARMs as a way of financing their home mortgages. Such people now find the terms of financing too costly leading up to major default. If you are one of them, then the way out would be to get your loan refinanced with a conventional 30-year fixed rate mortgage. This would bring in a great amount of predictability while steadily chipping away at the principal. This financial predictability would reduce anxiety and bring in peace of mind.Currently, the rates for fixed rate mortgage are at their historical low. This is a great opportunity for refinancing Option ARMS borrowings. It might cost you a sum to refinance but these costs are rather small compared to the risk reduction and cost of losing your home, if you were to remain in the Option ARMs. So its time now to talk to your lenders about converting your Option ARMs borrowing to a less risky fixed rate mortgage and gain a few hours of peaceful sleep.

As per the U.S. Department of Housing and Urban Development (HUD), the price and terms of a mortgage are negotiable and you can save you thousands of dollars if you shop around, compare and negotiate, before you sign up for a mortgage. Getting offers from several different home mortgage lenders, comparing them and negotiating a better deal can make a major difference in the total amount you will have to pay. <

There are several types of home loan lending organizations – mortgage companies, commercial banks, credit unions and thrift institutions like savings banks and savings and loan associations. Home loan transactions are also arranged by mortgage brokers, who will help you to find a home mortgage lender. Mortgage brokers may contact several home mortgage lenders, but they are not obliged to help borrowers to get the best deal, unless they sign agreements to act as agents. Contact more than one mortgage broker to get the best deal, just as you need to do with any other type of home loan lender. Some financial institutions operate both as lenders and brokers, so you need to find out if a broker is involved in the transaction. Brokers are usually paid a fee for their services, so compare the fees being paid to different brokers and be prepared to negotiate with them, as well as with the home mortgage lenders.

Obtain information for the same type of loan, amount and term, so you can compare the offers of different home mortgage lenders.

Ask home mortgage lenders for lists of current mortgage interest rates and ask if the rates being offered are the lowest for that week or day. Ask if the interest rates are fixed or variable. With a variable rate of interest, the monthly payment will usually go up, if the rate rises. Ask if the monthly payment will go down, if the rate is reduced. The annual percentage rate (APR) will help you to compare the offers of different home mortgage lenders. Apart from the interest rate, the APR also takes into account the fees of the broker and some other credit charges that you may be required to pay, expressed as a yearly rate.

Points are fees that are paid to the lender or to the broker and they tend to be linked to the rate of interest. Usually a lower rate of interest is offered, if you pay more points. You can find out about the rates and points being offered, in the newspapers. Ask home mortgage lenders to quote the points as dollar figures, so you will know how much you are paying. Many different types of fees are involved in home loan lending and you need to ask home mortgage lenders to tell you about what each fee includes.

Always bear in mind that home mortgage lenders may offer different loan prices, for the same terms to different borrowers, on any given day. This may happen even if the borrowers have the same loan qualifications. So, always try to negotiate a better deal. A small difference in the rates can save you thousands of dollars over the term of the home loan. http://www.hud.gov/buying/#loan

Mortgage rates will differ from one mortgage lender to the next, so it is important to shop around, compare the mortgage rates offered by different lenders and negotiate, to get a better deal. As per the HUD, these steps can save you thousands of dollars in the long run.    You can ask a broker to help you to find a good deal, but you must remember that brokers are not obliged to look for the best deal for you, unless they have signed a contract to work as your agents. Ask several mortgage lenders and brokers for information about mortgage rates and all other costs associated with mortgage loans.  

You can opt for a fixed or adjustable rate of interest. If you choose an adjustable rate of interest, the monthly payment will go up if the rate increases and will drop when it falls.  Ask mortgage lenders to give you the annual percentage rate (APR) of the loan, which takes into account the rate of interest, points, broker fees and some other credit charges, expressed as an annual rate.  

It is not enough to only ask about the interest rate and the monthly payment. You must ask about points, which are fees paid to the broker or mortgage lender. Points are often linked to the rate of interest and usually, the higher the points you pay, the lower the interest rate.  Ask the broker of mortgage lender about the fees that you will have to pay, such as loan origination fees, broker fees, transaction, settlement and closing costs, etc. Bear in mind that many of these fees are negotiable. Don’t be afraid to ask mortgage lenders if they will give you a better offer than what you have already got from other lenders.   

Always ask mortgage lenders to give you information and mortgage rates for the same type of loan, loan amount, and loan term, so that it is easy to compare different offers. Ask brokers and mortgage lenders to provide the rates and associated costs in writing, so you can be sure that they are not raising one fee, while reducing another one.  Once you are sure that you have negotiated the best possible deal, you may like to get a written lock-in from the mortgage lender. The lock-in should include the rate of interest, the number of points to be paid and the period for which it is valid. You may have to pay a fee for the lock-in, which is refundable at the time of closing.  

A lock-in can protect you from any rate increases, but you may end up losing money, if there is a drop in the mortgage rates. If the rates drop, you can try to negotiate with the mortgage lender for a better deal.  Buying a home is one of the most important financial decisions you will make in your lifetime and it is worth taking time to research your options, so you can get the best deal. 

Your home serves as the security against which home equity loans are given, but remember that it may have to be sold to pay off the debt, if you are not able to keep up with the monthly payments. If you need a large amount of money for medical expenses, college tuition for your kids, debt consolidation, home repairs or other necessary requirements, you can consider home equity loans.  

You can opt for fixed rate mortgages or adjustable rate mortgages. These home loans are available either as a lump sum or as a revolving line of credit. One of the benefits of home equity loans is that the interest you pay is usually tax-deductible.  The Federal Trade Commission (FTC) advises that your home may be your single most valuable asset and those who agree to take home loans based on the equity they have in their homes, may be putting their most important asset at risk. 

Homeowners must be careful while taking home equity loans, because certain exploitative borrowers indulge in abusive practices like equity stripping, loan flipping, hiding loan terms and adding extra charges. The elderly, minorities and those with low incomes or poor credit, are most at risk and these exploitative lenders tend to target them.  Lenders who indulge in equity stripping help home owners with a low income to take home equity loans that they may not be able to afford. Home owners who are unable to keep up with the monthly payments usually end up losing their homes.  

Home owners who have fallen behind in their mortgage payments and are facing foreclosure may be approached by another lender. The lender will offer to save them from foreclosure by refinancing their mortgages and also offer lower monthly payments.  Actually the monthly payments may be lower only because the borrower will only be paying interest every month, while the principal amount remains unchanged. The entire amount borrowed will be payable at the end of the loan term, in one lump sum, called a balloon payment. Borrowers, who cannot make the balloon payment or refinance the loan, may lose their homes.  

Loan flipping involves refinancing existing mortgages to raise money. Home owners who do this to raise money may have to pay high points and fees, apart from prepayment penalties. Borrowers who refinance their home loans may have to pay a higher interest rate and accept a longer loan term. With each refinancing they may take on more debt and increase the risk of foreclosure.  Unscrupulous lenders may try to trick borrowers into signing papers for credit insurance that they don’t need, or ask them to pay additional fees and costs. Others may ask borrowers to sign over their deeds, in return for saving them from foreclosure. 

Never sign any document without reading it carefully or sign a document that has blank spaces meant to be filled in later. Never consider home equity loans, if your income is insufficient to meet the monthly payments. Don’t get lured by extra cash or lower monthly payments. Use your discretion to determine whether the loan you are considering is worth the money you will have to pay for it. Before signing up for home equity loans or signing away their deeds, home owners must consult trusted and knowledgeable family members and/or attorneys.   

If you apply for a home loan, the home equity lender will check your credit record to find out about the type of borrower you are. All home loan lenders want to know about how much money you owe and whether you make your payments on time. An equity lender will also want to find out whether you have a record of bankruptcy, repossession, judgments or delinquent accounts.  If you have a low credit score, an equity lender may offset the risk by raising the rate of interest or reducing the loan amount.

Factors like long-term job stability and a low loan-to-value ratio can compensate for bad credit issues. If you have a good credit score, home equity lenders will offer you a higher loan-to-value ratio, a better interest rate and a higher loan amount. A loan-to-value ratio expresses the amount of the first mortgage lien, as a percentage of the total appraised value of a property. Credit problems like late loan payments, caused by situations like a job layoff or illness can be explained to home loan lenders. A satisfactory explanation may convince an equity lender to give you a loan, even if you have bad credit. A home equity lender will want to know about how long you have been working for your current employer and how long you have been in the same line of work.

If you have been changing jobs frequently and have been changing you line of work, you may be considered a bad credit risk by home loan lenders. Job stability is an important consideration for granting a loan and home loan lenders prefer to deal with people who have been in the same job or line of work for at least two years.To qualify for a loan, your income-to-debt ratio must be within the acceptable limits that are prescribed for specific home equity loan programs. The total income that is taken into account by home equity lenders for the debt calculation depends on whether you earn a salary or wages or if you are self employed. Salary or wages are taken on a monthly basis and the average bonuses and overtime over the last two years are taken into account by home equity lenders. In the case of self employed people, home loan lenders take the average net income on the schedule C for the last two years into account. Other income may not be taken into account by home equity lenders, depending on the history of the income and how long it is likely to continue. If you have a part-time job, you must have had it for at least two years, for it to be included by home equity lenders.

The decision of the home equity lender about approving the loan and about the interest rate also depends on the ratio of the equity relative to the value of the home you want to buy. Some of the home equity lenders will not lend you anything in excess of 80% of the value, while other home loan lenders will go as high as 125% of the value of the home. The U.S Department of Housing and Urban Development (HUD) advises prospective borrowers to obtain information about mortgages in writing from several home equity lenders. Ask them to submit offers for the same type of loan, loan amount and loan term, so you can compare the offers with ease

You can opt for mortgages with fixed interest rates or variable interest rates. Borrowers who opt for mortgages with fixed interest rates have to pay a fixed rate of interest for the entire term of the mortgage. Those who choose mortgages with variable interest rates have to pay mortgage rates that vary, as the interest rates in the market go up and down.  Those who opt for mortgages with variable interest rates are usually offered lower interest rates initially, than those who opt for mortgages with fixed interest rates. On the other hand, if you opt for a home loan with variable interest rates, it is not easy to predict if the mortgage rates will go up or down in the future. 

With fixed-rate mortgages, you can be certain that the monthly payment will not change over the term of the loan. It is preferable to opt for a fixed rate when the interest rates are low, so you can lock the lower rates for the entire term of your loan. Some borrowers prefer to opt for a 30-year term to have a lower monthly payment, while others prefer a 15-year payment because it allows them to pay off the mortgage much earlier. A shorter term reduces the total amount of interest payable, but you need to be sure that you can afford the higher monthly payments. 

Once you have decided about the type of mortgage that will suit you, start researching the lowest mortgage rates available, in the local newspaper and on the Internet. Mortgage rates can fluctuate, so you will have to keep in touch with the latest figures. The websites of lenders will provide their current mortgage rates and their different plans. You can also find a comparison of the interest rates of different mortgage lenders on some websites  

It is preferable to approach a bank where you already have an account, because you will be offered better terms and mortgage rates. Tell the loan officer of the bank about your plans and ask for advice about a suitable mortgage solution. Negotiate with lenders and ask them if they will offer lower mortgage rates or give a better offer than other lenders.  If you are not comfortable with approaching different lenders to ask about mortgage terms and interest rates, you can consider signing a contract with a mortgage broker to act as your agent.  

Compare the fees of different brokers before you select one. It may seem like an additional expense, but mortgage brokers can tell you about the mortgage plans offered by different lenders and suggest a suitable solution for you.  The interest rates offered are an important consideration, but don’t forget to ask lenders about other charges like points and fees that you may be required to pay. Ask mortgage lenders to give you their offers in writing and to submit quotes for the same type of loan, loan amount and loan term, so you can compare them.  According to the U.S. Department of Housing and Urban Development (HUD), if you take time to shop, compare and negotiate, to get the best mortgage deal, you may be able to save thousands of dollars over the term of the loan.  

Home owners use mortgage refinancing to get a new home loan to repay an existing home loan. They usually decide on mortgage refinancing because they are able to get a lower rate of interest or a special deal, which is not available on the existing home loan.  Before you apply for mortgage refinancing, you must bear in mind that it may not always be in your best interests. If you are already facing financial problems, mortgage refinancing may not be suitable for you. 

According to the U.S. Department of Housing and Urban Development (HUD), at times refinancing your mortgage can save you money. Refinancin