It just isn't true that the lender holds all the cards when you are discussing a mortgage. It may feel that way. However, lenders need your business now, and in the future. It is to their advantage to cater to you. The loan market is competitive. Use your strengths to negotiate with the lender for favor. For example, if you have an excellent credit score, you qualify for the lowest interest rates. It is to your advantage to assert the fact that you have impeccable credit. This is arbitration, one of the 3 tips for negotiating a better rate on your mortgage.
Another great negotiating tool is to let the banks, or a couple of lenders, battle it out for your loan. A broker is a bank representative with whom you discuss mortgage fees, interest rates, and programs. A broker positions a transaction for you, but does not directly lend money to you. They locate lenders for you. Find two mortgage brokers, and let them talk terms. You may have to pay them a fee, so make sure they are contracted with you to find the very best deal. Having the brokers discuss terms will eliminate much of your work in 3 tips for negotiating a better rate on your mortgage.
A home is a product, just like when you purchase a car, so the price and terms are open to discussion. Shopping, comparing, and arbitrating are the best tools or 3 tips for negotiating a better rate on your mortgage. Shopping means obtaining as much information as you can from all lenders, commercial banks, mortgage companies, credit unions, and mortgage brokers. Shopping also means you must inquire about all important cost information, such as rates, points, and fees. Find out if a down payment on the property is required, and if private mortgage insurance is needed.
Interest rates for mortgages may be adjustable or fixed, and may include an APR, or annual percentage rate. Points are fees paid to the lender or broker for a loan. Have points quoted to you in dollar amounts to decrease confusion. Other fees include loan origination, underwriting, transaction, settlement, and closing costs. Ask for an estimate of these fees. Once you have obtained all information, compare it. When you have decided upon the best terms for you, negotiate them to get the best possible deal. It isn't hard to get the optimal mortgage loan when you keep in mind the 3 tips for negotiating a better rate on your mortgage.
Tuesday, February 8, 2011
Will The Mortgage Interest Rates Be Going Up Or Coming Down?
In the aftermath of the recent economic crisis, we're likely to see significant change in all areas of business and finance. Considering that the US housing market was the chief catalyst for the credit crunch, it has understandably been the focus of much attention and target for criticism. The US housing market is one area that will be less accessible in the future to those on limited incomes.
Though lenders and government organizations like Fannie Mae have already tightened laws relating to who can and cannot qualify for a mortgage, this is not the only reason that there would be fewer home purchasers in the future.
Since the crash, the U.S. government has been pumping literally trillions of dollars into the housing market by purchasing mortgage backed securities which has kept mortgage interest rates artificially low, but that is soon set to change. The Federal Reserve has already stated that it will now purchase fewer and fewer of these securities, that is actually people's mortgages bundled together, and eventually their purchasing of these securities would taper away altogether. What this would do is hand the market completely back to the private investor and the private investor will wish to see a larger return on their investment.
In addition to this, government policies to stimulate the economy by investing huge sums of money have left the treasury with colossal debt and this debt is even a possible threat to the economic recovery. Recent U.S. bond auctions show that fewer people are investing in them that is increasing interest rates, which will be passed on to mortgages.
However, it's hoped, that mortgage interest rate increases won't be too great and 6% is forecast by this year's end. Even a little increase will spell trouble for a few homeowners though, especially those who purchased with a variable rate mortgage before the crash when house prices were still high. What happens beyond that depends a lot on how the housing market and the economy perform in general and whether or not the financial recovery is completed.
Those who are considering buying a house but are concerned about getting caught with higher monthly payments in the future might wish to consider taking out a fixed rate mortgage. Although this is typically regarded more costly than standard variable rate mortgages, you are protected by future rate movements by being locked in at a specific rate for a set time period. This choice would probably best suit the people who are considering purchasing an especially expensive home on that the slightest rate change could lead to a considerable increase in payments.
Whatever your credit status and regardless of the income range that you fall into, one ought to constantly be mindful of the likelihood that in the long run you'll probably be expected to have higher monthly repayments in the future for you to keep your home. Because of this it is essential to work within a range that provides room for maneuver or choose a fixed rate mortgage which protects you from changes.
Though lenders and government organizations like Fannie Mae have already tightened laws relating to who can and cannot qualify for a mortgage, this is not the only reason that there would be fewer home purchasers in the future.
Since the crash, the U.S. government has been pumping literally trillions of dollars into the housing market by purchasing mortgage backed securities which has kept mortgage interest rates artificially low, but that is soon set to change. The Federal Reserve has already stated that it will now purchase fewer and fewer of these securities, that is actually people's mortgages bundled together, and eventually their purchasing of these securities would taper away altogether. What this would do is hand the market completely back to the private investor and the private investor will wish to see a larger return on their investment.
In addition to this, government policies to stimulate the economy by investing huge sums of money have left the treasury with colossal debt and this debt is even a possible threat to the economic recovery. Recent U.S. bond auctions show that fewer people are investing in them that is increasing interest rates, which will be passed on to mortgages.
However, it's hoped, that mortgage interest rate increases won't be too great and 6% is forecast by this year's end. Even a little increase will spell trouble for a few homeowners though, especially those who purchased with a variable rate mortgage before the crash when house prices were still high. What happens beyond that depends a lot on how the housing market and the economy perform in general and whether or not the financial recovery is completed.
Those who are considering buying a house but are concerned about getting caught with higher monthly payments in the future might wish to consider taking out a fixed rate mortgage. Although this is typically regarded more costly than standard variable rate mortgages, you are protected by future rate movements by being locked in at a specific rate for a set time period. This choice would probably best suit the people who are considering purchasing an especially expensive home on that the slightest rate change could lead to a considerable increase in payments.
Whatever your credit status and regardless of the income range that you fall into, one ought to constantly be mindful of the likelihood that in the long run you'll probably be expected to have higher monthly repayments in the future for you to keep your home. Because of this it is essential to work within a range that provides room for maneuver or choose a fixed rate mortgage which protects you from changes.
Mortgages - What is the APR and How You Can Use it to Find the Best Loan
When you are in the market for a mortgage, choosing between lenders can be overwhelming. Lenders will make all sorts of claims in their advertising boasting of their low interest rate. This rate determines the amount of the monthly payments, but is only one factor in the final mortgage cost.
Comparing the Annual Percentage Rate (APR) among lenders is usually a better benchmark of the costs of the loan. The APR is a requirement of the federal Truth in Lending Act to be reported to borrowers and it estimates the costs over the duration of the year.
APR takes into account the interest rate as well as points, origination fees, any mortgage insurance premium, home inspections, prepaid interest (if applicable) and other fees that are incurred in acquiring the mortgage loan. Simply stated, the APR gives you an idea of how these costs affect you over the length of the loan.
Although some costs, such as the title insurance, are omitted from the APR calculation, the APR is a much better standard to use when analyzing different mortgages.
After you have applied for a mortgage you will receive a copy of the Federal Truth in Lending Disclosure form, detailing not only the interest rate used to determine your payments but the APR will be shown as well.
The APR is always higher than the Interest Rate due to the affect of the costs necessary for acquiring a mortgage loan.
If you use this knowledge you can make a better informed decision about which loan is right for you.
Comparing the Annual Percentage Rate (APR) among lenders is usually a better benchmark of the costs of the loan. The APR is a requirement of the federal Truth in Lending Act to be reported to borrowers and it estimates the costs over the duration of the year.
APR takes into account the interest rate as well as points, origination fees, any mortgage insurance premium, home inspections, prepaid interest (if applicable) and other fees that are incurred in acquiring the mortgage loan. Simply stated, the APR gives you an idea of how these costs affect you over the length of the loan.
Although some costs, such as the title insurance, are omitted from the APR calculation, the APR is a much better standard to use when analyzing different mortgages.
After you have applied for a mortgage you will receive a copy of the Federal Truth in Lending Disclosure form, detailing not only the interest rate used to determine your payments but the APR will be shown as well.
The APR is always higher than the Interest Rate due to the affect of the costs necessary for acquiring a mortgage loan.
If you use this knowledge you can make a better informed decision about which loan is right for you.
What Are the Different Kinds of Mortgages?
There are literally thousands of loan programs available in the market. Every lender tries to be as different as they can to create a special niche, which they hope will increase business. It would be impossible to provide a review of every type of loan, so in this article, we'll just stick to the main ones. Most loan programs are variations of the loans we will cover here. First of all we will go over some terminology you should understand and then we will delve into the different mortgage programs available today.
AMORTIZATION
Amortization is the paying back of the money borrowed plus interest. The actual term, or length of the mortgage along with the amortization is what determines what the payments will be and when the loan will be paid off. It is a means of paying out a predetermined sum (the principal) plus interest over a fixed period of time, so that the principal is completely eliminated by the end of the term. This would be easy if interest weren't involved, since one could simply divide the principal amount into a certain number of payments and be done with it. The trick is to find the right payment amount,which includes some principal and some interest. The formula of amortization uses only 12 days a year to compute the interest. The interest payment on a mortgage is calculated by multiplying 1/12th (one-twelfth) of the interest rate times the loan balance of the previous month.
On a 30-year, $150,000 mortgage with a fixed interest rate of 7.5 percent,a homeowner who keeps the loan for the full term will pay $227,575.83 in interest. The lender does not expect that person to pay all that interest in just a couple of years so the interest is spread over the full 30-year term. That keeps the monthly payment at $1,048.82.
The only way to keep the payments stable is to have the majority of each month's payment go toward interest during the early years of the loan. Of the first month's payment, for instance, only $111.32 goes toward principal. The other $937.50 goes toward interest. That ratio gradually improves overtime, and by the second-to-last payment, $1,035.83 of the borrower's payment will apply to principal while just $12.99 will go toward interest.
There are four types of loans when dealing with amortization and term. They are:
1. Fixed: with conventional fixed rate mortgages, the interest rate will stay the same for the life of the loan. Consequently the mortgage payment (Principal and Interest) also stays the same. Changes in the economy or the borrower's personal life do not affect the rate of this loan.
2. Adjustable: (ARM) also called variable rate mortgages. With this loan the interest rates can fluctuate based on the changes in the rate index the loan is tied to. Common indexes are 30 year US Treasury Bills and Libor (London Interbank Offering Rate). Interest rates on ARMs vary depending on how often the rate can change. The rate itself is determined by adding a specific percentage, called margin, to the rate index. This margin allows the lender to recover their cost and make some profit.
3. Balloon: A loan that is due and payable before it is fully amortized. Say for example that a loan of $50,000 is a 30-year loan at 10% with a five-year balloon. The payments would be calculated at 10% over 30 years, but at the end of the five years the remaining balance will be due and payable. Balloon mortgages may have a feature that would allow the balloon to convert to a fixed rate at maturity. This is a conditional offer and should not be confused with an ARM. In some cases, payments of interest only have to be made, and sometimes the entire balance is due and the loan is over. Unpaid balloon payments can lead to foreclosure and such financing is not advisable to home buyers. Balloons are used mainly in commercial financing.
4. Interest only: This type of loan is not amortized. Just like the name implies the payments are of interest only. The principal is not part of the payment and so does not decline. Interest only loans are calculated using simple interest and are available in both adjustable rate loans and fixed rate loans.
Fixed rate: The fixed rate loan is the benchmark loan against which all other loans are compared to. The most common types of fixed rates loans are the 30 year and the 15 year loans. The 30 year loan is amortized over 30 years or 360 payments while the 15 year is amortized over 180 payments. For the borrower, the 15 year loan has higher payments, since the money needs to be repaid in half the time. But because of that same feature the interest paid to the bank is much lower as well.
Even though these two are the most common terms, others are gaining in popularity, such as the 10, 20, 25, and even 40 year term loans Depending on the lender, the shorter the term, the less risk, and thus the lower the rate.
Other types of fixed rate loans:
BI-WEEKLY MORTGAGE
The bi-weekly mortgage shortens the loan term of a 30 year loans to 18 or 19 years by requiring a payment for half the monthly amount every two weeks. The biweekly payments increase the annual amount paid by about 8 percent and in effect pay 13 monthly payments (26 biweekly payments) per year. The shortened loan term decreases the total interest costs substantially.
The interest costs for the biweekly mortgage are decreased even farther, however, by the application of each payment to the principal upon which the interest is calculated every 14 days. By nibbling away at the principal faster, the homeowner saves additional interest. The ability to qualify for this type of loan is based on a 30-year term, and most lenders who offer this mortgage will allow the home buyer to convert to a more traditional 30-year loan without penalty.
GRADUATED PAYMENT MORTGAGE (GPM)
This loan is a good idea for buyers who expect their income to rise in the future. A GPM will start these borrowers off at a much lower than market interest rate. This allows them to qualify for a larger loan than they would otherwise. The risk is that they assume they will have enough income to pay increased payments in the future. This is similar to an ARM but the rate increases at a set rate, not like the ARM where the rate is based on the market. For example, a GPM for 30 years might start out with an interest rate of 5% for the first 6 months, adjust to 7% for the next year, and adjust upwards .5% every 6 months thereafter.
GROWING EQUITY MORTGAGE (GEMS)
For as long as mortgages have been around conventional fixed loans have been the standard against which creative financing has been measured. In the early 1980s the GEM was developed as a new alternative to creative financing. The GEM loan, while amortized like a conventional loan, uses a unique repayment method to save interest expense by 50% or more. Instead of paying a set amount each month, GEM loans have a graduated payment increase that can be calculated by increasing the monthly payment 2, 3, 4, or 5 percent annually during the loan. Or the monthly payments can be set to increase based on the performance of a specific market index.
So far it is sounds like a graduated payment mortgage but there is a difference. As monthly payments rise, all additional money paid by borrowers is used to reduce the principle balance. This results in a loan paid off in less than 15 years.
REVERSE MORTGAGES
While a reverse mortgage is not exactly a fixed rate mortgage (it is more of an annuity), I have included it here because the payments made to the home buyers are fixed. Reverse mortgages are designed especially for elderly people with equity in their homes but limited cash. They allow individuals to retain home ownership while providing needed cash flow. In a traditional mortgage, the homeowners repay the amount borrowed over a specified period of time. With a reverse mortgage the homeowner receives a specified amount every month.
To illustrate, say Mr. and Mrs. Smith are 70 and 65 years old respectively and retired. Their home is free from all encumbrances and worth $135,000. They would like to get the money out of their house to enjoy it, but instead of receiving it in one lump sum by refinancing it, they want to receive a little bit every month. Their lender arranges for a $100,000 reverse mortgage. They will get $500 a month from their equity and the lender will earn 9% interest.
Unlike other mortgages where the same $100,000 represents only the principle amount, with a reverse mortgage $100,000 is equal to the combined total of all principal and interest. On this particular loan, at the end of 10 years and 3 months, the Smiths will owe $100,000. The breakdown being $61,500 principle and $38,500 in interest. At this time the loan will end. So the Smiths will only receive $61,500, and they now owe the bank $100,000.
ADJUSTABLE RATE MORTGAGES
An ARM is a type of loan amortization where the most prevalent feature is that the interest rate adjusts during the course of the loan. Thanks to the adjustable rate feature, banks and lenders are better protected in case interest rates fluctuate wildly like in the 1970s when banks were lending at 8% fixed and then rates went as high as 18%. This left the banks holding loans that were losing money every month since the banks had to pay money to depositors at higher rates then they were making on their investments.
Important Tip: ARM interest rates are usually lower than fixed rates.There are multiple types of ARM loans in the market today. They all This makes it easier for borrowers to qualify for a larger loan amount with an ARM. differ from each other in minor but important ways. There are four main criteria to look at when dealing with an ARM loan: the Index used, the Margin, the Cap, and the Adjustment Frequency.
INDEX
The interest rates of an ARM loan are based on an Index, which is a published rate. The most common used indexes are:
COFI - The Cost of Funds Index. This index is related with the 11th District Federal Home Loan Bank Board in California. This index is also the most stable of all the common indexes.
The Treasury Series - This is a series of maturity lengths for Treasury Bills. These bills are used as investments by millions and are actively traded every day and so the rate varies daily.
LIBOR - The London Inter Bank Offered Rate is the rate the central bank in England uses to lend money to its banks.
Prime - This rate is the rate that banks in the US use to lend money to their best clients. This number is published daily in US newspapers, but it is important to know that each bank can set it's own Prime rate.
CDs - This index is from the rate paid to purchased of 6 month Certificates of Deposits.
MARGIN
Margin is defined as the amount added to the index rate to determine the current rate charged on the ARM. Once you add the margin to the index rate you arrive at what is called the Fully Indexed Rate (FIR). This rate is the true rate which the borrower will pay. The interest rate quoted to a borrower at closing might be lower then the FIR.
LOAN CAPS
The Cap is a very important number because it is the maximum that a rate can change. So even if the index rises 10% in one period, the FIR will not do so if there the rate cap is reached. There are two types of caps to worry about when discussing an ARM. The Rate Adjustment Cap which is the maximum the rate can change from one period to another. And the Life of the Loan Cap which is the maximum rate that can be charged during the loan. To figure out how the rate will change, you have to know the index, the margin, the rate, and the cap. Add the index and the margin to determine the FIR. Then take the rate and add it to the cap. Whichever is the smaller change is what the new interest rate will be.
ADJUSTMENT FREQUENCY
This is how often the rate changes. Initially when the loan is closed the rate will be fixed for a certain amount of time, then it will start changing. How often it changes is the Adjustment Frequency. So you can have a 7/1 Arm which means the rate will be fixed for 7 years, and then adjust every year after. Or you can have a 3/1 ARM. Fixed for 3 years. The more frequent the adjustment and the sooner it starts, the lower the initial interest rate. So a 3/1 ARM will have a lower rate then a 10/5 will. And that is because the 10/5 has more risk for the lender. The 10/5rate will be much closer to a fixed rate loan.
When a borrower considers an ARM, it is usually because the rate is lower then the fixed rate loan. And thus it is easier to qualify for. But the borrower is then betting against the bank. The ARM loan might turn out to be more expensive then the fixed rate loan in the long run, if rate rise during the term of the loan.
You must have an idea of how long you are going to live in the house you are borrowing to buy. If you are going to stay there long-term, a fixed-rate may make more sense. ARM's are better for military and other people who buy and sell within shorter time periods.
CONVENTIONAL MORTGAGE
A conventional mortgage is a non-government loan financed with a value less than or equal to a specific amount established each year by major secondary lenders. As of 2008, financing for less than $417,000 was regarded as conventional financing. A conventional loan is the most popular loan today, as so it has become the benchmark against all the other mortgages. It has 4 special features:
1. Set monthly payments
2. Set interest rates
3. Fixed loan term
4. Self amortization
A conventional loan is one that is secured by government sponsored entities such as Fannie Mae and Freddie Mac. Since they are secured, the lender is assured that they can easily sell the loan on the secondary market.
And because of that assurance, these loans have the lowest rates.
In order to qualify as a conventional loan, the home and borrowers must fall into the guidelines set by the secondary lenders.
HOME EQUITY LOANS
Real estate has traditionally been considered a non-liquid asset. Property can be converted to cash only by either selling or refinancing. Both are very expensive and time-consuming ways to raise money. Today's borrowers can convert their house to cash immediately by using the equity in their home.
These loans take much less time to approve and fund then regular home loans. And the fees are generally less than a normal loan as well. But home equity loans are usually placed in a second lien position after the original mortgage, at a higher interest rate. If the borrower does not pay, the house could be foreclosed upon.
The Equity Loan is an open ended mortgage similar to a credit card. Borrowers can take the money out, use it, and pay back the money when they choose. Recently, home equity loans have brought about new government regulations in some states since people were getting these loans without really understanding the consequences and thus being taken advantage of by less than honest lenders.
SECOND MORTGAGES
A second mortgage is a loan against a property in second or "junior" position. In case of foreclosure, the creditor in first position gets first dibs on any monies. In many cases, there is not enough equity in a house to pay off both the first and second mortgage. So the second mortgage holder can get nothing. Therefore, being in second position can be a very risky place to be.
That is why second mortgages come with higher rates then first mortgages. Second mortgages come in two main forms - a fixed mortgage and a home equity mortgage. The fixed mortgage follows the same format as a regular fixed loan. The equity mortgage is based on equity in the home.
Second mortgages are used by loan officers to either help the borrower avoid paying PMI, or to avoid a jumbo loan. A jumbo loan would be a non-conforming loan and thus would have a higher rate for the entire loan. If a borrower wanted to avoid this, he could get a first mortgage at the max conventional loans allow, and a second for the balance. The rate on the second would be high, but blended together, the rate would be less than on the jumbo.
GOVERNMENT LOANS
There are two governmental agencies that guarantee loans: The Department of Veterans Affairs (VA), and the Federal Housing Administration (FHA).
VA LOANS
VA loans are one of two types of government loans and are guaranteed by The Department of Veterans Affairs under the Serviceman's Readjustment Act. Lenders rely on this guarantee to reduce their risk. The best thing about VA loans is that for veterans is allows them to get into a house with zero or very little down. The amount of down payment required depends on the entitlement and the amount of the loan. Military service requirements vary. These loans are available to active-duty as well as separated military veterans and their spouses.
These loans are self-amortizing if held for the complete term of the loan, yet it may be paid off without penalty. These loans are only available through approved lenders. The amount of entitlement a veteran has is reported in a Certificate of Eligibility which must be obtained from the VA office in your area.
Veterans who had a VA loan before may still have "remaining entitlement" to use for another VA loan. The current amount of entitlement was much lower previously and has been increased by changes in the law. For example, a veteran who obtained a $25,000 loan in 1974 would have used$12,500 guaranty entitlement, the maximum then available. Even if that loan is not paid off, the veteran could use the difference between the $12,500 entitlement originally used and the current maximum to buy another home with VA financing.
Most lenders require that a combination of the guaranty entitlement and any cash down payment must equal at least 25 percent of the reasonable value or sales price of the property- whichever is less. Thus, in the example, the veteran's $23,500 remaining entitlement would meet a lender's minimum guaranty requirement for a no down payment loan to buy a property valued at and selling for $94,000. The veteran could also combine a down payment with the remaining entitlement for a larger loan amount.
FHA LOANS
The Federal Housing Administration is one of the oldest and largest sources of mortgage assistance available to the general public. The Department of Housing and Urban Development (HUD) run this program.
FHA backed mortgages are the other type of government loans and are an outgrowth of policy in the interest of the public, with the view that the government should stimulate the economy in general and the housing industry in particular. FHA loans like VA loans can only be obtained through approved lenders.
Why are FHA loans so popular? Because they have liberal qualifying standards, low or even no down payments and even closing costs can be financed and added to the loan. There is no prepayment penalty. FHA loans made prior to February 4, 1988 are freely assumable by a new buyer when the house is sold. Loans made after December 15, 1989 may only be assumed by qualified owner-occupants and cannot be assumed by investors.
FHA loans have limits too. Recent housing appreciation has pushed up the limits on this year's loan program by nearly 16 percent in the continental U.S.
If you want to find out what the loan limit is where you live you can call the consumer hotline for the Housing and Urban Development Department . Their toll-free number is available on their site. The FHA is a division of HUD.
As always, consult a mortgage professional. A Certified Mortgage Planner will work with your own financial planner, Realtor, CPA and other advisers to find a mortgage loan product that is right for you.
HELPSAKES
AMORTIZATION
Amortization is the paying back of the money borrowed plus interest. The actual term, or length of the mortgage along with the amortization is what determines what the payments will be and when the loan will be paid off. It is a means of paying out a predetermined sum (the principal) plus interest over a fixed period of time, so that the principal is completely eliminated by the end of the term. This would be easy if interest weren't involved, since one could simply divide the principal amount into a certain number of payments and be done with it. The trick is to find the right payment amount,which includes some principal and some interest. The formula of amortization uses only 12 days a year to compute the interest. The interest payment on a mortgage is calculated by multiplying 1/12th (one-twelfth) of the interest rate times the loan balance of the previous month.
On a 30-year, $150,000 mortgage with a fixed interest rate of 7.5 percent,a homeowner who keeps the loan for the full term will pay $227,575.83 in interest. The lender does not expect that person to pay all that interest in just a couple of years so the interest is spread over the full 30-year term. That keeps the monthly payment at $1,048.82.
The only way to keep the payments stable is to have the majority of each month's payment go toward interest during the early years of the loan. Of the first month's payment, for instance, only $111.32 goes toward principal. The other $937.50 goes toward interest. That ratio gradually improves overtime, and by the second-to-last payment, $1,035.83 of the borrower's payment will apply to principal while just $12.99 will go toward interest.
There are four types of loans when dealing with amortization and term. They are:
1. Fixed: with conventional fixed rate mortgages, the interest rate will stay the same for the life of the loan. Consequently the mortgage payment (Principal and Interest) also stays the same. Changes in the economy or the borrower's personal life do not affect the rate of this loan.
2. Adjustable: (ARM) also called variable rate mortgages. With this loan the interest rates can fluctuate based on the changes in the rate index the loan is tied to. Common indexes are 30 year US Treasury Bills and Libor (London Interbank Offering Rate). Interest rates on ARMs vary depending on how often the rate can change. The rate itself is determined by adding a specific percentage, called margin, to the rate index. This margin allows the lender to recover their cost and make some profit.
3. Balloon: A loan that is due and payable before it is fully amortized. Say for example that a loan of $50,000 is a 30-year loan at 10% with a five-year balloon. The payments would be calculated at 10% over 30 years, but at the end of the five years the remaining balance will be due and payable. Balloon mortgages may have a feature that would allow the balloon to convert to a fixed rate at maturity. This is a conditional offer and should not be confused with an ARM. In some cases, payments of interest only have to be made, and sometimes the entire balance is due and the loan is over. Unpaid balloon payments can lead to foreclosure and such financing is not advisable to home buyers. Balloons are used mainly in commercial financing.
4. Interest only: This type of loan is not amortized. Just like the name implies the payments are of interest only. The principal is not part of the payment and so does not decline. Interest only loans are calculated using simple interest and are available in both adjustable rate loans and fixed rate loans.
Fixed rate: The fixed rate loan is the benchmark loan against which all other loans are compared to. The most common types of fixed rates loans are the 30 year and the 15 year loans. The 30 year loan is amortized over 30 years or 360 payments while the 15 year is amortized over 180 payments. For the borrower, the 15 year loan has higher payments, since the money needs to be repaid in half the time. But because of that same feature the interest paid to the bank is much lower as well.
Even though these two are the most common terms, others are gaining in popularity, such as the 10, 20, 25, and even 40 year term loans Depending on the lender, the shorter the term, the less risk, and thus the lower the rate.
Other types of fixed rate loans:
BI-WEEKLY MORTGAGE
The bi-weekly mortgage shortens the loan term of a 30 year loans to 18 or 19 years by requiring a payment for half the monthly amount every two weeks. The biweekly payments increase the annual amount paid by about 8 percent and in effect pay 13 monthly payments (26 biweekly payments) per year. The shortened loan term decreases the total interest costs substantially.
The interest costs for the biweekly mortgage are decreased even farther, however, by the application of each payment to the principal upon which the interest is calculated every 14 days. By nibbling away at the principal faster, the homeowner saves additional interest. The ability to qualify for this type of loan is based on a 30-year term, and most lenders who offer this mortgage will allow the home buyer to convert to a more traditional 30-year loan without penalty.
GRADUATED PAYMENT MORTGAGE (GPM)
This loan is a good idea for buyers who expect their income to rise in the future. A GPM will start these borrowers off at a much lower than market interest rate. This allows them to qualify for a larger loan than they would otherwise. The risk is that they assume they will have enough income to pay increased payments in the future. This is similar to an ARM but the rate increases at a set rate, not like the ARM where the rate is based on the market. For example, a GPM for 30 years might start out with an interest rate of 5% for the first 6 months, adjust to 7% for the next year, and adjust upwards .5% every 6 months thereafter.
GROWING EQUITY MORTGAGE (GEMS)
For as long as mortgages have been around conventional fixed loans have been the standard against which creative financing has been measured. In the early 1980s the GEM was developed as a new alternative to creative financing. The GEM loan, while amortized like a conventional loan, uses a unique repayment method to save interest expense by 50% or more. Instead of paying a set amount each month, GEM loans have a graduated payment increase that can be calculated by increasing the monthly payment 2, 3, 4, or 5 percent annually during the loan. Or the monthly payments can be set to increase based on the performance of a specific market index.
So far it is sounds like a graduated payment mortgage but there is a difference. As monthly payments rise, all additional money paid by borrowers is used to reduce the principle balance. This results in a loan paid off in less than 15 years.
REVERSE MORTGAGES
While a reverse mortgage is not exactly a fixed rate mortgage (it is more of an annuity), I have included it here because the payments made to the home buyers are fixed. Reverse mortgages are designed especially for elderly people with equity in their homes but limited cash. They allow individuals to retain home ownership while providing needed cash flow. In a traditional mortgage, the homeowners repay the amount borrowed over a specified period of time. With a reverse mortgage the homeowner receives a specified amount every month.
To illustrate, say Mr. and Mrs. Smith are 70 and 65 years old respectively and retired. Their home is free from all encumbrances and worth $135,000. They would like to get the money out of their house to enjoy it, but instead of receiving it in one lump sum by refinancing it, they want to receive a little bit every month. Their lender arranges for a $100,000 reverse mortgage. They will get $500 a month from their equity and the lender will earn 9% interest.
Unlike other mortgages where the same $100,000 represents only the principle amount, with a reverse mortgage $100,000 is equal to the combined total of all principal and interest. On this particular loan, at the end of 10 years and 3 months, the Smiths will owe $100,000. The breakdown being $61,500 principle and $38,500 in interest. At this time the loan will end. So the Smiths will only receive $61,500, and they now owe the bank $100,000.
ADJUSTABLE RATE MORTGAGES
An ARM is a type of loan amortization where the most prevalent feature is that the interest rate adjusts during the course of the loan. Thanks to the adjustable rate feature, banks and lenders are better protected in case interest rates fluctuate wildly like in the 1970s when banks were lending at 8% fixed and then rates went as high as 18%. This left the banks holding loans that were losing money every month since the banks had to pay money to depositors at higher rates then they were making on their investments.
Important Tip: ARM interest rates are usually lower than fixed rates.There are multiple types of ARM loans in the market today. They all This makes it easier for borrowers to qualify for a larger loan amount with an ARM. differ from each other in minor but important ways. There are four main criteria to look at when dealing with an ARM loan: the Index used, the Margin, the Cap, and the Adjustment Frequency.
INDEX
The interest rates of an ARM loan are based on an Index, which is a published rate. The most common used indexes are:
COFI - The Cost of Funds Index. This index is related with the 11th District Federal Home Loan Bank Board in California. This index is also the most stable of all the common indexes.
The Treasury Series - This is a series of maturity lengths for Treasury Bills. These bills are used as investments by millions and are actively traded every day and so the rate varies daily.
LIBOR - The London Inter Bank Offered Rate is the rate the central bank in England uses to lend money to its banks.
Prime - This rate is the rate that banks in the US use to lend money to their best clients. This number is published daily in US newspapers, but it is important to know that each bank can set it's own Prime rate.
CDs - This index is from the rate paid to purchased of 6 month Certificates of Deposits.
MARGIN
Margin is defined as the amount added to the index rate to determine the current rate charged on the ARM. Once you add the margin to the index rate you arrive at what is called the Fully Indexed Rate (FIR). This rate is the true rate which the borrower will pay. The interest rate quoted to a borrower at closing might be lower then the FIR.
LOAN CAPS
The Cap is a very important number because it is the maximum that a rate can change. So even if the index rises 10% in one period, the FIR will not do so if there the rate cap is reached. There are two types of caps to worry about when discussing an ARM. The Rate Adjustment Cap which is the maximum the rate can change from one period to another. And the Life of the Loan Cap which is the maximum rate that can be charged during the loan. To figure out how the rate will change, you have to know the index, the margin, the rate, and the cap. Add the index and the margin to determine the FIR. Then take the rate and add it to the cap. Whichever is the smaller change is what the new interest rate will be.
ADJUSTMENT FREQUENCY
This is how often the rate changes. Initially when the loan is closed the rate will be fixed for a certain amount of time, then it will start changing. How often it changes is the Adjustment Frequency. So you can have a 7/1 Arm which means the rate will be fixed for 7 years, and then adjust every year after. Or you can have a 3/1 ARM. Fixed for 3 years. The more frequent the adjustment and the sooner it starts, the lower the initial interest rate. So a 3/1 ARM will have a lower rate then a 10/5 will. And that is because the 10/5 has more risk for the lender. The 10/5rate will be much closer to a fixed rate loan.
When a borrower considers an ARM, it is usually because the rate is lower then the fixed rate loan. And thus it is easier to qualify for. But the borrower is then betting against the bank. The ARM loan might turn out to be more expensive then the fixed rate loan in the long run, if rate rise during the term of the loan.
You must have an idea of how long you are going to live in the house you are borrowing to buy. If you are going to stay there long-term, a fixed-rate may make more sense. ARM's are better for military and other people who buy and sell within shorter time periods.
CONVENTIONAL MORTGAGE
A conventional mortgage is a non-government loan financed with a value less than or equal to a specific amount established each year by major secondary lenders. As of 2008, financing for less than $417,000 was regarded as conventional financing. A conventional loan is the most popular loan today, as so it has become the benchmark against all the other mortgages. It has 4 special features:
1. Set monthly payments
2. Set interest rates
3. Fixed loan term
4. Self amortization
A conventional loan is one that is secured by government sponsored entities such as Fannie Mae and Freddie Mac. Since they are secured, the lender is assured that they can easily sell the loan on the secondary market.
And because of that assurance, these loans have the lowest rates.
In order to qualify as a conventional loan, the home and borrowers must fall into the guidelines set by the secondary lenders.
HOME EQUITY LOANS
Real estate has traditionally been considered a non-liquid asset. Property can be converted to cash only by either selling or refinancing. Both are very expensive and time-consuming ways to raise money. Today's borrowers can convert their house to cash immediately by using the equity in their home.
These loans take much less time to approve and fund then regular home loans. And the fees are generally less than a normal loan as well. But home equity loans are usually placed in a second lien position after the original mortgage, at a higher interest rate. If the borrower does not pay, the house could be foreclosed upon.
The Equity Loan is an open ended mortgage similar to a credit card. Borrowers can take the money out, use it, and pay back the money when they choose. Recently, home equity loans have brought about new government regulations in some states since people were getting these loans without really understanding the consequences and thus being taken advantage of by less than honest lenders.
SECOND MORTGAGES
A second mortgage is a loan against a property in second or "junior" position. In case of foreclosure, the creditor in first position gets first dibs on any monies. In many cases, there is not enough equity in a house to pay off both the first and second mortgage. So the second mortgage holder can get nothing. Therefore, being in second position can be a very risky place to be.
That is why second mortgages come with higher rates then first mortgages. Second mortgages come in two main forms - a fixed mortgage and a home equity mortgage. The fixed mortgage follows the same format as a regular fixed loan. The equity mortgage is based on equity in the home.
Second mortgages are used by loan officers to either help the borrower avoid paying PMI, or to avoid a jumbo loan. A jumbo loan would be a non-conforming loan and thus would have a higher rate for the entire loan. If a borrower wanted to avoid this, he could get a first mortgage at the max conventional loans allow, and a second for the balance. The rate on the second would be high, but blended together, the rate would be less than on the jumbo.
GOVERNMENT LOANS
There are two governmental agencies that guarantee loans: The Department of Veterans Affairs (VA), and the Federal Housing Administration (FHA).
VA LOANS
VA loans are one of two types of government loans and are guaranteed by The Department of Veterans Affairs under the Serviceman's Readjustment Act. Lenders rely on this guarantee to reduce their risk. The best thing about VA loans is that for veterans is allows them to get into a house with zero or very little down. The amount of down payment required depends on the entitlement and the amount of the loan. Military service requirements vary. These loans are available to active-duty as well as separated military veterans and their spouses.
These loans are self-amortizing if held for the complete term of the loan, yet it may be paid off without penalty. These loans are only available through approved lenders. The amount of entitlement a veteran has is reported in a Certificate of Eligibility which must be obtained from the VA office in your area.
Veterans who had a VA loan before may still have "remaining entitlement" to use for another VA loan. The current amount of entitlement was much lower previously and has been increased by changes in the law. For example, a veteran who obtained a $25,000 loan in 1974 would have used$12,500 guaranty entitlement, the maximum then available. Even if that loan is not paid off, the veteran could use the difference between the $12,500 entitlement originally used and the current maximum to buy another home with VA financing.
Most lenders require that a combination of the guaranty entitlement and any cash down payment must equal at least 25 percent of the reasonable value or sales price of the property- whichever is less. Thus, in the example, the veteran's $23,500 remaining entitlement would meet a lender's minimum guaranty requirement for a no down payment loan to buy a property valued at and selling for $94,000. The veteran could also combine a down payment with the remaining entitlement for a larger loan amount.
FHA LOANS
The Federal Housing Administration is one of the oldest and largest sources of mortgage assistance available to the general public. The Department of Housing and Urban Development (HUD) run this program.
FHA backed mortgages are the other type of government loans and are an outgrowth of policy in the interest of the public, with the view that the government should stimulate the economy in general and the housing industry in particular. FHA loans like VA loans can only be obtained through approved lenders.
Why are FHA loans so popular? Because they have liberal qualifying standards, low or even no down payments and even closing costs can be financed and added to the loan. There is no prepayment penalty. FHA loans made prior to February 4, 1988 are freely assumable by a new buyer when the house is sold. Loans made after December 15, 1989 may only be assumed by qualified owner-occupants and cannot be assumed by investors.
FHA loans have limits too. Recent housing appreciation has pushed up the limits on this year's loan program by nearly 16 percent in the continental U.S.
If you want to find out what the loan limit is where you live you can call the consumer hotline for the Housing and Urban Development Department . Their toll-free number is available on their site. The FHA is a division of HUD.
As always, consult a mortgage professional. A Certified Mortgage Planner will work with your own financial planner, Realtor, CPA and other advisers to find a mortgage loan product that is right for you.
HELPSAKES
Remortgage With Bad Credit Is Actually Possible - Learn To Get Your Real Estate Refinanced
To successfully remortgage with bad credit is always to know about credit scores and exactly how it pertains to just what loan creditors watch out for. FICO scores actually are a numerical description of the factors such as wages to consumer debt ratio, regularity in repayment of dues, consumer bankruptcy, foreclosures, late or non-payments of monthly dues, active loans and these many other interrelated variables. These scores really are very important given that they are often the deciding factor on whether or not you're a candidate or not to get a whole lot of things like occupation, to more desirable mortgage rates and even financial assistance. With regards to property loan refinancing, loan providers normally start at 550 like a benchmark to make a decision on which specials you're going to get. A person who has a consumer credit score rating of less than 550 will enjoy less alternatives compared to someone whose credit ratings are over 550. The particular person aided by the low score would have to pay out a good deal more property loan interest charges on the same quantity of principal in comparison with a debtor with great credit score status. In reality, a good deal of loan companies are generally unwilling to even contemplate issuing a home loan to the borrower if his FICO score is underneath 550, and the companies who do provide the loans impose large monthly payments. However, there are some opportunities that happen to be nonetheless open if the consumer's FICO score is underneath 550.
An effective solution to be able to remortgage with bad credit would be to investigate on the web and uncover several of the conventional mortgage lenders that are ready to support the individuals with inadequate credit score histories. On account of the recession and also the sub-prime catastrophe you will discover lots of non-payments and real estate foreclosures and therefore a number of conventional lenders who before did not give lending products to those with very low credit profiles have begun financing currently to this group of people. Having said that, it ought to be observed once more that the premiums the same loan provider would give to somebody with very good credit report is definitely significantly less when compared with the costs that will be offered to a person with lower FICO scores.
Any remortgage with bad credit throughout recent times can have varying connotations these days considering the irregularities in the economic system. A FICO score that was borderline negative three years ago might be alright today in 2011. What you could do however is keep a record every so often about how each of the 3 crediting agencies are scoring you simply by examining the free credit rating reports, which is generally accessible once a year. Aside from this it is possible to additionally observe your Credit results on the internet and to examine your current financial condition. The crucial item yet should be to take into account paying out your costs in a timely manner, specifically the minor kinds to be sure that you keep decent FICO scores.
An effective solution to be able to remortgage with bad credit would be to investigate on the web and uncover several of the conventional mortgage lenders that are ready to support the individuals with inadequate credit score histories. On account of the recession and also the sub-prime catastrophe you will discover lots of non-payments and real estate foreclosures and therefore a number of conventional lenders who before did not give lending products to those with very low credit profiles have begun financing currently to this group of people. Having said that, it ought to be observed once more that the premiums the same loan provider would give to somebody with very good credit report is definitely significantly less when compared with the costs that will be offered to a person with lower FICO scores.
Any remortgage with bad credit throughout recent times can have varying connotations these days considering the irregularities in the economic system. A FICO score that was borderline negative three years ago might be alright today in 2011. What you could do however is keep a record every so often about how each of the 3 crediting agencies are scoring you simply by examining the free credit rating reports, which is generally accessible once a year. Aside from this it is possible to additionally observe your Credit results on the internet and to examine your current financial condition. The crucial item yet should be to take into account paying out your costs in a timely manner, specifically the minor kinds to be sure that you keep decent FICO scores.
The Importance of Your Credit Check Score
Three out of four mortgage lenders and auto lending companies rely on your credit check score to determine your trustworthiness as a borrower. If you are ever planning to borrow money for any reason, the importance of this credit rating score cannot be over emphasized.
WHAT IS A CREDIT CHECK SCORE?
The concept of using a score to determine the trustworthiness of a particular borrower was developed by Fair, Isaac and Company (FICO), a data provider out of San Rafael, California approximately twenty years ago. It is commonly referred to now as the FICO score. It is the benchmark in the lending world for establishing your soundness and reliability as a borrower. This credit check score consists of a number ranging from 300 to 850. This innovative scoring system is calculated from the information that your creditors furnish to the credit bureaus. This compiled data is then recorded in your credit report.
HOW DOES THE CREDIT CHECK SCORE AFFECT THE BORROWER?
In the not so distant past the only way to really keep track of your credit was to pay for a credit report and hope (while keeping your fingers crossed) that paying all of your obligations on time and other valuable habits would make you deserving in the eyes of the almighty lender. The credit check score was available to the lender but not to the person who was applying for the credit.
It was not until recently that this mysterious piece of your financial picture, your credit check score - the authoritative guideline that the lenders relied on - became available to the consumer for the first time. This was really a powerful tool for the borrower, because now they could begin to see how to help their financial profile look more attractive to the lending agencies.
WHAT DOES THE CREDIT CHECK SCORE TELL THE LENDER?
So what does this credit check score (also known as your FICO score) that all the banks, mortgage lenders, credit card companies and other lending entities use, actually tell the lender? In a nutshell, it shows the loan company just how trustworthy you are with your creditors.
The theory behind this scoring model is that previous financial behavior will indicate future performance. That is, the higher your credit check score, the more likely the statistical probability is that you will repay the loan in a timely manner.
HOW IS YOUR CREDIT CHECK SCORE DETERMINED?
This credit rating score is determined by measuring your borrowing history with all the other people in America who also have a credit history. The financial experts using certain forecast models analyze a certain number of consumers who started a loan or opened a line of credit at the same time. They then determine who actually paid back the debt or who defaulted on the loan. These specialists also look to see how quickly the loan was repaid. Both kinds of borrowers - the payers and the non-payers - are looked at to find the traits they had in common when they applied for their loans.
WHAT NUMBER IS A GOOD CREDIT CHECK SCORE?
So once the score is determined, what do the numbers represent? In the world of lending a credit score above 700 is considered a fairly secure loan to underwrite. If the credit check score is in the 600 range, it presents more problems. The FICO forecast model indicates that the delinquency rate for borrowers with a credit rating score of 630 is approximately 30 percent. Those borrowers with scores of 750 have a default rate of only 2 percent.
WHY IS IT IMPORTANT TO HAVE A HIGH CREDIT RATING SCORE?
This important credit rating score is used to decide how much of a risk you represent to the lender. So in the beginning stages, it can certainly be the difference in whether or not you even get the loan.
The second factor is also extremely important to the borrower, because the credit check score also establishes the rate of interest the lender will charge. Obviously, if the lender considers you a higher risk he will accordingly charge you a higher rate of interest on your loan. This can ultimately cost the borrower thousands of dollars over the life of the loan.
WHAT IS A CREDIT CHECK SCORE?
The concept of using a score to determine the trustworthiness of a particular borrower was developed by Fair, Isaac and Company (FICO), a data provider out of San Rafael, California approximately twenty years ago. It is commonly referred to now as the FICO score. It is the benchmark in the lending world for establishing your soundness and reliability as a borrower. This credit check score consists of a number ranging from 300 to 850. This innovative scoring system is calculated from the information that your creditors furnish to the credit bureaus. This compiled data is then recorded in your credit report.
HOW DOES THE CREDIT CHECK SCORE AFFECT THE BORROWER?
In the not so distant past the only way to really keep track of your credit was to pay for a credit report and hope (while keeping your fingers crossed) that paying all of your obligations on time and other valuable habits would make you deserving in the eyes of the almighty lender. The credit check score was available to the lender but not to the person who was applying for the credit.
It was not until recently that this mysterious piece of your financial picture, your credit check score - the authoritative guideline that the lenders relied on - became available to the consumer for the first time. This was really a powerful tool for the borrower, because now they could begin to see how to help their financial profile look more attractive to the lending agencies.
WHAT DOES THE CREDIT CHECK SCORE TELL THE LENDER?
So what does this credit check score (also known as your FICO score) that all the banks, mortgage lenders, credit card companies and other lending entities use, actually tell the lender? In a nutshell, it shows the loan company just how trustworthy you are with your creditors.
The theory behind this scoring model is that previous financial behavior will indicate future performance. That is, the higher your credit check score, the more likely the statistical probability is that you will repay the loan in a timely manner.
HOW IS YOUR CREDIT CHECK SCORE DETERMINED?
This credit rating score is determined by measuring your borrowing history with all the other people in America who also have a credit history. The financial experts using certain forecast models analyze a certain number of consumers who started a loan or opened a line of credit at the same time. They then determine who actually paid back the debt or who defaulted on the loan. These specialists also look to see how quickly the loan was repaid. Both kinds of borrowers - the payers and the non-payers - are looked at to find the traits they had in common when they applied for their loans.
WHAT NUMBER IS A GOOD CREDIT CHECK SCORE?
So once the score is determined, what do the numbers represent? In the world of lending a credit score above 700 is considered a fairly secure loan to underwrite. If the credit check score is in the 600 range, it presents more problems. The FICO forecast model indicates that the delinquency rate for borrowers with a credit rating score of 630 is approximately 30 percent. Those borrowers with scores of 750 have a default rate of only 2 percent.
WHY IS IT IMPORTANT TO HAVE A HIGH CREDIT RATING SCORE?
This important credit rating score is used to decide how much of a risk you represent to the lender. So in the beginning stages, it can certainly be the difference in whether or not you even get the loan.
The second factor is also extremely important to the borrower, because the credit check score also establishes the rate of interest the lender will charge. Obviously, if the lender considers you a higher risk he will accordingly charge you a higher rate of interest on your loan. This can ultimately cost the borrower thousands of dollars over the life of the loan.
How To Acquire A Bad Credit Mobile Home Loan
Even having with a bad credit, a person can still apply for a mobile home loan through the bad credit mobile home loan facility. If before, lenders would only choose to work with people who have good credit standing, today lending institutions have already recognized the fact that the bad creditors must also be given the opportunity for loan applications.
However, along this risk of opening the window for borrowers under the bad credit category is the special case of conditions set before them. Unlike borrowers with good credit standing, bad creditors will be asked to agree with certain special case agreements designed for them.
Now people wanting to apply for a bad credit home loan may simply go to a lending company and have him checked for his credit score. The credit score would be the company's benchmark as to how to categorize that particular borrower. Standards would take people having less than 620 credit score categorized as a bad credit mobile home loan. Being in this category, the borrower will have to accept special case conditions like higher interest rate as compared t those who belong in another category.
Another condition possibly set is the ballooning of the total payment if in case the borrower fails to pay on the dot. Also, paying less than the amount set would also bring a big problem to the borrower. These are just some of the special conditions that each of the bad credit mobile home loan borrowers must carefully understand so as not to further worsen their bad credit standing. These are also the reasons why people would have to think twice before engaging in this particular loan facility.
Only those who have got the gut and think that they can manage and meet with the conditions set by this loan facility are advised to apply.
However, along this risk of opening the window for borrowers under the bad credit category is the special case of conditions set before them. Unlike borrowers with good credit standing, bad creditors will be asked to agree with certain special case agreements designed for them.
Now people wanting to apply for a bad credit home loan may simply go to a lending company and have him checked for his credit score. The credit score would be the company's benchmark as to how to categorize that particular borrower. Standards would take people having less than 620 credit score categorized as a bad credit mobile home loan. Being in this category, the borrower will have to accept special case conditions like higher interest rate as compared t those who belong in another category.
Another condition possibly set is the ballooning of the total payment if in case the borrower fails to pay on the dot. Also, paying less than the amount set would also bring a big problem to the borrower. These are just some of the special conditions that each of the bad credit mobile home loan borrowers must carefully understand so as not to further worsen their bad credit standing. These are also the reasons why people would have to think twice before engaging in this particular loan facility.
Only those who have got the gut and think that they can manage and meet with the conditions set by this loan facility are advised to apply.
Why a Freedom Loan From Benchmark Lending is the Most Popular
When you think of mortgages that enable thousands of people to acquire homes every year, you are thinking of the Benchmark Lending group which has provided much needed finances to get new homes or refinance the existing homes to many families for over ten years. They offer tailor made mortgages to suit the needs of customers ensuring that you can afford it. They make this happen by considering the cash flow of every customer. They also consider the repayment period, investment opportunities and your equity plans. The Benchmark lending group was founded by Barney Aldridge in 1995 as a primary mortgage lending bank and it continues to grow. Customers can expect no hassles and there are no middlemen. The headquarters are located in Northern California and their culture is to provide a good service with dedication and passion.
When you need to apply for a loan, the company assures you that the process is easy and, you do not have to worry about complications. You will have a loan officer guide you through the whole process briefing you on all vital issues on credit until you have a satisfactory end. At Benchmark lending group, the management consists of people who have mastered the industry and proved that they can deliver what it takes to progress the business. It consists of the President who is the Chief Executive officer. His name is Jason Ehrlicher and he began as a loan officer in the company and years have seen him become capable and able to lead owing to his rich experience and dedication to the company since it began.
The others in the management team include the Director of Human Resources, Vice President of Sales and the Sales Manager. The first kind of loan they offer is the Fixed Rate Loan where the rate does not change and one can get a loan to repay in 10, 15, 20 and 30 years. People who go for such a loan must be planning to keep their house for more than 10 years and, for those who do not plan to use their home equity for the period of the loan. The other kind of mortgage the Benchmark Lending group offer is the adjustable rate mortgage. This loan is for people who plan to keep their house for up to 10 years or less. The duration for this kind of mortgage is usually 3, 5, 7 and 10 years.
A freedom loan from Benchmark Lending is the most popular because it is an adjustable loan that enables you to choose from 4 different payment methods according to your convenience every month. The loan is tailor made for people who do not have a regular or stable cash flow and for people who want to make other investments. Another loan suitable for people with fluctuating incomes is the Better Half loan and, it will help people with unstable monthly income realize their dream of owning a home. There are very many other options to choose from and, you can even apply online on their site. There are other resources that you will find very helpful. Before you take any mortgage, it is good to consider your income and your flexibility and ability to repay given the many options of repayments. Get a good system that will help you realize your dream for a good home.
When you need to apply for a loan, the company assures you that the process is easy and, you do not have to worry about complications. You will have a loan officer guide you through the whole process briefing you on all vital issues on credit until you have a satisfactory end. At Benchmark lending group, the management consists of people who have mastered the industry and proved that they can deliver what it takes to progress the business. It consists of the President who is the Chief Executive officer. His name is Jason Ehrlicher and he began as a loan officer in the company and years have seen him become capable and able to lead owing to his rich experience and dedication to the company since it began.
The others in the management team include the Director of Human Resources, Vice President of Sales and the Sales Manager. The first kind of loan they offer is the Fixed Rate Loan where the rate does not change and one can get a loan to repay in 10, 15, 20 and 30 years. People who go for such a loan must be planning to keep their house for more than 10 years and, for those who do not plan to use their home equity for the period of the loan. The other kind of mortgage the Benchmark Lending group offer is the adjustable rate mortgage. This loan is for people who plan to keep their house for up to 10 years or less. The duration for this kind of mortgage is usually 3, 5, 7 and 10 years.
A freedom loan from Benchmark Lending is the most popular because it is an adjustable loan that enables you to choose from 4 different payment methods according to your convenience every month. The loan is tailor made for people who do not have a regular or stable cash flow and for people who want to make other investments. Another loan suitable for people with fluctuating incomes is the Better Half loan and, it will help people with unstable monthly income realize their dream of owning a home. There are very many other options to choose from and, you can even apply online on their site. There are other resources that you will find very helpful. Before you take any mortgage, it is good to consider your income and your flexibility and ability to repay given the many options of repayments. Get a good system that will help you realize your dream for a good home.
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