Home Loan | Mortgage | Refinance

Archive for August, 2009

1% Mortgage Refinance loans, you’ve probably seen 100 different advertisements, but how is it possible? There is really only one big secret to 1% mortgages: 1% minimum payments are below the interest payable on the loan. Once we’ve addressed this feature, most of the other facets of 1% mortgages are relatively logical. 1% mortgages, which now come in dozens of varieties with start rates from below 1% (some even starting at 0% for a few months after refinance) up to 4% or more, offer astonishingly low payments. Some of them offer fixed rates for 30 or even 40 years, some of them are adjustable from the day you take them out, all of these are basically “1% mortgages” and are extremely popular amongst homeowners today. 1% mortgages and their offspring are being used for debt consolidation, cash flow management, investments, and for tax purposes, and they are being used a lot.

A full 40% of home loans originated in 2005 and 2006 are estimated to be from the 1% mortgage family, with multiple payment options. By its proponents, the success of the 1% mortgage has been hailed as a new era of affordability and flexibility, of an extremely sharp financial tool once available only to the very rich now available to every family in the country. Its opponents tend to think that the 1% mortgage is a bit too sharp for the average homeowner to handle, they fear “Average Joes” could conceivably cut themselves. Despite their division, one thing is certain, the popularity of the 1% mortgage is driven by the relentless pursuit of the American dream. There are more homeowners in the United States today than in any other period in history, and many of those who own homes have only been able to accomplish home ownership, which was once a lifelong achievement, in their early 20’s and 30’s, largely because of the extended availability of these 1% mortgages to normal borrowers.

How much less expensive is a 1% mortgage payment option versus the comparable 30 Year Fixed traditional principal and interest payment?

For a $500,000.00 Mortgage:

1% Minimum Payment: $1200.00

Normal Loan Payment: $3000.00

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Cash Flow / Savings: $1800.00

It’s easy to see why the 1% mortgage refinance is so heavily marketed as a way to cut your mortgage payment in half. In the above example, the 1% mortgage minimum payment option is 60% less than a typical, traditional principal & interest loan payment. 1% mortgage minimum payments are usually 50% lower than even the highly lauded Interest Only payment mortgages, and most loans in the 1% mortgage family include the ability to pay more than just 1% if need be.

So How Does it Work?

In fact, 1% mortgages are more than just the 1% start rate. They have a fully indexed rate as well, which is the true amount of interest due each month. When making a 1% mortgage minimum payment, the borrower is not paying all of the interest due, which is seen by some as a good thing and some as a bad thing. Let’s examine some of the commonly perceived benefits and caveats of 1% mortgages:

Commonly Perceived Benefits of the 1% Mortgage Family:

1. Extremely Low Monthly Minimum Payment: As we’ve seen in our example, the minimum payment option is less than half of the typical traditional mortgage payment.

2. Flexibility to Control Your Own Money: Unlike a traditional mortgage, which requires a payment to principal each month, 1% mortgages allow borrowers to take the power into their own hands to make principal payments when they want to, e.g after a bonus or a particularly good year.

3. Separate Cash Flow from Equity: While many personal finance pundits laud the benefits of building home equity, the reality is that investing home equity yields a 0% return on investment on a month to month basis. In the above example, paying the traditional principal and interest payment forces the borrower to invest $1800 more each month in their home, money which is locked up entirely in the equity of the home. Home Equity is illiquid, meaning all this money locked in equity cannot be accessed unless the home is sold or refinanced. The bank won’t cut a check each month for the borrower’s home equity in a traditional loan. With a 1% mortgage minimum payment, that $1800 difference in payments is money in the borrower’s pocket, to invest or spend at their discretion. By deferring interest using a 1% mortgage, the borrower has full access to money that normally would be locked up until they sold the property. That $1800 per month adds up to over $100,000.00 in cash over 5 years on a 1% mortgage, and it’s available every time your paycheck does not get used up paying a huge traditional mortgage payment each month.

4. Maximize Debt Consolidation: Using a 1% mortgage refinance to pay off all of your other creditors, such as credit card companies and high interest rate lenders, means that you can save even more money than with a 1% mortgage refinance alone. Since you aren’t throwing high interest money at your creditors each month, the cash which you save by making the 1% mortgage payment actually goes into your pocket, your savings, your investments, or wherever you need it most. That’s ultimate control. Let’s say that in our $500,000 1% mortgage example above, we rolled in $30,000 of credit card and other high interest debt that have a monthly minimum payment requirement of $1,000. By using a 1% mortgage refinance to pay off those debts, total monthly savings using the earlier example would be over $2800 per month, $1000 from the debt consolidation plus $1800 from the difference between the traditional loan payment at 6% and the 1% mortgage minimum payment.

5. Turn Equity into a Tax Deduction: First, the 1% mortgage payment is 100% interest and therefore should be 100% tax deductible in most cases. Secondly, One of the most attractive benefits of 1% mortgages is the additional tax deduction available on deferred interest. What this means is that borrowers can realize a tax deduction on interest they did not have to lay out the cash for, and choose the time at which this deduction is realized, which can be a huge savings upon liquidity or refinance. For real estate investors, this is a huge advantage as it can often wash out the capital gains consequences of selling a property. Disclaimer: We do not dispense tax advice, and you should consider consulting a CPA.

6. Easy Qualification: Normally, to qualify for low payment mortgages, borrowers are required to have exceptional credit. However, 1% mortgage refinance loans are routinely available to borrowers with credit scores as low as 620, and if they are borrowing less than 80% of the value of their home, scores can even be in the 500s provided there are no late mortgage payments reported on their credit file. The borrower’s income can be stated, and sometimes no income or employment documentation is required at all.

7. Enhanced Protection from Foreclosure: Because the minimum payment option is so low, the cash savings each month so high, and the loan is so flexible, the 1% mortgage family offers homeowners a low minimum payment option which they have a much higher likelihood of paying should they suffer an interruption of income or become disabled.

8. Biweekly Payments: A popular way to maximize the benefits of the 1% mortgage refinance is to elect to make biweekly payments (which are available on select 1% mortgages). This optimizes the loan to coincide with most borrower’s payment cycles and reduces any possible negative effects of deferring interest.

Commonly Perceived Caveats of the 1% Mortgage Family:

1. Artificially Low Payments: Because the minimum payments are so low compared to traditional mortgages, many pundits fear that people who would normally not qualify for home ownership can now own a home. The fear is that new or “low income” homeowners could “get in over their heads” by buying more house than they can truly afford. Ultimately, it is up to the borrower to decide how much they can afford.

2. Deferred Interest: Often referred to as negative amortization, this concern is commonly cited by journalists as a “negative” because the loan balance may increase over time if the minimum payment is always selected. However, this perspective does ignore the advantages of dramatically increased cash flow in the borrower’s pocket each month and the tax benefits of deferring interest. Of course, the borrower can choose for themselves whether they want to spend their money paying interest to the bank or if they would rather put the difference into their own pockets.

3. Depreciation: If the value of the borrower’s home falls dramatically, and other factors force the borrower to sell the home while the value is low, the borrower may wind up owing more than the home is worth. This is a valid risk over short periods of time for all types of mortgages, not just 1% mortgages. Even a traditional principal and interest mortgage does not pay off enough principal over the first 5 years of its life to offset a dramatic short term decline in home values. The risk of property values declining is a real risk of owning property, period. However, history tells us that residential real estate appreciates consistently over any given ten year period in the past 50 years.

4. Too Easy To Qualify: This may not seem to be a disadvantage to most borrowers looking to purchase or refinance a home, but there are those who believe that borrowers should be forced to document significantly more income and assets to qualify for these types of loans. A lot of this sentiment is an outgrowth of antiquated conceptions of 1% mortgages as a “Rich Man’s Mortgage”, which used to require significant net worth to obtain, and some of it is attributable to equally antiquated “one size fits all” notions about mortgages. Your perspective will likely depend on whether or not you are in a position to provide extensive documentation of your income and assets in support of your loan application.

Many of the criticisms of 1% mortgages revolve around the adjustable rate variety of these mortgages, which like all adjustable rate mortgages go up and down with the rest of the market. However, in most 1% mortgages, the minimum payment stays fixed and can go up or down only 7.5% per year. So if your payment in Year 1 is $1000.00 , in Year 2 it can go no higher than $1075.00. Because the rate on the loan can change more or less than the minimum payment, which is extremely low, the loan can result in the deferral of interest if only the minimum payment is made. Many of the amortization issues which are seen by critics of 1% Mortgages as their key detractor have been recently resolved by the introduction of fixed rate minimum payment loans to the 1% mortgage family.

Fixed rate 1% mortgage variations, the latest additions to the 1% mortgage family, have fixed interest rates from 3 to 30 years or more. The minimum payment option is generally available for the first 5, 10, 15 or in some cases 20 years of the mortgage, at which point the 1% mortgage payment recasts or readjusts to the interest only payment or the full principal & interest payment. During the fixed period, the loan payment and interest rates of fixed 1% mortgages are utterly predictable and can be defined down to the penny. Many borrowers who would prefer a fixed rate can benefit significantly from the 30 year fixed 1% mortgage, which actually carries a minimum payment of 1.95% and a fixed rates in the 6% to 7% range for 30 years.

While there are those in the journalism community who believe that 1% mortgages have too much power for your average homeowner, ultimately the decision is in the homeowner’s hands. Make a high payment to the bank each month, or put the money in their pockets. And homeowners seem evenly divided, as refinances into loans from the 1% mortgage category are projected to represent over 50% of all refinances in 2007. Traditional mortgages are not a one size fits all solution, and neither are 1% mortgages, but with low minimum payment options, excellent debt consolidation capabilities, significant cash flow and tax advantages made possible by deferring interest, and flexibility to control your finances or insulate yourself from interruptions in income or disability, 1% mortgages continue to post significant growth across the country. Whether or not a 1% mortgage refinance is right for you should be determined by performing a detailed analysis of your personal financial situation with a home loan professional who has extensive experience with 1% mortgage products. As always, we welcome your calls and emails.

Tristan Hunt is a seasoned financial professional with a wealth of experience in the mortgage industry, advising clients on Debt Consolidation & Refinancing. Phone: 800-515-8443 Website: http://RefinanceOne.net

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Ditech, is one of the leading lenders in the country. They have the size, experience, and capabilities needed to help almost any homeowner. With Ditech being one of the few mortgage lenders approved to offer President Obamas “Making Home Affordable” plan, the advantages of working with Ditech are even greater.

This plan which, Ditech is approved to offer, allows homeowners a chance to get a mortgage refinancing or modification into a more affordable monthly payment. This plan is aimed at helping struggling homeowners avoid lose their home. One of the biggest guidelines of this plan is that homeowners who are approved for it will get a home loan payment which is not more than 31% of their total gross monthly income. In many cases, homeowners, especially financially struggling ones, are paying upwards of 50% or even more of their monthly income towards their mortgage. The savings for homeowners with a bad mortgage can be 20% or more each month, which easily can add up to hundreds of dollars every month.

Another big part of this plan is that there is over $75 billion dollars funding it. The bulk of this cash will be given to mortgage lenders, like Ditech, who offer refinancing options to struggling homeowners. With this money, lenders can approve more applications, and save more homeowners from losing their home. This is all possible because the money given to the lenders is an incentive. Every time a lender uses this plan to help a homeowner, they are given the money. This money will cover any closing costs and fees, as well as some of the financial burdens or risks of the lender for approving you.

Ditech mortgage refinancing can help homeowners. This plan enables millions of homeowners a chance at a more affordable mortgage through refinancing or home loan modification. Contact Ditech today and see what they can do for you. Odds are, if your a struggling homeowners, this Obama stimulus plan can help you.

At my site I will teach you how to properly refinance or modify a home mortgage saving you thousands of dollars, or even your home. A lot of Greedy Mortgage Lenders will try to suck you dry if you let them. Learn the right way to refinance or modify your home loan at my site: http://www.refinancingcondo.com

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The Illinois payday advance loan, as maintained by the Payday Loan Reform Act of the State of Illinois is commonly considered as a quick and convenient way to get cash. You simply need to write a post-dated check and the loan company you are applying with will provide with cash on the spot. However, although the state considered the Illinois payday advance loan as the most convenient way of borrowing money, the state still placed certain limitations and requirements for such type of loan. These requirements and restrictions are generally covered by some provisions under the law which state that the Division of Financial Institutions of the Department of Financial and Professional Regulation should license and regulate entities that provide Illinois payday advance loans.

Speaking of entities, it is interesting to know that almost thousands of companies on the web offered Illinois payday advance loans especially for those who are seeking for Illinois payday advance loans so to cover whatever urgent needs the customers have, whether car repairs, home repairs, unanticipated bills, or for some special occasions. Among the Illinois payday advance loan providers operating on the web are the following:

The Cash Store.com

The Cash Store.com actually operates online to provide payday advance loans in the state of Illinois, Idaho, Michigan, New Mexico, Oregon, Texas, Utah, Washington, and Wisconsin. And since we are dealing about Illinois payday advance loan here, it is then interesting to know that The Cash Store.com provide the people the opportunity to obtain cash of $50 to $1,000. This amount can only be obtained by means of applying Illinois payday advance loan through their online Illinois application. However, it is just necessary to note that there are certain requirements for Illinois payday advance loan and these involve a regular source of income, an active checking account, a valid driver’s license or state identification. Once your application for Illinois payday advance loan is approved, the fund will be directly deposited into your checking account, so you can have it as early as you need it.

Payday-Loan.web.com

Finally, here is Payday-Loan.web.com as another notable site for Illinois payday advance loan. This site actually provides the people access to payday advance loans no just in the State of Illinois but also in some other states in the US. As such, they basically deal everything about the USA payday loans and they are composed of experts in the field of online payday loans. In particular, to apply for Illinois payday advance loan, you just need to fill out the online Illinois payday advance loan application form and wait for the approval. Once the application is approved, expect that the fund will be wired into your account in just matter of hours.

Did you know that President Obama has provided a way for millions of Americans to avoid foreclosure and bankruptcy? There is a new $75 Billion-funded Stimulus Package set to assist as many as 9 million homeowners in the US who are stuck in financial crises. Since the economy has been turbulent, the housing market has suffered greatly, putting homeowners as well as lenders at risk. Under the Plan, both sides receive assistance, so that the economy can slowly pick up once again.

If you are facing extreme financial hardship, you may be eligible for either mortgage refinancing or a loan modification.

What’s the difference?

Previously, refinancing was only an option to homeowners who had at least 20% equity in their homes. But because of decreased home values, the guidelines have been re-written so that it is easier than ever to be approved. If you have a Freddie Mac or Fannie Mae owned loan, and your home is your primary residence, you qualify if you owe more on your loan than 105% of your property’s market price.

Your other option is with receiving a loan modification. Modified loans have renegotiated terms either through the interest rate, extension of years, or repayment options, as ways to lower the monthly payments. Since banks lose out for every foreclosed loan, the government has stepped in to provide a $1,000 incentive to the lenders for each successfully completed loan workout. You can receive assistance if your home is your primary residence, and your debts are no more than 55% of your gross income. Your new payment, then, is calculated as no more than 31% of your gross monthly income. Late fees might also be waived. You can work with your lender to come up with the best strategy to help you break free from financial hardship and continue to afford your home.

Overall, the options in the 2009 Stimulus Package can be beneficial to so many homeowners that it is in your best interest to research the guidelines for your lender and apply before you stand to lose your home.

For tips and facts about how you can benefit from Obama’s Home Stimulus Plan – or to find out if you qualify, visit our no nonsense home stimulus guide: http://ObamasStimulusPackage.net

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These days everyone wishes to acquire a home for the family and to buy the dream house they do not wait till a huge sum of money gets accumulated in the bank account or buy the house at old age when there are sufficient funds instead it is being done before or after marriage by applying for loan which has become quite common and a necessity in order to get the perfect dream house. The most common type of loan which is being popularly applied by the majority of people is the loan that carries a fixed rate mortgage. The beauty of this loan that makes it loved by all is that the principal and the interest amount remains the same for the entire period of loan no matter if there are any highs or lows in the market economy or inflation, deflation. It also keeps the monthly budget steady as the amount to be paid is stagnant and it can be well planned and set aside in advance, because it is so designed as a planned expenses for a couple of years.

These fixed rate mortgage loans come for a minimum period of 15 -30 years. It is advisable to go for a long term which will ensure low rate of interest and as a result a less amount to be taken out from the monthly budget.

While applying for the fixed rate mortgage loan it is important to wait and study the interest market as the fixed rate mortgage keeps on fluctuating, thus the day the rates are found to be less as compared to other days is the right time to apply for the loan as the interest in fixed rate mortgage loan is fixed and hence the lowest rate should be opted. Moreover the interest rate also depends upon the credit history of the borrower as if the credit score is good and high then the interest rate is definitely going to be low, apart from it the monthly income also play a major role to get the right kind of loan which is affordable.

A Fixed Mortgage Rate loan ensures a lot of savings because the amount for this loan is fixed for the entire term of the loan and does not get affected with any changes in the economy and hence gives time and space for a lot of savings. Most of the consumers have now realized that fixed rate mortgage loan is the best kind of loan suitable in these days and hence the demand for this loan has increased in the recent time. Everyone wants stability in life especially when it comes to financial aspects and hence no one would take chances. Thus, for those looking for a loan, join the race and lock the right kind of rate of interest and live a peaceful life forever, knowing that your interest rate will never increase! Get a Fixed Mortgage Rate online and eliminate all hassles of going from lender to lender.

Choosing mortgage rates that suits your needs is no longer difficult. You can find an entire range of mortgage brokers, online vendors who are ready to offer their quotes online at ratessupermarket.ca. It enables you to compare a wide variety of the market as their mortgage rate comparison includes the big banks, credit unions, trust companies, specialty lenders, and mortgage brokers. Finding the Mortgage Rates could not be any easier.

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100% home mortgage refinance frees up your money for other purchases, like a second home, renovations, or debt consolidation. To get the best deal on your cash out refi, look online for your next lender. By evaluating loan quotes that you can get in minutes, you can save thousands with just a couple hours of research.

Better Mortgage Lenders Online

If you like low rates and fees, then you will find your best lenders online. Technology and competition has pushed down refinancing costs, saving you money.

Online financing companies also give free personalized loan estimates, so you have real numbers to make your refi decision. Requesting quotes is also a good way to “test-run” a company to make sure they deliver on prompt customer service.

Items To Check Before You Sign

Interest rates should be at the top of your list when researching lenders. But also take a look at closing and miscellaneous fees. On average, your refinancing closing costs equal no more than 3% of your principal. But for 100% refinancing, you may have to pay more, especially if you have poor credit. Early payment fees should also be dropped, in case you decide to move or refinance again.

The APR will give you a picture of the total cost of the loan. There are cases when a higher rate loan might actually save you money though. For example, if you plan to move in a couple of years, you may get a bigger savings by not forking out thousands at closing, even with the higher rate. For these types of situations, you need to use your calculator to determine which is the best option for you.

Commit When You Are Ready

When you have found the right loan package, commit to it as soon as possible to lock in rates. Your application can be completed online in about ten minutes with final paperwork arriving in the mail in a couple of days. Once your contract is complete and received by your lenders, your money can be wired to the appropriate accounts. From start to end it takes about 10 business days.

Visit http://www.abcloanguide.com/refinance.shtml for a list of 100% mortgage refinance lenders online. View our recommended 100% mortgage refinance lenders online.

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Why High Priced Attorneys:

In most cases it is not necessary for the average homeowner to hire legal advise. Commonly whenever a homeowner hires high priced counsel they are paying for something that does not take a lot of energy or work to complete on their own. Many homeowners get nervous and worried about their mortgages being behind and they start to panic. Making a simple phone call to your mortgage company, and talking to them will get you on the right track towards straightening out your mortgage problems. I have heard about clients using attorney’s to get out of foreclosure when they don’t have to. That’s a simple task in it self that does not necessarily require a foreclosure attorney that can get one out of foreclosure and back on track. A key thing that a person in foreclosure needs to do besides calling to their lender is to find out what date their property sale date is scheduled for, once they have that date, then use that date as their guide for making the payment if possible.

A homeowner that is in foreclosure can call directly to their mortgage company’s foreclosure attorney to get their property sale date information too. If paying is not possible by the sale date, then just keep requesting for sale date extensions through your lender. There are some mortgage companies that will extend a sale date 5 time without the homeowner paying in come cases with the right reason. That is like getting another 5 months on top of the amount of time since the last payment was last made by the homeowner, which might add up to close to a year since the last payment with a few sale date extensions.

Now if a homeowner can’t make a payment in 9 or 10 months for example, that person might not be the ideal candidate to be a long term homeowner. So ladies and gentlemen there are many ways around not making your regular mortgage payment which will affect your credit. However, you are not making any payments. We don’t encourage this, but if you don’t have any other choice then you might have to avoid paying, and squat on the property for a while and then eventually move out or pay up. In some cases homeowners have avoided mortgage payments for well over a year, and have legally continued to live on the property. There are strict rules when it come to foreclosing and auctioning off any property in all state. If you know how the “game” is played, you can use this to your advantage to try to fix your personal issues, and buy a little time to do so. Lookout for more mortgage updates coming soon.

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