Home Loan | Mortgage | Refinance

Archive for December, 2009

An adjustable rate mortgage, or ARM as it is popularly known as, is a mortgage loan [1] in which the interest rate on the note [2] is periodically adjusted based on a variety of indices [3]. Different lenders use different indices to calculate their interest rates, or their adjustable rates. Some of the commonly used indices are the 1-year constant-maturity Treasury (CMT) securities, the Cost of Funds Index (COFI), and the London Interbank Offered Rate (LIBOR). However, a few lenders prefer to use their personal or own indices to determine the rates. Lenders may choose to do this to avail a steady margin from the borrower, and their own cost of funding is related to the index. As a result, the payments made by the borrower may also change over time in accordance to the fluctuations in the resultant interest rates. Typically, the adjustable rate mortgages are characterized by their index and their limitations on charges or caps [4]. In many countries, the adjustable rate mortgages are the standard means of availing finance by offering the homes as securities, and in such cases, the credit facility is simply referred to as a mortgage.

Basic features of ARM or adjustable mortgage

The main features of ARM are:

The initial interest rate

It is the rate of interest associated with the ARM at the time of conception of the loan facility. The initial ARM rate is generally well below the existing current ARM market rates charged during subsequent years.

The adjustment period

This is the actual length of time, of the total loan period of the ARM, which is scheduled to remain constant or unchanged. The interest rate is reset at the end of the adjustment period, and the monthly loan repayment options are recalculated.

Index rate

Majority of the lenders prefer to associate the ARM mortgage interest rates changes with changes occurring in a particular index. As stated previously, lenders generally set the ARM rates on a variety of indices. The most common index rate used is one, three, or five years treasury securities index. Another commonly used index is the national or regional average cost of funds to savings and loan associations index.

The profit margin

The profit is calculated by adding a certain percentage of the loan amount to the amount of the base index rate. The difference of the net payable loan amount minus the base index amount is the actual profit enjoyed by the lender in an ARM.

Adjustments and interest rates

ARMs provide a unique adjustment period for borrowers during the inception of the loan facilities. The rate structure can change at the end of the adjustment period. However, several lenders provide more than one adjustment periods. It is possible for the borrowers to change certain aspects of the net payable interest rates with each new adjustment period. So there is an advantage to avail different interest rates with individual adjustment periods. If the borrower is market savvy, he or she can select different indices or interest rates and save money, provided the lender agrees to the rates and indices.

Initial discounts

Initial discounts are interest rate concessions, and are very commonly used as promotional aids to attract customers for ARMs. Such discounts are only offered during the first year of the ARM loan. The discounts help to reduce the interest rate below the prevailing rate for a certain duration of time so the borrower can save some money through temporary reduced rates.

Negative amortization[5]

Ideally, the net chargeable interest rate decreases with a regular payment of monthly dues against any credit borrowings. In case of mortgages the rates decrease over a period as loan pay offs occur. However, in case of ARMs, the reverse happens, and the mortgage balance actually increases whenever the ARM base index rates climb up. As the ARM base index increases in magnitude, its associated interest amount and repayment cap also increases, and the borrower ends up paying a greater amount to redeem the loan. This is a negative feature of ARMs and the borrower may suffer a certain loss over the loan tenure until redemption occurs.

Conversion to a different loan format

ARMs have an agreement according to which the borrower can convert the ARM to a fixed-rate mortgage at designated times. This is often a fall back facility in case the ARM does not work in the borrowers favor and the buyer wants to revert to a safe option of a steady rate of interest.

Loan prepayment

In majority of loans and credit facilities, lenders prefer the borrower redeem their dues as soon as possible, to recover the original lending amount. However, in case of ARMs a prepayment can result into a potential loss for the lender in the long run. So lenders generally include a clause in the ARM agreement which may force the buyer to pay special fees or penalties in case the borrower decides to pay off early. ARM prepayment terms are usually negotiated in the beginning before the credit facility is availed.

Summary

Even though ARMs have a low starting interest rate, there is no indication that the future cost of borrowings will be maintained at the same rate, since the base index rate is likely to change. If the indices rise, the net ARM cost will also be higher, and the borrower will have to pay a higher loan amount. So there is an inherent risk involved with ARMs. Certain studies indicate that on average, the majority of borrowers opting for adjustable rate mortgages save money in the long term.

Legend

[1] A mortgage loan is a specific type of loan, which is secured by some property or a fixed asset value having a certain financial value through a lien, or a legal written commitment empowering the creditor to sell the security offered in order to recover the outstanding dues, in case the creditor is unable to pay or redeem the borrowed amount. The word mortgage when used alone, in day-to-day life, is often used to convey a mortgage loan.

[2] A written promise to repay or redeem a specified borrowed sum of money, along with its interest at a predefined rate and length of time.

[3] An index rate is a widely used rate of interest generally used by lenders to set the interest rate on loans and credit cards.

[4] Loan capital or amount.

[5] Amortization is a gradual reduction in the value of an asset or liability by some predetermined process. In case of loans, it means a gradual or specific decrease in the magnitude of the net payable interest amount over a period, until the entire loan amount becomes void and is deemed as paid.

Refinanceitt.com offers you mortgage refinance with reasonable interest rates. Get adjustable mortgage rate compared to others.

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A sunshine Spanish Mediterranean holiday home for many Europeans, but especially the British, has been an aspiration achieved by many since the early 1980’s, when the UK allowed the free flow of capital, and property price gains allowed many to sell up in Britain and move to Spain and her islands – Menorca for example.

A slow down of Brits buying abroad happened in the early 90’s when recession hit the country, but overall the pace of number of people buying a home and often buying a business too has been relentless.

And with a growing number of British moving abroad, the UK’s financial infrastructure followed them, with British banks setting up branches in Spain and the Spanish islands like Menorca (ironically some of the British banks have now been taken over by Spanish ones), mortgage companies tailoring products for overseas home purchase,low cost airlines providing flights to Menorca and insurance companies offering building and contents cover.

For many of the British buying in Spain, it was like Britain with sunshine.

But times have changed, Spain is flooded with unsold brand new and re-sale properties, and property prices have crashed. In Britian property prices have dropped and are expected to fall further for the next year or more.

Confidence is low – unemployment in the UK is expected to hit 3 million before it peaks, and people with some money who might ordinarily have considered buying a property abroad are often keeping it in assets where the money is easily accessible – something it’s not when tied up in a property during a recession.

And of course the financial infrastructure that supported the British buying homes and businesses in Spain and her islands is in full retreat. The banks who were lending money readily to Brits moving abroad aren’t lending much, and many of them have been bailed out with taxpayers’ money – overall a dismal picture of a once flourishing overseas property market.

So, is now a good time to buy in Spain and her islands? If you’ve always fancied an apartment or villa in glorious Menorca – is this the time to take the plunge?

Part of that answer depends upon your individual financial circumstances, but if you need to borrow to buy a second home, and if you need income from holiday rentals to sustain your new Menorca property…halve the figure you think you might achieve and re-calculate to get closer to what you might realistically get from renting out to those taking Menorca holidays in today’s market.

But if you have a surplus of cash and are ready to buy a property in Menorca – is now a good time to buy?

There’s a property glut in Spain. If property was water, Spain and her islands would be renamed Atlantis. Developers and private owners alike are more than keen to sell, and anyone who is a cash buyer won’t have to wait long before they see a bargain. But don’t necessarily buy the first property you like that seems good value.

Draw up a list of say three or four apartments or villas you have viewed and liked and put in an offer of around sixty per cent of the already discounted price, starting with your favourite one, telling the owners that the offer remains good for two weeks, and at that time you will look elsewhere. Within a couple of months you, perhaps even weeks, you could have the property you want at an amazing price, even if the owners come back with a counter offer.

One bit of advice from UK based Tribune Properties is to avoid buying a brand new property.

‘Only buy a new property in Menorca if you’re absolutely certain that the developer has the funds to finish off a development and the promised infrastructure that goes with the new development…and even then only spend what you can afford to lose. Guarantees are often useless if a developer goes bust. And just don’t buy a property under construction – the development could be mothballed for years to come – along with any deposits and staged payments already paid by a buyer.’

Their final bit of advice is not good news for Menorca property developers either, or for private re-sales.

‘If you can hold on a few months, you might find even better bargains than there are now in the autumn when the same owners who are selling now have failed to find a buyer, and at the end of the holidays season owners might be prepared to listen to offers in the hope of finally selling their Menorca property.’

More information about Menorca property including apartments and Menorca holiday villa reviews can be requested at yourmenorca.net

Also available is a weather forecast for Menorca Spain with today’s weather in Menorca Spain

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Citizens Property Insurance Corporation was created by the Florida Legislature in 2002. The purpose of forming Citizens Property Insurance Corporation was to provide insurance coverage for homeowners in Florida, especially those in high-risk areas.

Citizens Property Insurance Corporation is the off-shoot of a merger between two state-run insurance entities. These two companies that make up Citizens Property Insurance Corporation are the Florida Residential Property and Casualty Joint Underwriting Association 9FRPCJUA) and the Florida Windstorm Underwriting Association (FWUA).

Citizens Property Insurance Corporation provided the kind of coverage that high-risk homeowners need. Before Citizens Property Insurance Corporation, Florida homeowners had trouble finding an insurance company willing to fund for the cost of their damages. With Citizens Property Insurance Corporation, Florida homeowners are looking at coverage that could reach up to $350,000. This amount which Citizens Property Insurance Corporation is willing to provide covers the costs of damages, repair, and rebuilding. In addition, Citizens Property Insurance Corporation also pays for reconstruction of structures outside the house such as fences, swimming pools, and the like. Replacement costs for lost or damaged items are also included in the coverage that Citizens Property Insurance Corporation provides.

Recently though, Citizens Property Insurance Corporation is experiencing a squeeze in its budget. Four hurricanes — Charley, Ivan, Jeanne, and Frances — devastated Florida. On July 28, 2004, Citizens Property Insurance Corporation estimated about 78,257 insurance claims for damages wrought by the four hurricanes.

According to Risk Management Solutions, an independent organization that assesses disaster damages, Citizens Property Insurance Corporation faces total damages worth $1.77 billion. Contrary to what Citizens Property Insurance Corporation released in late July, Risk Management Solutions found that the number of claims reaches almost 92,000. Citizens Property Insurance Corporation also faces the challenge of even higher claims within the next few months.

Citizens Property Insurance Corporation suffers $252 million in damages in their wind-only policies for High-Risk Accounts from Hurricane Jeanne. The estimated loss from the same hurricane for the Personal Lines Accounts of Citizens Property Insurance Corporation is $53 million. Citizens Property Insurance Corporation experienced somewhat lesser deficit from Hurricane Jeanne in their Commercial Lines Account with only $27 million to grapple with.

Hurricane Ivan costs less for Citizens Property Insurance Corporation in damages. The High Risk Accounts of Citizens Property Insurance Corporation, the former Florida WUA, only costs $220 million, a somewhat lower number compared to Hurricane Jeanne. Citizens Property Insurance Corporation estimates a total loss of $12 million from Hurricane Ivan for both their Personal and Commercial Lines Accounts.

Citizens Property Insurance Corporation estimates spending $225 million worth of coverage for damages and loss caused by Hurricane Frances. For the residential multi-peril policies of Citizens Property Insurance Corporation, the amount reaches up to $50 million. Citizens Property Insurance Corporation also expects to spend an additional $15 million in commercial residential policies from the same hurricane.

Citizens Property Insurance Corporation projects a loss worth $850 million from Hurricane Charley for their wind-only High-Risk Account policies. For the Personal Lines Accounts, Citizens Property Insurance Corporation sees spending around $60 million. An additional $15 million from Citizens Property Insurance Corporation is also needed to cover their Commercial Lines Accounts. All in all, Hurricane Charley costs Citizens Property Insurance Corporation an astounding $925 million.

Citizens Property Insurance Corporation is no doubt facing a peril of going into deficit. If Citizens Property Insurance Corporation, the company will be forced to assess other insurance companies in order to cover all claims.

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“citizens Property Insurance Corporation” – 31 ( 5.4%)

Mortgage broker. Mortgage lender. Bank loan officer. They’re all the same. Their job is to sell you mortgages. Period… Well, not exactly. While all three are closely related, the nature of their jobs deviates slightly from each other.

What’s a mortgage broker?

Contrary to popular belief, mortgage brokers do not work for the loan company or any lending organization or firm. A mortgage broker is a real estate financing professional who works independently from a lender. A mortgage broker concentrates on the instigation of residential or commercial mortgages. The lending company is the “wholesaler.” The mortgage broker is the one who provides the actual funding and servicing to these loan “wholesalers.”

Basically, mortgage brokers are freelance agents working with (not for) various wholesale lenders. Almost half of all the real estate residential loans in the United States are instigated by mortgage broker firm operations.

Mortgage Broker Services

Mortgage brokers have direct access to hundreds of loan products. Because of this, mortgage brokers are the best when it comes to providing consumers cost-effective and efficient options that cater to their specific loan needs. The mortgage broker evaluates and provides assessment based on the financial details which the customer gives. Using this information as leverage, the mortgage broker would then search through the hundreds of posted rates in order to find the best one for the customer. In this way, not only does a mortgage broker provide their customers with expertise and convenience, but choice as well.

Mortgage lending is a complicated task. Mortgage brokers act as guides for consumers, helping them through the entire process. When confusion sets in, mortgage brokers help dispel this by offering extensive choices and advice to aid the consumer maintain his financial balance with his goal.

When customers have a bad credit or a less-than attractive credit history, mortgage brokers help them get loans by looking for lending companies that are willing to let these types of consumers borrow money. Mortgage brokers also use novel loan packages to allow customers with low to moderate income enjoy the benefits of home ownership.

Mortgage brokers help consumers save on their time, money, and effort. Because mortgage brokers provide assessment on their clients’ financial status, they can easily target products which more or less cover and fit with the clients’ needs. This makes the job easier and less time-consuming. Mortgage brokers maintain contacts with several lending companies. This allows mortgage brokers to get the cheapest loans for their clients.

National Association of Mortgage Brokers

Established in 1973, the National Association of Mortgage Brokers is the primary trade association that represents the community. The association is affiliated with 46 states of the United States and promotes professional certification for mortgage brokers.

Mortgage brokers who are members of the National Association of Mortgage Brokers are required to follow the association’s code of ethics and keep only the best lending practices in his profession. The mortgage broker acts as the liaison between the lender and the borrower. A mortgage broker is responsible for bridging the gap between these two. Such a large responsibility requires a mortgage broker to be completely thorough in his dealings with both and in the mortgage process.
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“Mortgage Broker” – 31 ( 5.8%)

Each and every year, many of us go on vacations. Vacations are a great way to relax, and get away from the everyday pressure of life. Over half of all American families take their vacation between April and September, meaning that they spend a lot of money on travel. Whether it’s international or domestic travel, you can spend a fortune before you actually realize it.

As we all know, traveling with cash or checks isn’t always a wise decision. Renting cars, flying in airplanes, or checking into hotels is a much easier task if you have a credit card. Even though you may decide to use your credit cards for big purchases only, you’ll find that the traveling experience will be a much smoother process.

Unlike cash or checks, credit cards make handling your documents and receipts much easier. If you purchase something, records from that purchase will be made with your credit card manufacturer, which you can always fall back on if something happens. Things can go wrong without notice, so you’ll always want a backup plan or something to have as proof in the event of a disaster. With a credit card, all you need to do is look back at your statement and you’ll find everything that you purchased in one easy to find location.

Credit cards are also much easier to handle and keep track of than cash. If you decide to go to a theme park or a resort, you’ll find that cash can be a bit bulky to handle. Carrying a large amount of cash can be hard to keep track of, even though it isn’t recommended. Credit cards use up less space, and you can keep them in your pocket. When you need to pay for something, you don’t need to count through your cash, simply hand over your credit card and sign your receipt.

If you don’t have any credit cards, you can always get them for vacation purposes only. There are many benefits to having credit cards, besides the fact of them being easier to keep track of. There are many different credit cards out there to choose from, including those that will give you cash back or rewards when you make a purchase. Cash back is normally a small percentage of what you spend, and is given to you at the end of the month.

Some credit cards will give you reward points for every dollar you spend, which can be redeemed with several merchants offering a variety of products. Although cash back is always a great thing, many people find reward cards to be just as good. You can enjoy your vacation, buy just about anything you want, and know that the money you spend will help you to buy other things that you may need when your vacation is over. Actually, can you think of this as having your cake and eating it to.

All in all, credit cards can make your vacation easier than ever before. You can earn rewards and cash back with purchases you make using your card. Although you may think cash is the preferred way to go, there are several merchants who actually prefer credit cards. They are more professional, and easier for you to handle than cash or checks. They are easy to obtain as well, providing you have good credit. If you don’t have a credit card, you should look into getting one before you take your next vacation. All you need to do is look for your favorite company online and apply through their website – you’ll normally receive a response in a matter of minutes.

The Illinois Department of Financial and Professional Regulation said it’ll start to use the Nationwide Mortgage Licensing System for license … using the system, which is run by the Conference of State Bank Supervisors, a group of state banking …
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The Illinois Department of Financial and Professional Regulation said it’ll start to use the Nationwide Mortgage Licensing System for license … using the system, which is run by the Conference of State Bank Supervisors, a group of state banking …
Go to Source