Latest Mortgage Articles

Commercial Mortgage Refinance is Critical Now, Before the Commercial Lending World Implodes

Wed, 25 Aug 2010 00:06:05 -0600

Commercial refinance lending and commercial real estate is headed for a bailout, possibly a "TARP 2.0". There is crisis building in the commercial Real Estate market and commercial mortgage refinance. First, a very small market exists to refinance commercial loans. Secondly, the underwriting standards have tightened. Finally, the Obama policies are scaring away investors.

With around $1 trillion coming due in the next four years, there will be plenty of borrowers won't be able to refinance. With all these loans coming due, we are headed for another government bailout.

A bailout only hurts commercial real estate as it devalues the dollar. China and other big foreign investors are only going to shy away from the market if they feel the dollar will further devalue. In addition, capital from American companies is going to flow oversees as they want to buy assets valued in non-dollar currencies.

Now is the time for property owners and banks to execute a plan for commercial loan workout to resolve current loans coming due. The issue for most property owners is not the ability to make the payments rather it is the ability to refinance with the current lender, another lender.

During the looming trillion dollar financial crisis, refinance commercial property will become more difficult if not impossible. During and after a meltdown all the rules change and bank become afraid to lend.

Best thing to do is to refinance commercial property or get a commercial loan review and restructure your loan ahead of the pending storm. Lower your rate, extend the term or get interest only payments (very attractive to commercial banks) If you get in line behind the other trillion dollars of commercial loans coming due conduits may be gone and a commercial mortgage backed securities may be all but shut down completely.

FHA Home Loans - How Can You Benefit?

Mon, 23 Aug 2010 14:10:46 -0600

Some people prefer to take loans from the Federal Housing Administration because of the more advantageous conditions offered. An FHA mortgage loan is insured against default. When the borrower fails with all the payments, the FHA will probably pay; this makes lenders much more flexible with all the loans, within the sense which they give larger amounts.

Another great section of utilizing an FHA house loan is the income matters not, since it is not really a criteria for qualifying. Nonetheless, the income influences the amount you can borrow. The sum rely on the home prices in your neighborhood where you live, and in general, the borrowed funds is restricted to a relatively small mortgage.

The credit record and the debt to income ratio are the elements that really influence your qualifying for your FHA mortgage. With regards to credit, your history doesn't have to be the best, a decent situation will do to meet the requirements. If you speak to a financial consultant, he/she are able to clarify all aspects to suit your needs here.

Here are some more benefits of an FHA property finance loan:

-you can make a payment in advance under 3% of the property's value;

-you don't have to pay any penalty price if you pay the loan before established by contract;

-you can enjoy leniency in the event you face financial trouble;

-you can use other FHA programs to pay for home improvement.

There are also some cons you'll want to be aware of prior to obtaining an FHA loan:

-the amount of money it is possible to borrow might prove scanty to cover the cost of the home;

-you have to pay a monthly insurance premium in addition to a constant fee that will be used to pay the debt regarding default;

-there could possibly be other competitive offers that beat FHA property finance loan programs.

For those who have a favorable credit background and a decent income, it's worth evaluating all of your options before choosing a mortgage program in particular.

Talk to a financial advisor to view what possibilities you will find for you. Make comparisons involving the various offers, and only then choose the correct solution. It's so essential to possess a larger down-payment if at all possible. This is the time and energy to use personal savings, money gifts from family and friends to be able to reduce your debt as much as possible.

FHA Home Loans - What Are The Advantages?

Mon, 23 Aug 2010 14:10:24 -0600

Many individuals choose to take loans from the Federal Housing Administration because of the more beneficial conditions offered. An FHA mortgage loan is insured against default. If the borrower fails with the payments, the FHA will probably pay; this makes lenders much more flexible with all the loans, within the sense they give larger amounts.

An excellent element of utilizing an FHA mortgage would be that the income is not important, since it is not a criteria for qualifying. However, the income influences the sum you can borrow. The sum rely on the home prices in the area where you live, as well as in general, the loan is limited to a somewhat small mortgage.

The credit record and also the debt to income ratio would be the elements that truly influence your qualifying for the FHA mortgage loan. With regards to credit, your history doesn't have to be the very best, a good situation will do to satisfy certain requirements. In the event you speak to a financial consultant, he/she should be able to clarify every aspect in your case here.

Below are a few more benefits of an FHA home loan:

-you can make a payment in advance as little as 3% of the value of the property;

-you do not have to pay any penalty fee if you pay the loan sooner than established by contract;

-you can enjoy leniency in the event you face financial problem;

-you are able to use other FHA programs to cover home improvement.

Additionally, there are some cons you will want to keep in mind before trying to get an FHA home loan:

-the amount of cash you'll be able to borrow may prove scanty to pay for the cost of the house;

-you need to pay a monthly insurance premium in addition to a continuing fee that is to be useful to pay your debt in case of default;

-there might be other competitive offers that beat FHA property finance loan programs.

For those who have a favorable credit history and a decent income, it's worth evaluating all of your options before choosing a mortgage loan program specifically.

Talk to a financial advisor to see what possibilities you can find in your case. Make comparisons between the various offers, and only then choose the correct solution. It's so extremely important to possess a larger down-payment when possible. This is the time to use personal savings, money gifts from friends and family to be able to decrease your debt wherever possible.

FHA Home Loans - What Are The Benefits?

Mon, 23 Aug 2010 14:09:31 -0600

Lots of people prefer to take loans with the Federal Housing Administration due to more advantageous conditions offered. An FHA mortgage loan is insured against default. When the borrower fails with the payments, the FHA will probably pay; this makes lenders extra flexible with all the loans, in the sense which they give larger amounts.

Another great portion of utilizing an FHA home loan is that the income does not matter, which is not a criteria for qualifying. Nonetheless, the income influences the sum you can borrow. The sum depend on the home prices in the region where you live, as well as in general, the money is fixed to a fairly small mortgage.

The credit record and also the debt to income ratio would be the elements that actually influence your qualifying for your FHA mortgage loan. Regarding credit, your history doesn't have to be the very best, a decent situation is going to do to meet what's needed. If you speak to a financial consultant, he/she are able to clarify all aspects to suit your needs here.

Below are a few more benefits of an FHA home mortgage:

-you can make a payment in advance under 3% of the value of the property;

-you don't have to pay any penalty price in the event you pay the debt before established by contract;

-you can also enjoy leniency if you face financial problem;

-you may use other FHA programs to pay for home improvement.

Additionally, there are some cons you will want to be familiar with before obtaining an FHA loan:

-the amount of cash you are able to borrow may perhaps prove insufficient to pay for the price of the home;

-you need to pay a monthly insurance premium as well as a constant fee that'll be used to pay your debt in case of default;

-there might be other competitive offers that beat FHA mortgage programs.

If you have a favorable credit history and a good income, it can be worth evaluating your options prior to picking a house loan program specifically.

Speak with a financial advisor to see what possibilities you can find in your case. Make comparisons involving the various offers, and only then determine the proper solution. It's so crucial to possess a larger down-payment if at all possible. This is actually the time and energy to use personal savings, money gifts from family and friends so that you can reduce your debt wherever possible.

Poor Credit Home Loan - What You Should To Know When Seeking A loan

Fri, 20 Aug 2010 19:10:57 -0600

Many borrowers are confused and anxious in terms of dealing with the mortgage industry. The biggest difficulties appear for people who attempt to get bad credit home loan. Lots of people suffer due to their credit ranking, when they come to do business with lenders, financing institutions don't forgive them. The situation with a bad credit score is you get yourself a higher debt due to a bigger rate of interest charged.

The ideal borrower carries a credit rating above 700, he/she has assets along with a documented income and he/she has money for a down payment. People who don't meet these criteria have to keep working harder to truly improving their odds of loan approval. Before seeing a lender to negotiate a poor credit house loan, you ought to analyze your position carefully. You must also look into the strategies that can improve your credit rating and take measures in that direction.

An individual having a steady employment on a work for 1 or 2 years has good chances to get an unsatisfactory credit mortgage in good conditions. You also have to make sure that you make payment for all the bills punctually and you don't get behind on your rates. If you're able to develop savings in the meantime, that's all the better because you can carry on with more advance payments to get rid of debt. Savings are necessary for that initial down-payment; the greater you can pay of the home value, the fewer your debt.

If you have a look online, you might understand better exactly what it means to apply for an undesirable credit mortgage in terms of payment. You can find estimates for average home prices calculated with the interest levels for great credit and poor credit. As an example if a good credit borrower pays a 7% interest rate, an undesirable credit borrower will pay between .5% and 12% above the prevailing rate. Such figures usually sound alarming and discouraging but the lower your credit rating, the greater you will pay. This is the way the system works!

In case you don't be eligible for a low credit score house loan or else you consider it unacceptable to your situation, you need to try to find solutions somewhere else. Property sellers may sometimes offer a good contract with the possibility to pay for your debt over a pre-determined time period. You thus have more flexibility, lower rates and also the chance to a faster closing.

Bad Credit Home Mortgage - What You Must To Know When Seeking A loan

Fri, 20 Aug 2010 19:10:42 -0600

Many borrowers are confused and anxious with regards to dealing with the mortgage industry. The highest difficulties appear for those who try and get bad credit mortgage loan. A lot of people suffer as a result of their credit score, when they are offered to work with lenders, financing institutions don't forgive them. The issue with a bad credit score is that you obtain a higher debt due to a bigger rate of interest charged.

The best borrower carries a credit rating above 700, he/she has assets along with a documented income and he/she has money for a payment in advance. People who don't meet these criteria ought to work harder to really improving their likelihood of loan approval. Before seeing a lender to negotiate a negative credit home loan, you need to analyze your circumstances carefully. You should also research the strategies that will improve your credit and take measures in that direction.

A person having a steady employment on a job for 1 or 2 years has good chances to get a negative credit house loan in good conditions. There is also to be certain that you have to pay all of the bills promptly and that you don't get behind on your own rates. When you can develop savings in the meantime, that's all the better as you can carry on with more advance payments to get out of debt. Savings are necessary for that initial down-payment; the greater you can pay of the home value, the reduced your debt.

When you have a glance online, you can understand better what it means to get an undesirable credit mortgage in terms of payment. There are estimates for average home prices calculated with the rates for better credit and low credit score. For instance if a good credit borrower pays a 7% apr, a negative credit borrower will probably pay between .5% and 12% above the prevailing rate. Such figures usually sound alarming and discouraging however the lower your credit score, the greater you can pay. This is the way the system works!

Just in case you don't be entitled to less-than-perfect credit mortgage loan or else you consider it unacceptable to your situation, you need to look for solutions elsewhere. Property sellers may sometimes give a good contract with the possibility to pay for the debt over a pre-determined period of time. You thus have more flexibility, lower rates and the chance to a faster closing.

Bad Credit Home Mortgage - What You Need To Know When Seeking A loan

Fri, 20 Aug 2010 19:09:29 -0600

Many borrowers are confused and anxious when it comes to coping with the mortgage industry. The biggest difficulties appear for people who attempt to get less-than-perfect credit house loan. A lot of people suffer due to their history of credit, and when they come to work with lenders, financing institutions don't forgive them. The challenge with a bad credit score is that you get yourself a higher debt due to a bigger rate of interest charged.

The optimal borrower has a credit standing above 700, he/she has assets and a documented income and he/she has money for a down payment. People who don't meet these criteria have to work harder to truly improving their odds of loan approval. Before going to a lender to negotiate an undesirable credit mortgage loan, you need to analyze your circumstances carefully. You must also research the strategies that will boost your credit score and take measures in that direction.

Someone with a steady employment on the work for one or two years has better chances to getting a negative credit house loan in good conditions. There is also to ensure that you pay all of the bills promptly and that you don't fall behind on your rates. If you can have savings for the time being, that's all the better when you can carry on with more advance payments to get rid of debt. Savings are essential for that initial down-payment; the greater you can pay of the home value, the reduced your debt.

When you have a glance online, you'll understand better what it really means to try to get a negative credit home finance loan in terms of payment. You will find estimates for average home values calculated using the rates for good credit and adverse credit. As an example if a good credit borrower pays a 7% interest rate, a bad credit borrower will pay between .5% and 12% above the prevailing rate. Such figures usually sound alarming and discouraging but the lower your credit rating, the greater you may pay. This is one way the system works!

In case you don't qualify for poor credit mortgage or you consider it unacceptable for your situation, you ought to try to find solutions somewhere else. Property sellers may sometimes give a good contract with the possibility to pay for your debt over a pre-determined period of time. You thus have more flexibility, lower rates and also the possiblity to a quicker closing.

6 Mortgage Mistakes That Most People Make - And Pay For Dearly...

Thu, 12 Aug 2010 20:02:23 -0600

Mistake #1: They Have Unrepaired Credit

Your credit score and credit report are, unfortunately, a key factor in how a lender will determine what kind of interest rate they can offer you, while mitigating their own risks as much as possible. For this reason, it's very important to work on improving your score and removing unwanted items listed on your report if at all possible before applying for a mortgage - as this can drastically reduce your interest payments over time. As well, lower interest rates mean that you'll be paying less each month (immediately) for the same mortgage amount.

This can literally equate to saving thousands of dollars every year - money you can otherwise use for things like building up your savings, investing, or even just enjoying life a little more. There's no sense in making the bank even richer, just because of some "score" which you can often improve with simple financial management, or by taking care of some outstandig debts/collections.

Another thing to be aware of is that your credit report - which may list late payments, missed payments or debts sent to collections - is only going to provide "negative" information about your lending profile. In other words, a lender will only see the payment you missed last summer - they won't see that you've been faithfully paying every single month for 7 years.

Repairing your credit may not be the easiest thing at the time, but the process truly is a simple one, and both the long-term and short-term payoffs can be truly astounding.

It's well worth doing...

Mistake #2: They Don't Shop Around

Not all lenders are born equal, and often times certain lenders are only competitive in a certain area (such as commercial loans, or equity take-outs, etc.).

For this reason, the simple act of "shopping around" will be very revealing for you, as some companies simply do not offer competitive rates for certain types of loans, areas, borrower categories, etc. You'll be amazed, and it will save you a fortune just by finding the best possible lender for your needs, who is in the business of serving people like you.

Mistake #3: They Don't Get Pre-Approved

Most potential buyers/borrowers will get pre-qualified, but not necessarily pre-approved.

What's the difference?

Well, there's a big difference. Getting pre-qualified involves zero risk for the lender, and they're basically just saying "we might finance you if everything looks good and our underwriting team doesn't find any issues with you or the property - but no guarantees". You don't want to be going around signing real estate purchase agreements with that kind of off-the-cuff statement.

A pre-approval, on the other hand, is basically the same thing as applying for an actual mortgage, and getting approved - because you'll get an actual commitment from the lender, so long as the application details don't change when the time comes to actually press the button and apply "for real".

The bottom line is that you know exactly what you're working with when you get pre-approved. If you're parusing the real estate market and all you have is a pre-qualification, you really don't know what you can truly afford.

Mistake #4: They Borrow Too Much

It's the old adage of "just because you have it, doesn't mean you can afford to spend it".

Buying a home is certainly an exciting time, but don't fall into the trap of borrowing as much money as you possibly can to get your "dream" home. Your mortgage is only one of many expenses - even when it comes to your home itself.

Between maintenance, property taxes, insurance, inevitable repairs and necessary renovations, and possibly even legal issues - you need to have some "reserve" funds in place, as well as some positive cash-flow each month that you can use for savings (and living a little!)

And we're not even taking into account life's other expenses - car payments, insurance, kids, etc.

Getting approved for a mortgage isn't winning the lottery. You are locking yourself into a situation where you need to know for sure that you can either sell the house if times get tough and at the very least break-even (which, lately isn't something I'd be too confident about) - or make the payments for the duration of the loan term.

Being optimistic can be dangerous in the long run.

Be cautiously optimistic, and borrow what you can comfortably afford with confidence.

Mistake #5: They Pay “Bogus” Fees

Many people don't know this, but a lot of lenders will inflate the cost of basic things like "document preparation" (ie. pressing the print button), or charging $150 for a credit check that costs a mere fraction of that.

Some fees may be legitimate, but you owe it to yourself to find out exactly what the mortgage application will cost. You'll be paying these guys a small fortune in interest over the years, anyway, so there's no sense in paying a cent more than you need to.

And finally...

Mistake #6: They Don't Budget for Closing Costs

Closing costs are almost always much higher than the borrower might think, and if you're not prepared for the lawyer's fees, taxes, transfer fees, pre-paid homeowners insurance, lender fees and so on.

This can turn into thousands of dollars - and a lot of people find themselves scrambling at the end of the mortgage approval process to scrounge up every last dime, max out every credit card they have and so on just to "make it work".

Obviously, this doesn't leave you in a good position for your first few months to a year of home ownership - which can also be the most expensive when you first get settled, maybe renovate a few things, etc.

Talk to your attorney and/or get a "good faith estimate" from your lender beforehand so you can properly estimate what you need to set aside for your closing costs.

In conclusion - this article isn't meant to scare you off of getting a mortgage.

On the contrary, by simply addressing these mistakes now - and not later - you can get into a position where your mortgage can truly be a point of value, eventually turning itself into wealth as your property builds in value over time and the principal is paid down.

So be sure to recognize and avoid these mistakes.

Your wallet will thank you...

Why the Lowest Mortgage Rate is Not Always The Best Rate For You

Wed, 28 Jul 2010 20:48:55 -0600

Many times I am contacted by mortgage clients asking about what my best mortgage rate is. It is common to believe that everything is an apples vs. Apples comparison with regards to mortgage rates, and that the lowest rate is always the best deal. However, this is often not the case.

Borrowers often overlook the terms of the mortgage, or do not receive disclosure of items that are not attractive to an offer (particularly from Canadian banks). Below are some of the situations where taking the lowest rate will often cost you money in the long run:

-Many times the bank will not even approve you for the amount you need to buy the home you want. However, there are other “A” mortgage lenders out there who will approve you and also give excellent rates.

-I have also had clients who were with a bank who required that the money was taken from an account at their institution, which is not where they banked, and they found it very inconvenient to have to transfer money every month.

-Your mortgage lender may offer you a low rate to get into the door, and then when it comes time to renew your mortgage provide you an offer that is significantly higher than the market is offering. At that time it may be difficult for you to get an approval elsewhere and you could be stuck with their offer.

-If you get a variable mortgage with the intention to lock in to a fixed mortgage rate at a later date, many bank lenders will only give you posted rates when you lock in, meaning your interest rate will be much higher.

-Do you want mortgage life insurance coverage to protect yourself in case of death or disability? Many lenders including all the banks offer coverage that is strictly tied to their institution, so if you become sick during that coverage and try to move your mortgage, they will discontinue coverage and you will be paying much higher premiums to be re-insured elsewhere.

-Home Equity Line of Credit (HELOC) mortgages are often reported on the credit bureau, particularly with the banks and credit unions. It is generally much more favourable to have a HELOC mortgage that is not reporting on your credit bureau, as it is more favourable for your credit score. This could save you money and allow you to borrow money easier in the future.

-Sometimes a lender has a product that works with a strategy that is of benefit to you but may not offer the very lowest rate to get those benefits. An example of this would be the TDMP mortgages, which is a structure to make your mortgage tax deductible in Canada, and can help to create a great deal more wealth than a lower rate may offer.

Save Money on your Mortgage, Not Just on Your Mortgage Rate

These are just a few examples of things that could cost you much more money than saving .1% on your rate will give you. Keep this in mind next time you meet with your banker about your mortgage and often it is best to seek a second opinion from a mortgage broker who can give you helpful advice.

Following The Stock Market May Help Understand The Real Estate Market.

Tue, 25 May 2010 12:05:44 -0600

The recent events in the financial markets, which witnessed major brokerage and insurance companies fall, had a big effect on stock prices.

But for the average Joe, it is not the level of stocks that worries him, but the price of homes.

Since the housing and real estate bubbles caused most of these problems, we can understand why they are closely related. Both consumers and lenders are at fault, since too much easy lending put borrowers in over extended credit situations and lenders were able to sell off these risks in specialized markets, so they did not have to worry about the risk. This easy credit policy was a two edged sword, since both borrowers and lenders were in jeopardy. Nearly $7 trillion of new residential real estate and consumer debt was created during the first 6 years of this decade, according to Daniel Alpert, managing director of Westwood Capital. This represented a doubling of consumer type lending since the end of the previous century. This could not go on without consequences.

And this is going to affect all markets, not just the home market. The IMF projects that the crisis in global credit probably cost as much as $1trillion in 2008.

The real estate market was radically affected. Banking lines of credit have shrunk considerably. Homeowners have home loans they cannot afford, and so are cutting back on other areas, such as auto and credit card purchases, which decreases banks' incomes.

All loans, and not just mortgages will be tough to get. For some, this may be the best news for a while, since it may signal more normal lending practices.

But there may be a bonus for potential buyers in this mess. With lower levels of mortgages being granted, home prices continue to come down. This type of credit situation also eliminates speculators from the market, and they have a very inflationary impact on prices. This may be a real boon to first time home buyers who had been shut out of the housing market when home prices were skyrocketing. If the exaggerated housing market of the early 2000s kept anyone out of the market, those who spent this time to build up cash for a deposit and make any necessary repairs to their credit may be in the catbird seat, obtaining the few mortgage funds available to good credit risks at historically lower prices.