30 year fixed mortgage rates drop - With this new program is it time to Refinance??

If you are looking to take out a 30 year fixed mortgage rate you would be offered deals in the region of 5.5 percent and in some cases you may find even lower interest rate depending on your chosen lender.

You would need to match a certain lending criteria to qualify for the 30 year fixed rate mortgage deal that are being offered including a credit score of 720 or more, have a solid credit history and substantial deposit or equity.

Well the US Government announced a $800 billion plan to shore up consumer loans and mortgage, the plan had immediate effect and many lenders cut their mortgage rates.

The 30 year fixed mortgage rates fell on average 0.5 percent on Tuesday, with the rates lowered, it is thought that it will entice home buyers into the market that had been waiting for the rates to be cut. Although the drop in rates will not help homeowners who are in negative equity, mortgage brokers have said they expect the rates could fall even further.

It was a new Fed program announced on Tuesday that did the trick. With this new program the Fed will directly buy up to $600 billion in Fannie Mae and Freddie Mac and other mortgage backed securities, as well as another $200 billion in other consumer credit obligations. This is huge news, and something the Fed hasn’t done in the last 50 years. By moving into the market the Fed is sending a clear signal that they are going to stay in the market and do whatever is needed to keep rates down and get the market moving again. The markets reacted with a buying frenzy, and mortgage rates are about a half point lower now than they were at the end of last week.

If you are about to buy a home, this is great news. If you are thinking about refinancing your home, this could be great news, but it is not going to help everyone.

Refinancing your mortgage is a great way to lower your payment and it can help those who need to restructure their debt and those who want to move from an ARM into a fixed rate loan. But many of the people who would get the most benefit from refinancing are those who bought in the last several years, when home prices were at their highest and mortgage underwriting was easier. One issue we are facing now is low appraisal values.

Home prices have moved sharply lower, and the value may not be enough to support the mortgage. If you bought with a low down payment the mortgage may be higher than the current value of the home. I’ve seen other cases where the borrower bought the home with 20% or more for a down payment, but if they were to refinance now they would have to pay mortgage insurance. Another issue comes in with those who have a second mortgage or home equity line.

When refinancing, the lender on the second mortgage needs to subordinate their mortgage to the new first mortgage, that is, they aren’t going to try and jump in line and take over the first position. This used to be almost automatic. Now it depends on the guidelines and position of the lender on the home equity loan.

Still, there are a lot of people who will benefit from a refinance (no-closing cost refinance), and it makes sense to look into your options. If you have an FHA mortgage, you may have the easiest option with an FHA streamlined refinance. This mortgage offers no credit qualifying, often no appraisal and it can lower your payment by a lot. It is worth looking into.

If you are buying a home, the news is all good. With home prices down you get more home for the money, and with mortgage rates down your payment goes even further. If you are a first time home buyer (you haven’t owned a home in the last 3 years) you also can qualify for the first time home buyer tax credit, which means up to $7,500 off of your tax bill next year. As we come into the Holiday season, this is traditionally the slowest time of the year for real estate. If you are in the market and ready to buy, that means you have leverage and there are bargains to be had. The first step to buying a new home is to be pre-approved for a mortgage.

Source: http://ptmortgage.com

Understanding Purchase Points, Interest Rates, and Fees on your Mortgage Loan

Not only do you have to understand what type of mortgage you should choose, you have to understand the costs associated with your mortgage. All of these costs will be paid upon closing your mortgage.

Purchase Points

Purchase points, also known as a "buy-down" or "discount points," are an up-front fee paid to the lender at closing to buy-down or lower your interest rate over the life of the loan. Each point is equal to one percent of your total loan amount. If you have a $100,000 loan, one point would equal $1,000. The more points you buy, the lower your interest rate, but the more money you'll need at closing.

How do you decide whether you should buy points and if so, how many? Well, the decision should be based on how long you plan on living in your home and what you can afford to pay each month toward your mortgage. If you plan on living in your home for more than five years, it's probably a good idea to purchase points. The longer you live in your home, the more you can save on interest over the life of the loan.

Interest Rate

When you get a mortgage, you are charged an interest rate. This is the rate which the lender charges you for using their money to buy a home. It determines how much your monthly payments will be. Generally speaking, the higher the interest rate, the higher your monthly payment.

Mortgage interest rates change constantly, daily, even hourly. If you speak to a lender and are quoted a specific interest rate, that's not to say you'll necessarily get that rate when you close on your loan. Not unless you formally lock-in that rate with the lender. Locking in an interest rate will guarantee you get your loan with a particular interest rate. Lenders will allow you to lock in for 15, 45 or 60 days. But the longer you lock in, the more expensive it will be, since it's more of a risk to lenders.

Fees

There are always fees associated with getting a mortgage, these fees cover the cost of processing and underwriting the loan. These fees can include charges for ensuring the title to the home is free and clear; paying for a land survey; or paying for a home appraisal which gives you the estimated value of the property (lenders require an appraisal to close on your mortgage).

Deciding which mortgage to get may depend on what each lender does because different lenders may charge different amounts. Some may charge lesser closing fees to lure you in, but may charge you a higher interest rate, which means you may pay more in the long run. But everyone has different needs. You may or may not be able to afford to pay more at closing and are willing to pay more over the long term.

Before it comes time to close, do your homework, make sure there are no hidden fees, and ask your lender lots of questions so that you understand all the costs involved with your mortgage.

Source: http://realestate.yahoo.com

Tips on Remortgaging your current Home Mortgage Loan

Is your current Home Mortgage loan stressful?

Remortgaging can be a very effective means of saving lots of money, but in order to efficiently make use of it you must become aware not only of its advantages but its possible downsides as well.

In order to ensure that remortgaging is indeed worth your while, it's absolutely essential that you fully evaluate any potential savings you'll enjoy against all costs associated with the deal. Listed here are a few things to keep in mind as you're considering your remortgaging options:

• Most lenders offer a wide variety of remortgage products, such as discounts, fixed rates, capped rates, cash-backs and flexible deals, to name a few. If there's anything that you don't understand, ask questions. Be sure that the new lender or advisor explains the pros and cons (and the fine print) of each deal that interests you. Remember, there are no silly questions; it's your hard-earned money that's at stake.

• While it's rarely wise to remortgage directly to a new lender's standard variable rate, if you're initially getting a discount, fixed or capped rate it's likely that you'll have to pay their SVR when the mortgage deal runs out. Therefore – even though SVRs vary over time – comparing a lender's current rate with that charged by other lenders may give you a clue as to how competitive the new lender truly is.

• Many mortgage lenders apply early redemption charges (which are penalty fees charged by lenders to encourage you against remortgaging and also to boost their profits in case you do) to certain deals; for example, they're quite common on fixed rates and discounts. The ERC is usually equivalent to several months' worth of interest on the loan, and can easily run into thousands of pounds. You could be charged an ERC if you pay off your existing loan or remortgage with a new lender within a specified period of time. So before you agree to remortgage, check to ascertain if ERCs apply in both your existing and proposed new deals; and if so, the amounts.

• Be sure to compare arrangement fees. With competition the way it is, many lenders are so keen to attract your business that they've developed special remortgage deals that charge no fees. Therefore, you might not have to pay for the valuation or even the legal fees for your remortgage. But shop carefully; remember to evaluate the entire mortgage deal.

• If you're suffering from the effects of bad credit, you can certainly still find a lender to work with. Remortgaging may offer you two major benefits: lower monthly payments, and the opportunity to consolidate your debts into one lower-interest loan. A bad credit remortgage can also help you to improve your credit rating by clearing your other debts and making timely payments on your new loan. However, keep in mind that although the interest rate of your remortgage deal may be lower, your total interest payments will be greater due to the longer length of the new loan.

• Remember, you're free to remortgage your current home mortgage loan as many times as you like, and as often as you like. But be aware that each time you do, you could be charged ERCs as well as arrangement fees. Nevertheless, you should at least evaluate your mortgage every year or two to determine if remortgaging would save you money. If you find that it will, shop wisely!

Remember to always shop around and never let fear get in between your decision of a home mortgage loan. If you lack the credit qualifications, seek free legal help that will assist you in making the best credit decisions.

Source: http://financialweb.com

5 Tips You Must Know To Get The Best Mortgage Deal

Are you getting the best deal from your mortgage broker? Try investigating on it.

Your mortgage broker could be getting a fat check by a lender to sell you a loan. Although controversial, this is perfectly legal. The one thing consumers need to understand is that a broker is not always looking out for your best interests.

You need to be aware always, despite what the broker may say about getting the best loan for you. Mortgage brokers could get paid two ways. A fee from you and they can also collect a percentage from a lender based on the loan rate. Higher the rate the more they make.

However, don’t despair. There are ways to make certain that you’re getting the best deal from your mortgage broker.

1. Do your homework

This is probably one of the most important tips in obtaining the perfect mortgage deal. Shop around. Some mortgage rates and fees are negotiable so don’t jump at the first deal you hear.
Check with many different types of lenders and keep your options open. Also, consumers should be careful that their broker is offering a nontraditional loan that doesn’t require full documentation of income and assets.

These types of mortgages almost always have high interest rates, and the consumer should be very sure it is the right one for them.

If at all possible to document your income and assets, it’s always worth doing that and getting a more favorable deal.

Don’t rely solely on your broker. An inexperienced one may not explain these types of deals very well. It is always important to understand all fees and interest rates associated with a loan.

2. Bring a buddy

If you’re not an expert at real estate, find help from someone you know and trust. The key is to get someone who isn’t getting compensated. Find people like your friends and family with the professional skills or at least experience in this field or you can turn to a homeownership counselor.

When all is said and done, you should not depend on brokers to find the best loan to take. You should turn to experienced professionals who can steer you in the right direction and give you informed advice.

3. Never be shy

Experts say it is important to ask questions. You need to know everything that comes with the loan, whether it is a fixed or adjustable interest rate, if it includes a balloon payment and how soon you can get an interest rate adjustment.

These are areas you need to understand before signing, otherwise you could end up in a mortgage that is not suitable with your budget and can lead to a payment disaster.
Also, very important, is to be aware of terms such as “no cost” and “no fees.”

In any event, you should always be comfortable and understand the terms to the best you can before you sign.

4. Don't sign under pressure

Always remember you are in control of choosing the best mortgage for yourself. Take a deep breath and don’t stress. Brokers may use various tactics to press the situation for you to sign a contract, but that is a sign of a broker you need to stay away from.

You are the one paying and you shouldn’t sign the papers and leave before you understand everything. When a purchase is hanging, you still have the option of walking away if you feel it is not right.

It is easy to be intimidating at the closing of a deal. With the many pages of loan documents to review and some of the language being unheard of, you are bound to get scared and confused. Don’t be.

And most importantly, NEVER and I mean never sign a contract you don’t understand just to get the process over with. Don’t let fear get the better of you when it comes down to choosing a loan.

5. Know your credit score

Before going into any negotiation, you need to look at your credit score. Knowing your credit score, you have a better judgment in researching loans ahead of time and finding out what sort of rates you can qualify for. If you don't know your score I suggest you get your free credit score.

However, sometimes credit scores can be wrong. If you see problems with your credit report, you need to get that resolved right away. Make the adjustments so that you will feel at peace when making your loan decisions.