Friday, November 26, 2010

Long-Term Mortgage Rates Hit All Time Low!Long-Term Mortgage Rates Hit All Time Low!

Long-term mortgage rates hit new lows this week, on signs inflation remains in check.

The average rate on a 30-year fixed-rate mortgage in the week ending Oct. 7 was 4.27 percent, down from 4.32 percent last week. A 15-year fixed-rate mortgage fell to an average of 3.72 percent, down from 3.75 percent last week.

Both are the lowest long-term rates have been since Freddie Mac (NYSE: FRE) began keeping track.

“The 12-month growth rate in the core price index for personal consumption, which the Federal Reserve closely tracks, has been drifting lower over the last six months ending in August and suggests inflation is running at a tepid pace at best,” said Freddie Mac chief economist Frank Nothaft. “This allowed mortgage rates to ease to new or near record lows.”

A report this week from the National Association of Realtors showed pending sales of existing homes rose for the second consecutive month in August, up 4.3 percent. The group also revised July’s pending sales figures higher, indicating housing sales continue to recover even without the now expired homebuyer tax credit.

The hopeful news nationally is that this could spur sales after the recent tax credit expiration slump. Austin home sales fell 15 percent year-over-year in August, while sales so far this year have outperformed 2009, the Austin Board of Realtors reported. The Multiple Listing Service data showed total homes sold fell to 1,490 homes in August, while the year-to-date total increased 2 percent from the same eight months in 2009.

Sunday, November 14, 2010

4 Steps To Achieving The Largest Mortgage Possible On Your Circumstances.

Many mortgage lenders in the Uk have moved to ‘affordability based lending’ from the traditional ‘income multiple’ Essentially, the lender will subtract your total monthly expenses away from your total monthly income - the amount that is left must be enough to cover the monthly payment according to their calculations.

For many, the maximum mortgage available from a particular lender may be difficult to establish – some lenders have tried to improve certainty by publishing ‘affordability calculators’ on their websites, but to get the right result you need to know what to put in the boxes in the first place.

1 – Credit Commitments

Always declare the exact amount you have outstanding on loans and credit cards (remember HP agreements and car loans), the monthly payment and how long is left to run on your agreement.

The monthly payment on a loan or minimum payment on your credit card (assuming a rate of around 5% of the balance per month) can have a major affect on the affordability calculation. If your loan has less than 6 months to run, or you are able to settle in full some lenders will not include the payment in their calculations

2 – Income - if you are Employed

Being as precise as possible on your income is very important, overstating is never wise and not being accurate is just as bad. Always use the numbers off your payslips, bank statements and your and P60 as this is where the lender will look for evidence of your income.

If there are deductions from your salary other than tax & NI (season ticket loan or a pension) make sure you mention these at the point of application - some lenders may deduct these from your income and some don’t. Being accurate at the outset will reduce the chances of a lower mortgage offer than you expected which could cause problems if you are aiming for your maximum mortgage.

Bonuses, overtime, commissions and second jobs are used at different rates by different lenders. Most will only accept 50% (less for annual bonuses) and there will need to be a track record of usually a couple of years. Again speak to your broker or lender for advice.

3 – Income – if you are self-employed

You may be surprised to hear that self certification and fast track mortgages have become slightly more difficult to find. All this means in reality is that you will have to do a little more work than finding a broker who was stupid enough to make up your income for you!

If you are self-employed lenders will want to see at a minimum your last 2 years tax returns and SA302s (as your accountant if you don’t know what this is.) Typically they will average the last 2 years taxable income and use this figure as the start point on their affordability calculation.

If you are a director of a limited company (or partner in an LLP) the lender will, in most circumstances, use your salary and dividend (or net drawings) not your share of net profit. This distinction is very important (unless you own more than 51% of the shares in which case the rules are different).

Our advice is get your accounts before you apply and read through them. Alternatively, ask your accountant to write down your net profit, salary, dividends or drawings for the last 3 years on one page so you can see them.

If you are self-employed, getting advice from a good broker will make all the difference – many of the lenders we speak too still cannot read a simple set of accounts and some of the better ones will be able to convince a lender to use retained profit or accountant’s tricks in their calculations/

4 – The Mortgage Term

How much you can borrow depends on how much you can pay back per month. Your monthly payment depends on how long you arrange your mortgage over. Lenders (almost) always base their calculations on a repayment basis to your retirement age. Before you apply find a mortgage payment calculator and find out how much your mortgage will be over various terms and find the one which is most suitable to you.

Remember – the longer the term, the more you can borrow. The shorter the term, the less it will cost you in interest. The latter is the most important.

Thursday, November 11, 2010

Mortgage Refinancing Points Guidelines

In case you are buying a house, you may be coming into queries concerning points. These are the fees from the interest of mortgage that are disbursed at the front end, to decrease preliminary rates of interest. For most of the time they are frequently appointed as the points of mortgage, the origination fees or points of discount. The lender you have will possibly get you offered the choice to disburse them at closing or not. The lender you have will deliver you an estimation of good faith. By the time you think of that estimation, you may realize that the down payment you possess is bigger in case you disburse closing`s points. Prior to disregarding the choice of disbursing points, consider the circumstance a little more deeper seeing that in the closing, it will cost you more. Continue reading for more information about the mortgage refinancing points.

In the most fundamental explanation probable, disbursing for them is a decree of disbursing later or disbursing now. To the amount of your loan, one point is similar to one percent. Therefore, in case the loan you have is for $200,000, and you were to disburse one point, it would make you disburse $2000. For disbursing points at closing, lenders will frequently decrease the rate of interest of your mortgage. In case you disburse one point, get your lender asked the amount they will decrease the interest that you have.

Making a decision of whether or not you will disburse is uneasy, but it primarily depends upon the length you expect to live in the house. The common rule is that in case you make a plan to live in a house for five years or not, you don`t have to disburse for them. The reasons in this is that this is going to cost you more in points compared to what it could in interest in that short period of time. Interest versus points equal the equation. You have to make certain if disbursing the upfront for them will make you save in interest in the long run. Here, the common rule is that in case you arrange to stay in your house to ten years or more, disbursing points is a move that can save money.

The IRS (Internal Revenue Service) consider points as pre-disbursed interest. So, they are tax deduction, in case you get them disbursed in closing. In reality, you are able of getting them deducted even if the seller disbursed the points that you have. You`re gonna have this deduction claimed for the tax year in which you buy your home. You are able of having the total sum of points disbursed claimed in that return of the year.

Anyway, if, you are having a home refinanced, this deduction has to be amortized in the loan`s term.

Therefore, never give in on the idea of disbursing points in closing. More than that, think of the way their disbursement apply to the situations of yours and whether or not disbursing them, or a drawback, maybe, an advantage.

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