Uncle Sam Wants To Pay 10% Of Your New Home Loan

If 2009 is the year of your first home purchase, then Uncle Sam is ready to give you a gift that equals up to 10% of your entire purchase price. Known as the homeowner tax credit, the Obama Administration has finally figured out a way to make home buying a much more delectable proposition. Add this to the falling mortgage loan interest rates, the drop in home prices, and it would appear that Uncle Sam not only found a great way to sweeten the deal for aspiring home owners, but also tied it neatly with an irresistible ribbon.

This 10% gift is actually an outcropping for the American Recovery and Reinvestment Act of 2009. Consumers are undoubtedly familiar with the wrangling that had lawmakers debate the intricacies of this unprecedented bailout package in the media and also behind closed doors. As the discussions began to draw to a close, speculations about the actual nature of the mortgage credit were rampant and a lot of misinformation or soon outdated information would hit the blogs, forums and also news websites. Prospective homeowners have been cautiously optimistic that this could finally spell an end to the slow moving real property market.

Finally, upon passage of the act, the details of Uncle Sam’s new mortgage plan became known. Prospective homeowners may qualify for the tax credit if the home was purchase in 2009 as a primary residence. In addition, consumers need to be able to prove that it is their very first home purchase. The scope of the tax credit is 10% of the actual purchase price, but it is capped at $8,000. Unlike previous tax incentives under the Bush Administration, the Obama Administration has shied away from making this a repayable incentive loan.

There are of course some limitations; for example, if a single taxpayer seeks to qualify for the new mortgage loan credit but earns more than $75,000 as adjusted gross income, she or he may not be able to take the full amount.

Nevertheless, the $8,000 tax gift has gotten the calculations and speculations going of those who want to maximize their home loan advantage. Some are looking to keep their down payment to a reasonable minimum and then turn around and use the tax credit to pay it toward the outstanding principal balance, cutting down on a significant amount of interest debt. Others see the credit as a useful way of lowering their overall tax bill.

Even those who are not too worried about positioning their tax liabilities in the most advantageous light realize that no matter what, they could end up ahead of the game by $8,000. This is a lot of money, especially for those who had already decided that 2009 would be the year in which they are going to buy their first primary residence. At this juncture the only open questions that remain are where to find a great deal on a home, and also how to find financing in a lending market that seems to have greatly clamped down on offering consumer loans.

By: Lender411

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Mortgage Life Cover For Mortgage Security in the Event of Your Death

Anyone who has a mortgage to repay over a span of many years needs to give some thought to taking out mortgage life cover. If you are the main wage earner in the family then you need to consider how your loved ones would cope when it came to paying the mortgage in the event that you as the main income provider died, so protecting them is essential. Without cover they might not be able to maintain the mortgage repayments and lose their home and with it they would be able to use the money from the cover to payoff the outstanding mortgage and at least not have the worry about losing the roof over their heads.

Mortgage life cover is usually known as decreasing life insurance. This means that the payout you would get back from the life insurance would decrease along with the mortgage. You would initially insure the mortgage balance when taking out a policy and as you payoff the mortgage each month you owe less. Therefore you would take out mortgage life insurance to reflect the number of years you have left to pay on the mortgage. If you die the amount left owing on the policy is paid out but if you outlive the policy then of course the mortgage would be paid off and there would be no payout.

This type of insurance is great peace of mind to safeguard and protect your family at a time when they need it the most. The cost of insurance would of course take into account the amount you chose to insure and other factors such as age and your health when applying for the policy. The younger you are usually the less life insurance will cost. Premiums will also take into account your family history health wise, for example if there is a history of heart attack or stroke in the family you would usually have to pay more for the policy.

If there are two names on the mortgage then you could take out a policy for both names. Usually you can insure to payout upon the first death and then cover would cease.

When looking for mortgage life cover you need to compare the cost of premiums from several different providers to ensure that you get cover at a price that suits your budget. One of the quickest and easiest ways of doing this is to allow an insurance broker to search around on your behalf. They will be able to gather insurance quotes which you can then compare in the comfort of your own home. When comparing the cost of life insurance always check the exclusions which should come in the key facts of the cover.

Different providers add in different exclusions and these are what can stop a claim being made on the policy. It is essential when taking on the insurance that you always tell the truth, even if it means you would pay more for the cover, as if you are caught out then again a claim might be refused.

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Is A Mortgage A Good Or Bad Thing?

Are mortgages simply a trap? Many people have been burned by the real estate market and the corruption in this industry over the past several years. Should you even get a mortgage, or should you fear that if you do you'll face nightmares like foreclosure and losing your home?

Don't be afraid. Be smart. It's true that you can get taken advantage of and end up on the street (and taking a huge financial loss) if you are not careful. So the solution is not to give up entirely; the solution is to be cautious! Don't jump into a mortgage agreement you don't understand!

You see, that is what caused a lot of this mess. The reason so many people have lost their homes is two-fold. First of all, the economy and unemployment rates are both in very bad shape to date. This means that many people simply can't afford things like a mortgage.

The other issue that is causing people to lose homes is that they get into mortgage agreements and the interest rate fluctuates, goes through the roof, and then they cannot afford the monthly payments. Is this due to a deliberate booby-trap set up by mortgage companies? Perhaps.

On the other hand, when you sign a mortgage, this is a legally binding contractual agreement. You should never sign anything you don't completely understand or agree to, but especially not something with such a huge dollar value attached to it.

Face it: this is the biggest investment of your lifetime, this home you are financing! Do not take it lightly. Make sure you understand the mortgage before you sign. And don't be unrealistic about how much you can afford.

By: Roberto Bell

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What Do Lenders Consider During The Home Mortgage Approval Process?

This article will give you a perspective through the eyes of a bank or financial institution so that you can know what they are looking for when it comes to deciding whether or not somebody is considered a trustworthy borrower, and what goes into the mortgage preapproval process.

The Difference Between Prequalified and Preapproved

While people will sometimes use the words prequalification and preapproval interchangeably, these two words do not mean the same thing and it is important to understand the difference.

Prequalification means that you have met with someone at a financial institution and discussed the particular issues of your personal finances such as your income, assets, commissions, and debts, and from that discussion the lender has offered an educated opinion as to how much money you are qualified to borrow.

Preapproval is a much more in-depth evaluation where the financial advisor will actually go over your paperwork such as past paychecks and pay stubs, tax forms such as W2's and 1099's, bank statements, credit reports, and any assets that are owned. After this evaluation you will receive a letter from the lender that specifies how much money you are allowed to borrow pending a good review of the property to be purchased.

What Type of Paperwork Does The Lender Look For?

One important thing that your financial institution will look for when deciding whether they should or shouldn't give you a loan is your credit score and past credit history. If you have a good history of paying back you credit cards on time, especially if you can spend $10,000 or more in a month and then pay it off rapidly, this is a good signal of financial competence.

So what to do if you have a low credit score or an unattractive credit history? Start by not charging anything more, and then pay off all your credit card balances down to zero. From then on, only charge on your credit cards what you have the money in the bank to pay off immediately.

Lenders will also consider your income over the past months and years by reviewing your paychecks and pay stubs, and they will also look for your tax forms to verify your income. They will want to see the paperwork for your other bank accounts or investment accounts so that they can verify your current assets and work that number into the total evaluation.

Also important is your current outstanding liabilities such as credit card debt or other loans. With all of this information, plus any other information deemed appropriate to your personal financial picture, your bank will decide how much money they would be willing to lend you for a home loan.

About the Author

Nathan Navachi is an expert in the mortgage industry and specializes in mortgage refinancing information. You can read more of his expert advice at http://MortgageRefinancingSolution.com

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Guide To Overpaying Your Mortgage

Mortgage overpayments

If youve got an extra bit of money lying around, the first option that may spring to mind is to overpay your mortgage. By paying more than the required mortgage repayment each month you erode the amount you owe quicker, reducing the interest you pay and potentially knocking years off your mortgage term.

A borrower with a £150,000 tracker mortgage will have seen their monthly repayments drop by nearly £400 since interest rates peaked. If they used this extra money to overpay their mortgage each month, and continued to overpay it by the same amount for the rest of the term, they could repay their loan 11 years early on a 25-year mortgage.

The pros and cons

While being mortgage free 11 years ahead of schedule might sound like a very tempting prospect, there are several things that need to be considered before you go down this route.

1) Does your mortgage lender allow you to make overpayments or will you be penalised for doing so? Theres no point using your spare cash to pay extra off the mortgage each month if doing so will trigger penalty charges.

2) Its worth finding out if you can get your hands on the money again if you need to. Some mortgages enable people to borrow back money theyve overpaid at the same rate. Others allow people to take payment holidays up to the amount theyve overpaid. But on some deals, once the moneys been used to pay down the loan, the borrower cant get it back without remortgaging.

3) People are generally advised to repay debts with the highest interest rates first. So it might not make sense to prioritise making overpayments on your mortgage, if you have outstanding credit card or loan debt on which youre paying double-digit interest.

4) Since the credit crunch first struck, lenders have been increasing the size of the deposits or equity stakes people need in order to qualify for the most competitive mortgage rates. At the same time, house price falls mean people now have significantly less equity in their property than they did a year ago.

Making overpayments might be enough to reduce your loan-to-value ratio sufficiently to put you into a lower mortgage tier, saving a considerable amount on the rate youll pay when you come to remortgage.

By: Kate Tee-11606

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Steps to Consider when Looking for a Mortgage

The process of applying for a mortgage can be long and complicated, especially if you are a first time buyer, have poor credit, or have special mortgage requirements. Whether you’re a first time buyer or a seasoned pro, it’s good to refresh yourself on the important steps you should consider when you’re shopping for a new mortgage.

Step One: Your Finances

Regardless of any other circumstances, the first step in applying for a mortgage (or any other large loan, for that matter) should always be a thorough investigation of your finances, including your credit rating. This is an important first step, even though your lender will eventually want to examine your finances more thoroughly. Having a rough idea of your financial situation, and the amount of money you can afford to borrow, is going to be important when it comes time to choose a mortgage type and speak with potential lenders.

To examine your finances, look at your total monthly income, and total monthly debts, to find out how much you can afford in the way of mortgage repayments each month. In addition, check out your credit score. If your credit rating is over 700, good news, you should not have any trouble getting a mortgage. Under 700, you’ll probably be looking at a higher interest rate on your loan. To get a handle on fixing your credit, make sure you pay bills on time, and check your credit report for any obsolete information or errors.

Step Two: What Kind of Mortgage?

Generally you’ll be deciding between a fixed rate mortgage or an adjustable rate mortgage. If you plan to move or refinance within five years or so, a balloon mortgage may also be a viable option.

In most cases the main point to consider, apart from your finances, is how long you plan to stay in the home. A fixed rate mortgage gives you long-term peace of mind, in knowing that your mortgage repayments will never increase, so it’s a good option when you know you’ll be living in the home long term. The lower initial repayments of an adjustable interest rate or a balloon mortgage, on the other hand, can be useful if you know you will sell the home within a few years.

Step Three: Comparing Mortgage Quotes and Choosing a Lender

Once you’ve decided on the type of loan you want, it’s time to start getting quotes from lenders. Doing this before you start house-hunting can be very useful. Getting pre-approval gives you leverage when you make an offer on the property, and it saves time at closing too.

Try to get all your quotes within the same 14 day period, to make sure your credit rating isn’t affected by your credit inquiries. Getting all your quotes within a short space of time will also make comparing those quotes more accurate.

The problem is, it’s not always easy to get reliable quotes. Unscrupulous lenders often advertise very low rates to attract potential customers, but aren’t able to deliver on the advertised rates. Tell prospective lenders you can apply for a mortgage immediately, and most will be more likely to quote accurate rates they can deliver on.

Narrow down your list of lenders, and ask questions to help make your final decision. Ask about points and interest rates, closing costs, private mortgage insurance, pre-payment penalties, and anything else that’s important to you.

Once you’ve chosen your lender and applied for the mortgage, you should receive an Annual Percentage Rate and a Good Faith Estimate within three days. The GFE is required by law but lenders aren’t required to guarantee the estimate, so if a lender is willing to supply a written guarantee, consider that a good sign.

Step Four: Interest Rates and Points

Another important part of the application process is buying points, and locking in your interest rate. By purchasing points, you can buy down your interest rate, potentially saving thousands of dollars over the term of the mortgage. However points must be paid in cash when you close on the house, so if your cash flow is tight, it may not be an option. Also check out whether buying points will actually save money, as sometimes the money you spend on points may turn out to be more than the amount you save over the mortgage term.

Finally, a note on locking in your interest rate: It’s tempting to try and ride the market for as long as possible, hoping to lock in a low rate, but this requires some very careful attention to detail. Waiting even one day too long could leave you locked into a rate you can’t afford in the long term.

About the Author

Rachel Jackson is a freelance writer who writes about topics and pertaining to the mortgage industry such as how to refinance home mortgage

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Home Loan Modification - 5 Steps To Navigate Through The Mortgage Modification Process

It is an unfortunate truth that many people are facing foreclosure. While some may see no options available, a home loan modification is a very real possibility for many. This process is designed to change some of the terms in your home loan contract in order to reduce the monthly mortgage payment. If this process is done properly it can help people who have been unable to make their monthly mortgage payments obtain a new payment that fits within their budget. These changes are possible because the bank does not want to deal with a foreclosure. If the homeowner defaults on the mortgage, the bank stands to lose money in the process.

Here are 5 steps that lead you through the mortgage modification process:

1. Discovery. Understand the basic process involved with a home loan modification. Although the process seems difficult to many people, learning a little about the process lets a homeowner determine whether modifying their home loan is right for their situation. Understanding the process is valuable whether you handle the process yourself or hire a third party.

2. Decision. If a mortgage modification is something you want to pursue, decide whether you are going to do it yourself or hire someone to help. If you do it yourself, continue learning about the process and consider a book or other resource to better understand how to work with your lender. If you decide to hire a company or attorney to help with the process, find a reputable person or company and ask plenty of questions to be sure they are the right "fit" for your situation.

3. Letter. An important document for anyone interested in a loan modification is a hardship letter. This letter is typically required by all lenders. The letter should describe your financial hardship and why you need a change in the terms of your mortgage. If you are using a company or attorney, they can help you with this letter. If you are handling the procedure yourself, find a good resource that explains how to write this letter.

4. Communication. Stay in contact with your lender (if you are handling the home loan modification yourself) or with the company/attorney you hired for assistance. Be sure you understand what documents are needed and provide them in a timely manner. Also, communicate regularly and be certain that you understand the next step in the process and what your task is for that step.

5. Patience. The process can be frustrating and time consuming. Be patient and realize that lenders are handling many home loan modification requests, with new requests arriving daily. Be polite, even if the process seems to be moving slowly.

Following these steps will likely improve the overall process and increase your chances of receiving your desired mortgage modification.

By: Mark Winfield

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Looking At Two Popular Residential Mortgage Companies

Are you looking for a first time mortgage? Are you looking for a new mortgage or a way or refinancing your current one? If so, then you have probably looked over the promotional material of many lending agencies.

Those that have not explored what is offered by American Home Mortgage and Allied Home Mortgage would definitely benefit from taking a closer look. Both of these lenders have many positive attributes a brief overview of what these entities have to offer is provided?.

American Home Mortgage (americanhomemortgage.com) ?This is a service that provides a number of simple and easy to use online mortgage tools. These tools can then be employed to find high quality loan programs and competitive, low rates. This company offers a host of services including purchasing, refinancing, and even construction lending. This makes it a very popular online destination for those looking for a high quality mortgage issuance service.

Allied Home Mortgage (alliedmtgcapital.com) ? Allied Home Mortgage is such an expansive lender that is issued over $15 billion in one year in the form of 12,000 approved loans. Yes, this is one of the largest mortgage lenders in the United States. In addition to its expansive online presence, it is affiliated with various lenders in all 50 states. This company issues all variety of loans making an attractive to applicants from all sectors of borrowing.

In terms of the specific loans that each lender offers, applicant can seek to apply for a multitude of loans. American Home Mortgage offers 30 year fixed rate mortgages; 15 year fixed rate mortgages; Traditional Adjustable Rate Mortgages (ARM); Hybrid, Annual, and Monthly ARM rates; and rare mortgage loans such as 2/1 Buy Down and Negative Amortization loans. Allied Home Mortgage offers many of these same mortgage deals as well as a full variety of traditional loans.

There are also a host of other helpful benefits offered online. American Home Mortgage offers free online consultations. These online consultations can be accessed through an internal instant messaging system that provides real time answers to your questions. This will aid in making sure you are applying for the right loan and are able to properly fill out the necessary applications. Allied Home Mortgage does not offer online help, but you can contact them via phone or email.

A representative will definitely contact you in a timely manner to help you with your inquiry. American Home Mortgage also offers a clear description of the loans they offer on their website. Allied Home Mortgage offers a glossary featuring the loans they offer, but it is not as clear or easy to navigate as American Home Mortgage. So, it would be fair to say that American Home Mortgage has more expansive online services; however, this is not to infer that Allied Home Mortgage is inferior in any way.

In summation, both of these lenders have something to offer those looking for a lending source. As such, it is recommended to visit both sites and read them over. Within their online pages, you might be able to locate the answers to your lending queries.

By: Mohamad Alodah

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