Repair Before You Refinance
While the recent economic turmoil throughout the world has been a nightmare for many people, for just as many it has represented an opportunity, as interest rates have fallen steadily, resulting in mortgages and financing costs at record lows. As a result, many people have chosen to refinance their home mortgages in order to take advantage of much lower rates a typical family with a 30-year mortgage opened in 2006 at a rate of 6.375%, for example, thought they had a very good deal until 2012 when interest rates dipped below 4%, enabling our typical family to refinance into a 15-year fixed-rate loan at 3.25%. It's no surprise that people who are in good financial shape are seeking to improve their long-term mortgage prospects with a refinance.
However, too many people rush into the process. Often a simple phone call to ask a few questions results in signing an application just a few days later as homeowners are pushed along by eager mortgage consultant or broker seeking to get another loan on the books. If you're dealing with a reputable broker, this probably still works out to your advantage but there are a few benefits to taking a breath before diving in. One of the best ways to prepare for a refinance may seem to have nothing to do with your financial health: Consider your home and make improvements.
One of the most crucial aspects of any mortgage, whether for a home purchase or a refinance, is the appraisal. Your home's value will be determined by a professional appraiser hired by the bank or mortgage company, and this is sometimes a shock to the homeowners. After all, if you purchased your home within a few years, it's understandable that you might expect the value of that home to have stayed relatively steady. However, this is not always the case, and it's better to know what you're dealing with before you start paying fees and filling out paperwork. When first considering a refinance, spend the money to have a professional appraisal done. Don't simply rely on a web site such as Zillow.com to base your judgements on while these services can give you a very rough idea of where you stand and may provide a wealth of useful information, they are not considered reliable by the banks or mortgage companies you will be dealing with.
A professional appraisal will tell you two things: One, if a refinance is even worth pursuing. If the value of your home has fallen far below the balance on your existing mortgage, a refinance attempt might be a waste of time. Two, if there is anything you can do to improve the value of your home. An appraisal will include comparable houses from your neighbourhood, and if your home value compares unfavourably it may be possible to mitigate this. Some things, such as square footage or lot size, are beyond your control, but if the appraisal makes it clear that some repair or renovation work on your home can bring its value up to the number you need, it may be worth it. While many people are hesitant to put money into a house in order to improve their mortgage, it's important to remember that cutting your mortgage term, lowering the mortgage rate, or, ideally, both will save you a very large amount of money. Crunch those numbers and see if the money you can save with a refinanced mortgage will exceed the money spent on some repairs and renovations.
Mark Quigley is the owner and director of Darcey Quigley, an independently owned debt recoverycompany specialising in commercial debt recovery services based in the UK.
Buying Your First Home As A Couple?
Buying a new home as a young couple can be a very exciting thing. This is often one of the milestones of life, so it makes sense that you should be excited about getting your new home. However, if you are to have an easy time staying there, there are a number of things you would need to keep in mind. Most people usually take the process of buying a new house very seriously, and therefore do not make many mistakes. However, there are a few small things that you may end up neglecting, and which may make the acquisition of the house an easier thing. Some of these include:
• Choosing the right location. When you are trying to get a new home, you may find that it is very difficult to get one that suits your needs perfectly. In many cases, most couples tend to compromise on a number of things just so that they can get it over with. The location of the house is one of the things you should never compromise on. You always have to get a house that is in a neighborhood that you are comfortable with, and which is also close to any sites of interest you may have.
• Handling the mortgage. When you are applying for a new home mortgage, always make sure that you discuss the issue thoroughly with your spouse, and that you end up being on the same page by the time you are approaching the brokers. This will reduce the number of disagreements you may have in future about finances. To make the process of getting the loan easier, you can even split the responsibilities between the two of you. For instance, one can dedicate a majority of his or her income towards servicing the mortgage, and the other can take care of day to day issues such as the monthly bills and the savings.
• Consider any plans you may have for the future when choosing a house. For instance, if you are thinking of having children, buy a house that will be able to accommodate the number of children you want to get. It is often a good idea to get one that is slightly larger than this so as to cater for any surprises, such as when you get twins when you wanted to have one child.
These are just a few of the minor issues that most couples tend to neglect when they are getting a new home. By always keeping them in mind, you can make the process of getting the house much easier!
No Doc Loans
No documentation loans, also known as liar loans, are granted based on the buyer's stated income and credit record and do not require proof of employment, income, or assets. While they were fairly easy to get a fair years ago, they are effectively gone in the wake of the financial crises; however, this page is still provided for informational purposes.
Buy to Let Mortgages
A buy-to-let mortgage is one used to buy a property specifically for the purpose of leasing; the term is primarily used in the UK. Generally a property is purchased with the expectation that the value of the property will rise, allowing it to be later resold at a profit; in the meantime, the property is to be let with the hope that the rental income will cover the cost of the loan. Of course, there is no obligation to resell the property; the landlord may simply intend to let it out indefinitely.
Bad Credit Remortgage
As with a standard mortgage, the rates you can find with bad credit will be considerably worse than if your credit was better, if you can find them at all. However, that doesn't mean that it doesn't make sense to remortgage, particularly if interest rates are lower and your credit has improved since you got your original mortgage. Sometimes, when you've made mistakes in the past but are now making an effort to pay off your debt, high interest rates can make it difficult to even make a dent; in this case, a bad credit remortgage can be your best option for getting on top of your debt. Additionally, by taking out a different type of debt and using the money to make good on your existing debt, you can actually improve your credit! Finally, if you've built up considerable equity in your home and can do a cash-out remortgage while still retaining a good bit of equity, this lowers the risk to the lender (because the house is worth more than you owe them), which makes it easier for them to approve the loan.
Remortgaging is similar to refinancing, and the two terms are often confused; it is effectively the transfer of your mortgage from one lender to another. The term remortgaging is mostly used in the UK; elsewhere it is primarily known as switching. The term applies only when the homeowner is switching to a different lender, not when switching to a different product with the same lender. The new lender pays off the existing mortgage, leaving the borrower with a new mortgage (hopefully at a lower rate).