With the financial markets in crisis and the cost of homes plummeting, the subprime loan options that were responsible for this crash in the first place are becoming less common. But there are still lenders offering these risky loans, and this article will convince you to avoid what may seem like an offer too good to refuse, especially if you are having trouble finding a traditional loan. Here are three reasons why you should avoid subprime lenders! High Interest Rates The most obvious reason to avoid subprime loans is the high interest rate that comes with them. In most cases, if you fall into the subprime category you represent a higher risk than normal for the lenders, and the increased rates protect their investment. Inevitably in this category a certain number of borrowers will default on the loans, and the higher rates ensure that the lender still makes money. This means that you will be paying more for your house than it may ever be worth, and it essentially no longer becomes an asset, but rather a liability. Questionable Business Ethics Another reason to stay away from subprime lenders is their track record of questionable business practices. The bailouts of […]
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Especially in areas where housing values are quite high, jumbo loans are a common part of the financing process. Many people have heard the term but don’t quite understand what it means or in what situation you would need to obtain one. While jumbo loans are often used for high-value homes, inflated market prices in some areas mean that even a modest home can sometimes require one. What Is A Jumbo Loan? A jumbo loan is a mortgage loan for an amount that is in excess of what is considered a conventional loan. The maximum amount for a conventional loan is determined by the government-sponsored agencies Fannie Mae and Freddie Mac. That limit depends on the area of the country in which you live. In most parts of the nation, the conventional loan limit is set at $417,000. The limit in high cost areas has been changed a few times over the years. As of October 2011 it is set at $625,500. Any mortgage that is higher than these amounts is considered to be a jumbo loan. Jumbo Loan Rates And Lenders With the housing market having lost some ground, jumbo loans are not as popular or as common as […]
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VA home loans are designed to assist those who have served in the military with the purchase of a home. There are several requirements to qualify for a VA loan, but for those who do qualify, loan terms are often better than either conventional or FHA loans. Military Service Requirements In order to apply for a home loan through the VA, you must meet certain requirements in terms of your military service. While the VA will review each application case by case, they do have a set of basic eligibility requirements that serve as a guide. The applicant must meet one of the following: have served at least 90 consecutive active days during wartime or 181 active days during peacetime, have served six years in the National Guard or Reserves, or be the spouse of a service member who lost their life in the line of duty or because of an injury or disability related to service. Veterans discharged dishonorably will not qualify for VA home loans. Income And Employment Requirements There is no minimum income required to obtain a VA home loan, although the VA does expect applicants to show steady income and reliable employment. The applicant must be […]
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If you are in the market for a new home, or it is time to refinance your mortgage, there is no doubt you have been looking at the current interest rates. But with all the financial jargon and the multitude of lenders and mortgages available, understanding your options can really be confusing. Here are some simple facts about interest rates and how they affect your bottom line. Do Your Research As with any major decision, knowing the facts about the housing and financial markets before making any major decision is of vital importance to protecting your investment. Review online the national mortgage rates for different types of loans. There are a number of sites where you can find this information, or you can ask your REALTOR® to point you in the right direction. In general, fixed rates will be higher, but as they don’t fluctuate over the term of your loan they may be a better choice for those who need the stability of fixed payments. Also when comparing interest rates, be sure you are comparing the APR, or Annual Interest Rate, to ensure that your comparisons are on equal ground. Also keep yourself informed on some of the riskier […]
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If you are in the market for a new home, it’s important that you know what type of loans are available to you. Whether you have perfect credit, a few financial blemishes or are just starting out in life and want to own a home, understanding your options will prove to be invaluable during your house hunting excursion. Fixed Rate Mortgage A fixed rate mortgage is one of the most popular home loans and is commonly available as a 15 or 30 year term. Because it offers the borrower an assurance that both the principal and interest will remain the same throughout the term of the loan, a fixed rate mortgage is ideal for many. Adjustable Rate Mortgage (ARM) An adjustable rate mortgage, also referred to as an ARM loan, is one in which the interest rates adjust according to the current market. This means that interest rates can either increase or decrease at regular intervals, based on established market indexes. Interest-Only Mortgage An interest-only mortgage is one that requires the borrower to pay interest only payments for a preset number of years during the loan term. After that initial period, the monthly payments will then adjust to include both […]
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Looking to buy your first home, but having trouble coming up with the down payment? Typically you need to have between 5-50% of the purchase price of your home, so here are a few tips to help you save your down payment faster! Save Your Tax Refund—Doing this alone for a few years may add up to a considerable amount to contribute to a down payment, especially if both you and your spouse commit to contributing the full amount. Set Up A Savings Plan—This is a great way to make a regular contribution to your down payment fund, and with accounts that allow you to round up all your purchases and automatically deposit them into your savings account, this can be an easy way to save money quickly. Sell Unwanted Items—This can add a considerable sum to your down payment fund, and is also a great way to get rid of unwanted items before your move. Check Out Government Programs—There are a number of government programs available, depending on your area, that can assist you in saving for a home, especially if you are a first time buyer. Dip Into Your Retirement Fund—Be sure that you consult a financial advisor […]
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