Tuesday, May 30, 2006

Mortgage Refinancing Basics

Your mortgage may have a 30-year term, but not many homeowners stay with the same loan for that long. In fact, the average American refinances his or her mortgage every four years, according to the Mortgage Bankers Association.

That’s because paying off your present mortgage and taking out a new one can mean big savings over several years. However, refinancing comes with a price in the short term, so it’s important to consider both the costs and benefits before making your decision.

Why refinance?
Here are some reasons to consider refinancing your mortgage:

1. To obtain a lower fixed rate. If you took out a fixed-rate mortgage several years ago and interest rates have since dropped, refinancing may lower your payments considerably. A $150,000 mortgage with a 30-year term and a rate of 8 percent, for example, carries a monthly payment of $1,100. The same mortgage at 6 percent will have a payment of less than $900 a month.

2. To switch to a fixed rate or an adjustable rate mortgage. Adjustable-rate mortgages (ARMs) offer lower interest rates initially, but some homeowners find the fluctuations stressful. If rates are on the way up, you might consider locking in at a fixed rate and consistent monthly payment. On the other hand, if you want to reduce your monthly payments and are comfortable with the interest rate changes of an ARM, it could save you money to refinance to an ARM.

3. To reduce your monthly payments. Refinancing for a longer term will lower the amount you have to pay each month. You will end up paying more in interest charges over the life of your loan, but if you’re having difficulty making your current payments, this strategy could provide some relief.

4. To turn home equity into cash. You may want to take out a new mortgage with a larger principal, in order to turn some of your home equity into cash for a major expense. This is called cash-out refinancing. The advantage of taking out a loan secured by your home is that you can get a lower rate of interest than you can with an unsecured loan or credit card. However, if the interest rate offered for your refinanced mortgage is higher than your current rate, a home equity loan or line of credit might be a better choice.

Is refinancing right for you?
If you’re refinancing in order to pay less interest, you won’t usually see the savings right away. That’s because lenders typically charge fees when you take out a new mortgage, and you may also have to pay a penalty for getting out of your old one. To determine whether refinancing makes financial sense for you, consider these issues:

1. How long you plan to be in your home. If you expect to move in a year or two, you may never realize the potential savings you’d get from refinancing. As a rule of thumb, the longer you plan to stay in your current home, the more sense it makes to refinance.

2. The prepayment penalty on your current mortgage. Many mortgages carry a penalty if you pay them off early. The amount varies, but it is usually a small percentage of the outstanding balance, or several months’ worth of interest payments.

3. The costs of the new mortgage. When you take out a new loan, your lender may charge a number of fees including application, appraisal, origination and insurance fees, plus title search, insurance and legal costs that can add up to thousands of dollars. Lenders may also charge discount points, which are paid upfront to secure a lower interest rate. As a guideline, expect fees to eat up any potential savings unless your new interest rate is at least a half a percentage point lower than your current one.

To learn more about mortgage refinancing and when it makes sense, visit http://www.lendingtree.com/cec/yourhome/yourmortgage/mortgage-refinance.asp

About The Author
The editorial staff at LendingTree is committed to helping consumers become smarter borrowers. Visit http://www.lendingtree.com/cec for more information and tips on buying, selling, and financing a home. Copyright 1998-2006, LendingTree, LLC.


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Sunday, May 28, 2006

Mortgages and Home Financial Planning

Buying a property is likely to be the largest purchase you ever make – finding the right deal for you means choosing one mortgage from the many hundreds available. This will be much easier if you know what you’re looking for.

What’s Your Status?
Depending your life situation, age, income and financial status, you will need different things from your mortgage. Whether that’s flexibility, low rates or security, take the time to have a good look at where you are now, and where you want to be long term.

In For The Long Haul!
Most mortgages are for a 25-year term – so it’s an agreement that you could be locked into for a substantial part of your life. This means you need to have at least a vague idea of how your finances are likely to shape up long term – no one can predict the future, but good planning is one way to help ensure you meet the challenges to come.

Get The Budget Ready
The first thing to do is to draw up a budget – you need to know what income you have every month, and all your outgoings. Be realistic – there’s no point exaggerating your income or ignoring certain expenses. You want to buy your own home, but you also want to be able to eat once you’ve moved in! Take into account all your bills, council tax and loan payments, as well as living expenses such as food, running costs for your car, going-out costs and clothing. Check bank statements to make sure you have included all your usual expenses.

Crystal Ball Time..
Next, give some thought to your future. Now we don’t really mean for you to go to some charlatan and ask what your personal circumstances will be in the future, that would be just silly. However, what you would need to do is be honest with yourself in answering some personal questions in an attempt to plan ahead for financial reasons.

Do you expect your income to rise over the next few years, or will it stay the same? Do you have dependents, or are you planning a family? While some things are uncertain, you should be able to tell whether your needs will stay constant for the next five years, or are likely to change substantially.

Your budget should give you a fair idea of how much you can afford in repayments each month – bear in mind there will be other costs incurred when buying property, such as legal fees and stamp duty.

Generally, a mortgage lender will also look for a cash deposit – usually 5 or 10 percent of the total cost of your home. You will then repay what you have borrowed in monthly instalments. Read on for more detailed information on how mortgages work.

About the author
Joseph Kenny writes for the loan site http://www.ukpersonalloanstore.co.uk. Visit them today for more loan articles and financial information.


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Thursday, May 25, 2006

Secured Loans - Five Top Tips

If you own your own home then you probably already know that you can use it to make sure that you get low cost loans. Those of us that own our own properties can use them as security to take out secured loans whenever we like – and, these kinds of loans are routinely given the lowest interest rates in the sector today. Getting secured loans may well be a breeze for you but – before you rush out and apply – take a look at our top tips to make sure you get it right from the start!

1. Don’t just go to your mortgage lender
You may well find that your mortgage lender will give you the best deal for secured loans. But, equally, you may find that they don’t. You’ll only know this if you shop around for rates and deals to compare their rates with those on offer from other lenders. Remember that other lenders really do want your business too – so you could get the best secured loans rates somewhere else.

2. Use The Internet first
The best rates for secured loans at the moment are given online. It generally costs a lender less to sell their products over the Internet so they can reflect this saving in the rates they charge. You can also find all kinds of useful information sites on the web that will help you compare lots of loans from different lenders on one screen which can save you both time and money.

3. Keep to your budget
A lot of people find themselves in difficulties when it comes to taking out secured loans because they are often tempted to borrow more than they can actually afford to repay. It doesn’t make any sense to do this so make sure you can afford to meet your monthly repayments comfortably with some leeway for months when you need some extra cash.

4. Read the small print
Some secured loans have clauses in their terms and conditions that will charge you extra if you try to make an overpayment or to repay your loan early. You’d be surprised at this perhaps but there is a very real chance you’ll want to do this sometime in the future. There is no need to go for a loan with these kinds of penalty clauses in it as there are loads out there that won’t charge you a penny extra.

5. Think about the future
Your finances may be fine at the moment but you don’t know what might happen down the line. You could, for example, lose your job or become unable to work for a while. This could put your finances under pressure and could make it hard for you to make your secured loans repayments. If you look at taking out a loan protection insurance policy at the same time then this won’t be an issue as your insurer will cover your costs for you.
If you follow these tips then you stand a far greater chance of making secured loans work for you at the right kind of cost for your pocket!

About The Author
Micheal Reese is an expert in the Secured Loans http://www.only-online-loans.co.uk/secured-loans-online.html Field.


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Loans For Tenants

Let’s face it – it’s not always easy to find great low cost loans for tenants. Sometimes it can seem that all the great deals in the lending industry are just reserved for home owners. But, there is a whole sector of the lending industry that purely specialises in helping tenants get the loans they need – you just have to find the right lender for you.

The first thing you have to realise is that you may not get the best low cost deal from the high street lender that you currently use. Although big name lenders will nowadays quite happily give out loans for tenants, many still charge higher rates of interest to their tenant customers.
So, you may well find that you will be financially better off by bypassing a general lender and approaching a specialist loans for tenants company instead. But, where do you find them? The best place to look if you have a couple of minutes to spare is on the Internet.

If you go to your favourite search engine and type in loans for tenants then you’ll get thousands of results. But, you may not know any of these companies listed and you may have to wade through a lot of dross before you come across something useful. One way to get round this is to use a broker to help you find a good loans for tenants deal instead to save yourself time and money.

If you approach a broker – especially an independent one – then they’ll already know everything you need to know about the players in the sector. They’ll already have all the relevant information to hand on tenant loans and deals and rates. So, all you’ll have to do is to answer a few questions, to tell them what you want and then to ask them to go and find it. A good independent broker will dig out the lowest cost loans for tenants deal for you in just minutes.

And, the majority of brokers will also get you better deals and discounts than you could get for yourself. Lenders will reward brokers for finding them new customers by giving them the best deals which they can then pass on to you. If you’re looking for loans for tenants deals then this really is the only way to go if you want to save yourself some money!

About The Author
Micheal Reese is an expert in the Loans for Tenants
http://www.loan-for-tenant.co.uk Field.


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Personal Loans - Guide

Nowadays we no longer have to wait until we buy or do what we want. The personal loans sector in the UK today is packed full of many different types of loans that can be used for virtually any purpose. You can, for example, take out general loans to help you do or buy stuff whenever you feel like it. Alternatively, you can take out specialised personal loans to help you out with all kinds of stuff such as DIY projects, debt consolidation or buying a new car, for example.

Personal loans work in a very simple way at the end of the day. You will approach a lender and apply to borrow the money you need. Lenders can be big financial names such as banks or building societies or they can be smaller name specialist lenders. The lender you approach will do some checks on you to check out how your finances look – both now and in the past – and then will either approve you or reject you for finance. If approved, you simply sign up to the personal loans agreement and then they hand over your cash. You can do all this online nowadays if you prefer which can speed up the process and get some great rates or you can follow a traditional route if you’d rather do that.

Lenders don’t, however, let you borrow money for free. They do, after all, have to make some return on their investment so you’ll be charged for the money you borrow. This charge will take the form of the interest rate that you are given on the money you borrow. The aim here, at the end of the day, is for you to pay back personal loans with this interest added on top. In most cases you will pay the money back in instalments to make it easier to manage. So, you’ll usually have a commitment to repay a certain sum every month for the duration of your personal loans deal. This payment will be put towards paying back the sum of money you originally borrowed together with the interest that you owe on top.

The great thing about personal loans is that they can be used for just about any kind of purpose and, if you take out a general loan, you probably won’t even be asked what you want the money for. And, these kinds of loans are available just about everywhere nowadays and are quick and easy to arrange – whether you want to borrow just a few hundred or thousands.

The big advantage to the fact that there are so many personal loans choices out there for you is that this keeps loan rates low at the moment so now really is a good time to apply for this kind of finance. This also means that you should shop around as much as you can to find the lowest rates – this may well be best done online as the Internet has loads of great personal loans deals that could save you some serious cash.

About The Author
Micheal Reese is working at 1track personal loans
http://www.1trackpersonalloans.co.uk and has been in the Personal Loans http://www.bridgehouse-personal-loans.co.uk industry for over 10 yrs.


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