Mortgage Refinancing Guide

Buying a Manufactured House: Pros & Cons

2006-01-09T18:55:00.000-08:00

If you are currently in the market for a new home, perhaps you have considered manufactured housing. What is a manufactured house? It is typically a home that is built completely in a factory (commonly known as a mobile home). When it is finished, it is moved to the site where it will be installed.

One of the biggest cons to buying this type of a house is that you can almost never get a traditional mortgage. Lenders do not like to finance these types of houses as they could be moved at any time. Also, it is hard to build equity in a manufactured home (for reference, equity is the property value minus the debt). Many owners of manufactured houses do not own the land their house is sitting on, and land is a big part of equity. Manufactured houses simply do not tend to go up in value. They are also geared towards lower income levels, and sometimes there are inferior building materials used. These are a few of the reasons why it is hard to get a traditional mortage on a manufactured home.

The pros are that manufactured houses are very affordable, and provide people without a lot of income with a way to own their own home. More and more people are buying manufactured homes and permanently installing them on land that they own. Because of this sometimes they are able to qualify for a traditional mortgage.

If you are planning on considering a manufactured home, arrange for your own financing (do not necessarily go with the offer the seller of the home will try to talk you into). You will usually get a better deal arranging for financing yourself. Lots of financing tips are available on www.mortgage-refinancing-online-guide.com. Also, avoid "all in one packages" that include everything (installation, financing, home-site, etc). You can get a more competitive price on your home by shopping for just the home. Try to find a good site to install your home on, before you buy the home. Also, consider buying rather than renting the site where your home will be.

Manufactured homes have both pros and cons, and are often a good housing solution. Just be sure you get all the facts and options before you sign any contracts.

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2006-01-09T18:53:00.000-08:00

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Mortgage Q&A: What is Private Mortgage Insurance or PMI?

2005-12-22T08:17:00.000-08:00

If you are a first-time home buyer, with not a lot of money in the bank, you will probably hear the term "pmi" or "private mortgage insurance" sometime in the mortgage process. This is because private mortgage insurance is required on all mortgages where the loan-to-value ratio is 80% or greater. To put this in simplified terms, if you buy a house that is $60,000, and you are unable to put $12,000 (20%) down as a down payment, you will have to pay private mortgage insurance. This is actually to protect the lender from you defaulting (not paying) on your loan.

As a buyer, you will probably want to get rid of the private mortgage insurance (PMI)as soon as possible, because it is not tax deductible, and you never see it again. It really does nothing to help you. Unfortunately, you will probably not receive notification from the lender when you have paid off enough of your mortgage to be able to stop paying PMI. So you will need to carefully look at your mortgage statements to keep track of the debt to value ratio of your loan. Whenever it falls below 80%, you will then be able to make arrangements to drop the PMI.

Even if you haven't paid enough money down, you may be able to drop PMI if your house has appreciated in value. For example, if you buy a house for $60,000, and you remodel it, and the value goes up to $80,000, you can get it re-appraised and drop the private mortgage insurance.

Whichever way is best for you, be sure to keep watching your mortgage statements, and do everything possible to drop the private mortgage insurance as soon as possible. For other tips, see www.mortgage-refinancing-online-guide.com. Also, talk carefully with your mortgage professional before signing on to any loan agreement.

Can I Afford to Buy a House?

2005-12-08T14:03:00.000-08:00

Many people wonder if they can really afford to fulfill their dream of owning their own home, or how much of a home they could afford. They wonder what a lender will look at in deciding how much of a mortgage they can get. If this is what you are asking, here are a few things to consider:

1. First, a lender will look at how much of your monthly income before taxes is going into paying off debts. Frequently, they will use the 33/38 ratio. This sounds confusing but let me break it up simply: 33% of your income can go into housing costs (mortgage, insurance, taxes, etc) and 38% of your income can go into your regular consumer debts (loans, credit cards, car payments,etc.) Guidelines may be flexible or vary with different types of mortgages such as FHA & VA (veterans) mortgages.

2. Lenders will only count income that can be documented on paper. This is based on your gross income before taxes. One shortcut way to calculate your monthly income is to add the last two years income on your W2's and divide by 24 (for 24 months). This should give you a fairly good idea of what your monthly income is. If you are receiving 1099 income or are self-employed, you will need tax returns from two years to document what you are earning.

This information should be able to help you figure out how much home you can afford. You can also find additional facts on websites such as www.mortgage-refinancing-online-guide.com. If you are serious about buying a home, be sure to consult a mortgage professional.

Mortgage Q&A: What are points?

2005-12-01T10:29:00.000-08:00

If you are looking at buying a new house, or considering refinancing your current dwelling, you probably have a number of questions. One of the common questions involves mortgage banker terminology. One of these terms is "points". You are often given the option of whether or not you want to pay "points" on your loan.

At first glance, you may immediately decide you do not want to pay points, as your initial down payment will be higher. However, once you understand what a point is, you may want to reconsider your first impression.

A point is 1% of the total loan amount, and paying a point will reduce your interest rate throughout the entire life of your loan. This will save you money throughout the whole time you have your mortgage. In other words, you can either pay a point now, or pay that amount plus the interest on it later. Either way, you will pay eventually.

Before deciding whether or not to pay points on your mortgage, ask yourself how long you plan to stay in your house. If you are planning to move or refinance within the next four or five years, you may not save any money by paying points. If you are going to live in your house for a long time (and not refinance), points are most likely a good option for you.

When comparing rates from different lenders, be careful to look closely at exactly what rates you are getting, and how many points you have to pay to get those rates. Choose wisely based on how much money you have, how long you plan to stay in your house, and how much interest you want to pay long-term.

Is An Adjustable Rate Mortgage Right For You? Five Things to Remember

2005-11-26T08:22:00.000-08:00

Whether you are refinancing your home, or buying your first home, there are so many financing options to consider. Sometimes it can get confusing trying to understand your choices. Adjustable rate mortgages often seem hard to understand, and loan officers sometimes speak in big terminology. Here is a simple guide to adjustable rate mortgages (five things to remember), to help you decide if this option would be good for you.

1. Remember that adjustable rate mortgages are riskier. Your rate is not locked in like a traditional mortgage, so your payment could vary a lot.

2. An adjustable rate mortgage rate will be initially lower. Because the rates change frequently an adjustable rate mortgage will often start out at a rate as low as 2 percentage points below the rates for a traditional 30 year mortgage.

3. An adjustable rate mortgage may be a good idea if rates are expected to fall. If mortgage rates are expected to rise, you may not want to consider this option.

4. If you are planning to move within the next few years, an adjustable rate mortgage may be a good idea. You will get an initially lower rate, and won't have to worry as much about what happens if rates rise. However, read through your contract carefully, as some lenders may impose a fee for paying off the loan early.

5. All adjustable rate mortgages have a cap on how much the interest rate can be raised over the life of the loan. In other words, you don't have to worry about the rate being unfairly high.

Adjustable rate mortgages have some great benefits, and may be the best way to go in certain situations. Don't rule them out until you have talked to a loan officer and considered all your options.

If Your Credit Is Low, You Can Still Get A Mortgage

2005-11-23T19:13:00.000-08:00

Every one has some financial tough times in life. Some people go through rough divorces; others have medical bills that pile up. Often people are unable to pay their bills on time. If this is your situation, and you have dreamed of owning a home, don't give up hope. You can still get a mortgage.

A good credit score is 620 or above. If yours falls below that, your mortgage is considered "subprime". Don't worry if that sounds "bad" to you, it just means that there are a few differences between your mortgage and a mortgage for someone with good credit:

1. Your interest rate will be higher. How much higher really depends on why your credit score is low. If you have failed to pay your rent or previous mortgage on time, that holds a lot more weight than a late medical bill or credit card payment. Mortgage lenders will take these factors into consideration.

2. Your loan is more likely to have a prepayment penalty. This means that if you pay off your loan early or decide to refinance, you may have to pay an additional fee.

If you are considering a "subprime" mortgage, be careful that you do not get taken advantage of. Check your credit score yourself to be sure that the lender is being honest. Also, get a couple of different quotes so that you know you are not getting a sky-high interest rate. Only shop with reputable mortgage companies. Some of these companies are listed on www.mortgage-refinancing-online-guide.com/resources.php. Above all, remember that it is possible to get a mortgage and buy the home you have been wishing for.

Should I Refinance My Mortgage?-- Three Questions to Ask Yourself

2005-11-22T12:15:00.000-08:00

Joe and Helen's neighbors couldn't say enough good things about refinancing their mortgage. They mentioned how they had eliminated credit card bills, and lowered their overall interest rate. They had even been able to get some cash back to help with their daughter's college tuition. It sounded great, and Joe and Helen decided they should probably refinance too. But, is refinancing for everyone? Should you consider refinancing? Here are a few questions to ask to determine whether it might be a good idea for YOU to consider refinancing:

1. How high is my current interest rate? If the going interest rate is 6% and your loan is at 8.5%, you definitely should consider refinancing. In fact, the current "rule" is if your interest rate is 2 percentage points or more above the market rate, refinancing may be for you.

2. How long do you plan to stay in your current house? Are you planning to move this year or in the near future? Or are you in your house for the long haul? You need to be sure that the savings in interest money is enough to offset the costs of refinancing (closing costs, etc). However, even if you are planning to move within the next year or two, check with your current mortgage company. A little-known secret is that often they will refinance for you with no closing costs to keep your business.

3. Do you want to switch to a shorter term mortgage? Switching from a 30 year mortgage to a 15 year mortgage can significantly reduce your interest payments, and help you build equity much faster. There are a lot of calculators online to help you figure out the savings. Check out www.mortgage-refinancing-online-guide.com for useful articles, advice, and tools to help you in your decision.

These are only a few of the questions to consider when you think about refinancing your mortgage. Do a lot of reading, figure out your savings, and talk to a professional to find out if refinancing is right for you.

Quiz: How Much Do You Know About Credit Scoring?

2005-11-20T18:27:00.000-08:00

Before you get a mortgage for the first time, or refinance your existing mortgage, lenders run a credit check. Lenders use a scoring system to decide whether or not you are a good candidate for a loan, and even what rate you will qualify for. Credit scores are based on a number of factors. How much do you know about the current credit scoring system? Here is a 10 question quiz to help you find out:

1. True or False: Information on your credit report is always accurate.

2. True or False: There are currently 3 nationwide credit-reporting companies.

3. True or False: An occasional bill paid late will not show up on your credit report or affect your credit score, unless you make a habit out of paying bills late.

4. True or False: If you have applied for many new credit accounts recently, that could affect your credit score.

5. True or False: If you are denied credit, you have no way of finding out why.

6. True or False: You can improve your credit score by paying bills on time, paying down balances, and not accumulating additional debt.

7. True or False: Improving your credit score is a fast process.

8. True or False: If your credit score is low, you cannot get a mortgage.

9. True or False: Credit companies may take factors such as marital status and national origin into consideration when evaluating your credit report.

10. True or False: Credit reports are available free.

ANSWERS:

1. False. There are sometimes inaccuracies on credit reports. Be sure to review your credit report before applying for a mortgage or refinancing your home.

2. True. There are 3 main credit reporting agencies: Equifax, Experian, TransUnion.

3. False. Any bills paid late are very likely to negatively impact your credit score.

4. True. It may negatively affect your credit score if you have applied for too many new accounts in the recent past.

5. False. If you ask for the information, the creditor is by law required within 60 days to inform you of the reasons your application was denied.

6. True. All of these things will help you improve your credit score.

7. False. It can take awhile to improve your credit score.

8. False. You can get a mortgage or mortgage refinancing even with a lower credit score though the interest rate may be higher. There is more information on these types of mortgages on www.mortgage-refinancing-online-guide.com.

9. False. Credit companies cannot discriminate based on these factors.

10. True. You can now obtain a free credit report through www.annualcreditreport.com. By the way, a perfect credit score is 850.

SCORING:

1-5 You need to learn more about credit scoring. Go to www.mortgage-refinancing-online-guide.com, and browse the articles.
6-8 You know a lot about credit scoring. Keep up the good work.
9-10 You might want to consider a career in mortgage loans. Great job!

Top 3 Reasons To Consider Refinancing Your House

2005-11-18T10:51:00.000-08:00

Your house is one of the biggest purchases you have probably ever made. You make payments faithfully each month, take care of the interior and exterior, and fix it up to meet your current needs. Whether you are younger or older, your house is a part of who you are. Right now, you probably hear lots of people talking about refinancing their homes, and you wonder what you would stand to gain by refinancing. Here are the top 3 reasons why people choose to refinance their houses.

1. Refinancing can lower your interest rate. If you have good credit, and a current interest rate of 6-7%, you will probably be able to save yourself a lot of money by refinancing. Why pay the lenders more money than you have to? You can literally cut thousands of dollars of payments from your mortgage by refinancing at a lower interest rate.

2. Refinancing can help you reduce credit card debt. Are you drowning in credit card debts at high interest rates? Debt consolidation refinancing loans can eliminate all your existing credit cards, loans, and other debt. Instead of many payments you will be left with one significantly lower payment, and this can permanently help your financial situation.

3. Refinancing can give you money for the things you need now. If you are saving $200 a month that you were previously paying on your mortgage at a higher interest rate, you can now put that towards something else. Have you been needing a new car? Is one of your children starting college? Do you need help paying for private school tuition? Refinancing at a lower rate is definitely the way to go--it's cash right in your pocket!

These are only 3 of the many reasons to consider refinancing. Check out many more articles and resources at http://www.mortgage-refinancing-online-guide.com. Stop delaying and find out about mortgage refinancing today!