Financial News & Information.

April 29, 2009

The difference between a “normal” mortgage and an FHA loan

Filed under: Uncategorized — admin @ 9:15 pm

It is in every borrower’s best interest to understand the difference between a Conventional and an FHA loan, especially if they owe more than 80% of their home’s value or are interested in purchasing a home with less than 20% down payment.

First FHA will allow a borrower who wants to refinance, or purchase a home, the opportunity to borrow up to 96.5% of their home’s value. This is also known as LTV or the “loan to value” ratio. If it is a refinance, and they want to borrow 96.5% LTV, then the borrowers are not allowed to take out any cash. The only refinance that will be accepted is one where the borrower benefits with a reduced monthly payment from a lower interest rate.

A borrower can work with a Conventional loan if they only have to borrow 95% or less LTV. It’s usually financially better to secure a Conventional loan than an FHA loan because of the 1.75% up front fee that FHA requires. This can be a significant extra fee if the loan amount is three or four hundred thousand dollars. For example, the extra fee on $300,000 is actually $5,250.

So if you have at least a 5% down payment on a purchase, or have at least 5% equity in your home when you are ready to refinance, you might qualify for a Conventional loan and forgo the 1.75% up front fee. If you can afford a 10% down payment, or have 10% in equity when you are ready to refinance, you have an even better chance of securing a Conventional loan. This is because there are several restrictions on Conventional loans between 90% and 95% LTV and many borrowers will not be strong enough financially to qualify. For example, the credit score must be exceptional (over 720 points) to get a loan over 90% LTV.

One advantage to an FHA loan is the cost of their Mortgage Insurance Program. Mortgage Insurance is an extra fee that must be paid alongside the regular monthly Mortgage Payment. Regardless if it is a Conventional or FHA loan, anytime a borrower needs a loan that is over 80%, they will be required to add a Mortgage Insurance Premium to their monthly payment.

FHA’s mortgage premium is a standard .50% of the loan amount. In other words it does not matter if you borrow 81% or 94%, if you borrow over 80%, the Mortgage Insurance Premium would be the same at .5%. A .50% Mortgage Insurance premium on $200,000 would be $200,000 x .50%, which equals $1,000. This is an annual premium and so it needs to be divided by 12. Therefore, the Mortgage Insurance Premium on an FHA $200,000 loan would cost an extra $83.33 per month ($1,000 divided by 12 = $83.33).

With a conventional loan there are different percentages associated with different LTV’s. For example a borrower who needs a loan that is over 80% but under 85% LTV will have a smaller Mortgage Insurance Premium than someone who needs to borrow 90% or 95%.

The Mortgage Insurance Premium payment under 85% LTV is about the same as the FHA premium, but the Mortgage Insurance Premium (also known as MIP) on a 90% or 95% LTV loan is much higher than FHA. So where as the FHA loan asks for a large upfront fee of 1.75% and a smaller monthly Mortgage Insurance Premium, the Conventional lender does not ask for an upfront fee, but collects a larger Mortgage Insurance Premium during the life of the loan. A good loan officer can crunch the numbers and figure out which type of loan is in your best interest.

I hope that this explanation clarifies the differences between the two loans and shows the advantages and disadvantages of each type.

April 21, 2009

How to get a low income home loan…

Filed under: Uncategorized — admin @ 3:15 pm

When it comes to finding a home to purchase, many people simply give up their dream because they feel that they have to make a lot of money each year in order to qualify for a loan. There are such things as the low-income home loans for those who fall within credit income guidelines.

The low-income home loan is perfect for those who are currently without adequate housing but can afford the monthly payments if they had a home. There is certain criteria that has to be met in order to qualify for the low-income home loans.

Applicants must meet the following requirements:

· Must be a first time home buyer

· Must have income below 50 percent of the median income for the area to be low income

· Or have between 50 to 80 percent of the median income for the area to be of moderate income

· Must be unable to obtain credit through other means but have a credit history that is acceptable

Types Of Assistance

It basically boils down to two types of loans. There are the direct loans and the guaranteed loans that can be used to purchase a home. People who have limited income can do well with these programs as there are options out there that are geared towards helping them. Both the guaranteed loans and the direct loans can be used to build, buy, or improve a person’s residence.

Since manufactured homes are becoming a popular choice anymore, there are now options for low-income buyers so that they too can take advantage of the manufactured homes. Generally, the homes can be financed as long as they are on a permanent site, meaning these homes cannot be placed into a mobile home park. They also have to be purchased from a dealer that is approved and meet various other requirements.

Direct loans generally do not get involved with refinances, but there are always the exceptions. The home must also be located in the right kind of rural area. As you can see, there are many things that you will need to be aware of in order to make sure that you are heading in the right direction with the purchase of your first home.

Additional Programs For Low-Income Buyers

When it comes to low-income buyers, there are many options that they have to pick from. The following are good examples:

· Fannie Mae

· Freddie Mac

· Federal Housing Authority (FHA)

· Rural Housing Authority (RHA)

· Veteran’s Administration Home Loans (VA)

These are great examples of the various options that are out there for low-income first time homebuyers. With so many options out there, it is hard to imagine that there is anyone that would be unable to live the dream and own their own home.

The government and lenders want people to become homeowners as everyone then benefits. Now is the time to take advantage of all of the available options and see which is the best fit for you and your family.

April 14, 2009

How to get student loans in a rough economy

Filed under: Uncategorized — admin @ 5:17 am

Are you a college student searching desperately for ways to get cash for college? Such is the state of the economy these days. It seems like everybody is cutting back these days, except the universities. College costs have been outpacing the rate of inflation for many years now.

So how in the world do you get cash for college to finance the rising costs of education? Well, you can look to the government to help you out. You can apply for loans, grants, scholarships, etc. If you’re lucky, you might get free money to pay for part of your school, but most of the help you get from the government will come in the form of loans you need to pay back.

Loans may be a short-term solution to get cash for college, but in the long-run, they will be a big burden around your neck. Many people graduate from college these days with $50,000 to $100,000 in student loans.

The worst part about it is that it will take years, maybe decades to pay them back with an average starting salary out of college of about $25,000 per year-if you’re lucky enough to get a job in the first place.

You can help offset your need to get cash for college by getting a job. The problem is, jobs are not so abundant like they used to be. If you’re able to get one at all, it will hardly put a dent in your ability to get cash for college.

More likely, you will be working some minimum wage job with a boss you hate and hours you don’t like. This will put a big burden on your time as you try to balance schoolwork, your job, and your social life. And at the end of the day, the money you make will hardly put a dent in your need to get cash for college.

So what is the solution to get cash for college in today’s tough economic times? The answer may be staring right at you. That’s right, the internet. Until now, you’ve probably used the internet for playing games, chatting with friends, generally just hanging out. Did you know that you can use the internet to make money too? It’s true.

Now, granted, there are a lot of scams out there and you need to be careful and do your proper research, but the internet is full of people from all walks of life making a full-time living and beyond- and it is the perfect way to get cash for college.

Today, hundreds of millions of people use the internet, and many people buy stuff there. Even if you don’t have your own product, you can become an affiliate for one of hundreds of thousands of other people’s products and earn a commission off of every sale.

Done correctly, this constant flow of commissions can help you get cash for college that may even be enough to cover all your  tuition as well as living expenses. The sky is the limit on the internet- as you will soon find out. It’s up to you to grab your piece of the internet pie and learn how to get cash for college.

April 5, 2009

All you ever wanted to know about car loans

Filed under: Uncategorized — admin @ 9:16 am

Buying a car has always been a sort of milestone in people’s life. Most of us tend to remember incidents that happen as “before I got the new car” and “after I got the new car”. It also has always taken some planning to accomplish everything necessary to taking the much-anticipated step of driving your new car home for the first time. Unless you are in that very small percentage of people who are able to walk into an automobile showroom and pay cash for a brand new car, you are going to have to arrange for financing in order to get that car, be in brand new, or just new to you.

Getting a car financed brings to mind different thoughts and images than it used to. Of course, you can still procure financing in the “old fashioned” way. You can head over to your bank or credit union, and get your car financed that way. Alternatively, you can go to the car dealership where you plan to buy your car, and allow them to handle everything that needs to be done toward financing that car you have dreamed about. Nevertheless, in today’s world, the most popular option for auto loan financing is online.

What is so special about taking care of your car loan finance needs via the Internet? First, it is easier. Instead of having to make multiple trips to the car dealership, the bank or the credit union to get the car you want to buy financed, you can do everything in the comfort of your home or office. You can search the web for the best interest rate on a car loan at any time of the day or night, at your convenience. What could be easier than that?

As you are searching online for the best car loan financing, keep in mind that you only want to do business with a loan company that is reputable. Of course, that’s a given, as no one would deliberately give their personal information to a company that seems to be a bit on the shady side. You would be surprised at how many people see a too-good-to-be true interest rate, and jump at the chance to get in on it, however. They are only thinking about getting a car as cheaply as possible, without considering the repercussions of taking out a loan with a business that may not even exist except on paper.

There are several ways that you can make sure the online lender you will deal with is one you can trust. Your research is a big help, as it will help you to understand what a genuine lender’s web site looks like. If you do not see any way you can get in touch with an online lender, such as a telephone number and address, do not consider the company. Only deal with online lenders that can prove they are reputable businesses, and who will also keep your personal and financial details confidential and protected from hackers.

Your options for financing a car loan are many and varied. Learn to separate the wheat from the chaff as far as lenders are concerned, and you will soon be driving home in that new car.

March 28, 2009

Can you get a home loan after bankruptcy?

Filed under: Uncategorized — admin @ 9:13 pm

Did you know that you could still get credit facilities even when you are going through bankruptcy? Better still, this is a good way to rebuild your credit rating. This is because it gives you good opportunity to prove to creditors that you can be trusted with finances. Though it is not very easy to get unsecured loans at such a time, you will be surprised to find that some firms will be looking for you.

Some of the lending firms that will be more than willing to offer you a loan are mortgage firms. In fact, they will give you an unsecured loan. It is not entirely unsecured because what they will fall back on, in case you default payment, is the house you are going to buy. To improve on your credibility, there are a few things that you can do.

Once you have filed for bankruptcy, it is wise for you to open up an account and start saving. Maintain good records or the account and avoid overdrawing from it. If there are payments to be made through the account, make sure that they are timely. You will realize that with time, your credit rating will really have improved. This may take about two years.

If two years is a relatively long time or you to wait, then some firms will need some form of down payment or the mortgage. You can acquire this through borrowing from friends and relatives. If this is not adequate enough, take advantage of firms with down payment support programs like the Nehemiah program.

March 15, 2009

What’s an easy solution for bad credit mortgages?

Filed under: Uncategorized — admin @ 9:12 pm

When you need to obtain a mortgage for bad credit, there are a couple options you have to choose from. Before you commit to anything, it is crucial that you know your options and spend some time thinking about this important decision. Whatever you decide is something you may be stuck facing and paying off for the next 30 years, so do not take this decision lightly.

Your mortgage for bad credit options are basically the following:

1. Search for and try to find the best offer with your current credit situation
2. Focus on credit restoration to qualify for preferred treatment

There are a number of companies and organizations that will approve you for a home loan no matter what your credit score, but that comes with major consequences. You’re likely to pay outrageous fees and the interest you’ll pay on the loan will be two to three times the average rate.

As a result, not only will it cost you hundreds or even thousands of dollars more to live in your home every month, but by the time you pay off your mortgage it could cost you hundreds of thousands of dollars more. That’s because each month you pay your mortgage, more money is sent to the bank to pay interest than to actually owning your home. You’re simply paying a fee.

Whether you need a mortgage for bad credit to purchase a new home, refinance your current home, or buy a second home, you’ll end up paying more with these plans – and not just in mortgage payments. Because of your bad credit, your closing costs could be higher and you may end up paying private mortgage insurance (PMI), which is nothing more than a fee because of your bad credit score.

This can all be entirely eliminated by simply planning 30 – 90 days before you purchase your home. By putting a little effort in restoring your credit, you can erase any worries about getting approved for a mortgage. In doing so you’ll save thousands of dollars in the process and reduce your closing costs.

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