Mortgage Calculators Easy As 1,2,3

First Mortgage Trust have developed a number of diverse calculators over the years not only to improve the quality of their clients online experience but also in response to client, consumer and third party requests. Among the calculators are Mortgage Payment Protection, Bridging Loans, Secured Loans, Buy To Let Rental and Mortgage Calculator, Affordability and budget, How much can I borrow, monthly mortgage payments for both interest only and repayment, flexible mortgage calculator and three conveyancing calculators for purchase, sale and purchase and remortgage.

The benefit of online mortgage related calculators are many and varied. First Mortgage Trust's extensive collection of online calculators allow client retention and leaves them in complete control. not only to compare current outgoings but also for anticipated costs and savings. Every cost associated with selling, purchasing and remortgaging is available and for the client to interact with. Mortgage calculators help to create a sticky website.

Calculators are of benefit to solicitors, Independent Financial Advisers, mortgage brokers and those involved in residential and commercial real Estate. The calculators can be used both online and offline for ease of reference to professionals. Other benefits are client and consumer retention as website visitors no longer have to leave a professionals site to confirm or check figures.

For Financial services web designers, webmasters and search engine optimization this becomes invaluable keyword rich content and is an essential must have for any associated site. With around 500,000 searches every month in the US & UK for 'mortgage calculator' this confirms the demand for information required by online clients.

First Mortgage Trust's conveyancing purchase and sale & purchase calculators include a database of approximately three hundred and seventy local authority search fees. First Mortgage Trust update this database annually. Although local search indemnity insurance is now popular amongst conveyancing solicitors it must be remembered that not all lenders will allow this and may well insist on a local authority search. Clients can also work out stamp duty, another substantial cost in the home buying process along with many other functions.

With the ever changing landscape of lending and underwriting criteria it is important that the consumer have calculators available to them. Many lenders have now increased income multiples to as much as 5.6 joint for high credit score, high earners. Before a client proceeds with a mortgage it is important that they have an idea of borrowing capacity, after establishing borrowing capacity they can further confirm monthly figures to confirm affordability.

It is also important that any calculator placed on a financial services website not only carries disclaimers but also keeps pace and reflects changes with legislation from a regulatory perspective. The Financial Services Authority have expressed some concern over the self certification mortgage. A non status mortgage whereby income is not verified by the lender. Therefore a mortgage budget and affordability calculator is essential along with hints as to why the consumer is self certifying their income, this is in accordance with responsible lending practices.

With rising property prices diminishing rental yields a buy to let mortgage and rental calculator also proves exceptionally popular. Where the amount of mortgage available can be reduced substantially by a valuers comments or rental assessment it is important that the client is forearmed.

By: Martyn Witt

Mortgage made easy

Synchronize your brain with mortgage dictionary to understand the basic concepts of mortgage. Everybody will finance a mortgage loan in some point of life. In fact, a large percentage of the total household credit in North America constitutes residential mortgage. Since purchasing a home is substantial amount of money, Residential Mortgage is the most common way to acquire a home.

Mortgage Loan
The physical property holds and secures the loan. It is a loan to finance the purchase of property, or real estate in a specified period payment and interest rates. The lenders serve the right to repossess the property or real estate in case of default.

Face Value
The borrower promises to the pay the original principal amount which is the face value of the mortgage.

Mortgagor and Mortgagee
Mortgagor is also called the borrower or owner, while Mortgagee is also called the lender. In the mortgage contract, it states the lender who serves the right to repossess the real estate in the event of default. You can also see the same information on the title of the property which is registered at the provincial government�s land title office.

Term
The lender usually sets up a 20 or 25 year amortization period which is how long to repay the whole mortgage. The term of a mortgage divides the amortization period into several length of time. Most Mortgagees commonly offers 6 months to 5 year term in fixed interest rates.

First mortgage and Second mortgage
The first mortgage refers to the current mortgage, while the second mortgage refers to the additional mortgage. Financial institutions offer Home Equity Loans and Home Improvement Loans which are good example of second mortgage.

By: Dennis Estrada

100% Mortgage Financing With A Lowly "500" Credit Score?

The financing vehicles have been in place for several years now for a borrower using some creativity with a seller to make 100% financing possible. However, the real estate market had been so hot in many areas in the U.S. the sellers did not have to even entertain anything resembling creative financing. With a softening market, creative financing is back as a helpful tool to allow sellers to unload their properties as long as an over supply of inventory exists.

Harold and Laura had been renting a home in a suburban area for three years. They had been digging out from under a heavy debt load of medical collections. Laura was leaving work one day and a truck had crossed the line and pinned her in her small car for a half an hour until the jaws-of-life was used to extract her out from her crushed vehicle. With a broken hip, ankle, eye socket and fibula a long recovery ensured and Laura was not able to work for two years. The other driver was at fault, but any financial recovery was years down the road as the other insurance company was playing hardball. In the meantime, with constant harassment for the out standing medical bills and the weight of credit card and installment debt that existed prior to the accident was just overwhelming.

Harold had been working two jobs just to meet the basic family needs. Family help was limited and really wasn�t expected. Laura�s therapy had been going on for a year now and real progress was being made. Her employer had kept her job open as a customer service representative ironically at a credit card service center. The benefits were limited and very little of the medical bills and rehab had been covered. Harold and Laura had been seeking some financial advice from a local bankruptcy attorney. It was decided that with their level of income and huge medical bills that filing a Chapter 7 Bankruptcy action might be the best thing to do for mental sanity and cash flow. A Chapter 13-payback plan would be crippling for many years to come. As the bankruptcy attorney explained to Harold and Laura that in his practice example after example comes before him where just bad things happen to good people and that there was no shame in taking care of their financial affairs in this manner. The rationalization process followed.

Two months before filing the bankruptcy, the insurance company was offering a small settlement based on an allegation that Laura may have temporarily been distracted by talking on her cell phone and thus reduced her reaction time. Rather than put up a long protracted fight Harold and Laura, for better or worse settled for an amount that just covered her payoff on her totaled car. They were relieved of that installment. Their attorney for the accident urged them not to settle, but with Laura�s eminent recovery and the stress of the whole ordeal, they grabbed what they could at the time.

Harold and Laura received their notice of the Final Discharge of their Chapter 7 Bankruptcy. All the collections for medical bills, non-secured credit cards and one major medical bill that had resulted in a judgement being awarded for the first responding hospital had all been wiped out. They excluded their family car from the Bankruptcy matrix (which names all the debtors), which still had a $6,850 balance with a $295/month payment remaining. They also excluded a credit card that they had for years and had a low balance and a low monthly payment. This allowed Harold and Laura to maintain two trade lines and their on time rental payment of some $1,250/month outside the Bankruptcy action. Laura had now been back to work at her old job for two weeks. She was fortunate to take advantage of a car pool with a fellow worker who lived a half mile away.

It was like the world had been lifted off their shoulders. Now Harold and Laura had their rent, one car payment and a small credit card and their home utilities. The cell phone service had gone by the way side many months before.

Even through the most brutal times and the lowest of the low, Harold and Laura, as their custom, visited Open Houses after church every Sunday. It was always in the neighborhood and never more than two home visitations. It was Harold and Laura�s way to cope with the dark cloud that had beset them. During this process, they became familiar with a local Realtor who took a very personal interest in their situation. The Realtor, named Betty, knew they were not ready to do anything until some things had been handled. At the most recent Open House visit, Harold and Laura shared that they had put their financial challenges behind them. Laura was feeling great and off all her pain medication. Betty raised the prospect and questioned them if she could figure out a way to get them into a home at a little more than they were paying in rent with little or no money out of pocket, would they have an interest at least in hearing more about it. Harold raised his hands with palms up and a shrug of the shoulders, and shared that it wouldn�t hurt to listen to some possibilities. The accident had caused a detour in the quest to own a home, but it had not killed their dream.

Betty set up a meeting with the Realtor�s in-house mortgage broker to discuss their options. A joint credit report was pulled and as Harold at the time made the most money his middle score was utilized to qualify for a mortgage. His middle credit score was right at 500. The mortgage broker went on to explain that they would qualify for an 85% Loan To Value mortgage. Due to their lack of a cash down payment, it was added, that the only way that they could use this loan option would be with a seller held second of 15% loan to value with the seller also paying up to 6% of the contract selling price. This would then give them a 100% Combined Loan To Value (CLTV). The loan would need to be a Fully Documented loan with verification for employment and income. The mortgage broker felt like he could present Laura�s employment gap due to the accident and use her current income for qualifying purposes. Totaling up the income versus the debts, it was determined that Harold and Laura could buy a home in the $175,000 range IF the seller would offer reasonable terms on the 2nd mortgage. Betty piped in that she had been sitting on a listing for six months and the owner now may have an interest in holding some paper versus renting the property again and deal with the tenant challenges on repairs and upkeep. The home was close to their current residence.

Betty was able to work out the deal with reasonable terms on the second mortgage that would keep the overall monthly payment down at least for the first three years. As the mortgage broker explained, that should be plenty of time to establish a better credit history and qualify for a lower interest rate loan in two years. As an added bonus, the seller agreed to pay all the closing costs and prepaid expenses such as annual hazard insurance and tax escrows plus replacing a leaky roof. Harold and Laura moved into their newly purchased home putting all the travails of the past in the rear view mirror.

Sometimes bad things happen to good people. In this current real estate market, there are creative possibilities. It won�t last forever; the time is at hand for seller help and creative financing.

By: Dale Rogers

Reverse Mortgages Enable Retiring Homeowners

It�s a creepy thought. Over the nest 40 years, the proportion of Australia�s population aged 65 years and over will almost multiply. With continual expansion in the cost of healthcare and actual living expenses, and a decreased ability to rely on government assitance, many Baby Boomers are dreading a need to make important downgrades in their lifestyles to fund retirement.

The popularity of reverse mortgages is set to rise, as our population ages. An obstacle to the take up of reverse mortgages is a strong mentality among retirees to want to leave as much as possible to their children.

The downside? The interest on the financial loan can be up to 1 to 2 percent higher than ordinary home debt rates and is gradually added on to the loan over time. But the suitable news is that the financial debt doesn't have to be paid back until the real estate is sold. In most cases, however, kids of retirees would rather see their mum and dad tap into their assets to maintain a high principle of living and general satisfaction than leave a significant fortune to them.

To take some of the pressure level off ageing shoulders, economic institutions are continually exploring products specifically tailored to help retirees. Meet the Reverse Mortgage.

So how does it work? Just as the name says, a reverse mortgage works similarly to a standard mortgage, only it�s the lender who pays the homeowner instead of the other way around. The bank or lender will lend a percentage (somewhere between 30 and 50 percent depending on the retiree�s age) of the expense of retiree�s home as a lump sum, or regular revenues to supplement savings or a pension.

Also known as �Spending the Kids Inheritance� or �SKI-ing�, reverse mortgages enable retiring homeowners to release equity in their homes to fund a model of living that would be otherwise out of reach. Using a reverse mortgage is the best solution for retirees to strike into their homes, usually one of their biggest assets, for cash.

"When you work all of your life, you get to retirement and you want to savour what time you've got left," one retiree said.

By: Evelyn Miller

Biweekly Mortgage Programs - Are They Worth the Money?

Numerous companies advertise that they can help you pay off your mortgage in a lot less time. These services, which are known by several names, most commonly "mortgage accelerator", advertise that they can cut nearly 10 years from your thirty year repayment schedule. All you have to do to reap the benefits of their system is to enroll by paying a costly fee. Is an accelerator program worth the expense?

These programs offer what is often caled a biweekly loan. The company will charge a few hundred dollars to apply for their plan, as well as a small fee every two weeks. By signing up, you agree to allow them to take half of your mortgage payment out of your bank account every 14 days. The plans do work, but not because of any monetary magic used by the companies that offer the programs. The plans work because you are paying more money.

There are fifty-two weeks in a year. By withdrawing half of your house payment out of your savings or checking account every two weeks, you are making thirteen full payments per year, instead of the twelve you were making before. By making an extra payment every year, you are paying back your mortgage principal sooner and reducing interest that will be applied to the outstanding balance. This will, over time, take a number of years off of the time it takes to repay your mortgage.

Are these plans worthwhile? They could be, but only if you are rather lazy. It isn't necessary to enroll in a plan or pay upfront and pay regular fees to utilize this method of repayment. Most any lender will permit you to pay extra money whenever you like. All you must do is note that the extra cash is to be applied to the loan principal. A lot of lenders provide a place on the form that you put in the mail or use on their Website for that express purpose. You may mail in a bit of additional money each month, or you could send in one full additional payment each year. The net effect is just about the same either way.

If you are interested in making extra contributions towards paying off your home loan early, all you need to do is contact your lender and ask what options might be available. You will likely find that any one of a number of free options are available.

By: essmeier

Are you Biting your Nails trying to find the perfect New York Mortgage Service?

100% financing, as it names implies, offers complete financing of property. The other option, 80/20, finances your mortgage with two loans. Both loans may be carried by your lender, but sometimes the seller or a second lender is required to carry the 20% mortgage.

100% financing is easier to deal with, but not all lenders will offer this type of home loan. 80/20 financing is more common, but takes some negotiation if the seller is involved.
No Income/No Asset New York Home Mortgage Programs

Limited documentation programs can simplify the home mortgage process and pave the way for a smoother and easier home-buying experience especially for self-employed borrowers. Some of these mortgage programs eliminate the need to verify income information and require limited or no documentation for qualified applicants.

Imperfect Credit Loans

Imperfect Credit Loans allow borrowers with less-than-perfect credit to qualify for competitive interest rates to purchase a home, consolidate debt, or lower monthly payments.

Home Improvement Mortgages/Construction Loans

Home improvement loans are home loans used to finance improvements on your house or property. These loans are used to maintain or increase the value of your home. This can include repairs, a new kitchen, a new bathroom, an extension or general property improvements. Landscape improvements and swimming pools can also in many cases be considered home improvement. Generally, all actions that can be considered to increase the value of the property in such a way that it increases the expected sales value of the home or the property are to be considered home improvements.

Are you sifting through Mortgage Loan offers? This may help

A mortgage loan is different than any other loan, and most mortgage loans are negotiated for a set time period of less than 10 years. They are negotiated for a single interest rate which will remain in place for the entire term of the mortgage loan. You can pay off a loan in full at any time, but you may pay a penalty depending on the mortgage lender.

Most of us are familiar with this kind of loan through the purchase of our vehicles.

With mortgages, the length of the mortgage, the term of the mortgage and the mortgage interest rate are negotiated separately. In this case:

� the 'amortization' of the mortgage is the length of time it will take to pay off the mortgage
� the term refers to the time period covered by your current mortgage contract. This is normally the length of time that you are 'locked in' to a particular interest rate and payment amount.
� the interest rate can either be fixed or variable.
Amortization

The period of time taken to clear off the mortgage, even as long as 30 years is called the 'amortization' period. It indicates the amount of time it will take to pay off the mortgage loan, assuming you make all payments in full and on time.

In general, the shorter your amortization, the less you pay in interest costs over the life of your mortgage. So, if you amortize your mortgage over 15 years instead of 25 you can save thousands of dollars in interest costs.

The only challenge is whether you can afford the larger payments. A shorter amortization will always translate as higher mortgage loan payments - because you are paying off the mortgage loan more quickly.

Term

'Term' of the mortgage is the amount of time for the current conditions of the mortgage, including the interest rate (whether locked in or variable) and the mortgage lender.

Mortgage terms can be as short as 6 months, or as long as 10 years. In most cases, the longer the term of the contract, the more it will cost you. Most mortgage lenders will consider a longer term to be higher risk to them - after all, interest rates could go up and that means your mortgage may not be as profitable. So, longer term mortgages will usually come with the highest interest rates.

Also, mortgage lenders want to ensure that you stay with them - after all, they are making money from your business. So, the term covers them in two ways: they insure that they make their money and that their clientele is 'stable'.

Interest
An important aspect of your home mortgage is the interest rate. This rate is negotiated for a period of time - from 6 months to as long as 10 years. This time period is the period over which you will pay the agreed interest rate.

The lower your interest rate, the less you pay in interest costs over the life of the mortgage. This can also save you thousands of dollars.

A final word on interest rates: mortgage lenders 'stack' the deck in their own favour. Any interest rate they are willing to charge is at a level at which they believe they will make money. This is certainly not a charity business. Now, if you 'lock in' your interest rate for 5 years you will likely pay more for your mortgage.

However, if you are willing to accept a bit of risk at your end (particularly if you have a stable job and a good credit history) you are almost always better off with variable rate mortgage. This type of mortgage allows the interest you pay to fluctuate with the market. While this sounds risky, it actually allows you a lot of freedom and almost always saves you money, for two reasons:

� The interest rate charged on variable rate mortgages are usually much less than any 'locked in' rate
� If the rates look like they will go up you can generally switch to a 'locked in' interest rate at no penalty.
Savings

In most cases, it is best to get the shortest possible amortization coupled with the lowest interest rate possible. This is how you save money on your mortgage in the long term.

However, you have to be careful. The shorter the amortization period, the higher the payment. So, while you save money over the long run because you pay less in interest charges for your loan, you have to be able to afford the payment in the short term.

Caught In A Riptide Of Mortgage Debt With Rising Monthly Payments

When the nightly main stream television news leads with stories regarding mortgage foreclosures and down turning markets a viewer knows a trend has arrived. This is all backed up with data indicating the surge of properties for sale on the market with mortgage foreclosures trending up as well. Various areas are experiencing more downside moves than others. However, the overall housing trend is down at the current moment. Two years ago, if a buyer or seller breached the subject of a Short Sale, where the lender settles less than what is owed, the response would have been �What are you nuts?� �We�ll just put it on the market and it will be gone in two weeks.� Moving forward, if a seller is setting on a mountain of debt and just happened to have an ARM mortgage with negative amortization building up to 115% of the original mortgage this could be a bad thing. Then simultaneously the property values have dipped then the owners may find themselves upside down in the property where the mortgage is larger than the value.

Some areas have had employment downturns as well to further complicate the affected family�s financial stability. This is all with a backdrop of a rising economy that gives hope in the long-term scope of things. Historically, real estate, much like other investments rolls out in cycles. Right now, there is some question whether the bottom is in sight. Lower priced properties will spur some activity along with seller concessions. Buyers are now enjoying the comfortable shoes and benefits of seller�s past. Interest rates are still at a reasonable level compared with say 20 to 30 years ago. Thus a good price with terms and concessions will garner interest from buyers. Enter the lender-stage right.

The phone was ringing night and day with bill collectors. The power had been shut off recently, now back on. The latest notice of payment increase from the lender had been received and the payments were going to go up $300/month on their Adjustable Rate Mortgage (that has a negative amortization feature) starting in two weeks. Terry and Lynne were up against it. With three children the family budget was in the process of blowing up. Three years ago, while competing against five other buyers, Terry and Lynne bid $15,000.00 above the list price to get an accepted offer. Now the prices in the neighborhood have fallen back. If they were to sell using a Realtor plus other costs there would not be enough to cover the mortgage, they would have to bring money to the closing table in order to close the deal. This was not a good prospect. With savings tapped out there just wasn�t any cash available. Terry and Lynne quickly recognized that they had to do something immediately or their home would be falling into foreclosure. In the short term, they got rid of their cars along with the big payments and bought some high mile but reliable automobiles for transportation. That was still not enough. To keep things going, all the credit cards had been maxed out and there just wasn�t one extra dollar to pay the minimum payments. Macaroni and cheese was getting pretty old.

Terry and Lynne decided to sell the house and move into something smaller and less expensive. Recently the taxes and insurance had gone up as well on the property. Hits were coming from all sides. Terry and Lynne contacted the Realtor who had sold them the house. They had been getting her monthly newsletters since they had bought the home. In a recent newsletter, there was an article regarding a Short Sale. Terry called Nancy, the Realtor, to find out if that might work for them. Nancy explained with a bona fide contract on the table and a financing approval letter for the buyer, the lender MIGHT consider a Short Sale. Comparables were pulled at it looked like the value was about $30,000 less than what was owed. Terry and Lynne gave Nancy a Signed Authorization to discuss the mortgage status and the possibility of lender assistance. Nancy made the contact to the lender and discussed the fact that Terry and Lynne had to move as they were out of cash. It turns out that even at the lower payment before adjustment, Terry and Lynne had been 30 days or more late every month called in the mortgage trade a rolling thirty. The lender was aware of their struggles at least as far as their mortgage pay history was concerned. This was one of the top lenders of the country and this was not unusual with their current portfolio to hear the same recurring story.

Times were tough. If a foreclosure was to take place over a six-month period, the losses could be in the $50,000 to $60,000 range or more per trade numbers. Nancy explained that the lender had the right to go after a Deficiency Judgement against Terry and Lynne for any monies not satisfied at closing and that they should consult an attorney for legal advice. There likewise could be taxable income to Terry and Lynne for the shortfall amount. An accountant needed to be consulted. The attorney shared that they could do a Deed In Lieu Of Foreclosure, but it would be on their credit. The Short Sale may save the lender some money over going to a full foreclosure. Terry and Lynne decided to give the sale aspect a shot. At the same time, the attorney explained the benefits of seeking some protection through a Chapter 13 Wage Earner Bankruptcy Plan. A plan would be submitted to the Bankruptcy court and if the creditors agreed their overall payments could be reduced by at least a $1,000/month. This was the kind of relief Terry and Lynne were looking for.

It took three months to get an offer where the seller was being asked to pay $9,000.00 of the closing costs and prepaids. The offer was subject to lender approval on the Short Sale. The offer, pre-approval letter on the buyer together with the seller concessions and all addendum together with the facts that Terry and Lynne had filed a Chapter 13 and had excluded and exempted the mortgage from the petition was all shared with the mortgage holder. It was unclear whether the Bankruptcy Trustee was required to approve the sale. Their attorney was to follow up. Bottom line, the lender was being asked to take a $43,000.00 hit at closing. The lender took a week to answer. The contract was structured to allow for time on a lender answer. The phone rang and Terry picked up the phone. It was Nancy, the lender had accepted the terms on the condition that they received zero money at closing. They would take their furniture and turn over the keys and that was it.

Terry and Lynne felt like a boxcar had been lifted off their shoulders. After closing, they vowed to did out of this hole and take some family budget course and set on a strong savings regimen. With the monthly housing savings, Terry and Lynne were able to put a first and last months rent down on a large three-bedroom townhouse rental in the kids same school district and were now considerably below their former housing payment by $900/month. With the savings from the Chapter 13 Wage Earner Repayment Plan Terry and Lynne were now able to breathe and maintain a family budget with savings. With on time payments of the Chapter 13 Repayment Plan, over time, their credit should improve. The once per year free credit reports from the three bureaus will help track their progress. They planned now to accelerate the payback plan by $400/month and reduce the pay out term to 36 months. Terry and Lynne could see the light at the end of the tunnel and it was not an oncoming train.

In this case, the Short Sale was the answer for this couple. It�s not for everyone. Some lenders will not even consider it. It is a tool that can be used to solve an otherwise impossible situation.

Many lenders do not pursue the Deficiency Judgement, some do. It would be prudent to determine the lender�s intentions. An attorney at the ready is a good idea to work out a plan.

By: Dale Rogers

Finding The Right Mortgage Broker Online

The advent of the Internet has really revolutionised the mortgage industry. Now days you do not need to visit your local mortgage broker or bank to arrange a home loan, everything can be done sitting in front of your computer.

Not only does this make the whole process quicker and easier but also means you have much more choice and power. Now you can use a mortgage broker hundreds of miles away if their offerings are better.

More and more mortgage brokers are setting up online in order to generate leads as their traditional marketing methods are no longer that effective. Although the majority of online mortgage brokers are reliable and honest, there are still a number that are dodgy.

To find a good mortgage broker or lender you need to compare rates and do some thorough research to find reputable companies. Mortgage magazines and online reviews can often be a place to start.

Mortgage Broker Services

A mortgage broker will typically work with several lenders to find the best rates and deals. Whether you have a good or bad credit history, a mortgage broker will be able to find you a lower rate than if you went to your local bank. Do make sure that you use a mortgage broker that has access to a wide range of lenders.

Online mortgage broker quotes are very similar to the quotes given by mortgage brokers in the offline environment, except lower. With the reduced cost due to a simplified application process and reduce overhead for office space and personnel, online mortgage brokers can offer loans with small fees and/or lower interest rates.

It is important to remember that brokers are paid by adding on a fee to the loan, so when shopping around find out what fee they charge as well.

Online and traditional mortgage brokers differ in their sales style when relaying quotes to you. A traditional mortgage broker will use sales tactics to pressure you to complete the mortgage application right there. Many people feel the need to make a quick decision rather than taking the time to process the information.

Online mortgage brokers offer a different approach in that they will provide the information and then wait for you to take the next step. After requesting a mortgage quote, you will receive rates either through the web site, email or over the phone that you can then review at your own pace.

You can choose to apply with a specific mortgage lender, or decide that none of them are best for you and approach another broker. You have much more control and power with an online mortgage broker.

Online mortgage brokers have reduced the time it takes to compare lenders by consolidating information about several lenders into one site. Through such mortgage sites, you only enter your information once to receive interest rates from several different mortgage lenders. Just remember that these rates may not be 100% accurate.

Both traditional and online mortgage brokers can give you an instant generic interest rate quote to narrow your choices from a mortgage lender. However, to get a true quote, you will need to provide detailed personal and financial information.

With a traditional mortgage broker, the process can take a couple of days to process the information and meet with the mortgage broker to review rates.

Online mortgage brokers are connected to lender databases that are updated in real time. This allows them to give you a near instant quote and process the application very quickly.

Compare Rates And Fees

While online mortgage brokers make getting quotes easy, it is important to still take the time to compare rates and deals carefully.

Your mortgage rate will be based on current interest rates, the propertys location, your credit score, and employment history. If you receive a rate quote without providing this detailed information, then you will be just getting a rough estimate.

Rough estimates for mortgage rates are still useful, as you can use them to narrow your search down to a handful of lenders. You can then apply for a real mortgage estimate with the most appealing lenders. With these true mortgage quotes, look at both the rates and fees to determine the actual cost of the loan.

Interest rates arent the only factor to consider when comparing mortgage lenders. You should also be comfortable with the lenders reputation. Unfortunately, there is not a list of reputable mortgage lenders, but common sense can protect you from a bad mortgage lender.

Online mortgage brokers have automated much of the mortgage process, reducing overheads and costs. As a way to stay competitive, many of these brokers and lenders have eliminated or reduced their fees.

Fees are the hidden costs of loans. Mortgage brokers are paid a fee from the lender and possibly from you as well. The advantage of a mortgage broker is that they find the best mortgage rates for you. So even with their fee added into the loan, you still can expect to save money.

They will also have access to a number of lenders that are not available to the general public. The only way you have access to such lenders is by using a mortgage broker.

So next time you are in the market for a mortgage be sure to contact a number of mortgage brokers and find out what lenders they have on their panel, their fees, all other fees (such as solicitor, valuation, etc) and turnaround time.

Set aside some time to do this and never rush into signing anything until you know the facts and have had a good shop around.

Exclusive Mortgage Leads

Exclusive mortgage leads can help boost your business � but how do you know if they are really exclusive? There are a few things you can do to make sure.

When it comes to running a mortgage business, one thing is for sure: the more marketing strategies you pursue, the better your odds of being successful. Buying exclusive mortgage leads is one avenue you can take. Rather than depending solely on the business you can drum up on your own, you can supplement your clientele with leads you buy from a mortgage lead generation company.

This sounds great, you say � but how do you know the leads you pay for will actually result in new loans for you? The answer is that you don't, but you can increase your chances of making a sale by ensuring that your leads are exclusive � meaning that you are the only business who buys them. High quality, exclusive mortgage leads have been known to close at rates as high as 15%. However, many lead generation firms sell each lead to a variety of different mortgage brokers, which sharply decreases your chances of making a sale.

The biggest disappointment can be purchasing what you believe to be exclusive mortgage leads, but finding when you follow up on the lead that someone else has beaten you to the punch or you are competing against six other loan officers. Many brokers have been disillusioned in this manner. How does this happen? The problem is that although many lead generation companies market "exclusive" leads they also offer leads that are sold to multiple brokers at the same time. Some times you order the wrong product, some times it's the fine print and most times it's an unscrupulous vendor that stills sells your exclusive lead to others.

The problem with non-exclusive mortgage leads is that the more brokers who have the same information, the less likely it is that you will make the sale. This is why conversion rates for most leads are in the 2-3% range. And if you are lucky enough to get the loan, often it is a very competitive situation which means lower yield spread premiums. Thus the low price that initially attracted you turns out to be less of a good deal than you thought. Not to mention you are wasting a lot of time chasing 97-98% of those leads that go no where.

But with the proliferation of websites where brokers compete for borrowers' business, are exclusive mortgage leads even a reality any longer? The answer is yes � if you know where and how to look for them. Here are a few tips for ensuring those "exclusive" mortgage leads are really what they claim to be:

Read every piece of promotional material you can get your hands on. When you are looking for exclusive mortgage leads, the worst thing you can do is to simply skim the main page of a company's website. A well-marketed company will always put their best foot forward on their home page � that's how they hook customers. However, you may find as you read more of their materials that the deal isn't quite as good as they portrayed it in the beginning. That's why it is so important to do your homework before making a decision.

Ask questions. Sometimes the information provided on a website will not answer all of your questions. If there is any doubt in your mind, ASK. Often what is not said is more important than what is. Ask what exclusive really means. Ask to see a sample exclusive lead.

Read your contract. Reading every word before you sign is a good habit to get into. If you are buying exclusive mortgage leads, you want to be sure that you contract doesn't call for shared or non-exclusive mortgage leads. If you do find an inconsistency, it doesn't mean the company is shady � for instance, since some lead generation companies sell multiple types of leads, the person who prepared your contract may have selected the wrong option. However, since the company may hold you to your contract once you have signed it, you should always double check for mistakes before agreeing to anything.

Exclusively, exclusive leads. Look for a lead generation company that only develops exclusive leads. Buying leads from an aggregator is the surest path to disappointment. If possible, try to purchase leads from a lead generator based in the United States. They are rare, but you can find them. This way you know the odds of a "mistake" are drastically reduced.

If you're in the market for exclusive mortgage leads, don't be caught flying blind! You will have better success with your leads if you understand which type will benefit you most, and know the right questions to ask.

By: Mark greig

Everything You Need To Know About Mortgage Regulation

Until midnight of Saturday 30th October 2004 the regulation of mortgage sales was done so on a voluntary basis which was overseen by the Mortgage Code Compliance Board (MCCB) - Lenders and brokers alike had pledged to adhere to this code which has now closed down.

This changed on the 31st October 2004 when a large section of the mortgage market came under statutory regulation. At this time, control of regulation was passed on to the Financial Services Authority (FSA).

The role of the FSA is to oversee the regulation of the financial services industry in the UK. The FSA is not a government department but is in fact a limited company - It has statutory powers, given to it under the Banking Act 1987. The FSAs board which makes its policy decisions is appointed by the treasury.

All mortgage brokers must be authorised by the FSA, either directly or through an authorised network/packager. You can check whether a firm is authorised via the register on fsa.gov.uk

What Are The Main Statutory Objectives Of The Financial Services Authority In Relation To Mortgages?

The FSA has been given a number of statutory objectives including:
# Maintaining confidence in the UK mortgage system.
# Promoting public understanding of the mortgage system.
# Securing an appropriate level of protection for consumers.
# Reducing the scope for financial crime.

What Are The Main Features Of Mortgage Regulation Under The Financial Services Authority?

Regulation as laid down by the FSA is statutory and any person or any organisation found breaking the rules could be subject to discipline - fines, bans and ultimately, jail time.

# The rules cover mortgage advice and sales, advertising and promotions.
# All mortgage advisors, whether you are a broker or a lender, must be authorised and regulated by the FSA.
# Any mortgage advisors must be suitably trained and professionally qualified.

In respect to mortgage sales and promotions, the FSA is very keen to bring about clarity to the mortgage market - in order that borrowers can effectively shop around and make informed decisions. Any mortgage advice, whether this is provided by a lender or a mortgage broker, must be accompanied with an Initial Disclosure document (IDD), and a Key Facts Illustration (KFI) before the borrower actually applies for the mortgage. These two documents have been standardised across the board in order to compare between different mortgage products.

What Is An IDD?

The initial disclosure document (IDD) must be provided to the borrower at the initial meeting, or if contact is via telephone, the key points must be summarised and explained with written documentation provided in writing within five working days. The IDD must cover the following points:

# Whether advice is offered or simply product information only.
# Whether the lender or broker has access to the whole of the mortgage market, or a limited panel - or even just one.
# Details of fees to be charged.
# Details of the complaints procedure - including a postal address for which to send in writing.

What Is A KFI?

A mortgage lender or broker must supply an accurate Key Facts illustration before a mortgage application is made. The KFI is a standardised document and must contain the following points:

# The total cost of the loan to be repaid.
# Any associated fees including the amount of commission that the broker earns subject to mortgage completion.
# The full details of the mortgage product including the interest rate, monthly payments and all fees.
# The risk of rate changes and the impact of payments.

DoesThe FSA Regulate All Types Of Mortgage Contract?

Buy-to-Let and commercial mortgages are not currently regulated by the FSA under the new regime.

What You Should Do In The Event Of A complaint?

Firstly you must try and iron out the complaint with the mortgage broker or lender. If a satisfactory response is not made then the complaint may be taken further to the Financial Ombudsman Service.

Do I Have To Use A Commercial Mortgage Broker?

Well, the short answer is that you don�t have to if you don�t want to!

Anybody looking for a commercial mortgage is quite at liberty to apply and negotiate directly with any commercial lender - although there are some commercial mortgage lenders who will only deal with professional brokers.

To be realistic, the real question is �do I have time to keep track of all the product changes, offers, restrictions and opportunities that constantly change?� Because building up a network of commercial mortgage lenders is a full time job for a commercial finance broker. Not many business people, property developers or investors have the time to keep their fingers on the pulse of this ever changing market place.

Anybody who does not at least consult a commercial mortgage broker for free advice is possibly depriving themselves of a significant advantage when it comes to getting the best deal.

Maybe the real concern most people express is �Do I have to pay a broker fee?� Again the short answer is 'No' - for the majority of cases there is no real reason for a broker to charge a fee for arranging a standard commercial mortgage. This is because a broker is usually paid by the commercial lender supplying the funds. However, on the rare occasion where the negotiations become disproportionate to the anticipated revenue it can become necessary to agree an appropriate fee.

Independent commercial finance brokers work closely with mortgage lenders at both ends of the property lending spectrum. Their experience enables them to know where a particular project will 'fit', and may also help them to find a solution that is possibly more appropriate than the 'obvious' one the client was expecting. The broker's avowed aims should be always to provide a solution best suited to the client�s circumstances and requirements.

As stated at the outset, the choice as to whether or not to use a commercial mortgage broker rests solely with the borrower. In the real world there is no earthly reason why a business or individual with a provable income, clean credit history and sizeable deposit should need any help. In that situation the mainstream banks are falling over themselves to offer very attractive commercial mortgage rates.

The commercial mortgage market is evolving, lenders are now eager to help start-up businesses, companies with bad credit records, and even businesses with no accounting information. These are probably the types of businesses who benefit most from the services of a commercial mortgage broker.

Aside from the obvious time saving advantages, using a commercial mortgage broker has many other benefits. However, the onus is on the client/borrower to be completely honest with their broker. Full details of any previous credit problems, missed mortgage payments or disgruntled suppliers etc. need to be disclosed right at the outset.

When working with a commercial mortgage broker it is essential to establish right at the outset whether or not a fee is payable. Never pay any fees up-front, and always ensure that you have read and understood the full terms of any brokerage agreement. There are many very competent and professional commercial mortgage brokers in the marketplace who are willing to help without charging exorbitant fees.

By: Chris Clarke

Cold Blast Of A Blizzard Hits Home With Mortgage Defaults

Calls for bids on mortgage portfolios containing lower credit score and higher risk loans based on Stated Income, No Income, No Ratio, No Doc are going unanswered. As originators of these �flavor of the day� loans are having difficulty selling bulk caches of these products. Some State legislators are outlawing ANY origination of these loans within the state border. As defaults spike and borrowers get jammed up with loan programs that a few may not even understand are now under pressure to catch up defaulted loans. Previously, an accelerating market bailed out the lenders if an evaluation of the borrower and/or property was faulty and a foreclosure followed. Now the rubber has hit the road.

Major hits are taking place on trying to move Real Estate Owned (REO) properties. Some areas are devastated, others are going sideways in appreciation and a minority of areas still has slight appreciation in the short term. With a flood of REO properties as well as slow moving residential properties, major write-downs are taking place. Many of these defaults are taking place in the Option ARM and Stated Wage Earner products as with the other �flavor of the day� loan products. With a full plate, many portfolio buyers are not looking to swallow any more loans with chicken bones that may cause a fatal choking incident.

With the faucet being shut off for borrowers for this type of loan program what is a loan customer to do? Discussion follows. Many of these mortgage products the minimum threshold FICO scores are now being moved up by the lenders. What kind of options is out there for a borrower who really needs one of these programs? For one, they will need to raise their credit scores. Since the lower tier FICO scores are persona non grata as far as loans are concerned are now being shunned by portfolio buyers. Previously, portfolio buyers would pay 102%-107% above par (the face value of the instruments) thereby giving lender originators 2% to 7% above the face value of the mortgage note. Now, due to the high risks, portfolio buyers are either simply rejecting the note package or offering say 90% or 95% of the portfolio face value thereby giving the originator a 5% to 10% loss. With margins already thin, this was just enough to push many lenders out of business. As an example on a $50,000,000 value of notes a 5% hit would cost them $2,500,000 with little hope of selling anything in their existing pipeline as far as future business. Those lenders with deep pockets can wait it out and keep the paper and season it for a year or two and demonstrate on time payments and then might be able to sell the performing notes at a premium.

With rising defaults, portfolio holders are demanding payoffs from the originators per the recourse clause. Each file is sorted through with a fine tooth comb and if there is any indication of fraud involved with these loans immediate demand for buyback and reimbursement are fired off from the legal departments. In some cases various state governing agencies, presented with evidence of fraud, are prosecuting the originating companies while issuing cease and desist order from doing ANY business in the state. These �loans with a wink� are coming to a halt for the lower FICO score borrowers who may already be financially stressed with other challenges in their lives.

So with the rug pulled out from these lower FICO borrowers for Stated Income, No Income, No Ratio, No Doc and Option ARMs (with negative amortization) what must a borrower do now?

First, the status quo on credit scores must not be accepted. Before it may not have been CONVENIENT to pore over one�s credit report and formulate a strategy to raise the scores. Now it is a necessity if the scores are lower and the only programs with the higher LTV (Loan To Value) require a higher score, THEN a borrower must work to get a higher score inconvenient or not. Then to proceed to improve those scores a borrower needs to order their free annual credit report from each bureau and upon receipt go over every detail from collections, judgements, charge offs, bankruptcy information, inquires, prior addresses, prior employment reporting to determine that ALL the information is accurate. Many consumer credit companies have a rescoring function which will print out, for a fee, what proactive action needs to be put into play to raise specific scores with the three main reporting services namely, Equifax, Trans Union and Experian. Most mortgage brokers will have this service available for potential borrowers. In most cases, since lenders utilize the middle score, it will be necessary to focus on the one bureau that can facilitate a rise in score. Sometimes it takes action on all three. Whatever is required, that is what needs to be done to satisfy the computer model used to calculate the scores. With requirements in the upper 600�s from various lenders it will be necessary to get to that level to qualify. If it is necessary to get a part time job and cut expenses and pay off this or that then that is what needs to be done.

It is a new day in the mortgage business. �Loans with a wink� are not pretty any more for the lower FICO scores in the secondary market for portfolio buyers. The pendulum is swinging the other way and higher credit scores are required.

In conclusion, there is a huge shake out now occurring among mortgage brokers, wholesale lenders and the secondary portfolio mortgage buyers. Precipitated by a large volume of foreclosures, a soft market, and lender closings, things are going to get worse before they get better in lending circles. There is a lot of bad paper going around. The finger pointing has begun, states are prosecuting fraud where they find it and fining and putting people in jail. Loan threshold requirements are being stiffened and borrowers will need to put themselves in a better financial position with other loan products such as a fully documented loan in some cases.

The cold blast of a blizzard has struck the mortgage market and that is bringing a major change in how business is done. After the stock market crash of 1929 interest only loans were banned. They have come back, but for how long? The regulators at that time, thought it was important that borrower actually pay some money on the principal and pay the debt off. D�j� vu, here we are again. The past is revisiting us. High risk creates high losses. Go figure.

By: Dale Rogers

Fixed Vs Discounted

There are a huge variety of mortgage products in the marketplace today, and some with very confusing ways of charging interest. Most people, however, have heard about fixed rate and discounted rate mortgages together with that other mortgage foot soldier, the Standard Variable Rate (SVR).

Most people could save money by moving their mortgage from their lenders SVR, which are often as high as 2.5% + the Bank of England base rate. It is usually a question of lethargy or a lack of knowledge which stops people from changing, which is a shame because some lenders exploit this with high interest rates.

Definition of a fixed rate mortgage

Fixed rates are the most highly publicised of all mortgage products. They often advertised with very attractive- even unlikely- interest rates, designed to tempt people away from their existing lenders.

A fixed rate means exactly that. The interest on your loan is fixed at a certain rate for the duration of your offer period; you will spend no more on your mortgage payments if interest rates go up. During the deal period you are usually locked in, with penalties applying if you try to redeem your mortgage.

How can lenders offer rates which seem almost too good to be true? The answer is that the rate reflects the rate charged on a tranche of funds raised in one of the wholesale money markets. The lender then passes on the cost benefits of borrowing huge amounts of money to individual mortgage holders, their profit margin being extra interest charged on top of their negotiated rate. The product is withdrawn when the tranche of money raised is re-lent to mortgagors.

Advantages of fixed rates

Fixed rates enable people to budget in that their monthly mortgage payment is fixed for the offer period. They are protected against increases in interest rates and hence a nice idea for people with smaller budgets. This could be a great option for key workers, people on low incomes and right to buy and shared ownership applicants.


This is really an extension of the first point, but peace of mind is such an important factor for many people regarding their mortgage it could stretch out over several points! If your payments are towards the top end of what you can afford, you should not be gambling with a variable rate. Even a quarter percent base rate rise could result in considerable financial hardship on larger loans.

Disadvantages of fixed rates

It�s fixed! If interest rates start heading south, your fixed rate won�t be as desirable as it was. And if you want to remortgage to another lender during your offer period you can�t because:

An early repayment charge will almost certainly be levied if you redeem or partly redeem your mortgage! These are the clauses which tie people into their fixed rate deals and enable lenders to lend at reduced rates. Hence it is hugely important with fixed rate deals to get advice from a broker on the likely movement of interest rates. In the dog days of the early nineties some borrowers were locked into deals which were two or three times more expensive than others on variable rates.

Beware of �overhanging� early redemption charges. Some deals, admittedly more common a few years back, have early redemption charges which extend beyond the offer period. These are designed to force borrowers on to the lender�s SVR and then hope that apathy rules.

Watch out for high arrangement or booking fees. A current trend is for lenders to publish amazing headline rates, but double or triple their fees. These can be as high as 2% of the loan. Also �back end fees� such as redemption administrative fees have


Fixed rate products tend to be less flexible than variable rate products. Generally speaking, flexible mortgages tend to be on variable rates: these allow payment holidays, overpayments and underpayments.


Make sure there is no compulsory purchase of an associated product such as buildings and contents insurance or mortgage payment protection insurance. These lender- provided policies are usually more expensive than others on the market.

Definition of discounted rate mortgages

Unlike fixed rate mortgages, discounted rates are variable. They usually take the form of a discount off the lender�s SVR. Say, for instance that a building society was offering a discounted rate of -1.5% and their SVR is 6.5%, the rate you would pay for your offer period would be 5%. If the SVR went up 0.5%, so would your discounted variable rate mortgage. Simple as that.

However, some also offer what is known as a �stepped discount� ie the discount increases the further into the offer period. Year one may be -1.0 %, year two 1.25% etc. This is supposed to encourage borrowers to stay with their product.

Advantages of discounted rate mortgages

If you are prepared to take a gamble on interest rates going down, they can pay off handsomely. The borrower who uses a discounted rate is likely to be one with a significant monthly surplus above his mortgage payment ie somebody who can afford to make such a gamble.

You will be paying less than the lender�s SVR, so you will be paying significantly less than most of the lender�s clients. However, you will need to be aware of the differences in lenders SVRs. A discount of 2% sounds good- but what if their SVR was much higher than it�s competitors? Surprisingly, there can be big differences between lenders SVRs.

Disadvantages of discounted rate mortgages

The SVR, although linked to the Bank of England Base Rate, doesn�t necessarily follow it. For instance, a .25% rate rise by the Bank of England may be followed by a rise of .30% by the lender! SVRs are not totally arbitary, but they can be changed at a lender�s whim. Make sure your mortgage provider has a good reputation on that score.

By: jammaster

Little Known Commercial Loan Puts Cash In Your Hand For Any Reason Fast and Easy

Owning a commercial building such as an apartment complex, office building, retail center, business owner-occupied building and the like is a great investment that appreciates over time and can provide a constant source of monthly income.

How To Use Your Equity Without a Hassle

If you�ve got equity in your commercial building, it�s a great source of cash at your fingertips, if you can get it out. It�s not as easy as it sounds if you don�t work with the right commercial loan or commercial broker knowledgeable about your options.

Not all commercial loans and lenders are alike. Some are very restrictive when it comes to how you plan to use the cash you receive from the refinance loan.

Good News For Commercial Property Owners Who Want a Commercial Refinance Loan With Cash Out

The good news is, there is a little known commercial loan that lets you obtain unlimited cash out for any reason. There are no restrictions on how you use the money. Need to make property improvements? No problem. Need to buy some new equipment for your business? No problem. Need some down payment money for another commercial real estate investment? No problem.

In addition to no restrictions for unlimited cash out, all types of commercial properties are eligible. These include multifamily or apartment buildings, mixed-use property, office, retail, self storage, warehouse and industrial buildings, mobile home parks, bed and breakfasts and other special use properties.

High Loan-to-Value Ratios Are Acceptable

Another great benefit this little known commercial mortgage offers is high loan-to-value ratios. For example, you can obtain a cash out refinance up to 90% on commercial real estate such as multifamily or apartment buildings, mixed-use property, a bed and breakfast, light industrial buildings, a mobile home park, office and retail buildings, self storage and warehouse buildings.

The loan to value adjusts to 80% if you own automotive related real estate, hotels with national franchise affiliation, funeral homes, an industrial building or rooming house.

Special use properties can still get cash out up to 75% loan to value. These include day care and health care centers, restaurants, RV parks and independent hotel and motel properties.

If you need to get your hands on the extra cash fast, then you�ll love the fact that these cash out commercial loans fund in just 30-45 days. The application and underwriting process is hassle-free and you�ll know in just 48-72 hours of application whether or not you qualify for the loan.

All Legal Entities Can Apply

One other feature investors will find an advantage is that all legal entities can apply for this loan. This means you can apply for this cash-out refinance loan as individual borrower, corporation, partnership, limited liability company and certain trusts. Personal guarantees are still needed, but it's a lot less hassle than having to take property in and out of different legal titles to obtain the loan.

By: Naomi Monk

Mortgage Accelerators (Fact or Fiction)

Mortgage Accelators have been around for years, and most people have heard of them in one form or another. Years ago, the most people's idea of a mortgage accelerator was simply the idea of making an extra payment on your mortgage or adding extra money every month to pay down the principal. Those simple ideas have turned into many different techniques used to payoff mortgages faster.

Extra Payments - This is the easiest type of mortgage acceleration to implement, because it basically involves either making an extra payment whenever you can (using that Annual Bonus for example) or sending in an extra amount with your monthly payment that goes directly towards principal.

There are also many Advanced Techniques that involve using more complicated plans to payoff your mortgage faster. Although these techniques are more complicated, and usually require an investment into the program, they are also much better vehicles for paying off your mortgage quickly and saving tens of thousands of even hundreds of thousands of dollars in mortgage interest.

Although these types of plans are new to the United States, they have been used overseas for years and by a lot of people. In Australia for example, over 30% of people use a mortgage accelerator, and in the UK almost 25% use them.

The basic idea of these advanced products are to pay a big portion of money towards your mortgage using either money you currently have elsewhere, or using a line of credit, such as a home equity line of credit or HELOC. Some of these include Mortgage Accelerator Plus, CMG Financial, and United First Financial.

Mortgage Accelerator PLUS is a money management STRATEGY that teaches smart and efficient money management, with the goal of eliminating all debts, especially mortgage debt, in 1/3 the time. It is a �turn key package� that includes a workbook, instructions, and software that teaches ALL the particulars of using the program, HOW it works and WHY it works.

MAP is based on mathematics and allows you to manage your money to minimize interest. You will be using the same techniques that banks have been using to keep more of your money! MAP also teaches you about Real Estate, Mortgages, Investments, Budgeting, and much more.

By: JohnRobertson

Mortgages - Ad infinitum

There are some exiting developments in the mortgage market with the birth of a new mortgage designed in order to allow home owners to pass on their mortgage debt in the event of their death. Whilst some people might think this is a rather odd thing to do, read on for the full story:

The new inter-generational mortgage surely to be known by something less tongue-twisting is a product which has the promise of parents being able to pass on the mortgage debt on their home to their children, whilst considerably reducing the amount of inheritance tax paid on their estate.

The way in which this works is simple. Say, for example, the parent�s home is worth �250,000. The mortgage on this could be �150,000. Because this is an interest-only mortgage, the debt doesn�t reduce and the monthly repayments are purely interest. On the death of the parents, the house and its mortgage would pass on to their children. As there is a debt on the house, its value, excluding the mortgage, would only be �100,000 and this would be included in the parent�s estate as far as inheritance tax is concerned. Inheritance tax allowance rises annually. For the year 2006/7 this allowance is �285,000.

The children are then free to choose what they want to do with the property. If they decide to keep the home, maybe as a buy to let or for a family member to live in, then they continue with the mortgage, as there is no fixed time limit, unlike the situation with a normal mortgage. As long as the value of the house is more than the mortgage, then the children have still been left an asset of value.

Whilst the very thought of this type of loan is new to the UK, it�s already extremely popular in some other countries. The Japanese and Swiss have adopted the product with enthusiasm and neither of them are known for their lack of business acumen.

Where houses have risen in value over the past years, inheritance tax is proving a very real problem to people who would never have previously considered themselves wealthy enough to be in that tax bracket.
For older home owners, who might be finding their retirement years more expensive than they expected, they might find this mortgage useful. Borrowing on this basis would be at a much lower interest rate than the costs involved with equity release schemes and would release money to help the family during their own lifetime, rather than the tax man after it.

Interest only mortgages in themselves are not new, having grown from 18% to 30% of all mortgages in just two years. Prices of property are still rising faster than most young people can scrape together the deposit for a home and an interest only mortgage may be their only way to get that all-important first step on the home-ownership ladder.

Although the prospect of house prices actually falling, leaving people with negative equity in their homes, is always a possibility, over the medium term property has remained a stable investment. There seems to be no reason to doubt that this will continue.

Monthly repayments are very much more affordable on an interest only basis, and you could save around �130 per month on a loan of �100,000, compared to a comparable repayment mortgage.

However, you must bear in mind that the original debt is not being tackled. Whilst the inheritance tax saving aspect is an interesting thought for older couples, maybe youngsters should consider the interest free loan as a step up on the ladder rather than a permanent ball and chain.

If all this is new to you, the easiest way to find out what�s on offer is via the internet. A broker will be up to date on what�s going on in the market and find out what�s right for you.

By: Michael

Need to save money on your mortgage

Mortgage interest rates (taux hypothecaire) seem to be the name of the game in the lending market. All of the mortgage company ads seem to scream "Lowest rates in town!" lenders fly gigantic banners outside their branches advertising that they have the lowest rates of anyone. Yet, despite this emphasis on interest rates made by the banks and other lenders (and by consumers, who are unduly influenced by these ads), in reality, interest rates do not have that great an effect on the overall cost of a mortgage loan. The truth is that rates don't vary all that much; the difference only ranges about .06%. That means on a $100,000 mortgage you could save $41.12 a year by shopping around.

Is it worth all of the time spent on calling various mortgage brokers (courtier hypothecaire) and researching on the internet to achieve such a paltry savings? No. If you calculated the time spent shopping around for a rate at your per hour wage, you would find you spent a lot more than the $41.12 average savings! In fact any real savings on your mortgage is not going to be made by shopping around for hours and hours looking for the lowest rate. Let's face it, all of the bankers will know your credit rating; they are all going to be looking at the same factors and therefore the rates each of them quotes will be in the same narrow range. Determining interest rates is just a function of the risk/reward ratios that bankers analyze. Since they all use the same analysis techniques, you cannot expect the rates to be grossly different. (Don't listen to your neighbors. Anyone who boasts that he got a dramatically different interest rate than you were able to obtain either has a much more favorable credit rating, or is lying.)

There is a more important factor to look at. Instead of solely relying on obtaining the lowest interest rate, a mortgage borrower should be concentrating on following the correct "mortgage strategy". There are various mortgage strategies that are out there, from fixed to adjustable rate loans (taux hypothecaires), balloon loans or prime rate based loans. Working with a mortgage lender who is knowledgeable about the markets, looking at yield curves and who studies your individual situation to devise the perfect mortgage strategy for you is going to save you a great deal more money over the life of your home loan. It can probably save you tens of thousands of dollars in total mortgage costs, rather than less than $100 per year.

Why do banks only talk about interest rates when there really isn't that much of a difference between rates? Because that is the easy way to attract borrowers. Developing an entire mortgage strategy for a customer takes a lot more in terms of understanding and analyzing markets, mortgage products, individual needs and a host of variables. Many bankers and mortgage brokers have neither the time nor the expertise to perform this in depth services for their customers.

By: Gregory van Duys

Think again if you expect to easily qualify for a subprime mortgage

The United States housing market has been battling a difficult correction over the past year but one of the most impacting economic factors that many people are not talking about is the rising number of foreclosures and what it means for many mortgage companies across the country that specialize in subprime lending.

And if you do not care much about corporate America and think that if you have to borrow a subprime mortgage, you will make timely payments and avoid becoming a negative statistic, think again; you may never get the chance.

The article, �Shifting housing market snubs bad credit,� written by Dave Collins for the Associated Press and then posted February 25, 2007 on sacbee.com, explains how subprime mortgages are no longer going to be easy to obtain.

There has been warning over the past year that mortgage lenders will be tightening their underwriting guidelines on subprime mortgages but that talk was more for legal purposes. But now mortgage companies are seeing the affects of lending high rate mortgages to those who default payment and are taking matters into their own hands.
�Homeowners with troubled credit histories are finding it harder to get mortgages or refinance homes because softening in the housing market is making lenders less likely to handle riskier loans.�

Mortgage companies are looking out for themselves if not for the customer when requiring better documentations and evidence of the possibility to repay a subprime mortgage before agreeing to lend.

�On Wednesday, shares of Kansas City, Mo.-based Novastar Financial Inc. plunged more than 42 percent to $10.10 per share after the subprime lender posted fourth quarter losses of $14.4 million. Company officials set aside $45 million in anticipation of defaulting mortgages and said they were unsure Novastar would turn a profit in the next five years.�

The major requirement that is changing is the minimum credit score to be approved for a mortgage. According to David Zionts, owner of Connecticut Mortgage Lenders LLC, a borrower looking to take out a 100 percent financing mortgage must now have at least a 600 credit score to qualify opposed to the previous minimum of 580.
�A high-value loan with no income verification could be had last year with a credit score of 620 a year ago but now needs a minimum score of 640, he said.�

And these credit score guidelines will be less negotiable unlike what they used to be when mortgage companies valued volume over quality. During the booming years, most companies could afford a few defaults here and there because they were originating so many mortgages. The current correction ahs not allowed that luxury.

��The most immediate impact will be that both the lenders and investors will be more careful on who they make loans to,� said Richard F. DeMong, a bank management professor at the University of Virginia. �In Finance 101, we try to teach that return should be enough to compensate for risk.��

These stricter guidelines are ultimately being imposed to protect both mortgage companies and you, the borrower but most prospective borrowers would rather be given the opportunity to attempt to borrow a subprime mortgage than be limited.

By: Groshan Fabiola

Discount Points lowers mortgage payment

Discount points are paid upfront to lower the mortgage. Borrowers often confuse between origination fee and discount points. Although the calculation of origination fee and discount points are the same, both are two different cost of borrowing. The origination fee is paid for the privilege of acquiring a mortgage. Ask your mortgage consultant if you need to pay origination fee too.

How to calculate discount points?

Discount points usually range from 1 to 3 points where each point equals one percent. For example, the borrower pays $1,500 upfront ((1% / 100) * $150,000) on a 1% discount points of $150,000 mortgage.

How much is the monthly mortgage payment with or without discount points?

On a $150,000 principal, 6.5% interest rate, 1 discount points, and 30 year mortgage, the monthly mortgage payment without discount points amounts to $948.10. Using 1 discount points, the borrower pays only $851.68 monthly mortgage payment which saves the borrower $96.42.

When you do get back the discount points?

Recoup time is how long to get all the money back with discount points upfront. The borrower gets $1,500 back in 16 months ($96.42 x 16). The borrower benefits from discount points if he does not leave and refinance before the recoup time on his home. Let�s say the borrower locks the mortgage on a five year mortgage term. The borrower pays $851.68 for five years which put $5,785.20 ([$948.10 x 60 months] � [$851.68 x 60 months]) back on his pocket.

By: Dennis Estrada