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Using The Equity In Your Home To Your Advantage. By Russell Marsh. Most homeowners don't often think about the money they are sitting on in the equity which is in their house. The equity is the difference between the total sum secured on the property by the original and the current market value of the said property. This money is there to be used and indeed should be. There are far better things this money can be doing than just sitting as equity.
One of the most common ways of using this equity is to take out a 2nd against the equity and consolidate other higher interest debts such as credit card debts. Also using your equity can help to finance some of life's bigger or even unexpected expenses.
Lots of people have many different financial obligations such as their offspring's college education, credit card debts, home improvement projects etc etc. A 2nd can help to deal with these events without putting to much strain on the monthly financial outgoings and in many cases there will also be some spare cash for that rare treat.
Some advantages in this situation are:
Making your other higher interest loans more manageable by consolidating them to a lower interest rate loan.
Wouldn't it be nice to just have one monthly payment to make. All the credit card bills are gone, any other higher interest loans also for instance medical bills, car loans etc. Having consolidated all these bills into a much lower interest loan the actual total that has to be paid every month is like to be significantly lower.
But the real plus to this is the lessening of the stress we all feel when we're juggling all our individual debts every month. You will feel much better all round by just having the one payment to think about and don't forget it's also going to be less money to find!
Who wants to pay higher interest rates on those major purchases?
We are not being rash or frivolous here, now and again there are BIG bills that come our way and sometimes it's very hard to cope with the pressure of finding these large sums of money. Your daughter's getting married and you, of course, want the best for her but it's going to cost many thousands of pounds and you've had no overtime for two years. Taking out that second might just take all the
Proposed RESPA Reform
Mortgage brokers may have some intrusive rules from HUD to deal with.
When I read the news on HUD?s proposed reform of the Real Estate Settlement and Procedures Act (RESPA) I was skeptical. Cathy from Sequim challenged me to read the 96-page federal register document so we could all figure out what?s going on. I am here to tell you that there is one very good change coming out of this proposal. In fact, it?s so good that I am borderline hopeful that this change might do what legislation is suppose to do and what HUD forgot to do when they signed the original version of RESPA in 1974. But first, the changes that will have many, but not all mortgage brokers screaming bloody murder:
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Neocon-omics
How much can the Fed and the U.S. government do in the face of declining housing prices?
That?s been my worry since I saw the housing bubble peak in 2005. Historically, declines in housing prices take 3-4 years to bottom, which means we still should be at least half a year away. But after that, the economy doesn?t rebound instantly. It yo-yos for a bit - essentially running horizontal.
Fannie Mae and Freddie Mac have entered into cooperation agreements with New York?s attorney general to only purchase loans that meet a new home valuation protection code, the state announced. The code is effected on Jan. 1, 2009. Under the new code, mortgage brokers and loan originators are prohibited from choosing or communicating with appraisers.
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Choosing Second-best
How to leverage your second choice into seller concessions and a better deal.
So, rather than competing for the best house and paying top dollar, you can use it as leverage to get a lower price and seller concessions on a home that could be even more ideal for you ? after you do a little work.
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Price Depression
A forecast for more housing price depression.
My theory is that housing prices will continue to wilt as long as large levels of foreclosures and new home inventories run high. These are not traditional homeowners, and are motivated to slash prices, thus continuing to depress prices.
You should try to get pre-approved by a lender prior to shopping for a home. A pre-approval is a strong marketing tool when making an offer that may contain many a number of seller concessions. Telling a seller that you are already approved for a loan makes the acceptance of a low offer or one where he may be paying the closing costs much more palatable.
US News and World Report implies (hopes?) we may be nearing a bottom in housing prices but with a mountain of resets coming in the next few months, it?s difficult to see how a bottom can be seen or even predicted.
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Strike One
A look at role of mortgage insurance in FHA loans.
Regarding the second point: By not raising the loan limits they fail in one of the 11 ways they can help. I believe they will fail in almost all, but let us have hope. To be specific as to why I support this: FHA is not a government gimme. It is a government guarantee the mortgage will be paid or the lender compensated for losses. The program pays positive cash flow to the government in that there is a type of mortgage insurance fee charged the borrower. It is reasonable and more than pays for the reimbursements made to the lenders that suffer a default.
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Who's To Blame
Mortgage brokers share the blame with the rest of the industry in the current real estate mess.
Who is not to blame for the mortgage mess? Take one step back. As lenders, money was flowing from the spigot like there was no tomorrow. As mortgage brokers, there was money to be made by cranking the faucet, and it was a foot race to see who could get to the sink first. As agents, we sang the ?Houses are expensive, but money is cheap? refrain until we were blue in the face. And, as for the consumer, it really doesn?t matter in the final analysis whether they were motivated by necessity, opportunity or unadulterated greed. We all helped make this bed in which we now must lie.
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Trying To Move
Hard to move when you're house loses value.
I will continue to work from Los Angeles while we work on selling our house, which unfortunately is bad timing as housing prices have taken a bit of a dive around here. Once we have things settled over here, we?ll pack our things and move up to Seattle.
What else can you say to such a ridiculous report, such obvious sensationalism? The sad thing is, many people will read this wild hyperbole and imagine that the TV station?s salacious report has a ?point? to it.
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Home Buyers Returning This Fall
This blogger says lower mortgage rates will drive buyers to the residential real estate market soon.
Ten days ago after the Fed calmed the markets' credit panic with a 1/2 point cut in the Discount rate, I postulated that home buyers will come back this fall when the Fed finally drops the Fed Funds rate, and mortgage rates drop. It's now almost certain to happen. Here are the parameters in play now:
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Lead Scrub Rates
A look at the cost of a lead for a mortgage broker.
Joel has a good interview with Dave Wengel of TargusInfo around Mortgage lead scrub rates. Specifically that lendingtree and lowermybills have a 15% scrub rate whereas the free ipod guys (lure people in with promise of a free ipod but they and their friends have to signup for credit cards, netflix and talk to mortgage brokers to get it) have around a 50-60% scrub rate.
Having been an FHA lender I can attest it is a pain at times. FHA requires annual financial audits of the mortgage brokers financial condition and more. We always have survived the several day pain, and the expenses tied to it, but only FHA drags brokers through this. The actual banks that sponsor the mortgage broker go through even more red tape and grief. Loan officers have to know more rules. FHA doesn?t rely on the easy automated underwriting or the quick answer from a subprime lender. FHA restricts how the borrowers pay for certain expenses and how much the lender can charge.
stress out of this situation, make life much happier and more comfortable and the monthly payments might pleasantly surprise you.
Choose your own type of Mortgage
The best part about a home loan is there is a vast selection of choice even in the current situation so you can choose the loan type that you are comfortable with, in terms on monthly payment. You could either select a fixed rate loan that has a flat rate of interest and wherein you will make the same amount of monthly payments till the term of the loan ends.
On the other side of the coin is the option of a variable rate mortgage. Should interest rates be currently quite high and your adviser thinks there is a good chance of interest rates coming down in the next couple of years then this would be the better option. Initial rates are often very low for the first couple of years with this type of home loan but after that they usually follow the current Bank of England base rate plus 2 or 3 percent.
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