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Mortgage Refinancing (refinansman) In Turkey By Berk Akman The interest rates in Turkey have been falling in the last one year and more and more people are interested in refinancing their mortgages. With lower interest rates, refinancing loan can lower down monthly payments significantly. In addition it is possible to change the structure of the by changing the duration, currency, and interest rate type. Below we go over advantages of the refinancing and important factors that should be considered in a refinance decision in Turkey.
Lower Interest Rates In Turkey, interest rates have been falling in the last one year. About one year ago in November 2006, the average monthly interest rates was about 1.8 percent, which decreased to 1.6 percent in early 2007 before the law passed on March 2007 and currently it is about 1.3 percent. Such a sharp decrease in the monthly interest rate clearly makes refinancing a very beneficial decision. To demonstrate the gains from the refinancing, consider a 10-year loan of 100,000 YTL. A drop of interest rate from 1.6 percent to 1.3 percent reduces your monthly payments by 12 percent (from 1,880 YTL to 1,650 YTL). Over the remaining length of the loan, the difference between two loans makes 27,543 YTL, which is about 27 percent of the original loan.
Fees In the above example, fees are assumed to be zero; however, it is very important to know the closing fees, lender fees, and other third party fees. Since increased costs decrease the benefits received from lower interest rates. However, the benefits gained because of the decrease in the interest rates in the last one year would be typically more than the costs incurred from the fees. For example, the basic calculation above assumed that fees for closing the loan and getting the new loan are zero. To be more realistic, suppose that the early payment penalty of 2 percent is applied to close the original mortgage. Also assume that an additional 3 percent is paid for the new mortgage. With these fees included in the loan, your monthly payment would be 1,732 YTL, still a 8 percent reduction in the monthly payments compared to the 1,880 YTL with the original loan. Over the length of the loan, the total gain from the refinance would be 17,641 YTL, still a significant gain for a loan of 100,000 YTL over 10 years.
No Early Payment Penalty if… The law that passed on March 2007 introduced up to 2 percent early payment fee for fixed-rate mortgages if they are paid before the due date. However, if you got your before March 6, 2007, you would be exempt from the 2 percent early payment fee. So in the above example, without the 2 percent early payment fee your monthly gain would be 1,700 YTL and your total gains would be 21,602 YTL. Let's also note that early payment fee is only valid for fixed-rate mortgages but there is no penalty fee for adjustable rate mortgages.
Refinance in Foreign Currency with Lower Interest Rates Refinancing can be a chance to change the currency of the loan. In Turkey, the interest rates for mortgages borrowed in Turkish Lira (YTL) are significantly higher than those borrowed in foreign currencies such as Euro, US Dollar or Japanese Yen. On the other hand, the risk of borrowing in foreign currency is also high. Earlier financial crises have always ended up with sharp depreciation of the Turkish Lira. For example, in 2001 the Turkish Lira depreciated more than 50 percent in only a few days. Given the large current account deficit of Turkey, about 7 percent of the GDP and the largest deficit for an emerging country, we believe that the probability of Lira's depreciation in the next 10 years is also very high. So possibility of such a crisis in the future should be included in the risk analysis. Briefly, as a rule of thumb, borrowing in foreign currency may be advantageous if your income is in foreign currency or if the length of the loan is only a few years. What if the interest rates continue to fall? If you expect the interest rates and inflation to continue to fall in the future, the best strategy could be changing the fixed-rate to an adjustable-rate mortgage.
Qualify for FHA loan We want to buy a home immediately after we finish saving up for a down payment and closing costs. We have good income. Apart from this, my credit is good 660 and more but my husband has a low score around 630. Apart from that, he also has other collections!! I want to know if the old debts will create problem for us in qualifying for a FHA loan. Or should I apply alone for the loan? Possibility of getting a mortgage? Im a first time home buyer thinking of getting a mortgage this summer and was wondering if i had a chance of approval. I am 21, been working at the same place for 2 years making 28k a year(gross). My credit score as of now is in the high 600s with a lot of debt that i am going to pay off before i submit my app. My fiancé is 20 and has been working in the same occupation for over 2 years and has only had a small credit card limit for 3 years. She makes 32k a year(gross). What are my chances with... Transferring ownership of property to my sister My mother died in 2010 and left her Florida condo to my sister and myself. In 2011, probate was completed and my sister and I now own the property. We tried to sell it with no luck. My sister decided we should rent it out since expenses were so high. She is handling everything since I live in another state.
The condo is worth no more than $35K. I would like my sister to own the condo outright so I do not have any involvement--she is doing a lousy job of managing the rental and keeping re... Quitclaim deed i moved into my dads house about 3 years ago to help him out--in 01/2011 he had a stroke/dementia and went into a nursing home---my brother had power of attorney----both my brother and i are to split everything 50/50--in july he did a quitclaim deed putting his name on the deed and leaving me off---dad passed away in 11/2011--he now wants me out of the house---- charge off on 2nd mortgage making payments My equity loan/2nd with B of A was charged off in Nov. of 2009 I beleive, and I've been making payment to B of A in NC, I believe their collections dept, where I let them take money directly from my checking account, since then; however recently I have a new account representative who called, and says that they no longer will accept the amount of the payments I've been making, but need quite a bit more now. I'm not able to make payments in the amount that they're requesting, and be able to pay ... foreclosure and mortgage The real estate business can give you unique benefits like price appreciation. In the short term, the market may go up or down, but over the long term, you will have a safe investment because holding on to your property will almost guarantee an increase in value. Having a large portfolio of properties is a key secret to building massive wealth.You will find out that there is huge profit in dealing with undervalued foreclosure property and the statistics now show that out of every one hundred mo... Dismiss Chapter 13, want to save car Hello? as per the advice of my attorney, I am letting my Chapter 13 bankruptcy to get dismissed. The only debt I had was some credit cards and my car; I was NOT behind on anything. The attorney convinced me a Ch 13 was the way to go. After filing, I missed one payment and now I'm in a 9-month-doomsday period. I won't be able to pay this coming month due to medical bills so he advised I stop paying and let my case get dismissed. My ONLY concern at present is losing my car; I called the bank an... should i refi or pay down We have 12 years left on our 15 year loan at 4.375%. We can get a 3.25% loan with $5K in closing costs. Is this a good idea? GOT FORM 1099A i received a 1099a form from the mortgage company on 1-2-12 i filed chapter 7 bankruptcy in 2010 i got my discharge papers in july 2010. is this the correct form or should i have gotten 1099c i`m very confused please help!!!!! Credit card balances reported just once a month Are my credit card balances/payments reported to EQ/TU/EX just once a month or are the balances daily updated with the CRA?
This way, your interest rates will continue to fall if inflation falls in the future. In addition, re-refinancing the fixed-rate would be more costly in the future because of the 2 percent early repayment fee if you want to re-refinance when interest rates get even lower in the future. On the other hand, there is no early payment fee for the adjustable rate mortgages. We should also stress that an economic crisis that result with a depreciation of the Turkish Lira would also increase the inflation. Since inflation is the base index for the adjustable rate mortgages in Turkey, your interest rate and monthly payments may increase sharply with adjustable rate mortgages. So we suggest being very careful before switching to an adjustable rate for long loan terms.
Decreasing the loan term By refinancing, you can change the duration of payment: you may decrease it or extend it. If you refinance with a shorter loan term, you can pay off your loan faster and therefore build up equity in your home faster. Especially, in Turkey, since the interest rates are higher than the ones in developed countries, the optimal length of the is shorter than the developed countries. A with a loan term longer than 10 years is currently too costly and you may use the refinancing as a chance to reduce the duration. As an example, if we go back to our example with 10 years of 100,000 YTL with 2 percent closing and 3 percent opening costs and if we decrease the length to 9 years from 10 years, monthly payment decreases 3 percent to 1,815YTL (from 1,880 YTL) and the total gains increase to 29,580YTL (it was 17,641YTL with 10 years refinancing). So it is suggested that you refinance with a shorter loan term if possible.
Extending the loan term Refinancing is also one of the best ways to acquire funds which may be used with any purpose, including the opportunity to pay off other debts. If the duration of the loan is extended a few years, somewhat more funds would be available, however, as stated earlier, the interest rates are high in Turkey and therefore gains from extending the length of the loans may not be very high in long term loans. For example, going back to our example of 10 years of 100,000 YTL with fees, if new duration with refinancing is extended to 11 years, the monthly payment decreases to $211 YTL, reducing the monthly payment by an additional 65 YTL (from 1,733 YTL) when compared with the 10 year refinancing.
Compare APRs Remember that a wrong decision in refinancing can take years to recover from. Before making any decision on refinancing, you should compare all lenders in Turkey properly. In comparison, make sure that you use the Annual Percentage Rate (APR), which is the annual rate inclusive of fees on the mortgage. Kredihavuzu.com has all the tools you may need for such a comparison including all the up-to-date interest rate and fee information for all the lenders in Turkey.
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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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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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A forecast for more housing price depression.
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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.
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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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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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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.
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