Equity Mortgage - How Much Home And Mortgage Do I Qualify For?

How Much Home And Mortgage Do I Qualify For? By Jerry Williams

Buying a home in today's marketplace is a bit intimidating and frustration. And your new home purchase and mortgage is likely to be one of the most important decisions you've ever had to make. It's most likely one of the single most valuable assets and investments you will ever own.

Where to Start

Before you invest hundreds of hours searching and to avoid any disappointment, if you find yourself unable to qualify for your dream home sit down with a lender. Your lender can perform a verbal pre-qualification in about twenty minutes and a complete pre-qualification in about 5 days.
Pre-qualification not only allows you to concentrate your search in the proper price range, but it can also give you an edge when competing with other offers on a home that you find. If a seller is deciding between two offers, they are much more likely to pick yours. The amount of home that you qualify for will be determined by three main factors: down payment, ability to qualify for a mortgage, and closing costs.

Down Payment

Whereas a current homeowner can rely on equity from their home sale, a first time homebuyer is limited to the money they can save. The days of having to put 20 percent down on a home are in the past. Although putting a large amount of money down definitely makes it easier to qualify for a mortgage and to get the lowest interest rates available. With the various programs that are available today, you can put as little as 3 percent down on a home.

Qualifying for the Mortgage

There are two basic guidelines that lenders use to determine what size mortgage you are eligible for:

1. Your monthly mortgage payment of principal, interest, taxes and insurance (PITI) should not exceed 25 to 28% of your monthly gross income.

2. Your monthly housing cost (PITI) plus other long- term debt should not exceed 33 to 38% of your monthly gross income.

Specifically, most lenders will consider 4 key factors to determine your ability to qualify for a home loan:

Income - This first element can include not only your gross monthly income and secondary income (commissions, bonuses) but also your history of employment, stability of income, education, even potential for future earnings. Underwriters are looking for a average history, when there are fluctuations in the monthly amounts of income earned.

Credit History - This encompasses your history of debt repayment, total outstanding debt, highest balance, and your highest monthly debt balance.
Assets - Your assets consist of cash on hand, savings and checking accounts, CDs, stocks, bonds or any other type of liquid asset.

Property - The home you are planning to purchase will be appraised to determine the market value. The estimated value must be sufficient to secure the loan. Lenders will loan you no more than a certain percentage (usually 95% Conventional, 97% FHA, 100% VA) of this value.

Closing Costs

Keep in mind that in addition to your down payment, you will also be responsible for paying fees for the loan and closing costs. These will be required at the time of closing unless you qualify and choose to have these included in your financing.

Closing Costs generally will range between 2 percent and 6 percent of mortgage loan, depending on the loan and lender. You will be provided with a "Good Faith Estimate" of closing costs so you can know what to expect.

"Points", which are one time charges equal to one percent of your loan amount, may be required by your lender at closing. (Never agree to more than a 1% origination fee unless you understand exactly why it is over that amount.)

Your closing agent will charge a fee at the close of the sale.

We sincerely hope this information will help you gain a better understanding of the mortgage process.

Visit http://www.urdollars.com for other articles related to mortgages or the blog at http://www.JerryWWilliams.blogspot.com and subscribe to a great newsletter at http://www.JerryWWilliams.com Jerry W Williams is a seasoned professional and has worked for some of the top mortgage/banking instutitions in the country. Mr. Williams has "expert status" on ezinearticles.com. Article Source: http://EzineArticles.com/?expert=Jerry_Williams

Equity Release Mortgage Schemes Are Not My Favourite By Trevor Barrett

If a person has a property with a mortgage that is less than the value, they can take another loan called a home equity mortgage based on the amount of the difference. We still tend to call them mortgages or maybe a home mortgage loan.

When you have some real estate with some spare equity on it, it can be a good method of raising extra capital. People take these out for several reasons such as buying a new car, going on holiday or doing some improvements to their home.

Find out the value of your home and subtract the value of your existing home loan. The result is what is known as equity. A property valued at 400,000 with an existing mortgage of 100,000 means that the equity in it is 300,000. The lender would use that figure as a basis for how much extra you could get as a home equity loan.

Thus, the extra amount borrowed over and above your standard mortgage is the equity mortgage loan. The current mortgage loan can then be continued without any effect to it. It is good to know that you do not have to sell your house to get hold of some of the money tied up in it.

Cash poor and equity rich is when you have money tied up in property but you only have a small income. As we get older and have lived in our home for some time this can happen. In that case it is often known as a reverse mortgage. A pension can be supplemented by income derived from a lump sum based on the equity.

You can use that lump sum to redeem the main mortgage and use the balance for something special or just to live off or a combination of both. The amount of the loan is collected from the estate of the house owner after death.

A fixed interest rate is normally a part of the conditions of home equity loans. Budgeting for the monthly payment amount is made simpler when you know that it cannot vary.

These loans for the elderly are not actually one of my favourite things.

The interest rate will normally be variable if it is not a lifetime mortgage. It depends on a couple of things.

Here are some of them:-

• how much the loan is for
• the length of the mortgage term
• whether you have a good or bad credit record

The total amount of interest that you will pay over a long term will be greater than over a short period of course.

The only reason for taking out a loan at all should be that you have no other choice. Particularly when you are putting your home at risk. Before you fill out the application form, try to raise the money from friends and family or some other legal means.

The lender has your property as security so home equity mortgages will have a lower rate of interest than an unsecured loan.

With the way that the economy is today I have had to become the money advice expert for our family and would like to share some ideas that I have found. This one is relating to our mortgages website and is all about the refinancing mortgages. Article Source: http://EzineArticles.com/?expert=Trevor_Barrett

Equity Mortgage - Get a Mortgage Without Saving For a Deposit

Get a Mortgage Without Saving For a Deposit By Chris Borthwick

If you are looking to buy your first home you may be contemplating your options available to you. If you have found your home and have the necessary deposit saved then great but many are finding saving the deposits now being demanded are impossible for them to save for anytime in the near future.

There are a number of shared equity mortgage schemes that can help you avoid spending years saving up a deposit. If you are lucky enough to have family that can join in and take an equity stake in the property to get around the need for a deposit then there is a family equity mortgage this can be an option.

The parent or family member who takes the equity stake in the property legally has the stake in the property, which normally is around 10%. The parent would get their money returned to them if the property is sold, the property can't be sold without the funds being returned to the parent.

There are a couple of lenders who offer family equity mortgages, using a mortgage broker is beneficial in helping you find the right mortgage deal for you, taking the hassle out of searching the best deals as well as providing that valuable expert advice that can be very helpful to you in getting the best deal that suits your circumstances.

If family assistance isn't an option then there are government schemes that are there to help individuals and families with the purchase of their first home. The LIFT shared equity mortgages scheme in Scotland is for those who aren't able to financially afford a mortgage on their own, each applicant's finances are assessed which isn't limited to income, it also includes savings. It is aimed at low to moderate income citizens.

Each case would be individually assessed. The government can lend up to 49% (the buyer needs to hold a majority share), normally the funding would be around 20-40% but as I say more can be loaned. With the LIFT scheme the buyer owns 100% of the home and is pretty much left alone when it comes to the home with permission only needed if the buyer wants to bring in a tenant.

Chris Borthwick writes articles covering a broad range of subjects. His main area of expertise is mortgage advice and writes many articles on mortgages for finance industry, mortgage brokers and for the general public. Article Source: http://EzineArticles.com/?expert=Chris_Borthwick

Government Backed Shared Equity Mortgages Offer the Best Solution By Chris Borthwick

If you are trying to get your first mortgage or trying to remortgage, you'll know exactly how hard first of all being offering a mortgage and then at a decent rate. The mortgage market is far from competitive while many types of mortgages have been withdrawn. We have seen the demise of the 125% mortgage at the peak of the property boom, then the 100% mortgage last April. Now the most available to borrow is 85% of the value of a home.

The government is heavily promoting shared equity schemes as it recognises the biggest hurdle is being unable to put up a decent deposit. If you are in Scotland, the Scottish government offer their own shared equity scheme, low-cost initiative for First Time Buyers (LIFT). Under this scheme the buyer would normally pay between 60-80% of the price of a home and the government would take a shared equity by making up the reminder of the mortgage. The buyer owns all the property and the Scottish Government will have a security in the portion they have invested. If you decide to sell the property, the government will take back its cut at this point. It is worthwhile checking areas as it isn't available in every part of the country.

The UK government offers another scheme so consumers can get shared equity mortgages. The Open Market Home Buy scheme offers key workers and first time buyers the opportunity for an equity loan of up to 50% of the property's value.

There are a couple of different schemes available with one scheme not requiring the buyer to pay anything back on the loan for five years and even then the buyer only incurs a low rate of only 1.75% for the next five years. You can pay a deposit if you wish with these mortgage schemes however it isn't necessary.

I always recommend using the services of a mortgage broker that will search the whole market. This will take the hassle out searching all offers, ensure you can compare every deal as well as have access to expert advice.

Chris Borthwick writes articles covering a broad range of subjects. His main area of expertise is mortgage advice and writes many articles on mortgages for finance industry, mortgage brokers and for the general. Article Source: http://EzineArticles.com/?expert=Chris_Borthwick

Equity Mortgage - Understanding Second Mortgage

Understanding Second Mortgage By Jeff Livingston

Home mortgage is a loan that you take from a lender with your home as collateral. Second mortgage is the second loan you take on the debt free portion of your already mortgaged property. You can take such a mortgage from your current or a new lender, as it is a completely different loan from your primary mortgage.

Second mortgages generally have higher rates of interest as compared to primary mortgages because of the low priority it has in event of a default closure. Being a secured loan, the interest rates are lower than the unsecured loans, such as credit card or personal loans.

When to take second mortgages

• Remodeling of home - Usually this project requires a significant sum of money. Mortgaging your house for the second time could be a way to raise the funds required for it. Remodeling your home also raises your equity, as you are increasing the current value of your home in the process.
• Debt consolidation - If you have a number of debts such as auto loans, tuition fees and credit card debts, it may be a good idea to take a second mortgage to consolidate them. You would be making a single low monthly payment, which would be lesser compared to all individual loans' repayments put together.

How to get second mortgages

It certainly helps to have a good credit history. If the lender perceives you as a low-risk borrower, the chances of getting a loan increase. People with bad credit history are generally perceived as high-risk borrowers and are charged higher interest rates for a loan.

One of the first things to do when considering a mortgage is to have the property appraised according to the current real estate scenario. Having your home professionally appraised can help you get a realistic idea of your home's current worth. In this way, you can confidently discuss the terms and conditions of your loan with your lender.

You can avail the services of mortgage brokers if you are unable to find a lender on your own. These are professionals with the required contacts in the lending industry and can help you find a suitable lender and mortgage deal. All the paperwork is taken care of by them, making the process considerably simplified for you.

Benefits involved

Second mortgage comes with the option of long repayment terms, which in some cases go up to twenty or thirty years. It could also be a way of avoiding the payment of private mortgage insurance when you are buying a home. These loans are also lesser costly compared to other loans and can be a great way to raise big money easily.

Drawbacks of taking second loan on your home

After taking the second loan, you would have exhausted most of your home equity. Being in so much debt might look bad on your credit score in case you apply for another loan.

A major drawback of a second mortgage loan is the possible consequences of default. The penalty could be big - you may just end up losing your home. You should only consider this loan after establishing that you have surplus cash to make the required monthly installments.

For more information on second mortgage or to talk to a mortgage broker in Canada, contact Canadian Mortgages Inc. Article Source: http://EzineArticles.com/?expert=Jeff_Livingston

Equity Mortgage - Get Cash Out of Your Home

Get Cash Out of Your Home By Shannon Curcio

There are a lot of ways to borrow money such as personal loans, auto loans, credit cards or payday advances. For homeowners, however, there is one more opportunity to get cash to use for a variety of different purposes, and it comes in the form of an equity mortgage.

An equity mortgage, also known as a home equity loan or a second mortgage, is a loan granted based on the accrued value a borrower has in their home in comparison to the market value of the home. For example if a person owns a house that is worth 200,000 dollars in market value and only owe 150,000 dollars on a mortgage for the property, the homeowner could potentially borrow up to 50,000 dollars against the house.

Lenders who already service a mortgage a property can also extend a second mortgage most often referred to as a home equity line of credit. Companies not associated with the current mortgage holder can also extend a home equity loan to a borrower who has rights to the real estate. No matter where the home loan comes from, the equity loan is a separate loan with separate terms such as interest rate and payments than the primary mortgage.

People take out home equity loans for a variety of reasons. Some of the most common include improvements to the mortgaged property to increase its value, large one time payments like elimination of debt or unexpected costs. Most mortgage lenders are not concerned with what the borrower uses the money for because the loan is still secured by the property. This means that a mortgage company can potentially foreclose on the property if the borrower defaults on the loan.

When consumers shop for an equity mortgage, it is best to first contact the lender that holds the primary mortgage on the property. A borrower and the primary mortgage company already have a relationship. If the relationship is good they will be more likely to offer better terms, faster application and approval processes as well as a certain degree of predictability from dealing with a familiar company.

An equity mortgage is an excellent source of borrowing for home owners and can offer much better rates than personal loans or credit cards. Tapping into a home's equity to make needed improvements or increase the market value of a home is a beneficial use of a second mortgage. Article Source: http://EzineArticles.com/?expert=Shannon_Curcio

Do You Have a Negative Equity Mortgage? Then You Are Upside Down By Brent Lane

There is no easy way to handle a negative equity mortgage. You simply owe more than your home is worth and the strategies to fix the situation run from super aggressive to passive. First you need to understand what this truly means to you and your family.

If you have a negative equity mortgage you will need to figure out if you can simply stomach the issue and move forward without changing a thing. I know it can be difficult to see a home exactly like yours down the street for sale at $200,000 less that what you paid for your home. It seems unfair but the simplest thing you can do is do nothing. Continue to make your payment and go on with your life.

You could be forced to do something. You mortgage terms could be such that if you don't make a change then this will go south in a hurry. Adjustable rate mortgage or negative amortization mortgages are two simply reason many people need to make a change. The payments on these types of loans often go up and for that simple reason you may need to make a change in the form or a refinance or a loan modification.

Knowing you are paying on a home worth basically nothing to you could eat you alive. If this is the case then I suggest you look into refinancing or a loan modification first. There were so many people in the past that simply gave up without ever really trying and walked away from their home. If this is something you are considering, call a real estate agent and put your home up for sale. By doing this you are putting your problem in their hands and you might get lucky, not have to make payments on a place to live for over a year while your home is being sold. Imagine all the bills you could pay off if that were the case.

If you have a negative equity mortgage and need to find a solution to your problem, simply start small and consider everything it may take to properly handle your issue. There are some very easy solutions to this problem so I suggest you look for more information.

Finding the right help for a negative equity mortgage can be tough. I have lots of great content that will walk you through several options including refinancing a negative equity mortgage or upside down mortgage, whatever you want to call it. Article Source: http://EzineArticles.com/?expert=Brent_Lane