There are equity loans, refinance loans and 2nd mortgages just to name a few. As you’ll be able to see, any borrowers that chose these kinds of loans and over borrowed could be in serious trouble.
Every year the mortgage companies have made easy money from the millions of borrowers whose mortgage deal comes to its natural end and who then decide to make a switch. The customers have had tracker mortgages, or fixed rate deals for a few years, and they find a better deal for themselves.
But in today’s economic climate more and more mortgages are coming up for renewal and switching isn’t happening. People don’t see any advantage in making a change, and if this trend continues lenders won’t see an increase in their lending levels for the foreseeable future.
However, homes and property go up in value over time, so the home is building equity. Equity is when the home and property is worth more than the amount of the original loan. For example, a person buys a home for $100,000 but it appraises at 150,000. This person would then have $50,000 in home equity or money that belongs to them which they do not owe the bank. They can then remortgage and get a loan for the amount of their equity.
A standard home equity loan is a closed-end loan that can have a fixed term, a fixed rate, and fixed monthly payments. It can carry a variable finance charge rate that switches with a federal interest rate. The amount of the loan is usually made available in a lump sum.
If your credit rating is imperfect then you must take steps to clean it up and to get a new credit card to start building credit. Often you can get practical help with this through a government sponsored agency, or a debt consolidating business. You can also go to a bank.
If a house is too old, or near a flood plain, or over-priced – or for whatever reason – it is not wholly approved, they may not wish to give you 95% of the value. They may only offer 75%, or they may say ‘get the roof done’ and then they will extend the loan. However, this ‘pre-approved’ letter means that you are one jump ahead of any other buyer making an offer who is not yet pre-approved.
Stretch Loan – A which loan is better fixed or variable where the borrower is expected to pay over 50% of their pre-tax earnings towards a mortgage payment. Every time you visit nearme loans you might find yourself overwhelmed by which loan is better fixed or variable information. By the time all state taxes, local taxes, federal taxes, social security, health insurance, dental insurance and 401K are paid I only receive 62% of my gross income. With this type of loan, my house payment would take 80% of my after tax paycheck!!!
Choosing when to fix is simple in theory, however most people tend to fix at the wrong time! The economy moves in cycles that are roughly seven years long. During this cycle there are times when variable rates are high (and fixed rates are also high) and times when they are low. So fix your loan when rates are low. Simple right?
So, if you want to obtain a home loan, get yourself a bank home loan. Yu will receive a better rate of interest and you will not be spending money on the potential of other people to fall behind on their loans as you would if you went through a money lender. If you’ve been blacklisted or are experiencing debt counselling, wait a while until you are able to afford fresh financial debt and have been unlisted, it will not be for the remainder of your life. The last thing you need is to finish up in the bad books of an unscrupulous money lender who will do just about anything to get his revenue out of you.