Mortgage Payment
Mortgage Rates – The Benefits of Refinancing
So you’ve lived in your home for some time now and have been content mailing off your mortgage payment every month. Yet when you turn on the nightly news you see that mortgage rates are 1% lower than what you locked into 10 or 15 years ago and realize quickly that you may be paying more money than you have to in interest rates on your mortgage. For millions of people every year, refinancing is an option they take to give their mortgage a “health check” of sorts and to help them lock in lower rates or take advantage of increased property values to make some improvements to their homes.
Nobody likes to pay more than their neighbor did for something – especially their house! Refinancing is an activity that is as much a part of the mortgage process nowadays as taking out a mortgage is to buy a new home. A smart homeowner knows that interest rates will rise and fall and that by keeping track of where they are currently they can save a lot of money over the life of their mortgage note by locking in a lower mortgage rate now, even if it means paying a little money up front. Refinancing helps millions of homeowners get lower rates on their mortgages by paying off their old mortgage and writing a new one.
Of course, as with any financial transaction, you should carefully review all the costs associated with refinancing and the potential benefits versus the risks. Typically, if you only have a few years left on your mortgage note then refinancing is not for you – you simply won’t save enough in interest to make up for the fees you have to pay to rewrite your mortgage. The best time to refinancing, according to some experts, is when at least 40% of your monthly mortgage payment is still going towards interest fees.
If you do decide to refinance it is important to remember all the tricks we’ve talked about before when shopping around for a mortgage. Get plenty of competitive bids, keep a close eye on the fees, and be sure to read and understand the risks involved.
Another reason that many homeowners refinance their mortgages is to take advantage of increased property values as to “cash out” on some of the equity. Say you have a child who is ready for college and you need a way to pay for it. Your home, with cost 100,000 twenty years ago when you took out your 30-year mortgage may now be worth 200,000. By refinancing you can in essence write yourself a check to pay for home repairs or other needs and get the money easier at a better rate then taking out a 2nd mortgage.
For those who use it wisely, refinancing can be one of the best financial tools you have. Not only does it hold the potential to help you save thousands of pounds in interest charges by getting you a lower rate, but it also lets you take advantage of increased property values to help pay for other necessary items that come up in life. Yet another reason why owning a home is truly one of the best financial moves you will ever make.
Life after Bankruptcy – How to Restore Your Credit after
Life after Bankruptcy – How to Restore Your Credit after a Bankruptcy and obtain a mortgage
It is unfortunate that many bankruptcy attorneys do not give their clients more direction with regard to restoring themselves after their bankruptcy. There are some simple steps that anyone who files a bankruptcy needs to take in order to restore themselves financially.
Using these steps below, you can restore your credit and prepare yourself to become a home owner.
1. Get a copy of your credit report. Many times (most times) the credit accounts that are absolved with your bankruptcy are not removed from your credit report immediately.
2. Have derogatory credit items removed from your credit report. For the items charged off in your bankruptcy, you will need to send a copy (not the original) of your bankruptcy discharge papers to all 3 of the credit bureaus asking them to remove these inaccuracies.
3. Pay all of your bills on time. Bankruptcy is a means to financial recovery. It is intended to allow you to start over financially. After your bankruptcy, you need to make sure that all of your bills are paid on time. If you are having trouble with an upcoming bill, DO NOT IGNORE IT. This is where most people go wrong. Call your creditors before they call you and let them know what your challenges are. If you cant get a reasonable rep on the line, ask for a supervisor, but again, do this as early as possible, not the day the bill is due or after it is late. If you are having trouble with your bills, you may need to solicit some help.
4. Have a strong documented rental history. This is pretty critical, as it is most likely the largest monthly expense that you have. Underwriters (the people that actually sign off on your loan’s approval) will look very hard at how you have paid your rent as they are going to replace it with a mortgage payment of equal or greater size. It is very important to be able to document your rent payment history very specifically. If you rent from an apartment community, then all the bank will have to do is request a Verification of Rent (a.k.a. VOR).
If you have a private landlord, then the BEST way to document this is with cancelled checks for the last 12 months rent. Banks can do VORs for private landlords, but rarely do because they feel that a landlord may have a relationship with the borrower and say what the bank wants to hear to help them get a loan.
If you pay with cash or money orders, please stop doing this immediately and start paying with checks. Simply put, this is hurting you because by filing a bankruptcy you have already shown some financial instability. Paying your rent with cash or money order shows further financial instability and will not give you the positive rent history that the underwriter is looking for to give them the confidence in approving your loan.
5. Apply for a secured credit card A secured credit card allows you to make a deposit into an account to secure a credit card and then borrow against it to establish a new positive payment history. As time progresses, the bank may increase your credit line to an amount greater than your deposit, and then eventually return your deposit to you. (They will also often pay you interest on your deposit.)
6. Prepare non traditional trade references These are accounts that you pay on such as cell phones, car insurance, and store accounts which can be used to document a positive payment history, but would not be traditionally reported to a credit bureau. Ideally, if you can provide 3 of these accounts with a 12-month payment history, this will help us in convincing the bank that you are a good credit risk. The best way to document this is with a letter from the company stating that you have had a positive payment history with them for the past 12 months. Alternatively, you can provide 12 months of cancelled checks showing 12 months of timely payments.
7. Resist the urge (or encouragement) to buy a car. Some may tell you that this is the best way to rebuild your credit. The problem is that your interest rate will be so high, that your payments will make your debt ratios higher than normal, making it harder to qualify for a mortgage. Do you remember the figure of 45-50% of your monthly income that the bank will allow you to use towards your debts? This will quickly be absorbed by a car payment. Only buy a car if a) you NEED (not want) a car, and b) you have the income to cover the car payment, any of your current debts, and your proposed new car payment. We have seen SEVERAL people that have cars rather than homes because they went out and bought a car that they could not sell and their debt ratios were too high to qualify for a mortgage. It would be a shame to have a nice car (that depreciates daily), as opposed to a more humble car along with a mortgage on a home that gives you a tax break, and increases in value over time.
I hope this is helpful and helps get you on your way to finding the home of your dreams.