Tuesday, March 2nd, 2010 at
7:13 pm
Adverse credit simply implies poor or bad credit that can affect your financial status and you may be considered as a borrower with high risk by a lender. So you are at the receiving end of loan refusals. You may find it tedious to find a loan due to your bad credits.
Refinance Mortgage Information provides you a silver line in the midst of a debt cloud. The bad credit remortgage lets you refinance a mortgage loan if you have faced difficulties with bad credit history. When the mortgage lender reports late payments, bankruptcy, default payments to your mortgage bad credit history, it in turn affects your credit score. Based on these credit scores the mortgage lenders either approve or reject loan financing.
By choosing to remortgage, you get a new mortgage that replaces your existing high interest mortgage loan. Adverse Credit Remortgage is an option to consider when the loan market interest rates drop significantly. You no more have to stay put with just one mortgage loan deal through out your life. Take advantage of the gamut of refinance options.
Why opt for adverse credit remortgage uk?
• Lower the bad credit mortgage payment: Firstly, borrower wants to reduce his monthly mortgage payments. With the change in the mortgage rates, he can find a lower interest rate opting for remortgage.
• Raise additional money for your personal needs such as your home improvement, vacation, dream cars etc. One can release the equity which has increased ever since he first applied for a mortgage.
• Pay off debts: One can pay off existing debts which is more commonly known as debt consolidation remortgage. Club all different unpaid debts together into one adverse credit remortgage as against your collateral. Keep up to the monthly payments so that you don’t risk your collateral.
• Repair your mortgage bad credit: Your mortgage bad credit rating can be improved in the long run if you are consistent with your payments. With bad credit remortgage, your loans are rated at a low interest rate and there’s no chance of missing out on your loan payments. Gradually, your mortgage bad credit scores will improve.
Find the best and most cost-effective remortgage deal!
Take advantage of a flexible remortgage plan. With the booming markets, you can opt for better remortgage deal with a lower Annual Percentage Rate and also reduce your repayment term, in order to get rid of your mortgage debts soon.
However, it is wise to do some research online, to find out the best loan quote online and settle down with the right adverse remortgage deal.
Log onto Bad Credit Mortgage for a safe and secure online adverse credit remortgage.
By: Kirthy Shetty
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Friday, February 26th, 2010 at
2:59 pm
If you have used your IRA, or other self directed retirement plan, to purchase an investment property the mortgage loan you obtain must be NON-RECOURSE. What does this mean? A traditional loan provides for “recourse” to the borrower. In other words, if, for whatever reason, you don’t make the mortgage payment the lender reserves the right to come after you, -personally – for the balance of the loan.
The IRS will not allow you to personally guarantee a loan made in the name of your IRA. Therefore, all IRA mortgages must have no recourse, that is, be “NON”- RECOURSE to you. In simple English – the cash flow from the property must be sufficient to cover the mortgage payment and all expenses because the lender can not come after you for any shortfalls.
IRA property mortgages are not resold into the secondary market through the usual network of mortgage bankers, mortgage brokers and banks.
IRA property mortgages fall under the category of commercial loans. With a traditional mortgage the lender may look at the rent and cash flow on the property, but the majority of their decision to give you a mortgage is based on your personal credit, personal income and your current debt load. Here, the property takes a back seat to your personal ability to repay the loan.
With commercial loans you, your credit and your income take the back seat. The property’s cash flow is the major consideration. In fact, your credit and income may never even be addressed. So how does a lender underwrite an IRA mortgage? The same way and methods they apply to apartment buildings, strip malls and office buildings. The lender will want to verify the ability of a property to generate sufficient cash to pay the mortgage, taxes and operating expenses.
This is a two step process. First, the lender will look at certified copies of leases and operating expenses that have been obtained from seller. The lender may also ask for certified copies of the sellers tax returns. The lender will develop a picture of what typical annual operating expenses will be for the property. If there is a question of “authenticity”, rents may even be verified directly with the tenants. Once income and expenses are determined, credits and debits are applied to come up with a net operating income- NOI – figure.
Being the conservative group that they are, the banker will then order an appraisal on the property. The appraiser will determine the value of the property based upon two approaches. First is the usual “Market” Approach which looks at recent resale of comparable properties. Most investors are familiar with this appraisal method.
What is different is the second approach called the “income approach”. Here the appraiser lets the lender know what the income and expenses are in the market, for properties that are similar to the property that the lender is being asked to mortgage. This is why IRA mortgages have higher appraisal fees – because substantially more work is being asked of the appraiser.
The lender then analyzes both sets of figures, from the seller and from the appraiser, and will then calculate their own NOI. So far the procedure is pretty straightforward. Here the numbers “are doing the talking”.
Lenders, always conservative beings, will want a cushion in the expenses to cover the “extraordinary” expenses should they become more “ordinary”. By this I mean… This “cushion” is given the name DSCR – Debt Service Coverage Ratio. Depending upon how quickly a property could be sold in the event of default or foreclosure, the lender will make sure that the “cushion” is larger, rather than smaller. A property like a strip mall which could take months to sell would typically have a 25% cushion. In other words, a 10 to 25% cushion is left in the available cash after expenses and before the lender calculates the maximum mortgage for the property. You now know what a Debt Service Coverage Ration of 1.10 to 1.25 is. The .10 to .25 is the cushion. Let’s see a quick calculation.
A six flat is being sold for $300,000, has a net operating income of $1908.00/ month. The lender uses a DSCR of 1.20 for a multi-family building. The net operating income (NOI) of $1908/month is divided by 1.20 which leaves you with a figure of $1590. This is the maximum Principal and Interest – P&I) - that can be applied and still meet expenses and “the cushion”.
Using a 25 year amortization Interest rate of 7% The maximum mortgage (PV) is $224,950.00
Again, the numbers, in the above scenario, are “doing all the talking”. This property would require the IRA to use $75,050 (25%) as a down payment.
So, here you have it. A peek behind the banker’s curtain in determining mortgage qualifications for IRA owned properties.
Steve Miszkowicz is the President & Managing Member of Chicago Trust Administration Services LLC
www.chicagotrustadministration.com
©2008 by Chicago Trust Administration Services LLC, all rights reserved
By: Steven Miszkowicz
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Tuesday, February 16th, 2010 at
11:45 pm
Getting a good mortgage rate and terms at a reasonable cost can be tricky for the untrained consumer. I have been involved in the financing of real estate on two fronts, first as an appraiser who has appraised for lenders on over one 1000 mortgage loans and second as an investor who has applied for and refinanced over 100 loans in the past 15 years, so let me share some tips on how to get a good mortgage at the lowest possible cost. Visit my blog RealEstateInvestorsLife.com for more mortgage tips.
1. Know your credit report. One of the first things to do before considering a home purchase is to get a current copy of your credit report, and scrutinize it for errors. If you’re applying for a no-documentation loan, for example, the credit report can be the most important piece of information available to your lender. Errors can be completely erased, along with out-of-date information that might weaken your credit score, but it takes time. Begin working on this project well in advance of applying for any mortgage loan. This way, reporting agencies have time to update your data.
2. Shop around. Get quotes from 3 lenders. You may be able to save yourself hundreds or even thousands of dollars by avoiding mortgages with high rates and/or high fees.
3. Always check the 10 year bond rate. All mortgage rates are connected to the 10 year bond rate. This rate can be found at any finance or stock website, such as Yahoo Finance, Google Finance, Ameritrade, Fidelity and many more. For example, if your mortgage broker quotes you 6% on a 30 year fixed today and tomorrow the 10 year bond rate dropps by .025 basis points you can be sure that the rate of 6% which you received yesterday has also dropped. But your mortgage broker or lender will not call you. Why should they? They make more money in selling you the higher 6% rate. You will have to call yourself and notify your broker that the 10 year bond rate has dropped and you expect your 6% rate to also drop accordingly to probably 5.75%-5.875%. Trust me once you make this kind of call, your mortgage broker will know that you are on top of the game.
4. Try to avoid and eliminate the middle men, “mortgage brokers, loan broker” and go directly to direct lenders or banks. Private loan brokers rarely are able to compete with direct lenders or banks on rates and they often charge excessive 3rd party closing costs or “junk fees’, such as excessive processing fees, application fees, warehousing fees, documentation preparation fees and so forth. By going to a direct lender or a bank you can almost be certain that the closing costs related to your loan are always valid and no junk fees are applied.
5. Always haggle. A mortgage is just another consumer product. A few clever words can get a sweeter deal. Make your demands know upfront. Let them know that you would like to have your processing fees, which usually is about $330-$500 waived. Know your markets interest rate and try to pay the least amount of points. Try to pay less than 1 point on loan between $200,000-$1,000,000. On loans greater than 200,000 it is not uncommon to pay .075% points with no rebate at the back end. What is a rebate you ask? Mortgage brokers get an upfront fee called “points or Origination Fee” which is a percentage of your loan, but what most do not know is that mortgage brokers also get a back end fee, called a “rebate or yield spread” which is their markup over the par rate that they get from the source investor or lender, Assuming a 2 point markup, for example, the broker would quote 1 points on an 6.5% loan. If the current lender based par rate is 6% then you just paid the mortgage broker 1.5% total for your loan. The borrower pays for the rebate over time through the higher interest rate. By law in most states, such as California the mortgage broker must disclose the back end rebate fee to the consumer on the closing paperwork sent to the borrower, so check to see how much rebate or Yield Spread the broker is charging. The ideal situation would be 0 rebate and just negotiate on upfront points, this way you are certain you will receive the best available rate at the most reasonable cost, nothing is hidden or unknown.
6. Make sure your selected loan does not have a pre-payment penalty. Many people get what they consider a great loan and are not even aware that they have a prepayment penalty of 3-5 years. They find out when they try to refinance or sell off their existing loan that they would need to pay 6 months interest or more as a prepayment penalty. Lenders and Mortgage brokers also benefit in giving you a pre-payment penalty since they have you tied down with their loan product for 2-5 years not to mention higher compensation for them in a form of rebates if they can persuade you to get a loan with a pre-payment penalty. Do not fall for it. Never get a loan with a prepayment penalty.
7. Have the lender or broker write down all the costs associated with the loan, they usually are obligated by law to send you a “Good Faith Estimate” within 3 days of the initial loan application. All your fees have to be listed on the Good Faith Estimate, ask if the lender or broker will waive or reduce one or more of its fees or agree to a lower rate or fewer points. You’ll want to make sure that the lender or broker is not agreeing to lower one fee while raising another or to lower the rate while raising points. There’s no harm in asking lenders or brokers if they can give better terms than the original ones they quoted or than those you have found elsewhere.
Remember when buying or refinancing Real Estate, shop around to compare costs and terms, and to negotiate for the best deal. Your local newspaper and the Internet are good places to start shopping for a loan. You can usually find information both on interest rates and on points for several lenders. Since rates and points can change daily, you’ll want to check your newspaper often when shopping for a home loan. But the newspaper does not list the fees, so be sure to ask the lenders about them.
By: Hairloss Expert
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