Sub-prime mortgages offer financing for those with poor credit to finance the purchase of a home. Today’s sub-prime mortgages offer low down payment options with no private mortgage insurance (PMI). As a result, more people are finding it easier to buy a home.

Sub-prime Mortgage Options

Sub-prime mortgages come in as many flavors as conventional loans. Just like with a conventional loan, low down payments or zero down will increase your interest rate. However, you have no PMI premiums to pay.

Another option is to buy points to lower your interest rate as well, but this only makes sense if you plan to keep your mortgage for seven or more years. A better plan is to improve your credit score, and then refinance in two to three years for a conventional loan.

Sub-prime Lenders

More and more financing companies are offering sub-prime mortgages. Even Freddie Mac and Fannie Mae offer sub-prime programs. So to find the best rates and terms, you should request quotes from both conventional and poor credit lenders.

When you are comparing lenders, look at the APR for a quick check. The APR includes both interest rates, points, and fees. However, you will also want to look at terms, making sure there are no fees for refinancing or early payment.

To quickly gather this information, make use of the internet. Most lenders offer quotes online. You can also request quotes from a mortgage broker, who will provide you with several quotes at once. When you find a lender with a competitive bid, you can request more information or apply online for speedy approval.

Sub-prime Benefits

Subprime mortgages provide you the chance to purchase a home while improving your credit history. Instead of throwing your money away on rent, you are building up equity in your home that you can tap into latter. You can also deduct your interest from your taxes.

Regular mortgage payments will also improve your credit history. So not only will your rates improve with other types of credit, but you can also refinance your mortgage in a couple of years for lower interest payments.

To view our list of recommended subprime mortgage lenders online, visit this
page: Recommended Subprime
Mortgage Lenders Online.

By: Carrie Reeder

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Mortgages

Mortgages for people with bad credit do exist. You may have heard that getting mortgage loans with poor credit history is impossible. Not true. While it’s very difficult to get a mortgage loan when you have bad credit, it is certainly not impossible to get one. However, you will have to look around to find one.

So, what sort of mortgage options do you have when the credit is bad?

Typically there are a few things you can do to get a mortgage in this situation. But it comes down to how much you are willing to pay and the sort of mortgage you are willing to get. The best situation is one where you put money down for the home. Giving a bank a very large down payment will ensure you get the mortgage regardless of your credit rating. The worse your credit, the larger the down payment needed.

In some cases though, you will have to cough up a significant portion of the home’s value if you want to go this route. Unfortunately, this means that most people out there will be unable to take advantage of this method.

Another option you have is to look at getting a bad credit or “subprime” loan. You can look at getting one of these loans from a bank. However, since the housing crash and economic recession, banks are no longer willing to give these loans out – not unless they are sure you are a good candidate. The other option is to look at an online bad credit lender who specializes in poor credit mortgages. You can find out more information online.

By: Tim Jamson

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Mortgages

A balloon mortgage is a loan that is provided for a short period of time for a set amount of money. Balloon mortgages will often involve periodic payments that are made at a fixed interest rate. During this period, the loan may not be amortized. The balance of the loan has to be paid in full at a specific time.

Another feature of balloon mortgages is that they will combine many of the features seen in adjustable rate mortgages and fixed mortgages. The interest rate will remain fixed for a certain period of time, which may be from 5 to 7 years. The payments will be based on an amortization cycle that lasts 30 years. If homeowners can’t pay the balance by the end of the term, the lender will decide how the payments will be made. The sum is usually converted into a fixed rate mortgage.

Advantages?

A balloon mortgage can be good because it offers an interest rate that is much lower than standard 30-year mortgages. If you are buying a larger home, a balloon mortgage can help you. Larger homes tend to have interest rates that are high, and this can make them difficult to pay off if you don’t have a large income. Balloon mortgages can make things easier. They are also good for people who plan on refinancing the home before the term ends.

Despite this, balloon mortgages can be much more complex than standard mortgages. Some homeowners who use them end up running into problems. You will need to make sure you have solid documents before signing up for a balloon mortgage. You will want to make sure you choose the right lender and read all contracts carefully for hidden fees or other terms. Balloon mortgages can be risky for people who don’t understand them.

Extra Charges For Balloon Mortgages

One problem that customers run into with these mortgages is prepayment penalties. These penalties will often be placed on people who choose to pay off the mortgage early. If you refinance your existing mortgage or sell the home, this can lead to prepayment penalties. The problem with these penalties is that they greatly increase the chances that your home could become foreclosed. Mortgages that have balloon payments are highly susceptible to foreclosure.

Pre Payment Penalties

The cost of prepayment penalties can be large. They are usually calculated as a percentage of the total balance owed. This could be as high as 12% and many homeowners have found themselves paying thousands of dollars more than they expected. If you choose to get a balloon mortgage you should make sure there are no prepayment penalties. If you get into a situation where you can’t afford the home, prepayment penalties can keep you from being able to refinance the home in order to get out of debt. These mortgages can be risky, and should only be used by those who fully understand the risks involved.

Short Term Mortgage – Long Term Problems

A mortgage is a serious financial endeavor that you should take seriously. They involve large amounts of money that most people simply don’t have on hand. If you get into a situation where you can’t make your payments, you could end up losing your home and your credit could be ruined. Many people have made the mistake of getting involved with balloon mortgage without doing their research. They chose not to read the fine print on the applications. They often end up in situations that can haunt them for the rest of their lives.

While balloon mortgages may have low interest rates at first, you should have a plan to make your monthly payments after the first term ends. This can keep you from defaulting on your payments.

By: Joseph Kenny

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The notion of buying your first home for you and your family is inevitably exciting. But you have to understand that with all the excitement, you still have to remember that this still comes with responsible decision-making – and more importantly, a lot of budgeting. In fact, rarely would you find a first-time homeowner who can dish out hard cash when purchasing a house. Most of the time, this would be done through mortgages – FHA mortgages, to be exact.

But what exactly is this FHA mortgage? The thing that makes this type of mortgage very attractive is the fact that your down payment can be very low – even as low as just 3% of the whole mortgage. And the only stipulation that comes with this type is that you can only have one FHA mortgage at a single time.

So, how does this work? The Federal Housing Administration, or the FHA, was conceptualized and developed by the US government, for the sole purpose of improving housing conditions for Americans all over the state. The FHA does not really lend any money. What it does is that it insures that the complete mortgage will still be paid even if the buyer choose to commit the unfortunate act of defaulting. The decision to lend out the money still lies in the hands of private lenders – the bank, savings and loan institutions, or the credit union. The great thing about this program is that not more than 3 to 5% down payment is required. There are certain points associated with the mortgages and these are then paid to the lenders, so that the interest rates of the mortgages can be lowered.

The borrowers, however, have to pay what is known as private mortgage insurance or PMI on their mortgages. This amount ensures that the total mortgage will still be paid off in case the buyer defaults. For the most part, the PMI will be implemented only when 20% of the whole mortgage amount has already been paid.

To qualify for this mortgage, your credit history should be decent – which means your report should show you as capable and fit to pay off debts in a very timely manner. Apart from that, you should also have financial records showing that your monthly mortgage payment is not more than 29% of your monthly income.

These are just the fundamentals you need to know about FHA mortgages. By being informed about such fundamentals, you can certainly better your chances of qualifying for this type of mortgage.

By: Alex B Crothers

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A common question those paying off a mortgage have is whether or not they should be putting any extra cash into a savings account or using it to overpay on their mortgage, thus reducing it’s length.

Firstly, it’s important to note that if you have any outstanding debts (e.g. credit card, personal loan, store card) along with money in a savings account, then it’s best to use your savings to pay off these debts.

Consider the following example – £1000 outstanding on a credit card with an APR of 18% will cost you £180 in interest. Whereas £1000 in a savings account with a typical interest rate of 4% will give you a return of £40. Therefore by using the £1000 saving to pay of your credit card you can save cut your repayment down to £140!

It’s also worth noting that over the long term mortgages are relatively cheap forms of borrowing compared to loans or credit cards, so any outstanding debts on these should be paid off first.

One important factor when overpaying on your mortgage is to time it correctly. The frequency at which your lender calculates your interest will vary, with daily, monthly or yearly being the options – this can make a big difference in whether you will gain or loose out by overpaying.

The best idea is to call your lender and find out when they charge the interest, with this in mind; you should make your overpayment a few days prior to the mortgage payment.

There are a couple of factors that should be taken into consideration before overpaying your mortgage. The most notable of these is whether or not your lender actually allows this.

Some lenders for instance will charge you if you attempt to repay your mortgage earlier as they want you to stay with them for longer. Thankfully though, this is becoming less common.

By: Liam Gerken

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One of my jobs for a very long time included working very closely with a financial advisor and an elder law attorney. I learned a lot from both of them. The most important thing I learned is that long-term care isn’t just about picking a nursing home or a home care agency. Long-term care is also about the legal and financial matters that almost always come up when families are trying to help an aging loved one make choices.

Most families cannot afford to privately pay for nursing home care or in-home care for very long. This wasn’t planned for or budgeted for prior to retirement. Planning ahead is getting more popular, but for our older generations, it wasn’t an option for various reasons.

Because of this I try to make sure I know what all of the financial options are for seniors and their family members. One of them is something that not many of us understand very well- a reverse mortgage.

Reverse mortgages have received a lot of press lately. NBC Nightly news, ABC, CBS….they have all run stories. Of course there are pros and cons to reverse mortgages, but interestingly enough, two large organizations support and advocate them, especially for seniors who need long-term care. The National Council on Aging and AARP both support the use of reverse mortgages in certain circumstances.

A study released by The National Council on the Aging (NCOA) shows that reverse mortgages can be used by over 13 million Americans to pay for long-term care expenses at home, allowing many to remain independent and in their homes longer.
The “Use Your Home to Stay at Home: Expanding the Use of Reverse Mortgages to Pay for Long Term Care” report, funded by the Centers for Medicare and Medicaid Services and the Robert Wood Johnson Foundation, also shows how reverse mortgages can alleviate financial pressure not only for individuals and families, but also for state Medicaid programs and the federal government. Increasing the market for reverse mortgages could save Medicaid $3.3 billion (with a four percent take up rate) annually by 2010.

A reverse mortgage is also called a home equity conversion mortgage. These loans are backed by the federal government (HUD and FHA). Seniors 62 and older are eligible to use this federal program. This is a “non-recourse loan”, which means that the heirs of the seniors are not responsible for repaying the loan. In fact, a reverse mortgage is a loan that does not have to be repaid unless both homeowners (assuming a couple) leave the home permanently, or pass away. No monthly payments are required. The senior is the one who gets paid.

Finally, the money seniors receive from a reverse mortgage is tax free, and does not interfere with SSI or Medicare benefits.
As with any financial transaction, there are other things to consider, and reverse mortgages aren’t for everyone.

However, for the senior or couple who are having trouble making ends meet, this can be a life saver. Some seniors are using the extra cash flow to pay for in-home care, adult day care, pay for prescription drugs, pay off credit card debt, and make much needed home repairs so that they can live safely and more comfortably.

Find a reverse mortgage specialist in your area, and network with them. They might be able to help a senior you know pay privately for care much longer than expected.
For more information visit www.aarp.com , www.ncoa.org , or www.reversemortgagenation.com .

If you would like a FREE REPORT on reverse mortgages, I would be happy to send you one. Just email me at valerie@nextgenfinser.com and I will email or snail mail your report.

By: Valerie VanBooven

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Mortgages