It’s another day in the mortgage world. Yes, I’m still here. I haven’t left the business although alot of my colleagues have. There are still mortgages available it’s just the variety is not as good as it once was. There are still Jumbo mortgages out there but can you qualify for them? A jumbo loan is a loan over $417,000. It is not backed by Fannie Mae or Freddie Mac.

There have been major changes in this market lately. First of all let me say that alot of the Jumbo mortgages that are out there were produced by stated income/stated asset products. What that means is that the borrower never had to prove their income or prove that they had any assets. This product was strictly credit score driven. If your credit score was high enough you could be approved for a stated income/stated asset mortgage. The stated income program was really started for business owners that may have a high income but end up writing everything off so they don’t have to pay as much to the IRS. As underwriting guidelines loosened during the early 2000’s the product then morphed into a stated income program for W-2′d employees too. This was a big mistake for lenders as there is no reason for this program because W-2′d employees usually don’t end up writing anything job related on their taxes. During the hay day all it took was for one lender to start offering a new product and most of the other ones jumped right in. Right now there aren’t any lenders offering a Stated Income W-2 wage earner mortgage.

But, enough of that, let’s get back to the main question, are Jumbo Mortgages still available? Oh yes they are if you can show your income. Well wait a minute, they are still available even if you can’t show your income as long as you can show that you have 2 months worth of reserves in the bank. If you don’t have any reserves you are so done. You can’t do anything at this point.

The loan to values that the banks will accept have also been lowered due to housing prices declining.

My advice to anyone with a Jumbo Mortgage is don’t spend up your reserves. If things get tight be sure and do something before it’s too late. You don’t want to be another casualty in the mortgage meltdown.

By: Sandra Sheely

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Flexible tracker mortgages combine flexible repayment options with an interest rate that tracks the Bank of England Base Rate.

Flexible tracker mortgages offer several benefits to the borrower: you have financial freedom and control because you can make overpayments, underpayments, and payment holidays, according to your financial situation. This is a particularly attractive option for self-employed workers and commission-only workers who have an unpredictable income.

With a flexible type of mortgage, you can save yourself a lot of money if you are able to overpay on your monthly repayments, either on a regular basis or from one-off lump sum payments. The consequence of making overpayments is your mortgage is paid off early and thousands of pounds can be saved in interest payments- a feature that is attractive to everybody! Underpayments and payment holidays (normally allowed when a set number of overpayments have been made) are a useful feature, but can prolong the life of the mortgage.

Flexible tracker mortgages also track the Bank of England Base Rate. When the Base Rate is lowered, your mortgage interest rate will follow suit, and the changes are effective as soon as the Base Rate changes are announced. However, if the Base Rate increases, your mortgage interest rate increases. With a tracker, your monthly repayments tend to keep changing more than any other type of mortgage. The downside with a tracker, it has no upper limit; there isn’t a cap for how high the interest rate can go.

Many tracker mortgages only run the tracking element for a limited time, (anything from 1 to 10 years) before the mortgage is reverted to the lender’s standard variable rate of interest (SVR). If you are considering a flexible tracker mortgage for a short period, you need to find out what the SVR is likely to be once you’ve stopped using the tracker feature. A standard variable rate mortgage means the interest rate is set by the individual lending company and it is their decision as to whether they pass on the Bank of England’s rate change to their customer.

A tracker mortgage can offer very competitive rates, but if you’re on a tight budget and can’t withstand any increase in your monthly mortgage repayments, then you’d probably be safer with fixed rate mortgage instead. A tracker mortgage is probably best suited to people who enjoy a little more risk in their lives.

When it comes to choosing a flexible tracker mortgage, choose one that doesn’t have an Early Repayment Charge (ERC). ERCs are normally charged as a percentage of the outstanding amount owed on your mortgage (approximately 3%). This charge can easily run into thousands, especially if you have a large mortgage.

It is important to look at flexible tracker mortgages as a whole – deals with the lowest rates may initially look attractive, but they often have the highest fees. And, the lowest rate deals may come with a lower Loan-to-Value (LTV). The LTV is the ratio of the amount of money you can borrow compared to the value of the property. To be eligible for the lowest rates, you may need a larger deposit or a larger amount of equity in your home.

To determine if flexible tracker mortgages are the right option for you, it is worth consulting an independent mortgage broker. They are trained professionals with a wealth of knowledge and experience to find the mortgage that best suits you needs.

In conclusion, flexible tracker mortgages are ideal for borrowers who want flexibility with their mortgage repayments, and have their mortgage interest keep pace with the Bank of England Base Rate.

By: Eugene Tyler

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This is the right time to become a home owner:

People who are thinking about becoming a home owner have great advantages during the period of recession. This is because of the fact that the value of the homes have been decreased and there lot of homes undergoing foreclosures. It is a pity that many home owners have lost their home because of the recession. Although several solutions have been introduced, the housing crisis is still existing. Another advantage for first time home buyers is that the rates will be reduced by the government so as to improve the economy.

Tips and suggestions:

=> Finding the best loan offer is going to be a hard process. With so many lenders out there, you need to get the quotes from all of them. Comparing quotes will be the best way to get the lowest interest mortgage,

=> During the comparison shopping, make sure that you are getting details about both the interest rate and the other fees. Getting details about the prepayment penalties would also be better,

=> Some home owners have already made mistakes because of choosing the adjustable rate mortgages. Make sure that you are opting for a fixed rate mortgage. ARM offers will look attractive in the beginning. But when the indices change and interest rates increase, your mortgage payments will become unaffordable. This is only going to end in a foreclosure and a bad credit score,

=> Other options available to you are the interest only mortgages and the FHA loans. The FHA loans have less credit requirements and lesser down payments.

By: Jeff D. Thomas

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As Baby Boomers retire, and pay off their home loans, we are sitting on trillions of dollars in home equity! How to access these funds without going back into debt? There is a new program called a “Reverse Mortgage” that allows one to access the equity they have built up in their home without taking out a new loan.

Basically, the bank/lender looks at your equity and says, ‘We will give you most of that money as a lump sum, or in monthly installments.” In turn, they acquire a lien interest on your property.

There are several ways to be paid, so let’s just take some examples:

Example 1

John & Mildred Jones have a home worth $700,000. Paid off. They are 62 years or older. Retired. They dreamed of going on a vacation in a rented motorhome to see all the National Parks such as Yellowstone, Grand Canyon, Yosemite, etc. They also want to pay off some high interest credit card debt.

They do a Reverse Mortgage and get a lump sum of $200,000 and then have monthly equity distribution payments of $5,000. For life, or until they reach the max equity in their home.

Fast-forward to today. John & Mildred have passed away. They took out mortgage life insurance that paid off their accumulated debt against their home when they got the reverse mortgage. The home passes, free and clear, to their heirs.


Example 2

Dolores and Hiram have a home that is almost paid off, worth 500,000 and they owe about $50,000. They get a reverse mortgage that pays them $3,500 a month. They pay off their car loan and can go out to dinner, take vacations and enjoy their “golden years.”

Example 3

Arthur owns a home worth 7 million dollars, it is paid off. He retired from being CEO of a Fortune 500 corporation. He is 72 years old. He does a reverse mortgage and receives a lump sum of 3 million dollars. He takes that 3 MM and buys a life insurance policy for $10 million dollars, and this costs him, annually, a premium, at his age, of about $700,000. After 2 years he can SELL this life insurance policy to a viatical policy buyer for about 40% of face value, or $4 million dollars. Once they buy the policy, they pay the annual premiums for him thereafter.

He paid $1.4 million in premiums and has received $4 million on sale of the policy. He just made $2.6 million dollars profit. He dies and passes that money, and his home, paid off by mortgage insurance, on to his heirs.

The Reverse Mortgage is an incredibly powerful strategy to allow you to access the financial power of the equity in your home without going back into debt!

The loan has to be done just right and you will definitely want to talk to your Certified Mortgage Planner, CPA and/or attorney to have this come out right for you.

By: James Hussher

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For years, when someone wanted to purchase or refinance a home, the choices were simple. The buyer chose either a 15-year fixed-rate mortgage or a 30 year fixed-rate mortgage. That was it. Of course, those were also the days of twenty percent down payments, which seriously hindered the ability of many Americans to obtain the loan necessary to buy their own home. In recent years, more flexible loan types have become available and down payment requirements have been relaxed. There are now far more choices of loan types available for the borrower than ever before. That can be a mixed blessing, however, as prospective borrowers now have to do a tremendous amount of homework in order to determine which type of loan might be the best choice. The selection of loan types that are currently available can be quite bewildering, and the wrong choice could cost the prospective borrower thousands of dollars over the term of the loan.

The standard 15-year and 30-year mortgages are still quite popular. Each provides the stability of a fixed interest rate and a payment that will remain the same throughout the duration of the life of the mortgage. When interest rates are near historic lows, as they are today, these traditional choices work well for most buyers. Buyers who find a 15-year or 30-year mortgage to be within their means would probably benefit from obtaining such a mortgage now.

In recent years, as home prices have increased faster than wages, the lending industry has created more flexible types of mortgages designed to help buyers who may have trouble with traditional loans obtain financing. These types of loans tend to have adjustable interest rates:

The Adjustable Rate Mortgage, or ARM, has a rate that adjusts over time as spelled out in the mortgage agreement. Typically, the rate at the time of singing the loan is lower than that of a traditional mortgage, perhaps by one percent or so. The difference is that the rate can adjust over time as the market changes. The loan agreement will spell out how often the rate may change and how much the rate may change at one time. The agreement may also indicate a maximum interest rate that may be charged over the life of the loan. These types of loans are ideal for buyers who do not intend to stay in their home for more than a few years, or buyers who are purchasing in times of high interest rates, when there is an expectation that rates will drop over time.

Convertible mortgages are ARMs that offer the buyer an opportunity to “convert” the adjustable rate loan to a fixed rate loan after a certain period of time that is spelled out in the loan agreement. There is a fee charged for converting the mortgage, but the fee is typically less than the fees associated with refinancing the mortgage altogether.

Two Step mortgages offer an initial rate that is lower than the rate for fixed-rate mortgages for the first few years of the loan. After a set period of time, the rate increases to a fixed rate. This allows buyers to pay less during the early years of their loan, when they may earn less or need extra cash for home furnishings. The disadvantage of this type of loan is that the increase in the interest rate can be substantial, and may make the payments unaffordable for some buyers..

These are just a few of the types of loans that are currently available in the market. There are probably dozens of variations on ARM loans, and prospective buyers should study their options carefully before agreeing to a loan. Making the right choice could save buyers thousands of dollars over the life of the loan. Making the wrong choice could leave buyers with a loan that they cannot afford to pay. A little time spent on research is time well spent.

By: Charles Essmeier

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