Thursday, March 20, 2008

Lowering of home loan rates brings cheer to homemakers

The lowering of interest rates on home loans has brought some cheer among the homemakers with house loan seekers in the Valley expecting banks operating in Kashmir following the suit.

Experts said during past some months the growth rate of housing sector in India, and Kashmir as well, was sluggish due to rise in interest rates and other restrictions by Reserve Bank of India while tightening its credit policy.

The housing and realty sectors, experts said, had felt the heat of high interest rates in the Valley as well.
“Restrictions put on the housing loan sector by the RBI during its last credit review have slowed down the housing loan market in the Valley,” said a banker.

However, a recent development in which three banks viz. Housing Development Finance Corporation, Bank of Baroda, and Allahabad Bank reduced the interest rates on home loans from 25 basis points to 50 basis points as a festival season offer, has generated a hope that banks operating in Kashmir may also follow the suit.

Head Commerce Department KU, Khurshid Bhat said, “If the banks operating in Kashmir lower the interest rates on home loans, it will have impact on the multi players like house buyers, companies dealing in real estates and banks.”

“We don’t have the big companies in the Valley in real sector. However, the small firms in Kashmir would get benefited should the major banks in Kashmir reduce the interest rates on home loans. There would be surely a positive impact on public at large,” he said.

However, many experts hold a contrary view. “Just before six month the interest rates on home loans were hovering around 8-9 per cent, which mean that the recent lowering won’t have that major impact. Home loan is still on higher side,” experts said.

A senior executive of Punjab National Bank said, “PNB is the only Bank providing housing loan at cheaper rates as compared to prevalent market rates. We charge 9 per cent on the home loan to be repaid within less than 5 year. For the loans of 5 years to 20 years duration we charge 9.5 per cent.”

Experts said: “The RBI while seeking to bring down the inflation through monetary measures has limited options apart from raising repo and reverse repo rates.”

At present reserve ratios set by RBI are: CRR 7 per cent and SLR 25 per cent.

“Factoring the risks attached to home loans, the RBI has prescribed a higher risk weight of 100 per cent for residential housing loans with LTV (loan-to-value) ratio of more than 75 per cent, under its final Basel II guidelines,” said MBA student Khurshid Amin.

“If interest rate on housing loans comes down, it will have a favourable impact on the middle class in particular and common masses in general and thereby will increase the demand for real estate”, said Finance expert, Sovais Shafi.

Assistant Vice President, Jammu and Kashmir, HDFC Bank Zubair Iqbal said, “We don’t provide housing loans to our customers at any of the branches in Kashmir. We do have a separate institute Housing Development Finance Corporation, which provides home loans in Kashmir Valley.”

Information on Home Loans

When to apply for home Loans: One can apply anytime after deciding to acquire or construct a property, even if the property has not been selected or the construction has not commenced. The loan amounts are sanctioned in principle to let buyers know what amounts they are eligible of. Actual disbursements start after satisfactory validation of all necessary documents and completion of specific procedures.

Eligibility conditions for a home loan: While determining the loan eligibility of a customer, lending institutions primarily focus on the repayment capacity. The repayment capacity is determined by taking into consideration factors such as income, age, qualifications, number of dependants, spouse's income, assets, liabilities, stability and continuity of occupation and savings history.

Maximum loan amount: Housing finance institutions generally finance upto 75%-85% of the asset value. Depending on the institution, the maximum loan amount may vary from Rs.1 lakh to Rs.1 crore.

Repayment period options: Repayment period options generally range from 5 to 15 years. A few HFC's offer a 20-year repayment period, albeit at a higher interest rate.

Payable fees and charges: Home loans are usually accompanied by the following additional costs: a) Processing fee: It's a fee payable to the lender on applying for a loan. It is either a fixed amount not linked to the loan or may also be a percentage of the loan amount. b) Prepayment Penalties: When a loan is paid back before the end of the agreed duration a penalty is charged by some banks/companies, which is usually between 1% and 2% of the amount being pre paid. c) Commitment Fees: Some institutions levy a commitment fee in case the loan is not availed of within a stipulated period of time after it is processed and sanctioned. d) Miscellaneous costs: It is quite possible that some lenders may levy a documentation or consultant charges.

Security for the loan: In most cases, the property to be purchased itself becomes the security and is mortgaged to the lending institution till the entire loan is repaid. Some companies may also require additional security like the assignment of life insurance policies, pledge of shares, NSCs, units of mutual funds, bank deposits or other investments.

Documents required at the time of application: Following are the documents that lenders require at the pre-approval stage:

Proof of Age
Copy of Bank A/C statements for the last 6 months
Copy of latest credit card statement
Passport size photograph

For salaried employees:
Salary and TDS certificate
Latest pay slip
Letter from employer

For self-employed/businessmen:
Copy of audited financial statements for the last 2 years
Copy of Registration Certificate of establishment under shops and Establishments Act/Factories Act

Tax Benefits: One can avail of tax sops both on the principal as well as interest paid on home loans. With effect from 1st April 2005 (i.e. assessment year 2005-07) under section 80C of the Income Tax Act 1965: Principal amount of repayment of loan along with other savings such as PF, PPF, Life Insurance premium etc up to a maximum of Rs 1,00,000/- will be eligible for deduction from gross income.

Insurance of Property: Many HFCs insist on insurance of the purchased property against fire and other allied perils. Even in the absence of a mandatory clause, it is advisable to insure the property against potential contingencies.

Time required for loan disbursement: The average time required for loan disbursement is 3-15 days subject to satisfactory and complete documentation and completion of all relevant procedures.

Second Mortgage Loan

A second mortgage loan can be a great way to borrow money when you are in need. Unlike a regular mortgage, a second mortgage does not have priority on your home if you default on the loan. Your first mortgage would be repaid by your home's value before any funds go towards paying off the second mortgage. Second mortgage loans are most appropriate in situations where you require a large sum of money. Two common issues that may warrant a second mortgage are large home improvement projects and debt consolidation. While it may be tempting to take out a second mortgage in order to get money, remember, if you fail to adhere to the payment schedule, you could end up losing your home.

Second Mortgage Interest rates and Fees

Typically, second mortgages come with higher interest rates than a first mortgage. This is because that in the event of a default, the second mortgage will not receive payment from the home's value until the first mortgage is paid off. This makes a second mortgage slightly more risky for a lender. Also, there are high second mortgage fees associated with the application for a second mortgage loan. Sometimes, these fees may discourage you from taking out a second mortgage depending upon how much money you need and for what purpose you need it.

How to Find a Great Second Mortgage

  1. Shop around for the best second mortgage. By contacting several different banks, brokers, and credit unions, you can have companies compete to offer you the lowest interest rate on a second mortgage. Make sure to pay attention to additional second mortgage loan fees as well during this process.
  2. Avoid second mortgages that include penalties for lay payments and defaulting. While there aren't any homeowners who plan on making delinquent payments on their second mortgage, sometimes the unexpected may occur and leave you unable to make a payment on time. Additionally, clerical errors may delay the posting of your payments. No matter what the situation, you don't want to be charged hefty fees and higher rates for late payments on your second mortgage, so try to avoid lenders that offer these types of packages.
  3. Make sure you read and understand all the terms of your second mortgage loan. Some lenders offer second mortgages that seem to have extremely low rates - until the payments balloon and soar through the roof towards the end of the payment schedule. Make sure you pay careful attention to any documentation you sign. If you are not confident in your ability to judge the fairness of a contract, consider hiring a lawyer.
  4. Be aware of all the costs involved in getting a second mortgage. Aside from the regular payments on your second mortgage loan, there are other costs to consider in the process. Appraisal fees, points, application costs, and closing costs can all increase the total amount you have to spend on your second mortgage. Keep these in mind when planning a budget.

Mortgage Refinancing

Many homeowners struggling with unpaid debt and a constant stream of bills want to know if there is anything they can do to get a lower monthly payment on their mortgage. The good news is that there are some helpful ways to get a lower monthly payment without worrying about being scammed by unethical mortgage refinancing lenders.

Mortgage Refinancing Tips

The easiest way to get a lower monthly payment is through mortgage refinancing. Mortgage refinancing will not only get you a lower monthly payment, but you may be able to pay off your entire mortgage much more quickly once you have secured some better payment terms. So how do you know what types of terms to look for in order to get mortgage refinancing that will give you a lower monthly payment? Use these tips to help make sure that you use mortgage refinancing to get you the best rate possible.

  • Apply for pre-approval with several mortgage refinancing lenders. Applying for pre-approval with more than one lending company will allow you to shop around for prices to make sure you are getting the best rate available. During this process, make sure these refinancing lenders are not pulling your credit history. You want to save your credit pulls for the lender that can provide you with a mortgage refinance with a low monthly payment. Each time you pull your credit score, your score suffers a little bit. Too many pulls will prevent you from getting the best rates on a mortgage refinance. After qualifying several different lenders, authorize only the companies that can give you the best mortgage refinance rates to pull your credit.
  • Check to make sure your existing mortgage does not have any pre-pay penalties. Many homeowners select a mortgage that includes pre-payment or early pay penalty clauses. While the cost of this penalty may vary, it generally amounts to about six months of your mortgage loan's interest. If you want to do a mortgage refinancing that has these types of penalties, make sure you have enough funds to cover them.
  • Pay attention to interest rates and closing costs. A lender might be able to provide you with a lower monthly payment through mortgage refinancing with their company, but this does not automatically make them the best choice. If interest rates or closing costs are too high, avoid the lender in question. These two variables are often the deciding factor when it comes to making a final decision about selecting a lender for mortgage refinancing.
  • Get everything in writing. Once you decide on a mortgage refinancing lender, make sure you get all of your mortgage refinancing terms written down on paper. This includes the agreed upon interests rates and closing costs. It is also good to ask questions about pre-pay penalties or any other types of penalties that might be associated with the mortgage refinance. Often times, lenders will avoid this type of information if they feel it will be a deal-breaker that will prevent you refinancing with their company.

Cash Out Refi - Get Your Hands on Some Cash

Another way to make a refinance work for you is to refinance for more than the balance remaining on your old mortgage -- in effect, tapping your home equity, or "cashing out," in mortgage speak. Thanks to favorable rates, you may be able to do so without boosting your monthly outlay. For example, at 8.5%, the payment on a $200,000, 30-year fixed rate mortgage is $1,538. But at 7.5%, that same payment lets you borrow nearly $20,000 more.

The best use for the extra cash is to pay off any higher rate loans you may have. Let's say that you are carrying a $15,000 car loan at 10% and making minimum payments on a $10,000 credit card balance at 17%. Your monthly payments on those debts would total $680. Then assume you refinanced your mortgage, taking out an additional $25,000 to pay off your car and credit card loans. Result: At 7.5%, your additional monthly mortgage payment would total only $175, so you would come out $505 ahead ($680-$175=$505).

Of course, all the extra cash needn't go for paying off debts. When the Menards swapped their ARM for a fixed rate last December, they also increased their mortgage load by $34,000, from $106,000 to $140,000. They used $3,000 of the proceeds to pay their refinancing costs and another $17,000 to pay off a 10% home equity loan, which had been costing them $250 a month. Then they spent the remaining $14,000 to build a garage for Roger's antique car collection -- and they did all this for just another $19 a month.

Refinance To Build Equity Faster

Many borrowers use a refinance to shorten the term of the mortgage. And brace yourself, even at low rates, a shorter term means a higher monthly payment. The benefit is that you'll build up equity faster and pay far less in total interest over the life of the loan.

Consider Jim Neill, 48, a real estate broker and his wife Merrilyn, 55, a psychotherapist. Recently, the couple took out a 15-year fixed rate loan at 6.75% to replace an 8.13% ARM with a 30-year term. Their monthly payment jumped by $200, but now they will own their own home outright by the time they retire. In addition, the total interest on the 15-year loan will come to $95,447, vs. $222,234 on the remaining life of the ARM -- and that assumes their adjustable rate would have held steady at its current 8.13%. "This is forced savings," says Jim. "When we retire, we can scale down and take equity out of the house."

If you can't afford the payments on a 15-year mortgage, your next best means of building equity is to refinance for less than 30 years. To do so, ask your mortgage company to customize your new loan's term to match the years that are left on your old loan -- if you are five years into a 30-year mortgage, for example, ask for a 25-year loan.

Thursday, March 13, 2008

The Real estate book

If you are looking for new home for living near your new job, or new home for new family. You could be looking from the Real Estate company, but you can choose another way from the website that present home for sale by state or by county such as Charleston Real Estate, Atlanta Homes for Sale. Therefore you can search by filling the postal code or state and choose by price in $ to-from and number of bedrooms-bathrooms too.Anyway, international home for sale also included. There are many homes or vacation homes in some country for sale as well. The data of home are search from thousand of home and select some home that fits for you need. Try on search system at I think you can found some homes that you assign from the search result, and see the detail picture in each home if you want.

Easy Loans – To Make Your Life Easy

In a tough world, where life poses challenges at every step, it is quite natural that each of us would look for things that make our lives a little easy. Financial terminologies like loans often connote something critical and painstaking. But lenders online have also made this field easy for you. Now you can face life and everyday challenges with easy loans.

Easy loans are nothing but loans available to borrowers or prospective borrowers at easy terms and conditions. The terms and conditions are set in a way that gives a borrower a comfort zone while repaying the loaned amount along with the rate of interest.

The factors that make personal loans easy are:

  • It may have a low rate of interest which would comfortably fit into the borrower's budget
  • It may have easy terms and conditions
  • It may come with a longer repayment period thereby reducing the EMIs over the months

Easy loans can be both secured or unsecured personal loans. Usually easy loans are secured personal loans. This is so because in secured personal loans a borrower needs to place his home or any kind of property or other asset as collateral with the lender. This gives the lender a sense of security and a guarantee that the borrower will repay the borrowed amount. If the borrower fails then the lender has the right to seizure or foreclosure of the asset.

It is out of this feeling of security, lenders give relaxation in the repayment making them easy loans that can provide you elongated period of repayment, flexible terms and conditions or simply low rate of interest.

If you are interested in easy loans or fast loans, then the best place to search for them is the internet. When you apply online, you get a wide variety of options and offers from multiple lenders who are absolutely ready to give you such loans at customised terms and conditions.

About The Author: The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. He has done masters in Business Administration and is currently assisting Easy Loans Shop as a finance specialist. For more information please visit at

Home Equity 101

Want to pay off high-interest debt in one fell swoop? Or, with the start of home improvement season, perhaps you're searching for ways to pay for a basement renovation, bathroom upgrade, or a new tile roof. Since you probably don't have that kind of money stuffed under your mattress, a natural place to look for more funds is in your single biggest asset: your home.

But before you tap into those funds, you need to know exactly what you're getting into. Putting your home at risk isn't for the uninformed or undisciplined.

Home equity loan vs. home equity line of credit

The first step to tapping into your home equity involves understanding your options. There are two major ones: a home equity loan (HEL) or a home equity line of credit (HELOC). Here's a handy guide to the basic differences between the two, including pros and cons.

Go straight to HEL
A home equity loan is, at heart, a second mortgage. You receive a lump sum at a fixed rate of interest that's locked in when you procure the loan. You're expected to pay it back in fixed monthly payments for a fixed amount of time (typically 10 to 15 years).


  • Your interest rate is fixed, which means no shocking increases later.
  • Because payment is owed monthly, this can be a good option if you have a hard time exercising the discipline needed to pay off a loan a little at a time on your own.
  • The interest rate on a HEL, though higher than that on your primary mortgage, will still be lower than the rates available on credit cards.
  • If you're using your HEL to pay off credit cards, in addition to lower interest rates, you'll have the benefit of consolidating it all into one payment.
  • The interest on your home equity loan may be tax-deductible, but you'll want to thoroughly read Publication #936 (the IRS's guidelines on the home mortgage interest deduction) to ensure the degree to which you're eligible. If your loan is for home improvement purposes (rather than, say, college tuition) you're allowed even greater leeway in deducting the interest.


  • You borrow (and owe interest on) the whole amount, rather than being able to simply borrow what you need.
  • If you're using the equity to fund something that will involve multiple payments over time (say, for example, a phased home improvement project or quarterly payments on college tuition), you'll have to be sure not to spend the money on other things in the interim.
  • If you use your HEL to fund something that immediately depreciates -- a car or new furniture -- you may hurt your net worth long-term. Boosting the value of your home has a better chance of enhancing your overall financial picture over the long haul.
  • You may be prohibited from renting out your home, according to your loan terms.
  • You risk losing your home if you can't make the payments.

How about a HELOC?
A home equity line of credit, by contrast, functions more like a credit card, only it uses your home as collateral. You ask for a line of credit, and the lender assigns a maximum amount you can borrow (a credit limit). Lenders typically determine this amount by taking a percentage of your home's appraised value and subtracting the amount you still owe on the mortgage; then they factor in things such as your credit history, debt load, and income. The lender then gives you a set of blank checks or a credit card that you can use to withdraw funds.

Unlike a HEL, the line of credit allows you to borrow what you need, when you need it, up to the full amount approved. So why wouldn't everyone want to apply for a HELOC in case an emergency strikes? Take a look at the pros and cons to see for yourself.

Dealing with Neighbors in an Apartment

One of the major disadvantages to renting an apartment is the potential for conflict with the neighbors. While some renters may foster incredible relationships with all of their neighbors and never once have a disagreement with a neighbor this is not a likely scenario. Most renters experience at least one instance of dissatisfaction with their neighbors. They may or may not confront the neighbor about this issue but it is likely to cause at least some tension in the living situation. In some cases avoiding the issue can cause the problem to worsen. In other situations, discussing the issue can make the situation worse.

Paper Thin Walls

Although most modern apartment buildings are built with a fair amount of insulation, there is still the real possibility of neighbors in an apartment building hearing music, television, conversation or other noises emanating from a neighbor’s apartment on a regular basis. This is due to the close proximity of the apartments to each other as well as the common practice of having at least one shared wall among neighbors in an apartment complex. Renters should be aware of this and make an effort to avoid noises which will likely be heard through the walls during nights or early in the morning when others are likely to be sleeping.

Being Considerate of Others

Consideration for others is one of the key elements which can make apartment living more bearable and less prone to conflict. For example, while renters are free to listen to music in their own apartment, they should limit listening to music at a loud decibel to daylight hours when it is not likely that other residents are trying to sleep.

Residents in an apartment complex should also be conscientious when throwing parties. This is important because the renter is responsible for the actions of his guests. Therefore the renter should ensure his guests are not causing discomfort for residents of the apartment complex.

When Your Schedule is Unusual

Finally renters who have an unusual schedule may have a great deal of difficulty functioning in an apartment complex. This includes, but is not limited to, renters who work a night shift and sleep during the day. The unusual schedule kept by these renters makes them more prone to being disturbed by other renters who assume everyone residing in the complex sleeps at roughly the same time.

Unfortunately renters in this situation may have to make an effort to make their living situation bearable. While discussing the situation with the neighbors is certainly worthwhile, it is unrealistic to expect the neighbors to remain exceedingly quite during the daytime hours. Many residents do chores such as vacuuming during this time which can resonate in the apartment of another renter. However, asking the neighbor to do these types of activities in the evening is not feasible because the neighbor would likely be disturbing a number of other neighbors by doing so.

This is why the renter with the unusual schedule is often required to make changes to make the living situation workable. This may include purchasing and using earplugs while sleeping or investing in a white noise machine which can help to drowned out ambient noise and make the environment more conducive to sleeping. Additionally, the renter with the unusual schedule should make an effort to be quite during hours in which they are awake but the majority of neighbors are likely sleeping.


More than 25.5 million veterans and service personnel are eligible for VA financing. Even though many veterans have already used their loan benefits, it may be possible for them to buy homes again with VA financing using remaining or restored loan entitlement.

Before arranging for a new mortgage to finance a home purchase, veterans should consider some of the advantages of VA home loans:

  • Most important consideration, no downpayment is required in most cases.
  • Loan maximum may be up to 100 percent of the VA-established reasonable value of the property. Due to secondary market requirements, however, Estate Loan generally may not exceed $417,000.
  • Flexibility of negotiating interest rates with the lender.
  • No monthly mortgage insurance premium to pay.
  • Limitation on buyer's closing costs.
  • An appraisal which informs the buyer of property value.
  • Thirty year loans with a choice of repayment plans:
  • Traditional fixed payment (constant principal and interest; increases or decreases may be expected in property taxes and homeowner's insurance coverage);

  • Graduated Payment Mortgage--GPM (low initial payments which gradually rise to a level payment starting in the sixth year); and

  • In some areas, Growing Equity Mortgages-GEMs (gradually increasing payments with all of the increase applied to principal, resulting in an early payoff of the loan)

  • For most loans for new houses, construction is inspected at appropriate stages to ensure compliance with the approved plans, and a 1-year warranty is required from the builder that the house is built in conformity with the approved plans and specifications. In those cases where the builder provides an acceptable 10-year warranty plan, only a final inspection may be required.
  • An assumable mortgage, subject to VA approval of the assumer's credit.
  • Right to prepay loan without penalty.
  • VA performs personal loan servicing and offers financial counseling to help veterans avoid losing their homes during temporary financial difficulties.