Easy Estate Loans

Home loan rates may fall further

2008-05-09T02:09:00.001-07:00

For the past two years, interest rates have been moving northwards, forcing many potential home buyers to either postpone their buying decision or bear the brunt of high home loan costs. Add to that spiralling property prices and no wonder many buyers have been scared off.

Things, however, seem to be to calming down a bit. Says Akshaya Kumar, CEO, Park Lane Property Advisors, "The basic trend of home loan rates is downwards."

According to him, interest rates have already peaked and banks are now looking at the Reserve Bank of India (RBI) to cut its indicative rates as a signal.

Last week, when HDFC announced a festival season rate of 10.5 per cent, executive director Renu Sud Karnad clearly indicated that it was because their cost of borrowing had come down.

Others like State Bank of India (Maharashtra and Goa), Bank of Baroda , IDBI and Allahabad Bank have also cut rates in the range of 25-50 basis points.

But coming on the back of an over-two-per-cent hike in the last one year alone, the cuts do not look spectacular enough to enthuse the potential home buyer.

As a result, many customers are still sitting on the fence expecting rates to go down further. Bankers, meanwhile, have also not been over-aggressive because many are looking at this as a cooling off period.

Therefore, a cautiously optimistic view is being taken, and no one is joining the battle to get customers.

Now that the buying season is in, lenders would like to see the RBI come up with some measures so that sentiments improve further.

Says Harsh Roongta, "With inflation under control and the currency appreciating, there is definitely some pressure on the RBI."

The counter argument is that with oil prices at over $80 per barrel, sooner or later the rising fuel prices will be passed on to the consumers. And that would lead to a rise in inflation.

However, bankers like M Sundararajan, chairman, Indian Bank , believe that there should be no pressure on the apex bank to do anything.

"The RBI had indicated that there should be a deceleration in credit in 2006-07 itself. But because, the industry did not respond, it led to an imbalance in the system and thus, a hike in rates," he explains.

But, subsequently, inflation has been brought under control. "Also, deposit rates have been slashed, so a cut in credit rates is already due," adds Sundararajan. And there is good liquidity in the system, thereby making life simpler for bankers.

Optimists like Kumar believe that the RBI is likely to give the added edge by reducing indicative rates either in October or January. And if that happens, it will be great news for the home buyer.

New home inventory glut worsens

2008-05-09T02:08:00.001-07:00

The big news in housing this week was the 8.5% drop in new home sales in March 2008, with sales down more than 36% from March 2007. The worse news was a $16,500 (6.8%) drop in new home prices from February. But the news buried a bit deeper and even more troubling is that the inventory of new homes for sale nationally now represents an 11-month supply at the current sales rate.

A couple of points may mitigate the damage. With the individual economic stimulus payments due out starting in May, bills currently in Congress to potentially give home buyers a $7,000-$7,500 tax credit (details still sketchy) and mortgage markets still experiencing difficulties, some buyers may be waiting. Other buyers may be waiting for bargains, after median home prices for new homes rose $28,100 from January to February - sales could rebound at the lower price point in April .

Some buyers may be holding off until the tax credit proposals are firmed up a bit. The version in the House would give a $7,500 tax credit to any first time home buyer for any home purchased; the Senate version would be $7,000, not limited to first time home buyers, but could only be used to purchase a foreclosed home or an unsold new home. Even if neither passes, eliminating the uncertainty could move some buyers off the sidelines.

Mortgage applications jump 15%, mixed signals abound

2008-05-09T02:06:00.000-07:00

Mixed signals continue to abound in the US housing market as the National Association of Realtors announced that March pending home sales fell 1% on the same day that the Mortgage Bankers Association announced a 15% jump in mortgage applications and a better than 12% jump in purchase mortgage applications. The increase in mortgage applications highlights the futility of applying a seasonal adjustment to pending home sales, which are influenced by short term cycles of weather and interest rates and short term consumer planning that don’t fit broad seasonal trends. In the case of March sales, buyers had ample reason to put off buying for a couple of months - adding an $1800 tax rebate for a family of four to the down payment fund, a potential tax credit for buying foreclosure properties as early as this summer and temporary turbulence that drove mortgage interest rates up for a few weeks in March and April. Now that those rate problems have resolved themselves with 30-year Fixed Rate Mortgage (FRM) rates below 6% and 15-year FRM rates below 5.5%, buyers are back at the table.

Average Mortgage Rates

30-year FRM: 5.91%, 1.12 points*
15-year FRM: 5.49%, 1.07 points
1-year ARM: 6.77%, 1.35 points

* Points reported by Mortgage Bankers Association in this survey include origination fees as well as traditional discount points. Average rates are based on an 80% LTV loan. This means a loan amount no more than 80% of the property value as determined by the lower of the purchase price or appraised value. Typically this means a 20% down payment, though an 80% loan can also be achieved with a second mortgage carried by the seller or a third party lender for the difference between the actual down payment and 20%.

Mortgage Payments Sending You Reeling? Here’s What to Do

2008-05-09T01:59:00.000-07:00

The possibility of losing your home because you can’t make the mortgage payments can be terrifying. Perhaps you are one of the many consumers who took out a mortgage that had a fixed rate for the first two or three years and then had an adjustable rate. Or maybe you’re anticipating an adjustment, and want to know what your payments will be and whether you’ll be able to make them. Or maybe you’re having trouble making ends meet because of an unrelated financial crisis.

Regardless of the reason for your mortgage anxiety, the Federal Trade Commission (FTC), the nation’s consumer protection agency, wants you to know how to help save your home, and how to recognize and avoid foreclosure scams.

Know Your Mortgage

Do you know what kind of mortgage you have? Do you know whether your payments are going to increase? If you can’t tell by reading the mortgage documents you received at settlement, contact your loan servicer and ask. A loan servicer is responsible for collecting your monthly loan payments and crediting your account.

Here are some examples of types of mortgages:

Hybrid Adjustable Rate Mortgages (ARMs): Mortgages that have fixed payments for a few years, and then turn into adjustable loans. Some are called 2/28 or 3/27 hybrid ARMs: the first number refers to the years the loan has a fixed rate and the second number refers to the years the loan has an adjustable rate. Others are 5/1 or 3/1 hybrid ARMs: the first number refers to the years the loan has a fixed rate, and the second number refers to how often the rate changes. In a 3/1 hybrid ARM, for example, the interest rate is fixed for three years, then adjusts every year thereafter.
ARMs: Mortgages that have adjustable rates from the start, which means your payments change over time.
Fixed Rate Mortgages: Mortgages where the rate is fixed for the life of the loan; the only change in your payment would result from changes in your taxes and insurance if you have an escrow account with your loan servicer.

If you have a hybrid ARM or an ARM and the payments will increase — and you have trouble making the increased payments, find out if you can refinance to a fixed-rate loan. Review your contract first, checking for prepayment penalties. Many ARMs carry prepayment penalties that force borrowers to come up with thousands of dollars if they decide to refinance within the first few years of the loan. If you’re planning to sell soon after your adjustment, refinancing may not be worth the cost. But if you’re planning to stay in your home for a while, a fixed-rate mortgage might be the way to go. Online calculators can help you determine your costs and payments.

If You Are Behind On Your Payments

If you are having trouble making your payments, contact your loan servicer to discuss your options as early as you can. Most loan servicers are willing to work with customers they believe are acting in good faith, and those who call them early on. The longer you wait to call, the fewer options you will have. After you’ve missed three or four payments and your loan is in default, most loan servicers won’t accept a partial payment of what you owe. They will start foreclosure unless you can come up with the money to cover all your missed payments, plus any late fees.

Avoiding Default and Foreclosure

If you have fallen behind on your payments, consider discussing the following foreclosure prevention options with your loan servicer:

Reinstatement: You pay the loan servicer the entire past-due amount, plus any late fees or penalties, by a date you both agree to. This option may be appropriate if your problem paying your mortgage is temporary.

Repayment plan: Your servicer gives you a fixed amount of time to repay the amount you are behind by adding a portion of what is past due to your regular payment. This option may be appropriate if you’ve missed only a small number of payments.

Forbearance: Your mortgage payments are reduced or suspended for a period you and your servicer agree to. At the end of that time, you resume making your regular payments as well as a lump sum payment or additional partial payments for a number of months to bring the loan current. Forbearance may be an option if your income is reduced temporarily (for example, you are on disability leave from a job, and you expect to go back to your full time position shortly). Forbearance isn’t going to help you if you’re in a home you can’t afford.

Loan modification: You and your loan servicer agree to permanently change one or more of the terms of the mortgage contract to make your payments more manageable for you. Modifications can include lowering the interest rate, extending the term of the loan, or adding missed payments to the loan balance. A loan modification may be necessary if you are facing a long-term reduction in your income.

Before you ask for forbearance or a loan modification, be prepared to show that you are making a good-faith effort to pay your mortgage. For example, if you can show that you’ve reduced other expenses, your loan servicer may be more likely to negotiate with you.

Selling your home: Depending on the real estate market in your area, selling your home may provide the funds you need to pay off your current mortgage debt in full.

Bankruptcy: Personal bankruptcy generally is considered the debt management option of last resort because the results are long-lasting and far-reaching. A bankruptcy stays on your credit report for 10 years, and can make it difficult to obtain credit, buy another home, get life insurance, or sometimes, even get a job. Still, it is a legal procedure that can offer a fresh start for people who can’t satisfy their debts.

If you and your loan servicer cannot agree on a repayment plan or other remedy, you may want to investigate filing Chapter 13 bankruptcy. If you have a regular income, Chapter 13 may allow you to keep property, like a mortgaged house or car, that you might otherwise lose. In Chapter 13, the court approves a repayment plan that allows you to use your future income toward payment of your debts during a three-to-five-year period, rather than surrender the property. After you have made all the payments under the plan, you receive a discharge of certain debts.

To learn more about Chapter 13, visit www.usdoj.gov/ust; it’s the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees.

If you have a mortgage through the Federal Housing Administration (FHA) or Veterans Administration (VA), you may have other foreclosure alternatives. Contact the FHA (www.fha.gov) or VA (www.homeloans.va.gov) to discuss your options.

Contacting Your Loan Servicer

Before you have any conversation with your loan servicer, prepare. Record your income and expenses, and calculate the equity in your home. To calculate the equity, estimate the market value less the balance of your first and any second mortgage or home equity loan. Then, write down the answers to the following questions:

What happened to make you miss your mortgage payment(s)? Do you have any documents to back up your explanation for falling behind? How have you tried to resolve the problem?
Is your problem temporary, long-term, or permanent? What changes in your situation do you see in the short term, and in the long term? What other financial issues may be stopping you from getting back on track with your mortgage?
What would you like to see happen? Do you want to keep the home? What type of payment arrangement would be feasible for you?

Throughout the foreclosure prevention process:

Keep notes of all your communications with the servicer, including date and time of contact, the nature of the contact (face-to-face, by phone, email, fax or postal mail), the name of the representative, and the outcome.
Follow up any oral requests you make with a letter to the servicer. Send your letter by certified mail, “return receipt requested,” so you can document what the servicer received. Keep copies of your letter and any enclosures.
Meet all deadlines the servicer gives you.
Stay in your home during the process, since you may not qualify for certain types of assistance if you move out. Renting your home will change it from a primary residence to an investment property. Most likely, it will disqualify you for any additional “workout” assistance from the servicer. If you choose this route, be sure the rental income is enough to help you get and keep your loan current.

Consider Giving Up Your Home Without Foreclosure

Not every situation can be resolved through your loan servicer’s foreclosure prevention programs. If you’re not able to keep your home, or if you don’t want to keep it, consider:

Selling Your House: Your servicers might postpone foreclosure proceedings if you have a pending sales contract or if you put your home on the market. This approach works if proceeds from the sale can pay off the entire loan balance plus the expenses connected to selling the home (for example, real estate agent fees). Such a sale also would allow you to avoid late and legal fees and damage to your credit rating, and protect your equity in the property.

Short Sale: Your servicers may allow you to sell the home yourself before it forecloses on the property, agreeing to forgive any shortfall between the sale price and the mortgage balance. This approach avoids a damaging foreclosure entry on your credit report. You still may face a tax liability on the amount of debt forgiven. Consider consulting a financial advisor, accountant, or attorney for more information.

Deed in Lieu of Foreclosure: You voluntarily transfer your property title to the servicers (with the servicer’s agreement) in exchange for cancellation of the remainder of your debt. Though you lose the home, a deed in lieu of foreclosure can be less damaging to your credit than a foreclosure. You will lose any equity in the property, and you may face an income tax liability on the amount of debt forgiven. A deed in lieu may not be an option for you if other loans or obligations are secured by the property on your home.

Housing and Credit Counseling

You don’t have to go through the foreclosure prevention process alone. A counselor with a housing counseling agency can assess your situation, answer your questions, go over your options, prioritize your debts, and help you prepare for discussions with your loan servicer. Housing counseling services usually are free or low cost.

While some agencies limit their counseling services to homeowners with FHA mortgages, many others offer free help to any homeowner who is having trouble making mortgage payments. Call the local office of the U.S. Department of Housing and Urban Development (www.hud.gov) or the housing authority in your state, city, or county for help in finding a legitimate housing counseling agency nearby. Or consider contacting the NeighborWorks® Center for Foreclosure Solutions at 888-995-HOPE or www.nw.org. The Center is an initiative of NeighborWorks America.

Be Alert to Scams

Scam artists follow the headlines, and know there are homeowners falling behind in their mortgage payments or at risk for foreclosure. Their pitches may sound like a way for you to get out from under, but their intentions are as far away from honorable as they can be. They mean to take your money. Among the predatory scams that have been reported are:

The foreclosure prevention specialist: The “specialist” really is a phony counselor who charges outrageous fees in exchange for making a few phone calls or completing some paperwork that a homeowner could easily do for himself. None of the actions results in saving the home. This scam gives homeowners a false sense of hope, delays them from seeking qualified help, and exposes their personal financial information to a fraudster.
The lease/buy back: Homeowners are deceived into signing over the deed to their home to a scam artist who tells them they will be able to remain in the house as a renter and eventually buy it back. Usually, the terms of this scheme are so demanding that the buy-back becomes impossible, the homeowner gets evicted, and the “rescuer” walks off with most or all of the equity.
The bait-and-switch: Homeowners think they are signing documents to bring the mortgage current. Instead, they are signing over the deed to their home. Homeowners usually don’t know they’ve been scammed until they get an eviction notice.

30-Year Mortgage Rates Fall to 2-Year Low

2008-05-09T01:57:00.000-07:00

30-Year Mortgage Rates Fall to 2-Year Low - Concerns that a severe housing downturn and prolonged credit crisis could rattle consumer confidence and hurt the broader economy contributed to a sharp drop in mortgage rates this week, according to Freddie Mac. Interest on 30-year fixed loans sank to 5.96 percent from 6.10 percent last week, landing at the lowest point seen since September 2005.

Borrowing costs on 15-year fixed products fell to 5.65 percent from 5.73 percent over the week and five-year adjustable-rate mortgages were down to 5.75 percent from 5.86 percent, but one-year ARMs bucked the southward trend by bumping up to 5.46 percent from 5.43 percent.

The Recent Interest Rate Reduction

2008-05-09T01:56:00.000-07:00

The Federal Reserve to lower key short-term interest rates today, the third consecutive meeting since September it has taken such steps. The Federal Reserve's Open Market Committee lowered its target rate for the federal funds rate by 25 basis points, to 4.25 percent. In a related action, the Fed's board of governors approved a 25 -basis-point decrease in the discount rate, to 4.75 percent.

On Sept. 18, similar concerns prompted the Fed to shave 50 basis points off the federal funds and discount rates. When the Fed governors met next, on Oct. 31, they made smaller, 25 basis point reductions in both rates -- the same action taken today.

One member of the committee, Eric Rosengren -- the president of the Federal Reserve Bank of Boston – today argued in favor of lowering the target for the federal funds rate by 50 basis points.

The federal funds rate is the rate banks charge each other for overnight loans. The Fed can influence the rate be easing or constricting the supply of money. The discount rate is what the Federal Reserve charges banks for short-term loans.

In slashing short-term rates at its last three meetings, the Fed is gradually reversing increases to the federal funds rate made during 17 consecutive meetings between 2004 and 2006. Those increases, instituted to cool the pace of economic growth, left the federal funds rate at 5.25 percent.

Interest Rate Report - May

2008-05-09T01:40:00.000-07:00

ast Updated: 4/30/2008

Mortgage Rate News

Through the last eight weeks, mortgage interest rates dropped, then remained stable.

Analysis

We delayed our report because we wanted to see the Consumer Confidence Report which comes out on Tuesday and because the full range of National Association of Realtors is missing (naughty naughty! It was actually a week late). We wanted to wait until Thursday when the next mortgage rate survey comes out, but we could not do that.

Oops, Consumer Confidence slipped to a five-year low. The reading is 62.3. The base is 100, from 1985.

Tax rebates have gone out. They are in the bank accounts of some of us. But (and this is a BIG but), we have to spend that money on gas and groceries which are going up at a fantastic rate. Then, before the end of the year, some folks have to buy fancy converter boxes or televisions that get a digital signal. And we owe money to practically everyone.

We aren't getting any free money. "There ain't no such thing as a free lunch (TANSTAAFL)," according to Robert Heinlein, If you're rich, though, the spending does not stop (boats, motorcars, mansions, diamond bracelets...).

Sales of Sport Utility Vehicles (SUVs) were down 28% for the first quarter of the year.

Not counting rental homes, 2.9% of all other homes for sale were vacant in the first quarter. That beat the fourth quarter of 2007 by .!%. To find worse figures, you have to go back to when Eisenhower was president.

New homes sales fell to their lowest rate in almost seventeen years.

Europe expects higher inflation. So does the USA. The EU does not expect a recession this year, but a "global slowdown." The USA is not sure.

Venture capital spending is down. Manufacturing is down. Bear Stearns was rescued, due to over-investment in mortgage backed securities. Fewer borrowers qualify for mortgages. Asia has mounting inflation. There is more. There is much more.

Ben Bernanke (the chairman of the the Federal Reserve Board - and the successor to Alan Greenspan) says a recession is possible. It does not take a genius to see that. Nor does it take a genius to see that the stock market may have hit bottom and is on its way back up, six months (or so) in advance of the real market, as usual.

The problem is inflation is here, too.

Interest Rate Prediction

Fixed rates on mortgages may go down a little, then stabilize. Then they should head up a little.

No one can guarantee economic or interest rate predictions, of course.

Searching for estate loan – visit EASYESTATELOANS.COM

2008-04-22T01:24:00.001-07:00

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The Recent Interest Rate Reduction

2008-04-11T23:09:00.000-07:00

One member of the committee, Eric Rosengren -- the president of the Federal Reserve Bank of Boston – today argued in favor of lowering the target for the federal funds rate by 50 basis points.

Your Down Payment Affects Everything

2008-04-11T23:08:00.000-07:00

When preparing to buy a home, the first thing many homebuyers do is look at "homes for sale" ads in newspapers, magazines and listings on the internet. Some potential buyers read "how-to" articles like this one. The next thing you should do – before you call on an ad, before you talk to a Realtor, before you shop for interest rates – is look at your savings.

Why?

Because determining how much money you have available for down payment and closing costs affects almost every aspect of buying a home – including how you write your purchase offer, the loan programs you qualify for, and shopping for interest rates.

Mortgage Programs

If you only have enough available for a minimum down payment, your choices of loan program will be limited to only a few types of mortgages. If someone is giving you a gift for all or part of the down payment, your options are also limited. If you have enough for the down payment, but need the lender or seller to cover all or part of your closing costs, this further limits your options. If you borrow all or a portion of the down payment from your 401K or retirement plan, different loan programs have different rules on how you qualify.

Of course, if you have enough for a large down payment, then you have lots of choices.

Your loan choices include such varied programs as conventional fixed rate loans, adjustable rate mortgages, buydowns, VA, FHA, graduated payment mortgages and all the varieties of each.

Shopping Rates

A very important reason you need to have at least some idea of your down payment is for shopping interest rates. Some loan programs charge a slightly higher interest rate for minimal down payments. Plus, the interest rates for different loan programs are not the same. For example, conventional, VA, and FHA all offer fixed rate loans. However, the rates vary from one program to another.

If you shop lenders by phone, the loan officer will be able to tell which programs fit and quote you rates accordingly. However, if you are shopping on the internet, you have to have some idea of your loan program on your own.

Writing Your Offer

Another reason you need to have a clue about your down payment is because it affects how you write your offer to purchase a home. Not only are you required to put your down payment information in the offer, but different loan programs have different rules which also affect how you write your offer. This is especially important when dealing with FHA and VA loans.

If you are asking the seller to pay all or part of your closing costs, you have to be certain your loan program allows what you are asking. For smaller down payments, lenders allow the seller to pay less closing costs than for larger down payments. Some loan programs will allow a seller to pay certain types of costs, but not others.

Finally, your down payment also affects your ability to qualify for a loan. When you make a small down payment, lenders are fairly strict about having you conform to their underwriting guidelines. For larger down payments, they will tend to make allowances or exceptions to the rules.

Conclusion

As you can see, the down payment affects every choice you make when you buy a home. Although you should look at ads, familiarize yourself with neighborhoods, learn about prices, and read as much as you can - when you get ready to take action – the first thing you should do is figure out how much money you have available for the purchase.

How Much House Can You Afford?

2008-04-11T23:07:00.000-07:00

To determine your maximum mortgage amount, lenders use guidelines called debt-to-income ratios. This is simply the percentage of your monthly gross income (before taxes) that is used to pay your monthly debts. Because there are two calculations, there is a "front" ratio and a "back" ratio and they are generally written in the following format: 33/38.

The front ratio is the percentage of your monthly gross income (before taxes) that is used to pay your housing costs, including principal, interest, taxes, insurance, mortgage insurance (when applicable) and homeowners association fees (when applicable). The back ratio is the same thing, only it also includes your monthly consumer debt. Consumer debt can be car payments, credit card debt, installment loans, and similar related expenses. Auto or life insurance is not considered a debt.

A common guideline for debt-to-income ratios is 33/38. A borrower's housing costs consume thirty-three percent of their monthly income. Add their monthly consumer debt to the housing costs, and it should take no more than thirty-eight percent of their monthly income to meet those obligations.

The guidelines are just guidelines and they are flexible. If you make a small down payment, the guidelines are more rigid. If you have marginal credit, the guidelines are more rigid. If you make a larger down payment or have sterling credit, the guidelines are less rigid. The guidelines also vary according to loan program. FHA guidelines state that a 29/41 qualifying ratio is acceptable. VA guidelines do not have a front ratio at all, but the guideline for the back ratio is 41.

Example: If you make $5000 a month, with 33/38 qualifying ratio guidelines, your maximum monthly housing cost should be around $1650. Including your consumer debt, your monthly housing and credit expenditures should be around $1900 as a maximum.

Debt-to-Income Ratios

2008-04-11T23:01:00.000-07:00

Lowering of home loan rates brings cheer to homemakers

2008-03-20T22:20:00.000-07:00

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

2008-03-20T22:17:00.000-07:00

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

2008-03-20T22:16:00.000-07:00

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

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.
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.
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.
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

2008-03-20T22:15:00.000-07:00

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

2008-03-20T22:14:00.000-07:00

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

2008-03-20T22:13:00.000-07:00

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.

The Real estate book

2008-03-13T23:01:00.000-07:00

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 easyestateloans.com 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

2008-03-13T23:00:00.000-07:00

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 http://www.easyestateloans.com/

Home Equity 101

2008-03-13T22:57:00.000-07:00

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).

Pros:

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.

Cons:

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

2008-03-13T22:53:00.000-07:00

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.

VA FINANCING - A GOOD DEAL FOR VETERANS

2008-03-13T22:48:00.000-07:00

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.