Home Equity Loan

Home Equity Loans allow you to free up some of the equity tied up in your house. Not only this, home equity loan allows you as a homeowner to get a loan by using the equity in your home as collateral. The equity consists of whatever funds you have invested in your property in order to own it or improves it. Most of people apply for a home equity loan is to build new home extensions and for adding new interiors. By making improvements or repairs to your home, you can augment the fair market value, and at the same time giving your home a spanking new look. And this doesn’t come in between your plans to re-sell the house soon or continue living there for years, improvements or maintenance of your home really makes a substantial dissimilarity in the total worth of your home.

Another popular way by which homeowners take advantage of their home's equity is debt consolidation. Many people are burdened with credit card debt and a home equity loan can give them the respite that they so eagerly await.

A home equity loan is a loan that you take out against the value of your home. Through home equity loan, a person can borrow money at an interest rate that's less than the rate they are currently paying, thus allowing them to pay off the amount earlier. Also, the interest on a home equity loan may be tax deductible. If you would like more information on home equity loan rates, and how to find the best home equity loan then you must do a deep research or you may contact to any expert.

According to a bank, the next most popular rationale for home equity loan is to buy a car or van purchase, home repair etc. If you are a homeowner then you have huge advantage of taking a loan that is burden less to repay and such a loan seldom drains away your finances unnecessarily. But every secured home loan is not going to give you benefits of such a loan. It is secured home equity loans that are considered as more advantageous in providing host of benefits. You can use the equity build up in home for:

a) Home improvements

b) Buying a car

c) Wedding

d) Holiday

e) Paying for tuition fees of child

f) Debt Consolidation

Most home equity loans require good to excellent credit history, and reasonable loan-to-value and combined loan-to-value ratios. Home equity loans come in two types, closed end and open end.A secured home equity loans are the loans provided on equity in the home that you are pledging as collateral. The lender will first calculate equity and then decide on the loan amount. Equity is calculated buy subtracting a sum that you are yet to pay towards your past loans for buying home, from current market value of home. So the lender will approve a loan that is equal or less than equity.

This is sure shot way of safely lending money. The lender always gets back loan in case of payment defaults as selling home ensures the recovery of the loan. This is one reason that secured home equity loans are source of cheap rate finance. Lenders charge interest on secured home equity loans at lower interest as compared to other secured loans.

Source : http://www.articlesbase.com/loans-articles/how-to-get-cheap-secured-equity-home-loans-268311.html

Home Loan Process

The loan process is simply a means of evaluating one's creditworthiness, one's cash flow and assets, and project forward one's ability to handle new debt, for a property of verified value, all of which culminates at a signing by the borrower coordinated by a title or escrow company.

Conversely, if one has no credit history, no cash flow or assets, or a property which will not support an expected value, one will have a devil of a time obtaining a loan regardless of anyone's pure motivations or good intentions.

Mortgage lenders come in all shapes and sizes, and abilities. Obtaining a real estate license is a low barrier to entry, so borrowers should be careful where they place their trust, as in any marketplace.

One should seek people with proven success in managing detail-oriented activities because the mortgage origination business is all about details.

In order of priority, find someone who is worthy of your trust. If you would not trust the person with your health, why would you trust anyone with your financial health, because that is what a mortgage represents.

Secondly, since your private financial inner self will be revealed to this person, you need to make sure that the person has your privacy as their utmost concern.

Next, recognize that you will be engaging your mortgage person's time and effort, so please be honest and upfront with them if you do not wish to do business with them. It will save them time and money and save you from feeling guilty about using someone's time and energy.

Once you have made your decision, be quick in giving the person all of the required information. Obtaining a loan is a time sensitive activity (Time is money and money is time.)

Your service provider will attempt to gather your name, address, SSN, value of your property, and amount of your loan. Next, the credit scores will be obtained from 3 credit bureaus. An application will be required to be signed as well as disclosure documents. Your W-2s from the last two years will be requjred, your most recent month of paystubs will be required and two months of bank/asset statements will be required at a minimum. (If you are self-employed then tax returns will be needed.)

The sooner you can get this information to your broker, the better. Once the broker has this, your loan will be "locked" which is a requirement by a given lender who is going to "commit" to a particular interest rate for a period of time. When demand is high, commitments can be 60+ days, when demand is moderate 45 days, when demand is average, 30 days. In today's marketplace, the average is 45 days.

Once locked, the loan package will be given to a setup person to obtain an electronic approval, prior to submission to the lender of choice. Each lender has their own requirements, so the process gets tricky when lenders each have their own quirks. Experienced processors can help reduce last minute problems caused by lender changes in policy or procedures.

The lender's underwriter will take an average of between 5-10 days to give an approval, at which point, the lender is then instructed to draw up the documents and send them to the title company. At this point, the title company will typically send an estimated closing statement to the broker who will review it and hopefully discuss it with the borrower. This document is called a HUD-1 form (Housing and Urban Development, HUD).

The items listed on this form will be all of the fees associated with the transaction. Rule of thumb, these fees will typically total 0.75-1.1% of the loan amount, averaging 1.1% of the loan amount when the amount is above $250,000. These fees would be expected to be paid by the borrower unless the broker agreed to pay for all Non-Recurring Closing Costs (NRCCs) from the rebate which is paid to the broker by the lender, for originating the loan.

During times of decreasing interest rates, the lower the fees, the easier it is to get people to refinance their mortgages, so the "No Point/No Fee" loan has become popular in the past few years as competition has enabled borrowers to reduce rates by shopping around.

Source : http://homeloans.blogspot.com/

Best Home Loan Rate

The best home loan rate can be obtained by an individual borrower who has shown extreme responsibility in relation to their use of credit, and who desire to purchase a house that has a value high enough to match the fund request. Credit score and the amount of money used as a down payment determine best home loan rates. The percentage is usually advertised with mortgage brokerages and lending institutions such as bank and credit unions. Unfortunately, most applicants will not qualify for the greatest percentage. If lucky, they will qualify for a fair rate.

Those individual borrowers that have exceptional credit and a 10%-20% down payment to put towards the purchase of a home should assume that the best home loan rate advertised would apply to them. However, some lenders advertise relative amounts that are specific, and a borrower may need a different type of fund depending on the purpose for the house purchase. There are 3 types of categories that offer the best home loan rates. They are fixed, adjustable, and federally backed funds. The best funds belong to the adjustable rate mortgages (ARM); however, this rate will not remain the same throughout the life of the funds borrowed.

ARM funds offer the best home loan rate (usually 2 percentage points lower than the fixed) for a limited period of time, 2, 3, 5, or 7 years. Then the best housing percentage will fluctuate according to the current housing market interest index. There are limits placed within each ARM that state just how far up or down the interest can settle at. Once the interest has settled, the loan transforms into a fixed rate loan, and the borrower must pay off the funds according to the terms, sell the property and pay it off, or refinance. Many times, a borrower will refinance with another ARM fund to ensure the lowest monthly payments possible. Be sure to hear the words of Proverbs 2:6 which states, " For the LORD givethwisdom: out of his mouth cometh knowledge and understanding."

The best home loan rates within a fixed mortgage are gained by having excellent credit and a large down payment. Fixed percentages do not fluctuate at all throughout the life of the funds, (which is usually 30 years). The fixed rate loan is the best option for a borrower who plans on owning the property for a long time, and who purchases the house when the national housing market interest index is very low. The best percentages available within federal programs can be found in the FHA or VA funds. These are not direct loans, but guaranteed federally in the case of a borrower who defaults. The FHA loan is typically for first time homebuyers, while the VA fund is reserved for veterans and their spouses. Finding the best percentages on houses is no easy task, but thorough research and perseverance should result in success.

Source : http://home-loanandmortgage.blogspot.com

Mortgage Fraud

There are many types of mortgage fraud, but to raise awareness about this extremely rampant crime - we all need to be aware of the different types of fraud that are used. As one of our readers pointed out, there are FBI agents that are currently pursuing individuals and groups who are not only committing crimes with full intention of defrauding their customers, but they are also actively investigating common documentation "errors" that can be construed as mortgage fraud.

While not all mortgage professionals are intentionally participating in criminal activity, the only way to stop the "mistakes" that can lead to criminal prosecution is to become truly educated in the mortgage process, and make sure that all the documentation is correct and complete. It is extremely important that the lender or broker provide copies of ALL documentation.

As a consumer, the best protection that you can give yourself is education. Read all documentation BEFORE you sign. Don't just trust that your mortgage broker or lender is going to be completely honest with you. Remember - their paycheck depends on the outcome of the transaction. If you feel uncomfortable, don't give in to pressure, you must feel comfortable with every aspect of the purchase, and may even be in your best interest to have an attorney go over the documents before you sign. If you are put into a position in which you do feel overly pressured, there may be a problem - there may be a hidden agenda that is in the works, and you have every right to take some extra time to read through the disclosures and the documents that you are signing. The key is education - so if you don't understand something, ask questions until you do.

SOURCE : http://mortgages.weblogsinc.com/

Home Equity Loan Risky?

Do you own your home? If so, it's likely to be your greatest single asset. Unfortunately, if you agree to a loan that's based on the equity you have in your home, you may be putting your most valuable asset at risk.

Homeowners-particularly elderly, minority and those with low incomes or poor credit-should be careful when borrowing money based on their home equity. Why? Certain abusive or exploitative lenders target these borrowers, who unwittingly may be putting their home on the line.

Abusive lending practices range from equity stripping and loan flipping to hiding loan terms and packing a loan with extra charges. The Federal Trade Commission urges you to be aware of these loan practices to avoid losing your home.

We urge you to consider all the facts here. What if the value of your home plummets? It looks like in 2007 real estate prices will correct, if not take a dive.

Real estate is not what it used to be. Getting a HOME EQUITY LOAN might be very risky.

Source : http://homeequityloanss.blogspot.com/2007/07/home-equity-loans_22.html