More Than a Score
If you are looking for a new credit card, maybe to use for a balance transfer or to simply spread the cost of a large purchase, then it’s worth bearing in mind that lenders look at other factors alongside your credit score. So, even if you consider yourself to have a good credit rating, you may find that your application is refused.
For example, many lenders will look at your spending habits alongside your financial history and they can get this information by examining the ways in which you have utilized credit in the past. So if you currently have a balance on your credit card but you do not still use that card for new purchases then this can potentially work against your application. This is bad news for those wishing to transfer a balance to another card with a better interest rate.
Spending habits can also affect you if you are looking to take out a new card to spread the cost of an expensive item, particularly if you are already in possession of one or more credit cards. For example, you may currently possess a card that has a zero balance but you have not been using it because of it’s high interest rate and so you are looking for a card with a lower rate of interest. This seems like a perfectly reasonable way to manage your finances but it can work against you in two ways. Lenders may look at your spending habits and refuse you on the grounds that you do not regularly utilize your available credit lines, else they may refuse you on the grounds that you already have a reasonable amount of credit available to you. Continue reading “More Than a Score” »
Taking Out a Secured Home Loan
Do you own your home? If you do, you could be accepted for a secured home loan.
Got bad credit? That’s ok, most lenders will still over a loan for up to 85% of your home value for up to 35 years!
That sounds like good news, right? Well, what if the lender forced you to sell your home in order to recoup their money?
A homeowner loan means that the loan is secured against your home. So there is barely any risk for the lender, and you take on all the risk. Even if you don’t pay, the lender knows it can get their money back by taking control of the house and selling it. While it’s not an ideal situation for them, it’s better than giving unsecured loans which they would have little defense against if you stopped paying and filed bankruptcy.
Mortgage Rates Still Low Despite Speculation
As different facets of the economy continue to show slow improvement and there is an expectation of rising loan rates, current mortgage rates are still low despite speculation. FreeRateUpdate.com’s daily survey of wholesale and direct lenders show that conforming mortgage loans and FHA mortgage loans remain under 5% and jumbo mortgage loans are under 6%. These mortgage rates are still very attractive and very affordable when combined with current low home prices.
Current conforming 30 year fixed mortgage rates are at 4.750%, 15 year fixed mortgage rates are at 4.125% and 5/1 adjustable mortgage rates are at 3.250%. Conforming fixed rate mortgages offer consumers the security of mortgage payments that remain the same for the life of the loan. Available with 0.7 to 1% origination fee, these are the best mortgage rates accessible to borrowers who have maintained good credit and meet lender guidelines.
FHA fixed mortgage rates continue to be slightly below conforming fixed mortgage rates. FHA 30 year fixed mortgage rates are at 4.625% and FHA 15 year fixed mortgage rates are at 4.000%. FHA 5/1 adjustable mortgage rates are at 3.625% which is .375% above conforming ARM loan rates. FHA mortgage loans offer borrowers several benefits including a low down payment requirement. Easier credit qualifying guidelines continue to draw borrowers to FHA mortgage loans making them today’s most popular mortgage product. On the other hand, the disadvantages to FHA mortgage loans are the higher FHA closing costs (APR) borrowers must pay due to various FHA fees and the upfront mortgage insurance premium. Effective April 18th, FHA will also implement a .25% increase to the annual mortgage insurance premium for 30 year and 15 year mortgage loans.
Jumbo mortgage rates also continue to be very attractive for the high end borrower. Current jumbo 30 year fixed mortgage rates are at 5.500% and jumbo 15 year fixed mortgage rates are at 5.250%. Jumbo 5/1 adjustable mortgage rates are at 4.125%. Jumbo mortgage loans are used for financing above the conforming loan limit which is $427,000 and $729,250 depending on the property location. Borrowers with outstanding credit can still secure these low jumbo mortgage rates with 0.7 to 1% origination point.
MBS prices (mortgage backed securities) drive mortgage rates up and down, but rates go in the opposite direction of MBS prices. This past week, MBS price fluctuations resulted in a decrease of .125% for the conforming 30 year and 15 year fixed mortgage rates on Tuesday. This did not produce the same result for FHA mortgage loans which remained the same and jumbo 15 year mortgage rates which increased .250% to bring it to the current 5.250%. Following these changes, producer price index, consumer price index and housing starts were reported higher than expected which stabilized MBS prices and mortgage rates for the remainder of the week.
FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders’ rate sheets to determine the most accurate mortgage rates available to well qualified consumers at a standard .07 to 1 point origination.
Things to Consider When Getting a Second Mortgage
Second mortgages could really be tempting. If you need money and you already have an existing home loan, making a second loan using your home as a security could now be possible. Such loan products are getting more popular and more common. That is why many lenders and loan providers across Australia are offering such products.
There is nothing wrong about taking second mortgages. In reality, you could use the loan amount to make further investments or to add to your business capital. But there are still numerous pitfalls that you should avoid. There are numerous things you should always consider before and during filing of applications to take any of available second mortgages.
Interest rates
In general, second mortgages implement higher interest rates. This is logical because lenders are taking greater risks in providing such loans. If you would get into default on your loans, you are required to first settle your primary or first mortgage. Only after settling your first home loan would you be required to take care of the second.
Check the APR (annualised percentage rate) applied. It is advisable not to immediately apply for the second mortgage you find. There could be other second mortgages with lower APRs. As you perform a comparison before your decision, get quotes from several banks, credit unions, and dedicated mortgage lenders so you could logically find the best product there is for you.
Continue reading “Things to Consider When Getting a Second Mortgage” »
