Variable Or Fixed What Will Be The Decision
Jan 21, 2010 Mortgages
Once you decide to avail a housing loan, the immediate matter that storms your mind is choosing between fixed and floating rate of interest. It is easy to get dumbfounded at this level if you are not financially trained.
Normally, when news media splashes reports on banks increasing mortgage interest rates in and their affect on Monthly Installments, you deem it better to opt for fixed housing loan rates. In fact, your banker may also counsel you to go for the same.
Now ideally as it should be, we assume that once you choose fixed rate plan for yourself the rate of interest will remain unaltered for the entire period you have fixed the interest rate for irrespective of any subsequent increase in the same. But actually this is not necessarily the situation.
Here we demystify the nature of fixed interest rate home loan transaction for you so that you can make an educated decision over the matter.
* Read the small print of your home loan document. You will find that the bank has the right to give you thirty or sixty-days notice period that it intends to increase its interest rates.
* The bank’s first-year rates are binding on the bank only for that short period of 1 or 2 months. The 2nd-year home loan rates are not binding at all. Neither are the bank’s 3rd-year loan rates.
* Force Majeure Clause
So, while you read your housing loan contract, you can spot statement like this:
“Provided further that from time to time, the bank may in its sole discretion alter the rate of interest suitably and prospectively on account of change in the internal policies or if unforeseen or extraordinary changes in the money market conditions take place during the period of the agreement.”
This is called Force Majeure Clause that enables the lender to undertake appropriate adjustments in the interest rates on home loans they approve to their borrowers.
So remember to look at refinancing every couple of years so that you do not pay too much. If you select a good housing loan company you can save a lot of money over the life of your mortgage and in most cases the consultation cost is free.
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Refinancing Your Home In Singapore
Jan 8, 2010 Mortgages
Even though refinancing a mortgage can save you thousands of dollars you will be surprised that not that many people actually take the time to do it. If you considered the time it requires and calculate the cost saving and compare that to how much you get paid per hour it could be like not going to work for several weeks. Consider the following aspects so that you can see how simple it is to refinance your loan today.
Current Mortgage Interest Rate
It is decidedly a good indication for you to explore refinancing when your current interest rate is higher than available housing loan packages on the market. A first step to take is to go back to your existing banking company or financial institution and ask them to revise your package, otherwise known as repricing. If your lender comes back with an offer, it will usually be better than your existing one. You can then compare this offer with offers from other lenders to see whether you should switch or stay put.
Lock-in and Clawback Periods
When you take up a housing loan, there may be a lock-in period where your housing lender will charge you a penalisation fee, ordinarily a percentage of your outstanding loan value, if you were to fully repay your home loan. Almost all loans also come with a clawback period where the lender will claim back “freebies”, such as legal subsidies, that they “gave” you when you take up your housing loan (Note: lock-in period is separate from clawback period). It may not be commendable for you to refinance due to such costs.
Loan Quantum
The larger your housing loan amount, the larger your savings for the same decrease in interest rates. For instance, 1% on a loan of S$100,000 is much less than 1% on a loan of S$500,000. However, fixed cost to refinancing, which represents mainly of legal fees, do not vary much with loan quantum. The difference between your current and refinancing interest rates, therefore, has to be bigger for a comparatively smaller loan as fixed cost eats into a more substantial share of your interest rate savings.
Perceived Interest Rate Movements
Your view on how interest rates is moving can be a factor when considering whether you should refinance. If you are presently on a fixed rate package and think interest rates are dropping, you may want to refinance to a floating rate package. Conversely, if you are on floating rates and believe interest rates are rocketing, switching to fixed rates may be a effective choice.
Individual Financial Appraisal
If there is a change in your financial state, you may want to alter your package particulars via refinancing. For instance, you are opening your own company and do not want volatility in other areas. Give some thought to taking up a fixed rate package. Maybe you want cash to invest in different property. Consider increasing your loan quantum. Or your monthly income has increased and you want to reduce interest loan payments. Contemplate reducing your loan tenure.
Consider calling us today if you are looking for refinancing in Singapore. We can save you a lot of money plus give you the latest advice all for free.
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Take Charge of Your Family Finances
Jan 6, 2010 Mortgages
Regular assessment of your household finances is important to the family’s financial well-being. Here are some guidelines to control your household finances.
Credit Card Use
If you have a credit card, use it, but don’t forget to pay the entire sum, not the minimum amount, at the end of the month. Utilisation of credit card should be done wisely.
Rule of Thumb
If the total household expenses is higher than 33% of your household income, it’s time to cut down on expenses. Below are useful tips to cut down your household expenses.
1. Always clean your air-conditioners.
2. Wash your laundry on full load.
3. Put thimbles on your taps
Assign Book Keeping Duties to Your Kids
If you have kids, share them a simple task in book keeping, like data-entry. This will make them understand basic financial principles. Moreover, it will also give them a sense of responsibility and promotes good financial practice.
Keep a File of Your Financial Statements
List down your finances. Have a notebook or a ledger. If you have an access to a computer, organize the physical bills and statements by putting everything into a spreadsheet. You don’t even have to pay up cash for a spreadsheet.
The following tips will help you organize your financial statements.
1. To save time from entering data, get soft copies of bills and statements, if possible.
2. Save your files and have back-up of them. You can use CD-R or thumb drive. Then keep them in a secure place.
Plan Your Finances
If there is only one in the household is working, and there is not much sources of income, consider an insurance plan for the breadwinner. Financial worries are not something your family should cope with in the event the sole breadwinner is incapacitated.
Make It a Routine
The more you postpone, the more it piles up. Set aside 30-60 minutes each week to maintain your finances.
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Everything You Need To Know About Bankruptcy Equity Home Loans
Dec 18, 2009 Mortgages
There are a number of people who see bankruptcy as the only option for getting out of debt any time soon. Making this decision is very difficult. It is also very difficult to get credit again afterward. It’s hard, but possible. One type of credit that can be obtained even during a bankruptcy is an equity home loan. There are however, some facts regarding bankruptcy equity home loans that people should be made aware of.
You can discharge your chapter- bankruptcy ahead of schedule by getting a bankruptcy equity home loan. You are given 3-5 years to discharge all debts filed under chapter-. There are specific circumstances where a person can have his/her lawyer file paperwork to request the right to obtain a new debt in order to pay off the old debts faster and with an interest rate that is lower.
If this request is granted, the lawyer will then confer with financial institutions to locate a home equity loan that is agreeable to helping the debtor eliminate the debt in the time allowed, and can give a decent amount of cash to eliminate many of the original unsecured debts.
It is important to understand that if you already have an outstanding home equity loan at the time of bankruptcy, you are dealing with a secured form of credit. Essentially, secured debts can only be eliminated through any form of bankruptcy by turning over the debtor’s house to the bank.
This is also the case for any home equity loans received when the debtor is undergoing bankruptcy. If you’re looking to eliminate such a loan you will have to repay it by following the rules you acknowledged at the time you obtained the loan or to turn over your house.
This is a fact that can come in very handy for a homeowner who is filing bankruptcy. Banks are more willing to consider making a loan to someone with sufficient security to cover the amount of the loan and sufficient reason to ensure that it gets paid back on time.
Additionally, bankruptcy equity home loans would be a great way to start mending a damaged credit rating after going through bankruptcy. If you are careful about always submitting your payment on time, the financial institution will pass that information along to credit reporting companies who will then use it to make your credit rating rise.
Getting any kind of credit in the midst of bankruptcy is nothing short of challenging, but a bankruptcy equity home loan is one way a person can start traveling down the road to credit repair and in a better position than he/she could have imagined. It can help to pay off creditors much more quickly than would otherwise be possible. It can also help to make the payments easier to afford by giving one more time than the allowed three to five years to pay the loan off in full. All a person has to remember when using this option is that if the loan goes into default for lack of payment, the home and/or property that was used to obtain the line of credit will be taken.
John is an avid blogger that loves to blog about subjects like using your equity for a bankruptcy home loan and using your equity for a bankruptcy home loan on her site.
Tags: "mortgage, bankruptcy, bankruptcy equity home loan, bankruptcy equity loan, credit, finance, home loan, Mortgages
How Should Emigrants Apply for Housing Loan
Oct 21, 2009 Mortgages
There are two types of housing loan packages in Singapore: fixed rates or floating (variable) rates.
Singapore fixed rate packages are usually offered for up to 3 years, but there are some lenders that go up to 5 years fixed rates or even 10 years. In many Western countries, fixed rates can be made throughout the loan tenure.
On the other hand, floating rates are classified into published rates or board rates. Like Singapore Interbank Offered Rate (SIBOR) or Singapore Swap Offer Rate (SOR), published rates are normally rates that are issued daily. Meanwhile, board rates are defined by the respective bank or financial institution. Many of the lenders put their board rates to a particular financial bench marks, yet the exact components are sometimes not clear and variations in board rates turn indefinite.
There are no limitations for emigrants going for housing loans. However, the following constituents should be taken.
Loan to Value
The maximum loan to value (LTV) in Singapore is 90% of the purchase price or valuation, whichever is lower. Many lenders do not give maximum LTV to emigrants, thus, housing loan packages for 90% financing are limited. Loan approval for 90% financing is also tighter than for LTV 80% and below.
Proof of Income
A letter of appointment from your local employer or your latest income tax assessment is needed for housing loan. Some local loaners do not accept tax assessments from other countries.
Landed Property
The commendation from Singapore Land Authority is essential before emigrants can purchase restricted properties such as vacant land or landed properties such as bungalows, semi-detached, and terrace houses.
In-principle Approval
Try to apply for an in-principle approval before proceeding with a purchase, since loan applications are more intricate for emigrants. Consider to hire a respected and professional housing loan consultant. This may help you spare time and money with your loan approval.
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Is Refinancing The Right Choice For You
Oct 19, 2009 Real Estate
The decision to refinance is based on a number of factors. The terms of your current loan, the amount of your current loan and the remaining balance. It also is dependent on the amount you intend to refinance. Refinancing is a way to get your equity out of your home without selling it. If the new loan offers better interest rates and terms, you may be able to save money.
The reasons most people chose to refinance are to obtain more favorable interest rates, to use the equity they have in their home, to consolidate high interest loans like credit cards, or to simply to lower the amount of their monthly mortgage payments. If your reason for seeking refinancing is lower interest rates, you may not save money with your new loan. This is especially true if you intend to remain in your house over the long term.
Lower interest rates might be tempting but if you are in the 15th year of a 30 year mortgage, you will end up the loser. All the money saved from the existing loan will go up in smoke. But if your mortgage is just eight years old and the interest rate is 2% or 1% more than the new rate, go ahead, get a refinance.
Always review the terms of any loan you are considering. If you don’t understand the terms, seek help from an attorney or accountant that you trust. If you find, after reviewing all the aspects of the loan including the closing costs, the monthly equity increase and the point at which you actually begin realize savings, that the amount of savings is not significant, than you are better off remaining with your current mortgage. It’s necessary to compare the amount of the principal and monthly payments of the new loan and your current loan based on the amount of time left on the loan.
Your debt to income ratio needs to be a consideration, especially if you are removing equity from your home. It is unwise to end up with an upside down loan, in other words, a loan on which you owe more than the value of your home. You will also need to know your FICO score. A high FICO score will enable you to receive lower interest rates. If your FICO score is low, you will probably not be able to get favorable interest rates.
The origination fees and closing costs on a refinanced loan can run into thousands of dollars. Is your interest savings going to be enough to cover the financing costs? How long will you have the new loan before the savings cover the costs? If the refinancing includes the fees, you will be paying interest on that amount as well as on the amount that you originally borrowed.
If you qualify under the new government programs, you may not have to pay some or all of the fees. If you are refinancing because of the loss of a job due to the recession or due to serious illness, the fees may be waived in your case. The decision to waive the fee is made on a case by case basis, so before refinancing you should investigate whether you qualify for this waiver. This fee waiver will make refinancing more affordable for those who qualify.
Until you have reviewed your financial situation and the requirements for a refinance, you can assess your chances for paying off a refinance successfully. But if you are dealing with an Adjustable Rate Mortgage and want to switch to a lower Fixed Rate Mortgage, lock into the lowest rate now after considering everything that goes into a refinance. If you’ll break even soon enough and pay lower rates which you can comfortably afford, then by all means, check this option.
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Tags: advice, consumer, equity, finances, home loan, house, Lansing, Michigan, money, purchase, Real Estate, realtor", refinance
Reinvest Your Home
Oct 16, 2009 Mortgages
Many people are unaware that they have the option of switching their loan to other investor; others are simply uninterested. They simply become firm with their first lender but they don’t know that it could nring higher interest rates. Because of increasing number of housing loans and amortization period, the interest can range from thousands to hundreds of thousands of money. Below are some considerations when reinvesting your home.
Current Interest Rate
When your current interest rate is higher than available housing loan packages on the market, it is time for you to consider reinvesting. Go back to your current bank or financial institution and ask them to reprice your loan package. Most likely, your lender will give you an offer, which is better than your current one. Make a comparison between this offer and with offers from other lenders to see whether you should switch or stay put.
Lock-in and Clawback Periods
Lock-in period is when your lender give you a penalty if you want to fully repay your loan. Many housing loans have drawback period. This is when the lender will take back what they gave you when you get your housing loan. Lock-in period and clawback period are different from each other. Thus, it is not advisable for you to reinvest due to these extra costs.
Loan Quantum
The higher the amount of your loan, the greater your savings for the same decrease in interest rates will be. However, fixed cost to reinvesting, which comprises mainly of legal fees, does not vary much with loan quantum. The difference between your latest and reinvesting interest rates has to be larger for a relatively smaller loan as fixed cost takes into a more significant portion of your interest rate savings.
Identify Interest Rate Movements
Analyze how interest rates flow. Try a floating rate package as an alternative to fixed rate package if the interest rates are decreasing. However, if you are on floating rates, try to switch in fixed rates if the interest rates are increasing.
Personal Financial Evaluation
If your financial state changed, consider reinvesting. Try to get a fixed rate package. Think of increasing your loan quantum. When your monthly income increased and you want to decrease interest payments, try to reduce your loan tenure.
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Disadvantages of a 125 Home Equity Loan
Oct 12, 2009 Mortgages
The 125 home equity loan is just what it sounds like. A traditional home equity loan can be for up to 100% of the equity that is in your house. 125 home equity loans provide you with an additional 25% on top of the home’s equity.
The 125 home equity loan is basically a second mortgage. The borrower will still pay their regular mortgage and then have a second payment to make each month for the 125 loan. For example, if your house has an appraisal value of $100,000 and your first mortgage is for $90,000, you will be able to get a 125 loan amount of $35,000.
A 125 home equity loan can be very helpful for a homeowner who is in need of a large amount of cash but doesn’t have enough equity built up to cover that need. For example a homeowner might want to start a new business, or may need to pay the tuition for the child’s schooling or an emergency could come up. There are also some disadvantages to 125 home equity loans.
One major advantage of 125 home equity loans is that homeowners can receive a loan not only for their equity but 25% extra as well. The interest rate on this type of loan will also be lower than credit cards or personal loans. Interest may be tax deductible, whereas the interest on personal loans is not.
125 home equity loans also have some disadvantages. One of the major disadvantages is high closing costs. The closing costs on a 125 home equity loan could wind up costing a homeowner several thousand dollars and other fees may be added also.
125 home equity loans come with higher interest rates than for a regular home equity loan. So higher interest rate charges is another potential disadvantage. However, the rate of interest will still be less than most credit cards or personal loans.
One other drawback to a 125 home equity loan is that it can put the borrower at risk and make it difficult for them to sell their house. If home values depreciate it will be difficult to sell the house and move because the homeowner will still be responsible for paying the difference to the lender. Since the borrower already received more money than the house was worth in the first place, having the house depreciate in value will make it even harder to pay the loan back.
There are some nice advantages to 125 home equity loans but there are several potential disadvantages as well. So before you make your final decision regarding this type of loan, be sure to weigh all of these factors. It might be a good idea for you to review this will your financial adviser or accountant as well.
About the Author:
Tab writes on various subjects of interest to him, with the main objective of educating people on 125 equity loans as well as mortgage loans in general.
Tags: "mortgage, 125 home equity loan, financial, Home Equity Loan, home loan, loans, Mortgage Loan, Mortgages
Home Buyer Concerns
Sep 24, 2009 Real Estate
Many potential home buyers are hesitant to try to get a mortgage after hearing all the talk that no one is lending money or if you have bad or not so great credit buying a home will be impossible. It must be said that there is always someone lending money such as higher end banks. They deal with it by limiting the amount they lend out and to whom, but other lending options are out there. It is a myth that those with bad credit can’t get a loan but know that you won’t get the best interest rate available.
One thing that a new home buyer or someone who hasn’t purchased one in a large time needs to keep in mind is that adjustable rate mortgages should be avoided whenever possible. This is because you don’t want a mortgage that you can’t get out of and eventually won’t be able to afford.
If you can only get out by having your home foreclosed, then you went with the wrong mortgage loan. Don’t listen to those that want to tell you adjustable mortgages are better, because a fixed rate loan is always best and that is true even if you end up paying one or two percent more for the interest rate.
If you are forced to accept an adjustable rate mortgage just because that is the only choice you have, then you want to ensure that you have a long term plan. This means doing whatever you can immediately in order to improve your credit rating so that you eventually will be able to refinance before the first increase of the interest rate takes place. If you can’t do that by the first time, then at least the second. This plan enables you to purchase the home you want and you can enjoy a lower interest rate for a couple of years before refinancing.
When buying, if you are having difficulty rounding up the down payment and on top of that the closing costs, you should seriously consider asking the seller for help. More often than not they will compromise by paying all or at least some of the closing cost. This benefits the seller by helping them to dispose of the property.
You will find that sellers can be very willing to work with you since they usually need the cash, or it is a divorce settlement or trying to keep their credit intact by avoiding a foreclosure.
Remember that it is also possible you will have to obtain mortgage insurance. This is normally required when the money paid as a down payment is less than 20% of the home loan amount. This mortgage premium is added to your monthly mortgage payment and is therefore generally affordable.
It is easy to see that there is a lot to consider when it comes to purchasing a home. It does not matter if this is your first home or your tenth home, there are always questions to ask and things to worry about. Just take your time and ask for advice when you need it and you should be good to go.
About the Author:
For good quality writing on home mortgage Lansing, you should check out some of the posts on this site about refinance home mortgage Lansing.
Tags: Buy A House, equity, home buyer, home loan, Mortgages, Real Estate, real estate investing, realtor"
Getting the Bait on Good Home Loan Terms Despite Bad Credit Score
Sep 18, 2009 Mortgages
Getting a home loan is just like getting recognition at the end of each academic year in school. Before you are awarded of any recognition, you must comply with the requirements for such recognition.
For instance, before you will be given an academic award, you must first satisfy the required general weighted average on each or all subjects. Other awards also follows particular criteria before it would be awarded to deserving students at the end of the school year.
You now ask what kind of things that you can benefit from by having a good credit score. First of all, a good credit score can increase your chances of getting the loan you apply for and secondly, it will help you get certain jobs and programs that will require good credit score. These are the two main reasons why you need good credit score.
However, despite the wide availability of home loans, there are still thousands of individuals who failed to secure home loans merely because they possess a bad credit score. They are not fully aware that any delinquency in paying their outstanding loans caused the stain in their credit record, thus they would be having a hard time securing a good home loan.
A good credit rating will ensure the lenders that you pay your loans on or before the deadline and thus, will ensure them that you will be able to pay the loan you will apply for. The same applies when you are applying for a credit card.
To know about your credit score, you can simply ask for it in several credit reporting agencies. They will be able to provide you with a numerical indicator of how much your credit rating rates and how much credit risk you are.
So, if you have a bad credit rating, the first thing you need to do to improve your credit rating is to take care of old debts. By paying all your old debts, this will stop the creditors to stop making negative reports to credit reporting agencies.
However, paying all your debts doesnt necessarily mean that you will instantly get good credit rating. You have to remember that this will just stop it from getting any more worse.
Research for the best available bad credit home loan offer in the market. You may prefer visiting various commercial lenders and financial institutions in your local area to know their terms and conditions as well as their rate of interest for home loans with bad credit score. In addition, a personal contact inside these financial institutions could be of great help in your credit problem.
Eventually, your old bad credit score will expire in time. Always keep paying your debts on time and your credit history will look better than in the past. However, it will usually take around 5 to 7 years for your old credit report with negative reports to expire. This is why patience is very important.
Apart from these financial articles I write, I also have a website that is about hypotheek and hypotheekrente
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