Hawaii | Home Loan | Mortgage | Refinance

When purchasing a home, you will also be purchasing a mortgage. Many first time home buyers are unaware of the options they face when shopping for a mortgage. Choosing the wrong one can cost thousands of dollars, so buyers need to beware of the choices they face.

The most common type of home loan is a fixed rate mortgage. This is a loan that carries a fixed rate for a set period of time, otherwise known as the term of the loan. Fixed-rate loans can be held for many different terms, ranging from 15 to 50 years. Over that time, the interest rate, which will be slightly higher than the national interest rate at the time of the home’s purchase, will not change. The only way to change the interest rate is to refinance, which is basically purchasing a new loan.

Another common loan type is an adjustable rate mortgage. In this loan, the buyer receives an interest rate at the outset of the loan. The rate may stay fixed for a period of time, such as three to five years, but after that time it “adjusts” to mirror the national interest rate. In many situations, this means it will go up. Of course, it can go down as well, but these loans almost always end up costing the homeowner more over the life of the loan than a fixed rate mortgage, especially if they are purchased when rates are really low, since the rate is almost guaranteed to go up at some point in the future.

Interest-only mortgages are somewhat deceiving, because they do not work like a traditional mortgage. In this loan structure, the borrower is only required to pay the interest portion of the loan. The only money put towards the principle of the loan is the money the borrower chooses to add to the loan payment, which means there may be months when no money is added to what is actually owed. This can help buyers get into a home when they cannot afford the monthly payment on a traditional loan, but when the loan term is over, the entire principal amount will be due. These loans are usually only available for a short period of time, making them less than ideal for those who plan to stay in their home for a while. Sometimes people who are flipping a property and anticipate making a profit on the resell price can benefit from this loan structure.

The other loans that are out there, such as VA or FHA loans, are variations on these three structures. They have special guidelines and government programs associated with them, but they function as one of these types. Knowing the differences between these three will help you choose the best possible loan for your next home purchase.

Figure out how much your payments will be with a Home Mortgage Calculator. After that be sure to download a Home Inspection Checklist and grab some Address Change Cards for when you move.

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Streamlining is not really a term that explains the loan product so much as it refers to the amount of paper that the borrower is required to provide to the lender. Generally speaking, the amount of paperwork that is usually demanded during the initial mortgage application is virtually cut in half during a streamline refinance. Appraisals are optional, but in cases where there is little equity built up, the bank may mandate the appraisal of the property prior to issuing a loan. This protects the lender from financing a property that might put the borrower upside down into the property from the get go. Streamlining also refers to the paperwork processing that is required from the lender, and as such the fees associated with a streamline FHA refinance are generally lower than those that are charged for other refinances.

On the flipside, there are some downsides associated with a streamline FHA refinance. For one, this kind of mortgage loan does not permit the homeowner to take out any money. Thus, for homeowners who are hoping to pay off some bills with their built up equity, this is not a possibility. In addition to the foregoing, there are closing costs associated with this kind of loan. They are often a lot less than other loans, and therefore at times give rise to ambiguous advertisements, such as ads which promise no cost refinancing. In fact, these costs may be rolled into the loan — if there is sufficient equity — or they may take the form of a slightly higher than average interest rate to offset the fees.

This kind of semi creative financing makes FHA loans an attractive mortgage for those borrowers who simply want to take advantage of lowered interest rates, but who have no need for any cash-out refinancing. In some cases it shows that the costs rolled into the loan actually add too much money to make this a profitable undertaking and consumers are urged to find alternative means of paying the closing costs. Financing the fees over the course of 30 years adds more eventual costs than the consumer is actually saving. A loan broker or reputable bank can quickly and easily disclose the actual cost of the loan with the help of an amortization schedule that sheds light on the amount of money the consumer is expected to pay as opposed to the amount s/he will expect to save.

Other loan products receive a lot more airtime on radio and television than streamline FHA refinancing, in part because these fiscal vehicles are a lot more profitable for the lender. At the same time, the consumers who actually benefit from a streamline FHA refinance are not as plentiful as you might think. There are plenty of reasons why a refinance should be advantageous to both consumer and lender, and in this case only a select number of homeowners can actually benefit from a redo of their FHA mortgage without the ability to tap into the cash and use it for expenses.

To find the lowest mortgage rates, visit our site at Lender411.com.

Krista Scruggs is an article contributor to Lender411.com.

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With your history of poor credit ratings, no wonder getting home equity loans with bad credit is disheartening task. If you’ve failed to pay on a loan or even missed a couple of credit card payments, financial companies will label you as a bad credit risk.

Bad credit is the term used for a poor credit rating. It should be noted however that bad rating doesn’t equate to dishonesty and deceitfulness. Rather it is the consequence of late payment, exceeded credit limit, overdraft, and declaring bankruptcy. Whether the default of an account is on purpose or attributed to financial crisis, the resulting credit rating given is still the same.

So what will you do when you need the money to use for just about everything? Fixing your credit rating is the best solution. Paying off or maintaining a minimal amount on your credit cards, paying overdue bills and such. Bad credit is harder to fix especially in the presence of outstanding bills. But this solution is not for everyone.

Your Future is more Important than your Past

Getting home equity loans with bad credit may be a solution, if you handle it well. Some equity lenders do accommodate homeowners with a bad credit history. One such is ditech.com, whose *banner runs “To us, your future is more important than your past”. If your looking to reestablish your credit, ditech.com can help with your home financing needs even if you have imperfect credit. They offer clients cash out equity and consolidate high interest and credit card debt. If you are interested in checking out ditech.com, maybe they can offer you home equity loans with bad credit rating.

www.ditech.com can be contacted by this number: 1-800-700-9054

Cash Poor but House Rich

Using home equity loans to strengthen bad credit ratings is already a common venture for those wanting to step clear of a debt pitfall, though some would have a complicated time in getting a equity lender to accommodate the loan. But over the years, another devise has emerged from insignificance to become a major component in refinancing. Reverse Mortgage is one hot topic these days. Unlike home equity where you have to have an income to qualify or monthly bills to pay, reverse mortgage works opposite. It pays back to you. But to be eligible for most reverse mortgage plans, you must be over 62 years of age and is the legitimate owner of the home. You are paid for the home’s equity which you can get as a lump sum, a monthly check, a credit line or a combination of the stated options.

Concisely, home equity loans with bad credit are always bad business for financial companies. But that doesn’t mean you apply for an equity loan because of delayed payments, it is only a matter of knowing where to look.

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*to editor: I forgot the appropriate term for this