Top Five Reasons a Mortgage Broker Is Better Than a Bank

Top Five Reasons a Mortgage Broker Is Better Than a Bank
By Chris Brein

So, you've decided to buy property and can't decide whether to use a mortgage broker or go directly to your local big bank?

Perhaps you can't decide because you don't really know the difference between a mortgage broker and your bank's loan officer?

You are hardly an isolated case.

Before you read our top five reasons why going with a mortgage broker is better than going through the bank's loan officer in your area, let's review the difference between the two.

Loan officers are employees of a bank, credit union or some other lender and their job is to sell and administer mortgages available through their employer.

While they may be able to offer a whole host of different loans and types of loans, all loans that they are able to offer originate from the financial institution they work for.

Mortgage brokers, on the other hand, work with a range of lenders and it helps to think of them as freelancing agents. They are not affiliated with any one single financial institution.

Instead, they earn their living by bringing together lenders and borrowers. They do this by analyzing whatever loans are available on the market and choose one, or several, that fit homebuyers' needs best.

Now check out our top five reasons why getting a home loan through a mortgage consultant is better than going with a bank.

1. Wider choice

This is perhaps the biggest reason why using a mortgage broker trumps going with a bank. When you hire the services of a broker, you are essentially gaining access to a whole host of banks and other lenders who extend dozens of different products. Compare this with going to your bank's loan officer who is limited by the scope of products offered by his or her employer.

2. Experience

Chances are your bank's loan officer doesn't handle mortgage loans only. Banks are huge enterprises and often shift their employees between different departments. This means they often don't have as much experience under their belt as mortgage brokers whose job is to help their clients over the long haul.

3. Industry know-how

Let's say you are interested in venturing into property investing and want to consult an expert on the subject. In this case, you are much better going with a mortgage broker than the bank's lending officer because banks usually don't train their staff in any one specific area. Instead of focusing on building up expertise with their staff in one area,banks are more likely to train their employees to be able to service a broad range of clients instead.

4. Follow-up

Everyone knows that the red tape associated with buying a home is annoying and time-consuming. But a reliable mortgage broker will do all of this for you and, what's more, he or she will seek you out in order to keep you informed and make sure you don't miss filling out any important documents.

5. Personal touch

When you go to a bank, odds are you are just a number that needs to be serviced. But if you go to a mortgage broker you are treated like a client with specific wants and needs whose product will be tailored to reflect each and every one of them. Unlike lending officers, who change jobs climbing the corporate ladder, mortgage brokers act like business owners who are in it for the long run.

Lending Experts is Best Mortgage Broker and Consultant who provides best Mortgage rates for their valuable clients in Vancouver, BC and adjoining areas.

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Making Your Extra Mortgage Payments Count

Making Your Extra Mortgage Payments Count
By Jack Guttentag

Home owners with a mortgage usually want to reduce their interest cost by paying down the loan balance as fast as possible. This article is about what borrowers can and cannot do on their own, and answers some frequently asked questions about making extra payments.

Is There Any Benefit In Making Scheduled Payments Before the Due Date? No. On a standard mortgage, interest accrues monthly, and is calculated by multiplying one-twelfth of the annual interest rate times the loan balance at the end of the preceding month. For example, if the loan balance is $100,000 and the interest rate is 6%, the interest due is.06/12 x 100,000, or $500. The borrower owes $500 regardless of when the payment is made or how many days there are in the month,. If the payment is late by more than the 10 or 15 day "grace period," there is an additional late fee. But there is no rebate for paying early.

Simple interest mortgages, on which interest accrues daily, are an exception. On these mortgages, every day of delay in making the payment increases the interest cost, and paying early does reduce the borrower's interest bill. Simple interest mortgages used to be fairly common, but I am not aware of any being offered today.

Do Extra Payments Save More Interest When Made In Some Months? No, the only valid rule is that the sooner you make the payment, the more interest you will save.

One common misconception is that the best month to make extra principal payments is January. It is certainly true that a January payment saves more interest than one made in the succeeding February, but it saves less than one made the preceding December.

Is There a Best Time Within the Month to Make an Extra Payment to Principal? Yes, the best time within the month to make an extra payment is the last day on which the lender will credit you for the current month, rather than deferring credit until the following month. If it is the 15th, for example, an extra payment made within the first 15 days of January will reduce your balance that month and the interest due in February. Payments made the 16th or later will not be credited until February, and the interest deduction will be deferred until March.

There is no universal lender practice in crediting extra payments. Some lenders will credit payments received anytime during the month while others are much more restrictive. In most cases, extra payments sent in with the scheduled payment will be credited the same month, but it is a good idea to ask your lender what their rule is.

Is There a Best Way In Which to Make an Extra Payment? No, you can use the same payment method that you use to make your scheduled payment. Just bear in mind that the relevant date is when the payment is credited by the lender, not the date when you sent it.

A practice you should avoid is to make the extra payment an exact multiple of your scheduled payment. If that payment is $610.43, for example, don't make a payment of $1220.86 because then the lender will probably interpret the additional amount as an advance of your scheduled payment and hold it, rather than pay down your balance.

Is There a Best Way to Allocate Extra Payments When a Borrower Has Two Mortgages on the Same Property? Yes, the general rule is to pay down the second mortgage first. Not only will the second have a higher rate, but second mortgages also can make life more complicated for borrowers looking to refinance or having payment difficulties.

The possible exception is a HELOC second, which might well carry a lower rate than the first mortgage, though it has high potential for future rate increases. The borrower who directs extra payments to a HELOC that has not yet reached the stage of mandatory repayment increases his credit line by the amount of the extra payment. This could be a desirable outcome for the borrower.

Is There a Best Way to Allocate Extra Payments When a Borrower-Investor Has Mortgages on Several Properties? Yes, the general rule is that you save the most by paying down the mortgage with the highest interest rate first. One possible exception is where the mortgage that does not have the higher current rate is exposed to the most interest rate risk. For example, a borrower with a 4.5% fixed-rate mortgage and a 4% adjustable-rate mortgage, both in the early stages of their lives, might well elect to pay down the adjustable-rate mortgage because of the possibility that at some future time its rate could go as high as 9%.

Another possible exception would be where the lower-rate mortgage has a greater potential for a profitable refinance. For example, a 6% mortgage has a loan balance that is 89% of property value while a 5.75% mortgage is at 81%. If the extra payment directed to the lower-rate mortgage reduces the balance to 80%, no mortgage insurance would be required to refinance it.

A third possible exception is where the borrower-investor has so many mortgages that lenders refuse to finance any more acquisitions. Many lenders have a limit of 10. In that situation, the borrower looking toward further expansion wants a complete payoff ASAP and will concentrate all extra payments to the mortgage with the smallest balance.

The Mortgage Professor website has several online calculators showing how extra payments affect interest paid and loan payoff date at: http://www.mtgprofessor.com/CalculatorArticles/Mortgage%20Payoff%20Calculators.html

For more information on mortgages in general, or to compare mortgage offerings from multiple lenders in a fair, unbiased environment please visit my website at: http://www.mtgprofessor.com

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Home Buying Myths That Cause Fear

Home Buying Myths That Cause Fear
By Leah Soares

Buying a home may seem an overwhelming and even impossible goal. With proper education, you can confidently achieve your goal and without unnecessary fear. Add the right home buying team by your side and you can even enjoy the process.

The following sections describe some common fears. Let's take each one and cross it off your list of concerns.

It is less expensive to rent.

This is definitely not accurate. Most times you will save money being an owner rather than a tenant. Security deposits, cleaning fees and pet deposits can add up very quickly. Many times as an owner you will not have deposits with the local utility companies. Consider the potential tax write offs you may qualify for as a home owner that you will not appreciate as a tenant.

Besides actual dollars you will save, consider the emotional cost of renting versus owning. Recently an article published by Money/CNN expressed a nationwide concern. The article entitled "Rents are soaring - and so are evictions," shared a new trend in Landlords not renewing leases so they can remove the tenants and find higher paying tenants. Even more alarming than a rent increase is the trend reported that Landlords are evicting tenants over minor violations eager to get higher paying tenants in place. Once an individual is evicted, it damages their credit and most other Landlords do not want them as tenants. There is clearly no security in being a tenant is today's market.

My credit is not good enough.

Even if you have had credit problems in the past and you're worried that they will prevent you from buying a home, you may be wrong. I have worked with numerous clients who really wanted to get out of their rental situation. Some had bad credit or no credit at all. Many of these clients were able to improve their credit with coaching and tips from myself and the professionals on my team. Some chose to utilize my Credit Repair professionals and get their credit reports corrected and negative accounts or items removed. This process can be surprisingly short when you are organized and dedicated to your goal of becoming a home owner.

I Don't Have Enough Money for a Down Payment and Closing Costs.

In the last few years, new programs have been introduced allowing buyers to put down as little as 0-3.5 percent. Tax time is right around the corner. If you are expecting a tax refund, you can use these monies for your down payment. It is also possible to receive Gift Funds which is money that your family is allowed to "give" you to use as a down payment.

It is also an option is to ask the sellers to contribute toward your closing costs. There are even some mortgage loan options that you can consider that will build closing costs into your loan.

What if I lose my job or the economy gets worse?

Regardless of how strong the economy may or may not seem or what the stock market is doing at any given moment, the one thing that will never change is you will always need a place to live.

By all means, keep an eye on the economy and give your best to your employer. But don't let periodic downturns alarm you into thinking that buying a home is risky. If you buy wisely and within your means your investment will be safe from the natural ebbs and flows of the economy.

The key to confidently becoming a Home Owner is having a professional Real Estate Agent and a reputable Mortgage Lender on your side. Don't let these myths stand in your way from experiencing the personal and financial rewards of home ownership.

We can assist you in reaching your Real Estate goals in buying and selling a home in the Las Vegas and Henderson Nevada areas.

Contact us now to become a Realty Investments client and experience the difference in the way we provide Real Estate services.

Leah Soares - Realty Investments of Nevada LLC 702.553.8939 http://www.RiofNV.com RiofNV@gmail.com

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How to Use Your HELOC to Pay Off Your Home Loan Super Fast

How to Use Your HELOC to Pay Off Your Home Loan Super Fast
By Anna Tai

What is home equity line of credit or HELOC?

If you have used a credit card, you'll easily understand the concept of the home equity line of credit or HELOC. In simple terms, a HELOC is a revolving credit, like the credit limit with your credit card. The difference is that a HELOC uses your home's equity as collateral. Basically, it's a credit card secured with your home's equity.

How to use your HELOC to pay off your home loan super fast?

The nice thing about a HELOC compared to a regular loan is that once you pay down the balance, you'll have more money to use again. You can keep using the line until the end of the draw period, which is usually 10 years. At that time, you can either pay off the remainder balance with a balloon payment, or refinance into another HELOC or home mortgage.

The advantage of the HELOC over home mortgage is that a HELOC uses simple interest, so you can pay down your home A LOT sooner than the standard 30 years AMORTIZED home mortgage.

Let me give you my example. I had a $247,000 home mortgage with 4.25% interest rate. Not bad right? I was paying about $1,300 per month to the bank. Of the $1,300, about $900 is interest charge. So only about $400 goes to pay down my principal, about $4,800 in a year.

I later applied for a HELOC of $250,000 to pay off my existing $247,000 home mortgage. My HELOC has an introductory rate of 1% the first year. If I continue paying $1,300 a month, I would have paid off $13,200 in principal in ONE YEAR because my monthly interest in now only $200 a month.

The best of all, the HELOC acts as my emergency fund too. As I pay off more of the balance, more money is available to use.

And what is home equity?

Home equity is the difference between what your home market value and the total home loan you owed. For example, your home is now worth $1 million, but you have a home mortgage of $300,000. So in this case, your home equity is $700,000.

Most banks do not let you borrow 100% of your market value. The most I've seen are 90% and 95%.

How much home equity line of credit can you qualify for?

The qualification is very similar to qualifying for a home loan. You still have to show proof of income, good credit score, appraisal, etc. The general rule to figure out how much you qualify for is 80% of your home market value minus your outstanding mortgage.

We'll use the same example we used earlier. So your home is worth $1 million in the current market. 80% of that $1 million is $800,000. We then subtract your current outstanding mortgage of $300,000. Therefore, you qualify for up to $500,000 in HELOC, given you meet income and credit score requirements.

How do you use a HELOC to expand your real estate empire?

We hear a lot about using other people's money (OPM) in investing in real estate. A home equity line of credit is one of these strategies. Technically, it is still your money, because it is your equity that you're using.

So in the previous example, you qualify for a $500,000 HELOC, which you can use to buy a small rental property all cash. Or you can buy a multi-dwelling rental properties all cash too. The rental income that you generate, you use that to pay back the HELOC. Since you purchase these properties with all cash, which means you have instant equity in these properties. Then you can take HELOC again out from these properties and repeat the steps of buying more rentals or fix and flips, whatever your mean of investing is.

Isn't this brilliant?

Check out http://www.perfecthomeshonolulu.com for more home loan financing ideas and learn about everything and anything you need to know about owning and investing in Honolulu real estate.

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Strategies to Increase Your Credit Score for Mortgage Approval

Strategies to Increase Your Credit Score for Mortgage Approval
By Anna Tai

HOW TO INCREASE YOUR CREDIT SCORE AND BECOME A BETTER CANDIDATE FOR MORTGAGE APPROVAL

Your credit score is just one of the factors your mortgage lender will use to determine whether you qualify for financing. The problem is every lender uses different methods to determine your credit worthiness. So, in some cases, a minimum score is difficult to determine for conventional loans.

1. Pay Down Your Credit Balance and Pay On Time. If possible, pay off the entire balance every month. Set up automatic payment with your bank to pay off the full balance automatically. Use no more than 30% of your credit limit. One of the biggest ingredients in a good credit score is simply month after month of on-time payments.

2. Gather up all credit cards on which you have only small balances and pay them off. For bigger balance, consider paying off your loan with a lower interest rate credit card or line of credit, so you can pay off your loans faster. Once you pay off, most of your loans, choose one or two cards that you will use for everything. Avoid store credit cards.

3. Leave old debt and good accounts (debt that you've handled well and paid as agreed) on as long as possible. This is also a good reason not to close old accounts where you've had a solid repayment record. The longer you have the accounts the better it looks on the credit reports, as credit history is one of the area that credit reporting companies look at.

4. Shop for mortgage rates all at once. Too many credit applications can lower your score, but multiple inquiries from the same type of lenders are counted as one inquiry if submitted over a short period of time.

5. Don't open new credit card accounts before applying for a mortgage. Too much available credit can lower your score. This is true for department store or any retail store cards.

6. Do not do anything that could indicate current or future money stress, such as missing payments and suddenly paying less (or charging more) than you normally do, taking out cash advances, or charging at a pawn shop or divorce attorney.

7. Correct any errors in your credit report. Mistakes happen, and you could be paying for someone else's poor financial management.You should check your credit report every 6 months or at least once a year to check form errors and possible identity theft.

Check out http://perfecthomeshonolulu.com/ to learn more about home loan financing and everything and anything you need to know to own and invest in Honolulu real estate.

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Mortgage Rate Forecasts For the Future

Mortgage Rate Forecasts For the Future
By Andrew Stratton

One thing that consumers are very keen on paying attention to is mortgage rates. Recent research has indicated that a consumer will begin researching rates months before they finally pull the trigger and decide on a loan. If you are looking at buying a home in the near future, or you are just someone who likes to stay on top of the trends, you should pay close attention. Below, we will go over some predictions and projections from a few expert sources.

Thirty-Year Home Loan Rates

You may recognize the name Freddie Mac from the recent financial crisis in 2008. Freddie Mac is, in short, a federally backed company that deals in the purchases and sales of mortgage securities. Since 1971, Freddie Mac has released a weekly report of lending trends. Recently, the interest rates on 30-year loans were at 4.53 percent according to this publication. This figure continued to drop significantly to an impressive 4.1 percent interest. While the current numbers look good for potential homebuyers, Freddie Mac is projecting these figures to climb back up to 5 percent as time continues to pass. It is important to note that the increase in rates is just a projection based on observable market trends. Also important to keep in mind is that the increase in mortgage rates will occur over time and not all at once.

Unrelated to Freddie Mac is the Mortgage Bankers Association, which has also made projections for the coming future similar to those made by Freddie Mac. They also predict interest rates gradually rising to a 5 percent plateau.

An esteemed economist, Dr. Bill Conerly, projects an even sharper increase in rates for the foreseeable future. His forecast has this figure topping out around the 6 percent range. But, Dr. Conerly is not overly concerned about this rise, and he doesn't believe the public should be either. He attributes this natural rise to stronger economic growth; the likes of which have not been seen since our recent economic crisis in 2008.

The Home Buying Institute, however, does not see these figures getting much higher than they already are. They claim that some of the more dire predictions are focused on the state of the Federal Reserve. As you should know, the Federal Reserve is winding down and eventually completely stopping their economic stimulus incentives. These stimulus incentives were put in place amidst a severe economic crisis in 2008, and the fact that the Reserve is finally comfortable easing out of the programs speaks volumes to Dr. Conerly's assertion that the economy is getting stronger.

Experts predicted that mortgage rates would go up as the Federal Reserve slowed down their stimulus program, but the shut down has already begun and so far these numbers have only continued to drop. Stay tuned to see where these figures will go in the future!

When looking for an expert on mortgage, Grand Rapids residents visit Community West Credit Union. Learn more about our services at http://www.communitywestcu.org.

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Popular Savings Methods for First Home Buyers

Popular Savings Methods for First Home Buyers
By Wendy Chamberlain

First home buyers are becoming active in purchasing homes today. However, being their first time to invest in a residential property and being still young and not yet established in their careers, many of them can only afford a small home.

Surveys have even shown that most of these first home buyers still rely on their parents for funds that would help them purchase their first home and most importantly pay for their deposit.

When it comes to paying the deposit for a home, a survey commissioned by realestateview.com.au entitled Housing Sentiment Report revealed that 19.4 percent of buyers rely on their parents by borrowing money, living with them or using them as a parental guarantor. Buyers from Victoria (23.7 percent) were found to be more dependent on their mum and dad compared to their counterparts in NSW (15.8 percent).

As for first home buyers, nearly half or 42.6 percent of buyers heavily depend on their parents to enter the property market. The survey showed that 14 percent of first home buyers borrow money from their mum and dad to pay their deposit, 13.2 percent live with their parents and investing and 15.4 percent use a parental guarantor to help secure a loan.

Not all first home buyers, though, depend so much on their parents when investing in property. More than half or 59 percent are also saving via a regular savings account and 14 percent are saving through a first home saver account.

Normally, a 20 percent deposit is required when purchasing a home. If you don't have a deposit ready, however, you still have other options. One is to use a guarantee from your parents as equity to help you with your home purchase. This guarantee needs to be supported by a mortgage over your parents' property or a term deposit.

The Housing Sentiment Report further noted that more Victorians (43.2 percent) are saving money through a regular savings account than those from NSW (31.6 percent). The same trend was found in selling their home and using the profit from the sale to buy a new home with 35 percent for Victorians and 31.6 percent for NSW residents.

Another option is the Deposit Protect Bond which allows you to buy a home even before you can prepare a cash deposit. This is useful, though, if you are eligible for the First Home Buyers Grant or if your cash is linked to other investments.

Wendy Chamberlain is the founder of Social Property Selling, a trainer, speaker, International best-selling author and online engagement strategist who combines her online savvy with her passion for real estate to show sellers and real estate agents alike how to achieve a better price when selling a home. To receive your FREE Special Report and how-to articles to expand your real estate toolkit, visit http://www.SocialPropertySelling.com.

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