How to Cut Back on Mortgage Expenses

Houses Bought As-Is for ALL CASH! Fast Closings!

Market volatility is unpredictable

Situation at the real estate market is changeable and it cannot be predicted whether interest rates are going to go up or down. Unfortunately people often get in mortgage challenges because of rate increases and find themselves at the risk of foreclosure. Millions of families struggle with volatile economic circumstances in order to get homes and to preserve their property.

The following paragraphs provides some information which you may find helpful in avoiding challenges connected with your house, as well as to minimize mortgage related costs.

Consider covering mortgage interest as a priority

It doesn’t matter whether people sign deals with a mortgage broker or any other lender, paying off the loan as early as possible should become the top priority. The faster you get free from contract terms the less a risk you will take to be damaged by unpredictable economic circumstances. But the situation is a little different for high and low interest loans.

For example, when you use the services of online cash advance lenders you will likely get a high interest rate and it will be evenly spread out (amortized) over the life of your loan in even monthly payments. That means that the faster you cover the loan, the less interest you will pay. This works only in the beginning of the loan term when we’re discussing a mortgage.

Payments are organized so that you return most of the interest in the early years after which the principal is reduced with a smaller amount going to interest payments. So when you decide to buy a home make all your efforts to repay the amount of interest as soon as you possibly can thereby insuring that subsequent payments will not be a burden on your budget in times of economic instability.


Consolidate your loan

There is a great program provided by the government which is called HARP. You have a unique chance to get more beneficial terms and record low interest rates in cases of mortgage refinancing. This program is provided for millions of families who may be in need of relief. But it is also true that not many people use such a perfect opportunity to save their money.

It doesn’t matter whether they are improperly informed about the HARP or just treat it lightly because they think that it is too good to be true. What does matter is the unique opportunity this program provides for those who are experiencing problems with their mortgage. The program has been extended and homeowners will have an opportunity to avail themselves of it until 2015. So take your chance and ease your life, if you are among those who could use this valuable program.

Choose the most relevant solution

Being a homeowner is a dream of many Americans but it is time to think about whether or not it is worth the struggle, sacrifice and stress home ownership places on your family’s well being. Prices are constantly increasing in the real estate market and that means that mortgages are also getting more and more expensive.

Of course once you’ve become a homeowner you will be able to sell that property at some later date for a higher price; but it is important to estimate time frames objectively. Half of your life you will pay off the huge amount of the mortgage and the pleasure of owning a house will not be so bright when you become a pensioner and realize what a big responsibility it is to own a house.

That is why sometimes it can sometimes be better to rent an apartment which can be surrendered rather quickly, and without too many problems, when crises arise. Whether an individual purchases a home or rents and apartment really depends on his/her lifestyle, which is often the ultimate determining factor in such decisions.

Home: Abode and Intrinsic Equity-Based Asset

Houses Bought As-Is for ALL CASH! Fast Closings!

Home, the comfortable, warm and protective abode – to most of us – is the single biggest asset we have!

Home is what backs you up when you need to borrow money, making it one of the greatest advantages of owning it in the first place. During the pre- recession years, there was a major boom in the amount of people looking to use their homes to get access to extra money when they needed it most. One of the ways they did this was through second mortgages and equity lines of credit.

Second mortgage loans are loans made in addition to the first mortgage, and they are usually based on the equity a borrower has built up his/her home. The most common uses for second mortgages and equity loans were to fund home renovations, college education for children and extended medical expenses, although some borrowers had a tendency to abuse the process by refinancing multiple times due to the rapid increase in property values during that period.

Processing of secondary loans and lines of credit was much simpler then and would be today for the same reason, if there was enough equity in homes based on today’s values; and that is since the borrower would have already gone through the mortgage borrowing process once, the underwriting required to get a second mortgage would not be as tense an experience for the borrower.

The cost of these types of transactions will be lower than when the borrower applied for the original mortgage loan. Provided there is enough equity in the home to support a secondary financing, the upfront costs to a borrower seeking this type of financing would be greatly reduced because there is no need for a down payment; the loan amount is much smaller making a percentage of the loan amount proportionately less; and – although the interest rate will be higher in most cases – the amount paid in interest over the life of the loan is much less due to the shorter term (usually 10 to 15 years).

One thing to keep in mind when considering a second mortgage is not take a second mortgage unless payments on the original mortgage balance were made on time for a considerable amount of time. Since the prospects for obtaining a “piggy back” 100% LTV (Loan to Value) mortgage loan are near to non-existent in this post-recession economy.

When a borrower obtains a second mortgage loan the lender places a lien on the primary residence of that borrower (second mortgages on properties other than the primary residence are doubtful). This lien will be recorded in 2nd position after the primary or 1st mortgage lender’s lien, hence the term second mortgage. Second mortgages aren’t for everyone, though.

Borrowing more than 80% of the home’s value for a first mortgage will subject the borrower to private mortgage insurance. The monthly payments will obviously also be a factor. However, it is not recommended that a homeowner (or home buyer for that matter) attempt to obtain 2nd mortgage financing with an above 80% LTV ratio. This will lead to excessive costs if there is such a loan type available.

Proceeds from a second mortgage loan can be used for just about anything these days. Many consumers take out 2nd mortgage loans to consolidate debt, do home improvements or provide a college education for their children, as others did in past years. Whatever a second mortgage borrower decides to do with the loan proceeds it is important to remember that defaulting on the payments can lead to foreclosure and eventual loss of the home.

So an individual making application for a second mortgage would want to make sure that s/he is taking the loan out for a worthwhile purpose. A secondary mortgage loan can be of great help to the borrowers, although the borrower must take steps to ensure that s/he does not squander away the advantages (or proceeds) of the second mortgage, when available.

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Discrepancy in FICO Scores From Banks and MYFICO Site

Today’s post is brought to you by the credit specialists and consultants at North Shore Advisory, Inc.

Houses Bought As-Is for ALL CASH! Fast Closings!

Discrepancy in Fico Score Pulled by Banks vs. the MYFICO Site Scores

Fico scores are the scores that most bankers use when assessing the risk of a potential loan applicant. When a banker pulls credit scores they usually get a merged credit report showing all three credit bureaus (Experian, Trans Union, and Equifax), as well as three Fico scores, each one representing the risk of the consumer related to information on each bureau. Most bankers use the middle score number as the basis for calculating the price of the loan.

What is unknown in most cases is Fico scores come in many variations. There are actually 53 different Fico scores. Since the myFICO site has recently settled a 4 year rift with Experian allowing consumers to buy all three Fico scores, we are getting many complaints that the scores pulled by bankers are sometimes different.

Because there are many versions of Fico scores a lender may have an older or newer version of the Fico score which could cause a difference in the score pulled at the consumer site. The newer version of the Fico score is the 08 version as opposed to the 04 and 98 versions.

Besides the different models, there are also varied brand names of the model used by each of the credit reporting agencies. For example, the 08 version is called Fico Risk Score Classic 08 for Trans Union, Beacon 09 for Equifax, and Experian calls it Experian/Fico Risk Model v08.

These brand names are listed on the merged report pulled by the banker. There are many reasons why banks might use different models or generations of the Fico score. Some don’t want to spend money on implementing the new version and others may still be evaluating whether they will approve it.

In addition to the different versions of scores causing variations, discrepancies in scores can occur if information changes on credit in between the first pull by the consumer at the Fico site and when the banker pulls credit. For example, if a credit card balance was updated on credit hours after an individual pulled reports and scores from the Fico site, there could be quite a difference when the bankers merged report is generated later on with the update.

When the banker gets the tri-merged credit report and score from the pulling service the scores could vary 10-100 points depending on what balance to limit ratio the individual had prior to the update. The same goes for closing an account or new accounts being updated to credit. Changes of information on credit can cause drastic or small score differences. Although the Fico site is not guaranteed to be the same, it is a good indication of where the scores are.

Northshore Agency encourages you to…

Call us with any questions or feedback on credit challenged clients or credit in general! And they want you to know that…

Making sure credit is analyzed with future financial goals in mind is a MUST before taking an action that can foil those plans and limit a consumer’s options for a better quality financial life.

“Great credit brings great opportunity!!” Copyright 2013

North Shore Advisory, Inc. offers credit repair, restoration, monitoring, and education services. We’ve been providing credit education and credit improvement for almost 25 years. For bankers and realtors we can review your clients credit reports and scores to see if we can improve them.

We can help you with your business credit needs as well as any personal credit scores.

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