Bridge Loans Avoid Two House Payments

You are moving, and you have found your dream home. The contract is signed, and you have to close in 30 days. The problem - your old house is up for sale and getting very little interest. You are a nervous wreck, because you have to close a loan on your new home, and you are looking at two mortgage payments. Relax, this one is easy. Simply get a bridge loan. A bridge loan is very much like an equity loan, one that bridges the gap in the time you move into a new home and sell your old one. The...

Escrow and other prepaid fees

In order to close your loan, the lender will collect money in advance to create a tax and insurance escrow account, assuming you wish to pay these items inside your mortgage payment, which most people do. These fees vary, depending upon when your taxes and insurance were last paid. Consult your mortgage professional on these costs they shouldn't lead you astray here, as these fees are set by the lender and are non-negotiable. Also, a month or two after your loan closes, you'll get an escrow...

Grab your calculator

Now, let's assume you have 40,000 in equity in your house, but you need only 20,000 (taking less than 100 of the equity is important, but not mandatory). You take 20,000 and multiply it by 4.25 , which gives you 850. This is the amount of interest you'll pay the bank each year to borrow 20,000. Divide the 850 by 12 for a monthly, interest-only payment. Your payment for your 20,000 home equity line of credit is 70.83. This is a very powerful loan. Imagine paying less than 71 dollars for the...

How it Works

Lenders work their HELOCs on tiers, based on credit, the amount of the equity line, and loan to value. Again A+ borrowers can usually take as much as 100 percent of their equity at a rate of prime for life. The next tier for a particular lender might be for borrowers with A- credit ratings who take 100 percent of equity. Their level may call for a rate of prime plus one percent. So, if prime is 4.25 , they will pay interest only on their loan, at a rate of 5.25 . On a loan of 50,000, this is a...

Cashout Refinance

When interest rates plummet, as they did in 2003, the Cash-out refinance is one of the best home loan programs available. If you want to pay off high-interest credit cards, a car loan, get money for home improvement or combine two mortgages into one, this is the time, so don't worry about it adjusting and your payment blowing up. These are misconceptions most Americans have - that ARMs adjust all the time or that there is some Lenders do add a slight premium to your rate, usually one-eighth to...

Nonconforming or subprime loans

Now, you may be saying, All of this sounds great, but I don't have stellar credit. Don't worry, there are great loans for people with poor credit, and yes, you can still save thousands of dollars. In order to receive preferential treatment for mortgage professionals, you'll need a credit score of 680 or better (learn more about credit in the home equity section of the book). If you have a score that is less than 600, you'll fall into a sub-prime loan category. A sub prime lender will offer you...

Interest First Loan Keep Your Payment

Very few people, even those in the mortgage industry, know about this program, which was created just a couple years ago. Also, I would only recommend it, if you are the type of person who is afraid of the ARM, which, of course, you shouldn't be, after what you've learned in this book. Let's suppose you want to purchase a home, and you will need to finance 150,000, after down payment and closing costs. The 30-year fixed rate is 6 , which will create a monthly principal and interest payment of...

Line unless you choose to do so The best of all worlds

Getting a home equity line of credit is a marvelous financial move, especially if the HELOC is put to proper use. If you're paying off high interest credit card bills, car loans or other monthly debt, you can reduce your monthly payments considerably, consolidating all of these debts into one, interest-only payment. Consider the following example. Assume you have three credit cards with total balances of 12,000. Your average interest rate on these cards is 9.95 . Your monthly minimum payment is...

The Power of Interest Only Payments

So, let's suppose you take an equity line for 50,000 at 4.25 The payment on equity lines is very enticing. interest. This interest rate is based on the prime rate, a floating rate that can change but does not fluctuate very often. In fact, when this book was published, the prime rate had changed only .25 over a three-year period. During that time it averaged 4.25 , which is the rate used for the following equity line models. So, on your 50,000 equity line of credit, your payment is 177.00 each...

Here are a few examples of sub prime programs

Let's assume you have poor credit, and you want to purchase a house for 100,000. You also have only five percent to put toward a down payment. You bring a twofold problem to the lender - poor credit and a very high loan-to-value, or LTV. You need to borrow 95,000 on a 100,000 home, so your LTV is 95 . As a general rule, lenders like purchasers to bring 10 to 20 percent of their own money to the table, again lowering the risk for the lender they feel that the more money a borrower has in a deal,...

Stated Income and Stated Asset programs

A few years ago, a loan officer who worked for me was having a problem helping a customer. He was new to the business and had very little patience for problems (as you might have already guessed, he didn't last very long). He told me the customer was a doctor, who had left a hospital job to open his own practice. He was trying to refinance a 300,000 home, but he could not show any current income. After the loan officer and I discussed the options, he walked away from the loan, completely...

Winning the Mortgage Game Beat the Bankers Get Rich Doing It

Copyright November, 2003, Mark Barnes Copyright February, 2004, Mark Barnes No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means, electronic, mechanical, photocopying, recording, or otherwise, without written permission from the author. Printed in the United States of America Library of Congress Catalog Card Number 1244 Winston Road South Euclid, OH 44121 440 668-2420 FAX 216 658-1546 email Markbarnes19 hotmail.com