amortized http://www.artwoo.com Returned search results for amortized Copyright 2008 Thu, 04 Dec 2008 15:08:29 +0000 http://www.artwoo.com/rss/amortized Flexible Payment Mortgages http://www.artwoo.com/article/flexible-payment-mortgages http://www.artwoo.com/article/flexible-payment-mortgages#comments Tue, 18 Apr 2006 13:50:02 +0000 adjustable rate mortgageamortization schedulemortgage paymentmortgage balanceprincipalinitial interest ratemortgages http://www.artwoo.com/article/flexible-payment-mortgages mortgages, your payment is the same every month. But what if your paycheck isn't so regular? Would you like to be able to vary your depending on your cash flow? An option ARM -- also called a flex-ARM or pick-a-payment loan -- allows you to do just that.

How does it work? An option ARM is an adjustable-rate mortgage with a twist. You don't pay a set amount each month. Instead, the lender sends a monthly statement with up to four payment options. You simply choose the amount you want to pay that month and then submit your payment.

The options vary, but here's the most common menu:

Minimum payment: This is calculated using an "initial" interest rate that can start as low as 1.25 percent. Because this payment is so low, it's useful for months when you don't have much cash on hand, perhaps because you are waiting for a commission or bonus check. But any unpaid interest gets deferred, or added to the of the loan, so your principal grows.

Interest only: You pay all the interest due, but none of the principal. This doesn't reduce your , but it allows you to avoid deferring interest.

30-year amortized: This matches the monthly payment of a mortgage amortized over 30 years at your current interest rate. It includes both principal and interest.

15-year amortized: The same as above, but amortized over 15 years. This is the highest monthly payment. Choosing it allows you to reduce your principal faster than any other option.

The fine print The biggest caveat with option ARMs is that those enticing initial rates are short-lived. The low minimum payments that make these mortgages so attractive can increase dramatically. In addition, every five years, the loan is recast -- that is, a new is drawn up to ensure that the remaining balance will be paid off by the end of the loan's term. When that happens, the minimum payment can be pushed even higher.

What's more, if you defer too much interest, you can reach what's called negative amortization. If your balance grows to 10 percent to 25 percent (depending on state law) greater than the original principal, your loan is automatically recast and you have to start paying the fully amortized rate, which will increase your monthly payments.

Another potential downside of option ARMs is that they're more complicated than most other mortgages. Home buyers may be seduced without fully understanding how much the minimum payments will increase over the long-term. When the monthly amounts go up, these people can experience payment shock.

To learn more about flexible payment mortgages, visit http://www.lendingtree.com/cec/yourhome/yourmortgage/open-arms.asp">http://www.lendingtree.com/cec/yourhome/yourmortgage/open-arms.asp The editorial staff at LendingTree is committed to helping consumers become smarter borrowers. Visit http://www.lendingtree.com/cec for more information and tips on buying, selling, and financing a home. Copyright 1998-2006, LendingTree, LLC. ]]> Mortgage Tips - Pay Your Mortgage Weekly http://www.artwoo.com/article/mortgage-tips-pay-your-mortgage-weekly http://www.artwoo.com/article/mortgage-tips-pay-your-mortgage-weekly#comments Wed, 27 Dec 2006 10:27:08 +0000 mortgage paymentsmortgage paymentmortgage ratesaving moneyamortizedinterest ratemath http://www.artwoo.com/article/mortgage-tips-pay-your-mortgage-weekly math does not lie -- you should pay your mortgage WEEKLY. I have just completed all the math that you do not want to go through to find the truth.

I wanted to know the best way to pay a mortgage to save as much money as possible. Here are the conclusions that you want to take away from my studies.

Was it better to pay you mortgage weekly, bi-weekly or monthly?

-> Paying you mortgage weekly would save you 1294.12$ on a 200 000$ mortgage over 25 years (rate of 5.4%). Now that's not a ton of money but it does not cost you anything. You do not have to increase your payments at all to save. So take the saving and run with it.

-> The higher the the more you will save. If we double the interest rate, the savings are 7.08 times larger. That means that there is an exponential factor that increases, power of this strategy.

-> Paying your mortgage weekly generates 43% more savings than paying your mortgage bi-weekly.

How to increase your savings by weekly accelerated payments?

Recently many people have started to use a strategy called weekly accelerated s. That means that they not only save money by paying weekly but they also make their payments a little bigger and save a lot of money.

To do this they simply take their monthly mortgage payment and divide it by 4. Since there is a little more than 4 weeks in a month (actually there are 4.33) they end up making 4 weekly payments more every year.

-> On a 200 000$ mortgage (rate 5.4% amortized over 25 years) the extra payment would only be 23.25$ per week.

-> You would pay out the mortgage 3.7 years earlier

-> The total savings would be 23 173.78$. Not bad! (for details visit the resource box)

Paying your mortgage weekly and accelerated is worth it! The savings on the capital you use to increase your payments is equal to having a return on investment of 7.52%. Not bad for a guaranteed return!

does not have to be complicated: pay your mortgage weekly. If you can accelerate your payments a little, you'll save more. If paying your mortgage weekly is not possible then pay it bi-weekly. It's not as good as paying weekly but it's better than paying monthly! Gregory van Duyse is a writer for http://www.informezvous.com - hypothèques on http://www.informezvous.com/calculateur_hypothecaire/index.html mortgage calculators - calcul hypothèque. ]]> What Is An Option Adjustable Rate Mortgage? http://www.artwoo.com/article/what-is-an-option-adjustable-rate-mortgage http://www.artwoo.com/article/what-is-an-option-adjustable-rate-mortgage#comments Fri, 07 Dec 2007 15:19:59 +0000 market interest ratesadjustable rate mortgagegetting a mortgagemax capminimum paymentpayment optioncurrent market http://www.artwoo.com/article/what-is-an-option-adjustable-rate-mortgage Getting a mortgage for your home means that there are many different possible options. An option ARM, or is one possibility available for financing your new home. This mortgage gives you flexibility in the way you meet your monthly payments. Here are some details that will enable you to know if this mortgage is the one you need to purchase your home.

The option ARM's outstanding feature is that it provides the borrower with four different ways to make the monthly payments. This gives you the ability to control the way you make the payments. When things get a little tight, you can change the payment you make during that time. The four s are as follows:

Option

Once you have passed the low introductory payments with its special offer, you can expect that you will start paying the interest rate you received for the first year. The first year of an option ARM allows you to make a minimum payment each month. This can have an interest rate between 1 to 4%. Some option ARM's may even permit you to skip a payment altogether - remember, though, it gets added in somewhere.

It is important to note that if the amount of your payment does not cover the interest for those months, it does become added to the principal amount you owe.

The following year, however, the interest rate will climb to more normal market conditions, with a of a 7.5% increase.

Interest Only Option

Another way that you can pay on an option ARM is to choose the interest only option. This allows you to pay the interest only each month. Notice, however, that interest only payments do not reduce your principal. You can expect that the payment size will change monthly based on current .

30 Year Fully Amortized Option

This option allows you to make standard payments which will fully amortize the loan at the end of 30 years. The payment is calculated each month according to the interest rate at the time.

15 Year Fully Amortized Option

This mortgage is based on a 30 year calculation. You are making payments, though, so that it can become fully amortized in just 15 years. You do have the larger payments to make, but will save a lot of money by reducing the payment period.

It is very important, especially with the first option that you watch out for negative amortization. While some lenders actually use this term to name their product - it usually is not a good thing. You can find that your payments get raised very high (unusually so) in order to bring your payments into a fully amortizing status. In some cases, the caps may not apply because there is a possible resetting of loan terms when negative amortization occurs over a period of time.

Just like with any mortgage purchase you make, you should shop around in order to find the best deals. This will mean getting several quotes and comparing the various fees, interest rates, and terms. You will also want to know exactly what the margins are, too. Joe Kenny writes for the UK personal finance sites offering loans, credit cards, mortgages and insurance products - http://www.ukpersonalloanstore.co.uk/ and http://www.nationsfinance.co.uk. For US residents seeking loans, refinance or mortgages visit http://www.rebuild.org/ ]]> Hybrid Option Arm Mortgages http://www.artwoo.com/article/hybrid-option-arm-mortgages http://www.artwoo.com/article/hybrid-option-arm-mortgages#comments Mon, 16 Oct 2006 20:27:06 +0000 option arm mortgagesoption arm mortgageadjustable rate mortgagesadjustable mortgage30 year mortgagehybridfixed interest rates http://www.artwoo.com/article/hybrid-option-arm-mortgages adjustable rate mortgages is that monthly payments for the traditional are becoming more and more of a financial burden.

Fortunately, for current and prospective homeowners who have good payment histories over the last two years and credit scores above 620, an emerging product is making monthly payments for mortgages both affordable and safe.

Arms

Similar to Option-Arm mortgages, Hybrid Arm mortgages have 4 different options for monthly payments. These options are:

1.Minimum Payment - minimum payment--can lead to negative amortization. 2.Interest Only Payment - payment on only the interest of the mortgage 3.15 year Amortized Payment - payment towards the principal and interest based on a 15 year term 4.30 -- 40 year Amortized Payment - payment towards the principal and interest based on a 30 or 40 year term

The primary difference between an Option-Arm mortgage and a Hybrid Arm mortgage is the length of time the minimum payments and interest rates in a Hybrid Arm are fixed. Option-Arm mortgages typically have of 1 to 3 months. In contrast, Hybrid Arms have fixed interest rates between 1 and 7 years.

What this means for homeowners is that the benefits of Option-Arm mortgages are now combined with the security of longer termed mortgages.

For example, a homeowner with a 200,000 5-year pays $1467.00 before her taxes and insurance. With a 5 year Hybrid Arm, the homeowner would pay $800 a month on the same mortgage. The savings on the minimum payment would be comparable to the savings of an Option-Arm mortgage.

However, for an Option-Arm mortgage, the minimum payment would increase after 1 to 3 months, leading to minimum payments above $800. With a Hybrid Arm, the minimum payment would remain at $800 for the 5 year term. For the homeowner, this means a more predictable monthly payment and a reduced risk for negative amortization.

Hybrid Arms (also known as Hybrid Option Arms and Fixed Option Arms) typically save homeowners about 55% of their typical monthly payments. They are powerful tools to save money and ensure financial freedom. To see if you qualify for a Hybrid Arm, contact a mortgage professional today. Henry Tsaur is a seasoned financial professional with a wealth of experience in the mortgage industry, advising clients on debt consolidation, refinancing and investor loans. Phone: 800-515-8443 Website: http://www.RefinanceOne.net ]]> Four Things To Watch For When You Get A Home Equity Line Of Credit http://www.artwoo.com/article/four-things-to-watch-for-when-you-get-a-home-equity-line-of-credit http://www.artwoo.com/article/four-things-to-watch-for-when-you-get-a-home-equity-line-of-credit#comments Thu, 23 Aug 2007 05:25:02 +0000 home equity line of credithome equity loanhome equity lineshome equity loanshome equity lineequity line of credithome equity lines of credit http://www.artwoo.com/article/four-things-to-watch-for-when-you-get-a-home-equity-line-of-credit Home equity loans are a great way to get the cash you may need - for just about any reason. It could also be enough money to fulfill some of your dreams, too, if you have lived there for some time. Many people are tapping into their home equity in order to do some things they have always wanted to do. Still, though, there are some traps along the way that can be costly to those who are not watching. Here are four things to watch for when you get your of credit.

What Is The Interest Rate?

Probably one of the most important things that you need to watch for is the interest rate on the home (HELOC). This will mean that you need to watch the market some and be a little patient. Wait until you see that the interest rate is good. The interest rate may be near that of a first mortgage, but will often be a little higher.

Besides the interest rate, though, there will also be what is called a margin. This is an interest rate that is added to the prime rate, and it remains on it for the life of the loan. This figure is variable with each lender, and they often will not reveal it unless they are asked. You need to ask, because this could, in some cases literally double the interest you will be required to pay.

Is There A Guaranteed Conversion - If Necessary?

Because a home equity line of credit is an adjustable rate loan, you will want to have the protection of being able to convert - if necessary. This means that if the prime rate becomes high, that you will be able to convert your now high interest loan to a fixed rate loan. Oftentimes, adjustable rate loans have no caps on the interest rates, or very limited control over the caps. Currently, there are only about two states that put a cap on it - of about 16 to 18%!

What Charges Apply?

A home equity loan can come with quite a few charges - or just a couple of them. It really is up to the lender and what they think they might be able to get away with. Many of credit do not have any closing costs now, so look around to find one that does not.

Other charges may include a charge per check that you write. Another is a charge that will be given you if after a certain period of time you have not withdrawn any more money - often referred to as an inactivity fee. Then there may be an annual fee, or a monthly fee for participation in the program.

How Is It To Be Paid For - Amortized?

Another thing that you must look into is to find out how the home equity line of credit loan is to become amortized. You need to know how long is the draw period - the time that you have to withdraw the funds as you need them, and when you start paying on the principal of the loan. Some HELOC's require a balloon payment for the full amount at the end of the draw period. This would require that you refinance the loan. Other plans require that you start making payments that will fully amortize the amount you borrowed, but the time period to do so may vary.

As you can see, there are many different features given by different lenders. You want to make sure that you get several quotes when you go to apply for your home equity line of credit. Then carefully evaluate and compare them in order to find the features you like and that will fit your particular need for your equity. Joe Kenny writes for http://www.rebuild.org/, visit today for some home equity loan offers here, http://www.rebuild.org/home-equity-loan.html ]]> Beware Of Hidden Clauses http://www.artwoo.com/article/beware-of-hidden-clauses http://www.artwoo.com/article/beware-of-hidden-clauses#comments Wed, 06 Sep 2006 08:27:11 +0000 adjustable rate mortgagefixed rate mortgagerate cappayment capinterest rateaccordinglyconversion option http://www.artwoo.com/article/beware-of-hidden-clauses interest rate charged, the fees charged, the length of time before the mortgage is due, and the payment schedule. One of the ways they profit from lending to you is through the interest they charge against the amount you borrow.

Interest Rate: An interest rate is a percentage charged to the balance of your loan. Lenders are willing to lend you money because, by doing so, they make a profit.

Index: An index is a moving, economic indicator that an interest rate is tied to. Most indexes are tied to U.S. Treasury securities. If the index goes up, so does the interest rate.

Margin: A margin is a premium that lenders usually add to the index to determine the interest rate for your loan.

: A rate cap limits the amount the interest rate can increase. Most ARMs have two types of rate caps: periodic and aggregate. A periodic rate cap limits the amount the rate can increase at any one time. An aggregate rate cap limits the amount the rate can increase over the entire life of the loan.

: A payment cap protects the borrower from unaffordable individual payments. The payment cap sets a maximum amount for payments. If the rate increases but the payment cap prevents the borrower's payment from increasing , the rate could result in negative amortization.

Adjustment period: An adjustment period establishes how often the rate may be changed. For example, the adjustment period may be monthly, quarterly or annually.

: A conversion option permits the borrower to convert from an adjustable-rate mortgage to a fixed-rate loan at certain intervals during the life of the loan.

An interest rate for an typically starts off significantly lower than a . Because of this, an ARM can be a great way to finance a short-hold property.

Adjustable rates and fixed rates can be combined when obtaining a mortgage. You can take out a mortgage that is fixed for part of the loan term and adjustable for the rest. The shorter the loan term is at a fixed interest rate, the lower the interest rate is to begin with.

There are other factors that may increase the interest rate a loan officer quotes you from the par rate. The par rate is the going rate that all lenders are offering for a specific type of loan. If one loan officer quotes you a higher rate than another for the same loan, then he has increased your rate in order to make a larger commission. The interest rate that your loan officer quotes you is negotiable down to the par rate. Be sure to find out what the par rate is so you have a point of reference. This one point could potentially save you thousands by reducing your interest rate. However, there are increases to the interest rate that are required by the lender if the borrower is going on stated income, the property is non-owner occupied, the property has more than one unit or if the borrower's credit posed a greater risk to the lender. Your loan officer is unable to negotiate these increases down.

Most mortgage and deed-of-trust loans are amortized loans. That is, they are paid off slowly, over time, in equal payments. Regular periodic payments are made over a term of years and are referred to as a payment schedule.

An amortized loan payment partially pays off both principal and interest. Each payment is applied first to the interest owed; the balance of the payment is then applied to the principal amount. At the end of the loan term, if payments were made as scheduled, the entire loan balance and interest will have been paid in full unless a negative amortization was used. An amortization chart can tell you what your monthly payments would be for a certain loan amount, with a certain interest rate, for a certain length of term. You don't want to call your lender to find out what the mortgage payment would be for every property you are analyzing. Get familiar with how to use an amortization table. You should purchase a small pocket book amortization table, available at most book stores, so that you will have it accessible at all times. We have also provided a mortgage calculator located in the My Tools section above. This calculator is a quick and easy way to calculate amortized mortgaged payments.

A negative amortization occurs when the payment requirement is not large enough to cover all of the interest that has accrued. Instead of the loan balance decreasing, it increases. These loans are not highly recommended by our investors. They are usually used when a borrower is unable to qualify for the mortgage payments of a typical amortized mortgage. The lender will use a negative amortization loan to decrease the borrower's payments and get them qualified.

A straight loan or term loan, more commonly referred to as an interest-only loan, essentially divides the loan into two amounts to be paid off separately. The borrower makes periodic payments, usually monthly, of only interest followed by the payment of the principal in full at the end of the term. If you are not knocking down any of the principal and you end up having to pay one lump sum -- the amount you started with at the end of the term -- then how could this form of loan payment benefit anyone? Interest-only loans can greatly benefit the right person and the right investment. You can usually get a significantly lower interest rate with this type of loan. Due to the lower rate and the payments reduced to only the interest, your monthly payments are significantly less than an amortized loan or other payment plans. This can greatly increase an investor's cash flow on a property. True, you are not gaining equity by knocking off principal each month, but you may still be gaining equity due to appreciation. As for the enormous balance due at the end of the term, you don't need to have that ready in your bank account; you can pay it off with a new loan by refinancing your property. Paul constructs personalized investment plans that maximize profits and realize financial dreams. If you are ready to claim your success and learn what only the ultra-prosperous know, begin by going to http://www.myreiteam.com/link.html?promotion=trez, and capitalize on the real estate revolution. ]]> Turning Paper Into Profits! http://www.artwoo.com/article/turning-paper-into-profits http://www.artwoo.com/article/turning-paper-into-profits#comments Sun, 25 Feb 2007 04:27:08 +0000 money down10 yearsballoon paymentfinancial calculatormake moneynote investorcreative financing http://www.artwoo.com/article/turning-paper-into-profits make money buying real estate with no . Let me show you how you can achieve this objective. There are a few pre-requisites. First, the property has to be free and clear. Next, the seller must be willing to carry back a note that is secured by the property. So, let suppose you have found a good property. Here are two methods:

Method 1:

You have found a free and clear single family home that is selling for $200,000. The seller wants $40,000 or 20% down.The terms of the note are:

Length of the note: 30 years Interest rate : 10% Value of property : $200,000 Monthly payment : $1755

What you do now is create a note for the full purchase price of $200,000, due in . The at the end of 10 years is $181,875. You explain to the seller that you can give him the $40,000 down payment, but he will have to agree to go without the first 30months of payments on the note. He agrees to this after you illustrate additional financial benefits that he will realize from your .

Next, you are going to sell the first 30 payments to a for $44,208, which will result in a 14% yield to the investor. You pocket the $4,208 difference between the amount the investor will pay for the note and the $40,000 you have to pay to the seller as down payment. After the 30 payments are received by the investor ( which you as the buyer will be making), the payments will revert back to the property http://seller.Using your , the present value at that time will be $196,752, with 90 payments remaining. Remember the seller received a $40,000 down payment, so he actually makes $236,752, over the 10 years financing period, plus ongoing interest on the remaining balance. The results are that the seller gets $40,000 cash at closing. You purchase the property with no money down and keep $4,208 at closing. Make sure that when you sign the purchase agreement the contract states 'this agreement is contingent upon the buyer selling 30 monthly payments of $1755 for a minimum of $40,000.' Furthermore, you should have the note sale close at the same time as your real estate purchase.

Method 2:

Let's create 2 notes on the same property and sell the first one.

Here is one way of doing it:

Create a first mortgage for $125,000, at 10% interest, amortized over 30 years with a monthly payment of $1,097.

You will sell this mortgage to an investor for $100,000, or at a discounted yield of 13.8%.

You will also create a second mortgage for$100,000, at 10% interest, amortized over 30 years, due in 15 years.

The monthly payment is $877, and the balloon is $81,664.

The seller will keep this second mortgage. You will give the seller $80,000 down payment from the sale proceeds of the first note and keep the remaining $20,000 difference. Your benefit is that you get the property with no money down, all the appreciation, and the $20,000 at the closing of the transaction.

Yes, you are paying $5,000 more for the property ($125,000 + $100,000 - $20,000 = $205,000), but you will be paying for it over 30 years.

The seller gets a larger down payment of $80,000 and a monthly payment of $877 for 15 years of $157,860. After 15 years he gets a balloon of $81,664. So the total amount the seller gets over 15 years is $288,024. Of course, you can give less to the seller and gets more in your pocket, depending on your negotiating skills. Cody THOMAS is a Real Estate investor and a REALTOR, specializing in flipping properties. Learn how to create new note to flip properties at http://www.eforeclosureguide.com ]]> Expensive Mistakes And Priceless Knowledge http://www.artwoo.com/article/expensive-mistakes-and-priceless-knowledge http://www.artwoo.com/article/expensive-mistakes-and-priceless-knowledge#comments Tue, 12 Sep 2006 16:27:06 +0000 good faith estimatefaith estimatesbiweekly paymentsmippayment optionformulalender fees http://www.artwoo.com/article/expensive-mistakes-and-priceless-knowledge
Most financing fees are negotiable. The best leverage in negotiating down your lender's fees is a . This is an estimate that a lender is required to give to a prospective borrower. It is to inform the borrower of all the costs associated with obtaining financing through that particular lender. By obtaining a number of Good , you can compare to see who the less expensive lenders are. Just because they may charge less doesn't mean they are the lender that you should go through. More importantly, you want a lender that can provide you with the type of loan you need. However, you can use the lower cost Good Faith Estimates to negotiate with the lender you prefer to use if his fees are more costly. You'll need to make sure that the Good Faith Estimate contains all the fees that apply to obtaining the financing, not just the .

To determine what your monthly payment will be for an interest-only loan, you need to know how to calculate simple interest. To compute simple interest, use the following :

= P x R/12

MIP = monthly interest payment P = principal R = rate

Apply this formula to a $100,000 loan (P) at 10 percent (R) divided by 12 (months in a year).

MIP = $100,000 x .10 = $10,000 (the annual interest charged) divided by 12 MIP = $833.33

Combined Payment Schedules:

There are loans that combine both the interest-only with a fully amortized payment option. That is, you can take out a loan that requires only interest payments for the first so many years and then converts to a fully amortized loan for the remaining period.

:

Biweekly payments are payments that are paid every two weeks. Instead of paying a full month's payment at one time, biweekly payments divide the monthly obligation in half, due every other week. Because there are 52 weeks in a year, 26 half payments are made, which equals 13 whole payments. This is one more payment made per year than with loans that require one full monthly payment. Due to this extra payment as well as the more frequent deductions to the principal, loans on biweekly schedules can be paid off significantly faster. A 30-year fixed mortgage, paid biweekly, will be paid off in 22 years, saving the borrower 8 years worth of payments. We recommend setting up biweekly payments for every loan that the lender will allow.

Length of Term:

The length of the loan is the time that the terms of the loan require it to be paid off in full. The most common loan periods are 15 or 30 years, but there are numerous other options. You can opt for a term as short as 6 months or as long as the lender will permit, not too often past 40 years.

Short-term Loans:

Short-term loans offer lower interest rates, but your payments are larger due to the short period of time you have to pay off the entire balance. Because you are paying down your principal quickly, the total amount of interest you pay by the end of the term is significantly less than with longer-term loans. Short-term loans are great for building equity more quickly.

Long-term Loans:

A long-term loan is beneficial if the current rates are low and you plan to hold on to your property. Longer-term loans can help to increase your cash flow because the payment is stretched out over a longer period of time, so you pay less each month. The longer the term, the lower your monthly payment, but the longer it takes to increase equity by paying off principal and the more you will ultimately be paying in interest on the property.

Balloon Payments:

You can also combine benefits of both short-term loans and long-term loans with a mortgage that is due in full prior to the length of time its payment schedule is based on. For example, you can take out a loan with payments amortized based on a 30-year term, but agree to pay the loan in full in three years. Your payments are especially low with this type of loan because they are stretched out over a 30-year period and your interest rate is discounted due to the short three-year term. Because the payments over the term will not satisfy the entire amount owed by the end of the term, there will be a large balance due. This is called a balloon payment. The borrower will have to have the means to make this balloon payment at the end of the term. Because most people do not have enough funds sitting in their pockets to make a balloon payment, they usually pay it off with a refinance, or have sold the property before the end of the term. If you plan to sell a property shortly after the time you first take out the loan, a balloon payment is a beneficial way to go. Because of the short term, your interest rate is much lower.

Due-on-Sale Clause:

Whether a loan has a long term or a short term, they almost always have a due-on-sale clause. This clause gives the lender the right to call the loan due if you sell the property that it is collateralized by. If a lender calls a loan due, the borrower usually has only 30 days to pay it in full. Paul Pratt teaches easy and simple steps to achieve unprecedented real estate success, making every situation profitable. His successes include a college drop-out, MBA graduate, waiter, and a stay-at-home mom. Live your dream at http://www.myreiteam.com/link.html?promotion=trez ]]> Long Term Financial Planning Requires Careful Consideration http://www.artwoo.com/article/long-term-financial-planning-requires-careful-consideration http://www.artwoo.com/article/long-term-financial-planning-requires-careful-consideration#comments Tue, 30 Jan 2007 10:27:02 +0000 interest only mortgagesinterest only mortgagemortgage productpersonal financial planningold adagefinancial decisionshaste makes waste http://www.artwoo.com/article/long-term-financial-planning-requires-careful-consideration old adage says , and caution is your only friend. How true such a proverb is when it comes to the world of . Caution means that you stop and look at all options before making any decisions in order to ensure that more often than not the result is a sound decision with a positive outcome. This step is almost mandatory when dealing with issues of financial planning, 401(k)s, and future money needs like retirement funds, etc. Poor can result in catastrophic consequences like late payment, a deteriorating credit rating and even bankruptcy.

When investing in real estate for short term purchases, one of the options you may be considering is an . These can be a tricky investment and so you may want to consult with your financial advisor, before entering into a mortgage of this type. And, since it really can't be considered a piece of your investment portfolio, a will more than likely be part of a business venture or investment. This is where the looking at all the options really comes into play.

An interest only mortgage is not a good financing option when you are looking at purchasing a piece of property for a long-term investment purpose or are going to claim capital gains on the property. Interest-only mortgages are for quick profit transactions. You get in, and you get out. No hanging around in the middle. In. Out. Fast. Easy. Why do I say that? Because do not allow for an increase in value to you, there isn't an equity growing measure included so you can't get more out of the transaction, really; and, your investment debt never decreases.



Short-term implications and considerations of interest only mortgages have one main point. The payments are pretty low during the term of the payment, but that is simply because the overall liability is never going down. Other than that, this really shouldn't be a regular item of consideration in your financial planning portfolio.



The interest only mortgage offers little in the way of tax deferred savings when compared to the bigger products like IRAs, MSAs, and even 401(k)s. Sure the interest is tax deductible, but not at a one-to-one ratio. Even SEPs for the self-employed individual can have a one-to-one ratio of tax savings.



Over the long-term financial planning picture, if you were to consider an interest only mortgage in comparison to a regularly amortized mortgage you would see that when the regularly amortized loan is paid out, there is still a long line of payments to be made on the interest only loan. The amount of savings could be quite substantial if you consider the time value of money. Time value is easy to understand once you learn it. The basic concept is that the dollar is worth more today than it will be worth tomorrow (history seems to confirm this). So money put in savings today, will ultimately be worth more than money you start saving in ten or fifteen years. This is why financial planners urge folks to plan for retirement at such an early age instead of waiting until age 35 or 40 to start saving for the future.

While an interest only mortgage may seem like a viable option to you, be wary and consider all the other possibilities. Chances are a reputable financial planner will have other options that benefit you more in the long run. Johnathan Bakers repeatedly makes detailed reports on problems related to credit consolidation and personal finance. Recording his experience in reports such as http://www.debtania.com/negotiatesettlement.html ,the reviewer showed his experience on subjects similar to negotiate debt settlement. ]]> Details Of Loan Modification http://www.artwoo.com/article/details-of-loan-modification http://www.artwoo.com/article/details-of-loan-modification#comments Sun, 06 Apr 2008 05:20:01 +0000 loan modificationhome foreclosuremortgage notefresh startfacing foreclosurewaste of timemoney http://www.artwoo.com/article/details-of-loan-modification loan modification process. If you think that loan modification may be able to help you get back on track with your mortgage, you will want to get in touch with your lender in order to get started. But before you do that, you will definitely want to learn a bit more about what loan modification has to offer. After all, this is not something that you want to do for no reason whatsoever. The loan modification process can be long and drawn out, and unless you absolutely have to do it, you will be much better off staying away from it.

Generally speaking, loan modification is used among homeowners who are attempting to stop foreclosure on their home. Foreclosure is when the homeowner gets behind in their payments, and the bank is going to repossess it. With a loan modification program, a homeowner may be able to stop this by getting the terms of their mortgage changed. If you have the to make your current payments, but cannot catch up with the ones that you missed, a loan modification is probably the way to go; if your lender will work with you do this, of course.

The way that a loan modification works is not entirely difficult to understand. Simply put, your lender will take your back payments, as well as interest, and roll it into the overall amount of your mortgage. From there, the loan will be re-amortized, and you will have the chance to more or less start over fresh. Just remember, if you go through with the loan modification you should be able to stay up to date with your payments. It is going to be a for you to do this, and then start missing payments again. A loan modification can help you to avoid foreclosure, while also getting a on your . Although this process is not something that you want to go through, for most, it is much better than losing their home. If you find yourself , do not waste another day. Get in touch with your lender to see if a loan modification program would be possible.

For Rental Properties in Mumbai(Bombay), India check the link http://www.bharathrentals.com/browse/all/all/Mumbai James Gunaseelan writes for rental portal http://www.BharathRentals.com ]]> Spectrum Of Loan Programs http://www.artwoo.com/article/spectrum-of-loan-programs http://www.artwoo.com/article/spectrum-of-loan-programs#comments Wed, 13 Dec 2006 18:27:09 +0000 fixed rate mortgage30 year fixed interest rate30 year fixed mortgageconservativevariable rate loansinterest rates2046 http://www.artwoo.com/article/spectrum-of-loan-programs conservative to the least conservative, you'd have the 30-year and 40-year fixed amortizing loans on the conservative end and the negative amortization variable-rate loans on the opposite side. Those are the two extremes.

On the conservative end, you're paying off the loan at a fixed interest rate. Nothing changes. Your payment is exactly the same each and every month, for 30 or 40 years. That means you make the exact same payment today as you will in the year 2036, or even .

On the aggressive end, you've got a loan where your payment isn't even enough to pay the interest on the loan! So the size of the loan is actually getting bigger each month. To make matters worse, the underlying interest rate is variable. That means you can't even plan the extent to which your loan balance is expected to grow.

We'll take a look at the whole spectrum but first, we need to examine the interest rate structure. The 30-year fixed mortgage is one of the most conservative options available. It has the least amount of risk. Well, for the bank, the opposite is true. By reducing risk for the borrower, all the market risk is transferred to the bank. If sky-rocket, the bank cannot change the rate on your mortgage. It's fixed. They also can't "call" the loan because you've got a full 30 years to pay it off. So the bank could be making more money but they're stuck with you and your low fixed-rate mortgage.

That's a risk the bank takes when it gives you a fixed-rate mortgage. And as a result, the bank charges a premium for 30 or 40-year fixed mortgages. In fact, all other things being equal, interest rates get higher when you fix them for a longer period of time. An interest rate that's fixed for 5 years will be slightly higher than one that's fixed for only 3 years. A 7-year fixed is higher than a 5-year fixed. A 10-year is higher than a 7. A 15-year is yet higher and a 30-year fixed interest rate has traditionally been the highest. Of course, recently, the lending community has come out with the new 40-year mortgages. When fixed for the full 40 years, the rate is slightly higher than the 30-year. You pay for the luxury of a fixed interest rate; the longer it's fixed, the higher the rate is.

Remember: "all other things being equal." That's what we're talking about here. Given the exact same credit, income and assets; given the exact same closing cost structure; given the same down payment or equity; the interest rate will be higher as you fix it for a longer period of time. There's no question that rates could be higher or lower if other things in the file are different. For example, if you're comparing a 2-year fixed Subprime loan to a 5-year fixed A-paper loan, the 5-year fixed would have a lower rate than the 2-year Subprime but there are big differences between A-paper and Subprime loans.

The 30-year fixed is, historically, the most conservative choice. You pay for that security with a slightly higher interest rate but the risk is extremely low. The new 40-year mortgage is now increasingly common and by amortizing the loan balance over a longer period, it allows for slightly lower payments. Both of these loans have traditionally required "amortizing" payments; that is, they include both principle and interest.

Recently, the option of a 10-year Interest Only period has been introduced. The rate remains fixed for a full 30 years but you only have to pay interest for the first 10. If you think about it, there's no reason to have a 40-year loan if you also select the Interest Only option. If you're only paying interest, the amortization period become irrelevant. Either way, you're only paying interest. The difference would show up after the Interest Only period expires. With a 30-year loan, the remaining amortization period would be squeezed into the last 20 years. With a 40-year loan, you'd still have a full 30 years to pay the principle down.

Now, how many of us actually plan to spend the next 30 or 40 years in the same house? Perhaps some of us are but the majority plan to move into a different place sometime before 2036 (30 years from now). The trick is to balance the fixed period with the length of time you intend to stay in the property. There's no sense fixing the interest rate for a period of time when you'll no longer have the mortgage. There's no sense paying for a luxury you'll never benefit from.

In today's marketplace, you can fix an interest rate for 1 month, 6 months, 1 year, 2 years, 3, 5, 7, 10 years, 15, 20, 30 or even 40 years. So take a minute and think about how long you intend to stay in your current property. 5 years? Maybe 7? If that's the case, you should only fix your interest rate for 5 or 7 years; maybe 10, just to be safe. That way, you'll get the lowest interest rate possible while still getting the security of a fixed interest rate for the period of time you expect to keep the mortgage.

Most of these loans -- the ones that are only fixed for 3, 5, 7 or 10 years -- still have a full 30-year term. The payment is still calculated as if it was a 30-year amortizing loan. Again, if you select an Interest Only option, the amortization schedule becomes irrelevant. It doesn't matter; you're only paying interest anyway, at least until the fixed period expires. But for an amortizing loan, the payment is based on a 30-year amortization period and is completely fixed during the initial fixed period. After that, the rate changes to an index plus margin and the loan becomes variable. The margin never changes but the index can move up or down depending on trading activity in the bond markets.

In what circumstances should you select an Interest Only mortgage? Many homeowners today are stretching to make their monthly mortgage payments. Home prices have risen much faster than salaries, so it's a bigger strain on homebuyers than it was years ago. If you select an amortizing mortgage, you're basically putting yourself into a forced savings program. Any money you put towards your principle increases your equity. You get all that money back when you sell the house because your loan balance will be lower than it would otherwise, leaving you with more equity. An amortizing mortgage is definitely the 'conservative' choice.

On the other hand, you can look at an amortization schedule and see how much of the principle you actually pay down during the first 5 years of a 30-year mortgage. Not much. If you're only planning to stay in the property for 5 years, the difference in your equity is fairly minimal. Meanwhile, paying interest only would reduce your monthly payment. In California, Interest Only mortgages are extremely common and they definitely serve a purpose for those homeowners who are planning to get into a new, perhaps bigger, property within a few years.

The important thing to remember, obviously, is that your original principle balance never gets any smaller. In that sense, you're basically renting the house and banking on appreciation to build equity. During the past 10 years with house prices rising between 10 and 20% each year, this strategy has paid-off handsomely. But what happens when the market starts going sideways as it is today? What happens if prices remain the same or even go down a bit?

Also, consider the fact that you'll have to pay 5 or 6% real estate commissions when you sell. If you put 20% down on a house and only pay interest for 5 years and if house prices remain stable, you'll actually lose money on the deal. You'll start with 20% equity. If you end up paying 5% real estate commissions, you'll sell the place with only 15% equity (20%-5%) so you'll have less money after you sell the place than when you bought it 5 years earlier. And that doesn't include the closing costs associated with the original purchase. Those generally run about 2% so you'd end up losing 7% of the house's value during the 5-year period.

If the place actually drops in value, the situation gets even worse. I recently spoke with someone in this situation. He bought a place 10 months ago and can't keep up with the mortgage payments. His situation is even worse because he's got a prepayment penalty in his loan. Meanwhile, his home hasn't appreciated a cent. Between real estate commissions and the penalty, he'll be out over $35K if he sold today (he originally did 100% financing). If he rents it out, he'll still be under water about $1500 per month. Either way, he's in a bad situation. You have to be careful. Profit is not guaranteed.

That brings me to the last major loan program; one that is gaining in popularity. It's a bit scary, actually, because this last type of mortgage is the least conservative of the bunch. It's called an Option ARM and it gives the borrower a choice of 4 different payment options each month. They can pay a minimum payment which is based on an artificial starting interest rate of just 1%. They can pay the Interest Only payment. They can pay the 30-year amortized payment or they can pay the 15-year amortized payment -- the highest of the 4.

We've all heard about these 1% mortgages. They're heavily promoted and most of the marketing is deceptive. I personally believe that less than 10% of the people who get into these loans truly understand what they're getting into. There's no research to support that -- it's only my opinion. Let's take a closer look and unravel the hype surrounding these loan products. Believe me; they're not as great as they may appear.

First off, rates have never been 1% and they never will be. 1% is a marketing label that helps sell loans. They calculate the payment assuming a 1% start rate, but this minimum payment is less than the Interest Only payment. You're under water right from the start. The difference between this minimum payment and the Interest Only payment is referred to as "deferred interest" and it gets added to your mortgage balance each month. It's called Negative Amortization and it erases your equity every time you make that low minimum payment.

The next thing is that these loan programs are not fixed. They're variable right from the first month. The minimum payment structure is indeed fixed for the first 7 years (in most cases), but that's an artificial payment -- a Negative Amortization payment. Those minimum payments don't reflect the true interest rate at all. The underlying interest rate on these loans is variable and can change every month.

Third, the 30-year amortized payment is not fixed either. When people hear "30-year", they automatically assume "fixed". That's not the case here. There's a big difference between "amortized" and "fixed". With a variable interest rate, the 30-year amortized payment changes each month. And these days, it's probably getting higher, not lower.

We have to admit that there is value in these programs for people who fully understand them. In an appreciating real estate market, they can make it easier to maintain an investment property or provide flexibility for someone with an uneven income stream. But if the real estate is not appreciating, these programs erase your equity and destroy potential profits. So be careful. Patrick Schwerdtfeger is a fully licensed Mortgage Banker located in Northern California. He is the creator of "Beyond the Rate" (http://www.beyondtherate.com), a detailed and candid podcast series providing essential backstage information for California homeowners. ]]> Do You Have To Have A Mortgage To Buy A Home? http://www.artwoo.com/article/do-you-have-to-have-a-mortgage-to-buy-a-home http://www.artwoo.com/article/do-you-have-to-have-a-mortgage-to-buy-a-home#comments Fri, 14 Apr 2006 13:50:09 +0000 mortgage agreementtraditional mortgagehttpbuy a housebuying a houseloan sourcesubstantial down payment http://www.artwoo.com/article/do-you-have-to-have-a-mortgage-to-buy-a-home Buying a house is almost certainly the most expensive purchase you will ever have to make. Finding or saving the funds to buy your first home and get your foot on to the property ladder used to be almost impossible without taking out a mortgage to lend you the required funds.

Although most people still don't have access to the amount of cash you would need to buy a home, alternate options to the mortgage are starting to be explored. With the increased use of the internet to search for your new home, and the increased involvement of the buyer and seller of the house, direct communication between the two parties has never been better.

Buyers and sellers are now communicating together to see if they can reach a compromise for the exchange for the house which doesn't always include financial payment. These deals are becoming increasingly creative and can accommodate a whole host of requirements for either or both parties.

The most widely used alternative to the is that of the seller mortgage. Most buyers, particularly first time buyers, require a towards the purchase of their new home. This is usually a percentage of the overall price and is 10% as standard. The cost of houses in the UK has risen hugely over the past decade and so this can be as much as £18,000 in some areas of the country for a small two bedroomed terraced house. Given that many buyers have to rent their current home, savings are not always easy to come by. Should they wish to from someone who has no outstanding mortgage to pay a seller is a possibility.

The seller mortgage involves the original owner remortgaging the property and then setting up an amortized loan for the new buyer. This is a complicated loan but has been made much easier lately as it can be set up online and does not necessarily need an experienced and expensive accountant to work out the details. Mark Lambie is the founder of http://www.loan-source.co.uk a website providing homeowners with free secured loans quotes. ]]> Achieving Financial Freedom: Refinance To A 15 Year Mortgage http://www.artwoo.com/article/achieving-financial-freedom-refinance-to-a-15-year-mortgage http://www.artwoo.com/article/achieving-financial-freedom-refinance-to-a-15-year-mortgage#comments Tue, 19 Sep 2006 20:27:03 +0000 http://www.artwoo.com/article/achieving-financial-freedom-refinance-to-a-15-year-mortgage Interest rates are rising. News reports tell of increasing home sales and mortgage foreclosures. You're financially stable, but are keeping an eye on interest rates. A great way to save money on interest is to refinance to a 15 year mortgage. Of course, your payments will be higher, but in the long run, you will a considerable amount of money on interest. .

Loan Term Determines Interest Savings

If you've had your home for a few years, and want to refinance a 15 year fixed rate mortgage can give you peace of mind along wit significant savings. Your loan will be fully amortized, and the interest rate will not be subject to adjustment. Your principal and interest payment (P andamp; I) will be consistent. Here's an example of how much you can save by converting from a 30 year mortgage to a 15 year mortgage.

Let's say you've got a 30 year mortgage at 6.00%. Your original mortgage amount was $300,000. You want to refinance for the original amount to pay off lingering credit card and consumer debt, and are considering a 15 year mortgage loan. Your payments on the 15 year loan will be $2531.57, a difference of $732.92. Sure, that is a much higher payment, but depending on the amount of debt you refinance, you will have some extra cash available to meet the payments. Before you decide that the payments are too high, consider that you will save approximately $209,293 in interest compared to a 30 year loan at the same rate!

Refinancing: Part of the Big Picture

Everyone has a unique financial situation, goals, and priorities. If you're considering a mortgage refinance, it's wise to consider your entire financial situation including debts, anticipated needs, savings for college and retirement, and your present and future income. Consult your financial advisor to develop a plan that meets your needs now and in the future. Refinancing to a 15 year mortgage can be part of your overall financial plan. Karen Lawson is a freelance writer with more than fifteen years of experience in mortgage banking. She holds a Master's degree in English from the University of Nevada, Reno. Karen is a columnist for http://www.loanpage.com ]]> Interest Only Refinance Options http://www.artwoo.com/article/interest-only-refinance-options http://www.artwoo.com/article/interest-only-refinance-options#comments Wed, 10 Oct 2007 21:35:02 +0000 adjustable rate mortgagesadjustable rate mortgagemortgage expertterm mortgagesfederal reserveadjustable mortgage ratestarget http://www.artwoo.com/article/interest-only-refinance-options adjustable rate mortgage over the last five years? Have you seen your interest rate and your payment increase? Florida Jim Kemish discusses the current market environment and a new option for an affordable refinance.

Adjustable Rate Mortgage Popularity

Over the last five years almost forty percent of all home buyers selected . In early 2004 signs of inflation begin to appear. These indications pressed the into action. From June 2004 to June of 2006 the Federal Reserve increased the Federal Funds Rate 17 times. The impact of these increases was to push up the short- indexes that determine the or fully indexed rate on these adjustable rate mortgages. Borrowers that enjoyed the benefits of these low payment mortgage products are now finding themselves with considerably higher interest rates as their mortgages adjust.

Short Term Rates Up

This interest rate environment has a silver lining. The intent of the Federal Reserve's actions during this period of time was to contain inflationary forces that would have resulted in higher long-term interest rates. As of this moment, the Federal Reserve has been successful and long-term mortgage rates have remained near historic lows. The Federal Reserve has been so effective that long term rates such as thirty-year mortgages are now lower than adjustable rate mortgage offerings.

Long Term Rates Down

The anomaly of long term rates falling below short term rates is referred to by economists as an inverted yield curve. This phenomenon is currently providing the best possible refinance environment for borrowers that have recently experienced an increase in their . No one has been happy about watching their monthly payment increase. But imagine the alternative scenario where short and long term rates might have moved up together making it impossible for borrowers to refinance into an affordable mortgage.

Option ARM Concerns

One of the most popular mortgage programs of this period of time was the negative amortization loan. This loan type has been branded by many different names including the Option ARM. This loan allows borrowers to make a payment based on an interest rate that is often significantly below the effective, or fully indexed, rate. Borrowers selecting this low payment option find themselves owning more than they originally borrowed. Florida Mortgage brokers originated significant numbers of these mortgages as real estate values soared and buyers were eager to find ways to make their home payments affordable.

The New Fixed Rate Interest Only Mortgage

A new product has emerged that has become a terrifically popular option for borrowers wishing to refinance and to keep their home loan payments at a minimum. This program is the new thirty year fixed rate interest only mortgage. Interest only mortgages allow a borrower to pay only the interest due on a loan thereby minimizing their payments. Until very recently these interest only programs were only available on adjustable rate mortgages. That meant that in a short period of time, ranging from two to five years, the interest only feature would expire and the rate would adjust. This combination of events has the potential of more than doubling a borrower's monthly payment.

A Caveat

This new breed of fixed rate interest only mortgage combines the security of a fixed rate mortgage with an attractive low interest only payment. Like previous versions of interest only programs the interest only period is for a finite period of time. These new programs have improved on this aspect of the mortgage as well by extending the interest only period to ten years. There is one caveat to be aware of. Although the rate will remain fixed when the loan transitions from an interest only loan to a fully amortized loan at the end of ten years, the amortization period is limited to the remaining twenty years. The change from an interest only payment to a twenty year amortized payment will be noticeable and should be planned for.

Market Factors

Another factor that is driving this move to refinance is the weakened real estate market. As a Florida mortgage broker I have seen a significant increase in the number of borrowers that have decided against selling their homes, opting instead to refinance. Refinancing into an interest only program for many borrowers is the most attractive option. Many of these same people are refinancing out of their negative amortization loans wishing to keep their payment at a minimum and at the same time put an end to the reverse amortization effect of their current mortgages. The weakening real estate market has further underlined the importance of maintaining equity. There is little that we can do about market forces, but we do have control over the mortgage options that we choose.

Copyright =A9 2007 James W. Kemish. All Content. All Rights Reserved. Jim Kemish is the president of Sky Blue Credit Repair Services a national credit repair business established in 1989. For more great information visit Sky Blue at http://www.skybluecredit.com ]]> Need A Mortgage? Better Get One Because They Are Going Fast... The Affordable Ones http://www.artwoo.com/article/need-a-mortgage-better-get-one-because-they-are-going-fast-the-affordable-ones http://www.artwoo.com/article/need-a-mortgage-better-get-one-because-they-are-going-fast-the-affordable-ones#comments Tue, 11 Jul 2006 04:27:06 +0000 fixed rate mortgagemortgage interest ratesadjustable rate mortgageadjustable rate mortgagesfixed rate mortgagesmoneyappreciate http://www.artwoo.com/article/need-a-mortgage-better-get-one-because-they-are-going-fast-the-affordable-ones money in town. A mortgage is a type of loan that uses the property in which it is buying as security or collateral against the loan. Basically, a mortgage is the easiest and cheapest type of loan to get because whoever is lending you the money is really the one who is buying the house. It is not until you pay off that loan that the one actually owns his or her house.

There are many types of mortgage loans. The two basic types of amortized loans are the (FRM) and (ARM)

are set terms that a loan is to be paid off in and at a set interest rate. This rate never changes, allowing the person taking the loan to have some peace of mind about taking it. They know that even if the rise, they will still be paying the rate at which they locked into.

are still set in for a term of years but the interest fluctuates yearly based on the economy. This can be excellent if there is a period of years where the economy is prospering and the interest rates are low, than you save money. However it could go the other way as well, the choice is up to you.

The term "second mortgage" refers to taking out a loan against your house. Let's say you owned a house for a few years and you paid $25,000 of your mortgage. You could take a second mortgage out for $25,000 meaning now you no longer own a penny of your house, but you do have 25 grand to play with. Once again, this type of loan is the cheapest loan you will ever find.

Now you may be thinking, why on earth are mortgages so cheap? There are two main reasons that can explain this; 1. Houses almost always in value, meaning every year they gain more value. Every other type of assets that one might get a loan for will depreciate in value. 2. Banks own your house till you pay back the loan, so if you cant pay back the loan they foreclose your house - kick you out - sell it for more money (appreciation value) and go about their business like nothing ever happened. Its safe, that's all there is to it. The author makes a living in the field of research and if you have found this article useful, try clicking on his specialist resource sites, http://www.home-loan-facts.info and http://www.home-mortgage-facts.info . For other more general information on this topic and others, try this site http://www.important-information-online.com . ]]> Investment Property Mortgage Rate http://www.artwoo.com/article/investment-property-mortgage-rate http://www.artwoo.com/article/investment-property-mortgage-rate#comments Mon, 06 Nov 2006 08:27:08 +0000 property mortgagemortgage ratemortgage ratesmortgage brokerinvestment propertylowsinvestment properties http://www.artwoo.com/article/investment-property-mortgage-rate investment properties

Few people are intelligent enough to realize how difficult it is to make money from investment properties. Of course, not everyone can do it. Finding a good investment rate is not always that easy, especially with all the spam that comes daily in your mailbox advertising historic for interest rates. With so many options available, it may be difficult to choose the best for your needs. You may find the information below useful.

2. What you should do

You should contemplate both your plan and variables. Do you want to fix and flip the property, rent it out or just sell it to another investor. This may affect the choice of your investment property mortgage rate. Subtle differences in the type of loan you get may save you thousands of dollars. There are several lenders you can choose from, each offering different investment property . Analyze your needs variable and decide that is best for you. The best choice varies upon your financial position, what will happen with the interest rates over time, how soon are you planning to pay off the loan, either by refinancing or selling out etc.

3. What else you should do

You should contemplate options, choose a down payment, and choose a mortage. Your options will be limited by your current income, down-payment and credit worthiness. Credit worthiness refers to whether you have other consumer debts at the moment and if youve managed to paid the ones you had in time. If you already own a home, your investment property mortgage rate may be a little higher. A lender or can help you understand your options, as well as compare and contrast different loan programs. Of course, for a more in-depth understanding, you will also need an investment counselor, as well as a tax professional.A low down payment may be a better choice for working investors. A higher down payment may produce a taxable profit, that is taxed as regular income. Of course, a down payment may fail to get you a low investment property mortgage rate. The less money you put down at first, the higher the interest rate.

4. What you can choose from

You have a variety of options when it comes to deciding on investment property mortage rates. You can decide on an adjustable rate mortgage or a negative-amortized mortgage. Some mortgage consultants say that a fixed investment property mortgage rate, with no risks involved, is the best choice, especially if you have some money for down payment. The different mortgage plans may be difficult to sort out at first, especially if you are a newbie in the property investment field. With the proper help it will be easy to decide that option to pick. For more great mortage related articles and resources check out http://investmentplanet.info ]]> Comparing Fixed Rate, Hybrid Arm, Pay Option Arm And Hybrid Option Arm Mortgages http://www.artwoo.com/article/comparing-fixed-rate-hybrid-arm-pay-option-arm-and-hybrid-option-arm-mortgages http://www.artwoo.com/article/comparing-fixed-rate-hybrid-arm-pay-option-arm-and-hybrid-option-arm-mortgages#comments Sat, 21 Oct 2006 08:27:14 +0000 fixed rate mortgagehybridadjustable rate mortgageadjustable rate mortgagescosimtaoption arms http://www.artwoo.com/article/comparing-fixed-rate-hybrid-arm-pay-option-arm-and-hybrid-option-arm-mortgages Adjustable Rate Mortgage (ARM) types today are ARMs, , and Hybrid Option ARMs. Sound pretty similar don't they? There are similarities, that's for sure, but there are differences as well.

Hybrid ARMs

Hybrid ARMs are a cross between a traditional and a classic ARM. They generally come in varieties indicating how long they are fixed for, and how often they adjust thereafter. For example, a 3/1 ARM will have a fixed rate for the first 3 years, and can then adjust once every year thereafter. A 2/1 would be fixed for years and adjust every year thereafter, a 5/1 fixed for five years, 7/1 for seven and a 10/1 for ten.

All are calculated using an index, such as the , the COFI, the or the LIBOR. MTA and LIBOR are most popular. These rates indicate a basic borrowing cost of capital for the lender, this is how much it costs them to lend money in a perfect world. They also have a margin, which is like a risk premium, their profit for making the loan.

Hybrid ARMs have basic characteristics including:

1. Start Rate which remains fixed for X amount of time, so a 3/1 lasts 3 years and adjusts every year thereafter

2. Adjustment Cap Structure which dictates how much the rate can change when the loan begins adjusting. A 5/1/5 adj. cap structure means that the 1st time the rate adjusts it can go up or down 5 points max, any subsequent adjustments are limited to 1 point up or down, and the rate can never go up or down more than five points.

3. Floor: a rate which the note rate or fully indexed rate can never be lower than. (usually the initial fully indexed rate)

4. Ceiling: a rate which the note rate or fully indexed rate can never go higher than (usually 9.95 to 11.95 depending on lender and index)

The minimum payment on a 100,000 dollar regular Hybrid ARM with a 7% rate would be a bit over 665 dollars, and borrowers of all credit levels qualify for Hybrid ARM type mortgages.

One Month Option ARM

Option ARMs are one of the most popular loan types in today's market, and for good reason. Option ARMs are like regular ARMs, but they have 4 payment options instead of just the one fully amortized payment option on a regular mortgage. The minimum payment option is the main point of attraction for majority of the Option ARM customers in the USA today, because it allows them to make smaller payments when cash is tight. The minimum payment for the initial period of the loan for 100,000 dollars would be 322 dollars, versus 665 dollars for the full payment on a conventional mortgage. A great option for the self employed, the small business owner.

On 1 month option arms, they adjust every month after the initial period, so if the initial period is 6 months or 1 year, then every month therafter the rate adjusts. There are 6 month and 1 year option arms wherein the payment adjusts every 6 months or 1 year thereafter as well, however 1 mo arms are most popular. They have additional features in addition to standard Hybrid ARMs:

6. A Minimum Payment: a payment which like a credit card allows you to stay current on the mortgage without paying the full amount of interest due, referred to as deferring interest

7. A Minimum Payment Adjustment Cap: the maximum amount that the minimum payment AMOUNT can increase or decrease in a given period. Typically 7.5%. So if your minimum payment is 1000 dollars, then in the next period it can not go higher than 1075 dollars.

8. a Negative Amortization Cap: This is the maximum the loan balance is allowed to increase due to deferral of interest (making the minimum payment only) before the loan is re-cast and the minimum payment option goes away. Depending on state and LTV this is 110% to 120% of the loan amount.

Option ARM Example: On a $100,000 Option ARM with a 1% start rate, a base or index rate of 4% and a margin of 4%,

- Minimum Payment = 322 - Interest Only = 667 - Deferred Int. = 345 (IO minus Min Pay) - 1 Year Neg. Am. = 4140 - Recast Balance = 115000 (assuming 115% neg-am cap) - Months to Recast= 43 (assuming you only make the minimum payment)

When a regular option arm exceeds its negative amortization cap and recasts (typically in 3 and half to 4 years if you're only making the minimum payment) the minimum payment option goes away, and you are left with the fully amortizing payment, although some products are beginning to extend the availability of the interest only option for up to 10 years. Because of the incredible flexibility of these loans, they are limited to higher credit borrowers (generally a FICO score of 660 is required, however certain programs are available for borrowers with FICOs of 600 or better).

Hybrid Option ARMs or Fixed Rate Option ARMs

Hybrid Option ARMs combine some the best features of Hybrid ARMs, such as medium term fixed rates, with the best aspects of Option ARMs, such as low minimum payments, while solving a lot of the problems with both for the average borrower. They are most popular with homeowners who want the stability of a fixed rate mortgage but the option to make very, very low minimum payments, and are considered an ideal compromise between andquot;safetyandquot; and andquot;flexibilityandquot; in the mortgage world.

Hybrid Option ARMs are generally based on normal Hybrid ARMs, in that their initial period is usually 3/1, 5/1, 7/1 or 10/1 meaning 3, 5, 7 or 10 years where the rate and minimum payment stays fixed, and 1 adjustment per year afterwards.

However they have Option ARM like features such as a minimum payment, minimum payment adjustment cap, and neg am cap.

Using the above example the same loan amount in a typical hybrid option arm package

- Minimum Payment = 449 (assuming 3.5%) - Interest Only = 583 - Deferred Int. = 134 (1/3 of regular option arm) - 1 Year Neg. Am. = 1608 - Recast Balance = 115000 (assuming 115% neg-am cap) - Months to Recast= 112 (assuming you only make the minimum payment)

Also, when hybrid option arms recast, most of them allow for an Interest Only option instead of forcing the borrower into a fully amortized payment they might not be able to afford. Along with the long recast timeframes and the fixed rates for the initial period, this substantially reduces payment shock on recast.

Wrapping Up

So we've discussed Hybrid ARMS, Option ARMs, and Hybrid Option ARMs, and will provide a variety of real world examples and detailed treatment of relevant topics in other articles in this series. And as always we welcome your questions and calls. Tristan Hunt is a seasoned financial professional with a wealth of experience in the mortgage industry, advising clients on debt consolidation, refinancing andamp; investor loans. Phone: 800-515-8443 Website: http://www.RefinanceOne.net ]]> Balloon Loans - How One Could Help You http://www.artwoo.com/article/balloon-loans-how-one-could-help-you http://www.artwoo.com/article/balloon-loans-how-one-could-help-you#comments Sun, 04 Mar 2007 20:27:04 +0000 balloon mortgageballoon loanballoon mortgagesballoon loansballoon paymentfixed rate mortgagessecond mortgage http://www.artwoo.com/article/balloon-loans-how-one-could-help-you balloon loan also has a specific purpose, and it could be what you are looking for if you are looking for something that is more of a short term than long term. Here are some ways that a balloon loan could help you.

A balloon loan, whether as a first or a , is always set up for a 30-year span. This is so that there is a basis with which to calculate the payments. Your payments will always be what they should be to become fully amortized over the 30-year period. then are given a period of time, such as 5-year, or seven-year, or even a 15-year, in which they become due.

s are usually . The interest rate on a balloon mortgage is also a little lower, too, which reduces your monthly payments even lower, bringing even larger savings. There generally are not any limits on interest placed on refinancing, such as there might be with a 30-year ARM, so you will be refinanced at whatever is the current rate. Refinancing is simpler, though, and, if it is in your contract, you will not need to be requalified, or the property reassessed, and fees will usually be minimal.

When a balloon mortgage becomes due, then full payment is expected. However, because there is so much left to be paid, most people are required to refinance in order to pay the balloon mortgage off. Whatever the interest rate is at the time, is the rate that you will have to take -- there is not much of an option here.

If you are looking to buy a house, and stay for a short term, either less than the typical 5, 7 or 15 years, then you have a real good way to save some money. A balloon loan allows you to enjoy the lower monthly payment rates, and you can sell it before the becomes due. This gives you the perfect opportunity to buy an even a larger house for less. The only problem is if you decide you want to stay - then you must refinance.

are more commonly being used as a second mortgage now, in order to reduce monthly payments and save hundreds of dollars each year. If you do not have a 20% Downpayment when you apply for your mortgage, then you will be required to get private mortgage insurance (PMI). You can avoid this by getting a piggyback loan, one for 80% (first mortgage) and the other for 20% (balloon loan), and then you will not need to get the costly and unnecessary PMI.

It is even possible to get a larger balloon loan if you get it against the equity built up in your house. Another option would be for the purpose of projects around the house in the way of construction and remodeling -- especially if you want to do it before you sell. When applying for a balloon loan you want to be sure to check out the various fees and compare several potential mortgages in order to see which one has the best deal for you. Also make sure that you get one without any penalties for paying it off early. Joe Kenny writes for the UK personal finance sites http://www.ukpersonalloanstore.co.uk/secured_loans.html and also http://www.nationsfinance.co.uk/loans/ ]]> How To Find Discount Patio Furniture http://www.artwoo.com/article/how-to-find-discount-patio-furniture http://www.artwoo.com/article/how-to-find-discount-patio-furniture#comments Thu, 28 Jun 2007 22:34:59 +0000 teak wood furnitureteak wood patio furnitureteak patio furnitureteak furniturefurniture teakwood patio furniturediscount teak patio furniture http://www.artwoo.com/article/how-to-find-discount-patio-furniture Teak is renowned for its beauty and elegance. For many people, transforms their outdoor patio in to a lavish getaway. Teak wood has qualities that are unlike any other wood. It is dense, rich in oil, almost immune to splitting, buckling, and rotting, thus making it termite proof. Teak wood has been prized for centuries as one of the worlds most durable and stable woods for outdoor usage. For centuries, teak wood has been used for shipbuilding because of its durability. When amortized over the years, taking into consideration its quality and durability, teak wood is truly a worthwhile investment.

There are many types of hardwood used for outdoor furniture. In fact, a lot are even marked as "teak substitutes". There is absolutely no substitute for teak wood and no other hardwood in the world will perform to the same high quality standards as teak wood in outdoor conditions. Teak is without doubt, the best hardwood in the world for outdoor furniture.

Teak wood patio furniture is generally quite expensive. However, there are many people looking to redecorate their patio on a budget. Many of these same people make the mistake of believing that teak wood patio furniture is too expensive. is expensive by many people's standards, but as I said, teak wood is more than worth the costs. You will also be happy to know that there are options available in finding discount . One option is to pay close attention to store sales in your local area. You will find that retailers have sales on in the spring or at the end of season. The only drawback from end of season sales is that you will not get to enjoy your new teak wood patio furniture until the following season.

Another option for locating discount teak wood furniture is to use the internet. The internet can be one of the best ways for locating discounts and sales of just about any type of product. Keep in mind the shipping costs when searching the internet for discounts. Make sure you do some background checking before purchasing any teak furniture off the internet. Check the Better Business Bureau of the Internet stores home office. It might be wise to give the Internet store a call just to make sure they are a legitimate operation.

See if you can find a teak wood patio furniture supplier as opposed to a traditional retailer. Traditional retailers tend to sell a wide variety of different products, whereas many suppliers may only focus on a certain type of product, such as teak wood patio furniture. Since there may not be an intermediary associated with the supplier, you are more likely to find discount teak wood patio furniture from a supplier. Thomas D. Houser http://www.teakwoodpatio.com ]]> Retirement Planning - Should You Pay Off the Mortgage? 5 Factors to Help You Decide http://www.artwoo.com/article/retirement-planning-should-you-pay-off-the-mortgage-5-factors-to-help-you-decide http://www.artwoo.com/article/retirement-planning-should-you-pay-off-the-mortgage-5-factors-to-help-you-decide#comments Thu, 23 Oct 2008 16:50:23 +0000 fixed rate mortgageeggs in one basketsavvy moveinterest deductionsinterest deductiondecision 1interest on the loan http://www.artwoo.com/article/retirement-planning-should-you-pay-off-the-mortgage-5-factors-to-help-you-decide
1) If you are still able to write off the , then I would recommend that you keep the mortgage because you still get the tax advantage of the . If you are in a high tax bracket at retirement, this would be a . The higher the interest deduction, the higher the tax advantage.

2) If you don't have enough to itemize on your taxes then pay off the balance if you have the money to do so and only if those funds are making less than your mortgage interest. For example, if your cash to pay off the mortgage is making 4% and your is 7%, then pay off the balance with the cash. You are basically investing more money in your home.

3) Even though your mortgage is paid off, it is a good idea to make a monthly payment into cash reserves set aside especially for maintenance on your home. Just because the mortgage is paid off doesn't mean you can let that large investment sit without repairs. Too many seniors sit alone in large homes in disrepair. Don't let this happen to you.

4) A common mistake is for retirees to refinance a high interest fixed loan for a lower interest fixed loan. When you refinance, the interest and principal is amortized over the life of the loan and in the beginning you will be paying mainly interest. But if you had your loan for over half of its life, then you are paying down principal not interest which is a good place to be when you are on a fixed income.

5) You don't want all your , so why own a home with no mortgage? If you do, your largest asset may be your home and if it goes down in value, then most of your net worth will too.

Some people consider their home as their investment, and have no problems selling it to turn equity into cash and downsize to a smaller home. Other people feel attached to the home that they raised their kids in and want to stay for the long haul. Most baby boomers are heading into retirement with large mortgages and have no intention of paying them off.

Your individual circumstance will tell if it is the right thing to pay off a mortgage before you retire. By understanding the tax implications of your decision and how it affects your cash flow and your portfolio, you will feel better about making the right decision for you.Interested in more tips to survive this crisis? Get the Whole-Hearted-Way eNewsletter written by Fern Alix LaRocca, a fee-only Certified Financial Planner TM with over 24 years in the industry today.]]>