Be Cautious When Using Your Nest Egg as an ATMWritten by James H. Dimmitt
About five years ago I moved from ranks of being a renter to that of being a homeowner. Now, not a week goes by that I don’t receive some type of offer through mail encouraging me to refinance my mortgage, open a home equity line of credit (HELOC), or apply for a home equity loan.Payoff High Interest Credit Card Debt! Lower Your Monthly Payments! Buy A New Car! Refinance And Get Money Now! scream slogans splashed across envelopes. The promotional letters inside point out how easy it will be for me to “get extra cash you need NOW!” They promise “no out of pocket costs” with a newly refinanced 30-year loan. Could I use some extra cash NOW? You bet I could! Who needs high interest credit card debt? Not me, no way, no how! Buy a new car? Hmmm, I like that new Pontiac G6 I’ve seen on tv, maybe in a sleek titanium color with black trim? For thousands of U.S. households “Home Sweet Home” is rapidly being replaced with a new sentiment - “Home Sweet ATM.” According to latest Federal Reserve study, 45% of homeowners who have refinanced their mortgages pulled cash out and 74% wound up lengthening their mortgage by about six years. Only 17% shortened their loan term opting to downsize to a 15-year mortgage. In a period of six years, Americans have more than doubled amount owed on home equity loans and lines of credit, nearing $766.2 billion, according to Federal Reserve. If you’re in your 40’s and you refinance on a new 30-yr. loan, you’ll be in your 70’s by time your loan ends. Even if you shave off a few years by paying down your principle, you’re still risking not owning your home “free and clear” as you approach retirement age.
| | Bad Credit Home Loan – Tips to Get a Home LoanWritten by Carrie Reeder
Do you have bad credit and are trying to get approved for a home loan? Getting a mortgage loan with poor credit history can be difficult, but it’s definitely possible. Getting a home loan with bad credit has actually never been easier than it is today. Here are some tips to help improve your chances of success:Find A Good Real Estate Deal – If you can find a property that has some equity in it when you purchase it, you may have an easier time getting financing on that property. To lender it may be almost as good as if you had some kind of down payment on property. Some lenders will consider properties loan to value ratio when they consider loan. Talk to your mortgage broker and see if this factor could help you get qualified. Try Creative Financing – See if seller would be willing to carry back a second mortgage on home. This is where you set up a contract or agreement with seller that you will pay them monthly payments, including interest of, let’s say, $150/mo on $10,000 dollars of price of property, as a second mortgage. Then, to make it nice for seller, perhaps put in agreement that entire amount is due in full within 2 years or something. That should give you plenty of time to refinance and then seller doesn’t feel permanently locked into contract. Save For A Down Payment – There are lenders who may be able to qualify you for 100% financing, even with low credit scores, but your interest rate will be much lower if you can put even 3-5% down. If possible, try to save as much as possible for a down payment. Sometimes it may be better to wait about 3-6 months to get into a new home loan if it means difference of having a down payment. The interest rate could be quite a bit better because of that factor. However, if you don’t want to have a down payment, you can always refinance later for a lower interest rate.
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