What Causes Mortgage Interest Rates to Increase?

Do you wonder what causes mortgage interest rates to increase and fall the way they do? The media and even mainstream economists tend to say that interest rates are increasing as an indicator of economic health. 

However, this isn’t absolute and there are definite flaws in the idea. It is clear than the media has no clue what causes mortgage interest rates to rise at all.

Economic Growth

Interest rates went up almost 40 points in one stretch, and that is being hailed as evidence of economic growth. That isn’t the case, though. Recently, Treasury bonds saw a rise in yield, and the effects that had have been noticed all around the board.

Mario Draghi is the head of ECB (European Central Bank). The ECB printed trillions of Euros hoping it would pacify the bond market. The Eurozone had been financially flustered, and this helped the situation. After Greece left the Euro, some were afraid that the Euro would suffer more. Investors sold their Treasury Bonds to buy back into the Euro.

Economic Knowledge

Despite what is called wise economic knowledge, the rise of sovereign bonds would cause their credit to decrease. It would also run the risk of inflation. However, interest rates aren’t going to be so affected by economic health as is being pushed by the media.

When you mix economic growth with a well thought out, responsible financial policy, inflation tends to be less of a problem and then mortgage loan interest rates will rise. However, this happens without causing nominal rates to rise. It essentially just gives a much higher rate of return.

Inflation Concerns

This is exactly what happened in the United States in the 80’s. The battle against inflation had finally been considered over, the economy was booming and the stock market was doing great. Nominal rates were falling, not rising.

This is the direct opposite of what is being said now. Now, we are being told that the rise in interest rates is due to our well groomed, thriving economy. Why then, was the economy doing so well then, and the interest rates were lower?

When the amount of money in circulation is drastically increase, inflation increases as well. With all of the extra money and credit, centralized banks give some cover to the government, allowing it to end up in enormous amounts of debt. Central banks control interest rates for only a small amount of time.

Despite what is being said by most of the mainstream media outlets, mortgage loan interest rates are largely controlled by the banks. Rather than the economy influencing interest rates, a more realistic scenario is the interest rates influencing the economy.

What the banks base their interest rates on, however, is influenced by the economy and the need for profit. So while the interest affect the economy, they are based in part on the economy that it influences. This is the way things work, economics is a crazy, confused mess of policies, strategic manipulation and risk that if not watched carefully, can and will take you by surprise.

What to Look for When Getting a Remortgage

When you are going for a remortgage, the main aim is often to try and get better terms from the deal. What would be the point in going for a remortgage without knowing that it was going to benefit you in the long-term? It’s important that you take a closer look at what you expect to get from a remortgage (The Loans Department are a great source of such services).

The method of remortgaging does not usually involve moving home or taking out an additional mortgage on the property; it is in effect the transfer of a mortgage in one lender to another. 

Homeowners may choose to remortgage for various reasons, usually to reduce the general monthly mortgage payment amounts. However, other reasons may include to reduce the size of repayments, to pay for off a mortgage earlier, to improve capital, or even to consolidate other more costly short term debts.

Homeowners often misuse the expression remortgage when they are simply switching in one product to a different with the same lender; this isn't a remortgage which involves the removal of one legal charge over a house and its substitution with another in favour of a new lender.

It’s a very hard thing to get right, of course, but it’s important that you take the next steps to get that right. When you go to try and get yourself a remortgage, then, consider the following:

What is your credit rating? 

The first problem you might have is that you cannot get a standard adjustment to your mortgage for the simple reason that your credit rating is not good enough. Banks will turn their nose up at anyone they cannot feel 100% secure working with, so you should look to see what kind of remortgage options are open to you. 



If you take the time to read into this, you should find it so much easier to get a better understanding of what options you can pick from.

Can you get the rates you need? 

You should be looking for a company that can help you to get a good return on the opportunity. Basically, you will need to be able to work with a remortgaging and lending firm that is happy to give you access to the opportunity to prove you can be trusted. 

When you are looking for a remortgage firm, make sure they show a sense of emotion and understanding of the challenges you face and that they are open to working with you even if your credit reputation is poor.

What advice is offered? 

Since your credit rating is likely quite weak, it makes sense to look for someone who comes with free advice. Try to find a consultancy that can give you advice and information on how to best improve your credit situation with salient and reasonable advice. 

The more that you can do this for, the more likely it is that you can find a solution that isn’t going to cost you an arm and a leg investigating. Always take a look at the kind of advice that they can offer – and how much that advice would cost you to get!

Are they open and transparent? 

The best company to hire when you are looking for advice about your remortgaging options is the business that is open from the star. Make sure that they show off a policy of openness and engagement for all, making it much easier for you to work with someone who you can trust to give you the information that you need, when you need it. 

The more open they are, the more likely you are to get an honest appraisal of your likelihood of success in remortgaging your property.

Knowledge is power, so make sure you hire the right people to assist!

3 Ways a Mortgage Beats Renting for Aspiring DIY’ers

If your urge to undo and improve is strong enough, you might be able to put that energy to positive use by owning your home instead of renting. Besides the satisfaction you get from doing-it-yourself, you will probably come out financially ahead.

You Don’t Need Permission

Renters must have permission from their landlords or property managers to make changes to the home, even for the smallest improvements. They may balk at letting tenants paint, change faucets, replace faucets, or even have carpets cleaned.

Unless there’s a homeowner association involved, homeowners have complete control over their property. If they want brightly colored walls or flooring, the choice is theirs. They can remodel to the extent their budgets and abilities allow, something that few, if any, landlords will allow.

The two major issues that keep landlords from allowing tenant changes include skepticism about the tenant’s qualifications as a do-it-yourselfer and the budget. Even without the labor included, even the simplest home remodeling projects cost money.

Homeowners Can Borrow the Money

The first step in buying a home is to meet with the lender will calculate the monthly payment based on the down payment and interest rate. Mortgage payments are almost always lower than monthly rent rates. The interest rates for primary home loans are usually the lowest available for any kind of borrowing.

Home values appreciate over time and you can turn the equity into a home equity line of credit (HELOC) to fund other home improvement projects that will add value. HELOCs also carry lower interest rates than other kinds of consumer loans, especially compared to credit card interest rates.

Home Improvements Add Value

By putting your do-it-yourself skills to good use, you add value to a property. How much depends on the project and the demand for the improvement. Few projects return 100 percent of the retail cost, but when you contribute the labor, you will realize a net gain.

People who flip houses make substantial amounts of money improving homes and reselling them when finished. When going this route, research which improvements are in demand in your area. Giving home buyers what they want will enhance the value of your work and possibly speed the sale.

Anyone who enjoys home improvement projects and has the do-it-yourself skills to make the work profitable has the advantage as a homeowner. For them, a mortgage is definitely better than a rent payment.

4 Financial Resources for Families Looking for a New Home

Higher home prices and the decreasing number of homes available for sale aren’t the only things keeping most families in city apartments. Most of these families, regardless of their income levels remain hooked up in rentals as they don’t know how to source for funds to buy a home. 

Here are four possible financial sources for families seeking to buy their family home.

State Down-Payment Grant

Where do you live and what is your average annual income? Those are the only questions most state, county or even state governments ask in determining whether you qualify for down payment assistance. 

To make homes affordable to all citizens, state and county governments set up the little-known down Payment Assistance Scheme. This helps low income earners raise the down payment required by most mortgage providers.

College Graduation Grant

A Bachelor’s degree in any related field can also earn you a significant grant amount that you can use as a down payment for a family home, in Indianan and Ohio at least. 

In these two localities, you qualify for up to 2.5% of your home purchase if you graduated with a bachelor’s degree here within the last two years and have a full-time job.

Mortgage Loan

Mortgages by far remain the most popular financial resources to purchasing a family home. With a stable source of income and the required down payment, you can approach any financial institution offering mortgage services for financing. 

Note that the higher your down payment you raise and shorter the repayment period, the more favorable the mortgage repayment terms.

Through Low down Payment Loans

Though they suffered a major setback in the recent housing crisis, low down payment loans are still available. For instance, the Federal Housing Authority only requires that put down as little as 3.5% of your home purchase price.

Good Neighbor Next Door

Is your career centered on community services like emergency medical technician, firefighter, an active law enforcement officer or even a veteran? That too can increase your chances of owning a family home. 

Through the Good Neighbor Next Door program, the U.S. Department of Housing and Urban Development can finance up to 50% of the home’s listing price if you seek to buy a house in regions that the institution considers revitalization areas. 

There is a catch though. You must work full-time in the designated occupation and agree to live in the home for not less three years after purchase.

Bottom Line

Real estate experts believe the only reason hindering could-be homeowners from owning a home is the fact that they aren’t familiar with the different finance resources available to them. 

If you dream of moving your family out of a rental into a decent home, research on the various financial sources available to you based on your profession, income levels, and residence.

Investing Insight: Pros And Cons Of Condos Vs Homes

If you're thinking about purchasing a condominium unit or a home then there are a number of differences that you should be aware of before making your decision. 

You need to understand what a condominium actually is and how it differs from an apartment or home for starters. There are a number of personal and financial considerations that can tip the scale in favor (and against) condo ownership, so let's get started.

Condo Pros And Cons

The first upside that a lot of consumers appreciate about owning a condo is that their mortgage payments are far more manageable. 

Even with a 30-year home mortgage you could be talking about monthly mortgage payments in the thousands, which would seldom be the case with a condo in most areas.

With a condo you also don't have to worry about landscaping and trash collection as you normally would with a home. Those kinds of services are usually covered by the condo association and taken care of with your monthly condo assessments. 





With both condos and homes you may pay property taxes. A lot of people might also have a problem with all of the condo association's rules - like what you're allowed to renovate in your unit or the kinds of pets that you're allowed to have in your condo unit.

On the plus side condo ownership can mean an attractive urban unit in the heart of the city at relatively little monthly expense in terms of mortgage payments and biannual property taxes.

Pros Of Home Ownership

The first pro with a home is that there's usually much more space for you to entertain your guests and do what you like. 

You can have as many pets as you want without worrying about condo association rules, and you can have guests stay into the wee hours of the early morning. You'll have more indoor space too with most homes. Any upgrades you make will increase your curb appeal and likely home re-sale value as well.

Cons Of Home Ownership

The downside is that, although you'll have fewer rules to negotiate, you'll have to maintain your own lawn unless you go with a lawn service. 

You might also pay more on a monthly basis as far as mortgage payments or taxes go. It's possible your home could depreciate in value over the lifetime of your investment.

The amount that you're willing to pay towards your mortgage and property taxes, the amount of independence that you need, and the kinds of opportunities in your area will likely determine whether you become a condo or home owner. 

Checking in with real estate professionals, like those at RE/MAX Associates San Antonio, can make the decision easier. If you're still struggling, though, remember that a condo comes with rules and monthly assessments. 

Home ownership, on the other hand, likely means more maintenance but the chance to make a healthier profit at closing when you go to sell and independence until you go to do so.

How Your Family Can Become a Part of the 35% of People Who Own Their Home

According to the Federal Reserve, approximately 65.2 percent of families owned their own home in 2013. If you and your family are currently renting a home, you may be wondering what you can to do join the majority of families by buying your first home. 

The home buying process can seem intimidating and challenging if you have never been through this experience before. However, you simply need the right strategy to turn your goal into a reality. These tips can help you to position yourself for success with your goal.

Start Looking at Homes

Some people think that they should not start looking at homes until they are ready to move forward with their home buying plans, but this is not the case. 

When you start looking at homes now, you can learn more about the market so that you can better determine how much money you need to save as a down payment and what a reasonable sales price is. 

You can also define what you need and want in a home through your search efforts. Some people even find that they become more motivated to save for a down payment by dreaming about the possibilities. 

To begin learning more about the real estate market, search for listings in different communities in your area online. You can also tour homes in new construction areas, such as homes for sale in Davis County, Utah, in your free time.

Talk to a Mortgage Broker

You may not be ready to get pre-qualified for a home loan right now, but you can benefit from speaking with a mortgage broker. A mortgage broker can tell you more about interest rates, down payment requirements, credit score requirements and more for different loan programs. 

You may need to take several months or longer to improve your credit rating and save for the down payment, and your conversation with a mortgage broker can help you to develop reasonable goals in these areas. By setting and achieving these goals, you can qualify for the financing you need to buy your first home.

Save for a Down Payment and Closing Costs

Closing costs for a home loan may be as high as two to three percent of the sales price in many cases. In addition to paying for closing costs, you also may need to make a sizable down payment. 

Some loan programs are available for a five percent down payment or less. However, many home buyers prefer to make a larger down payment so that they have equity in their home from day one. 

By learning about sales prices of homes that appeal to you in your local area and about loan programs you could qualify for, you can determine how much money you need to save. You can also adjust your budget so that you can meet your savings goals.

Improve Your Budget

In order to afford a mortgage payment each month, you may need to make adjustments to your budget. For example, you may need to pay off a few credit cards or refinance your car loan. 

These efforts may also help you to improve your credit score so that you qualify for better loan terms. In the months leading up to your purchase, pay close attention to your budget so that you improve your family’s financial health.

If you have never purchased a home before, the thought of owning a home can seem like a distant and even unattainable dream. However, many people are currently enjoying the benefits of being a homeowner, and there is no reason why you cannot join their ranks. 

By following these tips today, you can more easily position yourself to buy a home within the next few months or years.

7 Benefits Of Owning A Home Through Mortgage in Retirement

There are many advantages of mortgages though many people may not be aware of these benefits. There are many benefits of owning a home through a mortgage. 

Therefore if you are planning to buy a home, make use of a mortgage, and soon you will realize the many advantages of owning a home through a mortgage. Continue reading to discover such benefits.

The Mortgage Does Not Affect The Value Of Your Home

The reason for buying a home is because it will increase in value with time. If you were sure that the value of the home would fall, you would opt to rent a home. 

 The value of the home will rise and fall different times within the years, but there will be no monthly statements that show the progress of the value of your home. Get your home mortgage with lasvegascustomloans.com and you can be sure the value of your house will not be affected.

You Can Still Build Equity In The House

Many people are interested in the building of capital which is the primary financial reason to own a house. The investment can be used in different ways such as paying for the wedding, college fees or even when you have retired. 

Many people have a thinking that mortgages are bad because of if the mortgage is big the equity is small, but that is not true. As you pay off your mortgage, the equity grows, and if you pay the mortgage fast, the investment will grow quickly.

Mortgage Can Be Considered As Cheap Money

It is true that you will never find more reasonable money to borrow than the mortgage. If you demonstrate that you can pay for a loan, then you can be given credit. If the lender is confident with you that you will pay the money as agreed, you will be charged less interest. 

If you decide to offer your house as collateral, then the bank will have your house if you do not repay. Therefore, the risk of the bank is reduced, and it will lead to low interest charged.

The Payment For Mortgage Become Easier Over Time

A time comes when the amount of your mortgage become fun. Over time the mortgage payment becomes almost insignificant because of you income rises and the house increase in value. 

The initial stages of mortgage payment may be a struggle, but over time the debt will become cheaper about the income that you are earning.

With Mortgages, You Can Create More Wealth

Some people get big mortgages for their first income mainly because they do not have any other option. Though they do not have a lot of money, they have the excitement of moving to a new house. 

Over time, you got a big family and increased income whereby you can now plan to go to a bigger house.

With Mortgage You Can Sell Without Selling

If you have a home which you purchased ten years ago, it has increased in value as compared to how you bought it. 

If you think that your home might fall in value or the equity of the home is at risk, get a new mortgage then pull the equity out of the house which will work just the same as selling though you do not have to sell it.

First-Time Homebuyers: How Your Mortgage Will Affect Your Personal Finances

When you're used to paying rent every month, it can be easy to think of a mortgage as more of the same: a monthly expense for housing. 

The truth is a mortgage can affect your personal finances in many ways that rent cannot, including saving up for your down payment and closing costs, ongoing maintenance and repairs, and your tax liability. 

Also as a renter, you are usually not responsible for any major updates and repairs. As a homeowner though, you will also be financially responsible for any home updates and repairs for the duration of your homeownership. Here's what you should know.

Saving for a Down Payment

The best way to clear your path to homeownership and keep your loan payment affordable is saving up for a down payment. 

If you choose a conventional mortgage, you will need a down payment of at least 20% to avoid private mortgage insurance (PMI) in most cases. PMI is a type of insurance that protects the lender if you default and it can add $150 or more to your payment. 

With an FHA loan, you will need a down payment of at least 3.5%, but you will need to pay two mortgage insurance premiums (MIPs) if you put down less than 20%. 

The upfront (MIP) of 1.75% is due at closing while the annual 0.85% MIP is automatically added to your monthly mortgage payments for the life of your loan.

If you don't have much saved for a down payment, a USDA mortgage may be a good option, according to USA Peak Loans. 

This loan option is designed for low to moderate income buyers buying in "rural" and suburban areas. USDA mortgages do not require a down payment.

Budget for Maintenance Expenses

For first-time buyers, one of the most overlooked costs of buying a home is the cost of maintaining the house. 

Expenses like lawn care, trash removal, plumbing repairs, and roof replacement add up over time. According to the Las Vegas Review-Journal, the average $350,000 American home costs $1,126 per month to maintain -- although this includes homeowner's insurance, property taxes, and utilities. 

A good rule of thumb is budgeting at least 1% of your home's value per year to spend on general maintenance and repairs like plumbing leaks, HVAC servicing, and roof repairs.

Owning a Home Can Offer Tax Breaks

While this may not affect your day-to-day budget, buying a home and taking out a mortgage can offer many tax breaks not available as a renter. Owning a home can reduce your tax liability in the following ways:

• Mortgage interest deduction, which is especially beneficial with new loans as the interest payments are higher 
• Mortgage points deduction 
• Mortgage Credit Certificate Program allows you to get a tax credit (not deduction_ worth up to 30% of the interest you pay every year. This program is available from many local and state governments for lower income first-time buyers. 
• Real estate tax deduction 
• Tax-free IRA withdrawals for first-time homebuyers to avoid the 10% penalty normally applied to early withdrawals 
• Deduction for interest on home equity lines of credit (HELOCs) and home equity loans to finance home improvements 

A home loan can affect your finances in many ways, both good and bad. It all comes down to how well you manage your finances each month. And hopefully you didn’t buy a home with a mortgage payment that you can’t afford in the long run. 

While owning your own home means being solely responsible for the property taxes, maintenance, and repairs, your mortgage can also be the gateway to better credit, tax breaks, and financial stability.

5 Ways You Might Be Sabotaging Your Mortgage Preapproval

If you're beginning the process of buying a home, obtaining a mortgage preapproval is one of the first key steps. Real estate agents often require a preapproval letter before showing homes to potential clients. 

With preapproval, you'll fill out a mortgage application from your chosen lender and pay the requisite application fee. You'll also need to provide documents that prove your income, and the lender will check your credit score. 

Here are five of the most common mistakes that potential homebuyers make during the preapproval process, and how to correct them in time to avoid sabotaging your mortgage during the early stages.

1. Not Knowing Your Credit Score

For most lenders, you'll need a FICO credit score of at least 620 to qualify for a mortgage, and a score of over 700 will qualify you for the best rates. 

Experts recommend checking your credit at least six months before you plan to apply for a mortgage preapproval. This gives you time to take necessary steps to raise your score before beginning the home buying process, such as paying down debt and disputing incorrect information on your credit report. 

Improving your score will not only help ensure you get approved, but potentially save you thousands over the life of the loan.

2. Making a Large Credit Purchase

You've already gotten your preapproval and had an offer accepted on your home, so it's time to finance your new furniture, right? 

Not if you want to qualify for a mortgage. According to industry blog My Mortgage Insider, Fannie Mae and Freddie Mac now require credit to be pulled again 48 hours before closing. 

If there are major changes, it could affect the lender's willingness to provide final loan approval.

3. Paying Off the Wrong Debts

You know that you have to get rid of some of your debt before you'll get approved for a mortgage, since your debt to income ratio should ideally be below 30 percent. 

According to Nerd Wallet, some aspiring home buyers waste money paying off old debts that are no longer collectible and won't affect mortgage approval. 

Instead, focus on paying down credit cards with a large balance in order to obtain the magical 30 percent ratio.

4. Missing Loan Payments

Make sure to keep paying all your credit cards and other loan obligations on time from the time you're applying for preapproval to the time you close on your home. 

Missing a payment in this period can jeopardize your mortgage loan by damaging your payment history and thus lowering your credit score.

5. Not Having Cash on Hand

In most cases, you'll need to show the lender that you have the required down payment funds plus three months' reserve in your bank accounts. 

If you're planning to cash out investment accounts to purchase a home, do so sooner rather than later so the funds will be in your account.

Buying a home is a great step, but it can be set back greatly by unwise choices surrounding the mortgage preapproval process. By keeping these five tips in mind, you're helping ensure that the mortgage approval process will go smoothly.

5 Must-Know Steps to Financing a New Home

Applying for a loan is just one step of many involved in financing a new home. There are several other steps you should take before you sign your loan documents and decide on a lender. Let's look at five of those steps. 

Make a Budget

You don't want to leave it up to a bank officer to decide how much house you can afford. Instead of letting them tell you how much you're approved for and then finding a house that's within that range, you need to create a budget that shows you exactly what you spend each month on bills, groceries, fun, entertainment and miscellaneous expenses. 

Then, start adding in house payments, savings for repairs and maintenance, home and flood insurance, property taxes and revised utilities. 

Then start tweaking your other spending categories until you find a manageable amount for your house payment based on your income. This will give you a guideline for the total amount you can finance. 

Compare Rates

Homeowners need to focus on getting a monthly payment they can afford, but they also want to get a good interest rate in order to keep the overall cost of the house low. Compare rates with local banks, national lenders and credit unions until you find the best deal. 

Check Your Credit

Your credit report and FICO score is going to dictate how low an interest rate you qualify for. 

Before you get financing, check your report for any black marks against you and any incorrect information. Then, work to get your information corrected and your score improved. 

Get a Home Inspection

When you're financing a home, you're making a huge commitment that you're not going to be able to back out of without some devastating consequences. 

Getting a home inspection will not only prevent you from buying a home in bad condition, it can also give you leverage to negotiate the cost down. 

Finance as Little as Possible

When you finance your new home, you will have the option to make a low down payment and wrap your closing costs into the loan. This will essentially increase your loan amount, interest charges and the overall cost of the home.

Financing your home is one of the biggest financial steps you'll take in your entire life. Take on the process carefully and thoughtfully, consult with a professional from an agency like Florida Lifestyle Realty, and remember -- it's up to you to protect your own best interests, not the lender's.

How to Reduce Your Mortgage Payment Significantly

Imagine finally saving up enough money to make a down payment on your first new home and when you finally get the rates for your mortgage you are stunned. They are higher than you ever thought possible and are already considering whether or not you can even afford them. 

When purchasing a home, you start with a set mortgage rate. In the beginning, the majority of your payment goes towards interest but as you reach the end of your loan the payments being made are the principal. If you feel as though your mortgage rate is too high, there are several ways to lower it.

Pay Off 20% of Your Home

If you have purchased your house with less than a 20% down payment, you are paying private mortgage insurance (PMI). This can tack on thousands of extra dollars every year. 

After you have reached the point where you own 20 or more percent of your home, contact the bank. They will look at your loan and drop this PMI. Be aware that this is not something that happens automatically and you might have to be proactive to save this money.

Extend the Life of Your Loan

Shorter 15 or 20-year mortgages come with a higher monthly payment. Refinancing to a conventional 30-year mortgage will help to make your monthly payment fall dramatically. One factor to be aware of when choosing this method to reduce your payment is that your interest rates will go up. You can, however, pay more than the monthly payment to get rid of your interest quicker.

Pay Your Mortgage Insurance at the Start of the Year

When your mortgage insurance is added on to your monthly payment, it can be a significant amount of cash. Instead of paying the same amount each month for many years, ask your lender about paying it all or part of it off at the time of closing. When you pay it off all at once, you are not going to be stuck paying the same amount each month until it is naturally paid off. This will result in a substantial amount of savings.

Explore Your Homeowner's Insurance

Every once and a while you should be exploring your options for homeowner's insurance. What was the lowest rate when you purchased the home may not be the lowest rate available to you now. Take some time and explore different providers. 

Request free quotes and see if you can get your insurance cheaper. When insurance is escrowed into your monthly payment, a lower insurance cost will be noticeable when you pay your mortgage bill every month.

No matter what you are doing with your mortgage, you should never just sit and pay the same amount year after year. Explore new options and potential ways to save on your monthly bill on a regular basis as there are many options for individuals to make changes. Talk to the bank and loan providers to discover ways to lower your cost.

Benefits and drawbacks of instant loans

Loans (Photo credit: zingbot)

Instant loans have been getting much popularity among the people. This is so because of the fact that these loans have been catering to the needs of the people. There is a great demand for such loans among the people. Some of the benefits that one can get from Kulutusluotto is of much help to the people.

Benefits of the loans

One of the biggest benefits of the consumer loans is that one will be able to get the loans within a span of twenty four hours. This will be of much help to the people who are in some financial stress. The benefit is that one will be able to get the loan in the smallest time. Fifteen minutes is the minimal time that one will have to spare for getting the loans. This will enable them to deal with the financial issue and get rid of them easily. The company checks the details and then gives the amount to the people. If there is any discrepancy in the details, then only there is a delay in the processing of the loans. Or else the loans are given at the earliest to the people.

The second benefit is that the customers are given the loans in such a way so that they can make the best use of such loans. The loans are customer friendly and this enables the people to make good use of the loans. The consumer friendly schedule is of much benefit to the people. They will be able to make good use of the loan amount in the long run.

The flexibility that the companies give to the customers is another benefit of such loan giving companies. They help the customers to get the loans at the earliest. Take a loan from a company which gives you maximum flexibility and hence making the repayment process easier for you. 

Drawbacks of the loans you taking

The biggest drawback of any kind of loans is that you will have to pay back the loan amount. This is a great issue for the individuals. The companies which give the loans to the people charge a big amount of money from the people. Before taking such loans consulting with friends and family members is a must. They will be able to guide you and let you know whether they have the money to support you in such problems. You will be able to solve the issue at hand easily and then also save yourself from the trouble of paying the company high interest amount that they will be charging from you.

Another drawback is that the more time you will be taking in giving the loans back, the more interest amount they will charge as the tenure increases and hence the interest amount. This will be a big problem for the people. They will have to pay a big sum of money for the small amount that they will be taking from the company. Hence before taking loans, one must think twice whether the loan that they will be taking is of such prime importance or not. Most people take loans to fulfill desires like buying a dress or an electronic gadget. But one must think of the extra money that they will have to pay back to the company as a result of this.

Therefore these are some issues which one must bear in mind while taking the loans from the companies. Having an understanding about the benefits and the drawbacks is of much importance in getting the loans from the people.

Golden Tips for Refinancing your Mortgage

Interest Rates (Photo credit: 401(K) 2013)

Mortgage rates are going through a good phase now. The interest rates for thirty ear mortgages are at a low end. This means that it is good news for all those who are looking to refinance their mortgages in the hopes of getting a better rate of interest. Many financial experts have opined that if you are looking for a good time to refinance your mortgage then that time is now. Low interest rates mean that you will be able to save more money. So if you have around 20 per cent equity on your house and a credit score of at least 740, then a creditor could give you a good refinancing package. 

If you are a homeowner looking for a refinance then here are some things that you should do and consider before taking the plunge. These are some of the things that experts recommend home owners should do.

Look around

The funny thing about mortgage interest rates is that they can shift really drastically from place to place. So don’t despair and lose hope if you a creditor is offering you a high rate of interest. Do a lot of research into different places before you make a choice. There are quite a few financial websites where you will find reviews of lenders. Also remember not to blindly go in for the interest rates alone. Look at things like customer support, fees, etc. Experts say that interest rates can differ by 1 percent or even more from lender to lender. That can translate into a huge difference in your monthly payments.

Don’t jump for a low rate

It is vital to remember that when you are refinancing a mortgage, there are many costs like closing costs which you will have to pay. These can be quite high. So if you already have a mortgage with a low rate of interest like 5 percent and the rates have dropped to 4 percent, it might not be an excellent idea to refinance. Think of how many months you will take to cover the closing costs and so on. Don’t go in for a refinance if you are not able to cut the rate of your mortgage by at least 0.5 percent or more.

There’s always a closing cost

Many refinancing offers will come with the tempting “no closing costs” line. Don’t fall for it. There will always be some costs for the loan. Even if it isn’t called “closing cost”, companies will charge you something or the other in some form. If they don’t call it closing costs, they could call it “up front charges” where you will be asked to pay an amount to cover certain expenses. It could be added to your new loan principal, instead of being charged separately as closing costs. In case you do happen to find a no or low cost refinancing, you will notice that the rate of interest is slightly higher than the others. They will find some way or the other to recover the money from you.

The best thing to do is to as your creditor to show you all the options available. Ask for a clear breakdown of all the costs you will incur if you do go in for a refinancing. Then, you can choose the one best for you. The main thing to take away from all this is that there will always be costs involved in a refinancing, and if you are aware and are able to handle it, then you can go ahead.

About the author

Jon has been working as a senior loan officer for a bank since the last eight years at RateZip. He advises homeowners on the kinds of mortgage options available to them. In his free time, Jon loves to read graphic novels.

Mortgage Approvals Rise Thanks to UK Lending Schemes

Loans (Photo credit: zingbot)

Mortgage approvals are on the rise in the UK, particularly for first-time home buyers. The increased number of approvals indicates resurgence in consumer confidence, along with an increased availability of products. Since most of the approvals were attributed to first-time home buyers, much of the credit for the increase can be attributed to government lending schemes, such as Funding for Lending, the NewBuy, and the Help to Buy schemes. 

These schemes have made it easier for people to enter the housing market due to a variety of incentives. Furthermore, because so many of the mortgage approvals are driven by high loan-to-value borrowers (meaning those borrowers putting forward a low deposit in relation to the size of the mortgage), many are further crediting this high LTV rate to the mortgage thaw instigated by the government lending schemes. We will look at why consumers are getting back into the property market, and specifically at how the government funding schemes are fueling the increased demand.

Higher Mortgage Approvals

After the 2008 financial crisis, mortgages became much more difficult to get. Many banks were warier about who they lent money to in an effort to avert another financial disaster. At the same time, property prices continued to rise. As a result, homebuyers were stuck: they could no longer qualify for mortgages, and even if they could, they couldn’t afford the payments on those mortgages. The housing market stalled, as did the economy.

Lending Schemes

The government’s lending schemes were designed to overcome this predicament. The three main lending schemes, Funding for Lending, the NewBuy, and Help to Buy, all have their own unique structures and regulations, but they all share the same purpose: to make mortgages easier for people to afford. The Funding for Lending scheme in particular has helped fuel much of the increased approval rate. 

Under the Funding for Lending scheme, cheaper funds are delivered to lenders, thereby mitigating the risk those lenders take on by approving mortgages for borrowers with smaller than average deposits. Likewise, the NewBuy and Help to Buy schemes work on a similar basis, with the government either paying the lender a certain portion of the property’s value, or contributing a portion to the borrower’s deposit. As a result, mortgage rates are being driven down, and first-time home buyers no longer need to save up for years on end in order to make a deposit on a home. In some cases, the government may even contribute up to half of a borrower’s deposit.

The housing market is a huge driver of the economy, and without people buying houses, the economy fails to grow. News that mortgage approvals are on the rise are encouraging not just for first-time homebuyers, but for all UK consumers. The increase in mortgage approvals, however, is due to more than market forces; it is largely driven by government lending schemes that mitigate the risks of lending for lenders, while decreasing the overall deposits borrowers have to put forward. While it is unclear if mortgage approvals can continue to rise without such government assistance, this current news is certainly encouraging for the foreseeable economic future.

Harry Davis is a former bank teller. He still likes to keep up with money matters, and then posts his findings for others to read. You can learn about the financial planning service at Moneyvista.com.