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Mortgage Refinancing - Lock Your Mortgage Loan
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Mortgage Cycling
Mortgage cycling is a way home owners can use to try and pay off their mortgages early. By making extra payments and paying off your mortgage early you can save yourself many thousands of £s in interest payments.
The basic principle of mortgage cycling is to have a flexible mortgage where you are able to pay extra payments every 6 or 12 months to reduce the amount of the mortgage debt.... Read mortgage refinance article
Commercial Mortgage
This article highlights the five primary reasons that banks decline commercial mortgage loan applications. The reasons provided below do not represent obscure issues, so it is likely that two or three of the reasons described will be important for typical commercial mortgage situations. The first two reasons (business plans and tax returns) will potentially impact all commercial borrowers. Many co... Read mortgage refinance article
Mortgage Refinancing - Lock Your Mortgage Loan
Locking in your loan is the process where your loan originator guarantees your rate and any points you have agreed to pay. "Locking" is a deceptive term; what you think you're getting isn't actually what you were qualified for. Here are several tips regarding rate locks to help you avoid overpaying when mortgage refinancing.
Your loan originator is the retail mortgage company that provides you a written guarantee of the interest rate and points you were qualified. The loan originator does not qualify you for an interest rate or actually guarantees that rate; that is done by the wholesale lender your mortgage company represents. Every wholesale lender uses a form where the retail originator requests your rate guarantee and that particular day's published interest rate. You can only lock in a particular interest rate from the time rate sheets are issued each day until the cutoff time. Cutoff is usually 4:00pm in the wholesale lender's time zone.
Your mortgage company receives the guarantee from the wholesale lender that will include the duration of the lock. The interest rate your mortgage company receives is the wholesale rate; they will add their own markup depending on the length of your lock period and how gullible they think you are. The longer the lock period you request, the higher the retail markup of your interest rate will be. Your mortgage company isn't going to tell you about the wholesale interest rate you were qualified so it is your job to find out what that interest rate is.
The retail markup of your mortgage interest rate by the loan originator is called Yield Spread Premium. Mortgage companies charge Yield Spread Premium because the wholesale lender pays them an additional point for each .25% they overcharge you on the interest rate. One point is one percent of your loan amount; the mortgage company receives this in addition to the origination fees you pay for their services.
Before you agree to a lock period you should find out what the realistic time frame for completing your loan. If it will only take 15-20 days choosing a 30 day lock period should be sufficient. The mortgage company might try to sell you an "extended lock" for an additional fee; however, you should rarely consider paying this fee unless you need it for your peace of mind. The purpose of the lock is to allow you sufficient time to close on the mortgage. If you are unable to close before the lock expires, the mortgage company will raise your interest rate.
Make sure you get the rate lock in writing. Until you have this written guarantee, you do not have an interest rate. Don't leave it up to the mortgage company to tell you when to lock in your mortgage interest rate, make getting this written guarantee your first priority once you have chosen a mortgage company. How can you find the mortgage interest rate you were qualified by the wholesale lender and avoid paying retail markup? You can learn this and more by registering for a free mortgage tutorial.
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Reverse Mortgage Services
Gov. Arnold Schwarzenegger signed a bill that helps protect seniors from unscrupulous lenders when they enter into reverse mortgages.
"It is our responsibility to help protect those who are most vulnerable in our society," said Gov. Schwarzenegger. "Getting a reverse mortgage can be very helpful, but it is a huge decision. We want to make sure people have all the information they need before making any financial commitment and we want to make sure everyone is getting the right deal, a fair deal and an honest deal."
Specifically, this bill prohibits a reverse mortgage lender from accepting a reverse mortgage application or assessing any fees until the potential borrower has received independent counseling regarding the loan. In addition, it prohibits a lender from requiring a borrower to purchase an annuity as a part of the reverse mortgage transaction and requires a reverse mortgage contract to be translated into Spanish, Chinese, Tagalog, Vietnamese or Korean if the contract was primarily negotiated in one of those languages.
A Reverse Mortgage applicant is already required to go through counseling through a HUD sponsored counselor. This has been a requirement since the government took over the program almost 15 years ago. But has time has gone on, safety measures must evolve and be update and it is good to see that Gov. Schwarzenegger see this and is acting accordingly.
A reverse mortgage generally allows homeowners 62 and above to receive either monthly payments or one lump sum from the property's equity without having to sell the property or make monthly repayments. Reverse mortgage loans typically require no repayment for as long as residents do not move, but they must be repaid in full, including all interest and other charges, when the last living borrower dies, sells the home or permanently moves away. Reverse mortgage borrowers continue to own their homes. They remain responsible for property taxes, insurance, and repairs.
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