Mortgages – Lowest Rates, Refinance, Reverse, Online

Over the past several years, a serious mortgage crisis began. Unfortunately, many people interested in purchasing a home were lured in by lenders offering subprime rates. The problem was that a large number of these people had poor credit. In fact, most of these people would never have qualified for a mortgage loan under normal circumstances. As a result, millions of homeowners lost a home to foreclosure.

Making the mortgage loan offers even more enticing were other facts to include those listed below:

  • The amount of required down payment was extremely low and sometimes, down payments were not even requested
  • Often, approval was granted without people going through proper credit checks or providing pertinent tax documentation
  • The majority of loans secured during this period were primarily ARMs or Adjusted Rate Mortgages with interest set at a sub-prime rate. Many times, people with bad credit were paying just two, possibly three points more than what people with good credit had to pay.
  • The rate structure was another contributor leading to the mortgage crisis in that teaser rates were offered, which meant super low rates paid by the borrower during the first few years of the loan. However, once rates jumped, they were so high that a borrower’s monthly house payment would skyrocket, sometimes by as much as 100%. Obviously, this put a tremendous financial burden on homeowners with many no longer able to make payments.
  • With a growing number of homeowners in debt, banks and various financial institutions began repackaging mortgage loans along with other “high risk” debts, selling them off to investors around the world. This resulted into what we know as CDOs, or Collateralized Debt Obligations, which are unique financial instruments.

All of these factors led to the country’s worst mortgage crisis. Today, literally millions of foreclosed homes sit empty. While some are being purchased, many homes sit idle with some going into ruin. While the mortgage crisis was bad enough, once two Bear Stearns hedge funds totally collapsed in 2007, the crisis was taken to new heights. Soon, other financial markets around the globe were affected, pushing the mortgage crisis over the edge.

The situation became suffocating to the point of the money market account being temporarily frozen. With this, operations for banks and other financial institutions were changed and the mortgage crisis began to influence other aspects of the financial world. Trying to calm a frenzied market, $100 billion was pushed into the system by the Federal Reserve Bank and European Central Bank but the market of subprime mortgage lending did not stop due to an increase in the housing market and no decrease of interest.

Unfortunately, people throughout the country were racking up incredible debt and the number of foreclosures continued to grow. The situation hit an all-time low once the US GDP hit $700 billion specific to mortgages. Although a slight slowdown started in 2006, it was not until the middle part of 2008 that things began to level off. Overall, the mortgage crisis involves such a massive number of foreclosures that housing values plummeted.

Due to sub-prime mortgage loans being handed out left and right to people who were simply not in a position to buy and CDOs, the entire mortgage system in the United States and other countries suffered tremendously. Not only has the housing market been hit hard but also people lost homes. Worse yet, this crisis snowballed to the point of damaging the entire economic system for the United States.

Securing a Mortgage Loan

Although the housing market remains somewhat shaky, major changes have been implemented in response to government mandates. Today, stricter rules for qualification have been established to ensure the people that apply for mortgage loans can actually afford the payments.

Other changes to include a drastic reducing in no-doc loans, huge reduction in lenders offering 100% financing, and a return to more traditional standards for buying a home have also been established, making it challenging for a person to purchase a home. However, while securing a mortgage loan may be harder than any other time in history, there are still viable options.

In fact, individuals with less than perfect credit, or those on the lower end of the pay scale might be able to qualify for a mortgage loan. Lenders now secure loans the right way, which will ultimately help rebuild a weakened housing market but also strengthen the economy.

Lowest Mortgage Rates

The two types of buyers with the greatest concern are first-time buyers and current homeowners who locked into a low interest rate for an introductory period that is getting close to conversion time. Clearly, individuals with excellent credit and money for a down payment will have no problem securing a mortgage loan and for a low interest rate but people interested in a sub prime loan, moderate credit, and little money for a down payment are the ones that will be impacted most.

In summary, this means a person with a credit score of 620 or higher and someone with consistent income would likely be considered an ideal candidate for a mortgage loan. Of course, current debt, the amount of money needing to be borrowed, and a few other factors would be considered by lenders but overall, someone in this situation should have few problems with getting a loan.You can check the Lowest Mortgage Rates Now !

In addition to new buyers, someone meeting the criteria would also find it relatively easy to refinance. On the other hand, someone with a credit score lower than 620 would face challenges. This does not mean it would be impossible to get a mortgage loan just that the amount of interest would be much higher and terms may not be as favorable. To improve the chance of securing a loan with the lowest mortgage rates, the following should be presented to a lender.

  • Credit score (FICO) of 620 or higher
  • Consistent income that qualifies when looking at debt-to-income ratio
  • Loan value of no more than 80% of the property’s value due to a 20% down payment
  • Pertinent tax documents
  • History of paying bills on time, not overextending credit, and not carrying a significant amount of debt, specifically on credit cards

Refinance Home Mortgage

As mentioned above, even with stricter rules pertaining to mortgage loans, this could be a key time for people to consider refinancing. Even if faced with obstacles, choosing a refinance home mortgage would definitely prove beneficial. Although some people choose to refinance to lock into a lower interest rate or better loan terms, this type of mortgage is secured for a variety of reasons.

For example, a couple sending one or more children to college faces huge financial issues. With refinancing, money would become available for tuition, books, room and board, and other college related expenses. A refinance home mortgage could also be used to pay off outstanding debt, complete a home improvement or remodeling project, or perhaps to pay for a medical procedure or ongoing healthcare. Some people will even refinance an existing mortgage so they can purchase a new car or take a much-needed vacation.

Regardless of the reason, the homeowner would need to qualify for a refinance home mortgage although requirements would not be as strict as criteria enforced for a new or first time home buyer. Of course, the individual interested in refinancing should still have good credit, income in line with a debt-to-income ratio calculation, and equity in the home or some type of collateral. The best option would be in meeting with a reputable and trusted lender since the process of refinancing is typically unique to each individual case.

Reverse Mortgages

What is a reverse mortgage?

The current condition of the housing market and an economy that has not yet fully recovered, some people want to know if reverse mortgages are a good option or if waiting until things stabilize more would be the better choice. Usually, an elderly homeowner would be most interested in a reverse mortgage since it allows them to stay in the home while drawing money each month against equity. However, this type of loan involves numerous components and while some mortgage experts support reverse loans, not all do.

One positive side of reverse mortgages is that the homeowner can use existing equity as a form of income. For this, a homeowner could receive monthly payments in a set amount, live off a line of credit, take out a one-time payment for a sum agreed on, or choose more than one of these options. One important note is that the actual amount of money a homeowner could get access to for a reverse mortgage depends on age, but also the current value of the property, interest rates being offered by lenders, and even fees associated with the mortgage loan.

Although reverse mortgages do have a number of benefits, there are also some negative aspects. For instance, upfront costs can be extremely high and they come directly from the equity during the official closing. In addition, the amount a person would pay at closing would be much greater than closing fees associated with a traditional mortgage loan. The homeowner would also be completely responsible for any real estate taxes, home repairs, homeowner’s insurance, and mortgage insurance.

People considering reverse mortgages should always talk to a number of reputable lenders to get the full story before going this route. Sometimes after weighing the pros and cons it becomes obvious that a loan of this type makes perfect sense but other times, refinancing a home might be a much better decision.

Best Mortgage Companies

Because so many mortgage companies have lost a tremendous amount of money due to foreclosures, as well as slow or late paying homeowners, major changes in the way mortgage loans are secured have been made. This coupled with government mandates helps protect mortgage companies so they can offer money to people who will pay while avoiding loans deemed too risky.

Now, some mortgage companies are in a position to be somewhat flexible, which would certainly help first-time home buyers and people interested in refinancing an existing mortgage loan. In addition, some mortgage companies still offer unique programs in connection with the government to help people who can afford loans get into a home. However, the goal would be finding several top rated companies so interest rates, loan terms, and special programs could be compared.

The reality is that mortgage companies understand risk of loaning money to someone burdened with too much debt but because of the recent mortgage crisis and large number of foreclosures, they also understand current homeowners without equity are also risky because without financial or emotional attachment to the home, walking away would be easy.

For the person with a hefty down payment, good to excellent credit, and low debt-to-income ratio, securing a loan with one of the top mortgage companies would not be too difficult. Although a number of mortgage companies could be considered, Forbes conducted a study of companies with long histories of excellence, competitive interest rates, and favorable loan options to come up with a list of the top five for 2011.

  • Citigroup
  • Bank of America
  • Wells Fargo Bank
  • Wachovia Bank – Now A Wells Fargo Company
  • AmeriSave Mortgage

Online Mortgage Quotes

Along with securing quotes through conventional brick and mortar banks and financial institutions, it would be worthwhile to consider online mortgage quotes as well. Today, lenders with internet presence have actually become incredibly popular for a variety of reasons. For one thing, these companies are merely extensions of the most reputable lenders in existence. In addition, the process of securing online mortgage quotes and even a mortgage loan is much easier while allowing people to conduct business from the comfort and privacy of home.

Just as with conventional lending companies, certain mortgage lenders online stand out from the competition. The following companies represent those ranking the highest for online mortgage quotes and actual mortgage loans, starting with companies that have the highest overall rating specific to fees, ease of use, customer service, interest rates, and loan options.

  • Quicken Loans
  • Wells Fargo Mortgage
  • Lending Tree Mortgage
  • AmeriSave Mortgage
  • Chase Mortgage
  • DiTech Mortgage
  • E-Loan Mortgage
  • Home Finance of America Mortgage
  • ING Direct Mortgage
  • Acre Mortgage
  • MSI Lending Mortgage
  • Suntrust Mortgage
  • Anchor Bank Mortgage
  • Bank of America Mortgage
  • CitiMortgage
  • Citizens Bank Mortgage
  • Nationwide Mortgage
  • American Equity Mortgage