http://www.citylightfinancial.com en theteam@10-spaces.com Copyright 2007 2007-05-18T05:34:00-06:00 http://www.citylightfinancial.com/site/mortgage_rate_quote/ http://www.citylightfinancial.com/site/mortgage_rate_quote/#When:05:34:00Z referredBy="079896d9-d3ea-4eca-9bc3-53629a0f0c35 “; qf_form_no="1”document.write(’‘); 2007-05-18T05:34:00-06:00 http://www.citylightfinancial.com/site/zero_cost_mortgage_refinancing/ http://www.citylightfinancial.com/site/zero_cost_mortgage_refinancing/#When:06:44:01Z Large closing fees can sour the deal on any refinance. In this article we’ll take a look at the options available for the borrower to make that refinancing deal pay dividends. Thanks to the slew of great interest rates available to borrowers in recent years it’s become much more common for borrowers to refinance their mortgages once or even several times during its life. While this may help bring down rates, shorten loan terms or free up much-needed cash, one problem is that they always come with costs. You see, when you refinance your mortgage you are, essentially, settling your old loan and taking out an entirely new one. As such you face the same origination, appraisal and title fees, as well as legal costs and a whole host of other incidental charges. These costs may actually make your once-attractive refinancing deal cost more in the long run than your current mortgage. To get around these costs, many borrowers who wish to re-jig their home loan opt for zero cost mortgage refinancing. Zero cost, in this case, refers to the way in which closing costs are avoided by actually structuring them into the principal of the loan. Instead of paying a lump sum on closing, the borrower will accept a higher interest rate to compensate. Now, while this may sound like an attractive offer, you should think long and hard about its effect down the line. If you intend to pay off the mortgage or refinance again within a few years this can be a great way to get around the closing fees. However, if you intend to keep the mortgage until it’s paid off anything up to thirty years away, well you see where this is going. The point or so in additional interest will kill you over a thirty-year period, making these initial closing costs look like pocket change. The lesson, of course, is this: if you intend to keep hold of the mortgage for more than three years or so you should avoid zero cost mortgage refinancing like the plague. If you know you’ll offload the mortgage before the next President is out of office, I say go for it. It’ll save you cash up front and won’t bite you on the behind in the future.  Citylight Exclusives, Home Mortgage Refinance, Home Mortgage Loan Basics 2007-05-07T06:44:01-06:00 http://www.citylightfinancial.com/site/should_i_refinance_now/ http://www.citylightfinancial.com/site/should_i_refinance_now/#When:06:43:01Z The answer to the question “Should I refinance now?” depends upon the answers to three subsidiary questions. What type of mortgage you have now is perhaps the most important. In California, as around the nation, in the past few years there has been an explosion of innovative mortgage offerings. The standard 30 year fixed rate mortgage has been supplanted by huge numbers of different options, one or more of which might be better suited to your circumstances. Perhaps an adjustable rate is better for you, or a shorter term? A second thing to think about when considering if you should refinance now is whether your own circumstances have changed. Perhaps you got your first mortgage when you had a bad credit record? If so, refinancing will almost certainly bring down your monthly payments if you now have a better credit record. The economy of California has changed enormously in recent years as well, as have house prices. Perhaps your original mortgage was 100% financing? With the recent rise in prices, if you refinanced this would now be a 70%, or even 50% mortgage. This would both bring your rate down and allow you to stop paying for mortgage protection insurance, leading to a big saving. The third part of the “should I refinance now?” question is whether there is something else that you want to spend money on. Mortgages are almost always the cheapest form of borrowing so if, perhaps, one of the children wants to go to California’s finest (say, Stanford) then a refinance might be the best way to pay for this, at least for the costs that they cannot get a student loan for. There are so many options possible and reasons to do so that the answer, in reality, to the question of “should I refinance now?” is somewhere between maybe and probably and your mortgage broker will be able to help you work out which.  Citylight Exclusives, Home Mortgage Refinance, Home Mortgage Loan Basics 2007-05-07T06:43:01-06:00 http://www.citylightfinancial.com/site/stated_income/ http://www.citylightfinancial.com/site/stated_income/#When:06:43:00Z Every borrower has different circumstances. This we know. It is also true that many people may have difficulty adequately verifying their income, perhaps because they are self-employed or run a business that brings in a fluctuating profit from month to month. For whatever reason, it can often be difficult for some borrowers to place a dollar figure on their income and provide the documentation to back up their claim. Fortunately, there is an option to help these people. Stated Income, Verified Asset (SIVA) loans are a type of low doc loan that allow borrowers to qualify without the need to produce as much documentation of their income as would be required with a full doc loan. In order to qualify for a Stated Income loan, a borrower is required only to disclose their 2-year employment history, state their monthly income on the Uniform Residential Lending Application (Form 1003) and provide copies of bank statements to the lender. The lender will not verify the borrower’s statement of income, though they may compare the claim to the industry average level of income for the borrower’s job. If the income claim greatly exceeds the industry average the application could be denied on the strength that the income claim may be fraudulently overstated. In most cases, the interest rate on a Stated Income loan will be higher than that of a full doc loan, and slightly lower than that of a no doc loan. This is due to the additional level of risk the lender must assume in lending to a borrower with an unverified income. Unfortunately, it’s just one of those things a self-employed borrower must accept in order to qualify for a loan.  Citylight Exclusives, Home Mortgage Loan Basics, Types Of Mortgages 2007-05-07T06:43:00-06:00 http://www.citylightfinancial.com/site/refinance_faq/ http://www.citylightfinancial.com/site/refinance_faq/#When:06:42:00Z There are a number of possible refinance FAQs (frequently asked questions) but the only one that is actually asked with any frequency is the one “Why and when should I refinance” to which there are three answers. So instead of a refinance FAQ this is rather a refinance FGA (frequently given answer). 1) When interest rates have fallen. If you have a fixed rate mortgage and interest rates fall then you may be able to save money by refinancing your mortgage. If they fall just a little, then you won’t, because of the fees you have to pay to actually refinance. If they fall a lot you can save substantial sums. 2) When you credit rating improves. Imagine that you had bought a house when you had bad credit, or anything less than perfect credit in fact. This would be reflected in the interest rate you are paying on your mortgage loan. A few years later your credit rating may well have improved (if you’ve been making your payments on time it will almost certainly have improved) so you might be able to save money with a home mortgage refinance again. Market interest rates haven’t changed but your situation has, so you should get a better rate. 3) When you want a cash out refinance. House prices have gone up so much in markets like California in recent years that someone who bought a $200,000 house ten years ago might have $400,000 of equity in it. It’s great making that money but when it comes to spending it taking the back porch down to the store doesn’t work. So you can refinance and take cash out of the value of the house.  2007-05-07T06:42:00-06:00 http://www.citylightfinancial.com/site/no_tax_return_loans/ http://www.citylightfinancial.com/site/no_tax_return_loans/#When:06:41:00Z In this age of choice there are hundreds of options available to the borrower when it comes to a home loan. One of the options that best suit the self-employed or others who have difficulty proving their income or simply don’t want to disclose their income, are no tax return loans. No tax return loans are quite simple. The borrower must provide only their social security number and the details of the property they wish to buy in the loan application. The lender will then run a credit check using the borrower’s SSN and decide whether to approve the application based on their credit score. The no tax return loan option is ideal for borrowers who prefer to protect the privacy of their financial information. Perhaps their income doesn’t come from a paycheck they may have a trust fund or a savings portfolio from which they draw an income. For whatever reason they cannot provide documentation that shows a regular monthly income, so they would prefer that their application not be based on that factor. While this type of loan can come in very useful for certain people, it should be noted that the interest rate would usually be higher than with a comparable full doc loan. After all, the lender must accept a higher level of risk in lending to a person without a verified income. However, many borrowers find that this is an acceptable price to pay for the sake of privacy. Before going into a no tax return loan application you should decide which camp you fall in to avoid disappointment.  Citylight Exclusives 2007-05-07T06:41:00-06:00 http://www.citylightfinancial.com/site/prepayment_penalty/ http://www.citylightfinancial.com/site/prepayment_penalty/#When:06:41:00Z If a borrower takes out a mortgage and then decides to repay it in full just a few years later they may be liable to pay a prepayment penalty. People often wonder why they should have to pay this penalty. After all, surely the lender should be happy they’re getting their money back, right? Well, not really. Let me explain. But first, let’s go through the basics of the prepayment penalty. Example: You take a mortgage with a term of 30 years. Two years later, you decide to refinance or sell your house. Now, there may be a provision in your mortgage contract that states that if you pay the balance of the mortgage you must pay a penalty to the lender of up to 4 percent of your total loan amount. Now, that may seem like a cruel penalty. However, when you think about it, it makes perfect sense. After all, the lender is risking money by offering you a mortgage on the expectation that you will repay much more than the initial principal. If you repay the loan early the lender will not only lose the potential interest but may also fail to recoup the cost of arranging your mortgage in the first place. Before arranging a mortgage you should think about what your intentions are. If you may choose to sell your property within 5 years of taking your mortgage you should ensure that there will be no repayment penalty. If you are fairly certain you will stay in the property more than 5 years you may want to accept a prepayment penalty clause as it should bring down your interest rate.  Citylight Exclusives 2007-05-07T06:41:00-06:00 http://www.citylightfinancial.com/site/no_points_mortgage_refinance/ http://www.citylightfinancial.com/site/no_points_mortgage_refinance/#When:06:40:00Z In this article we’ll look at the pros and cons of a no points mortgage refinance. First question, before we begin. What’s the point of points? Well, before that, I suppose, is the basic question: what is a point? Quite simple, 1 point equals 1 percentage point of the principal of your home loan. If the value of your loan is $200,000, 1 point would be $2,000. Simple, yes? OK. Now, most mortgage lenders will offer you the option of paying points as part of your closing fees in return for a reduced interest rate. When you refinance your mortgage you’ll probably be offered this option. The question remains: what’s the point? Well, it really depends on your long-term plans. If you plan to stay in your home for a number of years it may be worthwhile to pay a point or two up front to get that reduced interest rate. Take a look at this example: You’re refinancing a $200,000 mortgage over a 30-year term at 6.5%. If you pay a single point ($2,000) the lender may knock your interest rate down by .25%. That means that you’ll make a monthly saving of $33 with your monthly payment dropping from $1,264 to $1,231. Now, let’s do the math. With a monthly saving of $33 it’ll take you 61 months to recoup the $2,000 you spent on the point. So, if you intend to stay in your home more than around 5 years, you might as well pay the point. If you stay for the full 30-year term you’ll save $11,880, that’s not exactly pocket change. But! And this is a big but, if you’re not absolutely sure that you’ll stay in the property for at least five years you might as well put your wallet away, buddy. Paying points up front when there’ll be little payoff in the future is worse than flushing your cash down the toilet. Instead, take the no points mortgage refinance option and spend the money on home improvements instead. At least that should increase the value of the property and bring some tangible benefits. Citylight Exclusives, Home Mortgage Refinance, Home Mortgage Loan Basics, Types Of Mortgages 2007-05-07T06:40:00-06:00 http://www.citylightfinancial.com/site/no_income_verification_loans/ http://www.citylightfinancial.com/site/no_income_verification_loans/#When:06:39:00Z Finding an affordable mortgage can often be a trial for those borrowers who can’t prove their income. The best interest rates are usually only offered for conforming loans; i.e. loans that adhere to FNMA (Federal National Mortgage Association) lending guidelines. Therefore, you may find it difficult to find a good rate if you are self-employed or otherwise unable to verify your income. One option available to such borrowers is to take a No Income Verification Loan (NIV loan). Essentially, this is a loan that does not require proof of income. Instead, the lender requires only such documentation as relates to the credit report of the borrower, and the application itself. Lenders often advertise these as no doc loans. No Income Verification loans typically come with a higher rate of interest than conforming loans. While they may cost more in the long run they are preferred by many borrowers as they can be processed much more quickly than conforming loans. This can come in especially handy for borrowers who own several rental properties. After all, if a borrower purchases a new property every few months it can become a chore to go through the same paperwork over and over again. There can be pitfalls with NIV loans, however. While many lenders advertise the loans as no doc, it is often the case that they will request additional documentation as the application is processed. The best way to avoid this problem is by having a frank discussion with the lender before the application begins, identifying exactly how much documentation will be required. By outlining the rules of your No Income Verification Loan you can ensure that the process will run as smoothly as possible.  Citylight Exclusives, Home Mortgage Loan Basics, Types Of Mortgages 2007-05-07T06:39:00-06:00 http://www.citylightfinancial.com/site/no_doc_home_loans/ http://www.citylightfinancial.com/site/no_doc_home_loans/#When:06:38:00Z One of the many financial problems faced by the self-employed has always been in proving their income when applying for loans and credit. I should know I’m self-employed myself! It can often be highly frustrating to prove your income, especially when that income stream can fluctuate wildly and you don’t receive a regular pay check. However, there are options available to those who find it difficult to verify their income. Many lenders now offer no doc home loans to people who can’t provide proof of a regular income. In this article we’ll discuss the pros and cons of these loans. A no doc home loan is essentially a loan that doesn’t rely on proof of income documentation in order to be approved. A borrower would only have to prove that they have a good enough credit score in order to qualify for a no doc home loan, so they can come in very useful for the self-employed. The average no doc loan requires only a social security number and the basic property details in order to be approved. Provided the borrower has good enough credit, the loan may be approved with no more information required. While these types of loans are most useful for the self-employed they are also favored by those who prefer to keep their personal information private. Unfortunately, this convenience comes at a price. The typical no doc home loan will have a higher interest rate than a full doc loan, as the lender must take a greater risk in lending to a person with unverified income. The borrower must decide whether the convenience of this type of loan outweighs the additional cost and that can be a difficult question to answer. Citylight Exclusives, Home Mortgage Loan Basics, Types Of Mortgages 2007-05-07T06:38:00-06:00