The Current Buy to Let Mortgage Market Explained for Novice Landlords

The buy-to-let mortgage industry has gone from nothing in 1997 to an industry that in the first 6 months of this year saw loans being taken out of £21.2 billion. The stock of buy-to-let loans taken out is now £108 billion equating to 10% of all mortgage balances.
The good news for landlords is that the UK buy-to-let mortgage market is probably the most competitive and innovative in the world resulting in around about a thousand different buy-to-let mortgage products on the market at any one time.
The numbers have however been cut back recently as buy-to-let lenders have responded to the credit crunch by reigning in the more risky buy-to-let mortgage products. The other bad news for buy-to-let borrowers is that buy-to-let lenders have also repriced the risk premium within the costs of these buy-to-let loans. This means that the margin banks & buy-to-let lenders charge over the Bank of England base rate has risen by between 0.25%-0.5% as well as individual buy-to-let lenders tightening their lending criteria. At the same time the product fees charged by most buy-to-let lenders have also risen.
The bad news is largely a function of the good news. This is that the huge choice of products means that there is also the potential for landlords to get confused. Not only are there nearly a hundred providers of buy-to-let mortgages but there is also a large range of different type of buy-to-let mortgage products. The main ones are:
* Fixed rate - the interest rate charged is fixed for given period or up to a given date
* Discount - the rate of interest charged is reduced during an initial period then reverts to buy-to-let lenders standard variable rate
* Tracker - these buy-to-let mortgages track one of the recognised key mortgage rates such as Bank of England base rate or LIBOR (London Inter Bank Offer Rate)
Which type of buy-to-let mortgage product should I choose?
The type of buy-to-let mortgage product that is suitable for you as a landlord will very much depend on a landlord's personal financial circumstances and also a landlord's attitude to risk.
Landlords who are concerned that if interest rates should rise, that their buy-to-let payments may become unaffordable may want to consider a fixed rate buy-to-let mortgage product. This type of buy-to-let mortgage will give a landlord the certainty of a definite mortgage payment each month during the period of the fixed term regardless of what happens to interest rates.
A landlord who may be presented with a short term problem; perhaps where a variable buy-to-let mortgage payments will be greater than a landlords rental income may want to consider a discounted buy-to-let mortgage product. In this way a landlord can make lower than normal buy-to-let mortgage repayments whilst their rental income rises and / or the general interest rate drops. However, a landlord needs to be cautious about this approach. This is because if interest rates rise further or a landlord overlooks the fact that their rate and therefore their cashflow is only on a temporary footing the ending of the discount rate would cause them even more financial hardship.
A variable rate or tracker is often the safest and cheapest over the term of the buy-to-let mortgage as the landlord frequently avoids paying an 'insurance' premium to the buy-to-let mortgage provider by not taking out a buy-to-let mortgage product that insulates landlords against an unexpected interest rate change or that gives them a preferential repayment rate.
Things for landlords to look out for
Landlords seeking a buy-to-let mortgage product should always look out for the APR attached to any buy-to-let product. An APR or Annual Percentage Rate is the true cost of the loan worked out for the entire term of the loan. This annualised rate reflects the true rate of interest any landlord & buy-to-let borrower will have to pay on a landlords loan advance over the entire term of the buy-to-let mortgage. This figure will therefore take into account any fees or charges incurred in setting up the loan as well as the rate of the loan once any initial discount or special term have ended.
Where should landlords go to find out about buy to let mortgages?
There are a number of routes for landlords to use to find out about buy-to-let mortgages and find a buy-to-let mortgage product suitable for a landlord's needs. The first one is for a landlord to approach their bank directly to see if they provide buy-to-let finance. The problems with this is that a landlords choice of mortgage product will be small and therefore a landlord is unlikely to be able to secure the most suitable buy-to-let mortgage for them.
The other is for a landlord to go on Google to see if it is possible to find a buy-to-let mortgage provider or product that suits them. This can be a bit of a 'hit or miss' affair. There are many mortgage companies that are on Google or advertise there. However, the lending criteria and restrictions that a buy-to-let mortgage provider puts on their product means that not all will be suitable for a landlord's requirements. The other point is that a landlord will not get the biggest choice of buy-to-let mortgage products by just accessing one bank, building society or buy-to-let mortgage provider.
Whether landlords should use a to mortgage broker?
The other alternative is for a landlord is to source a loan through a buy-to-let mortgage broker. Brokers act on a landlord's behalf to find the best deals in the market place. A buy-to-let mortgage broker does this by having access to most buy-to-let lending products through an online database. A buy-to-let mortgage broker should therefore pick up the best buy-to-let mortgage deals that match a landlord's specific requirements. For this service a landlord should expect to pay a fee of between a £200-£500+, payable only if and when the buy-to-let mortgage is approved.
Landlords may ask, why use a buy-to-let mortgage broker at all when you can find so much of this information over the Internet for free? There are a couple of reasons. First of all, there is the matter of time. As long as a landlord is specific with their selection criteria; a good buy-to-let broker should be able to come up fairly quickly with a number of suitable buy-to-let mortgage products. This can save a landlord a considerable amount of work by not having to check through all the mortgage products, their interest rates, conditions and limitations. Secondly, where a landlord's financial circumstances are straightforward it should be fairly easy for a landlord to find a suitable buy-to-let mortgage. However, when a landlord's circumstances are more complex the time taken to source the right buy-to-let products can be considerable. In this situation buy-to-let mortgage brokers can easily earn their money by finding buy-to-let lenders that provides a buy-to-let mortgage product that fits a landlord's very specific requirements.
Not all buy-to-let landlords are aware that by using a buy-to-let mortgage broker that they can access preferential buy-to-let mortgage rates and deals not available to all landlords. Therefore it's always worth checking with a buy-to-let mortgage broker first to see what exclusive buy-to-let mortgage products they have access to, after all this will cost a landlord nothing.
Finally, the other benefit of using a buy-to-let mortgage broker is that they take care of most of the administration work involved in a buy-to-let mortgage application. Also many buy-to-let lenders look more favourably or less suspiciously on buy-to-let mortgage applications made through a buy-to-let broker or intermediary making it more likely that a landlord will have their buy-to-let mortgage application approved.

Chris Horne is an experienced landlord and property professional who now runs the website Property Hawk, a site aimed directly at UK Landlords. The site incorporates free property management software that enables landlords to track all their financial data relating to their portfolio. It allows users to print tenancy agreements and other forms FREE FOREVER. The site generates a real time rent book for each property as well as calculating a landlords tax liabilty. The service is totally free to use at propertyhawk.co.uk

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Texas Mortgage Loans - How to Shop for a Mortgage Online

Did you know that if you are searching for a mortgage online you are one of the most valuable commodities on the internet today? Why?
Because you may be money in the bank if you APPLY ONLINE! Many who search online for anything from mortgages to socks go to a search engine, type in their request and are happily led down a path of ease and convenience right into the arms of an advertiser (usually on the first search page) claiming they have just what they need. In the mortgage business there are three types of advertisers: mortgage lead generators, mortgage lenders and mortgage brokers. They spend millions of dollars every year just to have a chance to sell you their products and services. Two of the above advertisers are not always the best option and could end up costing you serious money, time and a few headaches. We'll explain below:
The Mortgage Lead Generator - This company's primary function is to make money by enticing you to apply online. Then they sell your information (lead) to mortgage lenders and mortgage brokers. Keep in mind this is how they make money! They advertise convenience and the fact that you will be in control when several mortgage lenders or mortgage brokers compete for your business. If you are an experienced mortgage shopper you might come out of this experience unscathed but if you are a first time home buyer and have little experience with the mortgage process here are some questions to think about.
1. Do you know anything about the company or companies that will be calling you? Do they have good track record?

• These companies may be reputable but you are blindly trusting the mortgage lead generator who just sold your information at a premium to these random companies you know nothing about! The inexperieced mortgage shopper simply does not know the right questions to ask. Most think it's all about the lowest rate and never focus on the company or the personal experience of the loan officer they are speaking with which is exactly what the lender is hoping for! It's simply a roll of the dice!

2. Does the loan officer you're speaking with have any experience?

• Did you know that the position with the highest turnover in the mortgage industry is none other than that of the loan officer! I have 20 years of experience to back this up. Trust me when I say that the Loan Officer position is a revolving door espeically at large lenders. An inexperienced loan officer can cost you serious money and time especially if you don't know the difference! Roll the dice!

3. Does the ease and convenience of applying for a mortgage online outweigh all the negatives and still save you time and money in the long run?

• Many mortgage lead generators charge another fee on top of their initial lead fee in the event a lender closes a loan for you. This additional fee is many times charged directly back to you at close! This fee is generally in the $200.00 to $300.00 range! Now what you thought was an easy and convenient way to find a mortgage online actually costs you significant dollars! Easy and convenient are rarely ever free ! Roll the dice!

4. Will you enjoy persistent sales calls from several sales people daily for at least the next 30 days?

• If you apply with a mortgage lead generator you are authorizing this wonderful experience so thoroughly enjoy it. Most people find this quite annoying. If you aren't up to the task of sifting through the endless barrage of phone calls and emails you may cave in and go with the smooth talker and not the best deal. Not to be redundant but Roll the Dice!

The Mortgage Lender - Of course this is the company with the money that you need. They have underwriters who look at your application and decide if you are approval worthy. They have processors who work with you to get all the documentation necessary to close your loan and they also have, you guessed it, loan officers, who will sell you their specific lenders products. Some say this is the best way to go when shopping for a mortgage loan because you are dealing directly with the money source. No middle man means savings. But the mortgage lender stilll may not be ideal choice for the reasons cited below.1. The Loan Officer - Again you may get someone who knows what they're doing and then you may not!

• Remember that large mortgage lenders have the highest turnover within the loan officer position. Mortgage Lenders unfortunately are most often glorified Loan Officer Training Centers. The Loan Officers that actually begin to understand their role most often move on to mortgage brokers where there is more opportunity to succeed. (see reasons cited below) And you still may be working with a middle man depending on the operational structure of the lender. At many lenders the loan officer has no direct access to the underwriting and processing departments effectively reducing the so called direct lender benefit. Many times you are forced to deal with someone you've never met to try and get your loan closed!

2. Limited options with products and rates!

• The lender is always limited to selling you their specific products and rates which many times puts you at a disadvantage in finding the best available rates and programs for your unique situation. This is a Huge factor! Mortgage Brokers on the other hand are not tied to one speicific lenders products and programs. More about this later.

3. Efficency always trumps service!

• Because profit margins continue to shrink for the mortgage lender especially those who sell their loans on the secondary market lenders are constantly looking for ways to automate their processes and become more efficient. Bad news for the consumer because this means doing more with less people. Ever heard the expression overworked and underpaid? This happens quite often at mortgage lenders. Again I've seen this in action. Frustration for borrowers runs high when there are delays and a general lack of personalized customer service.

The Mortgage Broker - OK I won't throw any punches here because I work with a mortgage broker! The Mortgage Broker has the same problem finding and keeping experienced loan officers. Generally the larger broker shops with 10 or more loan officers have the biggest problem policing what their loan officers are doing. Normally the smaller brokers have more stability and experience on their side.

• Mortgage Brokers simply have more available options in products and programs for the mortgage loan shopper because they are not tied directly to any one mortgage lender but have relationships with many. This makes a mortgage broker a much more attractive option for a mortgage shopper online.
• In addition most mortgage brokers have relationships with Realtors, Builders, Appraisers, Title Companies, Surveryors, Home Inpsectors, Insurance Agents etc.... full service, one stop benefit for most mortgage shoppers who don't have these relationships established.
• Mortgage Brokers can provide invaluable one on one personalized service that large lenders simply cannot. If you like you're hand held, frequent updates, phones answered and calls returned quickly and the ability to quickly place your file with another lender if one lender fails then working with a professional experienced mortgage broker is the way to go. If you are a first time homebuyer it really makes good sense.

Also as you begin your search online for the right lender or broker follow this rule. Don't apply with anyone you've never met. Meaning talk with a loan officer before you ever apply online. (Of course this rule of thumb precludes utilizing the mortgage lead generator.) This way you never feel obligated to anyone and can remain objective until you firmly decide who you want to trust with your mortgage loan needs. There are many excellent informational sites that fully explain the mortgage loan process and many that offer free tips for inexperienced mortgage shoppers. Take the time to use the web to educate yourself. You'll be glad you did!Article Written by Billy Killingsworth
About the Author: Billy Killingsworth is the editor for www.TexasMortgageInsider.com [http://www.texasmortgageinsider.com] sponsored by UniStar Mortgage, a full service mortgage broker in Texas specializing in all income and credit types.

Billy Killingsworth has over 20 years of experience within the mortgage industry in Texas. Most recently as Vice-President of Operations for a National mortgage lender in Texas, Concorde Acceptance Corporation. He is the current editor for TexasMortgageInsider.com sponsored by Unistar Mortgage a licensed full serviced mortgage broker in Texas. Billy is also a mortgage loan consultant with Unistar Mortgage.

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Mortgage Refinancing With a Broker: Costly Mistakes to Avoid When Refinancing With a Mortgage Broker

If you are considering mortgage refinancing with a mortgage broker, there are a number of things you need to know before signing an agreement. Mortgage brokers can be an excellent resource for finding competitive mortgage refinancing offers; however, you need to be careful to avoid overpaying for the mortgage broker's services. Here are several tips to help you avoid costly mortgage refinancing mistakes when working with a mortgage broker.
Mortgage Refinancing: What Are Mortgage Brokers?
Mortgage brokers are a third party retail outlet for securing mortgage refinancing loans. When mortgage refinancing it is important to understand the how the retail mortgage market works. With the exception of banks and broker-banks (which you should avoid altogether) the retail mortgage market is made up of mortgage companies, online web portals, and mortgage brokers. These retail outlets all work basically the same; mortgage brokers sell mortgages for wholesale mortgage lenders for a commission.
Mortgage Refinancing: How Do Mortgage Brokers Operate?
When you apply for a mortgage loan from a mortgage broker the wholesale lender qualifies you for a certain interest rate and provides the mortgage broker with a written guarantee of that interest rate. The mortgage broker will turn around and reissue the mortgage refinancing interest rate guarantee in their company's name. Do you think the guarantee you receive is the same as the one that came from the wholesale lender? If you said "No!" give yourself a gold star. Mortgage brokers always mark up the interest rate the wholesale lender qualified you for. The wholesale mortgage refinancing lender may have qualified you for a 6.0% loan; however, the mortgage broker marked it up to 6.75% on your interest rate guarantee.
Mortgage Refinancing: What is Mortgage Broker Yield Spread Premium?
The markup your mortgage broker slips into your interest rate when mortgage refinancing is called Yield Spread Premium. Mortgage brokers are compensated with the origination points or fees you pay for mortgage refinancing. Yield Spread Premium is the icing on the cake for many retail mortgage outlets like mortgage brokers. By overcharging you for the interest rate, the mortgage broker receives an additional point for each .25% they mark up on the loan as a bonus from the wholesale lender. In the case above where the wholesale lender qualified you for a 6% loan and your mortgage broker marked up the interest rate to 6.75%, that broker will receive three additional points as a bonus for ripping you off.
Suppose your mortgage refinancing loan was for $200,000, the mortgage broker would receive a $6,000 bonus for overcharging you. The overwhelming majority of homeowners never know they've been ripped off in this manner by the mortgage broker. How can you avoid paying this mortgage broker markup when mortgage refinancing? Homeowners that learn to recognize Yield Spread Premium can avoid paying the markup. To learn how you can avoid paying mortgage broker markup when refinancing your mortgage, register for a free mortgage refinancing guidebook.

To get your free mortgage guidebook visit RefiAdvisor.com using the link below.
Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. For a free copy of "Mortgage Refinancing Broker - What You Need to Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.
Claim your free mortgage refinance information guide today at: http://www.refiadvisor.com
Mortgage Refinance Information

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The Benefits of Using an Independent Mortgage Adviser

Types of mortgage advice
So what are the different types of mortgage advice and where would you expect to find them?
Non-advice
This type of mortgage broker offers the least consumer protection, they will simply ask a set of questions to narrow the customers requirements and thus filtering the number of mortgages available. They then present the customer with a small list of possible mortgages for the consumer to choose one appropriate. The consumer protection here is based on the script of questions the broker asks. The script is a process determined prior to the consumer appointment, and is impersonal. Therefore specific personal circumstances are unlikely to be assessed. It also assumes that the customers answers are factually correct and the final choice is made solely by the consumer. Although no advice is offered these brokers do handle the arranging of the mortgage on the consumers behalf, and therefore dealing with all the chasing and removing stress from the process.
Where would you expect non-advised brokers to exist?
Well believe it or not many non-advised brokers are within the high street banks and building societies.
Advice-only
This type of services is where a mortgage adviser uses their knowledge and skills to provide the most suitable mortgage to suit a consumers personal circumstances. This will involve a full fact finding interview, affordability assessment, discussion on the consumers future plans and aspirations, all of which provide key facts on a consumers requirements, and therefore a means for the adviser to identify suitable products. The adviser will not however, handle the arranging of the mortgage, and therefore the consumer would need to deal directly with the bank or buildings society to arrange the mortgage.
Where would you expect advice-only advisers to exist?
These advisers generally do not exist alone this is often a service provided through the 'Independent Mortgage Adviser' type below. And often comes about when the most suitable mortgage is only offered direct through high street (i.e. not through mortgage advisers/brokers). The adviser would therefore offer an advice-only option to the client and often charge a fee for this service. Although the client must deal directly with the bank or building society their mortgage adviser often provides support to the consumer.
Tied mortgage advisers
Tied mortgage advisers come in two forms 'only offering mortgages from one lender or its own mortgages' or multi-tied 'only offer mortgages from a limited number of lenders'. This clearly limits the number of mortgage products available to match a consumers personal circumstances and in a lot of cases they may not be able to offer the most suitable mortgage product and therefore advice may result in the best mortgage they can offer, being woefully inadequate.
Where would you expect tied mortgage advisers?
High street branches. A consumer calls into their local building society branch and their in house mortgage adviser can only offer mortgage products from that building society. Consumer choice and mortgage product suitability are considerably reduced. Whats more, high street branches often offer low mortgage rates/fees as a loss leader (marketing term to bring in business) and then try to sell their tied insurance products which are often also woefully inadequate and expensive.
Whole of market advice By far the best coverage these advisers can offer mortgages from all the UK mortgage lenders (having mortgage adviser/broker routes). The vast amount of mortgages available through these advisers is likely to cover the individual circumstances of a consumer. Whole of market mortgage advisers offer advice through conducting a full fact finding interview, affordability assessment, discussion on the consumers future plans and aspirations and then can arrange the mortgage through the lender thus alleviating the stress which comes when purchasing a house.
Where would you expect whole of market advisers?
These advisers are usually separate firms often found in the yellow pages or through the internet they are sometimes linked to estate agents. On an initial meeting mortgage advisers should declare if they are whole of market and this will be disclosed in the 'Initial Disclosure Document' they provide you. If you are not sure if an adviser is whole of market then ask them.
Independent whole of market mortgage adviser
Finally this type of adviser has the ultimate scope of the mortgage market, not only can they offer mortgage advice from the whole of market (lenders with mortgage adviser routes) but can also offer an advice only process if they identify a high street direct deal is more suitable. The 'Independent' statement indicates that the adviser must offer the consumer a fee based service if required. This means that rather than the adviser taking commission as payment for the mortgage advice, the consumer can opt for paying a broker fee and any commission is rebated to the consumer. The benefit of the fee based service is the consumer knows the adviser will not be swayed by higher commission mortgage products when selecting a suitable mortgage, however these days this is highly unlikely as the mortgage adviser must prove to the regulator why a particular mortgage is most suitable. Some occasions where the commission is quite considerable this would mean the consumer could receive more money than the broker fee paid and therefore would be better off taking the fee based approach.
Where would you expect to find Independent Whole of Market Advisers?
Like the author of this document Independent Mortgage Advisers are usually separate firms often found on the high street, yellow pages or through the internet and they are sometimes linked to estate agents. On an initial meeting an independent mortgage adviser would declare that they are whole of market and that they offer a fee based approach if required and this will be disclosed in the 'Initial Disclosure Document' they provide you. If you are not sure if an adviser is independent and/or whole of market then ask them.
What do independent whole of market mortgage advisers do for consumers?
The benefits of opting for an independent whole of market mortgage adviser include but are not limited to the following: -

• Treat customers fairly.
• Take time to gain key factual details of the consumers personal circumstances and aspirations.
• Support and inform the consumer from initial enquiry right through to completion and beyond.
• Provide an informed view on the housing market in general (price negotiation, leasehold issues etc).
• Provide a individually tailored service specific to the customers needs, not a faceless "one size suits all" (non-advised) service.
• Advise consumers to thing about their long-term interests as well as the short-medium term thus minimising risks.
• Work for the consumer - estate agents, lenders and insurance providers have a different agenda.
• Explain the features and benefits of different mortgage and protection options.
• Free to act based on conscience and fairness as not usually directly targeted on specific areas.
• Protect consumers data and privacy.
• Provide general support during what is acknowledged to be one of the most stressful events in life.
• Provide a knowledgeable "Ally" in what can be a very worrying process.
• Provide proficient, impartial, examination of mortgage products.
• Identify when specific lending criteria restricts consumers personal circumstances.
• Expert guidance in complex scenarios (shared ownership/shared equity, right-to-buy, adverse credit).
• Identify the potential lender in unusual situations, thus avoiding the need for multiple credit checks.
• Select the best protection providers for consumers with health issues or unusual insurance histories.
• Choose the most appropriate products, from the whole of market for each aspect of a consumers mortgage and protection needs, and thus increasing their ability to afford their commitments, even when things go wrong.
• Highlight unusual exclusions on protection and general insurance products.
• Ensure the provision of appropriate and customized protection products.
• Quickly find an alternative lender if declined without wasting the consumers time.
• Can arrange property insurance in ample time to be ready for exchange of contracts on purchases.
• Encourage competition and innovation from lenders.
• Assist in calculating affordability, ensuring that consumers can afford their mortgage and protection commitments, along with their other commitments.
• Perform data input/entry for the consumer, reducing errors, omissions and most importantly non-disclosure.
• Take responsibility for the advice and recommendation provided, thus increasing consumer protection.
• Protect the consumer from corporate sales tactics used by some lenders and estate agency chains.
• Understanding the urgency of some transactions and "go the extra mile" to meet deadlines.
• Collate, verify and supply documentation for the lender, thus reducing delays in processing and expedite the process for the consumer.
• Liaise with third parties in the transaction, tracking progress and any developments updating consumers throughout.
• Use past knowledge and awareness to predict problems and resolve them in advance.
• Act as advocate for the consumer during the application process.
• Explain the mortgage offer and assist in fulfilling the offer conditions.
• Can find appropriate lenders and insurers for unusual properties ( thatched roof, flying freehold flats etc).
• Protect consumers from aggressive third-party marketing.
• Often personally available outside of normal working hours to answer questions or resolve issues.
• Care about consumers and provide an ongoing long-term service, often several generations of the same family.

Steve Wentworth formed his firm Wentworth Financial Services Ltd in November 2007 and has been in the Mortgage Industry since November 2002. Visit his website if your require an Independent Mortgage Adviser.
Read the original article in context at Wentworth Financial Services website http://www.wentworthfs.co.uk/articles/independent-mortgage-adviser-003.aspx

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Mortgage Refinancing Questions

Mortgage Refinancing is way to replace the existing mortgage with another mortgage. The replacement can happen with the current mortgage lender or a different mortgage lender. Mortgage Lenders created numerous mortgage options which add to the complexities of mortgage. Here are a collection of common questions and answers about mortgage refinancing.
What are the steps to mortgage refinancing?
First, you analyze your current financial situation. This tells how well your financial situation. After, you shop for the best mortgage. Most mortgage lenders have a website. Borrowers can research on the internet. Once the borrower found an advantageous mortgage, the borrower applies for the mortgage refinancing.
How to choose the right mortgage lender, or mortgage broker for mortgage refinancing?
The mortgage lenders differ in mortgage options such as interest rates, mortgage terms, down payment, closing costs, and more. To choose the right mortgage lender requires many mortgage refinance calculations and considerations.
What do I need to complete mortgage refinancing application?
Borrowers need to supply the full names, current addresses, previous addresses, social security numbers, employers information, gross monthly income, property information, asset information, and liabilities information.
When should you do mortgage refinancing?
The life of the mortgage is divided into several mortgage terms. When the mortgage matures at the end mortgage term, the borrower refinances the mortgage. This process is repeated until the mortgage is completely paid out.
The borrower does not necessarily have to wait for the maturity date of the mortgage. Sometimes, the mortgage lender offers a mortgage that is too good to pass. When mortgage lender offers a very good mortgage, the borrower can refinance the mortgage.
If the new mortgage can reduce the life of the mortgage, and reduce the mortgage payment on pay period, it is advantageous for the borrower to refinance the mortgage.
What are the costs involve in mortgage refinancing?
The borrower may have to pay the penalty to refinance a mortgage before the mortgage reaches the end of the mortgage term. Since the mortgage lender loses the interest to be paid to them, the mortgage lender charges penalty. However, a low interest rate on the new mortgage may offset the penalty.
The borrower can pay for the discount points as well. It is the amount to bring down the monthly mortgage payment, or any mortgage payment. Each discount points means one percent.
The borrower also pays the application fee, title search fee, and appraisal fee every mortgage refinancing. Mortgage lender charges a fee to process the mortgage application called application fee. Mortgage lender also needs who the real owner of the property. Hence, the borrower pays the title search fee. Lastly, the appraisal fee tells the fair market value. The mortgage lender needs to find out if the value of the property can pay off the mortgage in case of default on mortgage payment.

Dennis Estrada is a webmaster of mortgage calculators, mortgage refinancing, and mortgage dictionary website that gives access to many resources, and calculators for mortgage.

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Using A Reverse Mortgage To Pay for Long-term Care and Avoid A Nursing Home

Alternatives to Long Term Care Insurance: Using a Reverse Mortgage and Other Methods to Pay for Long-term Care Costs
Because long-term care insurance requires you to be in good health, this planning option is not available to everyone, especially older applicants for whom the premiums may also be prohibitive. If you are at least 62 years of age and you own your home, you could use a reverse mortgage to pay for care at home or for a long-term care insurance policy that otherwise may be unaffordable.
A reverse mortgage is a means of borrowing money from the amount you have already paid for your house. You are freeing up money that would otherwise only be available to you if you sold the house. You can stay in the house until you die, without making monthly payments. The loan is repaid when the borrower dies or sells the home. The balance of the equity in the home will go to the homeowner's estate.
Payments can be received monthly, in a lump sum or the money can be used as a line of credit. The funds received from a reverse mortgage are tax-free.
While the eligibility age is 62, it is best to wait until your early 70's or later. The older the borrower, the larger the amount of equity available. There are maximum limits set by the federal government each year as to how much of the equity can be borrowed. Usually only about 50% of the value of the home is made available in the form of a reverse mortgage.
You can use the funds from a reverse mortgage to cover the cost of home-health care. Because the loan must be repaid if you cease to live in the home, long-term care outside the home can't be paid for with a reverse equity mortgage unless a co-owner of the property who qualifies continues to live in the home.
Use Your Home to Stay at Home Program
The National Council on the Aging, with the support of both the Centers for Medicare and Medicaid Services (CMS) and the Robert Wood Johnson Foundation, is laying the groundwork for a powerful public-private partnership to increase the use of reverse mortgages to help pay for long-term care. The ultimate goal of the Use Your Home to Stay at Home(TM) program is to increase the appropriate use of reverse mortgages so that millions of homeowners can tap home equity to pay for long-term care services or insurance.
Reverse Mortgages Can Help with Long-Term Care Expenses, Study Says
A new study by The National Council on the Aging (NCOA) shows that using reverse mortgages to pay for long-term care at home has real potential in addressing what remains a serious problem for many older Americans and their families.
In 2000, the nation spent $123 billion a year on long-term care for those age 65 and older, with the amount likely to double in the next 30 years. Nearly half of those expenses are paid out of pocket by individuals and only 3 percent are paid for by private insurance; government health programs pay the rest.
According to the study, of the 13.2 million who are candidates for reverse mortgages, about 5.2 million are either already receiving Medicaid or are at financial risk of needing Medicaid if they were faced with paying the high cost of long-term care at home. This economically vulnerable segment of the nation's older population would be able to get $309 billion in total from reverse mortgages that could help pay for long-term care. These results are based on data from the 2000 University of Michigan Health and Retirement Study.
"There's been a lot of speculation whether reverse mortgages could be part of the solution to the nation's long-term care financing dilemma," said NCOA President and CEO James Firman. "It's clear that reverse mortgages have significant potential to help many seniors to pay for long term care services at home."
According to the study, out of the nearly 28 million households age 62 and older, some 13.2 million are good candidates for reverse mortgages.
"We've found that seniors who are good candidates for a reverse mortgage could get, on average, $72,128. These funds could be used to pay for a wide range of direct services to help seniors age in place, including home care, respite care or for retrofitting their homes," said Project Manager Barbara Stucki, Ph.D. "Using reverse mortgages for many can mean the difference between staying at home or going to a nursing home."
Seniors can choose to take the cash from a reverse mortgage as a lump sum, in a line of credit or in monthly payments. If they choose a lump sum, for example, they could pay to retrofit their home to make kitchens and bathrooms safer and more accessible - especially important to those who are becoming frail and in danger of falling. If they choose a line of credit or monthly payments, an average reverse mortgage candidate could use the funds to pay for nearly three years of daily home health care, over six years of adult day care five days a week, or to help family caregivers with out-of-pocket expenses and weekly respite care for 14 years. They could also use it to purchase long-term care insurance if they qualify.
"Up until now, though, most of these seniors have not tapped the equity in their homes -- estimated at some $1.9 trillion -- to pay for either preventive maintenance or for services at home," noted Peter Bell, executive director of the National Reverse Mortgage Lenders Association. Noting that the average income of men aged 65 and over is $28,000 and $15,000 for women, he added, "This study shows that unlocking these resources can help millions of 'house rich, cash poor' seniors purchase the long-term care services they feel best suit their needs."
What is it about Reverse Mortgages that instills apprehension in some Older Americans?
Fears persist despite the enthusiastic endorsement of groups such as AARP and the National Council on Aging.
A major reason is likely to be the fact that a lot of misinformation has been circulating about this very attractive financial tool for those that qualify. Older Americans often consult friends and relatives who are likely to be misinformed themselves.
Since the Reverse Mortgage can be a beneficial and safe alternative for Older Americans, it's important to correct the major misconceptions associated with them and allow older homeowners to make an informed decision about whether a Reverse Mortgage makes sense for them.
Probably the most common misconception is " If I obtain a reverse mortgage I might lose my home". I frequently hear this when I'm advising elders about planning options related to long-term care. The fact is that the federal government requires that the home must stay in the name of the borrowers only. Since the Reverse Mortgage is a mortgage, a lien is placed on the property like all other mortgages. This assures that the lender will eventually be repaid but for only the amount owed which is principle, interests, and closing costs, just like any other mortgage.
The great advantage of this type of mortgage is that -unlike traditional mortgages-there are no monthly payments. Not having to worry about monthly bills has to be one of the greatest gifts one could wish for in retirement.
More than ninety-five (95) percent of Reverse Mortgages approved are the Federal Housing Administration (FHA) Home Equity Conversion Mortgage (HECM) loans. These loans are guaranteed the full protection of the United States Government through use of a two (2) percent insurance fee paid on all FHA Reverse mortgages.
Another misconception is that Reverse Mortgages are costlier than other mortgages. The truth is that closing costs average only about one (1) percent more than a traditional FHA mortgage would be on the same property. The Reverse Mortgage may even be lower in cost due to the fact that conventional mortgages can charge more than the two (2) percent origination fee allowed on all Reverse Mortgages.
Another cost factor is of course, the interest rate. The FHA Reverse Mortgage interest rate is based on the one (1) year United States Treasury note instead of the prime rate, which most conventional mortgages use as their base. This gives the FHA Reverse Mortgage an interest rate LOWER than most adjustable conventional mortgages.
Another myth about reverse mortgages is that the home goes to the lender after the loan becomes due at death or when the last survivor permanently leaves the home. In my experience, the loan amount of approved is generally about half of the appraised value of the home. (The older the homeowner, the greater the amount available for borrowing because it's assumed that the funds will be available for a shorter period.
All of the equity left after payment to the lender, goes to the estate or heirs of the borrower. This is exactly the same procedure followed with regular conventional mortgages.
Since the Reverse Mortgage is a "non-recourse" loan the most the estate will be required to pay to the lender is the value of the home at the time of repayment. This is true even if the home value decreased or the borrower lived to an unusually old age.
Another attractive feature of this financing tool is that the requirements for getting a Reverse Mortgage are not nearly as restrictive as other loans. Since no re-payment is made as long as one (1) surviving borrower remains in the home, there are NO income or credit requirements. Another requirement is that both spouses must be sixty-two (62) or older with no upper age restriction. The only other requirement is that the borrowers alone must own the home with no others on the deed. The home may also be in a revocable trust as long as the eligible borrowers are the only trustees.
All property types are Reverse Mortgage eligible except manufactured (mobile) homes built before June 15, 1976 and co-operatives (Co-ops). Co-ops are expected to be eligible in the future when FHA issues final approval. Homes with existing mortgages that can be paid from the equity can obtain Reverse Mortgages.
Still another misconception is that a Reverse Mortgage is taxable and affects Social Security and Medicare. That is NOT the case. Reverse Mortgage proceeds are not taxable because they are not considered income but is, in fact, a loan.
It should be noted that Supplemental Security Income (SSI) and Medicaid might be affected if you exceed certain liquid asset amounts. We can show you how to structure the loan so that a Reverse Mortgage will not affect these benefits.
Now that the myths of Reverse Mortgage have been removed, a qualified homeowner may ask, how can I get more comprehensive information? Is your local bank the answer? Only a few lenders have been approved for participation by the federal department of Housing and Urban Development, which oversees the program. Most local and regional banks do not offer Reverse Mortgages.
AARP, the Federal National Mortgage Association, American Bar Association (ABA) and the National Council On Aging provide consumer information about reverse mortgages. The ABA passed a resolution supporting Reverse Mortgages in August of 1995.
If you would like to get specific information on a Reverse Mortgage for yourself or a family member, contact Bob O'Toole at 1-800-375-0595 or send me an e-mail to bob@elderlifeplanning.com

Bob O'Toole, President of Informed Eldercare Decisions, Inc. is a nationally known elder and disability care specialist. He currently serves on the board of directors of the National Association of Professional Geriatric Care Managers, and is a former editor of the Geriatric Care Management Journal.
Prior to founding Informed Eldercare Decisions, Inc, Bob worked for 10 years as a senior administrator in the Massachusetts Home Care System and for one of the leading private long term care consulting firms.
A frequent public speaker on aging issues, Bob has contributed chapters to two books on elder care and geriatric care management issues and has written numerous articles on the delivery of elder care in the private marketplace. His articles have appeared in Geriatric Care Management Journal, Health Insurance Underwriter, Inside Case Management, Journal of Compensation and Benefits and Workspan magazine.

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Mortgages and Remortgages - Which One Will Suit My Circumstances?

If you're using a mortgage to buy your home but are not sure which one will suit your needs best, read this handy guide to mortgage types in the UK. Taking out a mortgage has never been easier.
Fixed Rate Mortgages - the lender will set the APR (Annual Percentage Rate) for the mortgage over a given period of time, usually 2, 3, 5, or 10 years as an example. The APR for the mortgage may be higher than with a variable rate mortgage but will remain at this 'fixed mortgage rate' level, even if the Bank of England raises interest rates during the term of the mortgage agreement. Effectively, you could be said to be gambling that interest rates are going to go up, above the level of your fixed rate mortgage interest rate. If this happens, your mortgage repayments will be less than with a variable rate mortgage.
Variable Rate Mortgages - the lender's mortgage interest rate may go up or down during the life of the mortgage. This usually happens (though not exclusively) soon after a Bank of England interest rate change. Most people consider that opting for a variable interest rate mortgage is best done when interest rates in general are likely to go down. They can then take advantage of these lower rates when they occur. It's a bit of a gamble but if they are right, it could really work in their favour.
Tracker Mortgages - have a lot in common with variable interest rate mortgages in that the APR of the mortgage can go up or down over the term. The key difference between a tracker mortgage and a variable interest rate mortgage is that the lender will set a margin of interest to be maintained above the Bank of England base lending rate. So, as the Bank of England, in line with monetary policy, raises or lowers the base lending rate of interest, so the tracker mortgage interest rate will follow. Over the lifetime of the mortgage, it could be said that the borrower will neither be better off nor worse off because of interest rate fluctuations.
Repayment Mortgages - you will be required to pay a proportion of the capital element of the mortgage (how much you originally borrowed) together with a proportion of the interest that will have accrued on the capital element, with each monthly repayment. In recent years, repayment mortgages have become highly popular over the previous favourite - endowment mortgages. This is because, unlike endowment mortgages, as long as you keep up your monthly repayments, you are guaranteed to pay the mortgage off at the end of the agreed term. Monthly repayments may possibly be a little more expensive but many borrowers say that at least, they have peace of mind.
Interest Only Mortgages - very common amongst borrowers who are looking to secure a second property. The reason being, with an interest only mortgage, the borrower will only be required to make monthly repayments based on the interest element of the mortgage. The lender will require the capital element to be repaid at the end of the term of the mortgage. Again, as with variable rate mortgages, this could be regarded as being a little bit of a gamble because the borrower is hoping that the property will be worth at least as much at the end of the term of the mortgage, as it was at the beginning, allowing it to be sold and the capital element of the mortgage to be paid off. Any capital gain on the property (although possibly subject to tax) is yours. It could be argued that experience tells us that property prices rarely go down in the long term, but it can never be guaranteed.
Capped Mortgages - a combination of the fixed rate mortgage and the variable interest rate mortgage. A cap or ceiling is fixed for a set period of time. During this period, if interest rates in general rise, above the capped interest rate, the borrower will not pay anything above the capped level. Correspondingly, if interest rates fall, then the rate of interest charged by the lender, will also fall so it could be argued that the borrower gets the best of both worlds. It could also be said that a capped rate is like having a set of brakes on your mortgage, but beware, the lender is also likely to charge a redemption penalty on this type of mortgage, making it less portable than some of the other options available.
Discounted Rate Mortgages - here, the lender may offer a reduced level of interest to be charged over a set period at the start of the mortgage term. Many first time buyers or people who expect their salaries to rise considerably during the discounted rate period opt for this type of mortgage but it should be noted that the reduced rate period will come to an end and when it does, the monthly mortgage repayments to the lender may rise sharply. The lender may also charge a slightly higher rate of interest compared with other types of mortgage over the rest of the term of the loan in order to recoup the monies that they have foregone during the discounted rate period. There's no such thing as a free lunch!
Offset Mortgages - an interesting newcomer to the UK mortgage market, although still comparatively rare in terms of choice and availability. The mortgage is linked to the borrower's current account. Every month, the minimum mortgage repayment is paid to the lender but where there is a surplus of cash in the account after other uses and debts have been paid, this is also paid to the lender. Over the months and years, the borrower can potentially pay off their mortgage much quicker and have accrued much less interest than with other types of mortgage provided that a reasonable surplus is maintained in the current account.
So, to sum up, the UK mortgage market has many types of mortgage; any or all of which may be open to the potential borrower, dependent on their circumstances. If you're looking to take out a mortgage [http://www.feelgoodloans.co.uk/mortgages.php], remember that whilst your broker will take care of the vast majority of the work on your behalf, it may still take around 3 months to complete as there is an enormous amount of work that goes on behind the scenes with solicitors and searches, valuations etc. At least now you're armed with all of tehinformation you need on each type of mortgage available to you.
This article is free to distribute however, please ensure that all links remain as in the original.

For more articles by Andy Silk, visit FeelGoodLoans.co.uk [http://www.FeelGoodLoans.co.uk], specialists in all types of loans and mortgages for UK homeowners and tenants.

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