Low Deposit Home Loans - Buy a Property Without Adequate Cash Deposit

Are you one of the many people who:

- Are a first-time home buyer and don't have adequate deposit to buy your first property?

- Are a current home owner, but don't have adequate cash deposit to buy another property? or

- Are retired and wish to downsize from the family home you have lived in for 45 years, but have no cash reserves?

If you fit into any of the above situations and you want to buy a property, you may have recognised that:

- It can be frustrating to find a suitable home loan; and

- Major banks and some lenders have introduced stricter lending criteria, since the GFC (Global Financial Crisis).

Interestingly, it doesn't have to be frustrating to find a suitable home loan, as there are still some lenders/credit providers who offer low deposit home loans. But, the key to finding the right low deposit home loan will come down to knowing which lender/credit provider can provide a suitable low deposit home loan solution that will cater to your particular situation.

If you are looking for a low deposit home loan, here is a list of options you can consider:

Note: Whatever option you decide to choose, will depend on what the "vendor" (seller) is prepared to accept.

Option 1 - 5 Percent Cash Deposit

There are still a number of lenders/credit providers that offer low deposit home loans. They will allow you to borrow up to 95 percent of the Loan-to-Value Ratio (LVR) of the security property. However, given the high LVR, they will be looking closely at your capacity to repay the home loan. So, you will need to:

1. Demonstrate a strong and stable income; and

2. Show at least some genuine savings.

Option 2 - Deposit Bond

Many home buyers do not have the ready cash to pay a deposit of 10 percent of the purchase price of a property. In such a situation, a deposit bond can be of help. It is a guarantee to the vendor, by an insurance company, that the vendor will receive 10 percent deposit.

How does a Deposit Bond work?

By taking out a deposit bond, the home buyer is taking out an insurance policy. The policy tells the vendor that the insurance company will pay 10 percent deposit to him.

Where can a Deposit Bond be used?

A deposit bond can be used as an alternative to a cash deposit. If the deposit bond is used properly, it will be of benefit to all parties involved in a real estate transaction (i.e. the vendor, the home buyer and the real estate agent). In fact, no money actually changes hands. Instead, all purchase funds are paid in full at settlement, and the deposit fund simply lapses after settlement. Some examples of where a deposit bond can be used are:

- You need a 10 percent deposit, but you only have a 5 percent deposit, and you have been approved for a home loan of 95 percent of the purchase price of the property;

- You have a deposit available, but your funds are tied up in shares or managed funds, and you don't want to liquidate immediately; or

- You are selling one property and purchasing another property, and you don't have a 10 percent cash deposit.

Option 3 - Bank Guarantee

Another option for you to consider is guarantor home loan. It has the potential to help you save thousands of dollars in Lenders Mortgage Insurance (LMI). It is a type of home loan in which another person (such as a parent) puts up their own property as security. It will enable you to borrow up to 10 percent of the purchase price of the property, without needing a deposit.

Normally, if you borrow more than 80 percent of the property value, you are required to pay LMI to the lender/credit provider. So, if you choose to use a guarantor home loan option, then be sure that the LMI premium is waived.

Seek Assistance from Expert

With so many different lenders/credit providers to choose from, you can seek help from a professionally qualified and licensed finance/mortgage broker to do all the leg work for you. He/she will:

- Negotiate with lenders/credit providers on your behalf to arrange a low deposit home loan that best suits your needs and situation;

- Manage the loan process right through to settlement and be there for you at post-settlement;

- Find out your eligibility for the First Home Owners Grant (FHOG) Scheme;

- Explain the process of the FHOG application to you; and

- Help you to determine your overall serviceability position.

Do not worry if you want to buy a property without adequate cash deposit. Simply take help of a licensed finance/mortgage broker and make a quick purchase.

Singh Finance is a reputed Australian finance brokerage firm that employs a team of expert finance brokers. The team will help you obtain pre-approved low deposit home loans. It will also assist you in getting low rate construction home loan. Enquire online or call on 0424 190 908 today.

Article Source: http://EzineArticles.com/expert/Frank_Zelasko/1780079



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Choosing Between Fixed and Floating Rate Loans in This Economic Climate

Getting a housing mortgage loan is quite easy, but is it easy to choose which package to go for 20 years? The fixed interest rate is tempting while the floating interest rates are scary. Which one is best for you in this present economic climate?

Fixed interest rate

Fixed bank rate refers to the fixed equal installments over the life of the home loan. The interest are served/paid during the early part of the monthly payments. The principal is served in the later parts of the tenure.

One of the greatest benefits is the fixed interest rate you enjoy regardless of the market conditions. If you want to budget ahead, you may want to have a fixed monthly schedule because it brings more certainty and security for you.

Being fixed, it does not provide you a lower interest rate in case the market interest rate decreases at any point in time. The fixed interest rate usually is 1 to 2.5% higher than the floating rate. Choosing the fixed interest rate is good when you can predict a rise of the interest rates in the upcoming years.

Floating bank rates

Floating bank rate varies depending on the market conditions. Although it is cheaper than the fixed rate, it can be surprising at times if it rises along with the changing market conditions. However, the fluctuation can be for shorter periods only.

With the floating bank rate, you can potentially pay off your principal faster even if you keep your repayments at the same amount whenever the interest rates go down.

Procedures in purchasing a land or property in Singapore

You can choose the Option to Purchase or initiate a Sale and Purchase Agreement. The contract can be made by the exercise of an Option, both parties (buyer and seller) signing an Agreement, or by correspondence. Most contracts that are silent on certain points will automatically follow the provisions of the Singapore Law Society's Conditions of Sale 1999, which is usually incorporated in the terms and conditions.

Most banks offer the fixed, variable, and market pegged rates. The fixed bank rate does not allow prepayment. If you choose to prepay, then there is a big likelihood you are going to incur penalty. The variable and the market pegged loans allow full settlement and prepayments without penalty.

Which is which? Floating rate or fixed rate?

Most banks give a fixed rate in 2 or 3 year time frame. Rarely would a bank extend its fixed rate up to 5 years nowadays. If the rate would be much higher after the fixed rate term, then you need to find a refinancing package.

Subject to the fluctuation of the SIBOR rate and of the stability of your income, you can choose the floating rate after your fixed rate expires. Depending on how much you owe your bank, a difference of 1% can already save you much dollars. I would prefer you choose the floating rate, which is usually a 1% lower than the fixed rate.

We are a Singapore home loan and Compare Home Loan consultancy firm offering free expert advice on compare home loan mortgage financing packages using the most advanced loan analysis system.

SMS (65) 9782 8606

Email: loans@propertybuyer.com.sg

Article Source: http://EzineArticles.com/expert/Shirley_Paul_Tan/707790



Article Source: http://EzineArticles.com/9228623

Choosing Between Fixed and Floating Rate Loans in This Economic Climate

Getting a housing mortgage loan is quite easy, but is it easy to choose which package to go for 20 years? The fixed interest rate is tempting while the floating interest rates are scary. Which one is best for you in this present economic climate?

Fixed interest rate

Fixed bank rate refers to the fixed equal installments over the life of the home loan. The interest are served/paid during the early part of the monthly payments. The principal is served in the later parts of the tenure.

One of the greatest benefits is the fixed interest rate you enjoy regardless of the market conditions. If you want to budget ahead, you may want to have a fixed monthly schedule because it brings more certainty and security for you.

Being fixed, it does not provide you a lower interest rate in case the market interest rate decreases at any point in time. The fixed interest rate usually is 1 to 2.5% higher than the floating rate. Choosing the fixed interest rate is good when you can predict a rise of the interest rates in the upcoming years.

Floating bank rates

Floating bank rate varies depending on the market conditions. Although it is cheaper than the fixed rate, it can be surprising at times if it rises along with the changing market conditions. However, the fluctuation can be for shorter periods only.

With the floating bank rate, you can potentially pay off your principal faster even if you keep your repayments at the same amount whenever the interest rates go down.

Procedures in purchasing a land or property in Singapore

You can choose the Option to Purchase or initiate a Sale and Purchase Agreement. The contract can be made by the exercise of an Option, both parties (buyer and seller) signing an Agreement, or by correspondence. Most contracts that are silent on certain points will automatically follow the provisions of the Singapore Law Society's Conditions of Sale 1999, which is usually incorporated in the terms and conditions.

Most banks offer the fixed, variable, and market pegged rates. The fixed bank rate does not allow prepayment. If you choose to prepay, then there is a big likelihood you are going to incur penalty. The variable and the market pegged loans allow full settlement and prepayments without penalty.

Which is which? Floating rate or fixed rate?

Most banks give a fixed rate in 2 or 3 year time frame. Rarely would a bank extend its fixed rate up to 5 years nowadays. If the rate would be much higher after the fixed rate term, then you need to find a refinancing package.

Subject to the fluctuation of the SIBOR rate and of the stability of your income, you can choose the floating rate after your fixed rate expires. Depending on how much you owe your bank, a difference of 1% can already save you much dollars. I would prefer you choose the floating rate, which is usually a 1% lower than the fixed rate.

We are a Singapore home loan and Compare Home Loan consultancy firm offering free expert advice on compare home loan mortgage financing packages using the most advanced loan analysis system.

SMS (65) 9782 8606

Email: loans@propertybuyer.com.sg

Article Source: http://EzineArticles.com/expert/Shirley_Paul_Tan/707790



Article Source: http://EzineArticles.com/9228623

How Do I Know If a Reverse Mortgage Is a Good Idea for Me?

How do I know if a reverse mortgage is a good idea for me?

That is a good question. Unfortunately, too many people rush into getting one and regret it later. This kind of loan can reverse your life for the better or toss it down the chutes. To know more and to see whether you qualify - read on...

What is a reverse mortgage?

A reverse mortgage is a special type of loan that allows older homeowners to borrow against the equity (assets) in their homes. It is called a 'reverse' mortgage because instead of making payments to the lender, you actually get money from him (or her). The interest added to this loan naturally accumulates as the months go on until the amount of this loan soon equals the amount of equity that your home is made up of (or corresponds to). So, for instance, the loan amount may have grown to a boggling $10 billion which is precisely the value of your home. Not everyone is eligible for this loan.

How do I know if I am eligible?

Age matters. You have to be at least 62 years old to quality. Your home must be your primary residence and then you must have paid off some, or all, of your traditional mortgage. There are limits to how much you can borrow so if you owe too much (or beyond a certain amount) on your traditional mortgage, you may be ineligible. Your reverse mortgage, too, goes towards paying off the original mortgage - that is, if you're in arrears.

What do I do to get this reverse mortgage?

The steps are very simple. The Federal Housing Administration (FHA) offers these type of loans through its Home Equity Conversion Mortgage (HECM) program. Its lenders - or counselors - must be approved by the Department of Housing and Urban Development (HUD). You meet with one to discuss how the loan works and how much it will cost you. The counselor will check your home to see whether it is properly managed for you to qualify for this loan.

Facts I should know before getting this reverse mortgage?

Certainly! The reverse mortgage basically means that you are selling your home off to anyone else, so the moment you move out or die, anyone else living in that house -even spouse or close family members - are naturally evicted too. You can avoid that by signing this person, or people, on as co-borrowers - as long as they are at least aged 62.

Know, too, that the Consumer Financial Protection Bureau advises that you think long and hard before entering into such a loan. Rather than using up your home equity, see if you qualify for a state or local program to lower your bills. Or maybe downsize to a more affordable home. Home equity is often the last resource to turn to in a financial emergency, but it may be advisable to speak to both a qualified housing counselor and a trusted financial advisor so that you make the right decision.

Other facts to consider before applying

Are you on a fixed income? If you have little income coming in, you may find yourself in trouble later with being unable to repay the loan. In that case, you may have trouble paying your property taxes and homeowner's insurance, and you could face foreclosure.

Another thing you should consider is whether you have children or heirs that you want to leave your property to. Taking out a reverse mortgage can jeopardize your ability to leave your home to them. (Neither they or you will be too happy!)

Secondly, consider the amount of time that you want to continue staying in that home. Such a loan only makes sense if you plan to live in your current home for a long time. This is because a reverse mortgage requires you to pay insurance premiums in case your loan balance grows to be more than your home is worth. If you only stay in your home for a short time, you'll be paying for insurance that you don't need and the loan balance is less likely to grow to more than your home value.

Reverse mortgages can also have high upfront costs. If you sell your house within a few years, you won't have gotten as much benefit from those costs than if you stayed in your home for a longer time.

How much does it cost to get a reverse mortgage? (And other money issues)

You'll pay differently depending on the type of mortgage you choose. So shop around. Also plan beforehand on how you're going to complete your property taxes and homeowner's insurance. You don't want to lose your home or be forced to move out.

In short, consider this: Have you thought about downsizing? How about selling your home and using your money from the sale to buy a more affordable one, you could be more financially secure in the long run. That may serve you better than going into the hassle of getting a reverse mortgage...

Yanni Raz is a hard money lenders and trust deed investments specialist as well as a blogger and contributor. The goal is to educate other real estate investors before they are getting into bad real estate deals.

Yanni Raz's main Blog: Hard money lenders

You can read his articles and learn more about the market.

Good Luck.

Article Source: http://EzineArticles.com/expert/Yanni_A_Raz/239019



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How You Can Learn to Predict Mortgage Rates, Too

How you can learn to predict mortgage rates, too.

Many people, particularly, first-home buyers, tend to shop around for the cheapest mortgage rate that they see not knowing, or understanding, that these rates dip and fall. If you get an understanding of how mortgage rates work, you will be in a far better position to land one that really works for you and may even be cheaper than the one you're ready to commit to, say, today.

Here's how mortgage rates work.

The firs thing you should know about these rates is that they are unpredictable. They change. A high rate today may be low tomorrow. At one time, these rates were more stable. They were set by the bank. But since the 1950s, Wall Street took over and adjusted them according to supply and demand. Or more accurately, Wall Street linked them to bonds. So that when bonds - that are bought and sold on Wall Street - drop, mortgage rates do, too.

How can I know today's bonds rates?

It sounds simple: let's keep up with the prices of bonds and we'll know when to shop for our mortgage. Unfortunately, only Wall Street has access to this knowledge (called "mortgage-backed securities" (MBS) data). And they pay tens of thousands of dollars for access to it in real-time.

Here's how you can make an educated guess:

Calculate according to, what's called, the Thirty-year mortgage rates.

These are the events that lower rates in any given 30 years:

Falling inflation rates, because low inflation increases demand for mortgage bonds
Weaker-than-expected economic data, because a weak economy increases demand for mortgage bonds
War, disaster and calamity, because "uncertainty" increases demand for mortgage bonds
Conversely, rising inflation rates; stronger-than-expected economic data; and the "calming down" of a geopolitical situation tend to elevate rates.

The most common mortgages and mortgage rates

You'll also find that mortgages vary according to the level of your credit rating. The higher your credit score, the more likely you are to win a lower mortgage rate.

Mortgage rates also vary by loan type.

There are four main loan types each of which has a different level of interest. In each case, this level of interest hinges on mortgage-secured bonds. The four loan types together make up 90 percent of mortgage loans doled out to US consumers.

Which mortgage loan do you want?

Here is the list:

1. Conventional Mortgages - These loans are backed by Fannie Mae or Freddie Mac who have set regulations and requirements for their procedures. The Fannie Mae mortgage-backed bond is linked to mortgage interest rates via Fannie Mae. The Freddie Mac mortgage-backed bond is linked to mortgage-backed bonds via Freddie Mac.

Mortgage programs that use conventional mortgage interest rates include the "standard" 30-year fixed-rate mortgage rate for borrowers who make a 20% downpayment or more; the HARP loan for underwater borrowers; the Fannie Mae HomePath mortgage for buyers of foreclosed properties; and, the equity-replacing Delayed Financing loan for buyers who pay cash for a home.

2. FHA mortgage - These are mortgage rates given by the Federal Housing Administration (FHA). The upside of these loans is that you have the possibility of a very low downpayment - just 3.5%. They are, therefore, popular and used in all 50 states. The downside is that the premium is split in two parts.

FHA mortgage interest rates are based on mortgage bonds issued by the Government National Mortgage Association (GNMA). Investors, by the way, tend to call GNMA, "Ginnie Mae". As Ginnie Mae bond prices rise, the interest rates for FHA mortgage plans drop. These plans include the standard FHA loan, as well as FHA specialty products which include the 203k construction bond; the $100-down Good Neighbor Next Door program; and the FHA Back to Work loan for homeowners who recently lost their home in a short sale or foreclosure.

3. VA mortgage interest rates - VA mortgage interest rates are also controlled by GMA bonds which is why FHA and VA mortgage bonds often move in tandem with both controlled by fluctuations from the same source. It is also why both move differently than conventional rates. So, some days will see high rates for conventional plans and low rates for VA/ FHA; as well as the reverse.

VA mortgage interest rates are used for loans guaranteed by the Department of Veterans Affairs such as the standard VA loan for military borrowers; the VA Energy Efficiency Loan; and the VA Streamline Refinance. VA mortgages also offer 100% financing to U.S. veterans and active service members, with no requirement for mortgage insurance.

USDA mortgage interest rates - USDA mortgage interest rates are also linked to Ginnie Mae secured-bonds (just as FHA and VA mortgage rates are). Of the three, however, USDA rates are often lowest because they are guaranteed by the government and backed by a small mortgage insurance requirement. USDA loans are available in rural and suburban neighborhoods nationwide. The program provides no-money-down financing to U.S. buyers at very low mortgage rates.

Mortgage rates predictions for 2016

Wondering what your chances are for getting a mortgage for a good rate the coming year? Wonder no further.

Here are the predictions for the 30-year trajectory:

Fannie Mae mortgage rate forecast: 4.4% in 2016)
Freddie Mac forecast: 4.7% Q1 2016, 4.9% Q2 in 2016
Mortgage Bankers Association (MBA) forecast: 5.2% in 2016
National Association of Realtors (NAR) forecast: 6% in 2016.
In other words, mortgage rates are projected to rise slightly in 2016.

Yanni Raz is a hard money lenders and trust deed investments specialist as well as a blogger and contributor. The goal is to educate other real estate investors before they are getting into bad real estate deals.

Yanni Raz's main Blog: Hard money lenders

You can read his articles and learn more about the market.

Good Luck.

Article Source: http://EzineArticles.com/expert/Yanni_A_Raz/239019



Article Source: http://EzineArticles.com/9240203