Benefits Of Refinancing Mortgages

If you current mortgage loan is on the higher side, you can consider the idea of refinancing it with a lower rate of interest, and other better terms and conditions. If you plan well and get a good refinancing deal, you could well end up saving thousands of dollars on your mortgage. This is especially true for those homeowners who are insecure because they have an Adjustable-Rate Mortgage (ARM). There are certain terms and conditions that a homeowner has to fulfill to qualify for a refinancing option. A good credit score is one of the most important prerequisites for qualifying for a refinance.

A number of people take the decision of refinancing mortgages to cut down on their monthly installments. A high monthly payment can easily be reduced if the refinancer offers favorable terms and conditions. The following example will elucidate how refinancing a mortgage can help in reducing your monthly payments.


Joe had taken a $200,000 mortgage loan in 2010. The rate of interest was 4.5% and the term was 15 years. According to the agreement, Joe had to make a monthly payment of $1,560 towards the home loan. In March 2014, Joe refinanced his mortgage with another financial institution. He arrived at this decision after taking into account the fact he could do better with a lower monthly payment. According to the new mortgage plan, Joe gets a 30-year term at 5%, bringing his monthly payment down to $1,074. One important thing to remember is that although Joe might pay lesser every month, he pays more over the course of the loan. He will also have to pay additional charges, such as appraisal fees, refinance fees, etc.

There are still a lot of benefits of refinancing a mortgage; let us take a look at them.

Change in Mortgage Plan

Refinancing a mortgage gives homeowners the option of changing their mortgage plan. Sometimes, many homeowners are stuck with an ARM mortgage that has high interest rates. Refinancing a mortgage can give homeowners an opportunity of switching from an ARM mortgage to a fixed mortgage. Also, homeowners who want to extend or reduce their loan term can also do it by refinancing their mortgage.

What is a Second Mortgage? - Should I Get One?

So, you have heard a lot of people talking about second mortgages, but are yet to get a gist of what it exactly means. Well, simply put, as the name suggests, a second mortgage is an additional loan against your home; it gives you access to the equity in your home. For example, if your home is worth $200,000, and you have paid off $100,000 (including the down payment and subsequent installments), you have $100,000 of equity in your home. A second-mortgage lender takes into account this equity and offers you a loan.

Why do Homeowners Take It?

There are a number of reasons why people take out second mortgages; some do it to pay off their other high-interest loans, such as credit cards, auto loans, while some want to use the money to fund a home renovation or say, child’s education. Whatever the reasons may be, it is important that you consider the implications of taking out a second mortgage. Like a conventional mortgage, the lender files a lien against your home, meaning that if you default on your payments, you could end up losing your home.

Types

There are two types of second mortgages – home equity loans and line of credit. The former gives you a lump sum amount (depending on the equity in your home), which you have to pay along with the interest in a stipulated time. Line of credit on the other hand works more like a credit card; you have access to a certain amount of credit limit, and you can draw on it anytime you want to, provided you do not exceed the maximum amount.

It is Another Debt

While the idea of capitalizing on your home’s equity is tempting, you need to understand that at the end of the day, you are adding one more debt for which you will need to make monthly payments. Taking a second mortgage also involves additional costs, such as the cost of appraising the property, processing fees, annual fees, etc. The important thing that you need to keep in mind is that if you are not able to repay the loan, your home will be on the line.

Average Interest Rates

For homeowners in Toronto who are looking forward to take a second mortgage, it might be worthwhile to know that the interest rates are in the range of 10% to 15%. If you have considered all your alternatives and definitely want to take it, remember to take the services of a well-known and credible lender. 

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How to Qualify for Mortgage with Bad Credit - 5 Steps

Given a choice only a few would prefer to buy things on credit; as they say - cut your coat according to your pocket. Unfortunately, the things we need in our day to day life are, at times, more than our affordability to making downright cash payment. For such situations, mortgages are helpful. It means asking for a credit loan against your property.

Lucky are people who already own a property against which they can ask for a credit loan but what about people with a bad credit score? The reliable banks and popular lenders step back the moment they see a low credit score in your record. Well, there’s always some option open when others close; options for mortgage for bad credit score. Read the following steps for getting a mortgage with bad credit.

Get Bad Credit Mortgage in Five Steps     

                  

Self help is the best help when it comes to money. No need of jeopardizing personal relationships by borrowing money from your uncle or second cousin. These five steps enumerated below will guide you on how to get a mortgage with bad credit.

1. Confirm Credit Score: It is good to rely on the government officials but it doesn’t harm to just confirm and rule out any scope for mistake on their part that might have occurred while making your credit report. Confirm and see if the figure indicated is accurate.
2. Know the Deal: One thing is for sure that no one will take a risk for you for nothing in return. Your credit risk is determined by the lender before finalizing the deal and if you are a good risk you stand a chance to bargain for lowering the interest rate (bad credit mortgage interest rates are always higher).
3. Study and Plan your Income: You don’t want to reach a point of no return by being a defaulter for long; that’s why plan your source of income or employment well in advance and be sanguine of getting enough money for paying back the bare minimum amount every month.
4. Save for Down Payment: This is the best way to lower your interest rates and get rid of the credit loan. Arrange for a substantial amount of money for making a down payment or tap onto some savings for making at least 10% payment of the total loan amount.
5. Choose Lender Wisely: At no cost should you compromise on the credibility of the lender. Check if his or their firm is recognized by the state government. It is better to trust a firm over an individual. Last but not the least; do run a comparative check for the interest rates different lenders are offering.

Now, with these five tips you are equipped with information on how to bag a mortgage with bad credit. Make the most of it.

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Residential Mortgage Rates At Toronto

Residential mortgages one such scheme that provides you, the borrower, with the funds required for owning a house of your reverie.  

 

In this scheme, the lender loans you the amount you want for the house on certain terms and conditions. This is done only after the lender is assured that you will pay the borrowed capital within the time interval specified by the creditor. You also need to qualify certain criteria for obtaining a residential mortgage, since the amount to be dealt with is very huge. One single mistake and the lender may lose all of its income for life.

                                    

The most important requirement is a good credit score. If your credit report contains any negative record like missing out the monthly payments, delayed obligations, and bankruptcy you may have to put in extra efforts in finding a lender for your loan. Conversely, borrowers with good credit rating have numbers of options to choose from. 

There are several lenders who are very keen to offer home buyers with residential mortgage loans but not all of them would offer you with the best deal according to your requirements. Therefore, you need to choose your creditor wisely. It is advisable to visit multiple lenders and discuss your requirements with them to find out what they have in store for you. You can get quotations and compare their rates to identify the lenders who are ready to compete for your deal. This is the best way to obtain a residential mortgage at competitive rates.

Get Second Mortgage Rates At Mississauga

A private Second Mortgage Mississauga can at times be a very good option to raise funds for some of your immediate expenses quickly and easily. Suggested by the name, a second mortgage is a mortgage which is taken in addition to a first mortgage. Getting this type of loan relieves you from the overhead of qualifying the rigorous quality checks conducted by the banks and other traditional lending organizations for assessing the credit worthiness of the borrowers. 

However, the lending decision for 2ndmortgage Mississauga is done on the basis of market value of your property and the amount of equity you have in your home. Additionally, your monthly income is also taken into consideration at the time of final decision. Thus, if your property is located in such an area which is in close proximity with market and other places of work and entertainment, the chances of getting a good amount of second mortgage and that too at affordable rate are very high.

It is important to note that, the second mortgages rate at Mississauga varies from one lender to other and also depends on your credit score. Since, the lenders bear more risk; these loans are generally offered at higher interest rates compared to the first mortgage. Furthermore, the payback period may vary from one year term to a term of as long as 5 or more years, as agreed upon by both the creditor and debtor.

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