Dina Wilson asked:


Buying a home is a dream of every person. Constant rise in property rates has made it only a dream for anyone to achieve. With home loans you can realize your dream of being a home owner. Home loans are offered to people to accomplish their dream and give them an opportunity of owning a home.

The home loans can be used for buying or constructing new home or for other needs like buying car, home renovation, debt consolidation, planning out a holiday, for higher education, wedding etc.

Home loans are secured in nature and are taken against equity in your home. Before offering loan the creditor evaluates present value of your home, outstanding mortgages, and any other debt which you have taken. Then the loan amount offered is calculated after deducting all outstanding debts and mortgages.

You can borrow anything from £ 5000 to £ 75000 for a term of 5 to 25 years. This amount may vary depending on the market value and registration value of your property.

Home loans generally carry lower interest rates and have flexible repayment options. The borrower can choose between fixed rate and variable rate. In fixed rate loans, the interest rate charged remains constant for the entire duration not effecting your monthly payments. On the other side, variable rates fluctuate and vary with market rates. Your monthly payments increase and decrease with changing rates.

A good credit history will enable you to easily attain loan. But that doesn’t mean that those with bad credit can’t apply! Bad creditors with less than perfect credit like CCJs, missed payments, bankruptcy, IVA, repossession can also qualify for home loans. You may have to pay slight higher interest rates owning to your credit problems.

You can apply for home loans either through conventional method or online. Online application is less time consuming. You can easily search for lenders that offer great deals at competitive rates.

Home loans are a financial tool that enables you to accomplish your dream of buying a home. These loans offer many benefits to borrowers. It caters to not only your home buying needs but allows you to resolve other purposes as well.



Leon

Kristin Abouelata - Home Loans asked:


It’s not very often that a borrower takes into heavy consideration what his loan to value is when shopping for a loan.  In fact, if the subject is brought up by the customer, it’s mostly in relation to avoiding paying monthly mortgage insurance.  But sometimes, a loan to value can affect even more aspects of your loan – like pricing and approval!

What is loan to value?  Well, it’s exactly what it says.  The loan amount compared to the value of the home you are buying or refinancing.  For example, if you are buying a $100,000 home, and your loan amount is only $50,000, your loan to value or “LTV” is 50%.  It’s also very common to refinance a home to obtain a lower LTV and drop mortgage insurance that was before required.

Different types of loans have different minimum requirements for LTV’s.   With primary residence purchases, for instance, an FHA loan can have as high as a 97.75% LTV (soon to change to 96.5% in 2009).  A conventional loan can have as high as a 97% LTV (but more common is 95% LTV).  VA and Rural Housing loans can have 100% LTV’s.  People who have cash to put down on the property they are buying and financing with a conventional loan oftentimes try to amass 20% of the purchase price in order to avoid mortgage insurance.  Mortgage insurance is required when your LTV for a primary residence is above 80% and is issued by independent mortgage insuring companies like Genworth Financial or PMI.  Fannie and Freddie, the big purchasers of conventional loans, will require one of these or other approved companies issue mortgage insurance unless the loan has an 80% LTV.  And if you’re refinancing the home you live in?  The whole grid of acceptable LTV’s changes for the most part, with a few exceptions.  And furthermore, if you’re talking about investment properties, it’s another can of worms.

But when else does LTV mean something?  Consider when a loan specialist prices your loan.  Oftentimes there are pricing differentials based upon the loan to value.  For instance, if you carry mortgage insurance and your LTV is 85.01% or higher, you might actually get a better interest rate than if you had an 85% LTV (but don’t get too excited because your monthly mortgage insurance will be higher).  Or if your LTV is 60% or lower, you might also get a better interest rate.  If you are close to tipping the scales on one of these ratios, it may be to your benefit to ask your loan specialist how close you are to a pricing break one way or another.  You’d be surprised to find out it might change your mind as to how much money you decide to put down on your loan. 

And guess what else?  A low loan to value may be the difference between loan approval and loan denial.  Why is that?  Because if you are investing enough of your own money into the equity of a property, chances are you won’t default on the loan.  And if you do, it’s probably a last recourse.  Not to mention, the lender who holds the note won’t lose money because there is enough equity in the property to cover foreclosure costs, re-sale costs and any value loss from an upside down market.  The lender is covered.  So, the lender will consider the loan less risky and a higher debt to income ratio is tolerated when reviewed with a high credit score. 



Betty

Martin Lukac asked:


You are planning to buy a new home. There are many issues that bother you at this point of time and the major one is finance. With markets full of options for home loans, there are many things to be considered while choosing a particular home loan program. We will go through the necessary steps to get home loan: some before you apply for it and some after you apply for it.

Steps to get home loan # 1 Maintain your credit records: Good credit track record will help you a long way in getting your home loan approved smoothly and quickly. So pay all your bills and takes on time every time, especially in the year before applying and during the period when your application is being processed. Pay down your credit card balances as it will reduce your liability and increase your credit score.

Steps to get home loan # 2 Get Pre-qualified for a home loan: Getting pre-qualified for a home loan is a good idea because it gives you an idea how much you can borrow. You can get pre-qualified for free from any major lending institutions. It can even be done over phone.

Steps to get home loan # 3 Organize all your paperwork and decide on a budget: Keep all your financial documents handy. These documents would include copies of your bank account statements, income tax returns, pay slips, recent credit card statements, and divorce decree and child support documents. Organizing these documents would also help you have an idea about your financial status and budget. The maximum limit of home loan that the organization will provide will be different to the limit that you can afford.

Steps to get a home loan # 4 Get a guarantor: Though all organizations do not ask for guarantor, it always works to your advantage to have one. This also increases your credibility and chance to approval of a higher amount.

Steps to get home loan # 5 Apply with all relevant documents: Once you have decided to buy a particular property apply for the home loan. The more complete and accurate your documents, faster will be your home loan process. You can even apply online and the loan agent will get in touch with you.

Steps to get home loan # 6 Processing and Verification: All the documents submitted by you are verified during the processing of your loan. A loan officer might visit your property as well as your current residence to verify your details. Your employment details will also be checked. An appraiser will call you up and visit your property you want to buy, for its valuation.

Steps to get home loan # 7 Loan Sanction: After all the details provided by you are verified to the satisfaction of the loan officer, a letter of sanction will be issued. This letter containing the amount of home loan and the terms and conditions has to be signed by you.

Step to get home loan # 8 Submission of original property documents: Your title deed will have to be left with the lending company as security for the home loan. You will have to go to the company to sign the loan agreement.

Step to get home loan # 9 Disbursal of the loan amount: You can withdraw the amount of loan as and when required by you as per the stages of construction of your house or payments. Until the whole amount is withdrawn you will be required to pay only the interest on the amount withdrawn. Your Equated Monthly Installments (EMI) will begin only after the loan amount has been withdrawn in full.



Stella