Loans, Insurance & credit card information

Having an even 3-point better interest rate on your home equity loan can save you over $1,000 in annual debt payments (on a loan of $50,000). Here are 4 tips for getting the best-possible home equity loan rates.

Tip #1: Pull your credit report: Even though your loan will be lent against the equity in your home as collateral, the rate for which you are eligible is still based largely upon your credit score. If you have not pulled your credit score in months or years, go ahead and do so now. You can get a free copy of your report at the Federal Trade Commission-authorized Web site.

Tip #2: Polish your credit score: If you have poor or fair credit, improving your credit score just 50 points or so can save you $1,000 or more in annual home equity loan payments. While an applicant with good credit might have a rate of 1/2 point below prime, someone with fair or poor credit might pay 1 to 5 points over the prime rate. Bonus: borrowers with better credit can often avoid application or appraisal fees as well, which can add up to significant savings.

Tip #3: Consider a home equity line of credit as an alternative: Before you apply for a home equity loan, consider a home equity line of credit as well. This is a great option if you are not sure exactly how much you will be borrowing over the next couple of years. The potential risk factor is that the rate is not fixed and as it is usually tied to the prime rate.

Tip #4: Compare rates: Once your credit score is in tip-top shape and you have decided that a home equity loan is your best option for securing cash, I suggest starting with your current mortgage lender to find out their best rate. Then, use that as a point of comparison and go online to shop for rates. There are a number Web sites that allow you to compare rates. Before selecting a loan on a given site, be sure to read the fine print about associated costs and fees.

For homeowners, a home equity loan can be a great way to secure cash. To get the best rate, be sure to check and then improve your credit score. Once you have decided that the timing is right to apply for a loan, shop for rates on any credible Web site that will allow you to compare among multiple lenders. And, be sure to read the fine print before signing on the dotted line.

Do you have any idea what you should do before buying a home? Sure, you may know that you need a down payment and that your credit should be good. But, do you really have what it takes to buy a house right now? You might be shocked to know the answer!

With a home being the biggest investment you could ever make, it is not surprising that so many are clamouring to apply for home loans. The tax benefits of home ownership outweigh the tax burdens, and of course the notion that you have a home that will be yours without having to worry about rents being raised, developers gobbling up apartment buildings only to turn them into condominiums, and the idea of gardening usually provide attractive incentives. Yet before you go out and speak to the first mortgage broker you can pull up online about financiering your dream home, consider what you can really afford.

Similarly, before you start house shopping, hoping that you will somehow qualify for the home loans you need, keep in mind that you need to not only factor in the cost of the home but also the cost of the taxes as well as the insurance you will need to carry. When it comes right down to the cold hard cash reality, it will be wise to have about 20 percent available for a down payment. Granted, there are many loans that are being advertised as zero down financing, yet the fine print is very clear in that this savings will cost you with respect to interest rates.

Reputable lenders of home loans will look at your long term and short term debts. If possible, pay off smaller debts and revisit your larger debts to see if they can be paid off quicker. While student loans may accompany you for a decade or more, a car loan may be paid off within a year or two. When you tally up all of your expenses excluding rent or your current mortgage, you should have about 30 percent left over for your future mortgage. Keep in mind that you still need to have enough money for savings, the occasional emergency and of course a vacation here or there. It is too easy to make the number match just to get into the house of your dreams only to then run up credit card debt for groceries, gas, and vacations.

Last but not least, stay away from adjustable rate home loans! Sure a teaser rate of maybe one or two percent is a great incentive, but sooner rather than later the interest rate will go up and your monthly payment will skyrocket! As a matter of fact, did you know that many adjustable rate home loans have a cap as high as 12 percent? This will make your home unaffordable very quickly, and if you are planning to stay in it for a while, you will be wiser to go ahead and look at the fixed rate home loans for security.

When you apply for a home equity loan, lenders consider your creditworthiness when deciding whether or not to extend a loan. Your creditworthiness is assessed based on three things: credit history, income, and loan-to-value ratio.

Credit History

As with any loan, your credit history will have a major effect on home equity loan availability and loan interest rates. Fortunately, qualifying for financing on a home you already own is much easier than qualifying for a new home loan. If you have good credit, you should have no trouble qualifying for a home equity loan. You should also be able to obtain a relatively good rate. If you have bad credit, you should still be able to obtain a home equity loan, but your rate will probably be a bit higher. Before applying for a home equity loan, take time to pull your credit report. If possible, improve your credit rating by removing mistakes and old debt.

Income

Even though the equity that has built up in your home belongs to you, lenders will still want to make sure that you can pay back any amount that you borrow. To determine your ability to repay, lenders will assess your monthly income and your total debt-to-income ratio. (Debt-to-income ratio is a term used to describe how much of your monthly income goes towards paying your mortgage, credit card debt, loan installments, and other financial obligations, including the home equity loan for which you are applying.) Most lenders will want to make sure that your total debt does not exceed 38 percent of your monthly income.

Loan-to-Value

The loan-to-value ratio is the amount you owe on your house versus the amount your house is worth. For example, if your house is worth $100,000 and you still owe $70,000, your loan-to-value ratio is 70 percent. When you get a home equity loan, the value of your home is re-assessed. The lender will add your current mortgage balance to the requested home equity loan amount, and divide the sum by your home’s current value. The final amount is the new loan-to-value ratio. Many lenders want to keep this amount below 80 percent. However, some lenders are willing to loan you 100 percent of your home’s value or more. Here is a list of recommended Home Equity Lenders online. It’s important to use a reputable lender online to make sure your personal information is secure.

A West Virginia home equity loan can be an excellent source of financing for almost any homeowner. That said, you should be careful to research exactly what it means to make home equity payments on top of your current mortgage payment. The last thing you want to do is squander your equity or find yourself in trouble financially.

Affording the Payment

When most people think about getting West Virginia home equity loans, their first question is: how much is it going to cost me. This is a great question, because it is very important for you to be confident in your ability to afford the monthly payments. There is no one answer to this question, as your payment depends on how much you have borrowed and the rate that you borrowed it at.

Repaying Your Home Equity Loan

Currently, the rates on home equity loans in West Virginia average 7.50 percent. If you borrow $30,000 at this rate for 60 months, your payments would be $601.14 every month. If you wanted a smaller payment, you could borrow less money or spread the payments out over a longer period of time. It is not unusual for homeowners to get a West Virginia home equity loan that has a 10, 15, or 20 year term.

Watch Home Equity Loan Rates

As you are making payments on your home equity loan, you will want to keep a careful eye on average home equity loan rates. If you see the average rate drop down below what you currently pay, you may want to consider refinancing your West Virginia home equity loan to take advantage of the rate decrease. By dropping a point or two, you could save yourself a lot of money over the life of your equity loan.

I have been approached by a swarm of homeowners who are currently facing foreclosure. It saddens me to see so many people in this situation, and how they have been deceived into thinking they can afford these homes. Even until now I hear stories about homeowners being promised false hope that they can be saved from foreclosure by paying a short sale fee, loss mitigation fee, or just being striped totally of their equity by scrupulous professionals.

The fact of the matter is that you can save yourself from foreclosure; because you don’t have many options.
The first thing homeowners in trouble have to come to realization is to separate their emotional attachment to their home if they have owned it for less than four years. I say that because if you bought your home within the last four years most likely you bought really high priced and most of these homeowners bought with a 100% financing with no income verification. If this is the case you must realize you have no equity and your house isn’t worth keeping. What I recommend is a family meeting putting together a budget; net Income minus all expenses and if you’re in a negative forget it! cut your loses and move on its not too late to start over.

Refinance may be an option with the new FHA guidelines that go into affect October 1, 2008 this where homeowners that are behind on their mortgage can refinance only if they can prove that their income is sufficient to pay the mortgage at 29% of their income, and only if their current lender agrees to take a loss (short Pay) on the current mortgage FHA will purchase the current mortgage up to 85% of current Fair market value with closing cost and debt all bagged together not to exceed 90% of current fair market value. You can visit their website at http://www.hud.gov and search for the HR 3221 housing bill for full description of bill. Please remember this is a full documentation loan it will not work for people who cannot prove their incomes!

After you realize you can’t afford it and refinancing couldn’t help you call your lender don’t be afraid bottom line you can’t afford it. your lender must see that you can’t afford it so you have to lay the cards on table with them period give them all the truth once they see you can’t afford it obviously a payment plan won’t work. The lender may offer you loan re-modification if your income proves that you can pay the new loan terms so you see why I say sometimes its better to come to reality and forget the emotional attachment we have for homes. Most lenders offer forbearance which is deffer payments for up to six months but again if you still have the same income in six months it defeats the purpose.

Option 4 is to put the house on the market to sell at current market value hire a Realtor to give you a free market data analysis if you list with them most likely your home won’t be worth what you bought it for, so its important that you maintain communication with your lender during this process, so they can at least see that you are trying to get yourself out the hole, plus they will pause foreclosing procedures during this time. Once the Realtor gives you the market value send a copy to your lender as they have to agree to take a loss; this is called a short sale. During this time make sure you save your money to start looking for accommodations to move out don’t get too comfortable. It surprises me how many people wait til the sheriff is knocking on their doors before they reality actually hits home.

If after a few months the property doesn’t sell you have the right to claim Chapter 13 Bankruptcy. Just keep in mind that if you file chapter 13 its only temporary, if you can’t afford your current mortgage chapter 13 won’t help you as now you will have to pay your regular mortgage payment and all of your debt consolidated in another payment to the state trustee so now you will have two payments. Notwithstanding the enormous fees you will pay an attorney. Chapter 13 is for individuals who can prove they will be able to pay their current mortgage plus all arrears in a payment plan over 5 years.

If Chapter 13, Selling, Refinancing, short selling, forbearance, payment plan, loan re-modification, don’t work out for you just give it up ask your lender if they have cash for keys ask for a couple of months to move out and you will voluntarily give them the deed in lieu of foreclosure, it’s certainly less embarrassing than the sheriff forcing you and your family out.

Just remember during these tough times we fail to think straight and anyone who offers us a sign of hope will look like a god; but reality is you can save your own home if you just talk to your lender and come to realization if you can truly afford to keep this home even if the lender works with you.

I can’t stress to how important it is to communicate with the lender, they will offer the options that they will offer any body else you hire to do it for you. Don’t fall into a trap just tell your lender the exact truth be bold and un-embarrassed tough times could happen to any one of us and it’s never too late to start over. Take it from me I have walked the path and I have helped hundreds some I saved their homes and the others just gave them up gracefully and started a new chapter in their life.

After all is said and done just educate yourself on credit repair as your starting point.

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