If you are new to home loans or if you have just started your preparation to apply, there are some basic terms and concepts you need to be familiar with. Collateral: It is a security or asset provided to the lender by the borrower in lieu of the loan amount. Upon failure of repayment, the lender can seize the asset (usually property or real estate). Down payment: The total cost of the house is almost always never financed. The partial value of the house needs to be paid to the seller of the house as down payment. Tip: the more your down payment amount, the lesser the loan amount and thus you might get better terms on your loan. Loan term Loan: This is the length of the loan repayment period. It can be a flexible span of time depending on your income – higher the income, a longer term can be chosen, your age – the younger you are, as you have most of your working life ahead of you to enable repayment, you are more likely to get a long-term loan. Equity: The difference between the current market value of your house and the current liability on the property.

Launched by the Federal Housing Finance Agency or FHA in the United States in the year 2009, the HARP – Home Affordable Refinance Program – is a home loan initiative targeted specifically at homeowners who have negative equity and are looking for options to refinance their mortgages. That is, for those people who own property and are continuing to pay the regular mortgage and the property has a value below the outstanding balance on the mortgage that was used to purchase it. In other words, the current market value of the property is an amount lesser than the balance on the outstanding mortgage, or more simply put, an own home with little or no equity in it. While banks require a loan-to-value ratio of 80% or less to qualify properties for refinancing without private mortgage insurance, the HARP allowed those homes with a loan-to-value ratio exceeding 80% for refinancing, with the same condition on private mortgage insurance as banks. From an initial 105%, after increasing it to 125%, now the HARP 2.0 program extended the offer to those over 125% and to those with or without a private mortgage insurance. The concept of guaranteeing mortgage lenders that they would not be penalized for home loan frauds on the original loan amount greatly enthused more participants into this program.

If you are a first time home buyer, you might get cowed down by the zillion procedures that need to be done regarding purchasing a new property. Of course, financing your home might be the first of your concerns. Here is a guide to the various mortgages available to first time home buyers. Among the top 10 mortgage lenders, Quicken Loans, the largest FHA lender in the nation, and Citi Mortgages that offers the full line of purchase mortgages, including FHA and VA loans, both have low down payment requirements. Even borrowers with low credit scores benefit from these two mortgage lenders. SunTrust and Flagstar Bank are the other two mortgage lenders that demand low down payment from first time home buyers. Others like JP Morgan Chase, Bank of America, SoFi Mortgage, Navy Federal, US Bancorp and Wells Fargo are part of the list that makes up the best home mortgage lenders. Secondary mortgage refers to the loan taken on a property in addition to the first mortgage. Home equity loans, home equity lines of credit and reverse mortgage are types of second mortgages. Second mortgage lenders charge higher rates than current mortgage rates because the primary loan mortgage company gets paid first in the case of a loan default situation.

A good credit score equals easily obtainable loans from banks when you need it. Right? Yes, but does that mean people with bad credit scores because of unforeseen circumstances can never get loans again? There are private mortgage lenders who provide home equity loans and asset-backed loans to those who have low credit ratings. So do not despair. Providing a concrete plan on how to use home equity loans to improve your financial position and bring up your credit rating, while at the same time saving money, are angels called private mortgage lenders. Unlike banks for whom income and credit are the fundamental considerations, for private mortgage lenders of bad credit, it is equity that plays the major role in deciding whether your loans are authorized by private mortgage lenders. Bad Credit House Financing or FHA mortgage is what the FHA, the Federal Housing Administration, lends to people with low credit ratings. It is difficult to get home loans with bad credit. But the FHA lets borrowers with credit scores of 500 or higher to qualify for insured home mortgages with their tolerant conditions for providing loans. While the current fixed mortgage rates in Wells Fargo is 4.125 % for a 15 year period, 4.375% for a 20 year period, and is 4.500% for a 30-year mortgage, the rates in Bank of America are slightly different.

A step-by-step process of mortgage refinance A mortgage refinance is paying off the existing loan and substituting it with a new one. Refinancing can help in lowering interest rates, shortening the loan term, or consolidating a debt. The mortgage refinance procedure can be a bit daunting but here we have a simplified, step-by-step process for you. Step 1 – Know your goal It is important to know why you are refinancing the mortgage for. Either aim for maintaining the current loan term while you lower the interest rate or shorten the loan term. Step 2 – Know your credit score Check your current score as a better score will help you receive better interest rates for mortgage refinance. Step 3 – Research about the current value of your house Look for the sale of houses in your neighbourhood to gauge the current price of your home. Step 4 – Get the best mortgage rate First, compare the rates of mortgage refinance online. Shopping for rates online is a preferred choice, but make sure that you shorten the length of the loan application period to two weeks in order to reduce the impact on your overall credit score. Step 5 – know the all-in costs A mortgage refinance may come with numerous fees – from application fee to document processing fee; from appraisal cost to underwriting fee, there are a bunch of costs to be taken care of.