Why A Hard Money Loan Is Better Than Using A Traditional Lender
Posted by adoex in Loans, Loans Tips, Money on January 1, 2012
When it comes to the real estate game, there’s plenty of money to go around, even in these tough economic times. The problem is that the money you need isn’t always in the right place at the right time which makes life difficult at times. Although a loan could get you through a tough spot, there are times a traditional loan isn’t going to work. That’s where a hard money loan from a private money lender can be exactly what you need to make a successful deal happen.
A traditional loan, whether through a bank or a mortgage company, is designed for the end consumer, a person or family who is buying a house to keep. These loans are intended to be paid off within 15 and 30 years and are generally low interest loans, usually between 3.5% and 5% in today’s market. Quite often, if these types of loans are to be paid off early, there is a penalty to be paid since the financing institution isn’t going to make all the money off of the interest the original contract stated. Plus, it can take several weeks or even a couple of months for all of the paperwork to be processed before the funds become available. These limitations don’t work well in a fast-paced environment. A private money loan or bridge loan is completely different.
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What Is HARP – Home Affordable Refinance Program Helps Millions Refinance
WHAT IS HARP?
The Home Affordable Refinance Program or HARP was altered on November 15th, 2011. Sweeping changes were made, allowing many people who otherwise wouldn’t have qualified, to refinance into the historically low interest rates of today. The HARP program was designed to help homeowners who are “under water” with their homes’ value due to depreciation. HARP guarantees loans that banks give to consumers that are experiencing a negative equity position because of the state of the housing market in America today.
There are qualifications; a homeowner must be current on their mortgage within the last 6 months. He or she may have one 30 day late reported in the prior 6 to 12 months. The consumer must be employed and their mortgage must be currently guaranteed by Freddie Mac or Fannie Mae.
Once you have figured out who owns your mortgage, you can figure out whether you are going to do a DU Refi Plus (HARP program for those with Fannie Mae Loans) or an Open Access loan (for those with Freddie Mac loans. Interest rates are at an historical low, with 15 year fixed rate mortgages in the 3.375-4% range and 30 year fixed rates in the 4-4.375% range, it is a great time to refinance.
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5 Reasons To Consider A 5 Year ARM
Posted by adoex in Loans, Loans Tips on January 1, 2012
With so many mortgage programs available, it can be hard to determine which one is best for your specific needs. Although the 30 year fixed rate mortgage has traditionally been the most common for borrowers in the U.S., it may not necessarily be the best option for everyone. Consider the adjustable rate mortgage (ARM for short.) With an ARM loan, the interest rate is typically fixed for a set amount of time. In the case of a 5 year ARM (or 5/1 ARM), the interest rate is fixed for the first five years. It then is adjusted once a year, for the remainder of the loan.
Although many borrowers avoid ARM loans fearing they are too risky, an ARM loan can be a great financial opportunity for the right home buyer.
So why would you consider a 5 Year ARM?
1. You Can Get Low Rates
Banks and mortgage lenders generally offer lower initial interest rates on ARM loans for the fixed time period (in this case, the first five years). In fact, initial ARM rates tend to be significantly lower than rates associated with 30-year fixed rate mortgages (though this is not always the case – check current pricing to be sure.) But keep in mind, after the fixed rate period is up, the rate will start to fluctuate.
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