Monday, August 28, 2006

Bad Credit and Home Refinance and Loan Options

When securing a low loan rate mortgage companies consider your FICO score. Your score which will be somewhere between 850 and 350 determines your credit rating. The higher the FICO score the higher your credit rating and ability to secure the lowest loan rate. Even with a low credit rating our loan agents may be able to help you refinance your home.

It is a good idea to review a copy of your FICO score before applying for a mortgage refinance on your home so you may eliminate any discrepancies and inaccuracies in the report. You may also want to consider securing a copy of your partners FICO score as both scores will be considered when securing the loan rate.

A good FICO score will help you secure the lowest loan rate for your new home loan, car loan, yacht loan, credit cards and mortgage refinance, etc. All of your debts are part of your credit score to include payment history. A mortgage refinance will not have a negative impact on your credit score but may help lift your financial burden today. Visit to discuss your options.

Home Equity Lines of Credit

What you need to know before making a decision
If you are in the market for credit, a home equity plan may be right for you or perhaps another form of credit would be better. Before making this decision, you should weigh carefully the costs of a home equity line against the benefits. Shop for the credit terms that best meet your borrowing needs without posing undue financial risk. And, remember, failure to repay the line could mean the loss of your home.

What is a home equity line of credit?

A home equity line is a form of revolving credit in which your home serves as collateral. Because the home is likely to be a consumer's largest asset, many homeowners use their credit lines only for major items such as education, home improvements, or medical bills and not for day-to-day expenses. With a home equity line, you will be approved for a specific amount of credit-your credit limit-meaning the maximum amount you can borrow at any one time while you have the plan. Many lenders set the credit limit on a home equity line by taking a percentage (say, 75 percent) of the appraised value of the home and subtracting the balance owed on the existing mortgage. For example:

Appraisal of home $500,000
Percentage x75%
Percentage of appraised value $375,000
Less mortgage debt -$100,000
Potential credit line $275,000

In determining your actual credit line, the lender also will consider your ability to repay the loan, by looking at your income, debts, and other financial obligations, as well as your credit history. Home equity plans often set a fixed time during which you can borrow money, such as 10 years. When this period is up, the plan may allow you to renew the credit line. But in a plan that does not allow renewals, you will not be able to borrow additional money once the time has expired. Some plans may call for payment in full of any outstanding balance. Others may permit you to repay over a fixed time, for example 10 years. Once approved for the home equity plan, usually you will be able to borrow up to your credit limit whenever you want. Typically, you will be able to draw on your line by using special checks. Under some plans, borrowers can use a credit card or other means to borrow money and make purchases using the line. However, there may be limitations on how you use the line.

What should you look for when shopping for a plan?
If you decide to apply for a home equity line, look for the plan that best meets your particular needs. Look carefully at the credit agreement and examine the terms and conditions of various plans, including the annual percentage rate (APR) and the costs you'll pay to establish the plan. The disclosed APR will not reflect the closing costs and other fees and charges, so you'll need to compare these costs, as well as the APR's, among lenders.

Interest Rate Charges and Plan Features
Home equity plans typically involve variable interest rates rather than fixed rates. A variable rate must be based on a publicly available index (such as the prime rate published in some major daily newspapers or a U.S. Treasury bill rate); the interest rate will change, mirroring fluctuations in the index. To figure the interest rate that you will pay, most lenders add a margin, such as 2 percentage points, to the index value. Because the cost of borrowing is tied directly to the index rate, it is important to find out what index and margin is used, how often the index changes, and how high it has risen in the past. Sometimes lenders advertise a temporarily discounted rate for home equity lines-a rate that is unusually low and often lasts only for an introductory period, such as six months. Variable rate plans secured by a dwelling must have a ceiling (or cap) on how high your interest rate can climb over the life of the plan. Some variable-rate plans limit how much your payment may increase, and also how low your interest rate may fall if interest rates drop. Some lenders may permit you to convert a variable rate to a fixed interest rate during the life of the plan, or to convert all or a portion of your line to a fixed-term installment loan. Agreements generally will permit the lender to freeze or reduce your credit line under certain circumstances. For example, some variable-rate plans may not allow you to get additional funds during any period the interest rate reaches the cap.

Adjustable Rate Mortgage Loan for Lower Interest Rates

f you are thinking of purchasing a new California home but are worried about making payments, the adjustable rate mortgage or ARM may be just what you need to get started. Although the payment amount changes over time the adjustable rate mortgage offers the lowest initial interest rate. The initial rate on the adjustable rate mortgage is often lower than the fixed rate mortgage. After the initial contracted period, your interest rate and payments will change with a adjustable rate mortgage. Along with a change in payments your loan will balance will decrease. If you find you are dissatisfied with this type of mortgage it is a simple process to change your ARM to a fixed rate mortgage. Contact to find the best mortgage option for your new home today.