80/20 Home Mortgage Loans

An 80/20 mortgage loan is where, for a new home loan, there are two separate loans with two separate payments. There are also two separate interest rates and the loans are usually funded by separate companies. The two loans consist of 80% of the loan amount and 20% of the loan amount. An 80/20 mortgage loan is a great option for those individuals who do not have a sufficient down payment for buying their new home.
Some of the benefits to having an 80/20 mortgage loan are:
1. No PMI - Private mortgage insurance is a monthly payment that every borrower needs to pay when they purchase a home with less than 20% down. PMI is insurance for the lender to protect the lender against losses should the borrower default on their loan. PMI does not insure the borrower in any way. When you split your mortgage into two loans, one loan is for 80% of the loan amount and the other is for 20% of the loan amount. So, PMI is not necessary for the first mortgage.
2. Qualify for 100% Financing on Your Mortgage - Many times a borrower might not be able to qualify for 100% financing on their mortgage loan unless they do the 80/20 setup with their loan.
3. Lower Interest Rate on 1st Mortgage - Let's say you expect to be able to pay down a significant amount on your mortgage loan in the near future. It works in your best interest to get an 80/20 mortgage loan, because as you quickly pay off the second mortgage, your interest rate on your first mortgage will be much less than if you had financed all 100% of the loan through one company. Usually the interest rate on the second mortgage is much higher, but that is nullified if you pay the second mortgage off quickly.
80/20 Home Mortgage Loans 

Mortgage Information - Refinancing? Second Mortgage? Home Equity Loan? Understand The Basics

A mortgage is usually the biggest purchase that an individual makes, and because of that, many people tend to get nervous during the process. But wouldn’t it make things easier if you felt that you had a “handle” on the process—or at least the terminology? After all, in order to get the best deal on your mortgage loan, you will need to understand certain things such as points, interest rates and closing costs.
If you feel like you could stand to brush up on your mortgage loan terminology, why not read the following common terms and their definitions?
Points
A point is amount that a borrower will pay in order to reduce the interest rate on their mortgage. One point is generally equal to 1% of the loan amount. For example, if you were taking out a 100,000 mortgage, and wanted lower interest rates, you might have to pay anywhere from 1-3 points (or $1,000-3,000 dollars) to get that rate. It’s important to note that some lenders will advertise very low interest rates, and only when you read the fine print will you learn that you will have to pay points in order to get them.
Interest Rates
When a lender makes a loan, they make money by charging interest on that loan. With a mortgage loan, all of that interest is front-loaded, which means that for the first few years, every payment that you will make will go mostly toward the interest.
When applying for a mortgage, you will have the option of “locking-in,” or “floating” your interest rate. If you choose to lock-in your rate, then you will be assured—for about 60 days—that when you close it will be at that rate. However, if it appears that interest rates will go lower, you can choose to float the interest rate, which means that you can watch the rates carefully, and then lock it in whenever it reaches an amount that you are comfortable with.
Closing Costs
When you go to close on your home at the title company, both the buyer and seller will have to pay a pre-determined amount of closing costs. These are determined by the type of loan you get, and the area where you live. Your lender is required by law to inform you of any closing costs beforehand, so be sure to ask for your truth in lending estimate.
As you can see, mortgage terms aren’t that mysterious! Do some research or read some more articles on this site to become familiar with the lending terms that you need to know.
There are also many mortgage companies online that can help you find direct mortgage lenders and home loan brokers that will best suit your needs. This is a quick way to find a good mortgage loan and compare rates and offers from multiple lenders. When lenders compete for your business, it works to your advantage.

Mortgage Lenders Finally Slash Mortgage Rates | Mortgage Expert

In the wake of last weeks shock announcement by Bank of England of a 1½% interest rate drop from 4.5% down to 3%. This was not before time! Around 40 mortgage lenders withdrew their trackers rate products from the market and said they would be reviewing and relaunching their tracker products later this week. By last Friday afternoon the London Interbank Offered Libor (Rate) which shows the interest rate at which the banks are willing to lend money to each other finally fell to 4.49% from 5.56%.

The main indicator and key driver when it comes to lenders pricing their new interest rate products is not the base rate but the three-month Libor rate. The Libor rate is still stubbornly high at 1.49% higher than the Bank of England Base rate. If mortgage rates are to regain any similarity with the base rate then the gap between the base rate and the three-month Libor rate needs to narrow. All we can do is wait and watch!

This defiance by the banks not to reduce their Libor rate continues to reflect the banks continuing unwillingness to lend money to each other. The experts say that the banks are still looking for further signs of stability before the libor rate drops any further and this will be a slow process. Add to this that the banks are hoarding money in an effort to show better than expected end of year results and you now start to see why the banks have been reluctant about dropping their interest rates. The Government is currently applying pressure to those banks where they invested taxpayers’ money in order to get them to reduce their interest rates.

In a strange turn of events last week the lender all withdrew their Tracker rate mortgages after the announcement by the Bank of England. Tracker rate mortgages are designed to benefit borrowers in the event of a Bank of England base rate cuts. The main reason for the base rate cut was to reduce the mortgage costs for borrowers and it was hoped that this would encourage homeowners to set about spending again in the run-up to Christmas and this would then stimulate the wider economy. Unfortunately things don’t work like this and these interest rate reductions will not affect every homeowner. As borrowers on fixed rate deals will not benefit until their penalty period has elapsed. First-time borrowers still need to find a minimum of a 5% deposits in order to buy their first home and there is currently only one lender at present willing to lend to first-time buyers. How are first-time buyers ever going to get on the housing market!

Mortgage lenders will start to pass on their new lower interest rates over the next few weeks and months. So don’t rush out for a quick mortgage deal or a secured homeowner loan. Consider that just 1% saved on a £100,000 remortgage is the equivalent of a £83.33 less to pay monthly. So the lower the interest rate the bigger your savings will be. There is unquestionably more hope around with the interest rate cuts announced by the Bank of England and the London Interbank Libor Rate last week and today there is talk of the government now considering tax-cuts. Better Interest rates to come!

Mortgage Lenders Finally Slash Mortgage Rates | Mortgage Expert

In the wake of last weeks shock announcement by Bank of England of a 1½% interest rate drop from 4.5% down to 3%. This was not before time! Around 40 mortgage lenders withdrew their trackers rate products from the market and said they would be reviewing and relaunching their tracker products later this week. By last Friday afternoon the London Interbank Offered Libor (Rate) which shows the interest rate at which the banks are willing to lend money to each other finally fell to 4.49% from 5.56%.

The main indicator and key driver when it comes to lenders pricing their new interest rate products is not the base rate but the three-month Libor rate. The Libor rate is still stubbornly high at 1.49% higher than the Bank of England Base rate. If mortgage rates are to regain any similarity with the base rate then the gap between the base rate and the three-month Libor rate needs to narrow. All we can do is wait and watch!

This defiance by the banks not to reduce their Libor rate continues to reflect the banks continuing unwillingness to lend money to each other. The experts say that the banks are still looking for further signs of stability before the libor rate drops any further and this will be a slow process. Add to this that the banks are hoarding money in an effort to show better than expected end of year results and you now start to see why the banks have been reluctant about dropping their interest rates. The Government is currently applying pressure to those banks where they invested taxpayers’ money in order to get them to reduce their interest rates.

In a strange turn of events last week the lender all withdrew their Tracker rate mortgages after the announcement by the Bank of England. Tracker rate mortgages are designed to benefit borrowers in the event of a Bank of England base rate cuts. The main reason for the base rate cut was to reduce the mortgage costs for borrowers and it was hoped that this would encourage homeowners to set about spending again in the run-up to Christmas and this would then stimulate the wider economy. Unfortunately things don’t work like this and these interest rate reductions will not affect every homeowner. As borrowers on fixed rate deals will not benefit until their penalty period has elapsed. First-time borrowers still need to find a minimum of a 5% deposits in order to buy their first home and there is currently only one lender at present willing to lend to first-time buyers. How are first-time buyers ever going to get on the housing market!

Mortgage lenders will start to pass on their new lower interest rates over the next few weeks and months. So don’t rush out for a quick mortgage deal or a secured homeowner loan. Consider that just 1% saved on a £100,000 remortgage is the equivalent of a £83.33 less to pay monthly. So the lower the interest rate the bigger your savings will be. There is unquestionably more hope around with the interest rate cuts announced by the Bank of England and the London Interbank Libor Rate last week and today there is talk of the government now considering tax-cuts. Better Interest rates to come!

Do You Pass The Mortgage Lender Analysis? Understanding The Home Loan Application And Mortgage Approval

Then a mortgage lender reviews a real estate loan application, the primary concern for both home loan applicant and the mortgage lender is to approve loan requests that show high probability of being repaid in full and on time, and to disapprove requests that are likely to result in default and eventual foreclose. How is the mortgage lenders decision made?

The mortgage lender begins the loan analysis procedure by looking at the property and the proposed financing. Using the property address and legal description, an appraiser is assigned to prepare an appraisal of the property and a title search is ordered. These steps are taken to determine the fair market value of the property and the condition of title. In the event of default, this is the collateral the lender must fall back upon to recover the loan. If the loan request is in connection with a purchase, rather than the refinancing of an existing property, the mortgage lender will know the purchase price. As a rule, home loans are made on the basis of the appraised value or purchase price, whichever is lower. If the appraised value is lower than the purchase price, the usual procedure is to require the buyer to make a larger cash down payment. The mortgage lender does not want to over-loan simply because the buyer overpaid for the property.

The year the home was built is useful in setting the loan's maturity date. The idea is that the length of the home loan should not outlast the remaining economic life of the structure serving as collateral. Note however, chronological age is only part of this decision because age must be considered in light of the upkeep and repair of the structure and its construction quality.

Loan-to-Value Ratios

The mortgage lender next looks at the amount of down payment the borrower proposes to make, the size of the loan being requested and the amount of other financing the borrower plans to use. This information is then converted into loan-to-value ratios. As a rule, the more money the borrower places into the deal, the safer the loan is for the mortgage lender. On an uninsured home loan, the ideal loan-to-value ratio for a lender on owner-occupied residential property is 70% or less. This means the value of the property would have to fall more than 30% before the debt owed would exceed the property's value, thus encouraging the borrower to stop making mortgage loan payments. Because of the nearly constant inflation in housing prices since the 40s, very few residential properties have fallen 30% or more in value.

Loan-to-value ratios from 70% through 80% are considered acceptable but do expose the mortgage lender to more risk. Lenders sometimes compensate by charging slightly higher interest rates. Loan-to-value ratios above 80% present even more risk of default to the lender, and the lender will either increase the interest rate charged on these home loans or require that an outside insurer, such as FHA or a private mortgage insurer, be supplied by the borrower.

Mortgage Closing Settlement Funds

The lender then wants to know if the borrower has adequate funds for settlement (the closing). Are these funds presently in a checking or savings account, or are they coming from the sale of the borrower's present real estate property? In the latter case, the mortgage lender knows the present loan is contingent on another closing. If the down payment and settlement funds are to be borrowed, then the lender will want to be extra cautious as experience has shown that the less of his own money a borrower puts into a purchase, the higher the probability of default and foreclosure.

Purpose Of Mortgage Loan

The lender is also interested in the proposed use of the property. Mortgage lenders feel most comfortable when a home loan is for the purchase or improvement of a property the loan applicant will actually occupy. This is because owner-occupants usually have pride-of-ownership in maintaining their property and even during bad economic conditions will continue to make the monthly payments. An owner-occupant also realizes that if he/she stops paying, they will have to vacate and pay for shelter elsewhere.

If the home loan applicant intends to purchase a dwelling to rent out as an investment, the lender will be more cautious. This is because during periods of high vacancy, the property may not generate enough income to meet the loan payments. At that point, a strapped-for-cash borrower is likely to default. Note too, that lenders generally avoid loans secured by purely speculative real estate. If the value of the property drops below the amount owed, the borrower may see no further logic in making the loan payments.

Lastly the mortgage lender assesses the borrower's attitude toward the proposed loan. A casual attitude, such as "I'm buying because real estate always goes up," or an applicant who does not appear to understand the obligation he is undertaking would bring low rating here. Much more welcome is the home loan applicant who shows a mature attitude and understanding of the mortgage loan obligation and who exhibits a strong and logical desire for ownership.

The Borrower Analysis

The next step is the mortgage lender to begin an analysis of the borrower, and if there is one, the co-borrower. At one time, age, sex and marital status played an important role in the lender's decision to lend or not to lend. Often the young and the old had trouble getting home loans, as did women and persons who were single, divorced, or widowed. Today, the Federal Equal Credit Opportunity Act prohibits discrimination based on age, sex, race and marital status. Mortgage lenders are no longer permitted to discount income earned by women even if it is from part-time jobs or because the woman is of child-bearing age. Of the home applicant chooses to disclose it, alimony, separate maintenance, and child support must be counted in full. Young adults and single persons cannot be turned down because the lender feels they have not "put down roots." Seniors cannot be turned down as long as life expectancy exceeds the early risk period of the loan and collateral is adequate. In other words, the emphasis in borrower analysis is now focused on job stability, income adequacy, net worth and credit rating.

Mortgage lenders will ask questions directed at how long the applicants have held their present jobs and the stability of those jobs themselves. The lender recognizes that loan repayment will be a regular monthly requirement and wishes to make certain the applicants have a regular monthly inflow of cash in a large enough quantity to meet the mortgage loan payment as well as their other living expenses. Thus, an applicant who possesses marketable job skills and has been regularly employed with a stable employer is considered the ideal risk. Persons whose income can rise and fall erratically, such as commissioned salespersons, present greater risk. Persons whose skills (or lack of skills) or lack of job seniority result in frequent unemployment are more likely to have difficulty repaying a home loan. The mortgage lender also inquires as to the number of dependents the applicant must support out of his or her income. This information provides some insight as to how much will be left for monthly house payments.

Home Loan Applicants' Monthly Income

The lender looks at the amount and sources of the applicants' income. Sheer quantity alone is not enough for home loan approval; the income sources must be stable too. Thus a lender will look carefully at overtime, bonus and commission income in order to estimate the levels at which these may reasonably be expected to continue. Interest, dividend and rental income would be considered in light of the stability of their sources also. Under the "other income" category, income from alimony, child support, social security, retirement pensions, public assistance, etc. is entered and added to the totals for the applicants.

The lender then compares what the applicants have been paying for housing with what they will be paying if the loan is approved. Included in the proposed housing expense total are principal,

Apply For A Loan If You Need Financial Help

There are occasions when you can feel overwhelmed by all the bills that you have to pay. Life can certainly come fast and hard at you. Today’s world is a relentless place when it comes to capital. Everyone nowadays wants to get their piece of the pie and they're not going to wait around for you to catch up with your debt.

If you are experiencing these concerns, then it may be time to apply for a loan. You may be hesitant to do so because you are thinking that a loan will probably cost you even more money in the long run. Let me tell you that you can acquire a good loan that won't stack up endless sums of interest. You should check out cyberspace and apply for a loan that you can easily handle.

I needed money for high tuition fees and ridiculously priced text books when I was in college. As a result, I had no choice but to apply for a loan. My grants and job just couldn't cover all of the expenses at hand. When I couldn't afford my rent, I knew that it was time to apply for a loan. I am not ashamed of doing this act.

Most of us need to apply for a loan in order to get by at one time or another. You can sort through numerous options if you log onto the Internet. There are online loans that will not bombard you with unfair interest rates.

Adults with careers can also have trouble grappling with bills and debt. Can you imagine owing $20,000 to various credit card companies? The smart thing to do would be to pay off all of your credit card bills so that you would only have to deal with one simple monthly payment. It's much easier to deal with a small $200 monthly bill, than pay 3 or 4 bills that add up to over a grand every month.

You are basically demanding your life back when you apply for a loan. People don’t want to be short every month and barely afford to buy groceries for their children. The Internet can provide infinite choices when it comes to loans.

There are plenty of companies that are vying for our attention making it easy to find low interest rates. You don’t have to struggle with monthly bills that leave you in anguish. Get online now and apply for a loan