Home Equity Refinance

Home equity refinance can come in handy when your main objective is to pay off your credit card debt or you want to remodel your home. The best part about home equity refinance is that you get the much-needed cash very quickly and that too without any problem. This is not the case with traditional refinance where you need to fill lots of application forms and go through various procedures.

No closing costs-

Another good thing about home equity refinance is that you don't need to pay any sort of closing costs for the loan. However, there are few financial institutions that will charge you few dollars for processing the loan but it is still quite low as compared to other loans.

Private mortgage insurance-

Don't opt for private mortgage insurance because not only it is useless but also quite costly in nature. You have to pay private mortgage insurance if you borrow against your home for more than 80 per cent of the value. You can avoid private mortgage insurance by going for a home equity loan, where you can borrow up to 100 per cent of the equity you possess.

Low interest rates-

Equity loan market is quite competitive in nature. Because of this, there is not much of a surprise that you can clinch the best equity loan deal with low interest rate by shopping around and comparing lenders. Local financial institutions are the brilliant source for these kinds of loans. In some cases, big national lending companies can also help you immensely.

Home Insurance

Insurance is a contract between the insured and an insurance company that protects against the risk of large and calamitous loss.

The importance of home insurance cannot be undermined. There are two primary reasons why home owners buy home insurance. Firstly, a home is the most important asset belonging to a home owner, and the need to protect it is imperative. Secondly, mortgage lenders require home owners to own insurance to protect the lender’s investment form damage or loss.

The major risks covered by home owner’s insurance are:

Damage or loss to the home and other structures included on the property
Damage or loss to personal property items in the home
Injury or harm to third parties who come to your home
The home insurance covers the person insured and the members of his home. Third parties who come to your home are also covered through the liability portion of the insurance policy for injuries. Additionally, you and your family members also have some liability protection to others even while you were away from your home.

There are two distinct types of insurance under home insurance - Title insurance and Homeowner's insurance. They protect against totally different types of risks.

Homeowner's insurance covers loss or damage to the home, structures on the property, personal contents of the home, as well as third-party liability.

Title insurance, on the other hand protects ownership interests in the real property. Title insurance is purchased to guarantee that the home owner has a good and marketable title to the property. When purchasing a home by means of a loan, lenders require you to obtain title insurance. That way they know that you have clear ownership of the real property and the home.

FHA Home Mortgage Loans: Understanding The Benefits of FHA Mortgages for Purchase or Refinance

We all try to find the best deal when shopping for a mortgage. And, you’ve probably hear of the FHA loan. FHA stand for Federal Housing Administration, and with built-in mortgage insurance, an FHA loan could help homeowners save hundreds of dollars a year.

The law requires any loan for more than 80% of a home’s fair market value or FMV to carry Private Mortgage Insurance. In fact, Private mortgage insurance costs homeowners insurance premiums ranging from $250 to $1200 per year. And, the insurance is not tax deductible.

FHA Today.com shows “The Federal Housing Administration (FHA), a wholly owned government corporation, was established under the National Housing Act of 1934 to improve housing standards and conditions. Its goal was to provide an adequate home financing system through insurance of mortgages, and to stabilize the mortgage market.”

The FHA program basically has three types of loans:

1. BASIC FHA requires 3% down payment and allows refinances up to 97% loan to value.

2. Disaster Victim Program requires no down-payment and allows 100% financing of the home.

3. Rehab-Loan Program allows borrowing above the purchase price to make home improvements.

Hopefully, you aren’t the victim of a disaster. “It is not a program reserved only for first time home buyers.” Shows FHAToday.Com. “You can buy your third or fourth home with an FHA loan. The only stipulation is that you may only have one FHA loan at a time.”

An FHA home loan is like having mortgage insurance for free. All of the interest is tax deductible according to the IRS.

For the homeowner looking to pull equity out of their home. The basic FHA program allows a home equity refinance of up to 97% of the home’s FMV. That means, homeowners are allowed to pull 17% more equity out of their home, without worrying about the extra costs of PMI. And, an FHA loan could prevent homeowners from having to carry two additional loans to pull more equity. Carrying fewer loans could mean lower interest rates and lower Combined Loan to Value Ratio. With fewer loans ands a lower CLTV, an FHA home loan could save homeowners the extra cash they need.

Homeowners Insurance - What Is Guaranteed Replacement Cost?

Many times when you apply for a homeowners loan, the bank requires you to insure the home for the entire amount of the loan. The value of the land, which may be substantial, is included in the purchase price, and in the event of a catastrophe, the land generally is not going anywhere. To get around that, insurance companies came up with a guaranteed replacement cost policy. If you reasonably insured your house for $100,000, and after totally burning down it cost $150,000 to rebuild it, the insurance company would be on the hook for the entire $150,000. This relieved the homeowner of the responsibility of insuring his home for the entire amount of the loan if it exceeded the replacement cost of his home.

Due to several recent natural disasters, many insurance companies have discontinued their guaranteed replacement cost policies. Some will provide a percentage of the policy coverage amount at no extra cost, but many will only pay up to the policy limits to rebuild your home in the case of a loss. I strongly urge you to determine the replacement cost of your home, contact your insurance company to see if your current policy will cover that value and increase coverage if need be.

Understanding Gap Insurance

The most significant aspect that differentiates a person who owns a car and a person who takes it on a loan is gap insurance. Gap insurance policy actually covers the gap between the lease amount and the amount provided by the insurance company at the times of vehicle theft or damage. This particular insurance coverage type has been designed so as to protect the investment.

There are several companies offering gap insurance. Many times, gap insurance is included in the lease agreement. Gap insurance is required when the buyer has taken the vehicle on lease without even making 20 percent down payment. Other situations where gap insurance is required include car finance that has been continuing for the last four years or when the existing car loan amount also includes the debt on the previous car.

According to the market, the value of a vehicle depreciates as soon as it is purchased from the dealer. This value is further lowered once the vehicle meets an accident. Depending on the damage and the cause of the accident, insurance companies determine the amount to be reimbursed towards insurance claim. After deducting this amount from the actual loan amount, the consumer is now left with the option of paying the remaining loan amount. This amount could be substantial on numerous occasions that could leave the customer in a financial crunch. Gap insurance protects customers from such situations.

However, gap insurance is not required for every individual who has purchased a vehicle on loan. Gap insurance is not required when the regular insurance policy has the option of paying off the entire finance amount in case of damage or theft.

Key to Choosing Life Insurance

Term Life Insurance

There are various forms of term life insurance available. The main feature of term life insurance is that it offers death protection, protection for a stated time period, referred to as a term.

Term life insurance is the easiest to understand. It's very simple, and it was intended to provide temporary life insurance for people who have a limited budget available. Term life insurance can be purchased in relatively small amounts.

A good use of term life insurance is to buy a large amount that would cover a loan. For example a loan on the home, a mortgage as that is a temporary and defined time period. For paying off the mortgage, the loan is a short range loan to fulfill a short range goal. This is a good idea to use during the child rearing years.

A term life insurance policy can be renewed once the term is ending. To continue it will continue add higher premiums as the insured is older at the time of renewal. In most states the insurance can be renewed as late as age 85 or 95.

The Advantages of Term Life Insurance.

Term life insurance is affordable. The premiums can be adjustable, which means the company may raise or lower them at some point that's been specified in the policy based on changes in the policy owners life.

Even though term life insurance can be renewed, at the time of renewal the policy owners life is probably at a different age and his health may be different so the terms of payment may be higher.

While term life insurance does not have the greatest long lasting benefit it serves a valuable purpose in the short term. It's easy to understand and easier to afford than other life insurance products.

A term life insurance policy can be converted to a permanent life insurance policy within the same insurance company to age 75.

Mortgage Loan – Loan to Value Ratio Explained

The loan to value ratio is an important aspect of your mortgage application. This ratio affects your approval status and the interest rate you qualify for. Here is what you need to know about loan to value ratios.

The loan to value ratio represents the part of home you are financing against the total value of the property. Mortgage lenders have specific guidelines for lending at a certain value of this ratio. If you are outside of the guidelines for a particular lender’s loan to value, your mortgage application will be denied.

Calculating Loan to Value is easy. Simply divide the total amount you wish to borrow by the value of your home. For example, if your home is valued at $180,000, and you are applying for a $120,000 mortgage loan you divide $120,000 / $180,000, and your loan to value ratio (LTV) is .66 or 66%.

The higher your loan to value ratio is, the less equity you own in your home. Mortgage lenders consider high loan to value ratios to be a greater risk. If your loan to value ratio is greater than 80% your mortgage lender may require you to purchase Private Mortgage Insurance as a condition for approving your loan. This insurance protects the lender from losses if you default on your mortgage.

If you are applying for a mortgage with a high loan to value ratio, expect the lender to charge you a higher interest rate for the loan. To avoid higher interest rates and private mortgage insurance you should save money for a larger down-payment. Use a mortgage calculator when shopping for your mortgage to help determine exactly how much mortgage you can afford. To learn more about finding the right mortgage for your situation, register for a free mortgage guidebook.