Entries Tagged 'Home Loans' ↓

If you are upside down on a car loan you’re probably scared and a little freaked out, but fear not – lots of other consumers are in your shoes. Being upside down on a car loan simply means you owe more on the loan than the car is worth.

Given how quickly cars depreciate, it’s not difficult to get upside down in a variety of situations. Many consumers get to this point and don’t even realize it until they try to sell or trade in their car and discover that their loan balance far exceeds the value of the car.

Owing more than your car is worth is not necessarily a problem if you plan to keep the car throughout the period of your loan. But if you need to sell or trade it in, you’ll need to deal with the loan. Here are few options for what to do if you are upside down on a car loan:

Roll your old loan into a new car purchase. Some car dealers will allow you add the unpaid principal of your old car loan into the loan for a new car. You would, in effect, be paying off two loans. As you can imagine, this gets expensive and is not recommended, but if you have no other options then it may be worth exploring.

Refinance your car loan. While many people refinance home loans, not as many know that you can do the same for car loans. If you bought your car a few years ago you might find that interest rates now are much lower and you can save on your monthly payments. Just be sure that your current auto lender allows prepayment of your loan.

Make extra payments. You can pay down your car loan fairly quickly by making larger payments each month, but be sure that your lender has agreed that extra payments will go to pay down the principal owed.

Use a home equity loan to pay off your car loan. If you have access to a home equity line of credit, you can probably pay off your entire car loan at once. The advantage is that you immediately get yourself out from being upside down on your car loan and have 100% ownership. Repaying a home equity loan can also have tax benefits, so check with your accountant.

Using a home equity loan can be an excellent way to pay for your child’s college education. A home equity loan taps into the equity that your house has built up over the years.

If you purchased your house several years ago you have probably been paying down the principal and (hopefully!) your house has appreciated in value. The difference between how much your house is worth and the amount of principal you still owe on your mortgage represents the equity you can tap into. A bank will also look at your ability to repay the loan when determining how much to lend.

Home equity debt comes in two flavors. A home equity loan is generally one lump sum with a fixed interest rate and repayment schedule. A home equity line of credit (called a HELOC) acts more like a credit card account – you are only charged for the money you draw down from the account.

Either home equity loan type can be appropriate for funding a college education. The biggest advantage to using home equity loans is that, in general, the interest you pay on this debt is tax deductible.

If you find yourself in debt, here’s a handy calculator to figure out how to reduce your debt burden through consolidation:

Home equity loans should not be your first choice when paying for college, as there are more suitable programs like student loans and various federal program available to help you with the cost. But if these other sources are not providing enough, think about tapping into your home’s equity.

A recent survey of experts by Bankrate indicates that half believe mortgage rates will continue to fall over the next month or two.

Many analysts say fears of inflation are overblown. While the Fed is printing money rapidly, this doesn’t cause inflation until it is borrowed. However, most consumers don’t have the financial ability or inclination to take on more debt.

“If you missed out on the low rates of earlier this year, get ready, because this fall we may approach the lows in mortgage rates reached earlier this year,” Michael Becker, mortgage consultant, Green Pastures Mortgage & Finance, Lutherville, Md is quoted as saying.

Current mortgages rates are only 0.05 percent away from the record low of 5.19 percent. While the economy does look to be on the mend, you can expect rates to stay fairly low for the duration of the year.

Against on the background of lower cash generated by the international crisis, banks look twice over credit requirements before they approve them. Many banks have decided to toughen the credit terms for mortgage financing, increased costs, and lifted lending criteria.

In the new format, people who earn income from abroad are excluded from funding. Starting with this month, are changed some conditions of the mortgage. Restrictions arise both in the cost of borrowing and in terms of eligibility requirements. They will apply to future applicants, and those who have already submitted a file for analysis, but have not received a final decision.

The main changes are:

• Removal of promotional interest rates on the first 6 months. All credits will be granted from the beginning with variable interest.
• The variable interest rate related variable will increase by 2 percentage points compared to the standard used until now.

Thus, after only a month, for a mortgage loan with a 25 % advance, the applicants received an interest rate of 6.4% in first 6 months. Subsequently, its value reached in this way to 9.3%. In the new conditions, interest rate for the loan will rise, since the beginning, at 11.32%.

What are secured loans?

Secured loans are those loans that are protected by an asset, in other words the loans where you will be required to use your property or other collateral as a guarantee that you’ll pay the loan back, so the lender could balance the risk of lending to you. And if you fall into arrears, you risk losing your home.

Secured loans are usually the cheapest, due to the fact that the annual percentage rate is a little bit less than other loans, the repayment periods are longer and you can borrow a bigger amount of money. Secured loans are usually the best way to obtain large amounts of money quickly. Other items such as stocks, bonds, or personal property can be put up to secure a loan as well.

The amount that can be borrowed differs from lender to lender and your individual circumstances.
The amount that you can borrow, the repayment period and the annual percentage rate will depend on: the value of your property; your ability to repay the loan and your individual circumstances.

So when you take out secured loans, it’s very important to take out payment protection insurance as well, that way if you suffer an accident that prevents you working or you’re made redundant, you don’t need to worry about losing your home.

It’s very important to think very carefully about how to manage your secured loans.