Mortgage Refinancing Tips for Self Employed Homeowners

Mortgage refinancing for self employed homeowners is not impossible; you will simply need to provide more documentation to the lender. There are a variety of reasons for mortgage refinancing regardless of the economy and mortgage interest rates. Here are several tips to help you decide if mortgage refinancing is right for you.

Convert Your Adjustable Rate Mortgage

Mortgage interest rates have been on the rise in recent years; as a result many homeowners are converting their Adjustable Rate Mortgage (ARM) loans to fixed interest rates. Converting your ARM to a fixed interest rate has the advantage of a predictable mortgage payment that will not change over time. As a self employed homeowner, having regular mortgage payments you can plan your budget around is a definite advantage.

Recouping Your Expenses

Because there are costs involved with mortgage refinancing it is important to determine how much you will save and how long it will take you to recoup the lender fees and closing costs. Generally speaking, the longer you plan on keeping your home, the more sense it makes to refinance your loan. A simple mortgage calculator will help you determine your new payment amount based on the interest rate and term length you choose.

Choosing a Shorter Term Length

As a self employed homeowner your financial objective might be to eliminate your debts as quickly as possible. Mortgage Refinancing with a shorter term length could help you reach this goal. By shortening the term of your new mortgage, 15 years is a popular choice, you will build equity at a much faster rate and qualify for a lower interest rate. Shortening the mortgage term length results in a higher payment amount and you will need to budget accordingly.

Documentation You Need When Mortgage Refinancing

Mortgage lenders tend to require slightly more documentation when approving self employed homeowners. You can save yourself stress and future headache by gathering the necessary documents before applying for a new mortgage. Here is a list to help get you started.

I. Tax Returns for the Last Two Years

II. Your Current Year Profit/Loss Statement

III. Your Homeowners Insurance Policy

IV. Bank Account and Investment Account Statements for the Last Two Years

V. The Payoff Balance and Contact Information for Your Existing Mortgage

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Mortgage Refinancing Self Employment

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What's In A Home Mortgage Calculator?

So what is a home mortgage calculator? Simply put, this calculator is a great tool for anyone in the real estate market. But what does it do? It helps you calculate figures related to your mortgage. If you are in the real estate market, you need one. It speeds up all the calculations by using formulas unavailable in a standard calculator.

Different Flavors

There are many variants of the home mortgage calculator. You can choose from many different types. The most basic gives you the payment after you enter the value. No frills and no fuss. All you need is a fixed time period, simple interest, and a fixed monthly payment.

Then there is the home mortgage amortization calculator. It is simply the basic home mortgage calculator with the addition of an amortization schedule. This schedule shows how much of your payments finances principal and how much finances your interest. But, any payment figures yielded will not have any insurance or taxes factored in.

Current homeowners use a home loan mortgage calculator to help them decide about refinancing to a lower interest rate. This calculator gives you the total projected savings in payments and interest. Some will even factor in closing costs.

Step It Up

If you are lucky enough to own multiple homes, you will be using a multiple home mortgage calculator. This type of calculator allows you to determine interest rates of multiple loans at the same time. Home builders are a common class of users for this type of calculator. Owners of rental or vacation properties are another class.

An advanced multiple home calculator is very complex and is used by banks and financial institutions. It can calculate the blended rate of up to four loans in a month and then yields an average blended rate by averaging the differing rates over the total length of all the loans. Some can even calculate loan payments of up to 30 years.

An interest only home mortgage calculator is perfect for the homeowner that is thinking of paying a little more than is required by his monthly payment. It displays how much more per month the homeowner would have to pay to reduce the loan length.

A home mortgage qualifier calculator basically tells you how much mortgage you can afford. It will need information such as income and expenses.

An adjustable rate mortgage payment calculator can derive new payments as rates change. Obviously, this is the type of calculator favored by people with an adjustable rate mortgage.

A balloon payment home mortgage calculator relates to a payment that is made to pay off the entire loan. This calculator helps you determine whether this is a viable option for you. A balloon mortgage is generally short term but the payment is based on a long term. The loan balance is paid off at the end of the period

As you can see, you have a lot of choices depending on your situation. Hopefully, you will use the right type of calculator given all the information above.

Use a home mortgage calculator to calculate the latest mortgage rates for your California refinance. Visit WhatAboutLoans.com today.

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What Is Capped Mortgage

The capped mortgage is basically an adjustable rate mortgage in which the maximum interest rate is set. Any spike of interest rate over the maximum interest rate will not affect the mortgage repayment. The borrower knows the maximum mortgage payment.
When the interest rate takes a dive, the borrower pays a lower monthly mortgage payment or bi-weekly mortgage payment. Using the capped mortgage, the borrower is protected from a spike in interest rate.

This protection on interest rate spike comes with a price. The mortgage lenders will charge a slightly higher interest rate. For example, the current interest rate is 4.5%. The borrower pays 5.0% interest rate.

The main benefit of capped mortgage is peace of mind. The borrower knows exactly how much is the highest mortgage payment. And, the borrower knows that the mortgage payment will not exceed the maximum mortgage payment.

Recently, the mortgage lenders suffered from mortgage meltdown. The interest rate went up high enough that the borrower could not repay the mortgage. There were so many foreclosures. In this instance, the capped mortgage could have been advantageous for the borrower.

The interest rate for capped mortgage is a compromise between the fixed rate and adjustable rate. So, the interest rate will be slightly over the fixed rate.

Annually, the mortgage lenders allow a certain level to pay additional or lump sum amount without paying mortgage penalty. When the borrower pays additional amount or lump sum amount over the certain level to pay off mortgage early, the mortgage lenders charge the mortgage penalty as well.

In most mortgage lenders, the capped mortgage is available mortgage options for buy to let mortgages. The buy to let mortgage is a mortgage in which the borrower purchase the property to rent. The borrower can purchase several property with buy to let mortgages.

Dennis Estrada is a webmaster of mortgage calculators, buy to let mortgages, and bi-weekly mortgage payment website.

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Maximum Mortgage Loan To Value Ratio

A key part of a mortgage lender's loan guidelines is how much they are willing to lend in different scenarios.

Lender base their loan analysis of a mortgage application on many factors, including:

income

assets

property type

down payment

property equity

loan type requested

bankruptcy

credit

One of the most critical areas lenders look at is the equity in a loan.

If a person is putting down a large down payment in a purchase loan then a lender is willing to look on this loan more favorably than a similar lender with no down payment or a smaller down payment.

In a refinance mortgage the lender will look at how much equity there is in a property. It will compare the total of:

current first loan

current second loan

loan closing costs

additional cash taken from the property

This will be the total size of the new proposed loan. The lender will compare loan size to the current appraised value of the property. This is the "loan to value" ratio.

Lenders usually offer a wide number of different loans, such as 30 year fixed loans, 15 year fixed loans, interest only loans, etc.

For each of these types of loans a lender may have a maximum loan to value (LTV) for different credit scenarios. For people with a credit score of over 720 and who can document all of their income the maximum loan to value ratio may be 100%.

The maximum loan to value ratio offered by the lender may decrease as the credit and other factors decrease. A borrower with an identical property, income, and assets but with a credit mid score of 550 may be eligible for a maximum loan to value ratio of only 70%.

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An Introduction to Mortgage Backed Securities

What Are Mortgage Backed Securities?

Mortgage backed securities are securities that are backed by the principle and interest payments on a group of mortgage loans. Lenders group together mortgages and the money that is repaid by the borrowers' pays investors in the mortgage backed securities.

Why Do Mortgage Lenders Issue Mortgage Backed Securities?

There are a variety of reasons that lending institutions issue mortgage backed securities rather than holding the mortgage themselves. Most lenders have a limited amount of liquid assets. By selling mortgages they are able to free up money in the short term to make additional loans.

Another reason that mortgage lenders sell off their loans as mortgage backed securities is to minimize their risk. Although every effort is made to establish the creditworthiness of an individual before a loan is made, circumstances can change. If a borrower defaults on his mortgage, the lender will have unplanned for expenses just in dealing with repossession and selling of the property. Adding in the lost principal and interest, and a small, local lender could find themselves in a financial mess very quickly.

When a lender sells a mortgage as a mortgage backed security, they receive their money up front, both the loaned amount and a percentage of the loan as their fee. The investors in a mortgage backed security then receive income each month, as the borrower pays back the principal plus interest on his loan.

Types of Mortgage Backed Securities

There are a variety of mortgage backed securities. The majority of mortgage backed securities are issued by the Government National Mortgage Association, otherwise known as Ginnie Mae, the Federal National Mortgage Association, or Fannie Mae, and the Federal Loan Mortgage Company, or Freddie Mac. These are all groups sponsored by the federal government. While Ginnie Mae is backed by the full faith and credit of the government, and guarantees its investors that they will receive their payments, both Fannie Mae and Freddie Mac have the authority to borrow from the Treasury, which makes them relatively safe investments as well.

In addition to the government agencies, brokerage firms and banks often offer mortgage backed securities. These are known as private-label securities.

Are Mortgage Backed Securities Risky?

Mortgage backed securities are not generally considered a risky investment. To obtain a mortgage, the borrower must go through a qualification process that assures the bank or lending institution that the loan will be paid back. The group who sets up the mortgage backed security will then group mortgages together in order to sell. By pooling the mortgages together, the risk to the investor is minimized. One borrower, who defaults on a loan, or, conversely, pays the loan off early, depriving the group of years of interest payments, will have less of an effect when he is a member of a large group. The same borrow, particularly one who defaults on a mortgage, can cause a real financial shock to a small lending institution.

Do Mortgage Backed Securities Make a Good Investment?

All investment decisions are extremely personal, and will depend on your personal needs. Decisions on investments are best made with help from a financial advisor. For someone who would like a monthly income, a mortgage backed security can make a good choice. A mortgage backed security, particularly one sold by Freddie Mac, Fannie Mae, or Ginnie Mae, can be excellent investment vehicles. In general, the greater the amount of loans held in a mortgage backed security, the safer the investment, because the risk is spread over more people.

Before investing in a mortgage backed security, you should find out your expected rate of return. While this can vary, it is nice to know what investors have been receiving. Remember, it is not only loan defaults that can affect your income from a mortgage backed security, but also prepayments and principal only payments. The income from the security is figured on full payment of both principal and interest over the life of the mortgage, typically 15 or 30 years. Any action taken by anyone holding a mortgage in the security can affect your income. It is important to be clear about this with the person you purchase the security from.

Mortgage backed securities are an excellent development for borrowers, lenders, and investors. No matter what group you are in, it is important to understand exactly how they work and what you can expect. By doing that, you are better able to make a wise financial decision.

About Author:
Craig Elliott is a freelance writer who writes about topics pertaining to the mortgage industry such as Mortgage Rate Calculator | Mortgage Lender

Need a Mortgage, How Much Can I Borrow? Find Out

Getting the most for your money is the goal of most people these days. Credit concerns and high housing costs can look like a giant question mark in your life. You may find your self wondering "I need a mortgage, how much can I borrow"? Having a nice place to live in with an affordable monthly payment is a realistic goal that can be achieved.

Calculating what you bring home each month is the first step. What you would so is consider your straight weekly pay (no overtime or bonuses), multiply by 52 and then divide by 12. This is the money that you are pretty sure you will make barring any unforeseen circumstances.

Once you have figured out your annual and monthly pay you can decide how much money you can borrow. Basically someone bringing home $25,000 each year earns about $2083 each month. This would be called your gross income, all the money you make before any deductions, including taxes.

Next you would need to subtract any credit loans from this amount, such as: tuition, credit cards, auto, bank notes, or even non-credit like child support. Most lenders will allow you to borrow around 1/3rd or about 36% of your total gross income

Don't be afraid of all the numbers, mortgages are a long term decision and it just takes a little work to make sure you are making the right choice. With something that could last between 7 and 40 years (longer than most relationships these days!) you don't want to rush. Lenders are also going to look at your job stability and your future income earning ability.

Thankfully internet tools are also available to help you calculate these figures. On-line mortgage calculators, brokers, agents and lenders are ready and willing to help you in the pre-mortgage process. Finding a loan match is important for all the parties involved.

When deciding to borrow, it is important to not leave out any options. Money you have saved up could be a down payment and help you get a larger loan. While you may be able to do this, it is not an absolute necessity. Your idea of the perfect house may cause a loan that is more than you can handle, leading to many sleepless nights.

So now you are ready to ask "It's my time to secure a mortgage, how much can I borrow?" So it is time to be honest with your numbers and check out all the facts. It is important to be organized, have a monthly budget and then you will know the answer to your question and you won't be disappointed when matching your loan amount to the home you want.

A common question that comes with many first time home buyers is "I need a mortgage, how much can I borrow? Getting a definitive answer can be tough but were here to help. For more, visit www.MortgageLoans-101.com where you'll find this and plenty more on your mortgage loan needs.

Absolute Best Way to Calculate a Mortgage Payment

How to calculate a mortgage payment is one of your most important decisions when purchasing a home. Rather than be a mathematician, you will just need to learn a little bit about the process and what it is all about. You will have many choices when it comes to figuring out what your payment will be. Key to the process is what your credit is and what you will want to borrow.

What kind of mortgage do you want? Whether you choose an adjusted rate mortgage (ARM), a fixed, or a balloon type payment will depend mainly on how much money you make and what your credit score is. These variations will cost you dearly if you are not well informed about their differences!

If you get a balloon mortgage you will have to pay it off or refinance it every 5 or 7 years generally. Interest rates can change daily and so will your ARM. Your rates could start as low as 5% and go up passed 8% in a short period. The rates don't stop there either; they could go very high, with no cap. Don't make the mistake of comparing a low ARM rate to a higher fixed rate, the fixed rate won't change but the ARM will. With a fixed rate of 7% what you start with is what you will end your mortgage rate with.

Do you have a large or small income? When a loan agent reviews your loan they will look at you using between one fourth and less than one half of what you make monthly or yearly. The best bet is not to spend more than a third of the money you make each month on your house payment. Basically you can look at it like this, if you are bringing home $1200.00, you will want your house payment around $400.

Are you aware of your credit score? The four basic categories for credit scoring are poor, fair, good and excellent. If you have good or excellent credit, the interest rate that you are offered is usually going to be lower. If your credit is in the low ranges, you can expect to see higher interest rates. Most mortgage loans are based on simple interest.

One type of simple interest loan, the amount of interest is added each day. If your payment on the first day is $360, the next day would be $370 and so on. Each day your interest is added until you pay for that month. When you have made your payment, your principle will go down (the base loan amount), and interest will be added to that smaller amount. So you will be saving money each time you do this by paying less interest.

Mainstream mortgages are usually calculated as monthly simple interest. Regardless of what day you pay your mortgage it will not change what you owe because the interest is charged monthly, as long as you pay on time. When using a mortgage calculator it is important to know which type of interest you are going to go with, daily or monthly.

When you decide on how to calculate a mortgage payment, make sure you are familiar with all of the terms associated with your loan. You will have a choice of simple or advanced models. You will get a bigger financial picture when you use the more advanced mortgage calculators.

Save time and learn the best way to calculate a mortgage payment from your own home. For more, visit www.MortgageLoans-101.com where you'll find this and plenty more on your mortgage loan needs.

Bad Credit Mortgage Refinancing Home Loan

Bad credit mortgage refinancing loans help borrowers with credit problems refinance an existing mortgage to either payoff debt or get cash out. If your credit is poor because of excessive credit card debt then bad credit refinancing is one of the best ways to improve your credit score.

Bad credit refinancing is typically for home owners who have credit scores under 620 and have late mortgage payment's in the last 12 months. Sub prime lenders are the main source for these types of loans and many will lend to bad credit borrowers with a 30, 60 and even a 90 day late payment on record. Although the amount of equity you can borrow will be greatly reduced with the amount of late payments you have. Qualifying Credit scores for sub prime loans begin at 500 and go all the way up to 700, at a 500 credit score expect to be able to borrow 70-80% of your home appraised value. The higher your credit score the higher the Loan To Value you can borrow.

Many sub prime lenders offer 2 or 3 year Adjustable Rate Mortgages to bad credit borrowers, short term Adjustable mortgages are not a good idea for the bad credit borrower. The biggest drawback to an ARM is that if you should fail to improve you credit score and be unable to refinance, your payments will begin to rise when your adjustment period begins. The rise in payments can often be hundreds of dollars a month making your mortgage difficult to pay. When applying for a bad credit home loan It is best to stick with a fixed rate subprime mortgage, if you need a lower payment ask your mortgage broker about 40 year fixed rate subprime loans.

With the availability of subprime home loans bad credit refinancing can be a great way to improve your credit score, however when the wrong programs are chosen it can do just the opposite. Use a good reputable mortgage broker and always use common sense when shopping for your subprime home loan.

Learn More About Bad Credit Home loans

There are over 1100 mortgage, real estate and credit articles available at http://www.mkemortgage.net/content/sitemap.htm that can help you educate yourself and make the proper financial and real estate decisions. And borrower's who may have very bad credit please http://www.bad-credit-finance-guide.com

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