Second Mortgages: Basics, Pros, and Cons, second mortgages.#Second #mortgages

Second Mortgages – Advantages and Disadvantages

Second mortgages

A second mortgage is a loan that lets you borrow against the value of your home. Your home is an asset, and over time, that asset can gain value. Second mortgages, also known as home equity lines of credit (HELOCs) are a way to put that asset towards other projects and goals.

What is a Second Mortgage?

A second mortgage is a loan that uses your home as collateral – similar to a loan you might have used to purchase your home.

The loan is known as a “second” mortgage because your purchase loan is often the first loan that is secured by a lien on your home.

Second mortgages tap into the equity in your home, which you might have built up with monthly payments or through market value increases.

Loans can come in several different forms.

Lump sum: a standard second mortgage is a one-time loan that provides a lump sum of money you can use for whatever you want. With that type of loan, you’ll repay the loan gradually over time, often with fixed monthly payments. With each payment, you pay a portion of the interest costs and a portion of your loan balance (this process is called amortization).

Line of credit: it’s also possible to borrow using a line of credit, or a pool of money that you can draw from. With that type of loan, you don’t ever have to take any money – but you have the option to do so if you want to. You’ll get a maximum borrowing limit, and you can continue borrowing (multiple times) until you reach that maximum limit.

Like a credit card, you can even repay and then borrow again.

Rate choices: depending on the type of loan you use (and your preferences), your loan might come with a fixed interest rate that helps you plan your payments for years to come. Variable rate loans are also available and are the norm for lines of credit.

Advantages of Second Mortgages

Loan amount: second mortgages allow you to borrow a large amount. Because the loan is secured against your home (which is generally worth a lot of money), you have access to more than you could get without using your home as collateral. How much can you borrow? It depends on your lender, but you might expect to borrow (counting all of your loans – first and second mortgages) up to 80% of your home’s value.

Interest rates: second mortgages often have lower interest rates than other types of debt. Again, securing the loan with your home helps you because it reduces the risk for your lender. Unlike unsecured personal loans like credit cards, second mortgage interest rates are commonly in the single digits.

Tax benefits: in some cases, you’ll get a deduction for interest paid on a second mortgage. There are numerous technicalities to be aware of, so ask your tax preparer before you start taking deductions. For more information, learn about the mortgage interest deduction.

Disadvantages of Second Mortgages

Of course, life is full of tradeoffs. Be aware of the pitfalls of using a second mortgage. The costs and risks mean that these loans should be used wisely.

Risk of foreclosure: one of the biggest problems with a second mortgage is that you have to put your home on the line.

If you stop making payments, your lender will be able to take your home through foreclosure, which can cause serious problems for you and your family. For that reason, it rarely makes sense to use a second mortgage for “current consumption” costs such as entertainment and regular living expenses – it’s just not sustainable or worth the risk.

Cost: second mortgages, like your purchase loan, can be expensive. You’ll need to pay numerous costs for things like credit checks, appraisals, origination fees, and more. Even if you’re promised a “no closing cost” loan, you’re still paying – you just won’t see those costs transparently.

Interest costs: any time you borrow, you’re paying interest. Second mortgage rates are typically lower than credit card interest rates, but they’re often slightly higher than your first loan’s rate.

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Second mortgage lenders take more risk than the lender who made your first loan. If you stop making payments, the second mortgage lender won’t get paid unless and until the first lender gets all of their money back.

Common Uses of Second Mortgages

Choose wisely how you use funds from your loan. It’s best to put that money towards something that will improve your net worth (or your home’s value) in the future – because you need to repay that loan.

  • Home improvements are a common choice because the assumption is that you’ll repay the loan when you sell your home with a higher sales price
  • Avoiding private mortgage insurance (PMI) might be possible with a combination of loans – just make sure it makes sense compared to paying – and then canceling – PMI
  • Debt consolidation: you can often get a lower rate, but you might be switching from unsecured loans to a loan that could cost you your house
  • Education: as with other situations, you’re creating a situation where you could face foreclosure. See if standard student loans are a better option

Tips for Getting a Second Mortgage

Shop around and get quotes from at least three different sources. Be sure to include the following in your search:

Get prepared for the process by getting money into the right places and getting your documents ready. This will make the process much easier and less stressful.

Beware of dangerous loan features. Most conventional loans do not have these problems, but it’s worth keeping an eye out for them:

Texas Commercial Mortgage – Apartment Loans Houston TX, commercial mortgage loans.#Commercial #mortgage #loans

commercial mortgage loans

Texas Commercial Mortgage is a national commercial mortgage banking firm specializing in commercial real estate loans, multifamily lending, apartment loans, consultation, and advisory services. The company’s primary service is sourcing and originating first lien (senior) mortgages for developers, owners and investors looking to refinance or for those in need of acquisition financing. Finding the right loan for your property which includes procuring the highest amount of leverage at the lowest interest rate is what Texas Commercial Mortgage does best. The commercial real estate lending industry is profoundly fragmented and complex with new and old participants entering and exiting the market on any given day. Because of our expertise, exceptional knowledge and daily interaction with local and national lenders you can be assured that Texas Commercial Mortgage will procure the most creative and most competitive loan terms available in the market.

Commercial Loans and Mortgage Banking

Professional Services

Searching for a commercial real estate loan and dealing directly with a bank or lender can be an unpleasant experience and extremely frustrating, therefore it is often prudent for a property owner or investor to delegate this side of the transaction to an expert. Texas Commercial Mortgage is more than just a commercial mortgage banking firm or your average financial intermediary. We are committed to the highest level of service and believe that we have a fiduciary responsibility to place the borrower’s interest above the interests of the lender or anyone affiliated with our company.

In addition to apartment loans and multifamily financing, Texas Commercial Mortgage provides the following custom-tailored professional services:

  • Debt Equity Placement
  • Advisory Consultation
  • Financial Modeling Cash Flow Analysis
  • Real Estate Brokerage
  • Loan due diligence, underwriting and processing
  • Financial Transactional Analysis
  • Entity Partnership Structuring
  • Property Asset Valuation
  • Net Worth, Liquidity Credit Analysis
  • Expert Witness Testimony Litigation Settlement

Commercial mortgage loans

Mortgage Calculators: Amortization Tables, Accelerated Payments, Biweekly Payments, lowest mortgage rate.#Lowest #mortgage #rate

lowest mortgage rate

Lowest mortgage rate

Lowest mortgage rate

Lowest mortgage rate

Lowest mortgage rate

Lets you determine monthly mortgage payments and see complete amortization tables.

Lowest mortgage rateHow Advantageous Are Extra Payments?

By making additional monthly payments you will be able to repay your loan much more quickly. Find out how your monthly, yearly, or one-time pre-payments influence the loan term and the interest paid over the life of loan. Make additional 1/12 of monthly payments (a popular ‘do-it-yourself’ biweekly) or an additional monthly payment once a year.

Lowest mortgage rateSimple Option ARM Calculator

Computes minimum, interest-only and fully amortizing 30-, 15- and 40-year payments.

Lowest mortgage rateAdvanced Option ARM Calculator with Minimum Payment Change Cap

Allows you to create a complete option ARM loan amortization table (with standard and neg-am recasts, automatically estimated possible future index changes, various fixed payment periods, interest rate rounding to the nearest 1/8 of one percentage, and more). See what happens if you always select the minimum payment option.

< Please see: Using Pay Option ARM Calculator

Lowest mortgage rateWhich ARM Index Is Better?

Lowest mortgage rateMortgage Pre-Qualifier

Mortgage Pre-Qualifier will determine the income required to qualify for the particular loan using the specified qualifying ratios.

Lowest mortgage rateHow Much Can You Borrow?

The calculator lets you see how various changes to your income, liabilities, and mortgage terms affect the loan amount you can borrow.

Lowest mortgage rateBlended Rate Calculator

Calculates a first and second mortgage blended rate.

Lowest mortgage rate‘True bi-weekly’ payment calculator

Prints yearly amortization tables. With bi-weekly payments, you pay half of the monthly mortgage payment every 2 weeks, rather than the full balance once a month. This is comparable to 13 monthly payments a year, which can result in faster payoff and lower overall interest costs.

Lowest mortgage rateAnother ‘true bi-weekly’ payment calculator

Builds complete bi-weekly amortization tables.

Lowest mortgage rateTrue bi-weekly vs standard bi-weekly

Shows how much you will save if you calculate interest for two-week intervals and apply the bi-weekly payments less the interest to reduce principal every two weeks, instead of having your money withdrawn from your bank account every two weeks by your lender and making a full mortgage payment once a month plus one additional payment once a year out of a special account, managed by the lender. Complete amortization tables are available.

Lowest mortgage rate

Underwater Georgia Mortgage Assistance Program – Lumpkin County Government, underwater mortgage help.#Underwater #mortgage #help

underwater mortgage help

Underwater mortgage help

Underwater Georgia Mortgage Assistance Program


A new, limited-time, federally funded initiative may be able to help.

Underwater Georgia is a new federally funded state program for Georgia homeowners who owe more money on their mortgage than their home is worth. For eligible applicants, the program may be able to provide a one-time payment of up to $50,000 to the mortgage lender to reduce the principal balance on the home. To qualify, a homeowner must file a pre-application by October 18, 2016. For more information, call 1-877-519-4443 24 hours per day, seven days a week from September 28 to October 18 or email [email protected] or visit .

*The property must be your primary residence (and only home) and purchased prior to January 1, 2012.

*The total amount owed on all mortgages on the home must be $250,000 or less and mortgage payments have to be less than 90 days past due.

*Total gross household income must not exceed 140 percent of the Area Median Income (AMI).

*The property must have a total loan to value (LTV) ratio of at least 110 percent.

*You cannot have received assistance previously through HomeSafe Georgia.

*Visit There, you can review full program requirements and complete a prequalification

quiz, which will help you determine whether you are likely to qualify.

*Submit a pre-application by October 18, which asks for your contact information and details including when you purchased your home, its value and mortgage balance and more.

*A random selection process via a third party will be conducted among pre-applications

submitted. Representatives from the Georgia Department of Community Affairs will contact homeowners selected and work with them directly to complete a full application, which also includes submitting supporting documentation.

Mortgage Calculator, mortgage online.#Mortgage #online

Mortgage Calculator

Mortgage online

$1,115.57 / Month


A mortgage is a loan secured by a property usually a real estate property. A real estate mortgage usually includes the following key components:

  • Loan Amount the amount borrowed from a lender or bank. The maximum loan amount one can borrow normally correlates with household income or affordability. To estimate an affordable amount, please use our House Affordability Calculator.
  • Down Payment the upfront payment of the purchase, usually in a percentage of the total price. In the US, if the down payment is less than 20% of the total property price, typically, private mortgage insurance (PMI) is required to be purchased until the principal arrives at less than 80% or 78% of the total property price. The PMI rate normally ranges from 0.3%-1.5% (generally around 1%) of the total loan amount, depending on various factors. A general rule-of-thumb is that the higher the down payment, the more favorable the interest rate.
  • Loan Term the agreed upon length of time the loan shall be repaid in full. The most popular lengths are 30 years and 15 years. Normally, the shorter the loan term, the lower the interest rate.
  • Interest Rate the rate of interest charged by a mortgage lender. It can be “fixed” (otherwise known as a fixed-rate mortgage, or FRM), or “adjustable” (otherwise known as an adjustable rate mortgage, or ARM). The calculator above is only usable for fixed rates. For ARMs, interest rates are generally fixed for a period of time, after which they will be periodically “adjusted” based on market indices. ARMs transfer part of the risk to borrowers. Therefore, the initial interest rates are normally 0.5% to 2% lower than FRM with the same loan term. Mortgage interest rates are normally expressed in Annual Percentage Rate (APR), which is sometimes called nominal APR or effective APR. It is the interest rate expressed as a periodic rate multiplied by the number of compounding periods in a year. For example, if a mortgage rate is 6% APR, it means the borrower will have to pay 6% divided by twelve, which comes out to 0.5% in interest every month.

The most common way to repay a mortgage loan is to make monthly, fixed payments to the lender. The payment contains both the principal and the interest. For a typical 30-year loan, the majority of the payments in the first few years cover the interest.

Costs Associated with Mortgages and Home Ownership

Commonly, monthly mortgage payments will consist of the bulk of the financial costs associated with owning a house, but there are other important costs to keep in mind. In some cases, these costs combined can be more than the mortgage payments. Be sure to keep these costs in mind when planning to purchase a home.

Because the recurring costs perpetuate throughout the lives of mortgages (exception being PMI), they are a significant financial factor. Property Taxes, Home Insurance, HOA Fee, and Other Costs increase with time as a byproduct of moderate inflation. There are optional inputs within the calculator for annual percentage increases. Using these wisely can result in more accurate calculations.

  • Property Taxes a tax that property owners pay to governing authorities. In the U.S., property tax is usually managed by municipal or county government. The annual real estate tax in the U.S. varies by location, normally ranging from 1% to 4% of the property value. In some extreme cases, the tax rate can be 10% or higher.
  • Home Insurance an insurance policy that protects the owner from accidents that may happen to the private residence or other real estate properties. Home insurance can also contain personal liability coverage, which protects against lawsuits involving injuries that occur on and off the property. The cost of home insurance varies according to factors such as location, condition of property, and coverage amount. Typically, the annual cost can range from 0.1% to 5% of the property value.
  • Private Mortgage Insurance (PMI) protects the mortgage lender if the borrower is unable to repay. In the U.S. specifically, if the down payment is less than 20% of the property value, the lender will normally require the borrower to purchase PMI until the loan-to-value ratio (LTV) reaches 80% or 78%. PMI price varies according to factors such as down payment, size of the loan, and credit of the borrower. The annual cost typically ranges from 0.3% to 1.5% of the loan amount.
  • HOA Fee a fee that is imposed on the property owner by an organization that maintains and improves property and environment of the neighborhoods that the specific organization covers. Common real estate that requires HOA fees include condominiums, townhomes, and some single-family communities. Annual HOA fees usually amount to less than one percent of the property value.
  • Other Costs includes utilities, home maintenance costs, and anything pertaining to the general upkeep of the property. Many miscellaneous costs can be deceptively high and it is important to consider them in the big picture. It is common to spend 1% or more of the property value on annual maintenance alone.

While these costs aren’t contained within calculations, they are still important to keep in mind.

  • Closing Costs the fees paid at the closing of a real estate transaction. It is not a recurring fee yet it can be expensive. In the U.S., even though not all are applicable, the closing cost on a mortgage can include attorney fee, title service cost, recording fee, survey fee, property transfer tax, brokerage commission, mortgage application fee, points, appraisal fee, inspection fee, home warranty, pre-paid home insurance, pro-rata property taxes, pro-rata homeowner association dues, pro-rata interest, and more. Sellers will share some of these costs. It is not unusual for a buyer to pay $10,000 in total closing costs on a $300,000 transaction.
  • Initial Renovations Some buyers invest money into renovations, features, or updates before moving in. Examples may be changing the flooring, repainting the walls, or even adding a patio.

Besides these, new furniture, new appliances, and moving costs are also common non-recurring costs of a home purchase.

Early Repayment and Extra Payments

For many situations, mortgage borrowers may want to pay off mortgages earlier rather than later, either in whole or in part, for reasons including but not limited to interest savings, home selling, or refinancing. Most mortgage lenders allow borrowers to pay off up to 20% of the loan balance each year but few may have prepayment penalties for one-time payoffs, mainly to prevent refinancing too soon (which will affect the lender’s profit). One-time payoff due to home selling is normally exempt from a prepayment penalty. The penalty amount typically decreases with time until it phases out within 5 years. Few lenders charge prepayment penalties regardless of home-selling or refinancing, but be sure to review the loan terms carefully anyway just in case.

Some borrowers may want to pay off their mortgage loan earlier to reduce interest. Typically, there are three ways to do so. The methods can be used in combination or individually.

  1. Refinance to a loan with a shorter term Normally, interest rates of shorter term mortgage loans are lower. Therefore, borrowers not only repay their loan balances faster, but receive lower and more favorable interest rates on their mortgages. Keep in mind that this imposes higher financial pressure on the borrower due to higher monthly mortgage payments. Also, there may be fees or penalties involved.
  2. Make extra payments the majority of the earliest mortgage payments will be for interest instead of principal on typical long-term mortgage loan. Any extra payments will decrease loan balances, therefore decreasing interest and pay off earlier in the long run. Some people form the habit of paying extra every month, while others pay extra whenever they can. There are optional inputs to include many extra payments, and it can be helpful to compare the results of supplementing mortgages with extra payments and without.
  3. Make biweekly (once every two weeks) payments of half month’s payment instead Since there are 52 weeks each year, this is the equivalent of making 13 months of mortgage repayments a year instead of 12. Utilizing this method, mortgages can be paid off earlier. Displayed in the calculated results are biweekly payments for comparison purposes.

The Calculator has the tools to help evaluate the options. Please be aware that the rates on mortgages tend to be very low compared with other types of loans. Also, mortgage interest is tax-deductible, and home equity accumulated may be counted against borrowers when applying for need-based college aid. Be sure to consider comprehensively before paying off mortgage loans earlier.

Workers Credit Union Mortgage Housing Loan, jumbo mortgage rate.#Jumbo #mortgage #rate



Jumbo mortgage rate

All Workers Mortgage loans and products are included in the GiveBack Program.

Jumbo mortgage rate

First Time Homebuyer Mortgage Loan

Buying your first home is a big investment, Workers offers low rates for first time homebuyer mortgages and even reduced closing cost options. Our professional mortgage lenders will help you find a financing options that fits your needs.

  • Get pre-approval before house hunting
  • First-time homebuyer loan programs including FHA* USDA*
  • Mortgages loans with fixed and variable rates
  • VA Mortgage loans* for current and past military personnel
  • Jumbo mortgage loans for amounts greater than $425,000
  • Reduced Cost Closing Option
  • HomeAdvantage TM to earn rebates
  • Free home appraisal credit at closing

Call 978-345-1021 ext. 5403 to speak with a Workers mortgage lender today.

*VA, FHA USDA Mortgages are not included in the GiveBack Program.

Construction Loans

If you are building your new home, speak with a Mortgage Professional about a Workers Construction Loan.

  • Fixed, 7/1, and 10/1 Adjustable Rate Mortgage options
  • Lend up to 80% of the sum of the construction cost and purchase price/value of land
  • Maximum 30-years after completion of the construction period
  • Nine month construction period
  • Construction loans are for owner-occupied residence properties

Call 978-345-1021 ext. 5403 to speak with a mortgage lender today or email us.

*Adjustable Rate Mortgage (ARM) rates effective as of for purchase and refinance of 1-4 family owner-occupied properties. A 5-year term with an interest rate of 3.500% and an Annual Percentage Rate (APR) of 3.992% is based on a $100,000 loan at 75% Loan-To-Value (LTV) at a cost of $4.08 per $1,000 borrowed. Caps 2% per adjustment and 6% over the lifetime of the loan. Index is 1-yr Treasury Bill. Margin is 2.50%. Maximum loan amount of $2,000,000 at an 80% LTV. For complete details, please contact Workers Credit Union. Workers Credit Union membership required, simply open a $5 membership account and you ll be a member!

Jumbo Mortgage


A Jumbo Mortgage loan is a home loan greater than $425,000.

They are available with 15, 20 and 30-year terms, as well as 5/1 and 7/1 Adjustable Rate Mortgages.

  • Online Pre-approval or Pre-qualification
  • Purchase or refinance your mortgage
  • Expert Mortgage Originators, including one in our Call Center
  • HomeAdvantage TM to earn rebates

Call 978-345-1021 ext. 5403 to speak with a Workers mortgage lender today.

*All Annual Percentage Rates (APRs) are based on $480,000 loan to purchase a single family primary residence at an 75% Loan-To-Value (LTV) and a FICO Score of 740 or greater unless otherwise noted. Jumbo mortgage limits: 1 family $2,000,000 at 80% LTV. Lesser loan limits apply on LTVs greater than 80%.

Mortgage Refinancing

Refinancing your mortgage involves paying off your current home loan and replacing it with a new one. The mortgage professionals at Workers can walk you through all your options for mortgages refinancing.

Benefits of a Workers mortgage refinance:

  • Reduce your monthly payments
  • Refinance your adjustable-rate to a fixed-rate
  • Shorten your loan terms to pay off your mortgage faster
  • Use your home s equity for large home improvement projects

Refinancing costs:

  • Appraisal fees
  • Closing/attorney fees
  • Recording fees
  • Credit reports
  • Underwriting fees
  • Private mortgage insurance
  • Loan origination fees

To find out about refinancing your mortgage is right for you visit our Online Loan Consultant, contact a Workers mortgage lender at 978-345-1021 ext. 5403 or email us.

Finish Line Refi Mortgage


AS LOW AS – 3.50% APR 1


AS LOW AS – 3.75% APR


AS LOW AS – 3.99% APR

A Workers Finish Line Refinancing mortgage is for those who are looking at retiring soon or want to pay off their home loan.

  • No closing cost
  • $399 non-refundable application fee
  • Fast approval process and closing
  • Other refinancing rates for a Workers mortgage are available

Call 978-345-1021 ext. 5403 to speak with a Workers mortgage lender today.

1. The Annual Percentage Rate (APR)is fixed, effective as of and includes a 0.50% discount with electronic loan payments from a Workers Credit Union checking account. APRs are subject to change at any time. A 7-year term with an interest rate of 3.50% ;is repayable in 84 monthly installments of $13.44 per $1,000 borrowed. 2. A 10-year term with an interest rate of 3.75% is repayable in 120 payments of $10.01 per $1,000 borrowed.A 12-year term with an interest rate of 3.99% is repayable in 144 payments of $8.75 per $1,000 borrowed. Minimum loan amount $50,000. Minimum term of Finish Line Refi is five years, or 60 months and maximum term is twelve years, or 144 months. Borrower is responsible for property insurance and any cost or fees required by their current lender to have the loan refinanced with Workers Credit Union. Maximum loan amount not to exceed 80% of property value for the refinance of a single family owner occupied primary residence and not exceed 75% of property value for an owner occupied second home residence. The program is available only for refinances only of single-family, owner occupied residences and is not available to refinance current Finish Line Refi loans. Requires active direct deposit into a Workers checking account within 60 days of Finish Line closing. Workers Credit Union membership required. Open a $5 savings account when you close your loan and you will be a member. Other restrictions may apply.

Adjustable Rate Mortgage

5/1 Adjustable Rate Mortgage*

3.500% RATE 3.992% APR**

A 30-year term adjustable rate mortgage can give you more options when trying to finance your home. Starting with a lower interest rate on a housing loan can open more doors.

This is the ideal mortgage if you:

  • Want to maximize your buying options for a mortgage
  • Have lower payments during the first few years of your mortgage
  • Plan to move within or pay-off within the next ten years
  • 7/1 and 10/1 ARMs are also available.
  • HomeAdvantage TM to earn rebates

Call 978-345-1021 ext. 5403 to speak with a Workers mortgage lender today.

*Adjustable Rate Mortgage (ARM) rates effective as of for purchase and refinance of 1-4 family owner-occupied properties in Massachusetts only. **A 5-year term with an interest rate of 3.500% and an Annual Percentage Rate (APR) of 3.992% is based on a $100,000 loan at 75% Loan-To-Value (LTV) at a cost of $4.08 per $1,000 borrowed. 5/1 ARM available single family owner-occupied property in Massachusetts. 7/1 and 10/1 ARM rates are available for construction loans. Rates on ARMS may increase after closing at applicable adjustment term. Caps 2% per adjustment and 6% over the lifetime of the loan. Index is 1-yr Treasury Bill. Margin is 2.50%. Maximum loan amount of $2,000,000 at an 80% LTV. For complete details, please contact Workers Credit Union. Workers Credit Union membership required, simply open a $5 membership account and you ll be a member!



Interest on borrowed capital for self occupied property

In the above context the following further aspects have to be kept in view:

Rs. 1,50,000 maximum deduction will not be available in the following situations:

  1. if capital is borrowed before April 1, 1999 for purchase,construction, reconstruction, repairs or renewals of a house property;
  2. if capital is borrowed on or after April 1, 1999 for reconstruction, repairs or renewals of a house property; and
  3. if capital is borrowed on or after April 1, 1999 but construction is not completed within 3 years from the end of the year in which capital was borrowed. In the above situations only deduction upto Rs. 30,000 can be claimed.

24(b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital: Provided that in respect of property referred to in sub-section (2) of section 23, the amount of deduction shall not exceed thirty thousand rupees : Provided further that where the property referred to in the first proviso is acquired or constructed with capital borrowed on or after the 1st day of April, 1999 and such acquisition or construction is completed 24[within three years from the end of the financial year in which capital was borrowed], the amount of deduction under this clause shall not exceed one lakh fifty thousand rupees. Explanation.Where the property has been acquired or constructed with borrowed capital, the interest, if any, payable on such capital borrowed for the period prior to the previous year in which the property has been acquired or constructed, as reduced by any part thereof allowed as deduction under any other provision of this Act, shall be deducted under this clause in equal instalments for the said previous year and for each of the four immediately succeeding previous years:] Provided also that no deduction shall be made under the second proviso unless the assessee furnishes a certificate, from the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable by the assessee for the purpose of such acquisition or construction of the property, or, conversion of the whole or any part of the capital borrowed which remains to be repaid as a new loan. Explanation.For the purposes of this proviso, the expression new loan means the whole or any part of a loan taken by the assessee subsequent to the capital borrowed, for the purpose of repayment of such capital.

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7 Secrets to Refinancing an Underwater Mortgage, underwater mortgage help.#Underwater #mortgage #help

7 Secrets to Refinancing an Underwater Mortgage

Underwater mortgage help

If you pay your mortgage on time, you may be able to refinance even if you are among the approximately 22% of mortgage holders in the U.S. who are underwater, have been turned down by multiple lenders, and heard that you don’t qualify for a new loan.

Recently, I spoke with underwater borrowers who have refinanced, one through a government program and another through his current lender. Their combined savings exceeded $800 per month, which may encourage anyone who is underwater to try and try again to snag a better mortgage deal.

Brush off rejections, and learn these secrets to save yourself tens of thousands of dollars in interest. (See also: 6 Options If You’re Underwater on Your Mortgage)

1. You May Be Eligible Now, Even if You Didn t Qualify Before

Super-strict guidelines for refinancing underwater mortgages (for those who are current on their payments) have been loosened. So, you may be eligible for the new-and-improved HARP (government-sponsored Home Affordable Refinance Program), which has been nicknamed HARP 2.0.

A big change that has helped people is the revision of the LTV (Loan to Value) requirement. Before, this ratio could not exceed 125%; now, you can be seriously underwater and still be able to refinance.

For example, you couldn t owe more than $250,000 on a home valued at $200,000 (250,000/200,000=125%) under original guidelines. Now, your balance could be $275,000, and you could still be eligible to refinance your mortgage.

2. Educate Yourself Without Driving Yourself Crazy

Trying to decipher the terminology and rules of all of the government programs is mind-boggling. Still, you might want to learn the basics by visiting the federal government s website Making Home Affordable. If you want to refinance your underwater mortgage AND you are current on your mortgage payments, then the Lower Interest Rates section is relevant to you.

Real estate website Zillow also offers information on refinancing for those with underwater mortgages. Use its flowchart to identify options among various programs that fit your situation and the HARP Eligibility Calculator to determine if you are eligible for that program.

The government resources that are relevant to those who are underwater but current on their mortgage include:

Determine what entity backs your loan in order to identify the specific program for which you may be eligible. Mortgage loans that are owned, guaranteed, or backed by Freddie Mac and Fannie Mae might qualify for refinancing through the HARP program; the majority of loans fall under this category. Otherwise, if you have an FHA loan, then you should check out the FHA Streamline Refinance; USDA loan, the USDA Rural Refinance Pilot (a pilot program) in selected states; or VA loan, the IRRRL.

If you are confused, overwhelmed, or just don t have time to sift through all this information, Erin Lantz, Mortgage Director at Zillow, recommends that you call your mortgage servicer. Ask what entity backs your mortgage in order to figure out what program, if any, for which you may be eligible.

3. Understand That Not All Lenders Use the Same Guidelines

This secret is the trickiest nuance of all. Lenders may have requirements that are more stringent than the eligibility criteria listed by the federal government on its Making Home Affordable website.

Such a situation seems to be like applying for college. Colleges and universities typically require that you are a high school graduate or hold an equivalency diploma (GED) to be admitted. But they may vary greatly in their admissions criteria, requiring a certain class rank in high school or a minimum SAT score or a great essay or all of these. So you could meet baseline requirements and be eligible to attend a college or university but not be accepted at any or all higher educational institutions to which you apply.

Note that though the federal programs indicate that borrowers must be current on their mortgage loans and have a good payment history in the last 12 months, lenders may also have credit score and debt-to-income ratio requirements.

4. Don t Take No for an Answer

Lenders may have told you that you don t qualify for a refinance. But Erin says that you should keep looking, even if you get turned down.

  • The programs have changed and made more accessible (see #1).

  • You may not meet a certain lender s requirements but qualify for a refinance with another lender.

  • Lenders and their employees are not perfect or perfectly knowledgeable; they may give you inaccurate or incomplete information.
  • So even if you hear that you don t qualify to refinance your mortgage, realize that you simply may not qualify for that specific lender s criteria at the time.

    5. Let Banks Fight for Your Business

    With a high-interest, underwater-mortgage loan, you may not feel empowered in the personal finance realm. But if you are current on your payments and have been for a while, lenders may still be interested in helping you.

    There are various ways of getting banks to bid on your business: you might approach a trusted mortgage broker and get quotes from multiple lenders, you may decide to call lenders yourself, or you may use an online service that obtains quotes on your behalf, such as Zillow Mortgage Marketplace or LendingTree. And, counterintuitively, your current lender may be more likely to refinance your mortgage than other sources.

    Whatever you do, don t pay someone upfront to help you.

    6. Be Patient, but Don t Put Up With Lousy Service

    Many people quit searching for a refinance deal because they get frustrated and just don t have time to search. Sometimes the process is too long.

    Erin tells me that many lenders are overwhelmed with demands and don t have the capacity to handle the business. When I mentioned the urgency that many people may have due to program expiration dates (HARP is scheduled to end in December 2013), she advised to find a responsive lender and/or evaluate service provided by lenders upfront using reviews posted on Zillow s website or by asking for recommendations from friends.

    As a rough gauge, one homeowner told me that her refinance took a couple of months to complete.

    7. Be Happy With a Better Deal, Even If It s Less Than Perfect

    Blogger J. Money at Budgets Are Sexy accepted an offer that Chase initiated with him. He has not yet been able to take advantage of historically low rates, but he did improve his circumstances.

    He refinanced a 6.875% interest-only, 30-year mortgage to a 30-year, 5.5% fixed-rate mortgage. Closing costs were $5,000, and his monthly payment went up slightly from $1,917.96 to $1,941.42. However, the outstanding balance on his loan is being reduced by $320 per month now that his monthly payment includes principal and not just interest. Plus, he got to skip a payment between the loans, which helped pay the loan expenses.

    Though he had tried to refinance his underwater mortgage for a couple of years, his attempts failed until he received a call from Chase, his current mortgage company. He was surprised and fearful of a scam, but happy that things worked out for him.

    Five thousand dollars sounds like a lot of money, and closing costs can vary significantly. To figure out whether the refinancing deal is a good one for you, calculate the break-even point. You can use calculators found on financial or real estate sites like Zillow and Bankrate. The results typically indicate the number of months it takes to recoup the cost of getting a new mortgage. Another way to figure out savings is to compare interest payments over the life of the loan.

    Note, though, that a refinance like J. Money s doesn t fit these models because he moved from an interest-only (I/O) mortgage to a fixed-rate mortgage, which required slightly higher monthly payments that included a reduction in principal. In this case, you could consider cash flow savings and principal reduction divide the incremental expenses ($5,000 in closing costs less the skipped payment of $1917.96) by the incremental benefit ($320 in principal reduction less the increase in payments or 1941.42-$1917.96) to get a break-even point of 10-11 months. Also, the original loan would have eventually required higher payments and end up costing significantly more.

    Even though borrowers aren’t able to gain home equity immediately, those who are able to refinance underwater mortgages can dramatically improve their finances. A lower interest rate can mean lower payments and more money to accelerate a mortgage payoff, put toward student loans, or save for retirement.

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