Christian Home Mortgage Lending
Christian home mortgage lending interest rates are at record lows making now the time to purchase or build a home, in order to save money long-term. Lenders have become very competitive in today's real estate market because so many consumers are taking advantage of the low interest rates. Home building and purchasing has continued to climb in recent years prompting financial institutions to create a wide variety of loan packages. Many consumers have credit issues and require loans suited to fit their circumstances. Adjustable rate mortgage packages are abundant and if the borrower has to pay a higher interest rate because of credit problems, an adjustable rate loan will allow them to refinance in a few years. Perhaps at this time, their credit will have improved and a lower interest rate will be available.
An Internet search for lenders will yield literally millions of web sites that contain information on mortgage options. There are so many choices, but no matter how many lenders offer almost instant approval, this is no quick process. Without the proper research, a consumer could end up in a nightmare. Borrowers can start with home mortgage lending companies they are familiar with in some way, or known lenders that come highly recommended by friends and family. Word travels fast when someone has a good experience with a lender and even faster when a bad experience arises.
Financial institutions offer purchase loans, construction loans, refinancing options, ARM loans, home equity lines of credit, and second mortgages. There is no shortage of package variations among these different types of loans. Virtually anyone can qualify for some type of loan regardless of his or her credit background. Many web sites enable consumers to enter information about the loan they are seeking and have it submitted to several home mortgage lending institutions, who will compete for business.
While having financial institutions compete for one's business sounds attractive, always read the fine print. There may be hidden closing costs or other fees that borrowers are not aware of. Also, when it comes to Internet home mortgage lending institutions, consumers don't always have the element of talking with someone face-to-face much of the time. Especially if there are credit issues, it helps tremendously to sit down with someone who can look at the homebuyer's situation and advise them of the best options. Listen to what professionals have to say. "I will shew thee, hear me; and that which I have seen I will declare" (Job 15:17).
Interest only mortgage rates have fluctuated over the past few years along with most other mortgage rates. Qualification will depend upon several factors. The most important factor is past credit score. Credit scores determine the risk associated with lending money to an individual and the interest only mortgage rate they get. If a person has a low credit score, they can expect rate to be extremely high. Credit scores are obtained from one of the three major credit reporting agencies. These agencies take into account things like past due payments, charge offs, and total outstanding debt and compile a score that is used by mortgage lenders to decide what interest only mortgage rate will be charged.
A person may not even be aware that an interest only mortgage is a new type of loan. The payment is simply interest and eventually a person will have to repay the principle as well. Interest only mortgage rates allow a person to pay this option for a specific period of time. Some may ask if interest only mortgage rates are a good idea. Many Christian experts feel these are a bad idea that allows a person to live outside of their means. The Bible teaches a man should provide for his family. "But if any provide not for his own, and specially for those of his own house, he hath denied the faith, and is worse than an infidel." (I Timothy 5:8.) Providing a secure financial future is a legacy everyone should strive for, but certainly not something that should be done if it is clearly unaffordable.
If a person is only paying the interest payment, they may wonder what purpose this type of financing will serve. With today's competitive real estate market, people are finding that the home they long for is just slightly out of reach. With low interest only mortgage rate this home now becomes attainable, but with some serious provisions. This option allows the borrower to pay only the interest, making any portion of the principle available. The gamble is that when the full payment becomes due, the borrower will now be earning more and the higher payment will be possible and become very important because these rates determine what the initial payment amount will be. Deciding whether or not this option fits into a specific situation will depend on information gathered from research and speaking with professionals. Careful consideration and prayer will help a person determine the best course of action for each individual situation.
Christian Mortgage AmortizationMortgage amortization is the systematic and continuous payment of an obligation through installments until such time as that debt has been paid off in full. The repayment plan for a fixed rate loan involves the constant payment for the life of the loan. Each payment is calculated so that all interest due to payment date is included, plus a portion of the principal which has a periodic reduction. Mortgage amortizations give assurance to home buyers that the loan payment will not increase during the life of the loan.
Another mortgage payment option in addition is the GPM or graduated payment mortgage. This payment offers differ from mortgage amortization in that the method allows home buyers to pay lower initial monthly payments in the earlier years of the loan, with payments rising in successive years to a level sufficient to receive mortgage amortizations within a 30 year loan term. With a lower monthly payment, the buyer with a lower income might qualify for a loan and be able to buy a larger house. An added requirement for GPM is to show that the home buyer will have an increase of income in the following years.
For most GPM plans, there is an accumulation of unpaid interest, called accrued interest, in the early years of the term. The borrower ends up at the end of the year with a larger balance than when the loan was originally undertaken. This is called negative mortgage amortization. Since the loan balance is increased rather than reduced, known as mortgage amortizations, prevention measures must be taken. To prevent an increase in the loan balance from exceeding the value of the property, higher down payments may be required. This is a tough decision when faced with lack of financial savings. Financial issues are important to God and He has many good tips and rules concerning how to use money. "Then said Jesus to those Jews which believed on him, If ye continue in my word, then are ye my disciples indeed; And ye shall know the truth, and the truth shall make you free." (John 8:30-31)
As long as the value of the house is not surpassed by the negative outcomes factor with a GPM plan, it is within real estate financing legal parameters. Regular mortgage amortizations decrease the principal balance at a slow and steady rate, while negative mortgage amortization increases the principal balance. If the purpose is to resell the property quickly, then the lower payment of a GPM plan may provide the savings in monthly cash flow to repair and update a home for resale. Before selecting any repayment option, it is wise to first consult with a financial counselor familiar with a borrower's history and financial goals.
A no equity home loan is sometimes referred to as a 125% loan. This caters to homeowners that do not have any equity in their house because they received 100% financing in the original purchase or because there is a second mortgage on the home. No equity home loans are relatively new and risky because the lender takes the second or sometimes third position on a lien against the house. This form of assistance does exist, but the borrower may have to pay a higher interest rate for this type as opposed to the low interest rates typically associated with an equity home loan.
Appraisal and balance of the original mortgage will have to be completed in order to receive a no equity home loan. The homeowners FICO score is also taken into consideration. The FICO score is the Fair Issac and Company score which is a number based on credit reporting history, credit balances, credit limits and the like. Credit reporting agencies such as Equifax, Experian, and TransUnion figure these scores and when a credit check is done by a lender or other business offering credit to the borrower, they receive a personal FICO score. If the FICO score is low, a consumer can either be denied for the no equity home loan, or they may be offered a high interest rate.
FICO scores directly determine interest rates in most cases. If the borrower has a high FICO score, they may be approved for no equity home loans, and offered a lower interest rate. They are granted at up to 125% of the house value. For example: A house is worth $200,000. The borrower still owes $200,000 through a first mortgage and any other mortgages combined. If the borrower applies for assistance, and qualifies, they may receive up to $50,000. This is 125% minus the balance owed on the house.
If the Christian borrower cannot qualify for no equity home loans, they may have to wait and have the house appraised in 6 months to see if it has gone up in value. These loans are not designed for poor credit borrowers. Usually a house that has been appraised for more than the price the homeowner paid will qualify for a no equity home loan. It would be wise for interested consumers to contact local lending institutions such as banks, credit unions, or a local mortgage brokerage to get specific information. These lenders will be able to answer questions and advise consumers on the best choices to make in this situation. Having patience will be very important in this entire process. "And the servant of the Lord must not strive; but be gentle unto all men, apt to teach, patient" (2 Timothy 2:24).