Following several years of very strict lending, several lenders and banks across the country have begun to open up their wallets and make it simpler for consumers to get approved for unsecured personal loans. According to SmartMoney.com, TD bank has reported a 6% increase in the amount of personal loans issued in 2011 while SunTrust Bank reports a 25% increase!

In addition to introducing less rigid credit requirements that will enable individuals with poor credit and high debt amounts to achieve approval, banks are also trying to entice applicants with good-excellent credit by offering lower interest rates. For example, in March of 2011, US Bank introduced unsecured personal loans with interest rates beginning @ around 9%, lowered from the previous starting point of 13%. The amount of loans serviced since have more than tripled.

Proof of income is still a requirement for all applicants of good and bad credit. And those with higher credit scores/rating in conjunction with minimal debt amounts are still considered ideal candidates with approval being likely, accompanied with favorable rates and terms. If you are able to receive an approval, the interest rates you receive will heavily depend on your ability of being able to pay the loan back timely. Interest rates are fixed, but if you fall behind on payments, you are going to incur late fees…which can end up being pretty costly at $20-$50/pop. If you neglect to make your payments, your account will be handed over to a collection agency which can equate to being sued in court. You don’t want to go this route. Therefore, don’t apply for a personal loan if you do not think you will be able to satisfy payment obligations.

Loan amounts offered by the majority of lenders are still pretty generous. Wells Fargo comes in at top, enabling consumers with excellent credit to apply for personal loans for as much as $100,000. Capital One is currently offering maximum borrowing amounts of $25,000 and OneMain Financial (formerly CitiFinancial) $10,000. And then you have online only loan providers like Choice Personal Loans that service the entire country, offering good and bad credit loans for as much as $150,000.

It is very important to note that being able to obtain easy credit also has its downside. For instance, many consumer advocates contend that these types of loans invite consumers to spend money that they should be saving. Choice has reported that many of their clients utilize their loans for buying large-ticket merchandise like flat-screen televisions, stereos, etc.. These types of purchases are not satisfying life’s necessities and should be carefully evaluated before proceeding. It is also common for borrowers to use the funding they receive for paying off high-interest credit card debt.

Unsecured personal loans are an excellent financing option, if used properly. They not only help satisfy unexpected financial crisis, like paying for doctor bills or home repairs, but can help you save money by paying off balances on high-interest credit cards. In addition, eliminating credit card debt will also help improve your credit score and rating since the carry on an unsecured loan is not as much of an impact on your credit.

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The current economic environment is making it a great time to refinance an existing home loan. Interest rates are as low as they have been in a long time, and with good credit borrowers are qualifying for great deals. Refinancing makes a whole lot of sense for anyone stuck with a high interest loan or that needs to use some of the built up equity in their home. For anyone in the market to refinance their existing home loan, here are a few things that you should know.

Find out your home’s value

Refinancing lets you take cash out of the price appreciation built up in your home. Housing prices have dropped dramatically in recent years so you need to find out exactly what your home is worth. You can check online and see what homes have been selling for in your neighborhood. This will give you a ballpark figure of your home’s values.

Another option is to hire an appraiser and find out the true value of your house. This way you will know exactly what you are working with in the event of a refinance and how much cash you have available in your house. Your home needs to have a much higher value than what you owe to qualify for a loan.

Credit scores do count

Over the past decade, qualifying for home loans was incredibly easy. There were lots of loan products available that required little to no documentation. Just about anyone could get a home loan that was in the market for one. Today, things are a whole lot more difficult. Refinancing a loan requires that you have a good credit score.

You should run a check of your credit before financing and make sure that your credit score is satisfactory. The interest rate that you qualify for is based largely on your credit score. Improving your score will reduce your rate and save you money on the amount that you refinance over the life of your loan.

Prepare for closing costs

The good thing about refinancing is that you do not have to come up with money for a down payment. Down payments can account for as much as 20% of the home’s purchase price. Although you don’t have to pay a down payment, you may have to pay closing costs on a loan.

Loans with the lowest interest rates typically do have closing costs attached. You can always include the closing costs in the loan but you will have to pay a higher monthly payment or get a higher interest rate. Pay for your closing costs in cash and you will save a lot of money over the life of your loan.

Shop around for special offers

Buying a house is just like buying anything else. You will get the best deals if you shop around at multiple places. You can start at a credit union or bank and find out who is offering the best financing options for your needs. There are also online sites like LendingTree in which banks will actually compete against each other for your business.
Another option that is often overlooked by people is to contact a mortgage broker. A mortgage broker is kind of like a middleman who negotiates loans on behalf of loan borrowers. Mortgage brokers work exclusively on your behalf and often have access to additional forms of financing that may not be available at a single bank.

Convert a bad loan product to a good product

The best refinancing situations are when you can switch from a loan product with a much higher interest rate to one with a much lower one. It makes sense to convert adjustable rate mortgages with higher rates to much lower fixed rate mortgages. Refinancing can take an exotic mortgage product and switch it to a traditional one.

If you are unsure about whether or not to refinance, you just need to look at the interest rate. If your current interest rate is two percentage points higher then the current interest rates being offered then you need to look into refinancing.

Negotiate with your lender

Negotiating with your lender can reduce the total amount of money that you will have to pay during the process. There are a lot of areas in which lenders have flexibility to waive fees in the event of a mortgage refinance.

No cost refinancing loans can result in title fees and home appraisal fees being waived or reduced substantially. Taking a few minutes to bargain with your lender could wind up saving you hundreds of dollars.

Ask for a good faith estimate

A good faith estimate will give you a report of exactly how much your new loan will cost you. You will get a detailed explanation of all of the settlement costs that you will have to pay. You can use a good faith estimate to help you make the decision about which loan to take.

Unfortunately, not enough borrowers utilize this valuable document. The Washington Post ran a survey and found that most homeowners ignore their good faith estimates when buying a home. More homeowners should rely on a good faith estimate. It is the single best resource that a homeowner can rely on to help them figure out the total cost of the financing process.

The best borrowers when refinancing a loan are informed borrowers. You can properly equip yourself for the entire process by applying each of these tips. Be sure that you find a company that can provide helpful advice and has a variety of options that will fit your needs. By doing this will ensure that you procure a loan that fits you and your family’s finances perfectly.

An ARM, or Adjustable Rate Mortgage, is a home loan that features an adjustable interest rate. This rate depends on the current economic index.

Many homeowners choose an ARM mortgage because these loans offer very low interest rates for a certain amount of time, called the initial rate period. After the initial rate period is up, the interest rate will then be reset. If interest rates have fallen since the loan was obtained, this can be a good thing. However, if rates have risen, the homeowner’s rate will be increased and their payment will go up.

When to Consider Refinancing an Adjustable Rate Mortgage

Adustable Rate Mortgages are subject to three different caps: an initial, periodic, and lifetime cap. The initial cap is how much the interest rate can increase the first time the rate is reset. The periodic cap is the most the interest can increase during an adjustment. Lastly, the lifetime cap is how high the interest rate can go over the life of the loan.

If your ARM mortgage is going to reset and your rate may significantly increase, you may want to consider refinancing. In order to avoid a significantly higher payment, a homeowner may want to consider refinancing a few months before the initial reset. This way, the refinance will be complete before the homeowner’s rates are adjusted.

However, if you have a very low rate on your ARM mortgage, as well as low initial and periodic caps, you may not need to refinance until the next reset. When to consider refinancing an ARM depends on the terms of your particular loan.

How to Get Low Adjustable Rate Mortgage Rates

Many homeowners want to refinance their mortgage, but are unsure of how to get low ARM refinance mortgage rates. The rate that you are offered will depend on your credit and ability to repay the loan. In order to secure a low rate, you may need to work towards improving your credit. Fortunately, if your credit score is already high, you will be in a good position to secure a low rate.

Rates are also based on the current market. If you are determined to refinance when ARM refinance mortgage rates are low, you will need to keep an eye on the market. If possible, depending on when your interest rate will be adjusted, make your move when rates are low or begin to decrease.

The Benefits of Refinancing an Adjustable Rate Mortgage Loan

There are a number of benefits to refinancing an Adjustable Rate Mortgage loan. When refinancing, many homeowner decide to obtain a loan with a fixed-interest rate. This will offer stability, instead of having to worry about the next time your rate is due to be adjusted.

Also, if you have built up a large amount of equity in your home, you may be able to lower your monthly payments and/or even receive cash back while refinancing. This cash can be used to pay off other, high interest debts or to meet another financial need. In order to take advantage of the best ARM refinance mortgage rates available, homeowners need to determine when to refinance and what they are looking to achieve by refinancing their home loan.

This has been a guest post provided by Refinance Mortgage Rates.

Buying a home is not something you should embark on alone, and so many of us rely on the advice from those in the business of selling home loans each and every day. It is invaluable to be able to ask your mortgage lender not only about your down payment, but also to seek advice on how to manage interest rate increases.

So is it a mortgage broker or a bank who will give you the most accurate, well rounded, and easy to understand advice when it comes to buying a home?

Pros and Cons of Mortgage Brokers

A mortgage broker does not work for a particular lender, but instead represents as many as 40 lenders. The mortgage broker is then paid a commission by these lenders when they sign up customers to new loans, however, every lender pays a commission so the broker’s recommendations are based on matching your needs to a loan product unbiasedly.

Benefits of working with a mortgage broker:

• The service is free. While you are getting comprehensive comparative services and advice, you are not paying anything extra for this extra service. Instead, the mortgage broker is paid by the lender you choose to have your loan with.
• Doesn’t cost you time either. While there are a lot of monetary cost involved when buying a home, the price you pay in your time should also be considered when you are looking for value. If you had to go back and forth between 40 or more lenders to compare their loan products you could spend months before you applied for preapproval, let alone could start looking at houses. However, a mortgage broker can do all of that work for you in just a few meetings, as well as help you negotiate your way through the paperwork, and helping you understand your loan and what you are entitled to.
• Mortgage brokers are industry experts. There are specific training courses and studies which mortgage brokers undergo before they are qualified to offer you advice and match you to a loan. A mortgage broker will also help you determine the loan amount you can comfortably afford by assisting you with your budget, and applying stress rates if interest rates rise.
• Explanations of extras. Choosing a home loan is about a lot more than saving for a deposit and picking a lender and that’s why your mortgage broker can also help you calculate the stamp duty amount you need to pay, and show you how to minimise your Lender’s Mortgage Insurance costs. A mortgage broker is also going to take the time to explain the different loan types and features so you make the right choice, rather than recommend a loan which is under promotion at the time.
• Save you money. An interest rate that is 1% cheaper or a free 100% offset account added to your loan can potentially save you hundreds of thousands of dollars over the life of your loan, not to mention years off of your loan term, so it is worth making the time to meet with a mortgage broker to compare all of the options out there. Mortgage brokers have established relationships with their lenders and are able to negotiate these deals on your behalf, where you may not be offered the same discounts if you went in alone.
• Ongoing service. Your mortgage broker will not just leave you to fend for yourself once your deposit has been paid and your documents signed. Instead, a broker will be there with you through the settlement period, and if you encounter issues with your lender or your loan during your term, you can speak to your mortgage broker who will explain the features, or help you find another loan which is right for your changing needs.

The drawbacks of working with a mortgage broker:

• Limited lenders. While most mortgage brokers have an extensive panel of lenders available for you to choose from, they are still only able to recommend loans from their panel. Therefore, while a mortgage broker may have between 10 and 40 lenders to choose from, this is not the entire range of loans available to you.
• Can be a fee. In some cases you may have to pay your mortgage broker a fee for their services as many banks have lowered the commissions they pay to brokers for bringing them loans.
• Only the best mortgage brokers can help. The benefits of a mortgage broker only apply if you have done your research to find the best and most knowledgeable broker. Ask for testimonials from past clients, and make sure your broker is fully qualified, and has years of experience before you rely on their advice.

Pros and Cons of Bank Lenders

Going directly to your bank to secure a home loan isn’t necessarily the old fashioned way to do it because there can be many benefits to dealing direct with a lender. Just make sure you are aware of the differences and drawbacks before you potentially limit your borrowing options.

Benefits of dealing directly with your lender:

• Up to date information. When you are looking at loan products and specials with your bank directly, then you have the current information for that day, rather than risking a delay in correspondence.
• Negotiate directly. If you already have a relationship with your bank, you could be in a position to negotiate a better deal directly and secure better interest rates than a third party could get you.
• No middle man. When you talk directly to your lender you are not waiting for answers or receiving information which has already passed through several communications channels. This means there is less chance of information being misconstrued and if you have a question you can ask your lender directly face to face.
• No commissions. Although you may not pay your broker a fee, you are paying for the service through the commissions your lender has to pay the broker. Mortgage brokers receive trailing commissions which are a percentage of the interest charged on your loan, and when you go direct, you can more easily negotiate for a lower interest rate as there are no commissions to pay.
• Add your loan to your existing financial products. If you already have other financial products with your lender such as a transaction account, you can easily set up for payments to be made to your loan account, without having to add more financial products.

The downsides to going direct to the bank:

• Different banks have different approvals processes. This means that where your loan application may be denied by one lender, it could be accepted without issue by another. However, you don’t know which banks have the stricter lending criteria, or which are more understanding of your particular financial situation – where a mortgage broker does. Plus, each loan application which is denied goes on your credit report and can affect your ability to borrow in the future.
• Time to compare accurately. As you make your way from lender to lender to compare loans yourself, you may think of new questions, or find out about new loan products which can change your application needs. Therefore, you would need to go right back to the first lender you spoke to in order to compare all loans on a level playing field, and this can only be very time consuming, but very frustrating too.

Alban is a personal finance writer at Home Loan Finder, a home loan comparison site.

Ever ask yourself this question?

What’s better – to pay off the mortgage early or to save and invest more money?

My guess is that we’ve all asked this question at some point or another.

Maybe you’re thinking about refinancing your mortgage and looking at how you could pay off your mortgage early.

Paying off the mortgage early is a goal that a lot of folks have and are committed to make happen!

But what is your mortgage payoff?

How much extra cash do you need to throw down on that loan to get to your mortgage payoff?

How much interest would you actually save?

How many years would you cut down on your loan with an early mortgage payoff?

Should you even try to pay off your mortgage early, or is it better to invest your money?

Those are the questions we want to look at today and I’ve got a great little calculator for you as well!!

Benefits to an Early Mortgage Pay Off

1. Peace of Mind – you can rest easy knowing you’ve got no liabilities!
2. Increase “Imputed Income” - This might be more of an ethereal benefit, but bear with me – Let’s say your mortgage payment is $1,200 per month. If you are in the 25% tax bracket, you have to earn $1,600 to net $1,200 after taxes.  So basically not having to pay $1,200 a month is like earning $1,600 tax free!
3. Increase Savings – once you’ve paid off your mortgage you can really start socking some big money away.
4. Increase Giving – without having a mortgage payment, you can use that money to help the needy, give to your favorite charities or increase the giving to your church.
5. Increase Net Worth – this is obvious here, but worth noting.  Net worth is simply everything you own minus everything you owe.  Take away the liability and your net worth increases dramatically, which is creating wealth!
6. Increase Freedom – what I mean is that you no longer have to work just to maintain your liabilities, but rather having no mortgage or no debt frees you up to pursue things like your passions and your purpose!

So, as you can see there are some pretty big advantages to knocking out that mortgage!

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Concerns With An Early Mortgage Pay Off

1. Opportunity Cost – If your mortgage rate is only 5%, but you can get 8% in the market, you are giving up 3% by paying off your mortgage.
2. Lack of Liquidity – Instead of building up an account (whether a non-qualified brokerage account or a Roth IRA) that you can access should you need it, your money will be tied up in the equity of the home.  Sure you can get access through a home equity loan, but you have to pay interest on that.
3. Missed Tax Advantages – You can’t write off mortgage interest if there is no mortgage interest.

Those are the three main concerns I see with paying off your mortgage early.  Maybe you can let us know of some other concerns or disadvantages to paying off the mortgage early.

Instead of just choosing one way or the other, maybe you want to pay off your mortage AND invest like Nickel is doing from Five Cent Nickel!

Mortgage Payoff Calculator

So maybe you’re wondering what it would take for an early mortgage payoff?  How much would you save by paying the mortgage off.

Here’s is a handy Mortgage Payoff Calculator compliments of MortgageLoan.com.

Check out ChristianPF for some advice on how to pay off your mortgage early?

You Also Might Be Interested In These Calculators

• Mortgage Refinance Calculator
• Credit Card Payoff Calculator

What Are Your Thoughts?

Readers, what do you think – should you pay off your mortgage or invest?

How many years would you trim on your mortgage by re-doing your budget and throwing some extra cash on that loan?

If you’re just starting out on the journey of home-ownership, I suggest you pre qualify for mortgage and lock in a great interest rate today.

Should I Refinance My Mortgage?

That’s the question we want to answer today.

Mortgage rates are still very, very low.  Who would’ve ever thought we’d see mortgage rates this low for this period of time.

I remember thinking back in August when we first started building our house and mortgage rates were at their lows that we’d never see those rates by the time we got our home mortgage loan.

But to my surprise we ended up getting a 4.875% rate even with a 60-day lock!  I was ecstatic!

Mortgage rates are still very competitive and so if you haven’t taken advantage of a mortgage refinance, you may want to seriously consider it soon – before mortgage rates start going back up again!

But, is refinancing your mortgage a smart thing to do?  What is you don’t plan to stay in your current house forever?  Should you still refinance?

These are good questions to ask!

Thankfully there are handy mortgage refinance calculators that can help us make decisions like this.

Here are some things to consider when refinancing your mortgage, and then I’ve attached a mortgage refinance calculator that I found on mortgageloan.com.

Additionally, it’s a good idea to check your credit report and score, so you know ahead of time what sort of rate you might be eligible for.

What is Your Current Mortgage Rate and What New Rate Could You Get?

What is your existing rate on your mortgage?  Where are rates at now in the open market?

Here’s where rates are at today:

Or, to get an idea of mortgage rates in your state, check out GoBankingRates.com, which allows you to choose your state and the mortgage amount and compare rates in your area.

If you can drop your rate by at least a percent or more, you’ll want to seriously consider a refinance.

How Long Do You Plan to Stay in the House You are Refinancing?

Are you only planning on staying in your existing home for another year or two?  Maybe you’ll want to hold off on the refinance!

If you plan to stay a little longer, then the closing costs may not be as bad as you look at your break-even point.

Have a good idea of your time frame so you can make a more educated decision on whether the costs of refinancing your mortgage will be worth it.

What Type of Mortgage Loan Do You Have Currently?

Do you have a 5-year Adjustable Rate Mortgage (ARM) that’s about to expire?  You may want to refinance very soon and get a fixed-interest loan!

Do you have a 30 year mortgage and you’d like to get that down to a 15 year mortgage?

The difference in rates may allow you to do that without adding much more to your payment.

What Is Your Home’s Value and Can You Get Rid of PMI?

With the real estate crash that we’ve seen the last couple years, it doesn’t always make sense to refinance.  Decreasing home values have made it difficult to really make sense of the numbers in many cases.

But, you’ll want to know what your home’s value is and if you can get rid of PMI if you are still paying it.

PMI is private mortgage insurance that lenders typically charge if your loan-to-value ratio is not quite 80%.  If you have paid off a chunk of your mortgage and think your loan-to-value is at least 80% then you may want to refinance so you can get rid of that pesky PMI!

Mortgage Refinance Calculator

Check out this handy mortgage refinance calculator and determine if a mortgage refinance is right for your situation!

You might also be interested in this Credit Card Payoff Calculator!

What Are Your Thoughts?

Readers, have you refinanced your mortgage recently?

How did the process go?

What tips would you offer other readers to help them through the mortgage refinancing process?

Questions for First Time Home Buyers

Don’t put one of the biggest financial decisions of your life at jeopardy by getting the wrong advice when finding a first time home buyer loan.

For many first home buyers, this can waste both time and money as they end up choosing the wrong loan for their hard earned deposit.

This guide will provide valuable information on finding the deposit for your loan and how to choose the best first time home buyer loan available.

How Much of a Deposit Do You Need for Your First Time Home Buyer Loan?

With so many first time home buyer loans available, there are even options for buyers with no deposit!

Despite this, with a bigger deposit you can take advantage of a greater selection of first time home buyer loans and find the most competitive interest rate while reducing the start-up fees.

Put more money down and you can receive lower interest as the provider does not have as much at stake and recognizes you as a low-risk customer.

Working hard to build up a good deposit can also let you avoid Private Mortgage Insurance or PMI.

Many lenders will insist that customers take out mortgage insurance if their deposit is less than 20% of the purchase price.

For first home buyers this can add up quickly, with insurance often costing up to 2% of the loan.

To put this in perspective if you were to take out a loan of $250,000 you could potentially be forced to pay a whopping $5,000!

Many lenders will make an exception for first home buyers as they realize the difficulty of saving for a 20% deposit and will offer first time home buyer loans up to 95% of the property value.

This has resulted in a high number of competitive 95% loans on offer with great features for first home buyers.

By being offered a greater selection of first time home buyer loans and being given the ability to take luxury in more competitive interest rates and features, buyers with a 20% deposit are generally in a better position than those without a deposit to offer.

However, with good first time home buyer loans on offer for those with smaller deposits saved, you can still find a loan with the right features to help you make the transition from renting to buying.

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How Do You Find the Best First Time Home Buyer Loan?

While it may be tempting to base your loan decision on the interest rate alone, it’s vital that you also take into the consideration the different features for each loan based on your unique financial situation and goals.

By not taking advantage of the right features, you can easily pay far more than is necessary.  This generally comes down to weighing up the interest rate and the flexibility of the options available.

Every first home buyer should consider these questions when comparing different first time home buyer loan options:

• What are my first home goals?
• What are my spending habits?
• Am I capable of budgeting?
• Am I eligible for the first home owners grant?
• How might my stream of income change in years ahead?
• Will I be able to manage a loan with ongoing fees?
• What are the exit fees of this loan?
• Does this loan offer portability?
• Does the loan offer redraw facility?
• If ahead in repayments, can I stop making deposits for period of time?
• Can I see myself moving in the next 5-10 years?

Your answers to these questions can greatly influence the loan you decide to go with.

Your first time home buyer loan should save you both time and money but also offer flexible options to ensure you aren’t struggling to make repayments down the track.

How Do You Choose the Right First Time Home Buyer Loan?

Comparing first time home buyer loans on the market can often seem overwhelming with many buyers unsure as to what loans will let them take advantage of a good interest rate while still giving the right features for their home loan needs.

You can make the process much easier by following these three simple steps:

1. Decide what your loan should offer based on the questions above.
2. Find the products on offer from the different providers that meet your criteria and create a shortlist.
3. Once you have your selection of first time home buyer loans, examine each one closely to make your final decision. Don’t be afraid to do extra research and seek advice. Remember this is one of the most important decisions you will ever make.

By following these three steps you can find the best first time home buyer loan for your specific needs. The loan you decide to go with should help you achieve both your short and long term goals.

With thousands of first time home buyer loans available, the hardest part is sorting through all of the competitive deals to find what is best for you.

Reward yourself now and in years ahead by following the necessary steps to get the best first time home buyer loan possible.

This has been a guest post by Fred, who is a personal finance writer. He provides budgeting tips and helps people to choose the best first home buyer home loans online.