| Mortgage Tips: Pros And Cons Of Refinance Loans For People With ...
If you're stuck under some high credit card bills and your credit rating is slipping, one of the best ways to immediately improve your credit is a home equity loan. When the loan closes, home owners have cash-on-hand to pay off bills. The result: their credit rating starts to improve immediately. Banking executive Dan Ambrose refers to those as the “band-aid loan", also known as the 2/28 in mortgage lingo. “Most sub-time loans are short term loans, not A paper market, which means a fixed rate for two years then the loan adjusts." He's talking about 30 year refinancing mortgages for people with less than stellar credit. Lenders offer a home-equity loan at a set interest rate for two years, and then the loan converts to a variable rate loan, where the interest rate fluctuates with the prime rate at the time.
Be careful with reverse mortgages
South Florida is one of the hottest markets in the nation for reverse mortgages. And yet, these types of loans -- which allow people age 62 and older to get payouts on the equity in their homes -- are more expensive in South Florida than many areas of the nation.
That's the situation in a nutshell. And it's easy to see how it came about. People are pressed for money, particularly post-hurricane needs for repairs and condo assessments. Reverse mortgages look attractive, because they don't require the borrower to pay the loan back unless they sell or move out of their home.
Add in low interest rates and some huge marketing efforts with such stars as Robert Wagner and James Garner as pitchmen. Borrowers are lining up. The number of loans, nationwide, doubled last year.
A 'perfect storm' swamps Lower Hudson borrowers
To see what happens when a slowing housing market meets a high-risk mortgage market, just stop by the lobby of the Westchester County Courthouse nearly any day of the week. There, with little fanfare and scant notice from the passing crowds, homeowner misfortune is auctioned off, one over-mortgaged house at a time. Luckily, the Lower Hudson Valley is not yet Ohio, or Mississippi, or any of the other crashing real estate markets, which have pushed national foreclosure rates to their highest level in the 37 years that the Mortgage Bankers Association has been keeping records. High housing demand in New York City has made the landing more bearable for most homeowners in Westchester, Rockland and Putnam counties. Nonetheless, foreclosure rates are increasing, too. RealtyTrac.com, a national online foreclosure listing service, reports a continuing rise in the number of homes entering foreclosure in Westchester, Putnam and Rockland counties.
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