Based On Our Model, We Estimate That The Mortgage Law Caused A Decrease Of 6 Percent In The Share Of The Very Short Term Loans

Category: Finance, Mortgages.

Because of the high interest rates( currently the monthly mortgage rates are about 3 percent for long term loans) , the mortgage loan terms have been very short in Turkey. Currently, 50 percent of the new loans have their original maturity from 5 to 10 years, about 22 percent of the new loans have a maturity of 3 to 5 years, and about 20 percent of the new loans have maturities between 10 and 15 years.

While loan term for most of the developed countries is typically between 15 and 30 years, in Turkey most people get a home loan with a maturity of 5 to 10 years. None of the rest of the loan terms( i. e. , less than 1 year, 1 to 3 years, 15 to 20 years and 20- 30 years) has a share of more than 5 percent in the new loans. The length of the loan term is mainly determined by the interest rates. So if we assume that the loans that are less than 5 years are very short term loans, very short term loans make about 30 percent of the all new loans. A look at the historical data also shows this very clearly. During this time we also see the demand towards 5 to 10 year loans decreased substantially and only about 25% of the new loans were issued with a maturity of 5 to 10 years in September- October 2006 period. For example, in the summer of 2006, along with other, Turkey emerging countries, went through a short crisis that caused the interest rates rise sharply in a few weeks of time.

During this time of increased rates, we also see that the share of the loans with maturities 3 to 5 years jumped from 20 percent to about 60 percent, again showing that interest rates are determining the loan terms significantly. On March 2007, the first ever mortgage law of Turkey was approved. How did the new mortgage law affect the loan terms? This law provided some tax advantages to the borrowers, gave some rights to banks to secure their credits when borrowers default, issued some penalty fees to borrowers if they want to pay back the fixed rate mortgages before the due date, and prepared the foundations of the secondary mortgage law, which is expected to operate early 200 After six months the law passed, we start to see some positive effects of the law on the mortgage market. To quantify the effect of the new mortgage law on the mortgage loan terms, we estimated a Vector Autoregressive( VAR) model using three endogenous variables: Share of very short term loans( 1 to 5 years) in all new mortgages, share of long term mortgages( 5 years+ ) in new loans and long run interest rate. Several lending institutions in addition to investment and participation banks were founded to operate in the market, banks started to offer new mortgage instruments, and started to offer loans with longer maturities.

We also used several dummy variables for certain large unexpected shocks and a dummy variable to measure the impact of the new mortgage law on the loan term. This is consistent with what we noted earlier. Our estimations showed that: 1) One percent increase in the annual interest rate causes about 10 percent increase in the share of very short term mortgages and 10 percent decrease in the share of longer term mortgages. One reason the mortgages do not usually extend more than 10 years is that interest rates are high in Turkey and if assume that in early 2008 mortgage rates decrease to 2 percent( about 10 percent less than the current ones) , the share of the very short term mortgages will decrease to about 18 percent from its 30 percent level. 2) We also found that new mortgage law had a statistically significant impact on the loan term. In addition to the 6 percent direct impact on the loan term, we also anticipate that the new mortgage law will have indirect effect on the loan term through decreased interest rates very soon, after the second, especially mortgage market starts to operate in early 200 In summary, we found that high interest rates have been the primary cause of the large share of short term loans in Turkey. Based on our model, we estimate that the mortgage law caused a decrease of 6 percent in the share of the very short term loans. But with the help of decreasing interest rates and the new mortgage law, we expect that the share of short term new loans will decrease to less than 20 percent from its current 30 percent level in 200

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That Extra Money May Just Be What You Need To Fund Other More Profitable Moves - Finance and Mortgages Blog:

If you re working on paying off your home, you might wonder if a windfall or a salary increase might be best directed to your monthly house payment. However, as with any financial move, you need to consider all of the ramifications of your actions before you begin.

Private Mortgage Insurance - Finance and Mortgages Articles:

First- time homebuyers often have difficulty coming up with a down payment for a home loan. While these homebuyers often qualify for a mortgage based on their income, and credit history, debt level, they would be denied if lenders held them to a specific down payment requirement.

The Standard Home Equity Loan Has A Term Anywhere From 5- 15 Years - Lesa Boroff about Finance and Mortgages:

When you buy a home, you buy the one that is closest to what you want in a home. A home equity loan is a natural thought, since serious home improvements are beyond most families budget.

Mortgage Loan Application Process

Category: Finance, Mortgages.

Mortgage loans are the easiest way to own your house or property.

The mortgage amount is the amount of money you borrow from a lender to pay for your house. New low down payment and longer mortgage terms allows people with low income or low cash to purchase their home by taking home mortgage loans. Home mortgage loans are offered against collateral security of the property you purchase. The lender also has an" ownership interest" on it until the loan has been paid. However, you possess the house you purchase and have its ownership as well. The mortgage loan rates have come down, which makes the mortgage loans attractive for borrowers.

Fixed interest loans have an interest that is fixed for the entire loan tenure. Mortgage loan rate varies according to loan plans. Here the mortgage loan rate never changes. The interest rate of flexible interest mortgage loans increase or decrease depending on the market condition and the national economy. Another type of mortgage loans is flexible- interest mortgage loans. Consequently, your mortgage loan s term may go up or down but the monthly mortgage payment will remain same. Mortgage loan application is filled in after deciding the mortgage loan plan.

Mortgage Loan Application Process. This application for mortgage loans has columns related to your personal details, credit history and, income details the details of the property that you propose to buy. On receiving the mortgage loan application, a mortgage loan advisor will contact you for verification of the details. You may be asked to submit documents as proof of information you provided along with your mortgage loan application form. After verifying your details and your income source, a surveyor will survey the property and evaluate it. Things To Remember Before Selecting Mortgage Loans.

On successful verification, you will be granted the mortgage loan amount to purchase your home. Your home mortgage loans will be amortized in regular monthly instalments. The choice of mortgage loan term depends on your repaying capacity. The most popular term for home mortgage loans is 30 years. A long- term mortgage loan plan has low monthly repayments. A short- term mortgage loan such as 10 or 15 years has high monthly payment. However, you end up paying more interest on your loan.

However, the total interest that you pay on that mortgage loan is lesser. We suggest you to choose a term for mortgage loans that has comfortable payment plan to let you own the house and still have sufficient funds to enjoy your life. Before you apply for a home mortgage loan, calculate your current and future income and then decide the period for which you need the mortgage loans.

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This Is Bad For All Good Mortgage Professionals - Diana Hankey's Finance and Mortgages blog:

No Closing Cost and Flat Fee mortgage advertising in a word is a rip- off. All state mortgage regulators should immediately adopted the same restriction if they truely want to protect mortgage consumers.

You Also Need To Explain Why You Want The Fast Remortgage - Kristy Wallin about Finance and Mortgages:

Generally the issue of a fast remortgage comes into play when youve missed mortgage payments and perhaps are threatened with foreclosure. The number one place to start your hunt for a fast remortgage is the Internet, where you will find several firms who can not only offer a remortgage fast, but directories who can let you do some comparison shopping for the best deal in a fast remortgage.

Others Require No Down Payments At All - Finance and Mortgages:

The home buying process can be very confusting. Myth# 1: You can t use a gift as a down payment.

An Interest- Only Mortgage Can Be A Game Of Chance

Category: Finance, Mortgages.

The concept of interest- only mortgages has emerged not so long a go, but it is becoming increasingly popular as a method of financing homes.

Thus, the interest may be considered as the price of taking out a loan. When you take out a mortgage, your payment includes two parts: interest and principal, the former being the actual cost of your house and the latter being the extra amount you pay on top of that cost in order to take out a loan and is based on the interest rate your lender imposes. A mortgage is called" interest- only" if the scheduled monthly mortgage payment- the payment the borrower is required to make- consists of interest only. The option to pay only interest is usually provided at the beginning of the repayment period and lasts for a specified period, which is usually 5 to 10 years. The concept is that you will pay the interest and the principal on the basis of a special repayment schedule, in which at the beginning of the repayment period most of your payment will be interest and towards the end of it most of your payment will be principal. However, even during this period a borrower, if he wants to, has a right to pay more than interest. The point in such scheme is that for the first several years your monthly mortgage payment will be much less then it would be with a usual mortgage.

Once the interest- only period is over, the mortgage will be re- amortized to include the principal. For example, if a 30- year loan of$ 100, 000 at 25% is interest- only, the monthly payment will be$ 5283, while a borrower with the same mortgage but without an interest- only option would have to pay$ 617But once your interest- only period is over, your monthly mortgage payment will be higher for the remainder of your repayment period. This is also a good option for people who are short on money at the moment, but expect to get more money in the near future via a raise or investments. This option may be good for people with fluctuating incomes, as when their finances are tight, they can make interest- only payments, and when they are flush, they can make a substantial principal payment. And now for the drawbacks. As for the people with fluctuating incomes, they should ask themselves, whether they are disciplined enough to make principal payments when they are not obliged to do so.

An interest- only mortgage can be a game of chance. As for those short on money at the moment, they should consider the risk that the expected income raise won t materialize. The decision on taking an interest- only mortgage basically comes down to whether you need to save some money at the beginning of your repayment period and whether you are ready to deal with the possible consequences described above. In both cases you may end up being unable to pay high monthly mortgage payments after the interest- only period is over. So think twice!

What Is An FHA Streamline Loan

Category: Finance, Mortgages.

If you need a quick and straightforward way to refinance your exciting FHA loan, you might want to consider applying for an FHA streamline Loan. What Is an FHA Streamline Loan?

Here, you will find basic FHA Streamline Loan information and information regarding how to submit an FHA Streamline Loan application. The FHA Streamline Loan is used for refinancing a home. The term" streamline" simply refers to the kind of refinancing plan you are using. The streamline loan was created by the Federal Housing Administration to provide customers with an easy. With an FHA Streamline Loan, information requirements are simplified which results in reduced paperwork, and documentation, underwriting. Information on qualifications and restrictions are included below.

The trade off is higher restrictions on an FHA streamline refinance, however if your purpose is mainly to reduce your payment or change terms, you should definitely think about an FHA Streamline Loan. You can talk to an FHA lender for more specific FHA Streamline Loan application information that will speak specifically to your situation. With a successful FHA Streamline Loan application, your monthly costs and/ or overall mortgage costs over the life of the loan will reduce, but a Streamline FHA loan is not cost free- closing costs either need to be: - Paid out- of- pocket- Included in the loan amount. - Exchanged for a higher interest rate( yet one that is still lower. than the current rate) Depending on the details of your situation and your FHA Streamline Loan application, you may be able to obtain a streamline refinance without paying any out- of- pocket fees, though. Will My Costs be Reduced with a FHA Streamline Loan? Who Qualified for an FHA Streamline Loan? Additionally, an FHA Streamline Loan may have other restrictions. Successful FHA Streamline Loan application requires: - The mortgage to be currently insured by the FHA. - The mortgage to be current- not in default, no late payments. - The refinanced loan to result in lower monthly payments( principal. and interest) for the borrower. - Subject loan to be more than 6 months old.

For example, cash- out is not an option and there are limits on the term lengths relative to the current situation. For clarification around your specific situation, you should work with a qualified FHA lender to get. specific FHA Streamline Loan information. Essentially, the new arrangement cannot significantly increase the life of the loan for loans that have been paid down a whole lot, and a 15 year mortgage cannot be changed to a 30 year term. How Do I Apply for an FHA Streamline Loan? If you feel that an FHA Streamline Loan is right for you, you should contact an FHA lender to discuss terms and rates. To have your FHA Streamline Loan application processed, you will need assistance from a competent FHA lender.

You will have a short FHA Streamline Loan Application to fill out, and the lender will give you more FHA Streamline Loan information regarding the process, and what to, your options do to move forward. If you have held your current loan for a reasonable amount of time, improved your credit standing, or increased equity in your home, it is time to contact your FHA lender for more FHA Streamline Loan information to learn how you may benefit from an FHA Streamline Loan application. The focus of the FHA Streamline Loan Application is to make your home s mortgage more affordable and more manageable for you. This article is provided by Access National Mortgage, based in Denver Colorado. Access National Mortgage provides progressive and superior financial solutions like a New Mexico FHA Loan Application, a Wyoming FHA Mortgage Calculator, information about California, debt consolidation loans FHA refinance benefits and whole host of other mortgage products all across the United States.

People Wonder About The Conditions That Are Likely To Be Related To This Type Of Loan

Category: Finance, Mortgages.

People wonder about the conditions that are likely to be related to this type of loan.

You have to pay attention to the fact that all the lenders are likely to have different rules when it comes to an Idaho Home Loan. The Idaho Mortgage Broker is likely to fill in all the information that you can actually need in order to find out whether you are qualified for this type of loan or not. They use these rules in order to determine whether you are a prospective borrower who will manage to repay the entire loan. All their characteristics will be taken into account, especially those who belong to the borrowers who have defaulted when it came to their loan payments. All these special rules are likely to be based on different repayment histories that belong to millions of borrowers. In order for a broker to streamline all this process that involves decision making, this special industry has developed different systems that are likely to scan the entire credit history when it comes to the borrower s credits.

Such type of scanning can actually give the Idaho Mortgage Broker the ability in order to give the future borrower the rapid credit decision. The score that is achieved through this type of process is likely to be regarded as a predictive source when it comes to determining the borrower s ability and even willingness when it comes to repaying his loans. This rapid process can take place thanks to the fact that the broker can actually use a sort of automated underwriting software that is currently available. If an individual has had credit problems in his past, he still can get an Idaho Home Loan because many lenders are likely to be highly specialized in financing the people who have experienced this type of credit difficulty. But one should also know the fact that only few lenders are likely to base all their decisions on this type of scanning. The mortgage insurance should also be taken into account and this insurance is likely to insure the lender when it comes to possible losses that are likely to be incurred if the borrower does not pay his debt and his loaning is to default.

These loans are quite special ones where the individual s down payment can actually be less than 20% . Actually, this type of insurance allows every lender in order to make loans. This type of insurance is patterned after the national programs that are mainly based on the fact that the American federal government is likely to guarantee all the insured lenders against different losses of default for different loans or properties. This term is also used for different types of insurance policies, namely the life ones which are used in order to pay off the entire balance of the mortgage in case that the borrower dies. When it comes to this type of loan, the borrower is likely to put down very little, namely as 3% when it comes to the entire purchase price. This problem can actually become a quite confusing one but every individual should make the difference between the mortgage insurance and the one that regards his own home, namely the house owner s insurance or the hazard insurance that is the traditional one. This is used in order to protect every borrower/ homeowner against weather, fire and property loss.

Who Can You Trust With Your Home Loan

Category: Finance, Mortgages.

Who can you trust with your home loan? So much has happened to home owners in the past two years this may be a good time for some strategic reflection.

When you consider the financial and social impact of purchasing a home, that's a great question. The reports about nationwide foreclosure are just astounding. Bankruptcies are now being pursued at the prime lender level. According to RealtyTrac. com, foreclosure activity is up over 55% in the first half of 2007! According to the Inman News service, American Home Mortgage Investment Corporation, a publicly traded real estate investment trust, and the nation's 10th- biggest residential mortgage lender, has filed for Chapter 11 bankruptcy protection. More financial dominoes are poised to fall as the one trillion dollars in Adjustable Rate Mortgage's( ARMs) are set to adjust in each of the next two years. Estimates suggest more than sixty subprime lenders have either sought bankruptcy protection or suspended lending operations.

What we are witnessing is the" cause and effect" of selfishness and greed in the mortgage lending community. For many lenders the desire for commissions, or profits, fees, whichever is most appropriate, simply overtook their better judgment. Instead of following sound business practices that protect the borrower and the lender with appropriate underwriting, the desire for more profits has thrown things out of balance. Their actions have created a" crisis of conscience" in the lending community. The creation of products like" Stated income loans" , "Adjustable Rate Mortgages" , "Interest Only Loans" , and" Negative Amortizing Loans" demonstrate a certain degree of creativity. Think about it.

However, in the hands of financially inexperienced borrowers, the improper use of these tools has resulted in financial disaster for too many home owners. To make matters worse, many of the loan contracts contained pre- payment penalties. As a matter of fact, it became too common for many lenders to actually encourage borrowers to apply for home loans they had very little chance of ever repaying. These penalties would have to be paid even if the borrower wanted to get out of the contract and into something more suitable. Since the loans were created and then sold to Wall Street as mortgage backed securities, the rest of the dominoes have not yet fallen. This is a major part of the" crisis of conscience" I refer to. You see these securities are part of pension funds, mutual fund families, hedge funds, Real Estate Investment Trusts( REITs) , and similar investments.

For many investors the results will be not only disappointing, but devastating. The results of these activities become real once the write downs and write offs have been completed. Here's another hit by the sub- prime market's collapse. The investment firm's High- Grade Structured Credit Strategies Enhanced Leverage Fund, as of April 30th, was down a whopping 23% for the year! Investors in a 10- month- old Bear Stearns( BSC) hedge fund are learning the hard way about the danger of investing in risky bonds with borrowed money. This is a preview of things to come.

Let's not forget about the conscience of the borrowers. Based on what has just happened, is it just me or is there something really wrong with the name of that fund? They are not without blame. Better buying decisions must be made that are based on deductive reasoning as well as emotion. A home loan for many people is the largest investment they will ever make. Professional help with contract reviews would also be very helpful.

He was a Vietnam war veteran. My barber gets credit for sharing a very simple but potent example of what should happen between a financial counselor and a borrower. After the war he decided to take advantage of the VA Bill that allowed him to get a 100% home loan in return for his service to this country. Just use your imagination to get an idea about what a dream home looks like. He and his wife finally found what they were sure was to be their" dream home" . When they met with the VA counselor to discuss buying this home, things became much more realistic.

Consequently it made a lot more sense to find a home that could be purchased with his income, not their combined incomes. For example, my barber was advised that only he was a war veteran, so only he was eligible for the special home loan funding. Further, when he reviewed the financial data the counselor asked if the couple intended to have any food in the house. Of course you can see how this was developing. In addition, if there was to be food, how would it be prepared? Once you add in the other utilities and the taxes and insurance, what you thought was to be your mortgage payment falls way short of your actual mortgage expense. In this land of opportunity there should also be a comprehensive investment plan.

As a home owner you should also put some money away for emergencies and the so- called" rainy day" . This counselor did exactly what needed to be done to prevent the very problems that are so prevalent today. Just do the right thing for the borrower and the lender when creating a home loan. His actions demonstrated the best way to overcome a" crisis of conscience" . In a win- win situation, there are no losers. Copyright 2007/ TDO Properties, LLC/ All Rights Reserved

This Is Why Research Is So Important In Deciding When To Buy A Home

Category: Finance, Mortgages.

Striking while the housing market is hot is like a delicate dance for the new homeowner.

But what can you do? From one day to the next, it seems like the housing market is changing on you, making what was once a great buy now impossible for your budget. In truth, there is little you can do in order to guess when the best time to buy would be, but there are some steps that you can take in order to make things a bit easier on you and on your home owning plans. How to Research the Ups and the Downs. You just don' t have to wait around forever. What you do need to do is start looking at the housing market to see what's happening in your desired locations.

Even over just six months of following these trends, you should be able to see what is happening in your local markets. Start getting a certain housing classified ad on a regular basis to see what is available and for what prices. It's also a good idea to start reading the business section in the town where you wish to move to see if the economy is growing, or having troubles, at a standstill. You might also want to research the housing market by talking to a realtor about what you' re looking at in terms of the current housing market. This is usually indicative of the overall housing market as well. The more you develop this relationship, the more likely you are to get good advice. Another good place to look at the trends in housing prices is to look at the value of your own home in comparison to others.

Of course, when you do finally decide to buy, you will want to use this realtor to' pay' them back for all the good advice. Since you' ve owned it, the value has probably changed- so look to see if its was for the better or for the worse. Right now, the housing market is slumping in many areas of the United States. What the Current Trends Are. Places like California, are experiencing a, for example surplus in housing that buyers just aren' t picking up. Other markets have lower housing prices, the home values, however don' t seem to be on the upswing, causing many prospective buyers to wonder if they are going to see any return on their investment at all.

The prices on these homes in many areas are decreasing due to foreclosures and high interest rates. This is why research is so important in deciding when to buy a home. Are You Ready to Buy? Even if the prices are good, there may be a reason for that- that the market isn' t making them worth anything more than the bare minimum. Of course, another good question to ask yourself when you are considering buying a home is whether or not you' re ready to take such a huge risk in terms of this investment. In addition, if you' re not ready to make your mortgage payment each and every month, you might not be the best candidate for a home at this time- regardless of the trends in home buying. Because you never know if the value is going to go up or down, you may not make anything for those high monthly mortgage payments, which can cause this to be more of a disaster than an investment.

While it's true that there are a number of different ways to finance a new home, you might want to make sure that you feel like you can be responsible enough to handle the rigors of owning your own home, and making sure, maintaining it to keep its value high with renovations and additions. The truth is that there is probably never a good time to buy a home unless you already have the money in hand and are ready to go. Is There Ever a Good Time? But with newer financing options to handle even the traditional closing costs for the home, more and more people are finally beginning to get out of their rental situations and into a brand new home. If you aren' t home a lot or you simply don' t like the idea of having a lot of loans to cover your costs, you might want to wait until you have saved up. But you might want to realize that the best time for you to own a home is generally when you do find that you have a lot of extra money a month that's going to waste. You don' t have to wait for the perfect time to buy a home, but you should make sure that you are looking into all of the trends and options you have before you finally commit to this investment.