Your Questions About Home Loan Interest Rates

Linda asks…

Can I pay off a home equity loan with my credit card ( lower interest rates!)+ how do I do it?

I have an offer from a credit card co with a low interest rate, 2% lower than my home equity loan interest. I would love to get rid of the horrible 8.75% home loan interest on $12,000. What to do?

John answers:

How long is that credit card rate good for? Bet it is less than a year. What are you going to do at the end of that time? Trouble ahead!!!!!!!!!!

Why don’t you look for a better home equity loan rate? In fact, you may be able to get the current lender to lower the rate with no cost. Contact them, tell them you are going to refinance the loan but want to give them the opportunity to keep your business at a lower rate.

I’ve done this twice before so it can happen.

Daniel asks…

should i take a home loan now or wait for the interest rate to go down?

are home loan interest rates going to go up or down in the near future?

John answers:

Home rates are still at historic lows. Most Americans don’t realize that mortgages were over 10% for many years.

Here is what I would ask myself:

Do I owe less than 80% of my present value on the home? Home values are going to continue plummenting.

Do I work for someone else? If yes, what happens if you are laid off? You won’t be able to qualify for a loan in the future.

How high is my rate now? Can I afford to add $3000-$5000 to my loan to cover the fees?

Is my present loan adjustable?

There are so many variables that no one can give you a real answer based on the facts in your question.

And please avoid the loan via email people. Rip offs, scam artists and spammers.

David asks…

Are private housing finance companies supposed to reduce the home loan interest floating rates as per RBI.?

I have taken home loan last year on floating interest rate.This year RBI reduced the home loan interest rates and following which all nationalized banks have reduced the interests. however, i have been paying on the same lines as last year.My query is
1.Are private housing finance companies supposed to follow RBI on the interest rates?
2. If yes, how should i take this up with the finance company in context.
3.Is anything can be done by going thru RTI Act , getting the correct info from RBI and taking step for claiming the loss of money i have incurred all this time.
4.should i transfer the loan to a nationalized bank to some nationalized bank which i am thinking of seriously.

Please help.

John answers:

The multinational banks are just looters of Indian economy. They will not follow the guidelines of RBI and our system also will not bother to insist them to follow.

Just approach SBI or other nationalised banks to take over your loan. That will solve the problem. Fighting will fetch you mental agony.

James asks…

HELP! Home loan interest rates! Is my answer right? Please check it out. Thank you.?

If the interest rate on a home loan is 3.68%, and I bought a house worth $100,000 then the interest alone on it would be: 100,000 x 0.0368 = 3,680$. Is this equation right?

Also,
Now if the interest rate is 7.5% and if I bought a house worth $100,000, then the interest alone would be: 100,000 x 0.075 = 7500$. Is this also right?

John answers:

Loan amortization is the opposite of compound interest.Your monthly interest payment drops slightly each month, and the amount of principal paid increases slightly each month.
Your computation does not account for the decrease in principal, and corresponding decrease in interest paid each month.

Where P is the principal amount borrowed, A is the periodic payment, r is the periodic interest rate divided by 100 (annual interest rate also divided by 12 in case of monthly installments), and n is the total number of payments , the formula is:
P=A x 1-(1 divided by 1+R) divided by R.

So the actual answer is $3,648.82

The answer at 7.5% is $7,468.74

Michael asks…

What kind of home loan interest rate could I get with a bankruptcy on my record?

I have a chapter 7 bankruptcy on my record from 2003, but I have no debt and a credit score of about 700. And I have $20,000 for a down payment. If I got a home loan, would the bankruptcy make a huge difference in the interest rate? How big a difference?

John answers:

I had a bankruptcy back in 2001. My husband and I bought a house in 2004, and my credit score was about 700 as well. We had no problem getting the low interest rates that were available at the time. You have a fairly large down payment too, so depending on the cost of the house you want to buy, you should have no problems getting the lower rates. I think the standard rate right now is about 5.5-6.5%.

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