Your Questions About Home Loan Rates

Chris asks…

Home loans?????

Does anyone know a good place to get a home loan for a first time buyer with not so good credit?

John answers:

Hello, I recommend you first obtain a copy of your credit report to see what negative things you can possibly clear up before actually applying for a home loan. Raising your credit score will give you more mortgage options and allow you to get the best rates and payments available. I’ve included a link below to a site where you can view your credit report for free once every 12 months.

Once you’ve made a effort at clearing up the negatives on your report, I recommend you ask someone you trust such as your family and friends who may have purchased a home for advice on their mortgage purchasing experiences.

Good luck. I’ve also included a link to some great information for First-Time Home buyers below.

Mary asks…

Should I repay home loan or Invest ?

I have a Home Loan of 6.75 lac from HDFC term – 15 yrs( 10.25 % floating- ) , I am payin EMI ( 7,558) for the last 3.5 yrs, recently I got money from some source , now I can repay the loan , What should I do repay loan or invest that money .
One worry is my interest rates are floating , as we know , how these interest rates, are creeping nowdays Pls also suggest some suitable option , if so ?

John answers:

Floating home loan rates are increasing very fast due to RBI policy of containing inflation.First, forgetting the home loan repayment, finalise where you would invest the money and what will be the rate of return after tax.Suppose, you decide to put this money in PPF, the you get 8 % return after tax (no tax on PPF). Since your current rate on loan is 10.25 %, it is 2.25 % higher than your earning.

Second calculation required is for Outgo and Income(or Saving). Your Outgo is Rs 7558 x 12= 90696.
Suppose you are paying annual total interest to HDFC Rs 50000. This Rs 50000 will be reduced from your income u/s 24D. Thus your net Outgo is Rs 40696. But, if you are also earning rent income of ,say, Rs 5000 pm(Annualyy Rs 60000), then your net income is 60000-40696=19304.

Third factor to be considered is whether your home loan is fully insured, meaning that, god forbid, any thing happening, remaining EMIs are paid by the Insurer, and the house remains with the family.

Generally, in today’s situation, where no one has any control over Home Loan Providers, it is better to prepay.

Robert asks…

help home loans?

where can she get a 6000.00 unsecured loan to pay medical bills so that she can have her home loan that she was approved for. only if the medical bills are paid before closing on the house.

John answers:

6000? Just put it on a credit card.
It’s very easy to get a card with that credit limit.

WHAT THE ?! WHY DID I GET A THUMB DOWN ON THIS ANSWER?!

Credit cards are *MUCH* easier to get than a home equity loan. Many cards have very low one-time introductory rates that’s BETTER than a home equity line of credit, and that’s all you need to pay for your one-time medical expenses.

And she did say an UNSECURE LOAN! AN HELOC is a secured loan! You’re securing it with your house as a collateral! @#$!@$#%!!

Donna asks…

Home loan – Fixed or floating rate?

Hi,
I may be getting a home loan for 15-20 years; is it best to get a floating interest rate (currently about 10.5%) or a fixed rate which we will about 12-13%?

I don’t know how the interest rates are going to be and what’s best in the long run.

Thanks.
Hi all, thanks for the answers. I thought I had posted this on the India site of Yahoo. I’m talking about loan rates in India, and the 10.5% I mentioned is the normal floating rate in the market. Some are 10, some even 13%.
So it has nothing to do with credit (I don’t live there, so I don’t even have a credit history – don’t know if India has that system).

Still unsure whether I should go for fixed or floating – in India; anyone know about that market specifically?

Thanks!

John answers:

Present government is in the habit of increasing rate of interest every quarter. In about three years i will exceed fixed rate of Interest. So it is better to opt Fixed.

Paul asks…

Refinance FHA home loan?

I currently have a FHA home loan. 6.25 % back in 2006. I keep getting these things in the mail to refinance. Is it a good idea? The loan was for 123,888. My current house payment is about 850 a month. If I refinanced would it really bring it down that much? Thanks for the help.

John answers:

If you bought an FHA home back in 2006 (with the standard 3.5% or so down), you probably don’t have enough equity in the property to refinance it. In fact, the value of the property has probably gone down to the point where you owe a lot more on it than it would currently appraise for.

If for some reason the property value has not gone down and you can refinance, consider that they may be charging you points (loan origination and discount fees) to have the loan go through. In this case, it may take several years of the new lower payments to make up the amount of the loan fees. And, it would not make sense to refinance.

Another consideration is that it’s generally not worth refinancing if you’re only lowering your interest rate by a half point or less. Especially with such a small amount financed. For example, if you went from a 6.75% mortgage on $123,000 to 6.25%, that would only save you $40 a month.

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