Where Do Lenders Go for Funding
The question of where banks and other mortgage lending institutions get the funds they use to disburse to home and property buyers doesn’t occur to most of us. After all, why should we care where they go for their funding, as long as they have money available to loan to us? Let’s answer both those questions.
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What is Conveyancing?
Many people thing conveyancing is restricted to the legal transfer of property ownership from one party to another. However, it also involves attaching encumbrances to the property title. An encumbrance is basically an assignment of interest in the property to another party beyond the title holders. A mortgage is the most common, but there are others and they pose potential risks for home buyers.
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What are Comparison Rates?
In the long distant past some home buyers were shocked to learn the interest rate they were actually paying after the closing of their home was higher than the interest rate they were quoted. What happened?
Back then, lenders were allowed to hide a variety of obscure fees the borrower would be required to pay in the fine print of the mortgage note. Today, the law requires lenders to post a “Comparison Rate” alongside the stated interest rate for the loan. The comparison rate is closer to what you will actually pay. Here is an example of the fine print you’ll find on a typical Australian mortgage website which explains how the Comparison Rate is calculated and what it does and does not include:
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Using a Co-Borrower or Guarantor to Get a Mortgage
If you are looking to buy a home and your credit record is something less than the best and your job history is a bit blemished, you are going to pay more for a mortgage loan.
Low credit ratings and job instability are the two major reasons many Australians find themselves herded into “subprime” land, where you are seen as a higher risk borrower and consequently will pay a higher interest rate. If your financial condition is seriously insufficient, you may not qualify for a mortgage loan anywhere at any price.
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Tricky Games the Lenders Love to Play
Perhaps you’ve heard horror stories from friends and family members about the surprises they experienced during the home mortgage application and approval process. You should not be shocked to learn that not everyone in the mortgage game is totally ethical and there are a variety of dirty little tricks and games these people can play to separate you from more or your hard earned money. Here are some of the most common tricky games some lenders love to play:
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Tips for Speeding up Your home loan Application
There are many steps in the process of getting final approval of a mortgage loan; even if you’ve gone through a pre-approval process. Little things can go wrong at each step that slow the whole process down to a crawl. Speed can be crucial if your contract to purchase has an expiration date for final mortgage approval. Here are four areas where slip-ups often occur:
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Property as Security Interest in Australian Home Buying
If you already are familiar with some of the general principles and procedures of borrowing money to purchase a home or other property here in Australia, you know that the home or property itself is the lender’s major source of security. While the buyer’s name will be the only one recorded on the official title to the property, other legal documents will award the lender a security interest in the property.
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The Status of 100% (No Deposit) Loans
Once upon a time it was possible for some prospective buyers to get a home mortgage loan for the entire amount of the purchase price. No down payment deposit was required. To qualify for one you had to have a high income and a long and steady employment history. Typically interest rates for these loans were higher. Then along came the world-wide financial crisis in 2008 and everything changed.
Today it will be difficult, if not impossible, to find a 100% No deposit loan. Some lenders are offering 90% loans and others 95% loans. What happened?
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Mortgage Brokers vs Direct Lenders
As you probably know, mortgage Brokers represent a variety of different lending institutions while Direct Lenders represent only the products and services available from their own institution.
In theory, mortgage Brokers would seem to be a better place to begin your search for the best deal you can get on your mortgage since they have more offerings from which to choose.
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How Property Valuations are Determined
Before you can settle on the property you are about to buy, the lending institution must determine the value of the property.
Lenders will not accept property valuations provided by you, your real estate agent’s estimate, or your local council’s taxation notices.
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Lender mortgage Insurance (LMI)
One of the things lenders do when they consider granting a mortgage loan is assess their risk of non-payment. For riskier loans, they require the home buyer to pay for additional Lender mortgage Insurance (LMI). This insurance does nothing at all for the home buyer, except cost them more money! It is solely for the protection of the lender.
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Tips for Saving Money on Your Home Loan
For the vast majority of Australians the purchase of a home will leave them with the biggest debt they will incur in their entire lives. Not even a glamorous sports car will lead to paying off a home loan of several hundred thousand dollars.
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Online mortgage Sites - What you need to know
Today the Internet has made the process of searching for home mortgage loans much simpler. There are a multitude of sites you can visit from the comfort of your own home. However, greater access to information has also increased what can best be described as false advertising.
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Online Lenders - Advantages and Disadvantages
In theory, one would expect to find lower mortgage rates and fees from online mortgage lenders since they do not bear the overhead costs associated with a “brick and mortar” bank or lending institution.
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