When it comes to credit and loans, there are so many terms and such a wide variety of options that might leave you dazed and confused. You may ask what the difference is between a second mortgage and refinancing in Oklahoma City on an existing mortgage.

Basically a second mortgage is taking out a new loan on your Oklahoma City house while re-financing is just reassigning the terms of your current mortgage for any number of reasons. With a second mortgage, you will have to make two separate mortgage payments every month. With a re-financed mortgage, you make one payment every month on the current mortgage, but under the revised terms after your mortgage has been re-financed.

A second mortgage can also be termed as a home equity loan and normally has a higher interest rate than the initial mortgage on your home. There are also different types of home equity loans. A home equity loan is a one-time loan that is taken out on your Oklahoma City house while a home equity line of credit is like taking out a credit card with your home as security. The money is put into an account as long as there are still funds in it. The interest rate on your home equity line of credit can fluctuate from month to month.

Refinancing is an option you can choose when there are newer and lower rates of interest that you can take advantage of. You can then pay a smaller amount monthly. You can also roll all your debts into one with a refinanced loan and pay them out over a longer period of time. If you are under great financial pressure you can alter your Oklahoma City mortgage payments so that there are smaller monthly payments made over a longer period.

Whenever you opt for a second mortgage or refinancing on your current mortgage, consider how the new rates will affect you over time. It is risky to your Oklahoma City home if you are not 100% sure that you can meet all of the monthly payments. If you cannot meet these payments, you may end up losing your property.

There is a direct link between your credit card and your Oklahoma City mortgage and it does not have to do with using your credit card with a 30% rate of interest to purchase your new home. The link between your card and your mortgage lies in your credit rating. If your credit is out of whack you are not going to be able to qualify for a mortgage. If you want to buy a house and get approved for a home loan you need to make sure that your credit card bill payments reflect responsible credit ownership so that the lenders consider you a good risk.

Credit card problems

If you have any credit card problems at all these will be reported to the credit agencies. Just by paying one payment late on your credit card bill reflects badly on your credit history. Any time you make a late payment it shows up as a black mark on your credit file and too many of these marks will influence your ability to get an Oklahoma City mortgage.

Always make your credit card payments on time. By doing so, lenders will look at you as a responsible cardholder that knows how to handle credit. When you apply for a mortgage, your credit file will be pulled and these things will be assessed. Having a good credit history is one of the most essential components of being approved for a mortgage.

Purchasing with your credit card

Another thing that will be accessed when you apply for a mortgage is how much credit you have available. If you are thinking about purchasing a large screen TV with all the bells and whistles and using up the credit left on your card, it is best to do so after you have purchased your house. The lender wants to see that you have available credit.

Applying for new cards

Don’t apply for any new credit cards when you want to get an Oklahoma City mortgage. You need to assume the position of not needing any extra credit at the time. Applying for too much credit at the same time will appear desperate to many lenders.

When you are applying for an Oklahoma City mortgage it is best to lay low with your credit and don’t do anything that will possibly raise any red flags. Make sure that you make all of your payments on time on your credit card, don’t apply for any extra credit and don’t make any big purchases. These steps will help you when you are trying to get approved for a new mortgage. yment for expenses related to moving to the new property, appliances etc.

If you have a Oklahoma City home loan you will be paying interest monthly on the whole balance that is still owing. At the beginning almost all of your payment will be put towards paying off the interest. As the years go by, however, less money is put towards the interest and more gets put towards the principal.

If you have a 30 year mortgage to pay off, for example, at a 7% rate, you will still be paying more towards the interest than the principal, even when you are halfway through the payments. When you are fifteen years into the mortgage only about 75% of your payment will apply to the interest. At this point only 1/4 of your payment is building up the equity in your Oklahoma City home.

You will not see more than half of your payments being put towards the principal until you are in your 22nd year. That is when the equity continues to build at a rapid pace and everything gains momentum.

With this 30 year loan, you do not own half of the home until the 22nd year or so. There are a couple of ways to reduce this time, however, if you can afford them.

Extra payments

As long as there is no clause on your mortgage for prepayment penalties, you can make extra payments when you have extra funds at hand. This will speed up the process so that your payments go towards building up equity in your home faster.

15 year mortgage

You will save an incredible amount of money on your Oklahoma City home loan by taking out a fifteen year loan at the beginning. If there is any way to afford it, this is your best option in terms of long-term savings.

As an example, if you have a Oklahoma City home loan at 7% for $150,000, a 15 year mortgage will save you about $117,000 dollars over a 30 year loan. This is a staggering amount of savings and makes a 15 year loan well worth your consideration when you are first looking for a mortgage.

You will have to take another look at your budget to see where you stand before making a final decision about your mortgage. If you can’t afford a 15 year Oklahoma City home loan, you’ll still have the option of making extra repayments when possible with a 30 year term.

The following was sent to me by Brandon Fischer of VA Benefit Blog .com

Choosing the Right Home Loan Program

The average price of a home in Oklahoma ranges from $150,000 to $200,000 and varies in type from highly urban to rural, and for those seeking to purchase a home in Oklahoma there are a variety of government lending options available. The most popular government lending programs include the FHA, VA, and USDA loan programs and all three offer flexible loan terms and eligibility requirements with each program offering their own unique set of advantages and disadvantages.

The VA Home Loan

The VA home loan has helped over 18 million active duty and veteran service members achieve homeownership. Because the VA home loan program is partially backed by the Department of Veteran Affairs, the VA home loan program is able to offer flexible and competitive loan terms to eligible veterans and active duty service members regardless of credit history. Other benefits of the VA loan program include:

• No down payment required
• Mortgage insurance not required
• flexible debt-to-income ratios

In order to apply for a VA home loan, potential borrowers should meet one of the following initial requirements:

• Have served 181 days on active duty or 3 months during war time
• Or have served 6 years in the National Guard or Reserves
• Or be the spouse of a service member killed in action
• Have a Certificate of Eligibility

The FHA Loan

For first time homebuyers in Oklahoma, the FHA home loan program is available, and additionally contains multiple financing options for borrowers in different phases of the homeownership process. Borrowers can buy their first home, renovate a fixer-upper, or update their current home to meet energy efficient standards with an FHA home loan, and can even purchase manufactured housing or a mobile home. In addition to multiple financing options, FHA loans offer benefits such as:

• 3.5% down payment
• low closing costs
• down payments can be made in the form of a gift

To be eligible for an FHA loan, potential borrowers should meet most of the following:

• two years of consistent employment and steady or increasing income
• a minimum credit score of 620
• a clean credit history after filing for foreclosure or bankruptcy

The USDA Loan

For homebuyers more interested in the rural real estate areas of Oklahoma, the USDA loan home loan  is generally the most beneficial. The USDA’s Department of Rural Development offers two types of home loans to potential borrowers:  a Guaranteed Housing Loan and the Direct Housing loan for lower income households, and both are designed to optimize rural living. USDA home loan benefits include:

• Zero down payment required
• No loan limit
• No mortgage insurance required

In order to be considered eligible for a USDA home loan, potential borrowers should meet the following requirements:

• have a consistent income
• be a U.S citizen
• have an income that is within the median household income for the area

The VA, FHA, and USDA home loan programs do have flexible eligibility requirements, however most approved lenders will usually require a credit score of at least 620 to secure financing. Those with an imperfect credit history who are interested in a home loan are still encouraged to apply as each program has approved even those with a history of bankruptcy and foreclosure in the past.

Well Intentioned new HUD rules went in to effect January 1, 2010. The intention was to provide a new standardized GFE that would empower the buyer and make it easier for the buyer to shop for a loan.

To some extent I think that they have accomplished their goal with one huge problem.

The problem now is that with the new rules the lenders have become much less free with the GFE.

We are now getting estimates with all kinds of names except for GFE.

I will write more on this as the industry sorts it out. Until then you will find below some info.

Sample of the new GFE

http://www.hud.gov/content/releases/goodfaithestimate.pdf

Explanation of the new GFE

http://www.hud.gov/offices/hsg/ramh/res/resparulefaqs.pdf

To Qualify you:

Must be in a binding contract to purchase a house prior to April 30, 2010 and settle on the purchase prior to June 30, 2010.

The Maximum Amount of the Credit is:

$8,000.00 for first time home buyers.

$6,500.00 for the “long time resident” credit. (To qualify this way, a buyer must have owned and used the same home as a principal or primary residence for at least five consecutive years of the eight-year period ending on the date of purchase of a new home as a primary residence)

You may claim an eligible 2010 credit on your 2009 or 2010 taxes.

To qualify for the full tax credit your income(MAGI) must be less than:

$125,000.00 if you are filing single.

$225,000.00 if you are filing jointly.

You cannot get the credit if:

You are a dependent.

You are buying a home  with a purchase price of more than $800,000.00.

You are under the age of 18 on the date of the purchase.

You are buying a home that is not going to be your primary residence.

Some Useful Resources:

http://www.irs.gov/newsroom/article/0,,id=215791,00.html

http://www.realtor.org/home_buyers_and_sellers/2009_first_time_home_buyer_tax_credit

http://www.nahb.org/generic.aspx?genericContentID=128298

http://www.federalhousingtaxcredit.com/

New Down Payment Assistance money should be available at the end of this month.  It seems that there are two components of the new issue.  One will be the normal issue which gives first time home buyers the down payment needed with an FHA Loan.  The other will be for first time home buyers too, but will be an advance of the Tax Credit.

Much like the Cash for Clunkers program this money will go fast.  Once the money is gone this program will no longer be available until the next issue which will probably be next year.  First time home buyers that qualify may receive both the Down Payment Assistance and the $8,000.00 Tax Credit. 

If you are looking for the deal of the century then the time to buy would be between 8/25/2009 and the time the bond money runs out which will be about 30 days later(based on the time it took the last issue to be used up).  In order to reserve this money you must be in a contract to purchase on a specific property, which means if you are looking to take advantage of the double benefit then you should contact a Realtor and begin looking at houses immediately.

According to OHFA:

Projected opening of 08/25/09 at 10:00 am.  $32.8 million bond
       issue with 6.10% interest rate. 1st Gold and OHFA Shield/4Teachers funds with
       3.5% DPA or Oklahoma Tax Advance Credit funds will be available.

That is the name that many in the industry have given to the new Home Valuation Code of Conduct (HVCC) that went into effect May 1, 2009.  The intention of HVCC  was to increase the independence of the appraisal process.  It was meant to free appraisers from pressures to increase appraisals at the behest of Mortgage Brokers and Real Estate Agents.

The code of conduct is the result of a legal settlement with the attorney general of New York. It is applied nationwide. And it should be considered a case study in the value of the legislative process: If the HVCC had been a bill introduced into Congress, it would have never passed without having undergone drastic changes. But it wasn’t a bill and it isn’t a law; it’s a legal settlement by one state’s attorney general, imposed on all 50 states.

As often is the case with government intervention we get not the intended goal but instead a lot of messy side effects.  So far this what I have observed as unintended effects:

1)  Appraisals now take much longer resulting in the need for longer rate locks which results in the consumer ultimately paying a higher rates.

2) Out of fear of compliance many banks have outsourced hiring appraisers to third party companies who charge more and pay appraisers less.  So the amount spent by the consumer has increased while the amount of money given to the appraiser is reduced while companies who only job is government compliance has increased.  Also, the third party companies looking to make the most profit often hire appraisers that are unfamiliar with the area of the property resulting in bad appraisals.

These are two of the effects noticed so far.  As the industry adjusts to HVCC I will keep you updated.