Homeowners Hit New Snag in Refinancing

In the latest sign of how the credit crunch is hurting even borrowers with good credit, some home-equity lenders are starting to slam the door on homeowners who want to refinance their primary mortgages.

In some cases, homeowners who in the past would have been easily approved for a mortgage refinancing are finding that they can't get their home-equity lender to give the go-ahead, which is required to complete the transaction. Others are being told by their home-equity lender that they need to reduce the size of their loan or line of credit.

Approvals from home-equity lenders used to be routine, particularly if the borrower wasn't increasing the size of the mortgage as part of the transaction. But that's no longer always the case -- even in places where the housing market hasn't been hit by huge price declines.

Such approvals, known in the industry as "subordinations," mean that the home-equity lender agrees to stand in second place behind the new mortgage and allow the existing first mortgage to be replaced by another first mortgage.

Many mortgage re financings continue to go through without a hitch. But some homeowners who want to lower their rates or lock in a fixed-rate mortgage can't, even if refinancing would save them money and put them in a better position to repay their loans.

"For borrowers trying to improve their situation, this is a nightmare," says Richard Redmond, a mortgage broker in Larkspur, Calif. That's because getting a new home-equity loan to replace the old one in order to get a refinancing approved "may be impossible," he says, as many lenders have significantly tightened their standards as housing prices have fallen.

During the housing boom, many borrowers used home-equity loans as a way to buy a home with little or no money down without having to pay for private mortgage insurance. Others turned to these loans to pay off higher-cost debt or to finance renovations and even vacations. The dollar value of home-equity loans outstanding stood at $1.1 trillion in the third quarter of 2007, according to the Federal Reserve.

The higher hurdles for borrowers come at a time when home-equity lenders are reeling from rising losses in the face of higher delinquencies and falling home prices. More than 5% of home-equity loans were at least 30 days past due in January, according to Equifax and Moody's Economy.com, up from 4.4% in December and 3.4% a year earlier. Delinquencies on home-equity lines of credit have also risen, to 2.2% in January, from 1.9% in December and just 1.2% a year earlier.

Lenders extended an estimated $456 billion of new home-equity loans and lines of credit in 2007, down from a peak of $504 billion in 2006, according to SMR Research in Hackettstown, N.J.

In an effort to stem future losses, home-equity lenders have tightened their standards by, for example, significantly cutting back on how much of a property's value borrowers can finance. They are also going back to some borrowers and freezing their home-equity lines of credit or reducing the maximum amount they can borrow. Charlotte, N.C.-based Bank of America Corp., for instance, began notifying some of its customers last month that it was blocking access to their home-equity lines because of falling home prices.

Cleveland-based lender National City Corp. last month stopped approving refinancing requests from borrowers who received a home-equity loan from the lender through a mortgage broker. Kristen Baird Adams, a National City spokeswoman, says the move was "consistent" with the company's decision last summer to stop making loans through mortgage brokers.

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10 Tips for Good Credit

After you've decided on the type of credit you need and how much you can afford, follow these steps for maintaining a good credit history.

1. Shop around for the best credit terms.
2. Understand the terms of the agreement before you accept a loan or credit card.
3. Save money each payday for emergencies.
4. Set a monthly limit for charges and stick to it.
5. Shop as carefully with credit as you do with cash.
6. Don't take on monthly credit payments unless you're certain you can meet them.
7. Pay bills promptly and in full to keep finance charges low.
8. If you charge day-to-day expenses, pay them in full each month.
9. Keep credit card information (including the phone number of the issuer) in a safe place in case your cards are lost or stolen.
10. Keep copies of your sales slips and compare the charges when bills arrive. If there's a mistake, call your issuer right away.

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Let a specialist shop around for used car loans on your behalf

You could have decided to buy a used car for many reasons but if the main reason is to save money then you are going to want to get the best deal on used car loans. When it comes to finding the best deal possible with the lowest rates of interest then you should let a specialist car loan broker shop around on your behalf.

The beauty of going with a specialist website is that they have the experience and so are able to search the car finance marketplace for the best deal possible. Used car loans do have to be given some serious thought especially when it comes to deciding how long to take it over. All cars depreciate so taking a used car loan over many years might not be advisable because the car could be worth very little by the time the loan is paid off.

Of course you will want to save money on the monthly repayments but then along with car depreciation is the fact that more interest will be added onto the total cost of the loan. Paying more over a shorter period of time will keep the cost down but of course you have to be sure you can afford to keep up the repayments.

If buying your used car through a dealer then they will probably offer finance in the showroom. Sometimes they can make it sound as though you would be getting the best deal possible but of course the interest rates will almost certainly be a lot higher than had you gone to a specialist car loan broker and let them search around on your behalf to find the cheapest deals so you can then look through them and decide which is the most suitable.

The interest rate will be determined largely on your circumstances. The biggest factor is your credit rating as with any type of loan and used car loans are no different. If you have an excellent credit rating then you are able to get the cheapest rates but if your rating is low then you would expect to pay a higher rate of interest even if you are able to get a loan. In some cases you might have to go for a bad credit rating loan but again a specialist website will be able to get the best rates possible for your circumstances.

Once you are presented with the cheapest used car loans make sure to take your time when looking them over to decide which is most suitable. While you are comparing the interest rates and the total cost of the loan you also have to compare the key facts and small print of the loan. The key facts will layout how much in total you will be paying including the interest and for how long and the small print is where you can find the any extra costs such as early repayment fees which can boost up the cost of the borrowing.

Everything about Secured Loan

Secured loans are specialist loans that are available only to homeowners, and this is because these loans are secured against the home. For many people secured loans offer an affordable and effective way to borrow money and raise finance, allowing them to unlock the equity in their homes without having to actually sell up and move on.

With secured loans it is extremely important that carefully consider whether this is the right loan for you, as failure to keep up with repayments could result in you losing your home. It is vital that you make sure you can comfortably afford the repayments, bearing in mind that interest rate hikes can affect the variable rate on these loans and therefore can affect your monthly repayments.

There are both pros and cons to taking out secured loans, and homeowners that are considering this type of loan should weigh up both the pros and cons in order to determine whether these loans are right for them.

There are a number of providers of secured loans for consumers to choose from, and it is also worth remembering that the interest rates, repayment periods, and terms and conditions can vary from one lender to another, and therefore if you are planning to take out a secured loan you should make sure that you compare quotes and loans from a number of lenders in order to find the right one for your needs.

Consumers that take out secured loans are able to enjoy increased borrowing power compared to unsecured finance, which tends to allow loans of up to £25,000.

You can borrow far more than this with most secured loans, although the amount that you will ultimately be eligible to borrow will depend on your personal circumstances, your credit rating, your income, and the equity in your home.

You can work out the level of equity in your home by deducting any outstanding mortgage or other loans secured on the home from the market value of the property.

The repayment periods offered on secured loans are also way longer than those offered on unsecured loans, which typically offer repayment periods of up to seven years.

The longer repayment periods offered with secured loans means that you can spread your loan over a longer period, and this in turn means that you can reduce the amount that you have to repay each month.

The main disadvantages with this are that you will be in debt for a long time if your take your loan over a longer period, and you will pay more in interest overall over the term of the loan.

Of course, the other main disadvantage with secured loans is that the loan is secured against the home, and therefore if you stop making repayments on your loan for whatever reason you may find that your home is at risk.

Before committing to a secured loan you should carefully look at your options and decide whether this is the best option for you. Your decision should be based on the amount that you wish to borrow, the amount that your can afford to repay each month, and even your credit rating.

Often those with poor credit that cannot get unsecured finance find that they are eligible to take out secured loans providing they are homeowners.

Some secured loans have terms and conditions that result in anyone that tries to pay off the loan early being financially penalized.

This is why you should always check the small print on secured loans before you sign up, as this will ensure that you don’t get any nasty surprises a few years down the line.