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Is It Home Loan Refinance Time?

Many mortgage lenders have tightened their lending criteria in the light of mortgage payment defaulting and mounting foreclosures. Borrowers are finding it harder to get finance or to refinance home equity loans.

It's strange how the news wires run headlines about mortgage applications being up when house sales are dropping. In actual fact what is probably happening is that people are having difficulty getting a mortgage home loan and are reapplying to different mortgage brokers or even making a number of applications at the same time in the hope that one will be successful.

In some ways it's a good thing that it is harder to get a home mortgage loan because there is nothing worse than being locked into a home mortgage that you cannot easily afford to repay. Especially when the housing market is dropping and your equity in your home is going from just positive to extremely negative. A very worrying situation.

So always make sure that you have a decent deposit preferably 10% plus and can comfortably afford the repayments, even taking into account that interest rates are sure to rise. You must be able to withstand the ups and downs of the real estate market. However, luckily for all of us, the values ​​always go up over time.

If you are stuck with just a small amount for a down payment there is a strategy that is worth exploring. It is the concept of "rent to buy". This can work quite well on a hard real estate market where vendors are finding it hard to sell. If you are short on the deposit make an offer where you are able to rent the property for 6 months or more at a high rent with all of it going towards the deposit. This could be in lieu of the vendor negotiating on price. As an example the home is priced at $ 250,000. You pay rent at $ 1,500 per month, after 10 months you have $ 15,000 towards the deposit, plus, lets say, savings of a further $ 10,000. This now gives you a 10% deposit for your mortgage loan application. If you have a prior approval from your mortgage broker this can work well for all parties. Make sure that you have a legally enforceable undertaking on the finance before you go totally unconditional on your contract.

Just be prudent and make sure that the commitment to a home mortgage loan is a worry free exercise and the start of a profitable lifetime of property ownership.

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