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For most Canadians, buying a home is the largest financial decision they will make in their lifetime. Yet, consumers across the country are more likely to painstakingly review dozens of investment possibilities for their portfolios than to scrutinize their mortgage choices. The mortgage world – like the investment world – can sometimes be confusing. There is a vast array of choices – open, closed, fixed, floating, long or short amortization, prepayment options, portability… and of course, the rate itself.

Making the right mortgage decision can have a huge financial impact over the long term. Many Canadians have an investment advisor to help them sort through their choices. Now, Canadians are also beginning to turn to mortgage brokers to help them make better mortgage decisions. Canadians are just now catching up with their counterparts south of the border, where mortgage brokers already arrange approximately 70 per cent of mortgages for U.S. properties.

So what is a mortgage broker? The role of a mortgage broker is to understand your mortgage needs, seek out the best options for your situation, and guide you through the lending process. A mortgage broker does not work for any individual institution or lender, but is independent, and has up-to-the-minute loan rates for a wide array of banks and other lending institutions.

There was a time when the banks exercised the view that they “owned” their customers, and mortgage brokers were perceived only as a last resort for home buyers with poor credit history. But times have changed, and home buyers in every bracket are learning they can benefit from the professional advice of a mortgage broker.

A good investment advisor can make you thousands of dollars. But a good mortgage broker will SAVE you thousands of dollars. Whether you are buying a home or renewing a mortgage, consider making a mortgage broker part of your financial plan this year.

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Article by Mortgage Guru

Would you like to refinance your second mortgage? Refinancing a second mortgage should work to your advantage. For some homeowners, refinancing is a good idea and a good financial move, but for others that may not be the case. Here are some things you need to know in order to help you make your decision. Refinancing your second mortgage can be a good idea if the interest rates are better than what you currently have, otherwise you may end up paying a higher monthly payment in addition to the cost of refinancing. Below are a few advantages of refinancing your second mortgage:? To consolidate the first mortgage and the second mortgage into one mortgage loan and one monthly payment? To get rid of adjustable rates and opt for a fixed interest rate? To get a lower interest rate? To change terms and conditions to fit your current financial situation? To lower your monthly paymentsThe reasons for refinancing a second mortgage are no different than the reasons for refinancing a primary mortgage. When refinancing a second mortgage you can potentially lower monthly loan payments, get into a fixed rate loan from an adjustable rate loan, shorten the term of your loan, and even get cash back at the closing. In addition to these reasons, refinancing for a second mortgage also helps to combine your first and second mortgage into one loan, so that you will have only one payment to make. Refinancing for a second mortgage can also help to get rid of private mortgage insurance. It is most important to know that refinancing a second mortgage is essentially the same process as refinancing for your primary mortgage.While buying a house, it is very important to ensure that the loan taken by you is not too large for you to handle. Many people are losing their homes as a result of this mistake. With refinancing a mortgage you can pay off your original mortgage and sign a new loan with which you still pay most of the same costs as you paid for the original mortgage. Mortgage refinancing provides a credit resource that is very valuable and can give an optimal level of comfort. However, the size of your loan is a very crucial factor. One of the factors that determine your loan size for purchase or mortgage refinancing is as follows, both from lenders’ and consumers’ points of view: Most lenders look at debt-to-income ratio when the consumer has good credit and a good job history. This is called DR (debt ratio) by many mortgage refinancing brokers. This is further broken up into two categories front-end ratio and back-end ratio. The first category, front-end ratio, calculates your gross monthly income against your new house payment and this should be 28% or less. For example, if your gross income (before taxes and other withdrawals) is ,500 per month, you should be able to afford 28% or less of this figure which works out to 0. This is the figure which your lender will use as your front-end ratio.

There are various reasons why people are considering refinancing their mortgage. Some of them are thinking of cashing out some money by mortgage refinance to resolve their debt problem or to improve their credit ratings. Others may consider refinancing a mortgage because they can benefit from today’s lowest interest rate ever. Mortgage refinance rates depend upon various market factors as well as your personal factors as a borrower. But mortgage refinance rates mainly depend upon the interest accrued on the refinance loan. The mortgage refinance rate is expressed as the Annual Percentage Rate (APR). APR is the total amount of money repayable by the borrower to the lender on a loan, per annum. It will also depend on the kind of mortgage refinance loan you would choose. The different kind of mortgage refinance options available can be broadly classified on the basis of: 1. Fixed mortgage refinance rate: Various fixed rate refinance include 30 year fixed mortgage refinance, 20 year fixed mortgage refinance, 15 year fixed mortgage and 10 year mortgage refinance, etc. 2. Adjustable mortgage refinance rate: This category includes 1 year ARM (Adjustable Rate Mortgage), 3/1 ARM refinance, 3/1 interest only ARM refinance, 5/1 ARM refinance, 5/1 ARM interest only refinance, etc.

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After months of fine tuning and Capitol Hill bickering, financial reform is finally official. President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law Wednesday, kicking the surrounding media frenzy into an even higher gear.

Last week we shared some folks’ speculation as to how the then-pending bill might affect the mortgage analytics industry. With those prognoses now a bit more real, these week we’ve been paying attention to some more specific and tangible implications. Industry groups and banks, for example, are mailing the White House with their specific concerns about setting the right precedent right out of the gate in terms of lending regulations. And on the broader end of the spectrum, there are also those of the belief that no legislation can change Americans’ innate borrowing habits overnight.

An excerpt from the Wall Street Journal’s piece on the housing groups’ pleas:

The Mortgage Bankers Association submitted perhaps the most specific vision for a new housing finance structure. Under its model, privately-owned corporations would apply for government charters to guarantee mortgages and package them into securities. The timely payment of interest and principal on the securities would be guaranteed by the government.

The model eschews the implicit federal guarantee that many blame for allowing Fannie and Freddie to grow too large and reckless.

“In our proposal, the extent of federal backing would be greatly constrained, making explicit what is guaranteed and what is not, and establishing mechanisms to properly capitalize, price and supervise those activities,” MBA Executive Director Benjamin Hatfield wrote.

The comment letters highlight some crucial fault lines in the debate over the extent and structure of the government’s role in the housing market.

Bank of America argued that housing GSEs shouldn’t hold portfolios of mortgages or mortgage securities, for example. The community bankers group, however, said that holding loans on their balance sheets allowed Fannie and Freddie to serve smaller lenders that were selling small volumes of loans into the secondary market.

The question of ensuring that mortgage credit flows to poorer borrowers is another flashpoint.

Critics blamed Fannie Mae’s and Freddie Mac’s affordable housing goals for increasing the enterprises’ risk. State housing agencies and community groups, however, say that backing loans from underserved markets should be a core part of housing GSEs’ public mission.

“Buying affordable loans did not get Fannie Mae and Freddie Mac into financial trouble. Buying bad loans did,” the National Council of State Housing Agencies wrote in a letter.

The American Bankers Association argued that housing GSEs should support the availability of mortgage credit broadly and efforts to serve poorer borrowers or other underserved markets should be left to other programs or entities.

A group of housing groups and academics, in a joint letter, said policy makers should relax their emphasis on homeownership and focus more on ensuring an adequate supply of cheap rental housing.

“Going forward, policy makers must refocus on the goal of promoting affordable and stable housing options, and pull back from the idea of emphasizing homeownership, regardless of sustainability or cost, as a goal for its own sake,” the groups wrote.

Industry remains concerned about the disruptions caused by switching to a new structure, particularly if the housing market remains fragile. Policy makers should focus on the costs to the industry of the adjustment to a new regime, the Independent Community Bankers of America argued.

“Just changing the GSEs’ names would entail a significant re-write of most mortgage processing, underwriting and servicing technology platforms,” the group wrote.

Save your breath, says Rachel Beck of the Associated Press. No matter how the new legislation shakes out in practice, Americans will always over-borrow:

New regulations, which President Barack Obama signed into law on Wednesday, can only go so far to prevent future financial crises like the one we are living through. Banks will still lend. And many of us will borrow too much.

“You can’t legislate diligence,” says Robert Lawless, an expert on consumer credit at the University of Illinois College of Law and a contributor to the blog Credit Slips. “You can’t pass laws that make people be careful when they take out loans.”

…

Amazingly, the pace of consumer borrowing hasn’t fallen off that much, even in the wake of the recession and financial crisis. Mortgage lending has dropped, but borrowing on credit cards and other loans, such as for autos, is only slightly below historical levels.Federal Reserve data shows consumer borrowing ran at an annual rate of .42 trillion in May. That was the 15th decline in 16 months, but the amount is still on par with the winter of 2007, when credit was still booming.

The new rules might get rid of the riskiest loans in the marketplace. Regulators will be able to ban financial products they think are unsafe or outlaw things that might be confusing, like the fine print on credit card or mortgage applications. Mortgage lenders will also be required to verify a borrower’s income, credit history and employment status.

Those are good first steps, but they’ll be meaningless if Americans continue to ignore the basics rules of avoiding credit disasters.

We have to understand the kinds of loans were are getting, and whether we can afford them. An adjustable-rate mortgage isn’t a bad thing on its own, but it can be if you don’t realize your rate could go from 2 percent to 10 percent five years from now.

We don’t need a wallet full of credit cards. We have to save more. We have to read the disclosures on every loan we get.

“You can’t force people into long-term financial stability,” says Todd Mark, vice president of education at the Consumer Credit Counseling Service of Greater Dallas. “Plenty of people still don’t understand the dangers of debt.”

Mark and other credit counselors worry what happens next, when the economy improves and credit flows more freely. If the unemployment rate finally retreats, the bingeing could come back, maybe even more than before.

“When credit is easy, it can be rational to over-borrow,” says Lawless of the University of Illinois.

Unless Americans radically change their approach to credit, we know where this story goes in five or 10 years. It will look a lot like the mess we’re in today.

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A California mortgage loan can be yours for the asking.  Just do your homework first, make sure you have a decent credit score, get a down payment in hand for the home you wish to buy, and then contact a good mortgage broker.  Remember that a mortgage broker can only make money when he or she finds you a loan, and assists in the state of California of acquiring a California mortgage loan.

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