Quit Claim deed is a legal document that helps to transfer your share of interest in the property (house, land, mobile home, etc) to another individual. The person giving away the interest is the grantor while the one who accepts it is the grantee. While the interest is transferred, no warranty is made on the rights which others may claim from the property.
The deed implies that the grantor simply transfers his interest but does not guarantee whether the grantor actually has ownership rights on the property. Moreover, the deed does not guarantee that the property is free of debt.Keep Reading...
When you get an Adjustable Rate Mortgage (ARM) you get an initial rate that is fixed for a certain period of time say five years for example. After the first five years of the loan, your interest will begin to adjust based on two factors: your index and your margin. The mortgage interest rate that your mortgage loan will adjust to after the fixed period is called the Fully Indexed Rate.
Fully Indexed Rate is the combination of the index the mortgage lender has chosen plus the fixed margin the mortgage lender places on the mortgage loan. This is often different than the initial rate offered, or the start rate. The fully indexed rate will only fluctuate at the adjustment period of your ARM, and may be subject to caps that determine how much they may increase within a certain time period.Keep Reading...
Margins on an Adjustable Rate Mortgage loan is the amount a lender adds to the index in order to determine the mortgage interest rate at each adjustment period on the loan. The margin is assigned by the mortgage lender at the time the ARM loan is originated. It cannot be changed once the mortgage loan closes as it is set for the life of the loan. Call 302-703-0727 to apply for an ARM Loan or for more information. APPLY ONLINE
Margins on ARM Loans – Example
Margin example, if the index of the ARM loan is at 5.0%, and the margin was set at 1.5% when the loan was originated, then the fully indexed rate is 6.5%. The margin is fixed for the life of the loan so if the next adjustment period the index is 4.5% then the Fully Index Rate will drop to 6.0% and the monthly payment would be reduced as well.Keep Reading...
The Federal Reserve commented on the troubled economy but still kept the Fed Funds Rate unchanged at 5.25%. The Feds noted that Wall Street Turbulence such as Hedge Funds closing, Main Street Credit problems, and a nationwide housing slump pose increasing risk to the economy. The Feds are still concerned about inflation so they have decide to hold the Fed Funds Rate Steady rather than lower rates to help bail out the slumping housing market which is a drag on the rest of the economy
The Feds have kept this key interest steady for almost a year after raising it for two straight years to fend off inflation. In turn commercial banks prime interest rates also stayed the same at 8.25%.Keep Reading...
Negative Amortization
Amortization is the repayment of a loan by making systematic payments over a set time period which are applied to the combined balance of the principal and interest for that loan amount. Therefore, negative amortization occurs when the payment is less than the required interest that has accrued on the loan for that month.
Summary:
Few lenders offer negative amortization loans today. Those that do have annual payment caps and lifetime interest rate caps for steady control on required payments over time.Keep Reading...
Interest Only
Interest is what a borrower pays a lender over and above the original amount of the loan, as compensation for the use of the money over a specified period of time. An interest only loan requires a payment that pays the interest that has accrued on the loan for the current month, but with no principal reduction required at all for some specified amount of time, outlined in the Note signed at closing. Permanent mortgage loans normally only allow interest-only payments for lower cash flow for a specific number of years. The most common is the 5-year interest only product, yet there are many other types available in the marketplace.Keep Reading...
Fed Funds Rate is the interest rate that Banks and other depository institutions charge each other when they lend money among each other. The money is usually lent on an overnight basis. Federal law requires banks to keep a certain percentage of their customer’s money on “reserve” or right at hand, where the banks earn no interest on it. Consequently, banks try to stay as close to the reserve limit as possible without going under it, lending money back and forth to each other in order to maintain the proper reserve level.
Similar to the Federal Discount Rate, the Federal Funds Rate is used to control the supply of available money and hence, inflation and other interest rates. Raising this rate makes it more expensive to borrow and lowers the supply of available money, which increases short-term interest rates and helps keep inflation in check. Lowering the rate has the opposite effect, bringing short-term interest rates down.
Fed Funds Rate Summary:
Knowing the facts about the Fed Funds Rate and Discount Rate are important to being fiscally literate. These indexes are not available for lending on consumer loans such as ARM Loans but will influence what the Prime Rate will be.
Federal Discount Rate is the interest rate charged by a Federal Reserve Bank to its eligible member banks and financial institutions when they need to borrow funds directly from the Federal Reserve. Banks whose reserves fall below the reserve requirement set by the Federal Reserve’s Board of Governors use that money to correct their shortage. The board of directors of each Reserve Bank sets the Discount Rate every 14 days. Borrowing from the Federal Reserve is generally considered a last resort option for banks, which usually borrow from each other.Keep Reading...
