By Erik Braunitzer of Douglas Elliman Real Estate Company, agents for NYC Apartments.

It has been a tough couple of years for anyone trying to survive in this economy.  Growth has stagnated, and unemployment continues to remain perplexing high.  Real wages for most workers have barely budged over the past decade, making it very difficult even for people with jobs to improve their situations.

Homeowners may have had the worst of it over the past four years as they have felt the full brunt of decreasing home values.  Across the United States, home prices have fallen more than 30 percent with no end in sight.  Nearly 30 percent of all homeowners now have mortgages that are underwater; some analysts believe that this number could ultimately increase to 50 percent.

This has created a glut of foreclosed homes as former homeowners decide to simply abandon their properties rather than futilely make payments on a mortgage they will never be able to pay off.  This has put even more downward pressure on home prices as banks attempt to unload these properties as quickly as possible to recoup at least a portion of the original loan amount.

However there are some bright spots for homeowners looking to save money on their mortgage payments.  Thanks to the Federal Reserve, which has driven down interest rates to record lows in the attempt increase weak demand throughout the economy, mortgage rates have fallen to levels that have never before been seen.  For a 30-year fixed-rate mortgage, the average interest rate is only 3.91 percent.  For 15-year fixed-rate mortgages, interest rates are even better at 3.23 percent.

For anyone who is struggling to make their monthly mortgage payments due to high interest rates, there has never been a better time to refinance.  It is exceedingly unlikely that rates will be able to fall any further; in addition, the Federal Reserve will not be able to maintain these low rates indefinitely, especially if inflation starts to become a problem.

Homeowners have a lot of options available to them when it comes to refinancing.  For those people who are looking to reduce the number of years required to pay off a mortgage, refinancing to a 15-year mortgage could be an option.  Alternatively those looking for an even lower monthly payment can still opt for a 30-year mortgage. (more…)

This is the age of creative real estate financing. Maybe you remember when financing meant you saved up enough to put 20% down on a house, and then got a mortgage loan for the other 80%? You can still do that, but there are many more options now. Here are ten of them.

1. Second mortgage loans from sellers. Many banks will allow you to have as little as 5% into a home purchase, but will then only loan you 80%. The seller can take payments on a second mortgage from you for the other 15%.

2. Manufacturer loans. Manufactured-home companies are arranging financing with 5% or less down for their buyers. This can be as little as $2,500 down if you already have a lot to put the home on.

3. State government housing programs. Most states have some sort of financing help in the form of a loan-guarantee program or outright loans for low-income buyers.

4. VA mortgage loans. If you have been in the armed services, have a decent job, and can save two or three paychecks, you can probably get a home with a VA loan.

5. Contract for sale. Called a “land contract” and other names depending on the part of the country you are in, this just means that you make payments to the seller instead of a bank. It’s up to you and them to negotiate downpayment amount, interest rate, and the term of the loan.

6. Builders gifting programs. In some parts of the country, builders fund foundations that give you a portion of the downpayment, so you can get into a home with as little as 3% downpayment from your own pocket. FHA and other lenders have so far approved of or allowed this.

7. FHA mortgage loans. The Farm Home Administration doesn’t actually loan the money, but guarantees your loan for the bank, so they can loan up to 97% of the purchase price, depending on the particular FHA program.

8. Friend and family loans. It may not be from charity that a brother or a friend lends you the money to buy a home. That 7% return might look awfully good if their money is sitting in the bank at 2%.

9. Bank no-doc loans. “No-doc” and “low-doc” loans, meaning no or low documentation requirements, are back, and you can find them through online banks. They are for those of you with bad credit but 20% to 30% to put down on a home. You don’t even need a job.

10. Your credit cards. A risky way, but if you have a low-interest credit card, you can use it to come up with the downpayment, especially if you can pay it off soon, perhaps with a coming tax refund. The banks generally won’t allow this, but you can combine this with seller financing.

So are there more ways to approach real estate financing?  You bet there are. These are just some ways to buy your own home. When you start investing, you can use other techniques for really creative real estate financing.

For people who have a bad credit the rent to own home facility provides solace in the fact that they can repair their bad credit while in the process of buying the house. The rent to own home policy is a good one and helps the buyers purchase a house by renting it first.

Some people choose the option of a rent to own home in order to check out the neighborhood, before committing to the property. But there are other cash strapped people with bad credit for whom the rent to own home is the only way to buy their dream homes, because of the fact that they are unable to get home loans because of their bad credit.

There are a huge number of home owners who have found the home of their choice by the process of rent to own. Leasing the house before practically owning it is fast becoming the preferred choice of transaction among most people.

Suppose you have a bad credit history, then it is really hard to get finance from the banks to buy a house, under such a scenario the only option left is to go through the process of rent to own. In the process of rent to own contrary to the outright sales the buyer does not need to make a huge down payment at first, in fact the down payments are very small indeed. This makes it easier on the pocket for the first time investors as well, and the other fact that bout fifty percent of the rent paid by the prospective buyer is accredited to the rent credit account lowers the price of the house substantially.

People who have bad credit can always choose a leasing option where they have a longer option period , making it easier for them to repair their credit while being in the process of buying the house.

Another important advantage of the rent to own home is that the individuals do not have to worry about the closing costs of the property. This is because of the fact that the buyer and the seller decide on a certain sum of money as the price of the house during the option period and that price does not increase with the ever increasing land prices. So this provides the prospective buyer with a certain amount of stability.

Rent to own homes are a certain way to increase the financial stability of a person, and help him repair his credit. In case you are preparing to go for a rent to own home, it will be a very good idea to get your facts right. Always try to ascertain the ongoing land prices of that area and do not go by the words of the landowner as the general tendency of the buyers is to overprice their property.

Just in case you were wondering most of the times you might be dealing with a real estate investor rather than a bank or a landlord, and there has been instances of unscrupulous people cheating the new tenant buyer by signing a one sided deal.

There are several ways to finance your home. In order to choose the most appropriate home mortgage for your personality and lifestyle, assess the different type of financing for home mortgage:

1) Fixed-rate mortgage
Fixed-rate mortgage are those with interest rates that remain the same until the life of the loan ends. For consumers who are looking for a stable rate that will not experience interest rate fluctuations, this home mortgage financing is a great deal.

A favorite among first time homebuyers and retirees, it can help in organizing and budgeting finances while protecting consumers from increase of interest rates. This kind of financing for home mortgage is best for consumers who plan to stay in their homes for more than 5 to 7 years.

2) Adjustable-rate mortgage (ARM)
Adjustable-rate mortgage, or simply ARM, is a kind of financing for home mortgage wherein the borrower and lender agrees on a certain interest rate that will periodically change. Interest rates will rise or fall, usually with regards to a specific index.

The advantage of an ARM is that the initial interest rate is usually lower than a fixed-rate mortgage. When the interest rate goes down, so will your payments. If you’re planning to keep a home for a short period, this mortgage financing is suitable for you.

3) Balloon Mortgage
A balloon mortgage is a loan that is amortized over longer period compared to the loan term. A balloon mortgage usually has a 15-year term, which is amortized over 30 years to make monthly payments controllable. When the 15-year term ends, you must repay the full principal due of the loan in one large sum, called the “balloon payment”.

When you plan to keep your home for a short time, this may be a practical financing plan. However, make sure to ask when the term ends to prevent possible financial problems.

4) Government loans
Through government lenders such as the Veterans Administration (VA) and the Federal Housing Administration (FHA), government loans often allows consumers with a lower down payment compared to traditional bank loans.

VA loans are perfect for veterans. Government loans are also suitable for consumers buying lower-priced homes with smaller down payments.

5) Convertible ARM (Adjustable-rate mortgage)
Convertible ARM usually starts out as an ordinary ARM, and then gives you an option to lock a fixed rate without refinancing. However, this option will only be offered after a specified time.

Knowing your financing options for home mortgage can save you money by preventing high interest rates and unworkable payment plans. Make sure to ask questions to learn which financing plan best fits your needs.

The decision to refinance a second mortgage should never be taken lightly. Yes, of course it’s one way of acquiring extra cash but it also means acquiring a new loan. You need to make sure that your second mortgage would not just come with surplus cash but better loan rates and terms as well.

Why You Should Refinance with a Second Mortgage
Not every situation would warrant refinancing and not every financial need can be solved with a second mortgage. You need to consider every factor and cost involved in the process before making your decision. Listed below are some excellent reasons that would merit refinancing with a second mortgage.

No More Private Mortgage Insurance
Private mortgage insurance could have been levied on your first or existing mortgage but if you refinance with a second mortgage, you can avoid paying for PMI. Unknown to many, private mortgage insurance is quite a costly expense. You may not notice it because it could already be included in your monthly payments, but PMI can cost you thousands of dollars every year. That’s money wasted and not well-spent!

Consolidate All Mortgages in One Loan
By refinancing with a second mortgage, you can consolidate your existing mortgage and maybe even other debts into one simple loan. Of course, this would only be beneficial if your second mortgage comes with better rates and terms. Shop wisely!

Better Rates and Terms
Had times been especially tough when you acquired your first mortgage? That could be the reason why your current interest rate is unusually high? But today’s market is different and there may be low interest rate mortgages you can now take advantage of. With low interest rates, you’ll be able to ensure lower monthly payments as well.

How about the terms of your current mortgage? Are you satisfied with it? If not, you can refinance using a second mortgage with terms that match your current financial needs. If your first mortgage’s due to expire this year but you haven’t yet enough money for the balloon payment, you can refinance with a second mortgage to settle the last payment and rest easy with a longer loan term.

Cash Out, Cash Back
Last but not the least, refinancing with a second mortgage will give you extra cash. The amount of surplus cash available will of course depend on how much you’ll borrow and the amount you have to pay to settle your existing mortgage.

But that’s not the end of it. If, for instance, you decide to sell your home, you can use part of the proceeds to settle your second mortgage. If you were lucky to get the best refinance mortgage rates then you’ll probably have extra cash once more after closing your loan.

How to Refinance with a Second Mortgage
If you’re convinced about the rightness of refinancing then here’s what you should do to refinance with a second mortgage.

Step 1 Improve or repair credit rating.
It’s the only way to make you eligible for the best mortgage refinance rates. You can do this alone or you can avail of the services of a credit repair company.

Step 2 Shop for rates.
Know which companies offer the lowest rates and what their requirements are in return. Know the costs involved and which of them could be waived in your favor.

Step 3 Apply.
Make sure you read the terms and conditions of your second mortgage before signing up for anything!