Bohaty Finance Journals

As most people are only too aware the mortgage and housing sectors in the UK have been going through turmoil over recent months, since the onset of the global credit crunch and its repercussions. As a result of the situation, mortgage loans have become far more difficult to come by and properties have become far more difficult to sell, leaving industry officials such as estate agents and property developers, as well as other related industry officials, facing severe problems.

Two housing development companies that were recently forced to slash around 40% of their workforce due to poor sales performance are Redrow and Bovis Homes. Both have seen sales figures slump, and the poor performance in the housing sector has meant that both have had to dramatically cut back on the number of employees.

The chief executive of Redrow recently stated: ‘It remains difficult to assess how long the sharp reduction in sales activity will continue or the extent to which house prices will be affected. However, we expect the difficult markets we are confronting may persist for some time.’

He added: ‘The housing market continues to be severely affected by the credit cards squeeze. Homebuyer confidence is now also being influenced by concerns about the future for house prices and interest rates. As a result, the market for both new and second-hand homes has declined rapidly to transaction levels not experienced for very many years with the price of homes now declining.’

The chief executive from Bovis stated: ‘The backdrop to the market is pretty awful. The volumes have been affected by that backdrop, which has largely been caused by the turmoil in the financial markets, and the inability to get a mortgage has been a massive constraint on the consumer.’

According to a recent report thousands of estate agents could end up going bust over the course of this year as a result of tighter credit conditions sparking fears of a housing market crash. Over the past six months lenders have brought in far tighter credit conditions as a result of the global credit card crunch, and this is affecting the ability of many people to purchase a property, even though house prices are falling.

An official from the National Federation of Property Professionals said that up to eighteen thousand estate agents could end up going bust as a result of the credit squeeze and the effects that it was having. He said that lenders were over-reacting to the global credit crunch, and were effectively bringing the mortgage loan market to a halt because of this.

He said: “Lenders do not seem to be in the business of lending any more. They are the ones who lent irresponsibly and now the public and our industry are paying the price.” However, banks continue to predict that it will take years for the mortgage market to recover because of the credit crunch, and this has been backed up by the gpvernor of the Bank of England, Mervyn King, who has predicted that it could take up to ten years for the mortgage market to get back to normal.

An economist from the British Chambers of Commerce said: “The Government must adopt pro-active policy measures aimed at countering the threats to growth. Public finances remain stretched. There are large current deficits and excessive levels of total borrowing.” He added: “Recent tax changes have undermined business confidence and they will face a difficult and risky climate over the next year.”

What is a reverse mortgage? A reverse mortgage is a special kind of mortgage loan for senior citizens. The borrower and co-borrower must be at least 62 years of age to qualify. Actually what is a reverse mortgage? It is a safe, simple way to turn your home equity into tax free cash.

It is dissimilar to a home equity loan and you do not have to make monthly payments. Instead of that, a reverse mortgage pays you. More significantly, you do not have to repay the loan for as long as you live in the house. It’s a great way to keep your home and obtain money from it at the same time. (more…)

When applying for a mortgage, your credit score is vital. It will determine whether you can get a loan, exactly how much you can borrow, and how much that loan is going to cost you in interest over the life of the loan.

If your credit score is below the 550-580 range, it usually means you’re a non-conforming borrower, and you may have to find home loan financing with either a sub-prime lender or get qualified for a Federal Housing Administration (FHA) home loan. In this article, we’ll cover both options.

1. Sub-prime lenders who offer “bad credit” mortgages.

A sub-prime lender is essentially any lender that offers financing to borrowers who don’t qualify for loans with other mainstream financers. Typically, their interest rates and closing fees are higher than the mortgages rates you’ll find with traditional lenders, but their qualification requirements are more lenient.

Sub-prime lenders will base their fees and rates on the same formulas as prime lenders. Basically, the lower the credit score, the higher the rate or the higher the down payment, the lower the rate. Because a higher percentage of sub-prime loans will go into default or foreclosure, this is their way of covering that risk.

When dealing with a lender who specializes in sub-prime or “bad credit” mortgages, always explore your options. Try first for a traditional mortgage, and then if you’re denied, shop around for an alternative lender. Get a variety of rates, and don’t settle for the first offer that comes your way.

2. Federal Housing Administration (FHA) home loans.

The Federal Housing Administration (FHA) is a subsidiary of the United States Department of Housing and Urban Development. They offer a home loan program that gives free mortgage insurance to less-than-qualified home movers.

Basically, if you only have a down payment of 3 percent of the home market value or your credit is less than perfect, you can still qualify for a mortgage through the FHA home loan program. By providing mortgage insurance, the FHA home loan can get you a better interest rate and save you the expense of private mortgage insurance (PMI) which can cost you hundreds of dollars a month.

You’ll still need to meet certain credit standards to qualify for the FHA home loan program, but the criteria are less strict. The Federal Housing Administration also offers ongoing support to buyers. This means if you do come up against hard financial times, they can help you negotiate and deal with your lender to avoid foreclosure.