Realtorsmortgage

Mortgages. First-Time Buyers Let Down By The Governments Homebuy Scheme.

Late last year, accompanied by the usual razzmatazz, Gordon Brown announced the Governments new Open Market Homebuy mortgage scheme for first-time buyers.

Under the Homebuy scheme, first time buyers take out a mortgage for 75% of a home’s value with no deposit and the Government and the mortgage lender will in practice buy the remaining 25% of the property. Then when the borrower eventually decides to sell the property, the borrower will receive 75% of the net sales proceeds and the remaining 25% of the sale price will go to the Government and the mortgage lender. In the mean time, if the owner wishes to buy out all, or part, of the Governments or mortgage lenders 25% interest, the borrower can simply repay the money the Government and mortgage lender initially put in.- there will be no penalty.

In our view, first time buyers shouldn’t become too excited about this scheme for six reasons: –

The Government has recently confirmed that buyers will have to pay a 1% premium on top of the usual mortgage rate.

There has been no announcement as to the amount relative to income, which borrowers can qualify for. So at this stage it’s impossible to judge what sort of house a first-timer could buy. However, we bet it’s a very small one!

Despite hopes that more mortgage lenders would join the Yorkshire Building Society, the Halifax, and the Nationwide, as co-sponsors of the scheme, no additional lenders have been added to the list.

The Government expects Homebuy to lend to 4,000 first time buyers per year. That’s only fractionally over 1% of the 361,000 first time house purchases arranged each year. In terms of availability, it seems as if Homebuy mortgages are going to challenge hens teeth!

The Government hasn’t even announced the rules under which a first time buyer can qualify to even apply for a Homebuy mortgage.

The scheme is not planned to be operational until October 2006.

So even if you’re happy to pay the 1% premium, your chances don’t look too good for qualifying for an Open Market Homebuy mortgage. Our advice is to forget about them and find a top class mortgage broker to seek out a great deal on the open market.

Signs that our reticence is shared amongst Members of Parliament came from a comment from Michael Grove, shadow housing minister. He is reported as telling the Sunday Telegraph that he wanted to see the Homebuy scheme made easier and cheaper for lenders in order to encourage greater participation from the mortgage providers. We think that’s fine, but participate in what? Until we know who can apply and how much they can borrow, the scheme means nothing.

A mortgage broker is an individual which acts as a middle man between lenders and borrowers. A skilled mortgage broker can look at a variety of different loans to find one which suits the needs of the borrowers. Once they have found a mortgage which meets the needs of their clients, they are then paid a fee which is a percentage of the money loaned.

What Is A Mortgage Brokers Purpose?

If you don’t have the time to look for a good mortgage, a mortgage broker can assist you. Looking for a good mortgage requires you to contact a variety of different lenders and compare the interest rates on different loans. You will also need to know about the different fees and closing costs which will be included with the mortgage. This can be tedious and time consuming, especially if you are a very busy person. A mortgage broker should be able to perform all of these tasks, saving you a lot of time.

Poor Credit? A Mortgage Broker May Help!

If you have a less than perfect credit history you may have trouble locating a mortgage at competitive interest rates. Using a mortgage broker in this situation may allow you to find better deals than you would find on your own. Many banks aren’t flexible with down payments, and a mortgage broker can find companies and negotiate a down payment which is much lower than you would find at many banks. If you don’t like negotiating deals, mortgage brokers may be an excellent choice for you.

Speculate To Accumulate

While using a mortgage broker may sound expensive, it is often a lot cheaper than the price you would pay to use the services of the lender in locating a good mortgage. If you are able to get a lower interest rate by using a broker, this is more money you will save. At the same time, you can run into problems if you use the wrong broker. Below are some things to look at when choosing which mortgage broker you want to use.

Shopping Around For The Best Deal

You should first talk to multiple brokers to compare their services and fees. You should also ask them for references. A mortgage is a serious part of your financial picture, and you can’t afford using brokers which will not give you the best service possible. All of the fees charged by the broker should be explained up front. In fact, you will want to make sure they are put in writing. The price a broker charges will typically be between the retail and wholesale price of the mortgage.

Many brokers will mark up the price of their services. You should look at multiple brokers to make sure the prices are comparable. If one broker has a much higher price than another, this typically means they are marking up their prices to get the highest commission possible. It is also important to make sure you read the agreement carefully. Ask about any terms you don’t understand.

Reading The Small Print

You should also make sure all the information on your application is accurate. Make sure the broker doesn’t add information which is inaccurate or false. Once you have found a service you’re interested in, go back to your bank or other lending institutions to see if they are willing to beat the price. You should also only borrow the money you need and keep a close watch on interest rates.

If the mortgage broker charges you for locking in a certain interest rate, make sure you get a copy which shows information from the lender. Mortgage lenders have been known to keep the fees they charge for locking in interest rates. You should also make sure the loan you get is the one which was promised.

Some loan officers have had tremendous amount of success buying mortgage leads, while others have wasted tremendous amount of money. Some of the best lead sources are hard to find and it is common to see agents and brokers keeping these sources close to themselves.

Surely, it is nice to spend money on mortgage leads that convert well into customers, but buying leads is often a risk not many people are willing to take. What is even better is to generate your own leads that convert well and are also inexpensive to generate.

Here is one sure-fire way you can use to generate free mortgage leads. In short, go and seek out online forums and discussion boards that talks about real estate and or mortgages. You would then register as an user to these forums and establish yourself as a mortgage expert.

Here is how you do it: Pull up a web browser and head to Google search engine and type in “mortgage forum” and that should give a plenty of online discussion boards related to mortgage. Before signing up for any of the forums, study the forum topics and see what people are talking about in these forums. Are they mostly home owners? Are they mostly real estate professionals like you? Now, do not disregard mortgage forums where many real estate professionals or loan officers hang out, because sometimes they can be your best mortgage lead source. Sometimes you will find requests from other loan officers seeking out smart partnerships.

Once you have come up with a few forums you would then go ahead and register for a forum account. If you have a website or blog, be sure to include your url in the signature profile if the forums allow – and most of them do. Here is what not to do: Do not simply sign up to a forum and start blasting your ad all over! It may be helpful that you introduce yourself to the discussion board telling people who you are and what services you provide. Be sure to obey the rules of each forum. Start breaking into the forum by responding to other people’s posts and provide valuable views and advices. Once you do that, you establish ground in the forum and you will build a reputation around you.

This technique, although free because you do not need to spend money on advertising, may take a while before you see some qualified leads coming your way. It is considered on of the best ways to generate high value qualified leads.