Home Mortgage and Refinancing » home loan

30 Year Fixed Mortgage Rates The Basics

admin — Fri, 02 Apr 2010 19:21:48 +0000

If you have not applied for a new home loan in quite some time, this article will explain the very basics of the home loan known as the fixed rate mortgage. This is a relatively easy mortgage to understand and is familiar to individuals who are purchasing or refinancing a home. As this is one of the biggest expenses you may encounter in your life, knowing a little about this type of mortgage will lay a foundation for you to be able to research both fixed rate mortgages as well as other mortgage products which have their foundation in this basic model.

The fixed rate mortgage is by far the most common type of mortgage. When new homebuyers begin pricing loans, these are typically where people will start. Most fixed rate mortgages advertised also usually talk about the rate for a 30 year “fixed” rate. When people talk about their mortgage, there is a very good chance that they are referring to their 30 year fixed. A little less common are the adjustable rate mortgages. Of course there are dozens of different mortgage products available based on the needs you have. Interesting that the selling of “money” is basically packaged in different forms just like any other product or service.

The fixed rate mortgages have a specific time period with them, such as a 30 year fixed rate mortgage. There are also 15 years which are probably the second most common. I have also seen 20 year and 40 year mortgages. Lenders have different programs that will work with what you are looking for. There are enough lenders out there that it would be uncommon to find a loan officer who couldn’t give you multiple options with your loan duration.

Fixed rate mortgages have the same payment for each period. The benefit here is that you are able to base your monthly budget or even bi-weekly budget from the amount you’ll be paying each month towards your mortgage. Because the rate doesn’t change, neither does the monthly payment. This makes the fixed rate mortgage very predictable.

With a fixed rate mortgage, at the end of the term, your home will be paid off completely. Several mortgage products have a balloon payment at the end of the term which means you’ll have a larger lump sum, usually a multiple of 10 to 20 times your monthly, or in the event of some interest only products, the principal would be due at the end of only a couple years into the mortgage product which would either require you to pay off the home completely or refinance the balance.

The fixed rate mortgages often make the most sense when the owner will be in the home for the duration of the loan, or in a situation where the home is appreciating in value. The reason for this is that for the first 22 years of the loan (assuming a 30 year mortgage), you’ll be paying more in interest than you will in principal. This can be a bit disconcerting, but this also has the advantage that when you are able to submit additional funds toward the loan, these funds are applied directly to the principal. This is sometimes known as a mortgage acceleration program of which there are several types.

Getting a fixed rate mortgage is a good program for a large percentage of home owners in today’s society. Keep in mind, however, that this is not the only option. But, if you understand the basics of the fixed rate mortgage, you’ll better understand the other mortgage products that are available as they are explained to you by your loan officer. It’s important to find someone you can trust to work with on your home loan. This will get you most of the way to where you need to be for getting a mortgage or looking into refinancing.

Understanding 125 Home Equity Loan

admin — Fri, 09 Oct 2009 13:56:37 +0000

A 125 home equity loan, like the name indicates, is a loan that is based on the equity in your home. However, traditional home equity loans are generally only for the actual amount of the equity that you have built up on your house. With a 125% home equity loan, you can receive 25% more than your equity.

The 125 home equity loan is basically a second mortgage. The borrower will still pay their regular mortgage and then have a second payment to make each month for the 125 loan. For example, if your house has an appraisal value of $100,000 and your first mortgage is for $90,000, you will be able to get a 125 loan amount of $35,000.

This type of loan can be very advantageous to homeowners who need a large sum of money, but do not have sufficient equity built up in their home to cover their cash needs. Homeowners may want to do some major home improvements, pay for their children’s college education, have unexpected medical or other emergencies come up, want to start a business, or have other situations where cash is needed. A 125 home equity loan also comes with several potential disadvantages as well.

The most advantageous thing about a 125 home equity loan is providing homeowners with potentially large sums of cash that they need. A 125 home equity loan will have a lower interest rate than a credit card or personal loan would. Part of the interest on a 125 home equity loan will most likely be tax deductible, which is not the case with personal loans or credit cards.

125 home equity loans also have some disadvantages. One of the major disadvantages is high closing costs. The closing costs on a 125 home equity loan could wind up costing a homeowner several thousand dollars and other fees may be added also.

High interest rates are another drawback to 125 home equity loans. The interest rate on this type of loan is higher than for a regular home equity loan or first mortgage. However, the interest rate will most likely be lower than the rate for a personal loan or a credit card.

One other drawback to a 125 home equity loan is that it can put the borrower at risk and make it difficult for them to sell their house. If home values depreciate it will be difficult to sell the house and move because the homeowner will still be responsible for paying the difference to the lender. Since the borrower already received more money than the house was worth in the first place, having the house depreciate in value will make it even harder to pay the loan back.

There are some nice advantages to 125 home equity loans but there are several potential disadvantages as well. So before you make your final decision regarding this type of loan, be sure to weigh all of these factors. It might be a good idea for you to review this will your financial adviser or accountant as well.

Some Tips That The First Time Home Buyer Should Know

admin — Thu, 08 Oct 2009 18:40:15 +0000

Starting off on the adventure of buying a first home is exciting, as well as thrilling for you and your partner who are ready to start a family of your own. However, there are still many things that must be known in advance that will be of great benefit later on. Some of these tips are well known, but others are not and you may not even know them.

One thing to know when you are a first time home buyer is don’t wait for the great market timing, especially in places like Southern California, Miami are even New York. And while some regions may cool, don’t count on it. If you find something that is right for you, then you should grab it. Even though interest rates are at historical lows at the moment, they may not last long.

You can find many free or low cost resources on the internet. In just one search engine you can find buying guides, checklists, and many online tools to help you determine interest rates, home values, and many others. Watch out for free property evaluation websites, these are usually real estate agency trying to fish for clients. Make sure there are no ‘strings’ attached. Through the internet you can check out and take advantage of first time buyer programs, and even get into one if you want.

Since you won’t have a lot of extra time or money to waste by messing around, you should start off by first determining a realistic budget. Unfortunately, many first time buyers think they will afford their dream home the first time around, but in most cases this will not be happening.

To make thing easier it would be wise to go to a lender and get “pre-approved”. What this consists of is a calculation of your income to debt ratio and your credit score which will tell you realistically what you can afford.

Once that is done, sit back and make a wish list. This can be things you absolutely need to have. This could be a yard for future children, how many bedrooms and bathrooms or even perhaps alternative energy possibilities. Remember to stick to your list so you don’t get side tracked or let emotions interfere with reality.

Fortunately, there are several programs for home buyers that not only help you get the house you want, but also help with other aspects of home buying like reducing debt or finding out what mortgage and title companies want. These programs also provide incentives for completion of their programs and this can be something like financial assistance, caps on real estate agent fees or lower mortgage interest rates. Another advantage for graduates of such programs is that assistance is often available if unexpected problems arise, like deferring payments or even loan forgiveness in rare cases.

Look on the internet for more information. It is also a good idea to check with your local agencies, like you local Housing and Finance Association for their first time buyers programs. Each state and community is different, so make sure you check carefully for programs that are available in your area.

How to Win the Mortgage Application Game!

admin — Tue, 08 Sep 2009 07:55:40 +0000

While most people know that a good credit rating is an important part of being approved for a mortgage loan there are other things that a lender looks at when making the loan decision. When deciding whether or not to approve a mortgage the lender looks at several elements; the credit report is only part of the data they review. For this reason mortgage applicants are required to furnish information that a lender cannot obtain by themselves.

One of these key factors is the applicants debt ratio. This is the ratio of an individuals debt and expenses to his net income. The lender compares the potential borrowers current debt load and living expenses with his income. This is why applicants are expected to provide pay check stubs, tax returns, and other documents that cannot be obtained from the credit reporting agencies. The ideal debt ratio is about 1.3, meaning that the applicant has about 30% more income than is required to pay for his current debt and expenses.

An applicants payment history is also a key element of the application, lenders look very specifically for late payments. Lenders view a habit of making on-time payments very favorably. While payment history information is part of the credit report, a mortgage lender weights this information differently than the credit bureau reporting FICO scores. Because of this mortgage lenders study the applicants credit report to find all the information possible about an applicants payment habits. If there are habitually late payments showing on a credit report it is a good idea to attach a letter of explanation to the loan application.

Mortgage lenders also look at the applicants other assets besides his regular income to determine if the applicant has the means of making an equity investment, or down payment. If the client has large additional assets and they are fairly liquid ” like a large stock portfolio ” this may help offset other factors, such as a less than optimal debt ratio. If the applicant has enough additional assets to make mortgage payments outside of his regular income, this is viewed favorably by most lenders. This information is usually not included in a credit report and is why a mortgage lender will ask for statements from the applicants brokerage accounts and retirement accounts (IRAs, 401(k), etc.).

There is one important element of loan approval has nothing to do with the applicants credit score or overall financial status. This factor is the property being mortgaged. Every lender will want to see an appraisal of the property that their client wants to purchase. This ensures that the lender will not loan more than the property is worth. The resell value of every property must be enough to cover the original amount of the loan in case of foreclosure.

This guideline can help a potential homebuyer in examining his own credit and make adjustments before applying for a loan. Having everything in order can streamline the process and be advantageous when the application is reviewed.

The Basics of 30 Year Mortgage Rates

admin — Sun, 06 Sep 2009 07:57:42 +0000

If you are new to mortgages or just don’t remember going through the process the last time you financed a home purchase, this article will explain some important features of the loan known as the fixed rate loan or fixed rate mortgage. These are pretty easy to come by and the product that is the most familiar to people purchasing or refinancing homes. A purchase of a home is most likely the largest outlay of funds you’ll experience during your life, so understanding the fixed rate mortgage is important knowledge to have.

These fixed rate mortgages are the most common type of mortgage product. They are not the only type of product, of course, by they are very prevalent. When people speak about getting a home loan, they are usually referring to this type of loan. The fixed rate mortgage product is the one that is probably advertised the most, at least with most state laws, the advertising you’ll here on the radio or see on TV or other media is typically providing information about their lowest fixed rate product.

With a fixed rate mortgage, a percentage of your payments each month will go towards the interest and the rest will go towards the principal. This is not an even amount. What I mean is that the the first few years of your mortgage, the majority of the monthly payment goes to pay the interest and the smaller percentage goes towards the principal. Of course you can make extra payments on the principal which means the interest payment will decrease simply because the interest paid is done so on the balance, which if you pay more towards the principal above and beyond the monthly payment, there will be a lower balance due and less interest. This doesn’t mean your monthly payment will change, but it will decrease the amount of interest due and increase the percentage of your payment that is applied to paying down the principal.

Establishing your first fixed rate mortgage or even refinancing for the 10th time shouldn’t be a complicated process. The key to getting this done is to find a loan officer you can trust who will work with you and educate you as needed so that you understand what you’re paying for. Because this is such a large dollar amount that you’ll typically be paying for a home, there are ways that you can get caught paying more than you should and even small percentage changes over the life of the loan may result in you paying thousands of dollars more in interest. There are a lot of mortgage calculators out there as well you can use to give you some rough estimates.

What You Need To Know Before Buying A House

admin — Fri, 04 Sep 2009 09:20:28 +0000

You were just surfing the net and you saw a picture of this unbelievable house, the perfect house. You know it’s the house you want to buy and live in forever. Slow down. Just because the house looks good on the web, doesn’t mean it’s your dream house. There are a lot of questions to ask and things to consider before taking on the responsibility of a home.

If you are buying a home for the first time you should take the time to learn something about real estate. Make sure you understand the terms of real estate contracts and mortgages. Don’t buy a home that costs more than you can afford to spend. Make sure the house doesn’t need expensive repairs.

Look around the area and see if the neighbors have pride in their homes. If other homes in the neighborhood aren’t well maintained, it affects the value of the houses that are maintained. Fancy areas carry fancy price tags. If the house needs repairs see if the seller will complete them before the sale.

If the home need repairs and the seller is not willing to complete the repairs, you may still be able to buy the home. Try to use repair issues to leverage for a lower price. The mortgage company may require an escrow for major repairs, so if you can’t put up the money you may be unable to get a mortgage. The most important areas of the house to check are the basement and the roof. Look for evidence of leaks or flooding. Mold can be a serious and expensive problem.

In the kitchen, check how many appliances are there to estimate if your appliances can fit in without additional outlets; check the floor, is it level or does it shake? Inspect the floor for stain — can these be removed with the usual cleaning mop and cleansers? If the sink top is marble, examine if it needs to be re-polished. Inspect the plumbing. Are there leaks? How about the tap water? Does it run well or drips?

Next to the kitchen, the bathroom is the most expensive room to remodel. Is the bathtub and shower clean and in good repair? How old is the hot water heater? What about the sink and toilet? Any cracks or discoloration? Have the home inspected by a professional who can check the plumbing and electrical systems.

Always take the time to look in the attic. Check to make sure that the attic is properly insulated. Look for any sign of roof leaks. Even roofs that look okay can have leaks. Attics need to be ventilated. Is there a fan? Windows? Other type of ventilation? Examine the windows and doors for fit and make sure the exterior maintenance is up to par.

After the interiors and the exteriors, check out the neighborhood. Do some research about the crime rate in the area. Is your house vulnerable to break-ins? Is the next neighbor a mile away? Are the houses crammed into a little neighborhood? After visiting the house on a nice sunny day, visit it on a rainy day to see how it fares. If there’s no problem, then make a deal according to the mortgage you can afford.

Finding the Best Mortgage for You!

admin — Thu, 03 Sep 2009 01:22:50 +0000

When it comes time to take out a mortgage there are many things that make it difficult to decide between a bank and a mortgage broker. It is a complicated choice because of the needs of each borrower and the sheer amount of different mortgage products to be considered. The choice is not simplified by the fact that mortgage products are generally under constant revision and changes are hard to keep up with increase the difficulty of making a wise choice. This means that if you found the perfect mortgage and lender a few months ago, it may not be the best choice now. However, this general guideline can be helpful in making your mortgage lender choice.

First of all, banks have a tendency to be conservative than brokerages; their policies and practices are traditional and they will only offer you mortgage products from their institution. Banks know that having more products to offer will help them gain return customers. Because banks only offer their own line of mortgage products they usually offer better terms and discounts to their customers. Bank customers that have substantial holdings in two or more accounts should consider getting their mortgage at their own bank first.

If the potential home buyer does not already have a strong relationship with a particular bank, then going through a broker may be more appropriate. A broker usually represents a number of different lenders selling different lines of products. A good broker can review an individuals circumstances and recommend a specific lender and product that can best meet the clients needs. Further, a broker will provide advice on how to present the clients financial information and will do much of the leg work involved in getting the process underway.

Generally brokers do not receive payment until the mortgage is closed, although some do charge a fee up front. While this can mean that a broker will be invested in helping a client obtain lending, it also means that the broker wants the client approved for any loan, and possibly one that is not idea for the homebuyer. Inappropriate mortgage approvals were a big factor in the sub-prime mortgage bubble burst of 2007.

Once the decision to use a mortgage broker has been made the next step is to make a list of brokers to check into. Start by gathering names from friends and family who have worked with brokers, and also the names of local brokers. Then you can begin to research, making sure they are properly licensed, if there are many customer complaints about their service, and if the broker has had legal difficulties. You can check this information with news sources, the Better Business Bureau, and the Attorney Generals website. At this point the list should only include those brokers that have a sterling reputations and no problems with licenses, legal problems, or customer complaints.

Once a homebuyer has researched the list and narrowed it to reputable brokers then it is time to interview or consult with each one. Consultations are important because each broker will have a different group of mortgage projects to offer. Interviewing brokers gives the homebuyer a pretty good idea about which broker can help them get the best mortgage for their needs.

The Perfect Mortgage–Shopping At A Bank or Brokerage

admin — Thu, 03 Sep 2009 01:10:39 +0000

There is no simple answer to the question of whether mortgage brokers or banks offer the best chance to find the ideal mortgage. This is because there are many different mortgage products available and each borrowers financial situation is unique. Further, the products available are subject to constant change and revision, so just because one lender seemed desirable six months ago does not mean it still is today. Nevertheless, there are still a few simple guidelines that can be followed to determine whether to use a bank or a broker.

In general, banks tend to be more conservative in their policies and practices and only offer their own line of mortgage products. However, they also know that the more products they sell to customers, the more likely they are to retain that customers business. For this reason, they frequently offer better terms and discounts to existing customers that are interested in one of their mortgage products. If a potential home buyer already has two or more accounts with a particular bank and has a notable amount of money held there, this bank should probably be the first place to look for a mortgage product.

Obtaining a mortgage through a brokerage may be a better choice if there is no strong relationship with a banker. A broker has many different products to offer because they represent several lenders with a wide variety of financial products. A good broker can do a lot to help find the ideal mortgage by studying the applicants situation completely so they fully understand the needs of the borrower. This puts them in a position to recommend the best possible mortgage product and lender for an individual. A broker can be invaluable by doing much of the beginning application work and advising clients on the best way to display their current financial statements.

Once you have decided to enlist the help of a mortgage broker then it is time to begin researching your options to find the most reputable broker to help you. Start by making a list of brokers that have worked with and are recommended by friends and family. You can also include brokers working in the general area. Once there are several brokers on the list start doing research to make sure they are properly licensed. Checking with the Better Business Bureau or Attorney Generals website can reveal if there have been many customer complaints about the broker or if there are legal difficulties he or she is dealing with. Any broker that has complaints, legal problems, or lacks a proper license should be removed from the list of potential brokers.

How Refinancing Your Mortgage Could Save You Money

admin — Wed, 02 Sep 2009 01:43:32 +0000

To understand the technique of how to refinance a mortgage, you have to know the subject of the refinancing of mortgage. The matter of refinancing a mortgage plan is the process of opting out of the current plan and taking a fresh scheme of loan. It requires a thorough study of the available schemes relating the refinancing of mortgaged loan. It describes options that are available in fresh plans from different service providers so that you can select the right one for you.

Acquisition of a new loan should be based on your expectations and plans. What are the factors responsible for a person to go for a Refinance of Mortgage plan? Some of the reasons are discussed here.

A most common reason is to offset the existing higher rate of interest. Any new plan you select might ease up your financial stress by offering lower rates. Another common issue is with regard to Adjustable Rate Mortgage which can be replaced with Fixed rates. Suppose you have a long term loan at present you can always go for a short term type to build up equities.

All the above option can be crystallized into four main categories, which are -when the value of a new mortgage plan is more than the existing one and the difference (equity) is paid to the borrower, it is called Cash Back Refinancing.

Market conditions often dictate the course of events that call for Refinancing of a Mortgage Loan. Some of the changes carried out under these conditions pertain to conversion of from high to low fixed rate mortgage, Adjustable Rate Mortgage to lower fixed rate to cover the period of the loan. These come under Low Fixed-Rate Loan -there are many who wish to convert their long term loan to what is called Shorter-Term Loan.

In this type, a long term loan is normally converted to a shorter-term loan. The results are obvious- higher monthly repayments and the ensuing advantages of lower interests. Not only the above, you are eligible for a more comprehensive tax deduction if for example you reduce the loan period by half.

Till now, the mortgage Refinance Option for normal creditors has been discussed. Refinance Mortgage plans are easily available for them. There exists certain option for bad creditors as well. Earlier it was extremely difficult for these defaulters to get such a loan. But this is not an issue anymore. Now the mortgage lender himself will help these people attain their goal.

His approach will have to be of a different kind so that he is able to receive the refinancing of the mortgage loan. During previous times, it was utterly difficult to arrange relief in these types of cases. Currently, the mortgage lenders are more helpful in the matters of arranging the refinancing of bad credit cases. One simple way to make it available is to enhance the rate of interest, concerned fees and incidental charges and so on to make good the past poor credit records. You are free to take help form the internet and find out several mortgage lenders who specialize in offering refinancing of mortgagee loans to people with bad credit record.

How To Refinance A Mortgage Loan

admin — Wed, 02 Sep 2009 01:38:10 +0000

Refinancing a mortgage basically means getting out of the old mortgage plans and adopting a new one. Before one decides to implement this, he must study deeply on the various schemes of How to Refinance a Mortgage Loan. This study must start with introspection on what you expect from a fresh mortgage plan, the options offered by different loan providers and choose in conclusion the best plan to fit your requirements.

People generally opt for refinancing of mortgage loans on certain grounds which make the candidate to look for a change in the current mortgage plan. Here, we discuss some aspects of the said issue.

This highlights four key advantages. If the value of the fresh mortgage scheme is greater than the current plan, the advantage of cash back refinancing is affected and the borrower gets the difference of money in equity. The mortgage loan is usually dependent to market conditions which basically prompt the refinancing of a loan.

It attracts higher monthly installments with the benefit of lower rate of interest. You are able to enjoy tax discounts when the loan tenure is brought to half. Persons, burdened with monthly installments may seek a long term loan to bring down the pressure of heavy monthly deductions and remain comfortable.

These loans are advanced under certain clauses. In order to make up for the past losses, the lender will hike the interest rates, charges and fees. The internet is a better option since there is a multitude of information available. Your search might lead you to a good online trader who might offer Adjustable Rates for bad credit mortgage refinance. Thus we’ve seen that a Refinance Mortgage loan can save you lots of funds which you can utilize for other reasons.