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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.

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.

Refinance Mortgage Loans – Take Advantage of These Money Saving Tips

admin — Thu, 10 Sep 2009 18:08:07 +0000

It can actually be quite challenging to know when the time is right to refinance mortgage loans. It is a timing thing more than anything else. Get it right and you lock in very favorable interest rates which will save you thousands of dollars over the life of the loan. Get it wrong and you’re going to pay a lot more money than you need to.

To add to our financial stress we also have to deal with the fact that many lenders have greatly curtailed their activity due to the stressed economy. This is in fact the worst economic crisis we as a nation have faced since the Great Depression ended in the 1930s. Credit lines are much more difficult to come by now as compared to just a few years ago when it seemed as if anyone with a pulse could get a mortgage.

When considering mortgage loans it is vital that you take into account how much longer you plan on owning that property. All loan originations have fees that the lender charges. After all, they are in it to make money. Examples of these fees include attorney fees and appraisal fees. There can be more depending upon the lender.

You may, in fact, be able to obtain a new mortgage with an excellent interest rate that will save you plenty in your monthly mortgage payment. But that savings must be weighed against the cost of the refinancing process. A rule of thumb in the refinancing businesses is that staying in a refinanced home for ten years will make it a worthwhile option.

If however you are planning to own the property for less than 10 years then it may not be worth refinancing. Even though the interest rates will be lower, the fees to get the mortgage will have pretty much negated your savings. That is why it is so important to carefully plan these things out and seek your best options.

Taking these things into consideration when looking into refinancing your mortgage will help you make the best decision for your particular circumstances. You can find a mortgage calculator on line that will help you compare your different options. Using different loan amounts, interest rates and fees will give you some bottom line figures to work with.

There are, of course, two types of mortgages. There is the fixed rate mortgage that locks in your interest rate for the life of the loan which is usually 15 years or 30 years. And there is the adjustable rate mortgage (ARM) that typically begins with a very low interest rate but adjusts as the Federal Reserve Board of the United States resets rates.

If you are going to be selling your property in the not too distant future then perhaps an adjustable rate mortgage would be best. I must warn you to be careful. Many people are enticed by the low interest rates at the beginning of an adjustable rate mortgage but soon find that they can no more afford the payments as interest rates move higher.

Weighing all the factors is crucial to refinance mortgage loans to your benefit. Taking the time to evaluate various scenarios and different outcomes will guide your decision making process. You will want to decide whether or not to refinance based on the long term results not just the amount of your immediate monthly mortgage payment. The hidden costs may end up costing you more than you save.

What will I have to Pay in Closing Costs?

admin — Wed, 09 Sep 2009 23:42:41 +0000

After all of the expenses of buying a home, many new owners are shocked to see how much more they have to pay at the closing. It is important to understand these fees, especially if you are considering re-financing your home, since any savings on a new rate may disappear once you have to pay the closing costs on a new loan.

You would expect the lender to charge something for creating a new loan. Needless to say, the bank is not going to absorb these costs, but rather pass them on to the borrowers. (Although, in competitive loan markets, banks have used lower closing costs as a factor to attract new borrowers, by absorbing part of the fees.)

Depending on the state where you live, there may be even more.

If you are concerned about these costs, you may be able to lower some of them to a certain extent. In some markets, banks may be willing to reduce or eliminate fees that they themselves charge, such as application fees. But many of the fees involved in the closing of your mortgage are not under the control of the bank, such as the appraisal fee, the legal fees, etc.

One of the first steps you should take is to get a good faith estimate of the closing costs. Be careful that your lender has not offered you a great loan rate, but then padded the closing costs to such an extent that they recover the difference.

If you do find that any of the costs are not in line with market rates (you can call another bank and ask them what their fees are-this will apply in some areas, such as an appraisal or a credit search, or you can file another application and get another good faith estimate), call them on it and request to negotiate the item.

Now you understand how much your closing costs are going to be, and you have made some efforts in reducing them, you can calculate if refinancing is really going to be worth while by using an online mortgage calculator to find out the costs left on your present loan.

To the total cost of the new loan, be sure to add the closing costs, since you will not have them if you stay with your present mortgage. Now you can decide if it is worth taking out a new loan on your home.

Do National Housing Trends Mean Anything?

admin — Wed, 09 Sep 2009 08:15:14 +0000

Every day the news gives a different picture of housing trends on a national level. Sometimes the story reflects that property prices are done deflating while others say that the devaluation process will continue. However, for the individual homebuyer these national trends mean very little because they generally do not apply to local markets.

The movement of each housing area is different; some areas have seen values driven up by speculators, some are still experiencing a decline in values, while yet other markets have stabilized. Because of this it is important to know that local market activity could be very different than the national housing trends so paying attention to national reports is of little value. It is imperative that potential homebuyers give strict attention the activity of the local market before making a home purchase there.

If the potential home buyer is using a real estate agent, the agent is likely to provide an accurate assessment of the situation. However, a real estate agent has a vested interest in making a sale, so the information they provide might be overly optimistic. While the advice of an agent is a good place to start, their advice should not be considered exclusively.

Websites like Trulia (www.trulia.com) make doing your own research easy. On websites such as this a homebuyer can find a wealth of information about the market being considered including current home values, what they are selling for, and pricing history. There may also be a local site that would include the same information if the larger sites do not cover a certain area. If there is no information online, research can be done through public records. This would provide information about current sale prices.

The real estate bubble burst in 2007 making it imperative that anyone considering a home purchase finds out how the local market has cycled and what is currently happening there. If there has been a decline in the number of homes for sale, and an increase in prices this indicates that the market is climbing up from the bottom of the cycle. It also indicates a fairly favorable time to invest in a home. However, it is important to find out if buyers are purchasing multiple properties. If this is the case it indicates that speculators are driving up home values and it does not necessary mean it is a good time to buy. Talking to real estate agents and taking a look at the public sale records can help a purchaser recognize the actual state of the market and improve their investment choices.

Regardless of what national or regional trends say, when it comes to real estate these trends are virtually meaningless. Careful research of the local conditions and markets is vital to making a wise investment.

How do Banks Decide upon the Rate for a Home Loan?

admin — Mon, 07 Sep 2009 23:41:08 +0000

If you are shopping for a mortgage, you of course want the best possible rate. This is a decision that you will live with for many years. How do the banks determine the rate they quote you in the first place?

And once you know how those rates are determined, is there anything you can do to get the best rate for your mortgage?

The most critical determinant of the interest rate you will be quoted by the banks is your credit score. This is an issue that is in the headlines all the time, and everyone who is looking to buy a home is concerned about their “FICO” numbers.

The idea behind a FICO rating is that private agencies do an analysis on a borrower’s credit profile to determine the chances that he will be able to pay the loan. Using the financial data of the borrower, such as payment history, held, credit card and other debt, the score will help the bank decide how much to charge for the mortgage.

The next determinant that will influence your interest rate is the size of the deposit you are putting on the property.

The higher the down payment, the better the rate you will receive from the bank; this is because with a higher down payment, the bank has less exposure based on the value of the property.

This means that the bank can consider you a better risk and will lower your home loan rate. In order to accumulate a higher deposit, the longer you would have to pay rent, so that tradeoff has to be taken into account.

Another important factor in the determination of a loan rate is the maturity of the loan. When lenders commit funds for longer terms, they have to include a cushion into the rate.

This is why you will typically see short term loans at a lower rate than a 25 or 30 year mortgage. Despite this fact, many people prefer a longer, fixed term mortgage because they always feel that the rates over time will increase and the loan will cost more in the long run.

Which is what leads us to the next determinant for interest rates, one which you have no control over: the market. If interest rates are going up in general, interest rates on mortgages will go up as well, since banks have to pay interest on the money they obtain. These market rates are set according to complex economic indicators.

But just as rates go down as well as go up, many people would rather have a longer term fixed rate.

Another factor that has an influence on the rate of your mortgage is the size of your loan. Banks have limits as to the size of the home loans they can write, and anyone who requires a higher loan than that, even if they have the income to support it, will most likely pay a higher rate.

Buying A Condo In Toronto

admin — Mon, 07 Sep 2009 14:36:39 +0000

Monica Itiniant cites “Buying a home is not like purchasing a car, a mutual stock or other commodity”. “Buying a home in Toronto is plausibly the heaviest investment you’ll realize in your lifetime”. My name is Francois and I have had the joy to work alongside Monica Itiniant, from Royal LePage Real Estate Services in Toronto, to experience why so many of her clients say so many great things about her. Now lets get started, Monica states – To make sure you purchase the proper home, you will need to set about all aspects of buying a house with research and concern. Buying a home is a special time in your life and that’s why working with a great real estate agent specializing in buying property is a super idea. It is experience that you realize by working with an agent, and experience cuts the amount of headaches and unknown variables that the average person encounters when buying.

Monica points out, as so many others do, that buying a home in Toronto is probably the biggest investment you will realize, with long-term financial complications. Whether you’re browsing for previously owned or new, if you’re considering about buying a home, make sure you recognize its true condition before you produce an offer. An accomplished real estate agent should be able to guide you through each step to purchasing a home.

Now lets get to the heart of this. The steps involved in purchasing a house are simple: Determine what you NEED, then decide what you WANT. The next step is to figure how much you can AFFORD, and folks are financially ready. Do all the numbers, all your disbursals and all your incomes. Be precise. Then the next step is to acquire pre-financing. Make sure you go to your bank of choice, or use a mortgage broker, and tell them you desire to get pre-approved for buying a home. This pre-approval mortgage amount is a specific dollar number that tells you what you can afford. Dont start searching until you have this all-important $ number.

The next step would be to research the listings of homes for sale in your area through an online service or with your real estate agent. By comparing your home to recent sales and other alike homes on the market, you and your agent will promptly acknowledge what your home is valued. After you have found and viewed few homes, you may be at the point where you have discovered your perfect home. Work with a real estate agent and then negotiate an offer to your liking.

Lastly, have the home inspected by a reputable inspection company. A comprehensive inspection by a certified professional can mean the difference between getting your dream home, or moving into a long-term nightmare. With a right home inspection, youll understand why an inspection can offer a peace of mind to a purchaser.

Let Monica take the mystery out of buying a condo in Toronto, use her online website resources. Monica also points out, go and do some online inquiry, investigate with your local alderman/politician if there are governmental/municipal inducements when buying a home, or if there are renovation discounts available as well.

First-time homebuyers may be eligible to receive tax credits for buying a home in 2009, and 2010 (certain conditions apply). I can see that working alongside Monica for a day how passionate she is about her business. The function of this article was for Monica to stress to you this – it is important for you to understand all of the consequences and pitfalls involved in buying a home, so that you can find the house that meets your needs and buy it on terms you can afford. You want to own a dream home, not a nightmare, or a property you grow out of in 2 months.

To conclude, right now as I write this article with Monica, one of her clients is buying a home in the city and they asked her to help them determine what type of home in the area meets their needs. Which brings me to another serious point: when buying a home, take the time to find a premium real estate agent, they make your life so easy and less emotional with such a big purchase. Give Monica a call, because when you meet her, you will see why people like her.

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.

Ways Of Stopping Foreclosure Fast

admin — Fri, 04 Sep 2009 22:04:58 +0000

Because of the recession many people are faced with the terrible option of foreclosure. Stopping foreclosure on the other hand is something that can easily be done. If you want to keep your home, here are some great tips that will allow you to keep the home you love. It does not even matter if you have already received your notice! You can still stop the process and get back on your feet!

Lenders all over the country are losing money because people are losing their jobs and their means to pay their bills. Stopping foreclosure so something that can easily be done when you simply talk to your lender. If you have just been laid off, do not wait until the payments are overdue. Simply give them a call and see what they can do for you.

While you are on the phone with your lender you may want to think about a new payment plan. Because the job market is so low many people are out of jobs for months on end. If you will be using your savings, smaller payments each month will help make your savings stretch.

If you are behind in back payments then why not ask your lender to either let one or two of them slide or add them to your payment plan? In some occasions a lender might actually wipe away one or two payment in order to keep you current. Of course this means that you have to have a very good payment record. Those who do not make payments on time might not be able to get this option.

If you cannot get rid of a payment or two then why not add those to your payment plan? This way you would have to pay a couple of months extra but still be able to keep the home you love. If you owe 3 payments, then you would owe 3 more payments at the end of your mortgage.

If you have run out of options think about filing for bankruptcy. Many people stop their foreclosure and keep their homes by wiping the slate clean. Just make sure that you have the money to cover the bankruptcy attorney fees. Remember, the bankruptcy can follow you for about 7 years at least!

Right now stopping foreclosure is not a very hard feat. Lenders are more than willing to help out their customers with loan modifications and new payments plans. Call your lender and find out what they will be able to do for you.

A 3 Step Guide to Successfully Preparing Your House to be Sold

admin — Fri, 31 Jul 2009 12:50:13 +0000

There is a set of steps a real estate agent needs to take in order to prepare a property to be marketed effectively so that the home can be sold for its highest value in the most efficient amount of time. Although there are a number of variations on this procedure the following steps are needed to achieve the best result. Make sure to review this list and evaluate the Agents answers when you speak with them.

Step 1: Agent Interviews Interview several Realtors, the most satisfied clients are the ones who have interviewed other Agents; by knowing who else was out there they are confident right from the outset that they have made the right decision.

Step 2: Sign an Exclusive Listing Agreement Once you have decided on your Agent it is standard for them to ask you to sign an exclusive listing with them. This document will reassure the Realtor that the homeowner has made a decision and will be loyal to the selected Agent. Once the Agent has this reassurance they will start to invest their time and money into marketing the property.

The property is listed ‘Exclusively For Sale’ at 5% or 6% commission. The exclusive period usually lasts a week or two while the prep-work is done (pre-inspection, photography, home staging, floor plans, decor etc…). If the home is ‘double-ended’ and the Agent is not in competition, the Agent will normally be receptive to discussing a reduction in the commission. Double ended means that the listing Agent sells it to a client during this exclusive period. There is a specific set of rules that will allow the Agent to negotiate in good faith on behalf of both parties. I believe that this is actually not fair to the Seller since you sign a listing with them vowing to work in their best interest. It is appropriate to ask the listing Agent’s Broker to negotiate on behalf of the purchaser. This way both parties still receive fair representation.

Step 3: The House is Staged There are many different things that have to happen before a property can be properly marketed. Most of these items have to do with getting the property shined up and ready to be photographed and subsequently shown. This process is typically referred to as ‘Staging’ a home.

Staging can mean anything from a new coat of paint and some fresh flowers to entirely re-decorating and furnishing a home. There is great value in staging because it helps market a home to a broader audience then the current owner’s individual taste. This can be a very touchy subject because most people take great pride in their home, as they should, and think that it already looks its best. Unfortunately a lot of Buyers might not have the same appreciation for lime coloured paint or they may have trouble seeing how big the room is past all the boxes of receipts and tax papers from 1976.

It is usually the clutter and minor deficiencies that the home owner doesn’t notice anymore. They tell themselves they will get around to fixing it eventually and just never do. This is where the Agent has to be cautious not to overstep their boundaries, but make it clear that the goal is to sell the home for the most amount of money and it is therefore necessary to appeal to the widest audience possible. Quite often an agent will recommend a ‘Fluffer’ or ‘Stager’ to do this because that way they don’t have to be the bad guy. The goal of staging is to make the house desirable to everyone who would be looking in their market.

The Agent should shoulder the costs of all the marketing, but the homeowner is expected to pick up the costs of staging and any pre-inspections. These are suggestions that will net them more money at the end of the day and stay with the house after sale.

At this point the house is ready to be professional photographed and subsequently marketed. Don’t underestimate the value of having your home professionally photographed. Pictures form the basis of any marketing campaign. To sell your house for the most amount of money in the least amount of time you need you home looking its absolute best.