Tips For Locking in the Best Home Mortgage Rate
By Mick Taylor
Tip #1: Always Shop For Home Mortgage Rates
Don't blindly accept a Realtor or Builder referral to apply for a Home Mortgage through their preferred lender. Many times they will say, "We work closely with this guy and he gets the job done". Translation: "We play golf together and he buys the beer". Remember, the Realtor won't be paying the bill each month for the next 30 years, you will.
Mortgage Loan Officers that work off of a referral network of Realtors and Builders don't have to have competitive Home Mortgage Rates because they have a steady stream of "Drones" (people who are referred to them and don't shop) calling them. Shop around, get the lowest cost Home Mortgage Rate, then if you are inclined, approach the "preferred" Loan Officer you were referred to and ask him to match the quote.
If you apply for a Home Mortgage through a preferred lender without shopping, you will pay hundreds or even thousands of dollars in additional costs.
Tip #2: Call For Home Mortgage Quotes After 11:00 a.m. Eastern Time
Mortgage Rates change each day and sometimes midday. The previous day's rates typically expire by 8:30 a.m. the next morning. Generally, Home Mortgage Rates are published each day by 11:00 a.m. Eastern time. This varies from lender to lender. To make sure you are getting Home Mortgage Rates from the current day and not a mixture of rates from the previous day from some lenders and the current rates from other lenders, always do your rate shopping after 11:00 a.m. Eastern time.
Get all your quotes after 11:00 a.m. Eastern time.
Sometimes Home Mortgage Rates change midday due to a volatile bond market. When this happens, some Home Mortgage Lenders will adjust the Discount Points for their rates in accordance with the new bond prices and publish new Home Mortgage Rates for that day. Other Lenders may continue to honor their morning rates.
Tip#3: Always Tell The Mortgage Loan Officer You Are Prepared To Apply For A Loan NOW
If you are buying a home, tell the Home Mortgage Loan Officer you are Rate shopping and you have a "ratified contract" to purchase a house. Tell him you intend to make a decision and Lock-In a rate on that day, but you have to check a few other lenders. If he asks you how his rates compare to the others, tell him he's the first person you've called. If you are refinancing, tell the Home Mortgage Loan Officer you are ready to apply for a Refinance Home Mortgage today. If you don't tell him that, he may provide a fake Home Mortgage Rate quote.
Loan Officers know you will probably talk to another lender with lower Home Mortgage Rates and the only way he can be sure for you to call him back is to give you a fake quote that appears to be the lowest. He's expecting you will rate shop for several days and figures you will call him back in a day or two because he provided a low, bogus rate quote. Also, since Home Mortgage Rates change daily and are subject to change at any time, he's not concerned about giving you a fake quote.
How will you compare quotes if you don't know which quotes are real and which are part of a bait and switch plan? The only way to ensure getting real quotes is to box in the Home Mortgage Loan Officers by making them think you are ready to Lock-In a Home Mortgage Rate immediately.
Tip#4: Ask For The Total Points And The Total Fees
When you call a Mortgage Lender, ask for the "Total Points" (Discount Points, Loan Origination Fee, Broker Points) for each Home Mortgage Rate. Some lenders will only quote the Discount Points and deliberately leave out the Loan Origination Fee. You won't find out about the 1.00 Point Loan Origination Fee until you apply for the Home Mortgage. By that time, the Loan Officer figures you will just accept it because he's got your application and pulled your credit report. In addition, Mortgage Brokers often neglect to mention their Broker Fee.
Some lenders do not charge a Loan Origination Fee.
When you are quoted the Total Points, specifically ask them if there is an additional Loan Origination Fee or Broker Fee being charged. You truly have to nail this down when you talk to a Home Mortgage Loan Officer.
Also, ask for a list of ALL other fees that will appear on the Good Faith Estimate that you will be paying to the Lender or Broker. Make sure they include their Credit Report and Appraisal Fees. Some lenders charge one lump sum fee and that includes the Credit Report and Appraisal Fees while other lenders will itemize each fee. Keep it simple and ask for all fees, including the cost of the credit report and appraisal fees.
Don't get confused by Title Company, Attorney Fees or Escrows. A lender will estimate these on your Good Faith Estimate, but these charges are not related to costs associated with a Mortgage Rate quote. The amount required for your escrow account will not change from lender to lender and Title Company and Attorney Fees are not being charged by the lender. Don't include them in your comparison.
Tip#5: Always Confirm The Rate Lock Period When Asking For A Rate Quote
If you are buying a home and you need 60 days to close, make sure you specifically request Mortgage Rate quotes with a 60 Day Lock period. Some Home Mortgage Loan Officers will quote rates with 15 Day or 30 Day Lock periods because the Discount Points for shorter lock periods are less than rate locks for longer periods. Quoting a Home Mortgage Rate with a 15 Day lock period obviously gives that Loan Officer an unfair edge. It is also a waste of your time because the quote isn't real if you can't settle on your loan within 15 days. Always specify a 60 Day Lock-In if you are buying a home. Ask for 45 Days if you are refinancing, but you may be able to get it done within 30 days if you are very diligent and call your Home Mortgage Loan Officer twice a week for a status of your application.
If your rate lock expires, the lender will re-lock you at the higher of either the original rate or the current rate when you decide to re-lock. That's a LOSE/LOSE situation for you. Never let your rate lock expire.
Tip#6: Compute The Dollar Cost Of The Points And Add All Fees
After you've spent some time talking to a bunch of Mortgage Loan Officers, you will have lots of Rates, Points and Fees on a sheet of paper. You will need to compute the dollar cost of the Points (multiply the mortgage amount X the Total Points expressed as a percent; For example, multiply 400,000 mortgage amount X.625% for.625 Points). Then add the dollar cost of the points to the Total Fees. You can then compare each Home Mortgage Lender's Total Cost (dollar cost of the points + all lender related fees) for a given rate. That will show you which Home Mortgage Lender has the lowest cost Home Mortgage Rates.
If Mortgage Insurance (not to be confused with mortgage life insurance) is required on a Conventional Home Mortgage, ask for the cost per year expressed as a percent and compare it from lender to lender. Some lenders require different levels of coverage and this will affect your monthly Mortgage Insurance payment. In addition, lenders use several different mortgage insurance companies and they charge different rates for their coverage. The lender will select the mortgage insurance company.
The cost of Mortgage Insurance can vary from lender to lender even though most Home Mortgage Loan Officers will say, "We don't determine the Mortgage Insurance coverage, Fannie Mae and Freddie Mac do". Your can just say, "Please humor me and provide the Monthly Mortgage Insurance expressed as a percent".
You will want to check the quoted percent with what is on your initial application documents and final loan documents to make sure the Monthly Mortgage Insurance payment isn't higher than what you were quoted. If it is, get it reduced immediately. If they won't do that, then ask them to reduce your Home Mortgage Rate by.125% and that should cover the difference.
If you are getting a government insured mortgage (FHA or VA), you don't have to get into a comparison of the FHA MIP or the VA Funding Fee. This is a cost you will be paying, however every lender MUST use the same costs, so there is no reason to attempt to compare these costs from lender to lender.
Tip#7: When You've Found The Lowest Cost Rate, Apply and Lock The Rate
While you were looking for houses or thinking about refinancing, you may have shopped around and gotten some quotes from lenders and narrowed down your search to the best 5 Home Mortgage Lenders or Brokers. But when it is time to apply for your Mortgage, make sure you update your quotes for the 5 lowest priced Home Mortgage Lenders. After you identify the Home Mortgage Lender with the lowest cost rate, call and apply for the loan. Tell the Home Mortgage Loan Officer you want to Lock-In your Home Mortgage Rate and apply NOW. If the quote has changed since you updated your quotes a couple of hours before, tell the Loan Officer you want him to honor the previous quote. If he won't do it, tell him you may call back. Then call the next cheapest Home Mortgage Lender on your list. If that lender tells you the same thing, you can go back to the first lender and proceed with the application process.
Before you provide your application information, make sure the Home Mortgage Loan Officer agrees to provide you with an actual Rate Lock confirmation via email or fax on the same day you apply for your loan. When you receive the Rate Lock confirmation, check it and make sure you are Locked-In for the number of required days (30, 45 or 60), with the correct Loan Type (30 Year Fixed, 15 Year Fixed, etc.), with the correct Total Points quoted. It's normal for a lender to require you to apply over the phone before they will Lock-In your Home Mortgage Rate.
TIP#8: Never Float The Rate
If the Mortgage Loan Officer thinks you might be inclined to FLOAT your Rate and Points, he may say, "I think the rates are going to be coming down, so you might want to FLOAT". Remember this, never FLOAT your Home Mortgage Rate. Never. Always Lock-In the Rate and Points. If you FLOAT, and the Discount Points for Home Mortgage Rates drop, you will only realize the benefit of a small part of that drop in the Points, if any at all. The Home Mortgage Loan Officer will keep the rest of the savings as a fat commission.
Here's how they increase their commission when you FLOAT. Originally, the lender quoted 4.875% with 1.00 Total Point when you applied for your loan. Then 45 days later you called to Lock-In. Keep in mind that over the 45 day period that you were FLOATING, the actual Points for 4.875% dropped to.250 Total Points. So you should have saved.75 Total Points on your 4.875% rate. Right? No! First, you don't know if his company's points have dropped or by how much they might have dropped. So, instead of giving you 4.875% for.250 Total Points, the Home Mortgage Loan Officer tells you his rates only dropped a little bit. He says you can Lock-In 4.875% for.75 Total Points. You are happy because it is.25 lower than what it was when you applied for your loan, but the Home Mortgage Loan Officer is ecstatic because he keeps half of the "overage" you paid. That overage is.50 points and he splits this with his company. If the mortgage amount was $400,000, he just earned.25% which is an additional $1,000 commission. That's not bad for a five minute phone conversation.
If you FLOAT and the Discount Points for Mortgage Rates increase, you will pay for the increase. FLOATING is a LOSE/LOSE proposition for you and a WIN/WIN for the Home Mortgage Loan Officer.
Some companies quote very low rates and attract lots of applications, but they don't let you Lock-In until 15 Days prior to loan closing. If you apply for a Mortgage through a company with that policy, you will get screwed. When it's time to Lock-In your Mortgage Rate, you will pay an "overage" that will go straight to the Mortgage Loan Officers pocket. You will either pay more points for the rate you requested at the time of application or you will get a higher rate. Either way, you will get screwed and the Loan Officer will get a fat overage added to his commission.
Tip#9: Get a Final Good Faith Estimate Several Days Before Loan Closing
Get a copy of the Final Good Faith Estimate at least a few days before the scheduled closing day. Check the Mortgage Rate, Points, Fees and Monthly Mortgage Insurance Premium (if applicable). Make sure you are getting exactly what you bargained for. Ask questions if you don't understand something. Demand that previously undisclosed fees be removed from the Final Good Faith Estimate. Make sure you get a revised estimate if the Mortgage Loan Officer verbally agrees to make changes.
The day of loan closing is the wrong time to haggle over discrepancies. Click Here! http://homefunding.com
Article Source: [http://EzineArticles.com/?Tips-For-Locking-in-the-Best-Home-Mortgage-Rate&id=4271545] Tips For Locking in the Best Home mortgage
Friday, May 21, 2010
Tuesday, May 18, 2010
mortgage
By Ailsa Forshaw
This is a great time to Refinance Your Home or Buy a New Home -- the Mortgage Rates are so low, these days! It's always worth a shot to find out what the costs of switching over to a new mortgage would be, to see if that's the right move for you.
Whether you are building your own house, buying a new property, gathering funds to do a renovation project, or Refinancing your current Mortgage at a much Lower Rate, you'll be looking for Funding -- Money, Money & More Money! Here are some commonly asked questions regarding funding for a Mortgage or a Home Improvement Loan.
Where should I go first to get a Mortgage?
You can go to the Loans Department of your regular bank, or you can go directly to a Mortgage Broker. (Click on the Mortgage Company Ads on rel=nofollow http://www.buildyourownhouse.ca to see if that's the easiest way for you to get the money you need... At the very least, it'll tell you how much you're qualified for, and the on-line Lenders have Rates the Banks have a hard time competing with. It's all about Saving Money, so check into it all, first -- it's a big financial decision! You can always take your information you've gotten On-line to the Bank -- if they can't or won't match it, there's your decision right there! ha,ha!).
Keep in mind that it is generally easier to work with a Broker, since they have the ability to be a lot more flexible than a conventional bank. Also, their rates will often be considerably lower than what the banks are offering, too, so shop around - this could save you a fair bit of money. Brokers can often get a mortgage for clients that a bank won't even touch, and they'll do it at your convenience, for the most part, so you can have a more relaxed meeting with them.
What questions will a Broker ask somebody who's looking for a Mortgage?
There are three main things you will be required to provide:
i.Verification of Income
ii.How much and where the Down Payment is coming from
iii.Personal information for Credit Checks (Birthday, Social Security Number, Address, Job Letters, Pay Stubs, 3 years worth of Tax Returns, 3 months worth of Bank Statements, any current Retirement Savings Funds...)
Your Banker or Broker will want to confirm your ability to qualify by doing a GDS Ratio (Gross Debt Ratio) and a TDS Ratio (Total Debt Ratio).
A Gross Debt Ratio is determined by taking the Mortgage Payment, the Property Taxes, and a Heat Component (really hot areas will be exempt from this, I'm guessing!), which is usually around $50.00. These numbers are added together. That number is multiplied by 12, then divided by your Gross Income Amount. This number can't exceed 32% of your Gross Income. Some banks &/or brokers may have different criteria, but this is a commonly used method to see if a client can qualify for a mortgage.
The Total Debt Ratio takes the above information (the GDS Ratio) along with all other debts and payments (whatever else you have to pay per month - credit cards, support payments, etc.) to make sure that the Grand Total of all of your payments, including the new mortgage and taxes, won't exceed 40% of your Gross Income.
N.B. Don't get too hung up on the math - that's the job of the banker or broker. This is just info to give you a good understanding of how they get their numbers.
What if someone has a job that is technically referred to as "Part-time", but they make a "Full-time" wage. Can they qualify for a Mortgage?
You can apply through a Mortgage Broker (probably your best bet) to see how much your Gross Income will allow you to qualify for. It is particularly beneficial if you have a solid work history (have been at the job for a few years, or more). A Broker will know how to present the documentation to help you get a mortgage. This is particularly important, now, since so many companies and Government Services hire 'Part-time' or 'Contract' employees. These can be career positions, and you can be there for fifteen years, and still be flatly turned down by the regular banks. Don't give up on your dream to own your own home because you're in a situation like this - call a Mortgage Broker, and give it a shot. If that still doesn't work, try another one. What's the harm? At the very least, you can get an honest answer of what you need to do in order to become qualified. Either way, you'll be that much closer to owning your own place, and that's the goal!
Is there an easy way to calculate a Mortgage?
There's a formula that I use that is relatively accurate, give or take a hundred dollars, or so. At the very least, you'll get a ballpark idea of your monthly payment (not including the Tax portion), and whether you can qualify for that amount. Remember that when you're qualifying for Mortgage money, if you're even $80.00 over what they think you can pay, you won't get the mortgage. It's best to Pre-Qualify for a mortgage, and ask how much you will qualify for before you go house-hunting. Keep in mind that as the Interest Rates get lower, the more you'll be able to qualify for. Don't go crazy, though, since all the costs go up as you increase in house size, and the monthly operating costs might end up being higher than you thought, then you've got a big house and a crappy lifestyle. Stay within your means; stay happy and comfortable.
The Formula - remember, it's a ballpark number...
On a 25 year Term, you would take the Percentage Rate (say, 5%) and multiply that out by the number of thousand (say, $100,000.), which would give you a mortgage payment of about $500./month (5 X 100 = $500.), plus Taxes. So if you've found a house for $165,000.00, and the rate is 5%, (based on a 25 yr. Term), the payment would be around $825.00, plus taxes, per month. (5 X 165 = 825)
We use this formula all the time - it's functional to see if you can even come close to being able to afford a particular property. If you always find yourself looking at the properties worth $300,000., when you can actually afford a $75,000. property, do the math, figure out what you can really buy, and get that. It's better to buy something already in your range, save your money, wait until your place has gained in equity, then make the move up. Have your Broker or Banker let you know how much you can spend, and have that up-dated every year, or so, depending on how long it takes you to find a place to purchase, especially when the rates are fluctuating so much. Also, your Broker will tell you the exact payment.
Can I qualify for a Mortgage based on the lowest rates out there?
Different Lending Institutions will have different rules, but you will generally have to qualify under their 3 Year Rate, which will be higher than the lowest rates available. Some institutions will use the 5 Year Rate (primarily regular banks).
What's the difference between an Open and a Variable Rate Mortgage?
An Open Mortgage is one that can be paid out at any time, but you will pay a higher Rate for this privilege. This is a good choice if you're not sure how long you'll be staying in the home. You'll save on the possible Penalty Payments you would have to pay if you had a Fixed Rate Mortgage, and had to move before the pre-chosen Time Period had elapsed.
A Variable Rate Mortgage (my favorite!) is not fully Open, but it can easily be converted into an Open Mortgage, so you would still save on any potential Penalty Payments. With this Mortgage, you'll usually get better than Prime Rates, and the flexibility to move if something better comes along...! The other thing I really like about this one is that you can usually make payments directly on the Principle, which will reduce your mortgage faster than almost any other method. Your monthly mortgage payment will be as low as possible, so with the extra money that you might have kicking around, put it in a Savings Account, then make the payments annually (or more - ask you Broker how often and when you can pay off the Principle).
One thing about this type of Mortgage that might seem off-putting, initially, is the fact that the interest rates actually fluctuate within the mortgage. This is not necessarily a bad thing, especially if the rates go down after you've established the mortgage. The important thing to remember is that the amount you pay per month will always be the same - the only thing that changes is the amount that will come off the Principle. If interest rates start to rise, make an extra effort to set aside some money to pay directly to the Principle.
My biggest Financial Pet Peeve is the whole notion of making two payments per month (or Bi-Weekly Payments) that are really high in an effort to pay off the Mortgage faster (usually a 15 year term). This drives me crazy, since it often puts a lot of unnecessary financial pressure on a family. That's a lot of money to come up with in a month, and if disaster strikes, they'll be in serious trouble very quickly. I always think that it's better to establish the lowest possible monthly expenditures, then if you still have a big wad of cash left over, great - put that toward the mortgage. Using the Variable Rate Mortgage will give you the lowest mortgage payment.
Here's a quick example: If you have a mortgage of $100,000. @ 5% (using a 25 Year Term), using the Variable Rate Mortgage, your monthly payment would be about $500/month, plus taxes. If you have the same mortgage in a Fixed Rate Mortgage (also a 25 year term), @ 6%--remember that the Variable Rate is lower - the monthly amount would be about $650, plus taxes. (Note that a Fixed Rate Mortgage is calculated differently from a Variable Rate Mortgage) If you were to sign up for the two-payment a month plan, that's $1300/month. The spread ($500/month to $1300/month) is $800. Multiplied out by a year is $9,600 - that would be a huge Lump Sum Payment directly on your Principle.
Keep in mind that only a tiny amount of your regular monthly mortgage payment goes toward the Principle in a new mortgage - have a good look at your Statement, the next time it comes in. Even if you were to put half that amount on the Principle, you would still be making a major dint in it. And your financial life won't be so stressful, which will make the rest of your life much nicer, too, since financial stress is one of the leading causes of divorce, but that's a whole other story...
What's a Fixed Rate Mortgage?
A Fixed Rate Mortgage is a mortgage that will have the same rate for the amount of years you have chosen to lock in at. Typically, there are 1 Year, 2 Year, 3 Year, 5 Year, 10 Year, 15 Year, and 25 Year time periods. If you choose to move before the time period is up, you will be required to pay a Pay Out Penalty, so keep that in mind if you're not completely sure how long you'll be there.
What's the best way to get money for a Home Renovation Project?
Check first with the Financial Institution that's carrying your Regular Mortgage. They may be able to provide the money you need to renovate. You could borrow on your Equity (the spread between how much you owe for the property and its current appraisal rate) in the form of a Home Improvement Loan or a Home Equity Loan. Keep in mind that you can use a Home Equity Loan for other stuff, as well. Your bank should be able to offer you a Blended Rate, and should waive the Pay Out Penalties. If they won't offer that, or give you any loan, call a Broker, and see what they can do. They're not miracle workers, but they can often help when the regular route won't come through for you.
The easiest way these days is to check out companies on the Internet. You'll get your response a lot faster, and probably get a better rate, too! I'll find some for you and post them here!
The bank wants to do an Appraisal on my house before they'll give me a Home Improvement Loan. Is that standard?
Yes. (You'll need this for the Home Equity Loan, too.) The financial institution needs to know the current value of your home to make sure that their backs are covered. Makes sense. You will probably have to get a 'Before and After Appraisal', quotes from the respective contractors to show proof of renovation, and a description of the type of renovations you're planning. It's much easier to borrow against the Equity, so try this route, first. Talk to your Lender before you get too involved to see what you can actually get, and when. If you have to pay for the whole job out of your own pocket first (as is often the case, which is craaaazy, since if you had the cash just sitting there, you wouldn't be at the bank, anyway....ah, the joy of financing!), make sure that you find a source for material that will provide a payment plan (many home improvement stores will do this), and a contractor who doesn't mind being paid at the end of the job when you're money comes in.
N.B. Just a little aside - I've seen some 'warnings' out there that you should nevah', evah' pay your contractor up front or in the middle of a job, or only pay them when you are 'completely satisfied'. Please. There are some people who are never satisfied with anything, even if they get exactly what they requested. This is such complete crap. You would never work for an employer for a year, then at the end of that year, he would sit back and decide whether he should pay you. That's crazy. Be smart about it, though. Get everything in writing, both of you agree to it, then sign the quote. You will often be required to pay for materials up-front, since the contractor doesn't know you anymore than you know him...Generally, you will make payments as the work progresses, which is easier than getting one big bill at the end, but if you have extenuating circumstances (like the bank won't give you the money until the end of the project), then tell your contractor that at the beginning. All projects work more smoothly when there's open and complete communication.
How do you get a Builder's Loan?
Apply for a Builder's Loan the same way you would apply for a regular mortgage. If you are a new Builder, you may require a 'New Home Warranty' on the property. That's pretty difficult, if it's your first house, so you may be calling a Broker right away! They're usually more flexible in getting you the capital you'll need to bring the house to fruition, but if you already have a good relationship with your banker, give them a crack at it. This might be easier in a rural area, where it is more common for people to build on their own, so the financial institution will already know how to manage this scenario.
When will we get our money?
The money is separated into 3 or 4 sections, or 'Draws'. Generally, you will get the funding in Three Stages:
i.Sub-floor
ii.Lock Up
iii.Completion
Can we get money to get to the Sub-floor Stage?
This is where careful and creative financing comes in... hopefully, you'll have that swack of cash in the bank (at least twenty thousand), and a fair bit of equity in your home. You'll probably need to sell your current property before you start building your new house, so you can use the equity spread from that sale to get the new house started. If your land is already paid for, you'll find this stage easier. Some Developers will allow a new builder to put 5% down on the land, then they can pay the balance when the mortgage money comes in. This is relatively rare, so if you find this deal and like the location, go for it.
Talk to your Excavator, Foundation Contractor and Framer to see if you can make partial payments until the First Draw comes through. They're in the business, so they'll understand your situation. A lot will depend on how busy they are and the relationship you establish with them. Some Suppliers (lumber, ICF Blocks, etc.) may have a payment schedule, too, so it doesn't hurt to ask if you need to.
A Personal Line of Credit from the bank, along with your regular credit cards (again, if you have an Air Miles credit card, now is the time to use it -- you'll really rack up the points, then you can take a well deserved trip at the end of your house-building adventure!), personal loans, etc. will all come into play, now. You might want to make sure you have an alternate source of funds for a 'just in case' scenario. It's best to plan out all the possibilities before you get started so that nothing will catch you off-guard.
What kind of Appraisals will the Bank do?
First, the Appraiser will inspect the Land, the House Plans, and your Proposed Budget. The amount of money provided for the Builder's Loan will be based on the Cost to Complete the house, not including the value of the land. The Land will be included with the final appraisal for the Completion Mortgage (Take Out Mortgage).
The Appraiser will come out to your property to do Progress Inspections at the Three Stages - Sub-floor, Lock-up and Completion. You should anticipate a one to two week waiting period for the Draw Money to come through. During that time, the bank will most likely have a lawyer check the Title each time.
It's an involvtion can't get you the money, try a Broker or two...eventually, it'll all work out!
One more thing -- What is Escrow??? I know, you hear that all the time! It's that seemingly very long period that your Lawyer holds onto your money while all the conditions are met on the House Deal. Make sure you ask your Lawyer for a good idea of the time-frame you might expect, and be sure not to leave yourself too tight (moneywise!) during this annoyink period!
Just so you know, a Real Estate Lawyer will be very pleasant to deal with ... they don't seem to deal with a lot of animosity, like many other types of Lawyers, and that probably accounts for their serene expressions! ha,ha,ha! They're there to help you get into or out of your home, so don't worry -- it won't hurt a bit!
Ailsa Forshaw is a Writer, Builder, Website Owner & Manager, Teacher, Mother... all in Alberta, Canada. She is Married with Two Lovely Children, and one gorgeous wee dog. Her Website, http://www.buildyourownhouse.ca, is chock full of all sorts of useful & fun information to help anyone become Financially Successful, Slim, Trim, and Happy... what more could you want?? Pop in for a wee visit! http://www.buildyourownhouse.ca http://www.theScottishDiet.com
Article Source: [http://EzineArticles.com/?Mortgage-Info-You-Can-Actually-Understand!&id=58879]
This is a great time to Refinance Your Home or Buy a New Home -- the Mortgage Rates are so low, these days! It's always worth a shot to find out what the costs of switching over to a new mortgage would be, to see if that's the right move for you.
Whether you are building your own house, buying a new property, gathering funds to do a renovation project, or Refinancing your current Mortgage at a much Lower Rate, you'll be looking for Funding -- Money, Money & More Money! Here are some commonly asked questions regarding funding for a Mortgage or a Home Improvement Loan.
Where should I go first to get a Mortgage?
You can go to the Loans Department of your regular bank, or you can go directly to a Mortgage Broker. (Click on the Mortgage Company Ads on rel=nofollow http://www.buildyourownhouse.ca to see if that's the easiest way for you to get the money you need... At the very least, it'll tell you how much you're qualified for, and the on-line Lenders have Rates the Banks have a hard time competing with. It's all about Saving Money, so check into it all, first -- it's a big financial decision! You can always take your information you've gotten On-line to the Bank -- if they can't or won't match it, there's your decision right there! ha,ha!).
Keep in mind that it is generally easier to work with a Broker, since they have the ability to be a lot more flexible than a conventional bank. Also, their rates will often be considerably lower than what the banks are offering, too, so shop around - this could save you a fair bit of money. Brokers can often get a mortgage for clients that a bank won't even touch, and they'll do it at your convenience, for the most part, so you can have a more relaxed meeting with them.
What questions will a Broker ask somebody who's looking for a Mortgage?
There are three main things you will be required to provide:
i.Verification of Income
ii.How much and where the Down Payment is coming from
iii.Personal information for Credit Checks (Birthday, Social Security Number, Address, Job Letters, Pay Stubs, 3 years worth of Tax Returns, 3 months worth of Bank Statements, any current Retirement Savings Funds...)
Your Banker or Broker will want to confirm your ability to qualify by doing a GDS Ratio (Gross Debt Ratio) and a TDS Ratio (Total Debt Ratio).
A Gross Debt Ratio is determined by taking the Mortgage Payment, the Property Taxes, and a Heat Component (really hot areas will be exempt from this, I'm guessing!), which is usually around $50.00. These numbers are added together. That number is multiplied by 12, then divided by your Gross Income Amount. This number can't exceed 32% of your Gross Income. Some banks &/or brokers may have different criteria, but this is a commonly used method to see if a client can qualify for a mortgage.
The Total Debt Ratio takes the above information (the GDS Ratio) along with all other debts and payments (whatever else you have to pay per month - credit cards, support payments, etc.) to make sure that the Grand Total of all of your payments, including the new mortgage and taxes, won't exceed 40% of your Gross Income.
N.B. Don't get too hung up on the math - that's the job of the banker or broker. This is just info to give you a good understanding of how they get their numbers.
What if someone has a job that is technically referred to as "Part-time", but they make a "Full-time" wage. Can they qualify for a Mortgage?
You can apply through a Mortgage Broker (probably your best bet) to see how much your Gross Income will allow you to qualify for. It is particularly beneficial if you have a solid work history (have been at the job for a few years, or more). A Broker will know how to present the documentation to help you get a mortgage. This is particularly important, now, since so many companies and Government Services hire 'Part-time' or 'Contract' employees. These can be career positions, and you can be there for fifteen years, and still be flatly turned down by the regular banks. Don't give up on your dream to own your own home because you're in a situation like this - call a Mortgage Broker, and give it a shot. If that still doesn't work, try another one. What's the harm? At the very least, you can get an honest answer of what you need to do in order to become qualified. Either way, you'll be that much closer to owning your own place, and that's the goal!
Is there an easy way to calculate a Mortgage?
There's a formula that I use that is relatively accurate, give or take a hundred dollars, or so. At the very least, you'll get a ballpark idea of your monthly payment (not including the Tax portion), and whether you can qualify for that amount. Remember that when you're qualifying for Mortgage money, if you're even $80.00 over what they think you can pay, you won't get the mortgage. It's best to Pre-Qualify for a mortgage, and ask how much you will qualify for before you go house-hunting. Keep in mind that as the Interest Rates get lower, the more you'll be able to qualify for. Don't go crazy, though, since all the costs go up as you increase in house size, and the monthly operating costs might end up being higher than you thought, then you've got a big house and a crappy lifestyle. Stay within your means; stay happy and comfortable.
The Formula - remember, it's a ballpark number...
On a 25 year Term, you would take the Percentage Rate (say, 5%) and multiply that out by the number of thousand (say, $100,000.), which would give you a mortgage payment of about $500./month (5 X 100 = $500.), plus Taxes. So if you've found a house for $165,000.00, and the rate is 5%, (based on a 25 yr. Term), the payment would be around $825.00, plus taxes, per month. (5 X 165 = 825)
We use this formula all the time - it's functional to see if you can even come close to being able to afford a particular property. If you always find yourself looking at the properties worth $300,000., when you can actually afford a $75,000. property, do the math, figure out what you can really buy, and get that. It's better to buy something already in your range, save your money, wait until your place has gained in equity, then make the move up. Have your Broker or Banker let you know how much you can spend, and have that up-dated every year, or so, depending on how long it takes you to find a place to purchase, especially when the rates are fluctuating so much. Also, your Broker will tell you the exact payment.
Can I qualify for a Mortgage based on the lowest rates out there?
Different Lending Institutions will have different rules, but you will generally have to qualify under their 3 Year Rate, which will be higher than the lowest rates available. Some institutions will use the 5 Year Rate (primarily regular banks).
What's the difference between an Open and a Variable Rate Mortgage?
An Open Mortgage is one that can be paid out at any time, but you will pay a higher Rate for this privilege. This is a good choice if you're not sure how long you'll be staying in the home. You'll save on the possible Penalty Payments you would have to pay if you had a Fixed Rate Mortgage, and had to move before the pre-chosen Time Period had elapsed.
A Variable Rate Mortgage (my favorite!) is not fully Open, but it can easily be converted into an Open Mortgage, so you would still save on any potential Penalty Payments. With this Mortgage, you'll usually get better than Prime Rates, and the flexibility to move if something better comes along...! The other thing I really like about this one is that you can usually make payments directly on the Principle, which will reduce your mortgage faster than almost any other method. Your monthly mortgage payment will be as low as possible, so with the extra money that you might have kicking around, put it in a Savings Account, then make the payments annually (or more - ask you Broker how often and when you can pay off the Principle).
One thing about this type of Mortgage that might seem off-putting, initially, is the fact that the interest rates actually fluctuate within the mortgage. This is not necessarily a bad thing, especially if the rates go down after you've established the mortgage. The important thing to remember is that the amount you pay per month will always be the same - the only thing that changes is the amount that will come off the Principle. If interest rates start to rise, make an extra effort to set aside some money to pay directly to the Principle.
My biggest Financial Pet Peeve is the whole notion of making two payments per month (or Bi-Weekly Payments) that are really high in an effort to pay off the Mortgage faster (usually a 15 year term). This drives me crazy, since it often puts a lot of unnecessary financial pressure on a family. That's a lot of money to come up with in a month, and if disaster strikes, they'll be in serious trouble very quickly. I always think that it's better to establish the lowest possible monthly expenditures, then if you still have a big wad of cash left over, great - put that toward the mortgage. Using the Variable Rate Mortgage will give you the lowest mortgage payment.
Here's a quick example: If you have a mortgage of $100,000. @ 5% (using a 25 Year Term), using the Variable Rate Mortgage, your monthly payment would be about $500/month, plus taxes. If you have the same mortgage in a Fixed Rate Mortgage (also a 25 year term), @ 6%--remember that the Variable Rate is lower - the monthly amount would be about $650, plus taxes. (Note that a Fixed Rate Mortgage is calculated differently from a Variable Rate Mortgage) If you were to sign up for the two-payment a month plan, that's $1300/month. The spread ($500/month to $1300/month) is $800. Multiplied out by a year is $9,600 - that would be a huge Lump Sum Payment directly on your Principle.
Keep in mind that only a tiny amount of your regular monthly mortgage payment goes toward the Principle in a new mortgage - have a good look at your Statement, the next time it comes in. Even if you were to put half that amount on the Principle, you would still be making a major dint in it. And your financial life won't be so stressful, which will make the rest of your life much nicer, too, since financial stress is one of the leading causes of divorce, but that's a whole other story...
What's a Fixed Rate Mortgage?
A Fixed Rate Mortgage is a mortgage that will have the same rate for the amount of years you have chosen to lock in at. Typically, there are 1 Year, 2 Year, 3 Year, 5 Year, 10 Year, 15 Year, and 25 Year time periods. If you choose to move before the time period is up, you will be required to pay a Pay Out Penalty, so keep that in mind if you're not completely sure how long you'll be there.
What's the best way to get money for a Home Renovation Project?
Check first with the Financial Institution that's carrying your Regular Mortgage. They may be able to provide the money you need to renovate. You could borrow on your Equity (the spread between how much you owe for the property and its current appraisal rate) in the form of a Home Improvement Loan or a Home Equity Loan. Keep in mind that you can use a Home Equity Loan for other stuff, as well. Your bank should be able to offer you a Blended Rate, and should waive the Pay Out Penalties. If they won't offer that, or give you any loan, call a Broker, and see what they can do. They're not miracle workers, but they can often help when the regular route won't come through for you.
The easiest way these days is to check out companies on the Internet. You'll get your response a lot faster, and probably get a better rate, too! I'll find some for you and post them here!
The bank wants to do an Appraisal on my house before they'll give me a Home Improvement Loan. Is that standard?
Yes. (You'll need this for the Home Equity Loan, too.) The financial institution needs to know the current value of your home to make sure that their backs are covered. Makes sense. You will probably have to get a 'Before and After Appraisal', quotes from the respective contractors to show proof of renovation, and a description of the type of renovations you're planning. It's much easier to borrow against the Equity, so try this route, first. Talk to your Lender before you get too involved to see what you can actually get, and when. If you have to pay for the whole job out of your own pocket first (as is often the case, which is craaaazy, since if you had the cash just sitting there, you wouldn't be at the bank, anyway....ah, the joy of financing!), make sure that you find a source for material that will provide a payment plan (many home improvement stores will do this), and a contractor who doesn't mind being paid at the end of the job when you're money comes in.
N.B. Just a little aside - I've seen some 'warnings' out there that you should nevah', evah' pay your contractor up front or in the middle of a job, or only pay them when you are 'completely satisfied'. Please. There are some people who are never satisfied with anything, even if they get exactly what they requested. This is such complete crap. You would never work for an employer for a year, then at the end of that year, he would sit back and decide whether he should pay you. That's crazy. Be smart about it, though. Get everything in writing, both of you agree to it, then sign the quote. You will often be required to pay for materials up-front, since the contractor doesn't know you anymore than you know him...Generally, you will make payments as the work progresses, which is easier than getting one big bill at the end, but if you have extenuating circumstances (like the bank won't give you the money until the end of the project), then tell your contractor that at the beginning. All projects work more smoothly when there's open and complete communication.
How do you get a Builder's Loan?
Apply for a Builder's Loan the same way you would apply for a regular mortgage. If you are a new Builder, you may require a 'New Home Warranty' on the property. That's pretty difficult, if it's your first house, so you may be calling a Broker right away! They're usually more flexible in getting you the capital you'll need to bring the house to fruition, but if you already have a good relationship with your banker, give them a crack at it. This might be easier in a rural area, where it is more common for people to build on their own, so the financial institution will already know how to manage this scenario.
When will we get our money?
The money is separated into 3 or 4 sections, or 'Draws'. Generally, you will get the funding in Three Stages:
i.Sub-floor
ii.Lock Up
iii.Completion
Can we get money to get to the Sub-floor Stage?
This is where careful and creative financing comes in... hopefully, you'll have that swack of cash in the bank (at least twenty thousand), and a fair bit of equity in your home. You'll probably need to sell your current property before you start building your new house, so you can use the equity spread from that sale to get the new house started. If your land is already paid for, you'll find this stage easier. Some Developers will allow a new builder to put 5% down on the land, then they can pay the balance when the mortgage money comes in. This is relatively rare, so if you find this deal and like the location, go for it.
Talk to your Excavator, Foundation Contractor and Framer to see if you can make partial payments until the First Draw comes through. They're in the business, so they'll understand your situation. A lot will depend on how busy they are and the relationship you establish with them. Some Suppliers (lumber, ICF Blocks, etc.) may have a payment schedule, too, so it doesn't hurt to ask if you need to.
A Personal Line of Credit from the bank, along with your regular credit cards (again, if you have an Air Miles credit card, now is the time to use it -- you'll really rack up the points, then you can take a well deserved trip at the end of your house-building adventure!), personal loans, etc. will all come into play, now. You might want to make sure you have an alternate source of funds for a 'just in case' scenario. It's best to plan out all the possibilities before you get started so that nothing will catch you off-guard.
What kind of Appraisals will the Bank do?
First, the Appraiser will inspect the Land, the House Plans, and your Proposed Budget. The amount of money provided for the Builder's Loan will be based on the Cost to Complete the house, not including the value of the land. The Land will be included with the final appraisal for the Completion Mortgage (Take Out Mortgage).
The Appraiser will come out to your property to do Progress Inspections at the Three Stages - Sub-floor, Lock-up and Completion. You should anticipate a one to two week waiting period for the Draw Money to come through. During that time, the bank will most likely have a lawyer check the Title each time.
It's an involvtion can't get you the money, try a Broker or two...eventually, it'll all work out!
One more thing -- What is Escrow??? I know, you hear that all the time! It's that seemingly very long period that your Lawyer holds onto your money while all the conditions are met on the House Deal. Make sure you ask your Lawyer for a good idea of the time-frame you might expect, and be sure not to leave yourself too tight (moneywise!) during this annoyink period!
Just so you know, a Real Estate Lawyer will be very pleasant to deal with ... they don't seem to deal with a lot of animosity, like many other types of Lawyers, and that probably accounts for their serene expressions! ha,ha,ha! They're there to help you get into or out of your home, so don't worry -- it won't hurt a bit!
Ailsa Forshaw is a Writer, Builder, Website Owner & Manager, Teacher, Mother... all in Alberta, Canada. She is Married with Two Lovely Children, and one gorgeous wee dog. Her Website, http://www.buildyourownhouse.ca, is chock full of all sorts of useful & fun information to help anyone become Financially Successful, Slim, Trim, and Happy... what more could you want?? Pop in for a wee visit! http://www.buildyourownhouse.ca http://www.theScottishDiet.com
Article Source: [http://EzineArticles.com/?Mortgage-Info-You-Can-Actually-Understand!&id=58879]
Saturday, May 1, 2010
Best Deal for a Mortgage
What is the Best Deal For a Mortgage?
By Helen March
Few of us invest the time and effort into researching and securing the best deal for a mortgage to purchase our home.
For most of us, our house is the single most important and expensive purchase we ever make!
We invest a lot of time and effort into finding the perfect property in the best location and with as many of the features from our wish list as possible, yet, when it comes to finding the best deal for a mortgage, we take what is offered rather than researching and securing the best mortgage for our situation.
When you consider that the average homeowner will pay out more in interest over the lifetime of their mortgage than the home originally cost, you can see why getting yourself the best deal for a mortgage now, could save you tens of thousands of dollars in interest over the 20 30 year term of your home loan.
Your research for the best mortgages or loans and repayment options currently available can be carried out on the internet, thus making the whole process that much more convenient and time efficient for you.
Mortgages are not a "One Size Fits All!"
Mortgages come in many different forms and you need to be aware of the various forms in order to determine which one is the best deal for a mortgage to your unique circumstances.
Basically, mortgages fall into one of the following categories. Lenders will have variations of these basic categories, but armed with this information, you will be able to sort through the choices for just the right package.
Fixed Rate Mortgages:
Loan with an interest rate that remains at a specific rate for the entire term of the mortgage/loan. Approximately 75 per cent of home mortgages are this type. A fixed rate mortgage is often considered the best deal for a mortgage for first time buyers as you can establish a consistent relatively fixed budget of household operating expenses.
ARM's or Adjustable Rate Mortgages or Variable Rate Mortgages:
A mortgage/loan with an interest rate that adjusts or varies with the changes in rates paid on Treasury Bills or bank Certificates of Deposit. In Canada, the rates vary according to the posted weekly Bank of Canada rates.
To offset the risk associated with an adjustable rate mortgage, some lenders offer various 'capping' options. Often, they fix or limit the maximum level to which the interest rate you are subject to can rise for a given period of time. Sometimes they fix the cap per year and sometimes for the lifetime of the mortgage.
Adjustable or variable rate mortgages can be very attractive as usually the rates are considerably lower than for fixed rate mortgages. They are an excellent vehicle for borrowers who are attentive to the rate fluctuations and prepared to 'lock in' their mortgage when interest rates start climbing. If you're constantly watching the money markets, this may be the best deal for a mortgage for you.
Balloon Mortgages:
A mortgage in which the monthly payment is not intended to repay the entire loan. The final payment is a large lump sum of the remaining principal. Balloon mortgages are often only partially amortized and requiring a lump sum repayment at maturity.
It's popular mortgage in the US for homeowners who aren't planning to stay in their new home for more than 5 or 7 years. The advantage is that the interest rate is lower than a fixed rate mortgage however, the disadvantage is that if you remain in the home beyond the 5 to 7 year term, you would have to secure a new loan or mortgage to pay off the balloon mortgage.
Jumbo Mortgages or 'Non-Conforming' Mortgages:
In the US, Congress has legislated a conforming limit to the amount a mortgage is allowable for funding by Federal National Mortgage Association (a.k.a: Fannie Mae) and the Federal Home Loan Mortgage Corporation (a.k.a: Freddie Mac). The 2009 limit is $417,000; $625,500 in Alaska, Guam, Hawaii and the U.S. Virgin Islands.
Any loan or mortgage above that conforming limit is considered a Jumbo Mortgage. A Jumbo mortgage/loan allows you to borrow over the conforming limit, but for that privilege, you will incur higher interest rates. There are variations to the Jumbo Mortgage such as the Super Jumbo Mortgage, but I'm sure you get the basic picture.
Canadians have an equivalent referred to as a "High Ratio Mortgage" guaranteed/funded through Canada Mortgage And Housing Corporation (CMHC).
Now that you have identified which type of mortgage might suit you best, you need to consider repayment methods and you basically have two options:
Interest Only:
An interest only payment method can be combined with any type of traditional mortgage. Interest only payment periods almost never run for the entire term of the loan, so prepare to have your payment rise to include both principal and interest once the interest only period ends.
Principal and Interest or Capital & Interest:
Your monthly repayments are divided into an interest payment and a principal or capital repayment. In the early years of the mortgage period most of the monthly payment is swallowed up in interest but over time the balance reverses and you start to pay off more of the capital or principal borrowed.
So Many Mortgage Lenders ... So Many Choices!
There are so many mortgage lenders offering such a variety of loan options that at first it can seem a daunting task trying to determine which lender most suits you and your circumstances and which Lender is offering you the best deal on a mortgage!
It is important to note that as you shop for a mortgage, each lender will perform a credit check prior to committing to the mortgage or loan. Each credit check remains on your credit record and could potentially reduce your credit score and eligibility for a mortgage or loan.
You will want to visit TodaysHouse.com for [http://www.todayshouse.com/real-estate.html]buying or selling real estate ideas as well as home improvement, mortgage financing options and lifestyle alternatives. If credit card debt, [http://www.controlcreditcarddebt .com/debt-relief.html]debt relief or the family budget are an issue, ControlCreditCardDebt.com is the place to go now.
Article Source: [http://EzineArticles.com/?What-is-the-Best-Deal-For-a-Mortgage?&id=44414] What is the Best Deal For a Mortgage?
By Helen March
Few of us invest the time and effort into researching and securing the best deal for a mortgage to purchase our home.
For most of us, our house is the single most important and expensive purchase we ever make!
We invest a lot of time and effort into finding the perfect property in the best location and with as many of the features from our wish list as possible, yet, when it comes to finding the best deal for a mortgage, we take what is offered rather than researching and securing the best mortgage for our situation.
When you consider that the average homeowner will pay out more in interest over the lifetime of their mortgage than the home originally cost, you can see why getting yourself the best deal for a mortgage now, could save you tens of thousands of dollars in interest over the 20 30 year term of your home loan.
Your research for the best mortgages or loans and repayment options currently available can be carried out on the internet, thus making the whole process that much more convenient and time efficient for you.
Mortgages are not a "One Size Fits All!"
Mortgages come in many different forms and you need to be aware of the various forms in order to determine which one is the best deal for a mortgage to your unique circumstances.
Basically, mortgages fall into one of the following categories. Lenders will have variations of these basic categories, but armed with this information, you will be able to sort through the choices for just the right package.
Fixed Rate Mortgages:
Loan with an interest rate that remains at a specific rate for the entire term of the mortgage/loan. Approximately 75 per cent of home mortgages are this type. A fixed rate mortgage is often considered the best deal for a mortgage for first time buyers as you can establish a consistent relatively fixed budget of household operating expenses.
ARM's or Adjustable Rate Mortgages or Variable Rate Mortgages:
A mortgage/loan with an interest rate that adjusts or varies with the changes in rates paid on Treasury Bills or bank Certificates of Deposit. In Canada, the rates vary according to the posted weekly Bank of Canada rates.
To offset the risk associated with an adjustable rate mortgage, some lenders offer various 'capping' options. Often, they fix or limit the maximum level to which the interest rate you are subject to can rise for a given period of time. Sometimes they fix the cap per year and sometimes for the lifetime of the mortgage.
Adjustable or variable rate mortgages can be very attractive as usually the rates are considerably lower than for fixed rate mortgages. They are an excellent vehicle for borrowers who are attentive to the rate fluctuations and prepared to 'lock in' their mortgage when interest rates start climbing. If you're constantly watching the money markets, this may be the best deal for a mortgage for you.
Balloon Mortgages:
A mortgage in which the monthly payment is not intended to repay the entire loan. The final payment is a large lump sum of the remaining principal. Balloon mortgages are often only partially amortized and requiring a lump sum repayment at maturity.
It's popular mortgage in the US for homeowners who aren't planning to stay in their new home for more than 5 or 7 years. The advantage is that the interest rate is lower than a fixed rate mortgage however, the disadvantage is that if you remain in the home beyond the 5 to 7 year term, you would have to secure a new loan or mortgage to pay off the balloon mortgage.
Jumbo Mortgages or 'Non-Conforming' Mortgages:
In the US, Congress has legislated a conforming limit to the amount a mortgage is allowable for funding by Federal National Mortgage Association (a.k.a: Fannie Mae) and the Federal Home Loan Mortgage Corporation (a.k.a: Freddie Mac). The 2009 limit is $417,000; $625,500 in Alaska, Guam, Hawaii and the U.S. Virgin Islands.
Any loan or mortgage above that conforming limit is considered a Jumbo Mortgage. A Jumbo mortgage/loan allows you to borrow over the conforming limit, but for that privilege, you will incur higher interest rates. There are variations to the Jumbo Mortgage such as the Super Jumbo Mortgage, but I'm sure you get the basic picture.
Canadians have an equivalent referred to as a "High Ratio Mortgage" guaranteed/funded through Canada Mortgage And Housing Corporation (CMHC).
Now that you have identified which type of mortgage might suit you best, you need to consider repayment methods and you basically have two options:
Interest Only:
An interest only payment method can be combined with any type of traditional mortgage. Interest only payment periods almost never run for the entire term of the loan, so prepare to have your payment rise to include both principal and interest once the interest only period ends.
Principal and Interest or Capital & Interest:
Your monthly repayments are divided into an interest payment and a principal or capital repayment. In the early years of the mortgage period most of the monthly payment is swallowed up in interest but over time the balance reverses and you start to pay off more of the capital or principal borrowed.
So Many Mortgage Lenders ... So Many Choices!
There are so many mortgage lenders offering such a variety of loan options that at first it can seem a daunting task trying to determine which lender most suits you and your circumstances and which Lender is offering you the best deal on a mortgage!
It is important to note that as you shop for a mortgage, each lender will perform a credit check prior to committing to the mortgage or loan. Each credit check remains on your credit record and could potentially reduce your credit score and eligibility for a mortgage or loan.
You will want to visit TodaysHouse.com for [http://www.todayshouse.com/real-estate.html]buying or selling real estate ideas as well as home improvement, mortgage financing options and lifestyle alternatives. If credit card debt, [http://www.controlcreditcarddebt .com/debt-relief.html]debt relief or the family budget are an issue, ControlCreditCardDebt.com is the place to go now.
Article Source: [http://EzineArticles.com/?What-is-the-Best-Deal-For-a-Mortgage?&id=44414] What is the Best Deal For a Mortgage?
mortgage
Mortgage: Effective Household Investment for Financial Autonomy
By Natasha Anderson
If finances had a copyright, we would have bought it by now. But it is hardly sold anywhere near the place we live. So, when we decide to take a mortgage it becomes highly perplexing for it is something you are not used to. Taking out a mortgage is not like an everyday errand. Mortgage in the simplest terms mean long-term loan used to finance the purchase of real estate. As the borrower, or mortgagor, you repay the lender, or mortgagee, the loan principal plus interest, gradually building your equity in the property. In a mortgage, you can use your property but not the title of it. When you pay the mortgage, you own the property.
You must have heard that interest rates on mortgage are at their lowest. There is no doubt that they are declining, lending new opportunities to homeowners to get the financial funding they require. Mortgage has become more competitive and easy to get. Competition among loan lender is rising therefore it has lot of potential for homeowners. So it is no surprise to know that mortgage is mounting among people.
Today's consumers have many different mortgage types to select from. Mortgages have been flavoured with different interest rates for the benefit of the mortgage applicants. The more recognized mortgage types are fixed, variable and balloon mortgage.
Mortgage has been publicized everywhere as a real good loan plan for every homeowner. However, it is essential to realize that mortgage is in itself a very exhaustive term. There are innumerable sub categories.
Mortgage types are meant to be for your benefit. Two major types of mortgages are available - repayment and interest only mortgage. Repayment mortgage is the traditional, old fashioned mortgage where the property is guaranteed and is yours only at the end of the loan term provided you repay the loan. The monthly payment on Mortgage compiles capital repayment and interest payments. Capital repayments repay the loan amount your have taken. Interest payments provide repayments for the interest on the loan. Every month you keep on paying a little of both the loan and the interest till the whole loan is repaid.
Interest only mortgage is a relatively new term. In an interest only mortgage the capital is not repaid directly. The capital on a mortgage term is repaid at the end of the mortgage term while simultaneous investments are made to an investment fund. The idea is to make this fund flourish so that at the end of the term there is enough money to pay the mortgage and also leave capital for your personal usage. The term 'interest only mortgage' might seem inviting but the capital has to be paid at the end of the mortgage term.
Interest only mortgage comes in all shapes and sizes. However, this kind of mortgage is not meant for every borrower. Each Interest only mortgage is meant to cater to the needs of a specific kind. It is very fundamental to learn about the interest only mortgages before you apply for one. The interest only mortgages are endowment mortgage, individual savings account mortgage, pension mortgages.
In this highly elaborate work structure of mortgages it is pivotal to find the precise mortgage. Precise mortgage type requires some basic steps which begin with knowing what you want. Loan borrower must be very clear about their requirements and their limitations. Once you know which mortgage type to take - make comparisons. Compare the mortgage types. Mortgage is essentially a buyer's market. Shop around. Compare the APR. The real comparison is through comparing the APR, which is the annual percentage rate. The APR takes all the costs into account: the application fee, the mortgage lenders valuation and so on.
A mortgage broker is a good idea with respect to mortgage. A mortgage broker is a licensed company or an individual that gets the best mortgage plan available at the best possible rates. Mortgage broker signifies convenience. They will do the legwork for you. Usually mortgage brokers don't cost any extra fee because they usually work on the fees given by the mortgage lender. However, sometimes you can get a better deal by going to the mortgage lender directly.
Mortgage and bad credit are very compatible. The only thing a loan borrower can do is to be open and honest about their bad credit status. Hiding your credit status would only go against your mortgage claim, when there are in fact easier ways to get a mortgage with bad credit.
Mortgage is like easy if you make the right choice. Getting a good mortgage is directly dependent on your knowledge of a mortgage. To know every nook and cranny of mortgage can be not possible. Since even the most judicious professionals may also not be aware of some of the mortgage details. However, basic mortgage knowledge will not only protect you against fraud and abuse but also stimulate financial gains. So maybe you don't have the copyright to financial sense; you can still find a mortgage.
After having herself gone through the ordeal of loan borrowing, Natasha Anderson understands the need for good quality loan advice. Her articles endeavor to provide you the wise counsel in the most elementary way for the benefit of the readers. She hopes that this will help them to locate the loan that beseems their expectations. She works for the Uk secured loans web site.
To find a [http://www.ukfinance.world.co.uk]Secured loan or mortgage that best suits your needs visit [http://www.ukfinancewprld .co.uk]
Article Source: [http://EzineArticles.com/?Mortgage:-Effective-Household-Investment-for-Financial-Autonomy&id=42347] Mortgage: Effective Household Investment for Fina
By Natasha Anderson
If finances had a copyright, we would have bought it by now. But it is hardly sold anywhere near the place we live. So, when we decide to take a mortgage it becomes highly perplexing for it is something you are not used to. Taking out a mortgage is not like an everyday errand. Mortgage in the simplest terms mean long-term loan used to finance the purchase of real estate. As the borrower, or mortgagor, you repay the lender, or mortgagee, the loan principal plus interest, gradually building your equity in the property. In a mortgage, you can use your property but not the title of it. When you pay the mortgage, you own the property.
You must have heard that interest rates on mortgage are at their lowest. There is no doubt that they are declining, lending new opportunities to homeowners to get the financial funding they require. Mortgage has become more competitive and easy to get. Competition among loan lender is rising therefore it has lot of potential for homeowners. So it is no surprise to know that mortgage is mounting among people.
Today's consumers have many different mortgage types to select from. Mortgages have been flavoured with different interest rates for the benefit of the mortgage applicants. The more recognized mortgage types are fixed, variable and balloon mortgage.
Mortgage has been publicized everywhere as a real good loan plan for every homeowner. However, it is essential to realize that mortgage is in itself a very exhaustive term. There are innumerable sub categories.
Mortgage types are meant to be for your benefit. Two major types of mortgages are available - repayment and interest only mortgage. Repayment mortgage is the traditional, old fashioned mortgage where the property is guaranteed and is yours only at the end of the loan term provided you repay the loan. The monthly payment on Mortgage compiles capital repayment and interest payments. Capital repayments repay the loan amount your have taken. Interest payments provide repayments for the interest on the loan. Every month you keep on paying a little of both the loan and the interest till the whole loan is repaid.
Interest only mortgage is a relatively new term. In an interest only mortgage the capital is not repaid directly. The capital on a mortgage term is repaid at the end of the mortgage term while simultaneous investments are made to an investment fund. The idea is to make this fund flourish so that at the end of the term there is enough money to pay the mortgage and also leave capital for your personal usage. The term 'interest only mortgage' might seem inviting but the capital has to be paid at the end of the mortgage term.
Interest only mortgage comes in all shapes and sizes. However, this kind of mortgage is not meant for every borrower. Each Interest only mortgage is meant to cater to the needs of a specific kind. It is very fundamental to learn about the interest only mortgages before you apply for one. The interest only mortgages are endowment mortgage, individual savings account mortgage, pension mortgages.
In this highly elaborate work structure of mortgages it is pivotal to find the precise mortgage. Precise mortgage type requires some basic steps which begin with knowing what you want. Loan borrower must be very clear about their requirements and their limitations. Once you know which mortgage type to take - make comparisons. Compare the mortgage types. Mortgage is essentially a buyer's market. Shop around. Compare the APR. The real comparison is through comparing the APR, which is the annual percentage rate. The APR takes all the costs into account: the application fee, the mortgage lenders valuation and so on.
A mortgage broker is a good idea with respect to mortgage. A mortgage broker is a licensed company or an individual that gets the best mortgage plan available at the best possible rates. Mortgage broker signifies convenience. They will do the legwork for you. Usually mortgage brokers don't cost any extra fee because they usually work on the fees given by the mortgage lender. However, sometimes you can get a better deal by going to the mortgage lender directly.
Mortgage and bad credit are very compatible. The only thing a loan borrower can do is to be open and honest about their bad credit status. Hiding your credit status would only go against your mortgage claim, when there are in fact easier ways to get a mortgage with bad credit.
Mortgage is like easy if you make the right choice. Getting a good mortgage is directly dependent on your knowledge of a mortgage. To know every nook and cranny of mortgage can be not possible. Since even the most judicious professionals may also not be aware of some of the mortgage details. However, basic mortgage knowledge will not only protect you against fraud and abuse but also stimulate financial gains. So maybe you don't have the copyright to financial sense; you can still find a mortgage.
After having herself gone through the ordeal of loan borrowing, Natasha Anderson understands the need for good quality loan advice. Her articles endeavor to provide you the wise counsel in the most elementary way for the benefit of the readers. She hopes that this will help them to locate the loan that beseems their expectations. She works for the Uk secured loans web site.
To find a [http://www.ukfinance.world.co.uk]Secured loan or mortgage that best suits your needs visit [http://www.ukfinancewprld .co.uk]
Article Source: [http://EzineArticles.com/?Mortgage:-Effective-Household-Investment-for-Financial-Autonomy&id=42347] Mortgage: Effective Household Investment for Fina
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