Archive for April, 2006
50 Year Mortgages?
YES! The 40 year mortgages haven’t even caught on yet, and we now have 50 YEAR mortgages on the way. One product I have seen is a “balloon” which means in 30 years it has a “must payoff or refinance” feature, but it keeps the payments down which is it’s intended purpose. You can get an ARM (adjustable) or fixed, and I don’t have pricing info, but the rate will be most likely slightly higher than the standard 30 year fixed, although the payment will be lower as it is amortized over a longer time period.
Sorry I have been out of touch with the blog and email newsletters. I have spent most of the month of April traveling to and from Arizona, while I have been working on getting everything set up with the new mortgage company.
The new site is up, but there really isn’t much there yet. You can check it out at:
www.ConsumersAdvantageMortgace.com .
More to come on both the 50 Year Mortgages and the updates to the web site. Both should occur around mid-May.
Anthony
www.AnthonyKirlew.com
1-800-453-9290
The Home Buying Process: What Steps To Make
By: Jason P Bertrand
There are several steps to take in the mortgage process. The following is a list of the best steps to take in order to ensure a smooth and simple transaction.
1. Get Pre-Approved First
During the pre-approval process all the information necessary to complete a mortgage transaction will be collected. A pre-approval is substantially different from a pre-qualification. A pre-approval is the process of actually getting approved for a mortgage without having an actual property picked out yet. Having a pre-approval helps substantially and will also help in negotiating with a seller. After all, a pre-approval tells the seller that your offer is already approved and informs them that you are ready to move forward with the purchase.
2. Making Verbal Agreements
There is simply no such thing as a verbal agreement in Real Estate. If there is something that you would like the seller to agree to, make sure they agree in writing. If there is a verbal agreement made, there is no feasible way to prove that that agreement was made. On the sales contract make sure everything that you are requesting is either agreed to or denied.
3. Find Your New Home
Now, with your pre-approval letter in hand it is time to search for your new home-to-be. Look at several properties, even if the first one you see seems as though it may be, “The one.” Once you have chosen your new home write a sales contract and give a deposit. Then forward the sales contract to your broker to accompany the rest of the documentation you have provided. Due to the fact that you already have a pre-approval the loan process should be relatively quick.
4. Lock in Your Rate
It is important to notify the mortgage company that you would like to lock in your rate. Once a rate is locked you have a certain amount of time to close. You can lock a rate for 15 days, 30 days, 60 days, and in some cases 90 days. Once you have locked the rate, you are guaranteed that the rate will not fluctuate. You also have the option to float the rate. If you float the rate and the rate goes down you could then lock at a lower rate. If the rate goes up you would be subject to a higher payment. It is always suggested that you lock the rate due to the volatility of interest rates. You may ultimately have to pay a higher payment if you decide not to lock your rate and rates increase.
5. Get a Professional Home Inspection
It is always wise to have a home inspection done. A home inspection is done by an independent home inspector. A home inspection involves the home inspector going through the home prior to purchase. In some cases a house that looks beautiful from the outside may have some underlying issues that may be unseen. It is important to know ahead of time if there are any issues with the property. A home inspector will make sure all of the outlets work, that there is no water damage, and that all of the appliances work. They will assess all of the homes mechanical systems and make sure everything is in working order. They will also let the home buyer know of any current issues or any items that could become issues.
6. Close on Your New Home
Get a copy of all of the loan documents prior to closing. It is important to be able to read through all of the documents as time may be limited during the closing. Always call your broker ahead of time with any questions. Never close on a property without having ample time to review the closing documents. After reviewing all of the documents set up a closing with the seller and your attorney. At the closing table make sure you have all the required checks and documentation. You should receive a checklist prior to closing. Remember, never sign anything you do not understand, and ask plenty of questions to make sure you understand.
This article was posted at iReprint.info on 2006-03-23. Webmasters and publishers are free to reprint this article as long as the resource box and all the links remain intact.
Fixed Rate Mortgage or ARM? Which is Better?
The fixed rate mortgage offers the certainty of a constant monthly payment, but an adjustable may seduce you with its lower payment. Security or affordability? Which do you choose? Just what is a home buyer to do?
Which loan you eventually choose may depend more upon your personality than a careful analysis of each loan’s advantages and disadvantages. People who generally seek security in other areas of their lives, such as occupations and relationships, will often opt for the security of a fixed rate mortgage. Those who are more adventurous will sometimes respond to the lure of an adjustable.
The attractions of a fixed rate mortgage are a principal and interest payment and an interest rate that remain the same for the entire length of the loan. That stable predictability is what entices so many people to choose it, and its safety and reliability will afford the homeowner peace of mind. You get your fixed rate mortgage and you forget about it. What could be easier?
An adjustable rate mortgage or ARM, on the other hand, is generally the opposite. An ARM usually has an interest rate and a monthly payment that are fixed only for a specific period of time, after which both rate and payment will adjust periodically.
The ARM’s initial low rate and monthly payment are its appeal, and it can offer that because its rate is based on the short term bond market while a fixed rate mortgage is pegged to long term bonds. The short term bond market generally features lower rates than the long term market. If you believe that interest rates will decrease by the time your mortgage rate begins adjusting, then the lure of an even lower rate and payment down the road may tempt you even further.
The foreboding most people have with the ARM involves its uncertainty. An element of fear is introduced because your rate and payment might increase once the rate starts to adjust. If interest rates in the bond market are higher once adjustment does begin, then your rate and payment will increase. None of us wants payments higher than they need to be, but some of us shrink from the risk more than others do.
But much of that risk aversion is needless hand wringing. Here’s why.
By deciding which ARM you prefer, you are also choosing the initial time period you want the rate and monthly payment to remain fixed. ARMs generally offer the following initial fixed time periods: one month, three months, six months, one year, two years, three years, five years, seven years and ten years. The shortest time periods will offer the lowest initial rates. A one month ARM may provide for a rate and payment guarantee of just one month before adjustment begins. A one year ARM is fixed for one year and then the adjustments start. A three year ARM is fixed for three years, and so on.
By picking a time period that best fits you and your situation in life, you can take advantage of the lower rate and monthly payment that an ARM provides at a substantially diminished risk. If you are a first time home buyer, for example, then a three year ARM might make the most sense because first time home buyers often stay in their home for only three or four years. Why get a 30 year mortgage if you won’t be in the home that long?
If you are middle age and your children are at the point in life where they go off to college or trade school, statistics suggest that they will soon move out and you will become an empty nester. Empty nesters frequently downsize to a smaller home once their kids depart, which means a different home and yet another mortgage.
The point is that our lives change frequently and predictably. We get married, have babies, relocate, get divorced, remarry, get sick, grow old, retire and die. All of these chapters in our lives will often occur in a span of only 30 to 40 years. When these joyous and not so joyous events arise, sometimes without warning, our housing and mortgage needs will oftentimes shift just as suddenly. Yet most homeowners rarely take such life events into account when choosing their mortgage.
The average mortgage lasts only about five years, sometimes because a major life event sprouts up inducing the homeowner either to move or refinance. Other times economic change will cause mortgage rates to drop, which, in turn, may influence people to enact changes themselves. They either refinance or perhaps decide that it’s an affordable time to invest in other housing. Despite all of this, people predictably embrace the 30 year fixed rate mortgage rather than an ARM because of the warm and fuzzy sense of safety that a fixed exudes.
The choice is yours to make. An informed decision will include considering all of the alternatives with the knowledge that your personality traits may be influencing your decision making process. While statistical analysis will often favor choosing the ARM, there is nothing wrong with selecting a fixed rate loan.
Copyright 2006. Bob Roscoe. All rights reserved.
Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Tips