Archive for April, 2008
New Home Mortgage – A Guide You Should Follow
As a home buyer, you are frequently overwhelmed by the idea of obtaining a new home mortgage. While the prospect of buying a new home is certainly exciting, you will want to know what to expect when you begin the mortgage process.
The first step in understanding a new home mortgage is in understanding that there are actually many different types of mortgages available. The two most common types of mortgages are fixed rate mortgages and adjustable rate mortgages. A fixed rate mortgage offers the advantage of the same interest rate over the entire length of the loan. So, if you obtain a 5.5% interest rate on your mortgage when you purchase your home, you can be assured that your interest rate will remain 5.5% until you sell your home, pay off the mortgage or refinance your home loan. This can be especially advantageous for home buyers who are committed to a budget and do not want any surprises.
An adjustable rate new home mortgage can offer a lower interest rate at the time you purchase your home. If you do not think you will be in the home longer than a few years, this can be quite attractive. The key to keep in mind with an adjustable rate mortgage is that the interest rate could rise at some point in time; however. In most cases, an adjustable rate mortgage will contain cap limitation, both the amount that the rate can rise as well as how often it can rise during a specified period of time.
You will also need to consider the term of your new home mortgage. At one time, the most common terms for a home loan were 15 years and 30 years. Today; however, lenders have recognized that the needs of homeowners have evolved and as a result, there are many more options including 10 years, 20 years and even 40 years. When choosing a term for your loan, remember that a shorter term mortgage will allow you to pay off your mortgage sooner and save money in interest overall; however, your monthly mortgage payments will be higher. A longer term mortgage will provide the benefit of lower monthly mortgage payments; however, it will take longer to pay off your mortgage and you will pay more interest over the duration of your mortgage.
Beside the type of new home mortgage and term, your mortgage payment will also be dependent on your ability to qualify for the best interest rate. Lenders must take into consideration the amount of risk they may be incurring when they approve a home mortgage application. If you have a low credit score, they may feel you are a higher risk. As a result, you may not be able to qualify for a low interest rate. If your credit score is good, then you will be considered a lower risk and consequently, you can qualifier for a better interest rate. This means your monthly mortgage payment will be lower.
Finally, the amount of debt that you are carrying could impact the interest rate you are able to qualify for. As a general rule of thumb, most lenders prefer for an applicant’s total housing costs not to exceed 30% of their pre-tax monthly income and total debt not to exceed 36% of their total pre-tax monthly income. There are exceptions in some cases; however, so be sure to speak with your new home mortgage lender about your situation.
Ready to purchase a new home? Visit New Home Mortgage or Home Mortgage for more information on getting the best rates possible for your new home loan.
Using A Home Equity Loan to Pay off your Mortgage?
So the Fed’s are continuing to bring the short term interest rates down, this is good news. Some will say it doesn’t matter, but lets take a look at what it really means.
Short term interest rates that are tied to the Prime are now a bit lower. Granted most people won’t notice because many people choose to live on credit card debt. If you are looking to make a difference in your personal finances, now is a time to aggressively attack those credit cards.
How, you ask? Well, now Home Equity Loans are much lower as well. Back in 2004 Home Equity Loans (a.k.a. HELOC’s) were all the buzz. As a loan officer, I think I did at least a few every week. They were like super sizing a loan “would you like a home equity loan with that? There is no additional cost and no extra closing costs as long as you keep it open for 3 years, and you never have to use it”. It worked like magic and it was what people wanted. The savvy consumers took advantage of them and converted high interest credit card payments into lower interest, partially tax-deductible payments.
Well, it’s 2008. and again, it’s a great time to get a Home Equity loan, but this time, I don’t just recommend paying off debts with it, I recommend paying off your mortgage with it. WHAT? Yes, you heard me right - I am recommending that you payoff your first mortgage with a Home Equity Loan. Before running out and doing this on your own, I will tell you that you have to work with a financial expert to make this work otherwise, you will be in lots of trouble. There is a special software that will take into account all of your debts including your first mortgage and show you how to leverage short term interest and its payment cycles to pay off all of your debts, mortgage included, in the shortest amount of time - usually less than 10 years.
If you want more information on how to get this done, you can visit UFirst , or call me at 800-453-9290
Until next time,
Anthony
Refinance Home Loan: 3 Home Loan Refinancing Pitfalls to Avoid
If you are in the process of refinancing your home loan, there are a number of common mistakes you need to be aware of. Here are three home loan refinancing pitfalls you need to keep an eye out for when refinancing your mortgage.
Watch Out For Prepayment Penalties
A prepayment penalty is a clause in your loan contract that requires you to pay a penalty if you refinance or sell your home before the penalty expires. Prepayment penalties can be expensive, mortgage lenders often charge up to six months worth of interest on 85% of the original loan balance. Predatory mortgage lenders include excessive fees in their loan contracts to discourage you from refinancing the loan. If you have good credit there is no reason to accept a home loan with this penalty.
Never Agree to Arbitration
Predatory mortgage lenders often ask you to agree to arbitration as a condition of having your loan approved. If you agree to arbitration you are forfeiting many of the rights and protection you receive under the law. Agreeing to arbitration means that you agree to a third party arbitrator resolving any legal disputes you have with the lender. Never agree to arbitration with any mortgage lender.
Watch Out for High Interest Rates and Fees
Predatory mortgage lenders often try and sell subprime mortgages to homeowners with good credit. This means you are taking out a bad credit mortgage regardless of your credit rating and will pay higher interest rates, lender fees, and points. The only way to know for sure that what you’re paying is fair is to shop from a variety of mortgage lenders and compare all aspects of the loans. You can learn more about comparison shopping for the best mortgage by registering for a free mortgage guidebook.
To get your free mortgage guidebook visit RefiAdvisor.com using the link below.
Louie Latour specializes in showing homeowners how to avoid common mortgage mistakes and predatory lenders. For a free copy of “Mortgage Refinancing: What You Need to Know,” which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.
Claim your free guidebook today at: http://www.refiadvisor.com
Refinance Home Loan
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