5 Ways To Get The Lowest Mortgage Interest Rate You Can Online
September 30, 2009 by admin
Filed under Mortgage Rates
Everyone loves a bargain and getting a lower mortgage interest rate can save you a substantial amount of money over the life of your loan. There are several ways to go about ensuring that you pay the least amount of interest when you take out a home mortgage.
Be aware of your credit score.
Good credit is the key to not only getting a mortgage, but to getting the best interest rates available. Mortgage lenders like to reward borrowers that pay off their bills in a timely manner. Chances are if you have been faithful with your other payments, you will be faithful to pay them back, so they can afford to take a risk on you and offer a lower interest rate.
Close any existing credit card accounts that you no longer use.
If you have several credit card accounts, they can affect the interest rate on your mortgage, even if they have a zero balance. Lenders see open accounts as potential for debt, which adds a risk of them not getting their money back. To balance this risk, they will often charge you a slightly higher interest rate.
Lock in interest rates before you close.
Once you have agreed on a low interest rate, ask the lender to lock in that rate. Rates can fluctuate drastically in the time it takes for you to get your mortgage and that could mean paying a totally different interest rate than what was originally quoted.
Make the biggest down payment you can afford.
Putting a down payment from your savings on your house, lowers the amount you plan to finance, lowering the interest you will pay over the life of your loan.
Shop Around.
You don’t have to work with the first lender that you approach. With the vast amount of online mortgage brokers, it is easy to compare offers and pick the company that offers you the lowest interest rate. Don’t be afraid to tell brokers that you are shopping around, or ask them if they can match the interest rates of a competitors quote.
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30 Year vs. 15 Year Mortgages
September 28, 2009 by admin
Filed under Mortgage Articles
Discussions of mortgages often focus on interest rates, but there is a much more basic decision to make. Should you go with a 30 year mortgage term or a 15 year mortgage term?
30 Year vs. 15 Year Mortgages
Any discussion of mortgages tends to turn on two points. How can you qualify for the most money with the lowest payment? How can you get the lowest interest rate for the mortgage? While these are two important issues, there is an addition one that people fail to consider, resulting in significant wasted money.
The term of a mortgage is extremely critical for a couple of reason. First, it sets the length of the obligation you are undertaking. Second, it defines the amount of interest you are going to pay over the life of the loan. These are huge issues when it comes to building equity.
The longer the loan, the more total interest you are going to pay. The trade off, of course, is you are going to have smaller monthly payments the farther you stretch out the obligation. While this may sound like a good goal when you first get the mortgage, it can backfire on you in the long run.
Most people focus on interest rates as a way to save money on mortgages. This is a valid approach, but playing with the length of the loan is a better way to save money. If you can cut the payments in half by going with a shorter loan, you can save huge amounts on the total interest repaid to a lender.
The decision on the term of the loan is relatively simple, but entirely dependent upon your personal situation. There is no absolutely correct choice. First, you need to determine if you can comfortably afford the higher payments that come with a shorter term loan. In general, a 15 year mortgage will have payments 20 to 25 percent higher than a 30 year loan. Of course, you will pay the loan off faster, to wit, be building equity in the home quicker.
The modern mortgage industry has a variety of different term length products. When applying for a loan, take the time to evaluate the different terms to see if you can find a loan that is perfect for your situation.
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Mortgage Crisis Giving more Woes to the Economy
The economic scenario seems to be getting worse as the financial sector continuously reporting huge losses from exposure to the mortgage market. Even the residential sector, the commercial real estate sector, and sectors like credit cards, auto loans are moving to a negative territory and are quite at risk.
However, default mortgage rates this year have already shaken the financial sector. And now it is expected that millions of adjustable rate mortgages will reset, giving higher interest rates (according to the new loan agreement), which is just impossible for the homeowners to pay. But the homeowners, who are having $600 billion of subprime adjustable rate mortgage loans that is the ARM, are about to reset at higher amounts during the next eight months. Its not all the mortgages that are in trouble but homeowners who default or fall behind on the payments are a problem.
Now the situation is such that this mortgage crisis is forcing people to get out of their homes, besides hampering the economy as a whole. It is expected that the housing slump may get worse by more empty homes in the market, causing prices to plunge by up to 40% in real estate spots, such as California, Florida, and Nevada.
According to a recent report by the Goldman Sachs, the estimated industry wide losses from declines in the market value of subprime mortgage related collateralized debt obligation, to be almost $150 billion. Moreover, the third quarter write-off settled down at $18 billion from the financial firms but some firms indicated that the write-off in the fourth quarter would come to $22 billion. However, the losses could even hit $300 billion, as estimated by the Organization for Economic Cooperation and Development.
This worse situation of the housing sector is resulting into bigger problems, that is the unemployment and the higher consumer losses. It is estimated that almost 100,000 financial services jobs related to the credit and lending have already been lost, from local bank loan officers to traders dealing in mortgage backed securities. And moreover, this kind of countless job losses would curtail consumer spending that makes up two-thirds of the economy. However, thousands of workers of the housing industry could loss their job and it is expected that this would affect the car dealers, retailers and other dependent on the consumer paychecks badly.
Other indication shows that borrowers who took out loans in the first six months of this year are already falling behind on their payments as compared to the borrowers who took out loans last year. And this is making it harder for would be buyers to get new mortgages. This is infact, is a frightening indication for the homebuilders with projects going begging on the market, and also for the homeowners desperate to unload property to avoid default on their loans.
Besides these sectors, there is one more vital sector that is foreclosure. The number of homes in foreclosure is expected to move high after more than doubling during the third quarter as compared to year earlier, to 446,726 homes nationwide. This is one foreclosure filing for every 196 households in the nation, a 34% jump from three months earlier.
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Best Mortgage Rates and ARMs
September 24, 2009 by admin
Filed under Mortgage Rates
When you go to get a mortgage you may start hearing the term option ARM thrown around, and you may wonder what one is exactly. An option ARM usually has two primary characteristics: interest rates adjusting monthly and payments adjusting yearly. Traditionally, a borrower can choose the size of the payment that they are required to make. The way you choose is you can usually pick whether you want to pay interest only on your loan or, if you want to pay a minimum payment.
Option ARMs are usually seen as a good deal by a prospective home buyer because they have low payments in the first year of the loan repayment. Some buyers realize that with a lower payment in the initial years they can enter into larger loan than otherwise possible. A minimum payment in early loan years can result in excess cash flow for the borrower as well, if a house well within their budget is involved.
While option ARMs may have very low payments in their first few payment periods, it is important to understand that rates can and will rise rather quickly in a few circumstances. If you elect a low initial rate on the loan, the payments will begin to rise in subsequent payment periods to recoup the lenders principal and interest within the loan term. When you pay less in the beginning of the loan life, the payments will accelerate to compensate for low initial payments. Option ARMs work if you can secure higher income in future payment periods. However, if you don’t see expenses dropping or income rising in the future, you should be very careful when setting low rates in the beginning of the loan, because you can expect rates to rise in the future with a static income which may lead to default.
Deciding to enter into an option ARM mortgage should be a well researched decision. Paying very little in the beginning is not the best option for the majority of people. Making payments as large of possible in the first few years is generally advisable so payments don’t really start to jump in years after low payments. Always comparing rates from competing lenders is crucial to getting a reasonable rate for the risk that you manifest. Settling on mortgage rates is not a good idea- get multiple rates if possible. While you want a low rate, you don’t necessarily want a low rate to translate into the lowest possible payment in the beginning of your ARM, because payments will potentially increase.
Lending institutions generally derive the rate they charge you by adding interest onto some average lending rate. Understanding how to keep this additional cost reasonable is key to making an option ARM manageable. This additional cost to you is know as the margin, and this information is not necessarily going to be relayed or shared with you as it is how the lender makes their profit. The best way to ascertain a reasonable margin for your risk profile is to get quotes from several institutions so you have relative comparisons.
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Best Mortgage Interest Rate
September 23, 2009 by admin
Filed under Mortgage Rates
The term mortgage in everyday lingo, is used to mean ‘mortgage loan’.The word mortgage has now become the generic term for a loan secured by real property. A mortgage is similar to that of a secured loan. The amount of money lent is slowly repaid in monthly amounts for the length of the mortgage term.
Getting a mortgage is therefore, a huge task for any homeowner. These loans can range from the tens of thousands to the hundreds of thousands of dollars, and impose many different terms and conditions. Finding the best mortgage interest rate available is therefore quite an uphill task, which can eventually save one thousand of dollars over a period of time. The mortgage-lending industry is however, not free from its own share of pitfalls. As the market is inundated with so many different mortgaging options one may quite easily end up choosing the wrong one.
The unsuspecting consumer may be lured to believe that a ‘balloon mortgage’ offers the best mortgage interest rate available. While it is true that in the beginning of this mortgage, monthly payments are quite low, homeowners often find difficulty at the end of the mortgage when they are forced to make a large balloon payment. Balloon mortgages do however, offer some of the best mortgage rates available for real-estate buyers who are looking to turn over the property quickly. Mortgage brokers are usually middlemen between the customer and a lender .The broker needs to look through the market to find out the best mortgage interest rate available.
Types of Mortgage loan: There are two main types of mortgage loans, fixed rate and variable rate interest. With a fixed-rate mortgage loan, the homeowner pays the same amount of interest every month during the lifetime of their loan. With a variable rate mortgage, the homeowner will end up paying different interest rates month-to-month solely depending upon market conditions. Banks and lending companies may use different market indicators to determine your interest rate.
While selecting the best mortgage interest rate one also needs to know that the true drivers of mortgage rates are the investors in the secondary market. A loan when its funded, the mortgage lender that funds the loan which may be a bank, a credit union, or other type of financial institution has the option of keeping that loan on its portfolio or selling it on the secondary market.
When selecting the best mortgage interest rate one needs to see whether it offers you the best return possible. That level of return is to a great extent determined by the current and anticipated condition of the economy. Determining the best loan that requires one to pay the smallest monthly payment possible is equally important as getting the best mortgage interest rate.
Fully equipped technologies are now available which simplify the lending process and ensure the current mortgaging rate is the best for his client. Only by exploring the wide-range of mortgaging options one can decide which one suits his/her purpose. It takes only a little bit of internet surfing, a few phone calls or may be a couple of visits to the local branch to find out and grab the best mortgage interest rate.
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Adjustable Rate Mortgages – Interest Rate Strategy
September 21, 2009 by admin
Filed under Mortgage Rates
Adjustable Rate Mortgages – Interest Rate Strategy
Over the last few years, many people squeezed into new homes using adjustable rate mortgages. With interest rates going up, you now need a new interest rate strategy
Adjustable Rate Mortgages – ARMs
Adjustable rate mortgages carry a bit of a gamble for home owners. Essentially, you trade smaller interest rates and lower initial payments on the gamble rates will not increase over time. If rates stay low, you make out like a bandit. If rates increase, you need to consider your options to avoid getting stuck with a high interest rate loan and resulting cash flow problems from increased monthly mortgage payments.
For the last three or four years, adjustable rate mortgages have been offered with incredibly low interest rates. Many people used these low, low, low rates to buy homes that would otherwise be beyond their means. Starting in 2004, Federal Reserve Chairman Alan Greenspan started making noises about increasing money borrowing rates. He has followed through on these hints. Although mortgage rates aren’t tied directly to the Federal Reserve Bank, they are heavily influenced by it. As a result, many people are now facing tight finances.
Avoid Rising Rates
There are really only two solutions for avoiding the increase in interest rates on adjustable rate mortgages. The first strategy is to immediately convert to a fixed rate mortgage product. Fixed rates are still at historic lows when compared to rates offered over the last 50 years. By flipping to a fixed rate, you will be able to solidify your budget and finances since you will know exactly what you have to pay each month. If rates decrease in the future, you can always try to flip back to an adjustable mortgage loan.
Unfortunately, some home owners are simply going to have to face the fact they lost one the interest rate gamble. Typically, this will occur when you realize you simply can’t afford to make the monthly payments required by getting a fixed rate loan. In such a situation, you are going to have to sell your home and downsize. In most situations, it is better to do this now since you’ve probably built up a sizeable chunk of equity over the last few years and want to avoid a loss of that equity as the market cools down. While this may sound like a disaster, it really isn’t. Yes, you have to downsize, but you should still have built up a chunk of equity.
Interest rates are going up whether you want to acknowledge it or not. The time to deal with your adjustable rate mortgage is now, not when you straining to make payments.
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30 Year vs. 15 Year Mortgages
When we talk about mortgages it is always about how can we qualify the most money with the lowest possible payment and where and how can we get the lowest interest rates in the market today. While these are two important issues, there is an additional one that people fail to consider, resulting in significant wasted money.
The term of a mortgage is extremely critical for a couple of reason. First, it sets the length of the obligation you are undertaking. Second, it defines the amount of interest you are going to pay over the life of the loan. These are huge issues when it comes to building equity.
It’s a rule of the thumb. The longer the loan, the more total interest you are going to pay. The trade off, of course, is you are going to have smaller monthly payments the farther you stretch out the obligation. While this may sound like a good goal when you first get the mortgage, it can backfire on you in the long run.
Most people focus on interest rates as a way to save money on mortgages. This is a valid approach, but playing with the length of the loan is a better way to save money. If you can cut the payments in half by going with a shorter loan, you can save huge amounts on the total interest repaid to a lender.
The decision on the term of the loan is relatively simple, but entirely dependent upon your personal situation. There is no absolutely correct choice. First, you need to determine if you can comfortably afford the higher payments that come with a shorter term loan. In general, a 15 year mortgage will have payments 20 to 25 percent higher than a 30 year loan. Of course, you will pay the loan off faster, to wit, be building equity in the home quicker.
The modern mortgage industry has a variety of different term length products. When applying for a loan, take the time to evaluate the different terms to see if you can find a loan that is perfect for your situation.
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Why You Consider an Adverse Re-mortgage
September 17, 2009 by admin
Filed under Re-Mortgage
Title:
Why You Should Consider an Adverse Remortgage
Word Count:
766
There are many reasons to consider an adverse remortgage, particularly if you have a variable rate adjustable rate mortgage (ARM) that is getting close to a scheduled adjustment. Many individuals who borrowed money to purchase a home under the sub-prime lending market have mortgage loans with very unfavorable terms.
<b>Who Can Benefit From an Adverse Remortgage?</b>
Many people with poor credit histories were so glad to be able to access funding to purchase a home that they did not stop and consider the long term consequences of having an adjustable rate home loan. Over the last few years, however, the landscape of the mortgage loan industry has made just how risky ARM loans can be for borrowers and investors alike.
Individuals who initially borrowed money to purchase a home under a sub-prime lending program may be pleased to find that their credit scores have started to head in the right direction, particularly if they have been making all their mortgage payments on time and have avoided taking on additional debt.
Those with unfavorable sub-prime mortgage loans can greatly benefit from applying for an adverse remortgage loan. This type of home loan is simply a refinance program designed for homeowners whose credit ratings are classified as adverse, yet have a positive track record of repaying the current mortgage loans.
While it can take years to repair a truly adverse credit history, establishing a pattern of on time mortgage payments may be sufficient to help homeowners get out of dangerous ARM loan situations. After all, it is in the best interest of lenders to make sure that goad customers have loan products that they are likely to be able to repay.
In some cases, adverse remortgage loans are a good option even for individuals who have not yet established a positive, on-time payment history on their home loans. Individuals who get behind on their mortgages can often opt to get an adverse remortgage loan that rolls the past due amount into a new loan. In some situations, this adverse credit refinancing option is the best route to prevent foreclosure.
<b>Who is Eligible for an Adverse Remortgage?</b>
Individuals with strong credit scores are not could candidates for adverse remortgage loans. While it is true that people in this situation would likely meet or exceed the criteria for being approved for an adverse remortgage it is not in their best interest to do so. Anyone who can qualify for a conventional home loan refinance can save a significant amount of money buy pursing that type of remortgage program rather than one designed for individuals with adverse credit histories.
The best candidates for adverse remortgages are individuals who are in the process of pulling themselves out of credit nightmares. Many people who apply and qualify for adverse remortgage loans have current financial problems, such as being in a state of arrears on their current home loan, having prior defaults, or having court judgments against them. This is why adverse remortgage loans are often referred to as bad credit refinance options.
<b>How to Apply for an Adverse Remortgage Loan</b>
If you don’t have good credit, but need to find relief from the terms or payment amount of your current mortgage loan, applying for a bad credit refinance may be the best option for you. In light of the changes in the home loan industry in recent history, finding lenders who are willing and able to make adverse credit loans is becoming more challenging.
However, the fact that so many homes have gone into foreclosure since the 2007 meltdown in the mortgage industry has had a significant impact on the overall lending industry. Whenever possible, lenders today are willing to take proactive steps toward helping homeowners who have the means and inclination to make mortgage payments stay out of foreclosure by way of bad credit refinancing programs.
If you are having trouble keeping up with the payments on your current home loan, speak with your lender before the problem gets out of hand. If you, and your loan officer, are proactive in seeking bad credit refinancing approval before your situation becomes too bad, you may be able to qualify for an adverse remortgage with terms that are more favorable than the loan you currently have.
When you approach a lending company about applying for an adverse remortgage, it’s very important to be honest about your financial situation. Take all of the documentation you are likely to need to use to demonstrate why you are not a bad investment risk even though your credit history is less than stellar.
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Adjustable Rate Mortgages Alert!
September 15, 2009 by admin
Filed under Mortgage Rates
Too good to be true? It probably is. The Adjustable Rate Mortgages (or ARM in industry lingo). These guys can be a wolf dressed in sheep’s clothing and if you aren’t careful they are going to take your home away from you!
An Adjustable Rate Mortgage works this way. Initially, you are probably going to be paying anywhere from 2 – 3 % below the current market interest rates on your mortage. For most people, this allows them to purchase a bigger house, one that would normally be outside their price range. The normal reasoning is that by the time the loan adjusts they will be earning more, the economy will be better, etc.- which could be a year from now, or as much as 7 – 10 years from now –
Sometimes it just isn’t that way. In no time, we went from two incomes to one or we just aren’t making as much as we were. Worse still, interest rates rise and when it comes time for our ARM to adjust it goes up.
Some Adjustable Rate Mortgages changes every year based off current interest rates set by the Federal Reserve. Sometimes, this can be a good as interest rates may have fallen and you could end up paying in interest than you were at the start of your loan.
There are other ARM’s that adjust after a number of years – say 7 to 10. When they finally commit themselves, it can be a real sticker shock for the homeowner. If they haven’t planned for this financially it could mean the difference between them keeping or losing their home because monthly mortgage payments could double in size depending on how low your interest rate was before the adjustment and what current interest rates are.
So what’s the best decision that most smart home owners make? Go with conventional mortgages that have a predefined interest rate that is locked in over the life of the loan. If market conditions allow, you can always look into refinancing your mortgage and getting a lower interest rate.
Adjustable rate mortgages are good for those who like to take risks – and some argue they are good for families just starting out who know they will need a bigger house in the future and will have larger incomes in the future as well. However, as we all know, nothing is as certain in life as change and sometimes the smart homeowner knows when to play it safe and keep a roof over his or her head!
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An Ideal Mortgage
Buying a home is an exciting prospect. Choosing the location, the floor plan and finally closing the deal. There is an important element that exists in most home sales and that is the mortgage.
One would need to get financing to purchase a property in full cash price.This type of financing is a mortgage. When you take out a mortgage you are using the property as collateral. If you fail to repay the mortgage on the terms you agreed to, the bank or lending company has the right to take over possession of your property. Therefore it’s very important to choose a mortgage that will fit into your budget.
There are several types of mortgages available today. One of these is the fixed rate mortgage.
When you take out a fixed rate mortgage it means that you are taking out a mortgage for a specific amount of time, It can be a 10, 15, 20 or 30 years period. When you apply for the mortgage loan, you agree to an interest rate. This interest rate will be in activated for the life of your mortgage and monthly payments will be set accordingly to the terms agreed upon with the lender.
Another type of mortgage is the adjustable rate mortgage where the interest rate applies for a shorter period of time. Once completed, usually a year, the interest rate in effect at that particular time is applied to the mortgage.
If interest rates are volatile when you are considering purchasing a home, it is advisable to consider an adjustable rate mortgage. The reason is that if you commit yourself into a fixed rate mortgage and then interest rates fall, you’ll be paying much more than you would have otherwise.
When you go to apply for a mortgage the loan officer will explain in detail the differences between the two kinds of mortgage. They will also advise you as to which one is better for you in terms of your financial goals.
If you are already a homeowner and are of an elderly, there is another type of mortgage that applies to you. It’s called a reverse mortgage. A reverse mortgage is when the homeowner wants to enjoy some of the equity they have already acquired in their home. Each month the homeowner is paid any amount of money. This money is charged interest. Once the homeowner passes away or sells the property, the bank takes the total of the reverse mortgage payments and any additional interest out of the proceeds of the home’s sale.
This works very well for retired people who want to enjoy the rest of their live without having to worry about money and still able to live in their homes and at the same time, the reverse mortgage gives them the extra cash funds they wouldn’t have otherwise.
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