This is the second part of Frequently Asked Questions about home loans. Feel free to ask your question in the comments, if you can’t find your answer here.
Finding A Cheap Mortgage
Finding a cheap mortgage is a goal that every homeowner has, but unless you know exactly what you are looking for it will be difficult to find. The definition of cheap may be different for you and your broker, so make sure that you know what all of your options are and exactly what you are seeking as far as mortgage loans. Your broker or real estate agent should be able to go over the options and choices with you so that you are educated on what is available and which are the best deal right now, so that you can make knowledgeable and smart decisions.
One type of cheap mortgage is the balloon or inflatable mortgage. This type of mortgage loan is perfect for couples just starting out, where the job is new or you are still finishing school. The initial payments of the loan are lower when you begin paying on them but over time they increase so that they keep in step with your job, promotions, opening your own business or various other ways of increasing your income to meet the payment. The drawback on these types of mortgages is that you’ll need to make sure that you know where you are headed financially to effectively use one.
Cheap mortgages may also be defined as mortgages that meet the low or prime rate of interest that is being advertised. If there is a low-interest rate available and you get a fixed-rate mortgage at that rate, then you will save a lot of money over someone who waited six months or a year to purchase their home, and missed out on the lower interest rate. Of course, there is always the chance that six months or a year from now the interest rate may drop even lower, and a decrease of one percent when talking about a thirty-year mortgage is several tens of thousands of dollars.
Another option when it comes to mortgages that are cheap is the one hundred and twenty-five percent mortgage, which is a mortgage that pays for your home plus 25%. This leaves you extra cash for other purchases. Many times this type of mortgage is used to start a business which they would grow and allow for cash to pay the mortgage. However, since you have taken out a loan for more than your home’s worth, it may be a very long time before you have any equity built up in your home, especially if your business doesn’t do as well as you thought it would.
Learning how to find a cheap mortgage is a simple process once you define for yourself exactly what cheap is. For you, cheap may be lower monthly payments at first, or it may be lower interest so that you end up paying a lot less for your home in the long run. Either way, there are a myriad of options available and your agent or broker will be able to guide you in the right direction. Get to know all of the options and products associated with your home purchase and you’ll have the tools to make an intelligent decision on your home loan.
Buy To Let Mortgage Lender
As a property investor, whether you have been in the business for a while or are new to property sales and leasing you have at least considered a buy to let mortgage lender for purchases which you can immediately rent out for recurring income. Going through one lender solves quite a few problems, one of those possibly even finding properties to purchase. Most charge some sort of brokerage fee, anywhere between 1 and 3 percent, but it is often worth it because of these advantages of a lender/broker all in one.
There are a couple of things to look for when looking for someone to handle your buy to let mortgages. First you’ll want to make sure that they have the advantage of listing properties that aren’t known or are exclusive to brokers. The reason for this is simple – a wider variety, and if a company doesn’t offer these exclusive properties, there are others that do, so move on to one of them. You’ll also want to make sure that they offer a wide variety of buy-to-let mortgages and properties because you’ll want a few choices when deciding on a buy-to-let property.
The nice thing about the buy to let market is that there has been a lot of recent companies that offer a buy to let mortgage and a wider variety of products that make buying to let easier. There are all kinds of different ways to go as far as these types of mortgages are concerned, and so if you have just entered the market you are here at the right time. Everything from base rate trackers, to variable-rate mortgages, fixed-rate and discounted variable-rate mortgages are available. Educate yourself on what is available, and especially what your lender or broker has.
How exactly do these buy to let mortgages work? Well, most lenders will require you to put up some sort of deposit. A common deposit is 15 to 20% of the purchase price, but you can often get a much better rate with a larger deposit so ask the companies you are considering what their policies are on that. Also, remember that deals come and go often so keep checking back for the best deal. Another thing to keep in mind if you can’t afford the initial deposit on a buy to let property is that you can borrow on equity in another property or your own home to come up with the down payment.
Lastly, you’ll want to decide if you want to go with just one buy to let lender or whether you want to spread your portfolio among several. Both methods have their advantages and disadvantages. If you choose to go with one lender than you are familiar with the people you are working with, and the terms, and you will likely build a strong relationship with them. However, going with several lenders have its advantages as well, chiefly that each lender has different listings and different deals at one time or another, and if you can juggle several you could have a major advantage.
Typical Fixed Home Mortgage Rate
What is a typical fixed home mortgage rate? This is an impossible question to give an exact number to, but as far as the general definition, a fixed home mortgage rate is one that is set in stone after you buy your home and will not increase or decrease over time. The opposite side of this fixed-rate loan is one that floats, such as in tracker mortgages, which follow the interest set forth by the Bank of England, or adjustable-rate mortgages which follow some sort of index. Your fixed-rate mortgage may be set at 3.9% for instance, and this will be the same interest rate for the remainder of your loan term.
There are many factors that affect the amount of your home mortgage interest rate including the state that you live, the amount of your down payment, your credit history, and the term of the loan. A search for interest rates on fixed mortgage loans today shows the market sitting at about 4.8% on average but that changes considerably with your own information on the loan, and event the base rate may change in a few days or weeks. Your credit rating, however, is probably the major factor that affects what sort of fixed rate you might receive.
Of course, fixed-rate mortgage loans aren’t the only type available. The adjustable-rate mortgage is a common choice among home buyers, created to take advantage of a lower interest rate at a later date. This usually changes quarterly or in some cases yearly. A much quicker changing variable rate mortgage is the tracker mortgage which not only takes its interest rate from that of the Bank of England but also changes your own interest rate within fourteen days of the change effected by the bank.
There are also less common types of mortgages that don’t necessarily have to be one or the other as far as interest rates go, such as the balloon mortgage, which starts your family off with low monthly payments and then gradually increases them over time so that as your income grows, from promotion or pay raises, you pay more on your home and make up for those low-interest rates that you got at first. However, if you don’t have a sound financial strategy in place you may find yourself refinancing so that you are able to make your payment.
Whether you go with a fixed rate of a variable rate mortgage is completely up to you and depends upon your own needs and your personal unique situation. The best person to help you make that choice is your real estate broker or agent, who can explain the pros and cons of each type of mortgage so that you can decide which will work best.
How To Rate Mortgage Companies
So, you are thinking about buying a home. One of your very first decisions that you’ll have to make is which mortgage company to go through, and for that you’ll want to know how to rate mortgage companies. There are many different mortgage companies out there and unless you know exactly what to look for and how to determine if a mortgage lender is a bad lender then it can be very difficult to make a decision and pick the right lender. There are some factors that you can use to weigh one mortgage company against another and using these determinations will ensure that you make the best decision for your mortgage.
The first thing to keep in mind is that you should go with a local company. Try to avoid companies that are out of state or solely on the web. You’ll want a company that is familiar with mortgage loans in your area so that you don’t miss out a great deal because they didn’t know about it. Try to avoid web-based companies altogether because although they may seem legitimate on the surface they may not be, and in fact, there are many so-called mortgage lenders on the web that simply collect your information and sell it. Sometimes it makes it to an actual mortgage company but more often the information is sold to anyone that will buy it.
Another don’t is to avoid the lender that your real estate agent recommends unless you do your research and find that they offer you the best deal. This is rarely the case. The real estate will recommend a certain lender because he or she may get a commission off of the loan in addition to the fee that they are already receiving from the sale of the house. This means that the loan may not be in your best interests or you may be dealing with a lender that will not be looking out for you. Try to avoid this if you can. The best way to find a mortgage lender is to shop around until you find you are completely comfortable with.
If your mortgage lender is underestimating fees such as per diem, tax escrow, and other pre-paid. All mortgage lenders will give discounts for things like new development discounts and seven and three-year reissues. The prepaid are actually set by the state that you are in and mortgage companies cannot give discounts on these things. Make sure that you are dealing with an honest lender that will tell you exactly what your mortgage is gonna cost. You don’t want any surprises later on that you didn’t plan for. It’s always better to deal with a lender that will tell you how it is, rather than one that will mislead you about a sale.
Rating mortgage companies will give you a much better idea of the overall value that they will offer you as well as how good their customer service is. You can figure out what factors you want and rate each company on your own scale and then go back after you have visited several lenders and look at your list with your spouse and make a decision as to which one you like best. The interest rate, customer service, and availability of options are all things that you can rate mortgage companies on. This gives you something to look back on when you make your final decision.
Types of Home Mortgages
There are several different types of home mortgages available on the market these days and the smart buyer will know what mortgages they are looking for before they ever set foot inside a bank or finance company. There are in all about ten different types of mortgages but we are going to talk about four different types here. The first is the first-time home buyer programs, the adjustable-rate mortgage, the fixed-rate mortgage as well as the balloon payment mortgage. Knowing these types of mortgages will help you to make the decision on which mortgage works best for your financial situation.
The first type that we’ll cover is probably the most common of the types of home mortgage and that is the fixed-rate mortgage. This type of loan has the same interest rate throughout the entire term of the loan. That means that your payment will be exactly the same each month, except for the payment at the very end. Generally, you can get fixed-rate mortgages at 10 or 15 years or 30-year loan terms. If you plan on living in your home for ten years or more and you need to know the exact amount of your house payment for budgeting reasons then this type of loan is perfect for you.
If you want to get the lowest interest rate possible then you may be interested in an adjustable-rate mortgage instead. An adjustable-rate mortgage or ARM, changes with the financial index. For instance, if you think that interest rates will be going down over the next few years then an ARM may be exactly what you want. A common type of adjustable rate mortgage is the one year ARM, which changes the interest rate yearly based upon the current financial market. There is a risk to the buyer with an adjustable rate mortgage that the interest may not change in your favor, and in fact may increase each year so that your monthly payment goes up. You’ll have to decide if this is a risk you want to take.
Another one of the home mortgage type is the balloon payment mortgage. These types of mortgages are intended for those who plan on a large sum of money or a business that will be expanding. The payments are low for the majority of the term of the loan, and then a large lump sum of money is required at the end of the loan. This can be great for someone who has a business that has expansion plans in the future or for someone who is expecting a bonus or some other form of big money at the end of a certain period of time.
The last type of mortgage that we’ll discuss is the first-time home buyer program. These programs are intended to make things easier for someone who has never purchased a home before and often offers incentives to make it more appealing and easier to get than for someone who has gotten a mortgage before. First-time home buyer programs will give you the benefit of an agent’s experience and can help you through things like closing costs, earnest money, and the down payment, as well as how to get your credit ready for buying a home.
Is A Mortgage 30 Year Fixed My Best Option?
One of the many options when thinking about buying a home is the mortgage 30 year fixed, which means that you get a fixed rate mortgage, or an interest rate that will stay the same throughout the life of the loan for a period of thirty years, which is an extremely common interest rate for mortgages. The nice thing about a fixed rate mortgage is that no matter what happens to the interest rate over time, yours will stay the same. The payments will also be the same, except of course for the last payment. This makes it easy to budget since you always know what your mortgage payment will be.
There are other options for mortgages of course, but many choose the fixed rate. There are also different terms. You can get a 10-year or 15-year fixed-rate if you think that you can handle the payments and want to pay off your home sooner, to sell it and move into a bigger one. There are also variable-rate mortgages that are offered yearly or a number of years. This means that the interest rate will change to reflect the financial index every year or every five years, or whatever you choose the period of the adjustable-rate mortgage to be.
Some people prefer not to go with fixed mortgages because a fixed mortgage doesn’t give them an opportunity to take advantage of interest rates should they fall quite a bit in the future. If you have a handle on the financial scene and you are expecting mortgage interest rates to drop in the future then you may want to go with a different type of mortgage. Fixed-rate mortgages are best for people who aren’t sure about the financial market and how interest rates will be affected. Of course, if you have a financial adviser you may rely on his or her advice about interest rates.
One thing to consider about the term of the loan is the amount of money that you will pay over time. A 30-year fixed mortgage looks appealing because the payments are much lower, but over that extra fifteen or twenty years you could be paying tens of thousands of dollars more than you should. If you can handle the higher payments for a ten or fifteen year mortgage then you may want to consider it, because of the actual cash money that you’ll save in the long run. For instance, even a one percent interest rate differs by $15,000 on a $100,000 house from fifteen years as opposed to thirty.
Of course, the payment on a ten-year mortgage or a fifteen-year may be more than most can afford. If that is the case then it is alright to go with a thirty-year mortgage. If you don’t have to give an arm and a leg to pay it off early then you may refinance when your wage increases or if you are a business owner, when your business takes off. A thirty-year fixed-rate mortgage is a commonplace type of mortgage and you can often get financed easier for a longer term than you can for a shorter one with higher payments, so if your credit is shaky you may want to go with a longer-term regardless.
The Reverse Mortgage Industry
The reverse mortgage industry in alive and well in today’s financial market especially with social security fluctuations and other factors that make it difficult for seniors to have a decent retirement. The nest egg from twenty-five years ago is a paltry sum today and prices are still on the rise. For seniors who aren’t bequeathing their home to children or other relatives a reverse mortgage may be the perfect way to retire with a sum that offers security and stability. If you aren’t; sure what a reverse mortgage is or how reverse mortgages work then read on, and we’ll try to explain them.
So, what is a reverse mortgage? Well, it is exactly like it sounds. It’s a way for your house to pay you, rather than for you to pay for your home. A reverse mortgage is intended for seniors who want to use the equity in their home to give them a lump sum of cash. How it works is by borrowing money against the equity in the home and giving it up to the lender when the home owner either dies or moves away. This way, you get a lump sum of cash that is equal to the equity that you have in your home to retire on, take a vacation, or whatever you choose.
You don’t necessarily have to do it all in one lump sum either. In fact, quite often the reverse mortgage payments will be monthly for a certain period of time. This will enable the recipients to travel or simply live in a tropical climate while receiving a check each month. The loan isn’t offered to everyone, in fact, you have to be age 62 or older to qualify for the loan and you must have enough equity in your home built up to obtain the loan. The main problem with this type of mortgage is that you basically undo all the work you did by paying for the house for so many years.
You can continue to live in the home after you have to take out the reverse mortgage. If you decide that you want to continue living in your home until you pass away then you will not only have a home but also money to live on, which makes life very nice for retirees. However, you will not be able to pass on the home to relatives when you die, because it will go to the company that you got the reverse mortgage through. If this isn’t a concern then a reverse loan for a mortgage may be exactly what you are looking for.
Many consider the reverse mortgage industry in poor taste because it purportedly preys on seniors who need money and basically takes the home that they have worked their whole life to pay for after they die. However, it is a blessing to many senior citizens who are wondering how they will continue to pay their bills with a small social security or retirement check. If you are offended by the idea of a reverse loan then you don’t have to get one, but for many people it is the life preserver that they were looking for upon retirement.
Mortgage Rates For Bad Credit
So, you are suffering from the more and more common malady of a poor credit score. Don’t worry, you aren’t alone and if you are looking at mortgage loans for people with bad credit you may have noticed that the interest rates vary considerably from those prime mortgage rates that everyone else is talking about. If you need a mortgage and you have a poor credit score you may have to go with a higher rate but there are some guidelines to follow to make sure that your bad credit doesn’t cost you too much on your mortgage loan.
First of all, let’s talk about why these companies offer mortgages to people with bad credit. They are usually legitimate companies but have considerable safeguards in place to prevent nonpayment. Also, they make a lot of money from these mortgages for bad credit and can afford to take a chance on nonpayment and foreclosure. Mortgage rates with bad credit can go several percentage points higher than a prime rate and even with a one percent increase a company stands to make a lot of money over a period of fifteen or thirty years during the term of your mortgage loan.
What are the rates for these subprime mortgage loans? Well, unlike conventional mortgage rates which will pretty much remain consistent no matter which lender you go to, subprime mortgage rates will differ considerably from lender to lender. Indeed, it may be a ‘get whatever you can’ market for subprime lenders so shop around and make sure that you are getting the best rate available in your area. Try to find a rate that is consistent with the prime rates or just a bit higher. Generally, a subprime rate will not be that different from a normal mortgage but, but there may be other factors to consider.
What you will want to keep in mind about these subprime lenders is that mortgage rates for people with bad credit aren’t the only thing you should be concerned about. There may be other factors such as terms that you are uncomfortable with, restrictions on early payment as well as severe penalties for late or missed payments. In fact, some lenders may even put a clause in the contract that they can foreclose on the property after only one or two missed payments. You’ll want to keep an eye out for these things as you shop subprime mortgage rates for bad credit.
Another consideration is how bad your credit really is. If it isn’t that bad or it is easily fixable then you might consider doing some repair work on it first, as you can get a regular mortgage with a stable job and decent income, and a credit score of around 650. If your credit score is anywhere near that number then it may take just a little bit of work to get it fixed, which means that you will be able to qualify for regular mortgage rates and won’t have to worry about the subprime market at all. If you do can do this, it is highly recommended over subprime.
No Equity Second Mortgage – Does This Exist?
With so many myths and mistruths in the financial market is is difficult for the average person to know what is a reality and what is not. As far as the no equity second mortgage – does this exist? Yes, in fact, it does. The no-equity 2nd mortgage can be a great option for a homeowner that needs a home equity loan. However, the definition implies that a no-equity mortgage means that you can qualify for it without having any equity in your home. This is not the case. The no-equity refers to what happens after you take out the loan. You borrow against all the equity in your home and afterward are left with no equity.
If you are still confused about this type of the second mortgage no equity means that you have not paid enough on your home to bring the principle down at all. If you have paid enough on your home to pay a certain percentage of the principle, then you could get a second mortgage with zero equity for the amount of the equity that you have in your home. For instance, if you have $10,000 of equity, you can get a loan for this amount, and after receiving the loan, you will be left with no equity. What’s the difference between this and other mortgage loans with your home equity? Not much, except that you generally don’t borrow the entire amount of your home equity.
What you are going to use your second mortgage for is up to you, but many people use it for home improvements just before a sale. If you can make certain improvements to your home, then you may be able to sell it for a lot more than you could before and you will have some money left over after paying off the first and second mortgage. Of course, if you are planning on staying in your home you may be using the money to start a business, remodel, or a myriad of other options. A no equity second mortgage is available for those who don’t have much equity yet whatever you are using it for, just make sure that you are cautious.
Let’s go over the difference between this type of home equity loan and a conventional one. Suppose that your house is worth $250,000 and that you put twenty percent down on your home when you bought it. You are financing $200,000. This means that with a conventional second mortgage you could not borrow because you are restricted to only eighty percent of the value of your home. With a no equity second mortgage you could borrow the full amount or in some cases even more of the value of your house. However, once you complete a no equity second mortgage keep in mind that the equity in your home goes down to nothing.
Remember that the interest rate for a 2nd mortgage no equity is going to be higher than your first mortgage rate was. Also, you may not have as many options with a no equity 2nd mortgage and in fact may have to go with a simply fixed-rate mortgage. Make sure that you check out all of your options for the second mortgage, whether it is a no-equity mortgage or just a conventional second mortgage. However, the no-equity second mortgage is a great option if you need money and just haven’t built up enough equity in your home to qualify for a conventional second mortgage.
How To Get Discount Mortgage Rates
If you are wondering how to get discount mortgage rates then the answer is actually relatively simple. You shop around and you ask for them. You will be surprised how many times you can get a discount on your mortgage rate simply by saying that you aren’t happy with the rate and that you are going to continue shopping. Companies want your business and they are often willing to give you a deal to get it. They may do so under the guise of special discounts or programs but generally, they will offer something.
The first thing to keep in mind is that to find the perfect mortgage loans you may have to shop around a bit. Start with local companies in your area, especially those that you already have an established relationship with to see if they will offer you some sort of discount mortgage rate. Of course, when it comes to mortgage rates discount may not be the term that is used, but they may say that your credit history allows you to qualify for their prime rate or some other terminology after you ask for a discount.
You can find discount mortgage rates at usually about a half a percentage point below the normal rate. For instance, a fixed-rate discount may be around .6 percent. This percentage will increase the longer that you make the term of the loan because the company will be able to make more on the interest the longer that you are paying for the loan. So, while you may not be able to get a discount for a ten or fifteen-year mortgage extending the loan out to thirty years may get you the discount rate that you want. Of course, this also means that you’ll be paying more money as well, so you’ll have to decide if it’s worth it.
If you had planned on getting a thirty-year mortgage anyway, but you go into the negotiations with a ten or fifteen-year mortgage on the table, then you will have a lot more room to negotiate a discount than if you simply went in, laid your cards on the table, and applied for a thirty-year fixed-rate mortgage. Also, you can play around with other options such as fixed or variable rates and get discounts that way. Make sure that you educate yourself about mortgages before you go into the finance company as knowing what you are doing can save you a lot of money.
Even a half a percentage point is quite a discount when it comes to mortgages. If you look at a $400,000 mortgage with no down payment, half a percent of interest saved is $2000 a year or $60,000 on a 30-year mortgage. That is why it is so important to try to negotiate for a discount if you can because even a small one will save you tens of thousands of dollars in interest over time. If you don’t ask then you won’t receive, or some variation of the saying.
Best Discount Mortgage
What is the best discount mortgage? Well, that depends entirely upon what kind of rate you can get with your credit score and what the prime rate is. A discount is anytime you get a lower interest rate than you would have gotten normally. There are many different discount mortgage factors. A credit score is a big one. Having a good credit score will ensure that you get the prime mortgage rate and sometimes a bit lower if you negotiate. There are also discounts for longer terms or by taking certain kinds of mortgages if they happen to be offering a deal for a certain type of mortgage.
If you look at mortgage loans you will find that they are pretty much consistent all across the board. The rates will be almost exactly the same at each company that you go to, so determining which will offer you a discount for whatever reason is vital. Of course, getting a discount shouldn’t take precedence over other factors such as early payment penalties or other terms that are uncomfortable. However, finding cheap mortgage loans can be as simple and easy as asking for them.
To find discount mortgage rates first determine if you qualify for the prime rates that are offered to those with good credit. Most mortgage companies start with a credit score of about 650 to even approve a mortgage and then 750 is about where they really start trying to earn your business. If you know what your credit score is, that will help you determine where to start. If your credit score is a little low then you may want to wait a few months before you begin applying for your mortgage to fix your credit. Even a little higher score may mean a much lower interest rate.
Another thing that can affect the interest rate that you get is other credit risk factors that aren’t based on your past credit history. For instance, if you make $3000 a month and you have $1500 a month going out in credit card payments and other loans then you will be a higher risk than someone who has more available income. If you can, try to eliminate as much of your debt as possible before you go in and apply for a mortgage. This is commonly referred to as your debt to income ratio and having one at around 35% will get you the best discount rate for mortgages.
Down payment is another thing that will affect your interest rate, again because you represent much less risk to lenders if you put a lot of money into your home. A down payment of 20 or 25 percent can often get you a discount mortgage interest rate especially if you ask for one. When buying a home, it’s always a good idea to have as large a down payment as possible, not only because you will get a better interest rate and have a much better of being approved, but also because you will save a lot of money in interest and already have some equity in your home.
Home Mortgages Are Easy
These days it’s fairly easy to get a home loan even if you don’t have perfect credit but home mortgages can be a complicated and lengthy process and unless you are somewhat educated in the terminology and definitions of home mortgage loans you may find yourself lost in unfamiliar territory. The first thing that I recommend for someone that is just starting out on getting a mortgage is to get a broker. You’ll pay a fee to use a broker you’ll also get some benefits that you wouldn’t get by looking for a mortgage on your own.
The application for a home mortgage can be daunting as some of the terms and vocabulary may not be familiar to you, as well as some things that are not normally asked on a regular credit application. Before you even start on the home mortgage loan application gather some essentials that you’ll need. You’ll need to know your social security number as well as how long you have lived at addresses within the past five years. They’ll also want to know about your job, how much you make, your position, your supervisor, and how long you have been there.
A home mortgage application explained can be a big benefit to you before you start which is one reason that I recommend using a broker. They’ll be able to tell you what information you need in total, whether you need to bring in bank statements or information on current or past debts or lines of credit. Also, they’ll want to know about your assets such as how much you have in stocks, your work pension, your savings accounts, CDs, or retirement. If you choose not to use a broker, just bring everything that you can think of.
The home mortgage application is long-form and it will take some time to fill out so make sure that you arrive with an open schedule. The first part will be the type of mortgage that you are looking at, such as fixed-rate or adjustable, and the terms of the loan. This will be filled out by the finance company so you don’t have to worry about that. When you decide on an amount that you want, then you can choose what type of mortgage you want to apply for. There are many choices in today’s market so you should be able to find an option that you like.
The next section will likely be informed about the property that you are interested in, and you can fill this in if you have already had an offer placed on the table. If you haven’t even looked yet, then you can simply leave it blank. You can fill this out later if you want. Below this will be where the personal information starts, information on things you have financed, and your job and address information. You may also have to put personal and professional references on the application. Each one differs a little bit, which is why a broker is such a handy tool to have at your disposal.
How To Apply Online – Mortgage
If you are looking for a mortgage you may have noticed that there are many companies online that are offering great rates and discounts on mortgage loans. If you decide to go this route you may save a lot of money by finding a great deal online but you’ll need to be cautious as some of these companies are unscrupulous, or are front companies for information mongers that will basically collect all your personal info and then sell it to the highest bidder. Just be careful that you are actually dealing with a mortgage company before you fill out the application forms.
Can you apply online for a mortgage? Yes, you can, and you can send in all pertinent information through fax or mail. These days, nearly anything can be done with the power of computers and wire transfers. You can complete the entire mortgage application online and even get the money from a long distance. However, going with a local company has its advantages as well. For one thing, a local company will know the ins and outs of the local market as well applicable laws that are indigenous to your area.
Before you apply online mortgage companies in your area may be able to give you some information. Another thing you can do is to find a broker that will give you any information that you need to apply online for mortgages such as laws or other factors that you need to be aware of. Whether or not you can get this information without paying a fee is debatable. Once you are armed with the right information you can proceed with your online applications and be able to tell when an online mortgage company or website is not a great fit or is ignorant of things that you’ll want them to know about.
You’ll need to have some information available before you begin to apply online. You’ll need your personal information of course, as well as information about your current and past residences and about your job. Come to the computer armed with some pay stubs and a phone book, as you’ll need to provide information about how much money you make, how long you have been on the job, and what exactly you do there. Also, your position will be asked, as it will help companies determine whether or not your salary will increase, which can help if they are on the fence about approving you based upon income.
Remember that an actual mortgage application will ask a lot of questions so be prepared to fill out a lot of paperwork. If you fill out a very short application then you may just be dealing with a company that brokers information and the companies that contact you about a mortgage may not be the best fit for what you are looking for. Your best bet is to choose a mortgage company that you are comfortable with, talk to them on the phone so that you can get an idea of how they do business, and be careful to who you submit your information to online.
Should I Refinance Mortgage
So, you are considering refinancing your mortgage. This can be a valuable way to save some money on interest or to get some cash back for home improvements or other expenditures. Whether or not to refinance is a decision that you’ll have to make, and it depends entirely upon what you are looking to get out of the refinance. If you are looking for a lower interest rate then a refinance may be a great option but you’ll also need to be aware of how much equity you have already in your home as well as any pre-payment penalties or other fees involved in financing.
Refinance mortgage decisions should be based upon whether or not you are going to live in the home for long enough to see the savings. For instance, assuming that you have a $200,000 mortgage with 20% equity from partial down payments and regular payments, and you currently have a 4% interest rate then determining how many months it will take you to see the savings is easy. Find out the sum of monthly payments that equals the amount saved by refinancing at a lower interest rate. This will determine whether or not the new mortgage will increase your liabilities or assets.
Another thing that you can do to easily determine whether or not the mortgage refinance is worth it is to compare the payment schedules from the old mortgage to the new one. This schedule is also called an amortization schedule and this will give you a basic estimate of whether or not financing would be a sound financial decision. Your lender should be able to answer any questions you have about refinancing mortgages and mortgage loans in general so that you are able to make a decision based on all the available information.
There are many different types of refinance loans available, from the adjustable-rate mortgage which changes with the financial index every one, five, or ten years, or the fixed-rate mortgage which remains the same over the entire term of the loan. There are also other mortgage options such as the balloon mortgage which has low rates at first and then increases over time in tune with your wage increases at your job or the growth of your business. There are quite a few types to choose from and most you may already be familiar with because of your first mortgage.
The question as to whether or not you can refinance can only be answered by you, by looking at your unique situation and determining both if, and what kind, of refinance mortgage is best for you. Factors such as what you plan to use the money for, how long you are planning to stay in the home, and other determinations must be discussed between you and your spouse, and possibly your financial adviser or broker. Once you decide that you do want to refinance you’ll need to choose from the myriad of options available to you.
Lowest Refinancing Mortgage Rate
To get the lowest refinancing mortgage rate you’ll need to check around. Most of the time the prime rate is pretty standard but you can find deals and discounts on a refinancing mortgage rate if you look for it. The best place to start is the place where you originally got your mortgage as they will likely give you a deal for no other reason than to keep your business. If you find that you cannot get a good rate out of them or even if you want to look around for a better rate then keep in mind that a good interest rate isn’t all you should be looking for.
If you get a great interest rate from a company, then you should be asking yourself why. This may seem cynical, but companies often make up for offering lower interest rates with other fees and terms. You should also look at the fine print when you are getting a great interest rate. If you truly are getting a much lower interest rate for your mortgage finance then great, but be aware of other fees, terms of the contract, and pre-payment penalties that you may not agree with. Also, odds are that if you got the best mortgage the first time from a certain company they will be able to offer you a great deal again on the refinance.
There are many online companies that offer the lowest mortgage refinance rates on their website, but you’ll want to be careful when you are working with an online company because many times these websites do nothing more than collect a lot of personal information to sell to other companies which may not even offer mortgages and certainly won’t be the best that you can find on your own. In fact, you may find after filling out one of these online “applications” that you are getting calls from car loan places, credit card companies, and various other companies trying to sell you financial products.
There are different types of refinancing, just as there were different types for your original mortgage. The term is one thing that you’ll have to decide, between a 10, 15, or 30-year mortgage. You’ll need to decide if this time around you want to go with a fixed-rate mortgage or if you want to try a variable rate. There are about 20 different types or mortgages that you’ll have to choose from. It may be the same type of mortgage that you got the first time, if you were happy with that mortgage, but because of fluctuations in the financial market, another type of mortgage may be right for you this time around.
Getting the lowest refinance rate for your new mortgage can be as simple as doing some research or as complicated as comparing rates, terms, and other fees from one finance company to another for several weeks. However, using a broker can save you a lot of time and energy, especially if it is someone that has been in the business for a long time. Find a broker that you trust and they may be able to find you a shortlist of the best rates so that you don’t have to put quite as much footwork into the task.
Best Re-Mortgage Deal
If you are looking for the best remortgage deal then you likely will have done a little bit of research already for a new mortgage. Obviously, the company where you obtained your mortgage the first time is a great place to start because you already have an established relationship with them, and they are already financing your first mortgage. Since you are planning on taking that first mortgage away from them, as well as all the interest they stand to make over time, then they may be willing to give you a special deal just to keep your business.
The best remortgage deals are ones that you are most comfortable with the terms and fees, as well as offering a prime interest rate, or even a little bit lower such as a discount rate. Remember that a discount doesn’t have to be huge. With a 30-year mortgage, even a half a percentage discount can be a huge amount of money over time. The mortgage rate that is offered by a company should be extremely close to the prime rate advertised by others and then you can work out some sort of deal depending on what options you choose for your new mortgage.
Mortgage rates do tend to fluctuate considerably over time and many people go with an adjustable-rate mortgage for this reason. They believe that the mortgage loan rates will decrease overall throughout the life of their mortgage and don’t want to be stuck at a higher interest rate when everyone else is saving money. An adjustable-rate mortgage can come in the one-year, five-year, or ten-year variety, and depending on how the market goes, you can save a lot of money over time with an ARM.
You’ll also need to take a look at the term of the loan. Many people want a ten-year mortgage because they are expected an increase in income from some source or another. For this type of person, a balloon mortgage for your remortgage deal may be exactly what you need. You can get lower payments upfront and take out the ten-year loan that you want to have, while making the same payments that you would on a thirty-year loan, at least at first. Over time your payments will increase but if your income increases at the same time that shouldn’t be a problem.
Let’s look at the difference between a typical ten-year mortgage and a thirty-year mortgage and you’ll see what I mean. Over a period of thirty years, a 5% interest rate for financing $200,000 will cost you quite a bit more than ten years without all the extra interest. However, the payment on the thirty-year may be a lot more attractive to you now. Many people feel trapped into getting a 30-year mortgage that they don’t want because they aren’t aware of balloon payments or other options. Make sure that you know your options before you go in and talk to a finance company.
10 Yr Mortgage Rates
Over time a thirty-year mortgage can cost you a lot of money. This is why many people prefer the slightly higher 10 yr mortgage rates because of the interest saved over time. 10 yr fixed mortgage rates are actually fairly comparable to mortgage rates on a thirty-year loan, but even a small percentage will cost you a lot of money – or save you a lot of money as the case may be. If you want a 10 yr mortgage rate on an average home loan, then you are going to need to have the income to back it up, so be aware of that fact.
Today mortgage companies offer all kinds of options that home buyers didn’t have a few years ago. The home loan rates fluctuate considerably and many different types of mortgages are offered including fixed-rate and adjustable-rate mortgages that will either lock in a very low rate that you have found, or that is available in the market right now, or allow for later fluctuations in the interest rates. There are other options as well, which we will discuss further down. Knowing all of your options as a home buyer can save you a lot of money over time.
What type of mortgage can influence the rates for a 10-year loan. For instance, you may find that 10 yr refinance mortgage rates are slightly higher than your original mortgage. Alternatively, you may be able to find a refinance rate that is lower simply because the company that you applied with or talked it is trying to earn your business on a refinance and is willing to work out a deal with you. If this is your first mortgage then you will also likely pay a higher interest rate, not by much but a little higher, for a ten-year mortgage, as the company is losing out on interest.
Another factor that will influence 10-year mortgage rates for your home loan is your credit score, and truly any term that you go with will be affected by your credit. You should always make sure that your credit score is up to par before you go into applying for a mortgage. A good credit score that will always get the best interest rates available and be approved is a 750 score. Anything above 750 and you are sure to get the prime mortgage rates for your home loan. Anything above 650 and you will likely get approved by someone, but your rate may be subprime.
Also, your job and income are going to be other factors that influence your rate a little bit. You’ll want to show stability on the job and a decent income. You’ll also want to show that you are going to be sticking around at the job for a long time so that the finance company feels comfortable loaning money for a period of ten or twenty years, knowing that the entire time you will have an income to be able to make the payments. If you are considered a risk factor by a finance company then they may not offer you their best rate.
Foreclosure Mortgage Loans
The smart investor knows that even the best deals must be considered carefully before making a decision on foreclosure mortgage loans. No matter how great of deal mortgage loans in foreclosure maybe you’ll still need to determine whether or not you can make the payment and whether the home is a good value. You can use mortgage calculators and other tools to make good investment decisions and for the sharp and informed investor, the foreclosure mortgage loan market is one that is ripe for picking, especially now.
There are so many different types of financing these days and the best interest rates are saved for those with good credit. Indeed a bad credit mortgage could cost you more than you will eventually make from the investment property. You’ll want to make sure that your credit is in top shape if you want to get the best deals at the bank, which will carry over into your bottom line as you invest in properties that have profit potential. A foreclosure mortgage can certainly do that, as the bank is simply trying to reclaim what they lost in some cases and you can get a great deal if you look for them.
The best place to look for these types of homes is with a service that advertises these auction homes or foreclosures. There are many of these available that you can belong to for free. Don’t fall into the trap of the infomercial promising that you will get exclusive information available only to their members. This information is public record and with a little bit of research, you will be able to find foreclosed homes in your area that are set to be sold or are going up for auction without having to pay any sort of membership fee.
If you are having trouble figuring out how you are going to pay for your investment properties an equity mortgage or mortgage refinance may be the answer. The thing is, when you invest in a property, even if you finance it, you will want to have as large of a down payment as possible. In fact, if you already own a home and this is a second home or investment property the bank may very well require a certain down payment that they wouldn’t require if you were using the home simply for living in. This is something to keep in mind as you look at investment properties.
Investing in a property can bring in a solid income, or can give you cash upon resale, and foreclosure mortgage homes are certainly a great investment as long as you can afford the down payment and the monthly payments after that. Renting out the home can help you to make those monthly payments and a quick sale can give you some cash to pick up other investment properties and truly start your investing business. However, just be aware that it may take time to find those few perfect homes that are such a great deal that you’ll turn a solid profit on them.
Mortgage Rates in the USA
If you live in the United States and you are thinking about buying a home then mortgage interest rates USA is likely first on your mind. The interest rates in the United States are pretty much consistent for prime rates all across the board – not for different types of mortgages but rather for the different finance companies. When you start getting into subprime rates for mortgage interest rates in us then you start seeing a bit of a fluctuation, but assuming that your credit is good you should be able to find a decent interest rate pretty much anywhere you go. Just be aware of what the prime rate is and what they should be quoting you before you go into any mortgage office or finance company.
The lowest mortgage rates the USA will come from companies that have a few options as far as mortgages go and you will find that you are going to be offered a better interest rate the higher your down payment. Preparing for a mortgage is a process and you’ll need to start a few months in advance. There are other costs associated with getting a mortgage but just keep in mind that you should start saving for your down payment as soon as possible as it influences interest rates, what type of home you can qualify for as well as whether or not you are approved.
Every time that you search for an interest rate, especially for current mortgage rates USA you’ll find a different amount, but right now the current mortgage rate in the United States is between 4.5% and 5%. This doesn’t mean that that won’t change by the time that you read this article, and in fact, I would bet money that it will. However, you can use that as a guideline when you go into asking about what rates are being offered at local mortgage and finance companies in your area. Compare the best rates that you can find online with the mortgage rates from companies in your local city or town.
Fixed mortgage rates USA will differ from adjustable rates and other types of mortgages. You should be educated on these different types of loans before you sit down across from a mortgage specialist. For instance, a fixed-rate mortgage is one that remains the same over the entire term of the loan, whether it be ten, twenty, thirty, or forty years. An adjustable-rate is one that changes everyone, five or ten years, depending on what you choose, based upon the financial indexes. There are also other types of mortgages with their own rates such as balloon mortgages.
Just be aware that these rates do change and even a tiny difference in the interest rate can cost you or save you thousands of dollars. Get a handle on what the current rates are and keep an eye on them. You can even learn a bit more about how mortgage rates fluctuate and talk to your financial adviser about their projections on mortgage rates in the future. Be smart, and get informed before you make any financial decisions because you will be paying for your home for a very long time and you’ll want to have no regrets when it comes to your mortgage.
Home Purchase Mortgage Loan
Are you thinking about buying a home? You probably need a home purchase mortgage loan if so, and there are several different types of home purchase loans. You should know about the different types of mortgages as well as the prime rates that are being offered and be educated on how to prepare your credit for a mortgage. Whether you are going with a fixed rate or adjustable-rate mortgage can make a huge difference when it comes to interest over time and you’ll want to know what all of your options are before you make a decision about a mortgage loan.
Your home loan mortgage purchase may last for ten, fifteen or thirty years. There are also other terms that you can get depending upon your financial institution or mortgage lender, but those are the standard rates. Before you go into your lender and tell them you want a thirty year mortgage consider telling them that you are looking at ten year mortgages. Then, after a few minutes of discussion ask what kind of a discount you could get if you did a fifteen-year mortgage instead. Finally, ask what they would do if you decided to stretch it out for thirty years. You may get a great deal simply by not laying all of your cards on the table.
A type of loan that is available is the FHA Loan. A mortgage FHA will save you some money in interest or you may be able to be enrolled in a special program because of low income or other factors. An FHA loan is a loan that is sponsored by the Federal Housing Authority and these type of mortgage loans are sponsored by the FHA and is insured by them. You’ll have to check specifically what this type of mortgage can offer you and what benefits you might get from a mortgage through them, or even if you qualify for their programs.
If you already own a home then you might be thinking about refinancing. Refinancing can help out in many ways. A home loan mortgage purchase refinance can help you to make improvements before the sale so that you can get a higher price from the home and put a little cash in your pocket or remodel your home for your own personal pleasure. A mortgage refinance is fairly easy to do, and if you have equity in your home even better. People also refinance to take advantage of a new low-interest rate or a mortgage loan that they just became aware of.
You should look at all of your options whether you are a first-time home buyer or you are refinancing your current property. There are a lot of options for mortgages available and if you are a first-time home buyer there are a lot of programs that will save you money on interest and make sure that you get the rate and terms that are comfortable for you. Ask your financial adviser or lender or do your own research and consider it carefully before making a decision.
Low Mortgage Payment
If you are considering a mortgage then you are looking for a low mortgage payment as well as low interest, terms that you like, and a company that you enjoy dealing with. In other words, the same thing that everyone else is looking for in a mortgage. You may also be looking for a low-down-payment mortgage loan. While all of these things are certainly possible, finding all of them at once is difficult. However, there are some things that you can do to improve your chances of getting all of these things from a mortgage loan.
If you are looking for a low down payment mortgage 2009 may not be your year. The economy is shaky right now and a low down payment mortgage loan is difficult to find because creditors are unwilling to take a chance as they used to a few years ago. However, the higher your credit score is, the more your chances of finding a mortgage with a low down payment is increased. If you have a perfect credit score then you may have a very easy time getting approved for a no down payment or low down payment mortgage.
As far as getting low mortgage payments to use mortgage loan calculators to determine what sort of payment you’ll get and then you can decide on how much you want to spend for a home and how long you want the term to be. You’ll have a much lower monthly payment with a fifteen or thirty-year mortgage, but obviously, you’ll also pay a lot more interest in the long run than if you took out a ten-year mortgage. Depending on what your unique goals are, you may wish to get a shorter-term mortgage or save to put more money down so that you don’t have as much interest.
To prepare for getting a mortgage your first step is to make sure that your credit is up to par. This is a very important factor in determining your interest rate and if you can do any improvements to your credit report that will increase your scores over a short period of time then you may find that you’ll want to do that instead so that when you apply for your mortgage you’ll get a much lower interest rate. It may involve simply getting an account current, or paying off an old $100 debt that was charged off and negotiating for them to remove it from your credit report.
You can do other things to prepare as well. Your debt to income ratio is one that that potential creditors look at when deciding whether or not to give you a loan. If your income is going to increase soon and your debt to income ratio is above 35% then you may want to wait until then before applying for a mortgage. Alternatively, you can try to remove some of the debt that you currently have by paying off high-interest credit cards or just getting rid of small lines of credit that are open. All of these things can help you get a lower payment when you decide to apply for your mortgage loan.
Best Mortgage Interest
The best mortgage interest rates are often difficult to find because they vary considerably from week to week. To get the best rate for your mortgage you should first understand what different types of mortgages are available and which would work better for what you want the mortgage for. The best current mortgage interest can be found by looking online at various websites that will pull the latest interest rates for you and see what they offer. This is also a great way to compare rates at different companies by checking their website for what they offer.
To get the best mortgage interest rates available you’ll need to come prepared. You are going to need to show that you have a stable job and a decent income as well as stability in where you are living. Someone that bounces around from house to house or from one job to another will be a risk to the mortgage company because your income isn’t steady – as in every week or month or whatever. Make sure that you can show some stability before you apply for the mortgage and make sure that your income can support the type of loan that you are asking for.
Another way to get mortgage interest rates that are the best is by coming to the table with a larger down payment. Down payment may get you some discounted rates if you ask for them. You will be much less of a risk to the company if you invest quite a bit of your own money into the home, say around twenty-five to thirty-five percent. Also, if you start out negotiating a short-term loan and then ask for a discount for a longer-term you may get a lower rate because the company stands to make more money from the interest in a longer-term loan.
Something else that you can do to present yourself as less of a risk is to lower your debt to income ratio. Generally when you apply for a mortgage or other types of credit the loan companies want to see a comfortable debt to income ratio of 30 percent or less. This means that you have more available cash to spend and that there is less risk of you not being able to make your mortgage payment. Of course, always make sure that your credit is perfect as this will affect the rate as well. Get any behind payments current and pay off any old debts and try to get them removed.
Today’s best mortgage interest rates may be the high rates of yesterday so look for your home loan over a period of weeks or months, not days. If you find a great rate today, that’s wonderful, but you may find an even lower one in the near future. Find out what the trends are when it comes to mortgage rates and plan accordingly. Also, you may want to look into other types of mortgages than the fixed-rate such as adjustable rates for a 1, 5, or 10-year period so that if the interest rates on mortgages goes down in the future you’ll still be able to take advantage of it.
Second Mortgage Interest
The interest on a second mortgage can vary from the first one that you get but you can still find deals on your second mortgage. The second mortgage interest rate depends on many factors but not the least of which is the company that you go through. If you go through the same place where you got your first mortgage you may find that they are willing to give you a discount in order to keep your business with them. Ask what they can do for you before you go scouting for other companies and see what their current second mortgage interest rates are.
For those who don’t know what a second mortgage is, and about 2nd mortgage interest rates and other factors a second mortgage is a loan taken out with the equity in your home. For instance, if you have made payments for a period of time and you put a sizable down payment on your home, you may have enough equity in your home to qualify for a second mortgage. This can allow you to make home improvements so that you can sell the home, or remodel it to exactly what you want it to be. You could also use the cash to start a business or pay off debt.
To get the best interest rate for your second mortgage you’ll also want to make sure that your credit is good and that you don’t have too much debt. Having a lot of debt that you are paying on and having a poor credit score or having fallen behind on some of your mortgage payments can hurt you when it comes to getting a second mortgage on your home. Your debt to income ratio should be around thirty or thirty-five percent to get the best interest rates. If you do have credit problems then you may slip into what is commonly called the subprime market.
A subprime mortgage or second mortgage is one that is offered at higher interest rates than the so-called prime rate that is offered to those with perfect credit. Make sure that your credit score is good and that you are able to qualify for the prime rates because if you have to go subprime you may end up paying a lot more interest than you want to. Also, shop around if you have to get a subprime loan because the rates vary a lot from lender to lender. Consider fixing your credit report before you look for a second mortgage if you don’t think that you are going to qualify for the prime rate.
A second mortgage could also refer to a second home mortgage. The second home mortgage interest will work nearly the same as it did on the first but you may have to have a bigger down payment. Often, finance companies and banks require a larger down payment on second homes and investment properties because as you are not living in them, they present a slightly higher risk to the company. Same as before, make sure that your credit is good and that you aren’t overwhelmed by debt or you may not get a great interest rate or even approval at all.
Conforming Mortgage Rates
A conforming mortgage and conforming mortgage rates is a source of confusion among many people but we’ll try to give you an easy and clear definition here. A conforming mortgage is one that follows the mortgage guidelines that are put forth by Freddie Mac and Fannie Mae, two of the world’s largest mortgage companies. This means that the mortgage must follow the rules set forth by these two companies. It’s still a little confusing for most so we will try to explain further so that you can make a choice as to whether or not you want to consider a conforming mortgage for your home loan or refinance.
Conforming mortgage interest rates are rates that are attractive to buyers because many banks and financial institutions cannot compete with the rates that are set forth by conforming mortgages. How this works is by guaranteeing to repay each part of the mortgage that is sold as bonds to investors. The investors don’t require quite as much return because their investment is secured, and therefore the rates can be much lower. Think of it as an investment with a guaranteed return. You wouldn’t care how much it paid, if it always paid you, especially over a period of 20 or 30 years.
The best conforming mortgage rates can usually beat the prime rates that are offered by other banks and especially on 30-year fixed conforming mortgage rates because the return is so much greater than the rate can be lower. This can be a great thing for those who want a really great rate for refinancing or for buying a home since the interest rate will be much lower. However, as mentioned there are other guidelines that must be met for conforming mortgage rates. You’ll have to check with your local financial adviser to get the specifics.
The current conforming mortgage rates will reflect the interest rates that are competing with the prime rates. Investors have no problem picking up these mortgage pieces because they are nearly risk-free. In other words, the bond is sold to investors who put up the money to loan for the mortgage. As mentioned before, Fannie Mae and Freddie Mac put their seal of approval on the mortgage to guarantee repayment to the investor. If you are thinking about a conforming mortgage or would like to know the rates that are being offered talk to your financial adviser.
Would It Be Smarter To Finance Your Mortgage Through A Fixed Rate Or An Adjustable Rate?
The only way to answer this question is to know exactly what is going to take place with our economy in the next two to five years. When choosing a mortgage, you need to consider a wide range of personal factors and balance them with the economic realities of an ever-changing marketplace.
Individuals’ personal finances often experience periods of advance and decline, interest rates rise and fall, and the strength of the economy waxes and wanes.
Then you have to ask yourself:
- How large of a mortgage payment can you afford today?
- Could you still afford the payment if it increases sharply?
- How long do you intend to live in the house?
- What direction are interest rates heading?
- Do you believe the present economy will continue?
The more information and financing you have in regards to the above, the easier it will be for you to make the superlative decision.
What Are The Main Differences Between The Two Financing Plans?
Fixed-rate mortgages and adjustable-rate mortgages are the two primary mortgages types. While the marketplace offers numerous varieties within these two main loan types, the first step when shopping for a mortgage is determining which of the two loan types best suits your needs.
The fixed-rate mortgage charges a set rate of interest that does not change throughout the life of the loan. Here the total payment remains the same, which makes budgeting easy for homeowners.
The main advantage of this loan is that the borrower is protected from sudden and potentially significant increases in monthly mortgage payments if interest rates rise. The downside to fixed-rate mortgages is that when interest rates are high, qualifying for a loan is more difficult because the payments are less affordable.
Although the rate of interest is fixed, the total amount of interest you’ll pay depends on the mortgage term. The trade-off for that low payment is a significantly higher overall cost because the extra decade, or more, in the term is primarily to paying interest.
The monthly payment of shorter-term mortgages offers a lower interest rate. This allows for a larger amount of principal being repaid with each mortgage payment, so shorter-term mortgages cost significantly less overall.
The interest rate for an adjustable-rate mortgage varies over time. The initial interest rate on the type of loan is set below the market rate on a comparable fixed-rate loan, and then the rate rises as time goes on.
If the adjustable rate is held long enough, the interest rate will surpass the going rate for fixed-rate loans. These loans have a fixed period of time during which the initial interest rate remains constant, after which the interest rate adjusts at a pre-arranged time.
This initial rate can vary significantly anywhere from one month to 10 years. Also, this initial rate enables the borrower to qualify for a larger loan and allows for a lower interest rate to begin with.
The downside is your monthly payment may change frequently and if you take on a large loan, you could be in trouble when interest rates rise. Some of these loans are structured so that payments can nearly double in just a few years. The home-loan dilemma continues to be personal and influenced by our economy.
Know When To Get A Loan By Tracking Interest Rates
Many people both consumers and investors wonder when is a good time to refinance a house, get a car loan, buy bonds, etc. While there is a lot that goes into the equation one of the primary things that affect the price and value is the level and overall trends in interest rates. Let’s look at a few examples of times when it is useful to know the trend in interest rates.
In 1980 housing prices suffered quite a bit. Was it due to massive leverage or excess speculation? No, it was caused by hyperinflation and the extremely high-interest rates that followed. Paul Volcker was in charge of the Fed and raised rates several times in order to tame the runaway inflation. In the process of raising rates, however, home values plummeted. They went down because as money got more and more expensive to borrow, the prospect of borrowing money to buy a home became less and less appealing.
As interest rates climb higher the appeal of many assets starts to lose its luster. If the cost of financing a home doubles, it is likely that you will not want to buy a new home or car. In fact, if rates are going up then just about everything goes down, or at least stalls out. Take bonds for instance, if rates go up bonds go down. This relationship holds true on the other side as well since bonds go up when rates go down.
These are all reasons that people and investors should be following interest rates. So where do we find these interest rates? And which rates should we be looking at? Well, there are several sites like Bankrate, Bloomberg, Stockcharts, and even the Wall St Journal that have interest rates and charts of these rates so that you can see the direction of the prevailing trend.
Look at the 90-Day Treasury bill yields for an assessment of what the Fed is doing. If T-Bill yields have been going down then the money is getting cheaper and it makes sense to start looking to be a buyer. If on the other hand T-Bill yields are going up you will likely want to either postpone any large purchases or possibly get ahead of the curb and sell your home while the price is still high, as it will be harder to sell as rates get higher and higher.
Another important interest rate is that of LIBOR. Many consumer loans are tied to LIBOR and so it is a helpful gauge when tracking rates. A typical loan might be LIBOR plus 2 points meaning that the interest rate of the loan will be the LIBOR rate +2. Obviously, if LIBOR is trending higher it means that money is getting more expensive and it is probably not a good time to be buying. When LIBOR is declining it means that money is cheaper and your financing costs will be lower.
Hopefully, this has been helpful for you. By determining the trend in interest rates you can be far better prepared to know when to buy, when to sell, and when to do nothing. Why fly blind when you can take the global macro view and know what is going to happen.
Macro Trader Tools for Real Estate and Loans
Some of you may be wondering what on earth does real estate and real estate loans have to do with macro trading? It actually has everything to do with a global macro. If you are considering the purchase of a first or second home then you should be taking the big picture into perspective before you buy your home. And before you sign a loan you should have a good idea of what the future holds for you.
If you are not tracking interest rates you could be like one of the poor souls that bought a house in 1982 when interest rates were at 15%. Can you imagine paying your mortgage with a 15% interest rate? It would be insane and yet some people did exactly that. What about when you hear from your real estate broker that rates are at new lows. Is this true or not? Most people take what the NAR (national association of realtors) and their broker say at face value but sometimes the truth is far from what they are hearing.
If you listen to the NAR it is always the best time to buy a house but if you take a step back and look at the macro or big picture you will make a better decision on whether you should buy a house, where to buy it at, and what type of loan you should buy it with. For instance, where has the 10-Year Treasury note yield been at lately? What is its trend of it? If it is headed down then you might want to wait since you will be able to get a cheaper loan in a while if interest rates go lower. If on the other hand rates are headed up then you would want to get the loan as soon as possible before they rose much more.
If you are looking at where to buy a house then you might want to look at the Case Shiller home indexes to see what they say. The Case Shiller data tracks twenty of the largest metropolitan areas in the country and do a good job of showing you if homes have been going straight up, straight down, or are moving slow and steady. You would want to avoid buying in a market that is flying to the moon as it will likely fall quite hard. On the other hand, if you are looking for a vacation home maybe take a look at some of the areas that have fallen a lot and are now stabilizing. These areas would represent good value.
Finally, look at things such as new home sales and bankruptcy filings. If new home sales are declining and bankruptcies are on the rise then you may want to hold off getting home, and will definitely want to avoid paying up as these signs point to it being a buyers market where the buyer has more pricing power than the seller.
Interest rate and housing sale trends can tell you a lot about where and when to buy a home. So while you may think that you have very little in common with a macro trader you actually have everything in common as all financial transactions are macro bets.
Why You Should Consider A Mortgage Refinance With Bad Credit
When you have bad credit, you pay more for everything. You pay more for loans and credit cards. You even are often asked to pay more or put down a deposit to get a cell phone or satellite dish. If you have the discipline to take a closer look at your finances you will realize that your credit is killing your spending power.
Since most people who have bad credit are extremely uncomfortable taking out loans, they often stay in the same circumstances – for life. They accept that it will always be hard for them and seldom try to better their situation. This can sometimes mean that they pay a lot each month for interest payments that they wouldn’t have to pay otherwise.
I would like to present to you a plan that can help you to move out of this rut.
If you took out a home loan when you had bad credit, you are probably paying a lot extra. I don’t have the exact numbers on this but I’d say that the average, extra amount I see many people paying is about $400/month. So instead of paying $1400 per month on your home, you’re paying $1800, or something similar. Each situation is different and the details don’t matter exactly. The point is that you’re paying extra – you have less buying power.
Right now interest rates are extremely low and it’s time to take control of your situation. You need to have a plan and execute that plan. The first thing you need to do is find someone that’s willing to help you out so that you can get control of your finances. Since you have bad credit, it’s going to be hard to do a mortgage refinance on your own. With help you can greatly improve your situation. Talk to your parents, but have a plan of attack. Let them know that this move will free up $400 (or whatever the amount is) per month that you’re going to use to rebuild your credit. Assure them that you’re in control and want to make positive changes. Family members will often react well if you have a plan that you’re willing to stick to.
People often hope that they will be able to find a mortgage refinance for bad credit on their own. Unless your current interest rate is REALLY bad, you won’t be able to improve it if you have a weak FICO score. If you’re above 700 you can probably handle it on your own, as long as you have steady employment.
How To Refinance Your Mortgage With Bad Credit
Again, the first thing you need to do is find a cosigner. Talk to your parents and layout the plan of attack. Be confident as you talk to them and assure them that you are ready to take total control of your financial situation. Since you don’t have a reputation for paying bills on time (hence the bad credit score), your parents will need some reassurance that you won’t trash their credit too.
If you aren’t able to find a cosigner, talk to a professional and have them help you to examine the situation. Most people don’t know that they can really improve their credit score in a few short months by paying down the amounts they owe on their credit cards. You could be a few short months away from a huge increase in your FICO score.
I have seen quite a few situations where the right move was to sell a car or other monthly expense in order to raise a person’s ability to pay off credit cards. If you want to boost your credit, you really need to pay down your cards and pay them now. Most people don’t understand that this is a really large part of your credit score and can be corrected in less than 30 days.
As you should be able to see, using a mortgage refinance can improve your credit dramatically if you use the money you save to pay down debts. This will increase your buying power and that will improve your situation.
Mobile Home Loans
Believe it or not, mobile home loans are one of the trickiest types of loans out there! We wanted to create a resource that people could use to find out what type of loan is going to be the best for their current situation.
Before we get too far into this explanation let’s cover the two basic types of loans that people generally use to purchase mobile homes:
- Mortgage Loans
- Personal Property Loans
Mobile Home Mortgage Loans
In order to qualify for a mortgage that can be used to buy a mobile home, you will need to own the land that the home will be on. You will also need to have a foundation under your home – it needs to be permanently attached to the ground. This means that the wheels and axles will need to be removed.
If you own the land where your home is and it has a permanent foundation, you can approach any lending institution for a regular mortgage loan.
Personal Property Loans
These loans can be used if your home sits on a rented space or if it doesn’t have a foundation. There are plenty of lenders who are set up to provide this type of loan. When you buy your mobile home they will probably want to put you in touch with a lender of this type.
Choosing The Best Option For You
If you can qualify for a mortgage loan, this is almost always going to be the best option. The interest rate will be lower and the terms will be better. I personally would only use a personal property loan if the mortgage option didn’t work for me.
Getting Mobile Home Financing With Bad Credit
In order to qualify for this type of loan with bad credit, you will still have to have a FICO score that’s above 550. If your score is between 550 and 620 you can expect to pay interest rates that are much higher than you would pay otherwise. If you’re between 620 and 650 you will qualify at most banks but will still be offered sub-prime interest rates.
Those that have a credit score above 720 will get the best interest rates. The lending institution will also look at your income level to determine whether you can afford to pay for the loan.
Improving Your Credit
As always, I would highly recommend improving your credit even if you already took out a mortgage loan with your current credit score. That way in the future you can do a bad credit mortgage refinance and reduce your monthly payments. Many people don’t know that you can improve your credit score by as many as 255 points by simply paying off your credit cards. The score increase can be reflected within a few short months.
What Happens To Your Mortgage
Since the fall of Bear Stearns in March of 2008, we have heard a lot of people ask how these businesses can lose so much money from some home loans so we felt it would be useful to go over what happens to your loan after you get it. We also cover a bit of how these banks and investors were able to lose so much.
After you get your loan the bank will take it and securitize it. If you get a loan from a large bank like Wells Fargo or Bank of America they might keep it for their own books but most of the time your bank or mortgage company will take the mortgage and re-sell it to a firm that will securitize it.
You see a loan is nothing more than a type of bond that you issue in order to buy a home. Like any regular bond, there is a steady stream of cash flows and principal payments. Because of this investors will purchase them in hopes of getting their money plus interest back.
Typically not paying a huge amount of interest due to their nature of being assets backed by the house, mortgages are then packaged with other mortgages and securitized. This means that they are made into a readily traded vehicle that has a rating from a rating agency and has a stated yield.
So that is what happens with your mortgage. It is sold off, packaged with other mortgages, and then sold as an investment vehicle. Assuming you pay off your mortgage the investors will get their money back. If you don’t pay it off then you will lose your home and the investor will receive a bit less the what they planned on getting.
So how do these investors and financial institutions lose so much money? In a word, leverage. By buying massive amounts of these MBS mortgage-backed securities and then leveraging them due to their perceived safety an investor was able to get twenty and even thirty times leverage. What this does is set you up for potential disaster.
If too many mortgages default then the investor will blow up due to leverage. Say there were one hundred regular loans of the same amount. If five of them default then you may lose five percent. But what happens if you are levered up ten times? Yes, you just lost fifty percent of your money.
This is obviously really bad for the investor but in most instances, the fault lies with the investor. If they don’t account for the chance of something going wrong then they will lose their money eventually. You take a decent idea and leverage it up thirty times you will blow up at some point.
So who are the different investors who bought or didn’t buy these securities? Well, we know that several investment banks and mutual funds lost a ton of money from the housing mess. We also know that global macro trader funds and commodity trading advisers made money. So while everyone can trade this stuff some people did the right homework and some did not.
How To Plan For New Home Loans
Getting a new home loan isn’t like walking into a 7-Eleven to buy a Slurpee. Buying a new home takes persistence, work, and some smart planning. Planning to buy a home can take a few years, but you can really short-cut the process if you understand what’s going to have to happen to buy a home. I wanted to create a small resource that can help you with this process.
The first thing you need to do is gain employment. Obviously, if you already have a job you’re taken care of in this area. Sometimes, however, people have some money because of an inheritance or rich parent and they try to get a home loan. This really complicates the process because most lenders want long-term security.
Make sure to file your taxes. You generally will need both pay stubs and tax returns to qualify for a new home mortgage loan. This wasn’t the case a short two years ago but banks have really tightened up in today’s economic environment. There was a huge amount of fraud that went down during the last real estate bull run and it caused a lot of problems.
Save some money. The most liberal loan out there right now is the FHA loan and you will still need to save 3.5% for a down payment. The days of 100% financing are gone for now and probably won’t be back for at least a few years. If you can’t qualify for an FHA loan you will likely have to pay somewhere between 5-10% for your down payment.
Fix your credit now. The biggest thing that can be done to improve credit is paying off your credit cards completely. When you carry a high balance it can really affect your credit score. The amount of debt you carry on credit accounts can affect your score by as much as 255 points. Yikes!
New home purchase loans really aren’t much different than other mortgage loans. The bank really doesn’t care whether the home is brand new or a few years old. The most important thing to the bank is the value of the home.
There are a lot of people who are going to want to shortcut this process but that isn’t wise. You shouldn’t be buying a home if you don’t have a down payment. You shouldn’t be buying a home if you don’t have a job. You should take the time to plan so that you can stay in your home without running into trouble.
How To Successfully Complete A Home Refinance With Bad Credit
Guys I have to be 100% honest here – this isn’t an easy task. Finding a home refinance when you have bad credit isn’t going to be easy. However, once you learn the rules I think that many of you will be able to get it done.
What’s Your Credit Score Now?
The problem with putting together a resource that will help people to find a certain type of loan with bad credit is that they will have completely different levels of credit history. The only way I know to REALLY help people is by creating a list that you can use while breaking it down into sections, one for each credit score bracket.
Higher Than 720
If you’re above 720 you have what is considered to be A credit and will be able to negotiate a home refinance with any lender and will also be able to get prime interest rates.
If you fall in this area you still have relatively strong credit and will be able to refinance your home without difficulty. Most lenders would be happy to lend you money but you might be penalized slightly on your interest rate.
This category presents more risk to a bank, however, you will still be able to qualify to refinance homes with most lenders. You shouldn’t expect to get the best interest rates if you fall under this category.
People who fall under this category will have more difficulty refinancing home with bad credit. This is because they provide a lot more risk for the bank and probably have a history of paying bills late. If you fall under this category and have no history of late mortgage payments you should be able to qualify for a loan. However, if you have late mortgage payments on your credit you may have difficulty.
For the bank, providing a home refinance for bad credit is about risk management. They don’t want to lend money to people whose credit is questionable and yours is questionable if you’re in this bracket. If you aren’t able to qualify for a loan on your own you may have to find a cosigner.
If your credit score falls under the 580 range, it’s likely that you will have to find a cosigner to secure a loan. You provide excess risk for lending institutions. If I was trying to refinance my home with bad credit and I was in this category I would fix my credit as soon as possible and find a person who could help me to secure a loan by cosigning.
Many people are unaware that you can REALLY improve your credit score by paying down your credit cards. Your balances on your revolving credit lines account for more than 250 points of your credit score. If you’re carrying high balances, you are definitely getting hit on your credit. The cool thing about this aspect of your credit score is that it can be corrected within 30 days by paying off the debts.
The bottom line here is that finding a home refinance for people with bad credit might take some work. If you’re willing to do it, you can save yourself a lot of money.
Is There Such A Thing As No Credit Check Home Loans?
When you provide people with information on finances, you sometimes get asked about things that don’t really exist. One question that I’ve seen a lot of is whether it’s possible to get home loans with no credit check.
Based on two years of experience with loans, I can tell you that there’s no such thing as a home loan without getting your credit checked. However, there are ways to get home loans with no credit and there are ways to get home loans with bad credit.
No Credit Home Loans
There are actually quite a few ways to get a no-credit home loan. The first is by getting an FHA loan, which is a loan designed for people who are buying their first home. Since these loans are backed by the government, banks can lend money to individuals that don’t have an established credit history. These loans are extremely useful for people that haven’t established their credit.
You can also get a home loan with no credit if you can find a cosigner. Not everyone has this option but a cosigner can generally solve most of your issues with getting loans. I personally don’t have anyone who could sign with me so it isn’t an option.
Bad Credit Home Loans
People are often scared to have their credit checked because they don’t have good credit. However, many lenders are used to working with people whose credit isn’t perfect. Your situation might not be nearly as bad as it seems. If your credit score is above 620 and you haven’t been paying your mortgage late, you are probably a decent candidate for a home loan.
How To Get A Home Loan With Bad Credit
So right now you have bad credit and you would like to buy a home. This lesson will teach you some of the things that you’re going to need to know in order to make this hope a reality. There are a lot of different options that you can look at and we’ll try to help you to determine which one is the best for you.
Find A Lender Who Specializes In Bad Credit Home Loans
To tell you the honest truth, this isn’t an easy task. The problem with going to a lender that specializes in this type of loan is that your loan will be extremely expensive AND a lot of these lenders bit the dust in the recent economic downturn. The ones that didn’t bite the dust are going to be a lot more conservative than they were even last year. That probably won’t change for a few years – lenders will remember these difficulties for quite a while.
Find A Cosigner
The easiest (and sometimes most difficult) way you can get a home loan with bad credit is by finding a person who will cosign for you. It’s easy because the bank will be a lot more likely to approve you, and it’s harder because it’s hard to get a person to cosign. This process can be a little embarrassing – I personally have a hard time asking for stuff like this. However, there’s a lot of risks there for the lender if you have bad credit. They are going to want to hedge that risk by getting the name of another person on the loan.
Fixing Your Credit
You should actually take a hard look at your credit to determine how bad it really is – and whether it can really be fixed within a reasonable amount of time. I have met a lot of people who thought their credit was probably ruined, only to discover that their 10-day late payments don’t affect their credit scores.
There are quite a few easy ways to improve your credit within a few months so if you’re not in a huge hurry you might be able to improve quite a bit. If you’re interested in that, follow these simple steps:
Pay down the balances on your credit cards. This aspect of your credit score is a huge percentage and you can make the most difference in the quickest time period this way.
Start paying all of your bills on time.
Make sure to have three or four open revolving lines of credit (unsecured or secured credit cards). If you currently carry a large balance on credit cards, that’s probably hurting your score more than anything else. Make sure to pay that balance down now and that will fix your score a lot during the next 30-day cycle. That will really help you to become a better candidate for a home loan and you won’t have to ask me questions like, “How can I get a home loan with bad credit”.
The Truth About Mortgage Loans For People With Poor Credit
The current economic circumstances in our country have exposed quite a few flaws in our financial system. The primary causes for the downturn were excessive speculation in the real estate market and banks providing too many mortgage loans for poor credit. In other words, banks took too many risks on individuals that have reputations for not paying their bills on time.
A bank is taking a huge risk when they decide to create a mortgage loan for poor credit individuals. If you think about it simply, these people don’t pay many of their bills and the bank has to hope that they will be the exception – for a 15, 30, or 40-year time period. As you can see, this risk didn’t work out for many banks so we saw the bankruptcy of a few large banks like Bear Stears and Merrill Lynch.
While it’s obvious now that these risks were a huge mistake, it wasn’t so obvious two years ago. Banks probably felt like they had to offer the same loans as everyone else to compete in that climate. The ones that survived are the ones that made better decisions by limiting or eliminating their exposure to the sub-prime market.
I suspect that it won’t be too many years before things turn around and banks start making the same mistakes. It might take ten years before real estate starts to move again but when it does, I’m guessing that banks will start losing perspective. A few banks will have spectacular earnings again because they will allow people to take out mortgage loans with bad credit and other banks will follow – again.
The truth about mortgage loans for people with poor credit – is they’re BAD for our country. I don’t believe that it’s a human right to own a home and there’s nothing wrong with paying rent. People that make smarter decisions can buy a home and the others can rent. I have rented for years and years. I’m not ready to buy a home but it has taken a lot of time to prepare. I had to rebuild my credit and work on my professional skills. I have now done all of that and feel like I’m ready to purchase a home.
Our nation’s obsession with giving anyone the ability to buy a home is very unhealthy. It puts pressure on financial institutions AND on people. I would like to see our nation as a whole back off on the pressure to buy a home.
Requirements For Getting A Bad Credit Mobile Home Loan
Bad credit mobile home loans aren’t available for everyone. If your credit score is too low, for example, no one will want to lend you money. This article will help you to know whether you’re eligible to take out a loan of this type.
- Employment (banks are usually going to want to see an employment history of at least six months)
- Legal Age (18 in most states)
- A credit score between 620 and 720 (people who have credit scores above 720 will be eligible for prime rates and won’t need to take out a bad credit loan)
- The self-owned property where the mobile home will reside (banks don’t provide mobile home loans when the land is rented). Those who are renting the land below their mobile homes will need to instead take out personal property loans.
- If you aren’t able to meet the above criteria, you probably aren’t eligible for a regular mobile home loan for bad credit and will probably have to either find a unique lender or a cosigner.
As you can see, mobile home loans for people with bad credit aren’t always the easiest to get and there are a few hoops that you’ll have to jump through. However, they are great if you own your own land and meet the above requirements. Please let us know if you have any questions and good luck finding your loan!
Three Ways To Get Home Loans With Poor Credit
Making the decision to purchase a home is a big one and the time when you buy a home is often a turning point in one’s life. This decision is a lot more complicated if you have poor credit because getting a loan is a lot more complicated. For people that have really bad credit, this might not be possible. However, there are plenty of people with poor credit who will be able to buy a home. This article will help you to learn how to find lenders that specialize in home loans for poor credit and will also give you some advice on making sure that you can qualify.
1. Purchase a home that has equity built-in. When you buy a home that already has equity, it lowers the risk for the bank. If you don’t make your payments in that situation, the bank can take your home, sell it, and make more money back than they would if the home didn’t have equity.
There are a lot of ways that you can go about finding a home that has equity. The most common method for this is buying a home that’s distressed. In other words, find a home whose current owner is having a hard time making the payments. This can often result in a short-sale, a pre-forclosure sale, or a foreclosure sale, all of which generally result in a nice discount for the person who is purchasing the home. If you’re able to get a home for a price that’s under market value, the bank will be a lot more likely to want to work with you. It hedges their risk.
2. Find a cosigner. My sister purchased a home last month and was able to get a really good deal. She has decent credit but it isn’t perfect. The situation helped a lot because her father-in-law was willing to cosign and help them out. They actually could have qualified on their own in this case but were able to get a much better interest rate because of the cosign. The cosign lowers the risk for the bank so this can push them from denying your application to giving you a loan at a great rate.
3. Improve your credit. Many people don’t understand that improving your credit can often happen within a few months. If you pay down your credit cards now and start making on-time payments you’ll see a nice jump in a hurry. The revolving credit balance portion of your credit score is recalculated each month so you can make huge gains within a 30-day period by paying your cards down.
Each of these methods can go a long way toward helping you if you need home loans for people with poor credit. They will also help people that are looking to find loans with interest rates that are more