Compare Rate Quotes Among Various Lenders
February 9, 2009 by · Leave a Comment
If you do not relish the thought of speaking to a selection of lenders in order to find the best mortgage possible then you are not alone. It is important to compare rate quotes among lenders because it is an integral aspect of shopping for a home loan. When you compare rate quotes from one company to another, bear in mind that a mortgage does not just include interest rates but other important aspects, such as a quoted rate, points and finally, closing costs.
Points
To compare rate quotes you must understand what points are. Points are a fee that is paid up-front to the mortgage lender when closing takes place. Points are paid in order to either lower or to increase the interest rate on the mortgage. Every point you have is equivalent to one percent of the total amount of the loan. There is some room for negotiation when it comes to interest rate and point combinations. When you compare rate quotes make sure you compare these important products that are part of the overall mortgage.
Closing Costs
The closing costs you must pay involve a number of different things. These include the title and escrow charges, fees related to the loan in general, transfer charges and government recording. The closing costs you pay can be into the hundreds or thousands. Not all lenders charge the same fees so when you compare rate quotes, remember to look at the differences amongst the offers you are given.
Loan Related Fees
All lenders have loan related fees such as the amount they charge for your home loan to be processed and approved as well as everything that is involved in setting up their clients’ mortgage loan. There is no standard fee that all lenders charge. For this reason, when you compare rate quotes you must cover all of the elements of how much you will actually be paying.
When you compare loan quotes from a variety of lenders you must look at all of the relevant features of the loan. This includes but is not limited to:
· The maximum LTV
· Mortgage insurance payments
· Qualifying ratios
· Requirements for credit and cash reserves
As well, when you compare loan quotes find out about prepayment penalties, the option for a rate reduction and whether or not you can convert your mortgage from an adjustable rate to a fixed rate in the future. Another important point when you compare rate quotes is to compare the lock-in period for your interest rate and points. Most lenders have lock-ins of 30, 45 or 60 days but for some they are shorter, such as 15 days. Compare rate quotes and shop around.
Save Time Save Money, A Pre Approved Home Mortgage
February 9, 2009 by · Leave a Comment
The prospect of the purchase of a home can be an exciting one and a dream come true, but it also carries its share of challenges. Before you start house hunting you should seek pre-approval of a mortgage from your financial institution.
Pre-approval before purchase means that you will be looking for houses in your price range and not above. This also means that you will not waste your time if you presently do not qualify for a mortgage. The purchase of a residence is a huge deal after all and a very big investment.
Being pre-approved for a mortgage to purchase a house means that the lender has carefully looked over all of your financial information including your income, job stability and credit history and has given you a quote for the maximum amount of funds that the financial institution is willing to lend you.
Advantages of Pre-Approval
· You have a number to work with so you can narrow your focus for houses in specific purchase range.
· Rising interest rates are not generally a concern after you have received pre-approval for a purchase because the lender can lock the current interest rate in for a period of 60 to 90 days.
· You have an advantage or an edge when it comes to making an offer to purchase a home because the seller is made aware of the fact that you have been pre-approved and therefore are serious about the offer you extend.
· When you apply for a mortgage to purchase a dwelling, you save time and energy as much of the paperwork has already been gathered together when pre-approval took place.
You do not have to go to the bank you have been dealing with for the past 10 years in order to be pre-approved for a home loan. Just as is the case with other types of purchases, the mortgage business is a competitive one so you should look at a variety of different financial institutions to find a mortgage rate that will work for you. Do not be afraid to bargain when it comes to finding a mortgage to purchase a home.
While you may be able to bargain for a more flexible mortgage and a low interest rate to purchase a house easier with a financial institution that knows you well, there is no reason why you cannot look at other banks, credit unions and/or talk to a qualified mortgage broker in your area. In order to purchase you must put all of the effort you have into finding the mortgage that will fit your financial needs.
Home Mortgage Refinance, Your Home For Your Benefit
February 9, 2009 by · Leave a Comment
Mortgage and refinance sometimes goes together. At some point in time you may have to consider the merits of mortgage refinancing in order to improve your financial outlook. Mortgage and refinance is an excellent way to pay off your present mortgage. The collateral you can use for the mortgage refinance is the exact same house.
Mortgage and refinance can benefit you in a few ways you may not have thought of. Let us take a look.
1. If you choose to mortgage and refinance you can get your hands on a loan that you desire that has either a longer term or a lower interest rate. For example, the term of your second mortgage might end up being longer but your monthly payments will decrease.
2. The mortgage and refinance option can reduce the length of time that you must pay for your first mortgage. This in turn helps free up some money for other bills you may have. By taking the mortgage and refinance route you can reduce the duration of the mortgage and use the refinance mortgage to pay off the first one earlier than expected. While this will cause your monthly payments to go up somewhat, on the other hand you will own your home in a shorter span of time. With the extra money you now have possession of you can pay down other debts such as personal loans, credit cards or car loans, or you can pay them off all together.
3. If you want to mortgage and refinance then it is best to do it after you have built up some equity in your home. It is recommended that you have at least 10 to 15 percent. If you mortgage and refinance with only five percent equity then you will have to put out extra money for the second mortgage because you are a greater risk to the lending institution.
4. You are more likely to be granted a mortgage and refinance loan if you are very diligent and responsible in making your loan payments. Lenders are much more inclined to say yes to borrowers who have not been late in making payments for the past 12 months or more. If you are conscientious with your first mortgage then this will send the message to the lender that you are just as likely to be the same in making payments for a mortgage and refinance loan.
What Home Mortgage Lenders Look For
February 8, 2009 by · Leave a Comment
Home Mortgage Lenders are well versed in what to look for when they sit down with clients who are interested in buying a home. The higher you rate in each one of the specialty areas that the mortgage lender discusses with you, the better will be your chances of qualifying for a mortgage.
Mortgage lenders look at a person’s job stability, their income, the money they have in reserves, their credit history and their down payment. Let us think like mortgage lenders and see if you have what it takes to make your home a reality.
Job Stability- Mortgage lenders like to see individuals who are stable and secure in their jobs. If you have been at the same full time job for two years or more than this will work to your advantage.
Income- To prove your income, mortgage lenders must see two years worth of your W-2 forms. They also need to see a few of your most current pay stubs that clearly show how much money you have earned to date. If your job is commission based then you still must provide a document that shows the income you have earned in two years time. From this the mortgage lender will figure out the average. Those who have monthly debts that are 41 percent or less of what they gross on a monthly basis will be looked at favorably by mortgage lenders.
Down Payment- How much money do you plan to use as a down payment? Traditionally mortgage lenders look for 20 percent down. This will make it possible for you to get the best interest rate that you can. If you are only able to put down five or 10 percent this is something that most mortgage lenders will still be willing to work with.
Reserves- Reserves are money that is left over in your bank account after everything involving the purchase of a home has been paid, including the closing costs. Mortgage lenders like to see that an individual has at least one month of reserves. Those reserves would be equal to a mortgage payment, property insurance and all of the taxes on your home. How much you should have in reserves is contingent upon the kind of mortgage you are looking to get. As a general rule of financial thumb, mortgage lenders recommend that potential homebuyers have reserves of two to six months.
Credit History- Your credit history and present credit score play an integral role in whether or not mortgage lenders will consider you to be a safe risk or not. Whether you like it or not your credit history will be thoroughly scrutinized by the mortgage lenders and will have an impact on whether you are accepted for a mortgage, or not.
Rules of Refinancing A Home Mortgage
February 8, 2009 by · Leave a Comment
What is refinancing exactly? Refinancing is when you pay off a debt you have with a new loan you get for your home. If you have good credit then refinancing can be an excellent way to get a lower interest rate. However if your credit is not good or if you are drowning in debt, then you must be extremely cautious when it comes to refinancing.
Here we give some important rules of refinancing:
1. Refinancing can be an expensive process with lots of hidden costs that could cause your debt load to become even worse. If you are uncertain about refinancing then perhaps it is best to hold off and explore other options.
2. If you are constantly receiving calls from collectors about debts you are having problems paying you might feel pressured into refinancing your home. Do not let the pressure force you into making a decision that is not right for you. Consider debt consolidation or speaking with a debt counselor instead.
3. Do not use your home as a form of collateral for any unsecured debts you have. If you refinance and use your home as collateral, it can be taken from you by the lender.
4. If you have a debt with a high-rate second mortgage lender and you wish to refinance your home then do it through a different financial institution. If you do it with the same company you might have to deal with a higher interest rate, new and pricey closing costs and hidden penalties. You might want to inquire about lower payments for the time being as an alternative to refinancing.
5. Do not turn the loan you have for your car into a second mortgage. No one wants to lose their car but losing your beloved home would be tremendously worse.
6. Refinancing should not involve taking a loan with a low interest rate and replacing it with a higher interest rate loan. Refinancing is supposed to work for you not against you. Double-check when you are refinancing that the annual percentage rate (APR) of the new loan has a lower interest rate than what you are already paying. Otherwise, why are you refinancing in the first place?
7. Err on the side of caution when it comes to variable rate refinancing loans. Many of these types of refinancing loans offer low interest rates and monthly payments for the first few months and then they both increase dramatically. Always read the fine print.
8. There are good refinancing deals and bad refinancing deals. Some refinancing options are scams in disguise and the lenders are scam artists. Before you sign anything make sure you take all of the refinancing paperwork to an impartial financial professional who can look it over and give you an honest assessment of whether you should choose the refinancing offer or not.
