Securing the best mortgage for your home may seem challenging, particularly for those who are first-time homebuyers. Fortunately, we're here to help you get the best possible mortgage rate, regardless of the real estate market. Here are three tips that you can use to get the best mortgage rate at any time: 1. Find Ways to Improve Your Credit Score. Your credit score likely will influence your mortgage rate. However, those who track their credit score closely can improve this score over an extended period of time. That way, when the time comes to secure a mortgage for a new home, you'll be in great position to get the best mortgage rate possible. Try to check your credit score regularly. You can do so quickly and easily, as you're entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies (Equifax, Experian and Trans Union). To improve your credit score, focus on paying off any outstanding debt. This will help you enhance your credit score without delay. 2. Take Advantage of a Shorter-Term Mortgage. Although you may consider a variety of mortgage options, a shorter-term mortgage may allow you to pay a lower mortgage rate for a shorter period of time. Remember, just because you choose a 15-year mortgage over a 30-year mortgage does not mean you will wind up paying twice as much for your mortgage payment each month. For example, selecting a 15-year fixed-rate mortgage over a 30-year fixed-rate mortgage may prove to be a viable option for many homebuyers. A 15-year fixed-rate mortgage will have higher principal and interest totals than a 30-year counterpart, while the insurance and tax fees associated with both types of mortgages will remain the same. 3. Look at All of the Lending Options That Are Available. It sometimes can be overwhelming to look at all of the banks, credit unions and other lending options that provide mortgage assistance. Diligent homebuyers, however, will dedicate the time and resources necessary to explore all of the lending options at their disposal to make an informed decision. Ideally, you should try to get multiple quotes from a variety of lenders. This will enable you to see exactly what each lender has to offer and improve your chances of making the best decision possible. Lastly, don't forget to lock in your mortgage rate in writing. By doing so, you'll be able to verify you have the mortgage rate you like and the loan you need to secure your dream home. Understanding the ins and outs of landing the ideal mortgage rate can be difficult. And if you ever have concerns or questions along the way, your real estate agent may be able to point you in the right direction as well. Because this agent boasts comprehensive real estate sector experience, he or she may be able to provide guidance and tips to ensure that you can find a reliable lender and land a great mortgage rate. Find a mortgage rate that works for you, and you may be able to save money over the life of your mortgage.
The first step in home buying is getting a mortgage. Many home owners also find themselves in a maze when they start the refinance process. Navigating the mortgage process can be confusing. There is so much to know between rates, types of mortgages and payment schedules. Avoiding making a mistake in the mortgage process can save you a lot of money and headaches. Here is a list of the biggest mortgage mistakes that potential borrowers make. 1. No or Low Down Payment Buying a home with no or a low down payment is not a good idea. A large down payment increases the amount of equity the borrower has in the home. It also reduces the bank’s liability on the home. Research has shown that borrowers that place down a large down payment are much more likely to make their mortgage payments. If they do not they will also lose money. Borrowers who put little to nothing down on their homes find themselves upside down on their mortgage and end up just walking away. They owe more money than the home is worth. The more a borrower owes, the more likely they are to walk away and be subject to credit damaging foreclosure. 2. Adjustable Rate Mortgages or ARMs Adjustable rate mortgages or ARMs sound too good to be true and they can be. The loan starts off with a low interest rate for the first two to five years. This allows the borrower to buy a larger house than they can normally qualify for. After two to five years the low adjustable rate expires and the interest rate resets to a higher market rate. Now the borrowers can no longer make the higher payment not can they refinance to a lower rate because they often do not have the equity in the home to qualify for a refinance. Many borrowers end up with high mortgage payments that are two to three times their original payments. 3. No Documentation Loans No documentation loans or sometimes called “liar loans” were very popular prior to the subprime meltdown. These loans requires little to no documentation. They do not require verification of the borrower's income, assets and/or expenses. Unfortunately borrowers have a tendency to inflate their income so that they can buy a larger house. The problems start once the mortgage payment is due. Because the borrower does not have the income they are unable to make mortgage payments and often end up face bankruptcy and foreclosure. 4. Reverse Mortgages You have seen the commercials and even infomercials devoted to advocating reverse mortgages. A reverse mortgage is a loan available to borrowers age 62 and up. It uses the equity from the borrower’s home. The available equity is paid out in a steady stream of payments or in a lump sum like an annuity. Reverse mortgage have can be dangerous and have many drawbacks. There are many fees associated with reverse mortgages. These includes origination fees, mortgage insurance, title insurance, appraisal fees, attorney fees and many other miscellaneous fees that can quickly eat at the home’s equity. Another drawback; the borrower loses full ownership of their home and the bank now owns the home Avoiding the pitfalls of the mortgage maze will hopefully help you keep in good financial health as a home can be your best investment. .
Trying to decide what type of mortgage is right for you can be tricky business. So you may be wondering what is an adjustable rate mortgage? An adjustable rate mortgage or ARM, has an interest rate that is linked to an economic index. This means the interest rate, and your payments, adjust up or down as the index changes. There are three things to know about adjustable rate mortgages: index, margin and adjustment period. What is the index? The index is a guide that lenders use to measure interest rate changes. Common indexes used by lenders include the activity of one, three, and five-year Treasury securities. Each adjustable rate mortgage is linked to a specific index. The margin is the lender's cost of doing business plus the profit they will make on the loan. The margin is added to the index rate to determine your total interest rate. The adjustment period is the period between potential interest rate adjustments. For example, you may see a loan described as a 5-1. The first figure (5) refers to the initial period of the loan, or how long the rate will stay the same. The second number (1) is the adjustment period. This is how often adjustments can be made to the rate after the initial period has ended. In this case, one year or annually. An adjustable rate mortgage might be a good choice if you are looking to qualify for a larger loan. The rate of an ARM is typically lower than a fixed rate mortgage. Remember, when the adjustment period is up the rate and payment can increase. Another reason to consider an ARM is if you are planning to sell the home within a few years. If this is the case you may end up selling before the adjustment period is up. Federal law provides that all lenders provide a federal Truth in Lending Disclosure Statement before consummating a consumer credit transaction. This will be given to you in writing. It is designed to help you compare and select a mortgage.
You might have seen the ads on TV about reverse mortgages, but what is a reverse mortgage? It is a loan for older homeowners that uses a portion of the home’s equity as collateral. Instead of the homeowner paying the lender, it is the lender that pays the homeowner based on the equity in the home. How much can be borrowed? The amount that can be borrowed in a reverse mortgage is determined by an Federal Housing Authority (FHA formula). The formula considers age, the current interest rate, and the appraised value of the home. What are the requirements for a reverse mortgage? You must be at least age 62 The home must be owned free and clear or all existing liens. Any mortgage balance must be paid off with the proceeds of the reverse mortgage loan at the closing. There are usually no income or credit score requirements. How is the loan repaid? The loan cannot become due as long as at least one homeowner lives in the home as their primary residence and maintains the home in accordance with FHA requirements (keeping taxes and insurance current). The must be repaid when the last surviving homeowner permanently moves out of the property or passes away. The estate will have approximately 6 months to repay the balance of the reverse mortgage or sell the home to pay off the balance.
Owning a house gives you a sense of fulfillment, and helps boost your self-esteem. It is a long term investment and should not be taken lightly. The present state of your finances is possibly the single most important factor when contemplating home ownership. Before you start shopping for a house, take into consideration the following factors. Have you set aside enough money for the down payment? The amount you need varies based on the price of the home and percentage required by your lender. Zero down mortgages are possible, however the interest rate is typically very high increasing the amount paid out over the life of the loan. Private Mortgage Insurance (PMI) is typically required for this type of loan, again increasing your monthly payment. How high of a mortgage payment can you afford to make ? If you opt for a fixed rate, your payment would remain consistent throughout the period of the loan. This type of loan is favorable for future financial planning. Adjustable rate mortgages make it a bit trickier to predict your monthly payments based on the fluctuating interest rate throughout the duration of the loan. This type of loan could be risky if interest rates rise and your payments increase significantly higher than anticipated. The security of your financial future is paramount when acquiring a mortgage loan. You would not want to enter into this long term investment without stable employment and a definite career path. Most banks and lending companies require a borrower to have been with the same employer for at least 2 years before considering a loan of this nature. Secure financial footing is key when applying for a mortgage loan. When determining your readiness to purchase a home, your credit score is as important as your finances. If you have a low credit score, you’ll attract a higher lending rate. This implies an increase in the amount paid back to the lender over the duration of the loan. An excellent credit score of 720 or above attracts the best interest rates and repayment terms. If your credit score is too low, improve it by: