Brief Description of a 30 Year Mortgage v. 15 Year Mortgage

Brief Description of a 30 year Mortgage v. 15 year MortgageSummary:
When you are in the process of buying a home and doing your research and shopping mortgage lenders and mortgage bankers you will often find that most of the discussions online focus on interest rates. You will also see lots of advertising about what today’s rate is or where the rates are going. Of course you need to stay informed and educated about the market and what mortgage interest rates are doing especially when you are shopping for a mortgage. The first question most people ask me is “what is my rate?” I feel that the next question should be “what is my term?” However this is rarely the case especially for first time homebuyers. When you hear the word term in the mortgage industry it refers to either a 15 year mortgage (180 months) or a 30 year mortgage (360 months) meaning the length of time you will be financing your home. In my experience most homebuyers ask the same questions over and over “how much do I qualify for?” and “what is my payment”. While these are two extremely important issues, there is an additional one that most first time homebuyers fail to consider and this ends up resulting in a significant waste of money in the long run. The term of your mortgage is extremely critical for a couple of reasons which I will explain next. First of all, it sets the length of the home mortgage loan obligation that you are undertaking. Second, it is a definition of the amount of interest that you are going to pay over the life of your mortgage loan. This is everything when you are buying a home and trying to build equity. The longer the loan the more total interest you will accrue. Whether it is a mortgage loan, car loan, credit card, student loan, etc…. It doesn’t matter. The bottom line is the longer you keep them and pay them the more interest you will pay in the long run. What home mortgage loan borrowers need to understand is if you take out a 30 year loan you are financing your home for 30 years which is 360 months and that is a long time. The trade off to this is that you are going to have smaller monthly payments and that sounds great but you are stretching your obligation to the bank, putting less equity into your home and paying more interest to the bank. At first it sounds great because your mortgage payments are low but if you end up staying in your home for 30 years that could end up being a ton of interest that you are paying your mortgage lender. If you are searching for a home and have already received your prequalification letter my suggestion would be to try to see if you can swing a mortgage payment for 15 years (180 months) or 20 years (240 months). People do not understand how much interest they are saving by trying to do this first. On the flip side to that you need to determine if you can comfortably afford the higher payment that comes with a shorter term loan. If you can’t than of course it’s much easier to take the 30 year mortgage loan with the lower payment. There is no absolute correct choice because everyone’s personal situation is different and that’s why a properly licensed mortgage banker or lender should ultimately make sure that you are comfortable with the outcome. The whole point in buying your dream home is to also build equity not so that you can cash out on the equity and spend it at the mall but there is some security in knowing that you actually own a certain percent of your home. The mortgage industry has a variety of different programs as well as different terms, for example there are 10 year, 15 year, 20 year, 25 year and 30 year mortgages. When you are applying for a mortgage loan take the time to educate yourself and evaluate the different terms to see if you can find a mortgage loan that is perfect for your specific situation.

Buying a Home is a Lifetime Achievement and Can Make All of Your Dreams Come True

Buying a home of your own is a lifetime achievement and a home mortgage can help you achieve this milestone if you don’t have all of the cash to pay for it up front.  A home mortgage can also help you achieve this milestone much earlier than it would otherwise have been possible.  In fact, when you go to buy your first home there is lots of emotion involved.  Most people worry about whether they can afford a home loan or whether or not the mortgage loan will be approved or not.  Some people anticipate problems with home inspections and appraisals the home loan process can be a long and daunting however in the end all of this is worth it because buying a home can make all of your dreams come true.  What is a home mortgage?  A home mortgage is something that allows you to buy a house if you do not have enough money to pay for it right away this is made possible by borrowing money from someone and paying it back in monthly installments.  The person who lends you money is called the home mortgage lender or mortgage banker and sometimes they are also called mortgage brokers (the middle man).  The home mortgage lender or mortgage banker lends you money for a specific period of time.  For example you can take out a mortgage loan for 30 years this equates to 360 months or you can take out a mortgage loan for 15 years this equals a total of 180 months.  This period of time is thetime you are given to pay back the loan in monthly installments.  It’s just like a car loan except you are borrowing much more money and they are giving you much more time to pay it back and instead of buying a car you are buying a home for your family.  The most important information you will need to search for in the home loan process is the actual mortgage interest rate.  A mortgage interest rate is an actual charge that the mortgage lender or mortgage banker is going to charge you in order to lend you the money for a home.  Most home mortgage lenders offer various home mortgage options and programs.  For example, there are options such as Fannie Mae and Freddie Mac Conventional Mortgages.  There are also FHA and VA mortgage programs all made available to you by the mortgage banker and lender.  There are two types of mortgage rates today.  There are fixed rates which are fixed for the entire payback period and there are adjustable rates which as the name suggests can change throughout the term of the mortgage loan.  The most recommended rate of all for any home loan mortgage is the fixed rate.  Do not go with an adjustable rate mortgage unless you are very knowledgeable and educated in the market and follow rates on a daily basis as this rate can adjust at some point and time during the home loan payback period.   The mortgage interest rate is set based on the terms and conditions agreed upon between you and your mortgage lender.  Contact outside sources for mortgage advice before searching for a home and be sure you use a knowledgeable mortgage lender or mortgage banker and make sure that your loan officer is licensed in the state that you are doing business.

 

Tips to Getting The Lowest Mortgage Rates Online

Tips to Getting The Lowest Mortgage Rates Online

Every consumer loves a bargain and getting a lower mortgage interest rate can save you a substantial amount of money over the life of your loan. There are several ways to go about ensuring that you pay the least amount of mortgage interest when you take out a home mortgage loan.

The first and probably the most important is to be aware of your credit score.

Good credit is the key to not only getting a mortgage, but to getting the best mortgage interest rates available in the market today.  Mortgage bankers and lenders like to reward borrowers that pay off their bills in a timely manner and chances are that if you have been faithful with making all of your other monthly payments on time you will have a great credit score and therefore qualify for a home mortgage loan.  If that is the case the mortgage lender will be willing to take a risk and reward you with a mortgage loan with an extremely low interest rate.

Close any existing credit card accounts that you no longer use.

If you have several credit card accounts this can affect the interest rate on your mortgage, even if they have a zero balance.  Mortgage lenders and bankers see open accounts as potential for future debt, which adds more risk for them to not get their money back.  In order for the lender to balance that risk, they will often charge you a slightly higher mortgage interest rate on your mortgage loan.

Lock in your mortgage interest rate before you go to settlement.

Once you have agreed on a low mortgage interest rate and the rate is to your liking, ask the mortgage lender/banker to lock in that rate.  Mortgage rates can fluctuate drastically in the time it takes for your mortgage to go through the entire process to get you to the closing table.  If you want to take the risk of waiting it out and not locking your mortgage loan that is find but you could be running the risk of the mortgage interest rates going up and in the end you could lose because you this could mean you could be paying a totally different mortgage interest rate than what was originally quoted.

Make the biggest down payment you can afford.

Putting a down payment from your savings account on your house lowers the amount you plan to finance therefore will lower the total amount that you will pay over the life of the mortgage loan.

Always shop around for the best rate.

You don’t have to work with the first mortgage lender that you approach.  With the vast amount of online mortgage bankers and lenders it is easy to compare offers and pick the best mortgage company that offers you the lowest and best mortgage interest rate and don’t be afraid to tell brokers that you are shopping around or ask them if they can match the mortgage interest rates of a competitors quote.

RatesAreHot.com made it q…

RatesAreHot.com made it quick and EZ for me to prequaify for the home of my dreams!! I just want to take the time to say Thank you!

What is a credit Score?

First of all if you do not know what your credit report looks like please visit www.annualcreditreport.com and obtain a copy of your credit report.  Of course they will give you your report only and not your scores.  You will have to pay for the scores however, they will send you a free copy of your existing current report and you can pull it once a year through this company.  You should know your scores and you should know how your creditors are reporting you to the 3 major bureaus.  Let’s talk about the 3 major bureaus.  There are 3 major credit bureaus in the United States who have relationships with millions of creditors across the country and this is why everyone has 3 scores because your creditors (such as your Mortgage, car, installment loans, visa, mastercard, etc…) are reporting you.  These millions of creditors will report how your paying your bills to these 3 major bureaus they also report your address, date of birth, etc….  The creditors that I mentioned above do not always report to all 3 bureaus sometimes they only report to two bureaus.  Who are the 3 credit bureaus?  Let’s talk about who these bureaus the first one is a company called TU which stands for Transunion, 2nd one is Equifax which you see all over the internet, and than there is Experian.  There will be times where say for example your visa company will only report to Equifax but your Toyota dealer that you have your car payment with will report to Transunion and your Mastercard reports to Experian.  As you notice the creditors are not reporting to all 3 bureaus just to 1 bureau.  When you are applying for a mortgage or any other line of credit you really should know what your credit report looks like and what your scores are I cannot stress that enough.  When you are applying for a mortgage or prequalifying for a mortgage the mortgage company will pull your credit report and take the middle of the 3 scores and rate you.  For example, if you have a high score of 789 a middle of 760 and a low of 723 the mortgage company lender, broker or banker will use the middle scores which is the 760 when you apply.  People ask all the time if their high score will get them a better mortgage interest rate and of course it will but remember there will be add on to your rate or the pricing of your mortgage interest rate if your scores are below 720.  That is why it is so important to know your credit score.

Planning is key to buying a home!

The key to buying a home is in the planning.  In order to make the entire home buying purchase successful you need to have a plan.  You should try to have very little bills as possible.  If you have credit cards pay them off or pay them down as much as you possibly can.  However, don’t close them out completely just pay them down or pay them off.  The least amount of debt that you have going into the home buying process the better.   In order to prequalify for a mortgage what you would need to do is take your “New” monthly principal, interest, real estate taxes and homeowners insurance and multiply that by your gross monthly income.  This number can not exceed 28%.  This would be called your housing expense ratio.  Another important number to know is your debt to income ratio.  What you need to do here is take your total monthly debts including mastercard, visa, car payments plus your new mortgage payment including principal, interest, real estate taxes and insurance and divide that by your gross monthly income.  This number cannot exceed 36%.  Most of the time the mortgage underwriter will allow this number to go up to 41% however, only if there are compensating factors such as a consistent and past history of overtime or bonuses.   Everyone’s situation is different and unique that’s why it is extremely important to go into the homebuying process with very little liabilities and lots of assets.

Get the Most Benefit Out of Refinancing Your Mortgage

In order to get the most benefit from refinancing your mortgage you should continue to make your mortgage payments every month and hold out as long as you can in order to build up enough equity so that your loan to value remains below 80%.  If your loan to value is over 80% the mortgage company will charge you PMI which is private mortgage insurance. Private Mortgage Insurance only covers the costs incurred to the mortgage lenders in case you default.  Private Mortgage Insurance is charged monthly and can turn out to be a hefty number when it is added to your monthly mortgage principal and interest.  Alot of timesthe borrower’s think that PMI is helping them but it’s not it only helps the mortgage lender who is refinancing your mortgage.  In order to figure out whether or not you need PMI is quite simple…. all you have to do is take your balance for example let’s say the balance of your mortgage is $150,000 and divide that by your value.  So, in this case let’s say your value is $300,000.  In this case your loan to value would be 50% which is less than 80% so in the above case you would not have to pay PMI. 

“If you do what you’ve…

“If you do what you’ve always done, you’ll get what you’ve always gotten.”
Anthony Robbins

“The Mortgage Loan Process”

Whether you are applying for your first home mortgage loan or your fifth home mortgage loan you need to know what to expect.  Most first time borrowers have no idea what to do first and here is where I am going to explain to you how the mortgage loan process works.

1.  You need to be prequalified for a mortgage.  You need to talk to a specialist in the mortgage field.  Somebody that is experienced and knows what they are talking about.  If you are thinking about buying a home the first thing you need to know is whether you qualify for the home so talk to a specialist.  It is extremely important for you to know whether you can “Afford” the mortgage payment.

2.  Gathering your personal information.  A mortgage specialist is first going to ask you for some personal information so you will need to start gathering that together.  You will need the following:  last 30 days pastubs for everyone that will be on the loan, last two years W-2’s, tax returns for the last two years and also bank statements for the last 3 months.  Start gathering all of this information together.  The mortgage company will need it.  The question here is will you be able to repay this mortgage loan.

3.  Know your credit history.  Go to www.annualcreditreport.com and pull up your credit and review it and make sure you are in good standing with all of the credit bureaus.  If not, dispute any times that you do not agree with.

4.  Sign the Documents.  You will need to sign a complete disclosure package with the mortgage lender.  This package will consist of about 45 pages of RESPA documents and disclosures.  Today everything in this industry is government regulated so you will need to sign every page.

5.  Submit to Underwriting.  After the entire package is gathered the mortgage processor will submit your loan to the mortgage underwriter.  At that point they will review everything in your package and check your ratios as well as check your appraisal.

Mortgage Payoff

This is a blog about Mortgage Payoffs (existing mortgage balances)
If you are refinancing this applies to you. You need to always know an estimate of your existing 1st mortgage and in some cases 2nd mortgage balances. In order to obtain this information you can look on your statement for an 800 number and call your existing mortgage company or if you make your mortgage payments online you should be able to login and look for an existing estimated mortgage balance. One more option you can take is to look on your monthly mortgage statement that your mortgage company sends to you in the mail (yes, Wells Fargo, Citibank, Chase, Bank of America, etc.. all still mail out statements to consumers that opt in). If you call, you can either ask them for an estimate or you can actually order a payoff from them but remember if you are ordering a payoff it will cost money. They will charge you for the work that is involved in figuring out what your payoff is even though it is computer generated and very easy to do they will still charge you. It is a small fee say $50.00 bucks that will be added to your existing balance. You will see all of the fees when you receive your payoff letter in the mail. When you call you will need to give them your name, address and account number, etc.. They will also ask you if you are trying to obtain a mortgage refinance because if you are that will redflag their customer service department that you are trying to leave them and they will of course try to sell you a new mortgage. Therefore, they will start hounding you to refinance with them because they are the best mortgage company out there.

If you are in the market to refinance your home the new mortgage company is required to also obtain an accurate payoff for you from your existing mortgage company and this will be done “prior to closing”. The payoff will tell the new mortgage company “how much” they have to payoff in order to obtain a brand new mortgage refinance. Knowing the exact number is almost impossible however, the better estimate you have the better qualified you will be for a new mortgage. This helps when you are being prequalified for a new mortgage.

FYI….Your payoff will include the following:
Existing mortgage balance
Property Taxes (including back taxes owed)
Late Fees (if you were ever late on your mortgage and didn’t pay the late
fee the mortgage company adds that in the end to the total balance due)
Any homeowners insurance (fire insurance) that is due (including anything past due)
Payoff letters (yes, it costs money for somebody at Chase Mortgage to figure out what your payoff is and somebody has to pay for it and that is you)
So, for example you might think that the balance of your first mortgage is around $200,000 and that is fine but remember that this is only an estimate. With all of the above fees the actual balance due to your existing mortgage company is probably more like $202,000.

Also, your mortgage payment is made “in the rears” so you live in your house for a month and than your payment comes due. Hopefully you found this information to be helpful if you need help with mortgage prequalification visit us at : http://www.ratesarehot.com