Mortgage Tips

Financial challenges do occur at times in our lives and, sometimes, these difficulties may include getting behind on mortgage payments. The stress of trying to stay afloat financially can be debilitating. This can cause unclear thinking or even a "what's the use?" attitude. Indeed, it may be time to honestly consider whether saving the home is the best thing for your future. It may not be easy to make that decision, as many of us have an emotional attachment to our homes.

Let uss assume that you do want to keep the home.

Lack of a clear understanding of your options, when you are behind on your mortgage, can lead to more expense and even more struggles later. Be careful when considering the direction you take and the advice you heed. There are many mortgage turn around services offered to consumers that are at risk of losing their home. Many are good for the pocket book of the service provider, but not all that great for consumers.

You can be pro-active by contacting the loss mitigation division with your lender directly.

Here are some options you may want to seek with your lender and/or mortgage servicing agent:

Repayment plan - Your lender or mortgage servicing agent may consider you for one or more types of payment plans that will fit your budget and possibly bring your account current by the end of the plan.

Loan Modification - If you qualify, your lender or mortgage servicing agent may have this program that adds the delinquent interest, taxes and/or insurance payments to your unpaid balance. If you qualify, it may include extending the repayment of the past due amounts over the remaining term of your loan.

Check with your lender or mortgage servicing agent for other options besides those mentioned above. Lenders are not in business to own real estate. They lend money. If you can meet the criteria, they will happily assist you.

These are things you can do for yourself. In fact, these programs may provide families the opportunity to avoid bankruptcy as an option to save their home. Admittedly, Bankruptcy has its place and will be a good option for some, although, it too will have its own costs and draw backs that should be considered.

Since the mortgage payment is an expense that is a necessity of your families shelter needs, perhaps talking with your other creditors to defer their monthly payments, so you can get caught up with your mortgage may be a realistic approach. This option is more commonly known as restructuring your debt to income ratio with full concentration on your needs, i.e. shelter, utilities, food, transportation, basic clothing and medical.

If you are realizing hardships, do not wait until it is too late. Contact your lender or mortgage servicing agent immediately.

For more tips, read 8 Big Mortgage Mistakes and How to Avoid them.

Article Source: http://EzineArticles.com/?expert=Michael_Bovee

Let's get started
Educate yourself. Get several quotes. Mortgage brokers will generally offer a better deal than a bank, but it doesn’t hurt to call a bank or two for comparison as well. A good loan originator will spend as much time with you on the phone as you need. And a truly professional loan originator will ask enough questions to understand your goals. If you don’t feel good about a conversation, trust your instinct; cross them off your list and move on.

Get everything in writing
Make sure to ask for Good Faith Estimates. There can be quite a few costs associated with getting a mortgage. You want to see every one. Comparing Good Faith Estimates can be challenging because different mortgage lenders often use different terminology. Don’t let that stop you. It’s also a good idea to ask the mortgage broker if there are any additional costs that are not shown on the estimate.

Ignore the APR
APR, or Annual Percentage Rate, was originally designed to help borrowers compare mortgages. I won’t go into the mathematics involved, but in principle APR was a good idea. In practice it has turned out to be useless. Lenders do not all use the same inclusion methods in calculating APR. To add to the confusion, adjustable rate mortgage calculations are notoriously misleading. But that’s okay! APR involves two variables, note rate, and closing costs, and all you need to see is on the Good Faith Estimate.

Points versus rate
I’ve been a Florida mortgage broker since 1989. My company is also licensed in Georgia, Massachusetts, and Virginia. We talk to lots of people about home financing. It’s my experience that when people are shopping for a mortgage they often fixate on the interest rate, and overlook the points. Interest rate and points are inversely related. Unless you specify that you don’t want to pay points a lender is likely to price your loan with one or two points. This will make your rate lower, but it may not be a better deal. If the lower rate saves you fifty dollars a month on your payment but you pay an extra five thousand dollars in points, it will take you eight years to catch up with the cost of the points. Do the math.

The margin trap
Many adjustable rate mortgage programs now offer a variety of margins for you to choose from. This means that you may have an opportunity to control your future interest rate. Sooner or later all adjustable rate mortgages adjust to an interest rate that is equal to an index plus the value of your margin. You have no control over the movement of the index. But if you can get a lower margin you will have a lower rate (once your loan starts adjusting) for as long as you have your loan. Your good faith estimates should all indicate the margin for your loan. Call the individual mortgage brokers and tell them you are interested in a lower margin. Don’t be shy. It’s your money!

Pre-payment penalties; Good and bad
As a Florida mortgage broker licensed in several states I discuss financing with many people every day. Most people are averse to considering a loan with a prepayment penalty. But it is worth looking into. Adding a prepayment penalty to your loan may reduce your interest rate significantly. Prepayment penalties typically expire after three years, but recently many lenders have started offering a choice of one, two, or three year penalties. Will you still be in the home past the expiration of the prepayment penalty? If you outlast the penalty you have reduced your monthly payment for as long as you have the loan. That can add up. And it didn’t cost a penny!

Choose wisely
There are an amazing number of mortgage programs to choose from these days. You can select a fixed or an adjustable rate mortgage. Or you might choose one of many hybrid fixed period adjustable programs designed to give the comfort of a fixed for a predetermined number of years before starting to adjust. Interest only options are available now on both fixed and adjustable rate programs. When selecting your mortgage program think about yourself. Any decision only makes sense if it makes sense in the context of your life.

Jim Kemish is the president and founder of Power Mortgage, a Florida mortgage company based in Delray Beach, Florida. Power Mortgage Corp was established in 1989 and serves the states of Florida, Georgia, Massachusetts, and Virginia. Jim is also the President of Sky Blue Credit, a national credit repair business.
Article Source: http://EzineArticles.com/?expert=Jim_Kemish

Home Loan Rewards - Are They Worth It?

As a specialist in the Home Loans area in Australia I have been asked by a few clients recently about the range of "Special Offers" made by banks and lenders. Specifically, are they worth it?

First, banks may offer rate discounts of 0.7% or more depending on the amount you borrow. Usually the higher the loan amount, the greater the discount. Sometimes the offer is a little different, say 50 cents off a litre of petrol for a year.

My approach is simple, just work out the exact money savings to do the comparisons, don't just look at the rate or the offer itself. In other words, will I save money.

Here are some examples.

Say you are borrowing $300000 and the bank is offering a discount of 0.7% off the standard variable rate of 8.07%. This is offered as part of a “professional” package (all banks have their own name, but let’s use this generic name), that attracts an annual fee of $300. At face value this means you get a rate of 7.37%.

Now, how does this translate into actual cash flow?

The monthly repayment on $300000 at 7.37% over 30 years is $2071
Add monthly component of package fee $ 25
Total $2096

Compare this with a similar loan from another bank at a rate of 7.4%

The monthly repayment on $300000 at 7.4% over 30 years is $2077
Nil monthly charge $ 0
Total $2077

This means that the loan at 7.37% is more than the loan at 7.4%! Another vital point about this is that the loan amount actually lessens as you pay it off, but the yearly fee does not, and so, the loan actually gets more expensive as the years roll by.

This is something to be very careful of.

I should mention, however, that with higher loan amounts the comparison may change in favour of the “professional” package, so the figures need to be worked out accurately for every loan scenario.

Now, what about “cheap petrol”?

One popular offer at the moment is that you will save 50 cents a litre for a year. The actual website quotes that you could save $2080 over a full year. Subject to the following conditions: “Offer limited to 52 purchases over a 12 month period (maximum 4 per month except for December, March, June and August when a maximum of 5 purchases applies), up to a limit of 80 litres of fuel per individual purchase. Promotion applies to funded new money Standard Variable or Discount Variable loans of $150,000 or greater.”

The petrol deal applies to loans currently quoted at either 7.99% or 7.59%, ie the Standard Variable Rate or the Discount Variable Rate respectively. Let’s look at the best case scenario at 7.59%, and for the sake of comparison I will also assume there are no monthly fees.

Monthly repayments on $300,000 loan over 30 years at 7.59%: $2116.16
Monthly repayments on $300,000 loan over 30 years at 7.4%: $2077.14
Monthly cost of the free petrol: $ 39.02

On the strength of these figures it will take 4 and a half years until the cheaper loan starts to get ahead, so it looks like a reasonable deal, unless you don’t use enough petrol! The bottom line is this. Don’t just look at the rate or the money you might save. Do the figures accurately and compare apples with apples.

Michael is the owner of Home Loan Answers, the BEST site for Home Loan Information in Australia. You will also find great tips on how to get the best credit cards and personal loans plus an opportunity for you to get personally tailored information so you can choose the best deal to suit your circumstances.

Article Source: http://EzineArticles.com/?expert=Michael_Haydon

What Mortgage Options Are Available To A Homebuyer?

Buying a home is something that most people look forward to. When it comes time to look at the various options that are available for mortgages, though, the questions start to arise. There are so many different options that it can definitely be confusing. Here are some brief descriptions that explain your different loan type products.

Every mortgage will fall under one of two general types - it will either be a fixed rate mortgage or an adjustable rate mortgage. Here are definitions of these two types.

Fixed Rate Mortgages
A fixed rate mortgage is one in which the interest and payment rate always stays the same. It does not matter what happens to the market - good or bad, your payment does not change. This is especially good when the market is changing or the economy is fluctuating.

Adjustable Rate Mortgages
An adjustable rate mortgage is one that changes periodically in order to reflect the economic conditions. Most people get these mortgages because it allows them to get a little bigger house than they could otherwise afford. These usually have a fixed rate portion for a few years first, then the rate changes regularly - could be monthly or yearly. This type of mortgage is the best when the economy is good, but could be very costly in times of adverse economies.
Among these two types of mortgages, there are different names that could come under either general type.

Balloon Mortgage
This type of fixed rate mortgage and is generally for 5 to 7 years. It does not fully amortize by the end of the term since it is usually refinanced for a 25 or 30-year mortgage. This option must be stated in the terms, though, so be sure it is in there, or you may be left without being able to refinance.

Jumbo Mortgage
Two of the largest loan agencies in the US - Fannie Mae and Freddie Mac, set ceilings on the amount of loans that they will give to a borrower for a home. Any mortgage requiring more than this is considered a jumbo mortgage. They may also be called a non-conforming mortgage.

Assumable Mortgages
An assumable mortgage is one that the new buyer of the house simply takes over without any refinancing. The terms that enable this kind of transfer must be in the contract when applied for, or it cannot qualify as an assumable mortgage. It will also require the lender’s permission and the new owner must qualify before being approved. Under some conditions, some of the terms may be changed, and closing costs will be involved. Taking over an assumable mortgage cold turn out to be very good for the buyer – especially if the interest rate is better than what the market is offering at the time. Both types, fixed rate or adjustable rate, can be assumable.

Interest Only Mortgages
While the title of this mortgage is more than a little deceiving, it is not what it seems. It would be more truthful to say interest first mortgage than anything. With this type of mortgage, the interest is paid first, leaving the principal untouched until the interest is paid. Generally, this means more is paid because the principal is not paid down at all. This would normally slowly reduce your interest. The difference could result in thousands of dollars more being paid over the lifetime of the mortgage.

Joe Kenny writes for the UK Loan Store, offering mortgage applications, visit them today for some great secured loan offers for that special purchase or even for home improvements.Visit today: http://www.ukpersonalloanstore.co.uk
Article Source: http://EzineArticles.com/?expert=Joseph_Kenny