| |
| |
|
Mortgage & Refinancing Information |
|
|
|
What Is The Best Deal For A Mortgage?
Few of us invest the time and effort into researching and securing the best deal for a mortgage to purchase our home. For most of us, our house is the single most important and expensive purchase we ever make! We invest a lot of time and effort into finding the perfect property in the best location and with as many of the features from our wish list as possible, yet, when it comes to finding the best deal for a mortgage, we take what is offered rather than researching and securing the best mortgage for our situation. When you consider that the average homeowner will pay out more in interest over the lifetime of their mortgage than the home originally cost, you can see why getting yourself the best deal for a mortgage now, could save you tens of thousands of dollars in interest over the 20 30 year term of your home loan. Your research for the best mortgages or loans and repayment options currently available can be carried out on the internet, thus making the whole process that much more convenient and time efficient for you. Mortgages are not a "One Size Fits All!" Mortgages come in many different forms and you need to be aware of the various forms in order to determine which one is the best deal for a mortgage to your unique circumstances. Basically, mortgages fall into one of the following categories. Lenders will have variations of these basic categories, but armed with this information, you will be able to sort through the choices for just the right package. Fixed Rate Mortgages: Loan with an interest rate that remains at a specific rate for the entire term of the mortgage/loan. Approximately 75 per cent of home mortgages are this type. A fixed rate mortgage is often considered the best deal for a mortgage for first time buyers as you can establish a consistent relatively fixed budget of household operating expenses. ARM's or Adjustable Rate Mortgages or Variable Rate Mortgages: A mortgage/loan with an interest rate that adjusts or varies with the changes in rates paid on Treasury Bills or bank Certificates of Deposit. In Canada, the rates vary according to the posted weekly Bank of Canada rates. To offset the risk associated with an adjustable rate mortgage, some lenders offer various 'capping' options. Often, they fix or limit the maximum level to which the interest rate you are subject to can rise for a given period of time. Sometimes they fix the cap per year and sometimes for the lifetime of the mortgage. Adjustable or variable rate mortgages can be very attractive as usually the rates are considerably lower than for fixed rate mortgages. They are an excellent vehicle for borrowers who are attentive to the rate fluctuations and prepared to 'lock in' their mortgage when interest rates start climbing. If you're constantly watching the money markets, this may be the best deal for a mortgage for you. Balloon Mortgages: A mortgage in which the monthly payment is not intended to repay the entire loan. The final payment is a large lump sum of the remaining principal. Balloon mortgages are often only partially amortized and requiring a lump sum repayment at maturity. It's popular mortgage in the US for homeowners who aren't planning to stay in their new home for more than 5 or 7 years. The advantage is that the interest rate is lower than a fixed rate mortgage however, the disadvantage is that if you remain in the home beyond the 5 to 7 year term, you would have to secure a new loan or mortgage to pay off the balloon mortgage. Jumbo Mortgages or 'Non-Conforming' Mortgages: In the US, Congress has legislated a conforming limit to the amount a mortgage is allowable for funding by Federal National Mortgage Association (a.k.a: Fannie Mae) and the Federal Home Loan Mortgage Corporation (a.k.a: Freddie Mac). The 2005 limit is $359,650; $539,475 in Alaska, Hawaii and the U.S. Virgin Islands. Any loan or mortgage above that conforming limit is considered a Jumbo Mortgage. A Jumbo mortgage/loan allows you to borrow over the conforming limit, but for that privilege, you will incur higher interest rates. There are variations to the Jumbo Mortgage such as the Super Jumbo Mortgage, but I'm sure you get the basic picture. Canadians have an equivalent referred to as a "High Ratio Mortgage" guaranteed/funded through Canada Mortgage And Housing Corporation (CMHC). Now that you have identified which type of mortgage might suit you best, you need to consider repayment methods and you basically have two options: Interest Only: An interest only payment method can be combined with any type of traditional mortgage. Interest only payment periods almost never run for the entire term of the loan, so prepare to have your payment rise to include both principal and interest once the interest only period ends. Principal and Interest or Capital & Interest: Your monthly repayments are divided into an interest payment and a principal or capital repayment. In the early years of the mortgage period most of themonthly payment is swallowed up in interest but over time the balance reverses and you start to pay off more of the capital or principal borrowed. So Many Mortgage Lenders ... So Many Choices! There are so many mortgage lenders offering such a variety of loan options that at first it can seem a daunting task trying to determine which lender most suits you and your circumstances and which Lender is offering you the best deal on a mortgage! It is important to note that as you shop for a mortgage, each lender will perform a credit check prior to committing to the mortgage or loan. Each credit check remains on your credit record and could potentially reduce your credit score and eligibility for a mortgage or loan. Helen March offers simple House And Home Sense solutions for buying or selling real estate as well as informative articles for home improvement and lifestyle alternatives. Visit her at: http://www.HouseAndHomeSense.com
MORE RESOURCES:
Google News |
 |
|
|
RELATED ARTICLES
Refinance After Bankruptcy Refinancing your mortgage after bankruptcy is actually the same as replacing it with an entirely new mortgage. The most common reason for refinancing your mortgage after bankruptcy is to get a lower interest rate and save money over the length of your mortgage. Selecting the Right Mortgage for You A mortgage is a loan you take out to buy a home. This loan covers the "principal" (purchase price of the house minus your down payment) plus the "interest," which is the fee a lender charges you to borrow the money. Home Equity Loan Information - How to Use One Wisely Using a home equity loan to get out of debt or make improvements to your home is usually a smart move. You have earned the equity, so it only makes sense that you put it to good use. Seniors Can Use a Reverse Mortgage to Fund Annuities, Investments, and Insurance Policies For many seniors in or entering retirement, the prospect of purchasing long-term care, investments or annuities can be cut short by a lack of retirement income. Statistics show that 3 out 4 seniors will have to lower their current standard of living during retirement. Home Loans -- The Hot New Product? The 30-year, Fixed-rate Mortgage In recent years, the mortgage industry has introduced dozens of new types of loans. The needs of every borrower are different, so the mortgage companies have tried to come up with an answer for every problem. Home Buying - What Can You Afford? Okay, you've decided to buy a home and are trying to figure out what you can afford. Before you go home buying, you need to carefully consider what you can afford as far as a mortgage payment. Who Could Benefit From A Reverse Mortgage? What is a "Reverse Mortgage?"Also known as a Home Equity Conversion Mortgage (HECM)a reverse mortgage,is a popular way older homeowners (62+) can convert part of the equity in their homes into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payments.Before explaining a reverse mortgage, let's review the features of a Standard Mortgage:With a standard loan or mortgage, your income stream is used to 'qualify' for the mortgage or loan. Self Employed Mortgage Loans - A Survival Guide When you're self employed you have numerous advantages. As you are a free agent, you will write off every deduction you can on your tax return. Should You Get a Home Inspection? It's very important, and in my opinion, mandatory to have a home inspection done before you close on a house. The inspection helps with giving you an objective evaluation of any problems with the home before you move in. A Home Loan Can Help You Own Your Dream Home Owning your dream home need not just be a dream. You can own it with a home loan offered by any number of financial institutions to help meet the shortfall between the purchase price of the home and the down payment that you provide. Fixed Rate or Adjustable? Fixed rate or adjustable rate mortgages are two choices of mortgage loans that most lenders will offer you. Your financial situation, how long you plan to live in the home, the current interest rates, and what risks you are willing to take is the best way to decide which loan makes the most sense for you. Home Loans and Mortgages - Watch Out for Dangerous Subprime Loans With the growing interest in real estate purchasing and speculation, more and more lenders are offering "nontraditional" types of mortgages. These include adjustable rate mortgages (ARM) of every shape and size, the more popular interest-only mortgage, and the very dangerous Option ARM mortgage, which can cause the amount you owe to actually increase as time passes. Stopping Foreclosures If you as an investor understand the process, you will be able to help more people!Foreclosure is tuff on folks it's all about losing!Your customer loses their home and the lender loses money!If you can get your focus going in the right direction, you can create a Win - Win scenario for all involved.Writer and philosopher Johann Wolfgang von Goethe said, "Kindness is the golden chain by which society is bound together. Mortgage Refinancing Companies -- Choosing The Right One Searching for a mortgage refinance company can be a daunting task. In a moderately sized city, there could be at least several major refinancing companies and several smaller local refinancing institutions. Home Equity Loan - Good Choice for Luxury Purchases? Home equity loans or lines of credit have increased dramatically in popularity in recent years. One of the reasons is that interest rates are at or near historic lows; borrowing money has rarely been more affordable. How to Avoid Paying Mortgage Insurance In today's world, a borrower should not be paying mortgage insurance (PMI) on their home mortgage with a few exceptions such as an FHA loan. Mortgage Insurance is a thing of the past. What On Earth are Home Equity Loans? Home equity loans are one of the most common types of financing for doing improvements on your house. These loans are not necessary used for home improvements but can also be used to simply obtain extra cash. Home Mortgage Loan Refinancing Online - 3 Tips on Refinancing Your Home When refinancing your home, it's helpful to know a few things about refinancing. When you refinance, you usually pay off the old loan and sign for a new loan, whether you are refinancing your 1st mortgage, second mortgage or home equity loan. Repayment of Loans - Lessening the Bitterness of the Process So how have you planned the repayment? Don't tell if you haven't started the plannings yet. It is high time the plannings and the decisions be made regarding the repayment of the loan. Shopping for A Mortgage? Do Your Homework First If you happen to be shopping around for a mortgage, it is very important that you first take the necessary time to do your homework.When I say homework, I am talking about research.
|
| home | site map |
| © 2007 |
