December 15th, 2006

In a Fix: Unsurprising Mortgage Payments you can Count on

Posted in Mortgage, 100 Mortgage Percent Refinancing, 1 Home Loancom Mortgage Refinance, 15 Mortgage Rate Refinance Year, 100 Percent Mortgage Refinancing, 125 Home Equity Loan And Second Mortgage, 10 Fixed Interest Mortgage Rate Year, 100 Finance Mortgage by Admin

In a Fix: Unsurprising Mortgage Payments you can Count on

A home is one of the biggest purchases youll ever make. Luckily, you dont need to pay for it all at once. Without mortgages, many people would never be able to own their own homes.

Despite that, mortgages can be the cause of much stress and aggravation. If youve chosen an adjustable rate mortgage, market fluctuations can send your interest payments soaring to the point that youre not sure how to cover your monthly payments. Fear of losing their home is one of the most stressful things people ever have to deal with. It is a scary reality that people have to face on a daily basis when they cant meet their monthly payments.

It doesnt have to be this stressful though. Try choosing a mortgage plan with fixed interest rates that you can count on month and month.

Today banks and lending companies offer a variety of mortgages to suit everyones needs and preferences. Fixed rate mortgages are the most traditional type of loan. With fixed rate loans, you are locked in to an interest rate for the entire period of the loan (whether it be for five, ten or twenty-five years). With adjustable rate mortgages, the interest rate starts low and then fluctuates depending on the market. A balloon mortgage has lower rates than a conventional fixed rate mortgage, but it must be paid back within five to seven years. If you know you will be moving within five to seven years this might be an excellent option for you but if you dont move then you will need to find another mortgage when your balloon mortgage comes due. You might also want to look into an open mortgage. If you think you will be able to pay off your mortgage within a few years, then you definitely want to look into this option. An open mortgage has opportunities built in to that allow you to pay off your mortgage ahead of schedule without any sort of financial penalties. You do pay for this flexibility so it is best for people who expect to come into some money or are intending to sell their property at some point in the near future.

Though a more open mortgage (like an adjustable rate mortgage) may mean lower interest rates at times, it can be quite a risky undertaking and many people would prefer to have a bit of security and know right at the start the amount of money they will have to repay to the bank. Wouldnt it be nice to have set mortgage payments that you can count on each month? With a fixed rate mortgage, your monthly payments are always the same. Some expenses (such as escrow and property tasks) may change a bit as the years pass, but the monthly amount of your principal and interest payments never alters. You may end up paying a bit more in the long run, but you will have some security and youll know exactly what to expect from month to month. Isnt it worth paying a bit more for this safety? Wouldnt you rather know what to expect month after month?

A fixed rate mortgage also makes it easier to balance your other experiences. Knowing exactly what you have to pay every month means there are no surprises and if you budget carefully and spend wisely you will be able to avoid many a financial crisis.

Whatever kind of mortgage you choose, remember to do your research. In many cases, you end up paying more in interest than the actual price of your home. Thats why you need to take a lot of time and do a lot of research to find the best mortgage for you and your familys needs. A lot of this research can be done online now. You can browse the rates and types of mortgages offered by many different banks and lending services providers. This will give you plenty of opportunity to shop around for the best rates and compare what each company is offering.

If you are someone who values security and certainty where your finances are concerned, then a fixed rate mortgage is probably the best option. It may take longer and cost a little more, but you might sleep a little easier knowing that your rate is safe from any kind of market fluctuation.

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December 8th, 2006

FYI on PMI General Information on Private mortgage insurance

Posted in Mortgage, 100 Mortgage Percent Refinancing, 1 Home Loancom Mortgage Refinance, 15 Mortgage Rate Refinance Year, 125 Home Equity Loan And Second Mortgage, 10 Fixed Interest Mortgage Rate Year by Admin

FYI on PMI General Information on Private mortgage insurance

What is PMI? PMI, or private mortgage insurance, is an insurance that home buyers are required to purchase if their down payment is low. Private mortgage insurance is usually required of home buyers whose down payment is 20 percent or less of the propertys sale price or appraised value. This insurance was created by private mortgage insurers, and was created to provide protection for the lender in the case that the home buyer should default on the loan.

Private mortgage insurance has helped create millions of new homeowners by allowing people to buy homes with much smaller down payments than had previously been accepted. As home prices continue to soar, the ability to purchase a home with a small down payment has become even more important. Private mortgage insurance allows potential homeowners to buy a home sooner, with even just a 5 percent down payment. Also, private mortgage insurance can help you qualify for a greater number of home loans.

The cost of private mortgage insurance varies according to the down payment and mortgage loan, but it typically equals approximately one half of one percent of the total amount of the loan. But how exactly is private mortgage insurance calculated? Lets assume you bought a house for $100,000, for which you put set down a 10 percent down payment. Your lender will multiply the remaining 90 percent by .005 percent. The result, $450, is your annual private mortgage insurance, which is divided into monthly payments.

After a few years of paying down your mortgage loan, you should be able to stop paying private mortgage insurance. You should keep track of your payments and contact your lender when you reach 80 percent equity so that your private mortgage insurance can be cancelled. In 1999, a new law, the Homeowners Protection Act, was passed that requires lenders to notify you, the buyer, how many months and years it will take for you to pay the 20 percent of your principal. However, it is still a good idea to keep track of it on your own.

This same law also allows lenders to make certain buyers continue their private mortgage insurance, all the way to 50 percent equity. This requirement applies to buyers classified as high risk borrowers. Some Federal Housing Administration loans may even require that home buyers acquire Private mortgage insurance through the lifetime of the loan.

If the idea of paying private mortgage insurance for years sounds unappealing, youre not alone. Over the years, new ways of avoiding payment of the private mortgage insuranceeven when you dont have the 20 percent down payment availablehave emerged. One strategy commonly employed to avoid paying private mortgage insurance is to pay more interest on your mortgage loan. Some lenders will waive the private mortgage insurance requirement if the home buyer agrees to pay a higher interest rate on their mortgage loan. One advantage to this strategy is that mortgage interest becomes tax deductible.

Another way to avoid paying private mortgage insurance is by using the 80-10-10 loan strategy. This strategy involves taking on two loans and putting down a 10 percent down payment to purchase a home. One loan finances 80 percent of the mortgage, while the second loan finances the remaining 10 percent of the sales price. The second mortgagethe one that covers the 10 percenthas a higher interest rate. But since the amount of the loan is low, the interest charges are relatively easy to pay off. Under this plan, the mortgage interest is also tax deductible.

You may also be able to cancel your private mortgage insurance if you can prove that your home has increased significantly in value. If the value of your home has gone up, you may already have 20 percent (or more) of the equity you need to cancel your private mortgage insurance. You can submit evidence of this to your lender, but the process is slow. Expect to wait up to two years for the lender to make a decision.

You may be required to continue paying private mortgage insurance, however, if you have a poor payment history, or if your credit record reflects any liens placed against your property. You should speak to your lender to see how any changes in your credit record may affect your use of private mortgage insurance.

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November 21st, 2006

This Option may not cost you an ARM Consider your Options with Adjustable Rate Mortgages

Posted in Mortgage, 1 Home Loancom Mortgage Refinance, 100 Percent Mortgage Refinancing, 125 Ltv Refinance Mortgage, 100 Finance Mortgage by Admin

This Option may not cost you an ARM Consider your Options with Adjustable Rate Mortgages

Adjustable rate mortgages, or ARM’s, are useful types of mortgages with set plans and terms which may help you in deciding which type of loan to get when buying or refinancing a home. An ARM is flexible and changes during your term of mortgage depending on certain guidelines and adjustments. An ARM will generally start at a lower than fixed rate mortgage, then begin to fluctuate throughout your loan term. If you decide to get an ARM when getting into a loan, there are several things to know that will help decide if it is right for you.

The first thing that applies to adjustable rate mortgages is that it is based around the ideal of lowering mortgage payments when fixed rate loans begin to rise. By doing so, mortgage lenders are able to offer lower prices for those who have a mortgage. One of the principles that apply is that there is a fixed period term, where the rate will have to stay the same. Depending on the type of ARM you are thinking about getting, this rate can last anywhere from the first month you decide to get the loan to up to ten years. The thing to consider with the fixed plan is how long you will be in your home and how this fixed rate will affect you with changes.

A second part of an ARM loan is the index. This is tied to the interest rate and helps to determine the adjusted rate. The indexes can come from several different sources. These include the 12 MTA, which is a one year treasury guide that is available. Another is the LIBOR, or London Interbank Offering Rate. These are updated every one to six months. There is also the Cost of Funds Index (COFI), Cost of Savings Index, (COSI), and Cost of Deposit Index (CODI). These are not recommended before the others, as the indexes seem to fluctuate more than necessary. A last way to find an index is through a bank prime rate. These, however, are based mostly around home equity lines of credit. The way that indexes work is that each set index has a margin. The margin determines your interest rate after the fixed period. These will vary widely depending on the index and lender that you have. The index will then tell the percentage of the adjustable rate in which you will have to pay. By knowing the index that the lender is using, you can find a lower adjustable percentage rate for your mortgage.

A third part to ARMs is the caps. This restricts the rate change to move no less than two percent, and no higher than six percent. This allows you to not have to pay high rates at one period of time because of the index and margin guides that are available. There are also start rates that are applicable with ARMs. These will vary by lender and index, and will most likely depend on how much you put as your down payment and what your credit rating is.

ARMs are helpful in offering you four different types of payments based on the index and caps. The first type is the minimum payment option. This is the lowest of the options. You do not pay the principle or the interest on the loan. The interest that is then not paid is simply put into an interest due, which increases the loan balance. This is also known as deferred interest or negative amortization. The next option is through the interest only payment. This will allow you to defer interest without having to make a principal reduction payment. The interest only payment will always have a restricted amount of time for you to pay the loan. The next type of ARM is a 30 year payment. With this type of payment, every payment will go towards principle and interest at a consistent pace. The fourth type of payment is the fifteen year payment. This is the same type of ARM as the 30 year option, but it is paid at an accelerated pace.

By using ARM as an option for a loan or for paying off a mortgage, one is able to see more flexibility in their payments, which can help them with finances and to pay off a loan with more ease. Before getting into an ARM loan, it is important to know what types of rates and terms apply so that you can get the best deal.

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