When it comes to mortgages, you can choose how long you want to pay because mortgages come in different lengths. Of course, certain types of mortgages require you to have better credit than others. But, assuming your credit is good enough to have your choice of mortgages, let’s look at the different mortgage loan options and discuss how you can choose the best one for you.

Fixed rate mortgage options

A fixed rate mortgage has the same interest rate and monthly payment for the length of the loan. A fixed rate mortgage is the best option for a homebuyer who plans to live in their home for at least 10 years. With a fixed rate mortgage, you’ll enjoy the stability of having the same mortgage payment every month.

Fixed rate mortgages come in 10, 15, 20, and 30 years. Interest rates typically go down as the mortgage length goes down. For example, a 30-year and 20-year mortgage interest rate may be 3.75%, while the 15-year and 10-year is 3.25%. Even though interest rates are lower on shorter-term mortgages, monthly payments are higher. But, the benefit is that you’ll pay much less interest over the life of the loan. Continue reading →

These days, it’s common to get a mortgage with a low down payment or even no down payment at all. It lets you purchase a home faster than if you had to save up a $10,000 to $25,000 down payment to make up 20%. But, there’s a downside to such small down payments – private mortgage insurance.

How Much is PMI?

Lenders require private mortgage insurance when you have less than 20% equity in your home. The insurance would pay off your mortgage if you default. Private mortgage insurance, or PMI, is typically a certain percentage of your mortgage loan amount, between 0.5% and 1%. On a $150,000 mortgage, your PMI payments would be between $750 and $1,500 each year or between $62.50 and $125 per month. PMI is paid with your mortgage. Continue reading →

One option for a mortgage loan with affordable monthly payments is an interest-only mortgage loan. While your monthly payments may be low with an interest-only mortgage loan, there are some drawbacks to this type of loan. These drawbacks often don’t show up until after you’ve had the mortgage for a few years.

What Is an Interest-Only Mortgage?

Usually, monthly mortgage payments are made up of part interest and part principle. Interest-only mortgages allow you to make interest-only payments on your mortgage for a certain number of years. Once the interest-only period has expired, your payments will include both the principle and interest on the loan. Continue reading →

If you’re having trouble making your mortgage loan payments, being proactive is the best way to avoid foreclosure. Though you may be afraid to, talking with your lender can help you come up with options that may save your home.

Mortgage loan reinstatement

You may be able to reinstate your loan if you had temporary trouble making your mortgage payments. Through loan reinstatement, you agree to pay your past due mortgage payments by a certain date and your mortgage is back on track. You might also be required to pay late fees and certain penalties. This option might be difficult if your past due account is high. Continue reading →

When it comes to mortgage types, there are traditionally two categories: fixed rate and adjustable rate. Both types of mortgage loans can be advantageous to you financially but it really depends on your financial situation to determine which will work best for you.

What the Difference?

Adjustable-Rate Mortgages

Adjustable-rate mortgages are those that contain an interest rate that fluctuates along with a predetermined index throughout the term of the loan. If the rates go up, your mortgage payment will go up. If the rates decrease, you’ll may less each month on your mortgage payment. Typically, the adjustable-rate mortgage is riskier because there is no way to predict how the rates will trend. It can be difficult for those on a fixed budget to calculate and meet mortgage payment amounts. If finances are not a concern, an adjustable-rate mortgage may be beneficial when the rates are down and payments are lowered. For those with financial concerns, an adjustable-rate mortgage may not be the answer. Interest rates will likely continue moving in the upwards direction and adjustable rate mortgages make it hard to create long-term planning goals. Continue reading →

Mortgage loan closing is a time many homeowners look forward to. It’s the time when all the final documents are signed and the seller finally hands over the keys to your new home. Closing is one of the last steps in the home buying process. Closing can also be a scary time. There are several different costs involved with the process and it’s important that you’re familiar with all of them. Since there are so many different costs, there are several points of negotiation, which can allow you to reduce your closing costs.

Mortgage loan application fee

The lender or mortgage broker charges an application fee between $65 and $640 for the cost of processing your loan. Your application fee also includes the cost of accessing your credit report and the credit report of any co-borrower. Continue reading →

Lenders carry strict requirements when it comes to mortgage loans. The mortgage application process is more intense than most other types of loans, like car loans and personal loans. It helps to know what you need to do to qualify for the loan ahead of time. That way, when you visit the lender to apply for the loan, you’re ready.

Check your credit report. Your mortgage lender will check your credit as part of the mortgage process. If you have outstanding negative information, it will hurt your chances at getting a loan. You check your credit report for free by visiting www.AnnualCreditReport.com. You have three credit reports, one from each of the three major credit bureaus – Equifax, Experian, and TransUnion. Check all three of them to make sure they’re accurate. Continue reading →

Before you go home shopping, you should figure out how much mortgage loan you can afford. Your mortgage – and any down payment you’ve saved up – will directly impact how much home you can buy. The amount of loan you can afford depends on your current income and expenses. Generally, the higher your income and lower your expenses, the higher mortgage loan you can afford.

Front-End Ratio

Most conventional mortgage loans – those loans that aren’t government-funded – expect that your housing expenses be less than 28% of your monthly gross income. Twenty-six percent (26%) is ideal. This percentage is known as a front-end ratio. Continue reading →

A mortgage application is not meant to be taken lightly, especially in light of the recent chaos that slammed the mortgage industry. Lenders are stricter than ever in their guidelines to qualifying a buyer and for those wishing to be approved for a mortgage loan, preparation is vital.

Purchasing a home is likely the biggest investment you will make in a lifetime and if you are a first-time home buyer, you need to be ready to see the process through from application to closing to handle everything in between. Here is a checklist of things you can do to increase your chances for a successful mortgage approval: Continue reading →

A mortgage is a big commitment and defaulting on a home loan can cause a lifetime full of financial problems if you go into it without being truly prepared. Being financially ready to take on the responsibility of a mortgage is something perspective homeowners should consider before shopping for a lender.

Here are some questions to ask yourself if you are thinking about securing a mortgage:

How Much Have You Saved For a Down Payment?

While there are some options available for individuals who can not afford to make a sizable down payment on a home, traditional lenders want to see at least 20% cash down based on the sales price of the home. If you have not saved the full 20%, you will have to pay additional fees for private mortgage insurance until you have secured enough equity in your home. Additionally, lenders will not be able to offer you the best interest rates on the mortgage, leaving you to pay higher payments each month. Continue reading →