January 21, 2008
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Differences between mobile home mortgage lenders and traditional home lenders explained.
More than 19 million Americans live in mobile homes today, a real indicator for the need for affordable housing. Because mobile homes are much different than traditional homes, the need for specialized mobile home mortgage lenders has become imperative. The terms are much different, and often the rates and overall cost can be as well.
If you’re shopping for a new modular or mobile home in an established community, don’t feel pressured to take the first financing you can get, which is usually offered by the builder. Just because you purchase your home in a community does not mean you must take their financing. Shop around for mobile home mortgage lenders who may be able to give you more flexible terms. Whether you own the land or not can also have a big effect on what kind of mortgage you end up with, so be sure you communicate this to the mobile home mortgage lenders that you speak to, as it can affect your tax rates and other things as well.
The rates for this type of home ownership tend to be higher than for those living in traditional homes. The reason that mobile home mortgage lenders usually offer a higher rate is because this type of housing usually poses a bigger risk to the bank. Since the home in essence is “mobile,” the bank sees their collateral as potentially disappearing if the homeowner enters times of trouble. Sometimes the type of loan will be different as well. Instead of a mobile home owner getting a mortgage, they may only be eligible for a personal property loan instead, much like for a car or boat. This varies per lender as well as per state law, so be sure you find out what you qualify for. There are a great deal of mobile home mortgage lenders out there, so be sure you check with as many as possible to ensure you’re getting the best financing available.
January 18, 2008
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When you’re shopping for a new home, a refinanced loan, or a mortgage on your next home, it’s imperative that you find the lowest mortgage rates. Unfortunately, rates are much like the tide: they rise and fall at will, so sometimes it can be difficult to tell whether you’re getting the best rate or not.
One good way to gauge what’s low and what’s not is to pay attention to the Federal Reserve, as well as the stock market. Both of these are excellent indicators of the mortgage market, and can help you when you find the lowest mortgage rates. Your mortgage rate, in many ways, is all about timing, and watching these indicators can help you choose the right time.
A second way to find low mortgage rates is by comparing and tracking rates on the Internet. There are a plethora of sites available that will allow you to do this, and this can be a very good way to establish a baseline for mortgage rates.
Asking your mortgage broker about different loan programs is another great way to find the lowest mortgage rates. He or she should be able to tell you up to the minute rates on the best programs for your mortgage, and help you track them as they fluctuate.
Finally, another good way to find the lowest interest rates is to ask the banks what the current rate is, and make comparisons among the banks. This is a good indicator of what the lowest possible rate could be.
When looking for a mortgage, remember that rates will always change, so don’t get too stressed out about finding the absolute lowest rate. Know what a good rate is, and then when you find a mortgage you’re eligible for, try to get that rate locked in. Most lock-in rates last anywhere from 30 to up to 90 days. These terms depend on the lender or the lender’s program, so ask your broker what the period length will be for you. Find a low rate, stick with it, and then enjoy house hunting.
January 18, 2008
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There are different types of mortgage rates. One kind of mortgage rate is called Interest Only Mortgage Loans. These loans can be paid for a certain time by only paying the interest on the principle in monthly installments. After the specified time period is up, the borrower can either pay the loan off in full, refinance and receive a different mortgage rate, or pay in installments a mortgage rate that includes the interest and the principle.
A conforming loan is another mortgage rate that may be chosen. These loans meet requirements set by bank funding, and follow guidelines that are made by the Federal National Mortgage Association (Fannie Mae). When you receive a conforming loan, the maximum loan amount, income requirements, the down payment, credit and properties are established, and new loan limits are taken out yearly.
Another kind of mortgage rate that can be received is a second mortgage. This may be taken out as a loan after the first one, and is secured against the home just like the first. Second mortgages are generally used when homeowners need to borrow money and have a secure mortgage rate that they can borrow against. There are a number of reasons many people take out a second mortgage and receive a new mortgage rate, such as emergencies, college tuition fees and home improvements. There are many varieties of second mortgages to fit every homeowners needs. These are traditional mortgages, home equity loans or home equity lines of credit.
Taking out a mortgage rate is a big step and one that must be approached carefully. However, owning your own home or property may be the only reward you need to take out a mortgage.
January 14, 2008
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When you’re shopping for a home, usually you will be pre-approved ahead of time by your mortgage lender or your broker. This approval amount is the total amount of the home you can afford. Usually, this amount includes any down payments you will be making. While it’s nice to be able to afford a more expensive home, what really matters are your monthly payments, so here are some steps for how to calculate a mortgage, so you can be better prepared. (There are calculators available that can do this for you, of course, but it’s a good idea to understand the factors they take into account.) Usually, the monthly payment listed on a realty website doesn’t account for property taxes or insurance, so be sure to calculate potential mortgage payments before you get too attached to a particular property.
First, you’ll want to calculate the total price of the home based on the amount of the total mortgage, not counting the down payment (if any.). Then, you’ll want to take into account the length or life of the loan (i.e. 15 years, 30 years, etc). Since the base amount is not the only factor when it comes to how to calculate a mortgage, you will also want to add in the amount of property taxes. This amount will vary by city and state, and can often increase over the years, but initially, you can factor in the current amount, divided by 12.
Aside from principal, interest, and property taxes, homeowners’ insurance and possibly mortgage insurance should also be included in your mortgage calculations. You can shop around for quotes before you choose a final company, so look for a provider who offers the most coverage for the least monthly premium. If you are required to pay PMI (private mortgage insurance), this will also be factored into the total monthly amount. When you add the principal, interest, taxes, homeowner’s insurance, and PMI (if applicable), you should have a good idea of your monthly total. With a little math and some know-how, you’ll have a good idea of what you will be paying each month for your home.
January 11, 2008
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People can spend months looking for the home of their dreams, but many buyers don’t take into consideration the factors that should be taken into account when choosing mortgage lenders. The lender or broker plays a vital role when it comes to buying a home. Making sure you pick the right one can be the difference between an easy and smooth transaction or a very difficult one. In addition, it can also save you thousands of dollars when all is said and done. First and foremost, when choosing mortgage lenders, ask your friends and family members for a recommendation. Word of mouth is usually the best way to find a reputable service. The people you know who have purchased a home have already been through the process and can usually tell you some good things about their own mortgage lender. Of course, rates should also play a big factor when choosing a bank. Not all financial institutions will offer the same bank rates, so definitely shop around and do your homework.
While you’re choosing a lender, find out if they offer a program that will lock your rate in upon approval. That way, you can be sure you’re getting that rate for a certain amount of time, and you can shop around for a home. A locked rate usually lasts 30-60, sometimes 90 days, so be sure to ask how long the lock in rate period is good for. Often, your real estate agent can help refer you to a reputable lender, as well as the Better Business Bureau, or your local bank. You can also check with credit unions, as they tend to offer good rates and services to people looking for a mortgage. Remember to follow your instincts. If your lender is patient, friendly, and easy to get in touch with, most likely you’ve made a good decision. If you feel uneasy or you have trouble getting in touch with your broker or lender when you have questions, it may be time to move on. Nothing is written in stone until you’ve closed on the home, so don’t feel pressure to go with one lender unless you are sure they will best suit your needs.
January 6, 2008
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By the time you’ve reached the age of 62, odds are that you will probably stay in the home you are currently living in for the rest of your life. You may give it to your children, or another family member, but it’s usually unlikely that you will sell it and move again. Reverse mortgages were created for people aged 62 or over so that they can take the equity that has been built in their home, and use it as a source of income. This income is completely tax free, and instead of the home owner making monthly payments to a lender, the lender actually makes payments to the buyer/owner.
Reverse mortgages can be a great way to help supplement income for your golden years. There are several factors that are taken into account when it comes to determining how much money you will receive. Some of those include your age at the time of application, the appraised value of your home, current interest rates, and other items. Most of the time, the longer you’ve lived in your home and the older you are, the more money you can receive. Most homes qualify for reverse mortgages, and that of course includes single family homes, but townhouses and condominiums usually qualify as well.
Before you decide to take out a reverse mortgage, read the fine print carefully, and fully consider your finances. If you have a lot of equity built up in a high-value house, chances are a reverse mortgage would suit you. However, if you haven’t been in your home that long, or if you expect to need access to your equity in the future (such as for moving into an assisted living facility) a reverse mortgage may not be for you. Instead, you might look into smaller home equity loans, or perhaps even selling your home and moving to a smaller one.
January 5, 2008
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With increases in foreclosures and more homeowners unable to pay their mortgage on time each month, mortgage protection insurance is a way for lenders to help ensure they receive their money on home loans. This is also known as PMI, or Private Mortgage Insurance. Two classes of borrowers are usually required to have PMI.
The first are buyers with a lower credit score and lower income, who often qualify for certain mortgage programs. The other type are people whose total loan value is 80% or higher of the value of the home. In other words, people who put less than 20% down on the home are usually required to pay mortgage protection insurance. The purpose of this insurance is to allow more people to be able to afford a home with a smaller down payment. The cost is fairly low, and is calculated into the borrower’s total mortgage payment each month. Once the loan amount has been reduced to about 78% of the home’s value or less, the borrower can ask that the insurance be removed.
Depending on the year you obtain your loan, this mortgage insurance may be deducted on your taxes. For example, all new home loans obtained in 2007 are allowed to deduct their mortgage protection insurance. Be sure to consult a tax professional to determine whether or not you will be able to deduct it this coming year. There is another benefit to mortgage protection insurance. If you happen to fall on hard financial times, the insurance is there to help protect you from losing your home. Your monthly payments can be covered for a certain amount of time with this insurance until you can get back on your feet. While many borrowers are leery of mortgage protection insurance, it really can be a positive thing, particularly for people who are new to the whole home purchasing process.
January 4, 2008
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What new homebuyers should know about how the subprime mortgage crisis will affect them.
As you probably know, much of the current chaos of the U.S. housing market is stemming from subprime mortgages. For the novice, you may be wondering just what are subprime mortgages? Subprime mortgages are home mortgages that are offered to buyers at a much higher interest rate than the standard or “prime” rate. This type of mortgage is usually offered to buyers who have lower incomes and a lower credit score. The bank charges them a higher interest rate because they are considered a higher risk for default.
So what are subprime mortgages doing to the economy? When borrowers have a harder time repaying their loans, they are often forced into foreclosure. When a home goes into foreclosure, essentially the bank repossesses the home, and tries to sell it to a new buyer usually for the original loan amount, but often for less. This results in banks losing billions of dollars per year due to foreclosed homes.
At the same time, the lending industry is changing, making the guidelines for new home buyers much stricter, so it’s more difficult for people to find affordable housing. This pushes rent costs up, and home ownership down, making the economy more volatile. New homeowners may find it more difficult to obtain a loan than ever, while at the same time, rental prices go up.
Being armed with knowledge is the first step in making sound financial decisions. Knowing how to qualify for a traditional mortgage and not being put into a financial bind is the best way to protect yourself from becoming a victim. Take steps to boost your credit rating, save as much as possible for a down payment, and buy wisely. Choose a home that will hold its value even in a volatile economy.
January 2, 2008
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Are you a good candidate for refinancing your adjustable rate mortgage?
ARMs, or adjustable rate mortgages, have been very popular in recent years, particularly for first-time home buyers. The concept of an ARM is to allow buyers to afford a home and a mortgage at a very low interest rate. This low rate period usually lasts anywhere from five to maybe even ten years, but once the ARM is ready to be adjusted, the rate can skyrocket, sometimes even double, increasing the monthly mortgage payment for the buyer.
Refinancing an ARM is a great way to help convert that adjustable rate into a fixed rate. There are many benefits to this, particularly the benefit of a stabilized mortgage payment. It is important to remember, however, that by refinancing an adjustable rate mortgage, your rate will still most likely increase from the original introductory rate, but it will be nowhere near the rate that would be incurred if you were to allow your ARM to readjust. Those interested in refinancing an ARM should also keep in mind that there will most likely be some closing and other costs involved in the process. Nonetheless, it’s usually a wise choice, as you’ll soon save the equivalent of whatever you pay in closing costs.
When refinancing an adjustable rate mortgage, it’s important to consult a professional who can help ensure you get the best newly fixed rate possible. Often, credit plays a factor as well as your previous payment history and the equity that has built up in your home. The length of time you plan to spend in your home is also a factor. Often, lenders tend to help refinance those who are not planning on selling more so than those who want to refinance and then attempt to turn around and sell the property. The benefits of refinancing an ARM are very clear: no longer will you have to worry about your interest rate changing, and you will have a mortgage payment that you can afford that will not change.
December 22, 2007
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Amortization is an interesting concept and one that a lot of people really are not aware of. In order to understand exactly how a mortgage amortization calculator can help you, it is important first of all to make sure that the term amortization is easily defined. Now, if you go by the dictionary definition, they basically just say that amortization is the “act of amortizing”, which is perhaps one of the most useless definitions to ever hit the books of the dictionary. Therefore, let us spend a few moments defining the concept of amortization before discussing the calculators that use it.
Amortization, simply put, is the process of assigning premium and interest payments into one payment rather than splitting them out into two separate payments. In other words, when you are amortizing payments, you are combining all of the different aspects of the same payment into one without offering the client the breakdown of those payments. Banks and other financial institutions do this all the time in any sort of loans they give out and ultimately people don’t really know what part of the payment that they make goes to interest and what part of the payment goes to paying back the actual premium. In all cases, amortization starts out with a higher percentage of the payment going to interest and a lower percentage going to principle. As the principle shrinks, so does the interest and therefore larger chunks of the same amount of monthly payments can go towards reducing the actual interest.
This is best served through the use of an example. If you have a premium of $100,000 borrowed from a bank with an annual interest rate of 8%, chances are you can get the bank to agree for you to pay that amount back over a 30-year period should you so choose. Under these circumstances, your payment amount each month would be $733.76 which in the first month would be a $67.09/$666.67 split between the premium and the interest and in the last month would be a $728.86/$4.90 split instead. The idea here is that at first you are paying down the interest with those same monthly payments, but once the principle shrinks the interest goes along with it and therefore a larger percentage of the payment can go towards paying down the principal amount.
So where do amortization calculators come in? Well, what they do quite simply is they allow you to calculate everything that you need to know about amortization schedules based on simply inputting a few pieces of information. For example, a typical online calculator will get you to input the amount being borrowed, the annual interest rate, the number of payments each year and the total number of payments. This in turn will allow the calculator to figure out what the interest is each year and therefore cross reference that interest rate with the monthly payments you will then have to make. It is an impressive piece of software that can do all that and that is ultimately why mortgage amortization calculators are so effective.
