Alan Lim asked:


 

Because many homeowners explore the possibility of getting a home mortgage refinance for the simple reason that they want to save money, it is particularly important to make certain that the interest rate and the way in which it is applied are completely satisfactory.  You should review each component of the proposed loan package when you have access to it, but even before the loan is applied for, there are some things you can do and some decisions you can make that will be beneficial to the overall cost of your refinance. The following tips will help you be aware of some of these factors that affect the price of your loan package.

 

Correct errors in your credit report

 

In preparing for a home mortgage refinance, you can usually save money by making certain that your credit report is clear and accurate.  It has been found that many credit reports from the three major reporting bureaus contain inaccuracies that can significantly affect your ability to get your mortgage refinance, or may cause you to pay much more due to higher interest rates. Checking with each of the credit bureaus, obtaining a copy of your credit history and correct any inaccuracies will help your chances of getting the best interest rates.

 

ARM or Fixed rate?

 

An adjustable rate mortgage (ARM) tends to be significantly lower in interest rates during the initial months of the mortgage.  It can, however, rise dramatically if the index on which it is based increases during the ‘honeymoon’ period. When you choose a home mortgage refinance with an adjustable rate mortgage, you should be aware of the impact that maximum adjustments to the rate will have in your monthly payment and you should plan accordingly.  A fixed rate mortgage generally is a little higher rate throughout the course or term of the mortgage but it never changes in response to outside causes.

 

Loan term

 

The loan term is the length of time that will elapse before the home mortgage refinance loan is completely paid off. The most common loan terms are 15 years and 30 years, but the term can be any of several other time lengths. There are even loan terms as long as forty or fifty years. Generally, the shorter the loan term, the better the interest rates. Considering the shorter loan term is more likely to get a better rate, you should obtain the shortest length term that you can reasonable afford.

 

Closing costs

 

Another factor that can affect the rates that you pay for a home mortgage refinance loan is that of closing costs.  For example, if you pay down points on your refinance loan, you will receive a better rate.  Paying down points is another way of saying you are prepaying interest. Prepaying points saves in two ways.  First, you pay a lower rate of interest on the entire loan and second, you pay some of the interest up front when it has the most impact on overall costs. Check each of the closing costs to make sure that none are being rolled into the principal balance.

  



Gloria

Ron Cutrone asked:

In order to buy and sell homes successfully, you need to know all you can about your Ohio home mortgage and decide which one is best for you and your needs. There are several to choose from and each one can be beneficial depending on your personal set of circumstances. Always be sure to deal with a reputable bank or company when performing such an important financial transaction.

Fixed Rate and Adjustable Rate

The terms fixed rate and adjustable rate mortgage loans refer to the two most common Ohio home mortgage options. Fixed rate home mortgage loans can be set up to extend for 15 or 30 years and sometimes conventional balloon mortgage loans fall into this category as well. The benefit to fixed rate loans is that your interest rate is locked into place and can’t be changed throughout the life of the loan and you will never have to be concerned with a sudden hike in your house payments and interest rates.

An adjustable rate loan may be just want you need for your Ohio home mortgage loan as it has the bonus of the interest rate fluxuating to match the current lowest interest rate. As unfortunate as it is when the interest rates go up and your rate continues to match it, you will have the added benefit of paying less than a fixed rate on average over the life of the loan. Your financial needs and amount you can pay on a home mortgage will have a lot to do with whether you choose a fixed or adjustable interest rate for your Ohio home mortgage.

Other Types of Home Mortgage Loans

Another possible way to go with your Ohio home mortgage is with a jumbo loan. That doesn’t refer to a huge amount of money; rather it is a loan that does allow for the borrower to receive money than regular conforming loans limits. These types of loans can be either set up with fixed or adjustable rates.

Finally, depending on your circumstances a VA home loan or FHA loan may be in order. Current or past military personnel may qualify for a VA loan and save money using their government benefits. An FHA loan is usually good for citizens looking to purchase their first home and is backed by the Federal Housing Authority.

Deciding on your Ohio home mortgage is a step away when you take the time to carefully analyze all of your options and make the right decision for your personal set of circumstances.

Ronald

Alan Lim asked:


The Loan

This is a type of loan wherein the equity of the borrower’s home is the collateral. Many a times, such loans are taken to finance various things like medical bills, or a college education amongst others.

You must have an excellent credit history if you are thinking of taking a home mortgage loan. Also, the ratio of the loan to value must be reasonable enough. This loan is secured against the value of the borrower’s property and is also called a second mortgage. A second mortgage is usually of a shorter term than a first mortgage.

The Types of Mortgage Loans on Offer



The Fixed Rate Mortgage Loan: A fixed rate mortgage loan has a fixed rate of interest. The fluctuating interest rates won’t have any bearing on your loan and you can repay your loan amount at a fixed rate through a fixed period of time.

Adjustable Rate Mortgage Loan: The opposite end of a fixed rate mortgage loan. Herein, the interest rate of your home mortgage rate will fluctuate and be dictated by the various economic indices. In most cases, at the beginning of the loan period, you usually have to pay a low interest rate.

The Closed End Loan

A closed end home mortgage loan gives a lump sum to the borrower at the time of closing. No other amount is further given to the borrower. The maximum amount that can be borrowed is dependant on factors like the appraisal value of the home, income, and credit history of the borrower.

If there are no liens on the property, most often, a borrower can borrow an amount equal to the appraised value of the home. However, various states have different laws that determine the amount that can be borrowed on equity.

The Open End Loan

This offers its borrowers revolving credit. This essentially means that you as a borrower can determine when and how often will you borrow against the equity of your home. However, the initial limit of the credit line is fixed by the lender, and are available for up to 30 years, very much like closed end loans.

In most cases, the open end home mortgage loan is available at a variable interest rate.

Credibility and Choice

We have mentioned the point that your credit history would be an important factor in determining the interest rates offered to you. However, don’t just take this as a one way mode. As a borrower, you must also check the credibility of the lender. You can do so through various banking sources, consultants, etc.

Also your choice of the lender must take into consideration the comparison of offers, negotiations on the rate of interest, and other conditions. Conduct an intensive study of the market and only then choose the perfect home mortgage loan that will suit your needs.

These are just a few home mortgage loan pointers that might just be able to guide you in the right direction. So take due cognizance of what we have mentioned, and make the right choice.



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Gregg Pennington asked:


When you decide you are ready to purchase a home, you are understandably excited. Home ownership is a valuable investment not only in real estate, but also in lifestyle. Along with the benefits that owning a home provides, there are there are also financial responsibilities. There are property taxes to pay, and homeowners insurance to purchase. And since most people, especially new homeowners, do not have the means to purchase a home outright, a mortgage is probably a necessity.

You have a variety of choices when shopping for a home mortgage; there are fixed and adjustable rate mortgages, and different lengths of mortgage loans. If you have poor credit, there are a number of mortgages options that will help you to purchase a home.

Length Of Mortgage - The most common mortgage length is thirty years, but ten and fifteen year loans are also available. The longer the duration of the mortgage, the lower your monthly payments will be, though you will pay out much more money over the length of the mortgage. With a ten or fifteen year mortgage you will be apply more money toward the principal early in the loan, and while your monthly payments will be higher, you will begin to amass equity in your home much more quickly.

Fixed Rate Mortgages - A fixed rate mortgage has the advantage of locking in a certain interest rate for the duration of the loan. This is especially helpful if you purchase a home when mortgage interest rates are low. Your rate will be locked in, and you will be protected against rising interest rates. On the flip side, if interest rates fall further, you will be stuck with that rate unless you refinance your mortgage.

Adjustable Rate Mortgages - Adjustable rate mortgages, commonly called ARM’s, usually offer lower initial interest rates than their fixed rate cousins. The danger of an adjustable rate mortgage is that if interest rates rise, your rate, and therefore your mortgage payment will increase. Fortunately, the rates on ARM’s are capped, having both a periodic rate cap limiting the amount your interest rate can increase at once, and a lifetime cap which limits the amount your rate can rise over the duration of the mortgage.

Many people obtained adjustable rate mortgages during the recent housing boom, betting that mortgage interest rates would fall further or at least hold steady. Many of them had sub prime credit and had no choice but to get an adjustable rate mortgage, and as the housing market slowed, interest rates rose, and mortgage payments grew. As a result, many already cash-strapped homeowners were driven to foreclosure.

Fixed-Period Adjustable Rate Mortgages - A safer alternative is an adjustable rate mortgage which has an initial period where the interest rate is fixed, anywhere from one to ten years. These mortgages are sometimes called hybrid ARM’s. This fixed rate period provides you a buffer against rising mortgage interest rates, and gives you time to build home equity and improve your credit. Hopefully you take advantage of this time and begin to shop for a low fixed rate mortgage.

Sub Prime Mortgages - Sub prime mortgages are designed to meet the needs of potential home buyers who have damaged credit. If you have a record of slow payments on credit accounts, or have a FICO score below 600, you may have to obtain a mortgage from a sub prime lender. Because of your less than perfect credit, you can expect to pay a higher interest rate than someone with immaculate credit. but by shopping around you should be able to find a competitive interest rate, as every lender has its own criteria to determine how much of a credit risk you would be.

Finally, be sure that regardless of the type of mortgage you choose, you will be able to afford the monthly payments. If you get an adjustable rate mortgage, plan ahead and decide what you will do if interest rates rise. Work at improving your credit score, and if you decide later to refinance your mortgage, you will have more and better options.



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john s asked:


I see it changing almost daily. What changes the rate that you can get for your home. What should i do as well?

I am getting a home and going through and have not decided on an 3-year ARM (adjustable rate mortgage), 5-year ARM or a fixed rate. Right now they are at 6.5%. with an ARM i am locked in with a rate of about .6% lower

Any suggestions? Lock-in for 30 years or do an adjustable?

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Alan Lim asked:


You must have heard of people rushing to refinance mortgages, with the fall in interest rates. Well, this is because taking the home mortgage refinance option is usually a good idea and makes financial sense.

What is it all about?

The whole concept of mortgage refinancing is that you are replacing your old mortgage with a brand new loan. This essentially means that you are substituting your existing debt obligation with a newer debt obligation which has different terms. With this type of refinancing, it is what we called a home mortgage refinance.

It is usually taken by a borrower to pay off the original loan. You also have the option for refinancing a home equity loan, taken earlier.

The types of Refinancing Options Available

Even if you are paying a fixed rate mortgage, refinancing enables you to select a different type of mortgage loan. Some of the refinancing options available in terms of mortgage loan types are described below.

Adjustable Rate Mortgage: If your home mortgage refinance rate is adjustable, then it means that the interest rate is periodically adjusted in conformity with a variety of indexes. In this case you might have to pay a lower interest rate or a very high rate of interest, depending on the financial and economical factors.

Interest Only Mortgage: Herein the payments will not include the principal amount due. You will only have to make interest-only payments.

Fixed Rate Mortgage: Suppose you already have an adjustable rate mortgage, you can still go to a fixed rate of mortgage. Herein your rate of interest is stable and won’t have any variations.

Reverse Mortgages: Herein, you will be able to borrow equity on your home if you go for home mortgage refinance. The core idea behind it is that the borrower does not make payment to the lender but the lender makes payments to the borrower. However, only those who are more than 62 years of age can qualify for a reverse mortgage.

The Benefits

A Short Amortization Period: If your interest rate is lower than your previous interest rate, than the term of your existing loan can be shortened. This can be done by making a higher mortgage payment monthly.

Obtain Cash: Many people take the refinancing option to attain cash that they can then invest to get a higher rate of return as compared to the existing rate of interest.

Reduce Monthly Payments: If you don’t plan to move out of home soon, you can break even in terms of refinance costs. You can lower your interest rates and monthly payments. This would enable in increasing the monthly cash flows.

A Few Considerations

Bear in mind that due diligence is required to get a fair idea of the financial charges with regards to refinance. You must get all information from your lender and leave nothing to chance or unclear in your mind.

If clarification is required, then get your home mortgage refinance information from a professional. Be well versed with the working of the mortgage industry so that your decision making process takes into account the new laws, interest rates etc.



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Matt Peters asked:


Many people are struggling to afford a home. But with the new offering available from a few lenders, these people now have a better chance of owning a home. The new offering is called the 50-year adjustable rate home mortgage and it’s bound to benefit a lot of consumers.

The arrival of the 50-year home mortgage is seen as a viable solution for a lot of homeowners who are cash-squeezed and looking for loan options more suitable for them. This home mortgage likewise offers homeowners a way to consolidate high interest loans. This type of home mortgage is also beneficial for borrowers who are searching for alternatives that offer them a way to afford more house for their money.

There are three different types of 50-year mortgages. They are:

· The fixed rate

· The adjustable rate, which may or may not come with a fixed rate for the first few years of the loan

· A loan that extends the principal payments for a period of 50 years, but obliges borrowers to come up with a balloon payment after a certain number of years

The 50-year home mortgage is also a good option for buyers who need to keep their payments low in spite of record home prices and rising rates. The most obvious advantage of the 50-year home mortgage is the lower payments as a result of the loan being stretched out for fifty years. Because the amortization is longer, the monthly payment is reduced, saving homeowners money every month. The monthly payments for a 50-year home mortgage can be as low as those for a 1-year mortgage. And, compared to a 30-year loan, the five-decades-long home mortgage normally costs around a quarter of a percentage point higher in interest.

The 50-year home mortgage is typically set up as a 5/1 adjustable rate mortgage. This means that for the first five years, the rate will be fixed, but will adjust with the market for the next 45 years. Because of this feature, the 50-year home mortgage becomes suitable for a buyer who needs assistance for the first five years of the loan. During this period, the buyer may opt to refinance into a more conventional mortgage with a shorter term.

Other benefits of the 50-year home mortgage include:

· Monthly payments are lower compared to more conventional mortgages like the 15- or 30-year mortgages

· Helps offset record-high home prices since the lower house payment boosts your purchasing power, allowing you to buy more of a house in a high-cost housing market

· An excellent option for those who are capable of making only small payments at first, but plan to refinance or sell the home in the future

· The minimum payments required will reduce the balance gradually

· The lower monthly payments enable you to buy a more expensive house, which you would find improbable otherwise

· An excellent way to enhance monthly cash flow for those considering purchasing or refinancing a rental property

With all the benefits the 50-year home mortgage offers, you might want to consider checking it with your mortgage lender. The important thing to remember is that not all 50-year loans are the same. There are lenders that offer a fixed rate for the entire life of the loan, while others offer options like a fixed rate for a number of years and a variable rate for the rest. Be sure to be fully informed first before making a decision.



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