Alan Lim asked:


A home mortgage loan is one of the most common and popular ways through which people buy property. Most properties in the Unites States are bought with the help of a loan and the industry is in itself worth billions of dollars. However, there are several steps before one can actually be approved for a home mortgage loan. But let’s start from understanding the concept it self.

Home mortgage loan

The concept of a home mortgage loan itself is generally quite simple. The property in question remains as the mortgage or the collateral, for the loan being issued. This is usually issued by a financial institute to the person who is buying the property. The original amount of loan remains the principal sum with an annual interest rate imposed on this sum. Should the new property owner be unable to pay the loan, the lending institute seizes the property which then will be foreclosed. Home mortgage loan are usually paid in instalments every month.

Key elements

If you are planning to buy a home or any property through a home mortgage loan, it is advised you work on your credit score long before you actually plan to make the big move. Your credit history is like a research paper on your personal finances and to any lender it speaks volumes about how well you manage your finances and how good you are at clearing your dues. It is usually very difficult to get approved for a home mortgage loan if you have a bad and sometimes even average, credit score. Also consider the fact that things could be somewhat easier if you are able to make a down payment on your property. Larger the payment, better it is.

Financial realization

Before you even begin to apply for a home mortgage loan, you must do some work on your own to get an idea of what your chances are in being approved that loan. Naturally, the first and most important element of the process is realizing your personal or household’s finances. Calculate how much money you are left with every month after you deduct all the fundamental expenses. This is important because it gives you an understanding of how much money you are left with at the end of month which in turn determines how much mortgage you can pay monthly. Don’t forget to anticipate the interest rates.

Documentation to secure a home mortgage loan

When you think you’re ready to go for it, make a check list of documents you will need for your home mortgage loan application process. If you are employed, you will need your W-2 form and pay stubs and if you are self employed then you would generally need to show your tax statements of about two years. Private business owners need to show a balance sheet depicting the revenue and loss you have incurred. Retirees need to have either a two- month long bank statement or the 1099 form. The social security award letter along with copies of all documents related to your pension checks is required too. Then of course there are other basic documents you will need pertaining to your bank and credit card accounts, existing loans and also on the present landlord and investments if applicable. These are the basic documentation required to be eligible for most home mortgage loan.



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T J Madigan asked:


Youre already paying tens of thousands of dollars on a home; undoubtedly, you dont want to spend several additional thousands on closing costs, interest rates, and other hidden costs. Ways to save on your home mortgage arent immediately obvious, especially when you arent familiar with all the ways lenders tack costs into the total amount of the mortgage. Use these tips for ways to save money on your home mortgage.

Make sure you are choosing the right type of home mortgage. When it comes to the total cost over the duration of the loan, the 30-year fixed-rate home mortgage is the most expensive, with one exception. If you plan to live in your home for the length of the loan, it is the best home mortgage. As you shop for mortgages, take into account how long you plan to be in your home. Let that length of time determine the type of mortgage you get. For shorter periods of time, choose an adjustable rate mortgage, longer ones choose a fixed rate.

Negotiate with your lender. Theres nothing wrong with asking your lender for a better interest rate or to eliminate some of the fees associated with the home mortgage. Consider the fees for which the lender make no money: appraisal, inspection fees, processing fee, title fees, private mortgage insurance, and credit report fees. Anything outside of these fees is fair game to be negotiated with the lender. Dont hesitate to ask your lender to take away some of the unnecessary fees.

Make payments more frequently. If you get paid on a bi-weekly basis, consider making bi-weekly home mortgage payments. Each time you make an extra payment, even if its just one, it shortens the life of your loan. By making two payments a month instead of one, it takes you a little over 23 years to repay a 30-year fixed-rate mortgage.

Make extra payments. Any extra payments you make toward your home mortgage go toward the principal of the loan. So, the balance of the principal, rather than the interest, is reduced by any extra money you pay. When you do this, you can reduce your home mortgage payment dramatically. Before you make extra payments, make sure your agreement did not include a cost for early repayment.

Avoid paying private mortgage insurance. You are required to pay PMI when you make a down payment less than 20 percent of the amount of the loan. The amount you pay in PMI could be used to make extra home mortgage payments or invested in a high yield investment account. If you are already paying PMI, watch your equity closely and drop the insurance once you have 20 percent equity in your home.

Theres no sense in paying extra money in interest and other home mortgage costs unless you absolutely must. By using just one or two of these methods you can save hundreds or even thousands of dollars in the total cost of your mortgage. When you take steps to reduce your costs, make sure you arent decreasing one cost and increasing another simultaneously.



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Sara B asked:


Online mortage calculators seem like they are fulll of lies. I exact same info used has be from 700 a month to over a 1000 (for a loan of about 122,000). I know taxes and interest rate will change, but about how much is your loan and what is your monthly payment? I’ve hear it is about 10% of your mortgage, but I have a really hard time trusting the people that make a living off of selling homes.

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