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Home Mortgages
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Ready for a mortgage?? |
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| Getting a mortgage is a scary thing to do. Just think, with a mortgage you are going to owe the bank for the next 15 to 30 years! YEARS! So, you find a house you love. Okay, you talk to the listing agent, and make an offer. Most likely you will have to counter back and forth until both seller and you agree on a price. next step? Go to a bank and see if you can get pre-approved for the amount you need. This doesn't mean that you have the money yet, just that the bank will say that you can have the money depending on whether or not they think the property you want is worth it. Yep..it's up to the bank. So, the bank will send their little appraisal guy around to see what the property is like and if it is worth the asking price. Again..it's all up to the bank. They hold all the cards at this point. Depending on the mood of the appraisal person at that time, you may get the go ahead. It's all a breath-holding game at this time. For both you and the seller, who wants to sell as bad as you want to buy! The bank will usually want a "comp" of similar houses that have sold lately. This means they want to compare the house you want with others that have sold to see if the asking price is within a reasonable range. Another wait. Finally, finally, you will get a letter stating that such and such bank will be happy to lend you the money.That's your mortgage. So move in, settle down, and make your mortgage payment on time each and every month. Oh..and pay your taxes and home owners insurance because banks don't like it if you don't. Smile..it's only time and money! | |
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ARM Mortgages |
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No longer are the days of simply the 30 year fixed rate mortgage. Now there are various types of mortgages available, but the most popular is the ARM Adjustable Rate Mortgage. This type of mortgage allows you not only to qualify for a mortgage but pay low mortgage costs, thus allowing consumers who would not normally qualify for a fixed rate mortgage. The way it works is you get a really low interest rate for a certain amount of time, say 5.5% for the first 3 years, making your mortgage payment minimal. After the 3 years is up then your mortgage adjusts to whatever the current market rate is. In one month your mortgage can go from $1400 to $1800. Once your rate adjusts you then have to refinance your mortgage for a fixed rate or you continue making the payments according to the market. However your rate will adjust every year, not every month. Even though you still dont want the worry of every year your rate going up. For those consumers who are in a financial situation and can ride out the up's and down's of an ARM great, but for those consumers who live on a moderate income that doesn't go up every year it could be a problem. The true sign of a disaster to come is when your mortgage goes up every year and your income isn't. If you do decide to go with the ARM, make sure your credit is in good shape so that you can refinance when you need to with out any hassles..Good Luck! |
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Sub Prime Mortgages |
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| A sub prime mortgage is a mortgage that is offered to someone with less than perfect credit, either in the past or at present. A conventional, or prime loan will not be available to someone with a credit score of less than 620. Sub prime mortgages were created to target the numerous people who wanted to be home owners, but due to poor credit, or no credit were not able to get a prime bank loan. The banks saw this as a way to create money in the long run for themselves, because of the high incidence of default as interest rates rose and people were not able to make their mortgage payment. A sub prime mortgage rate of interest is considerably higher than a prime rate, and is subject to going up as rates change, as opposed to a 'fixed' rate, where the rate of interest stays the same for the life of the loan. The people with a lower credit score were targeted by the banks as an easy way for the bank to eventually make money. Yes, the bank would be happy to extend a loan to these people, but at whose expense? The banks were not doing anyone any favors by doing this. There was money to be made, and lots of it, and banks took full advantage of this fact. People who had a sub prime mortgage eventually found that as the interest rates rose, they were not able to keep up their payments and therefore had to default on the loan. They lost their house, and the bank gained another way to make money. If you are applying for a mortgage, make sure you ask whether or not you are getting a prime or a sub prime mortgage, and save yourself a lot of headaches. | |
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Furst time home buyer |
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| For the first time home buyer, applying for a mortgage can be as scary as going to the dentist! You have found the home you want and now you are faced with the prospect of going to the bank you have chosen, where they will determine if you are 'credit worthy' of a loan. Have all your financial records in order. Be able to verify your income. The bank will request a copy of your credit report to check your credit history. If you have always maintained a good payment history and no complaints were filed against you, you won't have anything to worry about in that area. Your mortgage will be for a certain period of years, in which you will pay back monthly an amount determined by the bank, depending on the number of years (usually 30, but sometimes 15 or 20). The length of time will determine the amount of the payments. Interest rates play a very important factor, also. Decide whether you want a "fixed" rate (where the rate of interest stays the same for the length of the loan), or a" variable" rate ( you will usually start out with a lower rate for the first year or two), but subject to market change this rate could either go up, or down. Your loan officer will advise you as to which way to go.Yoy will also be required to have home owners insurance with your loan. If you decide to have an "escrow" account, you will pay the bank a certain amount that will include your mortgage payment, your insurance, and your property taxes. The bank will then disburse the funds to the different places. Make sure you shop around to different financial institutions to get the best rate. | |
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Mortgage Basics |
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A mortgage is a security for your promise to pay a certain amount of money in increments over a specific period of time. They are usually taken in relationship to buying property for home or business. There are other utilization of the mortgage system. It can be used to purchase rare items and a wide variety of other real property. There are many companies willing to secure your promise to pay. It is one those purchases where you will want to shop around to make sure you get the very best rate for what you are trying to do. The amount of lending institutions available are many, so, look closely and chose wisely. Today they speak of keeping your mortgage simple. Over the past ten years the mortgage product changed from the simple financial expression to more advanced products with a wide variety of changes. Most people want a simple mortgage where there is fixed rate on the payments with out those payments blooming or growing over the mortgage period. Changes allowed for those payments to be altered to fit more specific needs required by the lender and the buyer. This led to the record foreclosures and many of the problems experienced in the American mortgage industry over the last 10 years. So keeping the deal simple where everything is completely understood can be of great advantage to the mortgage purchaser. A mortgage for most people is simply a backed promise to pay a set price for a set period of time. Being able to obtain one is often said to be the American dream.
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