Tuesday, November 28, 2006

Mortgages - Which Loan is Right For You

When buying a home, you need to take a home mortgage loan, either because as a debtor, you end up paying less tax, or because in a market where property prices rise faster than salary levels, the money you have saved falls short of the amount required. When searching for a home mortgage loan, you can select from a wide variety. Study the types of mortgage loans available in the market and note the interest rates for each before you sign any documents. You can select from the following:

Fixed rate mortgage loans charge you the same rate of interest over a period of 15 to 30 years. You pay a high rate of interest over the tenure of the loan, because neither you nor the lender can take advantage of interest rate fluctuations, but you pay the same sum each month. This is an excellent option if you are on a fixed income or a salary. You begin by paying off the interest first and the principal later—as most of the loan is paid off, your equity in the house increases as compared to the lenders. When selecting a fixed rate mortgage, check the interest rates offered for fixed rate mortgages, select the loan tenure based on your repayment capacity, and ensure that you are not penalized for prepaying your loan.

Adjustable or variable rate mortgage loans (ARMs) are mortgage loans for the same period of time as fixed rate mortgages, where the interest rate changes based on market trends either annually, or every three, five, seven, or ten years. Although ARMs are considered risky due to the floating interest rate, the amount you pay as interest on the mortgage loan is lower as compared to that paid for a fixed rate mortgage loan. If you select an ARM when interest rates are high, you will pay off your loan with a slightly lower interest rate. Ensure that a periodic rate cap and a loan lifetime rate cap is included as part of the loan agreement—these will ensure that your rate does not rise or fall more than two percentage points in a period and does not rise or fall more than six percentage points during the mortgage loan tenure.

Balloon mortgage loans have three to ten year tenures, during which you pay the same amount each month. At the end of the loan tenure, you pay off the balance of the mortgage loan as one lump sum. Balloon mortgage loans are available at fixed or adjustable rates, but are considered highly risky because you end up paying off the interest on the mortgage loan and not the principal, and you stand to lose both the property and the money paid to date to the owner if you cannot pay off the loan balance at the end of the tenure or get refinance. If you want to save money by paying a lower rate of interest, are buying properties when interest rates are high, are sure of purchasing the property you want, are confident of refinance options when the balloon is due, or have no other choice, select a balloon mortgage loan.

This information should help you select the right mortgage loan. Check interest rates carefully before buying and you should be all right!

Sunday, November 26, 2006

Understanding Fixed-rate Mortgages

A fixed-rate mortgage is a mortgage on which the interest rate is put for the term of the loan. Your interest rate remains the same for the term of the mortgage or for a specified clip period of time. Most people utilize a fixed-rate mortgage. In fact, about 75 percent of all home mortgages have got fixed rates. The chief advantage of a fixed-rate mortgage is that you always cognize exactly how much your mortgage payment will be, and you can be after for it.

A Fixed Rate mortgage will offer you the security of knowing that your mortgage interest rate will not change during the term of your fixed rate. For example, a lender can offer a 30-year fixed loan to a homebuyer at a 6.5% interest rate. The loan is locked in to the 6.5% interest rate, even if the market interest rate rises to 8.0%. Conversely, if the market interest rate lessenings to 4.5%, you will go on to pay the 6.5% interest rate. A Fixed-Rate Mortgage uses the same interest rate toward monthly loan payments for the life of the loan.


- Straightforward and easier to understand than Adjustable Rate Mortgages (ARMs).

- More secure for the buyer and very popular with first-time home buyers.

- Ideal for anyone who wishes to budget monthly disbursals and programs to maintain their home for respective years.

- Since the hazard to the lender is higher, fixed-rate mortgages generally have got got higher interest rates than Adjustable Rate Mortgages (ARMs).

- Tend to have higher initial monthly payments compared to those of adjustable rate mortgages.

- Fixed-rate mortgages are less flexibleness than adjustable rate mortgages.

With adjustable rate mortgages the interest rate is not fixed, but changes during the life of the loan in line with motions in an index rate. The advantage of an Adjustable Rate Mortgage is that you may be able to afford a more than expensive home because your initial interest rate will be lower. In a fixed-rate mortgage, your interest rate remains the same for the term of the mortgage.

Friday, November 24, 2006

Fixed vs Adjustable Rates

Apples vs. oranges. Boxers vs. briefs. Dave Letterman vs. John Jay Leno. These arguments may rage on for decades, and we can add another 1 to the list: fixed vs. adjustable. We’re speaking, of course, of fixed rate and adjustable rate mortgages.

Let’s start the treatment by talking about risk. If I had to pick one word that explained the mortgage industry, it would be risk. If you can understand the conception of hazard and how it associates to mortgages, you’re manner ahead of the game. In a nutshell, riskier loans intend higher interest rates; you counterbalance the individual lending you money by paying them a higher interest rate. If you have got got got low FICO scores, this is a higher hazard to the investor since you don’t have a good history of paying your measures on time, so you’re going to have to pay a higher rate. If you can’t verify adequate income to measure up for the loan, this is a higher hazard and you’re going to have got to pay a higher interest rate.

As it associates to this discussion, the longer you inquire the lender to vouch your interest rate, the higher hazard for them since they’re guaranteeing the rate you get but they don’t cognize how much their finances are going to cost them going forward. This isn’t Associate in Nursing easy conception to wrap up your head around, so don’t feel bad if you don’t get it yet. Lenders work on a conception called arbitrage, which is a fancy manner of saying they borrow money at a certain rate and then impart it out to you. However, lenders don’t get money at 30-year fixed rates, so when they borrow money they have got to seek to gauge what it’s going to cost them over the clip they impart it to you. If you’re following me so far, you can understand why they would charge a higher rate to vouch you a certain rate for 30 old age as opposing to 3 or 5 years. Now, on to our discussion…

On the 1 hand, we have got fixed rate advocates. These days, this is a relatively easy statement to do since rates are at 40-year lows. The chief ground to get a fixed-rate mortgage, whether it be a 15-, 20-, or 30-year fixed, is to protect yourself from adjustable interest rates. When you get a fixed rate loan, you cognize exactly what your payments are going to be and they’re not going to change for the life of the loan. In a clip when rates are rising, a fixed rate mortgage gives you the security of knowing that you’re safe.

On the other hand, there are the adjustable rate advocates. The chief statement here, in a nutshell, is that you shouldn’t wage for something you don’t need. A great bulk of people out there will only maintain their mortgage for 3-5 years. Maybe it’s A occupation change, maybe it’s Associate in Nursing expanding or catching family, a refinance for home improvements or college for the kids, or any number of life circumstances. Since you’re probably not going to maintain your mortgage for 15 or 30 years, you’re probably better off to get a lower adjustable rate mortgage and pocket the difference.

I’m not going to state one statement is better than the other. There’s no such as thing as a “good” Oregon “bad” loan, but there are loans that are better or worse for certain people. In my career as a mortgage consultant, I can state you that I’ve done very few fixed rate loans. I only urge them in two cases – when people are on a fixed income and need to cognize exactly what to anticipate from their mortgage, or when people are absolutely certain that they’re not going to travel or need to refinance for many, many years. In a great bulk of cases, people don’t need a fixed rate loan and would in fact be much better off with a loan that accomplishes their ends and salvages them money in the long term. Like oranges vs. apples or Letterman vs. Leno, fixed vs. adjustable is not a argument that tin be definitively settled, but I trust I’ve helped you calculate out which one may be right for you.

Mortgage Loan Information - Know The Basics When You Refinance or Purchase a Home

If you are currently looking for a new home, opportunities are that in all the exhilaration you won’t really give any idea to the type of home loan mortgage you take out, instead going with the first 1 offered to you. This could be a serious error – costing you thousands, if not 10s of thousands. Brand certain you cognize all about the different types of home mortgage loans before you starting looking for that new dreaming home!

Here are some of the basic types of mortgage loans:

Fixed-rate home loan mortgage -

As the name suggests, this is a plain-vanilla home loan. Basically you borrow a certain amount over a certain time period at a fixed rate of interest. You then pay the same monthly installments for the life of the home loan. The benefit of a fixed-rate home loan is that you can easily budget for the repayments. The ruin of a fixed-rate home loan is that you could stop up paying a higher rate of interest than everyone else – no one cognizes what interest rates will be in 15-20 old age time!

Adjustable-rate home loan mortgage -

Mirroring the fixed-rate mortgage is the adjustable-rate mortgage. Again, you borrow a certain amount over a certain period, however in this lawsuit the interest rate is not fixed, but is adjustable (or ‘floating’ arsenic you may also hear it called). The top to adjustable-rate home loans is that the interest rate at the start of the loan time period can be lower than the fixed rate would be. The downside is that it is hard to budget for, as the amount can change, and you are at the clemency of something outside of your control – interest rate fluctuations, which can change quickly.

Hybrid home loan mortgages -

Trying to fill up the nothingness left with the downside of the fixed and adjustable/variable-rate home loans, the loanblend home loan allows you repair the interest rate over the first portion of the home loan, and then switch over to an adjustable/variable rate later. The top of crossed home loans is that they allow you to budget for your repayments during the expensive clip when you first bargain the home. The downside is that if floating rates are much higher than your fixed rate when the electric switch happens, you could happen you are paying a much higher repayment each month.

To see our listing of suggested mortgage lenders with competitory rates for refinance, purchase loans, second mortgages, home equity loans and all other mortgage loans, visit this page Recommended Mortgage

Tuesday, November 21, 2006

Which is Better? Fixed-Rate or Adjustable-Rate Mortgages

The reply depends on respective factors including your financial situation. Lets take a expression at the chief differences between the two types of mortgages.

Fixed Rate Mortgage

Two major constituents that are needed to compare fixed rate mortgages are the interest rate and the points. Points are fees paid to the lender at the beginning of the mortgage period. They are based on a percentage of the loan. So, one point bes one percent of the loan amount. Therefore, a $100,000 mortgage with 1.5 points would cost $1,500.

One lender may offer a lower interest rate than another but the points may be higher consequent in a less attractive loan. The of import consideration here is the length of clip you be after to throw the mortgage. The longer you be after to maintain the mortgage, a higher point with a lower interest rate do more than sense. And, the less clip you be after to stay in a home you may be more than likely to profit from low or no points with a higher interest rate.

In addition, be certain to inquire your lender the sum of all fees involved. Lenders tin tack on assorted fees that can add up in a hurry.

Some common fees are:

* application fee

* credit report

* property appraisal

* statute title insurance

* escrow fees

Request an itemized listing of all fees in authorship so you can compare mortgages fairly.

Adjustable Rate Mortgage

Selecting the best adjustable rate mortgage (ARM) is basically impossible because there are some unknowns. However, you can look at a few of the loan factors and depending on your state of affairs do a determination you can dwell with.

The interest rate that an adjustable rate mortgage starts off with is called the start rate. This rate is the least of import consideration when looking at ARM's because it will change. The start rate is often used as a teaser rate to do you believe that the loan have good terms.

The more than of import factors to see when crucial on an arm is a expression of index and border bes the interest rate. The index is what the lender utilizes to cipher your specific interest rate. Indexes can differ in how quickly they react to interest rate fluctuations. Some common indexes used are Treasury measures (T-bills) and Certificates of Deposit (CD). The border is a fixed figure which is added to the index to get the interest rate. Margins are typically about 2.5 percent.

Another of import consideration is the frequence in which the mortgage rate is recalculated. Some weaponry set monthly, while others only set every 6 or 12 months.

Also, rate caps are used to restrict the amount the rate can change within an accommodation period. An adjustable rate mortgage that sets every 12 calendar months may be limited to a 1-2 percent change up or down. There should also be a lifetime rate cap to restrict the rate change over the life of the loan which is usually around 5-6 percent higher than the start rate.

Before accepting an arm you should calculate out the payment at the highest rate allowed to see if you can manage the worst lawsuit payment.

Lastly, other lender fees should be considered with a petition for a written sum fees statement.

Fixed vs. arm Payments

A fixed rate mortgage is just that, a fixed interest rate for the life of the loan. The payment will always remain the same without fluctuation, however, the hazard is that if rates driblet significantly you may be stuck with a higher rate.

ARM interest rates can fluctuate many modern times over the life of the loan, thereby, changing your monthly payment amount. weaponry offer potentiality interest nest egg because the start rate is typically lower than a fixed rate. Also, if rates driblet or remain the same there will be a continued nest egg compared to a fixed loan. But, if rates rise Associate in Nursing arm will cost more than than the fixed rate loan.

Choosing a Fixed-Rate vs. an Adjustable-Rate Mortgage

First, see the hazard you can take with the monthly payment amount changing. Bash you have got savings? Or are you budgeted to the max without any emergency savings? If you can't afford to pay your arm at the highest payment amount you should maneuver clear of this type of loan.

Also, see how long you be after to have got the mortgage. Generally, weaponry are better for a mortgage of 5-7 years. If you be after to maintain your mortgage for the long-term somes fixed-rate mortgage may be the better, less nerve-racking choice.

Lastly, if the idea of having an adjustable rate mortgage emphasizes you out...don't make it! The emphasis is never deserving the possible savings. And, if rates driblet significantly you may have got the option to refinance to a lower rate anyway.

Sunday, November 19, 2006

Fixed Rate Mortgage

Many people automatically believe that they desire a 30-year fixed rate mortgage. They experience that this offers the upper limit peace of head for homeowner loans in that they forever cognize exactly what their mortgage payment will be, and their house is completely paid off at the end of the loan (anyone up for a “mortgage burning” party?). This is true, but it is actually very expensive for you to travel with the 30-year fixed rate option. Other programs offer a shorter length of clip at a fixed rate that tin save you many dollars of interest payments for lone a slightly higher mortgage monthly payment. A shorter length loan (still at a fixed rate) usually can be obtained at a slightly lower interest rate, and you construct up equity in the home much faster because of the higher monthly payment. Other common fixed-rate terms are 20 old age and 15 years.

The differences in the amount of interest that you will pay over the life of the assorted fixed-rate loan options can be staggering. Let’s expression at a $200,000 fixed-rate mortgage at different life terms:

Monthly Sum Interest

Term Rate Payment Paid over Life

30 old age 6.00% $1,199.10 $231,676.00

20 old age 5 3/4% $1,404.17 $137,000.08

15 old age 5 1/2% $1,634.17 $ 94,150.60

The difference in entire interest costs between Twenty old age and 30 old age is dramatic! For an further monthly payment of $205, you get a small spot lower interest rate and, more than important, you salvage $94,675.92 in entire interest payments – almost half of what you paid for the house to get with! If you can afford to pay $1,200 per month, you should be able to afford $1,400 each calendar calendar month – otherwise you are probably buying more than house than you can afford.

The buyer of your mortgage short letter will always terms the loan for their purposes. A fixed rate may not be the best deal for you. Are you positive that you will be life in this house for the length of the mortgage life? On average, a mortgage endures only about 7 old age because the borrower moves to a different house or refinances at a lower rate. Think hard and long before you lock into a fixed rate mortgage. Check out other types of loan options first. Depending on current interest rate structures, a fixed rate may be preferable to a variable rate – and vice-versa.

Happy home owning,

Wednesday, November 15, 2006

How to Compare Fixed Rate Mortgages and Adjustable Rate Mortgages

There are many types of mortgages, and the more than you cognize about them before you start, the better. To compare one Adjustable Rate Mortgage with another or with a fixed-rate mortgage, you need to cognize about indexes, margins, discounts, caps, negative amortization, and convertibility. You need to see the upper limit amount your monthly payment could increase. Most important, you need to compare what might go on to your mortgage costs with your hereafter ability to pay.


In a fixed-rate mortgage, your interest rate remains the same for the term of the mortgage. The chief advantage of a fixed-rate mortgage is that you always cognize exactly how much your mortgage payment will be, and you can be after for it.

Benefits and Advantages:

- Low rates for the full term of your mortgage

- Security of a fixed monthly payment for the life of you loan, regardless of fluctuations in interest rates

- More stableness may give you peace-of-mind


- Higher initial monthly payments compared to those of adjustable rate mortgages

- Less flexibility


With this sort of mortgage, your interest rate and monthly payments usually begin lower than a fixed-rate mortgage. But your rate and payment can change either up or down, as often as once or twice a year. The accommodation is tied to a financial index. Throughout the life of that loan, the principal and interest payment will set periodically based on fluctuations in the interest rate.

Benefits and advantages:

- Lower Initial payments owed to lower beginning interest rate

- Ability to measure up for a higher loan amount owed to lower initial interest rates

- Lower interest payments if the interest rate driblets over time

- Interest rate caps bounds the upper limit interest payment allowed for the loan


- Your hereafter monthly payment is uncertain.

- Initial lower interest rate and monthly payments are impermanent and apply to the first accommodation period. Usually, the interest rate will lift after the initial accommodation period.

- Higher interest payments if the interest rate rises over time


A Fixed Rate mortgage will offer you the security of knowing that your mortgage interest rate will not change during the term of your fixed rate. The advantage of an Adjustable Rate Mortgage is that you may be able to afford a more than expensive home because your initial interest rate will be lower. A Fixed-Rate Mortgage uses the same interest rate toward monthly loan payments for the life of the loan. Fixed-rate mortgages are more than straightforward and easier to understand than ARMs. They are more than secure for the buyer and they are very popular with first-time home buyers. Since the hazard to the lender is higher, fixed-rate mortgages generally have got higher interest rates than ARMs. A fixed rate mortgage is ideal for anyone who wishes to budget monthly disbursals and programs to maintain their home for respective years.

A more than elaborate version of this article including a glossary of terms is available at: http://www.us-banks.org/archives/1970

[Disclaimer: This article is provided for information intents only. No guarantee is either expressed or implied. Under no circumstance will the writer be apt for any loss or damage caused by a user's trust on this information.]

Monday, November 13, 2006

Fixed Rate Mortgage Loans - Understanding The Basics

Fixed rate mortgages are the most common type of mortgage loan for home buyers. With predictable payments, long term homeowners can be after their budgets and guard against rising interest rates. But a fixed rate mortgage is not for everyone with its higher interest rates and a reduction in your purchasing power.

Fixed Rate Mortgage Features

A fixed rate mortgage characteristics put rates, long term low monthly payments, and low risk. Interest rates are determined during your loan application process. Rates are put by the market. You can also lower your interest rate by paying points up front. This option only do sense if you remain in your home for respective years.

Long term low monthly payments are another benefit of this type of home loan. Over time, rising prices will raise the terms of everything except your mortgage payment. As your wage increases, your mortgage costs will also take a smaller percent of your income.

The low hazard of fixed interest rates also entreaties to borrowers. You don’t have got to worry about rising interest rates or a balloon payment. You can also refund your loan early, saving money on interest payments.

Mortgage Terms

Traditionally, fixed rate mortgages were 30 or 15 twelvemonth terms. Now lenders offer a couple of further options. 30 twelvemonth loans are still the most popular with their low monthly payments. A 30 twelvemonth loan also enables you to measure up for more than than shorter loans.

15, 20, and 40 twelvemonth mortgages are also options. 15 and 20 twelvemonth loans measure up for lower interest rates, but you will have got higher monthly payments between 10% and 15% compared to a 30 twelvemonth mortgage. Shorter loans also salvage you interest costs, appealing to those who desire their loan paid off before retirement or their children travel to college. 40 twelvemonth mortgages are less common, but offer low monthly payments with higher interest costs.

Biweekly mortgage, as the name implies, necessitates half your mortgage payment every other week. At the end of the year, you have got made an extra mortgage payment. You can have got your mortgage repaid in 18 to 19 years. Most lenders also allow you to revolve over to a 30 twelvemonth term with no penalties.

Fixed Rate Drawbacks

Even with their benefits, fixed rate mortgages aren’t for everyone. Option mortgages enable you to borrow more than than with a fixed rate mortgage. If you travel in less than 7 years, you will also probably pay more than in interest payments than if you went with an adjustable rate mortgage. Most homeowners move within the clenched fist 7 old age of life in a house. You are also locked into an interest rate that could drop in the future.

To see our listing of suggested mortgage lenders online, visit this page:
Recommended Mortgage
Lenders online.

Saturday, November 11, 2006

Tuesday, November 07, 2006

Fixed Rate Mortgage Loans - Understand the Pros and Cons of the Fixed Rate Mortgage

There are many benefits and drawbacks to see when crucial if a fixed rate mortgage is right for you. It is of import to look at all options when it come ups to something as of import as getting a mortgage for your new home.

There are a few benefits to fixed rate mortgages. One benefit is that the rates and payments stay constant. There won’t be any surprises even if rising prices surges out of control and mortgage rates caput to 20%. This sort of stableness do budgeting easier. People can manage their money with more than certainty because their lodging disbursals won’t change. Fixed rate mortgages are simple to understand making them appealing and good for first clip buyers. Also longer term fixed rate mortgages are very affordable.

There are also a few drawbacks to fixed rate mortgages. To take advantage of falling rates, mortgage holders would have got to refinance. That tin mean value a few thousand dollars in shutting costs, another trip to the statute title company’s office and respective hours spent excavation up tax forms, bank statements etc. Fixed rate mortgages can be too expensive for some borrowers, especially in high rate environments, because there is no early on payment and rate interruption like there is with adjustable rate mortgages. Fixed rate mortgages are practically indistinguishable from lender to lender. While lenders maintain many adjustable rate mortgages on their books, most financial establishments sell their fixed rate mortgages.

There are a few other of import inquiries you should do certain you have got replies to when crucial which type of mortgage is better for you. How long make you be after on staying in the home? How frequently makes the adjustable rate mortgage adjust, and when is the accommodation made? What’s the interest rate environment like? Could you still afford your monthly payment if interest rates rise significantly? Bash you cognize the chief professionals and cons for each type of loan?

Generally, fixed-rate mortgages are a safer manner for first clip home buyers to get a mortgage. There is greater stableness and less hazard involved. It is easy to budget and modulate your disbursals when you cognize exactly what your interest rate will be.

To see our listing of suggested mortgage loan companies online, visit this page: Recommended Mortgage Loan Companies Online.