Thinking About a 40-Year Home Mortgage Loan? Think Again…

We received an article from Dane Smith today, talking about the inefficiencies of a 40-year home mortgage. Dane brings to light some very excellent points in his article, titled…

Why I Hate 40-Year Loans

During the subprime crisis we saw the advent of numerous bizarre loan products. In general the new loan products were designed to get people into houses they could not normally afford. As people started to default on their mortgages banks realized many of these loan products were not a good idea. During the subprime crisis we saw most of these new loan programs fall to the wayside. I think in most cases this is a good thing. Many of these new loan products reduced the chances that individuals could gain equity in their homes by paying off principle. When difficult times arose for people they were in a difficult position because although they had made years of payments their loan balance had not changed. The worst of the new loan products had “teaser rates” so that individuals made low payments for a few years until the rate and their mortgage shot up. Its a wonder why banks are surprised by the number of foreclosures.

40 Year Loan = 6.375

30 Year Loan = 5.75

15 Year Loan = 5.125

Now using a mortgage calculator, lets look at the mortgage payments on a 200k house.

40 Year Loan = $1,153.14

30 Year Loan = $1,167.14

15 Year Loan = $1,594.64

While the difference between a 30 year loan and a 15 year is substantial, $441.50, the difference between a 40 year loan and a 15 year loan is only $14 per month. A little savings but is it really worth adding a whole extra 10 years to your mortgage. So over 30 years $14 dollars a month amounts to $5040. On the other hand an extra 10 years of mortgage payments comes out to $138,377. To run the numbers a different way by putting down a mere $2400 on your 30 year loan you would get the same mortgage payment as you would on a 40 year loan.

Obviously everyone’s situation is different and in a small number of cases a 40 year loan might be warranted. But in general the 40 year loan adds extra years to a person’s loan for a minimal benefit.

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Ki works as a realtor in the Austin real estate market. He provides updated stats on the market on his Austin real estate blog along with a free search of the Austin MLS.

Thanks for that insightful article, Dane.

If you’d like to talk to a local, Sacramento lending professional about finding the right mortgage for you, just drop us a line today and we’ll put you in touch with the best person to meet your needs.

Buying your First Home? Read these ESSENTIAL Borrowing Tips…

Matthew Sanz has brought us this excellent article on getting financing for you first home. There’s a lot to know, and a lot of people that will try to take advantage of your lack of expertise. The best way to prepare is to be informed.

The Essentials of First Time Home Mortgage Loan Borrower

Property ownership and buying a home for the first time can be an exciting yet mind-boggling experience. Before you make a decision, it is important, therefore, that you know your options as well as the basics of home mortgage loans.

What is a mortgage?

A mortgage is a loan you pull out to pay off your home. If you are a first time home mortgage loan borrower, you may be asked to deposit a down payment and pay for the rest (i.e. monthly) through a mortgage loan. Establishments that can offer mortgages are mortgage specialists, building societies and banks.

What are the types of mortgage?

-The repayment mortgage - monthly payments are made within an agreed term until loan and interest are paid off.

-The interest-only mortgage - monthly payments are made for a period of time as agreed in the contract, except payments cover only the loan’s interest within the initial term. Afterwards, you are asked to make interest payments in full every month.

-The fixed-rate mortgage - requires you to pay for a fixed interest rate over the whole term. Interest rates do not change and therefore offers a feeling of certainty for most borrowers.

-The adjustable rate mortgage - has rates that adjust after an initial term containing a fixed rate. Rates could adjust depending on the rise and fall of other economic rates. This could sound daunting for first time home mortgage loan borrowers, but those who want a lower initial rate can benefit from this type of mortgage.

What are the requirements?

1. Good credit report:

From your credit report, lenders will be able to determine whether they can grant your application or to increase the interest rates for your loan. Lenders especially want to make sure that a first time home mortgage loan borrower has the ability and willingness to make his or her payments.

2. Insurance:

Insurance can be used to pay off your mortgage if you have just been in an accident, lost your job or become sick. You might be required to use life insurance to pay off your mortgage should death occur. What are some tips I can use before purchasing property?

- Improve your credit report - Avoid applying for more credit and pay on time. - Review and correct credit information - Contact the credit bureau to correct inaccuracies - Get the best program - Choose a plan that is most suitable for your situation. - Research - Jot down your price range and find out how much you can borrow. - Do it online - Using the Internet could save you more time and money. Lenders now offer mortgage calculators online that you can use to predict which mortgage program is most suitable for you. - Choose the best mortgage specialist - Determine if the specialist works in a company that is likely to stay in business whenever rates fluctuate. - Ask for advice - Look for recommendations so you are familiar with what kind of mortgage plan you are getting into.

These are only recommendations, though, and should not be used in legal matters.

Read more data as a first time home mortgage loan borrower. Discover an online home equity mortgage calculator now.

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Those are some excellent tips for first times, Matthew! Thanks for sharing them with us!

If you’re a reader who would like more information and a chance to talk to an industry expert at absolutely no cost, simply get in touch with us and we’ll get you started on the right track.

Can You Find the Perfect Loan Without a Mortgage Broker?

Ron Mark is here with us today to show us how a mortgage broker can help us find the right home mortgage for our budget and goals. Ron has been working with mortgages locally in California for many years and, as many of us know well, recommends seeking professional assistance for something you’re not familiar with that has as large of a financial impact on your life as a mortgage. Let’s hand it over to Ron…

How can a mortgage broker help you? by Ron Mark

Whenever one mentions the term mortgage broker one thinks of a person that can help obtain a loan through mortgage. For most people mortgage means signing the house to a lender for a big sum of money that they can repay over a long period of time in small installments. However things are not as easy as they seem and knowing where to apply for a loan or when to apply for it as well as how to prepare your application successfully are extremely important steps in getting the loan you want under the terms you want. This is where a specialized broker comes to scene.

The mortgage broker can explain the process step by step, can help you get the necessary documentation; can explain all the terms used in the mortgage industry and help you make an informed decision. If you are looking to buy a home consider the homes for sale in California especially if you like the location. Of course there are homes for sale in all the states, but there is an advantage when searching through the homes for sale in California. The mortgage broker in California has fiduciary duties. This means that he is responsible toward you the client and has to have low service fees. He or she can also explain the difference between pre-approval and pre-qualification and can help you with both. The pre-approval follows all the steps of the full approval and can present you in a higher position when facing the lender. The broker is the mediator of the meeting and the one responsible of helping you get the better part of the deal.

Although the price of the homes for sale in California and other states in the United States is declining, most of the prices for houses are still obligated to take a mortgage loan. A mortgage loan or simply known as mortgage means that the loan has as a guarantee a valuable asset of the person that intends to take such a loan. A mortgage loan is given for a long period of time and the installments reflect the interest rate too. One of the most important things one needs to understand when thinking of a mortgage loan is the foreclosure or repossession clause the lender has. The characteristics of a mortgage may also differ from case to case. Since there are no specific rules when it comes to applying for a mortgage it is essential to contact a broker specialized in mortgage loans, a broker who works in the area where you intend to buy or build a home.

Another reason why you need a broker specialized in mortgage when buying a home is his or her ability of explaining the different types of mortgage loans. The general characteristics are similar from state to state, but these kinds of loans are subject to legal conditions and local guidelines. The general characteristics are the interest that can be higher or lower; the duration of the loan usually around 30 years, and the payment and regularity of payments. The most common loans are the fixed rate mortgage and the adjustable rate mortgage. The first one states that the payments are fixed and cannot change for the duration of the loan. The second one as the name explains it has an adjustable interest rate and the risk is taken by the borrower and not the lender. In most of the cases where houses are being bought or build, the borrower has to put a downpayment before getting a mortgage loan.
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Even though there are homes for sale all over the country the homes for sale in California are becoming more and more popular not only because of the weather and region but also because of the mortgage broker which has to act in the best interest of his or her consumers.

Thanks for that exceptional read, Ron.

If you’re a reader who would like to learn more about the mortgage industry before you go broker-hunting, just drop us a line and we’ll let you know our recommendations absolutely for free.

Is Your Mortgage Lender Doing the Best They Can? Find out with These Questions…

Today we have Brian Jenkins joining us to give us some very important tips about talking with your mortgage lender. If you’re wondering if you’ve selected the right lender, discussing these ideas with them will help you find out for sure. Enjoy!

Real Estate ~ Important Questions To Ask Your Mortgage Lender

Most of us will only buy a few homes during the course of our life. Combine this fact, with the axiom that home mortgages are perpetually the largest single debit that most people carry, and you can see why choosing a mortgage lender can be nerve wracking. In what is frequently the biggest business transaction of your life, there are certain questions that you can ask that will better help you follow your loan and negotiate the best deal.

What type of loan do you advise?

There are in nonconformist types of loans, and the competent lender should help you grasp each one, and explain the benefits and drawbacks of each. Adjustable rate mortgages are frequently touted for low interest rates, but they are not the best pick for everyone. The rate typically remains low for a year or two, but when it adjusts up, the amount of the monthly liquidation can increase enough that the home owner has trouble meeting their monthly obligations. Fixed rate loans have a fixed interest rate over the life of the loan. The fixed rate is every day a little higher than the adjustable rate mortgage rate, but you have the advantage of cognizant each month exactly how much your reckoning is. If rates drop substantially, you can always refinance your loan. Interest only loans are not as common. In interest only loans, the monthly arrangement is only the amount of interest on the mortgage. These types of loans are best suited for people who have high and steady incomes, and resolution on animated in a home a number enough for it to bodily increase in value. At the end of the loan term, the home owner will either refinance the loan, or pay the balance of the loan in full. If the home has not appreciated during the loan term, it can be onerous to refinance.

What are interest rates and annual percentage rates?

A qualified mortgage lender should be more than willing to lift the veil what their interest rates are for out of place types of loans, as well as the annual percentage rate. They should also be willing to run the numbers for you so that you can see exactly how the anomalistic percentage rates affect the amount of your monthly payment.

How much will the loan cost?

The qualified mortgage lender should supply you with a advantage faith estimate. This is an estimate on the amount of cash that it will cost to shut up your loan. This service faith estimate is not an exact amount, but should be very close, and include appraisal fees, medal insurance and any other fees that the lender requires to fill up the loan. If the lender is unwilling to give you a advantage faith estimate, it is likely that there will be some surprises on closing days. Some disreputable lenders pad the closing costs with administrative fees that are unnecessary and add up quickly. Before you commit to one lender, you should see a copy of the improvement faith estimate that lists every fee you will be to pay to occlude on the loan.

Is there any prepayment penalty?

Although not as common as it once was, some lenders charge a fee if you pay off your mortgage early. While you may ponder that this does not apply to you, if the lender has a prepayment retribution it can be enacted even if you refinance your loan. It is important to confirm with your prospective lender that there are no penalties for prepayment of the mortgage.

How for ages will it take and what if interest rates change?

Closing can take a week or a month, or even longer. It is important to ask your mortgage lender how for a long time they anticipate it will take from the start of the process to closing. You should also ask what happens if interest rates change during the closing process. Ideally, you will lock in your rate at the proviso phase, and if mortgage rates increase, you keep this rate, but if they drop, your lender will ‘float’ your rate down with them.

How much of a down compensation is required?

Down payments can swerve greatly, depending on your credit history, the appraised appraise of the home and even market conditions. Never assume that you know, ask the lender what percentage of the loan amount you should have on hand for a down payment. This is perpetually negotiable, but you need to know person in the process if you will have enough legal tender to case the cost.

How to qualify?

Ask the mortgage lender person in the process what the qualifications are to qualify for a loan. In accession to a solid job history, you will apparently be exigent to have several years’ value of income tax statements, as well as bank statements and notice on any stocks, savings bonds or other investments. Even if you do not conception on cashing these to buy your home, they do count as assets and make it easier to qualify for a loan.

About Author: Brian Jenkins is a freelance writer who writes about topics pertaining to the mortgage industry such as a Pennsylvania Mortgage

Thanks for the the awesome article, Brian, it’s always a pleasure.

I hope you all enjoyed Brian’s article, and if you’d like to discuss your options or have any questions about your specific challenges, we’d be more than happy to assist you. Just drop us a line today.

Home Mortgage Interest Rates Continue To Fall

Is it the right time to get into a mortgage? No one times the market perfectly, so waiting around could land you with a higher rate. This article by Ki summarizes a lot of important data if you’d like to look at the numbers yourself.

Mortgage Interest Rates Continue To Fall

This was the sixth week in a row were 30 Year mortgage rates fell or held steady. In the tarry 6 weeks 30 year notes have fallen from 6.63 to 6.35. This was preceded by a sudden jump in interest rates in July where 30 year mortgage interest rates rose from 6.26 to 6.63 midst July 17th and July 24th. So during the time rates are little higher today than what we saw on July 17th they have almost fallen rear to mid July levels. It’s interesting to dot that it took one week for rates to jump from 6.26 to 6.63 and six weeks of falling rates to get occlude to the July 17th levels.

This week we also saw decreases in all the other major mortgage products. The 15 year mortgage fell from 5.93 to 5.9 and the 5 year arm fell from 6.03 to 5.97. By far the biggest mover was 1 year arms which fell almost 1/5 of a point movable from 5.33 to 5.15. Below are rates for the 4 major mortgage products for the be late few weeks.

September 4, 2008

30-yr 6.35
15-yr 5.90
5-yr ARM 5.97
1-yr ARM 5.15

August 28, 2008
30-yr 6.40
15-yr 5.93
5-yr ARM 6.03
1-yr ARM 5.33

August 21, 2008
30-yr 6.47
15-yr 6.00
5-yr ARM 5.99
1-yr ARM 5.29

August 14, 2008
30-yr 6.52
15-yr 6.07
5-yr ARM 6.02
1-yr ARM 5.18

August 7, 2008
30-yr 6.52
15-yr 6.10
5-yr ARM 6.05
1-yr ARM 5.22

Ok so what does this mean for a mortgage? Obviously ones mortgage would be lower with falling rates but by how much. Let’s look at a 200k mortgage and using our free mortgage calculator lets fun the numbers based on today’s rates.

September 4th
30-yr $1244.47
15-yr $1676.92
5-yr ARM $1195.24
1-yr ARM $1092.05

August 28th
30-yr $1251.01
15-yr $1680.15
5-yr ARM $1202.96
1-yr ARM $1114.33

July 24th
30-yr $1281.28
15-yr $1707.22
5-yr ARM $1219.75
1-yr ARM $1134.32

So why have rates steadily fallen. I consider it has to be based on rumors (which have now proven to be correct) that the federal nation is going to takeover Fannie Mae and Freddie Mac. Basically the direction takeover provides more assurance to banks that their mortgage insurance is going to be paid out in case of default. The declining fortunes of Freddie Mac spooked some banks into pensive their mortgage insurance was harmoniously worthless. So now banks are concavity rates in their view the risk associated with the loans has gone down.

So what do I expect to see over the next few months? I would be fascinated if mortgage rates don’t collate to fall now that Freddie Mac and Fannie Mae are owned by the government. The Fed has been trying to push down interest rates all year and now they have the revenue to do so (I contemplate this was part of the motivation rearward the takeover of Freddie Mac and Fannie Mae). So does this mean investors? Should they wait for mortgage rates to drop before buying? I don’t ponder so. If rates follow in succession to fall certain estate prices could rise or at least I would expect to see underADJ Expensiveness deals sitting on the market. Instead if you find a dominion to I would watch interest rates and if they string together to fall I would try and relock your mortgage rate at the new lower rate. While I expect rates to fall something unexpected that spooks banks over the next month could of course push mortgage rates postern up.

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Ki lives in Austin Texas. His website has a graph that shows mortgage rate trends. He also provides a free calculator for potential home buyers and a mortgage interest rates widget.

Thanks for sharing that excellent information with us, Ki. I enjoyed reading your report and I know our readers will find it useful as well.

If you’d like to discuss what current mortgage rates mean to you, we can speak with you to help you make the right decisions. Just drop us a line >>

Buying a New Home? Use These Essential Tips to Do It Right!

If you’re looking to buy a new home, we’ve got a great article for you. Robin Smith has a great article for those new to the mortgage world. Without further adieu…

Getting a Home Mortgage Loan To Buy Your New Home

Most people find it difficult to buy their home as they are not in a financial condition to afford it. If you are looking for a new home and if you dont have enough money to make your purchase then you can apply for a home mortgage loan with which you could buy your dream home.

Home mortgages are a typical kind of home loan in which you are required to keep your home as collateral against your home mortgage loan amount. All home mortgage loans are secured kind of loan and they require security against the loan amount. Other than putting your home on mortgage, some financial lenders may also require you to provide some down payment in order to get approval for your home mortgage loan. The amount of your home mortgage loan finance is also determined by the current equity value of your home and also the amount that you provide as down payment.

Moreover, your credit history plays a vital role in determining the interest rate and the terms and conditions of your home mortgage loan. However, because of your collateral and your down payment, you will receive a larger home loan amount with a favorable interest rate.

Home mortgages may be again divided into fixed rate home mortgage loans and adjustable rate home mortgage loans. If you take a fixed rate home mortgage loan then you will have to make a fixed monthly installment until the end of your repayment. A large number of homeowners prefer this kind of mortgage loan as they get the knowledge of the amount that they are required to pay throughout the entire loan period. Moreover, it relieves them from surprises like a sudden rise in monthly installment. On the other hand, an adjustable rate home mortgage loan allows the borrower to adjust their monthly repayment according to their repaying ability. The interest rate of an adjustable rate mortgage loan keep on changing with the market trends.

Normally, an adjustable rate mortgage loan allows you to start your repayment with easy monthly installment as you can adjust the interest rate according to your convenience. However, the principal mortgage loan amount and the interest rate usually become much bigger with the completion of the loan period. This is the main reason for the rapid increase of foreclosures over the past few years.

Another type of home mortgages that you can apply is the bad credit home mortgage loans. Even if you have a poor credit record, you can still get a bad credit home mortgage loan if you own the clear title of your present home. Like other home mortgage loans, you are required to put your home as security against your bad credit home mortgage loan amount. Your bad credit mortgage loan amount depends up on the market value of your home and your repaying capacity. Before applying any of the home mortgage loans, you should fist figure out the type of home mortgage loan that will suit for financial condition. Moreover, you should consider various factors like the amount of your down payment and the means of financing the closing payments of your mortgage loan amount. You should also feel comfortable with the monthly repayment that you are going to make in order to avoid defaults on your home mortgage loan.

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The above article has been written by Robin Smith, a professional having keen knowledge of home mortgage loans. Find out more on types of financing and mortgages as listed in real estate directory.

Thanks for your contribution, Robin! We loved your article!

To learn more about how these tips and others can apply to your personal home search, just drop us a line today.