Looking for a home mortgage will help you get the best financing deal. A mortgage, regardless if it is a purchase of a home, home equity loan or refinancing is a product, so the terms and prices are negotiable. It is helpful to compare the costs involved to obtain a mortgage. A thorough research on the best deals could save you thousands of dollars.
If you are looking right now for a home mortgage, here is what you can do to find and qualify for the cheapest rate possible.
1. You have to shop around for a loan as hard as you would a car or a Caribbean cruise. Try to compare fees and interest rates from at least a dozen lenders by looking at newspaper ads and online sites. Loans that offer the lowest rate with $1,000 fees or less are usually the best.
2. Check out your Credit Report since this is the most important determining factor of the amount you can afford for a mortgage. If you find errors, you could fix them by writing a letter to the credit bureau, explain the problem, and ask them to do an investigation. Attach whatever proof you have and send everything through a registered or certified mail.
3. Pay your dues on time. Thirty-five percent of your credit score is based on whether you pay your bills on time. When applying for a mortgage, it is important that you do not have late payments on your report within the last six months. More than anything, lenders want to know that you would be able to pay your dues promptly every month. If your credit history reflects a skipped payment or payment that has been a few days late, you will be considered as a risk and borrowers in that category pay higher interest rates or worst, denied the mortgage.
4. To qualify for the best mortgage, you should be able to pay down your credit card debt. One-third of your credit score is based on the amount of available credit you have consumed. If you owe $8,000 on your card with a $15,000 credit limit, you have used more than half of your credit available and that will appear excessive. Every time your debt-to-available-credit ratio goes up above fifty percent will get you penalized. Reducing your balance to less than half of your limit on each card that you possess will have a positive and immediate impact on your score.
5. Refrain from applying for a new credit card and other kinds of loans. Your prospective mortgage lender will check your credit report when you fill out their application and those are noted on your history. Each inquiry could lower your score by up to 12 points.
6. The mortgage rate that you qualify depends on several factors and one of which is your years on your job. Different lenders will look at work stability as the key factor to determine the loan program that you qualify. Discuss with your lender about the best deal for you.
If you will borrow over eighty-percent of the value of the home, you will most likely have to carry mortgage insurance as part of your monthly fee. This fee normally drops off as soon as you have obtained twenty-percent equity in your home. You can buy out the mortgage but this often results in a higher rate of interest. You should be able to weigh the best option for you based on your needs and plans. A qualified mortgage consultant can help in evaluating your credit report. He or she has strategies and tools to ensure you are managing a credit in such a way to have a higher credit score.
The rates of mortgage are currently volatile. Some lenders adjust their rates several times everyday and usually based on the current market rates. Others change rates once a week. Once again, it is necessary to shop around for the best rates before you settle on one.
Homes that offer a range of designs at McDowell Mountain Ranch Homes and ranch condos at McDowell Mountain Ranch Condos
Article Source: http://EzineArticles.com/?expert=Sonia_C_Llesol
Tuesday, December 15, 2009
Reverse Mortgage to Finance Your Home
If you are over sixty-two years old, looking for money to pay off your current mortgage, finance home improvement, healthcare expenses or supplement your retirement income, you might want to consider a reverse mortgage. This allows you to convert a part of the home equity into cash without having to sell it or pay additional monthly bills.
There are several types of reverse mortgages. One is the Single-purpose Reverse Mortgage is the least expensive option. This can be used for one purpose only which is specified by the government or a non-profit lender. Homeowners with low or moderate income can qualify for this loan. There is also the Home Equity Conversion Mortgages or HECMs and backed by the U.S. Department of Housing and Urban Development and the Proprietary Reverse Mortgage backed by the companies that develop them.
HECMs and Proprietary Reverse Mortgages are more expensive than conventional home loans and the up-front costs are high. You can consider this, especially if you are planning to stay in your home for a short while or borrow a minimal amount. These loans are widely available, no medical or income requirements and could be used for whatever your purpose.
Before you apply for a HECM, you must consult with an independent councelor from a government-approved housing counselling agency. Several lenders that offer proprietary reverse mortgage also require you for counselling. He or she will explain the financial implications, expenses and alternatives of a HECM and should be able to help you compare the costs of different kinds of reverse mortgages. The amount you can borrow from a HECM or proprietary reverse mortgage depends on some factors such as you age, the type of mortgage, the appraised value of your home and the current interest rates. Generally, the older you are, the more equity you have in your home and the lesser you owe on it means the more money you can get.
Here are some facts of a reverse mortgage that you should be aware:
1. In general, lenders charge a mortgage insurance premium (for federally insured HECMs), origination fee and other costs of closing. They may also charge service fees for the term of the mortgage. Law currently dictates an HECM reserve mortgage origination fees.
2. While it is true that some reverse mortgages have fixed rates, most have variable rates tied to a financial index and they are likely to change with the conditions in the market.
3. The amount owed in a reverse mortgage grows over time. The interest is charged on the balance outstanding and is added to the amount you owe per month. This means that your total debt decreases as the loan funds are advanced into the interest on the loan accrues.
3. A reverse mortgage could use up all or some of your home equity and leave a few assets for you and your heirs. Most of these mortgages have a nonrecourse clause that prevents you or your property from owning more than its value.
4. You will be responsible for insurance, property taxes, fuel maintenance, utilities and other expenses since you retain the title to your property. If you do not pay these and maintain the condition of your home, the loan may become due and payable.
5. If you own a home with a higher value, you may be able to obtain a higher loan but the higher amount you borrow also means higher costs. The key to determine the differences between a HECM and a proprietary loan is to do a side-by-side comparison of their benefits and expenses.
6. You have the right to cancel the reverse mortgage deal within three days for any reason minus a penalty. You have to write a letter to the lender by certified mail and ask for an acknowledgment or return receipt, this will allow you to document that the lender received it a said date. Keep copies of your correspondence. After cancelling, the lender has twenty days to return any amount you have paid for the financing.
Bear in mind that regardless of the type of reverse mortgage you are considering, you should comprehend all the conditions that could make the loan due and payable.
Enjoy housing that's made with you in mind at Chandler 55+ Housing and homes that exceed your expectations at Sun Lakes Realty
Article Source: http://EzineArticles.com/?expert=Sonia_C_Llesol
There are several types of reverse mortgages. One is the Single-purpose Reverse Mortgage is the least expensive option. This can be used for one purpose only which is specified by the government or a non-profit lender. Homeowners with low or moderate income can qualify for this loan. There is also the Home Equity Conversion Mortgages or HECMs and backed by the U.S. Department of Housing and Urban Development and the Proprietary Reverse Mortgage backed by the companies that develop them.
HECMs and Proprietary Reverse Mortgages are more expensive than conventional home loans and the up-front costs are high. You can consider this, especially if you are planning to stay in your home for a short while or borrow a minimal amount. These loans are widely available, no medical or income requirements and could be used for whatever your purpose.
Before you apply for a HECM, you must consult with an independent councelor from a government-approved housing counselling agency. Several lenders that offer proprietary reverse mortgage also require you for counselling. He or she will explain the financial implications, expenses and alternatives of a HECM and should be able to help you compare the costs of different kinds of reverse mortgages. The amount you can borrow from a HECM or proprietary reverse mortgage depends on some factors such as you age, the type of mortgage, the appraised value of your home and the current interest rates. Generally, the older you are, the more equity you have in your home and the lesser you owe on it means the more money you can get.
Here are some facts of a reverse mortgage that you should be aware:
1. In general, lenders charge a mortgage insurance premium (for federally insured HECMs), origination fee and other costs of closing. They may also charge service fees for the term of the mortgage. Law currently dictates an HECM reserve mortgage origination fees.
2. While it is true that some reverse mortgages have fixed rates, most have variable rates tied to a financial index and they are likely to change with the conditions in the market.
3. The amount owed in a reverse mortgage grows over time. The interest is charged on the balance outstanding and is added to the amount you owe per month. This means that your total debt decreases as the loan funds are advanced into the interest on the loan accrues.
3. A reverse mortgage could use up all or some of your home equity and leave a few assets for you and your heirs. Most of these mortgages have a nonrecourse clause that prevents you or your property from owning more than its value.
4. You will be responsible for insurance, property taxes, fuel maintenance, utilities and other expenses since you retain the title to your property. If you do not pay these and maintain the condition of your home, the loan may become due and payable.
5. If you own a home with a higher value, you may be able to obtain a higher loan but the higher amount you borrow also means higher costs. The key to determine the differences between a HECM and a proprietary loan is to do a side-by-side comparison of their benefits and expenses.
6. You have the right to cancel the reverse mortgage deal within three days for any reason minus a penalty. You have to write a letter to the lender by certified mail and ask for an acknowledgment or return receipt, this will allow you to document that the lender received it a said date. Keep copies of your correspondence. After cancelling, the lender has twenty days to return any amount you have paid for the financing.
Bear in mind that regardless of the type of reverse mortgage you are considering, you should comprehend all the conditions that could make the loan due and payable.
Enjoy housing that's made with you in mind at Chandler 55+ Housing and homes that exceed your expectations at Sun Lakes Realty
Article Source: http://EzineArticles.com/?expert=Sonia_C_Llesol
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