Home Loan Guidance For Our Increasingly Complicated Real Estate Market September 4, 2008
Posted by janey in : mortgage finance , comments closedWith the slowing housing market, rising interest rates and lenders tightening the reins on their mortgage qualification requirements, it’s extremely important to get the best mortgage at a good interest rate.
Keep reading for four tips you can use to get the best mortgage in today’s residential real estate market.
1. Work on your credit.
If your credit score isn’t good, take the time to work on rebuilding it. Now is not the time to accept a higher rate just because you have poor credit. Spend a year or two making sure all your payments get in on time, that you stop applying for new credit and you reduce the balance on your double-digit interest credit.
Because interest rates are already rising, you can’t afford to lock in at a credit penalty rate. Remember, taking an additional year or two before purchasing a home could save you tens of thousands of dollars over the life of the loan, so have patience.
2. Build a sizable down payment.
Having a strong down payment of 20% or more puts you in the driver’s seat and allows you to direct negotiations with lenders. Not only will you save on private mortgage insurance (PMI) and your interest rate, you’ll also walk into your home with pre-established home equity.
You’ll have backup equity in case of a financial emergency, and you’ll have a strong financial foundation that’s not easily rocked by economic instability.
If you’re having trouble coming up with a larger down payment, try accessing 401K reserves or negotiating a loan through financing from your family.
3. Opt for the stable lender.
With fly-by-night mortgage companies closing their doors and selling their loans on the secondary market, you want a lender that’s going to give you good customer service and do so for 30 years.
Don’t make the same mistake as the countless thousands who lost their homes to foreclosure because of bad lender decisions; opt for a stable lender. Look for a financial provider whose personnel answers your questions, doesn’t try to rush you and is genuinely interested in helping you get the best loan.
If you’re stuck, ask around your neighborhood or hit family and friends for advice on their lenders. Having customer referrals from people you trust is invaluable.
4. If interest rates are too high, don’t lock in.
While an adjustable rate mortgage (ARM) means your monthly mortgage payments can still go up with inflating interest rates, you also don’t want to lock yourself into a 30-year fixed rate mortgage with a bad interest rate.
Whatever you decide, remember that if you have substantial home equity and good credit, you can always renegotiate or refinance down the line if interest rates come back down.
Learn More About Compare Mortgage Rates and Fixed Term Mortgage - Useful Tips September 4, 2008
Posted by janey in : mortgage finance , comments closedMany people are seeing their current mortgage deals coming to an end and are thinking about moving to a new mortgage to save cash. But is it always the case that a lower rate mortgage is cheaper in the long run?
It seems that if you can reduce your monthly mortgage payments by 0.5% then you could be saving yourself a lot of monthly expense. This could be a saving that you can spend elsewhere or if you are unlucky and expecting a huge rise in mortgage costs, just a reduction in the increase of the monthly cost.
Mortgage comparison tables tell you what mortgage is the cheapest on the market today, but is it right for you? More importantly, will it help you?
Although interest rates are static at the moment, some experts believe a reduction is on the cards in the short term. So if you lock into a 2-year, 3-year or longer fixed term mortgage, by the end of the term you might be paying more than a variable mortgage.
But you can be surprised by further interest rate rises and then you would be winning. That’s the nature of this game. But this isn’t the only area in which you could be spending a lot more than you need to. There is a lot in the game of how to compare mortgage rates properly.
Look carefully at those best offers that you see in mortgage charts and read the small print. Look for the upfront fees - arrangement fees, legal fees etc. Take a look at your existing mortgage, how much is involved in closing that? There may be exit and deed release fees. These fees may also exist in the new mortgage - are they significantly higher than now - that’s effectively a cost in the future?
How much will you be paying to switch your mortgage? Many lenders allow you to add this to the borrowing, but then you are paying interest on them for the life of the mortgage. Even more outgoings each month! No wonder that in the neighbor financial areas - like online business loan application - there are many details like this.
If you can afford to pay these fees at the time of the move then in the long term that way is going to be cheaper. But then look at your existing mortgage. If you are having to pay £2,000, maybe even more to switch mortgage, could you instead pay off a small chunk of the mortgage, or at least put that cash away in a high interest account instead? Then take a look at how that would reduce your payments - or work out what your net payments are after the money put aside earns some interest.
Changing to a new lender may not always be the right thing to do. First, speak to your lender and see what monthly charges they can get you down to with your existing mortgage. Then speak to a few mortgage brokers and get them to do all of the maths for you and write down exactly what you will be left paying each month.
