Mortgage Loans: Reviewed & Rated
Mortgage Loans...
Hi, I'm Andrew. I just recently bought a house, and spent a lot of time researching mortgage loans.
That's why we've created this special page within the site to advise you on how to choose the best mortage loans. I don't want you getting stuck in some sort of ARM, or crazy mortage with outlandish rates.
Which mortage loan is best for you?
Mortgage Loans: Should You Refinance?
With mortgage loans, refinancing may be one of the best things you can do. Is it a good idea for you? Let's take a look.
When is refinancing a good idea?
It's usually a good idea to refinance mortgage loans after you've had your mortgage for several years; at this time, you will probably be able to refinance for a much lower interest rate as compared to your older mortgage. That's good news, because what that means is that normally, you can simply "roll" the difference into your overall mortgage plan, which will not only significantly reduce monthly payments, but could in fact make it possible to shorten the term of mortgage loans in general.
Are there any dangers when it comes to refinancing mortgage loans?
There really isn't a danger in refinancing mortgage loans themselves, if what happens is that you will lower the amount of your monthly mortgage payments and/or will even reduce the amount of time you have your mortgage loan. However, make sure that when you refinance, you go through a reputable lender. The first place you should look when you decide to refinance is to your original lender. The original lender may very well give you the best deal, since you've been a customer on good terms previously and they will want to keep your business.
Finding the right lender
When it comes to refinancing mortgage loans, again, the best place to start is with the original lender of your first mortgage. It's a good idea, though, to get some competition rolling by going on the Internet and researching other reputable lenders. It doesn't hurt at all to do some research in and get some competition going in your favor, because if you get a lower interest rate from another lender, your current lender may be willing to match interest rates and terms once that lender knows they have competition for your business.
Best mortgage loans to get
In general, you want to get a mortgage loan that has a fixed rate. Most often, these are 15 or 30 year fixed rate loans. Many people have found that when they refinance, they can take a 30-year fixed rate loan, for example, and by getting a lower interest rate can roll that difference into the mortgage, refinance for 15 years, and pay their homes off much sooner. Doing that sort of thing isn't always possible, of course, but at the very least you should be able to lower your monthly mortgage payments significantly even if you still must go with a 30 year fixed rate mortgage loan.
Beware of adjustable rate mortgage loans whatever you do, because even though these seem like a steal to begin with in that they have very low interest rates as compared to fixed mortgages, those low interest rates adjust upwards after just a few years, sometimes very significantly. With a fixed rate mortgage loan, you know that the interest-rate you've got is one that will stay in place and won't price you right out of your home because of an interest-rate increase.
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Jumbo Mortgages May Carry High Interest
Jumbo mortgages are designed to be nonconforming. When secured through either Fannie or Freddie Mac, the amount limits are set by Congress. These loans will come with a lot of requirements and quite a few restrictions including a high-interest rate. Additionally, you'll definitely need to have a least a five percent down payment to secure these loans.
Higher Risks Means Higher Rates
When using a jumbo mortgage as a refinance loan, expect to pay a higher interest along with several fees paid up front because of not only the amount of the loan, but also due to the higher risk the lender assumes making such a loan. They are not typical finance or refinance products and are not as profitable to the lender as are conventional loan products. Therefore, many consumers seeking either a new mortgage or possible refinance probably to not encounter mention of a jumbo mortgage in any preliminary discussions about qualifying for a loan.
Why Higher Rates?
When is sure to shake these loans and sell them on a secondary markets where mortgage resale provides lenders with the necessary funds to make new loans. Furthermore, traditional banks and even investment groups are steering clear from issuing Jumbo mortgage loans at prevailing interest rates because of the recent credit crisis and the failure of the subprime mortgage market. These institutions are trying to stay clear of any high risk loans. Therefore, the players that will issue these loans are typically government-sponsored.
Jumbo by Default
In many high-priced housing markets throughout the country people seeking new mortgage finance are forced into the jumbo mortgage category. Housing that once upon a time was considered luxury priced is now considered standard pricing since housing values have skyrocketed in recent years. Therefore, many people seeking loans in the $450,000 and up category are forced to take upon these jumbo loans with higher interest rates. Loans below this amount are going anywhere from prime to about 6 ¾ percent while jumbo loans are getting hit with interest rates of 7 percent, if not higher.
Some Lenders Initiate Jumbo
Since home values have been on the rise, some lenders have begun to reenter the jumbo mortgage market. They are offering maximum amount loans with high-interest rates in the 5 percent range. Some offer even higher rates. And, according to published data, the going rate for a 30-year fixed-rate jumbo loan was 7.9 percent on the average for the week of Oct. 31. Industry experts believe more lenders will jump into the market offering loans at lower rates. Recently, five-year adjustable rate loans were in the low five percent interest rate area.
Why the Resurgence?
The recent upturn - albeit small - in the country's housing market has motivated several banks to reinstitute jumbo loans. There appears to be fewer institutional buyers of jumbo loans today that may force institutions to offer these at more favorable rates. When money was tight and credit was even hard to acquire, banks had less cash. Banks are finding themselves with greater cash deposits due to a loss of confidence in the stock market with consumers placing more money in traditionally conservative investment products like certificates of deposit.
Additionally, the increase in government assistance has helped banks gain greater liquidity.
Refinancing Your Mortgage
When it comes to mortgage loans, refinancing your mortgage may be one of the more important things you do. However, do you know that you can refinance your mortgage? And do you know whether or not it's a good idea for you? Let's take a look at what it means to refinance your mortgage, in regard to mortgage loans.
Should you refinance?
Refinancing mortgage loans may be a good idea, depending on your situation. For example, you could save thousands of dollars by getting a lower interest rate on your new mortgage versus your old one. In some cases, too, you can tap into your home equity to take care of financial needs.
Is it dangerous to refinance?
It can be dangerous to refinance, depending on what you're going to use the money for and where you get mortgage loans from. Make sure you get your refinancing from a reputable lender (a good place to start is your original lender for your first mortgage), and make absolutely sure that refinancing is going to make financial sense for you. For example, refinancing to get a lower interest rate on your mortgage and then rolling the difference into the amount you still owe on your mortgage is a great way to reduce the amount of money you still owe on your mortgage. This is a great deal for you financially, because it means you'll pay less on your mortgage over the long haul.
A less smart thing to do with the mortgage refinance is to take the difference and spend it on something frivolous, like a vacation. In general, use a mortgage refinance to improve your financial picture.
Who's the best mortgage broker for you?
As stated previously, the best place to start if you're going to refinance your mortgage is with your original mortgage lender. Especially if you've been great about paying your mortgage payments on time, they may be very willing to give you the best deal when it comes to refinancing.
You can also refinance by doing some research on the Internet and going with a different lender. However, make sure the broker you choose is absolutely legitimate and is truly going to get you a better deal than your current lender.
What are the different mortgage loans you can work with?
You can work with different loans, but in general, it's a pretty smart idea to go with a fixed rate mortgage as opposed to an adjustable-rate mortgage. For example, your current mortgage may be a 30 year fixed rate, and by refinancing, you may be able to get into a 15 year fixed rate at a better interest rate such that your monthly payments are going to be only minimally higher than they were previously with your 30 year fixed-rate mortgage. Again, do your homework and make sure the mortgage loan you choose is right for you.
Refinancing a mortgage absolutely makes financial sense provided that it saves you money over the long term and may even shorten the term of your mortgage. It can also make sense in other scenarios, depending on your situation. Research mortgage loans carefully before you choose, so that if you do decide to refinance your mortgage, you'll be armed with the information you need to make wise decisions.
How to Get the Best Mortgage Deals
Getting approved for a mortgage is a milestone in many people's lives because owning a house is something that gives many people a reason to be proud. When you're looking for the best mortgage deals, though, it can be tough to navigate the housing market especially if you're a new home buyer that doesn't know what to expect. Instead of applying to just any company and throwing out a ballpark figure that you should be approved for, there are some clear cut steps that should lead to you getting approved for the best mortgage deals possible.
Figuring a Budget
The first step in getting the best mortgage deals on the market is to figure out how much you need to borrow and get pre-approved for that set amount. The reason for this is that many companies will be more willing and ready to lend to you and give you the best deals if they know that you're already pre-approved for the amount you want because chances are that the amount will not increase all that much when you close a deal on a house. However, your budget should include all of the following since these are the other payments that you'll most likely be responsible for: property taxes, maintenance costs, utilities, as well as homeowners insurance. All of these cost estimations should go into your budget to figure out how much of a mortgage payment you'll be able to pay each month.
When you do apply to be approved for a mortgage loan, only apply for the set amount for which you'll be approved. Many people choose the type of house they want and then apply for a mortgage; this is the opposite of what should be done. Obtaining the best mortgage deals involves knowing what your budget is, getting approved for that amount, and then looking for a house within that price range.
Right Kind of Mortgage
The second step in getting the best mortgage deals is to search for a lender that will approve you for the right kind of deal. The only type of mortgage that you should be considering is a fixed-rate mortgage. These are home loans that set the amount of interest for which you'll pay each month. There is no adjustable rate, adjustable payment or other confusing principles to understand: a fixed-rate is simply the best term.
Getting quotes for your home loan is also crucial to getting the best mortgage deals. When speaking with lenders, you'll be able to negotiate your mortgage fees and even your interest rate level if you're prepared. Know what you can afford and how much of a down-payment you'll be able to place on a house; using these things will help you in your negotiations with each company to find the best mortgage deals possible.
As you can see, searching for the best mortgage deals involves a lot of leg work and time on your part. However, once you start the process of figuring your budget and negotiating with lenders then you should be well on your way to getting the best mortgage deal on the market.