Posts Tagged ‘mortgage rates’
Monday, May 17th, 2010
As if there were not enough choices to make when you are buying a house and getting a mortgage, lenders now have such a wide rang of ARMs (adjustable rate mortgages) and the borrower even has to choose the index upon which the ARM will be based!
The index is the underlying instrument that is utilized as a basis for the adjustment of the mortgage rate. Today, banks use various indices, such as the rate on government debt, or the Fed Fund interest or the London Interbank Offer Rate(LIBOR).
Interest rates on ARMS adjust, upwards or downwards, based on how overall rates are moving, which is reflected in the movement of the underlying index rate. If your index is CDs, and CDs go up, your interest rate goes up. ARMs have rate adjustment caps, so that the rate on your mortgage will only go up at certain intervals (every three or six months, for example), so that when the CD rate goes up, you may not have an increased rate for a few months, if your rate just adjusted recently. By the same token, if your adjustment is scheduled to take place immediately after the CD rate increased, you will have that rate for a while, even if the CD rate comes back down in the meantime.
ARMs can be tied to any number underlying instruments, such as the 90 day U.S. Treasury Bill. The Fed Funds rate is the most popular index for ARMs. Many of the international lender will use the LIBOR as the index rate for loans.
How you decide upon the right index is dependent upon your particular circumstances and how you believe interest rates will change. Adjustable rate home loans that use CDs as the reference rate tend to adjust more quickly. Adjustable rate mortgages that use T Bills will change more slowly. Quickest of all in reaction time is the LIBOR, so if you feel that rates are falling and want to take advantage of each downward move, this is the index for you.
But in addition to these standards, new products are always been put on the market; an example would be the option ARM, that will let a homeowner decide how much mortgage he is going to pay each month! There is a minimum payment that allows for the interest (so the bank gets its money) and then the other options will pay off some portion of equity. One of the big issues with an option mortgage is that you can get an increasing instead of decreasing mortgage; this is also called as negative amortization.
With this dizzying choice in interest rate scenarios for your mortgage, the best idea is to meet with a mortgage consultant who can explain all of them to you and advise you best on your needs.
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Tags: banking, business, credit, family, Finance, Insurance, internet, investment, money, mortgage rates, mortgages, mortgane loans
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Monday, May 10th, 2010
It really will help if you choose the best time to apply for your home loan, and not just when you have decided you want to buy a home. But there are some factors which, if they are under your control, can make one time better than another.
Let’s look at the reasons for this. To understand the issue, you have to understand a little about credit scores. You may not be in a position to be concerned about your credit score, but once you begin looking for a home loan, you will. Taking any steps to improve your credit score will make a major difference in getting a mortgage.
If you are at the position in your life where you have decided to buy a first home, or have outgrown a house and need to shop for a new one, putting off some decisions and changes may have a big impact on your credit rating.
There are some important issues that will influence your credit score. It is primarily a numerical judgment of a proposed borrower’s credit standing. Some items have a lot of weight in the calculation of this score.
If you can change some of these important issues, you can improve your rating. What are these issues?
Even if you have been a little lax in the way you have paid your bills in the past, now is the time to start paying them on time. It won’t change how you paid bills in the past, but paying on time now will show to a lender that your behavior has changed.
Now is not when to take on new credit card debt. Even lines of credit that have no balances are frowned upon by bankers because of their potential for abuse. Taking advantage of 0% financing, or store credit cards that offer percentage discounts for a new account will probably not make up for the higher loan rate you will receive.
High credit card balances will have a huge impact on your credit rating, so avoid any new purchases, and try to bring down your balances as much as possible.
If you have any control over the decision, do not change jobs at this time. Length of time in a job is a major part of your credit score, since a lender thinks you have a better chance of continuing income. With a short job history, your job is less safe, and a job loss would mean you could not pay your bills.
You may have some influence over when you retire, and this can be a help in your mortgage application.
Regardless of whether you have enough retirement funds, a bank prefers to see a salary before granting a loan. Refinance your home or apply for a mortgage for your retirement house before retiring.
Try to make as many of these changes as possible in order to help your credit score, and therefore your chances for obtaining a mortgage.
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Tags: banking, business, credit, family, Finance, Insurance, internet, investment, money, mortgage rates, mortgages, mortgane loans
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Tuesday, May 4th, 2010
One of the best ways to make sure your application for a mortgage goes smoothly and quickly is to have as much of the information that the lender is going to require ready ahead of time. This process makes it easier not only for the bank but for the borrower as well and if you want to close on a property quickly, it is imperative.
Here is a quick list of what you will in all likelihood be asked for in the application process. In no particular order, they are:
-List of payments: Any recurring and obligatory debts or bills you pay on a regular basis, such as student loans, child support, credit card bills, installment loans such as car payments, current mortgage or rent payments, including institution and account numbers.
-Proof of assets. Copies of bank statements. The lender will want to confirm your assets and therefore will request a recent copy of all bank and brokerage accounts in your name, including retirement (401, IRA) accounts. Have a list of your vehicles’ make and models. If you have a business, you will be required to have copies of the tax returns. For any rental properties you may have, supply rental agreements and estimated value of the rental unit.
-If you have been divorced and any property was jointly owned, supply a copy of the divorce papers.
-Employment History for the past two years, indicating name, address and telephone number of employer and employment dates.
-The previous two year’s W-2s and your pay stubs from the latest pay periods. These are used to officially confirm your income to the lender. The self employed will not have W-2s to supply, so you will have to bring copies of the tax returns for the last two years, both yours and the business’, if it files separately. If you are retired, you should supply a copy of your Social Security Award letter, and a copy of your most recent retirement or pension payment (or a copy of your bank statement if it is direct deposited).
-Addresses where you have lived in the past two years.
-Signed purchase agreement, if you have already made an offer on a home (or builder’s contract if it is a new home), and full description of home. -Copy of homeowner’s insurance policy and title insurance policy, if you are re-financing your house.
Giving all of this information to your prospective lender at the very beginning will get the wheels turning for your application, instead of them calling you and asking for documents one at a time, which can really delay the process.
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Tags: Insurance, mortgage insurance, mortgage rates, mortgages
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Saturday, May 1st, 2010
Like most things we do, if we outline the steps, it makes the job easier if you are shopping for a home.
Buying a home is not as simple as a) Choosing the house b) Obtaining a mortgage and c) Getting the movers.
But, as with so many decisions in life, one step is contingent upon the next. Before you can obtain the mortgage, you have to know how much you need. The first thing that will decide this is the size of the home you desire. And even before you are able to make this decision, you have to know what size home loan you can afford.
When viewed in this light, it would seem that shopping for a house is not possible until you have an amount in mind. The wisest and easiest way to do this is to meet with a mortgage consultant before you start house hunting.
This specialist will be able to do a total analysis of your financial situation and be able to advise you about how much you can afford for a mortgage.
It is wise to take this critical step for a number of reasons. The first reason is that you now have a perfect concept of the price range you should be shopping in, and won’t waste time looking at homes that are above or below this range, and the second reason is that you may qualify for a loan commitment. A prospective buyer who obtained a loan commitment has a big advantage over another buyer who does not.
With a mortgage commitment in hand, and knowing of how much you can spend in mind, you can then start looking for your dream home. Outside of the price of a home, the most important things people care about in a home is where it is located and the school system (important whether or not you have children, since home values are better in areas with good systems.) You may have to consider a smaller home in a preferred area to stay within your budget. Or, you may pick the larger home with a further commute.
Homeowners then must consider the more physical attributes: the home style and desired amenities like a fireplace or a pool. Sometimes what is important for one family is meaningless for another.
Now is finally the time to contact a real estate agent and start looking for a home because you now have all of the necessary information to make the right decision about a home.
1. How much you can afford. 2. The location you desire. 3. The style you prefer. 4. The amenities that are important. Now, and only now, should you contact a real estate agent to go look at homes, since you have the right tools to make the decision.
-What you can afford for your home -Your desired location -Your preferred design -Added features that matter to you. At this point, you should be ready to get in touch with a real estate broker and start shopping, since you have the most important information:
* How much you can afford for the home * Where you want to live * The style you prefer * Additional features. Now you are ready to go to a real estate broker and tell him what you want, since you have the right information:
1) What you can afford 2) Where you want to live 3) The style of home you prefer 4) The extras you consider important
With such a clear cut list in hand, looking for a home will be a breeze!
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Tags: Insurance, mortgage insurance, mortgage rates, mortgages
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