Fixed Rate Mortgage: Do the Pros Outweigh the Cons?

Mortgage RateWhile a fixed-rate mortgage offers certainty in terms of interest rates, many are still hesitant to consider this because of its higher monthly payment. The said home loan program has a higher interest rate, which then results in higher monthly payment. This is the cost of the financial certainty provided by the loan.

Constant Rates and Payment

The main benefit of a fixed rate mortgage is the same interest rates over the course of the loan. Even if the economic factors change or loan rates increase, the interest rate on your mortgage remains the same. This also means that your monthly payment will not change. This eliminates the risk that you may need to pay a higher monthly payment over the life of the loan.

Other loan programs like the adjustable rate mortgage (ARM) and interest-only mortgage have payments that are subject to change, with the possibility of increasing throughout the life of the mortgage. If the rates suddenly increase, some borrowers may not be able to afford the payments. This is especially for those who experienced changes in their financial circumstances after obtaining the mortgage.

Loan Term Options and Less Risk

There are also plenty of mortgage terms available with this loan program. Lending companies usually offer 10, 15, 20, 30, and 40 years. A shorter term comes with lower interest rates, while a longer one has high rates. A shorter term with a low rate decreases the total interest expense over the life of the loan. This, however, means paying a higher monthly payment, because you’re paying back the loan balance in a shorter amount of time.

If you’re not comfortable taking risks, you can find relief with a fixed rate mortgage. This can let you sleep better each night, knowing that your rate and payment will remain constant. If you have a 15-year fixed rate loan, this means 15 years of certainty. Your loan and payment will not be affected by fluctuations in interest rates.

While a fixed-rate loan has a higher monthly rate and monthly payment, it offers certainty with constant rates and payments. If your think this mortgage program is right for you, talk to a lender to know more about your options.

Prepare for Your Home Refinancing in Three Easy Steps

Home RefinancingHome financing commitments can take decades to be completely fulfilled. Prior to owning a property, it will also take years to build the merits that will give you the best mortgage rate that will work with your budget.

It takes long-term planning, good judgment, and negotiation skills to get the lowest possible mortgage rate if you’re looking to refinance your mortgage.

Here’s what you should do:

Protect personal finances

The most appropriate home financing is provided based on the financial institutions’ lending standards. Mortgage rates are tiered according to certain criteria that include your credit score, income level, debt-to-income ratio, downpayment, and cash reserves. To qualify for the lowest mortgage rate, it would take keeping a financial stronghold that protects these metrics. Your past behavior as a borrower and saver will help set better terms when negotiating mortgage rates.

Learn how refinancing works

Refinancing your mortgage sometimes allows savings. If you have an option to refinance the remaining balance in your mortgage at a lower rate, calculate your break-even point. It starts with computing for your total mortgage closing costs divided by your monthly savings to get how many months it will take to break even.

There are mortgage calculators available online to assist with these computations. Just input the necessary data and they will generate the amortization schedule indicating the total interest payments you’ll be making over a certain term. With these details, it’s easy getting to a well-grounded decision.

Compare home financing deals

Inquire around the local area if there are financial institutions that provide great cost savings with their mortgage refinancing terms. Compare the rates offered. Consult with some of them to find out if they provide deals that can meet your financing goals. Consulting wouldn’t cost you anything.

Make every dollar invested worth it by protecting your personal finances, maximizing refinancing options, and consulting with a reliable mortgage expert. By doing so, you’re getting your home credit and finances in a good shape.

Failing a Mortgage Before it Even Starts: What Are You Doing Wrong?

Mortgage and homebuyersMortgage and homebuyers have a long history of a love-hate relationship.

And just like every engagement, rejection can happen even before you make direct contact. Or, in the case of a mortgage, a contract. suggests that you should know how lending institutions view your financial situation. This is advantageous because you can fix and relocate the rejection factors before lenders take note of them.

Notorious Bank Activities

While your chances of rigging the system by transferring your money from one bank to another are super slim, it’s a big issue for the bankers. Since the inherent mode of banking is about good faith and the consistency of business, suspicious and unpredictable activities are naturally against every regulation. But, if the consistent move is for a good reason you can explain, you can ask your personal banks to document each of your transfers along with a brief description of the reason.

Partnered/Joint Accounts

Taking a loan out of a joint account would always require you to get a letter from the other party. The letter should include the statement that you have 100% access to the funding. Even if it’s your wife, brother, sister, or parents, you have to ensure you’re not bypassing any common courtesy.

Unlogged Cash Deposits Out of Payroll

Unless you won the lottery, depositing money into your banks outside of your monthly income can raise a lot of eyebrows once the mortgage officer assesses your financial situation. Because the nature of such deposits is untraceable, the institution is required to flag this. So, it’s better to take the initiative and document these transfers before anyone asks for verification.

Credit Score

If you’re good with the previously mentioned red flags, you don’t have to pay too much attention to credit score because it’s already in the process of reform. The average credit score in the U.S. is 687, which is good for most loans.

Avoiding these mistakes is a matter of self-inspection. If you’re not aware of your financial standing, there might be some areas that need your attention right now.

3 Things You Must Not Do Before Applying for a Home Loan

Mortgage Form in UtahNothing is more exciting than taking your first step towards home ownership. You can’t wait to end your renting life, and start paying for something you could actually own someday. Considering the number of housing options in Utah, the property hunt gets even more thrilling.

Unless you’re well heeled enough to buy your first-ever home cash, you must be more careful with your actions. Believe it or not, your decision-making right from the start might define the quality Provo, Sandy, or Salt Lake City mortgage you could get. Altius Mortgage Group and other lending companies noted that doing the following are how not to play your cards right:

Forgoing Pre-Approval

You must know how much you can afford before you shop around. No matter how fun it is to check each property for sale and imagine your family living in it, you might be wasting time if you find out you’re not qualified to receive the necessary funds to buy it.

A pre-approval allows you get an assurance from a lender that you’re approved for a particular mortgage. You would have to provide proper documentation of your credentials to see how much you can qualify for. Although the amount quoted to you isn’t final, a pre-approval gives you an exact amount how much a lender would be willing to loan you.

Swiping Your Card for Big Purchases

As your debt-to-income ratio is important to your mortgage approval, incurring large charges on your credit cards might sabotage your chances of getting approved. Even if you have good credit, a big purchase could seriously decrease your credit score by more than 10 points. Any damage to your credit might suffice to disqualify you for a number of desirable mortgage rates.

Forgetting to Establish Your Credit History

Your past is as important as your present financial situation. Lenders are smart enough not to depend on your flawless credit now. You must have a minimum of three credit accounts with a history of two years on each. The more information you can provide about your repayment behavior, then more confident the lender can make an intelligent decision about your approval.

Applying for a mortgage is no laughing matter. You must never take anything about it lightly, or else you’re bound to make regrets later on.

The Ease and Convenience of Getting a Mortgage Loan

Mortgage LoanEvery person dreams of having their own house someday. As children, people believe that studying and working hard so that they earn enough money to buy their own home, car, and own things. However, adult life has shown us that reality is not always this simple and easy.

The Reality of Adult Life

Sometimes, even when you study hard, get good grades, graduate with honors, get a nice-paying job, it’s still not that easy to pay in cash and in full for a brand new house.

This is usually because of all the other expenses that you encounter while growing up. As a result, you have to consider getting a mortgage as a much faster and easier way to finally acquire the home of your dreams.

In exchange for living in your own house prior to paying for it in full, you have to pay a certain amount on a regular basis to the owner of the house, lot, or both. This may seem like a downer, but it doesn’t have to be.

Get a Mortgage Loan Easily cites that it is quite easy and convenient to get a mortgage loan. The Internet has made it possible to know how much you can loan and how much you will be paying over a given period of time with just a few clicks.

Consider your credit score as it affects your ability to get a mortgage or any other kind of loan. Avoid defaulting on loans, late payments on bills or debt and only use your credit card during emergencies instead of shopping.

Your dream house is within reach when you get a mortgage. Begin your application online and they will be the one to take care of everything from there. Just make sure you take the time to research thoroughly so that you are certain that you will get a good mortgage loan based on your income and credit score.