Paying Off a Home Mortgage Early – A Road Map

It is hard to comprehend the fact that most new mortgages are written on a 30 year term. It is even harder to comprehend that the vast majority of these mortgages will never be paid in full because very few people remain in a home for that long. Do you want to be paying a mortgage forever? If you are like most, you would answer with a resounding 'No!'

Here is the best way to pay your mortgage down a little faster than your set term and a way to figure just how fast you can pay it off. There are home mortgage calculators available on the Internet that can tell you how a single or multiple extra payments will influence your overall payoff. It amazes most to learn that by making a single extra payment a year, a person can shave up to 10 years off of a 30 year mortgage term.

Most people would think that making double payments each month would pay your home mortgage off in half of the time, but this is way off. The truth is that every penny of your extra payment goes towards your principal. Your regular payment is split between your principal and your interest, so by making a double payment, you are really making a triple principal payment. Take advantage of these free mortgage repayment calculators to see just how much faster you can pay off your home mortgage.

Apples to Apples - Comparing Home Loans

When you are shopping for a home, you will find that you can get very different quotes on home purchase loans from lenders and mortgage brokers. When you get multiple quotes, it is important to make sure you compare apples to apples.

Some brokers may be proposing very different loan scenarios than others, so be sure you fully understand each. Here are a few things to look for.

• Term – Are the home loans that you are comparing based on similar repayment periods? Monthly payments will look a lot lower on home loans with a 30 year repayment period as compared to a 10 or 20 year. Do not be fooled by a low number based on a long term.
• Rate – Not all rates are made the same. First, are you comparing fixed rates or adjustable rates. If you think a rate is too low to be true, it probably is and you are looking at home loans that will eventually adjust based on one financial index or another. Double check that you are looking at home loans with similar rate structures and then compare the actual rates.
• Closing Costs – Different lenders, title companies, brokers, and brokerages have different closing costs associated with their loans. When examining closing costs, make sure that the escrows are accurate and that there are no points or origination fees. These fees can be well hidden and make you think you are getting a better deal than you are.

Take these three factors into account when you are comparing multiple home loans and you will be sure to compare apples to apples.

Choosing a Mortgage Term

If you are looking into getting a mortgage and are interested in the best investment for your future, the term, or length, of the mortgage you choose can be an important factor. Here are a few tips on how to choose the term of your loan. First, will you be living in the property or renting/leasing it? If you will be residing in the house, how long do you anticipate living there?

If you plan on sticking around for a while, do not be afraid to take on a longer term mortgage. You will have a lower payment because of the extra time that you have and you will still be building equity in the property. If you plan on leasing the property, determine what you will be able to charge and then translate that into a payment. Rental properties make the most for you when you quickly pay down your mortgage. If you can charge enough for rent to help you shorten the term of the mortgage, than do so.

In the end, the term of your loan depends on how comfortable you are with a higher payment. Shorter loans have larger monthly payments because there is less time to pay off the total principal. However, this is a tradeoff that lenders make because a shorter term loan will usually have a lower interest rate. If you have a stead income and can afford to make larger payments, get a shorter term mortgage and own your home, outright, as quickly as you can.

3 Tips to Using an Interest Only Mortgage Calculator

Interest only mortgages are prevalent in a current market where interest rates are so low. Using an interest only mortgage calculator can help you get a clear picture of your mortgage situation from the beginning of your loan on through until the end. Here are three quick tips to using an interest only mortgage calculator.

• Know your interest only term. For the first part of your loan's life, you will only be making payments towards your accrued interest. Whether you have a 6 month or 10 year interest only period, use an interest only mortgage calculator to figure the payments you will have during this period.
• Stay ready for after the adjustment. Once your interest only period ends, you will see a great increase in your monthly payment. Using an interest only mortgage calculator can fill in the blanks as far as what your new payments will be. Be sure to plug in the reduced term remaining on the loan to see what your accurate payment will be.
• Refi or Stick It Out? An interest only mortgage calculator can let you know if you would be better off refinancing to get out of the adjustment to your payment or riding out the loan once it adjusts. This will depend on the current interest rates vs. the rates when you got the original loan.

Use the calculator to plug in the data and see what your best move is.

3 Reasons to Refinance Before it is Too Late

There are many reasons that people today are choosing to refinance their home loans. Many of these reasons are specific to the person's situation; however, there are some general reasons why people across the country are rushing to refinance their mortgages. Here are three of the most popular reasons, and there is nothing to suggest that they will all last forever. Financial trends change, so pay attention to these three factors and refinance before it is too late.

• Low Rates – Home loan interest rates hit 40 year lows a year or two ago. Although they have gone back up slightly, they are still lower than we have seen in a few generations. These low rates would be enough excuse for anyone, but there are many more such as….
• Home Values – With home values skyrocketing across the country, people are looking to take advantage of their home equity by drawing some out through a refinance. Many lenders will loan up to 100% of your home's value allowing you to take cash out above what you owe on your principle.
• Options – Banks have become very creative with home loan programs. For refinance options, you can even get loans today that give you multiple payment options, depending on what you feel like spending in a given month. With all of these options, it is easy for a person to find one that fits their ‘needs'.

3 Ways to Avoid PMI

1. Buy In Your Means – The easiest way to avoid taking on PMI is to buy a house within your means. I know this is a pretty blunt way to say it, but today with interest rates so low, many people are buying homes way outside of their true means. By sticking to homes and loans that fit with a realistic budget, you will be better able to come up with a sufficient down payment or to pay it off quickly.
2. Borrow Your Down Payment – If you have resources to tap for down payment assistance, use them. Avoiding PMI is easy if you just have your 20% down payment. Check with family, friends, and financial centers for down payment assistance. You can offer repayment with interest, and a good rate at that, and still never pay nearly what you would have to for PMI.
3. Take Two Loans – Remember, PMI is only mandated when any ONE loan exceeds 80% of the loan to value of the property. This does not mean that you can't have two loans for 80% and 20% total. In fact, taking a first and a second is the best way to avoid PMI without needing to go beyond large lending institutions for the funds. Any of these three suggestions can help you avoid taking on PMI. Consult with a professional mortgage broker or lender for more information on how to avoid PMI altogether.

Applying for Bad Credit Mortgage Loans

If you are looking for a mortgage and have previous credit issues, you may find that bad credit mortgage loans are the only option available. The important thing to remember is that even a bad credit mortgage loan will help you build that credit back up for the next mortgage loan you wish to secure. Applying for a bad credit mortgage loan is simple.

Here are a few of the best ways to prepare for the application process:

• First, know the accuracy of your credit report. You can check this for yourself by ordering a credit report on the Internet or directly from the reporting agencies. If there are any incorrect notes on your report, you can get them fixed prior to your application.
• Next, gather as much proof of your income as possible. Lending bad credit mortgage loans is a risky proposition for lenders. They will want to know that you have a steady income from which you will be able to pay the monthly payments. Give them as much proof as they ask for and they will feel more secure in your loan.
• Lastly, bad credit mortgage loans will have applications that contain very strict rules for repayment. Be sure that you acquaint yourself fully with the loan you are applying for and that you will be able to live up to your end of the bargain. If not, a lender of bad credit mortgage loans will be far quicker to foreclose on your home.

3 Reasons to Use a Realtor as a First Time Home Buyer

A professional Realtor can often be the difference in finding your dream home and settling for the best you can find. Everyone should take advantage of the knowledge and connections that come with a professional Realtor. This is especially true for a first time home buyer. Here are three important reasons to use a Realtor if you are a first time home buyer.

1. Negotiation. Realtors are only as good as their negotiating skills. A Realtor may be able to show you thousands of properties, but if they can never get the owner to budge on price or contract, than what are they helping you with? Most first time home buyers do not know how to handle real estate negotiations and end up not getting the best deal possible. Using a Realtor with good negotiating skills can help you get that best deal.
2. Knowledge. A person cannot just fill out a form and get their realtor's license. There are tests that must be taken and a certain amount of knowledge that must be absorbed for a Realtor to begin practicing. As a first time home buyer, it is especially important to take advantage of this knowledge when making your purchase.
3. Resources. Do you happen to know a home inspector? Or an appraiser? Would you know where to begin looking for one? The average first time home buyer would answer ‘no’ to each of these questions and many more that deal with the necessary resources for making a home purchase. Realtors will also bring these types of connections to the table along with their own skills.

Second Home Financing Trends Recently Reported

Rate Hikes Help Stabilize Market

3 Quick Steps to Completing a Mortgage Application Online

If you are looking to secure a mortgage for a new home and want to fill out a mortgage application online, here are three quick steps that can help you make sure the process goes swiftly and without any problems.

• Prepare. Make sure that when you are going to fill out your mortgage application online that you have all of the answers you will need. Mostly, you will want to have information about your income, assets, taxes, and previous home ownership. Nothing holds up a mortgage application online like being unprepared, so gather as much of this information as you can at the beginning.
• Find the Site(s). There are so many websites that will accept a mortgage application online that it is sometimes tough to know where to go. The real trick is to go to several. There is nothing wrong with getting as many applications in as possible. This will just mean that you get more quotes from more brokers. Just remember that your credit will be pulled each time you apply and that too many credit pulls can be bad for your score. Pick and choose where you fill out a mortgage application online wisely.
• Be Thorough. Once you have found the sites that will take your mortgage application online, be extra thorough in completing the application. Leaving just one space empty could result in delaying or not even receiving quotes. Double check and then triple check each of your answers on the mortgage application for accuracy and you will be fine.

Hud Discussing Changes to RESPA

30-Year Mortgage Rates Expected to Continue Rising