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Moving Relocation Tools > Real Estate Tips > Mortgage Information
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Search Assistant          Moving? Learn About: Real Estate Advertising Mortgage Calculator |
What is a Cap Rate?Do you know your Cap Rate? Adjustable Rate Mortgages, commonly called ARMs, have periodic and lifetime cap rates. Knowing both is the first step in deciding whether or not it is time to explore mortgage refinancing options. The periodic cap rate is the maximum interest rate increase during a specific period of time. The lifetime cap rate is the most you can be charged over the life of the loan. For example, if your current rate is 4 percent then your periodic cap may only allow an increase of 2 percent per year with a lifetime cap of 10 percent. This means your mortgage payment can increase each year until it reaches the top rate. If you own or are thinking of obtaining adjustable rate mortgages then be sure to budget for those increased rates. If you already own a home with an adjustable rate mortgage but can't afford higher payments then it might be a good time to explore mortgage refinance options while the rates are still low. More Real Estate Tips. How do I Fix a Credit Error to Obtain the Best Home Mortgages?Shopping for home loans has never been easier; online listing services like HomesandLand.com allow users to view pictures of properties and use a convenient mortgage calculator to estimate the monthly payment all in one easy step. It's even possible to apply for home mortgages online and comparison shop for rates, closing costs and terms. Mortgage brokers will contact you upon request about home loans that meet your criteria. It's fast and convenient. To find the best home mortgages begin by taking an inventory of your credit and available income. Better yet, speak to a representative to get pre-qualified in advance. It sends a strong message to sellers that you are a serious buyer and can help in the negotiations stage of purchasing a home especially if time is of the essence. But what happens if you find a mistake on your credit report? Inaccurate information on your credit report can cost time and money so plan ahead by ordering a free copy of your credit report from the three major credit reporting agencies. You can reach them at:
More Real Estate Tips. Are interest only mortgages a good idea?Interest only mortgages are a special mortgage type that allows buyers to buy more house with less money. It works this way, each month a normal mortgage payment allocates some money toward the principal - or the original purchase price of the home and the rest towards the interest. Early in a home loan most of the monthly mortgage payment goes toward the interest portion of the loan. By allowing buyers to pay only the mortgage interest, interest only loans can be a useful tool for those who need low initial payments or who expect to own the home for only a short time. Unfortunately, interest only mortgages can also lead to problems if not used wisely. This is particularly true if the housing market declines: The loss of equity can lead to a situation where you owe more than the home is worth. Other common problems arise when trying to refinance mortgages with little equity. Closing costs and other fees can result in dramatically increased monthly payments. More Real Estate Tips. What is the best duration for my fixed rate mortgage?Given the recent increase in interest rates, many people are leaving their adjustable rate mortgages and opting to refinance to fixed rate mortgages while rates are still low. Finding the perfect way to refinance mortgage plans is easy once you know how to compare the interest rates and duration. The rate of mortgage interest is typically associated with the duration of the mortgage so one way to get a lower interest rate is to take out a shorter home loan. For example, standard 30 year fixed rate mortgages typically charge a higher interest rate than 15 year fixed rate mortgage. Not only is the interest rate higher, but the total amount of interest charged will also be significantly more since repayment takes place over 360 months rather than 180 total months. Of course, by spreading out the mortgage over 30 years instead of 15 the monthly payment is substantially less. First, determine what you can afford. Depending upon your credit you may qualify for a variety of different rates and terms so it pays to compare mortgage brokers and different offers. Ask what rates are available for different terms including: 40 year fixed rate mortgages, 35 year fixed rate mortgages, 30 year fixed rate mortgages, 20 year fixed rate mortgages, 15 year fixed rate mortgages and 10 year fixed rate mortgages. After determining how much you can afford and comparing the different rates available, you are now in a position to select the best mortgage for your budget. Remember, if your income isn't secure then it might be a good idea to select the longer term and make additional monthly payments. The longer term allows you the flexibility to remain current with your payments or even pay ahead without forcing you into payments you may not be able to afford in the long run. More Real Estate Tips. Should I prepay my mortgage?Mortgage prepayment plans are popular options and for good reason! Prepaying a mortgage can save tens of thousands of dollars over the life of the loan plus it's easy to do once you understand the basics about mortgage interest and mortgage principal. Prepaying a mortgage is a great way to save on interest charges. For example, instead of taking out a 15 year mortgage it might make more sense to take out a 30 year mortgage and make additional payments toward the mortgage principal. The 30 year interest rate is usually a little higher but you have the option of making lower payments should you encounter any hardship such as job loss or illness. To find out how much you can save by prepaying your mortgage, first review your home loan to make sure you don’t have a prepayment penalty. Next, determine how much extra to put towards your mortgage. You can decide to make one large lump sum payment, an annual large payment, small monthly payments or even bi-weekly mortgage payments. When sending additional payments or extra monthly amounts, indicate on the payment how it is to be credited to your account. Finally, use a mortgage calculator to see how much you will save by prepaying your mortgage. More Real Estate Tips. What mortgage type is best for me?Two of the most popular mortgage types include fixed rate mortgages and adjustable rate mortgages but there are variations on each so it's important to carefully analyze your options before making a final decision. Fixed rate mortgages have one rate that stays the same for a specified time period; typically 15 to 30 years. This is a great mortgage option for people who need their payments to remain stable because the rates are guaranteed for the life of the loan. The only fluctuations will be adjustments for taxes and insurance if they are escrowed. On the other hand, adjustable rate mortgages reset at different time periods depending upon the terms of the contract and prevailing rates. These adjustments can result in large increases in the monthly mortgage payment making it difficult for those on a budget. However, adjustable rate mortgages can be a great option for those who expect a large increase in their household income (for example, a spouse who returns to work). Finally, some mortgages offer fixed rates for a few years and then begin adjusting. This is a viable option for those who need the security and stability of a fixed rate mortgage but who will later be able to afford the flexibility of a variable rate mortgage. More Real Estate Tips. |
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