The House Team Of Mortgage Intellingence asked:


Just imagine  as you’re going through your favourite coffee drive-thru this week  that a well-dressed gentleman stops and offers you $11,000 for your medium double double. Who would hesitate? We’d take the cash. It’s not so far-fetched. In fact, if you take that coffee budget and apply it to your monthly mortgage payment  a mere $30 extra per month -you could save yourself about $11,000 over the life of your mortgage.

Most of us can accept the idea that we must borrow money to purchase a home. We look for the best mortgage, and then just keep doling out the money for as long as it takes to pay it off. Most Canadians choose to amortize their mortgage over 25 years. That’s a long financial commitment, and it could more than double the cost of your home. But with good planning  and a few smart tactics  you should be able to enjoy your mortgage-burning party much earlier.

Here are a few strategies for fast-tracking your mortgage:

1. Increase your monthly payments. Rather than choosing your amortization period first, ask yourself how much you can afford each month. For example, you may feel that you can afford $1,000 per month. You’re delighted when your $125,000 mortgage only demands an $800/month payment (at a 6% interest). But make a monthly payment of $1,000 instead, and you’ll shave 8.75 years and almost $46,000 off your total interest cost.

2. Take advantage of lower rates. In addition to reducing the overall interest component of your mortgage, you can take the opportunity to pay down more principal faster  simply by maintaining your original payment. You should even increase your payment if you can, to reap the benefits of the cheapest mortgage money in memory. Again, you could take years  and thousands of dollarsoff your ontario mortgage.

3. Tie mortgage payments to your pay schedule. Many Canadians are paid on a bi-weekly schedule. If you accelerate your payments to bi-weekly instead of monthly, you could improve your own cash flow and fit in an extra payment each year. That means that you’re paying off principal faster  leaving you with less interest to pay overall. It doesn’t seem like much but  like putting your coffee budget to work  the bi-weekly strategy can have you mortgage free four years sooner, with almost $22,000 in savings.

4. Use any bonuses, tax refunds or “found money” to pay down principal. This is especially valuable in the early years of your mortgage. If you receive an annual bonus or other lump-sum compensation, see if you can put it against the principal. An extra $1,000 per year is a great way to fast-track to mortgage-free!

5. Consolidate your loans into a new mortgage and use the savings to boost your payments. If you’re a homeowner with some equity, you can use your mortgage to consolidate your other loans: student loans, car loans, etc. Add the money you’ve been spending on loan payments to your mortgage payments, and you could see big savings in overall interest.

With ontario mortgage rates at historic lows, you should take the opportunity to get an expert mortgage analysis from an independent mortgage broker with access to mortgages from a wide spectrum of lenders. You’ve got a great opportunity to put some fast-track tactics in place. You’ll remember what a good decision you made at your mortgage-burning party.

Brian Jenkins asked:


As everyone knows, buying a home is stressful and one of the most important decisions that one has to make is what kind of mortgage to get. Choosing the mortgage that works best for you and addresses your specific needs can potentially save -or cost you -thousands of dollars over the length of the mortgage.

Perhaps the biggest decision is whether to take a fixed rate (FRM) or an adjustable (ARM) mortgage. A fixed rate mortgage is just that -the interest rate on your loan will not change even if interest rates go up or down. An adjustable rate mortgage will go up or down, depending on the prevailing interest rate at the time. It all depends on the state of the economy, your personal and financial situation and just how much of a risk you want to take. Around 70% of all mortgages are fixed rate.

A fixed rate mortgage offers stability -you do not need to worry about your monthly payment going up, although you may be missing out on a better rate. An adjustable rate mortgage carries an interest rate that is connected to the prevailing market rate -the monthly mortgage payment will be more or less, depending on what the market rate is doing. An adjustable rate mortgage does offer some safeguard – there may be a limit on the amount the rate can change during a certain period; there may also be a limit on the amount that rates can be increased over the length of the loan.

A change in the interest rate can mean a big difference in how much you pay for your home. An interest rate of just one point less can mean a savings of around $50,000 on the average thirty-year mortgage and around $5,000 on the average 15-year mortgage. In addition, an increase in the interest rate of just one or two percent can mean monthly payments that are between $50 and $250 higher. Another option is to take out the fixed rate mortgage and then re-finance if interest rates go lower.

The length or term of the mortgage is also important. Most home buyers opt for the traditional 15 or 30 year mortgage, but it is also possible to take out a mortgage that is 10, 25 or even 40 years. It all depends on how much you can afford to pay each month and how quickly you want to own your home outright -obviously, the shorter the term of the mortgage, the higher your monthly payments are.

It is also possible to take out a 30-year mortgage and when you can afford it, pay more towards the principal, thus making the term shorter. Simply making an extra payment a month will significantly reduce the term of the mortgage -as well as saving a substantial amount in interest charges. If you pay extra, make sure the payment is going towards the principal, rather than the interest.

There are some other options available. An option adjustable rate loan has an interest rate that adjusts every month -it allows homebuyers to enjoy lower monthly payment amounts at first and then to make higher payments later, when they can better afford it. A so-called balloon mortgage offers a payment schedule similar to the traditional 30 year mortgage -but with a shorter term of up to seven years. At the end of the term, the buyer must pay the outstanding balance.

You may also be eligible for an FHA (Federal Housing Authority) loan -a fixed rate mortgage that is designed for home buyers with a low income or poor credit, who are buying a home for the first time. An FHA loan usually requires less of a down payment and offesr a lower interest rate than a regular mortgage. An FHA mortgage loan is also secured to the lender in the event of default by the purchaser.

Another option is a VA (Veteran’s Affairs) mortgage, which applies to buyers who have experience of serving in the military, as well as a surviving spouse. VA loans have several advantages – it’s possible to get a mortgage with little or no down payment, the loans are assumable and there is no penalty for prepaying the loan. However there is a maximum loan amount – in most states this is $417,000 -and you still have to qualify as far as income and credit are concerned.

Your home is probably the biggest single purchase you will make. It is worth taking the time to find the mortgage option that works best for you. The types of mortgages that are available all affect your payments differently. The type of mortgage chosen mostly depends on personal income and the length of time in which you are looking to pay for the mortgage.

vik william asked:


The best financial deals are found only after a thorough investigation into home loans and mortgages. Many people dream of owning their own home, but the high cost of homes generally requires a home mortgage to make it a reality. A mortgage is just like any other product; thus whether it is a home purchase, refinancing or a home equity loan, the price and terms of a mortgage can be negotiated. If you decide to apply for a home equity loan, you shouldn’t necessarily automatically go with the same bank that holds your first mortgage. Instead, shop around to find the best rates and loan terms. Finding the right loan is always a challenge; it requires checking different lenders and comparing options to select the home equity loan that best meets your needs!

There are different types of mortgages today to suit different classes of people. To make life easier for the old and the retired, the government has even introduced reverse mortgages. This type of mortgage is a loan against the home that does not have to be paid back as long as the owner is alive and living in the home, and at the same time provides income to the owner.

Until recently, bad credit was something of a mystery. However, after the establishment of the FICO score, a uniform credit scoring agency, measuring people’s credit behavior has become easier. Your future credit behavior can more easily be predicted based on this data. Most lenders use the FICO score as a starting point when deciding whether or not to extend credit to you. Moreover, if you don’t pay your monthly mortgage payments, the mortgage company can foreclose leading you to lose your home and affecting your creditworthiness in the future.

In a rapidly changing economic scenario it is often difficult to keep up with the complexities of the financial world. We at mortgageproguide.com have made every effort to elucidate and enunciate in simple terms, matters related to money and mortgage. Mortgageproguide.com is a comprehensive site offering free and unbiased information on home loans, conventional mortgages, bad credit mortgages, home equity loans and reverse mortgage. So go through to moneyproguide.com in detail and make an informed decision on all matters concerning money and mortgage.

Selecting a Mortgage

Selecting a mortgage is not only time consuming but confusing, given the large variety of loan packages on offer in the market today. With different mortgage rates, varied costs and fees and multiple terms and conditions, you need to be well informed to make the correct decision about which mortgage is best suited for you.

Among other things, mortgage rates are extremely important while selecting a mortgage. Interest rates fluctuate depending on different factors that influence the economy like prime rate, Treasury bill rates, federal fund rate, federal discount rate and certificate of deposit rate etc. If the economy is doing well and the demand for mortgages is high, the interest rates will also see a climb. On the other hand, if the demand for mortgages is low in a poor economy the interest rates will drop as well.

However, there are several other factors that are as or perhaps more important than interest rates that determine which mortgage is right for you. These primarily include your financial situation such as income, savings and liquidity, your housing needs and duration of stay, the level of risk you are willing to take as well as the term of your loan. All these factors need to be considered equally and balanced with one’s present position and future goals.

Before you decided on which mortgage is best for you, you will need a mortgage lender approval who based on your credit rating will offer you a loan that he feels is within your reasonable risk limits. The mortgage lender will take into consideration your ability to pay and then adjust your interest rates, points, terms etc accordingly. Only after this will you be able to select a mortgage that fits your requirements both, personally as well as financially. You can go in for mortgage refinancing at the end of the term if such a need arises.

BASIC FEATURES WHILE SELECTING:

1. Interest rate – fixed or variable:

In a fixed rate mortgage your interest rate will not change during the entire duration of your loan. This will enable you to know exactly what your periodic payout is and how much of the mortgage will be paid off at the end of the term.

• Federal Housing Administration Insured Loans (FHA)

• Veterans Administration Loans (VA)

• Farmers Home Administration Loans (FmHA)

With a variable rate, the interest will vary periodically during the life of the loan, depending on interest rates in financial markets.

2) Duration of mortgage: short term or long term

The duration of mortgage is the length of current mortgage agreement. A mortgage typically has duration of six months to ten years. Usually, if the term of the loan is short, the interest rates will tend to be low. A short term mortgage is for two years or less and is appropriate for people who feel that the interest rates will drop in the future, especially when it is time for renewal. A long term mortgage is for three years or more and most suited for people who believe that current rates are stable and reasonable and want the security of budgeting for the future. After the expiration of the term loan, you can either go for a renewal in mortgage at the current rates or repay the balance principal owing on the mortgage.

3) Open or closed mortgages

Open mortgages are typically short-term loans and can be paid off at any time without penalty. Homeowners who are planning to sell in the near future or require the flexibility to make large, lump-sum payments before maturity choose these kinds of mortgages. Closed mortgages are committed after taking into consideration specific terms. If you want to pay off the mortgage balance you will have to wait until the maturity date or pay a penalty.

4) Conventional or high ratio

A conventional mortgage is one that is not more than 75% of the appraised value of purchase price of the property. The balance amount is paid through your own resources and is known as down payment. If you have to borrow more than the stipulated 75%, then you will need a high ratio mortgage. If the down payment is less than 25%, the mortgage will have to be insured. The insurer will charge a fee which will depend on the amount you are borrowing and the percentage of your down payment. Fees range from 1% to 3.5% of the principal amount and can be paid up front or added to the principal amount of the mortgage.

REVERSE MORTGAGES:

Unlike a traditional mortgage where you make monthly payments to a lender, in a “reverse” mortgage, you receive money from the lender. It is a loan against your home or borrowings on home equity, which you do not have to pay back as long as you live there and yet, retain the title to your home. It must only be repaid once you die, sell your home or permanently move out of there. With a reverse mortgage the value of your home can be turned into cash which you can receive as a lump sum and up front, monthly cash advance, credit line which allows you to withdraw as and when you need it or a combination of all.

Reverse mortgages thus help homeowners who are privileged to own a house but are cash strapped stay in their homes and still meet their financial obligations. Reverse mortgage is for seniors. To be eligible for most reverse mortgages, you must own your home and be 62 years of age or older. The proceeds of a reverse mortgage are generally tax-free, and most have no income restrictions. They also do not affect Social Security or Medicare Benefits.

There are typically three types of reverse mortgages:

• Single purpose reverse mortgage– these are offered by some state and local government agencies and nonprofit organizations and have very low costs. To qualify, one should typically belong to a low or moderate-income group. They are not available everywhere and can only be used for a single purpose as specified by the lender like repairs, improvements, paying property taxes etc.

• Federally-insured reverse mortgages- which are also known as Home Equity Conversion Mortgages (HECMs), and are backed by the U. S. Department of Housing and Urban Development (HUD) and

• Proprietary reverse mortgages- which are private loans that are backed by the companies that develop them.

In both, the HCEMs and proprietary reverse mortgages, the costs are relatively higher, widely available and can be used for any purpose. Additionally, the amount of money you can borrow with these mortgages depends on several factors, including your age, type of reverse mortgage you select, appraised value of your home, current interest rates, and the area where you live. In general, the older you are, the more valuable your home, and the less you owe on it, the more money you can get.

Just like a traditional mortgage, there are several fees and costs associated with reverse mortgages. These charges include an origination fee, up-front mortgage insurance premium (for the FHA Home Equity Conversion Mortgage or HECM), an appraisal fee, and certain other standard closing costs. In most cases, these fees and costs are capped and may be financed as part of the reverse mortgage.

Origination fee

This fee covers a lender’s operating expenses, office overheads and marketing costs for making the reverse mortgage. Home Keeper borrowers are charged an origination fee that may not exceed 2 % of the value of the home.

Mortgage insurance premium

Under the HECM program, borrowers are charged a mortgage insurance premium (MIP), equal to 2% of the maximum claim amount or home value, whichever is less Additionally there is an annual premium thereafter equal to 0.5% of the loan balance. The MIP guarantees that if the company managing your account goes out of business, the government will intervene to ensure that you have continued access to your loan funds. Moreover the MIP guarantees that your debt will never exceed the value of your home at the time of repayment.

Appraisal fee

It is paid to the appraiser who is in charge of appraising your home and assigning it a current market value. Since Federal regulation mandate that the home be free of structural defects, an appraiser will also ensure as much. If the appraiser uncovers property defects, these will have to be repaired through an independent contractor whose costs can be financed in the loan.

Closing Costs

Include other miscellaneous charges such as credit report fees, flood certification fees, escrow or settlement fees, document preparation fees, recording and courier fees, title insurance, pest inspection and survey fees.

Service fee set-aside is an amount deducted from the remaining loan proceeds at closing to cover the projected costs of servicing your account.

The benefits of reverse mortgages are plenty. Reverse mortgage for seniors is a boon and allows the older generation to live with dignity and happiness.

Sarah Johns asked:

Identifying the best mortgage rate is not very easy. There are various other factors to be considered to identify the best mortgage rate.

You can identify the best mortgage rate based on the interest rate, the time duration for which you wish to hold onto the mortgage, the Annual Percentage Rate or APR and whether you are refinancing or purchasing the property.

A careful comparison of various mortgage rates offered by various mortgage loan lending institutions will enable you to select the best mortgage rate that suits your requirement. A number of related websites are there to provide mortgage loan rate quotes of different loan lending institutions. Compare the current mortgage rates for the same type of mortgage. You can compare mortgage rates based on lender, points, rate, APR, fees in APR, lock, or estimated payment. Mortgage rates fluctuate based on the location, the loan amount and the economic state of the country. So it is always better to consider the mortgage rates of the same mortgage plan of few different lenders in order to choose the best mortgage rate. Mortgage rates may change considerably from day to day. Hence it is important to compare the mortgage rates of multiple lenders on the same day. After making thorough comparison, identify one or more mortgage options based on your mortgage goal.

The home mortgage calculator is one of the powerful tools used for calculating the best mortgage rate. Using home mortgage calculator you can also know whether a particular mortgage is affordable to you or not. It takes just few minutes to evaluate each option of mortgage rate using the mortgage calculator. Hence you can easily choose the mortgage that best fits your needs.

You can choose a better mortgage rate based on the advice from an experienced mortgage broker. A mortgage broker or mortgage agent researches the market and identifies the best option suitable for your mortgage goals. Mortgage brokers will guide you in every step of your mortgage process, from identifying the best mortgage rate to making the complete mortgage deal.  But the only disadvantage of using a mortgage broker is that they require a fee. Mortgage brokers who are well familiar with the mortgage industry can suggest you with smart options. The important thing in using a mortgage broker is that you must be careful in selecting an experienced and professional mortgage broker.

If you are familiar about the mortgage industry and you are comfortable with the internet, then a good mortgage lender would be your best choice. You can search out for mortgage lenders yourself. This involves educating yourself about mortgage details before contacting the lender. Contacting and working directly with mortgage loan lenders is free, but in this case you cannot expect the best deal unless you are well educated about the mortgage industry.

Some of the above useful tips enable you to identify the best mortgage rate. It is wise to get the best mortgage rate so that you can save money over time. If you are more educated about the mortgage terms and mortgage industry, it will be quite easier for you to find the best mortgage rates. And you need to invest your time and effort to learn more about mortgage loan options and rates, and do enough research in order to find the best mortgage rate.

tan ah asked:


ef=”http://mortgagerefinanceidea.blogspot.com/2008/08/mortgage-refinance-tips.html”>MORTGAGE REFINANCE TIPS

Introduction to Mortgage Refinancing:

A mortgage refinance is the process of taking out a new loan, and using the proceeds to pay off your old one. Generally, you’d do this to make a change in the structure of your debt in order to get more money, a lower monthly payment, or a shorter pay-off schedule.

Why refinance?

You’d trade-up your mortgage for the same reason that you’d trade-up your job, car, or living arrangement-because circumstances change. What you need out of a mortgage today may be different from what you needed five years ago. Refinancing can achieve one or more of the following objectives: 1. Lower your monthly payment. You can reduce your monthly payment by refinancing to a lower interest rate. Have market rates dropped since your old mortgage was funded? Has your credit improved? Has your home increased in value? Any one of these happenings could mean that you’d qualify for a lower rate. 2. Shorten your pay-off term. Paying off your mortgage loan in 15 years rather than in 25 can save you tens of thousands of dollars in interest over the life of the loan. If you can afford the higher monthly payment and plan to stay in the home indefinitely, it’s well worth it. 3. Optimize your loan structure. Your current loan structure may no longer be suitable for you in the future. Maybe you bought your home with an adjustable-rate mortgage (ARM) and your initial fixed-interest period is about to expire. Perhaps you have a fixed-rate mortgage, but you’d like to take advantage of the more flexible option ARM. Discuss your objectives with your lender to determine the most appropriate loan structure for you. 4. Consolidate your debt. If you’re carrying a lot of credit card debt, you can lower your monthly repayments through consolidation. To do this, you’d take out a mortgage loan large enough to pay off all the debts on your cards plus the balance on your old mortgage. 5. Fund large, one-time expenses. You can raise the funds you need by doing what’s called a cash-out refinance, where you’d take out a loan that’s larger than your current one. As soon as you pay off the old loan, the excess funds can be used to pay for home improvement projects, college tuition, your daughter’s wedding, long-term care expenses, etc. Essentially, your mortgage is a financial tool that might need occasional sharpening. As life throws you new circumstances, trading up that mortgage may be one way to manage change.

Tax Advantages of Refinancing:

Saving on taxes:



As an existing mortgage borrower, you already know that your mortgage interest is tax deductible. You may also know that you pay far more interest in the early years of a mortgage than you do later on. And the more interest you pay, the higher your deduction. Replacing your current mortgage loan with a refinance might lower your tax liability. And if you intend to use the refinance to consolidate credit card debt, the benefits would be even greater, because you’d be replacing non-deductible credit card interest with tax-deductible mortgage interest.

Tax deductions and refinancing:

The IRS designates two types of mortgage debt: home acquisition debt, and home equity debt. Home acquisition debt is what you paid to buy the house. When you refinance, the amount of the new loan used to pay off the old loan qualifies as home acquisition debt. Any amount over that would be home equity debt. The following example will help clarify the point: • Suppose Jenny owes $200,000 on her mortgage. She takes out a new mortgage for $225,000 and pays off her old mortgage. For tax purposes, $200,000 is home acquisition debt, and the remaining $25,000 is home equity debt.Interest paid on home acquisition debt is generally tax deductible in its entirety. You can also deduct interest paid on the first $100,000 of home equity debt.

Refinance or Second Mortgage?



Understanding your options:



1:Lower your monthly payment

2:Shorten your pay-off term

3:Optimize your loan structure

4:Consolidate your debt

5:Fund large, one-time expenses

The first three can only be accomplished with a refinance. The last two-consolidating debt and funding one-time expenses-can be accomplished with either a refinance or a second mortgage. To decide between a refinance and a second mortgage, compare your mortgage interest rate with current market rates. If you’re paying more than what’s available, a refinance will lower your overall interest costs. If you’re paying less, a second mortgage might be the better option. When the two rates are roughly comparable, many borrowers prefer the efficiency of a refinance-one loan, one monthly payment. It’s also worth noting that refinance loans generally carry lower interest rates than second mortgages. You cannot, unfortunately, take your new debt for a test drive before signing up. Therein lies the importance of making informed decisions; refinancing your mortgage every year, after all, can get expensive. That leads us to the next topic: closing costs.

Closing Costs and Refinance Risks:

1:Application Fee

2:Loan Origination Fee

3:Discount Points

4:Appraisal Fee

5:Title Search Fee

6:Title Insurance Fee

7:Prepayment Penalty on Existing Mortgage

The first three listed above are within your lender’s control; the others are not. If you have great credit, you might be able to negotiate lower application fees, loan fees, and discount points. Be cautious if a lender offers to cover your closing costs; this may mean you’ll be charged a higher interest rate. Closing costs have been known to change at the last possible moment. Your best protection against unpleasant surprises is to request a written estimate. Also find out what the lender’s policy is on closing cost changes; some lenders guarantee their estimated costs, and others don’t. If you’re refinancing just to save money, be sure to weigh the closing costs against your monthly savings. If the new loan saves you $50 monthly, but you have to shell out $1,200 in closing costs, it will be two years before you break even.





Risky business:



Are there risks involved with refinancing? The short answer is yes. But there are also risks involved in relocating, like noisy neighbors, a house that’s a potential money pit, and schools for the kids. Just like these examples, refinancing risks can be managed-if you’re prepared. Here are the most common to watch out for: 1. Taking on too much debt. Reputable lenders are trained to find you a mortgage loan program that you can afford. Trust that they know what they’re doing, and be honest about your financial situation. Over-burdening yourself with debt could put you on the fast track to bankruptcy. 2. Putting your home at risk of foreclosure. This should be a consideration if you want to consolidate credit card debt into your mortgage. When you consolidate such obligations with a mortgage refinance, your home becomes collateral for debt that was previously unsecured. 3. Increasing your total interest costs. If your old loan has 25 years left until its maturity and you replace it with a new 30-year loan, you’ll be incurring interest costs for an extra five years. In the end, you’ll have to evaluate the risks and advantages of refinancing relative to your situation. Since you already have the basic knowledge in your back pocket, that evaluation process should be pretty straightforward. Just stay focused n one goal: a financially stronger you! for mortgage calulator visit http://mortgagerefinanceidea.blogspot.com/