Know Your Mortgage Rates And Options Before You Sign
Surf the internet and you will find current mortgage rates all over the place
. Prime lending, sub prime lending, buy downs, no downs, interest only, adjustable, balloon, 20 year, 30 year, some with lower interest rates, some considerable higher. How do you know what is a good deal? The airways are full of mortgage lenders promising the best deal for you refinance or home equity loan or simply for your first mortgage.
Current mortgage rates are based on money loaned by the federal government to the broker houses, they add their increase and this your interest rate. They vary due to the fact that some mortgage companies charge higher loan origination fees than others. These origination fees should be at the top of a "good faith estimate" document so you know what they are ahead of time. The origination fee is from .5% to 2% of the loan amount. Sometimes discounts points are used to buy down the interest rates.
Sub prime lending is for borrowers with non-traditional loans, either by the the nature of the loan itself or due to poor credit scores. These loans carry much higher interest rates. Most people can get loans but the worse the credit the worse the interest rates.
Current mortgage rates vary day to day; keep a close eye on the market to get the best deal. When the rate drop, lock in to hold that rate, your mortgage lender can help with this.
Interest only loans are for loans that the borrower believes are short term. If you are only going to be in a house for two years, you are paying almost all interest anyway, these loans can serve as bridge loans until a more permanent location is decided on. The real downfall of these loans is people getting into them, thinking it is short term, and then not moving. This loan is basically renting, you will never own your home no matter how long you pay your mortgage.
The current philosophy among get-out-of-debt gurus is to put your mortgage on a 30 year loan and then pay it as if it were on a 15 or 20 year loan. That way if you run into hard economic times you can pay the lower amount, but if you stay disciplined you will have your home paid off in 15 to 20 years saving tens of thousands pf dollars on interest.
Ask your mortgage company about hidden fees, document preps, assessment fees and compare lenders. Some of these fees can be reduced or waived by comparison shopping. There are lots of options, an adjustable or balloon ought to be avoided, foreclosures are frequent at the time the balloon payment comes due. It takes a real disciplined person to put away enough money for those hefty payments that seem so far off at loan origination. Do your homework and you can save thousands.
by: Art Gib
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