Mortgage Loans Guide

Buying a new home can be very expense so make sure you know how to choose the best mortgage loan.

Choosing the right mortgage to fit your needs and your wallet can be complicated and time consuming. Many things you will need to consider when thinking about a mortgage loan. You want to consider the rate of interest, originator fees, closing costs, finder fees, and so on. Do you want the taxes and insurance included? How many years will you have to pay? What are the laws and rules for the mortgage holder?

You can start by finding the right mortgage loan before you even find the real estate property you want. Doing research on the Internet will give you an idea of the different interest rates and help you to decide what you can afford.

Decide if you are buying the real estate property to make a profit or to live in the home permanently. If you are going to buy for investing in the future, you will want to make sure that you do not go over your head in debt and have to take a loss when reselling the property. Search the Interest for articles on buying property for profit to give you information that you might not even think of.

Talk with your area mortgage holders asking questions before you buy, will give you a lot of knowledge especially if you are a first time buyer.

Comparison tools online will help you in your shopping experience, since you can compare rates and companies. Each area and state has different rates that might be better than what you can do locally.

Ask questions and be sure you understand what the rates and terms are before you sign and commit yourself. Find out if the interest rates are fixed or variable. When the interest rates are fixed that means that the percentage rate will not go up or down from the time you sign the mortgage until it is paid. With the variable rates, the interest can go up or down depending on changes for the going rate on the market. If the going rate is 9% in six months, it could go to 12% or down to 5%. When the rate changes you payment and the amount of years you pay could go up or down as well.

Be sure that you read the fine print as well as the larger print. Failing to read and understand all information could get you in hot water because they are sometimes very important. You may think that your monthly payment is always going to be $500.00 but the fine print might say if the interest rates go up so does your payment.

Asking how the interest is calculated is a good question. Is the interest based on the mortgage balance or a set amount for so many years? Be sure that you understand how the interest is calculated to save you much heartache.



By: Martin Lukac

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A second mortgage loan is a subsequent loan and subordinate to the earlier mortgage. In other words, a second mortgage loan is used as collateral pledged for the first loan.

Length of Second Mortgage Loans

Second mortgage loans have varying lengths with which they are eventually paid off. Some second mortgage loans may last for as long as 15 or 20 years. Other second mortgage loans only require one year for repayment.

When you’re thinking of taking on a second mortgage loan, you will need to know what term best suits you. Discuss the repayment terms of the second mortgage loan with your bank or lending company. For instance, you get a second mortgage loan worth $20,000 to make some home repairs. With this amount, you might want to take on a second mortgage loan that will allow you to repay the entire amount in one or two years. If you pay a second mortgage loan that has a shorter term, the monthly payments may be too high.

Payment Calculations for Second Mortgage Loans

Before taking on second mortgage loan, be sure that you understand a couple of things first. Know how much your monthly payments will be for that second mortgage loan. Moreover, it is also helpful if you also have an idea as to where those second mortgage loan payments will cover.

Some second mortgage loans require you to make monthly payments on both interest and principal. Other second mortgage loans only require you to pay the interest of the borrowed amount.

The former type of second mortgage loans will allow you to significantly shorten your payoff period since with each payment you make, you are also chipping away at the principal. With the interest-only second mortgage loan however you will be required to pay back the entire amount that you borrowed as soon as the term ends. This type of second mortgage loan is also called balloon payment loans.

Second Mortgage Loan Costs

Fees may be charged by some lending companies for the money you borrow on second mortgage loans. The fees, referred to as “points,” are usually a percentage of the second mortgage loan. One point on your second mortgage loan is equivalent to one percent of the amount you borrow.

So, if you were to get a second mortgage loan of $10,000 with an eight-point fee, then you would have to pay $800 in “points.” Second mortgage loan companies may charge you in varying number of points so if it might be helpful if you do a comparison first.

Second Mortgage Loan Rates

Second mortgage loans have different payments plans. Most second mortgage loans have a fixed rate payment included in their payment plans. If you have a fixed rate second mortgage loan, the interest rate will be set for the whole loan term. This means that your monthly payments for your second mortgage loan will not be affected by any outside changes.

Some companies also offer second mortgage loans with variable rate payments. These variable rate second mortgage loans periodically experience rate adjustments. A variable rate second mortgage loan might be cheaper than a fixed rate payment in the long run. But this is only provided if the interest rates of second mortgage loans go down. If interest rates rise, then your monthly payments for your second mortgage loan will rise as well.



By: Lorna Mclaren

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There’s a bunch of important points to review when considering a mortgage. And a ton of paperwork to look over. So much so at times it can be quite overwhelming. A Good Faith Estimate is one document to consider, and many people focus solely on it. But, in 1968, our lawmakers wanted to make sure lenders made it clear to the consumers just exactly what they were paying and that this information was consistently disclosed lender by lender. And for that, we have the Truth in Lending document, created by the Truth In Lending Act and outlined by Regulation Z.

The Truth in Lending document, or TIL as it’s affectionately known in the Biz, tells the consumer a lot about what he/she is getting into. It tells so much so that it can confuse a person, too. Thus, it is important to know and understand what it tells you. It allows one to make an informed decision. A TIL should be part of the beginning of the loan process and the end. When it’s all said and done, a mortgage customer should have reviewed an estimated TIL before closing, and then have also signed his/her final TIL at loan closing. The information found on the estimated TIL shouldn’t be too far off from the final TIL. If it is and you don’t understand the explanation for it, it’s time to put on the brakes.

A TIL will reflect your loan amount, interest rate and the amortization of your loan. A TIL comes in a standard layout, and most TILs will look the same from a distance, though there may be a few variations, like a payment reflection, lender’s logo, etc. But the nuts and the bolts should be identical in format.

The main thing you notice about TILs is they all have four boxes containing numbers stretched across their horizon. These boxes don’t mean much to you until they’re explained. But these are important numbers, which is why they are so blatantly highlighted in these little boxes. They shouldn’t be brushed off. If the TIL is an estimated or intial TIL, you’ll see a little “e” by the numbers in the boxes. Pretty straight forward - “e” means estimate. The final TIL you sign at closing should reflect all the numbers on your HUD-1 settlement papers and the “e” should be gone. That means you’re signing the final, real McCoy that is calculated by your final numbers.

The first box on the TIL reflects the Annual Percentage Rate (APR) or cost of your credit expressed as a yearly rate. Don’t panic, this rate is not your interest rate. It is the rate that the closing costs are actually costing you annualized over a year, and generally it is higher than your interest rate. However, if your mortgage is locked at a 5% interest rate, but your APR rate is 10%, you should reconsider the deal or get a second opinion. You’re paying too much.

The second box is the Finance Charge or the dollar amount the credit will cost you. It is the total amount of interest calculated at the interest rate over the life of the loan, plus Prepaid Finance Charges and the total amount of any required mortgage insurance charged over the life of the loan. The third box reflects the Amount Financed or the total amount credited to you on your behalf, minus Prepaid Finance Charges.

The fourth box is the one that gets most people’s attention - the Total of Payments. It’s the amount that a customer will actually pay back in principal, interest (and mortgage insurance, if applicable) if they keep the loan for the full term and stick to the outlined amortization schedule. Ouch. People find this number a little incredulous. I guess it really sends it home that mortgage lending is a business, and some company is going to make some money from it.

There are three other things on a TIL I like to point out to a customer. One is the late payment penalty. People need to know what it will cost them if their check gets to the Servicer late. It’s usually 4% or 5% of the monthly principal and interest payment, depending on the loan type. Another VERY important feature a lender should point out to a customer is if there is a PRE-PAYMENT penalty on the loan. A pre-payment penalty means that if you pay the loan off before a pre-determined time, you pay for the luxury of doing so. Make sure you know the terms of the pre-payment penalty if you should have one, and that you are certain you can live with it. They can be quite costly. Finally, the TIL tells you that should you pay off your loan early, you won’t be entitled to any of your closing costs or interest being refunded. In other words, don’t expect to get any of the money you have already paid back.

Simple enough, right? To tell you the truth, it is confusing, even for a mortgage lender. Take time to understand this document and ask all the questions you have regarding it. Don’t be shy.



By: Kristin Abouelata - Home Loans

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It can be very hard for anybody with bad credit to meet the repayment schedule outlined in the terms and conditions of a bad credit home mortgage loan. The reason that most people have bad credit is due to a low income, which is why these people need to apply for credit in any shape or form.

A mortgage for bad credit sufferers can be good, if the individual has access to sufficient funds. If somebody receives a pay rise at work, for example, and can afford to repay the bank, then by all means, make the most of it and apply for a bad credit home mortgage loan. The reality is, however, lots of people cannot.

In this case it can be a good idea to look into a residential property acquisition program. This is almost like a ‘bank free’ private mortgage that you may agree to with a friend or relative that wishes to sell you their house. An investor takes out a protected loan and buys a house for you. You must repay their loan amount, plus interest on a monthly price plan that is predetermined by the program broker. This is more beneficial than most kinds of bad credit home mortgage loan, especially for those that want to do things a little bit more discreetly.

You are not required to provide any proof of income and you do not need a good credit score. This method of buying property is becoming more and more popular. It is relatively expensive compared to a normal mortgage, but in terms of a mortgage for bad credit, it can work out cheaper in some cases.

If you do not want to use the banks for a bad credit home mortgage loan, or you think you will not be accepted, it is definitely recommendable that you try the residential property acquisition program. One of the major benefits is that you do not have the loan amount in your bank account at any time, because you do not take out the loan. This means that you will be in no way tempted to spend any of the money on other things, making the purchase of your house absolutely guaranteed.



By: Ron Mark

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Remember Jan Brady.  Ignored and always overshadowed by her older and prettier sister Marcia?  Borrowers seeking small commercial loans will face the same challenges as Jane.  Small commercial loan requests will have all of the typical commercial loan challenges, and yet have one more major hurdle – being ignored and neglected.  Commercial bank loan officers and commercial mortgage brokers will in most cases simply ignore the borrower’s small commercial loan.   Bottom line, there is the same amount of work involved, without the decent payday. 

This often comes to a shock to many borrowers that are use to residential loan officers competing hot and heavy on their $150,000 home mortgage.  The differences here are many but it’s not uncommon for a residential broker to make 3 or 4 points on a loan, while the commercial mortgage brokers is often expect to make only 1 point.  These borrowers often become frustrated when they can’t get their messages returned on a $400,000 loan. 

Besides the money, most commercial brokers and bank officers have a bit of an ego and will not want to admit to their peers, or bosses that they have spent 2 months working on a $300,000 small commercial loan.  Most will not acknowledge and or mention a loan closing that is less than $1,000,000.  $1,000,000 and above is considered respectable. 

So borrowers seeking small commercial loan options will in most cases be treated as the “Jan” deal and will have to overcome this factor.  It’s best to try to work with companies that are actively marketing and want to work on these smaller commercial loans than to try to egg a broker on that is not interested.  The rub here is finding the commercial mortgage broker that has the experience needed to complete the transaction and yet will still be interested in working on the small commercial loan.   

 



By: jeff rauth

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