15
Mar
By support
Home Mortgage Tips

Mortgage 101: Five Key Mortgage Terms You Need to Understand

Mortgage 101: Five Key Mortgage Terms You Need to UnderstandFrom putting your home on the market to finding the lender with the best rates, there are so many things involved in buying a home that the terminology is just one more thing to add to the list. While there may be quite a few words you’ll hear that may be unclear, here are a few you’ll want to watch out for so you’ll be prepared for home ownership.

Adjustable-Rate Mortgage

Often known as ARM, an adjustable-rate mortgage corresponds to the conditions of the market. This means that your interest rate will shift from day to day along with the market, and the amount of your monthly mortgage payment will fluctuate along with it.

Fixed-Rate Mortgage

Unlike an ARM mortgage, a fixed-rate mortgage will offer a predictable monthly interest rate that you can rely on. While this can be comforting for many homeowners who are market-weary, it can also end up costing more than an adjustable-rate mortgage by the end of the loan term.

Down Payment

Down payment is one of the most familiar mortgage terms out there, and refers to the amount of money you put down on your home to secure it. While putting 20% down will enable you to avoid having to pay private mortgage insurance, the amount that is required varies from lender to lender.

Private Mortgage Insurance

Often known as PMI, this type of insurance can often be confused with homeowner’s insurance, which protects your home in the event of fires, floods and other damage. PMI, however, is the type of insurance that is required for those who do not put 20% down and is there to protect the lender in case of loan default. For homebuyers who can put down 20% or more, PMI will not be an issue.

The Principal

With the costs involved in interest, insurance and the down payment, it can be confusing to keep all the mortgage fees straight. However, the principal is different from all of these things and is the total loan that you borrow to make your home purchase. When you hear the phrase “paying down the principal”, it refers to the total amount of your loan, without any interest.

There are many terms that may not be familiar to the layman, but there are a few that will be important to know when you’re hitting the real estate market. If you’re currently getting ready to purchase a home, contact one of our mortgage professionals for more information.

09
Mar
By support
Home Mortgage Tips

Are You ‘Mortgage Pre-approval Worthy’? Learn How to Assess Your Finances in 10 Minutes

Are You 'Mortgage Pre-approval Worthy'? Learn How to Assess Your Finances in 10 MinutesFinding the right home and the right mortgage can take a lot of time and energy, so it’s important to consider whether you’ll be prepared for approval before diving into the process. Whether you’ve had some financial setbacks or you just want to have an idea ahead of time, here are some ways to quickly determine if you’ll be pre-approved for a mortgage.

Do You Have A Down Payment?

You may have heard that the ideal down payment amount is 20% of the cost of the home, but this doesn’t mean you have to have this amount. However, it is important that you have a significant chunk of change put away so that it can signal to the lender that you’re financially sound and will be able to come up with your monthly payment. A down payment will not only minimize the amount of money you owe the lender each month, it will also show that you know how to save and can be trusted with a significant financial investment.

Determine Your Credit History

Many potential homebuyers have financial hiccups in their history, but it’s how they’re dealt with that determines the future. While you may have considerable issues getting a mortgage approved if you’re not paying your minimum payments on time and have debt, by making this change, you can have a positive impact on your credit history in a matter of months. You may also want to get a copy of your credit report to ensure there are no errors that have adversely impacted your score.

Do You Have A Solid Employment History?

It’s very important to have a solid work history in the event that you’re applying for a mortgage, as this will signal to the lender that you have the funds to make your monthly payment. Keep in mind that it’s good to have at least 2 years of solid employment under your belt, and you’ll need to provide paystubs. If you’re self-employed or your recent job opportunities have been sporadic, this can cause issues with getting pre-approved.

It can take a lot of time to find the right house and the right lender, but if you have a solid history of employment and a sizeable down payment you’re well on your way to pre-approval. If you’re preparing for purchasing a home and would like to learn more, your trusted mortgage professionals for more information.

03
Mar
By support
Home Mortgage Tips

Thinking About Refinancing Your Mortgage? 4 Ways to Ensure It’s Worth Your Time

Thinking About Refinancing Your Mortgage? 4 Ways to Ensure It's Worth Your TimeIf you’re familiar with the real estate market, you’ve likely heard the term ‘refinancing’ and may be wondering what this can mean for your mortgage and your financial well-being. While refinancing can be a great benefit for those who are looking for a lower interest rate or a different mortgage type, here are the details on what it can offer and whether or not it will work for you.

Acquiring A Lower Interest Rate

The most common reason people consider refinancing their home is to take advantage of a lowered interest rate. While it might seem like a minimal savings each month, a lower interest rate can add up to considerable savings over time and help you pay off your home loan more quickly. It’s just important to ensure that you’re aware of all the associated costs with refinancing before pursuing this option.

Limiting Your Loan Term

Refinancing also offers homeowners the opportunity to change the term of their loan, which can offer improved financial stability much sooner than expected. Many homeowners may avoid this option because it can bump up their monthly payment, but the difference in cost can be relatively insignificant while still offering financial freedom in less time.

Changing Your Mortgage Type

There are benefits and drawbacks of adjustable-rate and fixed-rate mortgages, and that’s why many people make the decision to refinance and opt out of their rate profile. While fixed-rate mortgages offer stability since you’ll know what you’re paying, an adjustable-rate will move with the market and can actually mean more savings at the end of the day. The option that will work best for you is dependent upon how comfortable you feel with the market.

Consolidating Your Debt

For homeowners who have a high debt load, refinancing can be a means of paying less in order to pay down debt at a more rapid rate. However, it’s important before choosing this option to determine a budget plan you can stick with, as refinancing to consolidate your debt does not necessarily mean you’ll be successful at paying it down. Ensure you weigh your options and potential savings carefully before making a decision.

Refinancing may seem like a good financial decision, but there are costs that go along with this mortgage option so it’s important to crunch the numbers to ensure it will work in your favor. If you’re currently considering refinancing, contact one of our mortgage professionals for more information.