02
Jul
By support
Mortgage Rates

3 Reasons Why the Lowest Mortgage Interest Rate Isn’t Always Your Best Option

3 Reasons Why the Lowest Mortgage Interest Rate Isn't Always Your Best Option One of the more common methods that home loan applicants use to find the best loan program available is to compare interest rates, but choosing the lowest rate possible is not always the best option available. In fact, in some cases, it may be one of the least advantageous options when all factors are considered. With a closer look, home mortgage applicants may decide to review other factors in combination with the interest rate to make a more informed decision when applying for a new loan.

The Closing Costs Impact The Rate

It is important to note that lenders can increase or decrease the interest rate with adjustments to closing costs, and this means that some of the lowest interest rates available may also have some of the higher closing costs. In some situations, choosing the lowest interest and paying more in closing costs is acceptable. However, a loan applicant should be aware of this and should compare interest rates along with closing costs in order to find the best loan program available.

The Loan Term Affects The Rate

Generally, a shorter loan term will have a lower interest rate. However, even with the lower interest rate, the mortgage payment may be higher due to the shorter term. A higher mortgage payment can impact affordability as well as loan qualification in some cases, and there are instances when the higher interest rate associated with a longer term is most desirable.

The Interest Rate May Adjust

Adjustable rate mortgages typically have lower interest rates than fixed rate mortgages, but the interest rate with an ARM may adjust higher in the future. For those who only plan to own the home or to retain the mortgage for a short period of time, this may be acceptable and even desirable. However, for those who plan to own the home or retain the mortgage for a longer period of time, the potential for a rate adjustment in the future may not be preferable.

For individuals who are shopping around to compare interest rates and to find the best deal on a mortgage, there may be a desire to opt for the lowest interest rate, but this is not always the best strategy. The interest rate can reflect many aspects of the loan, and each of these points should be analyzed to find the best loan program. A mortgage broker can provide assistance comparing loan terms and helping loan applicants determine which is the best solution for their needs.

30
Jun
By support
Home Mortgage Tips

Buying a New Home? 3 Tips for Being Approved for a Second Mortgage – and How to Manage It

Buying a New Home? 3 Tips for Being Approved for a Second Mortgage - and How to Manage It Applying for a second mortgage is a great way to keep your down payment amount to a minimum and to keep more of your cash in your bank account. It can also help you to avoid making PMI payments, and some lenders may even waive escrows for taxes and insurance if you use a second mortgage instead of a higher first loan amount. Whether you want to enjoy some or all of these benefits, you may be wondering what it takes to set up a second mortgage. With a focus on these tips, you can more easily get the financing structure that you desire.

Make Your Request Up-Front

Financial circumstances can change over the course of the loan process, but it is usually best to request a second loan up-front. A second mortgage will change how the first loan request is underwritten, and it may change the terms that you qualify for. In addition, there is often a different underwriting process for the second mortgage. By making both loan requests at the same time, you can save time and minimize the need to backtrack through underwriting.

Work With a Mortgage Broker

Some mortgage lenders will provide you with both a first and a second loan, but it is far more common for these two mortgages to come from different financial institutions. Some banks and direct lenders will only work with a handful of second loan companies, but a mortgage broker may be able to shop around to get the best overall deal on your second mortgage terms. Therefore, if you plan to apply for a second mortgage, there may be benefit with working with a mortgage broker.

Consider Paying Off Debts

You will need to qualify for both your first and second loans separately, but the payment for both will be considered during underwriting. If you have a high debt-to-income ratio, you may consider applying for a higher second mortgage to pay off some outstanding debt. You can work with your trusted lender or mortgage company to think creatively with regards to the best overall structure of your financing and to determine if any debts need to be paid off prior to or at closing.

A second mortgage provides you with many benefits when buying a home. Speak with your trusted loan officer or broker today regarding the options available for a second mortgage for your home buying plans.

23
Jun
By support
Home Mortgage Tips

Four Surefire Ways to Ensure That You Get the Best Possible Deal on Your Mortgage

Four Surefire Ways to Ensure That You Get the Best Possible Deal on Your Mortgage Taking time to set up your home mortgage is one of the best steps that you can take to promote financial health and security. The best home mortgage is one with an affordable payment, that does not empty your bank accounts of necessary financial reserves and that will help you to establish equity at a fast pace. If you want to ensure that you get the best deal on your mortgage focus on these tips.

Consider the Loan Term Carefully

The most common loan term options are a 15, 20 and 30 year term. There will be a slight interest rate difference between these options, but the term itself will play a critical role in how quickly your equity increases as well as what your mortgage payment is. The payment should be affordable, and you do not want to set up a payment that is so high that you run the risk of defaulting. However, a shorter term with a higher monthly payment can result in less interest charges and faster debt reduction.

Think About the Pros and Cons of a Larger Down Payment

The amount of your down payment is also critical to setting up the right mortgage. When you make a larger down payment, you will have lower payments and may even qualify for a better rate. However, you also may be tying up your extra funds that could be used for investments or for debt reduction into your mortgage.

Shop For the Best Interest Rate

The interest rate variation from lender to lender may be fairly minimal when factors like the down payment, the term and your credit rating are constant. However, even a quarter or a half-percent difference in the interest rate will impact your payment amount and equity growth significantly. It can also impact your interest charge for your annual tax deduction.

Review the Closing Costs

A final point to consider is the closing costs. Some lenders may take on a higher fee with closing costs in exchange for a lower interest rate. It is important that you consider the difference in the mortgage payment and equity growth over time. Think about how long it will take you to recoup the up-front cost differential with the monthly payment differential. This can help you to determine which loan option is the most affordable overall.

Many will pay attention to the interest rate and loan term when shopping for a new mortgage. These are important factors to consider, but they are not the only ones that are important and relevant. Keep each of these points in mind if you want to set up the best overall mortgage.