Definition of Adjustable Rate Mortgage Adjustable-rate mortgages (ARMs) differ from fixed-rate mortgages in that the interest rate and monthly payment can change over the life of the loan. ARMs also generally have lower introductory interest rates vs. fixed-rate mortgages. Before deciding on an ARM, key factors to consider include how long you plan to own…
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Paying Points On A Mortgage
Should I pay points on my mortgage? When it comes to comparing interest rates for a mortgage loan, homebuyers often have the option of choosing a loan with a lower interest rate by paying points. What are points on a loan? Simply put, a point is equal to 1 percent of the loan amount. For…
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How Mortgage Payments Work
How The Mortgage Process Works Excluding property taxes and insurance, a traditional fixed-rate mortgage payment consist of two parts: (1) interest on the loan and (2) payment towards the principal, or unpaid balance of the loan. Many people are surprised to learn, however, that the amount you pay towards interest and principal varies dramatically over…
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Understand Your Credit
Your Credit History Define Credit Report As part of the loan application process, virtually all lenders will want to see a copy of your credit report. The report will list all your long-term debts (credit cards, mortgage payments, automobile and student loans, etc), as well as your payment history. If you don't have a copy…
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Financial Assessment
Getting Your Finances in Order A crucial step in starting your search for a new home is having a clear idea of your financial situation. By getting a handle on your income, expenses and debts, you'll have a much better idea of what you can afford and how much you'll need to borrow. For lenders…
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Typical Closing Costs
Closing Costs The bundle of fees associated with the buying or selling of a home are called closing costs. Certain fees are automatically assigned to either the buyer or the seller; other costs are either negotiable or dictated by local custom. Buyer closing costs When a buyer applies for a loan, lenders are required to…
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Saving For Down Payment
Saving for the Down Payment Saving funds for a down payment should be part of an overall program to get your finances in order prior to shopping for a home. This includes rounding up financial records, examining your spending habits, and setting a budget you can live with. Remember, too, that the down payment is…
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Should you payoff your mortgage
Length of Your Mortgage 15-Year, 30-Year, or a Biweekly Mortgage? In the past, the 30-year, fixed-rate mortgage was the standard choice for most home buyers. Today, however, lenders offer a wide array of loan types in varying lengths--including 15, 20, 30 and even 40-year mortgages. Deciding what length is best for you should be based…
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Leverage In Real Estate
Leveraging Your Money One of the greatest financial aspects of buying a home is the ability to leverage your money. Simply put, leverage allows you to use a small down payment and financing to purchase a larger investment. For example, if you bought a $125,000 home with 10 percent down, you leveraged the $12,500 down…
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Refinancing Your Home Mortgage
Home Loan Mortgage Refinance Refinancing your home can be an excellent way to bring down your monthly mortgage payment, raise cash, or consolidate debts with high interest rates. However, you need to do your homework before deciding to refinance. One important factor is the difference between current interest rates and the rate of your original…
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