Mortgages

Getting a mortgage for your new home is one step toward the dream of home ownership. There are many different mortgages and many different lenders. So, putting them together can be quite and effort.

While everyone wants the most home they can afford, and the lowest monthly payment they can get, you can see that the two desires are often contradictory.

Evaluate Your Budget

The first thing you should do as a home buyer is to evaluate your budget for a new home. Remember that you will not only be making principle and interest payments, but there are taxes and insurance costs that are normally included in the total mortgage payment. And, for your new home you'll probably want to add furnishings and decorations. You may also want to do landscaping work.

And, don't forget about all the other things you're going to need. You'll probably need grass maintenance which will either include a lawn service or equipment such as a lawn mower, fertilizer spreader, and so on. If it gets cold where you are you may need a snow blower. Planning can save surprises.

You should also plan for repair work. Things go wrong even in brand new homes. And, for brand new homes, if you don't catch all the unfishied work within the first year, you are often stuck with paying for what you expected to be part of your new home.

One thing you'll want to check before your apply for a mortgage is your credit report. Your credit report contains information about your credit history including late payments, bank accounts, how much you owe, and other financial information. All this information is used to construct your credit score. And, your credit score often determines the type of mortgage you can get and the interest rate you are offered.

Check Your Credit

The U.S. Public Interest Research Group investigated credit reports and found that 79% of them contain errors and a quarter of the reports contained errors serious enough for individual to be denied credit. So, it would be wise to make sure your credit report contains accurate information before your apply for a mortgage loan. Make sure you allocate enough time to correct any problems you find before sending in your mortgage application.

Read Mortgage Contracts Carefully

You mortgage contract will be something you'll live with for many years. Make sure you read it carefully. As with any contract, consult with an attorney familiar with mortgages.

If you are planning on purchasing a newly constructed home, you should be especially careful to have an attorney examine the contract. Standard new construction contract contain many clauses that favor the builder. Before you sign is the time to learn about the potential pitfalls, not after you sign.

As you consider various kinds of mortgages, you should look for any prepayment penalty clause. Many people can benefit from making prepayments on their mortgage.

A prepayment allows you to make more than the normal payments on your mortgage. Why would you want to pay more than is necessary? Simply because it shortens the number of years you will be paying and builds equity (ownership) faster.

Here is a simple of why you may want to pay more than is necessary. Suppose you have a 30 year mortgage for $175,000 at 6.0%. Your principle and interest payment is $1,049.21. On your first payment you will build $174.21 in equity. The rest of your payment, $875.00, is interest on your loan.

What would happen if you paid an extra $175.08 in that first month? As it happens, $175.08 is exactly the amount of equity you would gain with the second monthly mortgage payment. Notice, with your first payment of $1049.21 + $174.21 = $1,224.30, you received the build-up in equity of two mortgage payments. In effect, you've shortened your loan by a month, and saved $874.13 (the amount of interest you would pay in interest in the second payment).

Now, this does not allow you to skip mortgage payments. It does shorten you loan and reduce the total amount you pay for your home. If you kept paying an extra $175.08 over the course of your loan it would shorten your loan by 9 years. That would save about $113,315.05 in total principle and interest payments.

So, the best tip is to read your mortgage contract carefully to see if this type of savings is possible for you.

We hope the following mortgage resources will be helpful to you.

Mortgage News

Inside Mortgages Weekly Column

1. Home loans cost a little more, but remain affordable
The mortgage industry is in turmoil.

2. Home loans cost a little more, but remain affordable
Interest rates are a quarter- to half-point higher than they were last fall and winter after mortgage costs took a surprising jump in late May and early June.

3. Interest rates level off after spring's surprising jump
For nearly 10 months interest rates moved up a little, then down a little, but the average cost for most types of mortgages remained below 6.5%.

4. Interest rates level off after spring's surprising jump
For nearly 10 months interest rates moved up a little, then down a little, but the average cost for most types of mortgages remained below 6.5%.

5. Interest rates level off after surprising spring jump
For nearly 10 months interest rates moved up a little, then down a little, but the average cost for most types of mortgages remained below 6.5%.

If at any time your wish to communicate with us, please feel free to contact us.

We are happy that you visited Reciprocal Link Management Software.