What Length Fixed Mortgage Is Best For You?

In today’s historically, low – interest environment, the vast majority of home mortgages, issued, are of the fixed – rate variety. In most instances, individuals want to lock – in these low rates, for the entire term of their loan, and therefore, opt to proceed, in that manner. Once you determine you are better served, using this type of mortgage, rather than a variable type, and you qualify, you must decide, which term, and/ or length, is best for your needs, conditions, and/ or situation. This article, therefore, will briefly discuss, which length, makes the most sense, for you.

1. 15 Years, or less: The main advantage of this term, is the interest rate, is almost – always, lower than longer – term, ones. Fewer payments over less years, combined with lower rates, translates to far lower, total payments. One’s asset accumulation grows more quickly, and payments go, far faster, towards paying – down principal, rather than simply, paying interest. However, there are also some draw – backs, or limitations, involved. One of these is they require possessing a higher income, less overall debt, and others assets, to qualify. In addition, the monthly installment payments, are obviously higher, because of the shorter – term/ period.

2. 20 – 25 Years: These are generally used, as a compromise, and/ or middle – ground, which stands between the shorter (15 years, or less), and longer – term mortgages. Although interest rates may be slightly lower than longer – period, ones, they are generally a little higher than shorter ones.

3. 30 Years: Traditionally, the 30 – year, length, is the most commonly used, type of mortgage. Although the interest rate may be a little higher, today, these rates are still, historically low. They generally provide an excellent opportunity for qualified individuals, to acquire the necessary financing, needed, to purchase a home. Especially in today’s market, where home prices have been rising for a couple of years, they often provide the best option available!

4. 40 Years: This extended term was rarely used, until recently. However, with the increasing prices of houses, extending the number of years, to repay, lowers monthly installments, even though it increases the overall payments. Since qualifying for a mortgage is based on several factors, including percentages based on that monthly installment, obviously, this term, makes it easier for some, to be able to qualify.

Deciding which term, and length, of a mortgage, is an individual decision, based on several factors, including financial, one’s comfort zone, monthly, as well as overall total costs/ expenses. Which length do you think, might best serve your needs and purposes, and why?

Why Home Appraisals May Be Wrong: 5 Possibilities

While there are many challenges, in terms of effectively selling a house, it must be recognized, most potential buyers, are only able to afford, buying a home, by taking advantage of acquiring a mortgage! We often discuss the need to assure, a potential buyer, possesses a quality credit rating, in order to qualify, as well as have proven, a responsible approach to taking care, of his personal finances, and obligations. However, one potential, stumbling block, which is often overlooked, is whether the subject property, will be assessed, for a high – enough, price, so a lending institution, will often the most favorable loan! Unfortunately (but the reality is), the appraisal process and procedure, is far from perfect, containing flaws, which sometimes creates, undesirable challenges and/ or obstacles! This article will briefly examine 5 of these possibilities, which might negatively impact, a potential transaction.

1. Price higher than what the market, indicates: There are times, when a buyer, either because he doesn’t know the marketplace, or loves a particular home, offers considerably more than what the market, might dictate. When the lending institute assesses the house, it shows a lower value, and thus, the LTV, or loan – to – value, ratio, creates resistance to obtaining the best terms, or, even, the loan, at all. A prepared buyer understands this, and, if he stills wants the house, should put considerably more down, so it doesn’t become a negative factor!

2. Wrong “comps”: There are times, when an appraiser, improperly, under – values, a subject property, because he, either uses the wrong properties, to compare the home, to, and/ or, is not fully familiar with the local real estate market. Beware if the assessment compares a Colonial style house, to Capes, etc. Look closely at the characteristics of all properties, and, either the buyer, and/ or his real estate agent, should help, guide the assessor, to the most appropriate houses.

3. Appraiser doesn’t know local market: Every real estate market has certain specific characteristics, and, in some cases, there may be several micro – markets, even within a local area. If the appraiser isn’t familiar, he may compare a house in a more desirable market, to one, in a less valuable one. Remember the edict, Location, location, location!

4. Errors: Check carefully, to discover and learn, if there are any errors, involved, in describing the features, etc, of the subject home (yours). Typical areas to check, include, conditions described (windows, doors, HVAC, bathrooms, kitchens, patio, deck, etc). Has the appraiser subtracted when he should have added, etc? Remember, if you believe there’s an error, you have the right to contest it!

5. Inaccuracies: Is lot size, properly listed? Has only the size mentioned, even if one lot, is fully usable, when another is not? Have any of the competitive (“Comps”) properties, overlooked the condition of another home, and its impact, etc.

While the appraisal process is important and essential, potential homebuyers should beware, they are not necessarily accurate or complete. Either, you or your agent, should contest any inaccuracies!

5 Tips to Consider When Refinancing Your Mortgage

Here are 5 tips to consider when refinancing your mortgage.

Is it the right move?

When conditions are right, financially and economically, you might be considering a refinance of your mortgage. Before you jump into what seems like a good idea, it’s best to know exactly what the refinancing process is, and just what it entails. You should know that when you are going to refinance, it involves starting the loan application process right from the start, as if you are buying a new home. Will you be taking the loan with a new lender, setting up a new deal, or should you shop around and see what’s on offer from other loan providers? The best person to lead you through what is now a veritable minefield of lenders, is your mortgage broker. They are far more up to date with what’s on offer than if you spent hours scouring the internet looking for the best deals.

Why Refinance?

What are your reasons for refinancing? There could be a variety of reasons. Lower interest rates on offer? A difference of a point or two in the rate may seem small when you look at it, but that couple of points can save you thousands over the years because your repayments will go on for 15 to 30 years for a typical mortgage.

Another reason some may decide to refinance is to get a shorter term, which also saves thousands of dollars. For example, things have never looked rosier personally, and both you and your partner are working, and your income is higher. So, a change in your financial situation can be used to save money on higher monthly payments. Conversely, you might be after a lower monthly payment or have that fixed rate changed to a variable rate, or vice versa.

Refinancing Costs

There are some obvious things to look at when considering refinancing. One of the first things is the actual cost of refinancing. Look at the fees you will be paying and divide it by the months of your mortgage and see whether there is a saving as a result of the refinancing. Sometimes you are ahead straight away, other times you might have to work out when you will hit the break-even point.


Are there any penalties in your mortgage terms and conditions that apply if you pay out the mortgage early? Lenders do NOT like mortgages paid out early. Remember, when you refinance, you are paying off one loan and applying for another completely new loan. Add any penalties to your total costs for refinancing and calculate that break-even point again. Be certain that you are not losing money overall when you refinance.

Your Equity

An important factor in this whole process is to work out the equity you have in your home. A negative equity is when you owe more on the home than what the house is worth. If you have been in your home for a number of years, the annual increase in your home’s value will stand you in good stead. But if this is a refinance taken out after only a short time into your mortgage, price fluctuations may have worked against you. If your lender is offering less than the equity, you will not be able to get the refinance, unless, of course, you have the money to pay the difference. Current markets indicate an overall rise in prices, but there have been some downward movements as well over the year and that may have had a negative effect on your home’s value.

See your Mortgage Advisor

With so many variables to look at with a refinance, you can get some quick answers by putting it into the lap of your Mortgage Choice advisor who probably got you the initial loan. With up to date calculators and current interest rates available from many lenders, you can get a fast answer to any refinance query.

Getting A Mortgage: 5 Steps For Ease And Success

Whether you are a potential home buyer, looking to find a home, of your own, or an existing homeowner, who seeks better terms, and/ or rate on your mortgage, it’s important, to know a little more about the process of getting the best one, at the best terms, which fits your needs, priorities and situation. Since the vast majority of individuals, use a Mortgage loan, to pay for their house, I felt it might be helpful, to review, some things to consider, from the onset. With that in mind, this article will attempt to briefly examine and consider, 5 steps, you might wish to consider following, to ensure this often – tense, stressful process and period, becomes somewhat easier, and more successful.

1. Check, and fully review, your Credit Report: Especially in today’s atmosphere and environment, where there is so much Identity Theft, it’s smart to begin, by doing this. First, review the report for accuracy, etc. Then, look at the items, and report, the way the lending institution might. Begin, by looking at your debt – to – income ratio. The desirable maximum for this changes, periodically, but if you keep it to about one – third (maximum), you’ll probably be somewhat safe. Prepare about 3 months, or more, before you begin the process, and pay – down, your debt. Do not wait to the last – minute to do so. If you can do this, a year or more before, ir’s even better! Look at the report, and consider, whether, if you were the lender, would you consider you, to be a good risk?

2. Repair: One of the primary reasons to begin Step One, as far in advance, as possible, is to give you the opportunity, to make any necessary repairs, and to enhance your credit rating, as much as possible. Be careful to avoid requesting or taking out any new credit during this period, because doing so, might harm or reduce your credit score!

3. Patiently wait after steps one and two: Optimally, waiting a year, will get you the best results, but you should always wait, at least 3 or more months, after you’ve made your repairs and/ or fixes, and/ or paid – it – down, to best position yourself.

4. Stay away from any credit offers, etc, during this period: That offer you get in a retail store, which will give you, immediately, an extra discount on your purchase, is not harmless, but, rather, might negatively impact your overall credit. Keep your eyes on the target!

5. Be prepared for the down – payment: Most lenders will want to know where your down – payment, and other funds, come from. At least 3 or more months in advance, place your probable down – payment, in an account, you can clearly provide statements for, demonstrating your ownership, etc. Also, realize, most lenders seek borrowers, with a significant amount of other assets, etc.

A little bit of preparation, and paying attention to some relevant details, will generally make the process, go smoother and easier, and more successfully, If you really want and/ or need that mortgage, do, all you can to be prepared!

What Length Of Mortgage Is Best For You? 5 Options

Since, for most people, their house, represents their single, largest, financial asset, it makes sense, for potential homeowners, to become as knowledgable, as possible, in terms of their options, regarding financing, and purchasing their homes. The vast majority of Americans take advantage of using a mortgage, but, few, fully consider, realize, and recognize, their options, and opting for the length of mortgage, which best serves, their needs, and personal situations. With that in mind, this article will attempt to briefly examine, consider, review and discuss, 5 options, and some of the potential, pros and cons, of each of these.

1. Traditional 30 – 40 year term: The vast majority of fixed mortgages, have a term of between 30 and 40 years. This is beneficial to most, because it usually offers a compromise between the rate of interest paid, and affordability of monthly payments. In addition, because most mortgages have no prepayment penalties, one can pay additional amounts, as is most beneficial, and, thus, reduce the length of the mortgage’s life. One should understand, however, is, when one uses this term, his total principal and interest payments, will be considerably greater than the amount borrowed. This is remedied, to a certain degree, because mortgage interest, within certain limits, is tax – deductible!

2. 15 – 20 years: Reducing the length of the term, normally creates a lower rate of interest, being charged. However, it also translates, to higher monthly payments, and lower, total payments.

3. 7 – 10 years fixed rate/ then adjustable rates/ term: Those who are intending to remain in their present home for a shorter period, often benefit from this type of mortgage. It provides lower rates, and, often, makes qualifying for a particular amount, easier to do. The drawback, potentially, is after the initial period, if one remains in the present home, their rate will change, according to pre – determined terms, or they will need to refinance.

4. 1 year – adjustable: These types of loans generally offer the lowest initial interest rates, but, also, the least predictability, for the future. Of course, if one can only qualify, presently, using this form, or, intends, to relocate, very soon, this might be the best way to proceed.

5. Balloon/ interest – only: There are sometimes interest – only loans available, for a specific period of time, and of course, since one is not paying down the principal, the monthly cost/ payment, will be lower. However, it should be realized, you are not paying – down, what you owe, and doing so, brings the risk of future undesirable ramifications/ results. In addition, these are usually referred to as balloon loans, because, at a specified period, the full amount of the principal of the loan, becomes due, and, one, must, either repay it, in full, or secure a new mortgage.

Based on one’s individual circumstances and needs, it becomes possible to determine, the best mortgage to secure. Remember, the more educated and knowledgable, you become, the better decisions/ choices, you will probably make!