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Low Mortgage Rate Is Not For All Borrowers

Mortgage rates have plummeted as you must know by now. However, some consumers are surprised that they are not getting the rate shown on their favorite finance website. There are reasons for this.

Consumers that have credit scores around 650 or below will not receive the best rate. It will be higher.

Those in the market for a mortgage may find that they need a high down payment to get the "average" mortgage rate.

There are other factors to consider. For example, rates change during the day. In the morning, the rate might be a quarter of a percent lower than in the afternoon.

Consumers should know how their credit report looks and their credit score to know if the deal they are getting is a good one. Learn more...

Get Equifax Score Watch Now!

The Pay Day Loan

It is possible that you have driven past the pay day loan store in your local neighborhood and wondered if that is an option during tough times. Well, consumers beware... loan companies are hurting too and want to give you money at the worst rates if they can. These companies offer short term loans with fees to get you to your next payday. You need to make sure that if this is something you need to do, that you need to plan on paying the full amount back from your next pay check. Also, be sure to read all the fine print and walk away if there is something fishy about the deal.

One way to shop cash advance options is to compare rates and terms. Try The SecureMoneyStore.com They have participating lenders that can offer you up to $1,000 within 24 hours. Scary right... well, make sure that you read ALL of the fine print.

Mortgage and Loans Require High Credit Scores - Prevent Identity Theft

Whether you like it or not, your credit score is tied to your identity. You cannot just change your identity when your credit score takes a dive. The issue becomes, what if the dive is not your fault. 90% of the banks use the FICO credit score system, they don't use your smile and sob story. So to protect your FICO score, it is a good idea to prevent identity theft during the loan process and here is why.

While taking out a mortgage or loan, you are likely faxing, emailing forms, and communicating back and forth between lending institutions. How often is your information available for someone to see. Are you sure that proper procedures are taken when discarding emails, faxes, and other information? How easy would it be for someone to pick up your information off a desk or off an email? Do you trust a 3rd party IT department located in India?

When a lender / mortgage professional runs your credit to pre-approve you, that is not the first time they will be doing this. To finalize the mortgage, lenders often pull your credit score again towards closing time. You just have to hope that nothing has changed between when you were pre-approved and when you closed.

One way to give you a piece of mind is to use a company that specializes in the prevention of identity. Learn more... Learn more...

Credit Scores and Credit Report Information

To apply for a loan you need to know your credit score. Your credit score is also called your FICO score. FICO is an acronym for Fair Issac and COmpany. They have their own proprietary system to compute credit scores. Other companies also do this but the Fair Issac Company is the most trusted. Knowing your FICO score will help you know what kind of deal to expect when dealing with a lender.

FICO scores range from 300 to 850 and the higher the better. Any score above 720ish range is considered good credit. This information is based on tons of factors including how regularly you make payments on other credit products.

FICO scores are NOT free. You can receive a free credit report but FICO scores must be calculated and companies do not provide this information free to customers. However, FICO scores are relatively affordable. See the link to learn more about your credit score.

**CLICK HERE:Fico Scores/Reports

Historic Lows - Interest Rates

Interest rates are currently at historic lows. Mortgage rates are below 5% and other loans are also low. It may be time to lock in a lower rate. Common advice given by those in the field is that refinancing ends up being a decent deal if you can recover the amount of money you send on closing costs within the first 24 months of your new loan. If that is the case, you may want to pull the trigger. Be careful of the fine print on your new loan though. It may not have the same terms as the one you are used to :)

What Is PMI?

PMI is an acronym for private mortgage insurance.  This insurance insures the mortgage lender against a default that can be very costly to the homeowner.  PMI is apart of prequalification usually when homeowners do not have a 20% down payment.  However, there are mortgage options that can eliminate paying this monthly fee.

PMI increases the monthly payment is often calculated by multiplying ½% of the total loan amount.  For example, the bank is funding $190,000 of your $200,000 home purchase.  The annual cost of PMI will be $950 a year, which adds $80 extra to the monthly payment.  But, if you avoid paying PMI, cost may actually be more depending on individual circumstances.

When Should I Refinance My 30 or 15 Year Fixed?

Mortgages come in two forms, both adjustable rate and fixed rate.  There are many reasons to choose a fixed rate when refinancing.  A mortgage broker should be a mortgage counselor.  They look at each individual case and provide borrowers with options.  The final decision is up to the homeowner.  Therefore, here are some tips to help in the decision.

 

Currently, fixed rate mortgages are low in comparison to previous years.  Choosing a fixed rate mortgage locks in a payment that will not change for the life of a loan.  Mortgage interest rates change frequently and over the last 25 years, they have reached 19% and as low as 5%.  Historically, rates are low and it is a good time to lock interest rates.

5 Questions to Ask Yourself Before Buying a Home

Buying your first house is a huge decision and there are multiple factors to consider.  This article will outline 5 questions each future homeowner should ask.

 

1.  How long do you plan on living in the home?

 

Americans usually live in homes for about seven to nine years.  Each future homeowner needs to decide if they plan to move in just a few years or stick it out for the long haul.  Usually, the shorter amount of time that you live in a home, the less time your home has to appreciate in value.  Also, in a market where home prices continue to decline in certain markets, future homeowners need to assess the risk of a short-term buy. 

 

The length of time future homeowners plan to live in their first home will impact the mortgage option of best fit.  Homeowners that stay in their homes for more than 10 years, a long-term fixed-rate mortgage might be the best choice.  If you know that will be imminent within 5 years then an adjustable rate mortgage or ARM might be the best choice.  There are many options to choose within these basic categories.  Talk with your mortgage professional about the other options available and the loan products they have access to.

 

2.      Will the home you are about to buy meet your future needs?

 

Many life changes can affect the first time homebuyer.  Some will plan to have kids within the next couple of years.  Do you plan to start a business and run it out of your home?  These types of questions need to be asked prior to taking the plunge.  Be sure that the home you purchase will meet your needs for years to come.  In other words, you don’t want to outgrow the house too fast.

 

3.      How do your finances look to lending institutions?

 

It is possible to find a mortgage no matter the financial situation.  But, if your financial history is good, you will have more and better options.  For example, some late payments on a credit report won’t affect the score too much.  Most will be able to enjoy the lowest interest rates available.  If you have more issues on your credit report, many lenders will still provide you with a home loan, but because you are more of a lending risk, you will have to pay higher interest rates and fees.  Mortgage professionals at FastMLA.com can help people in both of these situations.

 

4.  Where do first time homeowners find the down payment and closing costs?

 

Most homebuyers need to pay for the down payment and closing costs to complete real estate financing.  Usually, you do not need a large down payment if credit scores are high.  Multiple mortgage options offer a zero down and low down payment home loans.  If you have less than perfect credit, coming up with 10-20% of the property cost for a down payment will open multiple mortgage options.  In a slower market, many homebuyers will negotiate that the seller pays for all closing costs.  Some even negotiate a “home improvement” credit that can be used as a down payment. 

 

5.      Do you know what the ongoing costs of home ownership are?

 

There are multiple ongoing costs of homeownership that need to be considered.  Some of these costs include maintenance, improvements, insurance, taxes, HOA fees, and more.  If you are concerned about these costs, you may need to look for home loan options that minimize fees and lower mortgage payments.  Make your realtor and mortgage lender aware of any concerns you have.

 

No Hidden Points or Fees

Adding hidden points or fees is a way for mortgage/lending companies to make more money off current and future homeowners.  It is our goal to ensure that anyone receiving a mortgage is 100% educated and knows all fees and costs to their mortgage upfront.

Often we hear that homeowners are surprised by the fees charged at closing.  We prescreened mortgage lenders that guarantee not to add these hidden fees or points. 

Planning Your Monthly Mortgage Payment

To begin looking for a home, soon-to-be borrowers should look for what they can afford.  It is generally recommended that mortgage payment should not exceed 28% of your gross income.  This figure includes your mortgage payment and homeowner’s insurance.  First time homeowners may often be surprised by how many mortgage options are available.  To learn about all of them without dealing with many different individuals, using a mortgage broker is recommended.

 

Some of the options that new borrowers learn about are the traditional and non-traditional mortgage programs.  The traditional 30-year fixed mortgage locks your interest rate and locks your payment.  The advantage of this option is stability however many non-traditional mortgage options cater to people that do not plan to be in their home for the long term or that do not have the down payment for a traditional mortgage. One example of a non-traditional mortgage option is a “piggy backed” loan.  The first loan would finance 80% of the purchase price.  The second loan would pay for the remaining 20% of the purchase price resulting in needing a down payment of zero.  A disadvantage of this loan option is that the closing costs may be higher than other mortgages.  Borrowers need to remember that each mortgage option has pros and cons.  A responsible mortgage broker will tell you the pros and cons up front.