mortgage updates
Knowledge is often defined as learning from ones mistakes. In the case of getting financing for a loan, you can use the following without having to make the mistakes yourself.
1. When it comes time to sign your life away in blood on the final mortgage documents, take the time to read them. Specifically, take a close look at the math being used. It is often wrong!!!
2. Many people get pre-qualified for a mortgage and then go home shopping. This is an utter waste of time. A pre-qualification determination from a lender means nothing. Get pre-approved instead.
3. Interest only loans are a fairly recent creation that lower your monthly payment by having you only pay the interest due without any principal. Be careful with these. If the property does not appreciate, you gain nothing.
4. If you intend to buy a home in the next six months, you need to do mortgage planning. Get a copy of your credit report and make sure it is accurate. Start paying down debt so your debt to income ratio is good.
5. If you pay points on your mortgage, try not to wrap it into the mortgage. If you write a separate check from your personal account, you can deduct the full points on your taxes.
6. Should you go with a fixed or adjustable rate mortgage? In general, go with fixed when rates are low and an adjustable when rates are high.
7. When you apply for a mortgage, your credit score is a key factor. A FICO score of 740 or above is considered great credit, 700 to 739 is good, 680 to 699 is okay and anything below is bad.
8. The tax code in the United States makes little sense, but it is helpful with refinancing. If you refinance your home, you do not have to pay any capital gains tax. This is true even if you refinance for more than the home is worth.
mortgage updates
In this economic climate, a month is a long time – and since the last mortgage product review in May, things have certainly changed in the marketplace. If there is one single message to be gleaned from this month’s product update, it’s that rates for some of the most popular and most advantageous loans are heading upwards.
Last month and the month before that, I advised investors acquire the best fixed-rate loan they could, as rates were bound to rise before too long. Sadly, that prediction has now come to fruition. Over the last two weeks, The Woolwich, Northern Rock, Barclays, The Nationwide, Abbey, Halifax and Alliance & Leicester have all hiked up their fixed-rate mortgage products. In fact, The Nationwide has raised their fixed-rate mortgages twice in as many weeks. The main reason is that fixed-rate deals have become extremely popular, with over 90 per cent of all borrowers now aiming to safeguard the near future by opting for this particular type of mortgage.
And rates have certainly not plateaud yet. According to those in the know, more product rate rises are still to come – and these will be despite an apparent stagnation in the bank base rate. So, if you have yet to make your move on a fixed-rate product, I suggest you do it earlier rather than later to get the best of what is still on offer.
It is comforting to read that mortgage approvals rose to a thirteen month high in May and the market seems to be adjusting itself to the promise of a genuine recovery hovering somewhere over the horizon. A busier market is good news for everyone, but lenders are becoming just a little anxious about whether this will be a consistent recovery – or just a bit of sunshine before storm clouds darken the doorstep once again.
Housing Choices
For almost two years now, my family and I have been renting an apartment. It is a two-storey house with one room only so we are thinking of moving to another house where there are two rooms so that we can convert the other into our mini-office.
We like to collect brochures from housing developers so that when we find the right fit for us, we can just go ahead and inquire. Too bad we do not have enough money to pay for down payment so most probably we will take a housing loan. Even this is not easy to do as there are requirements that need to be met before it can be approved and processed. If it is a go, the monthly amortization can be paid for up to 30 years. I know it is a very long time but for ordinary employees like us, it is a great opportunity to own our own homes.
We have yet to find the perfect location for us because we prefer that it is just in the city. The cheaper housing options are found in the provinces but right now, it is not convenient to live there considering the traffic situation. Maybe in the future if we have money to spare, we could get one as it is a good spot for a rest house. For now, we’ll keep an eye for other new developers and who knows, we could find our dream house.
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