Research Your Mortgage Rates

When shopping for a mortgage, many people fall into traps due to the fact that they are desperate and are not researching properly. You should be checking the current mortgage rates, and look into the mortgage interest rate trends for the past couple of weeks. Mortgage usually rise and fall with the Wall Street securities, and they set a trend to how the mortgage market will turn out to be. By looking at the mortgage interest rate trends, and the economic activity you will have a higher chance of getting a mortgage at a great rate! You may use these tools to help you, search todays mortgage rates online for free: Todays Mortgage Rate. Search the mortgage rate trends for the past 30 days for free: Mortgage Rate Trend.

What is Annual Percentage Rate (APR)?

This is a tool used to compare loans from different institutions. When advertising a mortage rate, an APR will be shown. It is against the law to not show it. All lenders will show an APR when ever disclosing their rate. This APR shows the borrower what is the true value of the loan that they are receiving. The main purpose of the tool, is to prevent the institutions from hiding any small fees under the table, apart from the low mortgage interest rate. The calculation for the APR depends on the length of the loan period, so it can’t be compared to loans of different loan periods.

The APR does have several cuts in it. APR calculations are very complex, and they can vary from different lenders. Lenders may choose which fee will be included in the calclation of the APR. if there are two institutions with the same information, it is not neccesarily true that they will end up with the same APR score. Also, the APR score is most often connected with several market index, where the index is assumed to be constant, which means it will not change. This will make it difficult to compare with the different loan lenders. The APR also won’t tell you anything about your pre-payment penalties, monthly payments or for how long your rate is locked for. However, APR can be used as a criteria, but you should not depend solely on the APR to choose which loan is best for your needs.

Meeting With Your Lender or Institution

Your loan approval process will usually begin after your initial meeting with your lender, where you will discuss the potential loan in question. You will need to bring several information to verify your income and long term debts, this way the lender can eanr more about you, and process a better mortgage to fit your needs. As a borrowner you have the choice, to meet with a lender before looking for a home, to see how much you can afford, or you may meet after the selection of your new home. The first option would always be the smartest one, because it saves you time, and you may look for a house in the correct price range. This step is known as ‘pre-qualiication’. Listed below are the things you would need to complete a 1003 Mortgage Application.

A purchase contract for the house (if you have one)

Your bank account numbers and the address of your bank branch, along with checking and savings account statements for the previous 2-3 months

W2 withholding forms, Pay stubs, tax returns for two years, or other proof of employment and income verification

Your credit card bills from the past few billing periods, or canceled checks for rent or utility bill payments, which will show payment history.

Any information on debts such as car loans, furniture loans, student loans and retail credit cards

Balance sheets and tax returns, if you are self-employed

Any gift letters, if you are using a gift from a parent or relative or other organization to help pay the down payment and/or closing costs. This letter simply states that the money is in fact a gift and will not have to be repaid.Usually, the mortgage application fee and appraisal fee will have to be paid when submitting your mortgage application. Your lender will let you know if you qualify for the loan within days. Although, after the initial meeting with your lender, you should have a broad idea on whether you would qualify for the loan.

In the early 1970’s, there was only three types of loan programs available to home buyers. There was only a fixed-rate conventional mortgage, an FHA loan or a VA loan. Now, times have definetly changed, there is an overwhelming number of mortgage loan types. These are listed below, with a brief description.

Most Popular Mortgage Loans

Fixed-Rate Mortgage Type: This is what many people stick with. The borrower has the privilege to choose from a 10-year, 20-year, 30-year, 40-year and even a 50-year fixed mortgage. All these are completely amortized.

FHA Loans: FHA loan types are insured by government through a mortgage insurance, which is directly put into the mortgage. Usually, first time home buyers are the main people to look into FHA loans, since their down payment is minimal.

VA Loans: VA Loans is a government loan type, which is offered to veterans who have served in the U.S Armed Forces, and to spouses of deceased veterans. The main benefits of this type of loan is that a down payment is not required.

Interest-Only Mortgage: Interest-only loans contain an option to make an interest-only payment. The option is available only for a certain period of time.

Hybrid Types of Mortgage Loans

Option ARM Mortgage: This type of mortgage is complex. The interest rate fluctuates periodically. Borrowers must be aware of the minimum payment option, because this can lead to negative amortization.

Piggyback Mortgage: This type of mortgage financing consists of two loans: a first mortgage and a second mortgage. The mortgages can be adjustable-rate mortgages or fixed-rate or a combination of the two. Borrowers take out two loans when the down payment is less than 20% to avoid paying private mortgage insurance.

Adjustable Rate Mortgage: The interest always changes, never stays the same. It can increase, decrease monthly, semi-annually, or even annually.

Mortgage Buydowns: Borrowers who wish to get a loan at a lower interest rate, may pay a certain sum of money to bring down the interest rate. This is why it is known as buying down. Buyers, sellers and lenders can buydown the interest rate for the borrower.

Specialty Mortgage Loans

Streamlined-K Mortgage: Similar to the 203K loan program, FHA has another program that provides money to renovate a home, and the extra amount is added to the loan. The dollar limits for repair work are lower on a Streamlined-K loan, but it requires less paperwork and is easier to obtain than a 203K.

Swing / Bridge Loan: These types of mortgages are offered when a buyer puts a home on the market, but has not been sold yet, and the seller wants to buy equity to buy another home. The sellers existing home is used as a security.

Equity Mortgage: This type of mortgage is used to receive cash. This type of loan can be adjustable, fixed or even a line of credit where the borrower may take cash out.

Reverse Mortgage: This type of mortgage is available to anyone over the age of 62, who has enough equity. Instead of making monthly payments to the lender, the lender makes monthly payments to the borrower for as long as the borrower resides in the home. The interest rate can be fixed or adjustable.

There you have it! These are the mortgage types available. You may not qualify for some of them, but you have a great selection here to choose from. Make sure you speak to a professional mortgage broker, who would help you choose the best solution.