Apply for Mortgages

Resource for those of you that are considering buying a new home.  Mortgage information as well as refinancing information or borrow against your home with a home equity credit line.  Find online applications for a mortgage and understanding financing terms.

Deciding to Refinance:

Whenever interest rates drop, homeowners might have the opportunity to save money. Lower interest rates generally mean lower mortgage loan rates, and refinancing your mortgage at a lower rate can save you a few bucks on every monthly payment.

Deciding whether to refinance your home comes down to a basic calculation: Will your savings from reduced mortgage payments be greater than the up-front costs? Look for a minimum interest rate improvement of, say, two percentage points from our existing mortgage before we get serious about refinancing.

In addition to taking advantage of a lower mortgage rate and flat-out saving money, there are other reasons to refinance. For instance, you might want to build up equity in the home more quickly (by converting to a loan with a shorter term) in order to have that money available down the road for a necessary large purchases, or for your children’s education.

Mortage:

The three most important things to consider about a mortgage or any loan:

1. size (amount of money you are borrowing)
2. interest (the percentage rate you pay on the loan over time)
3. term (how long it will take to pay off the loan)

Taxes:

When you file your federal and state income tax forms, you’ll be able to deduct mortgage interest and property taxes

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Two Types of Mortgages:

Once you know some of the basics about mortgages, you can more closely examine the different types. You should familiarize yourself with the two basic kinds of mortgages.

Fixed-Rate Mortgage

This is the plain-vanilla loan that most people think of when considering a mortgage. You will owe a certain percentage of the loan as interest to the lender. This amount never changes, and your monthly payment will remain the same over the life of your loan. Fixed-rate mortgages are usually for 15 or 30 years.

ARM

This is an “adjustable-rate mortgage.” The interest rate changes to reflect changes in the credit market out in the great, wide world.

The first-year rate (otherwise known as the teaser rate) is generally a couple of percentage points below the market rate. There are also upward limits, above which the interest rate isn’t allowed to go — this is called the cap. If your teaser rate is 4%, and you have a five-point cap, then the highest that your interest rate can go is 9%.

What’s more, the amount that the interest rate can rise each year is limited, usually to one or two percentage points per year. The frequency at which the rate adjusts might vary; make sure you know these features.

If you’re considering an ARM, think about the worst-case scenario. What if interest rates go up, and your ARM adjusts to its maximum? What will that maximum be, and when will it kick in? Will you be able to afford the payments?

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