Loans and Mortgages Blog

3 Quick Steps to Completing a Mortgage Application Online

Filling out a mortgage application online may seem very easy. The truth is that no mortgage application, online or in person, is ever that simple, so here are some tips on what you can do to make is easier on yourself.

• Prepare. Get all of your information together ahead of time. Have last year's taxes on hand, a pay stub, a bank statement, your current creditors and account information. Be prepared and the arduous part of mortgage application completion will be much quicker.
• Find the Site(s). Figure out which lender web site you are comfortable with before you fill out mortgage applications. You may think you are being smart by filling out a ton of mortgage applications to find the best loan program, but if you give your personal information to the wrong site, you could be in trouble. Choose wisely and you'll still get a wide variety of loan program options.
• Be Thorough. Don't skip steps when filling out your mortgage application. Don't leave things blank or miss details. Be precise and be thorough and the whole process will be better as a result.

How to Apply for a Mortgage Online

The internet has improved information sharing, especially about home buying, home ownership and mortgage applications. Nowadays you can go online to almost any lender and learn the information they will need, the application process and the rates and terms available to you.

This information and free data has also made the marketplace more competitive which benefits all consumers. After all, with online lenders you can get dozens of mortgage and loan quotes from the comfort of your home without ever visiting a local bank branch.

By arming yourself with knowledge about the process, and by keeping the personal information you need on hand, your mortgage application process will be simple and straightforward.

Don't Get Frustrated with your Mortgage Application

Why are mortgage applications so painstaking, long and detailed? You are borrowing a huge amount of money here, and they want to make sure they know everything about you. Here are the most important things on which to focus during the mortgage application process.

1. Employment Information – Mortgage lenders calculate their risk based on your habits and your employment and income habits are of paramount importance.
2. Credit History – First, you should know exactly what is on your credit report and what your credit score is before you fill out a mortgage application. They will pull your credit report but sometimes, if a loan has been paid off and not yet removed, they will need explanations about debts that show up.
3. Accurately report your expenses and payments. They calculate what you can really afford for a reason and rather than trying to lie to get more house than you can afford, let your lender guide you on what will be feasible for your budget.

Differences in a Refinance Mortgage Application

What is the difference between a mortgage application and a refinance mortgage application? The nuances are minor but important, so here they are:

1. A refinance mortgage application related to a single property – the home you own whereas a mortgage application may end up being used on any number of properties. Many mortgage applications are submitted to secure pre-approval and this means it won't be associated with any single specific home. You will need all the information about your current mortgage to move forward with a refinance so get together the documentation from your last closing.
2. With most refinance mortgage applications, you will have already chosen what type of refinance loan you want. Your choices come down to various rates and terms or if you are want a “cash out” refinance. Some lenders require proof of payoff for debt consolidation refinances or they require proof of the home improvements completed with a home improvement refinance loan.

Refinancing is typically easier than home buying and if you are prepared, your refinance mortgage application process will be smooth and easy.

Downloading a Mortgage Application Form Online

If you are interested in looking at different mortgage applications before going through the process of filling them out, you can look online or visit your local lenders for hard copy examples.

In many cases this is a great way to begin your information gathering. You'll need various forms and paperwork like pay stubs, bank account statements, IRA statements and the like when you submit a mortgage application so getting one in hard copy is a sensible place to start.

You can download mortgage applications online and print them out with relative ease. If you don't have a printer, head out to your local library and print it there. You can also visit your local lenders and ask for a mortgage application to take home for review.

Being prepared will ensure your mortgage application process goes smoothly.

How to Apply For a Mortgage in Florida

Did you know that each state has its own lending procedures? They also have their own loan programs and potential perks for home buyers. It's always a good idea to fill out an application with a state certified mortgage broker. You never know what kind of incentives your city or state may be offering for first time home buyers, home restoration and repair or neighborhood improvement. Filling out a mortgage application only takes a short amount of time and looking into regional and state specific mortgage options may yield surprising results. Each state will likely have different procedures and processes. Read up and learn about your state and the opportunities that may be available to you.

Three Things Not To Forget in Your Mortgage Application

Filling out mortgage applications is a pain. Don't get frustrated or impatient though. A little time up front can mean big savings down the line. Here are some tips on what to prepare before you fill out your mortgage application. If you have this stuff on hand, you'll make the process much easier.

1. Residence History – Where have you lived over the past few years and did you rent or own? This is reflected on your credit report in most cases but lenders will want to know how long you have lived in a given location, if you rented etc. so they can make sure you are a viable credit risk.
2. History of Employment – One way a lender determines your legitimacy as a borrower is by looking at your employment history. If you have been consistently employed at a given salary for a good period of time you present a more viable credit risk.
3. What are your assets? Collateral can be a big piece of whether or not you get a loan. Do you have a car? Bank accounts? An IRA? All of these will affect your ability to get a home mortgage.

If you have these items prepared ahead of time your mortgage application process will be much more efficient.

See It All – Get a Mortgage Application Online and from a Broker

You'll have more options than you want during your mortgage application process. You should absolutely use both online and local resources at your disposal to ensure that you get the best mortgage quote.

• Submit a mortgage application to an online mortgage broker and you'll probably get at least three mortgage options from which to choose. This means a little work for a lot of data.
• Submit a mortgage application to your local mortgage broker. Find out what your local options are and if there are any state, town or regional specific programs that can help you.

Compare all of your options and make the best choice for your situation.

Resubmitting a Mortgage Application

Has your mortgage application been rejected by a lender? Don't let it get you down. Use it as an opportunity to learn more about your credit and what you need to do to secure a mortgage application acceptance.

Don't be afraid to ask why your mortgage application was rejected. Let go of any embarrassment or humiliation and learn from the experience. It could be credit issues, work history or income verification. Work with a consumer credit counselor to rectify any issues before you re-submit your mortgage application.

Use the mortgage application process as a learning experience. You'll find a loan that will work for you. It may take some additional time, but it will be worth it in the long run.

Submitting a 2nd Mortgage Application Online

If you are interested in taking out a home equity loan, the application process will be similar to that of your mortgage application.

First, look online for the best equity line rates and terms. Fill out online application forms with lenders you can trust. Online lenders have tons of programs available to you'll get a lot of information back quickly.

Make sure you complete your second mortgage application thoroughly though. If you aren't completely honest and thorough, you may not get accurate equity line mortgage quotes and you'll have wasted everyone's time.

Once you choose a lender, you'll get hard copy documents in the mail. You'll need to complete these in a timely fashion and get them back to your lender. Home equity lines typically move much faster than mortgages so your closing will quickly approach.

Source: LowerMyBills.com

Posted at 04:17 AM | Permalink

When it comes to home equity loans, there are mainly two different options: A second mortgage loan or a home equity line of credit. The following article will explore the reasons why a second mortgage is a much better choice than a home equity line of credit in most occasions and especially given the current market conditions.

Second Mortgage Vs. Home Equity Lines of Credit

A second mortgage loan is just like a regular mortgage loan, it is a secured loan guaranteed by the same asset as the first mortgage and holds an interest rate that can be fixed or variable. The flexibility regarding the interest rate type is the distinctiveness we will focus on in this article.

Home Equity lines of credit on the other hand, let you borrow and repay as much money as you want till you reach certain limit fixed by the remaining equity on your home. However, once you repay part of the money borrowed, you can borrow again without requesting a new loan. This revolving line of credit is not as flexible when it comes to interest rate type. Equity lines of credit ALWAYS come with variable interest rate.

Interest Rates, The Key Issue

Interest rate is always an issue to be taken into account. When in times of low interest rates, one tends to forget about it and concentrate on other benefits; however it should always be the center of our attention when considering the possibility of applying for a loan.

Certain recent events have proved that the above is true. Those who are stuck with a variable interest rate loan are now regretting their choice since in the past months, the interest rate charged has been escalating dramatically. And nothing seems to suggest that this trend is coming to an end in the near future.

Those who have selected fixed interest rate loans are praising themselves for being so conservative and they deserve the praise. They are saving thousands of dollars in interests while at the same time having the confidence that their monthly payments will remain static for the whole life of the loan.

Summing up

As explained above, home equity lines of credit do not offer the possibility to select a fixed interest rate, so you are always risking the possibility to end up paying a higher interest rate due to changeable market conditions. And given the current state of affairs, with this interest rate increasing trend, the home equity line of credit option doesn’t seem the way to go.

Thus, second mortgage loans are the best option for you. You can simply borrow just the amount of money that you need or you can always borrow a bit more, as long as you can afford it and keep it in a savings account if you plan to use it in a near future. Second mortgage loans are the right option if you are considering home equity loans especially due to the instability of current market conditions that can skyrocket interest rates at any time.

Richard Revis is an expert in the financial industry and knows exactly how to aid you in getting approved for the loan or credit card you need. He has helped a lot of people to obtain personal loans, home loans, car loans, unsecured credit cards and many other products regardless of their credit situation.

Posted at 04:10 PM | Permalink

Gone are the days when we took out a mortgage and stuck with it for life, until the debt had been completely repaid. The remortgage market is big business these days, and taking a look at the options available could considerably improve your finances. What are some of the reasons for considering switching your mortgage?

1. Get a better deal: Are you sure that your current mortgage is the best one you can get? The market is very competitive and mortgage providers are desperate to attract new business, usually by offering special deals to people who switch their mortgage over to them. As well as aiming for a lower interest rate and lower monthly repayments, remortgaging could net you other benefits such as cash back, free home insurance, or other valuable extras depending on the deal.
2. Lock in a low rate: Interest rates are at historic lows, even taking into account the recent rise. Many experts are predicting that rates will begin to rise again over the next few months and years, leading to more expensive mortgages. By replacing your variable rate mortgage with one that has a rate fixed for a few years, you can protect yourself against future rises in the interest rate.
3. Release equity: As house prices have gone through the roof over the last decade or so, many people find that they are sitting on a large amount of equity in their home - the difference between how much their house is worth and what the outstanding mortgage balance is. Taking out a remortgage that will pay off your current mortgage and also give you some extra funds is an effective way of unlocking some of this stored wealth, providing you with the funds you need for home improvements, a holiday or wedding, or any other large expense. It is often cheaper to raise the money with a remortgage than by, for example, taking out a personal loan.
4. Debt consolidation: It's well known that the public as a whole are in debt to a level never seen before, with easy access to relatively cheap credit providing the temptation to 'live now and pay later'. Nonetheless, the money has to be repaid at some time, and credit cards and the like aren't an ideal way of obtaining long term credit. Taking out a remortgage large enough to cover both your mortgage and your other debts will simplify your finances, leaving you with a single monthly repayment to make, which will usually be for a smaller amount than your total repayments at the moment.
5. Change your mortgage type: People's circumstances change over time, and what might have been an ideal mortgage a few years ago when you took it out might not be the most suitable for your current needs. Maybe you want to switch from an interest-only mortgage to a capital repayment one, or you might want to take advantage of some of the more recent features of mortgages such as flexible payments or offsetting - a remortgage can give you the chance to get a deal more in tune with your current circumstances.

Bearing all the above in mind, a remortgage might seem like an ideal way forward for restructuring your finances. It's important to remember though that the decision to remortgage is not to be taken lightly, as you could potentially be putting your home at risk if you get it wrong, and so it's essential to seek the advice of a properly qualified mortgage advisor if you are in any doubt.

Source: www.superfeature.com

Nicholas Hunt is a contributor to 1Stop Finance UK, your source for remortgages, mortgages and homeowner loans.

Posted at 03:54 PM | Permalink

When to Look Into Home Equity Loans

Home equity lines can be perfect for a variety of people in different financial situations. Here are some scenarios where a home equity line of credit can come in handy.

• An Unexpected Expense – Home equity loans have some of the lowest interest rates around and essentially, you are borrowing from yourself. If you have an open home equity line of credit, no matter what the expense you can be prepared.
• Home Improvements – What better to finance your improvements to your home than your home equity? You can use a home equity line of credit for a new roof or to paint your home or to complete the addition you need for your growing family.
• Loan Consolidation – If you have accrued too many debts there is nothing wrong with taking out a low interest home equity loan to consolidate your bills and get your on firmer financial ground. Just make sure you get your spending under control and reinvest your money back in your home equity as your situation improves.

If you fit into any of these categories, contact your mortgage broker today. You really can't go wrong with the low interest rates currently available.

3 Benefits to Home Equity Loans

There are many benefits of taking out a second mortgage or home equity line of credit. Here are several of those benefits:

• Extended Repayment Terms – Home equity lines of credit can have incredibly flexible repayment terms. Some will not require payment in full until you sell your home. This isn't to say you should allow debt to languish, but the extended payment terms on loans like these are a huge benefit.
• Payments on Interest Only – Home equity lines often only require a payment based on the interest you have accrued. This makes for much lower monthly payments.
• No Closing Costs – Most home equity lines of credit are available with no closing costs and no money out of pocket for you. There are always some fees, but with the right lender, these fees will be built in to their commission structure.

Home Improvements? Take a Second Mortgage

If you want to improve your living environment and your home equity, but you don't know where to get the money to complete the improvements, the answer may be far simpler than you think. Many lenders will be more than happy to help you take out a home equity line of credit for home improvements. Of course, it will depend on how much home equity you have accrued, but many lenders, because you are improving on their investment, will look well upon home improvement equity lines of credit.

Don't avoid improving your home out of fear of a second mortgage. If you think about it, there is nothing wrong with taking equity out of your home to reinvest it in your home. You are just putting that money to good use and making more money by wisely improving on your investment.

If you are interested in exploring the possibility of a second mortgage, talk to a few lenders and compare interest rates. Choose someone you trust and go for it. Smart home improvements will exponentially increase the value of your home.

Shopping for Equity Loans Online

An online lender like us is going to offer you the widest range and selection on equity loan rates, terms and programs. The best part about working with an online vendor is that they can get you competing quotes and you can still compare and make the best decision for you.

By using resources on the internet you may find other viable online lenders, but if you do solicit quotes from these people, be wary. If they are not accredited by a third party or they have any blemishes on their business record, you may not want to share your personal information with them. Don't farm out your personal information to any loan site you come upon so you feel like a better consumer. Your information is vitally important so protect it!

Finding a No Closing Cost Home Equity Loan

When you saw the closing costs for your home purchase, you may have been a bit appalled. There are a lot of junk fees thrown in with the legitimate ones and this may be something that is holding you back from considering a second mortgage. Stop right now.

Home equity lines are far simpler than a first mortgage on your property. In many cases there are no closing costs, or the closing costs are very low. Therefore, not only will you have money available at a low interest rate, you don't even have to pay out of pocket to get that money.

If you can find a no closing cost home equity line with a good interest rate there is no reason not to move forward. Many people even take out a home equity line just to have it available in case they need it. Talk to your mortgage representative today and find out which program will fit your needs.

Take The Max with Your Home Equity Line of Credit

Here is something to consider when you plan to take out a home equity line:

Did you know lenders will give you a lower interest rate if you take out a larger home equity loan? It may seem scary to take out a loan for more than you need, but if you have self discipline, why not get the lower interest rate?

A great tactic is to take the maximum loan so you can secure the lowest interest rate and then pay it back almost immediately. A line of credit, like a credit card, will stay open even if the balance is paid. This is a great way to secure a terrific interest rate and barely pay any money to keep a line of credit open.

You do want to make sure they won't penalize you for using this tactic, but typically they will only issue a penalty fee if you close out the line of credit too early. A good mortgage broker will have more strategies like these so try to develop a solid relationship with your broker. You'll get better advice in the long run.

Consolidating Your First and Second Mortgages

Due to the refinance boom and the increasing values of home, many people now hold a first and second mortgage on their property. At some point you don't really need that second mortgage so you may want to consider consolidating your home debt under one mortgage. It is easy to refinance your first mortgage to absorb your second and you'll be left with only one will and potentially lower monthly payments depending on the interest rate you secure.

You will have tons of refinancing options so find a mortgage broker you can trust and compare rates, terms and loan amounts across the board. You'll have this loan for a long time so choose wisely.

Interest Only Equity Loans – Quick Cash and Low Payments

If you need money quickly, at a low interest rate an equity loan may be your best or only option. One of the best parts about an equity loan is that you can typically get a larger amount of money, for a low interest rate with incredibly low monthly payments. This is because your payments on an equity line are based on interest rather than on the principal of the loan you have borrowed. This is not to say you should squander the proceeds from your equity loan, but if you need money quickly and you don't have a ton of budget flexibility to make large payments towards your loan an equity line may be just the ticket.

Investing Your Home Equity Loan Wisely

If you decide to cash out your home equity in order to invest in other money making ventures, make sure you consider the following factors in your decision making.

1. Make sure you realistically weigh the risks involved with taking out a home equity line and putting your cash into another investment. Real estate is a very steady investment vehicle, so if you are considering taking home equity out to become a day trader, you may want to think again. Look at the risk and reward scenarios that are associated with your potential investment before you leap.
2. You are going to need to pay back any home equity loan that you take out. This is not a situation where you can borrow from your home equity and then just hold the loan. Make sure you new investment vehicle will not impede your ability to pay back your home loan.

You should consult a financial advisor before removing home equity for investment in a different money making venture. Protect yourself and your home by making smart decisions based on good information.

Retirement Planning with a Home Equity Line of Credit

Any financial advisor will tell you to be wary of how you spend the money from your home equity line of credit. This is not money to spend on going out to dinner and grand shopping sprees. You really should only use home equity dollars for home improvement, debt consolidation or reinvestment opportunities.

Investing your home equity in the right retirement fund could be a great way to spend your money and make sure it's making money for you. Perhaps you want to put it into an IRA or some other long term, interest bearing vehicle. The best way to go is to consult a financial planner on the best way to reallocate your investments.

They will help you assess whether it is better to pull out home equity and reinvest it in another vehicle or if you should leave the equity in your home and sit tight. Follow the advice of a trusted professional – they will most likely lead you down the right path.

Source: LowerMyBills.com

Posted at 02:41 PM | Permalink

First Time Home Buyer? Shop Around

Just because you are a first time home buyer doesn't mean you can't be choosy. When you are looking for your first home, make a list of the criteria of utmost importance and do your best to stick to it. You may be tempted to offer on the first home or condo you see but you should avoid that impulse and continue looking around to make sure you've found the right place for you.

First time home buying is stressful but if you prepare yourself with a good mortgage, a good real estate agent and a list of what is important to you and on what you are willing to compromise, you'll find a starter dream home that really fits the bill.

Getting Your First Home Mortgage

If you are ready to start your first time home buying process, make sure you educate yourself on your options and don't just depend on the advice of others. For instance, first time home buyers are often entitled to special government funded mortgage programs that have low interest rates and low down payments. If you arm yourself with knowledge, you can explore all the options you have.

If you want more instant gratification, online mortgage brokers are for you. These folks specialize in fast turnaround time with mortgage options and closings.

It is recommended that you get a mortgage pre-approval before you go house hunting. Many sellers today demand a pre-approval letter before they will accept your offer. Pre-approval also gives a first time homebuyer a realistic idea of what they can afford to buy.

First Time Home Loans Are Easy to Find

You may still be renting because you think you can't get a mortgage as a first time home buyer. This is often not the case, so you should really find a mortgage broker online or locally to consult with. The best thing about mortgage brokers is that they will coach you on what you need to do to get into a better position if you need to.

Additionally, they will work harder to find you better programs if you prove your loyalty to them. When you talk to your mortgage broker you need to ask what kinds of programs you qualify for. They will get your credit score and analyze your financial data to assess what you can get and what you can afford.

Take this information to your real estate agent and begin your search only looking at the properties you can really afford.

Low Down Payments with a First Time Home Buyer Program

Are you worried about coming up with a down payment as a first time homebuyer? There are many programs out there that are specifically designed to help with this very concern. Several programs require little or no money down.

Did you know the federal government even allows for a one time withdrawal, up to $10,000, from an IRA or retirement account with no penalty for first time home buying?

It's hard to decide between the various mortgage programs out there, which is why you need to develop a relationship with your mortgage broker. They can help you find the right first time homebuyer program for you and explain all of your options thoroughly.

Making the Most of Your First Time Home Buying Experience

Make the most of your first time home buying experience by enjoying it and learning from it. Take the time to learn about your neighborhood. Find out about schools, about average home values, about the increase in those home values over the last five years. Assess crime rates and try to find out if anything significant is happening in terms of home or town development that will increase your home's value into the future. Take the time to learn about mortgage programs. Learn about your options as a first time homebuyer and arm yourself with information for the future. Finally, take this time to develop relationships with mortgage brokers and real estate agents. By establishing these relationships as a first time home buyer, you'll be able to navigate that much more easily through any future home buying.

3 Reasons to Use a Real Estate Agent as a First Time Home Buyer

Why should you use a real estate agent as a first time home buyer? They have the professional knowledge and experience to find you the home you've always dreamed of. Don't end up settling for a home you don't hate. Here are some basic reasons why using a real estate agent as a first time home buyer is a good idea:

1. Negotiation Skills - Great real estate agents know how to negotiate. They represent their clients in negotiation the home price, anything that needs to be addressed after the home inspection, closing details and the like. They have an impact on every aspect of your home buying process and using a real estate agent can mean saving thousands of dollars.
2. Experience. Looking for a home and getting through the closing process the first time can be incredible intimidating. Real estate agents have the experience to guide you through this process and they have the knowledge of neighborhoods, homes or condos on the market and properties coming on the market that you should absolutely tap into.
3. Resources. Finding a home inspector, a closing attorney or agent, a seller's attorney, an appraiser, a mortgage broker can all be arduous and painful. Your real estate agent will have contacts in all of these areas. You may find better mortgage rates online, but it doesn't hurt to explore all of your options and tap your real estate agent's network.

Look For Flexibility in First Time Home Loans

What do you need to look for in a mortgage program as a first time home buyer? Here are a couple of tips and guidelines:

1. Flexibility - Make sure you get a program that offers a monthly payment you can really afford. Be honest with your mortgage broker if your payment seems out of reach. They may be able to suggest a three or five year ARM mortgage with a lower interest rate and lower payments or an interest only loan to get you into your home without giant mortgage payments.
2. Building Better Credit - If your credit isn't perfect, your mortgage broker can probably find you a program that will help you build you credit up. The payments may be flexible and as you make more payments on time, your interest rate may even drop!
3. Long Term Goal - Are you planning on staying in this home forever, for three years, for five years? Communicate your goals to your lender because in situations like these they may have several mortgage options from which you can choose.

Refinancing Your First Home Mortgage

As a first time home buyer you can't always get the best rate. Maybe you didn't have twenty percent to put down or maybe your credit needed a little rebuilding. If you've been in the house for a few years now and you've built up some equity, it may be time to refinance and get a better rate.

Refinancing your first home mortgage is very easy and painless, especially if you use your regular mortgage broker. The process still requires and application, a home appraisal and some of the same financial documents you needed to provide for your first time home buying, but the processing and closing should be faster and this time there is no seller involved to slow the process.

Speak with your mortgage broker about first home mortgage refinancing options. You'll probably save some money and maybe you can pull out some equity and fix that master bathroom!

Interest Only - A Popular First Time Home Buyer Program

Interest only mortgages are gaining popularity with first time home buyers. The reason for this is that interest only mortgages offer great flexibility in terms of payments for the first several years of the loan.

When you pay for your interest only loan, you are actually only making payments on the interest of your loan, so the payment is substantially lower. You can make payments towards the principle if you can, but you aren't required to.

Be careful if you choose an interest only loan. Don't get into more house than you can realistically afford. Make sure you understand the loan schedule so you aren't caught unawares when you have to begin paying towards the principle as well.

Getting It Right the First Time Home Buying

Don't be tempted into excess when first time home buying. A real estate agent may show you a condo or home that is really more than you can afford and you need to be strong and stay within your budget. Here are a few tips on making sure you buy a home you can really afford to live in:

1. How do you know what can you really afford? Work backwards. Look at what you are paying in rent. Can you afford to pay more? Do you need to pay less? Consider that a mortgage payment will also include taxes, then assess the monthly payment from there.
2. Where do you want to live? You may not get exactly what you want as a first time home buyer, but you should be armed with knowledge about neighborhoods, school districts or any other factors that are important to you.
3. Don't get in over your head. Don't get a mortgage that is too large, has a high interest rate or that has a prepayment penalty if you can avoid it. Bad mortgages can make life much more complicated. Make sure you are using a reputable mortgage broker and you should be safe.

Source: LowerMyBills.com

Posted at 02:15 PM | Permalink

PMI is an abbreviation for Private Mortgage Insurance. This is special insurance that lenders force higher risk borrowers to pay to protect the interests of a bank in case of default. PMI is only applicable in very specific instances, most often when you are borrowing more than eight percent of your home’s fair market value.

Try to avoid PMI at all costs. Don’t be afraid of taking out a second mortgage to buy your home; don’t be afraid to borrow your down payment. PMI is just money out the door that is not going towards your equity or anything that benefits you. You can get PMI removed from your mortgage once you reach a goal of twenty percent in equity. If you have PMI already, work hard to get it removed.

The Purpose for Private Mortgage Insurance

Why do homeowners get saddled with private mortgage insurance anyway? This is insurance for the lender that is now necessary because so many people defaulted on their mortgage loans.

In reality, PMI saves everyone money because without the security offered by this insurance, lenders would be far less likely to lend so much money at such low interest rates. After all, no lender likes high risk borrowers and folks who don’t have twenty percent to put down seem risky.

Plus, PMI is not forever. Once you have your twenty percent in your home you can refinance and PMI will go away, but your low interest rate won’t!

Removing Your PMI

So you have PMI because you didn’t have a twenty percent down payment, and now you are ready to remove it. Where do you begin?

1. Watch home values in your area. If your home has substantially increased in value, consider getting an appraisal done of your home to back up your assertion of the increased value. With that data, you can ask your lender to remove PMI.
2. Watch the numbers – if you know you now have at least twenty percent invested in your home because of extra payments towards your principle, call your lender. If they see the numbers as well, they will appraise the home again and you’ll most likely be out from under PMI.
3. Persistence is the key to removing PMI. If your lender is stubborn about it, consider refinancing. You may even get a better interest rate.

Avoid Private Mortgage Insurance – Piggyback Two Loans

If you can avoid PMI by piggybacking mortgage loans, you absolutely should. If you take out your first mortgage for eighty percent of the value of your home and you don’t have a down payment of twenty percent to cover the remainder, you can actually take out another loan. Say you have ten percent to deposit, you’ll borrow eighty percent from one lender, ten percent from another and put your own ten percent down.

Don’t be afraid of having two mortgages. PMI is a waste of money. Wouldn’t you rather have a second mortgage that, as you pay back, goes directly to your home equity?

Using a PMI Mortgage Calculator Online

If you are buying a home and you think you’ll end up with PMI, use a PMI calculator to better understand the effects of this on your bottom line.

1. You must know the purchase price of the property.
2. You must know your down payment.
3. Finally, you’ll need to choose a loan term of 10, 15, 20 or 30 years.

After plugging in the pertinent data, the PMI mortgage calculator will detail results for each loan type, purchase price, and down payment options that you have entered.

What Determines a Private Mortgage Insurance Rate

PMI rates are calculated using two main factors, the loan type and the amount of the down payment. The loan type relates to how much PMI you need to pay in a given term. In other words the PMI rates will be quite different for a 10 year loan and a 30 year loan. Your down payment gives the lender a specific figure in relation to the loan to value ratio of your home. They will subtract the mortgage from the fair market value of the home and that helps them determine the rate they should charge.

3 Ways to Avoid PMI

What are some simple methods to avoid PMI?

• Buy A Home You Can Afford – If you buy a home you can afford, you are more likely to be able to come up with a down payment that is closer to twenty percent and you are more likely to build equity quickly and get rid of PMI down the line. Don’t get seduced by keeping up with the Joneses – they are probably up to their eyeballs in debt.
• Borrow Your Down Payment – If you can borrow the twenty percent to put down, then you should do it. Tap family or other resources. The interest rate on the loan will probably be far lower than the PMI you’ll be stuck with for years.
• Take Two Loans – A great way to avoid PMI is to take out two mortgage loans when you buy a home. Your first mortgage could be for eighty percent and the second mortgage could be for twenty percent. The great part about this solution is that you avoid PMI and you can pay down but keep your equity line open. This gives you low interest flexibility for future home improvements!

How to Terminate PMI Quicker

PMI is based on how much equity you have built up in your home. The sooner you hit the twenty percent sweet spot, the sooner you can get rid of your private mortgage insurance.

What are the best and fastest ways to build equity?

• Put more money towards your principle every month. Make an extra mortgage payment when you can, add money towards your principle in your mortgage payment, pour your extra money into the equity of your home. The more you do this, the faster you will be able to get rid of the expense of PMI.
• Make some home improvements. If you don’t want to just sink cash into you mortgage loan, sink cash into home improvements. If you make substantial improvements to kitchens and bathrooms or if you add to the square footage, the value of your home will rise and therefore so will your home equity.

Finding a PMI Mortgage Calculator Online

If you want to play the numbers game with PMI, use a PMI calculator to get the right figure. You usually have to get private mortgage insurance when you are borrowing more than 80% of the value of your home. If you want to calculate your PMI into your monthly payments, start with a good PMI calculator.

You can look online at the search engines for alternate options or you can start with large, well know financial resource sites. You could even try your own local bank’s website.

A PMI calculator will help you get a real idea of how much PMI will add to your monthly payment. Look into one so you can budget appropriately.

Getting a Lower Private Mortgage Insurance Rate

Private mortgage insurance is a reality that is hard to escape, especially for first time home buyers. If you do have to take on PMI, make sure you get the best rate possible. Lenders should be able to provide you with different private mortgage insurance rates from which to choose. Make sure you shop for PMI like you shopped for your mortgage.

You can learn a lot about a lender’s PMI options during the mortgage application process. This should be on your list of questions to ask a lender along with questions about interest rate, loan terms and closing costs.

Don’t be afraid to ask about lowering the first private mortgage insurance rate quote you get. Most people don’t and if they did they would be saving a lot of money every month.

Source: LowerMyBills.com

Posted at 02:00 PM | Permalink