Mortgage and Refinancing Information Channel:
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What Is The Best Deal For A Mortgage?
Few of us invest the time and effort into researching and securing the best deal for a mortgage to purchase our home.
For most of us, our house is the single most important and expensive purchase we ever make!
We invest a lot of time and effort into finding the perfect property in the best location and with as many of the features from our wish list as possible, yet, when it comes to finding the best deal for a mortgage, we take what is offered rather than researching and securing the best mortgage for our situation.
When you consider that the average homeowner will pay out more in interest over the lifetime of their mortgage than the home originally cost, you can see why getting yourself the best deal for a mortgage now, could save you tens of thousands of dollars in interest over the 20 30 year term of your home loan.
Your research for the best mortgages or loans and repayment options currently available can be carried out on the internet, thus making the whole process that much more convenient and time efficient for you.
Mortgages are not a "One Size Fits All!"
Mortgages come in many different forms and you need to be aware of the various forms in order to determine which one is the best deal for a mortgage to your unique circumstances.
Basically, mortgages fall into one of the following categories. Lenders will have variations of these basic categories, but armed with this information, you will be able to sort through the choices for just the right package.
Fixed Rate Mortgages:
Loan with an interest rate that remains at a specific rate for the entire term of the mortgage/loan. Approximately 75 per cent of home mortgages are this type. A fixed rate mortgage is often considered the best deal for a mortgage for first time buyers as you can establish a consistent relatively fixed budget of household operating expenses.
ARM's or Adjustable Rate Mortgages or Variable Rate Mortgages:
A mortgage/loan with an interest rate that adjusts or varies with the changes in rates paid on Treasury Bills or bank Certificates of Deposit. In Canada, the rates vary according to the posted weekly Bank of Canada rates.
To offset the risk associated with an adjustable rate mortgage, some lenders offer various 'capping' options. Often, they fix or limit the maximum level to which the interest rate you are subject to can rise for a given period of time. Sometimes they fix the cap per year and sometimes for the lifetime of the mortgage.
Adjustable or variable rate mortgages can be very attractive as usually the rates are considerably lower than for fixed rate mortgages. They are an excellent vehicle for borrowers who are attentive to the rate fluctuations and prepared to 'lock in' their mortgage when interest rates start climbing. If you're constantly watching the money markets, this may be the best deal for a mortgage for you.
A mortgage in which the monthly payment is not intended to repay the entire loan. The final payment is a large lump sum of the remaining principal. Balloon mortgages are often only partially amortized and requiring a lump sum repayment at maturity.
It's popular mortgage in the US for homeowners who aren't planning to stay in their new home for more than 5 or 7 years. The advantage is that the interest rate is lower than a fixed rate mortgage however, the disadvantage is that if you remain in the home beyond the 5 to 7 year term, you would have to secure a new loan or mortgage to pay off the balloon mortgage.
Jumbo Mortgages or 'Non-Conforming' Mortgages:
In the US, Congress has legislated a conforming limit to the amount a mortgage is allowable for funding by Federal National Mortgage Association (a.k.a: Fannie Mae) and the Federal Home Loan Mortgage Corporation (a.k.a: Freddie Mac). The 2005 limit is $359,650; $539,475 in Alaska, Hawaii and the U.S. Virgin Islands.
Any loan or mortgage above that conforming limit is considered a Jumbo Mortgage. A Jumbo mortgage/loan allows you to borrow over the conforming limit, but for that privilege, you will incur higher interest rates. There are variations to the Jumbo Mortgage such as the Super Jumbo Mortgage, but I'm sure you get the basic picture.
Canadians have an equivalent referred to as a "High Ratio Mortgage" guaranteed/funded through Canada Mortgage And Housing Corporation (CMHC).
Now that you have identified which type of mortgage might suit you best, you need to consider repayment methods and you basically have two options:
An interest only payment method can be combined with any type
of traditional mortgage. Interest only payment periods almost
never run for the entire term of the loan, so prepare to have
your payment rise to include both principal and interest once the
interest only period ends.
Principal and Interest or Capital &
Your monthly repayments are divided into an interest payment and a principal or capital repayment. In the early years of the mortgage period most of the monthly payment is swallowed up in interest but over time the balance reverses and you start to pay off more of the capital or principal borrowed.
So Many Mortgage Lenders ... So Many Choices!
There are so many mortgage lenders offering such a variety of loan options that at first it can seem a daunting task trying to determine which lender most suits you and your circumstances and which Lender is offering you the best deal on a mortgage!
It is important to note that as you shop for a mortgage, each lender will perform a credit check prior to committing to the mortgage or loan. Each credit check remains on your credit record and could potentially reduce your credit score and eligibility for a mortgage or loan.
Helen March offers simple House And Home Sense solutions for buying or selling real estate as well as informative articles for home improvement and lifestyle alternatives. Visit her at: http://www.HouseAndHomeSense.com
MORE RESOURCES updated Sat. August / 08 / 2020
Don't let mortgage rates distract you. You should also consider this when refinancing - Fox Business
6 ways to slash the cost of your mortgage refinance Yahoo Finance
How much does it cost to refinance? Bankrate.com
Rocket’s Refinance-Fueled Blastoff Might Not Last The Wall Street Journal
Refi Rates Today, July 24, 2020 | Rates slide Bankrate.com
Is It Already Time To Refinance Again? Mortgage News Daily
Current Refinance Rates, July 15, 2020 | Rates slide Bankrate.com
How to Refinance a Jumbo Loan Credible News
Wells Fargo tells new clients they need $1 million in balances for certain mortgage refinancings - CNBC
Wells Fargo tells new clients they need $1 million in balances for certain mortgage refinancings CNBC
You might have a tough time getting a 'jumbo mortgage' during pandemic. Here's what to expect - CNBC
What is the cheapest way to borrow money? Fox Business
2 On Your Side: Interest Rates Are At Historic Lows, But Can People Whose Home Loans Have Been Put In Forbearance Refinance? - CBS Los Angeles
2 On Your Side: Interest Rates Are At Historic Lows, But Can People Whose Home Loans Have Been Put In Forbearance Refinance? CBS Los Angeles
Don't make these mortgage refinancing mistakes | Business | swoknews.com The Lawton Constitution
Mortgage industry faces 'tsunami' of refinancing deals Phoenix Business Journal
What Is A No-Closing-Cost Mortgage? Bankrate.com
Community banks Aquesta, Uwharrie have logged growth during the pandemic. Here's how they did it. - Charlotte Business Journal
Community banks Aquesta, Uwharrie have logged growth during the pandemic. Here's how they did it. Charlotte Business Journal
The Tax Breaks for Homes That Help You Now The Wall Street Journal
Compare mortgage, refinance, insurance, CD rates Bankrate.com
Mortgage refinance: Everything you need to know Fox Business
New SimpleNexus eClosing feature enables mortgage lenders to conduct speedy and convenient hybrid closings of purchase and refinance loans - Send2Press Newswire
New SimpleNexus eClosing feature enables mortgage lenders to conduct speedy and convenient hybrid closings of purchase and refinance loans Send2Press Newswire
How to get the best mortgage refinance rates Fox Business
How to refinance your mortgage Fox Business
10 things to know before refinancing your mortgage Fox Business
Is now the best time to refinance your mortgage? Fox Business
7 ways to make extra income in retirement Bankrate.com
When should you refinance your mortgage? Fox Business
Mortgage refinance applications spike 79% as homeowners rush to take advantage of lower rates - CNBC
Student Loan Refinancing Rates Fall to New Lows Credible News
Record number of borrowers can now save on a mortgage refinance as rates drop from coronavirus fears - CNBC
Record number of borrowers can now save on a mortgage refinance as rates drop from coronavirus fears CNBC
How does mortgage refinancing work? Bankrate.com
With Mortgage Rates So Low, Getting a Floating Rate Mortgage Might Seem Crazy. Here's Why I Did It Anyway - MONEY
With Mortgage Rates So Low, Getting a Floating Rate Mortgage Might Seem Crazy. Here's Why I Did It Anyway MONEY
Should I refinance my house? Mortgage rates drop to 50-year low as coronavirus spreads across the U.S. — and the world - MarketWatch
Should I refinance my house? Mortgage rates drop to 50-year low as coronavirus spreads across the U.S. — and the world MarketWatch
I refinanced my mortgage during COVID-19, and thanks to low interest rates I'll save about $50000 - Business Insider
I refinanced my mortgage during COVID-19, and thanks to low interest rates I'll save about $50000 Business Insider
Rushing to Refinance Your Mortgage: 6 Tips and What to Avoid The New York Times
The impact of the coronavirus on mortgage refinancings Brookings Institution
The basics of no-closing cost mortgage refinancing Fox Business