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Home Mortgages: Think Before You Borrow
In today's overheated housing market, lenders are making it
easier and easier to get a mortgage. For example, some lenders
have lowered the credit score needed to qualify for a mortgage.
Others have increased the debt load that borrowers can carry or
have made it easier for borrowers to get loans while providing
little documentation. In some cases, lenders have even made it
easier for people to borrow money to buy investment
properties.
There are also many kinds of mortgages available today that
were never available before. There are interest only mortgages,
adjustable rate mortgages (ARMs) for 3,5 or 10 years and
adjustable rate mortgages with balloon payments at the end of a
five or ten year period.
There are even adjustable rate mortgages that have
introductory rates as low as 1% and that give borrowers multiple
payment options.
Lenders also used to loan only 80 percent of a home's value,
meaning that the borrower had to come up with 20 percent as a
down payment. So, if you wanted to buy a home valued at $150,000,
you had to put down at least $30,000. This might have been
difficult, but at least you started out with $30,000 in equity in
your home.
This standard was then lowered to ten percent, meaning you
needed only $15,000 to buy that $150,000 home.
Today, it's possible to find mortgage brokers who will lend
100 percent of the value of a house or even more than 100
percent.
This can be good news for families who, until now, might not
have been able to afford a $10,000 or $20,000 down payment. But
you need to be careful of. Some unscrupulous lenders may try to
sell you a mortgage you can't really afford. Let's say your
monthly take home pay (after taxes and other deductions) is
$4,000. You find a house for $150,000 and a mortgage broker
willing to lend 100% or the full $150,000. A 30-year fixed FHA
loan (not including taxes and insurance) will have a monthly
payment of about $851.00. The total monthly payment PITI (with
taxes and insurance) would most likely be close to $1,000.
A good rule of thumb is that your cost of housing should not
exceed 20 percent of your net monthly take home pay (after taxes
and other deductions). This means that for a $1,000 monthly
mortgage payment, your net monthly income should be at least
$5,000. If your income were only $4,000 a month, you would be
spending about 25% of your income on housing alone.
Before you make this kind of commitment, you should take a
long, hard look at your other commitments, such as car payments,
tuition, and insurance to make sure you can cover them as well as
your normal living expenses.
Easy, no-down mortgages can be very tempting, but it's
important that you understand the exact terms and that you can
meet them without stressing your finances.
For FREE help with debt and credit, subscribe today to Douglas
Hanna's free email newsletter "8 Simple Steps to Debt Relief" at
http://www.all-in-one-info.com
 MORE RESOURCES updated Thu. February / 09 / 2012
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RELATED MORTGAGE AND REFINANCING ARTICLES:
Is the Inverse Mortgage
a Scam? New Program Promises Mortgage Payoff inside of 5
Years
If a mortgage could be paid off in five years or less,
without it costing homeowners an extra cent, why wouldn't
every homeowner in America be doing it? Because they don't
know, or because they're too wise? Although the former may
be the case for many, I certainly hope the latter is the
answer for most. A real estate finance consultant company,
who shall remain nameless here, claims it has the secret to
paying off your mortgage in five years or less, without you
paying any more on your monthly payment or adding to the
principal mortgage of your real estate loan.
Mortgage: Effective
Household Investment for Financial Autonomy
If finances had a copyright, we would have bought it by
now. But it is hardly sold anywhere near the place we live.
Flexible Mortgages -
Offering Relief from the Fixed Mortgage
A pension mortgage may seem lucrative at the first sight.
However, they seldom are, if the customers who took pension
mortgage are to be believed.
Bad Credit Refinance
Loans - Finding a Good Lender
Finding a good lender to help you with refinancing your
home loan can be tricky if you have bad credit. There are
plenty of predatory lenders out there who would like to
take advantage of you with excessively high interest rates
and fees.
What is a Commercial
Mortgage?
A commercial mortgage is a loan that uses commercial
property as collateral. A commercial mortgage is a business
loan which is secured against a commercial property.
To Refinance or not to
Refinance -- Here is the Answer
I have written many articles on refinancing a fixed rate
mortgage to an adjustable rate mortgage. I have helped
people cut as much as $800 off their monthly payments by
turning their high fixed rate mortgage loan into a much
lower ARM.
Mortgage after
Bankruptcy - Bankruptcy Discharged Yesterday? Purchase a
Home Today!
So you have been through a bankruptcy and surely have been
told to wait at least two years before applying for a home
loan. Waiting two long years without any guarantee of being
approved for a mortgage after bankruptcy can be
disheartening.
Bad Credit Home
Loans
There was a time that seems like decades ago when people
with less than pristine credit were not able to get home
loans. At that time people with bad credit were all but
assured that their dreams of homeownership would never come
to fruition.
Home Equity Lines of
Credit - the Basics
A Home equity line of credit is a loan which is similar to
a credit card. These often have a very low interest rate
(In most cases even lower than home equity loans).
Is an ARM Right For
You?
Let's start by taking a look at 7 key elements of an
adjustable rate mortgage:1) ARM defined: While a fixed rate
loan is constant and never changes throughout the life of
the loan, an adjustable rate mortgage changes periodically.
The interest rate of an ARM goes up and down based on
whatever external index it is tied to.
Home Owner Loans
Explained
How To Release Equity Locked Up In Your Home For Immediate
Use. Free up the monetary worth tied up in your property by
asking your financial advisor for information on a secured
home owner loan.
Home Equity - Let the
Market Eliminate Your Private Mortgage
Insurance
In decades past, most people who were interested in
obtaining a home loan were required to put down at least
20% of the purchase price. Those days are gone, and as home
prices have risen faster than incomes, the average down
payment required by lenders has dropped.
Top 10 Things to
Consider on Home Loans
Here are our Top 10 most important things to consider when
shopping for a Home Loan, Equity Line of Credit, or
Refinance, courtesy of
Loans-Directory.Org:Down-PaymentFixed Versus Adjustable
RateAPRLoan TypesLoan Amount Qualification, IncomeLoan
Amount Qualification, ExpensesEmployment and Credit
HistoryPointsSub-Prime LoansShort-Forms1.
Look For a Great
Mortgage Online
People who are looking for a mortgage today have many more
options than those who were searching for a mortgage a few
years ago, thanks to the Internet. Consider how technology
has changed the way we do many things, including shopping
for products and services - including loans and mortgages.
Basic Tips for First
Time Home Buyers
The first time you purchase a home is an exciting
experience. You are anxious to call the place yours and
maybe a little worried about how the whole thing will play
out.
Home Equity Line of
Credit or Second Mortgage Loan Online - Things To Do With
Your Homes Equity
If you are wanting to get a home equity loan, rates are
still low enough that you may want to make use of that
equity in your home. Do you need some ideas on what you
could do to multiply your equity or make some extra money
off of the capital that could be available to you? Here are
some suggestions of ways to put the equity to good use when
you go to take out a home equity or cash out refinance
loan.
How Not To Be Ripped Off
By Mortgage Brokers
One of the things that bothers me about the mortgage
industry is the number of unscrupulous brokers that operate
in this market. Talk about giving the industry a bad name! I
worked for a mortgage lender until quite recently and I
used to be shocked at the fees that brokers charged their
clients.
Option ARM Mortgage Loan
- Is This Really for You?
What happened to the days of a 15 or 30 year fixed rate
mortgage loan? Ultimately this is the safest and most
popular mortgage loan product in our industry, but new
mortgage products are hitting the market, and we in the
mortgage business are using them to our advantage; ever
heard the radio advertisement saying, "buy a $200K home for
$643.28 per month; call XYZ Mortgage Company to apply"? The
product used in this ad is called an Option ARM, and I feel
it's my duty as a mortgage professional to tell you what
this product is in case you happen to meet up with that
loan officer whose only concern is to make a fee, and not
have your best interest in mind.
Why You Should Not Get
Hung Up on the Interest Rates!!
This is what a mortgage can do for you! AND Why you
shouldn't get hung up on the interest rate! Let me show you
the bottom line or the total dollar amount you will pay
when paying a mortgage and paying rent and what the
benefits of a mortgage are: Let's say John bought a home and
has a $75,000 mortgage @ 10% interest for 30 years on his
home with a payment of $750.00 per month.
Choosing a Mortgage
Lender
Just as there are many types of mortgages and mortgage
deals to choose from, there are also many sources where you
can go to get a mortgage. Your key choices are to use a
mortgage broker, a more general financial adviser, or shop
around yourself and go direct to the mortgage lender.
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