Mortgage and Refinancing Information Channel:
We would like to thank the local libraries, schools, and universities for recommending students to visit us when doing research on any of our information topics.
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:
1. Down-Payment - As a general rule of thumb, lenders will be seeking contribution from you of around 3% to 6% of the total loan value. This can be negotiable, and there are many loan packages available.
2. Fixed versus Adjustable - The two most common loan products available for home mortgages are fixed rate versus adjustable rate.
Fixed rate means that you agree on an APR (annual percentage rate) that does not change through the life of the loan, whereas, an Adjustable Rate Mortgage, better known as an ARM, means that rates and monthly payments can change, often tied to the U.S. Government Treasury Bills or some other form of "index", with the frequency of change dependent upon the terms of the loan.
Deciding on which way to go involves many variables. We suggest that you start by examining the fixed rate products available on the market. They are by far the most popular, and arguably with the least amount of risk. After evaluating several preliminary loan offers (quotes) for fixed rate mortgages, you can then venture into the world of ARM's to see if one of these products may be right for you. But, proceed with caution, and understand all the risks, alongside any potential benefits.
3. APR - APR, better known as the annual percentage rate, aka: "rate", is arguably the most important consideration you must examine when looking for a loan. The APR includes principle, interest, "points", fees, PMI (Mortgage insurance), and other costs associated with the loan. While all costs and terms are significant and affect the bottom line, we suggest that shopping rate is a very good starting point.
4. Loan Types: There are several standard loan products to look for, including 30 year fixed, 15 year fixed, bi-weekly mortgages, 1 month ARM's, 5 year fixed ARM's, 2nd Fixed, ARM's with a provision to convert after 5 years, lender buydowns, and discounted mortgages.
We think the best place to start, is to obtain quotes for a 30 year fixed rate loan, and then go from there. 30 year fixed rate loans generally produce the lowest monthly payments for fixed rate products, and they are relatively safe. Once you know where you stand with a 30 year fixed, after obtaining quotes from several lending institutions, then you can consider the possibility of exploring more exotic loan products. At this juncture, you will want to consult with those you trust, for good, solid advice and feedback on risk versus reward.
5. Loan Amount Qualification, Income: This can vary widely depending on you, your lender, and many other variables. However, as a rule of thumb, look at 2 to 2 ½ times your current household income, as a baseline to determine how much you can afford to borrow.
6. Loan Amount Qualification, Expenses: This is another broad category that varies from one lending institution to the next. However, there are two general factors to look at, and they are Housing Expenses (such as mortgage, property taxes, and insurance), and long-term debt (which can include credit cards, auto loans, etc.).
First, add all your expenses together. As a rule of thumb, you will want your expenses to not exceed 33% to 36% of your gross household income.
Second, examine your housing expenses only. As a rule of thumb, you'll want these expenses to not exceed 25% to 28% of your gross household income.
7. Employment and Credit History: Lenders generally want to take a look at your employment history so that they can see a pattern of stability and income. Lenders generally also want to take a look at your credit history, so that they can see a pattern of borrowing and repayment in your past. Lenders cannot discriminate and must use this information solely for the purpose of considering your ability to repay a loan. Also, many loan products are available for all kinds of customers, with varied financial backgrounds and histories.
8. Points: Points are one of the primary fees charged on the loan, and they represent the profit earned by the lending institution. One point represents one percent of the total loan amount, and points are usually tax-deductible (along with the interest paid on the loan). They are broken down into two basic types:
Origination Points - Origination Points are the fees charged by the lender, and represents their gross profit.
Discount Points - Discount Points are most often charged in association with a lowered interest rate. In other words, the Discount Points represents a dollar amount, as a fee for giving the borrower a lowered APR (lower than what the lender might otherwise charge).
9. Sub-Prime Loans: Sub-Prime Loans consist of loan products designed for customers with challenging credit and financial backgrounds, or, customers that are looking to re-establish credit. They can be significantly higher then the prime lending rate, with less favorable terms (Often times, the loans are for the short-term, such as 2 to 3 years). However, they do offer a venue for certain individuals, and they can allow customers to re-establish credit, or buy new homes prior to cleaning up a credit history, etc.
For some of you, this avenue may offer exactly what you're looking for. It's important to know that lenders who specialize in sub-prime loans are out there and want to earn your business. However, we advise that you proceed with caution. Be sure to gather sound advice from trusted friends and professionals, and understand all the risks versus rewards, prior to signing on the dotted line.
10. Short-Forms: The most important thing you can do as a consumer of loan products is to shop around and get several preliminary loan quotes for your consideration.
These are no risk, no obligation, preliminary loan offers. They take 30 seconds to 2 minutes to complete, they require no personal or confidential disclosure on your part, and they require no commitment from you.
We suggest that you obtain 3 or 4 offers. You can then examine and compare the terms, rate, fees, and all other pertinent information about the loan product, and the lender, at your leisure and in the comfort of your own home.
Also, take a quick look at the current interest rate for 30 year fixed loans, as well as the 6 month trend graph. We have set up a free webpage with this information, or you can find many graphs and charts via your favorite search engine.
We've enjoyed providing this information to you, and we wish you the best of luck in your pursuits. Remember to always seek out good advice from those you trust, but never turn your back on your own common sense.
Publishers: This article may be freely distributed so long as the copyright, author's information and an active link (where possible) are included.
Disclaimer: Disclaimer: Statements and opinions expressed in the articles, reviews and other materials herein are those of the authors. While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur. The author will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.
About The Author
Copyright 2005, by Loans-Directory.Org , This article is available in full format at: Home Loans , Tom Levine provides a solid, common sense approach to solving problems and answering questions relating to consumer loan products. His website seeks to provide free online resources for the consumer, including rate-watch, tips and articles, financial communication, news, and links to products and services.
MORE RESOURCES updated Sat. May / 28 / 2022
Today's best mortgage refinance deal? 15-year rates hold steady for third straight day | May 27, 2022 - Fox Business
Today’s 10-,15-year mortgage refinance rates sink to lowest levels in more than 30 days | May 25, 2022 - FOX 6 Milwaukee
Today’s 10-,15-year mortgage refinance rates sink to lowest levels in more than 30 days | May 25, 2022 FOX 6 Milwaukee
Today's mortgage refinance rates rise – May 11, 2022 Bankrate.com
The Mortgage Refinance Rush Has Cooled, But HELOCs Can Unlock Housing Wealth - Hawaii Business Magazine
The Mortgage Refinance Rush Has Cooled, But HELOCs Can Unlock Housing Wealth Hawaii Business Magazine
When to Refinance Your Mortgage Business Insider
Can You Refinance a Reverse Mortgage? Investopedia
What Are Mortgage Points? A Quick Guide Zing! Blog by Quicken Loans
Today's Mortgage, Refinance Rates: May 11, 2022 | High Inflation Means Rates Will Likely Stay Elevated - Business Insider
Today's Mortgage, Refinance Rates: May 11, 2022 | High Inflation Means Rates Will Likely Stay Elevated Business Insider
Personal Loan vs. Home Equity Loan: How to Choose the Right One for Your Financing Needs - NextAdvisor
Personal Loan vs. Home Equity Loan: How to Choose the Right One for Your Financing Needs NextAdvisor
A Wells Fargo exec answers questions over diversity controversies Business Insider
How Common Is Appraiser Racial Bias—an Update American Enterprise Institute
Today's mortgage refinance rates fall – May 23, 2022 Bankrate.com
Refinance Calculator Bankrate.com
Trends in Mortgage Refinancing Activity Freddie Mac
New mortgage refinance programs from Fannie Mae and Freddie Mac are expanding to reach more homeowners - CNBC
New mortgage refinance programs from Fannie Mae and Freddie Mac are expanding to reach more homeowners CNBC
Today’s mortgage refinance rates: Steady shorter terms offer best savings chances | March 17, 2022 - Fox Business
Today’s mortgage refinance rates: Steady shorter terms offer best savings chances | March 17, 2022 Fox Business
How long does it take to close on a house? Bankrate.com
Today's Mortgage, Refinance Rates: May 13, 2022 | Rates Increase for the Second Week in a Row - Business Insider
Today's Mortgage, Refinance Rates: May 13, 2022 | Rates Increase for the Second Week in a Row Business Insider
Today's Mortgage, Refinance Rates: May 16, 2022 | Rates Have Increased Over 2% Since Last Year - Business Insider
Today's Mortgage, Refinance Rates: May 16, 2022 | Rates Have Increased Over 2% Since Last Year Business Insider
Today's Mortgage, Refinance Rates: May 17, 2022 | Rates May Be Moderating Slightly - Business Insider
Should you refinance your mortgage now? Consider these factors The Seattle Times
Jumbo Loan Refinance Guide | 2022 Rates and Guidelines The Mortgage Reports
3.8 million homeowners would still benefit from refinancing amid rise in mortgage rates, says Black Knight - Fox Business
3.8 million homeowners would still benefit from refinancing amid rise in mortgage rates, says Black Knight Fox Business
How to refinance your mortgage, a step-by-step guide The Washington Post
Still time to lock in a lower rate: Today's 30-year mortgage refinance rates fall | Feb. 9, 2022 - Fox Business
Still time to lock in a lower rate: Today's 30-year mortgage refinance rates fall | Feb. 9, 2022 Fox Business
Survey finds 74% of homeowners haven’t refinanced despite historically low mortgage rates - Bankrate.com
Survey finds 74% of homeowners haven’t refinanced despite historically low mortgage rates Bankrate.com
Mortgage and real estate news this week: Affordability squeeze tightens, and refinancing must-knows - Bankrate.com
Mortgage and real estate news this week: Affordability squeeze tightens, and refinancing must-knows Bankrate.com
Texas' Best Mortgage Lenders & Current Mortgage Rates | US News Loans - U.S News & World Report Money
Texas' Best Mortgage Lenders & Current Mortgage Rates | US News Loans U.S News & World Report Money
3 Reasons to Refinance Your Mortgage Despite Rising Rates The Motley Fool
Mortgage Rates Increased to 3.27% Last Week. Here’s What Experts Forecast Amid Rising Inflation and COVID Cases - NextAdvisor
Mortgage Rates Increased to 3.27% Last Week. Here’s What Experts Forecast Amid Rising Inflation and COVID Cases NextAdvisor
Today's Cash-Out Refinance Rates Fox Business
After Losing Her Home in a Fire, This Teacher Needed a Fresh Start. A Mortgage Refinance Helped Her Do It - NextAdvisor
After Losing Her Home in a Fire, This Teacher Needed a Fresh Start. A Mortgage Refinance Helped Her Do It NextAdvisor
Cash-In Refinance: What It Is And If It's Worth It Zing! Blog by Quicken Loans
Cash-out refinance vs. no-cash-out | What's the difference? The Mortgage Reports
15 of the best mortgage refinance companies for 2021 Fox Business
VA Loan Refinance Options | 2022 VA IRRRL and Cash-Out The Mortgage Reports
Plunging Mortgage Rates Mean Refinancing Is Back on the Table for 2 Million Borrowers - The Motley Fool
Plunging Mortgage Rates Mean Refinancing Is Back on the Table for 2 Million Borrowers The Motley Fool
Mortgage Refinance As An Inflation Hedge Surfky.com
Best mortgage refinance lenders in 2022 Bankrate.com
Mortgage demand falls to nearly half of what it was a year ago, as interest rates continue to rise - CNBC
Mortgage demand falls to nearly half of what it was a year ago, as interest rates continue to rise CNBC
Can You Refinance A VA Loan? Zing! Blog by Quicken Loans
Mortgage refinance: Everything you need to know Fox Business
What Is A CEMA Loan? A Quick Guide For NY Homeowners Zing! Blog by Quicken Loans
Unemployed and unable to refinance Marketplace
Home Mortgage Refinancing Disparities During the COVID-19 Pandemic: Insights for Delaware, New Jersey, and Pennsylvania - Philadelphia Fed
Home Mortgage Refinancing Disparities During the COVID-19 Pandemic: Insights for Delaware, New Jersey, and Pennsylvania Philadelphia Fed