Because of declining home mortgage rates, many people are eager to refinance their existing home loan and take advantage of a lower payment or a fixed rate. In fact, homeowners with bad credit may also benefit and obtain comparable low rates. Although refinancing is very common, homeowners must be prepared to pay closing costs and other fees. Fortunately, there are ways the financially strapped can save money on a refinancing.
Understanding Refinancing Costs and Fees
Applying for a refinancing is similar to obtaining your initial mortgage. A refinancing creates a new mortgage. Thus, homebuyers are obligated to pay certain costs and fees at closing. Typical fees include broker fees, appraisal, title search, inspections, etc.
For the most part, these fees are paid at closing. If purchasing a new home, the buyer may negotiate and have the seller pay the closing fees. However, if you are the original owner, you may have to employ effective techniques to reduce your closing costs.
Tips to Reduce Refinancing Closing Cost
When refinancing your home, it may be wise to apply for a new home loan with your existing lender. In some instances, the lender may be willing to waive some fees. If a good credit history has been established, the lender will want to keep you as a customer. Hence, you have negotiation power.
Because of low mortgage rates, homeowners may also take advantage of “no or low closing cost” refinancing. With this option, the lender agrees to waive the application fee. Moreover, these lenders will pay the appraisal and title fee for the homeowner.
The downside is that these loans entail a slightly higher interest rate. Nonetheless, “no or low closing cost” loans are beneficial. Because these loans consist of a higher interest rate, this option is more practical for homeowners who plan on moving within three years.
Another common approach for homeowners refinancing involves including all closing fees into the home loan. This will increase the final loan amount. While this approach will not necessarily reduce closing costs, homeowners are not obligated to pay for their closing fees out-of-pocket. This method is perfect for homeowners with little available cash.
Sunday, June 10, 2007
Saturday, June 9, 2007
Refinancing Your Home Mortgage - Get Up To 125% Cash From Your Home's Value
With the lowinterest rates being offered by lenders today, now can be the perfect time to refinance your existing mortgage. Remember that you do not have to refinance your home through the same lender that provided your initial mortgage. Lending institutions are offering competitive terms and rates, with some lenders offering home loans up to 125% of the value of your home. Compare your current interest rate to the rates being offered by a variety of lenders and make sure the costs involved in refinancing your home will be worth your time and effort.
Ask each lender you contact to supply you a list of costs and charges involved in refinancing your home loan. Take into consideration the many implications involved in a mortgage refinance. Lowering your monthly payments and interest rate may decrease the amount you can deduct from your taxes each year. If you make the decision to refinance, ask the lender how many points will be charged and the annual percentage rate for your particular loan. Depending on the amount you owe on your current mortgage and the appraised value of your home, you may be able to get a loan up to 125% of the value of your home, allowing you to send your kids to college or simply consolidate debts into one monthly payment.
A lending institution must provide you with a written statement of the terms and costs of refinancing your mortgage. This statement will inform you of the amount of the loan, the interest rate, payment schedules, and charges related to the loan. You will have the right to cancel the loan and receive a refund of monies paid within three days of signing your contract.
You may be able to get a loan up to 125% of the value of your home. This would mean an increase in your monthly payments, depending on the interest rate you receive, and the extra cash you get can be used for any purpose you see fit. This is an excellent option for those wanting to pay off credit cards, student loans, or make improvements to the home. By comparing lenders and loan packages, you can potentially save thousands of dollars in interest and possibly get the extra cash you need.
Today's low interest rates and competitive lending industry give homeowners many choices in refinancing or purchasing a home. You can save money each month and over the entire length of your loan by comparing lenders and the products they offer.
Ask each lender you contact to supply you a list of costs and charges involved in refinancing your home loan. Take into consideration the many implications involved in a mortgage refinance. Lowering your monthly payments and interest rate may decrease the amount you can deduct from your taxes each year. If you make the decision to refinance, ask the lender how many points will be charged and the annual percentage rate for your particular loan. Depending on the amount you owe on your current mortgage and the appraised value of your home, you may be able to get a loan up to 125% of the value of your home, allowing you to send your kids to college or simply consolidate debts into one monthly payment.
A lending institution must provide you with a written statement of the terms and costs of refinancing your mortgage. This statement will inform you of the amount of the loan, the interest rate, payment schedules, and charges related to the loan. You will have the right to cancel the loan and receive a refund of monies paid within three days of signing your contract.
You may be able to get a loan up to 125% of the value of your home. This would mean an increase in your monthly payments, depending on the interest rate you receive, and the extra cash you get can be used for any purpose you see fit. This is an excellent option for those wanting to pay off credit cards, student loans, or make improvements to the home. By comparing lenders and loan packages, you can potentially save thousands of dollars in interest and possibly get the extra cash you need.
Today's low interest rates and competitive lending industry give homeowners many choices in refinancing or purchasing a home. You can save money each month and over the entire length of your loan by comparing lenders and the products they offer.
Thursday, June 7, 2007
Pro's And Con's Of Low Cost And No Cost Refinancing
At some point in time, many homeowners will check into refinancing their current mortgage. There are several things that need to be taken into consideration whenever you do this. One of the most obvious concerns is of course the interest rate. However, be sure to consider closing costs when looking to refinancing. It is wise to weigh all of your options before making a decision.
Since closing costs can sometimes be steep, many homeowners are searching for a low cost or no cost mortgage. Often times, they are also looking for a no fee refinancing. With the growing demand for more economical loans, came the need for no fee financing. A no cost finance loan is simply a loan in which the borrower does not have any closing costs to pay. The lender pays fees that often associated with a loan, such as an appraisal, title search fee, closing fee and/or application fee. This is an excellent opportunity for those who do not have the money to pay such fees up front.
Low cost or no cost refinancing deals often carry a much higher interest rate than a more traditional loan. The higher rate is used to compensate the lender for the fees they have paid on your behalf. Often times, the rates are somewhere between a quarter and a half of a percent higher, than if you would have paid for the normal closing costs. However, it is important that you keep in mind that most lenders will add the closing costs into the actual loan, if you do not have the money up front. This is generally acceptable if you have the equity in your home. However, if you are at the max for your loan value, it may not be worth it.
Prepayment penalty is another thing to look for. If you are planning to live in the home for a while, then this may not be an issue for you. However, if you are considering moving within a couple of years, be sure to have a full understanding of what the fee will be for paying off the loan early.
No cost refinance loans have other advantages. Often times, a different division of your bank will offer these. Generally, you can get a larger amount of money, without paying for Private Mortgage Insurance or PMI. Often time, this type of loan does not access points. This sometimes makes it worth paying a higher rate, since PMI can be very expensive. Be sure to ask about any special deals on credit cards or checking accounts too. Some banks will give you a higher checking amount with better benefits if you have a current mortgage with them. This can help to save you money on check ordering fees and monthly service fees.
Low cost or no cost mortgages are very common these days. When searching for an affordable mortgage solution, compare your options and calculate how, in the long run, you will be saving. Make sure you read all of the fine print, in order to find the best deal. If you do all of your homework, the right option for you might just be a no cost mortgage.
Since closing costs can sometimes be steep, many homeowners are searching for a low cost or no cost mortgage. Often times, they are also looking for a no fee refinancing. With the growing demand for more economical loans, came the need for no fee financing. A no cost finance loan is simply a loan in which the borrower does not have any closing costs to pay. The lender pays fees that often associated with a loan, such as an appraisal, title search fee, closing fee and/or application fee. This is an excellent opportunity for those who do not have the money to pay such fees up front.
Low cost or no cost refinancing deals often carry a much higher interest rate than a more traditional loan. The higher rate is used to compensate the lender for the fees they have paid on your behalf. Often times, the rates are somewhere between a quarter and a half of a percent higher, than if you would have paid for the normal closing costs. However, it is important that you keep in mind that most lenders will add the closing costs into the actual loan, if you do not have the money up front. This is generally acceptable if you have the equity in your home. However, if you are at the max for your loan value, it may not be worth it.
Prepayment penalty is another thing to look for. If you are planning to live in the home for a while, then this may not be an issue for you. However, if you are considering moving within a couple of years, be sure to have a full understanding of what the fee will be for paying off the loan early.
No cost refinance loans have other advantages. Often times, a different division of your bank will offer these. Generally, you can get a larger amount of money, without paying for Private Mortgage Insurance or PMI. Often time, this type of loan does not access points. This sometimes makes it worth paying a higher rate, since PMI can be very expensive. Be sure to ask about any special deals on credit cards or checking accounts too. Some banks will give you a higher checking amount with better benefits if you have a current mortgage with them. This can help to save you money on check ordering fees and monthly service fees.
Low cost or no cost mortgages are very common these days. When searching for an affordable mortgage solution, compare your options and calculate how, in the long run, you will be saving. Make sure you read all of the fine print, in order to find the best deal. If you do all of your homework, the right option for you might just be a no cost mortgage.
Wednesday, June 6, 2007
More Ways To Beat Closing Costs On Your Home Mortgage
Closing costs on your home mortgage are normally the thing that buyers don't worry about until the last minute. Problem is, if you don't think about closing costs until the last minute, you will likely be shocked when you find out that these costs run into the thousands of dollars. Relax though and don't be intimidated. I have made the mistake of not planning, and I can show you how a little planning, can save you hundreds and potentially thousands at closing.
If you can read a HUD1, then you should know exactly what you will be charged at closing. However, simply being able to read and understand a HUD1 doesn't mean that you'll save money. What you need to do prior to closing and during the entire time leading up to closing is be in the habit of every time you hire someone to complete work for you that's required for the close, ask how much they charge. Don't just accept the realtors recommendation for a home inspector. Ask around if possible. If you don't know the realtor that well, how do you know that their recommendations are best for you. Although they usually will be "steering you in the right direction. It behoves you to check around. Don't just shop for price, shop for service as well. If you are working with a home mortgage broker, you should understand that how much they charge usually varies by the amount of the loan. When your broker offers you several home mortgage loans to choose from, ask about their fees with each option. It's critical that you include the cost of fees when you are comparing home mortgage loans. This is the only way you can get an apples to apples comparison. Don't forget, there's more to a home mortgage than simply the interest rate. It's very possible that the lower home mortgage interest rate, might also include a "hefty" fee. Home mortgages are a one-time deal, but higher up front fees could also be your new carpet or furniture payments.
Beware of courier fees. I've been hit with these before. You've negotiated what you think is the best rate online through someone you got hooked up with through Lending Tree or some other Online Loan finding service. However, you're likely dealing with someone that's 1,000 or more miles from you. If this is the case, then there's likely no way around a courier fee. Since everyone wants to get the closing completed and start that wonderful experience called moving, the closing documents typically arrive at the Title Company one day after completion. Unless you know that someone had to drive over an hour just for your file, you should refuse to pay courier fees. It's reasonable to pay a next day air fee, which is usually about 10 to 15 dollars, but not a courier fee. It is very important that you make your home mortgage broker and lender justify their fees. Sometimes when they start to explain a fee, you might come to the agreement that it is unnecessary and can be removed from the HUD.
Another, most common way to save on Closing Costs is to comparison shop home mortgage brokers, too. Be careful when you do this. You want a home mortgage broker that will work to put you into your house. I recommend that you work a few local brokers against each other to get the best deal. Be up front with them and tell them that you want the best deal not only for the close, but for the life of the loan. Ensure that the mortgage broker or bank understands that you know what you're doing and that you understand the various fees and interest rates available. If your credit is good, you will save yourself the most money by going directly to a home mortgage lender (the bank or institution that will actually provide the funds at closing). A lot of times you may find that a home mortgage broker is your best option only if you are having trouble getting a home mortgage. Brokers, specialize in the hard cases. I used a broker for my first home loan. We had a bunch of credit card debt from graduate school and he had to creatively get us approved. It likely resulted in a higher interest rate, but I got into my first home and have never looked back. If you have good credit and have been in your job a while, I wouldn't bother with a home mortgage broker. But let this be our secret, please! The broker is actually working through the bank, so for them to make money, they have to charge more money than the bank. It's like buying directly from the distributor vs. a manufacturer.
More Fees, shop around for deals while you're in escrow or waiting to close Another place fees can vary greatly is your survey. You will probably have to have one, so call around and find a cheap surveyor. Since they are state licensed, any licensed surveyor will do an adequate job. You already know to shop around for homeowner's insurance. The closing process can take weeks or even months, so it really makes sense to use the time to your advantage to get great deals. You won't be able to do anything about reserves or prepaids, so do not worry about them. Usually the lender will determine the prepaids necessary based on your interest rate and timing for real estate taxes. Title companies are like surveyors. Most will do a competent job, so call around for the cheapest. If an attorney is required for closing, I have found that rural or smaller law firms are almost always cheaper than urban or even suburban ones. Better yet, if you have a friend that's an attorney, ask if he or she will help you. If they can't perhaps they can make a recommendation. You can call surrounding counties for attorney fees for a home mortgage closing. By driving a bit you could save major money.
Points and other gimmicks to lower your interest rate or buy-down your interest rate are actually home mortgage lender fees. Do not pay them unless you have to. If they will give you a lower rate with points, get it in writing, then go to someone else and get that rate without points. If you have a hard time getting a home mortgage loan, you may have to pay them. Points are a percentage of the loan, so they are very expensive. If it looks like you might have to pay them, offer to pay the same amount as a down payment, reducing the loan amount. The lower amount may get you a loan without points, and instead of fees, you have equity. Question everything, accept what you have to, and in the end be content. No home mortgage is perfect.
Closing costs on your HUD just compile many fees related to your home mortgage. Thanks to the Feds, they are all in one place on this form. Knowing what they are and what caused them can give you the confidence to have a smooth closing. You can now walk into closing knowing exactly what you bought and how much you paid for it, and then head out to with your new home and reason to celebrate.
If you can read a HUD1, then you should know exactly what you will be charged at closing. However, simply being able to read and understand a HUD1 doesn't mean that you'll save money. What you need to do prior to closing and during the entire time leading up to closing is be in the habit of every time you hire someone to complete work for you that's required for the close, ask how much they charge. Don't just accept the realtors recommendation for a home inspector. Ask around if possible. If you don't know the realtor that well, how do you know that their recommendations are best for you. Although they usually will be "steering you in the right direction. It behoves you to check around. Don't just shop for price, shop for service as well. If you are working with a home mortgage broker, you should understand that how much they charge usually varies by the amount of the loan. When your broker offers you several home mortgage loans to choose from, ask about their fees with each option. It's critical that you include the cost of fees when you are comparing home mortgage loans. This is the only way you can get an apples to apples comparison. Don't forget, there's more to a home mortgage than simply the interest rate. It's very possible that the lower home mortgage interest rate, might also include a "hefty" fee. Home mortgages are a one-time deal, but higher up front fees could also be your new carpet or furniture payments.
Beware of courier fees. I've been hit with these before. You've negotiated what you think is the best rate online through someone you got hooked up with through Lending Tree or some other Online Loan finding service. However, you're likely dealing with someone that's 1,000 or more miles from you. If this is the case, then there's likely no way around a courier fee. Since everyone wants to get the closing completed and start that wonderful experience called moving, the closing documents typically arrive at the Title Company one day after completion. Unless you know that someone had to drive over an hour just for your file, you should refuse to pay courier fees. It's reasonable to pay a next day air fee, which is usually about 10 to 15 dollars, but not a courier fee. It is very important that you make your home mortgage broker and lender justify their fees. Sometimes when they start to explain a fee, you might come to the agreement that it is unnecessary and can be removed from the HUD.
Another, most common way to save on Closing Costs is to comparison shop home mortgage brokers, too. Be careful when you do this. You want a home mortgage broker that will work to put you into your house. I recommend that you work a few local brokers against each other to get the best deal. Be up front with them and tell them that you want the best deal not only for the close, but for the life of the loan. Ensure that the mortgage broker or bank understands that you know what you're doing and that you understand the various fees and interest rates available. If your credit is good, you will save yourself the most money by going directly to a home mortgage lender (the bank or institution that will actually provide the funds at closing). A lot of times you may find that a home mortgage broker is your best option only if you are having trouble getting a home mortgage. Brokers, specialize in the hard cases. I used a broker for my first home loan. We had a bunch of credit card debt from graduate school and he had to creatively get us approved. It likely resulted in a higher interest rate, but I got into my first home and have never looked back. If you have good credit and have been in your job a while, I wouldn't bother with a home mortgage broker. But let this be our secret, please! The broker is actually working through the bank, so for them to make money, they have to charge more money than the bank. It's like buying directly from the distributor vs. a manufacturer.
More Fees, shop around for deals while you're in escrow or waiting to close Another place fees can vary greatly is your survey. You will probably have to have one, so call around and find a cheap surveyor. Since they are state licensed, any licensed surveyor will do an adequate job. You already know to shop around for homeowner's insurance. The closing process can take weeks or even months, so it really makes sense to use the time to your advantage to get great deals. You won't be able to do anything about reserves or prepaids, so do not worry about them. Usually the lender will determine the prepaids necessary based on your interest rate and timing for real estate taxes. Title companies are like surveyors. Most will do a competent job, so call around for the cheapest. If an attorney is required for closing, I have found that rural or smaller law firms are almost always cheaper than urban or even suburban ones. Better yet, if you have a friend that's an attorney, ask if he or she will help you. If they can't perhaps they can make a recommendation. You can call surrounding counties for attorney fees for a home mortgage closing. By driving a bit you could save major money.
Points and other gimmicks to lower your interest rate or buy-down your interest rate are actually home mortgage lender fees. Do not pay them unless you have to. If they will give you a lower rate with points, get it in writing, then go to someone else and get that rate without points. If you have a hard time getting a home mortgage loan, you may have to pay them. Points are a percentage of the loan, so they are very expensive. If it looks like you might have to pay them, offer to pay the same amount as a down payment, reducing the loan amount. The lower amount may get you a loan without points, and instead of fees, you have equity. Question everything, accept what you have to, and in the end be content. No home mortgage is perfect.
Closing costs on your HUD just compile many fees related to your home mortgage. Thanks to the Feds, they are all in one place on this form. Knowing what they are and what caused them can give you the confidence to have a smooth closing. You can now walk into closing knowing exactly what you bought and how much you paid for it, and then head out to with your new home and reason to celebrate.
Tuesday, June 5, 2007
Low Cost Mortgage - Perfect Mix Of Maximum Benefit And Minimum Cost Mortgage
Have you been planning to use a mortgage loan to buy a home? If yes, I would appreciate your decision. But, you need to look into one more aspect of mortgaging which is really important before you apply for it and that is mortgage costs. Mortgage costs can play a vital role in deciding which mortgage option is best suited for a borrower. Low cost mortgage is what you must be looking for.
Low cost mortgage imply that the mortgage is arranged at low cost so that the borrower can get maximum benefits from a mortgage arranged at minimum cost. Mortgage deal is defined as a contract in which a borrower pledge his property as a security against the loan. Though, each group of people in UK has different needs and expectations but they share a common goal of getting a mortgage deal which involves minimum cost.
Mortgage costs will vary depending on the lender, on the type of mortgage applied for and the amount a borrower wants to borrow as a percentage of the value of his home. Before going deeper into how you can minimize the mortgage cost. Let me first explain to you that what are the costs involved in mortgaging. These are various fees that add to the cost of the mortgage making it an expensive deal. Mortgage cost comprise of the following:-
Arrangement Fee – This fee is charged to cover the lender’s cost of setting up mortgage. It is also known as administration fee or setting up costs. Arrangement fees vary from £100 to £300. This fee is payable on completion of the mortgage.
Application Fee – This fee is less common. With the growing competition among the lenders to attract more and more borrowers, majority of the lenders do not charge any fees for application. This fee is just a way for lenders to increase their profits.
Valuation – Valuation involves determining the value of the new home of the borrower by the lender in order to confirm that the property is worth at least the value of amount to be borrowed. Valuation protect lender in case a borrower defaults on the mortgage.
Early redemption penalty- This penalty is charged if borrowers switch the mortgage to another lender within a predefined period.
Mortgage Indemnity Guarantee Premium – It is levied when the amount a borrower wants to borrow as a percentage of his property value is high. It is a type of insurance that protects lender from any default made by a borrower on the mortgage debt.
These above mentioned fees add to the cost of a mortgage deal and make it more expensive.
Mortgage costs are also affected by the mortgage option you wish to opt for. Popular mortgage options available in the UK finance market are buy to let, first time mortgage, council right to buy, self cert mortgage, pension mortgage, flexible mortgage and reverse mortgage. When choosing the mortgage you need to consider the benefits of the competitive interest rate against any additional costs that may be charged.
Cost involved in a mortgage deal also depends on the lender you choose. In the past, the borrowers had access limited traditional lenders who used to charge heavy fees. But, with the rapid changing technology, borrowers can now apply for a mortgage loan online by using internet.
In the present scenario, the loan market is flooded with infinite number of lenders who must be ready to offer you the mortgage loan. But, you need to stay aware of the costs involved in the mortgage deal. Online lenders usually do not charge any application fees from the borrowers. They offer the convenience of applying for a mortgage loan. You just need to fill up an application form online with some personal details. Online lenders will contact you back with the most suitable option after screening your application form. Search for different lenders and find out the one who can offer you the best mortgage deal at lowest cost.
Mortgage is the best option available in the UK finance market. Many lenders can arrange a mortgage loan at low interest rate. But, a little effort on your side can save you from the pitfalls involved in it. Calculate the cost involved in the entire deal and compare it with the benefits you will be getting from it. If you find that you are on the safer side and will benefit from the mortgage then do not hesitate, this is the best low cost mortgage, go for it.
Low cost mortgage imply that the mortgage is arranged at low cost so that the borrower can get maximum benefits from a mortgage arranged at minimum cost. Mortgage deal is defined as a contract in which a borrower pledge his property as a security against the loan. Though, each group of people in UK has different needs and expectations but they share a common goal of getting a mortgage deal which involves minimum cost.
Mortgage costs will vary depending on the lender, on the type of mortgage applied for and the amount a borrower wants to borrow as a percentage of the value of his home. Before going deeper into how you can minimize the mortgage cost. Let me first explain to you that what are the costs involved in mortgaging. These are various fees that add to the cost of the mortgage making it an expensive deal. Mortgage cost comprise of the following:-
Arrangement Fee – This fee is charged to cover the lender’s cost of setting up mortgage. It is also known as administration fee or setting up costs. Arrangement fees vary from £100 to £300. This fee is payable on completion of the mortgage.
Application Fee – This fee is less common. With the growing competition among the lenders to attract more and more borrowers, majority of the lenders do not charge any fees for application. This fee is just a way for lenders to increase their profits.
Valuation – Valuation involves determining the value of the new home of the borrower by the lender in order to confirm that the property is worth at least the value of amount to be borrowed. Valuation protect lender in case a borrower defaults on the mortgage.
Early redemption penalty- This penalty is charged if borrowers switch the mortgage to another lender within a predefined period.
Mortgage Indemnity Guarantee Premium – It is levied when the amount a borrower wants to borrow as a percentage of his property value is high. It is a type of insurance that protects lender from any default made by a borrower on the mortgage debt.
These above mentioned fees add to the cost of a mortgage deal and make it more expensive.
Mortgage costs are also affected by the mortgage option you wish to opt for. Popular mortgage options available in the UK finance market are buy to let, first time mortgage, council right to buy, self cert mortgage, pension mortgage, flexible mortgage and reverse mortgage. When choosing the mortgage you need to consider the benefits of the competitive interest rate against any additional costs that may be charged.
Cost involved in a mortgage deal also depends on the lender you choose. In the past, the borrowers had access limited traditional lenders who used to charge heavy fees. But, with the rapid changing technology, borrowers can now apply for a mortgage loan online by using internet.
In the present scenario, the loan market is flooded with infinite number of lenders who must be ready to offer you the mortgage loan. But, you need to stay aware of the costs involved in the mortgage deal. Online lenders usually do not charge any application fees from the borrowers. They offer the convenience of applying for a mortgage loan. You just need to fill up an application form online with some personal details. Online lenders will contact you back with the most suitable option after screening your application form. Search for different lenders and find out the one who can offer you the best mortgage deal at lowest cost.
Mortgage is the best option available in the UK finance market. Many lenders can arrange a mortgage loan at low interest rate. But, a little effort on your side can save you from the pitfalls involved in it. Calculate the cost involved in the entire deal and compare it with the benefits you will be getting from it. If you find that you are on the safer side and will benefit from the mortgage then do not hesitate, this is the best low cost mortgage, go for it.
Monday, June 4, 2007
Home Mortgage Loan Refinance – Benefits To Refinancing Your House Online
Here are some of the benefits to doing your home loan refinance online:
Everything seems to happen faster - Online, when looking for a mortgage loan you can search around, fill out an application and a few minutes later, you can be receiving a pre-approval letter via email. There was no calling, no driving & no waiting on hold for an answer. The mortgage company will usually contact you quickly and give you all the information you need to move forward.
You will be more informed and make better decisions - People nowadays that use the internet as consumers, use it primarily to make better purchasing decisions. If you are sitting at home on the couch with your phone book calling every mortgage company listed, you are not going to know what the current interest rate is. You aren’t going to know what your contacted companies competitors are like. All you will know is what that loan officer tells you.
Online, you can view a lot of information very quickly. - After looking at a few mortgage loan websites, you will know quickly that when you refinance you have many options. Do you want to get cash out of your home? Do you want to borrow more than your homes current value? Do you want an interest only loan? And, you will know right away which mortgage companies offer these options. There are many different kinds of refinance loans, and all of these options can be learned after a few minutes of searching online.
Deal with large, reputable companies – When applying online, you should quickly be able to spot the larger, more reputable mortgage companies. I always prefer to use the companies that will submit your application to multiple lenders. That way, your credit is only pulled once, and you can receive multiple offers from up to 4 lenders. For a list of these recommended mortgage companies, see the link below.
Save money – Many online mortgage service companies can save you money by cutting out fees like origination fees and underwriting fees. You will also save money using mortgage services where more than one lender competes for your business. When you can receive multiple offers, you will know that you are choosing the loan with the lowest rate possible and the best terms you can qualify for. I usually recommend applying with about 3 different mortgage companies that will submit your application to multiple lenders and give you multiple offers. That way you can really maximize your options.
Less Commitment – You can search around online and apply to 2-3 different lenders without feeling guilty for working with more than one company. That way you make can make sure you are getting the best deal. Often when you start working with a mortgage broker in person, even if the person isn’t doing the best job for you, you start to feel obligated to continue to work with the person. This is not so online. If you aren’t getting what you want, you are free to move on with no guilt.
Saturday, June 2, 2007
How Much Is Too Much For Mortgage Closing Costs?
Something that is very important for you to take into consideration when purchasing or refinancing your home is the closing costs.
I would love to tell you that closing costs are not expensive, but believe me they are. Once you add up all the fees’ involved, such as points, taxes, title insurance, county costs and various other fee’s, it really begins to add up.
The first thing you need to understand is that nobody works for free, so be prepared to pay at closing.
The total amount of fees’ depends on quite a few things. For instance, the percentage of loan origination fees’ (points) the lender is going to be charging you. Another large fee is the title search and insurance. The title fee varies by state and is determined by the amount of the home.
Closing costs on average should not exceed 5% of the total amount of the purchase price, and this does not include the down payment.
The total amount of these fees’ does not all go to the lender. Generally only the loan origination fee and the application fee go to the lender.
The rest of the fee’s such as the appraisal, credit report, interest for the period in between closing and your first monthly payment, home owner’s insurance, title insurance, pro rated property tax, etc., go to their appropriate institutions.
Before you go to closing, the lender is required by law to send you a Good Faith Estimate (GFE).The GFE discloses an accurate estimate of all the fee’s you will be responsible for at closing.
Make sure you go over the GFE with a fine tooth comb, and if there are any fees’ you don’t understand, call your lender or broker and ask for an explanation.
As I stated earlier, you must be prepared to pay closing costs. Closing costs are not cheap, but you should not pay a penny more than what is required.
If your closing costs are somewhere between two and 5% of the amount of the mortgage, you should be in good shape.
If they are drastically higher, consider finding another lender.
Remember, do your homework. Put yourself in a position to understand all the jargon that fills up all the paperwork you will be signing.
Also, take your time and shop around, always look for the best rate at the lowest possible price.
Subscribe to:
Comments (Atom)