Mortgage Life Insurance Protection

Mortgage life insurance is an insurance policy taken out on the life of the homeowner who has obtained the mortgage. This mortgage life insurance policy is aimed at paying any outstanding mortgage debt upon the death of the insured. To protect their investments, many companies provide mortgage life insurance in association with an insurance company. This mortgage life insurance ensures that the balance mortgage is comes from the insurance company in the event of death of the borrower.

There are two types of mortgage life insurances that borrowers can opt for, namely decreasing term insurance and level term insurance. Borrowers can choose among these on the basis of the kind of mortgage they have obtained that may be a repayment mortgage or an interest only mortgage. Decreasing term insurance is exclusively created for the borrowers who have taken a mortgage. This is preferred by mortgage borrowers because as the balance on the mortgage decreases, the coverage also decreases. This makes sure that at any given time, there are sufficient funds to pay off the balance in case the borrower dies. Level term insurance is for borrowers who have an interest only mortgage. The sum of the coverage remains the same, as the principal never reduces.

Terminal illness benefits are included in both the types of mortgage life insurance to protect the borrowers against having to repay the mortgage in case of any terminal illness. Critical illness coverage is an option that can be added as an additional coverage along with the policy or even as a stand-alone coverage. This allows the borrowers to receive payments in case they are diagnosed with a critical illness. Mortgage life insurance offers protection against the survivors of the borrowers losing their homes, if they are unable to make the monthly payments.

Mortgage Life Insurance provides detailed information on Mortgage Life Insurance, Mortgage Life Insurance Leads, Mortgage Life Insurance Quotes, Mortgage Life Insurance Rates and more. Mortgage Life Insurance is affiliated with Mortgage Insurance Leads.

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Mortgage Life Insurance

Mortgage life insurance repays the entire or most part of the mortgage, when the borrower becomes critically ill from disease or accident, or suffers from death. So, the mortgage life insurance protects the family, co-borrowers, or co-guarantors from repaying the entire mortgage.

Depending on the insurance policy, the insurance company pays for the entire mortgage or maximum amount. For example, the insurance company pays up to maximum of $600,000. If the mortgage went over the maximum amount, the insurance company repays the portion of the mortgage up to the maximum amount.

The borrower usually purchases home thru mortgage. It takes a huge amount income to pay off the mortgage. In case of critical illness, debilitating accident, or depressing death of the borrower, the family needs to replace the loss of income to pay off the mortgage. With mortgage life insurance, the family does not need to worry about repaying the mortgage.

Mortgage life insurance differs from private mortgage insurance also known as PMI. The PMI protects the mortgage lenders in case of default of mortgage payment. The mortgage lenders risk the inability to re-sell the property high enough to pay off the mortgage. When the borrower lacks enough money for twenty percent down payment, the mortgage lenders requires PMI. As soon as borrower pays off or the home equity reaches twenty percent, the mortgage lenders automatically cancel the PMI premiums.

Mortgage life insurance is voluntarily. It is the decision of the borrower to sign up for the mortgage life insurance. In order to see the need, the borrower must sit with a certified insurance agent. The insurance agent will analyze the overall financial picture of the borrower.

The insurance policy starts at the same day of the approval on mortgage. Even though the borrower has not paid the first mortgage payment, the borrower still gets the benefit.

As the borrower pays off the mortgage, the mortgage decreases. Naturally, the coverage decreases as well. When the borrower paid in full amount of mortgage, the coverage is gone. And, the borrower no longer needs to pay the premiums.

When the borrower engages in mortgage refinancing, the borrower needs to qualify to the new mortgage for mortgage life insurance again.

Dennis Estrada is a webmaster of mortgage calculators, Mortgage Refinance Closing Cost, and Private Mortgage Insurance Tax Deductible website that gives access to many resources

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Private Mortgage Insurance Tax Deductible

The private mortgage insurance allows the borrower to acquire a mortgage in which the down payment is less than twenty percent. The borrowers pay the private mortgage out of their pocket. Now, the private mortgage insurance is tax deductible for US residents.

Actually, the mortgage insurance is either government or private. Whether the mortgage insurance is government or private, the mortgage insurance is tax deductible.

To acquire the mortgage insurance is an alternative for piggyback second mortgage. The piggyback second mortgage is plain simply a second mortgage. The borrower acquires another mortgage on top of the first mortgage for down payment.

The tax deductible applies for modest income earners. That means the borrower earns up to $100,000. In case the borrower earns over the $100,000, the borrower can only write off the private mortgage insurance partially.

Additionally, the tax deductible only applies to new mortgage. The mortgage financing must have happen in the calendar year 2007. Unless the borrower made a mortgage refinancing for the mortgage on or after the calendar year 2007, the tax deductible will not be allowed.

This is good news to the millions of Americans. Millions of Americans pays for the mortgage insurance. The mortgage insurance only cancels out when the home equity or total amount paid goes over twenty percent of the principal amount.

More importantly, the mortgage insurance will be made affordable with this turn of event.

Like the mortgage interest tax deduction, the mortgage insurance tax deduction benefits millions of American. Now, the borrowers or home owners have a choice between mortgage interests of second mortgage or mortgage insurance premiums as tax deduction.

Dennis Estrada is a webmaster of mortgage calculators, mortgage refinancing, and piggyback second mortgage website which calculate the monthly payment, bi-weekly payment, affordability, refinance, annual percentage rate, discount points, and more.

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Tage : Mortgage , Insurance , Private , Tax

Private Mortgage Insurance – What You Need to Know to Avoid Overpaying

If you are in the process of taking out a mortgage and your lender is requiring you to purchase Private Mortgage Insurance, there are several things you need to know. Private Mortgage Insurance is expensive and can add hundreds of dollars to your monthly payment amount. Here are several tips to help you avoid paying this unnecessary expense or even drop Private Mortgage Insurance if you are currently paying it.

Private Mortgage Insurance is usually required for borrowers purchasing their homes with less than a 20% down payment. This insurance protects your mortgage lender from certain losses if you default on the loan. Private Mortgage Insurance is an unnecessary expense as there are loan programs that can help purchase your home without it.

80 / 20 Mortgage Loans & Private Mortgage Insurance

The easiest way to avoid paying Private Mortgage Insurance is to purchase your home using an 80/20 loan. 80/20 mortgages are actually two loans, one for 80% of the purchase price and a second loan for the remaining 20%. These loans are typically from two separate lenders; because your home is secured by two mortgages the interest rate on your second mortgage is typically higher. The advantage of using these two loans to purchase your home is that you will not be required to purchase Private Mortgage Insurance.

Mortgage Refinancing to Drop Private Mortgage Insurance

If you are currently paying Private Mortgage insurance on your existing mortgage, refinancing the loan could help you drop this costly expense. Private Mortgage Insurance is normally cancelled once you have 20 percent equity in your home; however, you do not have to wait this long. Mortgage Refinancing could save you a lot of money in Private Mortgage Insurance premiums.

You can learn more about your mortgage options, including costly mistakes to avoid by registering for a free mortgage tutorial.

To get your free mortgage tutorial visit RefiAdvisor.com using the link below.

Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. For a free copy of "Mortgage Refinancing - What You Need to Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.

Claim your free mortgage refinance information guide today at: http://www.refiadvisor.com

Mortgage Refinancing Costs

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Mortgage Life Cover For Mortgage Security in the Event of Your Death

Anyone who has a mortgage to repay over a span of many years needs to give some thought to taking out mortgage life cover. If you are the main wage earner in the family then you need to consider how your loved ones would cope when it came to paying the mortgage in the event that you as the main income provider died, so protecting them is essential. Without cover they might not be able to maintain the mortgage repayments and lose their home and with it they would be able to use the money from the cover to payoff the outstanding mortgage and at least not have the worry about losing the roof over their heads.

Mortgage life cover is usually known as decreasing life insurance. This means that the payout you would get back from the life insurance would decrease along with the mortgage. You would initially insure the mortgage balance when taking out a policy and as you payoff the mortgage each month you owe less. Therefore you would take out mortgage life insurance to reflect the number of years you have left to pay on the mortgage. If you die the amount left owing on the policy is paid out but if you outlive the policy then of course the mortgage would be paid off and there would be no payout.

This type of insurance is great peace of mind to safeguard and protect your family at a time when they need it the most. The cost of insurance would of course take into account the amount you chose to insure and other factors such as age and your health when applying for the policy. The younger you are usually the less life insurance will cost. Premiums will also take into account your family history health wise, for example if there is a history of heart attack or stroke in the family you would usually have to pay more for the policy.

If there are two names on the mortgage then you could take out a policy for both names. Usually you can insure to payout upon the first death and then cover would cease.

When looking for mortgage life cover you need to compare the cost of premiums from several different providers to ensure that you get cover at a price that suits your budget. One of the quickest and easiest ways of doing this is to allow an insurance broker to search around on your behalf. They will be able to gather insurance quotes which you can then compare in the comfort of your own home. When comparing the cost of life insurance always check the exclusions which should come in the key facts of the cover.

Different providers add in different exclusions and these are what can stop a claim being made on the policy. It is essential when taking on the insurance that you always tell the truth, even if it means you would pay more for the cover, as if you are caught out then again a claim might be refused.

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100% Mortgage Financing – A Way To Avoid Private Mortgage Insurance

Ideally, traditional mortgage lenders want new homebuyers to have a 20% down payment when purchasing a new home. Thus, if purchasing a $200,000 home, you should be prepared to have $40,000 as a down payment.

Unfortunately, many people do not have this kind of money lying around. For this matter, private mortgage insurance (PMI) was created as a way for mortgage companies to recoup their money if a homeowner defaults on the loan. There are various loans available to assist people with down payments. In some instances, homeowners can obtain 100% financing, and avoid PMI

What is Private Mortgage Insurance?

Because Americans are earning less money, and home prices are steadily increasing, the majority of the population is unable to save the recommended down payment of 20%. In order to make owning a home possible, mortgage companies created a particular mortgage insurance, (PMI), for people with less than 20% to put down on a home. This insurance protects the lender if you default on the mortgage.

How to Avoid Paying Private Mortgage Insurance

On average, PMI may increase your mortgage payment by $100 – sometimes less, sometimes more. However, there are ways to avoid paying this additional insurance. The obvious involves having at least 20% as a down payment. If this is not an option, homeowner may agree to a higher interest rate. Another tactic entails getting approved for 100% financing.

How Does 100% Mortgage Financing Work?

100% mortgage financing makes it possible to buy a home with no money down. Also referred to as a piggyback loan or 80/20 mortgage loan, 100% mortgage financing involves obtaining a first mortgage for 80% of the home cost, and a second mortgage, or home equity loan, for 20% of the home cost. Together, the first and second mortgage allows a home purchase with no money down, and no private mortgage insurance.

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Flood Damage - Do Not Be Caught Without Insurance

With the economy the way it is now days, paying for insurance of all kinds is becoming a huge problem that more and more Americans are being faced with every day. People are losing their jobs and health insurance at a rate no one wants to talk about. When they are laid off and now can not even pay the necessary bills they have each month, they have to cut back on something. Making your flood insurance one of these cuts is not the smartest idea.

Out of nowhere a flood can strike. There can be heavy downpours that make creeks and rivers over flow and in a matter of hours the water can reach a flood level that could end up making you a victim of the water. If you live in a low lying area, this could really be a disaster for you and your family. It can ruin some things or everything you own inside a home. There is nothing you can do at this point except wait it out and see how bad the damage is going to be.

When the water begins to recede, the damage will be revealed in a very ugly picture of destruction. If you have canceled your flood insurance, it will be the only thing you are able to think about. This is exactly the situation you do not want to be left in. Even if your home is paid for, how would you make the necessary repairs? And if your home is not paid for, just wait until your mortgage company or bank finds out your flood policy lapsed and has been canceled.

In the worst case scenario, your home could be totally submerged by flood water and could be a total loss. In a less severe instance, you might only receive a few inches of water in your home from a natural disaster flood, but that will still not be an easy or inexpensive situation to deal with. The water will have to be removed and the home dried completely. Your belongings that are not destroyed, will likely be damaged and must be repaired, cleaned, or replaced.

Then there will be the walls and floors that could be damaged that might have to be replaced as well. At the very least they will have to be dried out and sanitized to prevent mold and mildew. Dealing with the full extent of a home flood caused by natural disasters is never a good thing and it is usually never cheap either. If you manage to stay in your home during these difficult times, find a way to hang on to your flood insurance too because it is definitely one insurance you do not want to be caught without.

About the Author

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A Cheap Mortgage Insurance Quote Can Help You Maintain Your Mortgage

Many things have been said about payment protection insurance of which mortgage insurance is one part. One of the things said about it is that it is nothing but a huge "rip-off". In some cases this was proven true as policies have been sold to individuals for large premiums and they could not even claim on them. However it is not the policies that are to blame but those who sell them with little experience. If you wish to take out mortgage protection then shop around and get a cheap mortgage insurance quote with a specialist in payment protection.

A specialist will offer the lowest premiums for a policy and will make all the information available to you so you can decide if a policy is suitable. This you can easily do by checking the terms and conditions and in particular the exclusions against your circumstances. All payment protection has exclusions in the small print and they vary in how many are included with some providers just putting in the most frequent ones and others many.

In order to get the best deal on mortgage payment protection insurance you also have to take into account how long you would have to wait before you are able to put in a claim on the policy. The time frame differs depending on the provider. Some providers could make you wait for a maximum of 30 days and then allow you to put in a claim. Others might ask 90 days of waiting and some providers would backdate your policy to day one of you first becoming unemployed or incapacitated.

The policy would payout on unemployment which was brought about through reasons not of your own such as by being made redundant. Incapacity would include such as being injured if you were involved in an accident or if you became sick and are unable to work. It would not payout if you took voluntary redundancy or caused yourself to be let go. There are also other exclusions which you do need to check to ensure that you would be able to make a claim on the policy.

Once the provider has started to pay you benefit they would continue to do so for a certain period of time before the policy expires. The amount of time it pays would usually be between 12 months and 24 months. Again you have to check this in the terms of the policy before taking it on.

Covering your mortgage repayments is essential as if you do not have an income you could struggle to find the money each month. Even if you could you probably would have to cut out many things in your life and perhaps fall into debt with other outgoings. Life could become very difficult for you and it need not be if you get a cheap mortgage insurance quote with a standalone provider. If you did get behind even by just one missed mortgage repayment you would have to arrange to pay it back while at the same time keeping up with the repayments. Failure to do so and more missed mortgage repayments and you could find yourself in court facing repossession.

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Tips For Locking in the Best Home Mortgage Rate

Tip #1: Always Shop For Home Mortgage Rates

Don't blindly accept a Realtor or Builder referral to apply for a Home Mortgage through their preferred lender. Many times they will say, "We work closely with this guy and he gets the job done". Translation: "We play golf together and he buys the beer". Remember, the Realtor won't be paying the bill each month for the next 30 years, you will.

Mortgage Loan Officers that work off of a referral network of Realtors and Builders don't have to have competitive Home Mortgage Rates because they have a steady stream of "Drones" (people who are referred to them and don't shop) calling them. Shop around, get the lowest cost Home Mortgage Rate, then if you are inclined, approach the "preferred" Loan Officer you were referred to and ask him to match the quote.

If you apply for a Home Mortgage through a preferred lender without shopping, you will pay hundreds or even thousands of dollars in additional costs.

Tip #2: Call For Home Mortgage Quotes After 11:00 a.m. Eastern Time

Mortgage Rates change each day and sometimes midday. The previous day's rates typically expire by 8:30 a.m. the next morning. Generally, Home Mortgage Rates are published each day by 11:00 a.m. Eastern time. This varies from lender to lender. To make sure you are getting Home Mortgage Rates from the current day and not a mixture of rates from the previous day from some lenders and the current rates from other lenders, always do your rate shopping after 11:00 a.m. Eastern time.

Get all your quotes after 11:00 a.m. Eastern time.

Sometimes Home Mortgage Rates change midday due to a volatile bond market. When this happens, some Home Mortgage Lenders will adjust the Discount Points for their rates in accordance with the new bond prices and publish new Home Mortgage Rates for that day. Other Lenders may continue to honor their morning rates.

Tip#3: Always Tell The Mortgage Loan Officer You Are Prepared To Apply For A Loan NOW

If you are buying a home, tell the Home Mortgage Loan Officer you are Rate shopping and you have a "ratified contract" to purchase a house. Tell him you intend to make a decision and Lock-In a rate on that day, but you have to check a few other lenders. If he asks you how his rates compare to the others, tell him he's the first person you've called. If you are refinancing, tell the Home Mortgage Loan Officer you are ready to apply for a Refinance Home Mortgage today. If you don't tell him that, he may provide a fake Home Mortgage Rate quote.

Loan Officers know you will probably talk to another lender with lower Home Mortgage Rates and the only way he can be sure for you to call him back is to give you a fake quote that appears to be the lowest. He's expecting you will rate shop for several days and figures you will call him back in a day or two because he provided a low, bogus rate quote. Also, since Home Mortgage Rates change daily and are subject to change at any time, he's not concerned about giving you a fake quote.

How will you compare quotes if you don't know which quotes are real and which are part of a bait and switch plan? The only way to ensure getting real quotes is to box in the Home Mortgage Loan Officers by making them think you are ready to Lock-In a Home Mortgage Rate immediately.

Tip#4: Ask For The Total Points And The Total Fees

When you call a Mortgage Lender, ask for the "Total Points" (Discount Points, Loan Origination Fee, Broker Points) for each Home Mortgage Rate. Some lenders will only quote the Discount Points and deliberately leave out the Loan Origination Fee. You won't find out about the 1.00 Point Loan Origination Fee until you apply for the Home Mortgage. By that time, the Loan Officer figures you will just accept it because he's got your application and pulled your credit report. In addition, Mortgage Brokers often neglect to mention their Broker Fee.

Some lenders do not charge a Loan Origination Fee.

When you are quoted the Total Points, specifically ask them if there is an additional Loan Origination Fee or Broker Fee being charged. You truly have to nail this down when you talk to a Home Mortgage Loan Officer.

Also, ask for a list of ALL other fees that will appear on the Good Faith Estimate that you will be paying to the Lender or Broker. Make sure they include their Credit Report and Appraisal Fees. Some lenders charge one lump sum fee and that includes the Credit Report and Appraisal Fees while other lenders will itemize each fee. Keep it simple and ask for all fees, including the cost of the credit report and appraisal fees.

Don't get confused by Title Company, Attorney Fees or Escrows. A lender will estimate these on your Good Faith Estimate, but these charges are not related to costs associated with a Mortgage Rate quote. The amount required for your escrow account will not change from lender to lender and Title Company and Attorney Fees are not being charged by the lender. Don't include them in your comparison.

Tip#5: Always Confirm The Rate Lock Period When Asking For A Rate Quote

If you are buying a home and you need 60 days to close, make sure you specifically request Mortgage Rate quotes with a 60 Day Lock period. Some Home Mortgage Loan Officers will quote rates with 15 Day or 30 Day Lock periods because the Discount Points for shorter lock periods are less than rate locks for longer periods. Quoting a Home Mortgage Rate with a 15 Day lock period obviously gives that Loan Officer an unfair edge. It is also a waste of your time because the quote isn't real if you can't settle on your loan within 15 days. Always specify a 60 Day Lock-In if you are buying a home. Ask for 45 Days if you are refinancing, but you may be able to get it done within 30 days if you are very diligent and call your Home Mortgage Loan Officer twice a week for a status of your application.

If your rate lock expires, the lender will re-lock you at the higher of either the original rate or the current rate when you decide to re-lock. That's a LOSE/LOSE situation for you. Never let your rate lock expire.

Tip#6: Compute The Dollar Cost Of The Points And Add All Fees

After you've spent some time talking to a bunch of Mortgage Loan Officers, you will have lots of Rates, Points and Fees on a sheet of paper. You will need to compute the dollar cost of the Points (multiply the mortgage amount X the Total Points expressed as a percent; For example, multiply 400,000 mortgage amount X.625% for.625 Points). Then add the dollar cost of the points to the Total Fees. You can then compare each Home Mortgage Lender's Total Cost (dollar cost of the points + all lender related fees) for a given rate. That will show you which Home Mortgage Lender has the lowest cost Home Mortgage Rates.

If Mortgage Insurance (not to be confused with mortgage life insurance) is required on a Conventional Home Mortgage, ask for the cost per year expressed as a percent and compare it from lender to lender. Some lenders require different levels of coverage and this will affect your monthly Mortgage Insurance payment. In addition, lenders use several different mortgage insurance companies and they charge different rates for their coverage. The lender will select the mortgage insurance company.

The cost of Mortgage Insurance can vary from lender to lender even though most Home Mortgage Loan Officers will say, "We don't determine the Mortgage Insurance coverage, Fannie Mae and Freddie Mac do". Your can just say, "Please humor me and provide the Monthly Mortgage Insurance expressed as a percent".

You will want to check the quoted percent with what is on your initial application documents and final loan documents to make sure the Monthly Mortgage Insurance payment isn't higher than what you were quoted. If it is, get it reduced immediately. If they won't do that, then ask them to reduce your Home Mortgage Rate by.125% and that should cover the difference.

If you are getting a government insured mortgage (FHA or VA), you don't have to get into a comparison of the FHA MIP or the VA Funding Fee. This is a cost you will be paying, however every lender MUST use the same costs, so there is no reason to attempt to compare these costs from lender to lender.

Tip#7: When You've Found The Lowest Cost Rate, Apply and Lock The Rate

While you were looking for houses or thinking about refinancing, you may have shopped around and gotten some quotes from lenders and narrowed down your search to the best 5 Home Mortgage Lenders or Brokers. But when it is time to apply for your Mortgage, make sure you update your quotes for the 5 lowest priced Home Mortgage Lenders. After you identify the Home Mortgage Lender with the lowest cost rate, call and apply for the loan. Tell the Home Mortgage Loan Officer you want to Lock-In your Home Mortgage Rate and apply NOW. If the quote has changed since you updated your quotes a couple of hours before, tell the Loan Officer you want him to honor the previous quote. If he won't do it, tell him you may call back. Then call the next cheapest Home Mortgage Lender on your list. If that lender tells you the same thing, you can go back to the first lender and proceed with the application process.

Before you provide your application information, make sure the Home Mortgage Loan Officer agrees to provide you with an actual Rate Lock confirmation via email or fax on the same day you apply for your loan. When you receive the Rate Lock confirmation, check it and make sure you are Locked-In for the number of required days (30, 45 or 60), with the correct Loan Type (30 Year Fixed, 15 Year Fixed, etc.), with the correct Total Points quoted. It's normal for a lender to require you to apply over the phone before they will Lock-In your Home Mortgage Rate.

TIP#8: Never Float The Rate

If the Mortgage Loan Officer thinks you might be inclined to FLOAT your Rate and Points, he may say, "I think the rates are going to be coming down, so you might want to FLOAT". Remember this, never FLOAT your Home Mortgage Rate. Never. Always Lock-In the Rate and Points. If you FLOAT, and the Discount Points for Home Mortgage Rates drop, you will only realize the benefit of a small part of that drop in the Points, if any at all. The Home Mortgage Loan Officer will keep the rest of the savings as a fat commission.

Here's how they increase their commission when you FLOAT. Originally, the lender quoted 4.875% with 1.00 Total Point when you applied for your loan. Then 45 days later you called to Lock-In. Keep in mind that over the 45 day period that you were FLOATING, the actual Points for 4.875% dropped to.250 Total Points. So you should have saved.75 Total Points on your 4.875% rate. Right? No! First, you don't know if his company's points have dropped or by how much they might have dropped. So, instead of giving you 4.875% for.250 Total Points, the Home Mortgage Loan Officer tells you his rates only dropped a little bit. He says you can Lock-In 4.875% for.75 Total Points. You are happy because it is.25 lower than what it was when you applied for your loan, but the Home Mortgage Loan Officer is ecstatic because he keeps half of the "overage" you paid. That overage is.50 points and he splits this with his company. If the mortgage amount was $400,000, he just earned.25% which is an additional $1,000 commission. That's not bad for a five minute phone conversation.

If you FLOAT and the Discount Points for Mortgage Rates increase, you will pay for the increase. FLOATING is a LOSE/LOSE proposition for you and a WIN/WIN for the Home Mortgage Loan Officer.

Some companies quote very low rates and attract lots of applications, but they don't let you Lock-In until 15 Days prior to loan closing. If you apply for a Mortgage through a company with that policy, you will get screwed. When it's time to Lock-In your Mortgage Rate, you will pay an "overage" that will go straight to the Mortgage Loan Officers pocket. You will either pay more points for the rate you requested at the time of application or you will get a higher rate. Either way, you will get screwed and the Loan Officer will get a fat overage added to his commission.

Tip#9: Get a Final Good Faith Estimate Several Days Before Loan Closing

Get a copy of the Final Good Faith Estimate at least a few days before the scheduled closing day. Check the Mortgage Rate, Points, Fees and Monthly Mortgage Insurance Premium (if applicable). Make sure you are getting exactly what you bargained for. Ask questions if you don't understand something. Demand that previously undisclosed fees be removed from the Final Good Faith Estimate. Make sure you get a revised estimate if the Mortgage Loan Officer verbally agrees to make changes.

The day of loan closing is the wrong time to haggle over discrepancies.

Article Source: http://EzineArticles.com/?expert=Mick_Taylor

Types Of Mortgages Available In Canada

In Canada there are two types of mortgages available to residential borrowers, one being a conventional mortgage and the other is a high-ratio mortgage. Within both types of mortgages there are two sub-types, which are either open or closed mortgages.

To clarify the various options one can be presented with when shopping for a mortgage this article is divided into two parts;

Part one deals with the difference between a conventional mortgage and a high-ratio mortgage and part two deals with the different sub-types of mortgages available within the two types. However, these are fairly generic explanations - just as there are many different lending institutions, so there are almost as many different varieties of mortgages available. This is another good reason to consult a mortgage broker. Depending on your situation, one type of mortgage may be better for your circumstance than another.

CONVENTIONAL MORTGAGE:

If you have at least 20% of the purchase price (or appraised value if this is lower than the purchase price) as a down payment, you can apply for a conventional mortgage.
Some lenders may require either CMHC, Genworth or AIG insurance as well because of the property's location or type, even though you have 20% or more equity.

LOAN TO LENDING:

to 65% 0.50%

65.1 to 75% 0.65%

75.1 to 80% 1.00%

80.1 to 85% 1.75%

85.1 to 90% 2.00%

90.1 to 95% 2.90%

95.1 to 100% 3.10%

Please note: Insurance premiums are higher when the amortization is greater than 25 years or if there is more than one advance. This usually happens if you are building your house or having it built for you. Check with your Mortgage Broker to learn what the applicable premiums will be.

The insurance premium is calculated by multiplying the mortgage amount needed by the applicable percentage.

For example:

If the purchase price is $112,000 and the required mortgage is $100,000. You divide 100,000 by 112,000. This equals 89.29%.

Looking at the above chart - the premium is 2.00% when the lending ratio is 89.29%.
The next step is to multiply the mortgage amount by the insurance premium. Using our example this means $100,000 X 2.00% = $2,000. Your actual mortgage loan will therefore be $102,000.

CMHC's 5% DOWNPAYMENT PROGRAM was originally for first-time homeowners, but was expanded in May 1998 and is now available to all purchasers (principal residence only) who meet the normal requirements. Furthermore, borrowers can now even borrow up to 100% of their purchase price under new CMHC's Flex Down Insurance Program.

CMHC may set maximum purchase prices under these programs depending on the city so check with your Mortgage Broker to learn what the price limits are in your area.

If the property is a duplex (and you are buying both sides), with one side being owner occupied, the minimum down payment is 5.0%.

Mortgage brokers and lenders must verify that the borrower has the 5% down payment and 1.5% of the purchase price to cover closing costs. The only exception to the 1.5% is when the purchaser qualifies for an exemption of the Land Transfer Tax (Ont.) or Property Transfer Tax (B.C.), or similar provincial tax exemption. In these cases the mortgage broker or lender must ensure that there are sufficient funds available to cover all remaining closing costs.

OPEN MORTGAGES:

An open mortgage allows you to pay off part or the entire mortgage at any time without penalties. Open mortgages usually have short terms of six months or one year. The interest rates are higher than those for closed mortgages with similar terms.

VARIABLE RATE MORTGAGES / ARM (ADJUSTABLE RATE MORTGAGES):

At the start of a variable rate mortgage, the lender will calculate a mortgage payment that includes principal & interest. For the term of the mortgage your payments usually do not change. However, as the prime rate changes so will your mortgage rate.

If interest rates are dropping, less of each payment will go toward interest and more will go toward principal. If interest rates rise, more of your payment will be interest and less money will be reducing your principal.

Some of these mortgages are completely open (you can pay off all or part of your mortgage at any time without penalties). Others that offer a 'prime minus' interest rate (e.g. prime - 0.375%) may charge a penalty.

The interest rate on most variable rate mortgages is compounded monthly.

CAPPED RATE MORTGAGES:

These are variable rate mortgages that the lending institution has rate 'capped'. In other words, the rate will fluctuate with prime, but the institution guarantees that you will not pay more than a certain interest rate, set by them.

These mortgages often have a penalty for early 'payment in full' and are often not portable.

CLOSED MORTGAGES / FIXED RATE MORTGAGES:

The expression 'closed mortgage' originates from the 1980's when this type of mortgage was literally 'closed'. You contracted to the lender to make your payments for the term chosen, you could not pay anything additional, nor could you pay off the entire amount for any reason except the sale of your property.

These days, there are many ways to pay down your mortgage principal quicker, though the name 'closed' mortgage still remains. See pre-payment options for ways to pay off your mortgage quicker.

Fixed rate mortgages are the most popular type of mortgage. You benefit from the security of locking in your mortgage interest rate, for lengths of time ranging from 3 months up to 25 years. The rates are slightly lower than for an open mortgage for the same term.

If you think interest rates could rise, you may want to choose a longer term, such as a 5 or 10 year term. If you think that rates are going lower, you may want to gamble on a shorter length of time. Discuss this with your Mortgage Broker.

The major lending institutions have different pre-payment options allowed under their contracts. These options allow you to pay off your mortgage faster. It is also possible to pay off most closed mortgages prior to the end of the term or pay down a portion of the balance owing. However, lenders charge penalties for doing so.

Please note that some lending institutions will not give any pre-payment options. It is wise to find out what options are available before entering into any mortgage contract.

CONVERTIBLE MORTGAGE:

These are fixed rate mortgages for terms of 6 months or 1 year. Not all lending institutions offer convertible mortgages. With a convertible rate mortgage you can lock into a longer term during the current term of your mortgage without penalty - but only with the same lender. For example, if after a couple of months you hear that interest rates are going to increase, you may change to a longer term mortgage such as the 5 year term.

REVERSE MORTGAGE:

CHIP - Canadian Home Income Plan is the name of the company providing reverse mortgages in Canada.

A reverse mortgage allows homeowners to convert equity in their homes into cash, without selling the property or having to make monthly payments.

To qualify, homeowners must be at least 62 years old, have significant equity in their property and live in B.C. or Ontario.

The amount that can be borrowed depends on the homeowner's age. Reverse mortgages are for between 10% and 40% of the appraised value of the home. The older the homeowners, the more they can borrow.

The homeowner retains ownership and possession of the house. The lending company registers a reverse mortgage against the property. At death, or when the house is sold, the loan and the accrued interest must be repaid.

The biggest disadvantage to reverse mortgages, is that the interest keeps building on the amount of money borrowed (hence the maximum 40% loan). This means that if you borrow $50,000 this year and your interest bill is $5,000, next year your interest will be charged on $55,000 and so on. The longer the loan is in place, the greater the interest bill that has to be paid.

It is possible that when the house is sold, 100% of the proceeds from the sale may be required to pay off a loan.

If the homeowner dies the estate will have to pay off the loan and the accrued interest. This may wipe out any inheritance for the homeowner's heirs.

An alternative is to establish an equity credit line. This allows you to take funds only as you need them, thereby owing the least interest possible, with no surprises.

Consult with a financial advisor for more alternatives.

Article Source: http://EzineArticles.com/?expert=Victor_Borges

Mortgage Protection Insurance, A Way To Maintain Your Mortgage Commitment

Being able to maintain your mortgage commitment at all times no matter what happens is essential unless you want to give up your home to the lender through repossession. If you were forced to leave work after suffering an illness, accident or unemployment in an ideal world the lender would have total sympathy. They would send you a get well card, flowers and tell you not to worry. However we live in the real world, and the reality is no lender is going to do this, however patient and helpful they might be. The hard truth is that a couple of missed repayments could very well mean the lender would seek a repossession order. Following this would come the court hearing and if the judge rules against you, you could only be around 28 days away from eviction. The way you could avoid this scenario is to take out mortgage protection insurance.

Mortgage protection can be your saviour if you find yourself without an income following an accident that meant you were unable to work. It would also apply if you should become sick and have to take time off from work to recuperate. Unemployment would also be covered, providing that it was brought about through reasons not of your own making. It wouldn’t pay out if you simply gave up your job for example. Mortgage protection insurance would be the closest thing to a "fairy godmother" at this time.

With a policy behind you there would be no struggle each month and no juggling other bills in the hope that you could gather enough money together. Having to do this each month you remained out of work, especially if this was for any length of time would cause stress beyond belief. At this time all you need to be thinking of is recovering or finding work again.

You do have to shop around for the cheapest premiums when considering a policy. Some providers, usually high street banks, charge sky high premiums, which makes protecting your mortgage very expensive. Others give far cheaper quotes for cover. This means that everyone can afford to take protection and these are the providers you should look for. The terms of the cover also vary considerably and again need taking into consideration.

You could be waiting as little as 28 days after being unable to work before you are able to put in a claim. However some providers will extend this to 90 days, the same applies with how long a policy would payout. With some providers you could be looking at receiving 12 months of protection, others could give 24 months cover.

All providers should give an adequate explanation of what a policy can and cannot do and make you aware of the vital facts and small print. This information of course should be given to you before you buy; after all it would useless and unfair to give it you afterwards.

Lenders on the high street will very often try their hardest to get you buy their mortgage protection insurance when taking out the borrowing. This might seem like one of the best choices, especially if you got a good deal on your mortgage. Usually you could not be more wrong and high street lenders premiums are among some of the highest premiums. Nine times out of ten a standalone provider will offer the cheapest quote and provide one of the best quality policies to fall back on.

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Mortgage Protection Insurance, A Way To Maintain Your Mortgage Commitment

Being able to maintain your mortgage commitment at all times no matter what happens is essential unless you want to give up your home to the lender through repossession. If you were forced to leave work after suffering an illness, accident or unemployment in an ideal world the lender would have total sympathy. They would send you a get well card, flowers and tell you not to worry. However we live in the real world, and the reality is no lender is going to do this, however patient and helpful they might be. The hard truth is that a couple of missed repayments could very well mean the lender would seek a repossession order. Following this would come the court hearing and if the judge rules against you, you could only be around 28 days away from eviction. The way you could avoid this scenario is to take out mortgage protection insurance.

Mortgage protection can be your saviour if you find yourself without an income following an accident that meant you were unable to work. It would also apply if you should become sick and have to take time off from work to recuperate. Unemployment would also be covered, providing that it was brought about through reasons not of your own making. It wouldn’t pay out if you simply gave up your job for example. Mortgage protection insurance would be the closest thing to a "fairy godmother" at this time.

With a policy behind you there would be no struggle each month and no juggling other bills in the hope that you could gather enough money together. Having to do this each month you remained out of work, especially if this was for any length of time would cause stress beyond belief. At this time all you need to be thinking of is recovering or finding work again.

You do have to shop around for the cheapest premiums when considering a policy. Some providers, usually high street banks, charge sky high premiums, which makes protecting your mortgage very expensive. Others give far cheaper quotes for cover. This means that everyone can afford to take protection and these are the providers you should look for. The terms of the cover also vary considerably and again need taking into consideration.

You could be waiting as little as 28 days after being unable to work before you are able to put in a claim. However some providers will extend this to 90 days, the same applies with how long a policy would payout. With some providers you could be looking at receiving 12 months of protection, others could give 24 months cover.

All providers should give an adequate explanation of what a policy can and cannot do and make you aware of the vital facts and small print. This information of course should be given to you before you buy; after all it would useless and unfair to give it you afterwards.

Lenders on the high street will very often try their hardest to get you buy their mortgage protection insurance when taking out the borrowing. This might seem like one of the best choices, especially if you got a good deal on your mortgage. Usually you could not be more wrong and high street lenders premiums are among some of the highest premiums. Nine times out of ten a standalone provider will offer the cheapest quote and provide one of the best quality policies to fall back on.

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Permanent Link: http://www.isnare.com/?aid=258923&ca=Finances

Reverse Mortgage Calculator: Essential Tools For Future Borrowers

A reverse mortgage calculator is an online tool used to determine the payout one can expect to receive from a reverse mortgage. In addition to payouts, many calculators will also compute a borrower’s expected closing costs, interest rate, and mortgage insurance premiums. These tools are typically used to help borrowers determine whether they would be eligible for a loan, as well as how much they would qualify for should they choose to apply.

How to Use a Reverse Mortgage Calculator

To use a reverse mortgage calculator, borrowers will input their age, the estimated value of their home, zip code, and the remaining balance of their mortgage loan if applicable. The calculator will use this information to determine whether the borrower would qualify for a reverse mortgage loan based on his or her age and amount of equity.

Borrowers who would qualify for a reverse mortgage will be shown a few different options. In many cases, consumers will be shown how much they would qualify for through a fixed-rate HECM Standard, an adjustable-rate HECM Standard, and an HECM Saver. Consumers will also be shown how much they can expect to receive if they choose to accept their money in a lump sum, line of credit, or receive monthly payments.

Many calculators also calculate payouts based on a combination of payment options. For example, a person may want to receive a portion of their cash as a lump sum and the remaining portion as monthly payments. This is a popular option with borrowers who will be repaying their mortgage loan with a portion of their payout.

Consumers might also be able to calculate their expected interest rate, mortgage insurance premiums, closing costs, and loan origination fee. This is done to help consumers compare their estimated payout with the amount of money they can expect to pay for a loan. While fees can be rolled into a reverse mortgage loan, they are still important to consider. Any fees rolled into a loan must be repaid, plus interest, once the home is sold.

What to Remember When Using a Reverse Mortgage Calculator

While using a reverse mortgage calculator, consumers must understand that the calculations they receive are estimates. A reverse mortgage calculator will not be able to tell a consumer whether he or she would definitely qualify for a loan. These calculators are simply offered to give consumers an idea of what they might be able to qualify for.

Mortgage calculators are great tools for potential borrowers to use prior to applying for a loan. At first, reverse mortgages may seem overwhelming. There are not only several different loan and payment types, but borrowers are required to pay certain fees, closing costs, and mortgage insurance premiums. reverse mortgage calculators lay out a consumer’s different options, making them much easier to understand.

The goal of using a calculator is to understand how a reverse mortgage might benefit an individual. After using a reverse mortgage calculator, a borrower should come away with a better understanding of these loans, as well as their possible eligibility.

Zero Down 80 20 Mortgage Loans: How to Purchase Your Home with No Money Down

If you are a homebuyer lacking the necessary 20% down payment to purchase you home, an 80/20 mortgage could get you the financing you need. An 80 20 mortgage is basically two loans covering 100% of the purchase price. Here are the basics of 100% financing to help you decide if this type of loan is right for you.

The 80 20 mortgage is actually two loans covering 100% of the purchase price. Your primary mortgage will cover 80% of the purchase price; the remaining 20% will be a second loan often referred to as a “piggyback” loan. This type of mortgage has the additional benefit of not requiring Private Mortgage Insurance. Private Mortgage Insurance (PMI) is an insurance policy that many borrowers are often required to purchase that can add hundreds of dollars to your payment amount.

Another advantage of a piggyback mortgage is that the loan typically comes with a fixed interest rate. You may have the option of taking out a line of credit for your second mortgage; if you take the equity line of credit your loan will have an adjustable interest rate. The interest rate on your second mortgage will be higher than your primary mortgage because this lender assumes a greater risk.

To learn more about your no money down mortgage options, register for a free mortgage guidebook.

To get your free mortgage guidebook visit RefiAdvisor.com using the link below.

Louie Latour specializes in showing homeowners how to avoid common mortgage mistakes and predatory lenders. For a free copy of "Mortgage Refinancing: What You Need to Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.

Claim your free guidebook today at: http://www.refiadvisor.com

80 20 Mortgage Loan

Article Source: http://EzineArticles.com/?expert=Louie_Latour

Applying For a Home Mortgage Refinance Loan

Have you been thinking about applying for a home mortgage refinance loan?

Perhaps you are in an adjustable rate mortgage, looking to consolidate debt, or even just lower your rate to a lower, fixed monthly payment. No matter what goal you are seeking to obtain at closing, one thing that you should stay focused on is how to save time and money when applying for a refinance of your home. However, all too often, many home owners make the common mistake of not being fully prepared.

Being prepared, what does that mean?

When applying for a refinance loan, you will want to be able to lock in your interest rate as quickly as possible when you see a low rate you want. Unfortunately, many homeowners lack the organization of the required documents and end up fumbling for them when they see a low rate, only to miss their chance to lock it in before the market changes, and even delay the closing of their loan which costs even more time, money, and heartache. Here's how to avoid losing your precious time and money:

Gather Your Employment and Income Information

Always have one month of your pay stubs and spouse on hand, and if you are self-employed you will need to have your tax returns for the past two years. You should also have your W-2's from your employers for the past two years also. If you haven't been working at the same place of employment for at least two years consistently, have your work history and employer contact information along with payment history available as well. This will allow you and the lender to quickly and accurately calculate a monthly average of income.

Obtain Most Recent Bank Statements and Other Asset Statements

Typically most homeowners will only need to show two months worth of statements from your bank accounts, IRA's, 401k, and any other investment accounts when applying for your home mortgage refinance. Documenting assets is a vital part of loan application which can also position you to get the lowest rate possible. Your lender will typically ask for the last 3 months of these statements to evaluate.

Get Your Homeowner Documents Organized

In many cases your lender will ask for the title insurance and home owner's insurance policy and may even inquire about the property taxes you pay on the home. In some instances they may also ask for to see the note to your home if you have an adjustable rate mortgage or prepayment clause. Also be prepared to show the lender the most recent appraisal and survey of your home in case they ask. One other important document to have on hand is also the most recent mortgage statement that shows the balance and monthly payments of any and all loans on your home.

You've got everything Together, Now What?

Good! Now that you've got all the necessary paperwork together, you're going to find that when you're applying for your home mortgage refinance, you're going to feel very confident and in control. You'll notice that nearly every possible question on the loan application will be easily answered because you are prepared with the necessary information and you're lender will be happy too! So get started and apply for your loan today knowing that you just saved yourself a great deal of headache, time, and especially money by simply getting organized!

About The Author:
An author on refinancing. For additional articles and an extensive resource for everything about mortgage refinance rates and bad credit mortgage refinance . Please visit us for more info.

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Understanding Fixed Rate Mortgage

No matter if you are trying to mortgage your home or trying to buy a home, you must know in the market today the two most common mortgage rates known as a Fixed Rate Mortgage (FRM) and the Variable or Adjustable Rate Mortgage (ARM).

There are many benefits and disadvantages to consider when deciding if a fixed rate mortgage is right for you. It is important to look at all options when it comes to something as important as getting a mortgage for your home.

A fixed rate home mortgage loan (FRM) means that the interest rate you get upon loan approval is the interest you maintain for the life of the loan. The benefit is that the rates and payments remain constant. There won't be any surprises even if inflation rises out of control and mortgage rates head to 20%. The life of the loan is refereed to as a mortgage term. A mortgage can range anywhere from a six months loan to 30 years. The 30-year fixed rate mortgage is the most common terms.

In general, fixed rate mortgages are a safer way for first time home buyers to get a mortgage, since there is greater stability and less risk involved. It is easy to budget and regulate your monthly expenses when you know exactly what your interest will be. Generally, FRMs are more expensive to compensate for the lesser risk and greater comfort involved. FRMs are also less risky since you always have the option to refinance in case interest rates drop uncontrollably. If the current interest rates are low, a fixed rate mortgage will be a good choice as you will be assured of locking in at low interest all throughout your loan term.

There are also a few things to consider when deciding to choose a fixed rate mortgage. To take advantage of decreasing rates, mortgage holder would have to refinance. This means that you must spend a few thousand dollars in closing costs. Fixed rate mortgage can be too expensive for some borrowers, especially if the current rates are high, because there is no early on payment and rate break like there is with adjustable rate mortgages.

Which type of mortgage is better for you depends on your ability to handle the interest fluctuations. A fixed rate mortgage is right for you if you like the stability of a fixed payment over a predetermined period of time. You can apply for any term mortgage you feel you want, for example, a five year fixed table can be created for you with a fixed rate mortgage. This means that for five years you will repay the loan with a fixed interest rate table.

About The Author:
Liza has written various articles about insurance issues, including homeowners insurance, and home mortgage.

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Mortgage Advice For Frequently Asked Mortgage Questions

As you start your search for a mortgage, there are a few questions you need to ask yourself in order to narrow your search and know what you're looking for. Unfortunately, the answers to those questions aren't always easy. For some honest mortgage advice on the answers to your mortgage questions, keep reading.

Fixed Rate Mortgage or ARM?

If you plan to stay in the house you're planning to purchase for longer than 7 years or simply want stability in your monthly payments, pick the fixed rate mortgage if you can afford it. A fixed rate will allow you consistent payments month-after-month for the duration of the mortgage loan.

Alternatively, an ARM (Adjustable Rate Mortgage) is great for families who know they'll be out of their house in less than 7 years. Before you take on an ARM, ask your lender what your worst case scenario would be based on your annual rate adjustment cap. Make sure you could financially handle a potential sharp spike in your monthly mortgage payments.

How Large Should My Down Payment Be?

Ask yourself how much of an interest rate reduction you'll get with a higher down payment and whether a lower down payment will result in having to pay expensive private mortgage insurance. Mortgage insurance is often required by the lender to cover their risks when the buyer's down payment is too low.

Typically, investing in a larger down payment results in a return on the investment that's equal to the mortgage interest rate. Now, if dropping your down payment puts you in a different category (for example, below 20% or below 5%) that can affect the return significantly.

Do I Want an Interest-Only Mortgage?

An interest only mortgage offers homeowners an option to pay only interest, but for a specified period of time. This results in a lower required monthly payment and the buyer is still free to make payments on the principal.

Interest only mortgages should only be used though by borrowers who actually need them. For example, a good candidate might be a freelancer or contractor who has a fluctuating income and wants the freedom to make extra payments on the principal while still having a smaller monthly commitment.

Other examples include individuals who need the cash flow for high-yielding investments (earning more than 9% over the long term) or families who are expecting to make higher incomes in a few years, at which point they can begin making some significant principal payments.

Should I Accept a Pre-Payment Penalty?

A pre-payment penalty is a clause in your mortgage agreement that says you'll pay a penalty if you pay off the mortgage too early or seek to make extra payments. On the surface, you might assume the lending institution would welcome the faster repayment of its loan. However, doing so actually results in some financial loss through lost interest payments.

Typically, prepayment penalties disappear after a few years. If you opt for a fixed rate mortgage and plan to remain in the house for a long time, you can often exchange a pre-payment penalty for a lower rate!

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Permanent Link: http://www.isnare.com/?aid=256005&ca=Real+Estate

Mortgage Refinancing: Using a Mortgage Calculator

A mortgage calculator is a useful tool to help you budget for your new mortgage. A good mortgage calculator allows you to calculate your monthly payments based on your desired interest rate, taxes, and insurance. Here is how this useful tool can help you avoid common mistakes when refinancing your mortgage.

Mortgage calculators can provide you valuable information about your mortgage. A good mortgage calculator will show you monthly payment information and amortization tables to help you understand how your mortgage works. Amortization with a mortgage calculator describes the process of paying interest and principle graphically; using a mortgage calculator can help you get your head around a complicated financial concept like amortization.

To use a mortgage calculator you will need to provide the amount of the mortgage principle, your interest rate, the amount of your property taxes, and private mortgage insurance if you pay it. The calculator will figure your payment amount and show how the interest is paid over time. Mortgage loans are front loaded with interest; at the beginning almost all of your payment is pocketed by the mortgage lender for the interest due. As time passes, the ratio of interest to principle gradually reverses and more of your payment goes to pay back the loan.

If you are in the process of refinancing our mortgage a mortgage calculator can help you budget to avoid taking out more mortgage then you can afford. There are dozens of free mortgage calculators available online for you to use; your mortgage lender of choice will probably offer one on their website as well. To learn more about refinancing your mortgage and how to avoid costly mortgage mistakes, register for a free mortgage guidebook using the links below.

To get your free mortgage guidebook visit RefiAdvisor.com using the link below.

Louie Latour specializes in showing homeowners how to avoid common mortgage mistakes and predatory lenders. For a free copy of "Mortgage Refinancing: What You Need to Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.

Claim your free guidebook today at: http://www.refiadvisor.com

Baltimore Mortgage Refinance

Article Source: http://EzineArticles.com/?expert=Louie_Latour

Mortgage Modification | Adjustable Rate Mortgage | Fixed Rate Mor

The loan structure is one of the first decisions you’ll have to make when taking out a mortgage. The two main types of mortgages are fixed-rate and adjustable rate, the main difference being the way your interest is calculated. Each structure has its own pros and cons, and it’s important to know which one best suits your situation. This article lists some of the basic differences between the two.

Fixed-rate Mortgages
A fixed-rate mortgage, as the name suggests, uses a single interest rate for the life of the loan. The main advantage of this loan is stability: because the rate never changes, your monthly payments remain the same regardless of the market situation. Fixed-rate mortgages are typically offered in 10-year, 20-year, and 30-year plans. Some loans also have a bi-weekly option, which allows you to make extra payments and pay off your loan sooner.

On many fixed rate mortgages, you start off paying more interest than principal in your early payments. But since your principal gets smaller each year, the situation eventually reverses and more of your payments are counted against the actual cost of the loan.

The fixed rate doesn’t apply to property taxes and insurance premiums—these are controlled by the government and your insurance provider respectively. But since your monthly payments are mostly made up of principal and interest, you can expect fairly stable payments with only minimal changes.

Adjustable Rate Mortgages
An ARM bases its interest on a third-party index that determines the market interest rate. This means that your interest rates can change from time to time, depending on current market indicators. Some of the commonly used references are the Certificate of Deposit Rate (CD), the Treasury Security Rate, and the Cost of Funds Index (COFI) of the Federal Home Loan Bank.

To protect borrowers from drastic increase, most ARMs impose a cap on either the payment itself or the change in interest rate. For example, a mortgage may allow a maximum increase of 2% each year, no matter what the current rate is. Others may cap the actual amount your payments can go up. Ideally, this will be a “lifetime cap”; that is, the cap applies throughout the life of the loan.

ARMs typically have an introductory period where you pay a fixed or low interest rate for the first few years. This scheme is designed to attract more borrowers, especially in the sub-prime market. Many people take advantage of this structure by enjoying the introductory rate, and then selling or refinancing the home when the rates shift back to normal.

If you are in an adjustable rate mortgage that you cannot afford you may qualify for a loan modification. Mortgage Loan Modification allows you to work out better terms with your lender, and pause the foreclosure process while negotiations are under way. This is especially ideal for people in adjustable-rate sub-prime loans, which have reverted to higher rates in recent years. To know more about mortgage loan modification consult your mortgage loan modification attorney.

About the Author

The Loan Modification Department is composed of a team of Mortgage Loan ModificationAttorneys, Mortgage Professionals, and Hardship Analysts. Lead by Expert Mortgage Loan Modification Attorney, Marc R. Tow, Loan Modification Department has helped thousands of American Home Owners save their Homes and decrease their loan payments. For more information Just Call 800-738-1170 or Visit our website http://www.cdloanmod

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How To Choose The Best Deal With Home Loan Mortgage Refinance

Home Loan Mortgage Refinance refers to replacing the existing mortgage with the new one when required. Many circumstances lead the people to do so. Refinancing your mortgage gets you number of benefits but to get these benefits, it requires you to choose the best deal. If you choose wrong lender and fail to get the appropriate deal, you may have to incur loses in spite of enjoying benefits.

The most important thing to be taken care while availing Home Loan Mortgage Refinance is the cost of the loan. Lenders impose a number of charges in the name of processing fee like, Lender fee or funding fee, Attorney fee, Appraisal fee, Credit report fee, Document preparation and recording fee, Origination or underwriting fee etc.

With this you should also consider the interest rate offered by the lender, compare the interest rates offered by different lenders and processing fees. A cut throat competition in market lets you get the refinance loan at reasonable price. You should also check whether the interest offered by the lender is fixed or adjustable.

You should also check the closing fee of the loan. Sometimes it happens that you get enough money any how so that you repay your complete loan at once, then it requires closing fee to be paid to the lender. If the closing fee is high then, either you will have to go with burden of loan otherwise, you will have to pay a big amount for this which would lead you to save nothing. Therefore, this condition should be taken care in advance. Closing fee includes- Flood determination, State and local taxes, Surveys and home inspection fees, prepaid private mortgage insurance or PMI, Prepaid amounts towards interest, hazard insurance, taxes, etc.

After comparing the quotes and finding the best lender you need, you can also negotiate with lender. Write all the fees together and negotiate with lender. This way you can find the best of best deals. Your ultimate aim towards finding the best deal with Home Loan Mortgage Refinance is to save as much money as you can. Home Loan Mortgage Refinance gets you rid from a lot of financial troubles you are facing.

By: Christen Scott

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Tag : mortgage,mortgage refinance,mortgage rates,mortgage loan