Balloon Payment Mortgage

A balloon payment mortgage is a fixed-rate non amortized mortgage with a large final payment. Typically, the mortgage matures from five to seven year term. At the end of the term, the borrower pays final payment which is much larger than the regular mortgage payment. Hence, the final payment represents the balloon.
Most balloon payment mortgages are interest only mortgage. The borrower only pays the interest on periodically. So, the principal remains the same. At the end, the borrower pays the substantial principal.
For example, the monthly mortgage payment comes to $3,333.333 on a $200,000 mortgage with 20% annual percentage rate. First, you calculate the total interest which comes to $40,000 ($200,000 x 20%). Then, you divide the total interest with the number of payments on a year. Thus, the monthly mortgage payment comes to $3,333.33 ($40,000 / 12 monthly payments).
The mortgage payments on balloon payment mortgage are commonly based on a thirty year mortgage with a term of five to seven years. It is also easier to qualify for this mortgage. And, the interest rates are much lower than traditional mortgage.
The borrower usually sells the property before the mortgage matures to avoid the final payment. At the end of the term, the borrower needs to pay the final payment. The borrower must sell the property, refinance the mortgage, or convert the mortgage before the end of term.
The borrower can convert balloon payment mortgage into traditional amortized mortgage. In an amortized mortgage, the mortgage payment pays off the principal on each periodic payment.

Dennis Estrada is a webmaster of mortgage calculators, Balloon Payment Mortgage, and mortgage dictionary website that gives access to many resources, and calculators for mortgage.

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

Tags : Mortgage , Ballon Payment Mortgage , Mortgage Calculators

How to Calculate a Mortgage and Figure Out Your Monthly Payments

The fastest way to calculate a mortgage is to use a mortgage calculator. There are several types of mortgage calculators, and there's one for your every need.

There's fixed rate mortgage calculator, a mortgage amortization calculator, an adjustable rate mortgage calculator, a balloon mortgage calculator, a refinance mortgage, an APR mortgage calculator, and many more.

A Fixed rate calculator is one of the most common calculators online. This is used to calculate a mortgage with a fixed interest rate. The values required here are your loan term, your loan size, and the interest rate.

If you want to calculate a mortgage payment, by month, enter the amount the company will loan you and the repayment schedule you prefer. Do you prefer a daily, a weekly, a monthly, or an annual calculation?

An adjustable rate calculator (ARM) requires different values and information from a fixed mortgage calculator. With an adjustable rate mortgage, the borrower starts off with a low interest rate, but bears the risk of future increases in mortgage rates.

On the other hand, if mortgage rates drop, the borrower reaps the benefits. With an ARM calculator, future adjustments can also be calculated using a predicted adjustment interest rate.

A balloon mortgage, typically, is a 10-year program. During the term, the borrower can pay only a fraction of the mortgage loan. However, when the mortgage "balloons," the borrower has to pay the unpaid balance.

With a balloon mortgage calculator, you can calculate a mortgage loan remainder once the mortgage balloons if you pay only a certain amount each month.

With a refinance mortgage calculator, you will see how much your potential savings will be, and also the number of months it may before you'd break even on closing costs.

APR or annual percentage rate shows the total cost of a mortgage by putting into the equation not only the interest rate but also other fees and points. If you want to calculate a mortgage and its real cost to the borrower, use an APR mortgage calculator.

Want more info on how to calculate a mortgage? Check out internetmortgagetips.com, a popular mortgage site that shows you how to find the best mortgage rates quickly and easily.

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

Predatory Mortgage Lenders: What You Need to Know

Predatory mortgage lending describes any lending practice that takes advantage of the homeowner. These practices can cause you to overpay for finance charges or even result in losing your home. Here are tips to help you avoid predatory mortgage lenders.

Predatory mortgage lenders use loopholes in the law to profit by taking advantage. If your mortgage lender or broker exhibits any of the following behaviors you should seek your mortgage elsewhere.

Avoid Mortgage Lenders and Brokers That:

• Ask you to falsify information on your application.

• Ask you to leave documents unsigned or ask for your signature on incomplete or blank documents.

• Fail to provide Truth-in-Lending statements, Good Faith Estimates, or HUD Settlement Statements as required by law.

• Ask you to refinance the mortgage at regular intervals as a condition of loan approval.

• Tries to get you to borrow more than the amount needed to refinance or purchase your home.

• Fails to disclose all closing costs or requires a balloon payment as part of the contract.

Unethical mortgage brokers require payment for finding the mortgage or referring business as a condition of working with you; while this is not illegal you should not do business with individuals engaging in this practice. You can learn more about avoiding predatory mortgage lenders and common mortgage mistakes by registering 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

Baltimore Mortgage Refinance

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

Fix Your Mortgage - Set Mortgage Payments Reduce Stress

There's no doubt that for most of us, a home is the biggest purchase we'll ever make. If it wasn't for mortgages, there's no way most of us would ever be able to afford a home.

Despite that, the mortgage can be an enormous source of stress and aggravation. Disputes over money are one of the most common causes of marital breakdown. If you've chosen an adjustable (variable) rate mortgage, an increase in interest rates can make your repayments quickly rise to a level where you just can't afford it any longer.

In that situation, not only do you have to deal with the stress of trying to make the mortgage repayment each month, you also have the fear of losing your family home mixed in. For some people they live with that possibility on a day-to-day basis. No wonder marriages suffer as a result.

If you're worried that a few interest rate rises will make it impossible for you to make your repayments, then maybe it's worth considering a fixed rate home loan. With a fixed rate loan, you are locked in with a set interest rate for either a set period (say 5 years) or the entire period of the loan. This can give you great peace of mind, because although your repayments may start off a little higher, you have the certainty of always knowing what the repayment will be, and can budget accordingly.

Fixed rates can work in a couple of different ways. One is to set the loan as a fixed rate loan for the entire period of the loan. The only problem with this is that you may have a loan that last 25 years, but you need to sell up and move elsewhere either for work or lifestyle long before the 25 year period is over. Many fixed rate loans have quite hefty break costs, which may make the process of moving a lot more stressful than it needs to be.

Another option is to fix the rate for a set period, say 5 years. This works well for a lot of people, as the average time in a house is 5-7 years. So it's possible that in 5 years time you'll be getting close to moving anyway. It's also quite often the case that after 5 years, mum may have returned to work after having a couple of children, improving your financial situation to the point where you may want to investigate other loan options.

A further option is to take an interest only loan, with a fixed rate of interest, with a balloon payment. This can reduce your monthly payments enormously, which can be very helpful in a time of transition, such as the early years of starting a family. The disadvantage is that you pay little or nothing off the loan in that time. Also, if you want to remain in your home at the end of the interest only period, you will need to organise another loan to continue on.

There's no doubt that having a fixed mortgage payment each month can make life much easier. You can budget for all the usual household bills, confident that your mortgage payment won't change. Yes, it's quite possible that over the term of the loan you may well end up paying more than if you'd chosen an adjustable rate mortgage, but sometimes money isn't the only thing that's worth something - peace of mind and a reduction in stress is definitely worth something too.

Tag : mortgage,mortgage payments,mortgage rates,mortgage refinance

Published At: Isnare Free Articles Directory http://www.isnare.com
Permanent Link: http://www.isnare.com/?aid=54197&ca=Finances

Steps to Consider when Looking for a Mortgage

The process of applying for a mortgage can be long and complicated, especially if you are a first time buyer, have poor credit, or have special mortgage requirements. Whether you’re a first time buyer or a seasoned pro, it’s good to refresh yourself on the important steps you should consider when you’re shopping for a new mortgage.

Step One: Your Finances

Regardless of any other circumstances, the first step in applying for a mortgage (or any other large loan, for that matter) should always be a thorough investigation of your finances, including your credit rating. This is an important first step, even though your lender will eventually want to examine your finances more thoroughly. Having a rough idea of your financial situation, and the amount of money you can afford to borrow, is going to be important when it comes time to choose a mortgage type and speak with potential lenders.

To examine your finances, look at your total monthly income, and total monthly debts, to find out how much you can afford in the way of mortgage repayments each month. In addition, check out your credit score. If your credit rating is over 700, good news, you should not have any trouble getting a mortgage. Under 700, you’ll probably be looking at a higher interest rate on your loan. To get a handle on fixing your credit, make sure you pay bills on time, and check your credit report for any obsolete information or errors.

Step Two: What Kind of Mortgage?

Generally you’ll be deciding between a fixed rate mortgage or an adjustable rate mortgage. If you plan to move or refinance within five years or so, a balloon mortgage may also be a viable option.

In most cases the main point to consider, apart from your finances, is how long you plan to stay in the home. A fixed rate mortgage gives you long-term peace of mind, in knowing that your mortgage repayments will never increase, so it’s a good option when you know you’ll be living in the home long term. The lower initial repayments of an adjustable interest rate or a balloon mortgage, on the other hand, can be useful if you know you will sell the home within a few years.

Step Three: Comparing Mortgage Quotes and Choosing a Lender

Once you’ve decided on the type of loan you want, it’s time to start getting quotes from lenders. Doing this before you start house-hunting can be very useful. Getting pre-approval gives you leverage when you make an offer on the property, and it saves time at closing too.

Try to get all your quotes within the same 14 day period, to make sure your credit rating isn’t affected by your credit inquiries. Getting all your quotes within a short space of time will also make comparing those quotes more accurate.

The problem is, it’s not always easy to get reliable quotes. Unscrupulous lenders often advertise very low rates to attract potential customers, but aren’t able to deliver on the advertised rates. Tell prospective lenders you can apply for a mortgage immediately, and most will be more likely to quote accurate rates they can deliver on.

Narrow down your list of lenders, and ask questions to help make your final decision. Ask about points and interest rates, closing costs, private mortgage insurance, pre-payment penalties, and anything else that’s important to you.

Once you’ve chosen your lender and applied for the mortgage, you should receive an Annual Percentage Rate and a Good Faith Estimate within three days. The GFE is required by law but lenders aren’t required to guarantee the estimate, so if a lender is willing to supply a written guarantee, consider that a good sign.

Step Four: Interest Rates and Points

Another important part of the application process is buying points, and locking in your interest rate. By purchasing points, you can buy down your interest rate, potentially saving thousands of dollars over the term of the mortgage. However points must be paid in cash when you close on the house, so if your cash flow is tight, it may not be an option. Also check out whether buying points will actually save money, as sometimes the money you spend on points may turn out to be more than the amount you save over the mortgage term.

Finally, a note on locking in your interest rate: It’s tempting to try and ride the market for as long as possible, hoping to lock in a low rate, but this requires some very careful attention to detail. Waiting even one day too long could leave you locked into a rate you can’t afford in the long term.

About the Author

Rachel Jackson is a freelance writer who writes about topics and pertaining to the mortgage industry such as how to refinance home mortgage

Article Directory: http://www.articlerich.com

Fix Your Mortgage - Set Mortgage Payments Reduce Stress

There's no doubt that for most of us, a home is the biggest purchase we'll ever make. If it wasn't for mortgages, there's no way most of us would ever be able to afford a home.

Despite that, the mortgage can be an enormous source of stress and aggravation. Disputes over money are one of the most common causes of marital breakdown. If you've chosen an adjustable (variable) rate mortgage, an increase in interest rates can make your repayments quickly rise to a level where you just can't afford it any longer.

In that situation, not only do you have to deal with the stress of trying to make the mortgage repayment each month, you also have the fear of losing your family home mixed in. For some people they live with that possibility on a day-to-day basis. No wonder marriages suffer as a result.

If you're worried that a few interest rate rises will make it impossible for you to make your repayments, then maybe it's worth considering a fixed rate home loan. With a fixed rate loan, you are locked in with a set interest rate for either a set period (say 5 years) or the entire period of the loan. This can give you great peace of mind, because although your repayments may start off a little higher, you have the certainty of always knowing what the repayment will be, and can budget accordingly.

Fixed rates can work in a couple of different ways. One is to set the loan as a fixed rate loan for the entire period of the loan. The only problem with this is that you may have a loan that last 25 years, but you need to sell up and move elsewhere either for work or lifestyle long before the 25 year period is over. Many fixed rate loans have quite hefty break costs, which may make the process of moving a lot more stressful than it needs to be.

Another option is to fix the rate for a set period, say 5 years. This works well for a lot of people, as the average time in a house is 5-7 years. So it's possible that in 5 years time you'll be getting close to moving anyway. It's also quite often the case that after 5 years, mum may have returned to work after having a couple of children, improving your financial situation to the point where you may want to investigate other loan options.

A further option is to take an interest only loan, with a fixed rate of interest, with a balloon payment. This can reduce your monthly payments enormously, which can be very helpful in a time of transition, such as the early years of starting a family. The disadvantage is that you pay little or nothing off the loan in that time. Also, if you want to remain in your home at the end of the interest only period, you will need to organise another loan to continue on.

There's no doubt that having a fixed mortgage payment each month can make life much easier. You can budget for all the usual household bills, confident that your mortgage payment won't change. Yes, it's quite possible that over the term of the loan you may well end up paying more than if you'd chosen an adjustable rate mortgage, but sometimes money isn't the only thing that's worth something - peace of mind and a reduction in stress is definitely worth something too.

Published At: www.Isnare.com
Permanent Link: http://www.isnare.com/?aid=54197&ca=Finances

Bad Credit Mortgage Company - Recognizing Mortgage Lender Scams

Mortgage lenders recognize the value of owning a home. Because some people will not easily qualify for a home loan, several lenders have begun offering home loans to tailor a variety of needs. For this matter, bad credit mortgage lenders have gained widespread popularity. The majority of bad credit lenders are sincere in their efforts to help you finance a home. However, some lenders are only concerned about their profit, and will not offer the best rate and terms.

Pitfalls of Having Bad Credit

Unfortunately, bad credit shuts the door on many home loan financing options. Because a large number of lenders prefer prime applicants, you may have to apply with several lenders before getting a loan approval. Some prime lenders do offer bad credit mortgages. However, their mortgage selection is slim

Having bad credit makes you susceptible to high rates and additional fees. For this reason, choosing the right lender is important. Prime mortgage lenders hate taking risks. To avoid any possibility of losing money, they generally charge bad credit applicants extremely high rates.

Fortunately, the majority of bad credit mortgage companies do not operated in this manner. Still, if applying for a home loan through a bad credit lender, keep an open eye for deceitful lenders.

Avoid Pushy Bad Credit Lenders

Be suspicious if a bad credit mortgage lender appears too eager. Some bad credit mortgage companies have very convincing tricks. They advertise fresh start home loans and low rate mortgages for people with bad credit.

Pushy lenders may persuade homebuyers to accept a creative financing home loan, and then fail to educate them on how the loan works. In this instance, homebuyers may agree to a home loan that involves a balloon payment, huge prepayment penalties, additional fees, and clauses that prevent refinancing. If the mortgage company is too excited, and the terms sound too easy, choose another lender.

Research Mortgage Loan Offers

Many people could have avoided fraudulent mortgage lenders if only they have done a little research. Not all bad credit lending companies are untrustworthy. Still, begin the search for a home loan with your guards raised.

Shady bad credit mortgage companies are praying that a potential homebuyer is unfamiliar with loans and mortgage rates. This gives them the perfect opportunity to take advantage of you. The only way to avoid common lender traps is to become educated on how bad credit loans work. Furthermore, never accept the first offered received, obtain quotes from multiple lenders, and check to see whether a certain lender has any complaints.

Published At: www.Isnare.com
Permanent Link: http://www.isnare.com/?aid=67704&ca=Finances

Obama Mortgage Plan For First Time Homebuyers And Mortgage Refinancing

First-time homebuyers and current homeowners now have unprecedented access to home purchasing power under the Obama Economic Recovery Act of 2009 to help jumpstart the US housing market and the flagging economy. Because of this recently enacted legislation, potential home buyers and current homeowners now have the opportunity to either receive a one-time home purchasing tax credit or refinance their current mortgages.

These new programs, in addition to existing tax credits and grants, can provide much needed help to those who require it during these trying economic times, regardless of past or current credit situations. The program is meant to help people find homes but to also stay in their current homes and enjoy the security of the biggest, best investment they will make in their lives.

Buying Your First Home under Obama Legislation

Qualified first time homebuyers, under the housing stimulus component of the Obama economic plan can now take advantage of a refundable income tax credit of up to 10% of the total home purchase price, up to $8,500. Once you file your annual income taxes, this credit will be refunded to you. However, if you file before the deadline, you can receive this refund almost instantly once you file an amended tax return for the current tax year.

In addition to this home-buying credit, lenders are even advancing qualified homebuyers the value of their credit to put towards the down payment on their new home. Another way first time homebuyers can save is to purchase foreclosed homes through banks that own the properties now and through property auctions. Often, qualified buyers can get historically low interest rates on new mortgages. To avoid a mortgage meltdown, seek out a lender that will offer a fixed rate mortgage instead of an adjustable rate mortgage. This will give you the security of knowing your monthly mortgage payment and the interest will remain the same throughout the life of your mortgage.

Refinancing Your Current mortgage

Existing homeowners also stand to benefit from this portion of President Obama's economic plan with the Home Affordability Program or HAP. Under HAP, current qualified homeowners can refinance their existing mortgages to a historically low rate of 4.5%. This program is a great help to those owners who have seen their property values lose such significant value that they would not otherwise qualify for traditional home mortgage refinancing programs.

Many of these homeowners who are stuck in these underwater mortgages typically had adjustable rate mortgages with balloon payments or monthly payments that doubled or tripled upon the resetting of these mortgages. Often, these new payments, coupled with the unstable housing market, were simply unaffordable for most of these homeowners.

Determining Eligibility

Determining whether you qualify for either the new homeowner tax credit or the Home Affordability Program is as simple as contacting a reputable qualified lender. Your new lender should be able to inform you of any available government grants, programs and also let you know of what your new interest rate and monthly payment will be, in addition to savings over your existing mortgage.