Economic Stimulus Help Seniors with Reverse Mortgages

Depending on your political persuasion, you may be expecting this Bill to be one of the best things to come along since sliced bread or one of the worst possible disasters since the dropping of the atomic bomb.

Americans are split deeply about this legislation and as one might expect, much of the split does run along party lines, but also along the lines of those who support big government spending and those who believe that unchecked government spending is exactly what got us to the deficit and mess in which we find ourselves today.

There is no doubt about the severity of the stake riding on the outcome of this Bill which passed the House of Representatives and now has a version in the Senate.

With one of the worst economic recessions since the Great Depression upon us, with unemployment rising weekly along with record home foreclosures, Congress has set about to make a plan which has been billed a "stimulus package", designed to stimulate the economy and create jobs. Proponents of the package claim that it is needed and needed now to start projects to put Americans to work.

Opponents are quick to point out that most of the projects don't have an immediate impact and question just how many will receive employment as a result of many of the provisions contained in the Bill, calling them "Pork" or pet projects. Critics say they will serve only one purpose, spending money or paying back political backers and contributors but will not create massive jobs.

The package was originally sold as infrastructure improvement (roads, bridges, energy, etc) putting millions of Americans to work on much needed projects which would not only stimulate the economy but also improve the nation.

But when reading over the Bills crafted at both the House and Senate, one can find tax dollars going to programs such as $50 Million for the promotion of the arts; $335 Million for education about sexually transmitted diseases; $600 Million for new "green friendly" cars for government workers (even though the infrastructure of gas pumps to run these cars is not currently in place);

$600 Million for grants for diesel emission reduction; $650 Million foralternative energy technologies, energy efficiency enhancements, and deferred maintenance at Federal Facilities; $1.5 Billion for construction of :Green Cars"; $800 Million to clean up Superfund sites; $400 Million for NASA scientists to study climate change; $1 Billion to the controversial union Community Oriented Policing Services Hiring Program;

$2.75 Billion in stem cell research; $83 Billion for an earned income credit for those who do not pay taxes; $4.19 Billion to groups like ACORN and other larger dollar amounts for plug in car stations, $246 Million for Hollywood, $75 Million for smoking cessation programs, bike and walking trails and even ATV trails (those All Terrain Vehicles that you see people enthusiastically riding with the three or four wheels).

In fact, only a little over 3% appears to be going to tangible road and bridge construction. There are projects for many federal agencies. Billions of dollars are slated to go to federal programs overseen by the Office of Management and Budget or the Government Accountability Office ($54 Billion), repairs to the Smithsonian Institution Facilities; for agricultural research.

How about $1 Billion for the follow up to the 2010 Census (just try to figure how that will stimulate the January 2009 economy)? And then there is the ever-popular $227 Million for over-sight of pork barrel spending we have pork to over-see the pork!

When looking at all these billions of dollars, surely it will mean some jobs, but in the grand scheme of things, not many Americans will go to work based on the list above. So what are some of the things coming from this Bill that WILL help Americans? Right off the top is a proposed limit increase to the Home Equity Conversion Mortgage (Reverse Mortgage or Heck-um) to $625,500.

The limit was just increased to a national limit of $417,000 in 2008 which did help many areas where the old limits were considerably lower but didn't do much for the higher cost areas which already had a limit of $362,790. This proposed increase will help senior borrowers with higher valued homes, especially those who have mortgages to retire when the old limits just didn't get them enough cash to pay off their existing mortgage.

Realtors are currently urging congress to increase FHA funding. FHA's market share has increased from 2% in 2006 to what many believe will be 30% in 2009. Many are concerned that FHA does not become the new sub-prime, but FHA does play a vital role in serving customers such as first-time homebuyers, borrowers with little to put down and those with less than perfect credit. But FHA will really have to grow to accommodate the new demand.

As people still scratch their heads and wonder where the first $350 Billion of TARP funds were spent (since it seems that all the banks are still plagued by the troubled assets and there was no relief), we can only hope that this new stimulus bill actually does put American workers back to work and helps American Homeowners.

If the government is going to put the money into programs that don't really put people to work but will hopefully have an ancillary benefit to the economy, we would love to see it going to reduce Up Front Mortgage Insurance Premiums for Senior Reverse Mortgage borrowers and FHA borrowers alike;

release the Reverse Mortgage for purchase program as they announced in their 2008-33 Mortgagee Letter where they were going to determine eligibility based on appraised value (not the lower of appraised value or sales price which the latest indications from HUD are that they will soon issue the clarification to include); and that HUD would bring back the DPA (down Payment Assistance) programs.

There are good and bad things that can be said about each of these things as well but hey, by the time they include interest we're talking about a $1.1 Trillion Package so there has to be a little room for home owners and home purchasers!

About the Author

Michael G. Branson (CEO All Reverse Mortgage Company)is a Mortgage Broker who has over 31 years of mortgage banking experience. Toll Free (888) 801-2762 Reverse Mortgage Reverse Mortgage Calculator Reverse Mortgage Rates

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When to Choose an Interest-Only Mortgage

An interest-only mortgage is just what the name suggests. It is a loan in which you are only paying the interest amount and not the principal. However, most interest-only mortgages only allow you to pay just the interest amount for the first five or ten years of the loan term. After that period you would then have to pay the full monthly amount, based on the total amount of the loan.

Interest-only mortgages are sometimes perceived as risky or gimmicky, although for many buyers they do offer flexibility and the chance to buy a home with lower monthly payments. Interest only mortgages aren’t exactly a particularly new concept, they were actually popular back in the 1920’s until the depression came along. In the last few years they have become increasingly popular as several large respected lenders have offered them; in some more expensive areas of the US, interest-only mortgages have accounted for around 50% of all new mortgage loans.

Suppose you buy a $200,000 home and take out a 30 year mortgage with an interest rate of 6.5%. For the first five years of the loan, you pay just the interest amount, which is going to be around $1080 per month. The majority of your monthly payment during the first few years is the interest, rather than the principal. After five years, the loan balance remains the same, but the monthly payments are recalculated to what would be the amortized amount, making the monthly payment more like $1260. During those first five years, your monthly payments are almost $200 lower, a big difference. If you buy a more expensive home, the savings are even greater.

You may want to choose an interest-only mortgage if you are a first time homebuyer and not used to making monthly payments that are probably higher than you were paying in rent. If your income fluctuates, you work freelance or on commission, it gives you the option to perhaps buy a more expensive home but to still have more affordable payments. An interest-only mortgage is often seen as an effective way to buy a more expensive home than you might otherwise be able to afford. This shouldn’t be your only reason for taking this option.

An interest-only mortgage is also an ideal option for those who know that they will have more income in the next few years, perhaps with a pay raise. Then they know they will be able to afford higher monthly payments. And if you are fairly sure that you will be refinancing your loan sometime in the next few years, an interest-only mortgage may be an ideal option for you. If you feel you can pay more in a particular month, there is usually no prepayment penalty on the loan. This type of loan is very flexible; it also offers options for different terms, usually five, ten or fifteen years.

One of the big advantages of an interest-only mortgage is that you have the option of paying towards the principal if you want to. You aren’t required to pay extra; but it is an option if you can afford it. An interest-only mortgage allows you to not only buy a more expensive home with a smaller monthly payment; it also allows you to free up money that you may need for other things, such as home improvements, college tuition for your children or a retirement fund. Arguably, this type of mortgage also makes it easier to budget for those other important things, especially for a homebuyer who is just starting out.

Just as with a more conventional mortgage, an interest-only mortgage can come with a fixed rate or an adjustable rate. A fixed rate mortgage has the big advantage of stability. Meaning that the interest rate on your loan won’t change, regardless of the economy and regardless of whether interest rates go up or down. An adjustable rate mortgage can go up or down, as the rate is set against the overall interest rate at the time. Although if you’re monthly payments are much less anyway, a small increase in your monthly payment amount may not affect you too much. However, even with a fixed rate interest-only loan, the rate may change at the end of the interest-only loan period.

An interest-only mortgage is absolutely not for everyone. Whether or not it can work for you; depends on your short term goals, your financial situation and your capacity for risk. As with any type of loan, there are drawbacks. The biggest one being the higher monthly payment that takes effect after the interest-only period has elapsed. Always consult with your financial advisor before making the decision to apply for an interest-only mortgage. There will be certain people pointing you in different directions, but in the end the choice is yours.

About the Author

Shawn Thomas is a freelance writer who writes about topics and financial products pertaining to the mortgage industry such an adjustable rate mortgage available from a mortgage lender

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Identifying and Avoiding Mortgage Fraud

Recent financial industry distress publicly attributed to widespread mortgage loan defaults has generated mounting pressure on federal prosecutors to increase investigations into incidents of mortgage fraud across the nation. On February 6, 2004, CNN reported that the FBI warned that mortgage fraud was becoming so rampant that the resulting “epidemic" of fraud could trigger a massive financial crisis. Mortgage fraud has now become so prevalent that the United States Department of Justice and the Federal Bureau of Investigation have been forced to create an entirely new category for tracking these cases. According to a CBS news report, the number of FBI agents assigned to mortgage related crimes increased by 50 percent from 2007 to 2008. Prosecutors and investigators on both the state and local levels are also feverishly organizing task forces and creating real estate fraud departments to counter this burgeoning wave of crime.

CRIME & PUNISHMENT

The primary focus of these investigations appears to be on borrowers, investors, mortgage brokers, appraisers and real estate agents. Some of the charges levied against these perpetrators have included making false statements on loan applications, bank fraud, mail fraud, wire fraud, conspiracy to launder funds and a number of applicable state laws. However, the primary legal vehicle implemented by federal prosecutors has been section 1014 of Title 18 of the United States Code which declares mortgage fraud as a federal crime encompassing anyone who willfully overvalues any land or property, or knowingly makes any false statement, for the purpose of influencing a financial institution upon a loan application, purchase agreement or other related documents. A violation of the federal mortgage fraud law (18 U.S.C. § 1014) alone is punishable by up to thirty years imprisonment and a one million dollar fine.

MORTGAGE FRAUD SCHEMES

The most effective way to avoid prosecution for mortgage fraud is to identify mortgage fraud schemes prior to any actual involvement. Most mortgage fraud offenses fall into one of two general categories: “fraud for housing" and “fraud for profit". Fraud for housing often involves fraudulent acts committed by a borrower, often coached by his or her mortgage broker or real estate agent, to obtain a loan for the ultimate goal of acquiring a home. These fraudulent facts generally pertain to the falsification of facts and documents during the loan application process to enable the borrower to obtain financing that he or she would otherwise not be qualified to receive. Conversely, fraud for profit typically involves a more concerted plan to abuse the entire real estate transactional process for pecuniary gain.

FRAUD FOR HOUSING

Income Fraud

This occurs when a borrower inflates his or her amount of income to qualify for a loan or a larger loan amount. Although recent reductions in the use of “stated income" or “no-doc liar loans" has somewhat curbed income fraud, daring borrowers are increasingly generating more fraudulent documents to falsify income. Information technology and photocopy equipment have become so advanced that very convincing documentation, such as income statements, savings accounts and tax returns, can be produced on demand.

Employment Fraud

In order to justify overstated income in a loan application, borrowers will claim self-employment in a non-existent company or represent having a higher position in a company than the borrower actually holds.

Failure to Disclose Liabilities

The debt-to-income ratio is an important part of the loan underwriting criteria used to determine a borrower's eligibility for mortgage loans. Consequently, borrowers will conceal financial obligations like newly acquired credit card debt, other mortgages, and private loans to artificially reduce their debt-to-income ratios.

Occupancy Fraud

Generally occurs when a borrower states on a loan application that he or she intends to occupy a property as a primary residence to secure a lower interest rate when the borrower actually intends to obtain the loan to acquire an investment property.

FRAUD FOR PROFIT

Equity Skimming and Cash-Back Schemes

A straw buyer is typically implemented as the buyer of the property due to his or her creditworthiness and resulting ability to obtain favorable financing. Unknowing straw buyers can be manipulated by mortgage brokers and real estate agents to purchase a property as a primary residence with the broker or agent later serving as a property manager to collect anticipated rental income. After the escrow closes and the mortgage and real estate brokers collect their commissions, they proceed to collect rental income and fail to make the mortgage payments.

Complex schemes can involve a knowing straw buyer, an appraiser who intentionally overstates the property's value, a dishonest seller that intentionally inflates the selling price, and a dishonest settlement officer that makes undisclosed disbursements from the loan proceeds. All of these conspirators collaborate to collect portions of the proceeds of an inappropriately large loan before eventually letting it go into default.

Appraisal Fraud or Price Inflation

This fraud occurs when a dishonest appraiser intentionally overstates the value of a property or when an existing appraisal is altered to reflect a higher value. When a home is overvalued, more money can be obtained by the seller in a purchase transaction or by the borrower in a cash-out refinance.

The New Appraisal Fraud: Price Deflation

When done legitimately, a short sale occurs when a borrower that owes more than his or her property is worth sells the property below market value and the lender agrees to accept the lower repayment amount and forgive the difference. A new hybrid of fraud has emerged where an appraiser or a real estate agent drastically devalues the property in an appraisal or broker's price opinion (BPO) so that the home will sell with ease at a price well below market value. Of course the new buyer is in collaboration with the seller, agent and appraiser, so all of the conspirators proceed to sell the home at a higher price for a big profit.

Identity Theft

Identity theft fraud occurs when a victim's identity is assumed by another to obtain a mortgage without ever intending to make any payments on the loan. The perpetrators often abscond with a portion of the loan proceeds and sometimes are daring enough to lease the property and collect some deposits and rental income before disappearing.

The Buy and Bail

This completely new scheme is perpetrated by a home owner who cannot sell the home because more is owed on the property than its worth. Because no lender will provide the owner a loan for a second primary residence, the owner tells the lender that he or she plans to rent out the current home despite having no intention of doing so. Sometimes a falsified rental agreement is used to further support the falsehood. Once the second home is purchased, the owner “bails" on the original home and fails to make any further mortgage payments.

AVOIDING & PREVENTING FRAUD

Mortgage fraud frequently emanates from groups that complete an abnormal amount of similar transactions or churn out many offers to purchase at once. These outfits may appear disorganized or unprofessional due to the large amount of transactions they are attempting to manage. It is also no coincidence that mortgage fraud has significantly increased as housing values have decreased since most fraud schemes involve a financially distressed or otherwise vulnerable seller. It is equally important to remember that agents owe a very strict fiduciary duty to act in their clients' best interests. So before reporting a client to your local authorities, speak with legal counsel or your state real estate licensing department to ensure that your proposed actions don't constitute a breach of your fiduciary duty to your client.

Real estate agents are in a unique position that enables them to identify and even prevent the occurrence of fraud by recognizing the red flags, asking appropriate questions, and giving the principals in their transactions the full picture of what consequences are associated with participating in mortgage fraud. While a lot of damage has been done in the real estate market, we can prevent more of the same from occurring in the future.

About The Author:
Brian S. Icenhower, Esq., BS, JD, CRB, CRS, ABR, a California Association of Realtors Director, practicing real estate attorney, a real estate expert witness and litigation consultant, a prosecution consultant of Tulare County District Attorney Real Estate Fraud. He may be contacted at bicenhower@icenhowerrealestate.com, or www.icenhowerrealestate.com.

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Using A Va Mortgage Refinance Can Be Easy

If you are one of the many homeowners in the armed forces or military, a great refinance choice is the VA streamline program. A VA streamline is a quick and easy way to refinance your current VA loan into one with a lower interest rate. Some of the advantages include no appraisal, no income qualifying, no credit score or money that you need to pay. Why not use it to your benefit and save hundreds of dollars per month when there is no cost.

The unprecedented low mortgage rates have spurred many to seriously think about refinancing. Although, many find obstacles due to declining home values, low credit scores and income issues if they are in the conventional refinance process.

For military personnel, there is a fast track to getting it done by approved VA lenders. One such program called the VA Streamline Refinance, also known as Interest Rate Reduction Refinancing Loan, solves this dilemma. The VA home loan is a very good one in that it is government insured.

It does not matter who your current mortgage company, you can be helped if you have a VA loan. People in all walks of life need help and the VA is there for the active military and retired staff and in some cases immediate family members of military personnel who are or were in the Marines Corp, Army, Air Force and Navy as either enlisted personnel or as an officer. Even people who received a general discharge may qualify for a VA loan. You owe it to yourself to find out or better yet help a friend or neighbor who is a veteran.

The VA Streamline refinance arrives at a much needed period for numerous eligible veterans. Remember the income, credit score, or current value of your home for VA borrowers does not matter, take advantage of historically low interest rates.

By: Frank65

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Adverse Credit Remortgage - Help when Needed

Many people find for one reason or another that their bills start becoming too much to handle; most especially their mortgage payments. For these people, an adverse credit remortgage loan can be a help. Sometimes people try very hard to pay their bills even after losing a job or having some kind of financial crisis, but they find their selves getting farther and farther behind, causing payments to be late and their credit to be negatively affected. Adverse credit remortgage loans can help people who are turned down for other kinds of consolidation loans because of negatively affected credit, and this can mean the difference between keeping a home and losing it.

The equity that you already have in your home will be the security that you use for your adverse credit remortgage loan. This doesn�t mean that you only need to use it for refinancing your home, though. You can use the loan to stretch out and lower your mortgage payments, but you can also use the loan for home improvements or consolidating your bills. Bill consolidation is one of the main reasons that a person seeks an adverse credit remortgage loan, because it can take a lot of pressure off when times are financially difficult. Though you may end up paying a higher interest because of your negatively affected credit, this isn't necessarily always the case. You may be able to get the loan with a lower interest rate than you were previously paying.

If you have decided that you might be interested in an adverse credit remortgage loan, you should research before you approach a loan company. There are some loan companies that would take advantage of people with less than stellar credit ratings, convincing them that they will need to pay high interest rates if they want a loan. You owe it to yourself to shop around so that you can get the best deal possible. Search on the Internet for different loan companies and make a list of the ones that you think are best, then talk to an officer from each company and tell them what it is you need. Often when you tell them that you are talking to more than one loan company they will be willing to lower interest rates in order to secure your business.

In the end you want your adverse credit remortgage loan to be good for you financially; not only short term but in the long run as well. Don't get this type of loan if you don't really need it, but definitely look into it if you think that it can help put you on more even financial ground. When you talk to a loan company, have them spell out every step of the process for you, and ask them to explain how it will benefit you. You always want to stay on top of your financial situation so that you can ensure a more secure future.

About The Author:
Drew enjoys researching and writing about subjects of interest in his sparetime. Recently, he has begun submitting exclusively to www.articleclick.com so be sure to check back often for more of his work.

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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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How a Fixed Rate Mortgage can be Beneficial When Buying a Home

If you are just about to buy a house, one of your most important decisions, almost as important as which home you buy, is what type of mortgage to take out. You basically have two choices; a fixed rate mortgage (FRM) or an adjustable rate mortgage (ARM) Choosing a mortgage that best fits your specific needs can potentially either save or cost you a great deal of money over the term of the mortgage.

Around 70% of homebuyers today choose a fixed rate mortgage, rather than an adjustable rate mortgage. A fixed rate mortgage is exactly what it sounds like. The interest rate on the loan doesn’t change, regardless of whether interest rates in general go up or down. An adjustable rate mortgage may go up or down, depending on the interest rate at the time. Your decision may be influenced by your overall financial situation, the present state of the economy and the cost of your house.

The overall amount that you end up paying for your home can be greatly influenced by even a small change in the interest rate. A lowering of the interest rate by just one point can mean that a homeowner with a 30 year mortgage can enjoy average savings of around $50,000 over the term of their mortgage. An increase in the interest rate of just one or two percent can mean monthly payments that are between $50 and $250 higher, depending on how much you paid for your home. Whether you are taking out a 15 or 30 year mortgage may also influence your decision to take out an adjustable rate or fixed rate mortgage.

The biggest benefit of a fixed rate mortgage is the peace of mind that comes with knowing that regardless of how bad the economy is the rate on your mortgage loan won’t increase; neither will your monthly payment amounts. In fact, the terms and conditions of a fixed rate mortgage are protected by law. A fixed rate mortgage is an ideal option for those buyers who just don’t want to take a risk, or consider themselves the cautious type when it comes to finances.

Another benefit of a fixed rate mortgage is that it makes it easier for the homeowner to budget the expense. Your mortgage payment is probably your single biggest expense and you always know exactly how much the monthly payment will be. Some buyers believe that this makes it a little bit easier to plan and budget for some of life’s other big expenses. Certain things like college funds and retirement for example. With a fixed rate mortgage, the amount of the monthly payment will only increase if there is an increase in the amount of insurance rates or property taxes.

A fixed rate mortgage is not affected by inflation or the cost of living. Supposing you have a monthly mortgage payment of $700; this amount will still be the same after five, ten, and twenty years have gone by. Even though everything else has increased in cost, your mortgage payment will stay the same. One way to offset this is to consider the possibilities in the future. Chances are you could have a more disposable income as time passes. You could be earning a higher salary, but still paying the same every month for your home.

If you prefer the safer option of the fixed rate mortgage, one solution would be to take out a fixed rate mortgage and then refinance your loan if and when interest rates are lowered. This approach keeps your options open. If interest rates go down sufficiently to justify the cost of refinancing, you can do just that; if rates stay where they are or go up you will be glad you have the fixed rate mortgage. Some financial experts advise that it is only worth refinancing if the interest rate will be at least 2% lower than your current rate, although that decision entirely is up to you.

Another strategy that can be applied towards either a fixed rate or adjustable mortgage is to pay an extra amount each month towards the principal. By doing this regularly, you can potentially save a large amount in interest charges. It can also make the term of the mortgage shorter and you may be able to own your home sooner. Make sure that you specify that any extra amount that you pay is going towards the principal and not the interest. By doing this, if you have a fixed rate mortgage and the rate is not as low as it could be, you are getting ahead a little bit.

Ultimately the decision of whether to take a fixed rate mortgage or an adjustable rate mortgage is yours. Although several factors may influence your decision, one of the biggest questions to ask yourself is how much of a risk you want to take.

About the Author

Shawn Thomas is a freelance writer who writes about economic issues and financial products pertaining to the mortgage industry such a fixed rate mortgage as well as the lowest mortgage rates.

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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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