First and foremost, get quotes from several mortgage lenders. Getting a home purchase, second mortgage or mortgage refinance loan is easier said then done. If you submit a loan hastily to your local bank, you could end up with an average loan and pay a higher rate of interest than you might have if you shopped more efficiently.
Your goal for shopping should be to find the mortgage loan you need, while getting a competitive interest rate with minimal fees. It is paramount to locate the best home equity lender available. To accomplish this, you must consider several offers from several credible mortgage lenders. It is important that you explore all of the mortgage loan offers at the same time, because interest rates can change daily and you want to compare apples to apples.
Determine and evaluate all loan costs: Consider the interest rate, processing fees, prepayment penalties as well as lending junk fees. Line up the Reg Z- Federal Truth and Lending statements from all of the mortgage lenders you are considering for this loan. Check the APR and you should get a better understanding of which lender you want to do business with. A loan officer who is knowledgeable, cordial, and addresses your goals and concerns is important for making a decision.
Like with anything else, there are good mortgage brokers and bad ones. There are good experiences, and there are ones that you would like to forget. Don’t be in such a hurry that you commit your home equity to a bad experience from a bad lender. Take a deep breath and find the right home loan from the best mortgage lender.
By: Art Nourian
Posts Tagged ‘Prepayment Penalties’
Shopping for a Home Mortgage or Refinance Loan Online
April 3rd, 2010Refinance Mortgage Loan – Shorten Your Loan Term
March 7th, 2010
A 15-year loan term has many advantages, although it may appear to be expensive because of the higher monthly amortization. However, a shorter loan term assures you that you’ll be free from this burden before or at the time of retirement and save thousands of dollars. Consider having your loan restructured to a shorter loan term.
Benefits of a Shorter Loan Term
The prospect of spending 30 years paying back a mortgage is discouraging. If you have 20 years remaining on your loan, the option to shorten your loan term to 15 can be tempting. Taking away 5 years from a 20-year loan means a higher monthly bill, but freedom from the mortgage after 15 years instead of 20 is definitely more appealing. But if it’s only a matter of a few hundred dollars more, why not? Never mind if you’ll be paying a higher monthly bill.
You’ll be saving thousands of dollars from interests alone with the five years knocked off from the 20-year loan term. Another benefit is building your home equity faster. A refinance mortgage loan offers the chance to restructure your terms.
What’s Involved
For a home mortgage, the lender will pull your credit record to check if you’ve been paying your debts on time. You’ll also be paying the fees involved before, during, and after your loan is processed.
The lender will assess all the information to evaluate if you are a good risk for a shorter loan term. If you’re dealing with the same lender, the process won’t be as rigorous and as lengthy like it would be if you go to a new lender.
It’s a fact that lenders prefer long-term mortgages because it rakes in more profits. To counter loss in future profits, lenders penalize borrowers for paying their mortgage ahead of term. This is why prospective borrowers should always inquire if the lender charges prepayment penalties.
Assuming that your lender does not charge penalties on prepayment, you have to contend instead with the closing costs for your refinance mortgage loan.
Others get a refinance mortgage loan to switch to a short term interest only loan. They are banking on the equity of the house and intend to sell it in the near future. The proceeds of the sale will go to the interest and they can still have extra money from the profit. In your case, you’re looking at the full ownership of your home in a shorter time.
For a new loan, you can decide if you want a fixed rate mortgage or an ARM. An online calculator can compute how much you’re going to pay the monthly bill in 15 years’ time. From the calculations, you’ll be able to determine the feasibility of a short term ARM or fixed rate refinance mortgage loan.
Short Term or Long Term?
A short term, or traditional loan, will always depend on your financial situation and future plans. A short-term refi is ideal now that interest rates are low. You’ll be surprised that you’ll be paying the same monthly fee as your first mortgage, so there’s not much of a change in the monthly bills. The prospect of paying off your loan in 15 years, however, is imminent. For those who feel secure with the stability of the traditional 30-year loan term, switching from an ARM to a fixed rate refinance mortgage loan is recommended.
By: Rony Walker
Refinance Home Loan: 3 Home Loan Refinancing Pitfalls to Avoid
February 22nd, 2010
If you are in the process of refinancing your home loan, there are a number of common mistakes you need to be aware of. Here are three home loan refinancing pitfalls you need to keep an eye out for when refinancing your mortgage.
Watch Out For Prepayment Penalties
A prepayment penalty is a clause in your loan contract that requires you to pay a penalty if you refinance or sell your home before the penalty expires. Prepayment penalties can be expensive, mortgage lenders often charge up to six months worth of interest on 85% of the original loan balance. Predatory mortgage lenders include excessive fees in their loan contracts to discourage you from refinancing the loan. If you have good credit there is no reason to accept a home loan with this penalty.
Never Agree to Arbitration
Predatory mortgage lenders often ask you to agree to arbitration as a condition of having your loan approved. If you agree to arbitration you are forfeiting many of the rights and protection you receive under the law. Agreeing to arbitration means that you agree to a third party arbitrator resolving any legal disputes you have with the lender. Never agree to arbitration with any mortgage lender.
Watch Out for High Interest Rates and Fees
Predatory mortgage lenders often try and sell subprime mortgages to homeowners with good credit. This means you are taking out a bad credit mortgage regardless of your credit rating and will pay higher interest rates, lender fees, and points. The only way to know for sure that what you’re paying is fair is to shop from a variety of mortgage lenders and compare all aspects of the loans. You can learn more about comparison shopping for the best mortgage by registering for a free mortgage guidebook.
By: Louie Latour