What Is The Best Deal For A Mortgage?Few of us invest the time and effort into researching and securing the best deal for a mortgage to purchase our home. For most of us, our house is the single most important and expensive purchase we ever make! We invest a lot of time and effort into finding the perfect property in the best location and with as many of the features from our wish list as possible, yet, when it comes to finding the best deal for a mortgage, we take what is offered rather than researching and securing the best mortgage for our situation. When you consider that the average homeowner will pay out more in interest over the lifetime of their mortgage than the home originally cost, you can see why getting yourself the best deal for a mortgage now, could save you tens of thousands of dollars in interest over the 20 30 year term of your home loan. Your research for the best mortgages or loans and repayment options currently available can be carried out on the internet, thus making the whole process that much more convenient and time efficient for you. Mortgages are not a "One Size Fits All!" Mortgages come in many different forms and you need to be aware of the various forms in order to determine which one is the best deal for a mortgage to your unique circumstances. Basically, mortgages fall into one of the following categories. Lenders will have variations of these basic categories, but armed with this information, you will be able to sort through the choices for just the right package. Fixed Rate Mortgages: Loan with an interest rate that remains at a specific rate for the entire term of the mortgage/loan. Approximately 75 per cent of home mortgages are this type. A fixed rate mortgage is often considered the best deal for a mortgage for first time buyers as you can establish a consistent relatively fixed budget of household operating expenses. ARM's or Adjustable Rate Mortgages or Variable Rate Mortgages: A mortgage/loan with an interest rate that adjusts or varies with the changes in rates paid on Treasury Bills or bank Certificates of Deposit. In Canada, the rates vary according to the posted weekly Bank of Canada rates. To offset the risk associated with an adjustable rate mortgage, some lenders offer various 'capping' options. Often, they fix or limit the maximum level to which the interest rate you are subject to can rise for a given period of time. Sometimes they fix the cap per year and sometimes for the lifetime of the mortgage. Adjustable or variable rate mortgages can be very attractive as usually the rates are considerably lower than for fixed rate mortgages. They are an excellent vehicle for borrowers who are attentive to the rate fluctuations and prepared to 'lock in' their mortgage when interest rates start climbing. If you're constantly watching the money markets, this may be the best deal for a mortgage for you. Balloon Mortgages: A mortgage in which the monthly payment is not intended to repay the entire loan. The final payment is a large lump sum of the remaining principal. Balloon mortgages are often only partially amortized and requiring a lump sum repayment at maturity. It's popular mortgage in the US for homeowners who aren't planning to stay in their new home for more than 5 or 7 years. The advantage is that the interest rate is lower than a fixed rate mortgage however, the disadvantage is that if you remain in the home beyond the 5 to 7 year term, you would have to secure a new loan or mortgage to pay off the balloon mortgage. Jumbo Mortgages or 'Non-Conforming' Mortgages: In the US, Congress has legislated a conforming limit to the amount a mortgage is allowable for funding by Federal National Mortgage Association (a.k.a: Fannie Mae) and the Federal Home Loan Mortgage Corporation (a.k.a: Freddie Mac). The 2005 limit is $359,650; $539,475 in Alaska, Hawaii and the U.S. Virgin Islands. Any loan or mortgage above that conforming limit is considered a Jumbo Mortgage. A Jumbo mortgage/loan allows you to borrow over the conforming limit, but for that privilege, you will incur higher interest rates. There are variations to the Jumbo Mortgage such as the Super Jumbo Mortgage, but I'm sure you get the basic picture. Canadians have an equivalent referred to as a "High Ratio Mortgage" guaranteed/funded through Canada Mortgage And Housing Corporation (CMHC). Now that you have identified which type of mortgage might suit you best, you need to consider repayment methods and you basically have two options: Interest Only: An interest only payment method can be combined with any type
of traditional mortgage. Interest only payment periods almost
never run for the entire term of the loan, so prepare to have
your payment rise to include both principal and interest once the
interest only period ends. Principal and Interest or Capital &
Interest: Your monthly repayments are divided into an interest payment and a principal or capital repayment. In the early years of the mortgage period most of the monthly payment is swallowed up in interest but over time the balance reverses and you start to pay off more of the capital or principal borrowed. So Many Mortgage Lenders ... So Many Choices! There are so many mortgage lenders offering such a variety of loan options that at first it can seem a daunting task trying to determine which lender most suits you and your circumstances and which Lender is offering you the best deal on a mortgage! It is important to note that as you shop for a mortgage, each lender will perform a credit check prior to committing to the mortgage or loan. Each credit check remains on your credit record and could potentially reduce your credit score and eligibility for a mortgage or loan. Helen March offers simple House And Home Sense solutions for buying or selling real estate as well as informative articles for home improvement and lifestyle alternatives. Visit her at: http://www.HouseAndHomeSense.com
MORE RESOURCES updated Fri. April / 19 / 2024 280 Park Ave.'s owners refinance mortgage and pay down debt Crain's New York Business Mortgage Interest Rates Today, April 19, 2024 | High Rates Make for a Challenging Homebuying Season Business Insider 15-Year Mortgage Refinance Rates: Compare Current Rates Business Insider How to Refinance Your Mortgage NerdWallet How To Get A Home Equity Loan With Bad Credit Bankrate.com 30-Year Mortgage Refinance Rates Business Insider Loan Modification Vs. Refinance Bankrate.com Average Mortgage Interest Rates: Mortgage Rates by Credit Score, Year, and Loan Type Business Insider Types of Mortgage Refinance Options Bankrate.com How To Get The Best Refinance Rate Bankrate.com Mortgage Interest Rates Today, April 16, 2024 | Rates Remain Elevated After Last Week's Spike Business Insider The best mortgage lenders for refinancing in April 2024 CNN Underscored Mortgage Interest Rates Today, April 15, 2024 | Rates Are High, But They Still Could Drop This Year Business Insider With property values strong in 2023, many homeowners tapped home equity lines of credit, pushing total HELOC ... Miami Herald Best Mortgage Refinance Lenders of April 2024 Business Insider How To Refinance A Rental House Bankrate.com Best Mortgage Refinance Lenders In 2024 Bankrate.com Current mortgage refinance rates CNN Underscored Bain Proposes Japan's Kioxia IPO to Clear $5.8 Billion Loan Refinance U.S. News & World Report Current Student Loan Interest Rates in April 2024 Business Insider Mortgage Refinance Rates: Compare Current Rates Business Insider MBA: Mortgage Applications Increased in Weekly Survey Calculated Risk Mortgage Rates Chart | Historical and Current Rate Trends The Mortgage Reports When to Consider Refinancing Your Mortgage Business Insider 30-year refinance rates: What to know CNN Underscored Mortgage Rate Forecast April 2024 Bankrate.com Refinance Requirements: What You Need to Refinance Your Home in 2024 The Mortgage Reports Cash-Out Refinancing: How It Works, When To Do It Bankrate.com Mortgage Rate History: 1970s to 2024 Bankrate.com Current 15-year refinance rates — and lenders that offer them CNN Underscored How To Refinance An Underwater Mortgage Bankrate.com How Soon Can You Refinance a Mortgage? NerdWallet Mortgage Interest Rates Today, April 14, 2024 | Will Rates Still Go Down This Year? Business Insider Should You Refinance Your Mortgage In 2024? Bankrate.com Refinancing a Home Equity Loan (2024 Guide) MarketWatch Will Mortgage Rates Go Down in 2024? What Homebuyers Should Expect Business Insider When to Refinance Mortgage: Is it Time? - Buy Side from WSJ The Wall Street Journal Best Refinance Lenders of April 2024: Refinance Your Mortgage The Motley Fool Pros and Cons of a Cash-Out Refinance Bankrate.com Should I Refinance My Mortgage Now? When to Refinance As Rates Drop Business Insider What Credit Score Do I Need To Refinance? Bankrate.com Office of Research blog: A look at cash-out refinance mortgages and their borrowers between 2013 to 2023 Consumer Financial Protection Bureau
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