When buying a home, mortgage lenders don't look just at your income, assets, and down payment. Instead, they look at all your liabilities and obligations, including auto loans, credit card debt, child support, potential property taxes and insurance, and overall credit rating.
It isn't easy to decide between a fixed and an adjustable-rate mortgage. Factors such as loan duration, the index used by the lender, the number and timing of rate adjustments, and your assumption about the increase/decrease of future interest rates all have an impact.
Unlike fixed-rate mortgages, the payments on an adjustable-rate mortgage will vary as interest rates change.
If you choose to finance your closing costs, the monthly loan payments will be higher than if you had paid the closing costs out-of-pocket. To help borrowers compare loans, lenders use a standard calculation called annual percentage rates (APR), which considers the closing costs.
An interest-only mortgage may be enticing due to lower initial payments than a traditional mortgage. However, your monthly payments will be higher when the interest-only loan begins to amortize after 5, 10, or 20 years.
The loan amount, the interest rate, and the mortgage term can dramatically affect the total amount you will eventually pay for the property. Further, mortgage payments typically will include monthly allocations of property taxes, hazard insurance, and (if applicable) private mortgage insurance (PMI).
Over the last couple of years with interest rates at a 40-year low, many people refinanced their mortgages. Even though rates have crept up over the last couple of months, refinancing may make sense for you.
Different mortgage terms and rates can confuse the loan selection process, especially if you don't plan to keep the loan for the full term.
Sometimes, it may benefit you to 'buy down the interest rate by paying extra money in the form of discount points.
With interest rates near 40-year lows, deciding to rent versus buy becomes difficult.
It may surprise you that most banks and mortgage companies collect two to three dollars for every dollar you borrow! However, there is a way to accelerate mortgage payoff using Bi-Weekly Mortgage Payments.
Many lenders will offer a 'no-cost' loan in lieu of a traditional mortgage. 'No-cost' loans are generally priced at a higher interest rate than a traditional mortgage. The higher rate allows the lender to make enough money on the interest rate spread from the underwriter to pay for all your closing costs and provide them with their profit.
With interest on a mortgage being deductible when you itemize deductions, it may surprise you how much you can save in taxes.
Information presented on this website is not intended as tax or legal advice. You are encouraged to seek tax or legal advice from a qualified professional.
