Free Information About Mortgage

Free Information

2008-09-13T20:22:00.000-07:00

Mortgage is a lien on a property/house that secures a loan and is paid in installments over a set period of time. The mortgage secures your promise that you'll repay the money you've borrowed to buy your home. It come in many different shapes and sizes, each with its own advantages and disadvantages. Make sure you select the mortgage that is right for you, your future plans, and your financial situation.

Ask yourself:

Are you currently in a financial position to comfortably make the monthly payment?
Do you have a financial cushion in case you have sudden financial difficulties (for example losing your job)?
Are you prepared to take on a long-term financial debt?
Do you know the risks if you cannot pay your mortgage in the future?

Responsibilities that come
Buying a home is a big step and assuming a mortgage for that home is a big responsibility. Make sure you are ready for a financial commitment that could last several decades.

Owning a home has many benefits but it also has responsibilities. Be sure you are in a position to handle those responsibilities. If you don't think you are in the position to take on such a large financial debt, this may not be the time to buy a home. Instead, focus on getting your affairs in order and building a financial cushion so you can buy a home in the future. Taking the time before buying a home to make sure you are set up for success can alleviate much stress and many problems later.

Once you decide on the mortgage you want, do your homework. Different lenders offer different rates, points, and fees. Ask around and compare. Understanding the benefits of different mortgage offerings can be a complex process. How do you figure it all out?

Evaluate the pros and cons of a fixed-rate .
Know all the parts of an adjustable-rate .
Learn about balloon/reset .
Understand how a reverse works

SOURCE: www.freddiemac.com

Selection Guidelines

2008-08-20T05:24:00.000-07:00

Trying to understand the differences between mortgage products can be confusing. Compare the following:

Mortgage Rates

Rates vary from mortgage to mortgage and from lender to lender. Certain mortgage types and terms typically have lower interest rates.

Mortgage Types and Terms

Fixed-rate and adjustable-rate mortgages each have their benefits, and so do different loan terms (a loan term is simply the length of the loan). It's important to consider your individual situation, needs, and goals to determine the best mortgage type and term.

Other Factors

Be sure to factor in any points, fees, and other costs such as closing costs when comparing different mortgages.

Look at the big picture. Make sure you understand the specifics of the loan you choose:

If your mortgage rate is very low, know if it is an introductory rate or an ARM "teaser" rate – and when it can change. An initially low rate is not always the best option if it increases dramatically over the life of the loan.
Think about your future plans and your plans for your home. If you want to own the home for a long time, you might choose a different mortgage type and term than if you plan to sell in a few years.

What types of loans can be covered by private mortgage insurance?

2008-08-18T20:15:00.000-07:00

Mortgage insurance covers a wide range of loans, including most fixed-rate 30, 25, and 15-year loans and many adjustable rate mortgages. Your lender can help you determine which premium plan is right for you and will make all the arrangements for obtaining insurance from the mortgage insurance company.

Who pays for mortgage insurance?
The borrower pays for mortgage insurance, usually as part of the monthly house payment. There are many payment options available, including monthly payments, annual payments and programs that require no cash from the borrower at closing for mortgage insurance. There are also one-time mortgage insurance premiums paid at closing which are typically financed into the loan amount or may be paid by the seller.

Can I cancel my mortgage insurance?
Yes. The Home Owners Protection Act of 1998 requires that your lender cancel your mortgage insurance at your request once you have reached a certain level of equity in your home. Or the insurance will be automatically canceled by your lender if you don’t request it. Your lender can provide you with the requirements for canceling insurance, which are set by the investor in your loan. Contact the company you send your mortgage payment to for details.

How does mortgage insurance work?

2008-08-16T19:05:00.000-07:00

Private mortgage insurance allows the mortgage insurer to share the risk of foreclosure with the lender for a premium, which is paid by the borrower. If a borrower stops making mortgage payments, the lender uses private mortgage insurance to help cover the legal and other expenses involved.

What does mortgage insurance do for me?

Private mortgage insurance has a wide range of benefits for many different borrowers.

First time buyers can use private mortgage insurance to overcome the largest obstacle to home ownership: coming up with a traditional 20 percent down payment. With private mortgage insurance, first time buyers can buy a house and start building equity years sooner. It also eliminates the risk that the home will appreciate out of reach while the buyer is trying to save for a traditional 20 percent down payment.

Trade up buyers can use mortgage insurance to consider a wider range of homes. If you have $15,000 in savings or equity in your current home, you can make a 20 percent down payment on a $75,000 house. With private mortgage insurance, you can use that same cash to buy a $150,000 house with 10 percent down or a $300,000 home with 5 percent down (assuming you qualify).

Both first time and move up buyers can put less money down and use their remaining cash for additional investments, home improvements, eliminating debts or college education expenses.

Buyers who itemize their taxes gain increased savings from private mortgage insurance. The larger loan amount that results from a low down payment boosts the mortgage interest deduction.

What is Mortgage

2008-08-15T20:32:00.000-07:00

What is private mortgage insurance?
Private mortgage insurance is the easiest, most flexible and least expensive way to buy a home with a low down payment. It can help you buy a home with a down payment of as little as three to five percent instead of the 20 percent down payment lenders traditionally require for loans without insurance. Private mortgage insurance protects lenders and investors against loss if a borrower stops making mortgage payments.

What is the difference between private mortgage insurance and government insurance?
Government and private (conventional) insurance programs are based on the same premise. For qualifying home buyers, conventional mortgage insurance has several advantages:

Higher loan limits
Faster loan approvals
Less paperwork
Lower premiums
Wider variety of payment options
Automatic cancellation
More flexible qualification requirements

source: http://www.rmic.com/homebuyers/whatismortgageinsurance/Pages/default.aspx