Basics of Home Loans
Three fundamental pieces of knowledge for obtaining and maintaining a home loan include the application, rates, and repayment habits.
- Home Loan Application Process – Filling out home loan applications can be time consuming, and overly detailed. Before beginning, get yourself organized by finding all of the paperwork you will need to complete your application. Once you have everything located and in front of you, you'll find the application process to go very smoothly.
- Rates Change – Keep an eye on home loan rates for major changes, particularly changes of the downward version. Refinancing is inexpensive in comparison to the amount of money you can save if you obtain the right low interest home loan. Developing a good relationship with your mortgage broker may result in him or her calling you when the rates drop!
- On Time Payments – There is nothing that can hurt or help your credit rating more than your payment habits on your home loan. Make payments on time and your credit score will raise quickly. Alternatively, pay late and you'll do long term damage that is difficult to repair.
Quick Home Mortgages Online – Safe
Why should you shop for home mortgages online?
- Obtain mortgage quotes from a reputable lender and your information will be secure. Don't check with every no name mortgage company online, stick with names you can trust, as their online security will be top notch. .
- Fast Processing – Mortgage companies who operate online aren't bound by the same home loan processes as large local banks, and can process applications faster.
- Low Rates – With so many lenders from which to choose from, online mortgage brokers and home loan specialists are bound to find a program that's right for your budget and home loan needs.
How to Compare Various Home Loans
You've heard the saying “You can't compare apples to oranges”, right? When you're shopping for a home loan, you need to make comparisons among the same types of loans. When you compare a 30 year fixed home loan with 7% interest to an adjustable rate mortgage with 3.2% interest, you're comparing apples to oranges- unless you know the specifics to each type of loan.
- Loan Term – The term of a loan is the length of time you will be repaying on the loan Many mortgages are 30 year terms, but some are shorter, 10, 15, and 20 year terms are common. The longer the term of your loan, the lower you pay each month, but the higher you'll pay in interest!
- Interest Rate – An adjustable interest rate is one that can change from time to time, while a fixed rate interest means it remains the same for the entire term of your loan. To compare a fixed rate with an ARM loan, use an online mortgage calculator (they're free!) to compare your future payments as well as current payments..
- Closing Costs – There are many things that are factored into closing costs, including lenders, closing agents and attorneys. Choose a lender with the fewest junk fees or a lender that pays for your closing costs out of their revenues.
Home Mortgage Prepayment
It's not often that people stay in their home for thirty years. A thirty year mortgage probably seems like forever to most borrowers! Since no one would want to pay a mortgage forever, there are a few tricks that can save you a lot of money:
- Make use of free home mortgage calculators online to see how much of a difference one or two extra payments on your mortgage will make on your amortization schedule. Sometimes, as little as $20 extra on each payment can reduce the term of your loan a year or more! Many people never actually take advantage of paying one additional payment per year in order to shorten their 30 year mortgage term by up to ten years- because they have not educated themselves on prepayment.
- You can shorten your mortgage term by up to 20 years if you're able to make double payments. While it may seem that you should only be able to reduce your mortgage payment in half by doubling your payments, the fact is the extra payment goes towards the principal and saves you interest, so it reduces the amount owed much faster than if you only send the minimum payment each month.
Taking Advantage of Low Rates to Improve your Home
If you're looking to make improvements to your home and you have some equity into the home, you should take out a home improvement loan. These loans are typically easy to obtain because you are improving the asset that is the investment for the bank. Home improvement lenders are easily found both locally and online.
Missing a Home Loan Payment
It's extremely important to make your home loan payments on time. However, sometimes things are beyond your control, and you just can't make that payment. What should you do?
- Contact your lender immediately! Tell them about your situation and when you will be able to send the payment. Make sure to send your payment as soon as you possibly can and include any late fees associated with missing the payment as well. Sometimes the lender will cut you some slack and not report the late payment to your credit report- asking them not to may be enough to avoid a bad credit rating!
- If your lender is going to report the payment to your credit report, take time to contact the credit agencies yourself. While you probably won't get the late payment removed, you can make sure that they note that the loan is in good standing and that the payment was made, just slightly beyond the due date.
- Don't let it happen again! Plan to send your home loan payment early so you don't get stuck again, and try to keep enough money in your bank account to cover you for times when money is tight.
Consolidating Home Loans to Save Money
If you have a refinance loan and your original home loan, you may want to consolidate them into a single loan. This may sound complicated, but should be a painless process for you.
Find all of your current home loan information, including account numbers, bank name, initial loan amount, date of the loan, and any other documents you've obtained through the loan processes. Find out how much equity you have in your home, to determine whether or not refinancing and consolidating your second mortgage is feasible. Finally, go to your mortgage specialist to get a more specific and accurate portrayal of the options that are available to you.
Home Mortgage Tax Benefits
The tax benefits associated with owning a home ownership are outstanding. All of the mortgage interest you have paid is tax deductible because you pay property taxes on your house, the taxes must be waived on your mortgage interest payments in order to avoid double taxation.
Use a Home Improvement Loan to Repair Hurricane Damage
If your home insurance isn't covering the costs of repair to hurricane damage, you can take out a home improvement loan to fix the damage and increase the overall value of your home.
To start you'll want to get quotes from contractors for the cost of the necessary improvements or repairs that you need to make due to the storm. With the actual quotes in hand, go to lenders who specialize in home improvement loans, and the lender will evaluate the risks of the home improvement loan in comparison to the benefits that will be a result of improving the value of the home. Most often, you will be able to obtain a loan for this purpose.