Avoiding Mortgage Mistakes

Settling on a mortgage is the largest monetary transaction most people will ever make, and surprisingly, the majority of people find out very little about the details of mortgages. It is wise to gather as much lending information as possible so that you can prevent many of the common mistakes homebuyers fall into.
Finding the right lender is the most important decision you will make in the mortgage process. You should be looking for someone who is an expert, experienced, and most of all, reputable. Being able to trust in your lenders competence as well as their honesty will keep the process relatively stress free. After all, shouldn't buying a new home be fun?
Do some research about current interest rates and consider what would be a reasonable interest rate for your mortgage, given your income and credit score. Buyers should be wary of special advertised rates as some lenders will claim those rates have expired, just before closing on the loan. You should have a printed copy of any "locked in" rates and make sure there will be enough time for your loan to close. This is yet another reason why having a reputable lender will make everything much better.
There are so many mortgage programs, and each program has pros and cons. Carefully consider your situation and decide which loan program will fit your situation. Some programs may have extremely low rates but are not fixed interest rates and can increase greatly over time or require a sizable final payment, while others have fixed interest over a longer period of time. For someone only planning to stay for a few years, a fixed rate mortgage is not necessarily the best option. The longer you plan to stay in a home, the better a fixed rate mortgage will be.
Many buyers attempt to wait for the lowest interest rates, and though this is perfectly fine in theory, many end up waiting too long and settling for a much higher rate. The longer someone waits, the longer they will be paying on the mortgage as well, so it is best to begin the mortgage process as soon as possible and try to lock in a rate sometime before closing.
It is important to negotiate problems with a property you are planning to mortgage before the loan closes. Give yourself plenty of time before closing to come to agreements about any work that needs to be done by the builder or any compensation that should be granted for future work. This will allow both seller and buyer some time to think about the options and come to an agreement. Do not let the cost of closing take you by surprise. Closing costs on a typical mortgage will range from 2 to 6 percent, which can be a pretty large chunk of change. Be sure to ask your lender for a good faith estimate that breaks down all of the potential costs. This is a good time to investigate all of the fees associated with closing. Some of these can be avoided if considered carefully.
These are just a few helpful hints for avoiding mortgage mistakes. However, do not let your mortgage research end here. The more you know, the more you will save, and when you consider the magnitude of a home mortgage, a small percentage of savings can mean thousands and thousands of dollars in your pocket.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company offering low costs zero point mortgages. For more information on Mortgage Maryland please visit www.marylandsmortgage.com.

Credit History and Mortgage Qualification

Credit history is often the greatest obstacles in purchasing a new home, and many Americans do not realize its importance until they are trying to qualify for a mortgage. Regardless of an individual's income and job history, anyone can be denied a mortgage on the basis of bad credit. A low credit score can immediately bar you from owning a home, and if not, it will almost certainly increase your interest rates, totaling to tens of thousands of dollars. This problem is easily avoided by taking good care of your credit, which means one of two things: Managing your existing debts and payments or starting a credit history.
Your credit score is determined by several factors. The length of your credit history in comparison to how often you borrow money and how successfully you pay it back are the most important factors. Credit scores are also determined by how timely your bills are paid, if you have ever defaulted on a loan, how much credit you have been offered, and if you have ever declared bankruptcy or had a foreclosure. All of these things greatly contribute to your total credit score, but surprisingly, the lack of credit history or credit accounts can result in a low credit score as well. This goes back to the length of credit history and serves to show us that creditors want to see a history of responsibility of debts.
If you have no credit accounts or debts, it is a wise decision to open a credit card account and use it to make some sort of monthly payments, like the electric or phone bill. Then pay off the bill entirely at the end of every month. This will prevent you from paying extreme interest on those borrowings while establishing a credit history of timely payments.
For people who already have credit histories, the challenge is keeping it looking great. It is helpful to begin by requesting a copy of your credit report and examining it to find any corrections that may need to be made. Once you have accounted for all of your credit history, try to keep credit cards only half way to the limit or even pay the entire balance each month. The most important thing to remember about credit cards is not to let them go past due. This reflects poorly on your credit score.
In some situations, an individual's credit is so poor that it seems impossible to turn it around, but there are many non-profit agencies dedicated to helping people solve their credit problems. These agencies help people to consolidate and pay off their debts so that they can have the credit score they need to get a good mortgage. Don't let your credit be the deciding factor in buying a new home. Take the time and effort to keep a good credit score.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company offering low costs zero point mortgages. For more information on Mortgage Maryland please visit www.marylandsmortgage.com.

Your Mortgage, a Great Place to Invest

If you are a homeowner looking for a wise investment opportunity, you don't have to search very far. Real Estate is one of the greatest investments you can possibly make, and if you already have a mortgage on a home, putting in more money than the required payments is a wise decision. Every dollar paid towards your mortgage gives you more equity in your home, and that equity is almost guaranteed to rise in value. If you were to invest in a stock, your hope would be that the value of those shares would increase, and with real estate, it is only a matter of time before the value goes up, but even if your home does not increase in value, the sheer numbers of paying a mortgage early produces an incredible return. An investment made in your own mortgage is safe, easily accessible, tax free, and almost guaranteed to pay off at a great percentage. If you are considering a new mortgage, the same is true. Not only is it a great investment opportunity, but it will provide a home in the mean time. How many stock options can do that?
If you have a mortgage and a little extra money left over for investing every month, putting that money back into your mortgage can give you returns of up to 200%. Who wouldn't take these kinds of numbers for investment? Not only that, but it is tax-free as well! Money saved in the bank or used on stocks, bonds, and mutual funds is all taxable income, while payments toward a mortgage is not considered income at all.
By paying a little extra on your mortgage every month as a long-term investment, you gain equity and lesson the length of the mortgage. Think of an example of paying an extra $25 per month on your mortgage. If your monthly payment is $665 over 30 years, at 7% interest, the mortgage would be paid off 39 months early. Multiply those 39 months times the monthly payment, and you get $25,935, and subtract this amount by the number extra monthly payments of $25 (321 months x $25 = $8025). This is a savings of $17, 910. If you divide these savings by 321 months, the monthly tax-free growth is $55.79. On a yearly basis, this is an average growth of $669.50, and when you divide that by the $300 dollar annual investment ($25 x 12 months) you can see that there is over a 200% return. Of course, the more you invest, the better the return.
This is not even taking into account the increase of the home's value. In some regions, homes have been known to more than double in value over a decade, and with the growing population this is only going to increase. By building this equity faster, you also open the possibility of borrowing money against the equity for other investments, like building another home.
Investing is your own mortgage is one of the smartest ways to provide for your future. Everyone knows that real estate is one of the safest investments you can make, so why not start with the mortgage you already have?

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company offering low costs zero point mortgages. For more information please visit www.marylandsmortgage.com.