Lowest Morgage Rates 4U |
|
||||||||
| July 5, 2008 | |||||||||
Many first-time homebuyers think it's impossible to buy a home without a substantial down payment. There are many morgages with low or even no down payment options available. Ask your lender about morgages with low down payment options, including:
Understand morgage rates. You'll have to choose between a fixed-rate, adjustable-rate or balloon/reset morgage You'll also have to choose your loan terms. Keep in mind that the lowest morgage rate or longest loan term may not always be the best choice for you. You should also consider the overall cost of the loan, including fees (application, escrow, and appraisal fees, for example) and points. morgage rates change frequently. With many lenders, you can "lock in" the rate, which allows you to complete the morgage process knowing the exact interest rate you'll get for the life of the loan if the loan is a fixed rate or for the initial period if the loan is an ARM or a balloon/reset morgage. If you believe rates will increase while your morgage is being processed, you might lock in the current interest rate through your closing date. A typical lock-in lasts 30-60 days. If you choose not to lock in your rate, you can "float" the rate. This means that you can follow market rate trends and choose to lock in when the rates are more favorable. However, you will have to lock in your rate at the end of the float period, which is usually 72 hours before closing. Understand the differences between fixed-
and adjustable-rate morgages. Fixed-Rate morgages: The interest rate for a fixed-rate morgage
never changes for the life of the loan, so your monthly principal
and interest payment always stay the same. Know how 15-year and 30-year morgages
change your monthly payments. Most home morgage lenders offer two basic terms: 15 and 30 years, and many also offer 20-year fixed rate morgages. 15-Year Term: This term has higher monthly payments
because the loan is shorter. The interest rate is usually lower
and you can build equity faster. Understand down payments and closing
costs. Down Payments: A down payment is usually between 3% and 20% of the total cost of the home. The amount of the down payment depends on your credit history, income, the cost of the home, and the type of morgage you choose. Some lenders also have loan options that allow for no down payment at all. If your down payment is less than 20%, you will need private morgage insurance (PMI). This is insurance you pay to protect the bank if you don't repay your loan in full. PMI is added to your closing and monthly morgage costs. When you apply for a home loan, many morgages require you to also have at least two month's worth of morgage payments saved, called reserves. However, there are morgages that do not require reserves. Most lenders want to know the source of your down payment and have restrictions about how much can come from gifts from your relatives. In most cases, these gifts will need to be documented. Ask your lender for more information. Closing Costs: Closing, or settlement, costs are fees you pay when you actually get your loan from your financial institution. These include points, taxes, title insurance, financing costs, items that must be prepaid or escrowed, and other settlement costs. Closing costs generally range between 2-7% of the loan value. You'll receive an estimate from your lender after you apply for a morgage. You must pay these costs at the time you close on your loan.
Home| |
|||||||||
|
What Is A Morgage? fixed-rate morgage adjustable-rate morgage balloon/reset morgages purchase money morgage select a morgage
|
|||||||||