Mortgage Information

In more than six years today happens to be one of the best times for
home loan lenders. It is also a good time for those who are in need of
home loans. Through the government’s concerted efforts property prices
are now rising. It is also true that the cost of borrowing is edging
down. If you want an MD mortgage, there couldn’t be a better time for
you to get one. This is the right time for anyone who wants to own a
home especially in Virginia.

The demand for Mortgages in Virginia is fast rising.
Likewise the price on property in this the state of Virginia is on an
upward trajectory. You can today get a Virginia home loan easily than it
was last year. Possibly by the end of this year things may ever get
better. But having said that it does not mean that you know how and
where to look for a mortgage, some guidance is needed. First you will
need to contact a lender so that you get your credit score.

Your
credit score is one of the most important items that lenders use in
their consideration of the applications. Share your credit with the
other lenders that you will contact. This will save you a great deal. If
each lender pulls your credit score, too many inquiries may impact
negatively on the score. Allow at least one lender to pull your score.

We have several credit score models such that the score that you pull
and see as a consumer may be different from one that a mortgage lender
needs, so allow the lender to pull it for you. With that out of the way
now focus on providing your lender with the information that he needs.
The interest rate on your loan is based on the loan to value ratio. Due
to this you will have to disclose to the lender the amount of down
payment that you’re able to provide. If you can provide a large down
payment just do it, it will help in bringing down the interest.

Mortgages in Virginia can be tailored to meet your specific needs. If
you want to refinance, well and good. You will find a lender who is
willing to refinance your mortgage. Refinancing is a great way to reduce
the interest rate. However remember that if you’re taking cash the
reverse would be true. Taking out cash on refinance could raise your
interest rate by as much as 1/8 of a percent. Just try and ensure that
you’re not one of those customers who are considered high risk. Lenders
consider you a high risk borrower if you opt to pay your taxes and
insurance by waiving escrow.

Last but not least know when the
closing is going to happen. The lock-in period affects your mortgage
rate. Ask different lenders what they charge for the different loan lock
periods that you want to consider. Lock in the interest rate for the
right duration by telling your lender when you expect the closing to
take place.

The mortgage fees and charges applied by banks and building societies
are not always as clear as they could be and many people do not
understand exactly how much a mortgage will cost them over the lifetime
of the loan. Many simply ficus on the monthly repayments and the
interest rate they are paying. Yet research has revealed that only five
in a thousand people in the UK understand the true cost of their
mortgage deals. The survey by which found that a staggering 99.5 per
cent of borrowers failed to grasp all the costs involved with the
average mortgage deal.

Lenders are being urged to change the way they communicate their
mortgage fees as a result of this research from the consumer group.
However, the data is not wide ranging as it only looked at 2-year fixed
rate deals based on a 100,000 home loan but it did indicate that the
average consumer found it difficult to assess which was the cheapest of a
range of deals because of the lack of transparency in the fees and
charges and this is what is of most concern.

Whilst the results
varied depending on the type of borrower questioned, the survey
nevertheless showed that only a minority could correctly order 5
mortgage deals from most expensive to least expensive so this is
worrying research as it clearly shows that most borrowers find it hard
to work out the total cost of a large mortgage deal taking all costs
into account.

Sometimes the deal with a higher arrangement fee
can work out costing less and sometimes the deal with the lowest
interest rate is not the cheapest. It, obviously depends on the level of
mortgage you want to take out, the interest rate basis (fixed, tracker
or standard variable) and the mortgage term. It is often worth taking
specialist advice to establish which is the best deal for your own
personal and financial circumstances

On the whole mortgage borrowers find it difficult to accept that a low
interest rate deal is not necessarily the cheapest; a typical borrower
is still attracted by the headline rate rather than by the overall cost.

Nevertheless, lenders should be more transparent when showing
their charging structures so that borrowers have the opportunity to more
easily compare total costs rather than simply headline rates. This is
so important because more than 80 per cent of the thousands of mortgages
available in the UK include arrangement fees or other types of fee. And
mortgage arrangement fees have been rising rapidly over the past 2 or 3
years.

Many of the very low mortgage interest rates now on
offer can seem very attractive, as indeed some are, but the flip side of
those low rates is that big mortgage arrangement fees are being
imposed. These fees have risen dramatically,making it even more
important for borrowers to understand the cost of their mortgage over
the lifetime of the deal, especially those with large mortgages that are
likely to incur higher charges. If people are struggling to understand
such an important financial commitment them lenders should be doing more
to help clarify the costs.

All loans are setup to collect a payment from you once a month. That
means you are making 12 payments each year. Interest is added to your
loan based on the balance you owe and the rate per your original
contract. So, for example, If you have a loan for $100,000 and your
interest rate is 4% for the first month you are going to add to your
balance $400.00 or 4% of the $100,000 loan balance. Each month you’ll
add 4% of whatever the remaining balance is. If you really want to save
your thousands of dollars and cut years off your mortgage you want to
reduce the principal balance so the interest charges are less.

How does it work?

There are 12 months in a year, and in every year there is 52 weeks. If
you pay mortgage payment with a Bi-Weekly program you pay 26 payments of
one-half your payment instead of 12 regular payments. This results in
two additional half payments each year or one full payment. The extra
payment goes towards the principal of the loan. By reducing the loan
balance the homeowner is also reducing the interest charges. By paying
like this your loan will have less interest costs and the term of the
loan will be reduced.

How much you can save?

On a $200,000 mortgage at 5%, you’ll cut the total term by about five
years and shave off more than $34,000 in interest costs. This is not
some magic formula. Rather, it’s careful and diligent planning which
achieves a reduction of the principal balance.

Most lenders won’t accept a Bi-Weekly payment. They want to process your mortgage payments on a monthly basis.

Do it yourself Biweekly Payments

If the lender does not allow homeowner for Bi-Weekly program but the
homeowner is interested in paying the loan off early, then he can open a
bank account and he has to made arrangement for the mortgage payments
to come out every month in two bi-weekly payments. And at the end of the
year, the homeowner can write a check on the account for an amount that
will be the same as the monthly payment and sent into the lender. Or, a
customer can simply pay extra payments throughout the year. However,
the easiest way is to contract with a Bi-Weekly Payment Program and let
that company manage this account for you. The results will be achieved
by following the program and for the small cost of enrollment you can
achieve substantial results.

Myth for Biweekly Payments

Paying your mortgage twice a month gives you better credit: This is
wrong, bank often use an automatic bank draft, which means all your
mortgage biweekly payments will be made on time. But if you want you can
get the same effect on a monthly payment plan using automatic bank
draft.

Advantage of Mortgage Biweekly Payment

Below are the few things which Biweekly payments can do

1. Know Your Credit Score

Credit scores and credit activity have a major impact
on mortgage approvals. In addition to higher credit score requirements,
several missed payments, frequent lateness, and other derogatory credit
information can stop mortgage approvals. Pay your bills on time, lower
your debts, and stay on top of your credit report.

2. Save Your Cash

Requirements for getting a mortgage loan often change are ready to
cough up the cash. Walking into a lender’s office with zero cash is a
quick way to get your home loan application rejected. Mortgage lenders
are cautious: Whereas they once approved zero-down mortgage loans, they
now require a down payment.

Down payment minimums vary and
depend on various factors, such as the type of loan and the lender. Each
lender establishes its own criteria for down payments, but on average,
you’ll need at least a 3.5% down payment. Aim for a higher down payment
if you have the means.

3. Pay down Debt and Avoid New Debt

You don’t need a zero balance on your credit cards to qualify for a
mortgage loan. However, the less you owe your creditors, the better. If
you have a high debt ratio because you’re carrying a lot of credit card
debt , the lender can turn down your request or offer a lower mortgage.
This is because your entire monthly debt payments – including the
mortgage – shouldn’t exceed 36% of your gross monthly income. However,
paying down your consumer debt before completing an application lowers
your debt-to-income ratio and can help you acquire a better mortgage
rate.

But even if you’re approved for a mortgage with consumer
debt, it’s important to avoid new debt while going through the mortgage
process. Lenders re-check your credit before closing, and if your credit
report reveals additional or new debts, this can stop the mortgage
closing.

As a rule, avoid any major purchases until after you’ve closed on the
mortgage loan. This can include financing a new car, purchasing home
appliances with your credit card, or cosigning someone’s loan.

5. Get Pre-Approved for a Mortgage

Getting pre-approved for a mortgage loan before looking at houses is
emotionally and financially responsible. On one hand, you know what you
can spend before bidding on properties. And on the other hand, you avoid
falling in love with a house that you can’t afford.

The
pre-approval process is fairly simple: Contact a mortgage lender, submit
your financial and personal information, and wait for a response.
Pre-approvals include everything from how much you can afford, to the
interest rate you’ll pay on the loan. The lender prints a pre-approval
letter for your records, and funds are available as soon as a seller
accepts your bid. Though it’s not always that simple, it can be.

6. Know What You Can Afford

I know from personal experience that lenders do pre-approve applicants
for more than they can afford. After receiving a pre-approval letter
from our lender, my husband and I wondered whether they had read the
right tax returns. We appreciated the lender’s generosity, but
ultimately decided on a home that fit comfortably within our budget.

Don’t let lenders dictate how much you should spend on a mortgage loan.
Lenders determine pre-approval amounts based on your income and credit
report, and they don’t factor in how much you spend on daycare,
insurance, groceries, or fuel. Rather than purchase a more expensive
house because the lender says you can, be smart and keep your housing
expense within your means.

Perhaps the biggest challenge facing potential homebuyers is the issue
of how much deposit is required to attain a home loan. There are many
misconceptions about how much deposit is actually required, and good
Perth mortgage brokers can offer invaluable advice and guidance when it
comes to a buyer’s options with regards to this.

The deposit is one of the most important factors which will determine
the success or failure of a home loan application. The amount of deposit
that a buyer can put down will impact upon future repayments, amount to
be borrowed, and the amount of interest which will be payable over the
term of the loan. It will also have a significant impact upon whether
loan approval is likely.

Mortgage lenders and banks will have
differing criteria governing what monies can be used as a deposit; the
more money saved for a deposit, the more likely it is that a mortgage
broker will be successful in negotiating the waiving of certain fees,
and a lower interest rate on the loan.

As a general rule of
thumb, most banks will require a minimum of five percent of the purchase
price as deposit, and this must be in what is referred to as “genuine
savings”. This is actual money which one has had in a bank account for a
period longer than three months, at minimum. This money is used to
demonstrate a pattern of savings behaviour.

It is always advisable to have as much money for a deposit as possible
(and one must not forget that fees such as stamp duty and legal fees
must also be covered over and above the purchase price of the property).
The greater deposit paid, the sooner a home loan will be paid off. More
equity in the home will be available. Some lenders will even offer a
discounted rate for interest when a large deposit is offered.

Persons who are self employed or who have income which is erratic can
have a more difficult time gaining a home loan. If one in this situation
seeks to borrow more than eighty percent o the value of a property,
Lender’s Mortgage Insurance may be necessary in order to be approved for
a home loan. This insurance, payable by the borrower, protects the
lender in the event that a borrower cannot make repayments and the
property does not sell for a price that will cover the loan.

One
should always aim to have as much deposit as possible when buying a
property – yet in reality, and with the current economy and the expense
of daily modern life, this can be very difficult to attain. This is why
it is so highly recommended to enlist the services of superior Perth
mortgage brokers. These professionals can help a buyer traverse the
minefield of loan products and find the perfect loan for each
individual’s circumstances.