There were 15 single-family homes for sale in Mission Beach that sold in September 2009, at a price of $552 per square foot, down 22.7% from September 2008’s price of $714 per square foot, according to DQ News. Additionally there were 24 condos sold during September at a price of $402 per square foot, which was actually an increase from 2008’s figure of $384 per square foot of 4.7%.

The San Diego area, of which Mission Beach real estate is a part, seems to be slowly on its way back to normal levels. According to the San Diego Union Tribune, which reviewed new quarterly data from MDA DataQuick in October 2009, eight of its 56 neighborhoods saw higher prices than a year ago, compared with only one or none in the recent quarters. San Diego as a whole’s overall median home price was $360,000, down 5% from the same quarter in 2008, compared with 2008’s fall of more than 24% from 2007 figures, which were around $500,000.

The paper also reported the San Diego area is experiencing a decline in its long overloaded inventory of homes for sale. Quoting the San Diego Association of Realtors, it said the number of listings for detached homes during the week of Oct. 17 was 5,670, down from 8,562 in mid-July. Foreclosures is another problem this area must deal with. In September, San Diego.

The Mortgage Bankers Association said in a report this week that the number of mortgage applications filed last week had decreased a seasonally adjusted 28.7% compared with the week prior. Thirty year fixed mortgage rates were averaging a 5.75%, up just a tick from the previous week’s 5.74% average.

Though the real estate market has been hit particularly hard in the latest downturn of the economy, Congress is moving toward taking legislative action to help bail out the thousands of Americans in need of help. Leaders in the Senate reached a bi-partisan agreement last week on how they should proceed with the housing bill as legislators rush to get aid to Americans as quickly as they can.

The bill in current form would reduce the principal on mortgages from taking into account the decreased value of homes, which have already fallen 10% across the country. Legislators are anxious to get legislation passed to save the number of Americans who are facing foreclosure.

You might also be able to find more information in these real estate blogs.

The Mortgage Bankers Association said last week that the number of mortgage applications increased 48.1% when seasonally adjusted in the week that ended March 21 from the previous one. Applications for refinancing existing mortgages was up more than 82% from the week prior, while applications for new mortgages to buy homes was up more than 10%. Applications overall have increased more than 40% from last year.

The increasing volume of borrowers trying to get new mortgage or refinance old ones comes as the Federal Reserve has continued to lower its rates, and mortgage  interest rates have been falling along with them. The MBA said an average 30-year fixed-rate mortgage carried a rate of 5.74% the week ending March 21, down from the week prior’s 5.98% rate.

Rates on mortgages for less than 30 years dropped as well, though not as much. The data also showed that fewer borrowers are opting for adjustable rates and instead preferring to take a fixed rate. Many blame the adjustable-rate mortgages, along with careless lending, for getting the U.S. into the housing mess, as borrowers took out mortgages that they could not afford once the rates reset higher.

1. You weren’t realistic and honest about your financial situation.  You were not completely honest or maybe you stretched the truth about your finances on your home loan application.

Solution:  It is important to view your financial situation honestly to succeed in the world of owning real estate.  Look at your budget and see if you can comfortably accommodate the monthly mortgage payment.  If it looks doubtful, wait a year, save your money, repair your credit history if necessary, and then try again.  Keep in mind that rates and payments can fluctuate depending on your loan type.  If you are already in the home, consider taking advantage of the recent Fed cuts and refinancing your current loan.

2. You signed a loan agreement without understanding it.  You signed where you were told to sign, but you have no idea when your rate will adjust or how your new rate is determined.

Solution:  It is important to read and ask questions when signing any mortgage loan agreement and additional documents.  Make sure you read disclosures and documents that detail any future mortgage rate adjustments and how they will affect your future payments.  You can call your lender and ask questions.  Knowing the details of your loan agreement can also help you make certain decisions concerning refinancing and pre-paying your loan.

3. You have been avoiding your lender for weeks or months.  After missing payments, lenders will attempt to contact you to retrieve their payments.  You avoid your lender as a way of avoiding your payments

Solution:  Keep your avenues of communication open.  Avoiding contact with your lender will not alleviate your problem.  Communicate with your lender even if you’ve only missed one payment.  Letting them know what is going on will demonstrate that you are making an active attempt to alleviate the issues.  Many lenders will be open to negotiating payment options and plans to keep you in your home.

Source: Informa Research Services

Today, the U.S. Federal Reserve slashed the discount rate by 75 basis points down to 2.25%.  But how does the Fed rate cut affect you and your search for a new home?  Is the Fed rate cut the miracle elixir to cure the real estate market pain?
 
When the Fed makes a rate cut, it actually doesn’t affect consumers directly since the Fed funds rate is the rate that financial institutions are charged for overnight loans to fulfill reserve funding requirements.  However, this does affect consumers indirectly by allowing financial institutions to offer more financing options, possibly at lower rates.

The Fed cut should not directly affect fixed rate mortgages, but it can have a more immediate impact on short term loans, such as adjustable rate mortgages (ARMs).  Check online rate comparison tables to stay up to date with rates in this volatile market.

This should be good news for responsible borrowers looking to purchase a home.  If home prices either continue to drop or stay put, and more financing options become available, the market may look like a buyers market soon enough.

But if you already own a home, don’t fret!  The Fed rate cut could mean an opportunity to refinance an existing mortgage at a lower rate or use your equity to fund home improvement projects.  However, be aware that some lenders will have set floor rates.  These floor rates may be set slightly higher than how the rate is typically calculated, which is prime rate plus a margin.  To be sure you are getting a good rate, check convenient home loan equity rate tables.

Source: Informa Research Services

CALABASAS, CALIFORNIA – Today, the Fed slashed the Fed funds rate by 50 basis points.  Like most things, dropping rates are a game of give and take; the lowering of Fed rates can be beneficial for some parts of your financial life and detrimental for others.  So how exactly can you make the most of the most recent Fed rate cuts?

What does the Fed rate cut mean for my mortgage?
Not all mortgages are directly linked to the Fed rate, but adjustable rate mortgages (ARMs) are one type that is influenced by the Fed rate.  Thus, ARM rates were affected by last week’s drastic Fed rate drop.  In fact, just within the past week since the last Fed cut, the APR on a 5/1 ARM dropped from 5.65% to 5.25% based on Informa’s National Averages (Source: Interest Rate Review®, Informa Research Services). 

What about my other loans?
Because the Prime Rate is the key index used to determine the variable rates, such as credit cards and home equity lines of credit (HELOCs), the rates associated with these types of loans can be affected by the change.

And what is going to happen to my savings efforts?
Since the Fed’s rate cut last Tuesday, average deposit product interest rates have dipped as expected, but there has been no uniform decrease across the board.  For example, the interest rates on 3-, 6-, 12-, 24-, and 36-month certificates of deposit (CDs) (at $25,000) dropped an average of 20-30 basis points according to Informa’s National Averages report.  On the other hand, the rates for checking accounts dropped only 2 basis points (Source: Interest Rate Review®, Informa Research Services).

Despite some drastic rate drops due to the emergency Fed rate cuts last Tuesday, it is very unclear whether or not the most recent reduction will incur the same reaction.  Because today’s Fed rate cut was widely anticipated, some of the slashed rates over the past week may have been anticipated and incorporated into the rates offered today.  However, one thing that may be expected is the volatility of today’s rate environment.

“One thing we’ve noticed is that [financial institutions] are quicker to drop rates than to raise them,” said Ray Montague, Deposit Research Manager at Informa Research Services.  Looking at historical trends, when the Fed drops rates, deposit product rates tend to follow the Fed’s moves very closely and drop rates quickly.  On the other hand, when the Fed raises rates, deposit product rates tend to stray behind and raise their rates slowly.

So what now?  What should I do with my savings and deposits?
Despite falling rates, there is still hope for those looking to save.  Regardless of where Fed rates stand, financial institutions will continue to offer promotional and teaser rates to attract new customers.  If you are finding it difficult to judge what is competitive in the current rate environment, remember to use the sorting feature available on many of the online rate tables.  Additionally, checking rates regularly and staying informed of what rate changes mean for you can help you properly gauge what is best for your situation.

Source: Informa

Loans

• The effects of the Fed funds rate cut should be seen most noticeably in short-term adjustable rate mortgages (ARMs).  While a drop in rates will be more evident over the next few months, those who will benefit most immediately will be those with ARMs whose introductory fixed rate period is ending.  Because the rate adjustment period is beginning on these loans, the rate cut will be reflected in the newly assessed rate.  However, those with ARMs who are in their introductory fixed rate period could potentially see the benefits of the lowered rates over time.

Savings

• Think about locking your money into a CD today before rates have an opportunity to adjust to the Fed rate cut.  Because CDs flaunt fixed rates, this may be a smart move if you suspect rates will drop further.  Due to the volatile stock market, be sure to choosing a savings product with an FDIC-insured institution to ensure that you never lose your initial deposit.  Check online for the most competitive offers.

Pay close attention to promotional and teaser rates from various financial institutions.  Regardless of the rate environment, banks almost always offer impressive rates on CDs, money market accounts, and high-yield savings products to attract new customers.  Even if you have an institution you already enjoy banking with, do your research and check online for current promotions.  Be sure to use the tools available to you to stay up-to-date with the most current rates being offered.

This should also stimulate the real estate market as mortgage rates reach historic all time lows. New home hunters now can afford more home for their money.

Checking rates regularly and staying informed of what rate changes mean for you can help you properly gauge what is best mortgage for your situation.

Source: Informa Research Services

1.  How long do I plan on living in the home?
Depending on how long you intend on living in the house, you may or may not choose to make a substantial down payment.  If you plan on staying in the home for a longer period of time, you may want to look into making a larger down payment if possible.  However, because you don’t get your down payment back, you may want to think about putting less money down if your plans are still up in the air.

Also, figuring out whether you plan on staying in your home for 3 years or 30 years will help you decide what kind of loan you should get.  For instance, if you plan on staying in your home for a shorter period of time, you may consider looking for an adjustable rate or interest only mortgage loan.

2.  How much can I afford to spend on my monthly mortgage payments?
Because your down payment affects the amount you are borrowing, it affects the size of your monthly payments as well.  Typically, when a larger down payment is made (and as a result, a smaller amount is borrowed), monthly payments are smaller.  However, if this is not one of your options, then be sure that your monthly payments fit into your budget.  Think about what kind of loans are available because your monthly payment will be determined by the type of loan you have.  For instance, if you choose a 30-year fixed mortgage over an adjustable rate mortgage (ARM), your payments will stay the same for the life of the loan where as the payments on an ARM may change after the initial term of the loan.

Remember, if you do not put 20% down, you may need to pay private mortgage insurance (PMI), which will be added to your monthly payment.  Unlike the interest paid on most mortgages, PMI is not tax-deductible.  The alternative to paying PMI is to get a “piggy back” loan, or taking out a second loan to help finance the 20% down payment.

3.  What options does my credit score provide me?
It is important to see what options are available to you depending on your credit score.  Good credit can save you money by qualifying you for better interest rates on your mortgage loan.  For instance, let’s take a person with a credit score under 620 versus a person with a credit score of 720 or higher (assuming a standard 30-year fixed, $300,000 mortgage loan).  The person with the lower credit score would qualify for an annual percentage rate (APR) of 9.715% while the person with a higher credit score would qualify for an APR of 6.080%.  In this example, having a better credit score could save you approximately $756 a month, or $9,072 a year (Source: MyFico.com).

Credit Score APR Monthly Payment
Less than 620 9.715% $2,570
700 and higher 6.080% $1,814
Total Savings 3.635% $756/month
(or $9,072/year)

This applies not only to first mortgages, but second ones as well.  For those with impressive credit, getting a “piggy back” loan can be less costly than paying private mortgage insurance.  The rates available depend on your credit score, so be sure to use available resources to research rates.

Source: Informa Research Services

As a gift to my parents, I helped them refinance their mortgage loan
I found them a low 30-year fixed, so their payments won’t grow.
They’re able to make the monthly payments with ease
And they say it makes owning a home feel like a breeze.

For those who already own their home at this time,
Perhaps the gift of choice should be a home equity loan.
With the Fed cutting the rate again and again,
Rates are the lowest they’ve ever been.
If you want to tap into your equity, now may be the time,
To pay off your credit card debt so it doesn’t continue to climb.

By using rate tables, I filled my wallet with cheer
And ensured that gift-giving will be a little easier next year.
Finding ideal mortgage rates online has become such a cinch
Never again will I need to be a Scrooge or Grinch.
Bring out the holly, garland, and yule log,
Offer everyone some sugar cookies and egg nog.
Use tables to check rates and make your finances soar,
Happy rate shopping to all, from my home to yours!

Source: Informa Research Services

While most people look primarily for the best mortgage rate, an attractive mortgage is more than just the best rate.  Both lender’s fees and prepayment penalties can put thousands of dollars between you and owning your home.  Here are some pointers to help you acquire a mortgage fully equipped with “all the usual refinements” and save thousands on financing your (real estate) home.

Ask the right questions and go with your intuition.
Mr. Bond never needs to ask a lot of questions, but he always knows the right ones to ask.  Likewise, you should feel free to ask questions until you feel comfortable with the mortgage you have selected.

Similarly, don’t be afraid to ask questions about the lender’s or broker’s fees, which may also include points.  According to the Real Estate Settlement Procedures Act and Regulation Z of the Truth in Lending Act (TILA), the lender is required to fully disclose the cost of borrowing before your mortgage loan is finalized.

Always have an escape route available.
In the world of fictional espionage, there seems to always be a way out of every sticky situation.  In mortgages, this is not always the case.  However, one way to keep an escape route open is by opting out of a prepayment penalty loan.  This will come in handy if life decides to throw any unexpected curves your way.  For instance, you may plan on buying and living in a house for 20 or 30 years.  But what happens if you have an unexpected career change or life event that requires you to sell the house during the first few years of owning it?  Or what if rates drop next year and you would like to refinance?  As long as you don’t have a prepayment penalty, you can either sell or refinance your house as needed without paying a hefty fee.  Prepayment penalties can be effective anywhere from the first six months to three years into the mortgage loan.  Thus, this decision depends on how much flexibility you anticipate needing in the near future.

Furthermore, in addition to the aforementioned full disclosure of fees, Regulation Z of TILA also stipulates that for refinanced mortgages, through the right of rescission (or cancellation), the consumer has three business days to cancel their new loan without penalty.

Never fall for the tricks.
In the classic spy flick, the villain’s antics are typically predictable.  Similarly, the popular “bait-and-switch” move is one of the oldest tricks in the marketing book, so don’t fall for it.  Many financial institutions that offer mortgage loans use their best rates and lowest fees to lure customers into their establishments.  However, there may be stringent requirements to qualify for the advertised offer.  Often times, if the consumer does not meet all the requirements, they will then be offered a higher rate.  To avoid falling victim to this predictable scheme, research mortgage rates before going to the financial institution, and know your credit score.

Use the resources available, such as the Internet, to research and become knowledgeable about mortgages and you’ll see that with a little preparation, it doesn’t take a super spy to find a great mortgage.

Source: Informa Research Services

Choosing the Right Style
When choosing a mortgage, research the different types available and realistically consider which will fit your budget and lifestyle.  Furthermore, gaining a complete understanding of precisely how the various mortgages work should help you make a better decision.  For instance, even though the thought of lower monthly payments is tempting, unless you are anticipating a steady increase in your income over the term of your mortgage, an adjustable rate mortgage may not be the best option for you.

Furthermore, know your credit score and credit history.  Months before you go look at any properties, check your credit history and make sure it is accurate.  By federal law, you are entitled to a free credit report every 12 months from three designated consumer credit reporting agencies.  These free credit reports can be requested by mail, phone, or the Internet through the Annual Credit Report Request Service (Source: annualcreditreport.com).  If your credit history is less-than-perfect, you may consider consulting a credit counselor to help you manage and budget your finances to improve your credit score.  You will find it troublesome to have to clear up inaccuracies on your credit report while trying to get approved for a mortgage for your dream home.

Finding the Right Size
Look for a home that suits both your family and your budget.  Figure out how much you can afford and try to buy a property that is within your budget.  The rule of thumb is that you should aim to spend about a third of your gross annual income on housing.  Another way to figure out an approximate housing budget is to deduct your regular necessary expenses (such as food, utilities, car payments, etc…) from your gross income.  This should help give you a good idea of how much you can afford to spend on monthly mortgage payments.  You need to also remember that the cost of a home includes other costs such as maintenance and utilities which tend to correlate with the size of the home.  Moreover, it might be wise to try to leave room in your budget to include saving for emergencies or other unexpected expenses.

The “Little Black Dress” of Properties
Lastly, despite the popular mantra of “living-in-the-moment,” try to keep a property’s future resale and equity in mind when looking for your new home.  While a vogue home or location may be all the rage at this moment, choosing a classic, timeless real estate will pay off in the long run, especially if you intend on tapping into your home equity at a future date through a home equity loan or line of credit.

Source: Informa Research Services

Choose the size of your adventure: teacups or colossus?
Even at the largest theme park, rides are offered in a variety of sizes from “kiddie” rides for the little tikes to the extreme coasters that push the limits of speed, gravity, and the adrenaline rush.  Likewise, most financial institutions offer a variety of mortgages made to fit homeowner needs.  These usually come in the form of conforming mortgages and jumbo mortgages.  The main difference between these choices is that conforming mortgages are under the threshold (currently, $417,000 for a single-family residence) set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation (more commonly referred to as Fannie Mae and Freddie Mac, respectively), whereas jumbo mortgages are over the $417,000 threshold.

Mortgage term: How long is your favorite ride?
Another factor that coaster buffs consider in deciding which coasters to ride is the length of the ride.  Would you rather have a slow and steady five minute ride or an adrenaline-packed 30 seconds?  Similarly, the term of a mortgage loan, or the amount of time over which you have to pay the mortgage loan back, should influence your decision.  While longer mortgage loan terms allow you to have lower monthly payments, some people might prefer the financial and psychological comfort of paying off their mortgages more quickly despite the larger monthly commitments (i.e. a 30 year fixed vs. a 15 year fixed).

Speaking of monthly payments, consider your spending habits and abilities over the term of the mortgage.  For instance, a balloon mortgage typically requires very low payments in the beginning, but the balance of the mortgage is due in full all at once.  While the low starting payments may be tempting, be realistic about whether you will be able to pay off the loan in its entirety when it is due.
 
Are you ready for that 300-foot rise?
The most obvious and attractive features of coasters are the loops and the drop.  Likewise, many people only notice the interest rates attached to mortgage loans, and with good reason.  Interest only adds to your monthly payments and the overall cost of your home; thus, you should use resources, such as the Internet, to shop for the best mortgage loan interest rates.

Mortgage loans come attached to a fixed or variable rate (also called adjustable or floating rate).  If the rate is variable, look at what interest rate caps are in place (both annual and lifetime).  Interest rate caps can apply not only to the frequency and amount of interest rate changes, but also the total adjustment in the interest rate over the entire span of the loan.

Lastly, in making any financial decision, be sure that you understand the terms and conditions of the mortgage loan you decide to take.  You can save yourself hundreds and thousands of dollars by simply understanding what is expected of you and what you should expect from the lender.  Having this thorough understanding will ensure that you can enjoy the thrilling ride to homeownership.

Source: Informa Research Services

Educate yourself.  According to the White House Press Release, President Bush and his administration plan on enforcing a number of programs to promote consumer mortgage loan education.  The home buying and financing process is not a simple process, and since a home purchase is frequently the largest purchase most people will ever make (real estate), it is something buyers should definitely take the time to understand.

A common complaint among borrowers, particularly those who took out subprime mortgage loans, was that they did not understand the terms of their loan.  Thus, this is why some see education as an effective tool in preventing an inflated level of default mortgages.

Another common complaint among mortgage holders was that the terms of their loan had changed by closing.  Thus, these homebuyers ended up with mortgages and interest scenarios that were not ideal for them or their financial situation.  Had these borrowers been more aware of the different loan options that were available, they may have been able to avoid their current high cost loan.  There are a number of tools, including the Internet, that you can use to research rates and find available loan options.

Don’t be afraid to scrutinize.  While most of us probably sign documents that are placed in front of us in the blink of an eye, it is important to know what terms and conditions to which you are agreeing.  In addition to general knowledge concerning mortgages, being familiar with the mortgage loan vocabulary can help you better recognize bogus terms or interest rates.  The purpose of written documentation is to ensure that both sides understand the terms to which they are agreeing.  If either side neglects to read the fine print, once they sign it, they have agreed to whatever is stated in the document, regardless of whether they meant to or not.

While the government will continue to create more safeguards to protect consumers, doing your part as a responsible borrower can ensure that you don’t run into any surprises down the road.

Source: Informa Research Services

Free press.  Fat-free.  Free gift with purchase.  It seems like anything that’s “free” is harmless and generally, a good thing.  People will jump at the opportunity for something that is sans cost.  But should you be jumping for a no-cost mortgage loan?

So, what exactly is a “no-cost mortgage”?
A no-cost mortgage loan is a mortgage in which the upfront fees are paid by the lender at closing.  These fees include many of the settlement costs, but keep in mind that there are some costs, such as prepaid taxes, or title charges, that cannot always be paid by the lender.  Typically, the only fees that are waived are those that fall into the category of “lender fees.”

How much does a no-cost mortgage cost?
A no-cost mortgage costs nothing out of pocket at closing.  However, a no-cost mortgage may result in having a slightly higher mortgage rate.  Nonetheless, the difference between the interest charged on a no-cost and regular mortgage loan tends to be very small.  You should use the resources available to you, such as the Internet, to shop and find the best rates and fees.

Who would benefit from a no-cost mortgage?
Depending on your situation and personal finances, a no-cost mortgage may or may not be the right option for you.  Some homebuyers may opt to use the cash they save to furnish their home or perhaps upgrade the conditions of their home.  It may be advantageous to use the cash you save by not paying the upfront fees to get the mortgage loan to finance these purchases because it will be affected by a lower interest rate than many other loans, such as credit cards.

No-cost mortgages are not for everyone.  It is really a matter of preference.  You need to weigh the importance of paying closing costs upfront against paying a slightly higher rate over the term of the mortgage loan.

Although there are protective measures in place, such as the Truth in Lending Act, regardless of which loan you choose, you should be sure to read the details contained in the fine print to ensure that you are truly getting (and paying) what you think you are.  Additionally, one can use the Internet to research their available loan options, both traditional and no-cost.

Source: Informa Research Services

Getting a mortgage home loan might seem like a tedious process, but if you do your part to look good on paper, you can increase your eligibility for the best mortgage rates.  Financial institutions primarily consider three main areas in determining who is eligible for a mortgage: employment history, credit history, debt to income ratio (which is the percentage of income that goes to expenses).  As proof of these, most financial institutions will ask for a selection of the following documents in considering your request for a mortgage loan.

Employment

• Last two years’ federal tax returns and/or W-2 statements
Financial institutions typically use your past tax returns as verification of your employment and earnings.

• Pay stubs
Most financial institutions will ask to see your most recent pay stubs, usually covering the past month.  Your pay stub must have your name, your social security number, your employer’s address, and your year-to-date earnings.  These help them to gauge whether you will be able to handle your monthly mortgage payments.

• Employment history
While your pay stubs provide your financial earnings, your employment history gives the financial institution an idea of the nature of your employment.  Generally, a record of steady employment is going to work in your favor.

Credit History

• Credit report, including current creditors and account information
A credit report, including a list of your current creditors and the corresponding account information is useful to a financial institution because it allows them to see how you have dealt with your past loans.  This list should include the details (i.e. minimum monthly payment and balances) of all student loans, auto loans, credit cards, and child support payments.  By establishing a solid credit history, you can avoid having to pay higher interest rates that frequently accompany subprime mortgages.

Expenses and Payments

• Bank statements
In order to verify your banking assets, financial institutions will most likely want to see up to three months of your most recent bank statements.

• Complete record of assets
Additional assets that should be reported upon applying for a mortgage loan should include mutual funds, retirement accounts, real estate titles, and stock certificates.  These not only promotes your qualifications as a worthy risk for the financial institution, but they can also help you secure a lower interest rate.

• Canceled rent checks
If you are currently renting, canceled checks that were used to pay rent can be proof that you are punctual with your payments.  Some financial institutions may ask for the name and address of your landlord instead of the canceled checks.

• Information about desired property or property type
Providing the financial institution with a description of either the property you want to finance or at least a description of the property helps the financial institution decide if any of the loan programs would be right for you.

Having these documents gathered and ready to go when you are in the process of shopping for a new home will help your mortgage application process go smoothly.

Source: Informa Research Services

As the popular sports saying goes, “The best offense is a good defense.”  The same can be said for using a broker to get a mortgage.

Navigating the terrain of mortgages—including terminology, conditions, and the process as a whole—can be a challenge, to say the least.  Thus, to help alleviate some of the pain often associated with mortgages, many homebuyers seek the help of mortgage brokers to assist in making the process a little less daunting.

While most mortgage brokers do their work in the best interest of the homebuyer, here are a few tips to make sure you get the most out of your home financing experience.

• Acquire basic knowledge about mortgages and how they work.  Avoid meeting with a mortgage broker or loan officer without any knowledge of your own.  While brokers will take the time to explain the fine (and not-so-fine) print, having basic knowledge under your belt will help you better understand the terms to which you are committing.

• Research available rates online.  Brokers work with a number of lenders to offer you a wide assortment of financing options and competitive prices.  There are a number of resources available online and in print that you can reference for the most current and up-to-date rates.  By becoming familiar with the rates available, you will be able to better evaluate the rates  you are offered by your broker.

• All borrowers have the right to full disclosure of all fees, terms, and penalties associated with their loan, so don’t be afraid to ask your broker questions.  These questions can range from the details of the mortgages you are considering to the nature of their fees.  Asking these questions should help establish a good working relationship with your broker.  Also, this should help clear up any confusion concerning your mortgage.  For example, ask you broker about prepayment penalties.  You may not realize that the offer of a lower rate comes with potential restrictions.

Consider seeking out an Upfront Mortgage Broker® (UMB).  According to the Upfront Mortgage Brokers Association (UMBA) website, “UMBs disclose their fees…in advance and in writing and disclose the wholesale prices passed through from lenders” (Source: upfrontmortgagebrokers.org).  This can help ensure that both you and your broker have a clear understanding of what is being agreed upon.  The UMBA also states that UMBs represent the homebuyer and the homebuyer’s best interest when shopping for potential loans.  Furthermore, instead of increasing their commission from rebates or concessions they receive from third parties, UMBs pass along these credits to their clients.

By taking heed and completing your own pre-mortgage training, you and your broker can be a winning team.

Source: Informa Research Services

On a test, students want all the points they can get, and even adults will brighten up at the promise of some of those proverbial “brownie points.”  But in the mortgage world it is quite the opposite – people usually aren’t so thrilled about points. Mortgage points, also called discount points, are an up-front fee paid in cash to the lender at the time of closing.  Points can also be rolled into the loan, but this will partially defeat the purpose of paying points in the first place because of the resulting increase in the mortgage rate. However, paying points also means that you are paying extra money upfront to lower your interest rate. Therefore, the question is this: Will it save you more money in the long run to pay a lower interest rate or to pay no points?

What’s the Point?
Points are paid to lower the interest rate—the more points you pay, the lower the interest rate you get, and correspondingly, the less interest you pay overall. One point is equal to 1% of the loan amount, and depending on the individual’s loan scenario, each point lowers the interest rate by approximately .125% to .25%. Borrowers benefit from points because paying points typically results in having lower monthly payments.

Let’s Get to the Point
So, when is it better to pay points in order to get a lower interest rate? The general rule is that if you plan on staying in the same home or mortgage for five or more years, then paying points will work to your advantage.  However, if you plan on moving or refinancing your loan within five years, then your money may be better spent as an increased down payment or used for other purposes (Source: velocityloan.com).

Before you make a decision, analyze your situation and your plans for the future. Knowing what your future plans are will allow you to get the mortgage loan that best fits your needs.

Source: Informa Research Services

Once you’re on your way to home ownership, there are certain precautions you’ll want to take to further minimize your risks. Here are some tips to make your buying experience a more positive one:

• Know what you’re paying for upfront. Throughout the mortgage lending process, you’ll be faced with a flood of fees, some higher than others. From origination and escrow fees, to title insurance and property taxes, some may seem inflated while others fall in line with your expectations. You should never be afraid to question a fee you feel uncomfortable about or don’t understand.

• Try to avoid an early pre-payment penalty. Everyone wants to have the flexibility of paying off their 30- or 40-year mortgage early. The reward is not only owning your house outright but saving on interest charges. Work with a lender who is willing to waive any pre-payment penalties or can offer you the ability to refinance your mortgage at a better rate.

• Watch out for the classic bait-and-switch. We’ve all fallen victim to this one at some point or another. A lender may try to reel you in with low mortgage rates, no money down, or no closing costs, only to disqualify you with a less than perfect FICO® score. If you feel uncomfortable with the lender, or that they are not being truthful, then move on to someone you can trust.

• Don’t let real estate agents pressure you to buy. Realtors are motivated to sell homes in order to earn a commission. They may force you to buy something that doesn’t quite meet your expectations or pressure you to use their mortgage company. Always comparison shop for the best rates and programs. Remember, the real estate agent works for you and has a fiduciary responsibility to protect your best interests.

• Buy only what you can afford. It’s easy to get caught up in the hype of low-interest or no-interest introductory mortgage rates. Staying within your debt-to-income ratios can help prevent you from over-extending your debt. Use one of the affordability calculators to determine the minimum and maximum amount you can afford before going house hunting, and be sure to stick with your estimate.

• Never buy a home on impulse. At some point during your search for a home you may decide to settle for less or get caught up in a bidding war for a house you don’t necessarily want to buy. Staying within your budget can be a real challenge, especially if a lender approves you for a higher loan amount then you can afford. Give yourself permission to walk away from a questionable deal and see how you feel about it the next day.

Source: Informa Research Services

The loan to value (LTV) ratio is the ratio of the amount of money you borrow through a mortgage or home equity loan to the value of your home. When this ratio exceeds 80%, it is considered to be a high LTV loan. Typically, the maximum loan to value ratio lenders will allow is 80%; however, there are times when they will offer customers a loan with an LTV ratio that not only exceeds 80%, but reaches or even exceeds 100%, meaning that they are allowing the customer to borrow more than the value of their real estate. This could mean no down payment on your mortgage, or all (or more) of your home’s equity to spend on an improvement project. Sounds good, right? Maybe not.

When a borrower applies for a high LTV loan, especially on a first mortgage, it is something of a red flag to lenders, because borrowers who cannot make a substantial down payment are more likely to default on their loan. Then, if they are approved, they might be put in the sub-prime category, or they might be given higher interest rates and tighter qualifications. But when a lender sees that a borrower has a very good credit history, they may be willing to allow them to take out a loan with a high LTV ratio, because they know that they are responsible borrowers who are likely to make their payments on time. If you are given an offer like this, you have to take care to understand all the conditions before accepting the loan. Here are four disadvantages that you should be aware of when considering a high LTV loan:

• High Interest Rate.  A high loan to value mortgage or home equity loan is likely to come with a high interest rate.

• Private Mortgage Insurance (PMI).  You may have to get Private Mortgage Insurance with a high LTV mortgage.

• Fees raise your debt. Even if your principal is not more than the value of your house, do not forget to take into consideration the costs and fees. Common fees on both mortgages and home equity loans include closing costs, points, appraisal fees, and prepayment penalties. These and other fees could raise your debt to more than your house is worth, even if your original intention had been to borrow less than 100% of the value of your home.

• You might lose tax benefits. The interest on mortgages and home equity loans is usually tax-deductible, but if you take out a loan with a loan to value ratio above 100%, the amount by which your loan exceeds the value of your house is unsecured. The interest on that extra amount would consequently no longer be tax-deductible.

The most important thing to do, as is the case when you are shopping for any financial product, is to carefully research your different options. Whether you are buying a house and will need a mortgage, or you already have a house and need to borrow some money against it for a large project or purchase, check the ratesand offers of several different lenders before hastily making a final decision, so you can be assured that you are getting the loan that will save you the most money and that will best fit your needs.

Source: Informa Research Services

If you have a home and a mortgage, and you are thinking about refinancing, first you must know both what you want out of your new mortgage and what your different options are, so that you can pick the refinancing plan that best fits your needs.

There are many different situations that will make people consider refinancing their mortgage. Some of the most common ones are:

• They have a fixed-rate mortgage with a high interest rate, and they are looking to get a lower interest rate.

• They have an adjustable rate mortgage (ARM) and are looking to get a fixed rate.

• They have two mortgages and would like to consolidate them into one.

• They have a long-term loan and would like a shorter-term loan so they can pay it off and build equity more quickly.

• They have a short-term loan and would like a longer-term loan so as to reduce their monthly payments.

• They want to move from an interest-only mortgage to a loan that pays down the principal.

• They want some extra cash to make a purchase or to pay off other debt.

There are four main mortgage refinancing options available that can meet the needs listed above:

1. Cash-out or Cash back Refinancing. This plan allows you to refinance your mortgage for more than you currently owe, and the difference – the equity – is converted into cash for the homeowner.

2. Low Fixed-rate Loan. If you currently have a high fixed-rate mortgage and the rates have dropped due to market conditions, then you may want to refinance to a low fixed-rate loan. Also, if you have an ARM, you might consider this option in order to get the security of a fixed rate. Even if your adjustable rate is low now, it is not guaranteed to remain that way; but if you get a low fixed-rate loan, then you lock that low rate in for the life of the loan. This option is a good choice if you are not planning on moving within the next five years.

3. Shorter-term Loan. If your main goal is to quickly build up equity and to pay off your mortgage sooner, then the shorter-term loan is probably your best choice. A lot of times, if you refinance to this type of loan, your monthly payments will be higher, but you will pay substantially less interest and your mortgage will be paid off sooner. Also, you would benefit from a larger tax deduction on interest if you move from a 30-year fixed to a 15-year fixed loan. There are some cases, however, in which you may be able to refinance to a shorter-term loan without raising your monthly payment – if you’ve had your current mortgage for enough years.

4. Longer-term Loan. If your current monthly payments are higher than is comfortable for your financial situation, then you might want to consider refinancing to a longer-term loan. This will result in a decrease in your monthly payments, since you will have more time to repay the loan.

Examining your current mortgage and knowing how you would like to improve it are the first steps you need to take when starting the refinancing process. Once you know this, you can choose the option that will best help you achieve your goals.

Source: Informa Research Services

It used to be the case that you had only one choice when it came to paying off your mortgage – the conventional principal and interest plan.  Every month your payment would consist partially of interest (what you owe the lender for using his or her money) and partially of the principal (the actual amount you borrowed), and you would have the loan paid off, little by little, after a certain number of years.

But in 2001, a new type of mortgage was introduced – the interest-only mortgage – in which borrowers are required to make payments only on interest for an introductory period of usually three, five, or ten years.  When this period is over, the principal is then paid down, either in one lump sum or in monthly payments.  This means that, compared to the traditional mortgage, the initial monthly payments are much lower, but the future principal and interest payments will be much higher.

Why It’s Good
An interest-only mortgage is also good for people who either have limited funds now but are expecting to earn more in the near future, or whose income is mostly in the form of infrequent commissions or bonuses.  In both of these cases, the borrowers will not be under pressure to make initial monthly payments that are beyond their means, but once they start earning more or receive those bonuses, they will be able to pay off their principal as well. Therefore, with an interest-only mortgage, you have the ability to buy a house that you normally would not be able to afford.

Borrowers who apply for an interest-only mortgage plan often do it because they are planning on taking the money that they would normally pay for the monthly principal payments and putting it in some type of savings account.  If this is your intention, then make sure you have a strategy for investing the savings and that you will stick to this plan and continue to put your money away wisely.

Why It’s Not So Good
One disadvantage of an interest-only mortgage has to do with the equity in your home.  Since equity is the appraised market value of your home less any outstanding mortgages, then during the period of interest-only payments, you have zero equity to tap into.  This means that if for any reason you need a large amount of money during this time, a home equity loan or line of credit  may not be an option, and you would have to resort to using other alternatives like credit cards or your savings.  Also, if, during this time, your house loses value, then when it comes time to pay down the principal, you will be paying more than the house is actually worth.

Also, it happens that even though borrowers have the intention of saving the difference between their interest-only mortgage and what they would be paying with a traditional mortgage, they are not always able to accomplish it for one reason or the other.  Then, when it comes time to start making payments on the principal, they struggle because they were not able to save the money.  Therefore, you have to be very careful before going into an interest-only mortgage, and make sure that you have a savings strategy in order to come out ahead.

Don’t Rush Into a Decision
Make sure that when you are getting ready to apply for a mortgage that you carefully consider your situation and know how much you can afford each month, both now and in the future.  You should not just hear the words “lower monthly payment” and jump into an interest-only mortgage without examining its details and those of the traditional mortgage.  You have to be sure that you know what you can afford and which type of payments would fit better into your lifestyle, so that you can choose the mortgage that is right for you.  It is also wise to check with a financial advisor so that you make the best decision for your unique situation.

Source: Informa Research Services

Getting ready to buy a home?  Applying for a mortgage? Trying to figure out how you will fund your down payment? You could use the money you so diligently saved with your Savings or Money Market Account to make a higher down payment.  But do you want to make a higher payment, or is it better to spend less money upfront?  Here we show you both sides of the question, whether a larger or smaller down payment is better.

Advantages
Not all mortgage loans require customers to make a 20% down payment.  Some loans require only 5%, while others require no down payment.  As appealing as these two options sound, you must keep in mind that if the lender saves you money in one place, you will most likely have to pay it somewhere else. In this case, in the form of higher interest rates and Private Mortgage Insurance (PMI).  Here are three advantages of making a large down payment:

• Better rates. Generally, the larger the down payment, the better the rates and terms you will receive from the lender.
• Less interest. Making a larger down payment reduces the amount you will have to borrow, so you will pay less interest over the total life of your mortgage loan.
• No extra cost for insurance. By making a down payment of at least 20%, you will not be required to have Private Mortgage Insurance (PMI), the cost of which would be included in your monthly mortgage payment.

Disadvantages
1. One disadvantage of taking money out of your Savings Account to make a higher down payment is that you will no longer receive the interest that your money was earning in the account.  This is only a problem, though, if the average rate of return on your savings is more than the interest rate on your mortgage. 
2. Another disadvantage is that you will have less interest to pay on your mortgage, which translates into less tax-deductible payments.
3. One more disadvantage is the immediate cash access that you lose when you deplete your savings account.  It is important to have an emergency fund, and if you use your savings to make a down payment, you might sacrifice your emergency fund as well.

Consider Your Situation
Now that we have presented the advantages and disadvantages of making a large down payment on your mortgage loan, you need to consider your situation and figure out which is the best option for you.  Can you afford a 20% down payment?  If not, then maybe you need to go with the smaller down payment and higher monthly payments.  What kind of payment schedule would work best for you?  These questions must be answered before you apply for a mortgage loan.  Make sure to compare different loan products and rates online, as well as to consult your financial advisor or tax accountant before making your final decision.

Informa Research Services

The Federal Reserve continued to hold interest rates steady for the seventh straight consecutive time since June of 2006, remaining unchanged at 5.25%. The Fed’s decision means that the prime interest rate that commercial banks charge consumers for credit cards, home equity lines of credit, and other loans will remain steady as well.

While the Fed acknowledged that economic growth has slowed due to an increase in gas prices, a weaker dollar overseas, and a slump in the housing market, it remained bullish on economic expansion for the upcoming quarter. Even though the overall housing sector continued to suffer – primarily due to the sub-prime mortgage fallout – mortgage loan applications were up from the same time a year earlier, according to the Mortgage Bankers Association.

The national average interest rate on a 30-year fixed mortgage was lower from 6.76% a year ago compared to this week’s rate of 6.38% (Source: Informa Research Services). However, new home buyers are still finding it hard to qualify for a loan at today’s market prices. This gradual cooling of the housing market has resulted in a surplus of inventory and a decline in the number of new home sales, according to a recent report issued by the Lusk Center for Real Estate at USC.

Existing homeowners, faced with increasingly higher Adjustable Rate Mortgages are looking to refinance to lower fixed-interest rate loans. Lured by low-introductory teaser rates, nearly 41% of all variable sub-prime loans are scheduled to reset to a higher amount this year (Source: Center for Responsible Lending.) Borrowers who default on their loans could be faced with the threat of foreclosure causing consumer spending to become stagnant.

While slowing economic growth and curbing inflation is one of the main jobs of the Fed, it remains to be seen if the forces driving the real estate market will help or hinder consumer spending. Many economists believe that by not lowering interest rates in the near term may steer the economy towards a recession causing consumer prices to rise even further.

Source: Informa Research Services

While fixed mortgage interest rates have been holding relatively steady for the past year –averaging 6.38% APR, slightly down .38% from a year ago – some homeowners with higher adjustable rates are finding that now is a good time to refinance their mortgages. According to the Mortgage Bankers Association, nearly $1.1 to $1.5 trillion in Adjustable Rate Mortgages will face rate increases this year, with borrowers expected to refinance as much as $700 billion of these adjustable mortgages.

The costs savings to refinance a mortgage loan can be a considerable amount. For example, a monthly payment (excluding taxes and insurance) on a $250,000 mortgage loan at 7.50% would be about $1,748. Reduce this rate to 6.5% and the monthly payment becomes $1,580, or a savings of $168. However, as attractive as this savings might be, refinancing may not be the best option for everyone. Some homeowners with adjustable rate mortgages who would like to refinance into a new loan with lower interest rates are finding it harder to qualify.

With lenders tightening their lending standards, and the possibility of incurring  pre-payment penalty fees for getting out of a mortgage early, not all borrowers can afford the thousands of dollars it would costs them to refinance their existing real estate loans. These challenges are especially greatest for sub-prime borrowers, whose credit scores were below average to begin with and may have even declined further since taking out their initial loan, leaves them with little or no equity to negotiate with on a refinance.

As borrowers get caught up in an ever changing market, where home values are softening and inventory levels increasing, the Federal Reserve’s decision to hold interest rates steady has made fixed mortgage rates an attractive financing option for many borrowers.

Whether or not to refinance depends on each borrower’s unique set of circumstances and if the potential mortgage savings is enough to offset any existing refinancing penalties and fees. In which case, refinancing to a lower fixed rate may make the most sense.

Source: Informa Research Services

Some of the most important decisions that you will make in your life are the ones associated with buying or selling a home.  If you are a buyer, then you have to find the right neighborhood, the right home, and the right mortgage.  If you are a seller, then you have to know the right time and decide on a price.  But the step that is often overlooked is finding the right real estate agent. 

A real estate agent can be extremely helpful to guide you through the home buying or selling experience.  They have the knowledge and experience that you might not have.  They take care of handling the paperwork so that you do not have to worry about it.  When you are buying, they can help by letting you know where schools, shopping centers, and hospitals are located, so you can find the home and the area that best fit your family’s needs.  When you are selling, they set up and oversee open houses, making your life a little easier.  Therefore, you should not underestimate the value of a good real estate agent.

Here are four ways that you can find a real estate agent:
• Referrals. Ask your friends, family, or co-workers to refer you to a real estate agent with whom they had a positive home buying or selling experience.
• Search Online. Do a search for the top real estate companies in your area, then go to those Web sites and look up profiles of individual agents at offices near you. 
• Attend Open Houses. This is a great way to meet real estate agents without the pressure of having to make a decision right then and there.
• Use Print Advertising. Look in your local newspaper for real estate in your area, and then look online for the agents who are advertising those homes.

One more very important factor to take into consideration is that there is a difference between a real estate agent and a REALTOR®.  All REALTORS® are real estate agents, but not all agents are REALTORS®.  Although both a REALTOR® and a real estate agent are licensed to sell real estate, the basic difference between the two is that a REALTOR® belongs to the National Association of REALTORS® (NAR®), while a real estate agent does not.  As a member of the NAR®, a Realtor must subscribe to the REALTOR® Code of Ethics, which contains 17 Articles and Standards of Practice.  Because of the pledge that licensed REALTORS® must make to “put the interests of buyers and sellers ahead of their own and to treat all parties honestly and fairly” (Source: The REALTOR® Code of Ethics), it is most likely that you will have a much better experience if you take the time to find a REALTOR®.

When considering a real estate agent, one important aspect is to know your goals and expectations, that is, what you want out of your real estate agent.  If you have certain expectations, such as daily color ads, ad placement, or frequency of open houses, it is crucial that you find an agent who is on the same page.  So, before you choose a real estate agent, sit down and make a list of the things you know you want to do in order to sell your house.  Then find a real estate agent who will meet those expectations.

If you are buying, do not think that your work is done after you find a good real estate agent.  Be sure to continue to shop around for the best mortgage, so you can afford the home that your real estate agent finds.  Always compare mortgage rates and monthly payments, and find a mortgage that fits into your budget.

Source: Informa Research Services

As with most things in the financial world, the answer to this question is not a simple one. There is not one piece of advice that should be given to everyone. Instead, there are several factors that should be taken into consideration when deciding whether you should pre-pay your mortgage.

Why It’s a Good Idea
You can pay off your mortgage loan early by making extra payments throughout the year, or paying more than the minimum amount on each payment. The best reason for doing this is that it can greatly reduce the amount of interest you have to pay. Some economists estimate that by adding just $25 to each required payment on a $140,000 loan, you will save over $16,668 in interest costs (Source:www.goodadvicepress.com)! Another advantage is that you will have the loan paid off sooner, leaving you with one less source of debt and one less monthly payment to worry about. Also, the more of your mortgage that you pay off, the more equity you will have in your real estate, possibly opening up other opportunities that you might not have had otherwise – home improvement projects, for example.

When It Might Not Be the Best Option
There are certain situations where it might be prudent to use your extra money in places other than early mortgage payments. Mortgage loans, as compared to auto loans, home equity loans, and credit cards, usually have the lowest interest rates. Therefore, if you can only afford to make early payments on one of these at a time, it is best to pay off the loans with the highest interest rates first. So, before automatically using your extra money to make early payments on your mortgage, you should instead look first to get out of credit card debt, and then pay down your home equity loan, then your auto loan, and finally your mortgage.

Another consideration to make is to compare the interest rates on your mortgage loan with those of a high-yield savings account, such as a certificate of deposit. If you are able to find a savings account with a yield that is much higher than the interest you are paying on your mortgage, then it might be wiser to take the money that you would be using to make extra payments, and put it instead into the savings account.

Since there are so many factors and different situations to consider while trying to answer this question, remember that the most important thing is to do your research, comparing mortgage rates and calculating savings. After closely examining your financial situation and all the options available to you, you will be able to make the best decision for your unique situation, and you will know whether or not you should pre-pay your mortgage.

Source: Informa Research Services

Do you have your eye on that four bedroom house with a white picket fence and a bonus room?  You’ve compared mortgage rates and monthly payments, and the only thing holding you back from buying your dream home (real estate) is the large down payment required?  Well, here are a few strategies you should consider for saving up for that down payment.

Step 1 – Shop around for loans that require lower initial down payments. Not all loans require that customers have a 20% down payment.  Some loans require only 5%, while others don’t require a down payment at all. However, these loans usually charge a higher interest rate, or they require private mortgage insurance (PMI), which would increase the monthly payments. Make sure you do your homework by matching the best rates with the down payment requirement and monthly payments that work best for you.

Step 2 – Be disciplined in your savings. Saving a large amount of money can take time, but if you are consistent in your approach it can be done before you know it.  A great way to do this is by setting up an automatic savings plan that takes a set amount of money from your checking account and transfers it to your savings account. Make sure you shop around to get the best savings rate possible, and depending on when you will need the money, you may want to look into investing in a short term Certificate of Deposit or a High-Rate Money Market or Savings Account.

Step 3 – Know your options.  Another option would be looking into your 401K plan. Many companies allow you to borrow against your 401K, and if you have enough in your 401K plan, this can be the perfect option for getting your down payment. The best thing about this option is that since you are, in effect, borrowing from yourself, all the loan repayments and interest payments go back into your 401K account. Some plans also allow you to withdraw the money if you are purchasing your first primary home.

So, check all your options, save wisely, and go buy that home you have always wanted.

Source: Informa Research Services

Mortgage industry experts estimate that over one trillion dollars worth of adjustable mortgages will reset by the end of 2007. Almost half of these will be refinanced into new loans, including fixed mortgages, according to a news report in the Detroit Free Press.
With the cost of a 30-year fixed mortgage averaging 6.37% APR, slightly down .27% from a year ago, many homeowners will be looking to convert their existing three- or five-year teaser rate adjustables into a lower-priced, more predictable fixed-rate mortgage.

Re-financing your adjustable to a 30-year fixed rate can translate into an additional savings of $200 or more a month on a $250,000 mortgage loan payment. This is extra money that can be used to pay-down an existing higher-priced credit card (currently averaging of 12.15% APR nationally.)

Whether your goal is to reduce your monthly payment, cash-out some of the equity in your real estate, or get out of a mortgage product you don’t like, the amount you save by refinancing can provide you with the added income you need to start a savings program or pay-off an existing debt.
Before you decide to refinance, here are some other questions you’ll want to consider:

• When does it make sense to refinance? Decide how long you plan to live in the same house and if a fixed-rate mortgage makes sense. Let your goals influence what kind of mortgage you should get given your unique situation and not necessarily the lowest short-term rate. Always comparison shop for the best rates online.

• Will the added costs of refinancing my ARM offset the potential savings I can achieve by converting to a fixed-rate loan? Before refinancing, research your options and understand how additional points, closing costs, or pre-payment penalties can effect your mortgage loan payment and/or add thousands of dollars to your closing costs. Determine whether spreading these costs over the course of a 30-year fixed loan, along with any ARM to fixed-loan conversion fees if allowable, warrants switching over to a fixed-rate interest loan. While the interest rate may be lower, the savings may outweigh the benefits of your current ARM especially if it has an annual or lifetime cap.

While lowering your mortgage payment can put a few extra bucks back into you pocket, using that money wisely can be the difference between gaining control of your spending habits or going further into debt.

Source: Informa Research Services