Confused about getting a mortgage or refinancing your home? Maybe you're trying to figure out how to apply for a mortgage or home equity loan. Or perhaps you're in the middle of the loan application and you've found a term you don't understand. We'll help you find the information you need.
Getting a mortgage is the only way most of us could ever afford to buy a house. Since your house is likely to be the biggest investment you'll ever make, you want to go into the mortgage process well-prepared. Different lenders offer different types of mortgages, interest rates and mortgage terms. Shopping around for the best rate and mortgage terms could save you tens of thousands of dollars over the life of the loan.
Home equity loans -- sometimes called 'debt consolidation loans ' or a 'second mortgage -- are often an inexpensive way to finance large expenses. Most home equity loans have lower interest rates than other types of borrowing and your interest is likely to be tax deductible.
If interest rates drop after you have your mortgage or home equity loan, it may make sense to refinance your existing loans. A slightly lower interest rate can save you thousands of dollars over the life of a loan. You have to look at your own financial situation to see if refinancing can save you money. Traditionally, refinancing made sense if interest rates dropped 2% less than your existing loan. Now, some banks offer very low or even no fee refinancing, making getting the loan less expensive and it may make sense to refinance even if the interest rate hasn't dropped the full 2%.
If you're just starting to look for your mortgage, refinance or home equity loan, our article, Getting A Mortgage suggests where to start looking for lenders and includes a list of links to free government pamphlets and information. The Department of Housing And Urban Development sponsors housing counseling agencies throughout the country that offer unbiased advice on how to get the best home loans, this will help you contact an agency near you.
Our free mortgage calculator will calculate the monthly payment, the total amount you'll end up repaying the lender and how much interest you'll pay the lender over the life of your loan. You can enter different loan amounts, change the length of the loan, set the interest rate and decided how often you'd like to make a payment. Try different scenarios to see which one works the best for your financial situation.
Mortgages and other home loans are products -- just like cars or washing machines. Different lenders offer different types of mortgages with different interest rates, different fees and other options. You need to shop around and get quotes from several lenders to get the best mortgage for you.
Talking with your bank or mortgage broker may sound like they're talking in another language. Our mortgage glossary explains many common mortgage and home loan terms.
A recent article in USA Today says that a consumer group found that "One in four credit reports has errors serious enough to disqualify consumers from buying a home, opening a bank account or getting a job." Your credit report is some of the most important information a lender will use when deciding if they should give you your mortgage or home loan. You need to make sure that your credit report does not show any inaccurate or questionable items before you apply for your home loan. There are free or inexpensive ways to get your credit report.
What can you do if you're looking for a mortgage, but you have less than perfect credit? You can take steps to repair your credit history and improve your credit score.
Many home buyers like the security of a fixed rate mortgage where the interest rate you pay will remain the same throughout the life of the loan. That means you know exactly what you will pay for every payment . You don't need to worry about the interest rate going up after you get your loan.
An adjustable rate mortgage may save you money compared to a fixed- rate mortgage. With an adjustable rate mortgage, the lender will change the interest rate they charge you at specific intervals during the life of the loan. Every time the interest rate changes, your monthly payment will increase or decrease along with the interest rate.
Interest only mortgages and balloon payment mortgages offer experienced borrowers a chance to postpone paying back some -- or all -- of the principal. Savvy investors may be able to use one of these mortgages to afford a bigger house than would be possible with a fixed-rate or adjustable-rate mortgage of the same size.
Reverse mortgages are a special type of mortgage for home owners over 62 years old. Reverse mortgages provide cash by letting you borrow against the equity in your home. A reverse mortgage lets senior borrowers use the cash from the value of their home while keeping the risk of borrowing low.
When you've decided on the best type of mortgage for your financial situation, it is time to shop around to get the best deal you can on a mortgage. If you are considering using a mortgage broker to help you get your loan, see our article on how to find a good mortgage broker to help you avoid the bad apples.
Now you're ready to begin the mortgage application process. Our article on the mortgage application process will give you an idea about what paperwork you'll need to apply for your mortgage, and what happens after you apply. You should contact several lenders and get quotes for different types of mortgages to see which one works best for your unique financial situation. There are web sites that work with networks of lenders to help you find one that works for you. We have a list of sites that will provide you with free, no-obligation quotes from one or more lenders. Some of the sites specialize in mortgages when you purchase your home, refinance an existing mortgage and others who offer home equity or debt consolidation loans. These sites offer a quick way for you to compare several home loan offers quickly without having to commit to anything.
Many mortgage and home equity loan lenders will require you to carry private mortgage insurance if your down payment is less than 20% of your loan. The premiums you pay for PMI can add up to hundreds of dollars every year.
The Fair Lending Act is a federal law that protects every home buyer looking for a mortgage loan against discrimination on the basis of race, color, national origin, religion, sex, marital status, age, receipt of public assistance funds, familial status, handicap, or exercising your rights under other consumer credit protection laws. Our article about the Fair Lending Act will explain your rights and tell you what to do if you think they've been violated.
Unfortunately, not all lenders are honest. The U.S. Department of Housing and Urban Development (HUD) reports that every year misinformed home buyers - often first-time purchasers or seniors - become victims of predatory lending or loan fraud. In communities across America, people are losing their homes and their investments because of predatory lenders, appraisers and mortgage brokers. Don't let this happen to you! Our article on Avoiding Loan Fraud shows you some of the tactics predatory lenders use and how to protect yourself from them.