Best Mortgage Loans of 2017
There is no one-size-fits-all standard for personal loans, mortgage loans, or mortgage refinancing loans. The loan amounts, duration, and interest rates can vary dramatically and approval for borrowers can hinge on their credit history in addition to their capacity of return. Each type of loan carries its own particular benefits and risks for the consumer to weigh before signing on the dotted line. We recommend gathering as much information as possible prior to making a decision. You can start with our reviews of top lenders.
When you finish with our reviews, be sure to learn more with our informative articles.
How to Apply for a Mortgage
So, how do we get started? When applying for a mortgage, the burden is on you to show lenders that you have the ability to make your monthly payments. You will be asked to provide lenders with an overview of all your sources of income, as well as your regular bills, debts, and other outstanding loans. They will also run a credit check to gauge how high risk you are.
Some lenders may have different requirements and make sure they specify every document they need for the process. In addition, it s wise to keep your own personal copy of every document you submit to the lender.
When meeting with lenders, make sure they fully explain all the ins and outs of the mortgage before you sign. It s also a good idea to check with a number of different lenders, in order to see who can provide you with the terms that best fit your income and ability to repay.
Mortgage Loan Types
There is a wide variety of mortgage loans available on the market, and it s up to the individual borrower to decide what works best for them, through careful consideration of what the different loans entail.
The two main mortgage loans are fixed loans and adjustable loans. Fixed-rate loans keep the same interest rate for the entire duration of the loan, and will not fluctuate from month to month or year to year. Adjustable rate mortgage loans are just that they adjust at pre-determined intervals over time, but with a lower beginning interest rate than that of fixed loans. Fixed rate loans afford the borrower security and stability though they will start higher than adjustable mortgages.
Fixed rate mortgages tend to be the best option for first-time buyers and those planning to stay in a house for the long-term or duration of the mortgage, while adjustable rate mortgages are best for buyers who plan to stay only a few years in the property, in that for the first few years the loan has a lower interest than that of fixed rate mortgages. Adjustable rate mortgages do carry risk though if the value of the house plummets and your interest rates increase dramatically you may not be able to refinance your mortgage or sell the home a reality for many borrowers during the mortgage crisis of 2008-2009.
In addition, there are conventional loans which are not guaranteed by the government and loans such as Federal Housing Administration (FHA), Veterans Affairs (VA), and Department of Housing and Urban Development loans (HUD), which may be an option for borrowers who qualify.
Two step mortgages have a fixed-interest rate for an initial period of time, which changes at a predetermined date. The second rate will be adjusted to the market rates at the time of the shift which can work to the advantage or detriment of the borrower. When the rate shifts, the borrower has the ability to decide between a fixed or variable interest rate for the duration of the mortgage.
Balloon mortgages are for much shorter terms and begin with a fixed rate with regular payments for a predetermined period of time, after which it balloons and the rest of the remaining balance is owed with a one-time payment at the end. Though this sort of loan entails lower interest rates in the initial years, it requires the borrower to gamble that they will have the funds to make the large payment at the end of the loan period, which often hinges on their financial situation remaining stable, or the property maintaining its value.
The good news for prospective homeowners is that mortgage rates are currently at one of the lowest levels in decades, hovering at below 4% for 30-year and 15-year-fixed rate mortgages. With rates at their current low, this may be a great time to lock down a fixed-rate mortgage.
Mortgage Fee Calculator
If you re not in the mood to head down to your local bank branch and talk to a mortgage broker you re in luck countless online mortgage calculators can give you an idea of how much that house loan will set you back each month.
Most online mortgage calculators ask if the property will be used as a primary home, secondary home, or rental property, followed by the location and purchase price and the size of your down payment and your credit score. Others may go deeper, asking for your age, military history, and financial record (if you have ever declared bankruptcy, for instance).
Within minutes, you should be able to get a sense of how much you will stand to pay each month on a variety of fixed and adjustable loans.
Regardless of the length of the loan, all loans require repayment. Borrowers agree to pay back the loan in a particular amount of time and if borrowers are unable to do so they face legal implications.
There are a number of laws and regulations in place in the US to protect borrowers. On the federal level, these include a series of laws such as the Truth in Lending Act which establishes disclosure requirements for lenders and the Fair Housing Act, which bans discrimination based upon race, color, sex, religion, national origin, familial status, or handicap. Federal and state regulations are meant to uphold fairness in the lending process, and also to safeguard the financial information of borrowers.
Before taking out a loan, it is important for you to know the relevant state and federal regulations that apply to your loan and work to your advantage.
Important Information on Mortgage Loans
There are always risks when borrowing and there are consequences if the loan is not paid off. If the loan is not paid, you may be reported to a collection agency and face financial and credit score penalties. Regardless of the length of the loan, all loans require repayment. Borrowers agree to pay back the loan in a particular amount of time and if borrowers are unable to do so they face legal implications.
Two step mortgages, has the same interest rate for part of the mortgage and a different rate for the rest of the mortgage. The interest rate adjusts in accordance to the rates of the market. This may wither work to the advantage or disadvantage of the borrower. However this option likewise gives the borrower the opportunity to decide between a variable interest rate and a fixed interest rate at the adjustment date.
Balloon mortgages are much shorter return term and work like a fixed-rate mortgage. The monthly payments are usually lower because of a large payment at the end of the loan