Securing Home Mortgages
October 10, 2011 by admin
Filed under Finance & Loans
One of the most important decisions you will make in your life is the decision to buy a property. Owning your home not only gives you personal satisfaction but is also a trusted way to build wealth. The problem is that not many people starting out in life have the cash resources to purchase a house, so they have to secure a home mortgage.
Securing home mortgages is not as daunting as it once was when a down payment of 20% of the value of the property was required. Today you can put down 3 to 5% of the purchase price and secure home mortgages as long as you take out mortgage insurance, either from the federal government or the private sector. There are several things to check before approaching a lending institution for a home mortgage:
• Do you have 26 – 29% of your gross income to support the monthly repayments
• Do you have sufficient cash for the down payment and closing costs
• Do you have a good credit score
• Do you have two months payments in reserve
• Do you have money for maintenance and insurance costs
• Is the value of the house equal to the property price?
Now, you might already have had a home mortgage for several years and are considering refinancing your mortgage, which means that you pay off your existing loan and create a new one. There are various reasons you might want to refinance your home mortgages such as in order to lower your interest rate:
• To lengthen the term
• To decrease the term
• To change from an adjustable rate to a fixed rate
• To get cash from equity in your home.
However, if your current mortgage has a pre-payment penalty fee, if you have had your mortgage for a long time and are now paying off the principal, or if you are planning to move in the near future, you should not consider refinancing.
To make your decision to refinance easier, you will want to calculate your mortgage refinance. The costs to consider are any pre-payment penalties, 3-6% of principal in refinancing costs and various other costs such as for appraisals, title search, and attorneys. However, the easiest way to calculate your mortgage refinance accurately is to use online calculators available on lending institutions websites and on federal websites. I would certainly recommend this.
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