Confidence Can Lead to a Better Mortgage

As happens in any industry, there are professionals who work in the real estate industry who don’t mind cutting corners. Protections against working with inexperienced realtors and mortgage brokers comes through local and state realtor licensing requirements.

You may not be real estate savvy, but you deserve to be heard

The realtor licensing requirements vary from state to state, but generally mandate that realtors complete educational training and pass a state approved licensing examination. Ethical and legal issues may be covered during the training. What training seminars, study guides and tests may not give realtors are strong communication skills.

A study guide may not show realtors how to respect mortgage borrowers and house hunters. This training may fall into your lap. To be effective when dealing with realtors and mortgage brokers, you need to be confident. When you are confident while house hunting, you can increase the likelihood that you will:

  • Search for houses that fit within your financial range (confidence can help you to communicate to realtors the importance of not wasting your time and only showing you houses that are below your maximum budget)
  • Avoid giving into realtor or mortgage broker requests to buy houses that have amenities that you don’t really want or need
  • Stick to looking for houses that are located in areas that match your personal tastes
  • Get the chance to buy houses that your entire family will appreciate (this means that you won’t be talked into buying a house that may be great for adults but injury provoking for children)
  • Steer clear of attending open houses where former pet owners lived if you don’t want to live in a house that was once home to several dogs or cats
  • Receive a thorough explanation of each expense associated with owning a house. For example, if you’re confident, you could clearly and respectfully communicate to a realtor that you want all costs associated with a house to be level with or below your budget. In this case, expenses like your mortgage principal and interests, homeowners association fees,closing costs, broker fees, title fees and loan fees and insurances will not exceed your maximum budget.
  • Work with a realtor who takes the initiatives to update you on the status of the house shopping process.

House hunter confidence yields its own rewards

Reliable and respectable realtors and mortgage brokers are honest. They value house hunters and borrowers, whether these adults are their clients or not. They research directories, conduct smart marketing for their clients and look for quality houses that match their clients’ requests. Sharp realtors and mortgage brokers aren’t pushy or demanding. They listen to their clients.

If they exhibit enough respect and self-confidence, smart house hunters could help to sharpen realtors and increase their chances of working with realtors who find them houses that they will afford and appreciate. They could also help realtors gain the very skills that strengthen and lengthen realtor careers, skills like active listening, focused question asking, thorough research and welcomed communication skills.

What is an Adjustable Rate Mortgage?

Trying to decide what type of mortgage is right for you can be tricky business. So you may be wondering what is an adjustable rate mortgage? An adjustable rate mortgage or ARM, has an interest rate that is linked to an economic index. This means the interest rate, and your payments, adjust up or down as the index changes.

There are three things to know about adjustable rate mortgages: index, margin and adjustment period.

What is the index? The index is a guide that lenders use to measure interest rate changes. Common indexes used by lenders include the activity of one, three, and five-year Treasury securities. Each adjustable rate mortgage is linked to a specific index.

The margin is the lender’s cost of doing business plus the profit they will make on the loan. The margin is added to the index rate to determine your total interest rate.

The adjustment period is the period between potential interest rate adjustments. For example, you may see a loan described as a 5-1. The first figure (5) refers to the initial period of the loan, or how long the rate will stay the same. The second number (1) is the adjustment period. This is how often adjustments can be made to the rate after the initial period has ended. In this case, one year or annually.

An adjustable rate mortgage might be a good choice if you are looking to qualify for a larger loan. The rate of an ARM is typically lower than a fixed rate mortgage. Remember, when the adjustment period is up the rate and payment can increase.

Another reason to consider an ARM is if you are planning to sell the home within a few years. If this is the case you may end up selling before the adjustment period is up.

Federal law provides that all lenders provide a federal Truth in Lending Disclosure Statement before consummating a consumer credit transaction. This will be given to you in writing. It is designed to help you compare and select a mortgage.

How to Pay Off Your Mortgage Early

Who wouldn’t like to pay off the mortgage early? Getting rid of mortgage debt will allow you the security and the psychological benefit of owning your home free and clear. There are lots of ways to accomplish these goals. Here are some suggestions on ways to get rid of your mortgage debt. Compare the options and do what works best for you.

1. Add more money to your monthly payment. This will help pay down the principal balance shortening the length of your loan. When you pay more on your principal is gets lower, and the lower your principal gets, the more every payment from then on is applied to principal, as less goes to cover interest expense.

2. Refinance. Refinance your mortgage to 10, 15 or 20 years. Your payments will be higher on a 15-year loan, but often the rate is lower and the loan is paid off much quicker. If you are afraid to take out a 15- year loan take out a 30-year loan, but make payments as if you had a 15-year loan.

3. Make biweekly payments. Most banks have a biweekly payment plan. Since there are 52 weeks in the year if you pay half your regular mortgage payment every other week, you’ll have made 26 half-payments, or 13 payments.

There are options when it comes to owning your home free and clear. Just decide which one works for you and be on your way to being mortgage free.

Should You Pay Off Your Mortgage Early?

Paying off your mortgage early and having no bills sounds like a no brainer. The answer however is not so simple. The answer really is; it depends.

First you need to ask yourself a few questions.

1. Have you capitalized your employer’s match to your retirement savings?

If the answer is no and you are not contributing the maximum than you are throwing away free money. You may want to consider putting your money here before paying down your mortgage.

2. Do you have other debt other than your mortgage?

Pay off high interest credit card debit first. It makes no sense to pay off a lower interest loan and carry high interest debt.

3. Do you have an emergency fund?

Experts suggest at least a three month supply of living expenses. Some even go as much as twenty four months of living expenses after the turn in the economy and job market. It makes more sense to have money set aside for a sudden loss of income before you
pay off your mortgage.

4. Do you owe more than your house is worth?

If you are upside down you are more susceptible to foreclosure. Ask yourself how much how much you enjoy living there. Would you be willing to buy it again for more than it is worth now?

5. Do you have life, health and disability insurance?

If you are the main source of income in your household what would happen if you were no longer able to make the payments? Putting safety nets in place first is a wise idea.

6. Do you believe you can get better return investing elsewhere?

Paying off your mortgage is an investment decision. Ask how does paying off my mortgage stack up with other investment options?

7. Are you thinking of retiring and want to live with the worry of a payment?

The thought of living on a fixed income can be scary. Paying off your mortgage may give you peace of mind. There is no right or wrong answer to this question. It really comes down to what is most important to you. Sometimes, the answer is not based just on dollars and sense and more on what works for you, your life, your family situation and just plain old personal preference.