(LoanSafe.org) — It is very well established that the Federal Housing Administration (FHA) has a reverse mortgage program known as the Home Equity Conversion Mortgage (HECM). Some people might be confused when they here this, because their knowledge may lead them to think that FHA backed mortgages are strictly for low income borrowers. While the FHA is an agency that does helps promote homeownership to people who don’t live as comfortably as others, they indeed do offer reverse mortgages. (more…)
(LoanSafe.org) — To most, it is no secret that plans change. This philosophy of life can sometimes create drawbacks for some. Luckily for reverse mortgage borrowers, payout options can easily be changed, but usually at a cost for $20. (more…)
(LoanSafe.org) — We’ve written a lot on refinancing lately. With mortgage rates still lower than they were years ago, they are expected to rise sometime this year. There are many reasons why anyone would want to draw against their home equity such as debt consolidation, home repairs, paying off another loan, or just to gain extra savings. Something important to know when thinking about refinancing is to know the difference between home equity loans, and home equity lines of credit (HELOCs). (more…)
For people who plan on living in a home for a longer period of time, there may be an even cheaper option than the 30-year fixed rate mortgage (FRM). The 15-year FRM offers just as much, and comes with a few advantages of its own.
Pros of borrowing with a 15-year FRM
1. Lower mortgage rates
Despite the drawback that refinances on this loan will come out as less than they would on a 30-year loan, the rates to begin with are already lower. An average 15-year FRM (conventional and jumbo) currently hold rates as low as 4% on an average day at large lenders. A 30-year FRM on an average day currently carry rates as high as 4% at large lenders. This can be verified daily here on LoanSafe under our rates section.
2. Cheaper interest payments
With less overall interest being paid out over the entire life of the loan, a borrower pays less with a 15-year FRM. Interest payments are bundled up with the entire monthly payment along with everything else that comes in the package. The price of interest however, comes out to be a significant portion of the entire payment plan. A 15-year loan will help you save on this significant portion of your loan. With a $300,000 30-year mortgage currently running at 4.5% interest, you’d end up paying well over $200,000 in interest over the life of the loan. With a $300,000 15-year loan currently running at 3.625% interest, you’d end up paying just $89,360 during the life of the loan.
3. Short loan life
With less to pay, the entire thing gets paid off in half the time without twice the amount of the mortgage in interest.
4. Less in Mortgage Insurance
Monthly mortgage insurance payments that are also packaged into the entire monthly payment depends on the size of the loan and down payment that was paid. If your loan size was smaller, then your down payment would potentially have been smaller as well. Homeowners with lower loan sizes could potentially reach a higher loan-to-value ratio sooner as well.
Cons of borrowing with a 15-year FRM
1. Higher monthly payments
Although some of the payments such as interest and mortgage insurance would be lower, the shorter life span of a 15-year loan comes at the cost of more to be paid out each month.
2. A scenario where rates suddenly lowered
While fixed rate loans and adjustable rate mortgages both have their functions, one drawback of any FRM is the fact that it is the same for the life of the loan. There are still homeowners paying off mortgages that existed back when rates were 6% and above. Rates are currently much lower than they were years ago. There is no way of knowing if they will rise or drop in 2014, however they could potentially remain where they are or go lower. While this could be seen as a disadvantage by some, in the end it all has to do with the borrowers desires.
3. Higher rates compared to adjustable rate mortgages
Again, it all has to do with the perspective of the borrower. Despite the fact that the rates of a 15-year FRM are lower than those of a 30-year FRM, they’re still not as low as the rates of an ARM.
To get some assistance on top of a VA loan; or if a VA loan is simply not enough, the US Department of Veterans Affairs does offer two types of housing grants for qualifying service members. These grants are known as the Specially Adapted Housing grant (SAH), and the Special Housing Adaption grant (SHA). (more…)
(Source: Freddie Mac) — In this installment of “Dispelling the Myths,” we’re focusing on short sales – when a property is sold for less than the balance remaining on the mortgage loan. The short sale is an important tool for helping distressed homeowners avoid foreclosure and eliminate their mortgage debt. And thanks to key changes we’ve made in the program, Freddie Mac short sales today are taking less time to process on average than ever before. But for a lot of borrowers, short sales remain a mystery. Here are eight common misconceptions about short sales – and the facts every distressed homeowner should know. (more…)
(Source: CFPB) — Let me tell you a common story I hear. It starts with a woman in 2005 or 2006 who took out a mortgage to buy her first home. After two years, her teaser interest rate expired. Her monthly payments doubled so she could no longer afford them. (more…)
Some loan officers may claim that it’s downright impossible to do anything that will aid in speeding up the closing process when getting a mortgage. While many variables make the situation out of your (and the lenders) control, there are a few steps you can take to ensure a quick and smooth closing. (more…)