Mortgage News | Refinancing Articles

Home purchase is not an inexpensive transaction – it involves you investing considerable amount on a long-term property. It is, therefore, just reasonable that you give a lot of thought before you arrive on any decision involved in your home purchase. One very important decision you have to make is about home mortgage. Eventually, this can spell the difference between keeping and losing your home.

Two familiar options on home mortgage financing are the 15-year and 30-year mortgages. Homebuyers are often faced with the dilemma of choosing between the two financing options. Which of the two yields greater dividends? Which is the real buyer-friendly deal? Let us familiarize ourselves with the two choices and find out.

15-year Home Mortgage
One very apparent advantage of 15-year over 30-year is the period of time you will have to spend paying the loan. Under this financing option, your loan would have been paid half the time. That translates to you living your next fifteen years free of debt and worries.

In terms of interest, a 15-year loan carries lower rates than a 30-year. This means considerable savings on the part of the borrower.

30-year Home Mortgage
Opting for a 30-year loan also has its advantages. One of which is the lower monthly payment. Since you are given a longer period of time to pay your debt, you have the choice to invest your cash flow savings. While you are paying your debt, you can work on your investment portfolio over the thirty-year period.

Despite this advantage, some borrowers still prefer the 15-year mortgage. It has intangible benefits that may have more value than cash, stress relief for example.

Like a 15-year loan, a 30-year also has intangible advantages as it is less discouraging in moments when there is no certainty in the cash flow of a household.

Whichever option you choose, the most important thing is that you responsibly handle your home mortgage. This will ensure that you will be able to keep your home for as long as you would want.

Treasury market continues sell off making mortgage rates make its way up the scale once again. Despite proposals from the government that aim to ease mortgage payment for individuals, rates have been going against affordability of many struggling homeowners. More so, risks of further increase of these rates are projected still to come.

Frightened money is making its way beyond the risk curve. Treasuries are making sales and purchases more that the expected yields on debts on stocks and municipals. All these are happening despite the successful efforts of the Federal to bring credit markets to a stable state.

Late in November, the Federal made an announcement of intention to purchase almost half a trillion of dollars of securities backed up by mortgage. This is believed to have brought the home mortgage rates into decline. Even with the announcement of the MBS to purchase some mortgages did not post any effect on lowering the rates.

Moreover, in the absence of the government in providing conventional home mortgages, chances of an increase in home mortgage would only grow. Since Fannie and Freddie are not guaranteeing these mortgages, many of the banks do not prefer jumbo mortgages which are 2-3% higher. This is an unlikely scene for banks since o secondary market can be obtained from such.

Even the declining housing prices in the market and mortgage debts discharged by bankruptcy and modifications of loans are affecting the rates. Hence, continuous and total support of the government would be necessary in order to rescue the mortgage market.

With the efforts of the Federal in creating ways to ease the home mortgage rates, investors are only seeing an even worse inflation as an outcome. A lot of investment managers, who have projected the meltdown in finance, see an overpricing in the treasury market. Although it may not be considered a total threat, some unlikely situations are likely to occur with continuous guarantees and lending offered by the government.

Can you afford your dream house? Is it the perfect timing? These are just a few questions that we hope to answer to help you know if you are really ready to buy yourself a home.

What is your “BUDGET”?

Check if all of your expenses are within your takings especially your home mortgage. Make sure that housing fees, like your monthly mortgage payments, property tax, electric bill, condo fees, etc., are under 42 percent of your family’s income. The lower housing payments are the better so that in case rates change or you have a financial slump, you can still manage this baggage.

How much are YOU WORTH?

Know your net worth. You can avail loans easier if you have a positive net worth. Regularly monitor it to make sure that it is rising.

What can you REALLY buy?

You can do this with your own calculator to see how much you can manage. But it would be best to have professional home mortgage lenders or brokers assess how much you can or can not afford.

Inquire from one company to another until you find the perfect match. Each lending company has different set of offers so you should not get stuck in one. If lenders can not give you what you want, ask home mortgage brokers, they may answer your need.

But after assessment, you have the job to analyze the subject to yourself since you are the one who will suffer if you make a hasty decision. Remember: rates change. Can you still manage your loan in case rates increase?

Do you really, really need to buy the house NOW?

The housing market is very unstable nowadays. A few years back house were 10 percent pricier then with our current economy it is now on a three-sixty with bad investment returns. Then consider if your chosen property would be a great family investment.

If you have confidently answered these questions, go find your dream property and run to a trusted mortgage professional to handle your finances. They will give you great advice.

Here are some guidelines in choosing your home mortgage lender:

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