What Does A Home Mortgage Broker Do?

When you need to purchase a new home most people do not have the capital to be able to fully buy one. They will need to take out a mortgage or loan to make up the difference on the amount they have and the purchase price of the new home.

There are 2 main ways of getting a mortgage, through a bank or through a mortgage company. To help with getting a mortgage you will use a loan officer or a mortgage broker.

The main difference between a loan officer and a mortgage broker is that the loan officer works for the bank or mortgage company that is offering the mortgage and the mortgage broker is independent. They may use a number of different companies to arrange a mortgage with and there fore give you the borrower more choice.

One of the main advantages of having a broker arrange your mortgage for you is that they do have a wider choice of products and companies to choose from. On the other hand you need to be aware that the mortgage broker is paid from the closing fee made on the mortgage.

So if you have a poor credit history most banks will not give you a mortgage. The mortgage broker on the other hand can search around all the companies he deals with to find a company that offers bad-credit mortgage loans. He may even be able to find a choice of offers for you and you can pick the best deal for your circumstances.

It may be faster getting your mortgage through a bank or credit union but you may not always get the best deal. The mortgage broker should be able to get you a better deal on your mortgage, although it may take longer to arrange because he is acting as the middleman between you the borrower and the mortgage company, the lender. It can be time-consuming to resolve mortgage matters between these two entities because of all the paperwork involved and the financial checks needed.

While the mortgage broker can help with filling in the applications and details it is up to the borrower to check and submit correct information so that they do not get into financial difficulties later on.

While buying a home is one of the most stressful things you can do, it is also usually a sound financial investment. However it is always best to get good and sound financial advice from an independent financial advisor, someone who is familiar with property or an independent mortgage broker.

About the Author:

Find out how to get Hackensack homes for sale NJ or Wallington homes for sale NJ at below the market value of the property.

Article Source

Is Refinancing 5/1 Year Arm With a 30 Year Frm Worth It?

Scenario:

I am about to shift to a place 55 miles east of my current home which I intend to sell. I wanted to sell the sell the home before I could get the new home as I have sufficient equity ($30,000) in the old house which I could put into the new home when the former sells. But the market isn’t going great in the county where I live and it doesn’t seem that I will be selling it fast. I am thinking of going for a 5/1 year ARM on the new home while the old property is up for sale. I would then refinance the new home with a 30 year FRM when I am able to get the sale proceeds and hence my equity from the old home. Am I on the right track?

Solution:

If you are buying a second home with a Mortgage, you must be aware of closing costs involved in it. Such costs range from $2000-4000 and vary from one state to another and even from county to another. So, once you are buying the home, you’ll pay the closing costs and then again when you refinance it, you’ll pay another set of the same costs. And, the costs of refinancing are worth considering. So, why pay it twice when you can use up the money on something else that can benefit you.

Instead of going for a 5/1 year adjustable rate mortgage (ARM) and then refinancing it into a 30 year fixed rate mortgage (FRM), it is better that you go directly for the fixed rate loan in order to buy your home. Moreover, considering the current interest rates on 5/1 year ARM and 30 year FRM, the difference in interest expense isn’t much.

Let’s take an example to find out the difference in interest rates on 30 year FRM and 5/1 year ARM.

For 30 year FRM,

Suppose, Loan amount = $150,000

Interest rate = 5.90%

Using the FRM calculator, the monthly payment = $889.70

Loan balance at the end of 1 year = $148123.33

For 5/1 year ARM,

Say, Loan amount = $150,000

Interest rate = 5.56%

Using the FRM calculator, the monthly payment comes out as = $857.34

Loan balance at the end of 1 year = $148001.52

Thus, the difference in the monthly payments on 30 year FRM and 5/1 year ARM is around $32.36 ($889.70 – $857.34) which comes out to be $388.32 annually. And, the difference in loan balance at the end of the 1st year is around $121.81. So, the monthly payment and loan balance (at the end of 1 year) do not differ by a large number. Moreover, taking out a loan with variable payments just for the sake of saving $388 a year isn’t a good financial move. You don’t know what your rates can be each year when they adjust as per the changes in the ARM index. Therefore, it’s better to go for a 30 year fixed rate loan instead of first applying for a 5/1 year ARM and then refinancing it with a 30 year FRM.

Now, when you buy the second home (with a 30 year FRM), you need to pay the closing costs and for that you can take out a bridge loan in case you aren’t able to sell the current home and use the sale proceeds. The bridge loan gives you a short term financing solution and it will be offered against your current home as the collateral. Generally it should be repaid by the time you sell your current home but you can request the lender and extend the repayment period to another 6 months. And, you can get such a loan with little documentation of your income and assets.

However, I would advise that you sell the property within a short time, and if possible, even at a lower price. This is because if you delay the sale, you may end up paying much more as rates and costs of taking the loan may get higher. If you have any query on Refinance or loan related issues, feel free to discuss it with the community members in Forums.

About the Author:

Samantha Taylor is a contributing writer and moderator of  Mortgagefit.com Forums. She specializes in mortgage and real estate field.

Article Source

Mortgage Refinancing -Things you should know

What is Refinancing?

Refinancing is the process by which an existing secured loan is being paid off by getting a new loan, of the same value, that is again collateralized with the same property as the former loan. it is especially for those who already have a mortgage but would like to have it refinanced and get a lower interest rate.

Types of Mortgages

1. Mortgage refinancing – This type of mortgage is mainly for those who already have a mortgage but would like to have it refinanced and get a lower interest rate.

2. Fixed rate mortgage – This type of mortgage are very good if the interest rate is low. When going for this type of mortgage, look out for the interest rate that suits you. By doing this you make sure that you actually get the lower rate.

3. Reverse mortgage funding- This mortgage would work for people who have their homes fully paid for and have no mortgage on it. it gives  you the opportunity to receive a stipend which you will get monthly from the equity carried by your home.

4. Interest only mortgage options – This type of mortgage lower the amount you pay during the first few years of your mortgage term. In your first few years of your mortgage, you are only paying for the interest thus making the subsequent mortgage payments much lower.

5. Mortgage loan modification – launched earlier this year. It is called the Make Home Affordable program. You can apply for a loan modification to reduce your payment or your interest rate. Major reasons for mortgage refinancing Arguably the best reason to move forward is if you’ve found a lower interest rate. Maybe your credit score has improved, or maybe the market is more favorable-either way a lower interest rate can save you a great deal of money over the term of your loan.

Generally speaking, as a rule of thumb, it is worth pursuing if you can find a two percent lower rate. consider all these before you go for any type of mortgage refinancing; Lowering interest rate,Adjusting the length for mortgage,Shifting from an adjustable-rate mortgage to fixed-rate mortgage.Refinancing is a decision that deserves careful contemplation.

Mortgage refinancing may not be advisable for people who are interested in changing their primary residence. Refinancing may be foolhardy if the existing mortgage has prepayment penalties or if the loan is nearing maturity. Again, cash-out refinancing, that refers to refinancing for more than the current debt, may not be advisable since repaying the loan may prove to be cumbersome.

About the Author:

I provide premium information on how to get the best Mortgage Refinancing deals over a range of categories to help suit the needs of Mortgages buyers worldwide.A visit to http://mortgagerefinancingpro.co.cc will save you a fortune.

Article Source