In the simplest terms your credit score is your credit history calculated in figures. There are many methods which can be used to calculate your credit score but the most common method is the FICO. FICO was developed by the Fair Isaac Company and is the preferred method used by most lending companies. Your credit score determines whether a lender will approve your application or not or whether a lender will give you less rates on your payments or not.
Credit scores or FICO scores generally range form a low of 340 to a high of 850. Ideally, you should aim for a score of at least 700 or more. If you get a score of 600 and below, creditors will likely consider you as a high risk borrower.
Knowing how your credit score or your FICO score is calculated will help you become more aware of your spending and your payment habits. Let’s consider the break-down of categories used to sum up your credit score.
What comprises your credit score?
35% of your credit score depends on how good of a payer you are. If you make it a point to pay all your bills promptly, you should have no problem obtaining the complete 35% of your credit score. However, if you’re in the habit of delaying or skipping payments, or if you defaulted on some of your debts, your credit score will also be affected.
30% of your credit score is calculated based on the level of your debts. Do you always maximize the use of your credit limit? Were there instances that you’ve even exceeded your credit limit? If so, then you’ll likely get a low score on your credit utilization. Hence, borrowers are advised to keep spending below their credit limit. As much as possible, keep your balances at least 50% lower or even less of your credit limit
15% goes to the length of your credit history. How long has it been since you started your credit report? The longer your length of credit history is, the better your score will be. This is because, the more information your creditors can get out of your credit report, the better they can gauge you as a borrower. This is why it is very important to establish a good credit report as early as you possibly can. Also, this is the reason why you should always think twice before closing accounts that you’ve had for a long time.
10% of your credit score is based on inquiries. If you’re in the habit of submitting credit card applications just for the heck of it, your credit score can be affected. Also, whenever a creditor denies your application, it can also have an impact on your FICO score. Thus, before submitting any application, see to it that you really intend to get an approval out of it.
The other 10% of your credit score is based on mix of credit. If you have a credit card account, a car loan, a mortgage loan and various types of insurance policies, it will show your flexibility and dependability as a creditor. If you’ve been able to manage all these different types of accounts without any problems on your payments, then you’ll likely get a perfect score on this category.
http://www.articlesmaker.com/finance/mortgage-refinance/what-comprises-your-credit-score.html
Saturday, October 6, 2007
Peace of Mind with Fixed Rate Mortgages
Fixed rate mortgages offer borrowers the ability to help budget for household expenses more accurately because they have an interest rate that remains constant for an agreed portion of the overall term of the mortgage - typically between one and five years.
Unlike variable rate mortgages, the interest rate charged on fixed rate mortgages will not be influenced by changes in either the Bank of England Base Rate (BoEBR) or the lender’s Standard Variable Rate (SVR).
Instead, the interest rate on fixed rate mortgages will remain constant during the fixed rate period regardless of movements in interest rates on other financial products.
The fixed interest period gives borrowers the stability they need to manage their household budget more effectively, which is why fixed rate mortgages are popular with first-time-buyers and young households.
Fixed rate mortgages are also popular during times of historically low interest rates. Many homeowners fix their interest rates while they believe the cost of borrowing is cheap, therefore locking in the low rates well into the future.
However, while fixed rate mortgages provide borrowers with some advantages, there are also several disadvantages.
Fixed interest rates are usually slightly higher than current variable rates. Borrowers should therefore refrain from fixing their rate if they believe that interest rates will either remain stagnant or fall in the near future.
If a fixed interest rate is locked in for a period of time and the variable rate for the same mortgage product remains lower throughout that same period of time, the borrower will pay more interest on their mortgage than required.
Additionally, once the fixed rate period expires, the interest rate will convert to the lender’s SVR. It is therefore advisable that borrowers assess their remortgage situation before the termination of the fixed rate period.
It is also important to note that most lenders charge an arrangement fee for their fixed rate mortgages. Therefore, borrowers should assess whether the estimated future savings in interest that can be made by fixing the interest rate is not outweighed by any upfront arrangement or brokerage fees that must be paid.
Borrowers should therefore assess the overall expected cost savings in combination with the ability to manage their household budget more effectively, against any upfront fees that may be charged, before applying for fixed rate mortgages.
http://www.articlesmaker.com/finance/mortgage-refinance/peace-of-mind-with-fixed-rate-mortgages.html
Unlike variable rate mortgages, the interest rate charged on fixed rate mortgages will not be influenced by changes in either the Bank of England Base Rate (BoEBR) or the lender’s Standard Variable Rate (SVR).
Instead, the interest rate on fixed rate mortgages will remain constant during the fixed rate period regardless of movements in interest rates on other financial products.
The fixed interest period gives borrowers the stability they need to manage their household budget more effectively, which is why fixed rate mortgages are popular with first-time-buyers and young households.
Fixed rate mortgages are also popular during times of historically low interest rates. Many homeowners fix their interest rates while they believe the cost of borrowing is cheap, therefore locking in the low rates well into the future.
However, while fixed rate mortgages provide borrowers with some advantages, there are also several disadvantages.
Fixed interest rates are usually slightly higher than current variable rates. Borrowers should therefore refrain from fixing their rate if they believe that interest rates will either remain stagnant or fall in the near future.
If a fixed interest rate is locked in for a period of time and the variable rate for the same mortgage product remains lower throughout that same period of time, the borrower will pay more interest on their mortgage than required.
Additionally, once the fixed rate period expires, the interest rate will convert to the lender’s SVR. It is therefore advisable that borrowers assess their remortgage situation before the termination of the fixed rate period.
It is also important to note that most lenders charge an arrangement fee for their fixed rate mortgages. Therefore, borrowers should assess whether the estimated future savings in interest that can be made by fixing the interest rate is not outweighed by any upfront arrangement or brokerage fees that must be paid.
Borrowers should therefore assess the overall expected cost savings in combination with the ability to manage their household budget more effectively, against any upfront fees that may be charged, before applying for fixed rate mortgages.
http://www.articlesmaker.com/finance/mortgage-refinance/peace-of-mind-with-fixed-rate-mortgages.html
Rise of the Interest Only Mortgage
In the wake of increasing interest rates, interest only mortgage products have become an increasingly popular tool for home owners to control their monthly expenses.
Interest only mortgage applications generally rise in number when interest rates begin to rise as home owners fear becoming victims of rising borrowing costs. Mortgage costs are typically the highest expense of the average UK household and it is therefore important for many borrowers to control this cost.
Interest rates have begun to creep up slowly from their historically low level of late and because of this more and more households are opting for an interest only mortgage.
The Bank of England has been slowly increasing the base rate in order to curb inflation. This has been having an effect on the mortgage market by prompting home owners to consider locking in the low interest rates now instead of exposing themselves to potential future rate rises.
In addition to existing home owners locking in their interest rates with interest only mortgage products, first-time-buyers can also benefit from the scheme.
Interest only mortgages can provide a method for low income earners to get a foot on the property ladder. Because the monthly repayment amount is only comprised of interest, the repayments are lower and affordability is increased.
However, the capital portion of the loan must be repaid eventually. There are several vehicles available for this including savings and investment plans, endowments, and remortgaging to a repayment loan at some point in the future.
It therefore makes sense to some borrowers to apply for an interest only mortgage in the beginning and to develop a plan to repay the mortgage balance at a later stage.
If a borrower opts for an interest only mortgage for a period of ten years, for example, they can remortgage to a repayment mortgage after that and begin to pay off the balance. After the ten years has elapsed, the home owner’s income may have increased considerably, making it easier to being to repay the balance of the mortgage.
If you are considering applying for an interest only mortgage, it is a good idea to speak to a qualified mortgage adviser for some impartial advice. An independent adviser will be able to source interest only mortgage products from the entire mortgage market and therefore find the most appropriate product for you.
http://www.articlesmaker.com/finance/mortgage-refinance/rise-of-the-interest-only-mortgage.html
Interest only mortgage applications generally rise in number when interest rates begin to rise as home owners fear becoming victims of rising borrowing costs. Mortgage costs are typically the highest expense of the average UK household and it is therefore important for many borrowers to control this cost.
Interest rates have begun to creep up slowly from their historically low level of late and because of this more and more households are opting for an interest only mortgage.
The Bank of England has been slowly increasing the base rate in order to curb inflation. This has been having an effect on the mortgage market by prompting home owners to consider locking in the low interest rates now instead of exposing themselves to potential future rate rises.
In addition to existing home owners locking in their interest rates with interest only mortgage products, first-time-buyers can also benefit from the scheme.
Interest only mortgages can provide a method for low income earners to get a foot on the property ladder. Because the monthly repayment amount is only comprised of interest, the repayments are lower and affordability is increased.
However, the capital portion of the loan must be repaid eventually. There are several vehicles available for this including savings and investment plans, endowments, and remortgaging to a repayment loan at some point in the future.
It therefore makes sense to some borrowers to apply for an interest only mortgage in the beginning and to develop a plan to repay the mortgage balance at a later stage.
If a borrower opts for an interest only mortgage for a period of ten years, for example, they can remortgage to a repayment mortgage after that and begin to pay off the balance. After the ten years has elapsed, the home owner’s income may have increased considerably, making it easier to being to repay the balance of the mortgage.
If you are considering applying for an interest only mortgage, it is a good idea to speak to a qualified mortgage adviser for some impartial advice. An independent adviser will be able to source interest only mortgage products from the entire mortgage market and therefore find the most appropriate product for you.
http://www.articlesmaker.com/finance/mortgage-refinance/rise-of-the-interest-only-mortgage.html
Flexible Mortgages Are Made for Today’s Modern Lifestyle
Flexible mortgages are among some of the new mortgage packages that have been created to cater for the modern mortgage market. The modern mortgage market has become more liberal and creative, and therefore this has led to an increase in the choice and diversity of mortgage packages being offered to borrowers. Most major lenders include some kind of flexible mortgage in their product range. The majority of flexible mortgages are sold through the traditional routes and they are increasing their hold in the mortgage market, due to consumer demand.
Essentially a flexible mortgage is a secured loan that can be paid back in varying amounts, and the interest is calculated on the fluctuations of the outstanding balance. Flexible mortgages are particularly suited to today’s lifestyle, for example: ‘jobs for life’ are virtually unknown, you might want a career break to raise a family or you might expect some major life changes in the near future.
A flexible mortgage can offer:
Overpayments
You can pay off your mortgage quicker by making regular overpayments or by paying in a lump sum on an ad hoc basis, without incurring any redemption penalties. A flexible mortgage recalculates your outstanding mortgage balance on either a daily or monthly basis, and your interest payments are quickly adjusted for the overpayments that have been made.
Underpayments
You can reduce your regular mortgage payments or even have a complete payment holiday without being in default. There will be conditions attached to this option, for example: you might have to build up a reserve of overpayments before being allowed to underpay. However, a consequence of underpayment means an increase in your outstanding mortgage balance.
Further loans
You can withdraw lump sums from your mortgage account to be used for any purpose, without the formality of applying for a new loan. There are usually conditions attached to this feature, for example: you might have to build up a reserve of overpayments against which you can borrow, and there will probably be a ceiling on the overall amount you can borrow through your original mortgage.
Not all flexible mortgages offer those features, so you will have to shop around.
The ability to pay off your mortgage early is a necessary feature of all flexible mortgages, and the main point of distinction for a flexible mortgage is the extent to which you are allowed to withdraw funds from your mortgage account. The least flexible mortgage combines overpayment facilities with only the option to take occasional payment holidays.
In a recent survey of flexible mortgages carried out for the Council of Mortgage Lenders, nearly half of the surveyed borrowers had not made use of the flexible options that their mortgage gave them. The borrowers that had made use of the flexible options mainly used the overpayment option to allow them clear their mortgage early by either regular overpayments and/or an occasional lump sum payment.
A more structured approach to the flexible mortgage is offered by the current account mortgage (CAM) and the offset mortgage. With a CAM, there is just one account as it combines your mortgage account and current account. The offset mortgage uses separate accounts for the mortgage, current, and savings account. The interest earnt by the current and savings accounts is offset against the outstanding mortgage capital and the interest is reduced accordingly. It is important to make sure the mortgage rate is competitive because some lenders charge a higher rate than average and thus the benefit is lost.
Flexible mortgages have been around since the 1990’s and they have grown in popularity since then. The future looks good for flexible mortgages, with even more options for borrowers to choose from as time progresses.
http://www.articlesmaker.com/finance/mortgage-refinance/flexible-mortgages-are-made-for-todays-modern-lifestyle.html
Essentially a flexible mortgage is a secured loan that can be paid back in varying amounts, and the interest is calculated on the fluctuations of the outstanding balance. Flexible mortgages are particularly suited to today’s lifestyle, for example: ‘jobs for life’ are virtually unknown, you might want a career break to raise a family or you might expect some major life changes in the near future.
A flexible mortgage can offer:
Overpayments
You can pay off your mortgage quicker by making regular overpayments or by paying in a lump sum on an ad hoc basis, without incurring any redemption penalties. A flexible mortgage recalculates your outstanding mortgage balance on either a daily or monthly basis, and your interest payments are quickly adjusted for the overpayments that have been made.
Underpayments
You can reduce your regular mortgage payments or even have a complete payment holiday without being in default. There will be conditions attached to this option, for example: you might have to build up a reserve of overpayments before being allowed to underpay. However, a consequence of underpayment means an increase in your outstanding mortgage balance.
Further loans
You can withdraw lump sums from your mortgage account to be used for any purpose, without the formality of applying for a new loan. There are usually conditions attached to this feature, for example: you might have to build up a reserve of overpayments against which you can borrow, and there will probably be a ceiling on the overall amount you can borrow through your original mortgage.
Not all flexible mortgages offer those features, so you will have to shop around.
The ability to pay off your mortgage early is a necessary feature of all flexible mortgages, and the main point of distinction for a flexible mortgage is the extent to which you are allowed to withdraw funds from your mortgage account. The least flexible mortgage combines overpayment facilities with only the option to take occasional payment holidays.
In a recent survey of flexible mortgages carried out for the Council of Mortgage Lenders, nearly half of the surveyed borrowers had not made use of the flexible options that their mortgage gave them. The borrowers that had made use of the flexible options mainly used the overpayment option to allow them clear their mortgage early by either regular overpayments and/or an occasional lump sum payment.
A more structured approach to the flexible mortgage is offered by the current account mortgage (CAM) and the offset mortgage. With a CAM, there is just one account as it combines your mortgage account and current account. The offset mortgage uses separate accounts for the mortgage, current, and savings account. The interest earnt by the current and savings accounts is offset against the outstanding mortgage capital and the interest is reduced accordingly. It is important to make sure the mortgage rate is competitive because some lenders charge a higher rate than average and thus the benefit is lost.
Flexible mortgages have been around since the 1990’s and they have grown in popularity since then. The future looks good for flexible mortgages, with even more options for borrowers to choose from as time progresses.
http://www.articlesmaker.com/finance/mortgage-refinance/flexible-mortgages-are-made-for-todays-modern-lifestyle.html
Four Ways To Save Money On Your California Home Mortgage
You are already probably paying hundreds of thousands of dollars for a home in California or more. So you certainly do not want to spend unnecessary additional money on closing costs, lender fees, higher interest rates, and other hidden costs. Ways to save on your home mortgage are not immediately obvious, especially when you are not familiar with all the ways lenders can tack on additional costs to the total amount of the mortgage. Use these tips for ways to save money on your home mortgage.
Make sure you are choosing the right type of home mortgage for your situation. When it comes to the total cost over the duration of the loan, the 30 year fixed rate home mortgage is the most expensive, with one exception. If you plan to live in your home for the length of the loan, it is the best home mortgage. As you shop for mortgages, take into account how long you plan to be in your home. Let that length of time determine the type of loan you get. As a general rule of thumb for shorter periods of time, choose an adjustable rate loan, and for longer ones choose a fixed rate.
Try to negotiate with your lender. There is absolutely nothing wrong with asking your lender for a better interest rate or to eliminate some of the fees associated with your home loan. Consider the fees for which the lender makes no money: appraisal, inspection fees, processing fee, title fees, private mortgage insurance, and credit report fees. Anything outside of these fees is fair game to be negotiated with the lender. Do not hesitate to ask your lender to take away some of the unnecessary fees.
Make payments more frequently. If you get paid on a biweekly basis, consider making biweekly home mortgage payments. Each time you make an extra payment, even if it is just one, it shortens the life of your loan. By making two payments a month instead of one, it takes you a little over 23 years to repay a 30 year fixed rate mortgage. Any extra payments you make toward your home mortgage go toward the principal of the loan. So, the balance of the principal, rather than the interest, is reduced by any extra money you pay. When you do this, you can reduce your home mortgage payment dramatically as stated above. Before you make extra payments, make sure your agreement did not include a charge for early repayment.
Try to avoid paying private mortgage insurance. You are required to pay PMI when you make a down payment less than 20 percent of the amount of the loan. The amount you pay in PMI could be used to make extra home mortgage payments or invested in a high yield investment account. If you are already paying PMI, watch your equity closely and drop the insurance once you have 20 percent equity in your home.
There is no sense in paying extra money in interest and other home mortgage costs unless you absolutely must. By using just one or two of these methods you can save thousands or even tens of thousands of dollars in the total cost of your mortgage. When you take steps to reduce your costs, make sure you are not decreasing one cost and increasing another simultaneously.
http://www.articlesmaker.com/finance/mortgage-refinance/four-ways-to-save-money-on-your-california-home-mortgage.html
Make sure you are choosing the right type of home mortgage for your situation. When it comes to the total cost over the duration of the loan, the 30 year fixed rate home mortgage is the most expensive, with one exception. If you plan to live in your home for the length of the loan, it is the best home mortgage. As you shop for mortgages, take into account how long you plan to be in your home. Let that length of time determine the type of loan you get. As a general rule of thumb for shorter periods of time, choose an adjustable rate loan, and for longer ones choose a fixed rate.
Try to negotiate with your lender. There is absolutely nothing wrong with asking your lender for a better interest rate or to eliminate some of the fees associated with your home loan. Consider the fees for which the lender makes no money: appraisal, inspection fees, processing fee, title fees, private mortgage insurance, and credit report fees. Anything outside of these fees is fair game to be negotiated with the lender. Do not hesitate to ask your lender to take away some of the unnecessary fees.
Make payments more frequently. If you get paid on a biweekly basis, consider making biweekly home mortgage payments. Each time you make an extra payment, even if it is just one, it shortens the life of your loan. By making two payments a month instead of one, it takes you a little over 23 years to repay a 30 year fixed rate mortgage. Any extra payments you make toward your home mortgage go toward the principal of the loan. So, the balance of the principal, rather than the interest, is reduced by any extra money you pay. When you do this, you can reduce your home mortgage payment dramatically as stated above. Before you make extra payments, make sure your agreement did not include a charge for early repayment.
Try to avoid paying private mortgage insurance. You are required to pay PMI when you make a down payment less than 20 percent of the amount of the loan. The amount you pay in PMI could be used to make extra home mortgage payments or invested in a high yield investment account. If you are already paying PMI, watch your equity closely and drop the insurance once you have 20 percent equity in your home.
There is no sense in paying extra money in interest and other home mortgage costs unless you absolutely must. By using just one or two of these methods you can save thousands or even tens of thousands of dollars in the total cost of your mortgage. When you take steps to reduce your costs, make sure you are not decreasing one cost and increasing another simultaneously.
http://www.articlesmaker.com/finance/mortgage-refinance/four-ways-to-save-money-on-your-california-home-mortgage.html
A Guide to Save Thousands of Dollars on Your Mortgage!
The dream of owning a home is becoming very allusive these days. Although everyone would like to have a home that is paid for free and clear, many people are forced to assume mortgages that will be paid over 25 or 30 years into the future.
Everyone is constrained to a certain degree by their budget. Yet there is a way to pay off the existing mortgage on your home quicker and save money in the process.
Almost all mortgages have built into them an Accelerated Payment Clause. This allows the borrower to pay more than the minimum amount of the monthly mortgage payment.
To do this you simply remit more to the lender than the usual mortgage payment every month. The benefit to this is that every extra dollar paid against the mortgage will lower the outstanding balance of the mortgage. This increases the equity in your home faster over time. Also, by lowering your outstanding balance, you will save on interest charges.
Here is a good example based on the scenario of an average family.
If you are an average family of four making $50,000 a year, let us assume that you are saving annually at the same rate as most Americans. This rate of savings as reported by our government is about 4% of your income every year. This would mean that you are putting $2000.00 in the bank every year for future purposes. This comes out to around $167.00 a month.
Right now you are probably receiving less than 1% Annual Percentage Rate (APR) on your passbook savings.
Why not take $100.00 of this money that you would normally save and pay down the mortgage on your home ahead of time? The following example shows why this is in your best interest.
If you take out a mortgage on a house for $200,000 at a 6% fixed rate, and the contract calls for repayment in monthly installments over 30 years, your monthly mortgage payment would be $1,210.56.
The best time to learn about mortgage is before you're in the thick of things. Wise readers will keep reading to earn some valuable mortgage experience while it's still free.
If you paid an extra $100.00 dollars per month toward the amortization of your mortgage, you would add $1,200.00 to the equity in your home every year.
In this scenario, the total amount paid to buy your home over the life of the mortgage would be $435,798.89. When you add $100.00 to your mortgage payment every month you would save $46,360.13 in interest charges over the life of the mortgage. You would also be able to retire your mortgage earlier.
You would be able to trim 38 monthly payments off your repayment of the mortgage. So the mortgage would be paid off 3 years and 2 months sooner if you use this repayment method.
In short, what this strategy does is shift your money from passbook savings only ($2,000.00 per year), to paying $1,200.00 on your mortgage, and saving $800.00 directly into your bank account each year.
To sum up the benefits of using this method, the borrower in the example above saved $46,360.13 in interest on their loan, and accumulated $21,923.85 in passbook savings ( $67.00 per month X 1% APR X 322 months ). This equals $68,283.98 in accumulated savings over 26 years and 10 months (This is the actual time it would take to pay off the original 30 year mortgage).
If the family would have put all of their money ($167.00 per month) in a passbook savings account only, they would have accumulated $54,646.35 over the same period of time.
So this family would have actually saved $13,637.63 more by using this accelerated payment method. And they would have also paid off their mortgage 3 years and 2 months earlier than normal.
This method can be used in any situation where the mortgage has an Accelerated Payment Clause built into it. It will work best if you are consistent with the amount that you pay on your mortgage every month. Any change in the amount of monthly repayment of the mortgage will affect the amount that you will actually save.
Check with your banker to find out if your mortgage allows for Accelerated Payments. Then you can use this strategy to save a lot of money on your mortgage and own your home sooner.
When word gets around about your command of mortgage facts, others who need to know about mortgage will start to actively seek you out.
http://www.articlesmaker.com/finance/mortgage-refinance/a-guide-to-save-thousands-of-dollars-on-your-mortgage.html
Everyone is constrained to a certain degree by their budget. Yet there is a way to pay off the existing mortgage on your home quicker and save money in the process.
Almost all mortgages have built into them an Accelerated Payment Clause. This allows the borrower to pay more than the minimum amount of the monthly mortgage payment.
To do this you simply remit more to the lender than the usual mortgage payment every month. The benefit to this is that every extra dollar paid against the mortgage will lower the outstanding balance of the mortgage. This increases the equity in your home faster over time. Also, by lowering your outstanding balance, you will save on interest charges.
Here is a good example based on the scenario of an average family.
If you are an average family of four making $50,000 a year, let us assume that you are saving annually at the same rate as most Americans. This rate of savings as reported by our government is about 4% of your income every year. This would mean that you are putting $2000.00 in the bank every year for future purposes. This comes out to around $167.00 a month.
Right now you are probably receiving less than 1% Annual Percentage Rate (APR) on your passbook savings.
Why not take $100.00 of this money that you would normally save and pay down the mortgage on your home ahead of time? The following example shows why this is in your best interest.
If you take out a mortgage on a house for $200,000 at a 6% fixed rate, and the contract calls for repayment in monthly installments over 30 years, your monthly mortgage payment would be $1,210.56.
The best time to learn about mortgage is before you're in the thick of things. Wise readers will keep reading to earn some valuable mortgage experience while it's still free.
If you paid an extra $100.00 dollars per month toward the amortization of your mortgage, you would add $1,200.00 to the equity in your home every year.
In this scenario, the total amount paid to buy your home over the life of the mortgage would be $435,798.89. When you add $100.00 to your mortgage payment every month you would save $46,360.13 in interest charges over the life of the mortgage. You would also be able to retire your mortgage earlier.
You would be able to trim 38 monthly payments off your repayment of the mortgage. So the mortgage would be paid off 3 years and 2 months sooner if you use this repayment method.
In short, what this strategy does is shift your money from passbook savings only ($2,000.00 per year), to paying $1,200.00 on your mortgage, and saving $800.00 directly into your bank account each year.
To sum up the benefits of using this method, the borrower in the example above saved $46,360.13 in interest on their loan, and accumulated $21,923.85 in passbook savings ( $67.00 per month X 1% APR X 322 months ). This equals $68,283.98 in accumulated savings over 26 years and 10 months (This is the actual time it would take to pay off the original 30 year mortgage).
If the family would have put all of their money ($167.00 per month) in a passbook savings account only, they would have accumulated $54,646.35 over the same period of time.
So this family would have actually saved $13,637.63 more by using this accelerated payment method. And they would have also paid off their mortgage 3 years and 2 months earlier than normal.
This method can be used in any situation where the mortgage has an Accelerated Payment Clause built into it. It will work best if you are consistent with the amount that you pay on your mortgage every month. Any change in the amount of monthly repayment of the mortgage will affect the amount that you will actually save.
Check with your banker to find out if your mortgage allows for Accelerated Payments. Then you can use this strategy to save a lot of money on your mortgage and own your home sooner.
When word gets around about your command of mortgage facts, others who need to know about mortgage will start to actively seek you out.
http://www.articlesmaker.com/finance/mortgage-refinance/a-guide-to-save-thousands-of-dollars-on-your-mortgage.html
Low Mortgage Rates Can Be Had
Buying a house is a very big investment in your future. The more money you can put into your home, the more you're likely to get out of it. But, unless you get a low mortgage rate, you'll find a whole lot of your monthly payments actually end up going to the bank on interest charges than into your actual home.
The better you are at locking in a low mortgage rate, the quicker you'll build equity in your home. Getting a low mortgage rate, however, isn't always easy and it requires some time and patience for many people to earn the type of credit scores that justify a bank giving you a low rate.
The best way to ensure low mortgage rates are offered to you by banks, credit unions or even mortgage companies is to plan ahead for getting a mortgage. This means taking actions months and even years in advance to make yourself and any co-borrowers look like attractive customers for lenders.
But what do banks think is attractive? People with good credit scores, reasonable income and a decent savings for a down payment.
To look the best for a bank to consider low mortgage rates, you'll want to:
* Keep your credit as clean as possible. This means making payments on loans, credit cards and even utilities on time all the time (or as much as possible). It also means ensuring that you have a good mix of credit - revolving loans, regular loans, such as auto loans, and so on. In addition to making your payments, it's important not to have too much credit. This means striking a good balance between what you've borrowed or can borrow and how much you earn. If you can go to a store and charge up more than you earn in a few years at one sitting, you might have too much credit.
* Income. You don't have to be a millionaire to get offers of low mortgage rates, but you do need to have adequate income. Don't go after a home that's out of your financial reach and expect to get low mortgage rate offers. Keep your sights realistic and you'll find your chances for low mortgage rates are increased.
* Savings. Even if you put $100 a month away every month for six months, a year, several years, all it takes is a little to show a bank you're serious about saving. The more you can put away for your down payment on a home, the better. But even if it's a small amount, a long-term track record of savings looks good and can help your chances of being offered low mortgage rates. Banks like to see a history of savings to prove a person is disciplined and understands the value of savings.
Getting low mortgage rates isn't impossible - even for people with less than perfect credit. The better you make yourself look to lending agencies, the more likely you are to get these. It might take a few years to establish the kind of credit you'll need for low mortgage rate offers, but it will be well worth the effort in the end. The less you pay in interest, the more money will go directly toward paying off your home.
http://www.articlesmaker.com/finance/mortgage-refinance/low-mortgage-rates-can-be-had.html
The better you are at locking in a low mortgage rate, the quicker you'll build equity in your home. Getting a low mortgage rate, however, isn't always easy and it requires some time and patience for many people to earn the type of credit scores that justify a bank giving you a low rate.
The best way to ensure low mortgage rates are offered to you by banks, credit unions or even mortgage companies is to plan ahead for getting a mortgage. This means taking actions months and even years in advance to make yourself and any co-borrowers look like attractive customers for lenders.
But what do banks think is attractive? People with good credit scores, reasonable income and a decent savings for a down payment.
To look the best for a bank to consider low mortgage rates, you'll want to:
* Keep your credit as clean as possible. This means making payments on loans, credit cards and even utilities on time all the time (or as much as possible). It also means ensuring that you have a good mix of credit - revolving loans, regular loans, such as auto loans, and so on. In addition to making your payments, it's important not to have too much credit. This means striking a good balance between what you've borrowed or can borrow and how much you earn. If you can go to a store and charge up more than you earn in a few years at one sitting, you might have too much credit.
* Income. You don't have to be a millionaire to get offers of low mortgage rates, but you do need to have adequate income. Don't go after a home that's out of your financial reach and expect to get low mortgage rate offers. Keep your sights realistic and you'll find your chances for low mortgage rates are increased.
* Savings. Even if you put $100 a month away every month for six months, a year, several years, all it takes is a little to show a bank you're serious about saving. The more you can put away for your down payment on a home, the better. But even if it's a small amount, a long-term track record of savings looks good and can help your chances of being offered low mortgage rates. Banks like to see a history of savings to prove a person is disciplined and understands the value of savings.
Getting low mortgage rates isn't impossible - even for people with less than perfect credit. The better you make yourself look to lending agencies, the more likely you are to get these. It might take a few years to establish the kind of credit you'll need for low mortgage rate offers, but it will be well worth the effort in the end. The less you pay in interest, the more money will go directly toward paying off your home.
http://www.articlesmaker.com/finance/mortgage-refinance/low-mortgage-rates-can-be-had.html
Securing The Lowest Home Mortgage Rate
Shopping for a home mortgage can be a lesson in patience. It's not likely you'll get offered the lowest mortgage rate on your first attempt. To get the best rates, it's important to plan ahead and exercise patience.
Those who do their homework well in advance of shopping for a mortgage will find they are positioned to get a good mortgage rate, and perhaps the lowest going. The smartest of shoppers start working toward a low mortgage rate long before they apply. They understand what the banks look at and they work to make these items impressive.
Multiple factors are looked at by banks and lending companies when they decide whether they're interested in writing a mortgage loan. All of the factors are important, and they can add up to give you a high rate or the lowest rate going at the time you're looking. To ensure you get the lowest possible, you'll want to examine what the banks will before you apply for loans.
The factors that go into determining the lowest mortgage rate a bank will offer you include:
* Your credit rating. This will be the biggest factor that goes into how a bank will determine the rate you get. Your credit score is a snapshot of your credit history. The raw number that's given to banks is decided upon by such things as how much debt you have, the track record you've established for payments, what types of credit you have and if you've paid well in the past. Late payments, bankruptcy and even slow payments can add up to a lower credit score. Make sure you credit is as clean as possible before applying.
* Income. This is another factor that will come into play as banks determine what your lowest mortgage rate should be. The more you can prove your ability to pay, the less your mortgage will likely be. Don't go after a loan that will stretch your finances to the brink of breaking, and you should (in many cases) be rewarded with a better rate.
* Savings. Banks are generally impressed by those who manage to put a decent down payment into a new home. The more you can put down, the better. If your down payment is high enough, it's possible you will find your mortgage rate will be less. This, however, is not the biggest factor that's looked at for banks.
Remember, banks will want to evaluate all the factors before they decide what the lowest mortgage rate they can offer you is. If you are unhappy with what's being offered right now, look at your credit, your income and other factors and decide if there are things you can fix before applying again.
There are no guarantees you'll get the lowest mortgage rate, but if you make sure your credit and income are in order, you're more likely to. Take some time to evaluate, repair and save to help ensure the lowest rates.
http://www.articlesmaker.com/finance/mortgage-refinance/securing-the-lowest-home-mortgage-rate.html
Those who do their homework well in advance of shopping for a mortgage will find they are positioned to get a good mortgage rate, and perhaps the lowest going. The smartest of shoppers start working toward a low mortgage rate long before they apply. They understand what the banks look at and they work to make these items impressive.
Multiple factors are looked at by banks and lending companies when they decide whether they're interested in writing a mortgage loan. All of the factors are important, and they can add up to give you a high rate or the lowest rate going at the time you're looking. To ensure you get the lowest possible, you'll want to examine what the banks will before you apply for loans.
The factors that go into determining the lowest mortgage rate a bank will offer you include:
* Your credit rating. This will be the biggest factor that goes into how a bank will determine the rate you get. Your credit score is a snapshot of your credit history. The raw number that's given to banks is decided upon by such things as how much debt you have, the track record you've established for payments, what types of credit you have and if you've paid well in the past. Late payments, bankruptcy and even slow payments can add up to a lower credit score. Make sure you credit is as clean as possible before applying.
* Income. This is another factor that will come into play as banks determine what your lowest mortgage rate should be. The more you can prove your ability to pay, the less your mortgage will likely be. Don't go after a loan that will stretch your finances to the brink of breaking, and you should (in many cases) be rewarded with a better rate.
* Savings. Banks are generally impressed by those who manage to put a decent down payment into a new home. The more you can put down, the better. If your down payment is high enough, it's possible you will find your mortgage rate will be less. This, however, is not the biggest factor that's looked at for banks.
Remember, banks will want to evaluate all the factors before they decide what the lowest mortgage rate they can offer you is. If you are unhappy with what's being offered right now, look at your credit, your income and other factors and decide if there are things you can fix before applying again.
There are no guarantees you'll get the lowest mortgage rate, but if you make sure your credit and income are in order, you're more likely to. Take some time to evaluate, repair and save to help ensure the lowest rates.
http://www.articlesmaker.com/finance/mortgage-refinance/securing-the-lowest-home-mortgage-rate.html
A Fixed Mortgage Is The Right Way To Go!
It doesn't matter whether you're a first-time homebuyer or an old pro, you are likely to find the entire process of getting a mortgage can be gut wrenching. Making the most of the situation is possible, if you think clearly and examine all the options carefully. One of the biggest things you'll need to consider is what type of mortgage you want. You will find there are two major options: adjustable rate and fixed rate mortgages.
Both adjustable rate and fixed rate mortgages will work to get potential homeowners into a home. Almost every bank, credit union and lending company will offer loan programs that cover both types of mortgages. But, for many homebuyers, the fixed rate mortgage turns out to be the more desirable lending vehicle.
Why is this? A fixed rate mortgage might not offer the flexibility and chances for lower payments than expected that an adjustable rate mortgage does, fixed does provide people with a better sense of stability. There are a number of advantages to the fixed rate mortgage that make it so appealing. They include:
* Rates don't change. A fixed rate mortgage is stable in its very nature. Whatever interest rate is present at the beginning of the loan is present at the end. While this means payments won't go down with interest rate changes, it also means they won't go up. Many homeowners prefer this for budgeting reasons and security.
* Fixed rate mortgages enable homeowners to plan better. Since a homeowner will know exactly what their payments will be no matter what, this type of mortgage takes the "surprises" out of making the bills. This is good for those who don't have an ability to handle higher payments from time to time. It's also a smart idea for those who are having trouble dealing with the little surprises homeownership comes with in and of itself. The ability to plan can also enable a great ability to pay bills on time and improve credit ratings so a better fixed rate mortgage can be obtained down the road.
* Ability to lock in a rate. A fixed rate mortgage obtained at the right time can 'lock in' rates that are more favorable. Those who happen to have good credit and get fixed rate loans at times of lower interest rates will find they might pay a whole lot less over the life of a loan than someone who buys into an adjustable rate loan.
Buying a home is a very big deal. Many who go into homeownership don't realize the kinds of financial surprises that go along with it. To ensure at least one surprise doesn't happen, many borrowers opt to go with fixed rate mortgages. Providing payments that stay the same no matter what happens to the market, a fixed rate mortgage enables planning and can even give a peace of mind that homeowners appreciate.
While a fixed rate mortgage is the choice of many, it isn't the only option. Borrowers should carefully weigh all their options and choose the best one to meet their personal needs and circumstance.
http://www.articlesmaker.com/finance/mortgage-refinance/a-fixed-mortgage-is-the-right-way-to-go.html
Both adjustable rate and fixed rate mortgages will work to get potential homeowners into a home. Almost every bank, credit union and lending company will offer loan programs that cover both types of mortgages. But, for many homebuyers, the fixed rate mortgage turns out to be the more desirable lending vehicle.
Why is this? A fixed rate mortgage might not offer the flexibility and chances for lower payments than expected that an adjustable rate mortgage does, fixed does provide people with a better sense of stability. There are a number of advantages to the fixed rate mortgage that make it so appealing. They include:
* Rates don't change. A fixed rate mortgage is stable in its very nature. Whatever interest rate is present at the beginning of the loan is present at the end. While this means payments won't go down with interest rate changes, it also means they won't go up. Many homeowners prefer this for budgeting reasons and security.
* Fixed rate mortgages enable homeowners to plan better. Since a homeowner will know exactly what their payments will be no matter what, this type of mortgage takes the "surprises" out of making the bills. This is good for those who don't have an ability to handle higher payments from time to time. It's also a smart idea for those who are having trouble dealing with the little surprises homeownership comes with in and of itself. The ability to plan can also enable a great ability to pay bills on time and improve credit ratings so a better fixed rate mortgage can be obtained down the road.
* Ability to lock in a rate. A fixed rate mortgage obtained at the right time can 'lock in' rates that are more favorable. Those who happen to have good credit and get fixed rate loans at times of lower interest rates will find they might pay a whole lot less over the life of a loan than someone who buys into an adjustable rate loan.
Buying a home is a very big deal. Many who go into homeownership don't realize the kinds of financial surprises that go along with it. To ensure at least one surprise doesn't happen, many borrowers opt to go with fixed rate mortgages. Providing payments that stay the same no matter what happens to the market, a fixed rate mortgage enables planning and can even give a peace of mind that homeowners appreciate.
While a fixed rate mortgage is the choice of many, it isn't the only option. Borrowers should carefully weigh all their options and choose the best one to meet their personal needs and circumstance.
http://www.articlesmaker.com/finance/mortgage-refinance/a-fixed-mortgage-is-the-right-way-to-go.html
Determine The Best Home Mortgage Rate For Your Situation
When you're in the market for a new home, one of the biggest concerns on your mind likely will be the financing. For the new homeowner, the knee-jerk reaction might be to accept the first mortgage offer that comes their way, but that's not always the best move. To get the best home mortgage rate, it's important to shop around, look at all the options and be picky about what you agree to.
The best home mortgage rate will be impacted by a number of things. It's important to remember, too, that the best mortgage rate for one person will likely not be the best for another. Rates that are offered by banks and other lenders are determined by a number of different factors, so the best rate for one person might be very different than another is offered.
As you shop around for the best mortgage rate for your situation, you'll find the rates offered are dependent on a number of different things. These include:
* Credit score. This is one of the biggest factors potential lenders look at when they offer you what they can give you. The better your score, the more likely you will be offered a rate that's reasonable. Banks have to make money, too.
* Income to debt ratio. Even if you have perfect credit, if you don't have the income a bank would like to see, it's possible you won't see the best mortgage rate for your home. If you have more debt than lenders want to see, consider paying some of it off before shopping around. You might even need to close a few accounts and wait a brief while after doing so to make sure your credit score improves.
* Income. Banks will want to see what your income level is and be able to verify it before they make you an offer.
* The current home mortgage rate. Almost every mortgage loan going will have rates that are dependent on the "prime rate." The higher the going rate, the higher the rates you'll be provided by banks no mater how good your credit is.
* Value of the home. Interest rates are sometimes dependent on the value of the home a buyer wants to purchase. The more equity you can get right off the bat, the more likely you are to get the best rates available.
* Your down payment. Since your down payment will help determine how much equity you'll have in the home going into the deal, it's important to make sure you have a good one. Even if it takes a few years of saving, coming into a deal with a good down payment sitting in the bank can really help net you the best home mortgage rates.
Buying a home is not like buying a pair of shoes. It's a huge investment in you and your future. The more work you do on the front end to fix credit issues and ensure you're a good candidate for a loan the better. The more you do to help yourself, the more likely you are to get offered the best home mortgage rate going or close to it.
http://www.articlesmaker.com/finance/mortgage-refinance/determine-the-best-home-mortgage-rate-for-your-situation.html
The best home mortgage rate will be impacted by a number of things. It's important to remember, too, that the best mortgage rate for one person will likely not be the best for another. Rates that are offered by banks and other lenders are determined by a number of different factors, so the best rate for one person might be very different than another is offered.
As you shop around for the best mortgage rate for your situation, you'll find the rates offered are dependent on a number of different things. These include:
* Credit score. This is one of the biggest factors potential lenders look at when they offer you what they can give you. The better your score, the more likely you will be offered a rate that's reasonable. Banks have to make money, too.
* Income to debt ratio. Even if you have perfect credit, if you don't have the income a bank would like to see, it's possible you won't see the best mortgage rate for your home. If you have more debt than lenders want to see, consider paying some of it off before shopping around. You might even need to close a few accounts and wait a brief while after doing so to make sure your credit score improves.
* Income. Banks will want to see what your income level is and be able to verify it before they make you an offer.
* The current home mortgage rate. Almost every mortgage loan going will have rates that are dependent on the "prime rate." The higher the going rate, the higher the rates you'll be provided by banks no mater how good your credit is.
* Value of the home. Interest rates are sometimes dependent on the value of the home a buyer wants to purchase. The more equity you can get right off the bat, the more likely you are to get the best rates available.
* Your down payment. Since your down payment will help determine how much equity you'll have in the home going into the deal, it's important to make sure you have a good one. Even if it takes a few years of saving, coming into a deal with a good down payment sitting in the bank can really help net you the best home mortgage rates.
Buying a home is not like buying a pair of shoes. It's a huge investment in you and your future. The more work you do on the front end to fix credit issues and ensure you're a good candidate for a loan the better. The more you do to help yourself, the more likely you are to get offered the best home mortgage rate going or close to it.
http://www.articlesmaker.com/finance/mortgage-refinance/determine-the-best-home-mortgage-rate-for-your-situation.html
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