Cheap Mortgage Tips
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We will cover many different tips and suggest some strategies to look out for when shopping for cheap mortgages. Let’s start with the one thing we all want, best mortgage deals but how do we go about obtaining one and making sure we get the best mortgage deals possible?
Always shop around if you want best mortgage deals, even if it’s your friend that’s processing your loan. Nobody will volunteer or just give you cheap mortgages just because they like you. There are many funding choices, banks, mortgage companies, credit union and, thrift lenders. I know what some of you are thinking, why not contact a mortgage broker to obtain cheap mortgages. The simple answers is, he may not have access to the right loan type and will try to push you in the loan that will make him the most money.
Contact more then one mortgage broker for cheap mortgages, apply the same strategy for other funding sources this is very important; it is just like getting a second opinion from a doctor. When you are dealing with large amount of money you don’t want to leave any options open. It amazes me how many people over look this option, I would say that 90 percent of my friends never used a second source on funding loans. We will cover more on what type of relationship you should have with your broker.
Internet is your friend, so use it to your advantage, but be careful and only go with established companies. The great thing about internet lenders or brokers, they have many lending procedures
automated and this cuts down on overhead and overall processing cost. This gives them a huge advantage over your regular banks. Internet is a very good choice for cheap mortgages.
OK, we covered the very basics and it was pretty much an over view of what to look for from the beginning to the end, we still have plenty to cover. I think next, we will cover rates, point, fees, down payment, and mortgage insurance. So stay tuned for more cheap mortgages tips.
Cheap Mortgages Fees Tips
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The biggest mistake a home buyer or a customer that is looking for best mortgage deals will make, is only looking at the monthly payment or just finding what interest rate you will be paying. We will try to look at the total cost of a loans and help you see important fees related to cheap mortgages.
We will start with the interest rate. When you contact the lender about cheap mortgages, ask for the rate and then ask if this is the lowest rate for the week. This sound simple enough but you will be surprised how many potential home buyer don’t even ask this question, the reason could be, they fear rejection and the anxiety of just the whole home buying process.
Points are another term you should sound very familiar. So we will keep this simple. Points is 1 percent of the total loan, so this is where you want to negotiate, many times points have mortgage broker’s fees built in or the mortgage broker is giving you inflated point so he will make more money at closing. So when it comes to getting the best mortgage deals, always negotiate points, I can’t stress this enough, most of the time you can take off ½ point just by asking for lower points.
Fees..yes the dreaded fees. These fees will kill any chance you have on obtaining cheap mortgages. This is another money maker for banks, mortgage brokers and even credit unions. Have you ever seen that commercial, when a women talks about different kind of fees she was charged when applying for the loan ?
The lenders will try and stick you with lots of different and ridiculous fees and it’s your job to reduce or eliminate them. Ask for a print out of all the documentation fees, look for fees that don’t make sense like $25 fax fee, $150 transaction fee, $200 administrative fees and my favorite the $300 miscellaneous fees.
Don’t get shy, these people are trying to make as much money as they can, so please ask them to remove the fees and be firm about it. If you want best mortgage deals, then start treating the lenders like you would treat used car sales men.
Cheap Mortgages Traps
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Let’s take a look at some cheap mortgages and some of the traps that come with them. When shopping for cheap mortgages, the lenders will set teaser or what I like to call them ”traps”. Below we will cover some of the well known traps. It is very important that you recognize these traps, if you don’t, then getting the best mortgage deals will be out of reach.
We will start with prepayment penalties. When you are narrowing down your choices of loans make sure you keep an eye out for prepayment penalties. What are the negatives of prepayment penalties?? One major negative is when you try to refinance your loan, now if you have no intention of refinancing your loan then you really don’t have anything to worry about.
Now we will cover the basic negatives of Interest Only Loans. Interest only loans are a great idea if you will sell the home in couple of yeas or sooner, many home flippers would choose this option because it requires less money upfront. Now, interest only is a terrible idea if you plan to keep your house for longer period of time, because you will build no equity and if the market slows down or collapses you will be in deep trouble and will be most likely upside down on the loan.
Next up is the worst option possible for a loan and it should only be used by real estate investors. I’m talking about Negative Amortization Loans, these loans can make you or break you . When making a payment on a conventional loan you’re paying down interest and balance of the loan. The Negative Amortization loan adds to your loan balance while keeping your payments as low as possible. If you want the best mortgage deals, then this should be you last choice. Many borrowers got way over their heads with this type of loan. i would pretty much avoid this loan type and not use it as an option.
The new kid on the block of cheap mortgages tricks is 50 year loan, yes, that’s right 50 years. If you calculate a $500,000 loan and compare payment differences between a 30 year loan and a 50 year loan what do you think it will be?? It will be about $200 dollar difference. You will be better of going with interest only loan, because the payment difference will be the same.
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