Before Applying For an Online Mortgage Loan - Read This

If you are in the market for a new home or if you plan to refinance or re-mortgage your existing home loan, there are a myriad of options including filling out the application for an online mortgage loan. But before you do, there are some procedures in which you need to be cautious.

Online mortgage loans are a great way to find lenders who you would not otherwise know about. They are anxious for you business providing that you are qualified for one of their loan products. And that is the key. Qualifications are different at almost every lender. Some are very similar particularly within a specific region of the country. But not all of them know the market that you live in which may have specific guidelines that disallow certain properties. So before you apply or have them to a credit check, which is the very first thing they want to do - stop!

If the property that you are interested in does not qualify and they check your credit against one of the credit bureaus then your score will be "dinged" or more accurately it will lower your number. Too many of these may put you out of contention for a loan altogether if you are marginal, or at the very least cost you more in interest rates when you finally do apply.

Here is what you need to do. First do not have them do a credit check to see if you are qualified, but instead make sure that they are qualified to finance the property you are interested in purchasing. For example, if you are purchasing a condo, then many lenders have requirement that a certain percentage of the condos in the building must be owner-occupied. Whether it's 50% or 75% you need to know this before allowing your credit to be checked.

Another example is that some properties are in a flood zone, or tornado zone and many lenders will not lend money to a property without flood or tornado insurance and in some areas, it is impossible to get. So an online mortgage loan may not be your best bet in this circumstance. Only a local lender who knows the market will be able to help you with a home loan.

Next, ask a lot of questions about the lock-in, closing costs, length of time, income qualifications, terms and conditions. Most calls are recorded so you should do the same. Record your conversation and let them know you are recording it so there will be no question about accuracy in the statements made.

So before you apply for an online mortgage loan, make sure you follow some sound advice and look out for your best interest. There are, of course, many more tips that someone getting ready to take out a mortgage needs to know. The more information at your fingertips the easier it will be in the long run.

Ms. Galbraith is now a consultant and has been in the mortgage business since the late 80's. She offers many useful tips that can help anyone in need of an online mortgage or a home equity or 100% mortgage or 100% home loan at her website for finance. There is up to date news of the lenders and rates at her Direct Mortgages Blog.

Adjustable Rate Mortgage FAQ's

The adjustable rate mortgage (ARM; also called a variable rate mortgage) creates changing home loan rates, for which you qualify to get a mortgage loan while buying a house. The ARM allows the borrower to make lower payments in the initial months or years of the loan repayment.

What is an Adjustable Rate Mortgage or ARM?

An adjustable rate mortgage is a kind of mortgage loans whereby the home loan rate changes periodically based on the index changes. The most frequently used index is the LIBOR. Indexes created by the Federal Banks and Lenders are also used. The use of these different types of indexes causes the variation in the amount required for payments. The terms of the loans also vary due to these differences. The ARM plays a major role in transferring some portions of the risks of building the loans from the money lenders to the borrowers. Generally the rate of ARMs initiates from a lower level, but may elevate at a much higher rate compared to the ones that conservative loans such as fixed rate mortgages cover.

The Advantages of ARM

The ARM acts as a great deal for a borrower during the expansion of the economy and income. Here the Arm helps to obtain a higher amount of loan compared to what they can actually afford. The rate set for the home loans initially remains at lower levels, but then it increases gradually by keeping pace with the increased interest index. The easier qualifying of getting an ARM and the lesser payments required in the initial stages are considered to be the two major advantages of the adjustable rate mortgage. If there are chances of increase in the income of the borrower within the loan-period, then an ARM could very well be the best possible way of starting your home ownership.

The Disadvantages of an ARM

The ARM is a type of mortgage loan that is associated with some outside indexes. The most vital disadvantage of getting a mortgage loan at a rate in related to an outside index is the gradual increase of the rates. Let us discuss with the example of a borrower who has received a mortgage loan having payments almost at the extreme limits of his or her borrowing potentials. Now as the rate of interest increases significantly, the borrower may find that his or her income has not increased in comparison to the rate of interest. This sometimes causes real trouble for the borrowers such as delinquent payments or worse yet, a foreclosure.

What Is the Prime Rate?

Prime rate is the rate of interest at which the most eminent banks take loans. It is considered to be among the most favorite indexes employed for calculating the rate for home loans. For example, the rate for an equity line of credit, can be calculated as the prime rate index plus 2%. If the mortgage is an ARM, then the starting point is similar to the rate for the indexes plus a margin.

Frank Collins is an investor and an editor for LoanShoppers and Mortgage Loan Shop

The Right Time to Refinance

Mortgage activity has been picking up due to the recent drop of interest rates from the Fannie Mae and Freddie Mac crisis. Many homeowners are inquiring to see if refinancing their mortgages might be a good idea at this time.

As is the case with most borrowers, for some people it will be advantageous to refinance now and for others they may need to wait for interest rates to drop further.

Contrary to newspaper columnists and media reporters, mortgage lenders, loan officers, and mortgage brokers do want to save people money. According to a study, the logic is simple. If they do a good job they will get referral and repeat business from that client. So, it is to their advantage to be a professional and do the best job they can possibly do.

Interest rates declining
It is evident that lower rates in the last few weeks of September have triggered more activity for mortgage companies according to the national Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey. Those trends show no conclusive signs of slowing down either. The financial worries on wall street are driving down rates s mortgage demand will continue to increase. Although the number of inquiries has increased, some will not be able to take advantage due to home values decreasing in some areas. On the other hand, investors or homeowners who waited a long time for a deal are buying the bank REOs at discounted prices.

Therefore, for some individuals, it's an opportunistic time to do something while for others the interest rate might have to dip a little more to justify doing something. The other factor that can play a part is the appraisal. These have been getting cut in value by over-conservative appraisers who want no part in being taken off the lenders approved list from being aggressive or adamant on the property's value.

So still the question remains, "When is it the right time to refinance?" Generally, if a homeowner can get a rate that is at least 1 percent lower than their existing rate, it could be a good idea to contact mortgage lender or broker. In addition, variables such as how long they plan to live in their home and what type of loan they have now, their long term goals, are other considerations. With so many variables arising, there is no real boilerplate answer. So, the best thing one can do is get on the phone, apply online and see what is offered for your situation.

Frank Collins is an avid investor in real estate and contributor to Jumbo Home Loans and a website to Find Low Mortgage Rates and trusted lenders in your area.

Easy Path to Loan Approval

Many experts in the real estate industry predicted the credit crunch to have eased by now but that is not the case. Good borrowers with excellent credit payment histories are being turned down due to rising foreclosures from borrowers who cannot afford their mortgage payment. Some of the keys to getting approved is the loan guidelines have become more strict and underwriters are eyeing loan applications with more scrutiny. The borrower never gets to speak with the underwriter and probably never will. So, the approval is in their hands.

An experienced loan officer can convey or send your message to the underwriting department along with your application which could be the missing link or go-ahead to getting approved for a loan. Especially, if the underwriter was on the fence before, now they have something to hold their hats.

Also, a borrower should educate themselves on the mortgage process by going to their local library or bookstore to get informed on the basics of a home mortgage. The reason being is so they can ask the loan officer questions that can be relayed to management so you know you are proactive in becoming approved. In addition, knowing a bit more about mortgages before you apply will help in choosing the best possible home loan product for your needs. You will be less attracted to a negative amortization loan if you knew all about it and also be less vulnerable to unscrupulous lending tactics.

Mortgage companies and loan officers are eager to receive loan applications from prospective borrowers they've never met in person. A borrower can still apply for a home loan over the telephone just like the days before the internet.

An in-person meeting can be very important for those expecting to encounter unusual walls for loan approval. These walls may include self-employed borrowers, applicants with credit scores under 720, and little liquid assets. Borrower credibility is added when you explain your situation, dress appropriately and arrive with related documents in hand for your meeting.

The lender's loan officers, underwriters and staff work hard at packing files to make it a more efficient system. So they really appreciate it when a borrower is prepared also. It makes everyone's job easier and more streamlined. Being prepared such as knowing your credit scores and having supporting documentation to dispute any possible credit report errors helps tremendously in all phases. Borrowers should stay in touch with their mortgage lender during the process. Make it easy for them to reach you and be proactive and forthcoming to the loan officer you are working with. In the end your chances of getting approved increase dramatically.

Frank Collins is an avid investor in real estate and contributor to Jumbo Home Loans and a website to Find Low Mortgage Rates from trusted lenders in your area.

Offsetting Your Mortgage

Offset mortgages, which were practically unheard of around six years ago, are becoming an increasingly popular option within today's market.

They are particularly popular with higher-rate taxpayers and are expected to become more and more common, with lenders saying that 25% of current mortgage holders would be much better off with an offset mortgage.

The basic principle behind offset mortgages is that we tend to pay more interest on debts than we accumulate on savings. Therefore, by linking the two accounts - and even a current account into which your salary is paid - the amount you are in credit by helps to offset the capital owed on the mortgage. In turn, this reduces the interest payable on what you owe.

For instance, if you had an offset mortgage of £100,000 with a savings account of £10,000 and £2,000 in your current account, you would only accrue interest on £88,000 of the mortgage.

Another major advantage with offset mortgages is that the interest saved is not taxed. For instance, instead of getting a net return of 3% on your savings, by offsetting you can expect a net return of 6%

One of the main disadvantages of offset mortgages was the high interest rates attached to them. Such interest rates were often at least 1% or more higher than the most competitive fixed rate mortgage within the market at the time.

As offset mortgages have become more popular though, introductory rates of less than 5% are becoming more and more common.

As to be expected, the highly competitive nature of the lending market has led to banks offering various extras to increase customer base.

The most popular of these include free valuations, legal fees and some lenders even allow you to offset 2 savings accounts. On top of this most lenders offer "super low" introductory interest rates, usually for 6 - 12 months.

The actual interest rate you will end up with will depend on a number of factors, notably the percentage of the properties value that you wish to borrow.

Liam is a UK based financial author currently focusing on mortgages, and in particular, offset mortgages. Compare mortgages from over 8,500 lenders online today.

Looking For a Home Loan

One of the most important things a home buyer can do t save money is to shop for the right mortgage lender.

For example, let's say you are getting a loan for a home in Texas, but the lender is in New York and you may receive a good faith estimate based on New York Loans. What will happen is you will be very surprised once you are at the closing table.

It is also significant to consider the lender's experience, reputation, knowledge, and loan program selection. If you are like many who simply call companies and ask "What is your rate for X loan amount?" it is not the best way to shop for a loan. A borrower needs to get a loan that is right for them for what they want to accomplish financially not the loan officer's needs or specials. This is where experience comes in with a lender by analyzing your situation and offering you what works best which does not necessarily mean the lowest rate with an adjustable rate loan, interest only or negative amortization loans.

Once you know the best loan program for your needs such as the loan product, loan amount and loan term, you are ready to discuss your goals and get the following information.

What is the interest rate and APR (annual percentage rate) of the loan? The APR is sometimes confusing to people. It is simply the total of the interest rate, points and other loan fees divided by the loan term to yield an annual interest rate for the first year. Lenders must provide this information by law and it is the best way to compare loan costs.

Will there be points charged? A point is the loan amount times 1 percent and this varies from lender to lender. Be careful when being offered a low interest rate and high points - this could end up costing you more out of pocket versus a loan with a higher interest rate and less points. Although, it is important to know that points are tax-deductible to the buyer. However, always consult a tax professional to say abreast of changing tax laws.

What are the total loan fees? Lender fees (loan fees) include such costs as application, origination, document preparation, document review, underwriting and tax service. Sometimes, they will charge for appraisal and appraisal review fees as well. Always ask what fees you will be charged, what is included and what you will be charged for out of pocket or individually. Remember, these are lenders fees. There is still escrow/settlement, attorney fees (east coast states) and title insurance fees.

Can you lock in your interest rate and points? Lenders can guarantee you certain interest rate for a specified number of days. The length of the lock can vary from 15 days and all the way up to 6 months in some cases. Fees charged to safeguard a rate can be broad and range from .25 to 2 percent of the loan amount depending how long you want it locked. Be sure your rate lock-in is documented in writing and displays both the rate and points.

Are you a VA or FHA direct lender? With government backed loans, you can put less down like 3% on FHA loans and VA loans have some zero-down programs.

With all this information you are now able to talk and search through the various lenders online in your area and find the right loan for your situation. Keep in mind: "Don't take a loan based on just the interest rate!"

Mario Olivera is an investor and contributor with Loan Shoppers and FHA Home Financing

Fixed Rate Mortgage

A Fixed rate mortgage is a type of mortgage where the rate of interest stays standard throughout the term of the loan and it is primarily stated as an index. This type of mortgage is followed in order to ascertain a regular and standard payment of amount for the borrower. There are different types of mortgage loans which incorporates balloon payment mortgage, adjustable rate mortgage, graduated payment mortgage, interest only mortgage and finally negative amortization mortgage. Defrayal made by the receiver might vary all over the time with altering escrow amount. The defrayals covering the rate, the principal amount and also the rate of interest on the loan will never change. The Fixed rate mortgage is deliberated with three important values and they are illustrated by their rate of interest, mortgage term, and also by the amount of loan.

There are several terminologies that are followed in Fixed Rate Mortgage. It is given below just for your reference.

• Index – LIBOR financial index is practiced in order to regulate the rate of interest of the ARM.

• Margin – For a Fixed rate mortgage the index is applied to the rate of interest on the basis of index plus margin. The margin is the major variation among the note rate and the index on which the note rate is conveyed in terms of percentage. This will never perplex the profit of the margin. It is very much better if the margin rate reduces.

• Fully Indexed Rate – The price of the Fixed rate mortgage is computed by adding the index and the margin rate. This is the rate of interest of the loan.

• Mortgage Term – Mortgage Term is nothing but the time duration of the loan. The term can be of any duration of time. It can be either a short term or long term duration. It depends upon the type of loan the borrower selects.

FRM is the most excellent and attractive class of loan for buying dwelling and merchandise in US. Short term mortgages are also accessible but the very general FRM terms are 15 and 30 year mortgages. Now days 40 and 50 years mortgage terms are also available. Fixed rate mortgages are very much popular and familiar in US, on the other hand FRMs are less popular in some other countries. Some countries do not have the real FRMs for short term loans.

Like the other different types of mortgages, Fixed rate mortgages provide the possibilities to prepay the capital amount earlier without any penalization. Quick defrayal of the capital amount will contract the aggregate cost of the loan and it will castrate the duration of time to remunerate the loan. Quick and early defrayal of the total amount through refinancing is also practiced at times, if the rate of interest deteriorates substantially.

Fixed rate mortgages are very much costlier when compared to adjustable rate mortgages. The major divergence in interest rates of short term and long term mortgage loans is called as the yield curve and this will mostly grow upward. Generally a long term mortgage are expensive when compared to the other mortgage terms. The other sporadic and the contrary consideration are called as inverted yield curve.

Nila Priya - Fixed Rate Mortgage