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Author: David S. Jones

Mortgage loans – sorting out the options

Going in search of a mortgage loan can lead you into a very tangled thicket. There are literally scores of loan configurations and many of them are complicated beyond measure. There is fine print that it often takes a professional in the industry to understand, and explain. There are also plenty of misleading ads, online and on TV, promising large loans for minimal payments and leaving it up to you to find the traps.

For that reason, online sites such as this one can provide, if nothing else, a thorough education in mortgage loan basics. You can also elicit a selection of loan options through an online source and look them over at your leisure. When it’s time, you can seek an expert opinion on what is best for you, which is determined by an assortment of life situations and decisions that you probably have no idea should be involved.

You can also go through a mortgage broker, and count on that person to be your mentor and to find the mortgage that is the best deal for you. There is nothing like one-on-one communication, particularly when it comes to putting together something as complicated as a home purchase. But there is no substitute for self-education – that’s the purpose of this article, and many others like it on ExtLoansUSA, Inc.

Mortgage Loans and Credit

Your credit score is going to dictate the range of mortgage options that are open to you, and the level of interest rate for which you qualify. For that reason, it is imperative that you go into the process having reduced your debt to the extent possible and cleaned up your credit reports, which are used to calculate your credit score. Those credit reports are often inaccurate, most often containing outdated information. Look them over and make sure they are current.

Fixed Rate Mortgage Loans

If your credit score is high enough – at some institutions 700, at others 720 – then you will qualify for a fixed rate mortgage loan. That is the traditional standard loan, where you pay a fixed interest rate for the thirty year life of the loan. These loans are also often 80/20 loans, which means that the borrower is putting up a 20% down payment on the home. A twenty percent down payment also precludes the requirement of mortgage insurance, an additional cost required by the lender in NC. Since few of us have a hundred thousand in the bank set aside for a rainy day or a down payment, secondary loans known as “piggy back loans” have become popular. These are shorter term loans that are provided with an adjustable interest rate, meant to cover the gap between the cash you have and the cash you need to make that down payment.

Some lending institutions think that borrowers need to have a history in the home buying market in order to qualify for a fixed rate loan. However as the housing market continues to lose steam, competition may loosen this requirement among some of the lenders. If your credit is good and you are looking for financial continuity with an unchanging mortgage payment, the fixed rate mortgage loan is a good option.…

Pay more than the minimum

Paying the minimum payments on your credit card is what the credit card companies want you to do. They get more money from interest that way. Pay more than the minimum monthly payments or you’ll pay double or triple of what you owed.

$12,000 credit card debt will take you 400 months (30+ years) to pay off if you make the minimum payments each month. You will pay almost $20,000 in interest. The minimum payment gets lower as you pay off the balance. You’ll end up paying for a long time thanks to compounding interest.…

Beware of teaser rates on home equity loans

With the increasing popularity of home equity loans and home equity lines of credit (HELOCs), many lenders now offer a special “teaser” interest rate for the first few months of your loan. Make sure you find out how long this rate is in effect for and how much the interest rate will rise once the teaser rate expires.

Remember, if something sounds too good to be true, it probably is. Except, of course, for this kind Nigerian fellow that I correspond with via email. He’s inherited about $8 million through a deceased uncle, and if I send him a couple thousand bucks, he’s split the inheritance with me 50/50. I’m gonna be rich!…

Rainy day savings made easy

Now that the holidays are over and your September credit card bills are coming due, you may be kicking yourself for overspending. You always say you won’t overdo it on the gifts, but you do.

And that holiday money that rich Aunt Edna and Uncle Frank sent? Well, you planned to put it towards a family vacation, but where did it actually go? A new iPod for you? A Nintendo for the kids? Or just some extras here and there that you didn’t even pay attention to as you added them to your shopping cart?

You have good intentions about saving money for some special things that you don’t want to buy with credit, but somehow all your extra cash finds its way out of your pockets. If you’re an impulsive spender, then “saving money for a rainy day” can be a hard thing to do. However, new options in online banking can provide a solution!

Many banks now offer online savings accounts with high interest rates and no fees. The most popular example is probably ING Direct, but most big banks offer something similar. (I use HSBC Direct, for example.) For many people, the benefits of using these accounts far outweigh the drawbacks.

Because online banks have low operating costs, they can afford to provide you with higher interest rates and little or no fees. And good online banks (like ING and HSBC) are FDIC-insured, just like your local bank.

Additionally, you may be able to set up automatic transfers from your local bank account to your online savings. This way, if you plan to save $25 a week, the money is whisked away into your savings before you even have the chance to miss it!

The only drawback to online savings accounts is that you can’t visit a local branch when you want to deposit or withdraw money. Your local bank account is linked to your online savings account, and transfers to or from this account are done over the Internet or on the phone. These transactions can take a day or two to process.

This “drawback,” however, is actually a benefit for someone who spends impulsively. If you’re keeping your savings in an online account and you see a fabulous new gadget that is begging you to take some of that vacation savings and buy it, your impulse is halted by the fact that your cash is not readily available for spending. You have to process a transfer to make the money available, which requires going home and getting online and, by then, your impulse to spend has most likely been curbed. The cash is there should an emergency arise, but it’s not at your disposal when something unexpected catches your eye on a shopping trip.

Online savings accounts are a great way to save for a rainy day! Compare interest rates and fees before you choose a bank, and be sure that your bank is FDIC-insured. You’ll be surprised how quickly your savings builds when you protect it from your impulses!…

A few quick updates

There’s a few updates to give all of you on things that didn’t necessarily warrant a whole post on each one. So, I decided to write one post with all of the updates.

I never did find the title to our truck so we could get rid of it. We ended up ordering a new one from the Secretary of State at a cost of $10. We should get it in the mail in 7-10 days. There was a way to get it the same day (at a cost of $15), but we would have to drive over two hours away to do it. So, we’ll wait for the mail.

My camera that fell into Lake Superior is working now. I left it in our hot car over the summer and that might have helped to dry it out because it is functional now. Thank you to those who told me to give it some time. We saved some money by not going out and buying a new one.

We may have had to turn on our heat early this year, but we didn’t have to leave it on for long. After some cold days, we had a heat wave of sorts. It’s been raining a lot, but it has been warm.

Speaking of heat, moving my office has been very nice. Getting the sun in my office in the morning is refreshing and helps to bring the outside in the house a little bit. With working at home, sometimes you feel a little stir crazy because you don’t go anywhere. The sun is helping to negate those feelings.

That’s all I can think of at the moment. If there’s something I haven’t updated everyone on and you are curious about it, please feel free to refresh my memory in the comments.…