MortgageFeliz

Current Home Loan rates

Here are some recent mortgage rates. All require about 1.5% closing costs. Use a mortgage calculator at the right to get more precise numbers.

30 year mortgage rates 7%
15 year mortgage rates 6.7%
1 year adjustable rate (30 year loan that adjusts after 12 months) 6.0%

If you do not have 20% income, you probably can not get a loan right now, so these rates probably don't apply and if they do, they are 1% too low.

If you want a jumbo loan, get prepared to pay through the nose in the current market. Jumbo rates are about to jump 1 % or more if they are available.

Where should I buy?

The old adage is that there are three important factors to consider: location, location, location. Think carefully about where you buy your house. How convenient is it to your place of employment? You will be going there every day and the costs of commuting can be significant. How much time will the commute take? In today’s world, housing prices often reflect commuting distances and time and it may be hard to afford an ideally situated house, but you should at least consider the implications.

Is it important to live close to your friends and family? Think it through.

Is the neighborhood improving or deteriorating? Many people say buy the least expensive house in the best neighborhood that you can afford. That way, your house should appreciate with the market without concerns of a loss because of neighborhood problems.

Wherever you choose to live, think about the pros and cons into the future and not just today. And then, live there happily

What is a cosigner?

Many people cosign loans to buy houses. By joining together several individuals, the combined income and credit history can permit qualification for a loan for a house that would have otherwise been impossible. All of the signers do not have to occupy the house.

Who can sign? There really are few legal limits, but every signer should realize the extent of their obligation. They are agreeing to individually accept responsibility for the timely and complete payment of the loan as scheduled for the duration of the loan: often 30 years or more! This is not a guarantee, but effectively a loan to each of the individuals.

A person who signs may also discover later that they might have difficulty qualifying for a loan because of a legal liability.

When used appropriately, everyone can be happy. Just make sure everyone knows what their commitment means.

What is Subprime?

Subprime is anything where you the borrower has less than a perfect application. In the past few years, many lenders have appeared that want to make loans to applicants that historically have been denied loans or that might not otherwise qualify. Why? Well a few say it is to help out, but many smelled money and realized that they could charge more and earn more with a desperate group with few other options and little knowledge of their options, the products and the process.

It basically works like this. The lower the monthly payment, the easier it is to qualify. The comparison of monthly income to a monthly mortgage payment occurs only at the original application. Lenders gave teaser or introductory low interest rates which made the initial payments smaller and allowed qualification for a larger mortgage than otherwise possible.

This leaves no room for problem. Any short period without employment, or an unexpected expense or the increase in the interest rate when the introductory rate disappears can through a tight budget out of whack and result in a default.

Other factors contributing to the increased defaults are low or no down payments, which again mean little or no savings available to cover increased needs.

If you have a subprime loan - you are paying too much.

How much can I spend on my house?

This mortgage calculator chart tells you how much you can spend on a house. This assumes an interest rate of 7%, that you make a downpayment of 10% and that the lender allows you to spend about 32% on your monthly income on the mortgage. The monthly payment includes principal and interest, real estate taxes,  hazard insurance, & mortgage insurance. For other amounts or to see details, use one of the calculators on the right.

Monthly Income	Mortgage Payment	What you qualify for
$3,000	$949	$123,000
$3,500	$1,107	$143,000
$4,000	$1,265	$164,000
$4,500	$1,423	$184,000
$5,000	$1,581	$205,000
$5,500	$1,740	$225,000
$6,000	$1,898	$246,000
$6,500	$2,055	$266,000
$7,000	$2,214	$287,000
$7,500	$2,372	$307,000
$8,000	$2,530	$328,000
$8,500	$2,688	$348,000
$9,000	$2,846	$369,000
$9,500	$3,004	$390,000
$10,000	$3,162	$410,000

Calculator for Monthly payments

Most loans are 30 years. Unless your credit score is good or bad, 7% is a reasonable fixed rate to use for estimates. This does not include any insurance, taxes or PMI.

Loan	Monthly Payment
$100,000	$666
$150,000	$998
$200,000	$1,331
$250,000	$1,663
$300,000	$1,996
$350,000	$2,329
$400,000	$2,662
$450,000	$2,994
$500,000	$3,327

Ask a question

Got a question. We can try to help or try one of the ads on the right. They have lots of good info.

Our address: contact(put @ here)r2gomulti.com

I’m starting to think more seriously about buying a home. What additional expenses can I expect?

There are certain costs of home ownership with which many renters are not familiar.  These include:

·         Mortgage payments of principal and interest – paid monthly

·         Real estate taxes – paid annually or in two installments

·         Home owner’s insurance – sometimes included in the monthly mortgage payment, but usually paid separately from the mortgage in an annual or semiannual premium

·         Electric service

·         Heating/hot water

·         Gas service

·         Trash and garbage collection service

·         Water and sewage service

·         Repairs and maintenance of the interior and exterior of the home

·         Landscaping and grounds maintenance

How much do these items cost?  The answer depends greatly on time of year and climate, as well as usage.  Your mortgage and insurance payments will likely remain the same.  Just remember one thing, this is your home and the cost of having a home that you can call your own is priceless.

I bought a house about three years ago and I’m still paying what’s called “private mortgage insurance” (or PMI). Why do I still have to pay for it?

Private Mortgage Insurance (or PMI) is a necessary expense that accompanies buying a house with less than 20% down in cash.  Although it tends to be expensive, it allows you to purchase a home with a small down payment.  PMI is an additional insurance designed to protect the lender from individuals who default on their loans and who have less than 20% equity in their property.  Mortgage experts say that home buyers who make small down payments are more likely to default on their payments than those who put down 20%.  Therefore, lenders require PMI to insure themselves against the extra risk and ensuing cost of foreclosure. 

Although it may seem like a lead weight, you don’t have to pay PMI throughout the whole life of the loan.  When you have accumulated 20% equity in your house, you can approach the lender to cancel your PMI premiums.  Just be sure that the cancellation agreement is spelled out in writing on the policy. 

When you’re ready to cancel your PMI, contact the lender and ask what steps are required.  Don’t go to the mortgage servicing company, because they don’t make the decision.  The company that purchased your mortgage on the secondary market decides if and when PMI can be dropped, and they usually have specific rules about canceling PMI.  If the lender funds its own insurance program, it may also have its own set of rules.

The most important thing to remember is that it is up to you to contact the lender.  Unless it has been spelled out in a contract signed at the closing, the lender will NOT contact you when your property reaches 20% in equity.

My parents and uncle tell me they have a fixed-rate loan and that it is the best. I’m not so sure about that because the interest on it is higher and I don’t think I can afford the monthly payment. What should I do?

You’re right about the fact that there are many loans to choose from.  I’m almost certain that your parents and uncle didn’t have as many choices, and therefore, feel much more comfortable with something they’re familiar with.  If you’re worried about a high monthly payment, consider a variable interest rate loan (ARM) to take advantage of a low interest rate.  Or choose a loan with a fixed interest rate for 10 or 15 years to obtain a greater tax break and save yourself thousands of dollars in interest.  Also inquire about a “two-step mortgage” that combines some of the risk associated with a variable rate loan with the stability of a fixed rate loan.  Research all your options.  The lenders are there to help you choose the loan that is best for you.  Ask them to give you in writing what each loan will cost and the differences between each one of them.

To avoid making a mistake, try to spend as much time as possible in the area.  Drive through neighboring streets and visit the local supermarket, cleaners and other nearby businesses.  Wait and observe the neighbors as they come home from work or walk up and talk to them.  Think about how your life would be in this new community and if you would enjoy being a part of it.