Archive for the ‘Tips’ Category

Three Proven Ways to Reduce Closing Costs

April 7th, 2011

All too often mortgage applicants simply prepare for the cost of closing, rather than trying to negotiate it. In fact, some homebuyers don’t even consider the cost of closing, as they are just anxious to get the process over with and begin moving into their new property. Fortunately, it is possible to save hundreds or even thousands of dollars by using the following three proven ways to reduce closing costs.
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Adjustable-Rate Mortgages Versus Fixed-Rate Mortgages

April 2nd, 2011

The first step in choosing a suitable mortgage is to decide between an adjustable-rate mortgage (ARM) and a fixed-rate mortgage (FRM). With an adjustable-rate mortgage the interest rate charged on the loan is set at a fixed rate for an introductory period, after which it is subject to change every year throughout the mortgage term. With a fixed-rate mortgage the interest rate charged on the loan remains the same throughout the mortgage term.

How Adjustable-Rate Mortgages Work

While fixed-rate mortgages are relatively simple to understand, adjustable-rate mortgages are more complex, due to the ever-changing rate structure. Interest rate changes which take place in adjustable-rate mortgages depend on a specific index which is agreed upon within the mortgage contract. The index can be any of the investment instruments which accurately indicate the current position of the real estate market. This allows the lender to increase the interest rate during times when the market is expanding, and decrease interest rates when the market is slowing down. Although one-year adjustable-rate mortgages, in which the introductory fixed rate expires after one year, are the most popular, there are also three, five, seven and ten-year ARMs available as well. The following comparison briefly reviews the pros and cons of ARMs and FRMs.

The Pros and Cons of Fixed-Rate Mortgages

• Pros

Fixed-rate mortgages allow the mortgage holder to budget more effectively since they’ll know the exact monthly payments that will need to be made during the next 15 or 30 years. FRMs also eliminate the possibility of having the interest rate hiked, which could result in unexpected financial hardship. Even if inflation caused market rates to increase by 20% and economic turmoil ensued, the interest rates charged on a fixed-rate mortgage would remain the same.

• Cons

Since fixed-rate mortgages are more stable they usually require the mortgage holder to pay a higher interest rate, which makes the monthly payments higher as well. Although having a fixed-rate can be advantageous, it can also be detrimental if market interest rates begin to decline significantly. In fact, if rates reach a low enough level it would be more beneficial to apply for an ARM.

The Pros and Cons of Adjustable-Rate Mortgages

• Pros

Since adjustable-rate mortgages offer lower initial interest rates during the introductory period, the monthly payments will also be lower. Individuals with an adjustable-rate mortgage will be able to enjoy market interest rate drops if they occur, rather than being locked in a set rate that is higher than the current market rate. It is also easier to gain approval for adjustable-rate mortgages, and homebuyers can afford more expensive homes for relatively the same cost if market conditions are favourable.

• Cons

Just as adjustable-rate mortgage holders can benefit from interest rate decreases, they can also be victim to higher market interest rates. For example, a 6% ARM could easily turn into a 10% ARM in just a couple of years under certain economic circumstances. Such rate increases could even result in the mortgage holder being unable to afford monthly mortgage payments.

Tips For Selling a Home

March 23rd, 2011

Selling a home can often feel even more daunting than the task of buying a first home. Not only must the owner look for a new place to live and concern themselves with the many details of relocation which are involved in such a decision, but they are also forced into deciding how to use their existing property.
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How to Get a Property Sold Faster

March 22nd, 2011

Getting a property sold as quickly as possible is the priority of the vast majority of home owners who are seeking to relocate. But putting the property on the market assumes that the home is ready to be made open to the viewing public so sellers must be sure that they  are prepared for process. Home owners can help move their units in a timely manner and with more money in their pocket at the end of the deal by following some of the suggestions outlined below.
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How to Handle Credit Cards to Make it Easier on a Home Loan

March 18th, 2011

As long as credit cards are kept in check, they can serve as valuable financial tools in assisting the card holder in expanding their purchasing power while building a credit report at the same time. Where users run into trouble, of course, is when they employ their credit cards too often, eventually reaching a point where they maximise their credit limits and very quickly fall into a debt that they are unable to immediately repay. The situation worsens if the card holder exceeds their spending limit or is unable to keep up their payments due to their high rate of interest.
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