Friday, September 19, 2008

Home Loan Rates - Closing Costs

Closing costs have a significant impact on the home loan rates that is paid when obtaining a new mortgage loan. Here are a few of the major closing costs and how they affect the rate of the loan.

First time home buyers or borrowers are often rather unpleasantly surprised at the time of closing or just prior when the good faith estimate of closing costs is received. These closing costs can sometime add a significant cost to the dollar amount that the borrower is expected to provide to clear the escrow account at the time of closing or shortly thereafter. The home loan rates are not directly tied to each of the closing costs, but indirectly, you will pay the closing costs. You should make sure you realize and understand each of these costs and how they impact your total cost of the loan.


'Closing costs' is just one of the definitions that you should understand when considering obtaining a home loan. The 'home loan rates' is another. Closing costs are expenses related to the obtaining of the loan, such as document preparation, title search, appraisals, and various other expenses. These costs are typically listed as part of the closing process on the loan. The closing of the mortgage at the title company or with the loan officer will spell out each of these costs and who is responsible for payment of the cost at closing.

Title search

One of the responsibilities that must be met is a search by a title company of court records to insure that the ownership or title to the home in question is clear. They will be looking at sales and deed records to determine that the sellers actually have the legal authority to sell the property. There is a fee charged by the title company to conduct this search. The clear title means that the title company can guarantee the title is correct and that you will have a clear title to the property in question after closing. The title company actually provides a type of insurance, known as title insurance. The cost of the title insurance is one of the closing costs built into the home loan rates.

Origination fees

Another factor in the home loan rates is that of origination fees. These are costs associated with the work the lender or broker does in opening an application file and working to collect and pass on all the necessary documentation required to complete the loan according to the contract. These fees can be sizable or modest, depending upon the broker, but in most cases are negotiable also that fact is not commonly known.


The borrower may be required to pay 'points' as part of the loan fees. There are two types of points that you may be asked to cover. Origination points are the fees you pay your broker or lender to secure the loan while discount points are essentially interest that you prepay in order to manage the best interest rates on your loan. Both types of points are usually paid at the home of closing. Payment of the discount points can significantly lower your home loan rates meaning thousands of dollars less in cost over the life of the loan.

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Thursday, August 21, 2008

Home Loan Rates - ARM or Fixed?

This article defines the characteristics of and differences between the two major types of a home loan rates. It also discusses some of the advantages and disadvantages of each.

There are many ways to structure home loan rates, but the two most common type of loan structures are the Fixed Rate Mortgage and the Adjustable Rate Mortgage. The type of mortgage rate that you choose will depend upon your own situation. The interest rate is the amount the loan costs you over time and varies according to the initial rate set or according to the changes in the index rate applied to your loan. The fixed rate loan will carry the same interest rate throughout the life of the loan, while the ARM changes according to a predetermined index rate.


There are two major types of mortgage loans. Home loan rate that is set at the beginning of the loan and doesn't change during the course of the loan is known as a fixed rate loan, for obvious reasons. The loan rate is often based on what the economy is doing at the time. Lenders want to protect themselves if there is an indication that loan rates may change drastically during the course of the loan.

The adjustable rate mortgage is flexible and helps to protect the lender in situations where the interest rates are rising over a period of time. If the increased in rates reach a certain level, the lender is allowed to adjust the interest rate and thus the payment amount upward for the balance of the loan term

ARM Advantages and Disadvantages

The ARM is relatively new on the home loan rates picture. The ARM or adjustable rate mortgage was created at a time when fixed mortgage rates were high. The ARM allowed initial interest rates to be set lower than the prevailing fixed rates and to be adjusted upward according to a predetermined formula in the future. For example, the ARM might be set with the rate two points lower than the fixed mortgage rates at the time with the provision that after two years, the rate would be adjusted in accordance with a predetermined index in the future. More borrowers could qualify to obtain the loan, while the lenders didn't have increased risk so long as the interest rates or index were increasing.

Fixed Rate Advantages and Disadvantages

Fixed rates are often set slightly higher than ARMs in order to lock in a loan rate when rates are rising so that the lender doesn't lose money on the opportunity to lend money at higher interest rates. At the same time, with a fixed rate, if the rates are falling, the lender has the older fixed rate loans that are bringing more interest money than the current loan. Fixed rate type home loan rates packages are believed to be more favorable to the borrower than the lender.

Another advantage of the fixed rate loan is structure. You can not be priced out of your home by increasingly painful mortgage rate adjustments with corresponding payment amount adjustments. This makes it easier to budget and to plan your expenditures over a longer period of time.

Visit the web site located for the best information about common Home Loan Rates or Home Loan types such as fixed rate and adjustable rate mortgages.

Friday, August 8, 2008

New Home Mortgage - Choosing the Right Mortgage

Since a new home mortgage is probably the largest financial obligation most people will make during their lifetime, it is important to select the right mortgage. You want one that provides payments that will fit within your budget and helps you achieve the goal of home ownership.

What kinds of mortgages are available?

The major types of loans that borrowers find available include fixed rate mortgages, adjustable rate mortgages, interest only mortgage, negative amortization mortgage and balloon payment mortgage. Each of these new home mortgage types has different advantages and disadvantages. Selecting the right mortgage for your particular financial situation should be done after reviewing the major factors in each of the above loan types to find one that fits. Be sure you have looked at the immediate results of a specific mortgage type as well as the long term effects of the loan. Three years into the mortgage payment period is not the time to discover you can't afford the loan.

How much can you afford?

This is a critical factor in choosing a new home mortgage that will enable you to meet your financial obligations easily without undue financial stress on you and your family. Lenders often use a guideline for affordability of your proposed home purchase based on 2.5 times your annual salary, but this figure can vary depending on the lender and upon the level of your income. It may also be affected by other characteristics such as your credit score, the economy of the region or the country, and whether it is a new home or a pre-owned home.

What other factors enter into the type of mortgage selected?

In addition to reviewing your ability to repay the new home mortgage, other factors are important in selecting the mortgage type for which you should apply. For example, your past history in managing your credit obligations may be a factor in choosing your new mortgage. You will also need to look at your debt load and whether you have excessive credit card debt or other payments. Your job history may be reviewed to see whether you typically stay with an employer or whether you bounce from job to job. If you have moved several times in the recent two year period, you will probably need to be able to explain why that was necessary to a potential lender.

Your credit score

Your credit bureau score often called the FICO score is a representation of your creditworthiness as perceived by the three major credit bureaus. Lenders often use the FICO score in determining your qualification for various types of mortgage loans. When you have a low FICO score, the type of new home mortgage that you can qualify for may be limited. Conversely, you have more options both in the type of mortgages that are available to you and the terms of the mortgage when your credit score or FICO score is high.

Saving money on your mortgage

No matter which type of new home mortgage that you select, there are ways to reduce the cost of the mortgage. For example, you can lower total interest costs by reducing the term of the loan, such as getting a 25 year loan instead of a 30 year loan. This can save a significant amount in overall costs.

Selection of a new home loan is facilitated by finding internet resources that provide information and assistance about the subject. One of the best sites for the subject of home loans is located at New Home Mortgage or Home Mortgage.

Friday, July 25, 2008

New Home Mortgage : How Your Credit Score Affects Your Loan

A credit score is a representative number calculated by each of the credit bureaus, including the three major bureaus that purport to show potential lenders how good or poor a risk you are. When you apply for a new home mortgage, the credit score will affect your ability to obtain a loan.

Ability to obtain a loan

The first indication that there may be a problem with your credit score might be when you try to obtain a new home mortgage and are unable to find a lender that will talk to you. Actually, most people, even those with a really low credit score will be able to find a loan of some sort to purchase their home. It just may cost a lot more in interest rates than you had planned. If you can obtain a loan, it may take more justification and documentation than would be required with a good credit score.

Which lender to select

If your credit score is too low, you may not be able to get a new home mortgage with your lender of choice. The difficulty with having to switch to another lender is that you need to document your second try just as thoroughly as your first effort. In the meantime, because of the reviews on your credit bureau report, your score may actually drop, particularly if the report that the first lender denied you credit before the second lender is approved hits the report. The extra time to document your information for the lender can be one of the most discouraging parts of applying for a mortgage loan.

Loan term

The length of time that you will set in order to complete repayment of your new home mortgage loan will be affected by your credit score. This factor is probably of less significance than some of the others, but still must be taken into consideration. The direct impact is caused when a low credit score causes the requirement of higher interest rate. This may make the payment too high for the borrower if the shorter term loan is selected. So, the borrower ends up paying more interest over a longer loan term just to keep the payment within manageable levels.

Loan rate

The new home mortgage loan will almost certainly be impacted by the credit score of the borrower. Generally, the lower the score, the higher the interest rate. If the score is too low, the borrower may not be able to obtain a conventional home mortgage at all. Conversely, better terms will be available to the borrower who has high credit scores. It is important to know your credit score and make certain that the reports by the major credit bureaus are cleaned up and accurate.

Type of loan

Another way in which the level of your credit score affects the new home mortgage loan you can obtain is in the type of loan that is available. The major types of loans that are available include adjustable rate mortgage, fixed rate mortgage and balloon payment type mortgages--usually paired with ARMs. Again, sometimes lenders will steer the borrower to an adjustable rate mortgage so that increasing interest rates will be borne at least in part by the borrower rather than the lender. The borrower should avoid getting into a loan that results in negative equity in the property.

Finding resources on the internet to help you obtain information about a New Home Mortgage or Home Mortgage is simple when you take advantage of the links available at Know what to look for and where to find it with this all purpose website.

Thursday, July 17, 2008

Home Loan Rate : Facts You Should Know About Adjustable Rate Mortgage

An adjustable rate mortgage makes a different in the amount of the home loan rate that you qualify for in purchasing a house and obtaining a mortgage loan. The adjustable rate mortgage or ARM allows for lower monthly payments initially.


An ARM or adjustable rate mortgage is a type of mortgage loan where the home loan rate fluctuates periodically depending on any of an index measurements. Common indexes used include Prime rate plus x, LIBOR (London Interbank offered rate) or other index, including one developed by the lender. This causes the payment amount to vary or the term of the loan to vary to cover the increased (or sometimes decreased) amounts owed. Adjustable rate mortgages have the effect of transferring part of the risk of making the loan from the lender to the borrower. The rates of ARMs usually start lower, but can increase at a much faster rate than the borrower is prepared to cover.


In times of expanding earnings and economy, adjustable rate mortgages are a good deal for the borrower, because it allows them to get a larger loan than they would have been able to afford otherwise. The home loan rate starts out at a lower level and then increases (usually) after a waiting period to keep pace with increasing interest rates. The ease of obtaining an adjustable rate mortgage and the lower payments in the beginning are two major advantages of this type of loan. If the borrower's income increases over time, the ARM is the ideal way to get started with home ownership.


The major disadvantage of obtaining a mortgage with a home loan rate that is tied to an outside index is that in most instances, the rates increase over time. If the borrower has obtained a loan with payments at the top end of the borrowing capability, and the interest rates on the loan rise dramatically, the borrower may find that pay raises or earning capacity have not increased as rapidly as the payments on the mortgage loan. It can be very easy to find oneself in a foreclosure mode when this happens.

Prime rate

The prime rate, or the rate at which the best banks can borrow money is one of the favorite indexes used to calculate the home loan rate. For instance, the mortgage loan may be listed as prime rate plus two percent. If the mortgage loan is an adjustable rate mortgage, the loan may be structured to start at prime rate plus two percent. If the prime rate increases by one quarter percent, the loan can be increased over time to cost the extra one quarter percent. Usually, the amount cannot be increased more than so many times in a time period. There is also usually a top limit to growth for the loan payment.

How are they obtained?

Any mortgage lender can agree to lend the borrower money using an adjustable rate mortgage. In fact, lenders approve of such loans since they remove part of the risk of lending money from the lender and place it upon the borrower. When the home loan rate increases to the lender, it can in turn be passed on to the borrower. Personal financial advisors often suggest that adjustable rate mortgage are something to be very sure you understand what you are getting and what can go wrong.

Choosing a home loan rate is easy, understanding what it is and what your options for obtaining a good rate is something entirely different. Check out a good web site for the best resources on the internet. Click here at Home Loan Rate or Home Loan to learn more.

Thursday, July 10, 2008

Home Loan Rate : What Can You Afford?

The question of what a home is worth versus what you can afford is one that can best be answered by reviewing some of the factors that go into the determination of what size of a home loan rate will best fit within your budget.

Amortization Schedule

The amortization schedule is typically a part of the loan documents package that you will receive when you sign the papers on your loan. The home loan rate amortization scheduled tells you each payment period what the amount of your total payment is and what portion of the payment goes toward principal and what portion is retained to pay the monthly interest. Each month, if the payment is monthly, the amount of the payment going toward the interest is smaller and the amount going to pay against the principal is larger. If you pay extra against the principal, the results are even more noticeable.

Income to Debt ratio

Another factor that helps you to know what you can afford is a measurement by the mortgage company when preparing the amount of your home loan rate. This is your income to debt ratio. Credit bureaus often include this figure in their report to the lender. The calculation to determine whether or not you qualify for one of the best rate loans depends on factors such as the income to debt ratio. In recent years, the debt to available credit has been used more widely to measure affordability of the mortgage loan.

Credit capability

The amount you can afford on your home loan rate is certainly driven by the credit history and capability of the prospective borrowers. The person with a high credit score can qualify for a better deal on the loan terms than one with a low or non-existent score. Even with a very good score from the credit bureaus, you should not over extend the size of the loan which you negotiate. By taking on too much debt, you can place yourself in a position where you are only a few days and a weekly paycheck away from being in trouble financially and those type of stressors are not healthy.

Market Value

The market value of the house you purchase is essentially whatever you are prepared to pay for the property. Your home loan rate doesn't depend directly on the market value, but indirectly is a factor in determining whether you can afford a specific loan and the terms associated with it. Sometimes the market value is based on what neighborhood properties that are similar in design are selling for. A real estate buyer's agent can help you to determine what the market value of a particular property would be.

Assessed value

The assessed value of the home doesn't have a direct bearing on whether you can afford the home loan rate of a specific piece of property, but it does make a difference indirectly. When the county tax assessor looks at the value of the house, it is known as the assessed value of the property. The assessed value is typically quite different than the market value of the property. The assessed value is driven by such things as the value of other houses in the neighborhood, and what the market price of the previous property sale was pegged at.

Finding a web site that contains a wealth of resources to help you in your search for the best Home Loan Rate is not difficult. Just log in to and take advantage of all the tips, links and helps you will find there.