Mortgage leads loans Rates

You’re ready to buy your first home, but where do you start the search? Well it would seem today the best place to start would be in the online market; the online market offers some of the most competitive interest rates are valuable and you can apply right from the convenience and privacy of your home.

Does this mean that the online process is just 1,2,3.. and you’re ready to buy? No, this means the online community is one of the better places to start. This article will take a look at the good, the bad, and the useless. Not every web site is your key to your new home; not every web site is what it claims to be. Why don’t we start with the tools that are available for the novice buyer and then move into the online programs that are valuable, and finish up with the online mortgage companies?

Many of the advertised web sites do offer really useful tools for a novice buyer in order to prepare them and determine eligibility levels. Tools such as the mortgage calculator, the debt to income ratio calculator, and tools available that will determine the mortgage products that are obtainable based on your input of information are really helpful and do actually provide the potential homebuyer with working information. Normally, all of the major web sites will provide access to these tools through the use of hyperlinks; some even offer to calculate home value based on your location.

The most useful and perhaps the most often offered a tool for the perspective homeowner is the application form to pre-qualify and to have a representative contact you. There’s nothing like talking to another person, especially one that is a specialist in the mortgage industry, in order for you to determine what you actually will qualify for and what you might actually want to buy.

What other options and tools are available on these web sites? Another useful and often overlooked tool is the link that will provide you with access to your credit file. More often than not, a young person tries to pre-qualify for a mortgage product and there is no existing credit history, there is no established credit score, therefore there is no hope of obtaining a mortgage. At least not without a cosigner. But if you’re a beginner, and you take the time to visit web sites you can gain access to information before it’s necessary to have established plan. This in itself puts you one step ahead.

What would fall under the classification of “bad”? Here’s the only item that I can truly file as a bad side effect of and online mortgage quest: your name and information is shared with all other online lenders and at some point in time your phone will ring and a telemarketer will asked to speak with you, in order to sell you a mortgage. Now, a mortgage is not really something that you impulse buy, therefore I believe this to be a waste of time for you, the telemarketer, and the online mortgage company.

What falls under the “useless” category: the web sites that offer to find bidders to bid and compete, for your mortgage business. First of all they don’t gather enough information to actually compete for anything; not what mortgage company is willing to submit a bid for your business until they check your credit file, are familiar with your credit score, and know something about the property you’re proposing to buy.

Now why would you even advertise like this? Well the answers really simple these web sites that offer to recruit mortgage companies that will be it for your business are telemarketers in disguise. That quite obviously earn a commission for every lead they provide for a mortgage company, and you are simply providing information to be one of their leads. It’s really a simple way to search for and locate live leads, and it really does save a lot of live telephone time. So there you are a general overview of the online mortgage market, the good, the bad, and the useless.

Some of the mortgage companies today, sell their mortgage packages with every kind of mythical benefit known to man, from the belief that interest only is a real mortgage that will eventually payout (slight of words, there) to the belief that an interest only mortgage carries a lower interest rate(which is does, but only for the short term). Let’s start with some of the more traditional loans, and move into the weird and unusual.

There has been a tremendous jump in the available interest only mortgage packages in the last three to five years so maybe we should take a minute to break down some of these mortgages into a language everyone can understand.

There’s a 3/1 ARM. A 3 year ARM, means that the interest rate is locked in for 3 years. For the first month, the interest payment is only 1%, for the next 3 years following only the interest is due as the monthly payment. After the 3 year term, and for the remainder of the life of the loan, normally thirty years, the interest rate will change, and the payments will begin to include principal and interest.

There’s a 5/1 ARM. A 5 year ARM, means that the interest rate is locked in for 5 years. For the first month, the interest payment is only 1%, for the next 5 years following only the interest is due for the monthly payment. After the 5 year term, and for the remainder of the life of the mortgage, normally thirty years, the interest rate may change, and the payments will begin to include principal and interest.

These mortgages also come in 7/1 and 10/1 ARMs, but analysts really don’t recommend extending the interest only option out that far, since too many things can change before the 7 or 10 years is up.

The 10/30 interest only mortgage works in the following way: you borrow money in the form of a 30 year mortgage, with a fixed interest rate. The first 10 years are interest only payments, with the full amount of the principal being amortized (interest payments included) over the last 20 years of the loan.

The 15/30 interest only mortgage works in the following way: you borrow money in the form of a 30 year mortgage, with a fixed interest rate. The first 15 years are interest only payments, with the full amount of the principal being amortized (interest payments included) over the last 15 years of the loan.

These mortgages are really appealing to the consumer with any sort of investment knowledge. If I were going to borrower with the interest only mortgage option, it would be one of these two, the 10 or 15 of 30.
Now what other myths can we find? There’s the belief that the home mortgage income tax deduction is a substantial benefit to the taxpayer, and that 1% interest only loans are for the life of the loan! Ha! There’s also the balloon note myth that proliferates the belief you can automatically refinance through your current lender when the note matures, or that adjustable rate mortgages are a better deal than fixed rate!

Another mythical idea is that the real estate market can’t go bust. An exploding growth rate in the mortgage loan industry, and the continued surge in real estate prices, has put the interest only mortgages in a huge category all their own. Up from the first part of the century, the interest only mortgage loans are now garnering nearly one-fourth of the mortgage loan market. That kind of growth is almost frightening, to even the most experienced lender. Can you imagine the possibilities, say four to five years from now, when many of these loans come due to pay the interest and the principal; what happens if our economy isn’t still a thriving bustling place?

The benefit of the interest only loan is that the consumer is eligible to buy much more house, than with a standard mortgage. That’s great if you’re certain in a given period of time, you’ll be able to afford a higher mortgage payment. But is anything guaranteed and given in this day and time? What if you can’t afford the payment when the interest only term expires?

We have only to look at the disastrous consequences of the crash of the stock market during the 1920s to appreciate where this may be leading us today. Many people had financed their homes with an interest only mortgage, and when the stock market crashed and there was no work, they lost everything, including their homes.

So, we not only promote mythical nursery rhymes, we promote mythical mortgages, too!

Jumbo loans are an investment tool they’re not for the average borrower. Or so we thought. Today, however, thanks to the boom in real estate prices, and the ever declining value of the dollar, more and more average consumers are applying for these jumbo loans, and using them to finance a home purchase.
The most typical area to see the home prices rising to a level that makes a jumbo loan necessary is in your resort area housing. Many of these homes have escalated tremendously in price over the last couple of years, and the loan needs have risen to all time highs. The jumbo loan has now become a real mortgage product, not just an investing tool.

Before we get too deep into the real estate market, and the use of the jumbo loan, perhaps we’d better define the jumbo loan and the consequences of financing your mortgage in this manner.

The jumbo loan is a loan amount that exceeds $359,651. In fact, this is the defining characteristic of the jumbo loan. The other “baggage”, if you will, that often accompanies these loans, is the large amount of paper work, higher private mortgage insurance, and the higher interest rate. It might also be interesting to know, that Freddie Mac and Fannie Mae, the two largest mortgage buyers in existence today, usually establish these limits, and dictate to many lending companies exactly what they will buy, and how. It should not need to be mentioned that these loans present a bigger risk than the other, traditional loan needs, and therefore must meet some rigorous requirements.

Now, having explained the definition of the jumbo loan, it deserves to be said that there are alternatives to avoid this type of loan, and still secure the funding you need to purchase a home, without using all your life’s savings to do so.

The jumbo loan can be broken down into a first and second mortgage, negating the need for a jumbo loan, and cutting through all the extra paperwork and interest expense. But, that’s another discussion. Another option homeowners have for avoiding the jumbo loan trap is to simply put enough down on the home to keep the amount financed below a certain level.

To further explain the role Freddie Mac and Fannie Mae play in the determination of the jumbo loan limits and expense, you need to understand how the mortgage market actually works, and the role these two companies play in that process. Today, if a mortgage company loans you money to purchase a home, you sign a waiver that states that you understand that your loan may be sold to another servicer. They should simply have you sign a form that says you know your loan is going to be sold; who is it? Freddie Mac and annie Mae.

The mortgage companies find it necessary to resell your mortgage, in order to make another one. So, quite naturally, they must abide by the rules established through the buying companies. Jumbo loans can prove quite risky, so Freddie Mac and Fannie Mae don’t even purchase these types of mortgages. For the mortgage companies that do, there are set limits, and they require more information, larger proven income levels and adequate private mortgage insurance to assure that the home won’t go into foreclosure and auction.

In some areas of the country, there have been increases in the jumbo loan limits, simply because the housing market and home prices are so high, every home purchased would be a jumbo loan, if the limits weren’t extended. Most of these areas are resort homes, vacation homes, and property is scarce.

What is happening today, however, is the growing segment of the population that really needs the jumbo loan financing in order to buy their home; not make a business investment. What does this say about our real estate market, and the value of the property? Our real estate prices are increasing at an astonishing rate, and right along with that, is the increase in products being offered by the mortgage lenders, therefore, it only stands to reason that we would see an increase in the jumbo loan market. The current estimate for the jumbo loan market is generally around 15%; that is still a pretty large hunk of the mortgage market.