Mortgage Tips For The Frantic

It is a curious fact of human nature that people will haggle over the price of an umbrella, but buy a house on impulse.

We understand small amounts of money; we know what they can buy. £200,000 is harder to grasp; you can't fit it in your pocket. The desire to acquire, combined with the stress of the purchase, can make people do funny things. With this in mind, here are a few tips to review when getting a mortgage.

Watch out for the 'Deal Of A Lifetime', the deal that seems too good to be true. The company may be saving money by cutting back on their level of service.

When getting a fixed rate: get a written statement which details the interest rate, how long the rate is fixed for, and the conditions attached.

When interest rates fall: try and leave your repayments as they are. You will therefore be paying more than the minimum each month. You'll repay your loan much earlier. When rates rise again you may not have to change your payment.

Consider a fifteen or twenty year term. Try to pay off your mortgage quickly. Use a mortgage calculator with an amortization function, and see what's possible.

Keep your mortgage as small as possible. Aim for *comfortable* affordability.

You will find mortgage lenders who will stretch your qualification ratios. They aren't doing you a favour. The qualification ratio is the ratio of your total mortgage payment to your total income.

The traditional ratios are: The mortgage payment as 28% of your income; the total of your mortgage payment plus your monthly debt payments as 36% of your income.

Try not to 'churn' your mortgage. Each time you refinance you'll probably incur completion costs and non-refundable fees.

Beware of prepayment penalties. Many 'no fee' credit lines have a pre-payment penalty. This can be very expensive if you are planning to refinance or sell your house in a few years time.

You don't need to sign a mortgage agreement which contains any significant prepayment penalty, if you have good credit. One of the smartest things you can do with a mortgage is to prepay it.

Don't look for a home without being pre-approved. You will have much more negotiating power with the vendor, and may be able to save thousands of pounds.

Get a full, professional survey. Human beings can be perverse; happy to spend £150,000 on a house after a half-hour viewing, but be-grudge spending £500 finding out whether it's worth buying in the first place!

Find out the true value of your home. Get more than one independent appraisal. Compare it with the prices of similar-sized houses for sale in the same area.

Start gathering documents. Provide your mortgage company with documents in good time; don't let your rate lock expire!

Verbal (oral) agreements are worthless. When buying or selling property, always get it in writing.

When you do get your mortgage, check your payments are correct - do the mathematics. There's a one in ten chance you could be paying more than you should.

Review your mortgage regularly - this, and possibly remortgaging, will ensure you pay as little as possible in interest.

Finally, consider the following advice from the U.S. Department of Housing and Urban Development:

Be sure to read and understand everything before you sign;

Refuse to sign any blank documents;

Do not buy property for someone else;

Do not overstate your income;

Do not overstate how long you have been employed;

Do not overstate your assets;

Accurately report your debts;

Do not change your income tax returns for any reason;

Tell the whole truth about gifts;

Do not list fake co-borrowers on your loan application;

Be truthful about your credit problems, past and present;

Be honest about your intention to occupy the house;

Do not provide false supporting documents.

A mortgage is the biggest financial committment most of us will ever make; worth spending a little time on, to get it right!

About the author: T. O' Donnell (http://www.tigertom.com/mortgages-uk.shtml) offers mortgage quotes, advice, an ebook and a mortgage calculator, in London, UK.

In The News:

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Washington Times
How can I avoid a mortgage refinancing rip-off?
IndiaPost.com, CA - 53 minutes ago
For mortgage refinancing, that means knowing the terms of your existing mortgage and the latest mortgage rates, as well as reviewing your credit report and ...
The Truth About Mortgage Refinancing Revealed By Connecticut ... SBWire (press release)
Refinancing suddenly booms Honolulu Advertiser
Low Mortgage Rates Bring Refinancing Boom MSNBC
Forbes - Modesto Beeall 25 news articles

Baltimore Sun
Average Mortgage Rate Hits 5%, Lowest in Decades
New York Times, United States - 11 hours ago
Of course, buying a home is a more lengthy process than simply calling up a mortgage broker to refinance, and activity typically slows during the holiday ...
Long-Term Mortgage Rate Falls Again Wall Street Journal
Banks' mortgage rates fall below 5% Boston Globe
Homeowners with good credit scores are poised to capitalize on ... Baltimore Sun
AHN - Scripps Newsall 68 news articles

Lenders Backlogged By Refinancing Rush
Washington Post, United States - 26 minutes ago
Mortgage rates immediately plummeted well below 6 percent, breaking a psychological barrier. Refinance applications have soared each week since, ...

WJBF-TV
US Banks Offer Mortgages Below 5% After Fed Action
Bloomberg - 21 hours ago
The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan dropped to 1143.8 for the week ending Jan. ...
Mortgage rates fall to record low again Forbes
Freddie Mac: Benchmark mortgage rate continues to new low MarketWatch
Bold government action can solve housing crisis North Texas e-News
American Banker - Connecticut Postall 599 news articles

Cardoza proposal could aid housing crisis
Stockton Record, CA - 4 hours ago
Under the Cardoza plan, the payment on that mortgage refinanced to 4 percent fixed rate would drop to $1194 a month. Contact reporter Bruce Spence at (209) ...

REFILE-UPDATE 1-US mortgage demand dipped before Fed move-MBA
Reuters - Jan 7, 2009
The jump in applications during December may have been driven by homeowners already "on the fence" and prepared to refinance on a drop in mortgage rates, ...
Mortgage applications down in latest survey Forbes
Week-to-week mortgage applications down 8.2% MarketWatch
Fewer apply for home loans; credit line delinquencies increase Los Angeles Times
KVOA.com - Kansas City Starall 63 news articles

Boston Globe
Fed’s Rosengren Calls for ‘Concerted’ Fiscal, Monetary Policies
Bloomberg - 7 hours ago
... to purchase or refinance homes,� Rosengren said. The average rate on a 30-year fixed-rate mortgage dropped for a 10th week to 5.01 percent yesterday, ...
Rosengren sees path to recovery Boston Globe
Fed's Rosengren says recession more severe than thought Reuters
all 54 news articles

Los Angeles Times
Congressional Press Release on Mortgage Deal
Wall Street Journal - 11 hours ago
"Despite efforts by Congress to address this issue, not enough lenders have come to the table to help borrowers with bad mortgages refinance into new, ...
Citigroup reaches agreement with key senators on mortgage ... Minneapolis Star Tribune
Citigroup agrees to allow judges to help modify some mortgages IdahoStatesman.com
all 565 news articles

TopNews
Question & Answer on mortgage refinancing
Boston Herald, United States - Jan 1, 2009
If I refinance the mortgage on my current house, will I hurt my chances for getting a loan for a new place later on? A: No. Refinancing a loan shouldn’t ...
MORTGAGES: 30-year Mortgage Rate Falls For Ninth Straight Week To ... CNNMoney.com
Mortgage Rates Hit 37-Year Low Poynter.org
Mortgage Rates Down Again After Rising Above 5.00 Percent Last Week PR-CANADA.net (press release)
Wall Street Journal - Ventura County Starall 457 news articles

Refinancing shoots through the roof
Plano Star Courier, TX - 17 hours ago
“Quite a few people have remortgaged,� said Craig Jarrell, loan officer with Pulaski Mortgage. “Most people who refinance are new homeowners as recent as ...

mortgage refinance - Google News

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