Jim Kemish asked:


The Single Largest Financial Obligation

Your mortgage is probably the single largest financial obligation that you will have in your life. The investment that you have in your home can have great long term value, but on a month by month basis it represents a significant expense. The math for most people is simple, the more you pay on your mortgage, the less you have to spend on other things.

To underline this point it might be of interest to note that in 1980 the average person spent 25% of their gross monthly income on housing expenses. By 2005 that percentage had risen to over 43%. This is not really a surprise. We are all aware that home prices have risen significantly during this period of time. Income levels have not kept up with home prices and as a result home buyers are finding more of their paycheck going towards their mortgage payment.

Florida mortgage holders have acutely felt the impact as home prices in recent years have rivaled those of California. Your mortgage may consume more or less than the average 43% of your gross monthly income, but it is probably safe to say that it deserves to be intelligently managed.

Mortgage Management

I’ve been a licensed Florida mortgage broker since 1989. My company Power Mortgage Corp. a Florida Mortgage Company is also licensed in Georgia, Massachusetts, and Virginia. Over the years I have originated, refinanced, and analyzed countless mortgages. I’m always happy when we can help a customer make an intelligent decision about their mortgage. Active, regular mortgage management can make a big difference in your life. The right choices will save you money. Sometimes lots of money.

To Refinance or Not to Refinance

Active mortgage management does not always mean taking action. Active mortgage management means an intelligent periodic review of available options. Call your friendly mortgage broker from time to time! We like to hear from you. We will always take the time to help you understand your options. And always make sure that you know all of the costs involved.

Request a Good Faith Estimate. Make sure that your mortgage broker includes all third party charges and statutory costs along with the lender fees. It is equally important to consider your personal goals; how long will be in the home? Do you plan to retire soon? What type of personal saving plans do you have? What is your aversion to risk? Is an adjustable rate mortgage suitable?

Fixed or Adjustable

Fixed rate mortgages are pretty easy to understand. Adjustable rate mortgages on the other hand can be surprisingly complex. And there are literally thousands of variations of adjustable rate mortgages. Over the last five years negative amortization adjustable rate mortgages have become popular. Florida mortgage borrowers have embraced these programs for the advertised low payment rates. But these loans are complex; I believe that very few people that get this type of mortgage understand them. I also believe that there are mortgage brokers actively selling these programs that do not understand them.

Please take your time. Ask lots of questions. Take notes. Ask more questions. Make sure you understand the index, the margin, the adjustment period for both the note and the payment. It wouldn’t hurt to look at the worst case scenario. Can you live with it? If your mortgage broker can’t answer your questions find a new mortgage broker. Your financial life may depend on it.

How About a 15 Year Fixed?

There was a time when the interest rate on a 15 year fixed rate mortgage was consistently and significantly lower than the rate on a 30 year fixed rate mortgage. Between June of 2004 and June of 2006 the Federal Reserve increased the Federal Funds rate 17 times. This rate directly impacts all short term interest rates such as the Prime Rate. During the same period of time the long term rates remained more or less steady. The net effect was to close the gap between rates on shorter term mortgages like the 15 year fixed and longer term mortgages like the 30 year fixed.

At the time of this writing the rates on these two loan products happen to be exactly the same. But this should not take the 15 year fixed rate mortgage out of contention. For many people it is an excellent option. And it can still save lots of money.

For example, the payment on a 30 year fixed rate mortgage for $100,000 at 6% is $599.55. The payment on a 15 year fixed rate mortgage for $100,000 at 6% is $843.85. That is an extra $244.30 per month on the 15 year mortgage. But consider that the total payments made on the 30 year loan would be $215,838, versus $151,893 on the 15 year mortgage. By choosing the 15 year mortgage you would save $63,945. And you get to stop making mortgage payment in 15 years!

Interest Only

Given the high cost of homes it is no surprise that interest only programs have become so popular. Florida mortgage customers have flocked to these programs to make increasingly expensive homes affordable. An interest only mortgage can be appropriate if your sole concern is cash flow. During the interest only period you will not be paying any principle off. There are many types of interest only mortgage programs. The majority of interest only mortgage programs are “fixed period adjustable rate mortgages”. This means that they are fixed for a limited period of time; typically 3, 5, 7, or 10 years.

The interest only period usually corresponds to the fixed rate period. Once the fixed rate period ends the mortgage becomes adjustable. A new version of the interest only mortgage worth considering is the 30 year fixed rate mortgage with a 10 year interest only period. You get the benefits of the low interest only payment for 10 years - but with no adjustable rate risk waiting for you at the end of the interest only period.

It’s Your Money

How often do you balance your checkbook, get a physical exam, go to the dentist? Your mortgage can have a huge impact on the quality of your life. Think of your mortgage from time to time. Call your friendly mortgage broker. Have a chat. Ask questions. It’s your money.

Copyright © 2007 James W. Kemish. All Content. All Rights Reserved.



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Andres Navarro asked:


Owning a home is a huge responsibility overall, but the biggest single homeowner responsibility is managing the mortgage payment. Mismanage your mortgage and you could risk not being a homeowner anymore. (Yikes!) That’s why it’s so important that you avoid the following mistakes when choosing a mortgage:

#5 – Leaping before looking.

It’s no secret that mortgage lenders weigh a potential lendee’s credit history heavily when deciding whether to offer the lendee a mortgage loan. Still, countless people meet with mortgage consultants without knowing where they stand credit-wise. Don’t do it. If your credit isn’t up to par, the meetings will be in vain because it’s highly unlikely the mortgage consultants would be able to offer you an affordable mortgage that won’t bite you in the buttocks in a few years; what’s worse is that, by meeting with various mortgage consultants, you will put unnecessary inquiries on your credit report—which reflect negatively on your credit! So, the lesson here is that the first step in obtaining a mortgage loan is to order your credit score and learn your what your credit rating is. Next, you do one of the following: (a) meet with a mortgage consultant if your credit is in good shape or (b) use your credit report to determine how you can improve your credit score and work on bettering it.

#4 – Following the leader.

Mortgages are often perceived to be complex and confusing. As a result, many people simply “do what they’re told” rather than learn what’s best for them and comparing that to the direction given by a mortgage consultant. Don’t be mindlessly herded towards a specific decision like that. Now, that’s not to say that you shouldn’t listen to your mortgage consultant, just that you should be knowledgeable enough to ask questions about the suggested option and other options. Make sure that you understand the “why” as well as the opportunities and risks of all the options you’re considering.

#3 – Signing blind.

Many homeowners stop asking questions as soon as they get word they’ve been approved for a mortgage; they forego delving into the details of the mortgage because they’re so elated about being approved. Don’t be that person! Take the time to discover and understand the terms of your mortgage before you sign on the dotted line. Review the Good Faith Estimate (GFE) statement

#2 – Maxing out mortgage limits.

Many homebuyers meet with a mortgage consultant and obtain a mortgage pre-approval. Then, they go out and look for a home based on how much they’ve been pre-approved for; they take the pre-approval amount to be what they can afford but in reality, that amount actually represents how much lenders are willing to loan you. So, as a general rule, remember that it’s never good to max out your mortgage limit. Stay conservative when shopping for homes. In fact, use an affordability calculator to determine how much of a mortgage loan you can handle without having to pinch pennies every month. Do this before you start home shopping. That way, you won’t be tempted to buy beyond your means.

#1 – Settling instead of bargain hunting.

Two mortgages may look alike, but that’s not necessarily the case. So as you’re comparing mortgage options, don’t just look at mortgage rates and the mortgage loan type. In addition to the mortgage rate and type, you should also compare mortgage terms, mortgage point options, mortgage underwriting fees, and mortgage broker fees. When you compare two or more loans side-by-side, you’ll see some clear-cut differences.

Don’t just avoid one of the common mortgage mistakes above; avoid them all. If you do, you will be able to find a manageable mortgage, and not only become a homeowner, but stay one!



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Tim Robbins asked:


In most cases the senior is looking places to find money to off set the major loses they have felt from the banking and investment crisis. The one place that is still a safe haven in many areas is the home, even with declining values. The main reason is that most seniors purchased their homes when values were mush lower before the great appreciation era. If a seniors still has a mortgage on their home and many do have a current mortgage on their home and have to make payments every month. If a senior has a first mortgage lets say just for $100,000 at a 6% rate they are putting out over $600.00 per month or $7,200 per year. This amount if they did not have to make the payment would be added to their income that they would be able to use to live.

In many cases seniors over the years when the economy was booming many took at 30 year loans and or adjustable rate mortgage and are now faced with higher payments and they are trying to stay afloat.

If a senior is faced with this problem they should really consider a Reverse Mortgage for many reasons not to mention relief from payments. In many cases not only would they be free from mortgage payments, but they would receive additional funds to use as they see fit. Under the Reverse Mortgage program they senior controls how and what they spend the money on once they have closed.

Some things never change when doing a Reverse Mortgage and that is they still must pay the taxes and insurance on their home. If a senior is use to having an escrow of taxes and insurance they maybe able to set aside the monies with the company and have them pay it yearly for them.

One thing that all seniors should be looking at is the availability to access the money that they need from their home that they paid for over the course of their lives. In the years that you will need it the most and not have to worry about paying it back in their lifetime.

Many seniors are now thinking that if they take out a Reverse Mortgage and the bank or Mortgage Company goes out of business they will be out of luck. This is not true it is protected by the FHA mortgage insurance, that if they do go out of business then Federal Government takes over and pays them the money. The Reverse Mortgage is the safest mortgage in the entire mortgage industry. Unlike a typical mortgage where a lender has many options to force your paying of the loan, the Reverse Mortgage has the full protection of the US Government that guarantees that the senior will never have to leave their home for as long as they live. This of course is providing they pay their taxes and Insurance and continue to live in the home as their primary residence.

Now in 2009 a new program is emerging within the Reverse Mortgage and this a great option for many seniors who have one reason or another sold their home or have to move to a newer location. The Reverse Mortgage purchase program is now available to seniors over the age of 62. The program is design to allow seniors to purchase a home without any mortgage payments for life. Now just to make it very clear this does not mean that a senior can purchase with no money down. This is not the same mortgage that got this country in to the financial situation that we are in where people would by a home with zero down or less in some cases.

A senior who is looking to purchase a home will have to have money to purchase a home; it is all based on the age of the person and the appraised value of the home. Let’s say that a person age 62 wants to purchase a home that is appraised at $200,000, they would need approximately 40% down payment on the home. They would in most cases be able to finance all or part of the closing cost within the Reverse Mortgage. But let’s look at it in another way! Remember the older you are the less you will need down!

If that same person wanted to purchase a home using a conventional mortgage, they would need at least 20% down and would have to qualify with at least a 720 credit score and have the income to qualify for the mortgage payment.

So let’s look at the difference!

Conventional Reverse Mortgage



$200,000 Purchase price ………………………$200,000

$40,000 down payment ……………………….$80,000

$160,000 mortgage …………………………….$120,000

$858.00 per month payment……………………Zero per month



Now this is what it looks like on paper for a conventional mortgage verses the Reverse Mortgage the big difference is that a senior for a Reverse Mortgage purchase they will not have to qualify for the loan they already are if they are 62 or older. Also under the conventional mortgage if a senior fails to make a payment on their mortgage they will be foreclosed on just like anyone else.

For the senior who has a mortgage currently and is worried if they are going to be able to make payments on the mortgage Think Reverse Mortgage! No Income or Credit qualifying; if think this isn’t a big deal call your mortgage banker and see what it takes to get a mortgage today.

Also this is very important issue your conventional mortgage is not guaranteed that you will stay in your home for the rest of your life!

Here is what you have to do to get a Reverse Mortgage for your home!



Speak to a Reverse Mortgage Specialist who can educate you on all aspects of the program.

You will be required to have a FHA Approved counseling session and receive your certificate to hand to the mortgage company.

A Fully executed loan application must be signed and submitted.

The FHA appraisal must be completed for value and condition of property.

The title search must be completed and cleared of any and all liens and judgments

All insurances must be changed all endorsements

Closing is scheduled once all final conditions have been cleared.

Closing takes place either in the home or at a title office.

The client must wait three business days for the cancelation period which includes Saturdays.

Money is disbursed and all existing liens are paid off and any additional funds available are sent to the person who closed on the loan.



So if you are thinking of how you are going to make it through these hard times, waiting to see if the market will ever turn around you are loosing money in your home.

Remember this as the stock market, and real estate even stay where it is now you may never see the return of that money.



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Rachel Jackson asked:


With so many different types of mortgage available, it’s difficult to determine the right one for you. Before you start looking at available mortgages, however, it’s important to first evaluate your finances, as your financial situation is an important factor that will dictate the type of loan you need, and how much you can afford to borrow.

Step One: Evaluating Your Finances

Before you even think about the type of mortgage you should obtain, it’s important to evaluate your financial situation. Check your credit rating and FICO score, evaluate your income and debt level, figure out the size of the down payment you can afford, and determine how much mortgage you can afford and what your credit rating will allow you access to.

When it comes to your credit rating, know that between 620 and 699, you’ll probably pay a higher interest rate than if your credit rating is over 700, due to a slightly higher perceived risk on the part of lenders. If your credit rating is below 620, you may find it’s better to wait and improve your credit rating rather than be forced into a sub-prime mortgage with a high interest rate.

Step Two: Choosing the Best Mortgage

Once you have completed an evaluation of your financial situation, you’re ready to start thinking about the kind of mortgage you want. The mortgage that best suits you will depend on a long list of factors, not all of which are related to the amount of money you have for a mortgage. Think not only about how much mortgage you can afford, but also your credit rating, how long you plan to stay in the home, and whether you think your plans or financial situation might change in the future.

So what are your main mortgage options?

Fixed rate mortgage

Normally a 10, 15, or 30-year mortgage, you pay the same interest rate over the life of the loan.

Good for: If you like the security of paying the same amount every month and you’re planning on owning the home long-term, this is definitely the best option. There are some variations on this theme, including jumbo mortgages, which are larger-than-standard loans with a slightly higher interest rate.

Adjustable rate mortgage

These are mortgages with adjustable interest rates, which come in several different varieties. When you first get an adjustable rate mortgage the interest rate is lower than that you’d get with a fixed rate mortgage. However, at intervals, the interest rate can increase or decrease according to current market rates. This means your monthly repayments aren’t fixed, so these types of mortgages are more risky in comparison to fixed rate mortgages.

Good for: If you want a mortgage with an initial low rate and you’re prepared to take a risk on later rates (or you only plan to own the home for a few years), this may be a good prospect.

Interest-only mortgage

The standard type of mortgage is amortized, meaning your monthly repayments include both principal and interest. An interest-only mortgage is just what its name suggests – your monthly repayments don’t have to include principal (but you can pay off principal amounts at any time). This means you are not building up equity in your home while you’re only paying interest, but there are no pre-payment penalties.

Good for: This type of loan can work well if your income is at a consistent level overall but is subject to highs and lows, since you can pay off extra principal when you can afford to do so, and pay interest only when your income is at a lower level.

Balloon mortgage

This type of mortgage has a fixed interest rate and stable repayments over the life of the loan, with lower repayments in comparison to a fixed rate mortgage. However, the terms of the loan are generally short, with three, five, and seven years being the most common options. At the end of this time period, the entire balance of the loan is due. The final payment is typically very large, so a balloon mortgage is one which shouldn’t be taken lightly.

Good for: This type of mortgage can be a good option if you plan to stay in the home long term, want to get your mortgage paid off quickly, or if know you can afford the balloon payment. Alternatively, a balloon mortgage can be useful if you know you’ll be moving or refinancing before the balloon payment is due.

30-due-in-7

For the first seven years of the mortgage you have a fixed interest rate which is generally lower than that of a standard fixed rate mortgage. In the eighth year of the mortgage, the interest rate changes to be in line with whatever the current rate is at that time. For the remaining 22 years of the mortgage, the interest rate stays fixed at that rate. Another option is a 30-due-in-5 mortgage, where the interest rate changes in the sixth year.

Good for: These mortgages can be a good option if you’re planning to stay in the house for more than five or ten years and you are willing to risk the possibility that your monthly payments may change substantially when the second interest rate is due.



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Unitedibertymortgage asked:


It is common practice to apply for a mortgage loan when buying a property; in which a lien on the property is given to the lender as collateral for the loan. Though a property with good value can guarantee you a good mortgage loan, the rate (interest rate) applied on the loan is often dependent on various other factors like your credit ratings, personal assurance, etc.

Mortgage rates also vary depending on the type of loan and the duration of the loan. There are basically three types of mortgage rates:

# Adjustable Rate Mortgage

# Fixed Interest Rate

# Variable Interest Rate

Adjustable Rate Mortgage:

On the basis of an index, the mortgage interest rates of an adjustable rate mortgage are adjusted from time to time. When there is a downward fluctuation in the interest rates, it can be beneficial to get adjustable mortgage rates.

Fixed Mortgage Rates:

In the case of ‘fixed mortgage rates’, the monthly payments and the principal as well as the interest rate do not change throughout the entire tenure of the loan. As long as the borrower is in a fixed rate mortgage, the interest rate remains the same. The advantages of this type of mortgage rate are that a record of the exact amount of payments can be kept by the borrower; and an increase in market interest rates will not affect the borrower’s payments.

Variable Interest Rates:

Being better for higher risk threshold customers, mortgage hunters have been showing a higher interest in this type of mortgage. This type of mortgage requires the bank rate to be stable and when you have this mortgage, you have to hope that it remains stable. Variable rate mortgages can save you a lot in interest, but your payments would vary according to the market.

Factors affecting mortgage rates

Major factors affecting mortgage rates include:

• Income of mortgage borrower

• Credit scores

• Total mortgage loan amount versus value of home

• Consideration of closing costs

• Whether or not the mortgage rate is adjustable

• Amount of down payment on mortgage

• Life of mortgage loan

You need to know the mortgage type that fits your lifestyle and your financial needs the best. By choosing the right kind of mortgage loan, you can actually save thousands.



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Chris Borthwick asked:


The UK mortgage market looks set to improve offering borrower’s new cheap mortgage deals as banks agree to finance support conditions. Banks have agreed that borrowers will be able to get more competitive, cheap mortgage offers with rates set to return to 2007 levels and for at least three years so a cheap mortgage for borrowers looks like its on the cards. Welcome news for UK homeowners as cheap mortgage offers have been disappearing since the credit crunch bit.

The banks have also said they will be cheap mortgage deals for all as they agree to support schemes for those struggling with mortgage repayments to stay in their homes and to support expansion of financial capability initiatives.

Banks taking the government financial help will have to achieve a certain level of funding therefore will need to increase lending so we should start to see a more competitive market and cheap mortgage offers available across the different types of mortgages.

A recent survey of mortgage brokers revealed a return to cheap mortgage for all view is expressed by this group also suggesting a return to a competitive cheap mortgage market. Mortgage brokers’ forecast improved future business compared to May or July this year. Exact figures for the future of the business have been predicted as a decline of between 0.4 per cent (for remortgages) and 2.3 per cent (for first time buyers) over the next two months. Much more positive outlook than was given in May this year of a predicted fall of almost 5 per cent for first time buyer business, 3.6 per cent for home movers and 3.4 per cent set at 3.4 per cent.

Peter Williams of the intermediary Mortgage Lenders Association executive director, said: “These survey results which were obtained before the latest volatility in international markets appear to offer a glimmer of hope that confidence among mortgage brokers is starting to return, very slowly.” So mortgage brokers also believe the market will return to offer cheap mortgage again. Peter went on to say “Although a cheap mortgage may take some time as a recent Bank of England credit conditions survey points towards tighter lending criteria in the fourth quarter.”

Cheap mortgage deals available at Northern Rock as it reduces its variable mortgage rates following the Bank of England rate cut to 4.5 per cent. However if on its standard variable rate (SVR) not so cheap mortgage for you as it is only reducing it by 0.15 percentage point to 7.34 per cent, a  high rate for the market and certainly not a cheap mortgage rate.

This news certainly won’t please borrowers especially existing customers of Northern Rock who have in the past got a much cheaper mortgage, sometimes 100+ per cent cheap mortgage and are now faced with not only finding it impossible to find a cheap mortgage but to remortgage to an improved mortgage deal.

There is a cheap mortgage out there for you. By using the services of a mortgage broker you can find a cheap mortgage. A high quality mortgage broker will search the whole of the market to find a cheap mortgage for you and one with the best conditions.



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justin narin asked: