Refinance mortgage online
For the last couple of years lenders have many times been doing a 1st mortgage for 80% of the sales price and a 10, 15 or sometimes even 20% second mortgage for the rest. This was done to avoid paying private mortgage insurance which is required if you finance more than 80% of your sales price.
There are several things to consider.
There are now mortgage insurance programs that are not paid as a premium, but are paid in the form of a higher interest rate. This because it is in the form of more interest is, as allowed by law, tax deductible. The mortgage insurance premium paid is usually of no benefit to the borrower. Now that there are other options for private mortgage insurance all aspects have to be carefully considered to see what the best one is.
There are often more costs involved with getting a 1st and 2nd mortgage.The 2nd mortgage is usually a higher interest rate and may be a variable rate or a balloon loan (one that payments are amortized over a 15 or 30 year period, but the loan matures in a lesser number of years; usually 5, 10 or 15.) Depending on each situation borrowers need to make sure they're comfortable knowing that their interest rate may increase resulting in higher payments or they may have to refinance at the end of their balloon term.
Variable rate loans normally are interest only payments so the required payment may be less, but if only paying interest obviously the balance will remain the same. There are some 30 fixed rate 2nd mortgages being offered. Again there are many variables when determining which private mortgage insurance option is best for each borrower. You need to make sure that your lender offers many options and helps you decide which one is best for you.
Many factors need to be considered when deciding which mortgage insurance options. First you need to apply, find out the total payment, tax deductibility, and approximatiately how long you plan to stay in the home. These are just some of the things that you should discuss with your lender about private mortgage insurance to determine what is best for you. Make sure you have a lender that is knowledgeable and offers lots of options.
Home Inspections
Since you're going to read the ENTIRE contract, it will probably include information about your rights to having home inspections done on the property and what will happen if you discover unacceptable conditions from these inspections. Even if properties are being sold "as is" you probably still have the right to conduct inspections.
Some contracts state that inspections must be done with a certain number of days from the contract date. Make sure you have any inspections done within the time period specified. Normally if you are working with a Real Estate Agent they can suggest home inspection companies to use or do your own homework and choose your own companies.
Costs being paid
Normally there are "traditional" costs that depending on customs in your area are typically paid by either the seller or buyer. Sometimes contracts include preprinted language that states who pays for what.
Since you are going to read the ENTIRE contract you will know what is your responsibility and what the seller will agree to pay. Home inspections are just like all terms of the contract and are negotiable.
Your lender may offer you Mortgage Life Insurance
Some lenders offer mortgage life insurance. This is an insurance policy that pays off your mortgage balance in case of death. Ask an insurance agent to compare costs and benefits of other life insurance plans and mortgage life insurance policies they might offer. Some policies can be used for anything; not just to pay off your mortgage.
Health and Accident Insurance
Some lenders offer health and accident insurance. This is an insurance policy that makes your monthly house payment in case you are disabled. Again check with your insurance agent to compare costs and benefits before making a decision.
Homeowner's insurance
You will need homeowner's insurance on your property.Either the amount of coverage will need to be sufficient to cover your loan amount(s) or you will need guaranteed replacement coverage.
You may be hesitant to make a claim in case of loss due to several factors. Some feel that their premiums will be raised or that if they try to obtain insurance again on a future home they will be turned down. I've even heard of homes being considered uninsurable when they were sold to a new buyer because the home had a previous claim. When you refinance is an excellent time to talk to your homeowners insurance agent about your coverage and how you might save money.
Insurance rates vary as much as loan interest rates
so it is a good idea to shop around. Sometimes borrowers opt for a high deductible thinking that they probably won't make a claim unless it's a substantial loss. If this is the case you will benefit from the lower premium associated with a higher deductible.
Lenders vary in how much of a deductible they will allow
Check with your lender for their specific requirements. Then compare the premium cost and confidence in the Company you choose for homeowners insurance before you make a decision.
Your Closing
You will be signing all of the documents and a settlement statement showing all mortgage closing costs. If possible ask for a copy of the settlement statement ahead of time so that you can review it for accuracy. Make sure that the charges are similar to what was disclosed on your good faith estimate of charges provided at loan application.
Make sure that all credits are accurate
Make sure the amounts for your earnest deposit, amount being paid by seller, tax proration credits, etc. are correct. The mortgage closing costs documents are not as intimidating as you might think. Most lenders use standard Fannie Mae or Freddie Mac docs. The language in them is standard. Examples of mortgage documents by state.
Check for blanks filled in on the note for accuracy
Check the rate, term, prepayment penalty, and any other variables. This document is your promise to pay back the funds and should be reviewed for accuracy.
You should receive copies of all documents signed at closing
If not offered, request a copy of the appraisal done on the property. If you feel that an amortization schedule showing the amount of each scheduled payment and breaking down the amount going to interest and to principal would be helpful to you, request it as well.
If you want to read through the documents
Request a copy package ahead of time so you will have time to review your mortgage closing costs. It is very difficult at the closing table to read all of the documents word for word.
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