US long-term mortgage rates rise; 30-year at 2.79% – Manhattan Mercury
US long-term mortgage rates rise; 30-year at 2.79% Manhattan Mercury
US long-term mortgage rates rise; 30-year at 2.79% Manhattan Mercury
Today weâll analyze NBKC Bank, formerly known as National Bank of Kansas City, which a depository thatâs also big on home loans, funding billions in mortgages annually. They refer to themselves as an âaward-winning national mortgage companyâ thanks to their many accolades and numerous 5-star customer reviews. Additionally, NBKC is a top-15 VA loan lender [&hellip
The post NBKC Mortgage Review: An Award-Winning Online Lender first appeared on The Truth About Mortgage.
President Biden plans to sign 17 executive orders his first day in office, including an extension of the eviction and foreclosure moratorium.
The post Biden’s executive order will extend foreclosure moratorium appeared first on HousingWire.
The Coronavirus Aid, Relief and Economic Security Actâalso known as the CARES Actâis a $2 trillion stimulus package passed by the federal government. The goal of the CARES Act is to provide relief for individuals and businesses struggling with the financial fallout of the COVID-19 pandemic and resulting shutdowns. One of the components of the… Read More
The post Coronavirus Mortgage Relief: What Homeowners Need to Know appeared first on Credit.com.
If you need a quick cash injection and own sizeable equity in your home, equity loans can help. Home equity loans and home equity lines of credit are low-interest rate loans taken out against your home. Also known as second mortgages, they allow homeowners to tap into their equity, and offer a plethora of benefits, as well as a few downsides. But […]
Home Equity Loan vs Line of Credit is a post from Pocket Your Dollars.
Don’t re-invent the wheel. Personal finance rules of thumb let you apply wisdom from the past to reach quick solutions.
A close friend of mine was diagnosed with cancer this year. It was the serious kind, where you need to treat it quickly and aggressively or it will spread through your body, stick to all of your organs, and kill you. The diagnosis was a shock to my friend and her loved ones – sheâs […]
After months of searching, planning and saving, youâre finally ready to apply for a mortgage. You think you have all your ducks in a rowâyou have great credit and a killer history of making your loan payments on time. But thereâs one small hiccup. A lender noticed that youâve had a recent, slightly unusual cash… Read More
The post How to Explain a Cash Deposit for a Mortgage appeared first on Credit.com.
When you're ready to buy a home, choosing the best lender and type of mortgage can seem daunting because there are many choices. Since no two real estate transactions or home buyers are alike, it's essential to get familiar with different mortgage products and programs.
Let's take a look at the two main types of mortgages and several popular home loan programs. Choosing the right one for your situation is the key to buying a home you can afford.
First, here's a quick mortgage explainer. A mortgage is a loan used to buy real estate, such as a new or existing primary residence or vacation home. It states that your property is collateral for the debt, and if you don't make timely payments, the lender can take back the property to recover their losses.
In general, a mortgage doesn't pay for 100% of a home's purchase price.
In general, a mortgage doesn't pay for 100% of a home's purchase price. You typically must make a down payment, which could range from 3% to 10% or more, depending on the type of loan you qualify for.
For example, if you agree to pay $300,000 for a home and have $15,000 to put down, you need a mortgage for the difference, or $285,000 ($300,000 – $15,000). In addition to a down payment, lenders charge a variety of processing fees that you either pay upfront or roll into your loan, which increases your debt.
At your real estate closing, the lender wires funds to the closing agent or attorney. After you sign a stack of mortgage and closing documents, your down payment and mortgage money go to the seller and various parties, such as a real estate broker, title company, inspector, surveyor, and insurance company. You leave the closing as a proud new homeowner and begin making mortgage payments the next month.
The structure of your loan and payments depends on whether your interest rate is fixed or adjustable. So, understanding how these two main types of mortgage products work is essential.
A fixed-rate mortgage has an interest rate that never changes, no matter what happens in the economy.
A fixed-rate mortgage has an interest rate that never changes, no matter what happens in the economy. The most common fixed-rate mortgage terms are 15- and 30-years. But you can also find 10-, 20-, 40-, and even 50-year fixed-rate mortgages.
Getting a shorter mortgage means you pay it off faster and at a lower interest rate than with a longer-term option. For example, as of December 2020, the going rate for a 15-year fixed mortgage is 2.4%, and a 30-year is 2.8% APR.
The downside is that shorter loans come with higher monthly payments. Many people opt for longer mortgages to pay as little as possible each month and make their home more affordable.
Here are some situations when getting a fixed-rate mortgage makes sense:
The second primary type of home loan is an adjustable-rate mortgage or ARM. Your interest rate and monthly payment can go up or down according to predetermined terms based on a financial index, such as the T-bill rate or LIBOR.
Most ARMs are a hybrid of a fixed and adjustable product. They begin with a fixed-rate period and convert to an adjustable rate later on. The first number in the name of an ARM product is how many years are fixed for the introductory rate, and the second number is how often the rate could change after that.
For instance, a 5/1 ARM gives you five years with a fixed rate and then can adjust, or reset, every year starting in the sixth year. A 3/1 ARM has a fixed rate for three years with a potential rate adjustment every year, beginning in the fourth year.
When shopping for an ARM, be sure you understand how often the rate could change and how high your payments could go.
ARMs are typically 30-year products, but they can be shorter. With a 5/6 ARM, you pay the same rate for the first five years. Then the rate could change every six months for the remaining 25 years.
ARMs come with built-in caps for how much the interest rate can climb from one adjustment period to the next and the potential increase over the loan's life. When shopping for an ARM, be sure you understand how often the rate could change and how high your payments could go. In other words, you should be comfortable with the worst-case ARM scenario before getting one.
In general, the introductory interest rate for a 30-year ARM is lower than a 30-year fixed mortgage. But that hasn't been the case recently because rates are at historic lows. The idea is that rates are so low they likely have nowhere to go but up, making an ARM less attractive.
I mentioned that the going rate for a 30-year fixed mortgage is 2.8%. Compare that to a 30-year 5/6 ARM, which is also 2.8% APR. When ARM rates are the same or higher than fixed rates, they don't give borrowers any upsides for taking a risk that their payment could increase.
ARM lenders aren't making them attractive because they know once your introductory rate ends, you could refinance to a lower-rate fixed mortgage and they'd lose your business after just a few years. They could end up losing money if you haven't paid enough in fees and interest to offset their cost of issuing the loan.
Unless you believe that rates can drop further (or until ARM rates are low enough to offer borrowers significant savings), they aren't a wise choice in the near term.
So, unless you believe that rates can drop further or until ARM rates are low enough to offer borrowers significant savings, they aren't a wise choice in the near term. However, always discuss your mortgage options with potential lenders, so you evaluate them in light of current economic conditions.
RELATED: How to Prepare Your Credit for a Mortgage Approval
Now that you understand the fundamental differences between fixed- and adjustable-rate mortgages, here are five loan programs you may qualify for.
Conventional loans are the most common type of mortgage. They're also known as a "conforming loan" when they conform to standards set by Fannie Mae and Freddie Mac. These federally-backed companies buy and guarantee mortgages issued through lenders in the secondary mortgage market. Lenders sell mortgages to Fannie and Freddie so they can continuously supply new borrowers with mortgage funds.
Conventional loans are popular because most lenders—including mortgage companies, banks, and credit unions—offer them. Borrowers can pay as little as 3% down; however, paying 20% eliminates the requirement to pay an additional monthly private mortgage insurance (PMI) premium.
FHA or Federal Housing Administration loans come with lenient underwriting standards, making homeownership a reality for more Americans. Borrowers need a 3.5% down payment and can have lower credit scores and income than with a conventional loan.
VA or Veterans Administration loans give those with eligible military service a zero-down loan with no monthly private mortgage insurance required.
The USDA or U.S. Department of Agriculture gives loans to buyers who plan to live in rural and suburban areas. Borrowers who meet certain income limits can get zero-down payments and low-rate mortgage insurance premiums.
Jumbo loans are higher mortgage amounts than what's allowed by Fannie Mae and Freddie Mac, so they're also known as non-conforming loans. In general, they exceed approximately $500,000 in most areas.
Always compare multiple loan products and get quotes from several lenders before committing to your next home loan.
This isn't a complete list of all the loan programs you may qualify for, so be sure to ask potential lenders for recommendations. Remember that just because you're eligible for a program, such as a VA loan, that doesn't necessarily mean it's the best option. Always compare multiple loan products and get quotes from several lenders before committing to your next home loan.
It was bound to happen. So-called alternative financing sources for student loans have been popping up all over the place. Some take a peer-to-peer (P2P) approach, where individuals with a few bucks to spare and hopes of a better-than-market return lend to others who are looking for a good deal on a loan. P2P companies… Read More
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