Home mortgage loans are offered against collateral security of the property you purchase. However, you possess the house you purchase and have its ownership as well; the lender also has an “ownership interest” on it until the loan has been paid.

The mortgage loan rates have come down, which makes the mortgage loans attractive for borrowers. Mortgage loan rate varies according to loan plans. Fixed interest loans have an interest that is fixed for the entire loan tenure. Here the mortgage loan rate never changes.

Another type of mortgage loans is flexible-interest mortgage loans. The interest rate of flexible interest mortgage loans increase or decrease depending on the market condition and the national economy. Consequently, your mortgage loan’s term may go up or down but the monthly mortgage payment will remain same.

Mortgage Loan Application Process

Mortgage loan application is filled in after deciding the mortgage loan plan. This application for mortgage loans has columns related to your personal details, income details, credit history and the details of the property that you propose to buy. You may be asked to submit documents as proof of information you provided along with your mortgage loan application form.

On receiving the mortgage loan application, a mortgage loan advisor will contact you for verification of the details. After verifying your details and your income source, a surveyor will survey the property and evaluate it. On successful verification, you will be granted the mortgage loan amount to purchase your home.

Things To Remember Before Selecting Mortgage Loans

Your home mortgage loans will be amortized in regular monthly instalments. The most popular term for home mortgage loans is 30 years. The choice of mortgage loan term depends on your repaying capacity. A long-term mortgage loan plan has low monthly repayments. However, you end up paying more interest on your loan.

A short-term mortgage loan such as 10 or 15 years has high monthly payment. However, the total interest that you pay on that mortgage loan is lesser. Before you apply for a home mortgage loan, calculate your current and future income and then decide the period for which you need the mortgage loans.

We suggest you to choose a term for mortgage loans that has comfortable payment plan to let you own the house and still have sufficient funds to enjoy your life.

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No one likes to be saddled with a long-term debt such as a 30-year mortgage. Because of this many ways have been thought up where people can pay off their mortgages well ahead of schedule.

These methods sometimes promise you’ll be paid off in 7 years, some 10 years, 15 years and some incredibly promise you will pay off your mortgage 26 years ahead of schedule. I’m sorry, but now I must hit you with sobering thought number 2: there are only two ways to pay off your mortgage early!

By the end of this article you will find out what these two ways are, but first let’s talk about some of the not so real ways.

Accelerator mortgage

With an accelerator mortgage, you pay every cent you make into a mortgage account and at the end of the month your mortgage payment is taken out of the account. Proponents of the accelerator mortgage say it works because this account you pay into pays interest and that compounding interest negates the interest you are paying on the mortgage.

However, when the agent sets up your accelerator account, he/she asks you how much you want to leave in your savings each month to be paid toward the mortgage. You will even be egged on. They will ask, “$250, $500, $1,000?” $1,000! Heck, if you paid that much toward your mortgage each month, you would pay off any mortgage way ahead of schedule!

If you were to say, “well, nothing. I don’t have anything left after groceries and other expenses.” They won’t want to give you the mortgage because the compounding interest in this mortgage account means very, very little. The heart of the accelerator plan is you pay extra principal in the way of savings left in your account each month.

Biweekly, Bimonthly and Weekly Plans

With the biweekly plan you are led to believe making two payments a month, which together equal the same amount you have been, paying monthly, will take 7 years off the time it takes to pay off the mortgage.

In reality, with a biweekly plan you make 26 half payments or 13 monthly payments each year instead of 12 so, of course, you will pay off your mortgage a lot sooner. The backbone of this plan is you are led to believe you will not be paying more money each month, but the fact there is more than 4 weeks in a month is the real reason it works. Oh, and by the way, for getting fooled like this you get the pleasure of paying about $1,000 upfront in fees to convert to the biweekly plan!

There is no such thing as a bimonthly plan. It is just a Biweekly plan improperly titled. Weekly plans are the same as biweekly plans cut up into smaller payments, but the same arithmetic applies.

The only two ways

The conclusion is there are only two ways to pay off a mortgage ahead of time. One is to pay more principal each month. For instance, the payment on a 30-year mortgage for $200,000 at 6.25% is $1,231. However, if you pay an extra $270 each month, you will pay off the mortgage in full, 11 years ahead of schedule and you will save over $100,000!

The only other option you may be able to get that will help you pay your mortgage earlier is to get a lower interest rate and continue to make the same monthly payment. In the example above, if you were able to refinance at 5.50% but you continued to pay $1,231 monthly, you would have that mortgage paid in full in 25 years, instead of 30 years.

Still, paying $1,231 monthly is the same as making additional payments toward principal because the scheduled monthly payment for $200,000 at 5.50% is $1,135. So, here is the final conclusion; you can try to fool math, but it is just as futile as trying to fool Mother Nature. You can’t do it! To get your mortgage paid ahead of time, you have to make principal payments ahead of time one way or another. That is all there is to it!

Ed Lathrop is a successful real estate investor. He has developed EzCalculator, a mortgage calculator that shows you how to save $100,000 on your mortgage. Come visit this free site at free financial calculator . Also, find out how to get and use your amortization table to make big money at amortization schedules free. These sites are not owned by any lender, so no one will harass you for visiting!

The reason? The borrower is seeking financing for an investment, or rental, property. The increase in rate seems significant so the borrower inquires about it. The loan officer explains that an investment property represents a higher degree of risk for a lender.

Then, what happens all too often, unscrupulous loan officers advise their clients to simply state that the home will be used as a second residence. Second homes typically carry the same rate of interest as a primary residence.

This is a very big mistake for two reasons.

The first reason is that this misrepresentation is a crime! Here is the exact wording that a borrower is asked to sign at the closing:

I have read and understand this Statement of Applicant. I understand that the making of false certifications or declarations is a crime under section 1014 of Title 18 of the United States Code.

You may not see this wording with your initial application but it will be there in the closing package. Most closings contain a form specifically addressing occupancy with the above wording directly below the statement.

Few people want to break the law. But adding the additional cost to words like “Oh, people do this all the time” from the loan officer, many people opt to mislead the lender. Of course the loan officer is also breaking the law by advising their client to do this, but very few ever get caught. But borrowers can get cauhght. Lenders check for occupancy on many of their loans. They check phone and tax records. It’s actually pretty simple to catch these law breakers but because of the volume of loans that lenders provide, few people are ever convicted of this crime. And that is why so many people “take the chance”.

But what is really puzzling about all this, is for how little people are willing to break the law. Fannie Mae and Freddie Mac are two government-sponsored agencies that purchase a large majority of the mortgages loaned in this country. The agencies have a set of rules. or “guidelines”. If a loan falls within those guidelines, either entity will purchase the loan. The agencies take no issue with purchasing loans secured by investment properties other than they require a slightly higher fee, or interest rate.

How much higher?

That depends on how much is being borrowed. With a 10% down payment, there is an add-on of 2.5 points – each “point” represents 1% of the amount being borrowed. A $200,000 loan amount will cost a borrower $5,000 in order to get the very same rate they would get for a primary residence. A 20% down payment would have an add-on of 2 points and down payments of 25% or more would have an additional 1.5%. But these add-ons DO NOT have to be paid in upfront cash.

A borrower can elect to accept a higher interest rate rather than pay the extra fee. When paying points, borrowers are “buying down” the interest rate. The longer they have the mortgage, the more beneficial the rate “buy-down” becomes.

In a typically buy-down, one point (1% of the loan amount) will “buy down” the interest rate approximately 1/4 of 1%. If 1 point = 1/4%, then, 1/2 point = 1/8%. So a total of 2.5 points will be an approximate increase of 5/8% (0.625%). 2 points will be about 1/2% increase and 1.5 points will be around 3/8% (0.375%).

Going back to the above example of a $200,000 mortgage, at current interest rates, an increase of 5/8% adds $82 to the payment; a 1/2% increase is an additional $66 and 3/8% would add $49. Is it worth those kinds of numbers to break the law? I hope you feel like me and not even think twice.

Another part of this equation is that it becomes easier to qualify for an investment property because lenders will often use a portion of the projected rental income and add that to the borrowers regular income.

So follow Spike Lee’s advice and “Do the right thing!”

Ron Borg is the founder & CEO of Mortgage123.com – offering mortgage shoppers a safer way to comparison shop online.
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Balloon mortgages are quite popular amongst many home buyers. It has a shorter time period, having a term of five to seven years, but with the payment is based on a term of 30 years. The interest rate in a balloon mortgage is lower than the usual mortgage, and it has been found that, it is easier to avail compared to the traditional 30 year fixed mortgage. However, there is a disadvantage in this type of mortgage, where you would need to fully pay off the balance outstanding at the end of the mortgage term. This condition may put you in a situation where you would need to go for re-financing against the real estate property that you have purchased, sell your home, or convert the existing balloon mortgage into the traditional one at the prevailing rate of interest. Balloon mortgage may not suit all. It is ideal for those people who have need for loans for a short period of time. There are several loan schemes that are available, which would need a balloon payment at a specified period of time.

If you avail balloon mortgage, you will need to pay a fixed amount for a defined period of time, may be three to seven years. After that period is over, you would need to pay the full outstanding in one go. The payments that you make against this type of mortgage are less than necessary for amortizing, and this puts you in the advantage in making lower than normal payments. This type of mortgage becomes attractive to people, because of its lower payment, and this lower payment is availed by people who could be looking for a larger house, for which they do not have enough money.

The balloon mortgage is available for a definite term, after which you are required to pay back the balance in a lump sum. The condition is that, the outstanding has to be paid off fully after the term is over. Since there is no other way, you have three options with you. You may like to go in for re-financing and a conversion of the balloon mortgage into the traditional mortgage that we know. This option is taken by most of the people. The second option is to sell your house before the balloon mortgage term gets over. In taking up the third option, you would be paying larger sum as installments each month, being more than what has been stipulated in the terms of payment. In this way you would be paying off the complete mortgage dues at the end of the period, or you will have an affordable outstanding when the balloon mortgage term gets over.

J Amalorpava Mary is the owner of MortgageCentreDirect.Com, to find out more on Mortgage Loan, Mortgage Rate and much more mortgage information visit her site.

A foreclosure is not a process that is private. In fact, it is quite public. A notice may be published in the newspaper, and a sheriff can show up at your door and give you a notice that you must vacate your property. Police have been known to enter a home and start moving furniture out into the lawn in order to vacate homes when people ignore the deadline on their notice. Can you imagine how humiliating it would be? Imagine living in an upscale neighborhood in San Diego, only to be thrown out of your own home while your neighbor stares on in disbelief from the driver’s side of his BMW. Foreclosures can happen in any neighborhood and in any economic market.

The nightmare of the foreclosure doesn’t end when you vacate your property. In fact, the long-term financial devastation of a foreclosure is probably the worst part. It will remain on your credit for at least ten years. This is not a small blemish, either. It isn’t like a missed credit card payment or a forgotten phone bill. A foreclosure can even prevent you from renting a home for yourself or your family. If you couldn’t buy a house and no one would rent one to you, where would you live?

The credit scar isn’t isolated to home buying. Even if your financial state bounces back and you are making double the money you were when your house was foreclosed, you will have a very difficult time finding an auto loan or any other line of credit. If you do, you will pay tremendous interest premiums on any amount of money you borrow because you will be considered a high risk.

It is important to note that when a home is in default, mortgage companies often will not accept less than full payment. For example, if you mail them a check for $300 but you owe $2500, they will often mail the check back to you.

Because the process is different at every mortgage company, the foreclosure process can take anywhere from two to nine months before you will be kicked out of your home. But, it doesn’t have to turn out that way.

You have options. Know that people specialize in helping preforeclosure homeowners. For example, a realtor can step in and negotiate on your behalf with your mortgage company. They will attempt to get the amount of your debt reduced so your home can be sold quickly. This process can spare you the awful experience of a foreclosure. Rather than waiting for someone to drag your sofa out into the street, call a reputable agency that specializes in foreclosures, and let them help you out of your perilous financial situation.

Kari Shea, of Shea Real Estate & Investment Group, is an accomplished business professional and community leader in the San Diego, California area. With more than 45 years of collective sales, marketing and consulting experience; the Group are master negotiators in the marketing and selling of real properties. Learn more about their services at: shea-realestate.com.