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Must-Ask Questions When You Get Your Mortgage

Whether you’re buying a house or refinancing, there is more to a mortgage than the rate. Here are eight questions to ask while mortgage shopping. You’ll have to ask yourself some of these questions; others can only be answered by mortgage professionals and insurers.

How long do I plan to stay in the house?

That’s often a hard question to answer. Try anyway because a lot of your decisions depend on the answer.

The answer affects whether you would be better off paying points to lower your rate, whether you should get a fixed-rate or adjustable-rate loan, whether you should accept a prepayment penalty. If you’re thinking of refinancing, the answer helps you decide whether you should refinance at all.

If you have no idea how long you’ll live in the house, keep in mind that homeowners stay in one residence for a median duration of 8.2 years, according to census data. In other words, half of homeowners move within 8.2 years. The other half, naturally, stay in their homes longer. Do you feel “average”? If so, maybe it means you’ll stay home for about eight years or so. (FYI, with renters, the median stay in one residence is 2.1 years.)

How much are the costs of getting the loan?

When you apply for a loan, you’ll get a federally mandated document called the ‘Good Faith Estimate’ of closing costs. It estimates how much the lender will charge you for origination and discount fees, an appraisal, a credit report, document preparation, title insurance, a pest inspection and a myriad of other costs. Compare good faith estimates and especially take note of the line that reads “Estimated cash at closing.” That’s an educated guess of how much you’ll have to pay out of your checkbook to get the loan.

How long will it take to break even?

If you’re buying a home, how long will it take to break even if you pay discount points to get a lower rate? If you’re refinancing, how long will it take to recoup the closing costs from your monthly savings?

In either case, all you have to do is divide the upfront cost (of discount points if you’re buying a house and of all the closing costs if you’re refinancing) by the monthly savings you would get. That tells you how many months it will take to break even. If it’s going to take five years to break even but you expect to stay in the house four more years, it’s probably not worth it.

What makes me feel comfortable?

Bitton says some of her clients insist on paying zero discount points, while others want to pay a lot of points to get absolutely the lowest interest rate, “even if it takes four or five years to break even.”

As far as Bitton is concerned, there often is no right or wrong answer when people ask whether they should pay discount points or choose a 15-year or 30-year mortgage. “There’s not just an objective, dollars-and-cents number,” Bitton says. “There’s also the psychological factor: What are you going to feel comfortable with?”

She has clients in their 70s and 80s who get 30-year mortgages because that’s what makes them feel comfortable. Some homeowners would rather refinance once and never have to bother with refinancing again, so they pay a lot of points for a rock-bottom rate. As a bonus, they have something to boast about at cocktail parties. Other clients simply want the lowest possible payments, so they snag an interest-only, five-year ARM. All understand what they’re getting into and have found their comfort zones.

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Escape The Burden Of Taxes With Colorado Interest Mortgage Rate Refinance

Lets face it. Even if they are for a good cause, taxes are a pain. It doesnt help when you know its not being used the way it should be because of the shameless pilfering of corrupt politicians. Unfortunately, there are only two things certain in life and these are death and taxes, so theres really no way to get away from them.

Less Is More

Instead of moving to the jungle where the Internal Revenue Service or IRS cant find you and force you to pay taxes, why not think about relocating to a state where taxes are minimal and not so painful like Colorado? In Colorado, you dont only get to breathe fresh mountain air all the time, which is already a perk in itself, but income tax is a flat 4.63% and is calculated based on taxable income, basically the income left over from federal exemptions and standard deductions. That is so much better than having your taxes computed from your gross income.

Yes, Colorado is indeed ideal. You get to pay less in taxes and save more of your hard earned money for yourself and your family. With a Colorado interest mortgage rate refinance, youll be well on your way to making bigger savings in the famous Centennial State.

Lower Is Definitely Higher

Of course, real estate and personal business properties are taxable in Colorado. But isnt it taxable everywhere else? The important thing is the fact that the state of Colorado collects considerably less than a third of the nations 50 states. You can be sure that your Colorado interest mortgage rate refinance is reasonable and therefore, easy on the finances.

At this point, youre probably a tad bit disappointed. After all, why cant you just have your Colorado interest mortgage rate refinance as it is without the added burden of state taxes? Well, as inviting as it may be, you cant fight the institution and you certainly cant fight the government. There are simply some things that cant be helped, one of them the taxes imposed on the property you are buying with a Colorado interest mortgage rate refinance. Look on the bright side. It wont go away altogether, but it is a lower tax rate than anywhere else, giving you higher savings than when you purchase property in, say, Vermont.

The Price Of Living

Like any financially sound person, you are of course thinking about the cost of living. That is naturally dependent on your lifestyle. Retail sales tax in Colorado amount to only 2.9%. Add that to your daily expenses and to your Colorado interest mortgage rate refinance payments and you get the picture. The math is actually fairly straightforward. Also, if you lived in the state for a full year, you are eligible for sales tax refunds and individual state income tax returns. Employment is not a problem. Colorado plays host to thousands of industries and Denver, the states capital, is the home of Wall Street in the West.

Indeed, Colorado is not only economically and financially ideal; it also provides perfect living conditions. After all, who can put a price tag on beautiful mountains and fresh air? In Colorado, you get those, and more, for free.

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Many people have jumped on adjustable rate mortgages to take advantage of the historically low interest rates we have seen over the last few years. Rates are now rising, which means you need to understand caps.

Adjustable Rate Mortgages Talking About Interest Rate Caps

An adjustable rate mortgage is just what it sounds like. The interest rate can be adjusted to match certain interest rate standards. The advantage of such a loan is it can seriously lower monthly mortgage payments if interest rates are low. Over the last few years, of course, rates have been incredibly low. Rates are now rising and you need to understand what that means for your adjustable rate mortgage.

Since the interest rate on your loan is adjustable, you should be getting a little nervous about rising interest rates. That being said, most loans have graduated step increases and caps that keep things from getting nightmarish too quickly. Here is a closer look.

A good adjustable rate mortgage protects you from massive rate increases through something known as rate caps. There are two types of rate caps. Each has benefits and negatives.

A lifetime rate cap is just what it says. This cap sets the maximum interest rate the lender can charge you for the loan. You must always demand a lifetime cap on any mortgage you take out. Assume you take out an adjustable rate mortgage with an interest rate of four percent. As part of the agreement, the loan has a lifetime cap of eight percent. If interest rates shoot up to 10 percent, your loan will cap out at nine percent. While this is a high interest rate, it is a lot better than paying 10 percent.

Periodic rate caps also protect you, but in a different way. A periodic rate cap defined the maximum percentage your interest rate can increase over a period of time. The shorter the time period, the better the cap. If your loan document allows the lender to adjust the rate every six months, the cap may be as low as one percent. This means the lender can only increase the interest rate by a maximum of one percent, regardless of what the market is charging for new loans.

Adjustable rate mortgages are great when interest rates are low. When rates start creeping up, however, you need to take a close look at your caps.

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5 Ways To Get The Lowest Mortgage Interest Rate You Can Online

Everyone loves a bargain and getting a lower mortgage interest rate can save you a substantial amount of money over the life of your loan. There are several ways to go about ensuring that you pay the least amount of interest when you take out a home mortgage.

Be aware of your credit score.

Good credit is the key to not only getting a mortgage, but to getting the best interest rates available. Mortgage lenders like to reward borrowers that pay off their bills in a timely manner. Chances are if you have been faithful with your other payments, you will be faithful to pay them back, so they can afford to take a risk on you and offer a lower interest rate.

Close any existing credit card accounts that you no longer use.

If you have several credit card accounts, they can affect the interest rate on your mortgage, even if they have a zero balance. Lenders see open accounts as potential for debt, which adds a risk of them not getting their money back. To balance this risk, they will often charge you a slightly higher interest rate.

Lock in interest rates before you close.

Once you have agreed on a low interest rate, ask the lender to lock in that rate. Rates can fluctuate drastically in the time it takes for you to get your mortgage and that could mean paying a totally different interest rate than what was originally quoted.

Make the biggest down payment you can afford.

Putting a down payment from your savings on your house, lowers the amount you plan to finance, lowering the interest you will pay over the life of your loan.

Shop Around.

You dont have to work with the first lender that you approach. With the vast amount of online mortgage brokers, it is easy to compare offers and pick the company that offers you the lowest interest rate. Dont be afraid to tell brokers that you are shopping around, or ask them if they can match the interest rates of a competitors quote.

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