Getting a Mortgage Loan for Manufactured Homes – It’s Easier Than You Think!

Getting a Mortgage Loan for Manufactured Homes-It's Easier Than You Think- 150x150Manufactured homes are a good alternative to conventional homes, but still follow a similar home buying process. A manufactured home, also referred to as a mobile home, is a type of home that is factory built, with a steel frame, and that can be transported anywhere on its own wheels. This can also mean homes that are prefabricated, meaning that they look very similar to traditional houses, but are built as modules that are then transported and assembled on a normal house foundation.

These types of homes are usually cheaper than traditional homes, but most people will still probably have to take out a mortgage loan in order to purchase a manufactured home. Unfortunately, getting a home loan for a manufactured home can be more difficult than taking out a mortgage for a traditional home. Not only that, but you will most likely have to pay a higher interest rate on a manufactured home. Two or three percent more on your interest rate can mean thousands over time. Here are a few options if you are considering buying a manufactured home with a mortgage loan.

FHA or VA Loans

The Federal Housing Administration (FHA) and the United States Department of Veterans Affairs (VA) have designed mortgage loans that can help home buyers with lower incomes as well as for military active and retired personnel.

Because the minimum square footage is required to be 400 feet for an FHA loan to be approved for purchasing a manufactured home, single-wide homes cannot be bought using this type of government insured mortgage loan. Also, the home owner must pay the same property taxes as he or she would pay on a traditional home. In most areas the owners are required to strap the manufactured home to the ground using anchors or concrete pylons. The home’s wheels may have to be taken down, depending on that area’s regulations. The amount that you can borrow to purchase a manufactured home is much lower than the amount that you can borrow for a traditional home, when taking out an FHA mortgage loan, and it is based on whether you take out a mortgage for the lot, the home, or both.

The United States Department of Veterans Affairs requires that you use the home as your primary residence in order to qualify for a VA loan. Your credit score must be good and your debt shouldn’t be more than 41 percent of your income. You are able to borrow up to 95 percent of the home’s value with a VA mortgage loan.

Lot Owners Are At An Advantage

If you own the lot on which the manufactured home will be placed, and if it will be placed on a house foundation, you will receive better interest rates and loan terms from lenders. If the home will be your residence, you will be able to deduct your interest payments. However, this won’t be the case if you rent the property.

Normally, financing for manufactured homes is done through the company that sells the home. Other lenders will, most likely, require that you own the lot on which the house will be, or your mortgage loan application will risk being denied.

Manufactured homes are cheaper than traditional homes and is a great alternative when you don’t have enough money available to buy a home. Before buying a home with a mortgage loan, do a little research in order to avoid being denied the loan for something that could have been prevented.

FHA Mortgages: Pros and Cons

FHA Mortgages-Pros and Cons- 150x150The Federal Housing Administration (FHA) mortgages are designed to help people with lower incomes become home owners. Tight lending requirements make it difficult for people with low incomes, less than perfect credit scores, and tight financial situations to obtain a conventional loan. The Federal Housing Administration insures the mortgage loan against default, so in the event that the borrower can’t make mortgage payments anymore, the FHA will pay.

Pretty much anyone can qualify for an FHA mortgage loan, but the amounts that you can borrow are usually close to median home prices in the area. In order to qualify for this type of loan, your debt to income ratio should be fairly reasonable and you should have a good credit score.

FHA Mortgages- Pros

FHA mortgage loans are not for everyone, but they do have a few advantages over conventional loans. FHA loans make it easier for people who can’t normally afford a conventional mortgage loan to become a home owner. Here are the most important pros of taking out an FHA mortgage loan:

  • It is easier to qualify for an FHA mortgage loan than for a conventional mortgage loan. Conventional mortgage loans have strict qualification requirements, making it harder for people with low to medium incomes and not so perfect credit scores to qualify. FHA mortgage loans, on the other hand, are designed by the government to help these people, by having less strict income and credit score requirements.
  • FHA loans require a much smaller down payment than conventional loans. Regular mortgage loans require a 20 percent down payment in order to avoid paying for insurance. 20 percent of a loan value can be a pretty hefty chunk of money, depending on how much your mortgage loan is for. Down payments for an FHA mortgage loan can be as low as 3.5 percent, making it easier for more people to become home owners.
  • FHA loans don’t come with a pre-payment penalty. Many conventional loans come with a pre-payment penalty, meaning that you will have to pay a penalty fee if you decide to pay off your loan before the end of its term. FHA mortgage loans don’t come with such a penalty, so you can pay off your loan or refinance at any time.

FHA Mortgages- Cons

FHA mortgage loans are designed to help people who can’t otherwise afford a conventional mortgage loan. Because of this, FHA loans come with a few cons, as well. Here are the most important:

  • You can’t borrow as much money as you would with a conventional loan. Because the Federal Housing Administration insures these loans, they will have to pay in case the borrower defaults. That’s why the amounts that you can borrow are lower than what you would be able to borrow on a conventional loan.
  • Many sellers don’t want to deal with buyers using an FHA mortgage loan. When the housing market is hot, sellers in a sellers’ market receive multiple offers on their properties. FHA mortgage loans are seen as a hassle by sellers, so your offer might be refused just because the seller doesn’t want to deal with an FHA loan.
  • You will have to pay a mortgage insurance premium. Conventional loans require the borrower to pay private mortgage insurance if the down payment is lower than 20 percent. FHA insured mortgage loans require an initial insurance payment of 1.5 percent of the loan value, and a monthly mortgage insurance premium of .5 percent of the loan value.

Mortgages backed by the Federal Housing Administration are a great way for those with lesser means to become home owners. Depending on each borrower’s situation, this type of loan can be a good or a bad choice. It is up to the home buyer to evaluate his or her financial situation and decide if an FHA loan is the best choice, or it would be better to look for a more conventional loan.

Current FHA Mortgage Rates vs. Current VA Mortgage Rates

Current FHA Mortgage Rates vs. Current VA Mortgage Rates- 150x150Both Federal Housing Administration (FHA) and Veteran Affairs mortgage loans are backed by the government and both are good alternatives to conventional loans for people with lower incomes. While the rules of handing out these types of loans are written by the government, it is still up to the individual lender to decide if you qualify, based on their own set of rules, which are usually stricter than the government’s guidelines.

Similarities and Differences Between FHA and VA Mortgages

Both types of mortgage loans were developed by the United States government in order to aid people who don’t possess the means to secure a conventional mortgage loan. Buying a home if you have low income is extremely difficult so, through these two types of loans, the government gives more people the chance of becoming home owners. People who would normally be refused a conventional loan by banks and credit unions can qualify for an FHA or VA loan with a much lower credit score. The government doesn’t hand out the loan, but insures it against a default, giving people who are regarded as a high default risk the possibility of buying a home.

The biggest difference between them is that, in order to qualify for a VA loan, you have to be an active-duty military member, a veteran, or a surviving spouse. So a person who is serving or has served in the military can qualify for both types of loans, but someone who hasn’t served can only qualify for a FHA loan if he or she meets the other requirements.

Other differences between the FHA and VA mortgages have to do with the applicant’s income, the down payment, and mortgage insurance. FHA loans have more restrictions when it comes to someone’s income than VA loans do. The money that you will have to put down as a down payment is also a big difference between FHA and VA mortgage loans. While FHA loans require a minimum 3.5 percent down payment, VA mortgage loans do not have a down payment requirement. Lastly, you will be required to pay mortgage insurance for at least 5 years, if you choose an FHA loan, while VA loans don’t have this requirement.

Current FHA Mortgage Rates

Most lenders offer 3.5 percent interest rates on 30-year fixed rate-mortgage loans, which means that FHA mortgage rates remain near historic lows. Also, most economists predict that FHA rates will remain under 4 percent for 2013. Interest rates for 15-year fixed-rate mortgage loans also remain low, in the neighborhood of 2.70 percent.

FHA mortgage rates were around 3.90 percent last year at this time, hitting a historic low at the beginning of 2013, and they remained in that range since then. Freddie Mac‘s economists say that they expect FHA mortgage rates to reach 3.75 percent by the end of the year.

Current VA Mortgage Rates

VA mortgage loans are backed by the government through the Department of Veterans Affairs, but they are not the ones who set the interest rates. VA mortgage interest rates are set by each lender who is approved by the VA. There are many factors that have an influence on what your VA mortgage rate will be, so working with a VA specialist is recommended.

Current VA mortgage rates hover around 3.25 percent for a 30-year fixed-rate VA mortgage loan and around 3 percent for a 15-year fixed-rate VA mortgage. The short-term prediction is that VA mortgage interest rates will decrease by a small percent, but they are at near record lows right now, so it is up to you if you want to risk it and wait longer.

Familiarizing yourself with the current FHA and VA mortgage rates can help you spot a good deal when the time comes. Choosing between an FHA and a VA mortgage loan depends mostly on your individual situation and your future plans. The current mortgage rates are fairly close for both loans, but you need to take into account all of the characteristics of each loan and decide to go with the one that best fits your needs.

Current FHA Rates: Which is Best, Fixed or Adjustable?

Current FHA Rates-Which is Best, Fixed or Adjustable- 150x150Federal Housing Administration (FHA) loans may have stricter requirements and bigger mortgage insurance premiums, but at least the interest rates are still low for now. As with conventional loans, this might be a good time to get an FHA loan because interest rates are predicted to rise in the near future. The increase won’t be substantial, but over time the small percentages will add up, making your FHA loan significantly more expensive than it is now.

What is a Federal Housing Administration Loan?

The Federal Housing Administration doesn’t actually give out the mortgage loan, but insures it against default. The Federal Housing Administration acquires the money needed to pay these claims through the mortgage insurance premiums that the homeowners are required to pay, if they acquire an FHA backed loan. Part of the mortgage insurance premium is paid up front at the time of closing, and is then paid in monthly installments after that.

FHA loans are similar to conventional loans, offered by Fannie Mae, Freddie Mac, or loans insured by the Department of Veteran Affairs. Like conventional loans, FHA loans are offered in various lengths, such as 30-year, 20-year, or 15-year; they can be fixed-rate or adjustable-rate; they can be made with full, low, or zero closing cost options.

The difference between conventional loans and FHA loans is the down payment, which is only 3.5 percent for FHA loans, and 5 percent or more for conventional loans. Another difference between the two types of loans is the fact that FHA loans don’t have such strict requirements in regards to the home buyer’s credit score. While lenders require the home buyer who applies for a conventional loan to have a high credit score, FHA loans can be given to people with lower credit scores.

Fixed-Rate or Adjustable-Rate

Current interest rates for 30-year FHA mortgage loans are lower than the interest rates for conventional loans. For example, the interest rate for a 30-year fixed-rate conventional loan is around 3.6 percent, while the rate for an FHA loan of the same length is only 3.2 percent. The interest rate for a conventional 5-year adjustable-rate loan is 2.1 percent, while the rate for an FHA adjustable-rate mortgage loan is slightly higher at 2.2 percent.

Fixed-rate FHA loans are a great choice for new home buyers. These types of mortgage loans will have the same interest rate until the loan is paid off and, with a down payment of only 3.5 percent, they allow you to finance the rest of the loan amount. Your closing costs can be paid with a gift or it can be financed, making it easier for you to qualify for the loan. Less than perfect credit scores and not so stellar credit history are not going to matter as much as they do when applying for a conventional loan.

Adjustable-rate FHA mortgage loans feature lower interest rates, but that doesn’t necessarily mean that you will save money over a fixed-rate FHA loan. Mortgage interest rates can jump up even a few percent over the life of the loan, increasing the overall cost of the loan significantly. Of course, there is always the chance that the interest rate will decrease, but based on recent predictions, it looks like the interest rates will continue their upwards trend.

It is hard to decide between a fixed-rate and an adjustable-rate mortgage loan based solely on the interest rates. Adjustable-rate FHA loans might seem more attractive, but there is always the risk that the interest rate can rise. Whatever type of FHA loan you decide to go with, remember this: predictions say that the economy will continue its growth, making interest rates go up. Whether it’s a fixed-rate or an adjustable-rate FHA loan that you need, this year might be the last time you can take advantage of interest rates this low.

Deciding Between Fixed-Rate FHA or Adjustable-Rate FHA

FHA- fixed and adjustable- 150x150There are many good reasons why you should choose a mortgage loan insured by the Federal Housing Administration over a conventional loan. The FHA has been helping people buy homes since 1934 and it’s a great alternative to other lending options for families who want to buy their first home, people who have less than perfect credit score, or someone who doesn’t have a large amount of money to use as a down payment. FHA mortgage loans can be obtained with a credit score as low as 500, and by making a minimum of 3.5 percent down payment. However, you should remember that FHA loans come with a fairly large disadvantage. You will be required to pay mortgage insurance for at least 5 years.

Once you have taken into consideration all of the advantages and disadvantages of a Federal Housing Administration backed mortgage loan, and decided that this type of loan is your best choice, it is time to decide between a fixed-rate FHA loan and an adjustable-rate FHA loan.

The Fixed-Rate FHA Loan

The fixed-rate mortgage loan is the most popular type of FHA loan. Also known as the 203(b) mortgage loan insurance program, the fixed-rate FHA loan is a very good choice for first time home buyers. Some very important advantages that the fixed-rate FHA mortgage loan has are:

  • The interest rate remains the same for the duration of the loan. If you are comfortable with the interest rate that you received from the lender, then the fixed-rate FHA mortgage loan will give you peace of mind for the years to come.
  • The fixed-rate FHA loan allows financing for up to 96.5 percent of the loan amount. As a result of this, you will be able to make a low down payment, and your total closing costs will also be low.
  • This is the only type of loan that allows 100 percent of the closing costs to be a gift from family, or funding from a government agency or a non-profit organization. Many of the closing cost charges can be financed, as opposed to conventional loans, where the borrower must pay 2-3 percent of the loan amount at the time of purchase.
  • It’s easy to qualify for a fixed-rate FHA loan. If you have a low credit score, a bad credit history, your debt-to-income ratio is high, or if you have a bankruptcy that is more than 2 years old.

The Adjustable-Rate FHA Loan

Designed for people or families with low and moderate income, the adjustable-rate FHA mortgage loan (ARM) is a type of loan that features low initial costs. If interest rates are high, the adjustable-rate loan will keep the initial interest rate on your mortgage low, so you can qualify for the financing that you need. While, with this kind of loan, there is always the risk that the interest rates will increase, here are a few advantages that you should take into consideration before deciding:

  • The interest rate may rise over the duration of the loan, but it may also decrease. Also, the interest rate cannot fluctuate more than 1 percent per year, and cannot increase by more than 5 percent of the initial rate.
  • 25-day notice for increased interest rate. In case the interest rate on your adjustable-rate FHA mortgage loan increases, you will have to be notified at least 25 days before.
  • Many of the closing costs can be rolled into the cost of the mortgage. This will therefore reduce the initial expense that will be involved in purchasing a home.
  • Option of refinancing. You have the option of refinancing your adjustable-rate FHA loan to a fixed-rate FHA loan at any time through FHA’s streamline refinance program.

Both fixed-rate FHA loans and adjustable-rate FHA loans have their advantages, but choosing one over the other depends entirely on your situation. Understanding all the requirements, advantages and disadvantages is very important when considering any type of FHA loan.

Should You Refinance Your FHA Mortgage Loan?

FHA loans -150x150Federal Housing Administration (FHA) mortgage loans are a great choice for someone with a lower credit score, who is also looking for a loan with a lower down payment and closing costs. FHA loans are insured against default by the Federal Housing Administration, therefore allowing lenders to give out large mortgage loans. With down payments as low as 3.5 percent of the property price, an FHA mortgage loan can be a great choice when buying your first home. Also, FHA loans can be used if you need money to make repairs or improvements on your home, or if you buy a property that needs repairing.

Only available to homeowners who use their home as a primary residence, refinancing an FHA loan is a great way to save money. Because interest rates will be lower, refinancing an FHA loan will allow you to reduce your monthly payments. You will also have the option of reducing the mortgage loan term, from 30 years to 15 years, which will build home equity in your property faster.

FHA Mortgage Loan Refinancing Options

Refinancing an FHA mortgage loan is usually done through the FHA’s Streamline Refinance program, which can only be used when refinancing an FHA insured loan. This program allows you to refinance your FHA mortgage loan without getting a new home appraisal, with the condition that the new loan amount is the same or lower than the old loan amount. For refinancing a conventional loan to FHA, you will have to take the regular FHA refinance route. FHA’s Streamline Refinance program’s requirements are that the original mortgage loan must be FHA insured and in a good standing, you must have been the owner of the property for at least six months, and you must use an FHA approved lender. The refinance must result in a decrease of the principal and interest rate.

An option that is available for both homeowners with FHA and non-FHA mortgage loans is the FHA Secure Refinance program. This type of refinancing allows homeowners who are not keeping up with their adjustable rate mortgage payments to refinance into an FHA fixed rate mortgage.

When refinancing an FHA mortgage loan, you also have a cash-out option, which allows you to take out a larger loan than you currently owe and receive the difference as cash. The new loan can be as high as 96.5 percent of the property’s value.

Pros of Refinancing an FHA Mortgage Loan

Choosing to refinance an FHA mortgage loan can be beneficial to your financial situation. The process is easier than refinancing a conventional mortgage loan and, done at the right time, can help you save money. Here are some of the pros to refinancing an FHA mortgage loan:

  • An appraisal is not required. On a conventional loan, your home needs to be appraised when refinancing, in order for the lender to make sure that the property value is larger than the loan amount. When refinancing an FHA loan, the original appraisal is used, meaning that you can refinance even if your home’s value has decreased. You also save a few hundred dollars, which is what an appraisal would cost.
  • Your monthly payment will be lower. Because your interest rate will decrease when refinancing an FHA mortgage loan, your monthly payment will also be lower. Changing your loan from a 30 year to a 15 year term will also lower your interest rate.
  • Monthly income documentation is not required. While lenders will still verify that you are working, proof of your monthly income is not required. Because your mortgage is already insured by the Federal Housing Administration, your income will not be relevant.
  • Higher approval rate. The approval rate for FHA loans is much higher that the approval rate for conventional loans. This way, more people can own a home than with any other kind of mortgage refinance program.

Cons of Refinancing an FHA Mortgage Loan

While there are some clear advantages to refinancing an FHA mortgage loan, there are also some important drawbacks that you should take into consideration before deciding to refinance:

  • FHA mortgage insurance. When taking out an FHA mortgage loan, you will have to pay mortgage insurance for at least 5 years. After refinancing an FHA loan, the 5 year mortgage insurance requirement starts over.
  • Higher interest rates for people with good credit score. While FHA mortgage loans are very attractive for someone with a less than perfect credit score, they are not ideal for people with good credit scores. A conventional mortgage loan would be a better choice for someone with a spotless credit report.
  • Fees and closing costs. Between the transaction fee that you have to pay your lender, the recording and administration fees, you could be looking at a bill that can reach several thousand dollars. You will need to have a pretty important drop in your interest rate if you are going to justify the fees and closing cost.

When considering refinancing your FHA mortgage loan, it is very important to understand all the pros and cons. It may seem like an attractive option, but you need to exercise caution and document yourself as much as possible before making a decision.

Top 10 Mortgage Tips For 2013

tips-150x150You may be wondering why so many Americans are getting mortgages right now. 2013 has already started off with low interest rates so people have been anxious to secure these rates while they last. A deeper look at why you might look into getting a mortgage is that those who live in their own houses tend to have lower anxiety and expenses overall. Houses allow for individuals and families to settle down in a more permanent environment and focus on other aspects of their lives. Here are a few other benefits to consider:

Benefits Of A Mortgage Loan

  • Home Ownership. A mortgage loan enables you to have ownership to your own house without having to pay the full price instantly. A down payment is required for you to have your own home, but it is only a small fraction of the whole price premium.
  • Access to Cash. With a mortgage, you can tap into equity to access cash as needed. With this option at your fingertips, you will be able to use this money towards a car, making home repairs and even funding your child’s college education.
  • Improves Credit Score. If you handle your mortgage perfectly according to the terms and conditions of the mortgage lender, then your credit score will rise tremendously. A high credit score will enable you to access more credit products at lower interest rates.
  • Tax Benefits. If you have a mortgage loan, then you qualify for certain tax deductions in accordance to the rules and regulations of your State, which reduce your tax liability significantly. These deductions range from homeowners insurance to private mortgage insurance.
  • Capital Gains. If you maintain ownership of your home, then its value will increase over time; allowing you access to more products using the value of your home. If at some point you want to sublet your home and your mortgage lender allows you to, because you will have access to extra income.

Tips You Must Know

If you’ve been contemplating whether to take out a mortgage loan or not, then this is the time to end the dilemma. 2013 has come with new lending standards which you need to acquaint yourself with before making a decision. It doesn’t matter whether you are taking a mortgage loan for the first time or refinancing- 2013 is a great year for mortgages!

  1. New Rules. The Consumer Financial Protection Bureau (CFPB) released new rules beginning January 2013 which will ensure that lenders only advance loans to borrowers who have the ability to repay. The mortgages advanced from this year must comply with all the basic requirements that are designed to protect consumers. Once these are met, then the lenders will issue you (the lender) with a qualified mortgage.
  2. Mortgage Rates Have Decreased. Compared to last year, interest rates on mortgages have significantly reduced by about 25% from Freddie Mac’s average of 3.87%. This presents a great opportunity for you to lock your interest rate by taking a loan in 2013.
  3. 10-Year Mortgages. You are used to the normal 30-year mortgages which sometimes deny you financial peace in your latter years. You can take advantage of the lower interest rates so that you have a shorter mortgage repayment term because the lower interest rates will offset the lower monthly balance. This can enable you to repay your mortgage loan over a very short period of time of about 10 years. If you had already taken a long-term mortgage then you can refinance it now and complete making payments earlier.
  4. Conventional Loans vs. FHA. The line for FHA mortgage applicants is always long because they allow you to take a loan for a down payment as low as 3.5% of the value of the home. However, they charge higher fees in comparison to conventional loaners. With conventional loans requiring a down payment of 5%, the overall cost of the loan is generally lower. You can use a mortgage calculator to compare the costs before making a decision.
  5. Credit Rating. This is a golden requirement for receiving a good rate. The credit standards released by CFPB require that you must have a faultless credit history for at least one year before applying for a mortgage. In order to get the most attractive interest rate on your mortgage, you require a credit score of 720. However, you will still get your loan approved with a credit score of 680, but if it’s below this, then you will have to negotiate with your lender.
  6. Lock-Rate Rules. If you’ve submitted an application for a mortgage loan at a locked interest rate, it is not yet over. If there are any documents you still need to submit to the lender then do it immediately (within 24 hours). Delays can happen in this process which may make you lose your locked-in rate. Ensuring paperwork is submitted quickly to your lender and keeping in contact at least weekly will hopefully avoid any problems. The lender’s time is valuable and you need to safeguard it so that you receive a good deal.
  7. Opening New Accounts. If you want to apply for a mortgage this year, then be careful not to open new credit accounts which will have an impact on your credit. Most lenders will ask you for a second credit report shortly before closing the deal to confirm your credit habits. Since such acts could lower your credit score, your mortgage loan deal may be rejected in the last minute when you’ve made other plans with it.
  8. Shop from Several Lenders. Even though the lending rates may look attractive, you should still look further to all lenders so that you land a mortgage deal with the lender who offers the lowest interest rate. There are new programs in the market which will help borrowers to manage payments according to the FHA mortgage rules.
  9. Good Communication with Your Mortgage Lender. In case you have a hard time making payments with your current mortgagor, you may want to look into the new 2013 FHA programs like forbearance. These programs will enable lenders to easily work out any delinquent loans with loan modifications or short sales if the borrower’s financial status has changed unfavorably. Communicating with your lender regularly is the only sure way to have peace and safeguard your credit report.
  10. Underwater Refinancing. Perhaps you feel frustrated because you’ve been trying to repay your home but your home now has a greater value than what you owe the lender. Well, 2013 is the year that you can escape with a refinancing deal. Regardless of how underwater you are, the Home Affordable Refinance Program (HARP) has been revamped to enable you to refinance your mortgage.

No matter your financial situation, 2013 is a good year for mortgages if you have a decent credit report. This will enable you to borrow more money at lower interest rates. A house is out there for you and this is the year for you to get it!

Top 10 Types of Mortgage Loans

top 10 loan types- 150x150A mortgage is a type of loan where the bank or another lender loans you a large amount of money, which you must repay with interest over a set period of time. There are several types of mortgage loans available, each tailored to meet the needs of a specific group of home buyers. Searching for the mortgage loan that best suits your financial situation must be treated very seriously. Here is another resource to help you decide: mortgage lender or mortgage broker?

Types of Mortgage Loans

Even if you are considering getting professional advice before choosing a mortgage, it is always wise to know what options you have before talking to a professional. Knowing what types of mortgages are available will not only make things easier to understand, but also put you in a position where you can ask the right questions, making sure that what you choose is the right option for you. Additionally, here is a list to help you find the Best Mortgage Rates.

Top 10 Mortgage Loans Available from Most Lenders

  1. Fixed Rate Mortgage. This type of mortgage is the most popular mortgage in the United States, and is suitable for individuals who plan to keep their house for more than a couple of years. Usually, the life of a fixed rate mortgage is 15 or 30 years, but it can also come in terms of 10, 20, 40, or even 50 years. The interest rate and the monthly payments remain fixed during the life of the loan, thus homeowners can manage their budget more easily knowing exactly how much they owe to the lender every month. In case rates drop, homeowners have the possibility of mortgage refinancing to get a more advantageous interest rate. Here is a list of the Best 5-Year Fixed Mortgage Rates.
  2. Adjustable Rate Mortgage. Also known as ARMs, adjustable rate mortgages are preferred by people who aren’t expecting to own a house for a long period of time. With an ARM, individuals have a predetermined adjustment interval (6 months to 5 years), for which the interest rate will be fixed.  After the adjustment period, the interest rate will usually go up, and then change periodically over the term of the loan, as specified by the lender.  Before committing to this type of mortgage, homeowners should make sure that they can afford the highest possible payment of their loan, as sometimes the interest rate can go up by 6 percent. Some of the most common ARMs are: 1-year Adjustable Rate Mortgage, Hybrid or Intermediate ARM, Flexible Payment Option ARM, and Convertible ARM.
  3. Balloon Mortgage. A balloon mortgage will have a fixed rate for a period of 5 to 7 years, after which the remaining balance is due in its entirety. Because of its large size, the final payment is also known as a balloon payment. Balloon mortgages are best for people who intend to sell their house before the balloon payment must be made.
  4. Jumbo Mortgage. When the mortgage loan is over Freddie Mac and Fannie Mae traditional loan limits, the mortgage is called a jumbo mortgage. The conforming limit for a jumbo loan is $625,000. A jumbo mortgage will require a larger down payment, and the interest rates will be higher compared to the interest rates of a conforming loan.
  5. Interest-Only Mortgage. With this type of mortgage, homeowners have the option to pay only the interest of their principal, for a period of five or ten years. After this initial period of time, the principal balance will be paid down over the remaining years of the loan. Due to the fact that interest-only loans are riskier for the lenders, the interest rate might be higher, but these loans are still attractive to homeowners because they offer financial flexibility during the interest-only period.
  6. Reverse Mortgage. Available to elderly individuals 62 years old and over, a reverse mortgage is a lifetime mortgage secured by the equity in the borrower’s home. Elderly homeowners can transform a portion of their home’s equity into cash. During the term of the loan, homeowners are not required to make any monthly payments. Reverse mortgages allow elderly persons to live in their own homes, and the owners only repay the loan if they sell the house or move to a nursing home. In the event of homeowners’ death, the loan must be paid in full by their heirs. Here is a list of the Top Reverse Mortgage Lenders.
  7. Veteran Affairs (VA) Mortgage. A VA loan is a government insured mortgage available for veterans, their eligible spouses, and service members only. Issued by a regular lender, a VA loan requires no down payment, and the borrowers don’t pay any mortgage insurance, or a penalty fee in case they pay off the loan earlier.
  8. Federal Housing Administration (FHA) Loan. Insured by the FHA, this government guaranteed loan is great for first-time home buyers, as well as individuals who can’t afford a large down payment, or have a poor credit score. A FHA mortgage offers better interest rates than conventional mortgages, and the lender might show the borrowers leniency in case of financial setback.
  9. Graduated Payment Mortgage (GPM). GPMs are available in 15 and 30-year loan terms, and are more suitable for young individuals, such as students, who wish to purchase a home, but currently do not have financial resources to pay for a loan. A GPM offers affordable monthly payments in the beginning, after which the payments will gradually grow by a percentage decided in advance. This increase stops after several years (5 to 15 years), and the borrower will pay a fixed amount every month for the rest of his loan life. The GPM is a type of negative amortization mortgage. Negative amortization (NegAm) occurs when the mortgage payment for a period of time is lower than the interest due for the same period of time, causing the balance of the loan to rise.
  10. Pledged Asset Mortgage. Also known as Asset Integrated Mortgages, and Asset Backed, pledged asset mortgages allow burrowers to use their financial commodities, such as bonds, stocks, CDs, as collateral for the mortgage loan, instead of a down payment. This kind of mortgage is intended for individuals who have enough income to easily afford the monthly payments of a loan, but who have their cash engaged in investments. A pledged asset mortgage offers attractive rates, and don’t require a mortgage insurance, but it is more accessible by wealthier people.

Choosing the right type of mortgage loan will not only save you money, but give you peace of mind for the following years. Being aware of your financial situation, budget, and understanding that paying off a loan can take a while, in which many things can happen or change, are keys to making the best choice when it comes to mortgage loans.

Using Mortgage Interest Rates Forecast to Your Advantage

Mortgage Interest Rates ForecastMortgage interest rates predictions for 2013 say that, while the mortgage rates will remain low throughout the year, they will be higher at the end of 2013 than at the beginning of 2013. The same mortgage interest rates forecast was made for the last two years, as well, but it turned out to be wrong. Mortgage rates kept dropping and they are near historic lows right now, so it’s hard to see them dropping even further. For now, the Federal Reserve is doing its best to keep mortgage rates low by buying billions worth of Treasuries and mortgage-backed securities.

Some predictions say that the mortgage interest rates will be around 3.8 percent by the end of the year, while others say that they will grow up to 4.4 percent. Most predictions agree that the rates will remain below 4% during the first half of 2013, but, if the unemployment rate falls to 6.5 percent, the Federal Reserve will decide to stop buying bonds, which will cause the mortgage interest rates to grow.

Should You Trust the Mortgage Interest Rates Forecasts?

Mortgage interest rates are hard to predict. Some people use historical data to come up with a forecast, carefully analyzing previous interest rates trends. Others look at the current economic climate or any upcoming major changes that may have something to do with mortgage rates, while others make predictions based on instinct.

Mortgage rates can never be predicted in absolute terms. It is entirely up to you whether you believe a mortgage interest rates forecast or not, but the most important thing is to understand that these predictions can give you a ballpark figure as to where mortgage loan rates are going.

Just by looking at mortgage interest charts for the past few months, you could get a general idea of the direction in which mortgage rates are going. Mortgage interest rates don’t fluctuate dramatically and most people pay attention to even the smallest interest rate fluctuation. Because mortgage loans extend over long periods of time, even the smallest drop could save money over time.

Predictions made by a bank representative should be taken with a grain of salt, as the bank employee’s job is to convince you to borrow money from them. You also shouldn’t trust alarmist ads in newspapers or on TV. Those types of ads are designed only to get you to borrow money.

Tips to Help with Your Mortgage Decisions

Tips to Help with Your Mortgage DecisionsBuying a house or refinancing a mortgage is a decision that involves several factors, not just mortgage interest rates. Your credit score and your financial situation also influence how much you’re going to pay and if it’s really the time to be taking this step. Here are a few tips that will help with your mortgage decisions in 2013:

 

  • Mortgage interest rates are low right now, so, if your financial situation is in order, it might be the time to take out a mortgage loan. Also, if you haven’t refinanced lately, you’re probably paying a higher interest rate than if you would refinance right now.
  • Make sure you have a good credit score. Having a credit score of over 720 is perfect for taking out a loan and receiving the best interest rates.
  • Shop around. Even if mortgage loan rates are very low right now, you should get quotes from several lenders and carefully compare them.

In conclusion, using a mortgage interest rates forecast is ultimately up to you. Most interest rates predictions are available to everyone, but always pay extra attention to the source of these predictions. These forecasts are nothing more than guesses, so they shouldn’t be the only factor in deciding whether to take out a mortgage loan or not.

Take Advantage of Current FHA Mortgage Rates

FHAThrough FHA loans, the Federal Housing Administration (FHA) allows people with a lower income to take out a loan for the purchase of a home. FHA loans are not actual loans, but a type of insurance. If you get approved for an FHA loan, the Federal Housing Administration will insure this loan against default. Being designed for people with low to moderate income, FHA loans allow someone to borrow up to 96.5 percent of the cost of the home.

As opposed to conventional mortgage rates, FHA rates are endorsed by a mortgage bond issuer group called Ginnie Mae, the only group of its kind that is fully backed by the US government. This makes Ginnie Mae bonds risk free, and the Federal Housing Administration mortgage rates reflect this.

Advantages of an FHA Loan

With lower mortgages rates than conventional mortgage programs, Federal Housing Administration loans are an attractive alternative. Here are some advantages to taking out an FHA loan:

  • Easy to qualify with a less than perfect credit score. Conventional loans made through Freddie Mac and Fannie Mae punish applicants with a credit score lower than 740, but you can still qualify for an FHA loan if you have a low credit score.
  • Smaller down payment. Being as low as 3.5 percent, down payments for FHA loans are generally lower than down payments for conventional loans, which can be as high as 20 percent.
  • The down payment and closing can be paid with borrowed money or gifts.
  • No prepayment penalty. While many conventional loans require you to pay a prepayment penalty, with FHA loans you’re able to pay off your mortgage before the full term of the loan.

FHA Mortgage Rates and Insurance Premiums

FHA mortgage rates have decreased a lot lately, but the cost of the mortgage remains mostly unchanged due to high mortgage insurance premiums (MIP). Because FHA provides insurance for loans, it faces the same risks as home insurance company, for example. If the amount of premiums it collects isn’t higher than the amount of claims paid, the FHA could face bankruptcy. The FHA differs from other insurers because it is required to maintain $2 for every $100 insured in its reserves, but, in November 2011, it was discovered that the FHA only held $0.24 for every $100 insured, which made insurance premiums increase 4 times during the last 4 years.

While the FHA used to charge an annual mortgage insurance premium of only 0.50 percent back in 2008, the annual MIP is up to 1.25 percent in some cases, and even 1.50 percent in some high cost areas. This means that, for example, if you have a mortgage rate of 4 percent, your annual mortgage rates will be as high as 5.25 percent, with the current mortgage insurance premiums.

The good news is that the FHA insurance is not permanent. On a 30-year fixed rate FHA mortgage, the insurance has to be paid for at least 5 years before the MIP can be removed, regardless of what your loan balance or loan to value ratio is. On a 15-year fixed-rate FHA mortgage, the MIP is removed as soon as your loan to value ratio is low enough.

mortgage-insuranceAnother good news is that, if your mortgage pre-dates June 1, 2009, you could get a reduced MIP through the FHA Streamline Refinance program. In order to qualify for the FHA Streamline Refinance you must have made at least 6 mortgage payments in the last 12 months, and not have missed any payments in the last 12 months. Through this program, you will only pay a 0.55 percent annual mortgage insurance premium.

Even with fairly high mortgage insurance premiums, FHA loans are still an attractive alternative to conventional loans for people with a lower credit score, and who want to take advantage of the low FHA mortgage rates and various other advantages.