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!

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