Three fundamental pieces of knowledge for obtaining and maintaining a home loan are the application, rates, and repayment habits. Let’s discuss them.
Why should you shop for home mortgages online? Because you can obtain mortgage quotes from a reputable lender and your information is secure. The old way meant visiting or calling each lender, giving your same data to a new stranger each time, and waiting for a reply. To stay safe online, don't check with every no-name mortgage company that comes up in search results. Stick with names you can trust, or use a lender-matching service like Lendgo.
Mortgage companies who operate online aren't bound by the same home loan processes as large local banks, and can process applications faster. And with so many lenders for you to choose from, mortgage brokers and home loan specialists are motivated to offer you the best deal they can to secure your business.
You can't compare apples to oranges, right? Well, there are so many loan products and different rates and terms surrounding home loans that the whole thing can seem like a fruit salad. An adjustable rate is most definitely not a fixed rate; a 15-year term means much bigger savings than people guess when compared to 30 years; interest rate and annual percentage rate (APR) are two different things. Let’s run down the basics.
A 30-year mortgage probably seems like forever to most borrowers, yet it’s the most popular mortgage term. Having 30 years to pay back the loan is not the same as taking 30 years to do it. Just one or two extra payments when your finances allow can make a surprising difference on your amortization schedule, which is a big-picture look at how much of your money is going to the home versus interest over time. Extra payments go toward the loan principal (the home) and not toward interest. Sometimes as little as $20 extra on each payment can reduce the term of your loan a year or more! Many people never take advantage of paying one additional payment per year in order to shorten their 30-year mortgage term by up to 10 years because they have not educated themselves on prepayment.
If you're looking to make improvements to your home and you have some equity in the home, you should take out a home improvement loan. These loans are typically easy to obtain because the money is adding value to the home. Home improvement lenders are easily found both locally and online.
Hurricane damage might not be covered by home insurance. A home improvement loan is the next best option to fix the damage and increase the overall value of your home. To start, you'll want to get quotes from contractors for the cost of the repairs. With quotes in hand, go to lenders who specialize in home improvement loans. Each lender will evaluate the risks of the home improvement loan in comparison to the benefits of improving the home’s value. Most often, you will be able to obtain a loan to repair hurricane damage.
It's extremely important to make your home loan payments on time, yet sometimes circumstances are beyond your control and you can't. What should you do? First, contact your lender immediately. Tell them about your situation and when you will be able to send the payment. Keep your word. Send your payment as soon as possible, and include any late fees associated with missing the payment—don’t let fees pile up.
Sometimes the lender will cut you some slack and not report the late payment to credit bureaus. If your lender is going to report the late payment, get ahead of the story and call the credit reporting agencies yourself. While you probably won't get the late payment removed for your profile, you can make sure that they note that the loan is in good standing and that the payment was made, just slightly after the due date.
Most importantly, don't let it happen again. Try to keep enough money in your bank account to cover yourself when money is tight.
If you have a refinance loan and your original home loan, you may want to consolidate them. This sounds complicated but should be painless for you. Find all of your current home loan information, such as account numbers, bank names, initial loan amounts, dates of the loan, and any other documents you've obtained through the loan processes. Find out how much equity you have in your home to determine whether consolidation makes sense. Finally, go to your mortgage specialist to get a more accurate portrait of the options available to you.
The tax benefits of home ownership are outstanding. All of the mortgage interest you have paid is tax deductible.