Mortgage Tips For The Frantic
It is a curious fact of human nature that people will haggle over the price of an umbrella, but buy a house on impulse.
We understand small amounts of money; we know what they can buy. £200,000 is harder to grasp; you can't fit it in your pocket. The desire to acquire, combined with the stress of the purchase, can make people do funny things. With this in mind, here are a few tips to review when getting a mortgage.
Watch out for the 'Deal Of A Lifetime', the deal that seems too good to be true. The company may be saving money by cutting back on their level of service.
When getting a fixed rate: get a written statement which details the interest rate, how long the rate is fixed for, and the conditions attached.
When interest rates fall: try and leave your repayments as they are. You will therefore be paying more than the minimum each month. You'll repay your loan much earlier. When rates rise again you may not have to change your payment.
Consider a fifteen or twenty year term. Try to pay off your mortgage quickly. Use a mortgage calculator with an amortization function, and see what's possible.
Keep your mortgage as small as possible. Aim for *comfortable* affordability.
You will find mortgage lenders who will stretch your qualification ratios. They aren't doing you a favour. The qualification ratio is the ratio of your total mortgage payment to your total income.
The traditional ratios are: The mortgage payment as 28% of your income; the total of your mortgage payment plus your monthly debt payments as 36% of your income.
Try not to 'churn' your mortgage. Each time you refinance you'll probably incur completion costs and non-refundable fees.
Beware of prepayment penalties. Many 'no fee' credit lines have a pre-payment penalty. This can be very expensive if you are planning to refinance or sell your house in a few years time.
You don't need to sign a mortgage agreement which contains any significant prepayment penalty, if you have good credit. One of the smartest things you can do with a mortgage is to prepay it.
Don't look for a home without being pre-approved. You will have much more negotiating power with the vendor, and may be able to save thousands of pounds.
Get a full, professional survey. Human beings can be perverse; happy to spend £150,000 on a house after a half-hour viewing, but be-grudge spending £500 finding out whether it's worth buying in the first place!
Find out the true value of your home. Get more than one independent appraisal. Compare it with the prices of similar-sized houses for sale in the same area.
Start gathering documents. Provide your mortgage company with documents in good time; don't let your rate lock expire!
Verbal (oral) agreements are worthless. When buying or selling property, always get it in writing.
When you do get your mortgage, check your payments are correct - do the mathematics. There's a one in ten chance you could be paying more than you should.
Review your mortgage regularly - this, and possibly remortgaging, will ensure you pay as little as possible in interest.
Finally, consider the following advice from the U.S. Department of Housing and Urban Development:
Be sure to read and understand everything before you sign;
Refuse to sign any blank documents;
Do not buy property for someone else;
Do not overstate your income;
Do not overstate how long you have been employed;
Do not overstate your assets;
Accurately report your debts;
Do not change your income tax returns for any reason;
Tell the whole truth about gifts;
Do not list fake co-borrowers on your loan application;
Be truthful about your credit problems, past and present;
Be honest about your intention to occupy the house;
Do not provide false supporting documents.
A mortgage is the biggest financial committment most of us will ever make; worth spending a little time on, to get it right!
About the author: T. O' Donnell (http://www.tigertom.com/mortgages-uk.shtml) offers mortgage quotes, advice, an ebook and a mortgage calculator, in London, UK.
Latest News
 ABC News | A Rush Into Refinancing as Mortgage Rates Fall New York Times, United States - Mortgage rates immediately dropped, and that led to a surge in mortgage refinancing activity for the week — even with the Thanksgiving holiday. ... Treasury mulls plan to lower mortgage rates to 4.5% Homeowners' Refinancing Jumps by Record Pace Proposal could drop mortgage rates to 4.5 percent |
 Emirates Business 24/7 | Mortgage Refinance Applications Soar As Rates Fall EasyBourse.com, France - The Mortgage Bankers Association's index of refinance applications posted a record 203.3% increase over the previous week. Additionally, the US Treasury ... Fed will buy $500 billion in securitized home loans Mortgage rates fall, but many borrowers will have trouble qualifying US move cuts mortgages to lowest rate since February |
 RTT News | US MBA’s Mortgage Applications More Than Doubled Last Week Bloomberg - The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan jumped 112 percent to 857.7, the highest level since March, ... FINANCIAL STOCKS Bulls outlast bears in Wednesday grudge match Mortgage Apps On Rise As Rates Drop UPDATE 1-US mortgage applications post largest gain ever |
VA Specialty Lender Offers 100% Mortgage Refinancing PR Web (press release), WA - Salt Lake City, Utah (PRWEB) December 3, 2008 -- iFreedom Direct Corporation, a Salt Lake based mortgage company, is now offering 100% VA refinance "cash ... |
 Reuters | Bernanke Says US Must Step Up Foreclosure Efforts (Update1) Bloomberg - ... been prodding private mortgage servicers and bond investors to cooperate with government efforts to modify or refinance loans for troubled borrowers. ... Bernanke: More foreclosure help needed Op-Ed: Fed Throws Refinancing Party; No One Shows Up The Fed's Potentially Very Bad Policy |
Carmen: Time Is Right to Refinance Your Mortgage CNBC, Englewood Cliffs - Despite the doom and gloom in the economy, there's actually a glimmer of hope shining through for homeowners looking to refinance. The average interest rate ... |
Lower mortgage rates help but jobs, prices key Reuters - Applications to buy and refinance homes hurtled higher last week as the lowest rates since the summer of 2005 unleashed pent-up demand. ... |
Bally Total Fitness files for bankruptcy again San Francisco Chronicle, USA - Refinance volume more than tripled, while purchase volume increased 38 percent. Refinances accounted for 69.1 percent of applications, up from 49.3 percent. ... Thanksgiving week saw rise in mortgage activity |
Low rates breathe life into mortgage market Columbus Dispatch, OH - Spurred by average interest rates on 30-year fixed mortgages that are under 5.5 percent, many homeowners are considering refinancing. "The mortgage rates ... |
Refinancing a viable option for certain homeowners Monitor, TX - For the many locals who are still paying off subprime mortgages, refinancing is also likely not an option. But with a 30-year mortgage rate at close to 5.5 ... You can still refinance loans |
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