Best Mortgage Remortgage Deals Ideas

This article discusses best mortgage remortgage deals ideas. First, here are four quick mortgage tips:

1. Although your monthly payment may be higher, you can save tens of thousands of dollars in interest charges by shopping for the shortest-term mortgage you can afford. On a $100,000 fixed-rate loan at 8% annual percentage rate (APR), for example, you will pay $90,000 less in interest on a 15-year mortgage than on a 30-year mortgage.

2. You can save thousands of dollars in interest charges by shopping for the lowest-rate mortgage with the fewest points. On a 15-year, $100,000 fixed-rate mortgage, just lowering the APR from 8.5% to 8.0% can save you more than $5,000 in interest charges. On this mortgage, paying two points instead of three would save you an additional $1,000. See mortgage remortgage for more information.

3. If your local newspaper does not periodically run mortgage rate surveys, call at least six lenders for information about their rates (APRs), points, and fees. Then ask an accountant to compute precisely how much each mortgage option will cost and its tax implications.

4. Be aware that the interest rate on most adjustable rate mortgage loans (ARMs) can vary a great deal over the lifetime of the mortgage. An increase of several percentage points might raise payments by hundreds of dollars per month.

Low mortgage rates lure more and more people to buy a new home or refinance their current one. But many end up paying more, not less, for a mortgage because lenders charge new types of fees and loan arrangements can be complex.
If you're planning to live in a new house for many years-or if you don't expect a significant increase in your income in the years ahead-a conventional, fixed-rate mortgage of 15-30 years is probably best. Drawback:
Equity buildup from amortization is very slow. Of course, this won't affect a home's increase in value through appreciation.
Home buyers who aren't planning to stay in the new house for more than five to seven years, or who can look forward to big income gains, should consider an adjustable-rate mortgage.

First-year payments on an adjustable-rate mortgage are much lower than those on a conventional mortgage as long as interest rates stay down. The fear that interest rates might skyrocket (and greatly raise monthly payments) can be partially offset by taking an adjustable-rate mortgage with limits on the annual and overall increases in interest charges.
Most common: A 2 % annual increase up to a maximum of 5 % higher than the initial rate over the life of the loan. Make sure the limits are spelled out dearly in the mortgage contract. Also, check to see if there's floor to the adjustable rate. In many cases, if interest rates drop, mortgage rates won't.
Spotting hidden costs: Before applying for a mortgage, figure out what the loan will actually cost. The advertised interest rate doesn't tell the whole story. Additional charges and fees can raise the cost of a mortgage by more than 20%.
Example: A one-year adjustable mortgage with an advertised interest rate of 8.25 % at a New York savings and loan association actually costs 9.99% after several types of fees are included.

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The biggest expense is prepaid interest, sometimes called discount points. It's typically 1 %-3 % but can be as high as 10 %. When comparing interest rates, always include this cost. A low interest with high points can easily cost more than a higher rate with lower points.
The mortgage company's application fee can also be costly. Typical charges are $250-$500, but some lenders charge a percentage fee. A 2 % application fee for a $200,000 loan adds up to $4,000, more than 10 times the average flat fee. If the fee is nonrefundable, as many are, you stand to lose a substantial sum if the mortgage isn't approved.
Moreover, many low-interest mortgages have very high up-front charges. These closing costs can add up to thousands of dollars and can vary dramatically among lenders.

More mortgage traps:
• Negative amortization of an adjustable rate mortgage. Negative amortization clobbers you when you go to sell the house. How it works: Mortgage payments remain fixed, but if interest rates rise, less of the monthly payment is used to payoff the principal. If rates rise a great deal, the higher interest due is added to the principal. When the house is sold, you may end up owing the bank more than you borrowed.
• Change in mortgage collection agent. If the mortgage company sells your loan to another lender, there's a chance the new company will send you a payment book automatically. You make payments to the new lender, instead of the originator, and end up with an apparent failure to make payments because the original lender is still Servicing the loan.

Solution: If you see any change in your mortgage payment processing, contact the originating lender at once. Don't just start paying the new lender.
• Private mortgage insurance. This is generally required only where small down payments are made on a property, but it can be demanded by banks for any loan. Charges for this insurance are usually 0.5%-2% up front-and then 0.33 %-1 % annually. If you're making a 20% or higher down payment, use a lender that doesn't require PM!.
• Prepayment penalties. This expense won't show up when you buy a home, but when it's time to sell, you could wind up paying as much as three to six months' worth of interest charges to get out. If you expect to move within five years, a prepayment penalty could eat up many of your profits gained from appreciation in the property's value. Look for a statement in the mortgage contract that there's no prepayment penalty or one that expires after a couple of years.