What You Need to Know about Home Mortgages

Unless you’re independently wealthy (and sometimes even then), buying a home means getting a mortgage loan. Home loans are pretty much a universal requirement these days. There’s no getting around it. With that being said, there are multiple options out there, and you need to know how to choose the one that’s right for your particular needs.

Fixed Rate Mortgages

Fixed rate mortgages are the most common in existence, and they’re generally the best fit for most home buyers. These home loans have the benefit of ensuring that you know exactly what you’ll pay every single month for the life of the loan. It’s probably what you think of when you imagine a mortgage in the first place.

Of course, there are drawbacks. For instance, you’ll be stuck paying the same interest rate even if the actual rates drop far below what you were given when you applied for the loan. There’s also the fact that fixed rate loans often carry a higher premium in the form of percentage points, but the peace of mind offered by being able to budget is generally worth the extra.

If you plan to stay in your home for a long period of time and aren’t particularly happy with financial risk, a fixed rate mortgage is the better choice. However, they aren’t necessarily the most affordable. They’re just the most predictable.

Adjustable Rate Mortgages

Adjustable rate mortgages are pretty much the opposite of fixed rate mortgages. They’re just want they sound like. Rather than a single interest rate for the life of the loan, you get a fixed rate for only a specific introductory period, and then the rate changes based on market movements. This could give you the benefit of dramatically reducing the amount you pay in interest if rates drop.

However, it could result in a much higher payment each month if rates were to climb. For many buyers, that’s just too much left to chance. Without the ability to budget for your home payment after the introductory period, you could be in hot financial water. There are also different forms of adjustable rate mortgage that may or may not work for your needs. Some lenders now offer adjustable rate mortgages that adjust less frequently than others, which could save you some money, or at least a little bit of sanity.

There’s also the potential to enjoy a very low interest rate during the introductory period. If you’re planning to buy and then sell again within just a few years (say, before the introductory period ends, or shortly afterward), this could be a smart move.

Additional Considerations

In addition to the type of mortgage, you need to consider the amount you’ll be required to pay as a down payment. The minimum with most lenders is around 3 to 5%. However, understand that only paying the minimum can increase your costs by requiring you to have PMI, or private mortgage insurance. You can get around this by putting 20% of the loan amount down in the beginning, but many buyers simply cannot afford that. Either way, the more money you put down at the start, the less you’ll pay in interest during the loan.

Working with a Long Island Mortgage Broker

Really, the best way to move forward with your home buying plans is to get the help of someone who has in-depth knowledge of the mortgage industry – a Long Island mortgage broker. This offers a number of benefits.

For instance, it simplifies things a great deal. With a Long Island mortgage broker like Reliant Home Funding, you get the added benefit of our exclusive 1st Approve program. Essentially, this allows you to start the process of getting a loan, including being approved by an actual underwriter for a specified amount, even before you find the property you want to buy. Once you find the right property, it’s added to the approval and the process continues.

In the next step, your mortgage broker will help you understand the various home loan options out there and how they apply to you and your situation. You’ll learn about fixed rate and adjustable mortgages, but also unique programs like VA loans (for veterans and certain family members), FHA loans and more.

If you’re interested in learning more about the 1st Approve program, or speaking with a Long Island mortgage broker about your options when it comes to a home loan, get in touch with us at Reliant Home Funding. We’ll walk you through the process, answer your questions, and help ensure you’re able to make an informed decision.

President

Gregory A. Topal

Gregory is Co-Founder and Licensed Loan Originator at Reliant Home Funding, Inc., a Long Island based Mortgage Company.  Gregory currently holds a Mortgage Loan Originator License in NY, NJ, CT, CO, FL and PA and plays an active role in running the company. (NMLS #: 38684)

Gregory was raised in Long Island, NY and attended SUNY Oneonta receiving a Business and Marketing degree in 2004. Shortly after graduating he started a career in Real Estate and has been fortunate enough to advance his career throughout the years. He believes his success can be attributed to consistently striving to exceed the expectations of his clients and colleagues.

Email:gtopal@rhfny.com

Direct:631-446-3103

Zillow:http://www.zillow.com/profile/gtopal/

NMLS::38684

Build Your Credit Before Applying for a Mortgage – Tips for New Homebuyers

Think that you’re ready for the responsibility of owning a new home? Maybe you’ve tied the knot and you’re looking for the right place to start a family. Whatever the case, stop right now. Before you contact a realtor or start looking at homes for sale, you need to make sure that you’re the most attractive candidate for lenders. Why? Simply put, if your credit isn’t up to snuff, you won’t get the loan you need. Possibly even worse – you’ll get a loan, but the interest will be horrifying and you’ll end up paying far, far more than you should.

Get Your Credit Report

The first thing you need to do is get a copy of your credit report. You’re entitled to one free copy every year from each of the major credit bureaus (TransUnion, Equifax and Experian). Why get a copy from all three? Isn’t it the same information? It’s supposed to be, but it isn’t. You’ll find that each report differs, sometimes substantially. One account might not be shown on the report from one or even two bureaus.

So, what are you looking for? Anything that might be considered a black mark. This can be anything from maxed out credit cards (particularly those you got as a student and weren’t able to pay off), to closed accounts. As a note, don’t look for your credit score on these reports. It’s not there, nor are the bureaus required to give that information to you. It is available, but you’ll have to pay for it. It’s simpler just to start cleaning things up before you shell out any more cash.

You should also keep an eye out for any debts listed under your name that don’t belong to you. These must be disputed with the bureau so they can be removed. Think it won’t happen? It does more than you might think.

The Next Step

Now that you have your reports, it’s time for the next step. Take action on anything that you can. Pay off credit card debts. Get in touch with creditors and make payment arrangements. The goal is to repair the damage caused by late payments or nonpayment.

If you have a lot of credit card debt, consider paying off several smaller cards so that you’re left with only one or two higher-balance cards. Not only will the paid-off balances boost your credit, but you’ll find life is a lot easier to manage with fewer monthly payments, even if paying off those cards didn’t put a huge dent in your overall debt.

Even if you can’t really afford to pay off cards completely, focus on getting the balances down. You want to be at about 30% of your limit on each card. So, if your card has a $2,000 balance, you should have no more than about $600 on it.

No New Debt

It’s tough, we know, but you need to resist the temptation to create any new debt right now. That means no applying for new credit cards. It means no new cars. It means not opening a line of credit at your favorite clothing store. Not only will this help ensure that you’re not creating yet more debt for a lender to sift through when considering your mortgage application, but it stops inquiries into your credit. Every time you apply for credit, whether it’s for an auto loan or a credit card, the lender checks your credit.

Get Financing in Hand with a Long Island Mortgage Broker

Once you’ve cleaned up your credit and are a financially attractive candidate, it’s time to shop for a mortgage loan (before shopping for a home). Ideally, you’ll work with a Long Island mortgage broker capable of providing you with what’s sometimes called a TBD mortgage (to be determined). In this instance, you go through all the steps you would for an actual mortgage, including having the loan authorized by an underwriter. The only difference, and what makes it “to be determined”, is that there’s no specific property attached to it. Your mortgage broker will let you know the loan amount you’ve been approved for, and you can start shopping. Once you find a home, the loan is finalized through your Long Island mortgage broker, and you buy the property.

If you’re ready to start the process of buying a home and have already taken care of your financial homework, get in touch with us at Reliant Home Funding and learn more about how a Long Island mortgage broker can speed up the buying process.

President

Gregory A. Topal

Gregory is Co-Founder and Licensed Loan Originator at Reliant Home Funding, Inc., a Long Island based Mortgage Company.  Gregory currently holds a Mortgage Loan Originator License in NY, NJ, CT, CO, FL and PA and plays an active role in running the company. (NMLS #: 38684)

Gregory was raised in Long Island, NY and attended SUNY Oneonta receiving a Business and Marketing degree in 2004. Shortly after graduating he started a career in Real Estate and has been fortunate enough to advance his career throughout the years. He believes his success can be attributed to consistently striving to exceed the expectations of his clients and colleagues.

Email:gtopal@rhfny.com

Direct:631-446-3103

Zillow:http://www.zillow.com/profile/gtopal/

NMLS::38684