Prepare for a Mortgage Loan – 5 Steps
Most of the time potential borrowers tend to sabotage their opportunities of getting the mortgage loan. Every mortgage lending company has its set rules and guidelines for one to qualify. Doing your homework and preparing can help speed up the process of getting the loan and helps to save money too. Getting an approval for this loan is not as easy as it was some years back. Bad credit and the crisis in housing have changed the way lenders and banks do their business and the people they associate with. This means that you have to be well organized in these economic times to get the loan. more ...
How to Decipher Your Need of a Home Equity Loan
There is no shortage of reasons why you should not take out a home equity loan. For most people, as long as money is in their pockets, when it comes to spending, people usually don’t differentiate between borrowed money and earned money. As far as they are concerned, money is money, and money is for spending. They conveniently ignore the fact that they will have to repay this money (plus interest) at a future date. From this perspective, almost all kinds of borrowing can ultimately be considered borrowing from your future self, since it is your future self who will be repaying these debts. more ...
Your Guide To Mortgage Loan Companies
Fixed rate and adjustable rate are the two basic types of mortgages. An adjustable rate mortgage, or ARM, has an interest rate that constantly changes over the duration of the loan. The rate is linked to an economic index and it will fluctuate from high to low depending on the market. Fixed rate mortgages lock you in at a certain rate that will not increase or decrease with the changing market. This can be wise if the interest rates are historically low however rates are very unpredictable and a fixed rate could possibly cost you money in the long run.
How can I find a good mortgage loan company?
It's best to search online for local mortgage loan companies that have reputable backgrounds. Once you have a list of a few mortgage companies, check out their websites for competitive pricing and the various types of loans that are available. You will want to compare fees, percentages, and interest rates between each mortgage loan company to calculate your specific cost. OR simply check out our detailed reviews and comparison chart above; StarReviews has done all that work for you!
You should also have a list of questions to ask your mortgage loan company, or mortgage lender, before agreeing to do business with them. Some questions should include:
- What type of loan is best for my circumstance?
- What are the pros and cons of the loan?
- What are the interest rates?
- What are the percentage rates?
- What are the total costs?
- Are there loan rate locks available?
- How much time will it take to process the loan?
Always find out how long a mortgage loan company has been in business, if they have a FAQ section, and how helpful and available their customer support services are. Some mortgage loan companies will offer free guides for first-time home buyers so you will know exactly what to expect. You can also choose to monitor local home sales via email and speak with customer service representatives through email, phone, or on location.
Applying and agreeing on a mortgage loan can seem like a tedious task, but this loan will likely stick with you for at least the next fifteen years. Be thorough in your research and find the best mortgage loan company with the most choices and the most competitive pricing.
Can I get an idea of pricing before I commit?
Some websites offer a mortgage rate and payment calculator that allow you to find out your potential monthly payment. Enter a few simple facts--such as the state you will be purchasing in, your down payment amount, and the price of your home--and it will calculate a ballpark figure for your monthly mortgage loan payment.
What's the loan application process like?
The mortgage loan application process can take anywhere from a few minutes to over a half hour to complete, depending on what mortgage loan company you apply with and what questions they ask. Some standard questions include your address, email, phone number, social security number, how many dependents you have, annual income, employment history and liabilities.
What kind of service should I expect from an online loan company?
One of the advantages to using an online company is simply that it's online--it's always accessible. View your balance, request a quote, transfer money, and obtain tax and interest rate statistics at any time. Some sites even offer a loan checklist so you know exactly what documents you will need to have on hand prior to filling out an application.
A Short History of Home Financing
Mortgage loan brokers didn't appear until the 19th century when the United States really began to take shape. In 1893 the first mortgage loan company, Sonnenblick-Goldman, was established in New York City in order to finance difficult real estate projects. Around the same time on the West coast, "loan arrangers" were becoming popular. These businessmen would arrange loans between wealthy people and borrowers who had been turned down by banks--thus the birth of the mortgage broker.
With the Great Depression in full force, the 1930's brought a drastic change to U.S. housing policies and financing. Laws were implemented such as The U.S. Housing Act of 1937, which was created to improve the living conditions of low-income families, and the Federal Home Loan Bank System, which provided stable and cheap funding for home mortgage loans. These programs were put into play in order to extend qualifications for home mortgages.
In 1979 Paul Volcker was appointed chairman of the Federal Reserve Board and created a monetarist policy to counteract the United States' growing inflation problem. The policy caused interest rates to skyrocket and it created sheer chaos within the financial world. While second mortgages are quite common today, in the 1980's it was almost unheard of and any borrower who needed one was seen as a financial outsider. However, once interest rates peaked it became apparent that secondary mortgages were necessary. Brokers closed their mortgage loan departments and commissioned mortgage brokers were terminated.
Charles W. Knapp, founder of American Savings & Loan implemented a mortgage-banking approach to the industry. Soon after, brokers and realtors began working together, marketing the convenience of "one-stop-shopping" in which brokers would find the best mortgage loan while realtors found the best home. This combination of mortgage brokers, bankers and real estate agents became the mortgage-brokerage business that we are familiar with today.