Fixed Rate Mortgage (FRM)

In a FRM, the interest rate, and hence monthly payment, remains fixed for the life (or term) of the loan. In the U.S., the term is usually for 10, 15, 20, or 30 years (15 and 30 being the most common).

• 10 year FRM: A fixed rate mortgage with a 10-year repayment term. Compared to a 30 year FRM, this loan has higher payments, a lower interest rate, and lower interest costs.
• 15 year FRM: A fixed rate mortgage with a 15-year repayment term. This loan has a lower monthly payment than a 10 year FRM and allows you to quickly build up equity.
• 20 year FRM: A fixed rate mortgage with a 20-year repayment term. This loan has lower monthly payments than a 10 year FRM. Compared to a 30 year FRM, this loan has higher payments and a lower interest rate.
• 25 year FRM: A fixed rate mortgage with a 25-year repayment term. This loan has slightly higher monthly payments than a 30-year FRM.
• 30 year FRM: A fixed rate mortgage with a 30-year repayment term. This is one of the most popular home loans. With this type of loan, your monthly payments are lower than with a 10-25 year FRM but your interest costs are higher. Plus, this loan gives you the best tax advantage by having the largest interest deduction. A 30-year FRM is best if you plan to have a steady income and stay in your home
• 40 year FRM: This fixed rate mortgage has a 40 year repayment term. A 40 year FRM has a slightly higher interest rate and a slightly lower monthly payment than a 30 year FRM. However, you will end up paying a lot more interest than if you had a 30-year mortgage.
• 80-10-10 Loan: A combination of an 80% loan-to-value first mortgage, a 10% home equity loan, and a 10% down payment. The loans can be used to eliminate the need for private mortgage insurance.
• Convertible ARM: An adjustable rate mortgage that can be converted to a fixed-rate mortgage under specified conditions. This type of loan usually includes a higher rate or more points for the convenience of not having to refinance.
• Option ARM: This kind of adjustable rate mortgage allows you to choose between four payment options each month. With an option ARM, a lender may give you a choice of a minimum payment, interest only payment, a 30 year amortized payment, or a 15 year amortized payment. Option ARMs are best for people who are very organized and who have fluctuating incomes or work on commission. Be aware that the loan’s interest rates can fluctuate and that these loans are complicated to manage.
• Graduated payment mortgage: A mortgage where the payments increase each month over a set period of time, usually 5 years. After this period, the last payment is fixed as the monthly payment. This type of loan usually has higher rates and has a rising balance for the first few years. Graduated payment mortgages are available as ARMs or FRMs.
• Interest only mortgage: A mortgage where you only pay interest each month during an introductory period, usually 5-10 years. After this period, you have a set amount of time to pay all the principal and interest. This type of loan is best for people who know that their income will rise in a few years or who believe house prices will increase dramatically.

Source : http://www.proloanz.com/mortgage_refinance_interestrates_types.asp

Adjustable Rate Mortgage(ARM)

Types of Refinance Interest Rates

Here is the some brief information about some of the popular mortgage plans available in market.

Adjustable Rate Mortgage (ARM)

An adjustable rate mortgage or variable rate mortgage is a loan secured on a property (house) whose interest rate and therefore monthly repayment vary over time.

• 1/1 ARM: An adjustable rate mortgage that has a set initial interest rate for the first year. After that period, the mortgage rate adjusts each year. Each annual rate adjustment is based on (or “indexed to”) another rate, often the yield on a U.S. Treasury note. (Also called a “hybrid mortgage.”)
• 2/1 ARM: An adjustable rate mortgage that has a fixed interest rate for the first 2 years. After that period, the mortgage rate adjusts each year.
• 3/1 ARM: An adjustable rate mortgage that has a fixed interest rate for the first 3 years. After that period, the mortgage rate adjusts each year.
• 5/1 ARM: An adjustable rate mortgage that has a fixed interest rate for the first 5 years. After that period, the mortgage rate adjusts each year.
• 7/1 ARM: An adjustable rate mortgage that has a fixed interest rate for the first 7 years. After that period, the mortgage rate adjusts each year.
• 7 year balloon payment mortgage: A loan where the payment is calculated over 7 years. At the end of this term, the remaining amount must either be paid off or refinanced. Balloon loans sometimes include convertible options that allow the remaining amount to automatically be transferred into a long-term mortgage.
• 10/1 ARM: An adjustable rate mortgage that has a fixed initial interest rate for the first 10 years. After that period, the mortgage rate adjusts each year. (Also called a “hybrid mortgage.”)

5 year balloon payment mortgage: A loan where the payment is calculated over 5 years. At the end of this term, the remaining amount must either be paid off or refinanced. Balloon loans sometimes include convertible options that allow the remaining amount to automatically be transferred into a long-term mortgage

Source : http://www.proloanz.com/mortgage_refinance_interestrates_types.asp

Best Quotes on Mortgage Refinancing

Are you looking to refinance your loans but not getting the best refinancing quotes? There are times when you feel the repayment of your first mortgage is actually costing you few extra grand. And when you hear that your colleague or friend has recently got a mortgage at much lower rate of interest than that of yours, you are bound to consider mortgage refinancing. But getting lowest mortgage refinancing quotes is not always easy.

The mortgage lenders will always try to extract maximum profit from you and because of your ignorance and his expertise; you may close your second mortgage in a costly bag. Refinancing mortgage in such a case will not do any good to you. So what to do? Most of the mortgage expert, including me, will suggest you to surf internet to find best mortgage lenders for you. Use your MSN or any other search engine and type best refinance lenders or best mortgage lenders followed by your state name. Explore some of the cheapest mortgage lenders in your state. Fill up the quote request form to receive free quotes from up to 4 lenders.

The lenders also have mortgage calculators on their website. Use those calculators to find, which mortgage refinancing plan will actually suit you. Besides mortgage refinancing rates, also compare the closing cost, discount point, etc. Refinancing at lowest rate of interest is possible only when you compare mortgage refinancing quotes from 3-4 cheapest mortgage refinancing lenders.

If you keep yourself aware of the latest trends in mortgage industry then you must be aware of the fact that mortgage lenders are having tough competition. Presence of large number of lenders in the market has actually turned the mortgage market in favor of borrowers. Lenders are competing against each other to bag your business and hence offering loans at low rate of interest. Subsequently mortgage refinancing is a wise option but before closing any refinance deal always compare the rates of 3-4 lenders.

A pretty decent amount can be saved by opting to refinance mortgage but this can be done only when you choose the best mortgage refinancing deal. Best deal will include lowest mortgage refinance rates, low closing cost, fixed rate mortgage plan in case the rate is much cheaper than the previous amount.

Source : http://www.proloanz.com/mortgage_refinance_quotes.asp

Mortgage Discount Point

What is Mortgage Refinancing Discount Point?

A point is the amount that a borrower pays to the lender at the closing of loan. On a loan of $100,000, 3 points means $3000. Points are part of the cost of credit to borrowers and part of return on investment for lenders. Should you pay points while refinancing your mortgage? It depends on the rate of interest on which you are seeking loan and at the same time the period for which you are taking loan. If you think to stick by the loan at least for 3-4 years, paying points would be advantageous for you.

By paying points you will be lowering down your interest rate from 0.25 to 0.75 percent. Hence points are sometimes used to buy down the interest rates. Point actually helps borrowers in longer period. By paying 1 or 2 points on your loan, you can save 100s of dollars every month and 1000s of dollars in the entire loan term.

Do you need to pay points compulsorily?

Paying point is optional. Your lender will offer you choice of paying points or sticking to loans without points. If you think point is actually benefiting, you can go for it. This can simply be calculated by seeing the time period in which your saving equals the amount you paid as points. Always remember the fact that point system actually benefits people who wanted to continue with the same loan for long period. While choosing the best mortgage deal always asks lenders about the point.

Some lenders may advertise about their low interest rate but will not mention about the points. Be careful while dealing to such lenders as lenders may sometime try to get benefit at the cost of your ignorance. Remember one thing always, i.e., point system benefit only when you want to be in same loan for long duration.

Point may also benefit you from saving taxes.

The fees paid on the closing of loan are tax deductible. Hence you can get advantage of tax deduction by paying points on your mortgage.

Source : http://www.proloanz.com/mortgage_refinancing.htm

Mortgage Refinancing

Mortgage refinancing is a wonderful option to choose when you want to lead a high interest debt free life. What happens when you opt for Mortgage Refinancing? Before going into this detail let us understand what actually Mortgage Refinancing means.When you bought your first home and the price of the home was being paid by a mortgage lender in lieu of the property you bought, your property will be said to be on mortgage. It means the loan was granted to you by keeping your property as security. The asset you keep us security is called collateral.

Now when you choose to Refinance Mortgage, it means you are looking for loan that will be granted to you against the same collateral. With the help of refinance loan amount you will be able to pay the balance in your first mortgage and this entire process is known as mortgage refinancing. .Mortgage refinancing is opted for various reasons depending on the persons need and condition.

Why do you need to refinance mortgage? Refinancing mortgage can be opted for multiple reasons. Maximum number of borrower opts for mortgage refinancing to reduce the interest rate. Interest rate fluctuates and it is wiser to opt for mortgage refinancing if the interest rate has gone down by 2 points. Mortgage Refinancing Qoutes can be easily applied online. Fill up our form and we will send you four free mortgage refinancing quotes.

Bad Credit Refinance Mortgage

You need not loose hope if your credit rating is bad or poor. Today, the market is flooded with so many lenders that anyone can get their mortgage refinanced. All you have to do is just a little shopping around. Several Bad Credit Refinance mortgage lenders offer loans to people with bad credit record, poor credit score, low income, etc.

FICO, an abbreviation for Fiscal Isaacs is an organization that keeps a check on your credit scores. Three credit agencies that work under FICO and score your credit. FICO credit scores range from 350 to 950. A score lower than 250, might result in outright rejection of your loan by most lenders. However, there are lenders dealing with providing finance to borrowers with bad credit. Such lenders are known as ‘sub-prime’ lenders.

You need to analyze how much money you can afford to pay each month for a refinance. Then the lenders will match your request and provide you with the best deal.

You should honestly discuss your bad credits with the new lender. Many times, there are genuine reasons behind having bad credits, which lenders consider while offering refinance.

Refinancing your mortgage improves your credit scores as you pay off your debt. A good credit score is essential for future credit opportunities. Obtaining credit without a decent credit report on file with a credit-reporting agency is very difficult. When you refinance, your EMI comes down and you build equity in your home, which you can cash out to meet your other expenses.

Should I Refinance My Mortgage?

If you choose to refinance your mortgage, then this is right time for you to do so. The market is filled with lenders competing with each other to offer the best refinance mortgage deals. To enjoy the benefits, grab the opportunity as fast as possible.

There are innumerous reasons why people go for refinancing their mortgage. The most common reason is that one is relieved from paying high interest rates even when the market offers much lower interest rates. If you want, you can also reduce the repayment period to get rid of the loan as fast as possible and save thousands of dollars, which could have gone into paying high interest rates. In addition, what more you want when you don’t need to pay anymore Private Mortgage Insurance (PMI) if your current loan balance is below 80 percent of the new appraised value of your home. If you think ARM (Adjustable Rate Mortgage) is not anymore suitable to you, you can shift to FRM (Fixed Rate mortgage) according to your own convenience by refinancing your loan.

The process is as easy as a cakewalk. Forget about the hassles of physically negotiating with lenders. If you are looking for the cheapest and the best mortgage rates, look no further. Once you apply for refinance, your request is matched with the best deals. You can get connected to multiple lenders, as they are available online. All you have to do is, fill up an easy online form and in response, up to four lenders will send you free refinance loan quotes that enable you to compare refinance rates and other terms. Refinance loan calculators help you to compare the different refinance rates and choose what suits you the best.