If you can afford the higher payments, or are willing to buy a less expensive home, a 15-year mortgage can save you thousands of dollars in interest and can allow you to own your home free and clear in half the time. Fifteen-year interest rates are about one percentage point lower than 30-year rates, and you might be surprised how much the combination of a lower rate and shorter amortization period can save you.
Since there are so many different types of mortgage loans, it can be difficult to choose the best loan for your needs. If you want a set monthly payment and a definite period of time to pay off the loan, you should look primarily at home mortgage loans. This is a good option if you want to remodel, and you know exactly how much it is going to cost. A home equity loan gives you added flexibility since it is a revolving line of credit. This is a good option if you have several smaller projects you are working on and you are unsure of how much each will cost. It also gives you the opportunity to withdraw the money to cover other expenses like a wedding for your child or to help cover college expenses. Either option does put your home at risk if you default on your payments, even if you are current on your first mortgage. It is important to carefully consider your budget to make sure that you can afford the payments. Once you do this you can be confident in moving forward on either type of loan.
In addition to a down payment, you will also have to pay closing costs to finalize your loan. This can be a substantial amount of money, so it’s important to plan ahead and be aware of the amount you will likely have to bring to the table. Make sure you have budgeted and saved up enough for these fees in advance, so they don’t catch you by surprise.
Military Homeowners Assistance Program (HAP) provides assistance to military service members, recent veterans and their families who are facing housing issues. Banks and national lenders such as Chase and Bank of America are also offering solutions to the nation’s veterans and service members. The military Homeowners Assistance helps veterans and service members.
Maybe your parents had a 30-year fixed-rate loan. Maybe your best friend has an adjustable-rate loan. That doesn’t mean that either of those loans are the right loan for you. Some people might like the predictability of a fixed-rate loan, while others might prefer the lower initial payments of an adjustable-rate loan. Every home buyer has their own unique financial situation and it’s important to understand which type of loan best suits your needs.
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You may not receive mortgage approval the first time around. Sometimes you're just shy of meeting program qualifications. It happens. But, it doesn't mean you should be written off as a customer. Be sure to choose a lender who sees you for you, not just your credit score. At American Financing, we'll guide you through credit weaknesses and next steps, getting you one step closer to mortgage approval.
Less is charged for interest because your balance is lower and lower. But keep in mind that (at least for now) the interest you pay is deductible for tax purposes. That means if you pay $15,000 in interest this year, you will effectively reduce your taxable income by $15,000. If you’re in the 30% tax bracket, that saves you $5,000 in taxes. In short, for many people, having a mortgage is smart financial tax planning.
In addition, Countrywide will be spending billions of dollars to modify mortgages as a result of a lawsuit they settled with the federal government. Many state governments sued the lender for all of the questionable home loans that they issued to uninformed borrowers, and the funds to the settlement will go directly to helping homeowners. Find more details on the free mortgage modification from Countrywide.