The media is quite happy to bombard Australians with tales of woe from struggling families who find it difficult to keep up with mortgage payments. They blame high interest rates, the rising cost of living, and low incomes for their troubles.
What most of those media reporters don’t seem to realize – or maybe they just don’t report on it – is that the majority of those people suffering from mortgages stress are also those who have poorly set-up banking facilities.
With just a little tweaking and some simple negotiation, it’s very possible to relieve some of that financial pressure. They key is to play the banks at their own game.
Reduce Interest Costs
If you’re having a hard time keeping up with your mortgage payments, it might be time to give your finances a bit of an overhaul. Look closely at how much you’re paying in interest on your home loan. Sure, the rates have just come down a little, but are you really getting the best deal available?
This isn’t the only aspect of your finances you need to look at. You should also consider whether there are ways you can cut down interest costs on any credit card debt or personal loans you have outstanding.
Paying off those consumer debts is obviously the best option, but if you can’t do this, it’s strongly suggested you shop around and find a better deal that helps you to pay less interest. When you’ve found that better deal, call your existing bank or lender and negotiate with them. If they won’t offer you a discount, take the better deal you found with someone else.
You should also find that a lower interest rate also means lower monthly payments. This will help to free up your cash flow a bit more, making mortgage payments that little bit easier on you.
Negotiate for Better Deals on Other Expenses
Are you really getting the best possible insurance rates for the level of cover you need? Negotiate with your current provider and let them know you’ll be shopping around with competitors.
The same is true for your mobile phone plan and your Internet plan. Really work out how much you need and shop around.
This simple tactic of negotiating and shopping around for better deals can save you quite a lot of money each month. That’s money better spent paying off your mortgage than putting profits into your Telco’s or your Insurance company’s pockets.
Consolidate or Refinance?
It can be tempting to roll a car loan and a couple of outstanding credit cards into the mortgage. This lets you take advantage of the much lower interest rate home loans offer. It also gives you a great way to reduce your monthly repayments.
Unfortunately, your mortgage extends for 30 years. The compounding effect of paying a lower interest rate over a much longer term actually means you end up paying far more money in the long run.
It might be well worth the effort to do the sums on consolidating smaller debts into loans with lower interest rates than you’re currently paying. Then work on paying those off as quickly as possible.
Change Payment Frequency
When you first got your mortgage, you would have been shown exactly how much you needed to pay for your minimum monthly payment, and what the due date was. For the vast majority of Australian homeowners, they do exactly as they’re told.
They pay the exact amount the bank tells them to pay on the day they’re told to pay it. They even think they’re doing the right thing.
Here’s the thing: banks charge interest on your mortgage, which is calculated at the end of every single day on the amount you owe. You get to see the sum of all those daily calculations at the end of the month on your statement.
If you call your bank or lender and ask them to change your payments to match your current pay times, you can actually reduce the amount of interest you pay. So, if you get paid every Thursday, make a weekly payment every Friday. This reduces your balance a little bit every week, which means the bank get to charge you less interest as a result.
Leveraging the Relationship of Mortgage and Credit
Whether you are looking to purchase your first home, or your third, sitting before a loan officer who is deciding your credit-worthiness can be terrifying. If they do not deny your application, you may be wondering whether you got the best interest rate.
What Are Lenders Looking For?
What exactly is a good credit score? While that answer can vary, we do know the specifics of what makes your credit report look good in the eyes of the loan officer and lending agency.
While some may think to have a squeaky clean credit report is good, that is, little to no debt taken on and paid off, a track record is important. The agency needs to know that you pay off your debts in a timely manner.
The bigger the loan, the bigger the risk the company is taking on, so the more history you have with credit, the better. Also, while credit cards may seem like a quick and easy way to boost your credit score, lenders need to see variety.
How to Get the Best Interest Rate and Most Mortgage Options
Now that we know what lenders look for in a borrower, we can work on getting the best interest rate on our mortgage, as well as get more mortgage offerings.
Take a close look at your credit reports. The three credit reporting agencies – Experian, TransUnion, and Equifax – will have differing credit scores, but accounts among them should be exactly the same and reflect their status correctly. You want to make sure that closed accounts are listed as such, and if you see any errors, you will want to dispute them immediately.
If everything on your reports if correct, all you can do is play the waiting game. Building up credit takes time. As long as you are making payments on your debts, as well as not exceeding credit limits, your credit scores should increase.
Ties Between Mortgage and Credit
While the link between your credit score and ability to get a mortgage is obvious, many people fail to realize that your mortgage will be reflected on your credit score. A lending agency or bank may tell you that your credit score will qualify you for a $300,000 mortgage, but you can absolutely shoot for a home with a lower price range, and probably should.
Similar to credit cards, you do not always want to hit your limit. Not only will this affect future credit, but it can cut you off from better interest rates right now.
Before putting yourself in the hot seat, understand what lenders are looking for and clean up your credit reports. This will put you in a better position to negotiate with lending agencies.
The lower the interest rate, the more you will save in the long run, so you want to make sure your credit history is long and shows an accurate picture of your trustworthiness and responsibility.
Doing These Thrifty Things To Get The Best Mortgage
When preparing to purchase a home, far too many people settle for a home loan with high costs and high interest. This type of loan is not always necessary and you should really work hard to find the loan that is right for you and your family. Here are some guidelines for getting the best mortgage loan possible for your future home.
Your credit score will play a huge role in the interest rate you are granted for your mortgage. Before ever applying for the loan, pull your credit report and score. Check for accuracy and work to improve your score before you take the plunge into a mortgage. The better your score, the better the loan – normally.
Be prepared to make the largest down payment possible on your loan. The more money you can put down on your new home, the more attractive you are to lenders so saving up for a hefty down payment can mean all the difference in the world for your pocketbook.
Document All Assets
The mortgage lender is going to make sure you have a way to pay back the money they loan you. Make sure to document all of your assets so as to make the process go as smoothly as possible. These may include a retirement plan, an IRA, any CDs you own and your savings. No one wants to get denied a loan for inattention to details and you can easily avoid this situation with a little organization.
Interest rates and fees differ from lender to lender. Make sure you shop around at a variety of lenders to find the best deal possible. Many people think that the interest rate is the only thing to look at when comparing loans. Unfortunately, many fees also apply when looking at mortgage possibilities. Some lenders divide up the total fee into smaller fees, others simplify these costs by making them one, larger amount. Ensure you get the whole amount for accurate comparison purposes.
Get Approved First
Obtaining a pre-approval letter from a lending institution is a good way to show other lenders you are a qualified and serious buyer. Pre-approval means that you have had your income verified and credit approved for a specific mortgage amount.
Save, save, save! You will need cash for a healthy down payment on your Comfort King Ltd. furnished Kanata home. You will also need significant assets in your accounts to show the lender you can repay the loan in the event of financial hardship. This process can take years and you will have to make lifestyle changes, but it is a non-negotiable part of the home buying process.
Obtaining a great mortgage is not impossible and one should do all they can to find the right loan for their particular situation. While many people sign the first loan they can, this is a poor idea. With patience, research and hard work, you will soon be reaping the benefits of a reasonable mortgage loan in a house that can be called your own.
BAD (Big American Dream) Is Not Bad After All
All of us wish to live the Big American Dream of having a great job, owning property and a wonderful family. This is indeed achievable if we carefully budget our finances and plan ahead for it. There are loans like home loans/ mortgage that can help you live your BAD (Big American Dream).
Home loans and real estate business are like two sides of a coin. One cannot exist without the other. It is nearly impossible to provide cash up-front for a towering mansion lying on 12 acres or a small apartment in Downtown; so home loans are sought instead.
When scouting for a home loan or a mortgage refinance loan, there are several factors that need to be looked into. Let’s take a look at some of them.
Types of mortgage
There are two types of financing your home through home loans: fixed and adjustable. A fixed rate mortgage is a loan with a fixed annual percentage rate that stays the same until the end. An adjustable rate mortgage (or ARM) comes with varying interest rates and monthly payment through time depending on inflation that change according to its terms.
At first glance, refinancing a mortgage with a fixed rate loan is better – but both carry their own advantages. Interest rates remain the same with a fixed mortgage loan, which means home equity is easier to create and uncertainty can be avoided.
However, many fixed interest rates can start higher than normal, whereas an adjustable interest rate on a home mortgage loan can start smaller. In essence, more people apply for fixed rate mortgage loans than adjustable rate mortgage loans.
Advantages of mortgage
Another aspect of the mortgage refinancing business is the down payment. Typically, mortgage lenders will ask borrowers to throw down up to 6% of a home’s total value to secure the home loan. Secondly, APR varies according to the mortgage lender.
The most important criteria by face, the annual percentage rate includes the principal, interest, and fees that come with the loan. Before applying for mortgage loans, this is the first thing you should look at.
Looking deeper into fixed rate vs. adjustable mortgage financing, there are several loan types according to the length of term. There are the standard 30 years fixed mortgage, the 15 years fixed mortgage, 5-year adjustable rate mortgages, and more.
Banking enthusiasts would tell you to consider 30 years fixed home financing loans first because they allow for lower monthly payments than shorter-term loans. Keep in mind, many mortgage lenders have varying quotes so be sure to shop around.
Look for mortgages online and there are calculators in the websites that allow you to find how much your monthly outgoing will be towards home loan. Shop around for the right property by hiring an agent who can show you homes within your budget.
Don’t shy away to ask questions. Get all your doubts cleared before you sign on the dotted line. With the American home market at an all-time low, this is the ideal time to buy property which is sure to appreciate ten years later. So fulfill your BAD with home loan/ mortgage and live the life of your dreams.