HELPFUL MORTGAGE TIPS

Shopping for a mortgage may first seem to be an overwhelming experience, especially if you are a first time home buyer and have little or no knowledge about the loan process. If you've shopped online, you probably have already found hundreds of mortgage sites quoting low ball rates for every loan term under the sun. One would think that if you just spend a few hours online you will find the lowest rate available and receive the best deal! Unfortunately this is rarely the case. Don't play the interest rate game without a load of information. Read this first!

• Not all low rates are considered equal

There's a lot more to the cost to refinance your home loan than just the interest rate. Many mortgage lenders will set the interest rate as low as possible, and then hike up the number of points and/or fees attached to the loan once you've applied. Most online mortgage lenders will post the number of points next to the interest rate for your consideration. One point is equal to one percent of the total loan amount.

To ensure the best deal, compare the Annual Percentage Rate (APR) of the mortgage loan which includes the interest rate, points/fees and closing costs. If you compare companies using this percentage you will find that a lot of the low rate lenders are not the best deal in town.

To compare quotes accurately, ask for the APR instead of the interest rate.

• Your Credit

Your credit history is important to lenders when evaluating your eligibility to refinance your home mortgage loan. An individual with many late payments will not be deemed as trustworthy for payment terms as someone with perfect credit. Find out what has been documented on your credit report and correct any possible mistakes, order your Credit Report today!

• What?!! I don't qualify for that rate?

The most important thing to learn about a mortgage loan is that rates are based on your individual needs and financial situation. The rates quoted over the phone and/or online are not always accurate representations of what you will qualify to receive. Most rates quoted are applicable only for individuals with perfect credit, a low debt to income ratio and either a large down payment or a lot of equity in their house. These qualifying factors are crucial elements to be aware of before shopping for a loan.

• Down payment

There are several refinance home mortgage loans available with little to no down payment, however, most of these loans come with a higher interest rate. Evaluate your finances and estimate the maximum amount of money you can afford to put down on your new home. Once you have made this estimate, find out how much house you can afford by using the LoanWeb Mortgage Calculator to calculate your refinance loan.

• Debt to income

Mortgage lenders use your debt to income to verify that you have the means to pay a monthly mortgage. To figure out how much debt you have compared to your income use the following formula. This number is usually expressed as a ratio. Add up the following Monthly Debts: Mortgage + Auto loans + Student Loans + Credit Cards + Furniture loans + Alimony.

Debt to Income % = Monthly Debts/Monthly Income

• Equity

If you are looking to refinance your home, receive a home equity, consolidate debts or make home improvements then you need to know how much equity you have in your house before you apply. Most of the time, the more equity you have the more money you can borrow. To estimate this calculation use the formula listed below:

Equity Ratio = 100% - Loan Amount/Home's Value

Equity $ Amount = Current Value - Home Loan Balance