Interest only mortgages are mortgages where you only pay the interest every month. This means you aren’t paying off any of the principal that you borrowed initially. This usually lasts for a set amount of time. After this “introductory” period you’ll be required to either pay off the loan, refinance or start making larger payments to cover both interest and principal.

These types of mortgages do work well for certain circumstances. For example, if you are definite that your income will be going up in the near future, an interest only mortgage will allow you to afford more house before the raise. Or it can work if you already have a large amount of equity in your home and want to refinance with an interest only loan to use the money for other, more profitable investments. Finally, if you have an irregular source of income, like commissions or seasonal work, you can make the income only payments during slow times and larger payments during larger income times.

The troubles with interest only mortgages are many though. You may end up paying way more in the long run because you aren’t paying off any of the principal. Or you may experience payment shock, where your payments rise as much as two or three times after your introductory period.

Beyond that, you aren’t really building any equity in your home with an interest only mortgage so it doesn’t really make sense to take out this kind of loan except in certain circumstances. Often times, if you take out a interest only loan you’ll find yourself scrambling to pay off the loan or refinance or even possibly losing your home in the end. Whichever type of mortgage you decide on, make sure it is the right choice for your needs and that you’ll be able to pay it off on schedule.

Getting a mortgage is a big event in your life. There are a lot of aspects to obtaining a mortgage and if you aren’t prepared you could make some costly mistakes. Here are some of the most common mistakes borrowers make when getting a mortgage.

One of the biggest mistakes is not reviewing your credit report in advance. If you review your credit report and FICO score before trying to get a mortgage you’ll have a better understanding of your chances to get a loan and what types of interest rates you’ll be looking at. Then, if your credit report is less than desirable you can take actions to improve it, thereby lowering your interest rates.

Another common mistake is not getting pre-approved for a mortgage. A pre-approval will give you an idea of how much of a mortgage loan you’ll be able to get. This helps you determine what houses you can afford.

A third common mistake is not shopping around, or not shopping around well. There are tons of sources for mortgage loans – look into a few rather than just going with what’s convenient or a friend’s recommendation. And be sure to shop by more than just interest rate alone. A low rate isn’t always the best deal. There may be high fees involved with a low rate or a rate increase later down the road. Consider all points of a mortgage before deciding on one.

Also, don’t let lenders influence how much you borrow. Although they are experts at what they do, you should be an expert at assessing your monthly expenses and determining how much you can pay towards a mortgage each month. Lenders will tell you how much you qualify for, but that doesn’t always mean you should take the entire amount available. Only borrow what you can comfortably pay back.

Finally, make sure you understand all of the terminology and conditions. And if you don’t, ask questions. Your loan will include lots of technical jargon, various closing costs and loan terms and conditions. Know what all of these are to avoid any surprises down the road.

If any of these are confusing talk with your lender or another expert and ask questions until they are all clear. It’s important to avoid unnecessary charges or problems with your mortgage by doing so.

Having a home mortgage instead of renting can offer some advantages, even during an economic crisis. These include greater stability of housing costs, the ability to make changes to the property, the mortgage interest tax deduction, and the option to rent part of the home. Read on to learn more about each of these advantages of having a mortgage and owning a home in general…

One advantage of owning your residence is that you can freely make changes or improvements to it (and retain their value), in response to economic conditions during an economic crisis. These might include installing smaller appliances, different heating equipment, more insulation, additional security devices, or an efficient water heater. A home owner can become more self-sufficient in some ways, such as planting a large vegetable garden or setting up a wind turbine. However, a drawback is that expensive maintenance costs can always unexpectedly appear and be the owner’s responsibility to pay.

If you have a fixed rate mortgage, there is no need to worry about the monthly payment changing, even during economic crisis. This advantage does not extend to an adjustable rate mortgage, but these usually at least have limits as to how much their payment amounts can change. The monthly cost for rented homes can change at any time (after the necessary amount of notice has been provided), and there is always the possibility that the owner will sell the property to someone else or even be foreclosed upon, if he or she becomes unable to afford the mortgage and taxes.

Another advantage is that you can rent out part of the home (or other buildings on the property, such as a garage or trailer) for housing or storage, to generate additional income which may be necessary during an economic crisis. Some landlords prohibit this, and sublet renting is less attractive to potential tenants, so owning a home is preferable in this way. A home owner can also do this with the entire home during a time of the year when he or she is elsewhere, or share the house with someone in exchange for a portion of the mortgage payment.

Finally, yet another advantage is that some people are eligible to deduct mortgage interest from their taxes, which does not apply to rent payments. This is a useful advantage in an economic crisis, as it frees up money which would otherwise be paid to the government. Some other additional tax deductions are available to home owners, including deductions for Private Mortgage Insurance and some types of local or state taxes.

A third option exists in between renting and owning a home; these are rent-to-own houses. This option offers some of the benefits of either renting or buying a house, but there are also drawbacks. Keep reading to learn if rent-to-own houses are a good option for you.

Rent-to-own houses have several good aspects, including the ability to try living in a home before buying it and the lack of need for a large down payment. It is not uncommon for owners to discover undesirable characteristics of a home or its neighborhood after moving in, which they were unable to detect before buying it; a rent-to-own property gives you the option to change your mind about buying it. When renting houses of this type, part of each monthly payment goes toward purchasing them. It also eliminates the need to obtain a mortgage from a bank to begin living in the home.

However, houses with a rent-to-own option do have some disadvantages and are sometimes fraudulent. A substantial deposit toward the home’s price must be paid when you start renting one; according to LawNY.org, this is generally 2.5-7 percent of the price and often cannot be refunded. It also indicates that the renter is usually required to pay for maintenance, unlike with most other rental properties. Thus, the renter may be putting at risk the cost of maintenance, the initial deposit, and the monthly payments. To some extent, the owner has incentive to evict even a good renter, whereas a traditional landlord or mortgage lender does not.

There is a serious potential for rent-to-own offers to have unfair or deceptive terms. A brochure on SCjustice.org warns that the home owner might unfairly evict the renter and keep all of the payments, and points out that the property owner’s bank may foreclose upon the property regardless of payments the renter is making. It recommends that potential rent-to-own customers ask a lawyer to examine all papers prior to signing them, and conduct a title search to ensure that the person offering the rent-to-own option is actually the property’s owner.

Basically, rent-to-own houses offer a few unique benefits and can be a good option for people in some types of financial situations; on the other hand, they have a greater overall cost than houses which are purchased initially, and aren’t as affordable to live in as homes which are being rented in a normal manner.

A non-status mortgage is a mortgage that is given to a person that doesn’t have proof of income or a previous mortgage history. Basically, the lending isn’t dependent on the income of the applicant; the applicant simply states they can afford to make the payments.

Most conventional mortgage lenders have a standard method that allows them to assess a potential borrowers income. However, there are certain instances where this method doesn’t work – a lottery winner for example. Occasionally it may be hard to guarantee income also if you work on a bonus structure or are a seasonal worker.

In order to get a non-status mortgage you’ll usually fall into one of the following groups: self-employed workers, contract workers, commission based employees or seasonal workers. If you do qualify for a non-status mortgage your interest rates on the mortgage will be much higher because your risk is also much higher. Therefore it’s better to get another type of mortgage if at all possible.

When you are considering to move to a new area, there are a number of steps which can be taken for finding information on a potential neighborhood online. Read on to learn where and how you can find this sort of information on the internet.

A good source of general information on a specific city or county is the QuickFacts section of the U.S. Census Bureau web site, at quickfacts.census.gov. Just select the correct state from the drop-down menu, then choose the county or city the potential neighborhood is located in from the drop-down menu. This provides a long list of information on the area, including the percentage of people in different age groups, income level of residents, average commuting time, and population density.

For potential neighborhoods with businesses like restaurants or motels in or near them, consider reading customer reviews of these on web sites like tripadvisor.com. This will give you a better idea of what sort of people they are likely to attract to the area and help you determine if living near them is of any benefit (either as a customer or potential employee). Try to find the hours of any businesses around the potential neighborhood, for a better idea of how late they are likely to produce additional traffic and noise.

A more neighborhood specific tool which provides a variety of information in a map-based format can be found on the Dept. of Housing and Urban Development web site. It is located at egis.hud.gov, under the “Map Your Community” link. It combines information from various government agencies on to a close-up roadmap of the neighborhood. When selected from the menu on the right, the map can be used for finding such items as toxic waste sites, areas prone to flooding, various building types, and pollution sources.

If the potential neighborhood is located near a college or university, finding information about the level of crime which occurs on the campus may be useful. Campus crime statistics for most educational institutions of this type can be found on the government Office of Postsecondary Education web site. Many colleges provide this information on their own web sites as well. Finding what percentage of the students commute there (rather than living in dorms) and checking when the earliest/latest courses begin will help clarify how much vehicle traffic there will be.

Following these tips should be helpful in finding more information about a potential neighborhood of residence, thus giving you a better understanding of the area’s residents, traffic, noise, economic conditions, crime, and environment.

When someone applies for a mortgage, lenders usually look for three qualifications which reduce the risk of issuing a mortgage loan. These include the borrower’s ability to repay debts in the past, his or her potential to repay them in the future, and the value of the collateral. Here are some more details on each of these mortgage qualifications and how lenders determine them:

A mortgage lender will look for any bankruptcies or foreclosures in the borrower’s past as part of its estimation of how well a borrower has previously repaid debts. It will also look at the borrower’s history of paying bills on time or late, based upon his or her credit record. The lender is likely to reject the application or charge a higher interest rate if the borrower has not paid or has been very late in repaying many debts. Only the repayment of debts to businesses which provide information to the credit reporting agencies will have an effect on this.

The lender will also look at the potential borrower’s ability to make mortgage payments on time in the future (if the loan is approved). To determine this, it will take into account the level of income (usually from tax returns), along with the apparent stability of that income. The down payment amount also has an impact on this qualification, as a larger down payment decreases the size of monthly payments and reduces the amount of money the lender has to risk losing.

Additionally, the mortgage lender will look for the value and security of the collateral. The collateral consists of the home or business and the land it is located on. The lender wants to know that it will be able to sell the collateral for a sufficient amount of money if it has to foreclose upon it, and will use an appraisal to determine how much it is worth. Its value must also be secure; if the home or business is located in an area where a natural disaster is likely to occur, the mortgage lender will look to be assured that the owner can and will insure it.

Because of the current subprime mortgage crisis, lenders have become more wary of issuing loans to borrowers who do not thoroughly meet all three of these qualifications. However, it is thought that recent moves by the Federal Reserve may encourage somewhat less restrictive lending.

There are a few different ways to find free mortgage quotes for a home or business you plan to purchase. Such quotes go beyond just listing different rates and mortgage types that are available, and provide a clearer estimation of the actual cost. Read on to learn more about how to find mortgage quotes…

1. Local Bank Website: Many local banks and credit unions have forms on their websites for requesting a free mortgage quote. These quotes are often instant, and provide information such as estimated closing costs and monthly payments. Some of the questions which usually have to be answered include the mortgage amount, the type of property, and the county or city it is located in. Banks generally do not require registration, personal information, or membership to use this feature. This is arguably the quickest and most convenient method of the three listed here, although it will become more time-consuming as you have to find the web sites and quote features of more individual banks.

2. Quotes Via Telephone: If a particular lending institution will not give an online mortgage quote, its quote tool is incompatible with your web browser, or it is unable to provide an online quote for the type of purchase you are considering, quotes can be requested by telephone instead. The “Banks” category of a telephone book’s “yellow pages” is useful to find a list of local and national banks with branches in the area, along with their phone numbers. Before calling, be sure to determine how large a down payment you can make, and have a pen and paper ready. A disadvantage of this method to find mortgage quotes is that you will have to call during business hours, which can be inconvenient if you are away from home during the day. Many national and local banks offer a toll-free number to use for this purpose.

3. Comparison Services: A number of web-based services allow users to automatically find and compare mortgage offerings from multiple lending institutions. These include lendingtree.com, nextag.com, and others. A downside of many such websites is that they demand more personal information before providing mortgage quotes, and may request an e-mail address or require registration. One exception is the “Compare Rates” feature on bankrate.com, which provides mortgage rate quotes from local and national banks, without registration or personal details. You will not always find the best rates by using these services, so it is a good idea to find quotes using the above-mentioned techniques as well.

In addition to this web site, there are a number of methods for staying up-to-date with the current mortgage market. These include certain television programs, magazines, newspapers, and other sources of information. Read on for more details on staying up-to-date with the mortgage market…

Various printed publications specifically cover the mortgage market and related issues, including National Mortgage Broker Magazine, The Real Estate Professional, National Mortgage News, Affordable Housing Finance, and Mortgage Banking Magazine. Newspapers which focus on financial coverage, such as the Wall Street Journal, often report on this market as well. The same is true for business oriented magazines like BusinessWeek.

Financial news television networks like CNBC and Bloomberg are useful for staying up-to-date on the mortgage market. If you don’t have cable or satellite TV, you can watch financial news programs like “Nightly Business Report” on the broadcast networks. Radio stations which continuously broadcast financial news, like AM-1130 in New York, also provide up-to-date information on this market. Television and radio reports on the market are likely to be more up-to-date than those in newspapers or magazines.

Some subscription-based web sites offer frequently-updated mortgage market coverage. MortgageDaily.com is an example of this; it provides a wide variety of mortgage market news articles, but charges about $12/month (varies depending upon the amount of months prepaid) for access. Many print publications also include access to additional online material (at their web sites) with paid subscriptions to their magazines or newspapers. Remember to add useful news web sites on this subject to your browser’s “Favorites” list or subscribe to their RSS feeds, if these are available.

A number of print and e-mail newsletters on the mortgage market also exist. Some of these are free, while others require a monthly subscription fee. Be sure to only give your e-mail address or other personal information to reputable web sites. If you aren’t able to receive an e-mail newsletter after subscribing to it, make sure you don’t have any “spam” filters which are mistakenly blocking it. This is a convenient way of staying up-to-date without having to go beyond your e-mail or mail box.

The best method depends upon your internet connection, TV reception or channel coverage, and reading preference. Using one or more of the above-mentioned sources of information, you’ll be staying up-to-date with the latest information on mortgage trends, relevant government policy changes, rates, major bank stocks, and other related news.

The number of mortgage lenders in the United States of America is far too great to list all of them here. However, several nationwide lending institutions stand out from the rest in terms of how much loan funding they provide. Some of them are the result of mergers or acquisitions combining multiple formerly-separate companies. The following is an alphabetically listed overview of the major lenders based in America:

BANK OF AMERICA: In addition to being a major mortgage lender, it offers other types of loans, various kinds of insurance, and checking/savings accounts. Wikipedia.org indicates that Bank of America is larger than any other commercial bank in the U.S., is based in North Carolina, and has acquired several other major lenders in recent years.

CITIGROUP: Also known as “Citi”, Citigroup Inc. provides home mortgages through its CitiMortgage brand. Residential loan options include adjustable (5-year or 1-year) and fixed (30-year or 15-year) rates. It also offers the Diners Club credit card, checking/savings accounts, and a wide variety of other services listed on its web site.

COUNTRYWIDE FINANCIAL: This major lender has been heavily impacted by the subprime mortgage crisis, with many layoffs occurring in 2007. According to their web site, Countrywide is the top lender in America, and was founded in 1969; its IPO occurred only a half year later. Its money market accounts and CDs are less well-known than its mortgage offerings, which are the company’s primary function.

JPMORGAN CHASE: The web site of JPMorgan Chase & Co. indicates that it is based in New York and has over 170 thousand employees. The corporation’s home mortgage services are offered through its Chase brand name. According to wikipedia.org, JPMorgan Chase was formed after the Chemical Banking Corporation’s acquisition of major banks Chase Manhattan and J.P. Morgan.

WELLS FARGO: A press release issued by MortgageDaily.com in January, 2008 indicated that Wells Fargo funded the second largest amount of mortgages during the previous year; more than all other lenders except Countrywide. According to its web site, Wells Fargo is based in San Francisco and has over 5,900 locations throughout America and other regions. It also offers credit cards, checking accounts, and additional services.

Other major lenders in America include Washington Mutual, Sovereign Bank, and Wachovia. Fannie Mae and Freddie Mac are of great significance to this sector, but do not provide loans directly to home owners. Many smaller lenders are considered to have a major role locally or regionally. Although the above-mentioned lenders are based in America, many of them have a worldwide presence as well.