Avoid Extra High Mortgage Financing Costs

While it is true that real estate property buyers and owners looking to refinance their mortgages want to avoid extra high financing costs, the question of how to avoid such costs and what action(s) one must take in order to to so. What costs are considered extra high? And when might a borrower find him/herself in a position to be chartged extra high financing costs in today’s – years AFTER the subprime mortgage era – real estate mortgage market?

You may or may not know that there are ways for you to pay less while you own more, but taking yourself out of a certain high-cost category may be another thing entirely. If you know exactly how to work within the real estate arena, then you can probably find ways to avoid extra financing costs being tacked on to your purchase or refinance mortgage.

For example, if you’re an investor, finding the right area to focus on for your investment can be an important element in paying lower amounts without extra charges. If you’re not an investor but you’re seeking mortgage financing for the first time or you wish to re-mortgage a home you already own, the work you do BEFORE signing a mortgage application will determine what kind of mortgage you obtain and at what costs.

One of the easiest ways to avoid extra costs is to make sure that you make your monthly payments on time. Usually, mortgage companies will add extra charges (late charge penalties) if you don’t pay by the date they have set for you. Over a period of time – if you continue to pay late – this can result in hundreds of extra dollars in extra costs at one time. Staying ahead and consistent will help you to keep costs stable and lower. But this is one of the easily identified extra costs which is similarly easy to avoid paying.

What about other charges you can be hit with? Like pre-payment penalties, discount points, origination fees (which are also considered points by most attorneys), warehousing fees, a higher-than-prevailing interest rate at closing, a longer-than-necessary loan term (30 years when you qualify for 15 years can cost tens of thousands of dollars, if not hundreds of thousands), getting locked (or talked) into a FHA mortgage when a conventional mortgage would be a better, more affordable mortgage loan (FHA rates are usually 1/2 percent higher than conventional and you’ll have to pay the MIP which is non-existent on a 80% LTV conventional mortgage).

So of course, knowing the mortgage financing options that are available to you can certainly help you to avoid extra high financing costs. Some homes will require that you invest more, and some loan programs will also ask that you invest a higher amount out-of-pocket, but this is not necessarily a bad thing. For example, if you are able to make a down paymwent of 20 percent of the home selling price, you immediately eliminate any kind of mortgage insurance (MIP AND PMI), making your monthly payment lower by those amounts.

As long as you put youself in a position to determine the type of financing that would be beneficial to you in the short term, and even more importantly, the long term – which is where many mortgage borrowers fail to spend enough time planning for – the decisions you make will be informed and thus guide your selection of a mortgage loan that will best suit your situation.

Keep in mind that until you commit to a mortgage type, you always have the choice of looking into a different type of mortgage program. The type of program that you decide upon for your mortgages will make a huge difference in how much you pay overall and how much you pay each month.

The finances don’t stand alone when you are trying to avoid extra costs. The value of the property that you are investing in will also make a difference. The goal for any real estate investment is a high quality home for a lower price. You want to get as close to this goal as you can. Even if you pay on the home for a while, it will allow you to benefit later on with the investment that you have made. You will have the ability to have more equity returned to you when you decide to invest in something bigger and better.

Real estate financing can be beneficial if you approach it correctly. Understanding how all the parts of your loan, your home and your individual needs work together can help you to find the best deal. Over time, you will not only have a home to live in, but will also have an investment that can help you to make the most of what you have. That is, of course, if you are buying a home to live in and not one to buy and flip in a short period, in which case your approach to buying real estate has to be totally different although the goal of avoiding extra high costs is the same.

Searching The web When Planning To Refinance Your Home

If you are a homeowner who is planning to refinance your home, and want to get as much information about refinancing as you possibly can before making a commitment to any particular lender, then you’re in the right place. On the Web! I’d like to think that you will find all the information you’re going to need on this website, and as such, I welcome you to stay as long as you like and browse as many pages (they are a lot) as you wish in order to find what you need.

However, I know that you may need more than can be found on this blog-ste and may have to take advantage of all the Web has to offer and, ultimately, find the best information to suit your pre-refinance purposes. In that regard you will find the Web to be a very worthwhile resource. The Web is useful because it can give the you and other homeowners a wealth of information as well as the ability to compare different rates from different lenders at your convenience.

While these options have made refinancing a more convenient process there is more of a potential for danger (or risk if you like), due to the unknown elements that can sometimes render the Web unsafe for the unsuspecting. However, homeowners who exercise a small amount of common sense in using the Web for refinancing often find they can avoid any additional risk.

Comparison Shop at Your Convenience

One of the most popular advantages of doing research for refinancing online is the ability to comparison shop at the homeowner’s convenience. This is important because many homeowners work long hours and often find they are not able to meet with lenders during regular business hours because of job restraints. The Web, however, is open 24 hours a day and allows you to research their options, make important calculations or receive online quotes at any time of the day through the use of automated systems.

You can also take your time comparing the quotes you receive from these lenders online instead of feeling pressured to provide an immediate response. While some homeowners may have a little additional time available to them, they should realize there is a need to act relatively quickly to lock in estimates they receive as interest rates are often time sensitive in nature and cannot be guaranteed for long periods of time.

Use Only Reliable Resources

When you are using the Web to research refinancing options and obtain quotes, you should carefully consider your sources when making important decisions, because some decisions made in the area of real estate and mortgages – and refinance will be a new mortgage on your home – are the kind that stays with you for a very long time. Homeowners who stick with well known lenders and established websites will not likely encounter problems, but those who select a new lender may be surprised by the results they get in their attempt to refinance with with certain unknown lenders and brokers.

If you are unsure about the reliability of a particular resource or lender, it will be worth your time and effort to do additional research on the company. One of the easiest ways to do this is to consult the Better Business Bureau (BBB). The BBB may be able to provide the you with valuable information regarding the number of previous complaints against the company, if any.

A company which has a large number of unresolved complaints should be considered unreliable. However, you really should not assume that companies without a significant number of complaints are reputable either, unless of course, the company has been in existence for a number of years and is a member of the BBB.

Try to take care not to be fooled by fancy web designs and a lot of bells and whistles. A website which looks very professional is not necessarily a website that is accurate and informative. Many skilled website designers can create websites that are both attractive and professional looking. These website designers can also optimize a website for particular mortgage related keywords so users like you find the page easily when searching for these terms; But this does not necessarily make the website designer knowledgeable about the subject of refinancing.

Confirm Loan Terms in Person before Committing

While shopping for refinancing options online is certainly easy and convenient, you should consider completing the application process either in person or over the phone instead of relying on an automated system. While the Web is good for research purposes, many homeowners to take advantage of face to face meetings or telephone conferences to ask all of their relevant questions. Asking all of these questions will help the you to ensure that you fully understand the loan terms as well as all of your available options.

Completing the refinancing process in person or over the phone can also prevent or lessen possibility of being surprised by any elements of the mortgage refinance. This may include additional fees which are tacked on during the processing of the application, rates which are only available in certain situations or other elements of the refinancing agreement which could significantly impact your decision making process.

All-in-all you really have the best of both worlds with the Web for your research and information gathering during the pre-refinance period, as well as the face-to-face and telephone aspects when the time comes for you to get your questions answered and perhaps make a commitment to begin the application process with a particular lender you are comfortable with. You save loads of time using the Web for research, and you get the best deal you possibly can from a reputable and established lender.