Can you get special assistance or qualify for a low-cost mortgage New Jersey based on the type of job you have? Does working as a teacher, nurse, police officer, firefighter or other career in public service let you qualify for special mortgage programs not available to other borrowers?
Well yes – and no. In reality, there are almost no mortgage programs specifically targeted at certain professions that aren’t available to the general public. But that’s not to say there aren’t any – or that there aren’t certain advantages that teachers, cops and other have when shopping for a mortgage.
A search on the Internet will easily turn up tons of special mortgage offers targeted at these professions. Searching for “mortgages for teachers” or “mortgages for nurses” will turn up page after page of mortgage promotions directed at these professions.
Stable employment = good loan risk
However, almost none of these are actually special mortgage programs New Jersey designed for those professions. Instead, teachers, nurses, firefighter, police, professors, state employees and others in institutional careers share certain characteristics that make them attractive customers for mortgage companies – so many of them design special appeals aimed at people in those jobs.
What those careers share are stable employment prospects and income. Unlike salespeople, factory workers, managers or others in the private sector, people in institutional jobs tend to be at very low risk of being laid off or fired – and often stay with the same employer for many years. Their incomes tend to be stable as well, unlike, for example, a salesperson or small business owner.
All this makes them very safe candidates for a mortgage loan New Jersey. And that’s what can enable you to get attractive terms on a mortgage, rather than a special program aimed at your profession.
HUD Good Neighbor Program
One major exception to this rule is HUD’s (U.S. Department of Housing and Urban Development) Good Neighbor Next Door Program. This program does offer huge discounts for K-12 teachers, law enforcement personnel, firefighters and emergency medical technicians who purchase HUD properties in specific areas.
The incentives are considerable. The program allows you to purchase a home at 50 percent off the appraised value with only a $100 down payment. The catch is that the property has to be a foreclosed home reclaimed by HUD and located in a “designated revitalization area.” These areas tend to be less desirable than other areas, with elevated rates of vacant properties and crime, but are considered potentially attractive to young people looking for areas that may rebound.
Showing posts with label adjustable rate mortgages. Show all posts
Showing posts with label adjustable rate mortgages. Show all posts
Wednesday, April 14, 2010
Saturday, April 10, 2010
The Value of Your Mortgage
If you are like most homeowners, you are focused -for good reason - on finding the best possible rate for your mortgage. Your mortgage broker Reevytown can offer you the best range of rate options and terms. If a mortgage broker can get you one per cent off the posted rate, that could translate into more than $13,000 in interest per $100,000 borrowed over a 25-year amortization schedule. If, however, you believe that most mortgage rates are basically the same from one institution to the next, then consider the fact that even an eighth of a point difference in the rate can offer significant savings over the duration of your mortgage.
But it's also important to look beyond the rate. There are other ways to find savings in your mortgage. Your mortgage broker Reevytown is up-to-date on market trends and new opportunities... as well as some of the tried-and-true ways to save money in a mortgage.
Do you get an annual bonus in your job? You may want to use that bonus to pay down the principal of your mortgage. If you pursue this strategy consistently over the life of your mortgage, you could save thousands of dollars in interest by paying your mortgage off sooner.
Are you paid bi-weekly or bi-monthly? Consider a change from the usual monthly mortgage payment. Set up your mortgage payment schedule to coincide with your pay period. Again, you can shave years off your mortgage, and enjoy thousands of dollars in savings.
In the coming weeks, we'll look at some of these savings opportunities in more detail. In the meantime, consider the old penny proverb again. How much is your time worth? Time savings is one of the key, unexpected benefits that clients say they have enjoyed when they choose to work with a mortgage broker Reevytown. Above all, a mortgage broker is an expert in customer service, and that means that your broker looks after every detail of your mortgage research and negotiations on your behalf.
But it's also important to look beyond the rate. There are other ways to find savings in your mortgage. Your mortgage broker Reevytown is up-to-date on market trends and new opportunities... as well as some of the tried-and-true ways to save money in a mortgage.
Do you get an annual bonus in your job? You may want to use that bonus to pay down the principal of your mortgage. If you pursue this strategy consistently over the life of your mortgage, you could save thousands of dollars in interest by paying your mortgage off sooner.
Are you paid bi-weekly or bi-monthly? Consider a change from the usual monthly mortgage payment. Set up your mortgage payment schedule to coincide with your pay period. Again, you can shave years off your mortgage, and enjoy thousands of dollars in savings.
In the coming weeks, we'll look at some of these savings opportunities in more detail. In the meantime, consider the old penny proverb again. How much is your time worth? Time savings is one of the key, unexpected benefits that clients say they have enjoyed when they choose to work with a mortgage broker Reevytown. Above all, a mortgage broker is an expert in customer service, and that means that your broker looks after every detail of your mortgage research and negotiations on your behalf.
Friday, March 19, 2010
Different Kinds of Mortgages
Below we will discuss the different types of mortgage loans and some key points of each one. Before we begin that, we must address rates, a dynamic that transcends all different types of mortgage loans and affects them immensely.
Fixed Mortgages New Jersey
Over approximately the past four years, the average of 30-year fixed rate mortgage loans has remained below 6.5 percent. While Federal Reserve short term interest rate increases do have an affect on fixed mortgage rates, yields on long term government bonds and fixed rate mortgages are closely tied. Sub 6.5 percent rates will become a financial endangered species as rates move into the upper 6s in the second half of 2006 approaching the ten-year average of 6.9 percent.
However, borrowers are still favoring fixed rates mortgages New Jersey over adjustable rate mortgages because the difference in initial rates is not worth the risk; current 30-year fixed rate averages 6.34 percent, while a 5/1 ARM is 6.08 percent and a one-year ARM is 5.73 percent. You might be asking yourself, Why doesn't everybody have fixed-rate mortgage loans, why take the chance? Some people who can handle rate fluctuations and are willing to play against the odds might see their rates go down if the Federal Reserve does have to lower short term interest rates to stimulate investment even though that does not at all seem likely in the immediate future.
Adjustable Rates
The fluctuations of Adjustable Rate Mortgage loans New Jersey (ARM) are inexorably linked to short-term interest rates determined by the Federal Reserve. Since Ben Bernanke's takeover as Fed chairman, he continued to move short term interest rates upward to thwart possible inflation; most experts state that he will definitely error on the side of caution - raising rates higher in the foreseeable future. Borrowers already in an ARM mortgage should be bracing for a jump in their payments that in many cases will be quite substantial. The one year Treasury, a common index for adjustable rate mortgages, may top five percent by the time the Fed is done raising interest rates, add on the margin of 2.5 percentage points and many ARM borrowers will be looking at a rate of 7.5 percent. Depending on your loan balance and previous interest rate one simple adjustment can make your monthly payments much more of a burden.
Fixed Mortgages New Jersey
Over approximately the past four years, the average of 30-year fixed rate mortgage loans has remained below 6.5 percent. While Federal Reserve short term interest rate increases do have an affect on fixed mortgage rates, yields on long term government bonds and fixed rate mortgages are closely tied. Sub 6.5 percent rates will become a financial endangered species as rates move into the upper 6s in the second half of 2006 approaching the ten-year average of 6.9 percent.
However, borrowers are still favoring fixed rates mortgages New Jersey over adjustable rate mortgages because the difference in initial rates is not worth the risk; current 30-year fixed rate averages 6.34 percent, while a 5/1 ARM is 6.08 percent and a one-year ARM is 5.73 percent. You might be asking yourself, Why doesn't everybody have fixed-rate mortgage loans, why take the chance? Some people who can handle rate fluctuations and are willing to play against the odds might see their rates go down if the Federal Reserve does have to lower short term interest rates to stimulate investment even though that does not at all seem likely in the immediate future.
Adjustable Rates
The fluctuations of Adjustable Rate Mortgage loans New Jersey (ARM) are inexorably linked to short-term interest rates determined by the Federal Reserve. Since Ben Bernanke's takeover as Fed chairman, he continued to move short term interest rates upward to thwart possible inflation; most experts state that he will definitely error on the side of caution - raising rates higher in the foreseeable future. Borrowers already in an ARM mortgage should be bracing for a jump in their payments that in many cases will be quite substantial. The one year Treasury, a common index for adjustable rate mortgages, may top five percent by the time the Fed is done raising interest rates, add on the margin of 2.5 percentage points and many ARM borrowers will be looking at a rate of 7.5 percent. Depending on your loan balance and previous interest rate one simple adjustment can make your monthly payments much more of a burden.
Mortgage Interest Rates
Mortgage interest rates New Jersey favorable to home buying are still available. Mortgage interest rates have moved higher than the sub-six percent levels that were available from 2003-2005, however, the current 30-year 6.34 percent fixed mortgage average is still well below the eight percent average over the last 20 years. The most important characteristic of mortgage interest rates is whether they are fixed or adjustable.
Since July of 2002, the average 30-year fixed rate mortgage has remained below 6.5 percent. While Federal Reserve short term interest rate increases affect fixed mortgage rates other indicators are also crucial; yields on long term government bonds and fixed rate mortgages are closely linked. Demand for US government bonds and domestic inflation that weighs heavy on that demand must be examined. Low six percent mortgage interest rates New jersey will become a luxury of the past as rates move into the upper 6s in the second half of 2006 bound to revisit the ten-year average of 6.9 percent. Regardless, borrowers are still favoring fixed-rate mortgages over adjustable-rate mortgages because the difference in initial rates is not enticing; current 30-year fixed rate averages 6.34 percent, while a 5/1 ARM is 6.08 percent and a one-year ARM is 5.73 percent.
Adjustable Rates & the ARM
If you have an adjustable rate mortgage New Jersey (ARM) it might be smart to keep a close eye on interest rate movements in the market. ARMs bound to reset in 2007 with a hefty increase in their monthly mortgage payment may be an unpleasantly surprise some folks. Those people whose ARMs have already reset know that substantial increases in monthly mortgage payments can be burdensome to say the least. The one year Treasury, a common index for adjustable rate mortgages, may top five percent by the time the Federal Reserve is done raising interest rates, add on the margin of 2.5 percentage points and many ARM borrowers will be looking at a rate of 7.5 percent. Households that can withstand an increase in their monthly mortgage payment may opt for an ARM in hopes of seeing mortgage interest rates fall if the Federal Reserve does have to lower short term interest rates in the further off future. For people on a more fixed income who have or are thinking about an adjustable rate mortgage beware that short term interest rates, which are on an upward trend, can drastically affect a person's mortgage debt load.
Since July of 2002, the average 30-year fixed rate mortgage has remained below 6.5 percent. While Federal Reserve short term interest rate increases affect fixed mortgage rates other indicators are also crucial; yields on long term government bonds and fixed rate mortgages are closely linked. Demand for US government bonds and domestic inflation that weighs heavy on that demand must be examined. Low six percent mortgage interest rates New jersey will become a luxury of the past as rates move into the upper 6s in the second half of 2006 bound to revisit the ten-year average of 6.9 percent. Regardless, borrowers are still favoring fixed-rate mortgages over adjustable-rate mortgages because the difference in initial rates is not enticing; current 30-year fixed rate averages 6.34 percent, while a 5/1 ARM is 6.08 percent and a one-year ARM is 5.73 percent.
Adjustable Rates & the ARM
If you have an adjustable rate mortgage New Jersey (ARM) it might be smart to keep a close eye on interest rate movements in the market. ARMs bound to reset in 2007 with a hefty increase in their monthly mortgage payment may be an unpleasantly surprise some folks. Those people whose ARMs have already reset know that substantial increases in monthly mortgage payments can be burdensome to say the least. The one year Treasury, a common index for adjustable rate mortgages, may top five percent by the time the Federal Reserve is done raising interest rates, add on the margin of 2.5 percentage points and many ARM borrowers will be looking at a rate of 7.5 percent. Households that can withstand an increase in their monthly mortgage payment may opt for an ARM in hopes of seeing mortgage interest rates fall if the Federal Reserve does have to lower short term interest rates in the further off future. For people on a more fixed income who have or are thinking about an adjustable rate mortgage beware that short term interest rates, which are on an upward trend, can drastically affect a person's mortgage debt load.
Friday, March 5, 2010
ARM Resets
If you’ve got an adjustable rate mortgage (ARM), you may be feeling some pressure to refinance now before your rate resets. However, for some borrowers, waiting may not be such a bad idea.
Many people assume that your rate automatically increases when your ARM resets. But that’s not the case. It’s possible that your rate can actually go decrease after a reset, particularly when prevailing rates are low, such as they are now.
When your ARM resets, your new interest rate is based on a formula tied to some index representing prevailing market conditions. In most cases, it will be something like the Cost of Funds Index (COFI), London Interbank Offered Rate (LIBOR) or a Treasury-based index like the Constant Maturity Treasury (CMT). Your new rate is the index rate plus a fixed adjustment (called the margin), such as 2.5 or 3 percent, which is determined at the time you take out the loan.
Generally, the index rate plus the fixed adjustment will produce a new interest rate that’s somewhat higher than the initial interest rate you’d pay on a new ARM. But if market rates have declined since you first took out the mortgage, your rate could reset lower than what you were paying – from 6 percent to 4 percent, for example.
Finding out what will happen with your own mortgage is simple. Get out your mortgage documents and find out what index your reset will be based on and what your margin adjustment will be. Look up what the current rate on your index is, add the margin, and you’ll have what your new rate would be if you refinance today (the maximum increases or decrease is limited to a cap specified in your mortgage).
Refinancing to lock in rates
But even if you’d get a lower rate by letting your ARM reset, refinancing may still be a good idea. Rates are unusually low right now, and ARMs typically reset again each year after the initial reset. So if rates increase over the next few years, you might wish you’d locked down a long-term rate now while rates are low. And if your ARM isn’t due to reset for six months to a year, rates might already be higher by the time it resets.
Allowing your ARM to reset instead of refinancing can make sense for a variety of other reasons as well. Maybe you think you might be moving within the next two or three years and it wouldn’t be worth it to pay several thousand dollars to refinance for that short a time. Or your home value has dropped and you want to see the market stabilize before refinancing. Or you need additional equity to qualify for the best mortgage rates, so you need to pay down additional principal before refinancing.
Of course, if you have an option or Alt-A ARM where you’re going to need to make increased principal payments once your ARM resets, you’ll probably want to go ahead and refinance if possible. But that may be difficult, as many homeowners with those types of loans have not accumulated enough home equity to qualify for a refinance, particularly given the steep declines in home values in recent years.
Many people assume that your rate automatically increases when your ARM resets. But that’s not the case. It’s possible that your rate can actually go decrease after a reset, particularly when prevailing rates are low, such as they are now.
When your ARM resets, your new interest rate is based on a formula tied to some index representing prevailing market conditions. In most cases, it will be something like the Cost of Funds Index (COFI), London Interbank Offered Rate (LIBOR) or a Treasury-based index like the Constant Maturity Treasury (CMT). Your new rate is the index rate plus a fixed adjustment (called the margin), such as 2.5 or 3 percent, which is determined at the time you take out the loan.
Generally, the index rate plus the fixed adjustment will produce a new interest rate that’s somewhat higher than the initial interest rate you’d pay on a new ARM. But if market rates have declined since you first took out the mortgage, your rate could reset lower than what you were paying – from 6 percent to 4 percent, for example.
Finding out what will happen with your own mortgage is simple. Get out your mortgage documents and find out what index your reset will be based on and what your margin adjustment will be. Look up what the current rate on your index is, add the margin, and you’ll have what your new rate would be if you refinance today (the maximum increases or decrease is limited to a cap specified in your mortgage).
Refinancing to lock in rates
But even if you’d get a lower rate by letting your ARM reset, refinancing may still be a good idea. Rates are unusually low right now, and ARMs typically reset again each year after the initial reset. So if rates increase over the next few years, you might wish you’d locked down a long-term rate now while rates are low. And if your ARM isn’t due to reset for six months to a year, rates might already be higher by the time it resets.
Allowing your ARM to reset instead of refinancing can make sense for a variety of other reasons as well. Maybe you think you might be moving within the next two or three years and it wouldn’t be worth it to pay several thousand dollars to refinance for that short a time. Or your home value has dropped and you want to see the market stabilize before refinancing. Or you need additional equity to qualify for the best mortgage rates, so you need to pay down additional principal before refinancing.
Of course, if you have an option or Alt-A ARM where you’re going to need to make increased principal payments once your ARM resets, you’ll probably want to go ahead and refinance if possible. But that may be difficult, as many homeowners with those types of loans have not accumulated enough home equity to qualify for a refinance, particularly given the steep declines in home values in recent years.
Thursday, November 19, 2009
Adjustable Rate Mortgages (ARM)
How to Decide if an ARM Is Right for YouAn adjustable rate mortgage, called an ARM for short, is a mortgage with an interest rate that is linked to an economic index. The interest rate, and your payments, are periodically adjusted up or down as the index changes.
If my payments can go up, why should I consider an ARM?
The initial interest rate for an ARM is lower than that of a fixed rate mortgage, where the interest rate remains the same during the life of the loan. A lower rate means lower payments, which might help you qualify for a larger loan.
How long do you plan to own the house? The possibility of rate increases isn't as much of a factor if you plan to sell the home within a few years.
Do you expect your income to increase? If so, the extra funds might cover the higher payments that result from rate increases.
Some ARMs can be converted to a fixed-rate mortgage. However, conversion fees could be high enough to take away all of the savings you saw with the initial lower rate.
Center State Mortgage is your #1 source for all your adjustable rate mortgage needs in Straten Island and New Jersey! You will find the lowest interest rates and the best brokers to help you get your home loan! Choose Center State Mortgage for all your home loan and mortgage needs!
Subscribe to:
Posts (Atom)
