Eight Important Things to Know about a Mortgage

So, you are ready to buy a home and want to understand basic points about a mortgage? Here is a simplified guide on important things you need to know regarding mortgage loans. For the full description of these terms, go to my source, The Smart Borrower Center on Lending Tree's website at lendingtree.com. Look under "Tools to help you borrow better."

Compare these important factors when choosing a mortgage:
1. Principal - The amount you are borrowing to buy your home. When you shop for mortgages, lending institutions will tell you how much they are willing to lend and help you determine what you can afford.
2. Type of mortgage - Usually fixed or adjustable rate mortgages. With a fixed rate, you usually pay the same amount each month for the life of the loan. This can mean less risk but a little higher interest rate. An adjustable rate mortgage (ARM) may provide a lower rate but change with the market, which can increase your risk and payment amount. Discuss options with your lender.
3. Interest rate - Consider the annual percentage rate (APR) which takes into account the interest rate as well as the other costs in the loan. Review with the lender how your interest rate will change if you choose an ARM.
4. Monthly payment - Think about the amount you can comfortably afford to pay each month for your mortgage. The lowest interest is not always the best deal. You will want to reduce your principal with each payment so you can build equity and use that money for a down payment when you move to a new home.
5. Mortgage term - the number of years your loan will be active. Shorter-term loans carry higher monthly payments, and longer-term loans carry lower monthly payments. The term of the mortgage can be set based on what you can afford to pay each month and how soon you wish to pay off your loan.
6. Discount points - These are offered by some lenders as a way to lower the interest rate. One point equals one percent. For each point, The Smart Borrower Center estimates yoy can lower your interest rate 0.25 percent. Think about how long you plan to keep your home when deciding what makes sense about paying discount points.
7. Lock-ins - A specific interest rate and possible discount points quoted by a lender. The market can change while you are looking for a home. Locking in the interest rate may help protect you against rising interest rates.
8. Closing costs - Fees charged when closing mortgage deals. This can run up thousands of dollars on what you must bring to the table at closing. Be sure to get a good faith estimate from your lender so there are no hidden costs.

Best wishes as you shop around for a good lender, good interest rates, and the best match for your individual needs. I can give you the names of reputable lenders in the Chattanooga, TN area who will help you find what you pre-quality for in a loan.

30-Year Mortgage Rates Hit Record Low

According to Realtor.org (source USA Today), the average interest rate for a 30-year mortgage is at the lowest level since Freddie Mac began collecting its weekly survey in 1971. Rates have now declined to 4.71 percent the week of 12/4/09 from 4.78 percent the week prior. Fifteen year loan rates also fell from 4.29 percent to 4.27 percent, but homeowners should remember they face higher credit standards from lenders now.

During Thanksgiving week, the Mortgage Bankers Association's index of application demands rose 2.1 percent on a seasonally adjusted basis, which indicates consumers are considering taking advantage of mortgage rates at an historic low.

If you are considering buying a home, the buyer's market continues with many homes competitively priced. Around one-third of homes now selling are priced below what the owner paid. Interest rates are comparatively low for qualifying buyers. Take advantage of the extended tax credit and either buy your first home or move up to a nicer home at a competitive rate.

Call me if I can assist you with buying or selling a home. I am licensed in GA and TN and will assertively represent your interests in the desirable Greater Chattanooga real estate market