A reader shared this link with me and I absolutely had to share it with you guys. 

Joe Consumer reveals an interview with a mortgage broker wherein the mortgage broker spills the beans.  You get the full inside scoop of how they overcharge, make up fees, inflate rates, bait and switch, or just overall stick it to you simply because you’ve been too annoying with your questions.

Just when you thought these guys were on your side — you really need to arm yourself with the ways to protect yourself against such fraud.  Check out the article for yourself and be a better informed, more aware consumer of mortgage broker services.

There is a non-traditional type of home mortgage loan being marketed to consumers known as an interest only home mortgage loan. Sometimes called a balloon mortgage, an interest only mortgage is exactly what the name implies. For the term of the mortgage, the borrower is paying only the interest that is due on the home mortgage loan and is not paying anything back towards the original loan amount.

At the end of the mortgage term, the balance due on the loan will be equal to the full amount that was originally borrowed. This balance will be due, in full, when the mortgage loan term ends.

Why an Interest Only Mortgage Loan Sounds Attractive

Obviously, we would all like our monthly mortgage payments to be as low as possible. With an interest only home mortgage loan, the borrower is keeping his monthly payments to a minimal by paying only the interest that was accrued on the loan in the last thirty days since his last payment. Therefore, this type of mortgage is often marketed to the consumer as a tool which allows the borrower to “buy more of a home” than they would be able to afford with a traditional home mortgage loan.

To illustrate this let’s take a look at the purchase of a $150,000 home. Buying this home with a traditional 30 year fixed rate mortgage with a seven percent interest rate would give you monthly mortgage payments of approximately $1,000. On the other hand, if the consumer chooses an interest only 30 year fixed rate mortgage at the same seven percent interest rate, monthly mortgage payments would only be $695. This type of mortgage would be attractive to the consumer who can afford $700 each month, but can not afford $1,000.

For the most part; however, financial advisors will tell you it is best not to choose this type of loan except in rare circumstances. It is generally accepted that an interest only home mortgage loan is an alright choice if you don’t intend to hold the loan for more than a year or two and you are being offered a great interest rate.

When an Interest Only Mortgage Loan Isn’t Good

In general, it’s best not to choose an interest only option for your home mortgage loan. Why? The largest problem with this type of financing is that the home owner is not building any equity into his home with an interest only mortgage. The home will still be considered “fully financed” even after the mortgage term comes to an end.

There are also other reasons that an interest only mortgage is not usually your best choice.

If you buy the home during a high market and the value of the house drops or remains the same during the term of the mortgage, it is possible that even after selling the home, you will still have money unpaid from your interest only mortgage.

Furthermore, if the homeowner does not wish to sell the home at the end of the mortgage term, then he will have to have another plan in place for paying off the balance of the mortgage due.

As you can see, there are times when this type of loan would be wise-such as in investment properties-but if you are buying a home and planning on living in it for some time, it’s probably not the loan for you!

As interest rates drop, home owners and investors alike pay attention. As a home owner, you know your monthly mortgage payment, you know your interest rate, and you remember, all too well, the closing costs and miscellaneous expenses involved with securing your mortgage.  Yet, when surrounded by market conditions that lead to declining interest rates, we must all weigh the benefits with the costs and how those decreasing interest rates affect us.

The sluggish economic conditions that may surround declining interest rates are of concern, in that job security or portfolio investment returns may be less certain. Yet, when refinancing mortgages, if the upfront costs of mortgage refinance do not out way the midterm benefits of money saved each month due to lower mortgage payments,  then by all means read further and explore if a mortgage refinance will increase your cash flow by reducing your mortgage payments and freeing up more disposable income.

Many financial institutions recommend, as a general rule of thumb, that if interest rates fall 2 or more percentage points below your existing home mortgage, it is worth researching further and consider mortgage refinance. However, this is not recommended and readers are encouraged to see that more as a financial urban myth of the days of old. Today, there are many different types of mortgage refinance loans; middle income families have much more complex investment portfolios today, and have become financially savvy by being creative and juggling a number of different types of loans and cash-producing investments, both short term and long term. Also, unfortunately, many have become victim to credit card lending and practices that have escalated interest expense for an average of 8-10% for decades now.

These are the critical factors regarding refinancing home loans for you to consider:
1. Current Interest Rage
2. Interest Rate of Your Mortgage
3. How Many Years are Left on Your Existing Mortgage?
4. How Long Do You Plan to Keep the New Mortgage?
5. Explore the Different Ways Banks are Competing to Lower Closing Costs
6. Does Your Current Policy Have a Prepayment Penalty?

Once you’ve thought through these basic concepts and jotted down a few notes for yourself about refinancing your home mortgage, you will have a relatively clear notion of how this will affect your cash flow and if it will generate additional cash flow from the monthly savings. At this point, an online financial or mortgage calculator might be helpful to run a few financial scenarios and speak with loan officer about refinancing.

Note: If the value of your currency is decreasing at a historically unusual rate as compared to benchmark currencies, consider factoring in the current and future value of money. A calculator may walk you through this or you may ask your financial advisor to go over it with you.

Although a nice mansion on the beach you found for sale looks just like your dream home, you should probably take a look at the loan you will need to pay for this. In Florida, just about any individual can get a home loan. Someone with bad credit, or even no credit, is a valid candidate for getting a home loan. When buying a home in Florida, prices can be high.

Like any other normal person, you probably do not have an unlimited amount of money in your bank account. When you are planning to get a Florida home loan and you have a set price range, it may not be a bad idea to look at loans before you find a house you fall in love with. By finding a loan first, you will be set on looking at houses that are in your price range, and won’t end up buying something that will cause you financial problems in the end.

Throughout the process of getting your Florida home loan you will learn that each bank or lender has different plans for you. It will be best for you in the long run if you go with the lender whose offer seems the most reasonable. Which one will you benefit the most in the long run? If I choose this one, will I have the money to pay it off in the future?

There are several things to keep in mind when getting your loan.

First, the interest rate. If getting your new house and home loan all depends on what you can afford financially, then getting a loan with the lowest interest rate will be best for you. Remember the interest rate is the amount you pay back for borrowing the money to pay for your new home. You want to make sure you can pay back this money in the end to stay away from any future problems.

Second, make sure you understand the terms of the loan. Simply stated, the terms determine how long the loan is for. To state the obvious, longer terms means more money you are paying because of interest. On the other hand, if your loan lasting only a few years, your monthly payments are going to be much higher. Once again, make sure you know what you will be able to afford.

Finally, realize all the fees that come along with the loan. Although different lenders will offer higher or lower rates, you will always have to pay origination and closing fees.

When you are ready to get your new home make sure to find the lender who will offer you the best deal. While you may find a house you really like, it is a good idea to get different rates from more than one lender so you know you are getting the best deal in the end. By getting the most reasonable price on the market, you are only helping yourself in the long run.

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There are numerous programs and deals available for Florida mortgages. How do you find the right one for you? Here are some guidelines to help you get started.

Remember the three C’s

How do banks and brokers rate mortgages? It is quite simple. Just remember this equation: three C’s equals LTV (Loan to Value). The three C’s stand for collateral, capacity and credit. Collateral is the property that the borrower pledges to the lender to secure a loan and is subject to seizure if requirements and terms are not met. Capacity is the borrower’s ability to pay and it is determined by income or employment. And lastly, credit is the person’s capacity to borrow and his credit standing (whether he has a good credit history or not). If all of the 3 C’s are excellent, then the borrower will have no problem obtaining a loan. If one or two of the requirements is unsatisfactory, then certain conditions and adjustments will be made. This could mean bumps in interest rates.

Get oriented

The Internet is a rich resource for obtaining information on Florida mortgages. You could orient yourself on the available programs and try to see what is out there and get a feel of the marketplace. Search the Internet for good deals by making your key words more specific like “Florida mortgage programs” or “Florida mortgage rates.” Try to compare rates to see what the market standard is.

Get a mortgage broker

Getting oriented on getting a mortgage Florida is essential for the next advice–getting a mortgage broker. This is so because you would want to ask the right questions from your prospective broker so that you can be sure you are on the right track and that your broker is looking out for your best interest. Once oriented, you would know how to ask why a certain program is more advantageous than another. You could also ask why a certain program is not so beneficial for you. This way you get the best possible option. A mortgage broker will also help you understand everything about the mortgage business. Also, the best things about getting a broker is getting the inside tips he or she knows about the marketplace that no one else knows about. This is the information that only seasoned and experienced mortgage brokers know about. So it is important to choose your broker well. Just remember to be clear on all the fees required by your broker before hiring.

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