Your Home Equity Line of Credit (HELOC) is the right choice for your remodeling and home improvement projects. It comes with the tools to manage your project with the least cost and maximum return. You can use your home equity line whenever you need. It’s like becoming your own banker. Simply advance the funds you need, when you need, as you need. Simply advance yourself funds by writing a check. You will pay interest only on the amount you borrow, which may be later deducted from your taxes if you qualify. Consult your tax advisor for information. You can use your home equity line of credit for any other home remodeling project that you can dream up. In fact, you can also use your HELOC for any other emergency, such as tuition payments or debt consolidation.
If you like the option of paying off your mortgage faster with a 15-year term but currently don’t have the finances to pay the higher monthly payment, consider pre-paying your mortgage a little each month. For example, if you start with a fixed rate 30-year term, you will be required to pay a minimum amount each month based on a 30-year amortization schedule. You can pay a little extra each month by sending in an amount that is over the minimum amount required. Note that your minimum payment amount will remain the same each month no matter how much you prepay.
This “pay a little extra” option allows you to budget your finances so that you can prepay when circumstances allow. One way to discipline yourself is by establishing a reoccurring online payment schedule through your financial institution. You can also use an outside bill paying service to make your payments. But there is a cost to such services. Be aware that some mortgage lenders penalize on prepayment. If a lender offers you a mortgage product that has a prepayment penalty, negotiate the terms to have that prepayment clause removed.
Mortgage interest rates are a competitive arena. Don’t be lured in by teaser rates by some loan brokers. Those low rates come attached with high fees, points (interest charges you pay upfront when you close on your loan) and ancillary costs related to the mortgage. Shopping for rates can be as easy as surfing the Internet. Many Web sites are dedicated to comparing rates, fees and loan products. You simply enter some basic information and you will get an array of loan options. Don’t overlook the place where you do your everyday banking. As an existing customer, you can fetch some attractive rates. And since you already have a financial track record there, it may be easier for you to qualify for a mortgage loan.
You should remember to shop for the lowest rate accompanied by the lowest fees. National mortgage lending companies who originate and loans and hold them in their own investment portfolios, typically offer the lowest rates and fees.
A fixed-rate assures you a predictable monthly payment for the term of your loan. Make sure any loan you are interested in does not have a prepayment penalty clause in the mortgage note. Without one, you are free to shop for a better rate if you decide it is a good time interest-rate-wise to refinance. Many homeowners like the benefits a fixed-rate mortgage provides : interest rate and monthly payment amounts are fixed for the life of the loan, homeowners can budget how much they need to set aside for the mortgage payment, Homeowners can easily understand how a fixed-rate mortgage works and Homeowners like the stability of a fixed-rate mortgage.
Fixed-rate conventional mortgages are the easiest mortgage loan for home buyers to understand as the monthly mortgage payment and interest rate amounts will never change. A fixed-rate mortgage is a loan where the interest rate on the mortgage note remains the same through the entire term of the loan. Fixed-rate mortgages are available in 15-, 20-, 25- and 30-year terms. The fixed-rate mortgage is perfect for home buyers who are on fixed incomes or who do not like to see adjustments made to their mortgage payment. Note that your total monthly payment may change if the escrow payment goes up or down depending on the change of your tax and insurance assessment. Some mortgage loans are available for shorter terms with a balloon, lump sum payment, at the end of the term. A newer type of mortgage is called a hybrid fixed-rate — combining fixed-rate and adjustable-rate mortgages (ARMs) — meaning the rate is not fixed for the entire term of the loan.
