Posts Tagged ‘home mortgage’

How much money should I spend on a home mortgage?

If you are wondering how much money should I spend on a home mortgage you should use an online detailed mortgage calculator to help guide you or talk to a lender before you start. Many lenders are happy to provide you with information up front even before you start looking at homes.

If you take the online approach, SmartMoney provides a great calculator to help you get an idea of how much house you can afford. The basic rule of thumb is between 28% and 33% of your gross monthly income. Be very careful when using online calculators because there are many factors involved that most don’t include.

However, with that said I personally think there are many other factors involved in how much you should spend on your home mortgage. I would personally take a more conservative approach and suggest staying under the 20% range. There are many factors involved in your personal finances that a lender won’t look into detail. My personal rate is around 15% and sometimes the budget runs tight with gymnastic class, dance lessons, rising fuel costs, eating out and the list grows.

Carefully consider all your expense before you sign on the line.

Should I Stop Paying My Mortgage?

A record number of foreclosures have hit the banks in the past couple of years and just when the banks start to see relief more foreclosures pile up everyday. Number 8 on the list of highest foreclosure rates in the United States is Michigan. Today I read an article from Michigan Mortgage Attorney . They ask the question “Should I stop Paying my mortgage?”

It’s very tempting to stop paying your mortgage especially if you are in the situation that many Michigan home owners are in today. House values in the United States have plummeted in the past two years. Many home owners owe much more than their house is actually worth and there is no relief in the housing value market in sight. Many home owners owe 2 or 3 times more than their house is actually worth. It seems like they are fighting a losing battle with their mortgage. Should they just walk away?

I agree with MichiganMortgageAttorney.com in the fact that I don’t they it’s the right thing to do. If you can pay for your mortgage then you have an obligation to fulfil the promise you made to the bank or mortgage company. When you purchased your home you signed a legal contract stating that you would pay x amount of dollars over then next x amount of years. The bank or mortgage company in turn trusted you to fulfil your obligation.

I do however realize that times are tough and sometimes paying your mortgage payment isn’t an option. There are other alternatives to paying for your home other than just walking away. Many banks and mortgage compnies are very willing to work with interest rates and financing terms so you can keep your home and fulfil your mortgage.

If you have not yet purchased a home please keep this information in mind when signing on the line for your mortgage. Make sure all your personal finances are in order and always have a backup plan. Your mortgage is probably the single most important financial decision you will make so make sure you are ready to take the leap.

Streamline FHA refinance

So about two weeks ago I got a letter in the mail from a finance company offering a new low interest rate on my home FHA home loan. I should hurry and take advantage of the new low rates and drop my interest rate from 6% to 5% with no out of pocket money. Because of the recent Obama stimulus package many new options are now available to help save money with home loans, including a streamline FHA refinance.

At first I was very skeptical. I have never heard the term streamline FHA refinance before so I had to do a little research. After just a few minutes and several website articles I realize streamline loans are a totally legit way to refinance your home loan.

Your loan must meet a few guidelines before it’s eligible for the refinance.

1. The loan must already be insured by the FHA.
2. You have to be current on your mortgage payments with no late notice.
3. The refinance must lower your interest rate and monthly payment
4. No money can be received back to the borrower as a result of the refinance.

I contacted the company and started the process. The entire process was very simple and only required verification of employment, copy of our drivers license, social security numbers, and home owners insurance. We closed the streamline loan in less than 10 days. The underwriter even came to our house to sign the loan papers.

The only negative thing to say about the whole process was about $1,500 in closing costs due to the lender which wasn’t ever disclosed during the process. However, this is much lower than any other home loan I have every closed. Our escrow account even transferred over so that money wasn’t due at closing. The $1,500 was rolled into our loan so there was no out of pocket money due at closing. We lowered our interest rate 1% and our monthly payment decreased by $135. We should recover the closing costs in less than one year. Best thing about the streamline loan is that if the interest rate dropw another percent we can do the process again!