Tips for finding the best mortgages.

Where can you find the Best Mortgages?

Interest rates have been rising gradually for a couple of years. Everyone in the housing market is affected both buyers and sellers, and millions of homeowners may see their monthly mortgage payments increase this year. However, real estate is till booming. What is the best mortgage can you find today, if you are in the market?

Choosing a mortgage can be a tricky particularly now days. There are too many options to choose from but how do you know which one is the best fit for your situation.

Some mortgage experts suggest that a fix rate mortgage is the ideal if you plan to stay in your house or a new house more than 10 years or longer. Even it costs you extra to get the fixed rate mortgage it is worth to avoid rate increase in the future. They also suggest that you should read the fine print and comparison-shop whether refinancing or taking out a first mortgage.

You should avoid the following options:

• Interest only (IO) loan payments – This offers initial low monthly payments because your payments are not included to pay off principal, but when the loan is adjusted your monthly payments can be doubled.
  
• Option ARMs – Bankers call this “negative amortization.” This offers you to decide how much you can pay each month; however, unpaid interest will be added to the loan principal later on. As a result, your mortgage balance will grow.

According to a financial report, Federal regulators fear that many Interest only loan and Option ARM mortgage borrowers will be forced to default when their payments rise rapidly. In 2005, banks resold approximately 64.8% new mortgages to investors. Most people assume that banks wouldn’t lend money more than you can afford but it is far from the truth. Banks are willing to sell as long as people want to buy.


Here are some tips for you to consider:

• If you are a seller, compare the asking prices of similar houses and set yours accordingly. Be flexible.
• If you are a buyer, do not expect on rapidly increasing home pries to bail you out. Do not stretch your budget to buy a house that you cannot afford.
• If you have an adjustable rate mortgage, find out how often your interest rate can change and how it is determined. Typically, adjustable rate mortgages are tied to benchmarks that rise when the Federal Reserve raises short-term interest rates. It can rise over the life of the loan.

Here is how you can protect yourself:

• Comparison shop by looking at the annual percentage rate (APR), which includes all costs and out-of-pocket fees.
• Avoid unsolicited loan offers.
• Choose a mortgage broker who sets his/her fee in advance.
• Choose a mortgage broker who will find you the lowest-cost mortgage. \
• Decide a loan that you can afford.
• Do not choose a loan based on the initial monthly payments.