Home Equity Loan Sheridan WY

Residential Mortgage is a mortgage on a residential property, tax-deductible for individuals up to $1 million.

1. A temporary, conditional pledge of property to a creditor as security for performance of an obligation or repayment of a debt.

2. A contract or deed specifying the terms of a mortgage.

3. The claim of a mortgagee upon mortgaged property.

A mortgage is a long-term loan obtained from a bank, thrift, independent mortgage broker, online lender or even the property seller.

Because mortgages are such large loans, consumers repay them over long periods -- usually 15 to 30 years. A monthly mortgage payment is called a PITI payment. That's because each one covers a portion of the following four costs:

Principal:the loan balance.

Interest: interest owed on that balance.

Real estate Taxes: taxes assessed by different government agencies to pay for school construction, fire department service, etc.

Property Insurance:insurance coverage against theft, fire, hurricanes and other disasters.

Depending on the kind of mortgage a borrower has, the monthly payment might include a separate levy for mortgage insurance.

The breakdown of each payment changes over time because mortgages are based on a repayment formula called amortization. Means that the lender spreads the interest you owe on the mortgage over hundreds of payments. This keeps the monthly payments low.

We start with the three phases of getting a mortgage for a house:

1. NEEDS AND GOALS: Figure out what kind of mortgage is wanted, determine how much can be afford and anticipate what other steps are involved. Once you have established these preliminary boundaries, it would be beneficial to speak with a mortgage consultant; together, you can determine the optimal loan amount and program best suited to your needs.

2. PRE-APPROVAL: Provides confidence, knowing that you are pre-approved for home financing allows you to search for properties with confidence, having eliminated financing issues.

3. APPLICATION PROCESS: These are some of the things needed:

Copies of your most recent, consecutive pay stubs (covering 30 days), or a copy of a signed offer letter stating your new salary/

Most recent 2 years W2's.

Most recent 2 months consecutive bank statements (all pages) to verify assets, including checking/savings, mutual funds, and brokerage accounts.

Miscellaneous information, such as copies of resident alien cards, visas, divorce decrees, etc., may also apply, depending on your particular situation; your mortgage consultant can advise you about documenting any unique information.

4. UNDERWRITTING: Underwriting is the process of evaluating your credit history, debts, assets, income, and information about the property you are looking to purchase, in order to make a mortgage loan decision.

5. PROCESSING involves the collection of all the outstanding documents that are needed to satisfy the conditions that were set forth by the underwriter in your commitment letter. These conditions could include verifying your income and assets, reviewing the Purchase and Sale Agreement and appraisal, or documentation to substantiate past credit issues, child support/alimony payments, receipt of gift funds, employment information, etc.

6. CLOSING: Is when the mortgage is activated, the title (ownership) to the property is transferred from the seller by recording a deed, and you are given the keys to your new home.

A FIXED RATE; where the interest rate remains constant for a set period; typically for 2, 3, 4, 5 or 10 years.

A DISCOUNT RATE; where there is set margin reduction in the standard variable rate (example: a 2% discount) for a set period; typically 1 to 5 years.

A CASHBACK mortgage where a lump sum is provided as a percentage of the advance e.g. 5% of the loan.

A CAPPED RATE; where similar to a fixed rate, the interest rate cannot rise above the cap but can vary beneath the cap. Sometimes there is a collar associated with this type of rate which imposes a minimum rate. Capped rate are often offered over periods similar to fixed rates, e.g. 2, 3, 4 or 5 years.

To make matters more confusing these rates are often combined: For example, 4.5% 2 year fixed then a 3 year tracker at BOE rate plus 0.89%. With each incentive the lender may be offering a rate at less than the market cost of the borrowing. Therefore, they typically impose a penalty if the borrower repays the loan; this used to be called a redemption penalty or tie-in, however since the onset of Financial Services Authority regulation they are referred to as an early repayment charge.

Mortgage banks is a direct lender, bank employees alone review your application and make the decision to lend you money.

Advantages of a mortgage bank are:

Reliability: It is easier to trust the a bank that you know already.

One-stop shopping The deal with the source of your loan is direct.

Savings: A bank may save you money in the loan process and/or offer you better terms based on your total assets on deposit with the bank.

Speed: A bank also may process your loan faster than other providers.

Disadvantages a mortgage bank:

Limited choice: Mortgage bankers only offer their own programs. To comparison shop, you will need to speak with several lenders.

Mortgage brokers is a middleman who may represent the mortgage loan products of hundreds of different lenders. The broker's goal is to match you up with the loan product that best meets your needs at the best price. Once your loan is approved, you will usually deal directly with the loan originator or their mortgage service provider.


Advantages of a mortgage broker:

Variety: By shopping across a range of different programs and lenders, a mortgage broker may find you a better fit than a mortgage bank.

Qualifying: A mortgage broker can best steer you to the national or regional lenders that are most likely to accept your application based on your financial and personal information.

Savings: You may get a more favorable loan rate.

Speed: A broker saves you time shopping for a loan.

Disadvantages of a mortgage broker:

Hidden costs: Some mortgage brokers attempt to increase their profit by writing hidden costs into your loan. Best hedge: know the loan process and ask questions.

Professional oversight: Unlike mortgage bankers, mortgage brokers are not subject to licensing and regulation in all states.

Banks, thrifts and credit unions a limited menu of loan products just as mortgage banks do. They typically hold mortgages in their portfolios or sell them on the secondary market.

Home builders and real estate agencies own their own on-site mortgage company to make it easier to buy their properties. These affiliated companies may operate as a mortgage banker or broker.

Internet lenders offer fast, easy loans at competitive rates. Some are online channels of brick-and-mortar financial institutions or mortgage brokers, others are Internet-based banks or brokers.

The low initial cost of adjustable-rate mortgages (ARMs) can be very tempting to home buyers, yet they carry a degree of uncertainty. Fixed-rate mortgages offer rate and payment security, but they can be more expensive.

ARM advantages

Feature lower rates and payments early on in the loan term. Because lenders can use the lower payment when qualifying borrowers, people can buy larger homes than they otherwise could buy.

Allow borrowers to take advantage of falling rates without refinancing. Instead of having to pay a whole new set of closing costs and fees, ARM borrowers just sit back and watch the rates -- and their monthly payments -- fall.

Help borrowers save and invest more money. Someone who has a payment that's $100 less with an ARM can save that money and earn more off it in a higher-yielding investment.

Offer a cheap way for borrowers who don't plan on living in one place for very long to buy a house.

ARM disadvantages

Rates and payments can rise significantly over the life of the loan. A 6 percent ARM can end up at 11 percent in just three years if rates rise sharply.

A borrower's initial low rate will adjust to a level higher than the going fixed-rate level in almost every case even if rates in the economy as a whole don't change. That's because ARMs have initial fixed rates that are set artificially low.

The first adjustment can be a doozy because some annual caps don't apply to the initial change. Someone with an annual cap of 2 percent and a lifetime cap of 6 percent could theoretically see the rate shoot from 6 percent to 12 percent 12 months after closing if rates in the overall economy skyrocket.

ARMs are difficult to understand. Lenders have much more flexibility when determining margins, caps, adjustment indexes and other things, so unsophisticated borrowers can easily get confused or trapped by shady mortgage companies.

On certain ARMs, called negative amortization loans, borrowers can end up owing more money than they did at closing. That's because the payments on these loans are set so low (to make the loans even more affordable) they only cover part of the interest due. Any additional amount due gets rolled into the principal balance.

Fixed-rate mortgage advantages

Rates and payments remain constant. There won't be any surprises even if inflation surges out of control and mortgage rates head to 20 percent.

Stability makes budgeting easier. People can manage their money with more certainty because their housing outlays don't change.

Simple to understand, so they're good for first-time buyers who wouldn't know a 7/1 ARM with 2/6 caps if it hit them over the head.

Fixed-rate mortgage disadvantages

To take advantage of falling rates, fixed-rate mortgage holders have to refinance. That means a few thousand dollars in closing costs, another trip to the title company's office and several hours spent digging up tax forms, bank statements, etc.

Can be too expensive for some borrowers, especially in high-rate environments, because there is no early-on payment and rate break.

Are virtually identical from lender to lender. While lenders keep many ARMs on their books, most financial institutions sell their fixed-rate mortgages into the secondary market. As a result, ARMs can be customized for individual borrowers, while most fixed-rate mortgages can't.

Your monthly mortgage payment depends on your credit score, the size of your down payment, and whether you pay discount points. The credit score is a reflection of your credit history -- whether you pay bills on time, how much debt you have, how much you earn, the types of debt you have. A down payment of less than 20 percent means that you will pay a higher interest rate, and that you will have to buy mortgage insurance or get a piggyback loan. You can reduce your mortgage rate by paying discount points. A point is 1 percent of the loan amount. Paying discount points makes sense only if you have the mortgage long enough for the lower monthly payments to make up for the out-of-pocket expense of paying the points. This "payback" period usually takes a few years.

What kind of borrower are you? Best source to shop.

Excellent credit, easy access to financial documents, long-time employee of one company Internet lender, bank or mortgage bank.

Self-employed borrower, don't want to share data about income or assets with mortgage provider Mortgage broker.

Repeat home shopper, rate-and-term refinance customer, financially savvy Internet lender.

ARM shopper, "relationship" customer with many accounts at one institution Bank, thrift.

Convenience shopper, wants easiest loan to get even if it costs more Home builder or real estate agency lender.

GET RECCOMENDATIONS: Ask friends and family members for suggestions, especially if they've recently obtained a loan.

CHECK CREDENTIALS: Mortgage bankers are regulated by either your state's department of banking or division of real estate. Check with the one appropriate to your state to see if a lender is in good professional standing. Mortgage brokers may be state regulated or not. If not, check with the local chapter of the National Association of Mortgage Brokers or the Better Business Bureau to see if their record is clean. The Library of Congress has a good index of state and local government Web sites.

DO YOUR HOMEWORK: Learn about typical mortgages and ask questions when something looks amiss; a broker may be trying to pad closing costs or other fees at your expense.

TAKE CARE ONLINE: There are plenty of attractive deals online, but first make sure you're dealing with a reliable broker or lender.

EXTRA CARE DURING PEAK SEASON: Unscrupulous lenders and brokers are more apt to quote you bogus rates or slip in extra costs during peak home buying season, in hopes you won't notice.



Additional Links

RAM Funding Services Corp.
Get Mortgages Refinance
Mortgage for Less