Online Mortgages: Online Mortgage Applications and Obtaining Low Mortgage Rates Online

Mortgage Loans

There are several different types of mortgage loans. Some of the main types of amortized loans represent the adjustable rate mortgage and the fixed rate mortgage. Many mortgages are available online as well as online mortgage quotes.

Fixed Rate Mortgage

Fixed rate mortgage interest rate and the monthly payment is always fixed for the duration of the mortgage loan. Some of the common mortgage terms are 10, 15, 20, and 30 years. In the recent years some lenders have been offering terms that are amortized for 40 and 50 year mortgage terms.

Adjustable (Variable) Rate Mortgage

Adjustable or variable rate mortgage interest rate is fixed for an agreed period of time. After the expiration of this time, it will periodically adjust upwards or downwards according to market index levels. Those indices include the Prime Rate, the London Interbank Offered Rate, and the T-Bill (Treasury Index).

Mortgage Rates : Bad Credit Good Credit Game

Lenders refer to the borrowers’ credit reports and credit scores when approving a mortgage application. The better (higher) the score, the better rates a borrower can obtain. Lower credit scores, however mean higher risk to the lender, therefore mortgage lenders will require higher interest rates in order to compensate for the increased risk.

Balloon Type Mortgages

A balloon, or partial amortization loans are the ones in which the mortgage monthly payments are calculated over a certain period of time. The outstanding principal balance is payable at by the end of the mortgage term. This type of payment of the principal is also called a balloon payment. A balloon mortgage loan can either be of fixed or an adjustable interest Rate.

Online Mortgage Applications and Obtaining Low Mortgage Rates Online

Mortgages online can typically be obtained at lower online rates. Many people save thousands of dollars when applying for a mortgage online or when getting an online mortgage quote.

Which is a Better Mortgage Rate – Fixed Or Adjustable?

In the realm of mortgage – Toronto or elsewhere, there’s what is referred to as the fixed-rate mortgage and the adjustable rate mortgage (ARM). Therefore, when you will be applying for a mortgage to make that dream house a reality for you and your family, you need to shop for the best mortgage rate – Richmond Hill or just about anywhere.

Sometimes though, having the best mortgage rate is not that easy. There is even no exact science that demonstrates what would be the best mortgage rate for you. There is no universal rate. Because just like everything else, the best rate for you depends on the situation. This means that you can consider your mortgage rate “best,” if it addresses you needs.

So which is really better: fixed-rate or adjustable rate mortgage? Let’s examine the definition and advantages – as well as the disadvantages – of each.

Fixed-Rate Mortgage

A fixed rate mortgage is a loan that imposes one interest rate throughout the term. Usually, a loan of this kind of mortgage rate runs for 30 years.

The primary advantage of this kind of mortgage comes from the fact that your monthly/yearly amortization is friendlier. This is obvious considering that the number of years that you have to pay for your loan is higher. Elementary math tells us that a greater divisor will always give us a lesser quotient. Indeed, $100,000 divided by 30 years is lower (3,333.33) than $100,000 divided by 10 ($10,000).

But this has a downside. Any business-minded individual won’t allow others (strangers mostly) to use their money without anything in return – a profitable one at that. Therefore, money that is lent to someone else for a longer period of time will always bear a large interest.

Adjustable Rate Mortgage

On the other hand, an ARM is one wherein the interest rate varies. The change in the mortgage rate depends on a few indices. Naming these indices would be too technical for this write-up; just know, however, that in an ARM, the interest rate changes and is not constant throughout the term of the loan.

An ARM also has a shorter term. This means then that interest rate is slightly lower (1/4 to 1/2 of a percent) than that in the fixed rate.

Comparing the Two

While your amortization in an ARM is significantly higher than that of a fixed rate mortgage, in the long run, you can save if you go for the former. It is always advised for anyone to go for a shorter loan – lesser interest rate, shorter stress over impending payables, shorter time to wait before you can finally call that house your own. This is the reason why experts recommend a shorter loan.

But if you cannot afford a higher amortization and you are not in a hurry, then there’s really nothing wrong with going for a fixed rate mortgage. Yes, you may be paying for a higher interest, but this is price for taking things slow, for returning you lender’s money at a later date – and this should be a price that you are willing to pay for.

Mortgage Rates – Are They on the Rise?

The recent crisis in the housing market resulted in millions of people losing their homes because they could not afford the sudden increase in mortgage rate. The Federal Government, recognizing the collapse of the housing market, stepped in and implemented measures to stop the decline and help people stay in their homes. The Federal Reserve took action by reducing interest rates. In 2009, millions of homeowners took advantage of the incentives and refinanced their homes and purchased homes with low mortgage interest rates. The results have been positive leading many people to wonder when mortgage rates will start to rise.

In December, a few signs have indicated that mortgage rates may be starting to increase. Most experts agree that 2010 will likely see economic recovery which will lead to an increase in these rates. For instance, mortgage rates that were once at about 4% saw an increase of a rate on a 30-year fixed loan to 5.14 percent in December. The cost of variable rate mortgages for homes also increased. Many experts believe that rates may increase to 6 percent in 2010.

Because of the concerns about rising rates even though the economy is still in recovery, banks and the Federal Reserve still plan on keeping mortgage rates low for some time; at least until the economic recovery is making a more positive impact and the housing market is no longer struggling. If you are considering refinancing a mortgage or buying a home, this may be a good time to take advantage of the low mortgage interest rates. Most experts agree that these low mortgage rates will not last much past the first half of 2010 because they forecast the economy starting to rebound. Many also say that if people wait too long, they miss out on a great mortgage rate.

In the last few months, there has been an increased demand for homes. This is due to Government tax incentives for first-time buyers and the Federal Reserve efforts to keep interest rates low by buying up mortgage-securities. Because of the demand and the Government carefully watching for a housing recovery, it is expected that the Fed will stop purchasing mortgage bonds within about three months. The result will be a rise in interest rates. As a result, this may be the best time to lock in a low interest rate mortgage.

Another indicator of whether mortgage rates will rise is bank lending. In previous months, banks have been more restrictive with their lending practices which have made it more difficult for people to acquire a mortgage. As the economy recovers, banks are expected to loosen their lending standards, making it easier for people to get loans. This will likely cause an increase in mortgage rates. Lending is currently still rigid, which is one reason why rates for a 30-year home loan recently declined. The average rate on a 30-year fixed mortgage was recently 5.09, down from 5.14 percent a week earlier.

A strong economic recovery is essential to getting the housing market back on track. Because most financial forecasters expect only a few more months of low mortgage rates, this may be the best time to take advantage of these low rates and refinance your mortgage or purchase a new home.