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[H924]How To Calculate Your Mortgage

by Jason P. Jones, Jas

One way or the other most of us have mortgaged our home and in these crunching times, it's more and more difficult to pay our annual percentage rate or APR. However, current trends indicate that mortgage rates have been dropping to record lows. In fact the average contract interest rate for a 30 year fixed-rate mortgage went down to 5.04% from 5.18%. For 15 year fixed-rate mortgage, the average contract interest rate decreased to 4.91%. While the average contract interest rate for 1 year is now only 6.36%. According to the Mortgage Bankers Associations or MBA, this promptly resulted to an increase in refinance applications which went up by a whooping 62%.

Mortgage refinancing means using your existing home to lessen the amount paid to your annual percentage rate without extending additional cash. But before you can apply for refinancing, ask yourself this question “is it really time?” The question below can give you an idea.

Is your mortgage rate one percent higher that the current rate offered? If the answer is yes, then go for refinancing. This one percentage is already a considerable savings on your part. If you have decided to go for refinancing, there are some things you need to consider as not everyone's application can be successful. The following questions will guide you:

How much is your yearly income? A lot of refinancing applications place heavy emphasis for this information. If you can provide details that you can amply pay for the mortgage rate, your application has more chances of being approved.

How much is your credit score? Current requirements for a credit score is 740 if you really expect to get a lower annual percentage rate. The higher the credit score, the lower the annual percentage rates offered.

How much is your home equity? In order to qualify for refinancing, you must a have minimum home equity of 3 percent. Sad to say but a lot of home owners now have negative home equity.

How much is your loan to value ratio? The ideal shouldn't be more that 80%. This means if you have a home worth $500,000 your loan should be $400,000 or less.

Even if you have a full percentage points down from your current mortgage rate, make sure there are no hidden charges which could eat up your gains. Fees charged with mortgage refinancing can be deceiving. To determine how much you'll e paying for the annual percentage rates, you can use an online mortgage calculator.

With the number of refinancing applications high and the number of mortgage lenders willing to take risk is low, its all the more difficult to find the best mortgage rates available. You have to be very patient and meticulous when searching. Luckily, Monitor Bank Rates provides this service. Monitor Bank Rates has an online mortgage refinancing search service, that's easy to use. Just select loan type, which in your case is “Refinancing” and provide your zip code and that's it. You'll be getting quotations for the best mortgage rates. Aside from these, Monitor Bank Rates has a lot of useful information on mortgages. The website is updated with the latest information on the financial industry that can help you.

Choose Your Lender Carefully

Too many people look at 20 houses but only consider one lender. If you've worked with someone in the past and you like them, great. If not, shop around a bit. Find a lender that you're comfortable working with, who will listen to you and take the time to really understand your needs.

Take Your Time

Don't feel rushed. Take all the time you need to understand your options. Don't let anyone pressure into making a decision that you are not comfortable with.

Schedule Enough Time

Normally it takes at least an hour with the lender to go over your loan application and the related documentation. Make sure that you have scheduled enough time for this important process.

Get a Babysitter

Loan origination and mortgages are pretty boring topics for adults but they're truly stultifying for anyone under 18. Leave the kids at home. If you have small children, get a babysitter. It's virtually impossible to keep your kinds entertained for an hour while you go over important financial documents. Lenders say that interviews where children are present normally take twice as long. Even worse, you'll be distracted, and you may miss something important.

Plan Ahead

Be sure to allow enough time for the loan application to be processed. Normal mortgage applications take 2 to 4 weeks. An application for an FHA or VA mortgage usually takes 4 to 6 weeks. It's possible that your loan will move along faster, but you can't count on it.

Get Your Records Together

The most common reason for mortgage applications to be delayed is missing paperwork, especially documentation like income tax returns and bank statements. Get all the required information together as soon as possible, and get it to your lender early. One of the best reasons to be prequalified is because it gives you more time to find your paperwork!

Don't Pack Important Documents

It's natural to begin packing while you wait for your loan to be approved but don't pack those important documents! At any point during the loan approval process, the lender may need additional documents, including tax returns, bank statements, pay stubs, W-2s, etc. If you're self-employed, this applies to your business records, as well. It's better to wait until last to pack these items.

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Both Jason P. Jones & Joe Ramirez are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Jason P. Jones has sinced written about articles on various topics from Finances, Finances and Make Money Online. Compare the Best (Certificate of Deposit Rates),. Jason P. Jones's top article generates over 14800 views. to your Favourites.

Joe Ramirez has sinced written about articles on various topics from Mortgage, Home Buyers Guide and Finances. Vist MyRefi.com for all of your and needs.. Joe Ramirez's top article generates over 3600 views. to your Favourites.