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From the category archives:

Mortgage Options

January 12, 2009

FHA-Insured Mortgages

There has been a lot of change in probably the most liberal until recently mortgage offer – the FHA-insured mortgage. Are you confused by the middle word in the title? Well, it is there rather to clarify any possible confusion or misunderstanding that FHA mortgages (that’s how they are called a lot more often) usually [...]

December 6, 2008

My fixed rate mortgage payments keep changing from year to year. Am I missing something?

Each period mortgage payment is in fact a combination of several payments: towards the interest, towards the principal (if the mortgage is not interest-only) and optionally towards PMI and the escrow. With a fixed rate mortgage the interest and the principal parts are usually unchanged unless you make extra payments, but the PMI and/or the [...]

December 6, 2008

How do I know if my escrow works?

The RESPA requires the lender to provide initial and annual escrow account statements. Do make sure you get one. But for the “good to know” feel, it is your proof in any legal procedure should you find out something is wrong with your escrow account. You always need to check with the other party, too [...]

December 6, 2008

How much is an escrow payment?

Before you buy a house, contact the county property appraiser and tax collector to find out how much the fully assessed property taxes will be, as well as an insurance agent for an estimate of how much your homeowner‘s insurance premiums will be. Find out about other payments to be placed in escrow. Sum all [...]

December 6, 2008

Do I always have to agree to have an escrow attached to my mortgage?

Generally speaking, mortgage escrowing is not mandatory. In fact, sub-prime mortgage market offers mortgages without any escrows, which I personally find very weird, because sub-prime borrowers are a lot more likely to have problems paying taxes and insurance. Escrow payments, naturally, make overall monthly mortgage payments higher and thus less attractive to such borrowers. A [...]

December 6, 2008

How can I cancel my mortgage escrow?

You have to buy your way out straight away at closing or any time later. It may not be easy, though. Lenders and servicing agents make pretty good income on escrows, so they will not be eager to let you get away with that easily. You may have to be very insistent, persistent and determined [...]

December 6, 2008

Is there any advantage in escrowing with the lender?

Yes, there certainly is. If everything works as well as it should, the escrow service will save you the personal headache of keeping up with the property tax and insurance payments schedule all through the years of your mortgage. Even the loss of a certain amount to the interest that the lender is going to [...]

November 29, 2008

Mortgage Escrows

The system of mortgage escrow accounts was created with good intentions. On the one hand it was to make the lender happy, because the lender got some guarantee that no lien prior to his own will be put on the mortgaged property through taxes or insurance, on the other hand, it was to save the [...]

July 31, 2008

How can I reduce my monthly payments?

You have to analyze, what exactly your period payment consists of. The two biggest parts are the principal and the interest. In the early years they will very likely be accompanied by PMI. Under other circumstances unchanged, reducing any of these three components will result is a lower monthly payment. First of all, PMI has [...]

July 26, 2008

Is there a way to pay my mortgage off sooner?

Yes. Moreover, the sooner you pay off your mortgage, the more cash you save for yourself as never-charged interest. The most reliable way to achieve such a spectacular result is extra payments towards the principal. A mere $20 on top of your regular monthly payment can result in roughly $24,000 of interest savings! The idea [...]

March 27, 2008

Discount Points (Points)

Points are quite a useful tool helping a borrower to lower the interest rate on his mortgage loan. The price of one point equals to 1% of the amount you borrow. If you pay this 1% amount in cash at the loan origination, the interest rate of your loan will drop by usually 0.25 percentage [...]

March 18, 2008

Extra Payments

 It’s amazing how surprised people usually are to find out how much an extra $20 payment may save them on their loan in the long run. For example, a $100,000 30-year mortgage bearing 9 percent annual interest calls for monthly payments of $804.62. Suppose a borrower could afford to increase the payment amount by $20 [...]

March 14, 2008

Biweekly Mortgages

A Biweekly Mortgage, unlike its name may suggest, is not a regular mortgage with a payment period of two weeks. In most cases, a product offered to you as a Biweekly Mortgage is, in fact, a Biweekly Accelerated Mortgage. Its main advantage is the accelerated repayment mechanism it is based on. A conventional 30 year [...]