Mortgages in General

For a loan to be handled through a mortgage department, the property must include a dwelling. The majority of a bank's mortgage loans have 25 acres or less. However, some mortgage programs are limited to no more than five acres. Mortgage loans to purchase farm land or business property would be handled through a commercial loan department. Depending on the qualifications of the borrower, there are loan programs with down payments ranging from zero to 25 percent. Down payments are calculated on the lesser of the purchase price or the appraisal amount. Loans are made to purchase a home, refinance a present mortgage, or second mortgages on homes, and to purchase rental housing for investment purposes.

Applying for Mortgage

When applying for mortgage, certain information is required to enable a bank to process your loan. Information in where you have worked and lived for the past two years with complete address and zip code for both will be required. A list of creditors with account numbers, payment amounts, balances and addresses is required. Also required are your checking and savings account with their addresses, accounts numbers, and balances. Written verifications are required for employment, residence, and deposits. Bank deposits are verified in writing for proof that money for down payment and closing costs is on deposit at a financial institution. Self-employed borrowers must provide a minimum of two years tax returns. A fee normally required at time of application is for the appraisal.

Mortgage Refinancing

In recent times, many home owners have taken advantage of lower rates to refinance their mortgage. If you're wondering whether now is a good time to refinance, here are some factors you should consider. First, there is an old rule of thumb that if mortgage rates are two percent lower that your current rate, you should refinance. Well, like all rules of thumb, there are exceptions, but it is certainly a good time to start investigated the possibility of refinancing. You may be able to reduce your interest rate by two percent, but if you have to pay high closing costs to obtain your new mortgage, it may not be worth it. Pay careful attention to how many "points" you have to pay to get the advertised rate and ask your lender if they have no-point programs. Another thing to look at is reducing your term. If you currently have a 30 year mortgage that you have paid down over the years, maybe you should look at a 15 year mortgage. If rates have decreased, the reduction in interest rate on a 15 year mortgage may actually make your payments about the same and you'll save thousands of dollars by paying off your mortgage early. It may make sense to refinance if you're considering another major expenditure. Maybe you're going to put in that new kitchen you always wanted, or you've reached the point in life that college tuition is a major concern. It might be wiser to refinance your home and take some of the equity you've built up over the years for your needs now. Refinancing your home may be less expensive than continuing to pay on your current mortgage and adding another loan to pay for what you want now.

Home Equity Line of Credit

For years you've been building equity in your home. A Home Equity Line of Credit lets you put money you've invested in your home to work! If you qualify, you can borrow a maximum amount equal to 50, 60, or even 80 percent of your home's equity value, minus the amount of your outstanding mortgage. Because it works like a renewable line of credit, you have complete freedom of choice when it comes to borrowing with your Home Equity Line of Credit. No need to apply for a home improvement loan, auto loan, money for education, or any other reason you may need to borrow money. A Home Equity Line of Credit make those funds available whenever you need them! Most lenders designed the Home Equity Line of Credit to be as easy to use as a checking account. Whenever you need to borrow money, you can "write your own loan" by simply writing a check. Since you only need to apply for your Home Equity Line of Credit once, you'll have continual access to the available balance in your account, and in most cases, your balance renews itself as you make payments. Each month, the status of your Home Equity Line of Credit is usually detailed in a complete statement showing all your account activity. Your available credit balance, the minimum payment due, the payment due date, payments made, and finance charges should be clearly indicated. You can choose to extend your payments for a period of years, or make it larger-than-minimum payments with no pre-payment penalty. The amount of your Home Equity Line of Credit is based on the market value and equity of your home. To determine the amount of equity in your home, you take your home's appraised value minus the current amount of your mortgage and any other home equity loans. Most lenders will lend you a percentage of this amount. The true value of a Home Equity Line of Credit is that unlike any personal loans, in most cases the interest you pay can be deducted if you itemize on your Federal tax return. You should check with your tax advisor for your specific situation.