Leif Swanson
Arizona Saguaro LEIF SWANSON, REALTOR®
Phone 602-686-3852
Fax 602-971-6372
Leif@LeifSwanson.com
John Hall & Associates
Financial Information

In This Section:
Mortgage Information
Obtaining A Mortgage
Reducing Mortgage Interest

Mortgage Information

Mortgage 101

Information about:

Obtaining A Mortgage

The mortgage application process can be confusing and intimidating, especially to first time purchasers - but today's market offers homebuyers more options than ever before.

Have Your Records Ready
Organizing your records ahead of time will help speed things along when you're completing mortgage applications.

Shop For a Lender
There are many types of lenders in today's mortgage market - review their loan terms to decide which offers the best package for your needs. If you have credit problems or other difficulties, look for a lender specializing in this type of loan. I work with several outstanding mortgage brokers. They are happy to help you become pre-qualified for a loan.

Consider Loan Types and Terms
Today's mortgage market offers a bewildering array of financing options and loan programs - each with different rates, points, and amortization schedules. Consider the details of each so you can select the one that best suits your needs. Your mortgage broker will advise you and work within your budget.

Choose the Right Loan
After considering the various mortgage programs available, it's time to make your selection. Don't forget to review all aspects of the loan, not just the interest rate - the points, fees, and term can be just as important.

Watch Interest Rates
Keep an eye on interest rates during (and after) your mortgage search. Many lenders offer the option of locking in the interest rate before closing - a valuable alternative if rates are rising.

Apply for Your Loan
Carefully complete each section of the application and provide all of the documentation required by the lender along with the loan application fee. Maintain frequent communication with your mortgage broker. Respond promptly to any requests for additional information.

Reducing Mortgage Interest

The largest debt that the average person has in our culture is the home mortgage. And with every mortgage payment you make, a large percentage goes toward interest. How can you reduce the mortgage interest? One way to minimize your interest expense is to consider making additional principal payments on a regular basis. Another option is to switch to a bi-weekly payment plan. Chances are your mortgage service provider has already sent you an invitation to switch to a bi-weekly payment plan.

Things to Consider:

If you like the idea of a bi-weekly payment program, consider this: Benefits:

The benefit of bi-weekly payments: paying half of your mortgage every two weeks coincides with many paycheck cycles. Also, borrowers can pay off a 30-year mortgage in 22 to 26 years with the bi-weekly program.

There is some debate whether it is wiser to pay down your mortgage or use the money you would do so with and invest it in a higher yielding investment. This of course depends on if you think you can earn more than you are paying for the interest. Many borrowers believe that your home mortgage is some of the least expensive money you can borrow, so instead of paying it off early, you should use that money to earn more. The more conservative borrowers can't imagine spending all that money on interest and believe reducing the duration of indebtedness is a greater advantage. The route you take is a personal decision, depending on your financial views.

Disadvantages:

Many bi-weekly programs come with a hefty price tag, anywhere from $250 to $379. If you are interested in paying half of your mortgage every two weeks instead of making one full payment every month, get detailed information on your mortgage company's program, including all of the fees and charges.

According to articles in USA Today, Money Magazine, and the Wall Street Journal, it is common for mortgage providers to make honest mistakes.

Your prepayment strategy can easily be misunderstood, causing mistakes made by the mortgage company. Your prepayment could end up in many different places. It could be applied to your escrow account. Prepayments may also be held toward future payments rather than being directly applied toward principal reduction.

Free Alternatives to the Bi-Weekly Programs:

While many borrowers have signed up for bi-weekly payment programs, they represent a small fraction of mortgage borrowers, according to a top loan service provider. Here is how to get many of the same benefits without the cost:

Contact your mortgage provider for additional information.

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Leif Swanson
11211 N. Tatum Blvd, Suite 200
Phoenix, AZ 85028
Phone 602-686-3852
Fax 602-971-6372
Leif@LeifSwanson.com