Mortgage Overview

Hi,
Different types of mortgages have grown enormously over the last ten years. The reasons for this vary from accommodating buyers to making more money for lenders. There has been quite a change since our grandparents' day when 90%+ of mortgages were one type: the 30 year fixed rate mortgage. In the the past, many of these were assumable mortgages, which meant that buyers generally did not have to seek financing on their own. They simply needed to qualify for the existing mortgage on the home they wanted to purchase. In today's mortgage market, the most important factor is for people to do their research and find the most economical form of financing to fit their needs. Generally, the cost of mortgages is directly related to the credit worthiness of the buyer. A mortgage is no different than any other loan in that obtaining funds from a primary lender (IE., banks, credit unions etc., ) is more economical than dealing with secondary lenders. The costs in getting a mortgage differ from lender to lender. These costs include, but are not limited to, appraisals, title insurance, and points.
1) Appraisals: Some lenders use drive by appraisals as a basis for lending money. Others require a full appraisal which costs the borrower more money. Some lenders (primarily second tier) advertise "free appraisals". Those lenders include the appraisal costs under other fees in the loan.
2) Most major title companies are fairly competitive in issuing title insurance.
3) Points: These are usually fees only charged by second tier lenders. The basic premise is that the credit risk associated with the borrower warrants a fee for obtaining a mortgage. These costs are generally rolled into the overall mortgage, so at the time of closing, the borrower doesn't analyze them. Certain circumstances justify the need to get a mortgage which includes points. Be aware that an extra $4,000.00-$5,000.00 in fees tacked onto a mortgage can end up costing many thousands of dollars in interest over the term of the loan.
I am going to discuss various mortgages and mortgage rate structures, including the adjustable rate mortgage, (ARM), 15 year mortgages, 30 year mortgages, reverse mortgages, and my personal favorite, 50 year mortgages. Tomorrow, I'll begin with ARM's.
Until then,
Alan