Why Have an Annual Mortgage Review?

A mortgage is a major obligation. People look at their annual mortgage statements to see what they paid, but they rarely think what can be done with their mortgages.

What to look for

When reviewing your mortgage, look at the renewal date, interest rate and prepayment options. By looking these things, it may be possible to find a way to pay off your mortgage faster or save money.

The renewal date is the date your mortgage has to be renegotiated. Knowing this date tells you how long you will be paying the current interest rate.

Take a look at the rate

Reviewing the interest rate is important. It may make sense to get a new mortgage if your interest rate is higher than current rates.

The things to think about when setting up a new mortgage are prepayment penalties, lawyer fees and other expenses.

The question to ask is “Will I save money?”  You may also want to think about other debts you have. Would you save money on those debts if they were included in your mortgage?

Look at the pre-payment options. Making prepayments will cut the interest you pay by thousands of dollars unless there are penalties. How much would you save if you used some or all of your prepayment options?

Look at the type of mortgage you have. Is it the right type of mortgage for your current situation? What are the risks attached to the type of mortgage you have? What will happen to your payment if interest rates change?

Your annual mortgage review will tell you if your mortgage is right for you and if you will achieve your mortgage goal.

The calculations can be complicated and you may want to ask your agent for help.

Buying Investment Property? What You Need to Know

With home prices and interest rates at historical lows, now is the ideal time to at least be looking into your options with regard to purchasing an investment property.

Whatever your intent, your best bet is to start by doing two things. First, sit down and figure out what your goals are in purchasing a property, both short and long term. Second, figure out if it makes sense on paper.

A good real estate agent or appraiser should be able to help in determining property values in a given location, with specific attributes such as venue, square footage and number of bedrooms, and what those properties would bear in a rental market as well.

Looking at foreclosures, short sales and bank-owned real estate is a good place to start looking for properties, as they are often below market value. Keep in mind that they may need a bit of work.

Financing an investment property is similar to financing a primary residence, but the rates are higher as are the reserve requirements.

Also, investment properties are financed primarily by conventional loans, as the Federal Housing Administration lends only on homes where the buyer intends to live, with the exception of multiunit properties where the buyer plans on living in one of the units.

Plan on putting 25% to 30% down, and have six months worth of assets in the bank with which to make the payments. This is a bit steep, but lenders want to know that you are committed to making it work.