Mortgage Lowdown

As monthly payments on adjustable-rate mortgages are starting to balloon, quite a few Americans seem to have found a way to work around their payments. No, it’s nothing illegal — they are only refinancing with new adjustable-rate mortgages that keep monthly payments low - for now, that is, though their payments will likely rise even higher in the future. Registerguard.com reports:

This mini-refinancing boom is assuaging fears that rising interest rates and higher monthly payments would drive some borrowers into foreclosure or force them to scale back sharply on other spending. But the refinancing also represents a doubling-down on a bet that housing prices will continue to rise. If the value of the home falls closer to the amount of the loan, that could curb the ability to refinance.

Read more: For Mortgages, A Shot In The Arms

A recent report by the Mortgage Bankers Association of America shows that 4.7 percent of U.S. mortgages were delinquent at the end of 2005. Outstanding US mortgage debt stands at $9 trillion today and homeowners would do well to use a few tips to avoid mortgage trouble. Emaxhealth.com reports:

Be very careful with ARMs or interest-only loans. These types of loans let borrowers qualify for more expensive homes - but beware as rates (and payments) climb. If you can barely afford the payment on your ARM or interest-only mortgage, you are asking for trouble in a few years when the "teaser period" expires and your loan re-sets to a fixed rate. Be sure you have extra cushion in your budget with these loans.

Read more: Home Loan Tips: Avoid Mortgage Troubles, Other Pangs of Rising Interest Rates

The Internet has invaded our lives so totally that today there is no sphere of our daily lives that is complete without the Internet. From booking your vacations to ordering pet food — just about everything can be done online. And oh, you can even get yourself insured online and your documents delivered asap. So with all this development, could mortgage loans be far behind. Shopping for a mortgage loan online is a simple and easy method of getting the loan. However, there is a certain method you need to follow to ensure that you get what you want and are satisfied. Here are three questions. If you have the answers to these, you will be able to use mortgage loan sites effectively:

1. Are you an online shopper? One of the first things you need to find out is if you are comfortable shopping for a mortgage loan online. Don’t do it just to keep up with the Joneses. If you are computer-phobic, then online shopping isn’t for you. The same goes for people who feel overwhelmed by the complexity of mortgages, and don’t have the time, energy or desire to educate themselves about them — they are better off getting mortgages the traditional way.
2. Do you qualify? Unless your particular deal is priced on-line by at least some lenders, you can’t shop on-line. So, if you have poor credit, don’t bother with online loans. On-line shoppers also do best if they can fully document their income and assets.
3. Do you know what you want? You have to specify exactly what you are shopping for if you want to compare prices of different loan providers accurately. For example, when you are shopping for a vehicle, you know exactly what model, make and type you want. Similarly, when you shop for a mortgage, you should know if you want a fixed-rate or adjustable rate (ARM). You should also know your preferred term, points, down payment, lock period, and options including interest-only, prepayment penalty and waiver of escrows.

Being able to be totally debt free is something all of us dream about. I mean wouldn’t we want to pay off the mortgage and finally own that home we call ‘our own’. While this is an interesting idea, it may not be a financially sound plan say some experts. Frugalliving.about.com reports:

The book called "Ordinary People Extraordinary Wealth, A New York Times best seller, by Ric Edelman states in his findings that most of the 5000 people he surveyed with extraordinary wealth still carry a mortgage.

Read more: Pay It Off Or Keep It?