The Mortgage Company Inc.

Keys to Smart Mortgage Shopping

2006-05-22T08:54:00.000-07:00

Shopping for any major purchase can be difficult. Shopping for a mortgage is no exception. It is not something you do very often and can be very confusing. It's common to ask about rates, but you'ree not getting the full story with just that information.
Many lenders advertise low fixed rates to get borrowers to call them. Yet few consumers qualify for these rates. Many times the programs are not as the appear to be at first glance. Many are very short fixed rate periods. Rates also change constantly. Comparing what several lenders offer on different days may not give you an accurate picture of which lender is providing the best prices.
First you must determine which type of loan best suits your needs and situation. Do you need a fixed rate loan or an adjustable loan? How long will you own the home, can you use a 3, 5, or 7 year product or would you prefer the standard 30 fixed rate loan? All are questions someone must help you answer before you can accurately compare pricing.
Fees associated with obtaining a home mortgage - from the appraisal to legal fees - also add to a mortgage's cost. Points can also be added to a mortgage's cost so two identical rates can have two totally different costs.
It is crucial to be able to discuss your needs and wishes openly with a loan originator who is concerned with your best interests. You can always count on me to look out for your best interest, answer your questions, show you options, and help you make a borrowing decision you'll be happy with for years.

Joe King - Loan Originator
The Mortgage Company Inc.
503-667-0306

It Pays to Buy

2006-04-11T07:54:00.000-07:00

Renters often find their monthly housing expense going up after they purchase a home. Yet most agree that buying a house is a wise decision. Here are some reasons why:

1. Rent always increases. If rent increases only 3% per year a $1000 rent will increase to $1200 over 5 years. Home owners can enjoy stable
payments that do not rise over time. As your income rises you home payments will become more affordable over time.

2. You have nothing to show for you rent. At the end of a half dozen years a renter has nothing to show for the $60,000 or $70,000 they have paid in rent. Homeowners on the other hand not only payoff their mortgage with each monthly payment but also grow their wealth as the house value rises over those years.

3. Real estate goes up in value. Average home prices have consistently risen for decades. One leading housing economist forecast values will increase 6.5% annually for the next decade.

4. Homeowners gain tax breaks. Mortgage interest is tax-deductible which lowers your income tax.

5. Owning a home brightens your life. Our homes mean a lot to us. We can do what we want with our home because it is ours.

6. Buying a home is easier than ever. With low interest rates and a variety of loan programs that can meet anyone’s needs now is the time to buy. Most experts predict rates will rise as the economy grows. Housing prices will increase so waiting to buy will cost you money.

Joe King - Loan Originator
The Mortgage Company Inc.
503-667-0306

What is PMI?

2006-03-09T20:03:00.000-08:00

Private Mortgage Insurance (PMI) is insurance that home buyers are typically required to buy if their down payment is less than 20%. This insurance protects the lender if the borrower fails to repay the loan.

Many years ago the only way to get a mortgage was to first have a 20% down payment. PMI changed the rules and enabled buyers to purchase with very little down payment. That is the only benefit PMI is to a buyer, PMI protects the lender and should not be confused with Homeowners Insurance or Mortgage Life Insurance. Homeowners and Mortgage Life Insurance both protect the buyer in the case of a problem. PMI only protects the lender.

PMI can cost as much as $1500 per year on a $200,000 home which adds $125 to each monthly payment. You will pay this extra until the PMI is cancelled. You have the right to request the cancellation when the loan you have is less than 80% of the value of the home based on a new appraisal. You must provide a new appraisal that is less than three months old and have a good repayment record. You must request the cancellation and the lender can or not cancel the insurance based on the information. By law the lender must cancel the PMI when your loan is less than 78% of the original loan amount.

Combination loans have become the popular alternative to PMI. You can borrow up to 100% of the money in the combination of a 80% first and a 20% second mortgage. By borrowing a first and second combination (80/20, 80/15/5, 80/10/10, and many others) you avoid the PMI and although the interest rate may be a little higher ultimately the monthly payment is smaller.

Joe King - Loan Originator
The Mortgage Company Inc.
503-667-0306