What are Adjusted Rate Mortgages or ARMs?

Are you planning on moving from an apartment to a house? Unless you have saved a lot of money, you will need a loan to finance the purchase.

Buying a home is possible within two or three times of your yearly household income, but this does not mean you get a loan outright. Creditors consider several factors such as credit and employment history, current debts and savings, and the down payment you plan on making. You also have to at least grasp the basics of adjusted rate mortgages, or ARMs to get the best value for money loan.

Understanding Adjusted Rate Mortgages

Home buyers often have to choose between a fixed or adjustable rate mortgages. Both have their pros and cons, but for those who do not have enough cash flow, an ARM, or an adjusted rate mortgage, is an ideal option.

An ARM has an interest rate that periodically adjusts after a period of 5, 7 or 10 years – or even monthly – depending on the terms of your creditor. The interest you pay on the outstanding balance varies based on a certain benchmark. Other names of this type of loan are variable-rate or floating-rate mortgage. Some banks or creditors provide longer terms or a cap on how high interest goes.

The advantages of getting an ARM include:

Lower initial interest rate

  1. An interest rate cap
  2. Offers flexibility depending on future income or refinancing within the next few years
  3. Before you get a mortgage, it helps that you have an adviser guiding you every step of the way to fulfil your dream of becoming a homeowner.

Altius Mortgage Group Can Help You

We at Altius Mortgage Group pledge to help you buy your home, whether it is the first time or if you plan on refinancing. The company offers some of the lowest rates and extensive communication throughout the process of applying and obtaining a loan.

Altius Mortgage Group can pre-qualify you in less than 10 minutes, help you look for the best rate, or close a loan in as short as 30 days.

Contact us to learn more we can do for you.

4 Mortgage Terms Every Future Homeowner Should Know

For many first-time homebuyers, the process of navigating through a home loan can seem a lot like learning a foreign language. Before you dive in to that new mortgage, though, it’s important that you understand exactly what your lender and real estate agent are talking about when they use industry jargon. Here are a few critical terms to learn.

Prequalified or Preapproved

Before you begin house hunting, you should swing by your lender’s office and talk to them about getting prequalified or preapproved for a loan. Prequalification is a simple process that will give you an estimate of how much you might be able to qualify for based on the information you provide to the lender. Preapproval is the next step, and can help you figure out exactly what you can borrow and prepare you to put down an offer after you get a credit check and determine exactly how much of a loan you will be able to get.

Conventional Loans

The traditional home loan requires that you put between 5 and 20 percent of the purchase price down, and finance it with a fixed rate for 15 or 30 years. If you have bad credit or a short credit history, you might not qualify for these conventional loans. That doesn’t mean you can’t purchase a home, it just means you will need to talk to your lender about what options are available for you.

Fixed or Variable Interest Loans

The interest rate on your mortgage determines your monthly payments. On fixed-rate loans you will have a single interest rate that is locked in at today’s market rates that will remain on your loan for the duration that you have it. A variable interest rate often starts out lower, then may increase in the future if interest rates in the market go up. Talk to your mortgage loan company about what this might mean for you and your payments to make sure you get a loan you will be able to pay in the future.

Mortgage Insurance or PMI

Gone are the days when you could get a home loan for little or no down payment at a very low interest rate—those terms for loans disappeared in the housing bubble crash of 2008. Today the banks and lenders generally require that you have at least 20 percent equity in your home, and if you don’t (for example if you put down 5 percent), you will pay private mortgage insurance (PMI). Once you pay down your loan, or if your home increases in value over time, you can petition your lender to get this cost removed.

You might also be confused about the process of closing your loan, which involves things like closing costs, potentially paying “points”, and how escrow works. If that is the case, talk to the loan specialists at Altius Mortgage to learn more today so you can confidently go into your next home purchase.

Understanding the Full Disclosure Clause & Its Implications

You may have read the “full disclosure” phrase in many of your business documents and transactions, but do you know what it really means? As a buyer, how does the concept of full disclosure affect your purchase? Our experts at Altius Mortgage Group weigh in on the topic in an effort to walk you through it.

The Importance of “Full Disclosure” Clause

Many real estate transactions contain the “full disclosure” requirement. It means revealing every material issue that the other party must learn about the transaction. The material issues that require full disclosure are those that may affect whether the client decides to push through with the deal or not. It aims to bring into light everything that could change, clash and affect the contract you are signing.

In most states, real estate agents and brokers need to sign a full disclosure form under the penalty of perjury, in which there may be sanctions to the party who failed to follow the agreement.

Typical Materials to be Disclosed

Real estate agents, brokers and sellers follow the disclosure agreements in service to the buyer.  Each state has different regulations on what can be disclosed or not, but in general, full disclosure means revealing property defects and property history. All parties must follow the regulation to avoid any fraud lawsuits.

To qualify for mortgage, the applicants must submit the ‘Truth in Lending’ disclosure, which — according to legal definitions — is a federal law requiring lenders to disclose the true cost of credit transactions by providing certain information to borrowers, including the terms of interest rate, loan, and the amount, number and due dates of all payments necessary to pay off the loan.

As mentioned earlier, every state has some modifications on full disclosure requirements and Utah has the same, too. Find out how our services can help you get pre-qualified for your mortgage loans, and purchase or refinance your home. Talk to our specialists here at Altius Mortgage Group and make your transactions as seamless as possible.

It’s Not Crazy to Get a Big, Long Mortgage

Anything big and long outside mortgage is good, excellent even. But when it finally involves money, a big, long mortgage is taboo. After all, who would want to pay seemingly endless monthly amortizations? Nevertheless, don’t always throw away the chance to get a big, long mortgage. It might be the right choice for you.

Let us help you determine what’s good about mortgage with large value and lengthy payment period.

Home Valuation

If it’s in your plan to make money off your real estate in the future, don’t make your mortgage suffer by thinking it would affect the house’s value. It wouldn’t. From start to finish, what your mortgage will not influence is the real estate valuation. The house’s value will grow or fall through time, but the equity will earn no interest.

Equity

Speaking of equity, you need a higher amount of it. Your mortgage, however, won’t hasten your equity’s increase. Either way, it will increase by 3% per year in the next 20 years. If you do the math, you will be earning a quarter million dollars without exerting any effort.

Cheap Money

Credit cards offer 0% interest for six months. You could use from $100 to a few thousand for a month’s worth of supply. Mortgages are worth in the hundreds of thousands with a very low interest. Furthermore, banks like it when you put your house on escrow if you offer your house on collateral. They can give you an even lower interest rate, and you can always get a reverse mortgage if money becomes tight.

Tax Benefits

The interest you pay in mortgages isn’t purely for profit of the lender. All of your acquired interest will be deductible at your top tax bracket. Wherever you are on the tax bracket, you’ll definitely receive tax benefits because of your mortgage.

These are, among others, the good things from choosing a big, long mortgage plan. We here at Altius Mortgage are dedicated to helping you find the perfect loan to buy your home.

Contact us for more information!

When and How to Get Prequalified for a Mortgage

When your search for a new home transitions from casually browsing through available listings on a local real estate agent’s website to actually reviewing and visiting open houses, it’s time to start thinking about getting preapproved for a mortgage. The prequalification process is really very simple, but most homeowners don’t realize just how vital this step can be in the process.

Is Prequalification the Same as Preapproval?

Mortgage prequalification is a process that gives you an estimate of approximately how much money you could borrow to purchase a home. This is a little different from a mortgage pre-approval, in that it does not generally involve an official loan application and will not be quite as exact, and it is not an indication that any specific lender has approved you for a specific loan—it is only an estimate based on the information you provide.

Benefits of Prequalification

If you walk into a store in the mall but you don’t bring your wallet, it’s going to be difficult for the salesperson to take seriously your intent to make a purchase. The same is true for homeowners who look at houses without prequalification. Since they have no idea exactly how much they might be able to borrow, these homeowners might be looking at houses that are way above (or below, although usually homeowners look at houses far above their price range) what they will be able to afford to buy.

Another benefit of this process is that you can avoid falling in love with a home that you will ultimately not be able to afford. If you are unaware that you will only likely be approved for a loan in the range of $250,000, you might begin your home search for $350,000 houses. Once you have these homes in mind, the houses available on the market that are actually in your price range might feel like a disappointment compared with what you initially saw.

It is also important to remember that prequalification is simply an estimate of how much you could likely get approved to borrow, which is not necessarily the same as the amount you would be comfortable taking on as mortgage debt, or the payment that you would be able to afford based on your net income and monthly expenses.

Spot Potential Credit Problems

The loan prequalification process also helps you spot financial areas that might become a problem for you when you do plan to apply for a loan, giving you time to sort them out prior to your loan application. This is critical in your quest to get approved for a loan, since even something that dings your credit score by 20 points could significantly impact your ultimate interest rate.

Talk to a lender today about the prequalification process, or visit the Altius Mortgage website to find a simple prequalification calculator.