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When A 30 Year Mortgage Is Better Than 15

Sometimes it makes more sense to get a 30 year mortgage over a 15 year.  There are many benefits of shortening the loan term to 15 years, but you have to consider all factors when deciding which mortgage term is best for you.

Below are some great tips to help you determine which loan term is best for your current financial situation.

With interest rates as low as they are, a lot of borrowers are being tempted by 15-year fixed-rate mortgages. But for many, a 30-year loan may still be the best option.

To be sure, interest rates on 15-year fixed-rate mortgages are astonishingly low right now — averaging 2.89 percent, according to Freddie Mac. That can mean some major savings on interest, as well as paying off your mortgage faster. But there are other factors to consider as well.

15 years means higher payments

The downside of a 15-year mortgage is that your monthly payments will be a lot higher than on a 30-year loan. For a $200,000 loan at Freddie Mac’s posted rate of 2.89 percent, monthly payments on a 15-year fixed-rate mortgage would be $1370.91 — and that’s before including property taxes and homeowner’s insurance.

By contrast, the payment on a 30-year fixed-rate mortgage at the current Freddie Mac average rate of 3.62 percent would be $911.54 — nearly $460 less than the payment on a 15-year loan.

The potential problem with a 15-year mortgage is the classic one of “you can go broke saving money.” Yes, you can save a lot of money on interest with a 15-year mortgage — in the example above, over the life of the loan, you’d pay only about $47,000 in interest on the 15-year mortgage, versus $128,000 in interest payments on the 30-year mortgage. But how will those higher payments affect your financial picture?

Consider other financial needs

In the example above, note that payments on the 15-year mortgage are half again as much as on the 30-year loan. That’s a pretty big bite out of anyone’s budget. What else could you be doing with that money? Saving for retirement? For your children’s education? How about a reserve fund for unexpected expenses, like a medical emergency?

The big problem with a 15-year mortgage is that it leaves you with less financial flexibility than a 30-year loan. You might be able to manage the mortgage payments most of the time, but what if you hit a tight spot? You can’t miss a mortgage payment without financial penalties and damage to your credit score, and getting caught up again can be harder than you think, especially if you were already stretched to cover your monthly payments in the first place.

In addition, the savings may not be as much as you expect. Remember, mortgage interest is tax-deductible for most borrowers, which effectively reduces the savings you get from a 15-year loan.

Paying off your mortgage faster

The situation where refinancing into a 15-year mortgage can be most attractive is when refinancing an existing mortgage. In that situation, you’ve already been paying on your mortgage for a number of years, so refinancing into a 15-year loan may not shorten the time remaining on your loan that much, so it may seem like you can squeeze your remaining loan into the new time frame.

Keep in mind though, that most of your payments go to interest during the early years of a 30-year mortgage, so you may not have made as much progress in paying down your principle as you think, even if you’ve had the loan for 8-10 years.

If you want to pay down your mortgage faster, one option to consider is to refinance into another 30-year mortgage, then make payments equal to what you would need to pay it off in 15 years. This lets you pay off your mortgage more quickly, while maintaining the flexibility to make a smaller payment now and then should the need arise.

30-year rates are also cheap

Over the course of the loan, you won’t pay a lot more using this approach than you would refinancing into a 15-year mortgage. Remember, even though 30-year mortgage rates are presently running about three-quarters of a percentage point higher than 15-year rates, they’re still extremely low by historic standards, and cheap.

Typically, the difference between the two approaches would be about an additional four monthly mortgage payments over 15 years — fairly cheap, considering the additional financial freedom you gain.

Good money after bad?

One of the undeniable advantages of a 15-year mortgage is that it allows you to pay down your mortgage faster, allowing you to build equity more quickly and brings closer the day you own your home free and clear. If you’re refinancing through HARP (the federal Home Affordable Refinance Program) because you’re in negative equity, it lets you get back to positive equity more quickly. The question is, do you want to do this?

If you’re underwater on your mortgage, many financial advisors would question the wisdom of accelerating your payments on an asset that is worth less than the balance owed. Even if you’re not underwater, you should consider whether boosting your payments on a depreciated asset is the best use of your money.

This is a key reason why refinancing back into a 30-year mortgage, even if you’ve already been paying on the original loan for 10 years or so, can make sense. You’re reducing your monthly payments and limiting the additional money you’re committing to an asset that has declined in value. If the housing market rebounds and home prices rise again, you’ll benefit from the increased equity. Meanwhile, you’re limiting the amount of good money you’re throwing after bad, while increasing the amount of money available for other uses.

Examine your own situation

This isn’t meant to be a hard-and-fast guide to whether or not any one person should opt for a 30-year mortgage over a 15-year one, but only to point out some of the issues involved and the questions borrowers should consider.

For many borrowers, a 15-year mortgage may be the best choice given their finances and personal situation. For others, buying a home with or refinancing back into a 30-year mortgage may be the more sensible option. But you have to look at your own financial situation, the value of your own home and your other financial needs before you can decide which is the best choice for you.

Article source: http://www.mortgageloan.com/when-30-year-loan-better-15-9153

When you are ready to decide which type of loan is going to suit your situation best, contact one of our mortgage specialists at SLS Mortgage of Charlottesville for a free mortgage consultation. We can go over your current situation and evaluate your goals so that we can match you with the perfect loan product. SLS Mortgage is here to help. Call (434) 260-7793 today

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Letter to America’s Seniors from the National Reverse Mortgage Lenders Assoc.

We often get asked many questions about how a reverse mortgage works and what are the pros and cons. Many questions are asked in a skeptical manner as if to say “what’s the catch?”. Richard Cordray of the National Reverse Mortgage Lenders Association has written a letter to those interested in learning more about reverse mortgages and tells how to get a publication that the NRMLA has written, too.

To America’s Seniors and Their Families:

Last week, the Consumer Financial Protection Bureau released a report highlighting the confusion many consumers have about reverse mortgages.

WASHINGTON, D.C. – July 9, 2012 – (RealEstateRama) — “Because reverse mortgages can help older homeowners ease the strain of retirement, this product can be beneficial if seniors choose it based on a solid understanding of how it works,” CFPB Director Richard Cordray said. He added, however, that many seniors “struggle greatly to understand this complicated product and the tradeoffs involved.”

Through our ongoing public education efforts, the National Reverse Mortgage Lenders Association is aggressively trying to help seniors avoid short-sighted or misinformed choices.  We share the CFPB’s concern that seniors and their adult children need a more in-depth understanding of reverse mortgages.

To address that issue, NRMLA has developed a series of tools to help seniors better understand the facts aboutreverse mortgages before they choose to use this complex financial product.

In order to provide straightforward and easy-to-understand information, NRMLA has worked with key stakeholders over the past year to develop a comprehensive public education effort called Borrow with Confidence.

The members of the National Reverse Mortgage Lenders Association agree that a reverse mortgage is not the right choice for everyone. It is a significant financial and emotional decision about a complex product.  Borrow with Confidence provides the facts so consumers have a clear understanding of the reverse mortgage process.

Consumers may find Borrow with Confidence at www.ReverseMortgage.org or they may request a booklet by calling (866) 264-4466.

It clearly explains the reverse mortgage product, application process, fees, qualification criteria, borrower responsibilities, the potential risks and offers advice for adult children of borrowers. There is also a glossary of terms, answers to frequently asked questions, and the truth about many common misperceptions about reverse mortgages.

Potential borrowers are encouraged to ask their own questions – either via the Website or a toll-free telephone number – about any aspect of reverse mortgages that they find confusing.

Additionally, Borrow with Confidence includes a 19-point pledge to borrowers that clearly explains borrowers’ rights and confirms the high level of integrity they should expect. NRMLA members are bound by a strict code of ethics, which, among other things, clearly forbids “false or misleading or deceptive or unfair communications or advertisements.”

The National Reverse Mortgage Lenders Association wants consumers to have the resources they need to make informed and deliberate decisions about their retirement security.  We want them to borrow with the confidence that they know the facts.  We want them to borrow with confidence because they know what to expect.

Clear and honest information can help seniors and their families make the best decisions for their own situations.  The National Reverse Mortgage Lenders Association will continue to work with the CFPB to achieve that goal.

Sincerely Yours,

Peter H. Bell
President & CEO

About Reverse Mortgages

Reverse Mortgages are available to seniors 62 years old and older with significant home equity. They are designed to enable elderly homeowners to borrow against the equity in their homes without having to make monthly payments as is required with a traditional “forward” mortgage or home equity loan. Under a reverse mortgage, funds are advanced to the borrower and interest accrues, but the outstanding balance is not due until the last borrower leaves the home, sells or passes away. Borrowers may draw down funds as a lump sum at loan origination, establish a line of credit or request fixed monthly payments for as long as they continue to live in the home.  To date, more than 750,000 senior households have utilized an FHA-insured reverse mortgage.

About the National Reverse Mortgage Lenders Association

The National Reverse Mortgage Lenders Association (NRMLA) is a membership organization comprised of more than 300 companies and more than 1,000 people participating in the reverse mortgage industry.  With a membership responsible for more than 90 percent of reverse mortgage transactions in the United States, NRMLA serves as the national voice for the industry.  It serves as an educational resource, policy advocate and public affairs center for lenders and related professionals. NRMLA was established in 1997 to enhance the professionalism of the reverse mortgagebusiness.  All NRMLA member companies commit themselves to our Code of Ethics & Professional Responsibility.

Read full article here.

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Top Ten Refinancing Tips

With so many great mortgage refinancing options available at the moment, you should be considering refinancing your mortgage. There are a few things that you can do to help determine if this is a good course of action for your specific situation.

Below is a brief article that outlines some simple things you can check to see if this is right for you and what you can do to secure the best mortgage rate possible.

The Top Ten Refinancing Tips

Richard Barrington

Chances are that over the course of a typical mortgage, a home owner will have an opportunity for refinancing. Possible reasons to refinance a mortgage are compelling. They include:

  • Saving money by lowering the interest rate
  • Making monthly payments more manageable by stretching out the remaining loan term
  • Stabilizing the monthly payment by switching to a fixed-rate mortgage

With so many factors in favor of refinancing, it is a shame that anyone would fail to refinance a mortgage just because the process can seem complex at first.

10 Easy Ways to Streamline Refinancing a Mortgage

As with many things, refinancing can be broken down into a series of smaller steps, each of which is fairly simple on its own. For example, the following are ten tips that can help anyone refinance a mortgage successfully:

  1. Specify the reasons for refinancing. Is the purpose of this refinancing to lower the interest rate, reduce the monthly payment, or lock in a fixed monthly payment? The type and terms of the refinance mortgage needed will depend on which of these–or which combination of these–goals is in play.
  2. Define the refinance mortgage parameters. Based on the above goals, set targets for interest rates and monthly payments. Decide on the mortgage term and whether to apply for a fixed or adjustable-rate mortgage. A refinance mortgage calculator can help define these parameters.
  3. Check your credit rating. In particular, find out whether it has changed since you last applied for a mortgage. A low credit rating will affect the interest rate and the availability of a refinance mortgage.
  4. Determine changes in property value. A drastic drop in property value can make it difficult to refinance a mortgage unless that mortgage is old enough to have been paid down substantially.
  5. Research prepayment penalties on the existing mortgage. Some mortgages have penalties for early repayment, which includes refinancing. This is not necessarily a deal-killer, but it is important to know the amount of any penalty so it can be measured against the potential savings from refinancing. Also, the original lender might waive this fee if they handle the refinancing.
  6. Obtain refinance mortgage quotes from a variety of refinance mortgage lenders.Mortgage rates and lending standards vary from institution to another, so it is well worth researching multiple refinance mortgage lenders.
  7. Ask lenders for full disclosure of points, closing costs, and other fees. This will help with setting up apples-to-apples comparisons between refinance mortgage lenders. For example, the lender offering the lowest interest rate may also be charging the most in points. Try to request quotes with as nearly identical terms as possible for comparison purposes.
  8. Ask lenders how long they will commit to their rate quotes. Lenders can’t offer the same rate indefinitely, but they may commit to locking in a rate for a reasonable period of time to allow for the application process.
  9. Use a mortgage calculator to compare monthly payment savings with closing costs and other upfront fees. Besides comparing refinance mortgage quotes against each other, also compare them against your existing mortgage. It is likely that there will be a trade-off between paying upfront expenses to refinance a mortgage and achieving a savings in subsequent monthly payments. It is important to make sure the savings in monthly payments will, in time, adequately compensate for the upfront costs.
  10. Check for any prepayment penalties in the refinance mortgage. As mentioned in tip #5, prepayment penalties can dampen the benefits of refinancing. Since another refinancing opportunity may arise in the future, it would be helpful to avoid prepayment penalties in the refinance mortgage.

Again, each of the above is a simple step on its own, and taken together they will help clarify the process of refinancing a mortgage. Article source: http://www.guidetolenders.com/refinance_mortgage/articles/top-ten-refinancing-tips.jsp

These points are easy to do and can save you thousands (and sometimes ten of thousands) over the history of your mortgage. If you’d like to learn more about what type of refinance you can qualify for, contact one of our financing specialists for a free counseling session. We can answer any questions and help you decide what’s best for you. SLS Mortgage of Charlottesville (434) 260-7773

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Low Mortgage Rates Pump 11% Gain In Purchasing Power

Low interest rates have given your mortgage dollars more purchasing power and home affordability is at an all time high. There’s no question that now is one of the best times to buy a house or refinance a mortgage that we will likely ever see.

There are some really attractive statistics below about just how good a time it is right now to refinance or buy.

Mortgage Rates : Low Mortgage Rates Pump 11% Gain In Purchasing Power

For today’s refinancing households — whether via HARP, FHA Streamline Refinance, VA Streamline Refinance, or otherwise —  falling mortgage rates can lower monthly mortgage payments by a ton, adding money to household budgets and bank ledgers.

For home buyers, however, falling rates do something more.

Falling mortgage rates raise maximum purchase prices. In some cases, by a lot. Your mortgage dollar goes a lot farther than it used to.

Click here to get today’s mortgage rates.

For Home Buyers, Mortgage Rates On Sale

Home affordability is at an all-time high nationwide.

According to Freddie Mac’s most recent mortgage rate survey, the average 30-year fixed rate mortgage fell to 3.62% last week, down from 4.08% in March 2012, and down from 4.60% from one year ago.

And, this week, rates have moved lower still. From Marin County, California to Bethesda, Maryland to Miami, Florida, mortgage rates are easing and poised to register a new, all-time low for the third consecutive week. Mortgage rates have been down over consecutive days dating back to last week.

It’s a great time to be a buyer.

Purchasing Power Up 11% Since Last Year

Rapidly changing mortgage rates make for interesting personal economics. It can’t help but change the way a buyer looks at properties.

In a falling mortgage rate environment such as this one, it can make for a heady home shopping experience. Buyers can set their sights on a price range for a home, then watch as their corresponding monthly mortgage payment drops with the rates.

Or, buyers can go the other way.

For a buyer who’s set his monthly housing payment  as mortgage rates drop, home purchasing power goes up.

Since July 2011, that increase has been significant.

Assuming a principal + interest mortgage payment of $1,000 per month on a 30-year term, today’s home buyers can buy 11% “more home” as compared to 12 months ago.

  • July 2011 : Each $1,000 payment affords a maximum loan size of $197,130
  • July 2012 : Each $1,000 payment affords a maximum loan size of $219,409

That extra 11% can mean a lot of things. It can be an extra bathroom; an extra bedroom; a series of upgraded finishes. It could even mean a home on a different street, or with a different-sized lot.

The 11% increase in purchasing power can mean anything you want it to mean. It’s just great to have it available. There has never been a more affordable time to be a home owner.

From Washington State to Washington, D.C., homeownership is on sale.

Click here to get today’s mortgage rates.

Home Affordability : Tied To Low Mortgage Rates

Unfortunately, today’s buyer-friendly environment can’t last forever. Home prices have already started to rise nationwide, cutting into the rise in purchasing power afforded by low mortgage rates. And, as the economy recovers, mortgage rates will, too.

When mortgage rates move past 4 percent into the 5s, it will hit affordability hard.

For now, though, the market is a buyer’s oyster. Get started with a rate quote and see what you can buy.

See source here: http://themortgagereports.com/10608/mortgage-rates-low-mortgage-rates-push-11-gain-in-purchasing-power

Don’t let this amazing opportunity of either buying a home or refinancing your mortgage pass you by. SLS Mortgage of Culpeper has many great options to help you take advantage of the great mortgage rates currently available. Contact our team of mortgage professionals for a free consultation today. (540) 216-0665

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Low Mortgage Rates Pump 11% Gain In Purchasing Power

Low interest rates have given your mortgage dollars more purchasing power and home affordability is at an all time high. There’s no question that now is one of the best times to buy a house or refinance a mortgage that we will likely ever see.

There are some really attractive statistics below about just how good a time it is right now to refinance or buy.

Mortgage Rates : Low Mortgage Rates Pump 11% Gain In Purchasing Power

For today’s refinancing households — whether via HARP, FHA Streamline Refinance, VA Streamline Refinance, or otherwise —  falling mortgage rates can lower monthly mortgage payments by a ton, adding money to household budgets and bank ledgers.

For home buyers, however, falling rates do something more.

Falling mortgage rates raise maximum purchase prices. In some cases, by a lot. Your mortgage dollar goes a lot farther than it used to.

Click here to get today’s mortgage rates.

For Home Buyers, Mortgage Rates On Sale

Home affordability is at an all-time high nationwide.

According to Freddie Mac’s most recent mortgage rate survey, the average 30-year fixed rate mortgage fell to 3.62% last week, down from 4.08% in March 2012, and down from 4.60% from one year ago.

And, this week, rates have moved lower still. From Marin County, California to Bethesda, Maryland to Miami, Florida, mortgage rates are easing and poised to register a new, all-time low for the third consecutive week. Mortgage rates have been down over consecutive days dating back to last week.

It’s a great time to be a buyer.

Purchasing Power Up 11% Since Last Year

Rapidly changing mortgage rates make for interesting personal economics. It can’t help but change the way a buyer looks at properties.

In a falling mortgage rate environment such as this one, it can make for a heady home shopping experience. Buyers can set their sights on a price range for a home, then watch as their corresponding monthly mortgage payment drops with the rates.

Or, buyers can go the other way.

For a buyer who’s set his monthly housing payment  as mortgage rates drop, home purchasing power goes up.

Since July 2011, that increase has been significant.

Assuming a principal + interest mortgage payment of $1,000 per month on a 30-year term, today’s home buyers can buy 11% “more home” as compared to 12 months ago.

  • July 2011 : Each $1,000 payment affords a maximum loan size of $197,130
  • July 2012 : Each $1,000 payment affords a maximum loan size of $219,409

That extra 11% can mean a lot of things. It can be an extra bathroom; an extra bedroom; a series of upgraded finishes. It could even mean a home on a different street, or with a different-sized lot.

The 11% increase in purchasing power can mean anything you want it to mean. It’s just great to have it available. There has never been a more affordable time to be a home owner.

From Washington State to Washington, D.C., homeownership is on sale.

Click here to get today’s mortgage rates.

Home Affordability : Tied To Low Mortgage Rates

Unfortunately, today’s buyer-friendly environment can’t last forever. Home prices have already started to rise nationwide, cutting into the rise in purchasing power afforded by low mortgage rates. And, as the economy recovers, mortgage rates will, too.

When mortgage rates move past 4 percent into the 5s, it will hit affordability hard.

For now, though, the market is a buyer’s oyster. Get started with a rate quote and see what you can buy.

See source here: http://themortgagereports.com/10608/mortgage-rates-low-mortgage-rates-push-11-gain-in-purchasing-power

Don’t let this amazing opportunity of either buying a home or refinancing your mortgage pass you by. SLS Mortgage of Culpeper has many great options to help you take advantage of the great mortgage rates currently available. Contact our team of mortgage professionals for a free consultation today. (540) 216-0665

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Dominion And Arlington County At Odds Over Tree Removal

This is an article that I found on ABC News Channel 7’s website that describes an example of what we as tree removal contractors have to deal with at times. We sometimes can’t remove a fallen tree until the power company gives us the okay. But sometimes the power company can’t work on their power lines until the tree is removed. It can be a catch 22 that ultimately hurts property owner’s, who are the ones that have to deal with no electricity.

A lot of people have been helping each other get through the aftermath of last week’s storms.

But, there have been a few situations where there has been a battle on what to about trees falling on power lines, like in Arlington, where Dominion Virginia Power and the county were reportedly at odds.

For those who live around the tree-choked street in the Claremont area, emotions are far exceeding the 100 degree conditions.

Friday’s derecho toppled a tree that entwined in Dominion’s power lines then crushed a car.

For five, miserable days, David Carr and hundreds of his neighbors have been without electricity.

Carr said, “We wake up at 2:30 in the morning just bathed in sweat unable to sleep anymore.”

David Hemenway blames dysfunction, adding that the utility company and the county can’t agree on how to proceed.

“At the very least that tree should have been removed by now, but the county says they can’t remove it until Dominion gives them permission. Dominion says they can’t do the wires until the tree is removed. Are you kidding me?,” Hemenway said.

His biggest fear is for his adopted daughter, Bekah, whose disability leaves her sensitive to stress. Her service dog, Griswald, can only do so much.

Hemenway added, “When we have a disruption like this for a long period of time, it does become a bit of a problem.”

Only a few hours after 7 On Your Side called Dominion, the utility giant sent out a supervisor who assured a tree removal crew would be dispatched.

And that’s exactly what happened.

In fact, Dominion officials say they’ll return Thursday morning to repair the mess and restore power.

The Dominion spokesperson stressed that there was never an issue between the county and the utility company. He says the blame rests on Dominion not moving quickly enough to respond to the area due to the overwhelming amount of work they have.

You can see how even slight miscommunication can bring cleanup and power restoration to a halt. It’s unfortunate but it does happen. If you have a fallen tree that still needs to be removed, call Fairfax Tree Service today for a free storm damage cleanup evaluation and to remove any trees that may hampering power restoration for you or your neighbors. (703) 688-3900

tree removal and cleanup

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Nonstandard Mortgage Refinancing

Nonstandard mortgage refinancing is an option for people that want to refinance their mortgage to take advantage of these incredible rates but don’t want to have to settle for a standard 15 or 30 year repayment term. While not very common, nonstandard mortgage refinancing is gaining popularity.

I found an interesting article explaining some of the reasons why people would want a nonstandard refinance. Read on…

Today’s record-low interest rates have lots of homeowners debating whether to refinance into 15- or 30-year mortgages, but few realize lenders offer products with all sorts of repayment periods — from five-year “balloon” mortgages to 29-year loans.

Although normal repayment terms are suitable for most homeowners, it isn’t the case for everyone. We have loan programs available for those who want nonstandard mortgage refinancing products. Contact one of our mortgage professionals at SLS Mortgage of Culpeper to discuss your nonstandard refinancing needs today. (540) 216-0665