Know Your Home Mortgage

Wednesday - 03/14/07

You can't blame a person for spending endless hours researching the latest whiz-bang electronics gizmo or hot new fashion item. Shopping for fun stuff is, well, fun. Shopping for mortgages, on the other hand, can be as grueling as finding a parking space at a shopping mall on the day after Thanksgiving.

However, the more you know about a mortgage, the smarter you'll be when it comes time to find one, or refinance the one that you currently have. A little knowledge could save you a lot of money, both on a short- and long-term basis. Here are three must-know definitions to help you on the road to home loan enlightenment:

PMI

If you can't put more than 20 percent down on a first mortgage, a lender will most likely require you to carry Private Mortgage Insurance (PMI). It's designed to protect the lender from losses in the event that you default on your loan. You can eventually refinance mortgage, and drop the insurance after your home exceeds 80 percent of the loan-to-value ratio.

Grace Period

If you fail to make your mortgage payment on its due date, you can thank your lucky stars for the grace period. This is generally a 1- to 2-week period that follows the date that your mortgage payment is due. As long as your payment is made during this window, most lenders won't assess a late fee.

Negative amortization

With some adjustable-rate mortgages, the interest rate on your loan can fluctuate and not impact your required minimum payment. If a borrower pays only that minimum payment and doesn't cover the increased interest amount, he's effectively deferring the interest payment. This amount is added to the balance of a loan, a condition referred to as "negative amortization." This is a very undesirable feature if interest rates rise.

Granted, there's more joy in learning about an ipod as opposed to a mortgage loan. However, the more adept you can become at knowing your home mortgage, the more money you'll have for the fun stuff. And that should be music to your ears.

BretlinFloridaMortgage.com - Contact us:  Phone: 904-226-0648 - Email: info@bretlinfloridamortgage.com

Apply Online Anytime: www.bretlinfloridamortgage.com  Toll Free: 800-572-5964

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