When it comes to a Boca Raton mortgage, there are a wide range of alternatives: variable rate, interest only, convertible (variable to fixed), jumbo, FHA, reverse. Here is an explanation of mortgage loans, plus a general idea on mortgage loan rates. Add this to your list of things to do in Boca Raton!

3/1 ARM — A 3/1 ARM is an adjustable-rate mortgage, or ARM, that has an initial interest rate for the first three years, and thereafter adjusts each year. The mortgage lenders annual rate adjustment is based on (or “indexed to”) another rate — often the yield on a Treasury note. The rate can only change within limits — by a specified amount each year, and a specified amount over the life of the loan. Most variable rate loans have specified limits (capped at a certain interest rate) – in addition they may also limit the adjustment (e.g. only increase 1% every six months). A typical mortgage rate is currently 3.25%

30-year fixed — 30-year fixed mortgages are loans that have an interest rate that stays the same for the 30-year term of the loan. Despite the fact that the average loan-life is only five years, a high percentage of loans are fixed rate for 15,20 or 30 years, because many homeowners like to be able to budget without the long-term uncertainty. A typical Boca Raton mortgage rate is currently 4.25%.

30-year jumbo — A 30-year jumbo mortgage loan is a home loan that exceeds the limits set by federal mortgage institutions Fannie Mae and Freddie Mac (the 2010 limit is $417,000). Jumbo mortgages generally have a slightly higher interest rate than smaller (sometimes called “conventional” or “conforming”) mortgages. A typical variable rate is 4.5%. Because the rate is higher than a conventional mortgage, some people with a loan near the limit look to borrow the maximum amount as a First mortgage, and then ‘top-up’ the additional amount with a Second separate mortgage. Ask your mortgage broker for more details

Interest Only – this mortgage can just be a pure interest only loan, which minimizes monthly payments. This is often used by investors looking to maximize their cash-flow and minimize their tax liability, but can be more risky as none of the principal is repaid and relies on increasing capital appreciation. A blended option is also available where there is a 30 year fixed rate mortgage with a 10 year interest only period followed by a 20 year interest plus amortizing principal payment.

Reverse mortgage – A reverse mortgage is a loan typically made to an older homeowner, which pays out on a monthly basis and is not repaid until the borrower dies, sells the house, or moves out permanently. Effectively this puts more money in the pockets of seniors, at the expense an inheritance, but can be used for any purpose you like such as Boca Raton travel! The vast majority all of reverse mortgages initiated today are insured by the FHA under the Home Equity Conversion Mortgage (HECM) program, and has a limit of $625,500. The current rate according to Boca Raton Mortgage is around 5%.

Home Equity Line of Credit (HELOC) – these are a refinance mortgage loan which is set up as a line of credit for some maximum amount, rather than for a fixed amount. All HELOCs are adjustable rate mortgages (ARMs), but are tied to the prime rate and typically adjust much faster than a standard ARM mortgage, sometimes on a daily basis. As an example, using a standard mortgage you might borrow $200,000, which would be all be lent at closing, but with a HELOC, your credit line is agreed in advance up to $200,000, and can be accessed at any time, usually by writing a check, or using a special credit card. Most HELOCs are second mortgages, but can also be first mortgages, which can be attractive with low prime rates, but can rapidly move against you if rates rise.

Graduated Payment Mortgages – these are FHA mortgages for people such as recently graduated students, who currently have a low to moderate income, but are expecting that to rise significantly over the next 5 to 10 years. This is known as a Section 245 FHA program. Typically these mortgages will increase at a rate of 2-3% in the first five years of the loan. The lower qualifying rate of these mortgages can help borrowers borrow more, but can result in an increasing loan balance during the early years.

It seems an age ago already, but there was a time when it was easy to get a Boca Raton mortgage for just about anybody. However these days, getting a mortgage is much harder than it was a couple of years ago, especially for the small business owner. Banks rate small businesses or self-employed workers as a much higher risk than employees. Actually a worker can be let go at the drop of a hat, whereas a self-employed person can keep working through difficult times. But that’s the way Boca Raton mortgage lenders assess lending risks. One alternative is the Federal Housing Association (FHA), which has proved more flexible than most commercial banks. Providing you have two years of excellent credit, even with past credit blemishes, as long as you can document good reasons, there is a good chance of approval with the FHA. It accepts reasons for past credit issues as job moves, job loss and health problems. So look at a possible FHA loan as a self-employed person.
Your credit score that the FHA will review is typically based on a FICO number. Your credit score is a number that is supposed to show how likely you are to pay bills, or how creditworthy  you are.  For a self-employed loan, the FHA looks at your credit score, together with additional information. It is worked out by looking at your individual credit history files.  It is used by many Boca Raton mortgage lenders that use a risk-based system to decide if you are likely to default on your financial obligations to the lender.  Your credit score typically comes from one of the three major credit bureaus – Experian, TransUnion or Equifax.  Each bureau has different methods of calculating credit scores. FICO, is the most widely known type of credit score, and produces a score in the range 300-850.

Now is a good time to think about looking at a Boca Raton mortgage for refinancing your home or business. Locking in a good interest rate is often a matter of good timing, and as you will be aware, in the current economic climate, interest rates are at multi-year lows. When the economy inevitably recovers (slow though it may be) it is almost certain that that inflation will increase. The knock of effect will be rising Boca Raton mortgage interest rates. So if your current mortgage is not optimum for your current situation economically speaking, this is probably a good time to consider a refinance. But first there are several factors to consider.

First of all you need to thoroughly check all the best rates available. As background information, you will need to know the amount of equity in your home, your credit score or credit history, and the approximate monthly budget you have, to get a clear view of your options (and to decide if refinancing is the best choice). A good place to start is your current lender – you may want to check into refinancing with them as a first step. They already know your repayment history, and you will have a track record with them. If it is a local bank, they should be more flexible working with you in the event of a future problem.

Doing enough early research is a key to getting the best deal. There are many ways to do this research. Looking through your mail is one option, and will result in getting possibly better offers than if you go through your favorite bank. However, if you want to actually go through and find the best Boca Raton mortgage refinance rate, then you will need to go through quicker methods. So also check into radio, television, magazines, tabloids, and even the internet are great routes for your research. Make sure to look online. There are many resources online, and finding the best refinance home loan rate is possible online. While a final decision will require a more in-depth meeting, you can usually narrow your choices by making a few short phone calls. In addition to interest rates, you should also find out any upfront costs of refinancing. (If a lender offers programs that don’t require you to pay anything out of pocket, the closing statement may have additional costs that are deducted from your share of any equity. Long-term, if your monthly payment is lower, most likely your total cost will be higher. Check changes to financial terms. Most people want to get rid of uncertain Adjustable Rate Mortgages and balloon payments, but you want to keep the option of prepayment without penalty. And if refinancing includes a second mortgage, will you be able to afford both payments? Does the lender require additional insurance or other escrow payments?

Once you have found a good deal, you will need to gather the required paperwork. You can speed up the refinancing process by taking all the necessary documentation to your first appointment. Taking the time to find out what your bank or lending institution requires will help you avoid unnecessary delays and multiple appointments.
Refinancing can be a long and painful process, but following these simple Boca Raton mortgage refinancing steps will make your experience much less stressful. Preparation is the key to making an informed decision that will help you achieve your refinance.