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More Changes for the Mortgage Market?

By now, most consumers anticipate that the days of the under-five percent interest rate for a thirty-year mortgage are either fast fading or already passed in most areas of the country. What some consumers may not be aware of is that other factors that have to do with mortgages may also fade out this year. One of those factors is the amount of down payment required to obtain approval for a mortgage.

Five Percent Down Payments May Disappear Too

Even as interest rates are on the rise, there is also a good chance that many lenders who currently settle for less than a five percent down payment will require more in order to approve mortgages. The reasons for this are fairly straightforward, considering that each time a lender grants a mortgage, the lender is taking on some degree of risk. By increasing the minimum amount required for the down payment, a lender helps to minimize a little more of that risk factor, something that is very important in today’s marketplace.

This is not necessarily a bad thing for consumers. A larger down payment means a smaller balance to finance, which in turn can mean the ability to either enjoy lower monthly mortgage payments or possibly even go with a twenty-year term rather than a thirty-year mortgage duration. In any event, make it a point to determine how much of a down payment you can reasonably afford to make on the home of your dreams. As the year progresses, that amount may be more important than it has been in recent years.

Safeguarding Yourself During a Mortgage Refinance

There are many instances in which a mortgage refinance is a good idea. At times, the goal is to restructure the debt so the monthly payments are more affordable. There are also situations in which the primary goal is to lock in a more competitive interest rate. Regardless of the reasons behind the refinancing, it is important to protect your interests as you choose a lender and commit to a new set of terms and conditions.

Read the Contract Thoroughly

Unfortunately, many people are more concerned with reading the sections that have to do with the interest rate and the amount of the new monthly payment. While those sections are very important, glossing over the rest of the agreement is something that every consumer should avoid at all costs. This can be self-defeating in the long run, as there is a good chance that the contract includes information that is vital if the debtor is to gain the most benefit from the contract. For example, finding out that one late payment will result in increasing that great rate of interest is something that the homeowner needs to understand before a payment is late, not afterwards.

Also makes sure the provisions of the contract are in compliance with current regulations. The assumption by most consumers is that greater legal minds than theirs have already approved the terms, so they must be correct. Assume nothing. Read the contract thoroughly, ask a lot of questions, and make sure you know exactly what you are getting into before anything is signed and the mortgage goes into effect.