They say that home is where the heart is. Yet do you know that a mortgage is the heart of every good financial plan? Making sure you've got the right one can save you a ton of money, along with creating wealth and financial health for your family. And with home loan rates near historic lows, now is the perfect time for a home loan check up.
When it comes to determining if your mortgage is still the right one for you, some important factors to consider include the type of loan (or loans) you currently have, your current loan balance, your current interest rate, and any recent or upcoming changes to your financial situation (i.e. job change, marriage, divorce, kids going to college, etc). While analyzing your home loan can seem like a daunting task, have no fear. The mortgage professional who supplied you with this month's issue of YOU Magazine can help!
Be sure to find your loan paperwork. Remember signing all those papers at your closing...and walking away in an ink-stained blur? If you cannot find the thick packet of documents you were provided at closing, check with the title company or real estate attorney's office you closed at. They may be able to provide you a copy - sometimes for a fee - or at least point you in the right direction in tracking them down.
One of the most important documents is called the Note, which you will clearly see labeled on the top of the form. It is several pages long, and you probably have several copies of it. This document will tell you the amount of your original loan, as well as the interest rate you closed at, and most importantly, the terms of the loan itself.
Oftentimes, there is an addendum to the Note, which may or may not be directly attached to it, which can explain more details about an Adjustable Rate Mortgage (ARM). If you have an ARM, your Note will say how often your interest rate will adjust (for example, annually, semi-annually, or monthly). In addition, the Note will explain if your ARM carries a Prepayment Penalty. These are key factors in determining whether your current ARM remains the best loan for your situation.
Just as it is important to gather the information on your first mortgage, you should also gather the information for your second mortgage, if you have one. Home Equity Lines of Credit (HELOC's) and Home Equity Loans are a little bit different than a standard first mortgage, and the paperwork will look slightly different. These loans are usually called "second mortgages" since they are in second lien position behind a first mortgage.
Remember, your mortgage is the heart of your financial plan. Now is the perfect time to discuss your options with your loan professional as home loan rates remain at historic levels. But keep in mind: They won't stay this way forever
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