Scripps Howard News Service
I get a lot of e-mails from readers who ask for advice about their personal mortgage problems.
Before sending an e-mail, here are some points to consider:
1. You can search out a lot of information on your own that will help you make a smart decision on your own.
There is an easy-to-use mortgage calculator on www.hsh.com that lets you see exactly how much you'll have to pay under various scenarios. Change the mortgage amount, change the interest rate, change the term of the mortgage and see how much you'll save by paying some extra amount each month.
Mortgage calculators figure out principal and interest but not property taxes or insurance. Keep that in mind when you compare the online results to what you're paying now if you make a payment that includes escrow for taxes and insurance. This site also has educational information on various mortgages.
2. There are dozens of places on the Internet to check for mortgage rates.
The "best" rates may not be available in your area because competition and lenders differ from place to place and national lenders seldom offer any bargains. Also, be aware that the rates you see in the newspaper or on computer sites aren't the only ones offered. You can get a mortgage with no points from almost any lender.
You can pay a bundle of points to get a really low rate. You can get a term of 20 years, though it's almost never advertised. Pick up the phone and call a number of lenders. It takes time, but the payoff can be worth the hours invested.
One of the consistently best sites for mortgage rates is www.bankrate.com. It's easy to use and you can see both the best rates nationally and what's on offer in your area.
3. Consider psychological factors when you make a decision.
Perhaps you have a taste for risk. If so, one-year adjustable mortgages, home equity lines with variable mortgage rates and big mortgages may not cause you any worry. Sometimes people who can tolerate financial risk get the best deals. Such a person might be more willing to go into debt to get a new car, as well, and to borrow to maintain a certain lifestyle.
The thinking is: live as well as you can while still being able to comfortably pay the bills. Don't worry about the overall debt, especially since much of it is deductible on federal income taxes.
Other people are acutely uncomfortable with debt and risk. They make big down payments if they can, get the shortest-term mortgage they can afford and mail off extra mortgage payments whenever possible.
Their goal is to be debt-free. Like 70 percent of taxpayers, they may not itemize on federal income taxes and so get no deduction on mortgage interest. The thinking is: live conservatively so that you'll be able to handle whatever problems arise down the line.
4. Knowing what your financial philosophy is can help you make your own decisions.
Being familiar with financial terms also helps and again there are many sites that have easy-to-digest educational value. The www.aarp.com site is a good one for anyone near or at retirement age. Click on "money and work."
All the big mutual fund sites have tons of financial information, mostly on investing but also on more general money ideas. The sites www.fidelity.com and www.vanguard.com are two of the biggest. All the big mortgage companies have sites with lots of information on mortgages and explanations of terms.
If you still feel hopelessly confused, see if you can arrange a one-time session with a financial adviser--one who works on fees, not commissions. Even one session can clear up a lot of cobwebs.
Resources AARP
This association promotes independence, dignity and purpose for older Americans. Its resources are dedicated to national and community-based programs, advocacy efforts on the state and national levels, and extensive educational and information programs.
AARP
Phone: 800-424-3410
E-mail:
member@aarp.org
Website:
www.aarp.org
Vanguard Fund Finder
Vanguard Group, Inc.
Toll Free Phone: 800-871-3879
URL:
majestic.vanguard.com/FP/DA
HSH Homeplans mortgage information
The nation's largest publisher of consumer loan information.
HSH Associates, Financial Publishers
1200 Route 23
Butler, NJ 07405
Phone: 973-838-3330
Toll Free Phone: 800-873-2837
Email:
info@hsh.com
URL:
www.hsh.com
