In the journey to homeownership, securing a mortgage is a pivotal step that can feel complex and overwhelming. The experience, however, is profoundly ...
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The arrival of a notice in the mail announcing that your mortgage servicing rights have been transferred to a new company can be an unsettling experie...
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When purchasing a home, particularly a condominium, townhouse, or a property in a planned community, prospective buyers must account for more than jus...
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When purchasing a home, most buyers diligently budget for their mortgage payment, property taxes, and homeowner’s insurance. However, a frequently o...
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The journey to homeownership is paved with important documents, and one of the most critical early milestones is receiving the Loan Estimate from your...
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Before you embark on the journey of applying for a mortgage, there is one crucial number you must know: your debt-to-income ratio, or DTI. This single...
Read MoreYour decision should be based on your financial picture and life goals. Choose a shorter term (15-20 years) if: Your monthly budget comfortably handles the higher payment, your primary goal is to save on interest and be debt-free faster, and you have a stable, robust income. Choose a longer term (30 years) if: You need the lower payment to qualify for the loan or to maintain comfortable cash flow, you want the flexibility to invest extra money elsewhere, or you plan to move before the long-term interest savings would be realized.
You must proactively contact your mortgage servicer (the company you send your payments to) to request forbearance. Be prepared to explain your financial hardship. It is crucial to call as soon as you anticipate difficulty making a payment. Do not simply stop paying, as this could lead to foreclosure.
Your DTI ratio is a key factor lenders use to assess your ability to manage monthly payments. Most lenders prefer a DTI below 43%, though some may allow up to 50% with strong compensating factors. To calculate it, divide your total monthly debt payments by your gross monthly income.
The main risk is payment shock. If interest rates rise significantly at the time of your rate adjustment, your monthly mortgage payment could increase dramatically. With a fixed-rate mortgage, you are protected from this risk for the life of the loan.
Recasting is an excellent strategy in specific situations, such as:
You receive a large sum of money (e.g., inheritance, bonus, or sale of an asset).
You want to lower your monthly obligations but have a low interest rate you don’t want to lose by refinancing.
You want a simple, low-cost way to adjust your mortgage after a significant principal paydown.
