A 30 year mortgage can have a negative effect on you both financially and psychologically. In some cases, it may even have an emotional impact on you. Did you know that you could end up paying an extra $100,000 over the course of a 30 year mortgage on a $200,000 loan than you would if you had the same loan spread out over 15 years? That is why many homeowners try to pay off their mortgage much earlier than scheduled. If you want to do this, here are some tips to help you make that happen.

Apply Lump Sums to Your Mortgage Payments
Do you get sizeable Christmas bonuses each year? Did you recently come into a significant inheritance? By applying these and other large lump sums to your mortgage when you get them, you can significantly reduce the amount of time that you pay on your mortgage loan. If this is money that you were not counting on anyways, you won’t miss it so why not just apply it to your house payment?

Pay More Each Month
If you have any money left over at the end of each month, one way to pay off your mortgage early is to apply that extra money to your mortgage. Be sure to pay with a separate check and contact your mortgage lender to let them know about the extra payment. You might not think a little bit of extra money each month will make a difference, but it can knock down the interest significantly which reduces the amount of time it will take to pay off your loan.

Consider Refinancing
Are you in a much better credit situation than you were when you first bought your home? If so, you can probably qualify for better mortgage rates than you have right now. You will have to pay some closing costs when you refinance, but a lower rate could save you thousands in the long run. Crunch some numbers and find out what rate you qualify for to see if refinancing is a good choice for you. Find the best current mortgage rates where you live here.

Making a Mortgage Payment Every 2 Weeks
If your mortgage lender will accept it, paying half of your mortgage payment every two weeks is a good idea to pay off your mortgage early. For one thing, this helps to stop the interest from accruing so much each month. But doing this also helps you get an extra mortgage payment in each year. That’s because you will be making 13 months of payments rather than 12 because there are 52 weeks (or 26 2-week periods) in a year.

These are just a few of the things you can do to get out from under your mortgage early. Once you see that balance begin to drop, you will start to feel a huge weight being lifted off of your shoulders and you may even start feeling better mentally and physically.

For all of the talk of the US government defaulting on its debt and rising inflation, mortgage rates have remained exceptionally low. Both the Treasury and mortgage markets do not look convinced of any future default or sharp rise in inflation.

This week, according to BestCashCow data, the average 30 year conforming mortgage rate slipped below 5% while the average 15-year FRM was 4.24 percent down from 4.28 percent last week.

I like to also look at real rates, not just averages. I've been following actual rates, not just averages for a 30-year fixed rate loan in Massachusetts with 0 points ($200,000 loan) for the past year. Last August the best rate was 4.460% with 0 points and $1,995 in fees. It's now 4.789% APY. So rates have risen from their lows last summer, but not by much. It's still a golden period for homeowners in terms of financing a home.

This fits in squarely with what is happening with Treasuries. As I wrote before, the Treasury market is showing little indication of long-term inflation concerns. The Wall Stree Journal jumped on this bandwagon yesterday with an article entitled Inflation? Numbers Show Faith in Fed. The bottom line is that while the pundits are shouting about inflation and default, the markets, where people back up their convictions with money, are showing very fear of either at the moment.

That means that from a macro standpoint, mortgage rates could stay low for some time to come. Mortgage rates though are not just set by inflation numbers. Rates are also dependent on what happens to Fannie Mae and Freddie Mac and whether the government shuts them down and privatizes them. Mortgage rates right now are subsidized by the backing of the US government. If that backing disappears, rates will rise, although by how much is unclear.

So, with housing prices down and mortgage rates near record lows, it's never been a better time to be looking to buy.

There is a common misconception that underwater homeowners who walk away from their mortgages are irresponsible with money and they have bad credit. But a recent study shows that to be false. According to a recent article in USA Today, strategic mortgage defaulters are not necessarily the deadbeat debtors that many people think. Here are some findings reported in the article that was gathered from credit bureau information:

• The majority of underwater homeowners who walk away from their mortgages have above average credit scores. Most of their scores are above 620. In today’s world, a score of 620 and above is very good.
• At least 35 percent of underwater homeowners who do not strategically default on their mortgages have credit cards that are maxed out to their limit. Only 10 percent of the strategic mortgage defaulters have credit cards that have reached their limits.
• Many strategic defaulters have not been in their home for too long.
• A large number of strategic mortgage defaulters look for new lines of credit before they default on their mortgage.

Andrew Jennings, the chief analytics officer with FICO, made the statement that strategic mortgage defaulters are “getting their life in order.” He said that FICO is going to begin using new tools that will help banks and lenders identify people who are in danger of strategically defaulting before it actually happens.

There is no way to find out exactly how many of the defaulted mortgages are strategic defaults. However, according to the University of Chicago Booth School of Business, those estimates are about 35 percent of the total number of defaults. That figure is for September 2009. That’s a 9 percent estimated increase in strategic defaults when compared to the 26 percent in March 2009. The Nevada Association of Realtors did a study in its state which showed that about 23 percent of homeowners in Nevada admitted to strategically defaulting on their mortgage.

The reason it is so difficult to identify strategic defaulters is because they are homeowners who can typically pay their mortgage payments and their other bills. Banks and lenders cannot tell that they are strategic defaulters until the homeowners start the defaulting process. With the new tools introduced by FICO and other companies, banks and lenders may be able to identify these homeowners before the default process begins so they can offer other options to them, such as rewards for paying off their mortgage loans.

Are you considering a strategic default? If so, it may be best to contact your bank or lender before you begin to default. There may be favorable options available to you that will help you stay in your home without ruining your credit.

Find the best mortgage rates where you live.

If you are considering getting a home with a jumbo mortgage this year, you need to act quickly. The two major mortgage securers – Freddie Mac and Fannie Mae – are going to reduce the mortgage limits that they will secure beginning on October 1, 2011. That gives you about five months to find a home with a jumbo mortgage and close on it if you plan on having it backed by the federal government.

The maximum limit that Freddie Mac and Fannie Mae will secure right now is $729,750. That is going to be reduced to $625,500 on October 1. As a result of this change, mortgages may become more expensive and even more difficult for buyers looking for mortgages that are above the new limits. A $700,000 mortgage will be harder to come by for buyers who do not make a down payment of at least 10 percent. Even then, lenders may be less willing to loan more than the $625,500 to buyers even if they have great credit.

These new rules mean that buyers will have to come up with larger down payments for the more expensive homes. A home that costs $1 million, for example, will require home buyers to increase their down payment from $270,000, which it would be right now, to $370,000, which it will be after October 1. On the bright side, the higher end real estate market is beginning to pick up. Realtors are reporting that they are having more success in recent months in the more expensive market than they have had in recent years. In fact, according to the National Association of Realtors, sales of homes that are in the $1 million market and above have increased by more than 5 percent in the last year. The study compared the sales figures in March of this year to the figures in March of 2010 to arrive at that conclusion.

Some analysts in the mortgage industry are expecting private mortgage lenders to pick up where Freddie Mac and Sallie Mae are leaving off. Realtor Linda Chaletzky stated that the mortgage industry will need to find a way to deal with these new rules because they will go out of business if they don’t.

However, jumbo loan limits were not always as high as they are now. It wasn’t until 2008 when those limits were increased. Before 2008, any mortgage that exceeded $418,000 was deemed a jumbo loan. But the stimulus package of that year saw Congress raise those limits not once, but twice. The first time the limits were raised to $625,000 and the second time the limit was raised to $729,750, where they are right now until October 1. These limits were only meant to be temporary anyways so lowering them back down to $625,000 should not raise much concern or controversy. It’s just something that buyers should know about if they are planning on buying a higher end home in the near future.

Find the best mortgage rates where you live.

Earlier this week, the Federal Reserve proposed new rules for the mortgage industry. Some of these new rules may seem a little complicated while others just seem like common sense. Here are some of the highlights about the new rules proposed by the federal government.

1. Banks should only give mortgage loans to buyers who can afford the payments.
You would think this is common sense financially. If someone cannot afford to pay a mortgage loan payment, why would a lender loan them the money? But many lenders were not following that simple rule which is why the mortgage mess occurred in the first place. Under the new proposal, there would be eight underwriting qualifications that a buyer must meet before they can be considered for a mortgage loan. Some of these factors include the person’s current employment status, the mortgage payment amount, assets and income, current debt payment obligations and more.

2. Creating qualified mortgages.
A qualified mortgage is one of the new concepts introduced in the new rules. This refers to a mortgage product that conforms to a set of rules in order to get “special protection from liability.” This doesn’t mean that banks and lenders cannot offer non-standard mortgages and products, but they will be vulnerable to legal liabilities if they do. Some of the rules for a qualified mortgage state that the loan cannot contain: interest-only payments, a term longer than 30 years and it cannot have a negative amortization, among other rules.

3. Some subprime mortgages are acceptable.
The federal government wants lenders to have some flexibility when it comes to offering subprime mortgages for “rural and underserved areas.” As such, they will be allowed to write some risky loans in some circumstances. These mortgage loans would have a low monthly payment but a large balloon payment at the end of the loan. This is under the presumption, however, that the owner would refinance when the balloon payment became due rather than risking default.

4. Income verification is avoidable when refinancing some mortgages
Lenders can avoid the income verification rule if they are refinancing a non-standard mortgage. A non-standard mortgage is one in which there is an adjustable rate, negative amortization or other non-traditional terms. This is only available if the homeowner is refinancing into a standard mortgage from their non-standard one.

These are just a few of the new rules proposed by the Federal Reserve. What are your thoughts about these new rules? Do they go far enough in preventing another mortgage meltdown that happened a couple years ago?

Find the best mortgage rates where you live.

The average mortgage rates have been on a rollercoaster lately, but they have remained relatively low compared to years past. We may never see the historically low rates again that we saw just a few months ago, but the rates are still holding around 5 percent.

This week, the average mortgage interest rates for a 30-year fixed rate loan stood at about 4.8 percent. That’s a drop from the previous week’s average which was 4.91 percent. Last year, the average interest rate for a 30-year fixed rate mortgage was 5.07 percent so the latest rates are about a quarter of a percentage point lower today than they were a year ago.

For a 15-year fixed rate mortgage loan, the numbers are even better. This week’s average stood at about 4.02 percent for those who qualify. That’s a 0.11 percent drop from last week’s figures which stood at 4.13 percent. Last year at this time, a 15-year fixed rate mortgage was about 4.39 percent. That’s a 0.37 percent drop which is fairly significant in the mortgage industry.

If you prefer an adjustable rate mortgage and you qualify for the best rates, you can get a five-year hybrid ARM today at a 3.61 percent rate. That’s a 0.17 percent drop from last week’s numbers and an even bigger drop from last year’s 4.03 percent average. One-year ARMs are going for even less with this week’s average standing at about 3.16 percent. That’s a 0.09 drop from last week’s 3.25 percent rate and more than a whole percentage point from last year’s 4.22 percent rate.

Frank Nothaft, the chief economist at Freddie Mac, said the rates are as low as they are because of low inflation. Mortgage rates have been below 6 percent since November of 2008 when a 30-year fixed rate mortgage would cost the buyer about 6.33 percent. In terms of monthly payments, the difference between paying on a $200,000 mortgage in November of 2008 and today would be about $173 each month. So if you qualify for these rates now and you didn’t when you first bought your home, this might be the best time for you to refinance. You can put hundreds of dollars back in your pocket each month or pay off your mortgage quicker than you thought!

Find the best mortgage rates where you live.

Are you having problems making your mortgage payments but refinancing your mortgage loan just isn’t an option for you? If so, there are other options available if you are willing to do some legwork in order to make it easier to pay your monthly house payment. Here are three such options.

1. Ask your lender if you can recast the amortization of your mortgage. For homeowners who have had their mortgage for at least five years and your loan payments have been on time every month, you may qualify to have your mortgage recast. A recast means that your mortgage loan is recalculated so that you can spread out the amortizing payments over the period of the loan. This can be especially effective if have paid down the mortgage principal at some point. It is also possible to recast a mortgage so that the principal amortizes at a slower rate at the beginning of the loan (lowering payments in the near years since they are primarily interest payments). In many cases, therefore, a recast will lower your monthly mortgage payment quite a bit to make it easier on your budget. However, since a recast delays paying off principal, it extends the loan and means that you will be paying more in the long run over the term of your loan.

2. Ask for a lower interest rate. Mortgage lenders are often willing to work with you when you run into trouble making your payments. One thing that your lender may be willing to do is to lower your mortgage rates. If you have a good record of making your payments on time, you will be more likely to qualify for an interest rate reduction so be sure to send those payments when they are due. Before you ask for a lower rate, you should be sure to check the current interest rates in your area.

3. Ask about modifying your mortgage loan to an interest-only mortgage for a couple years. By turning your current traditional mortgage into an interest-only mortgage, you can lower your monthly payment significantly. However, this may be the most difficult option as many banks are not as willing to do this as they are the other options.

These are just a few options available to today’s troubled homeowners. But just because they are options does not mean that your mortgage lender will be willing to do it. If you have a history of late payments or other problems with your mortgage payments, your bank will be less willing to work with you. That’s why it is so important to contact your lender as soon as you start having financial problems. Never ignore the problem. The sooner you call your lender about your financial problems, the more options you have when it comes to working out an agreement.

See mortgage refinance rates where you live here.