Can Mortgage Impounds Get You a Better Mortgage Interest Rate?By Sheryl Landrum
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Underwriting guidelines for lenders have tightened over the flood of recent mortgage foreclosures. Many lenders have also dropped home loan programs that are equated with a higher risk of mortgage foreclosure such as short term adjustable and option ARMs (adjustable rate mortgages). Mortgage loan foreclosures are not specific to homeowners unable to make their mortgage payments, however; the inability to pay property taxes, HOA assessments and dues, and homeowner's insurance can also cause foreclosure.
Adding the cost of monthly impounds to a mortgage payment will make your monthly "nut" more expensive; however, it can help to ensure all your home loan costs are met on a monthly basis and will reduce the risk of defaulting on taxes and insurance which can lead to foreclosure and other problems. You can add impounds retroactively if you want and you can usually reduce your interest rate when opting for impounds on your new home loan.
About the Author
Sheryl Landrum is a Senior Loan Officer with Charter Funding, Inc. in Carlsbad, California and a freelance writer on mtgage issues.
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