1. Shorten The Term of Your Mortgage. Lenders charge lower interest rates for loans with shorter terms. For fixed mortgage loans, try a 20 year or 15 year term instead of the standard 30 year fixed rate. A 20 year term is often 1/8th of an interest rate lower while a 15 year term will save you up to 1/2 of an interest rate. The drawbacks include a higher monthly payment and stricter guidelines for underwriting, but the total interest paid over the life of the loan will be dramatically reduced with a shorter term. For Fixed Period ARM’s (loans that are fixed for 3, 5, 7, or 10 years), the lowest interest rate will again be found with the shorter term loans. The 5 Year Fixed Period ARM gives you a lower rate without a lot of risk of increasing interest rates if you reasonably think you will move or refinance within the next 5 years. Note: The average homeowner is currently moving or refinancing at least every three years.

2. Improve Your Credit. Lenders often offer lower rates for select customers with extremely good credit, especially on jumbo loan amounts (loan amount in excess of $400,000 – 2006 Conforming Loan Limit). To qualify, you will need a credit score of at least 780 – a mark achieved by less than 20% of all credit scored borrowers. On the flip side, if your credit score is below 680, you may find yourself being charged a higher rate or not credit-qualified for the best programs. Similar credit score hurdles may exist at 520, 580, 620, etc. The key is to find out what your score is and then work to raise it to the next level to obtain lower interest rates or access to better loan programs.

3. Increase Your Down Payment (or Equity). One of the key parameters for loan pricing is the loan to value percentage (loan amount / home value) of your loan. Borrowers using 95% or 100% loan to value financing will find themselves paying a higher interest rate. If you have access to additional cash, find out if you can get a lower interest rate at 80% or 90% loan to value and use the different interest rates to determine the best use of your available funds. If you are refinancing, getting cash out of your house above 70% loan to value will cost more than at under 70% loan to value and the interest rates really jump at 80% and 90% loan to value. As you are researching interest rates, be sure to ask about the interest rate for lower loan to value percentages.

4. Pay Discount Points. Always consider paying discount points, or higher fees, for a lower interest rate. One discount point, 1% of the loan amount or $1,000 per $100,000 borrowed, will give you a lower interest rate on any quoted mortgage program. You will need to analyze the cost of the lower interest rate against the monthly savings that the lower rate will bring for your mortgage payment. If you pay $2,500 to lower the interest rate by 1/4% on a $250,000 loan, this will save you approximately $600 per year in interest expenses. If you plan to stay in your house for more than 4 years ($600 for 4 years), then paying a point to get a lower interest rate will benefit your pocketbook past year 4 for the remaining length of the mortgage loan.

Current Arizona renters are also leaping into the realm of first-time home buying, filled with thoughts and concerns of down payments and credit scores. Of course, if the renters don’t move quickly, they will find themselves priced completely out of the Arizona housing market.But the lending process can be so difficult and nerve-racking; how do you know who to trust? Are the rate and terms given to you by one lender truly the best available to you in your situation? In order to assist you in making the best possible decision for one of the most important purchases in your life, we’ve compiled a list of 4 tips to help you find a better Arizona lender:

The first tip: Do your homework. Research and educate yourself on the home loan and lender process, taking into account all laws governing the mortgage industry in Arizona. Lender fees, closing costs, points, escrow, adjustable rates and pre-payment penalties are just a few costs associated with a home loan.

The second tip: Get several quotes from multiple Arizona lenders. Leaving the entire mortgage process to just one lender is leaving yourself wide open to be charged astronomical fees and interest rates, and you won’t know any better because you have nothing to compare these costs to. Some mortgage brokers receive their payment from you (the borrower), lenders (financial institutions) or both. Some mortgage brokers will receive “kick-backs” to “sell” you one particular program over another. Multiple quotes are your best protection against being taken advantage of.

The third tip: Ask questions. Don’t be afraid to ask as many that you feel are necessary, as this is your home, your loan and your money. Ask about lender fees, points, as well as anything else that a lender might “accidentally” forget to inform you about. Ask them about the “Good Faith Estimate” and when you should expect to receive it.

The final tip: Don’t get personal. Mortgage professionals are working to make money, as are we all. Although some lenders will have a conscience, it’s relatively difficult to trust someone (who works on a commission basis) to truly have your best interest at heart. If you work with multiple Arizona lenders, be sure to inform each of them that they aren’t the only mortgage provider in your book. Competition is key throughout this industry, and you may just be setting yourself up for some great benefits, like free appraisals, lower fees, and a fabulous new mortgage to tell your friends about.

Understanding the marketplace and rationalizing the escalating prices has become difficult for investors and home buyers . At a time when real estate prices are soaring there are still many opportunities to buy properties that are 30 percent to 40 percent below market value. Foreclosures are one of the best ways to find great bargains.

So what is a foreclosure?A foreclosure is a legal process that a lender initiates after the borrower fails to repay the loan as per the terms of the contract. The lender initiates the foreclosure process to reclaim the possession and ownership of the property. For example, let’s say a borrower has a mortgage of $1 million on his property that is worth $1.5 million. Let’s assume monthly payments on a $1million mortgage are about $9,000. If the borrower misses three consecutive monthly payments, then at the end of the 90th day or third month the lender will file a “Notice of Default” at the county recorder’s office.

This is the notice that indicates pending foreclosure proceedings. It also indicates the auction date. At this time the borrower will have the following options:Pay off all the back payments, penalties and legal fees if any and make the loan current. As the borrower in the example has equity of $500,000 he can convert a part of that to cash by re-financing the property. Re-financing a property in foreclosure is usually difficult.Sell the property and payoff the mortgage, provided the proceeds from the sale equal or higher than the mortgage amount.The opportunity to buy a pre-foreclosure property opens the day the “Notice of Default” is filed.

The opportunity ends on the day the property is sold at the auction. The time between these two events enables a buyer to work with the homeowner and the lender to negotiate and structure a deal that could be extremely profitable. This is the only time in the entire foreclosure process where the buyer can use conventional mortgage, hard moneylenders or creative financing techniques to buy the property.Once a “Notice of Default” is filed it becomes public information, and usually there is a lot of competition from other investors due to this filing. Hence to avoid competition experienced investors use various farming techniques to spot owners before the “Notice of Default” is filed.

Properties can also be bought in auctions at bargain prices too, but one would need cash for the purchase. Bidding in an auction sale is extremely risky and one needs lot of experience and skill.What is the motivation of the seller?Once a borrower defaults on a loan his credit is at serious risk. A foreclosure stays on the credit report for a minimum of seven years. This is the prime reason why people who have defaulted their payments are extremely motivated to avoid a foreclosure proceeding.Borrowers in foreclosure are sometimes difficult to deal with, as they are confused and scared. Their self-esteem is low and they are in need of support from someone who understands the process.

As a buyer your motive should always be to help them in their tough times. If any time during the transaction a seller perceives that you are taking advantage of his or her situation, he/she always walk away from the deal.