What To Look For in a Home Loan

New home and keys

Shopping for a mortgage probably doesn’t top your list of fun things to do this week, but it’s not something that should be rushed. Want to get a good deal on a home loan? Here are four important things you should be looking for during your comparison shopping.

The Interest Rate Isn’t Everything

If you only focus on the interest rate, you’re going to end up with a mortgage that costs you more than you want to pay. Why? Because home loans also come with fees or closing costs. That’s why interest rates are also advertised with the loan’s annual percentage rate (APR), which is the cost of the loan over one year including interest and fees. Unfortunately, there is no standard for which fees must be included in the APR so don’t assume that number paints the whole story.

Comparing loan offers can be tricky because one lender may have a lower rate but higher fees. Mortgage lenders are required to disclose most loan costs on the Good Faith Estimate (GFE) which explains fees associated with the loan. The GFE can be used to effectively compare mortgage offers.

Adjustable Rate vs Fixed Rate

For most homeowners, a fixed rate mortgage makes the most sense. This means your interest rate will stay the same for the life of the loan and your monthly payments will be unchanged. With an adjustable rate loan, you may get a lower rate (and lower payments) initially, but mortgage rates are on the rise. When your loan resets, your interest rate can go up along with your payments. This can make your mortgage unaffordable.

There are some situations in which an adjustable rate mortgage (ARM) makes sense:
Know If You’re Paying Points

  • You are planning to sell your home before your rate resets.
  • You are expecting your income to rise significantly.
  • You are planning to refinance into a new loan in a few years. This may be the case if you have bad or fair credit when you get the mortgage but are taking steps to boost your credit score over time.

One point or discount point is equal to 1% of the principal amount of your loan. With a $200,000 loan, a discount point is $2,000. These points are a form of prepaid interest or fees that lower the interest rate on your mortgage. The more points you pay, the lower your interest rate — but it’s not always a great deal.

You can pay anywhere from 0 to 4 points on a home loan, but whether you should pay points depends on whether you have that much money to put down at closing and how long you’re going to live in the house. The longer you plan to stay in the home, the more you will save in the long-run by paying points. If you plan to sell in a few years or you want the lowest possible closing costs, look for a loan without discount points.

Are You Stuck with Private Mortgage Insurance (PMI)?

If your down payment is less than 20%, chances are you’re going to be paying for mortgage insurance. Mortgage insurance protects the lender if you default on the loan and it’s typically a payment you must pay in addition to your monthly mortgage payment until you reach 20% equity. As you can imagine, PMI isn’t cheap. Depending on your loan, you can expect the monthly PMI to be anywhere from $115 to $150 or more.

If you can’t put down 20% but you don’t want to pay PMI, there are alternatives:

  • Get a second mortgage or 80-20 mortgage. This means taking out a first home loan for 80% of the home’s value, avoiding the PMI, and taking out a second loan that brings you up to the sales price.
  • Lender programs without PMI. Some lenders advertise loans with no private mortgage insurance and low down payments. One example is Bank of America, which has partnered with Freddie Mac and Self-Help Ventures Fund.
  • USDA loans don’t have PMI, but there is an upfront insurance premium instead. The good news is this fee is much lower than PMI and it can be financed into your mortgage. You do need to buy a home that’s USDA-eligible.
  • VA loans don’t have PMI either. In fact, VA loans are almost always the best solution for eligible borrowers. VA loans do have a funding fee that depends on service credit, down payment, and whether it’s your first time using your VA loan entitlement, but the fee is still lower than PMI and can be rolled into your loan.

When It’s Time To Receive Hospice Care

Helping hands, care for the elderly concept

If you’re faced with the decision to begin hospice care for a loved one, it means you’re coming to terms with their impending demise. You’ll be part of the closing act of their life, and it should be comforting to know that the goal of every hospice worker is to create a safe, pain-free, and peaceful finale.

Often, when people think of hospice care, they picture frail, elderly, cancer-ridden patients, and while that is quite often the case, it’s not always true. There are people of all ages suffering from a variety of ailments and injuries who require hospice care because their condition is terminal.

Hospice care doesn’t mean that curable conditions like bladder infections and pneumonia won’t be treated. It does mean, however, that they’re not going to try to cure the terminal illness with aggressive treatment that offers little if any benefit.

How to Know it’s The Right Time

If you’re the primary care giver, there are a number of signs of decline that may lead you to inquire about hospice care. Every case is different, but in general, the following indicators of failing health should be noted and passed on the patient’s doctor:

  • Continued weight loss
  • Increased pain
  • Difficulty swallowing
  • Gradual decrease in eating and fluid intake
  • Shortness of breath
  • Increased confusion

There are also medical guidelines for qualification for hospice care:

  • Two physicians have to agree on a six-month prognosis
  • The patient has ceased aggressive curative treatment
  • The physician recommends, but the patient or designated power of attorney decides
  • The patient always has the right to reinstate traditional treatment
  • Hospice care does not prolong or hasten death

What are the Benefits of Hospice Care?

One of the most appreciated benefits comes from caregivers who no longer feel alone. In addition, hospice programs generally provide:

  • A team comprised of a nurse, doctor, and social worker
  • Clergy can be provided if desired
  • Pharmaceutical pain management
  • Therapy
  • Medical supplies and equipment
  • Counseling
  • Constant care in times of crisis
  • Bereavement services

How Does Hospice Help Caregivers?

Most often, it is spouses or adult children who are primary caregivers. In-home hospice provides support and guidance and works in conjunction with the caregiver.

Hospice nurses understand that the caregiver is a vital link between all parties involved – hospice, the patient, the caregiver, and other family members. Hospice provides support in the form of:

  • Instruction related to patient care
  • Emotional support
  • Respite care
  • 24/7 on-call nursing for questions and emergencies
  • Grief counseling when the time comes

Hospice is Provided in a Variety of Environments

In-home
In-home hospice patients have all the benefits of a hospice program, plus, they’re in their own home – no small thing.

In Nursing Homes
Nursing home patients who meet the criteria for hospice care are able to remain in familiar surroundings as the shift is made to palliative care provided by qualified hospice nurses.

In Freestanding Hospice Facilities
Hospice facilities are often the best answer for families who are unable to accommodate the medical equipment and supplies, cannot be home to care for the patient, or who need a freestanding facility for any number of valid reasons.

In Hospitals
Hospice care in the hospital is often started prior to discharge to home, where the care will continue. Often, the care is short-term because death is imminent.

Don’t Assume You Can’t Afford Hospice Care

Coverage for hospice is available through:

  • Medicare
  • In many States, through Medicaid
  • Private Insurance
  • HMOs
  • Some hospices that run on donations that provide free services or payment based on ability to pay

…Death and Taxes

People face their demise in different ways. Religious beliefs provide peace to many people. Others believe they’ll be going into the great unknown. Then there are those that see the end as just a poof and they’re gone.

But before they go, if they receive hospice care, their pain will be lessened, they’ll be symptom free, and they’ll have time to make their wishes known. They’ll be able to focus on spending time with family members as they reunite and reminisce. It’s not uncommon for the sound of laughter to ring out from a hospice patient’s room.