Examine Quicken Loans' YOURgage, a Customized Mortgage Program
Quicken Loans has a new mortgage product, the YOURgage. YOURgage is designed to offer you greater flexibility and choice than you can find in the standard mortgage loans available.
In reviewing the innovative loan program, Quicken Loans' goal is for YOURgage to match you with a loan that fits your individual needs and circumstances. What differentiates YOURgage is that it is a custom mortgage with a flexible term. With YOURgage, you can customize the loan term to fit your needs, so you get a loan that is tailored to accomplish your specific financial goals.
Normally, when you shop for a mortgage you have a limited menu to choose from. 30-year fixed loans and 15-year fixed loans are, by far, the most common options. Most lenders are trying to fit you into one of these boxes. Quicken Loans' YOURgage, instead, allows you to set the term of your loan to any length between 8 years and 30 years. Instead of trying to fit you into a one-size-fits-most box, YOURgage allows you to adjust your loan to your individual needs and goals.
With YOURgage, you can:
- Customize Your Loan Term- YOURgage offers you the flexibility to refinance without resetting the term of your loan. For example, if you have a 22 years left on your 30-year loan, you can choose a new 22-year loan to take refinance you current mortgage. You can take advantage of the low rates without restarting the clock on another 30 year mortgage.
- Customize Your Loan Payment- With YOURgage, you have the ability to determine how much you want to pay each month and then select the loan term that matches your desired monthly payment.
- Customize Your Loan to Your Life's Needs- You may want to pay off your loan, before your income drops or before you take on another major expense. YOURgage can help you, if you want to have your loan paid off by the time you retire or when you need to start paying for college for your children.
Quicken is not the only lender that offers this kind of customized mortgage loan, but it is the most high-profile.
Fixed-rate Loans Only
YOURgage loans are restricted to fixed-rate loans. There are no adjustable loans available in the YOURgage program, although Quicken Loans does offer other adjustable loans. The lack of adjustable rate mortgages (ARMs) in the YOURgage problem is not currently a big problem, as ARMs make up only about 4% of mortgage loans that consumers take out.
Purchase and Refinance Loans
YOURgage loans can be taken out for purchase loans, as well as refinance loans. Purchase loans require as little as a 5% down payment, as long as you are financing the purcahse of your primary home. Quicken Loans' YOURgage refinance loans can have a loan-to-value as high as 95%. Both YOURgage purchase and refinance loans are restricted to loans between $25,000 and $417,000.
The biggest effect of YOURgage is psychological. By showing you that it is working to customize a loan to fit the your needs, Quicken Loans is separating itself form all the other lenders that are competing for your business, but who have only identical loan products to offer.
As a borrower, you need to focus not only on the length of the loan term, the size of the monthly payment, and the total cost to pay off your loan, but also on the fees associated with your loan and the interest rate you are offered. It is not worth paying more for a 22 year loan, if you can find a 25 year loan with cheaper costs and a lower interest rate. Remember that most any fixed-rate loan allows you to accelerate the principal payment on your loan, so you can take out a 30-year loan and make a payment that will pay off the loan in 22 years.
It is possible that you will find it easier to make accelerated payments when it is the required payment you see listed on your monthly YOURgage statement, but committing to the higher payment that comes with a shorter-term loan is not without risk.
Bills.com advises you to be very careful about committing to a shorter term loan, especially if it takes two incomes for you to comfortably make your mortgage payment. Few people have a rainy-day fund built up with enough money to cover their mortgage payments (and other bills) if there is a job-loss or an unexpected interruption in income. If you have a longer term loan and, therefore, a smaller monthly payment, you can over pay on the principal when you can afford to do so, but are not at risk of defaulting on your loan if you make only the required monthly payment. On the other hand, if you take a shorter term loan, in order to pay off the loan sooner and reduce your long-term costs, you must make the higher payment every single month, or put your home at risk.
Quicken Loans' YOURgage offers you a way to adjust the length of your mortgage loan and the size of your payment to fit your specific needs. While customizing a loan may benefit you, make sure that you shop around to see what other mortgage loans are available and compare the costs of all your available choices. Look at the interest rates, the costs associated with the loan, the length of time that your lender is locking in your rate, and the lender's general reputation for honesty and reliability.