Because of the risk to lenders, in previous years, financing wasn't always available to you borrowers with low down payments. In simple terms, a down payment is the portion of your home’s purchase price that a buyer puts into the escrow. But lenders want to lend. So to mitigate the risk with downs under 20% and protect against any default on a loan, lenders now offer private mortgage insurance.
PMI enables borrowers to obtain a mortgage with a lower down payment while protecting the lender from defaults. And, as of Jan. 1, new legislation allows borrowers with household adjusted gross income of $100,000 or less who buy a home in 2007 to deduct the full cost of the mortgage insurance they pay during the 2007 tax year. PMI typically amounts to about one-half of one percent of the loan, according to the Mortgage Bankers Association of America.
So if you put 10% down on a $400,000 loan, for example. The lender multiplies 90%, or $360,000, by .005 percent. The result is an annual PMI of $1,800, which is divided into monthly payments of $150. However, creative financing treatments like the 80-10-10 loan can help homeowners with low downs avoid PMI payments.
So what is an 80-10-10 loan? The program is a package of two loans, one added on top of the other, and a 10% down payment. The 90% mortgage is made up of one mortgage equal to 80% of the sale price. The remaining 10% loan, which can be either fixed or adjustable, has a higher finance rate. However, since that higher finance rate applies to only 10% of the loan, the payments on an 80-10-10 loan are still lower than a single mortgage with PMI insurance. And the mortgage interest on the 80-10-10 loan is tax deductible.
If you have questions about an 80-10-10 program, HomeLoan123.com is ready to help.
Keeping you informed.
Doctor Mortgage
To ask HomeLoan123.com’s Doctor Mortgage a question, e-mail: info@homeloan123.com
Sunday, January 28, 2007
Saturday, January 27, 2007
Should I refinance in 2007?
As with 2006, most industry observers expect mortgage rates to rise in 2007. Still, David Lereah, chief economist for the National Association of Realtors, says buyers have a window of opportunity to secure lower mortgage interest rates.
So if you’re looking to pay off that line of credit, secure a better rate with a fixed rate or adjustable loan or consolidate debt, now is as good a time as any.
Don’t get caught up playing the rate-guessing games. You might miss a great opportunity to secure a super loan or buy the home of your dreams while waiting on the sidelines for the so-called “lowest” rate to arrive.
A good rate is a good rate. And if you plan to be in a home or secure a loan for the long term, financing or refinancing with a good lender is a smart move. Inbar Cohen would agree. Believing a rapid decline in prices would diminish the equity accrued on her Tarzana home she bought for $166,000 in 1999, Cohen sold the property for just under $400,000 in August 2003, rented a house in Encino for $2,000 a month and started looking for her dream home. Four years later, Cohen is still renting.
Dixie Long, an agent with First Team Real Estate Inc. in Huntington Beach, says Southlanders waiting for the market and mortgage rates to hit rock bottom, should ask themselves: “When is that going to happen?” So if the timing is right, and you’ve seen a home you like or feel it’s time to refinance, trust your instincts and get the loan.
If you have questions about financing that dream home, HomeLoan123.com is ready to help.
Keeping you informed.
Doctor Mortgage
To ask HomeLoan123.com’s Doctor Mortgage a question, e-mail: info@homeloan123.com
So if you’re looking to pay off that line of credit, secure a better rate with a fixed rate or adjustable loan or consolidate debt, now is as good a time as any.
Don’t get caught up playing the rate-guessing games. You might miss a great opportunity to secure a super loan or buy the home of your dreams while waiting on the sidelines for the so-called “lowest” rate to arrive.
A good rate is a good rate. And if you plan to be in a home or secure a loan for the long term, financing or refinancing with a good lender is a smart move. Inbar Cohen would agree. Believing a rapid decline in prices would diminish the equity accrued on her Tarzana home she bought for $166,000 in 1999, Cohen sold the property for just under $400,000 in August 2003, rented a house in Encino for $2,000 a month and started looking for her dream home. Four years later, Cohen is still renting.
Dixie Long, an agent with First Team Real Estate Inc. in Huntington Beach, says Southlanders waiting for the market and mortgage rates to hit rock bottom, should ask themselves: “When is that going to happen?” So if the timing is right, and you’ve seen a home you like or feel it’s time to refinance, trust your instincts and get the loan.
If you have questions about financing that dream home, HomeLoan123.com is ready to help.
Keeping you informed.
Doctor Mortgage
To ask HomeLoan123.com’s Doctor Mortgage a question, e-mail: info@homeloan123.com
Friday, January 26, 2007
How can I make sure the loan agent delivers on their promise?
Refinancing a home or securing a new mortgage can be stressful under the best of circumstances. So how can you make sure your lending experience meets your expectations?
Completing and application and verifying information is only one step in the loan process. Understanding all the elements of securing a loan, being involved and keeping yourself informed and in communication with your lender are all good tools for ensuring a smooth experience. Before you meet the loan officer, make sure to have documents that may be required to process your loan. Being prepared up front can save a lot of time and prevent anxiety in the long run.
To be prepared, secure documentation that shows your financial health such as an itemization of your current bills, existing mortgages, loans, debts and monthly payments (credit cards and car loans) and work history.
The lender also should be prepared to explain the application process and provide information on mortgage vehicles, interest rates and fees. To get the most from your lender, don’t be afraid to ask questions about rates, fees, points and anything else that concerns you.
While consumers usually complete the initial form, it is imperative that the form is accurate, so any good lender will have no problem helping you complete the form. Even when both sides are prepared, waiting to see if you got the loan can be stressful. So find out how to contact your loan officer. Make sure you stay in contact with your lender. And get detailed information about timelines and what to expect.
Remember, a good lender wants to secure your loan as much as you do. And by working together as a team and keeping the lines of communication open, lenders and consumers can make the loan approval process a great experience.
To speak with a lending agent, contact HomeLoan123.com.
Keeping you informed.
Doctor Mortgage
To ask HomeLoan123.com’s Doctor Mortgage a question, e-mail: info@homeloan123.com
Completing and application and verifying information is only one step in the loan process. Understanding all the elements of securing a loan, being involved and keeping yourself informed and in communication with your lender are all good tools for ensuring a smooth experience. Before you meet the loan officer, make sure to have documents that may be required to process your loan. Being prepared up front can save a lot of time and prevent anxiety in the long run.
To be prepared, secure documentation that shows your financial health such as an itemization of your current bills, existing mortgages, loans, debts and monthly payments (credit cards and car loans) and work history.
The lender also should be prepared to explain the application process and provide information on mortgage vehicles, interest rates and fees. To get the most from your lender, don’t be afraid to ask questions about rates, fees, points and anything else that concerns you.
While consumers usually complete the initial form, it is imperative that the form is accurate, so any good lender will have no problem helping you complete the form. Even when both sides are prepared, waiting to see if you got the loan can be stressful. So find out how to contact your loan officer. Make sure you stay in contact with your lender. And get detailed information about timelines and what to expect.
Remember, a good lender wants to secure your loan as much as you do. And by working together as a team and keeping the lines of communication open, lenders and consumers can make the loan approval process a great experience.
To speak with a lending agent, contact HomeLoan123.com.
Keeping you informed.
Doctor Mortgage
To ask HomeLoan123.com’s Doctor Mortgage a question, e-mail: info@homeloan123.com
Thursday, January 25, 2007
How can I change my credit score?
Although changing your credit score might seem like a mythical act, you have the power to change your credit score. Changing your credit score might require amending personal spending habits or paying bills in a timely manner. But all too often, the real credit score offenders live on your FICO report. And with as much as 50% of all credit reporting agency data reportedly listed incorrectly, looking at your report is the first step toward improving your credit score.
To get a copy of your report, check with the big three reporting agencies: Experian, (formerly TRW), www.experian.com, 888-397-3742; Equifax, www.equifax.com, 800-685-1111; and Trans Union, www.transunion.com, 800-916-8800. Some companies offer free credit reports, so go ahead and ask.
Federal and State laws require that derogatory information bankruptcies and other items that are not accurate or can’t be verified in a timely manner be removed.
If you find erroneous information on your report, write a letter to the credit reporting agency stating your position and why you feel the information is incorrect. Include supporting documents and request that the item be amended or deleted. The CRA is required to investigate. This will usually take about 30 days. The CRA will respond and should include a free copy of your credit report. If they don’t remove or amend the item, contact the creditor who placed the item on your credit and write to the Federal Trade Commission. Explain the problem and request help resolving the issue.
It might take time, but it will be worth the effort to change your credit score.
If you have questions about your credit and financing, HomeLoan123.com is ready to help.
Keeping you informed.
Doctor Mortgage
To ask HomeLoan123.com’s Doctor Mortgage a question, e-mail: info@homeloan123.com
To get a copy of your report, check with the big three reporting agencies: Experian, (formerly TRW), www.experian.com, 888-397-3742; Equifax, www.equifax.com, 800-685-1111; and Trans Union, www.transunion.com, 800-916-8800. Some companies offer free credit reports, so go ahead and ask.
Federal and State laws require that derogatory information bankruptcies and other items that are not accurate or can’t be verified in a timely manner be removed.
If you find erroneous information on your report, write a letter to the credit reporting agency stating your position and why you feel the information is incorrect. Include supporting documents and request that the item be amended or deleted. The CRA is required to investigate. This will usually take about 30 days. The CRA will respond and should include a free copy of your credit report. If they don’t remove or amend the item, contact the creditor who placed the item on your credit and write to the Federal Trade Commission. Explain the problem and request help resolving the issue.
It might take time, but it will be worth the effort to change your credit score.
If you have questions about your credit and financing, HomeLoan123.com is ready to help.
Keeping you informed.
Doctor Mortgage
To ask HomeLoan123.com’s Doctor Mortgage a question, e-mail: info@homeloan123.com
Wednesday, January 24, 2007
What does my credit score really mean?
Past payment history used to be a major factor lenders considered when deciding whether to lend money. Today, more lenders look at the relationship between credit scores (FICO) and mortgage delinquencies.
The chart below shows the likelihood of a 90-day delinquency related to specific FICO scores.
FICO Score Odds of a Delinquency
595 2.25 to 1
600 4.5 to 1
615 9 to 1
630 18 to 1
645 36 to 1
660 72 to 1
680 144 to 1
700 288 to 1
780 576 to 1
So while about 50% of borrowers with scores below 595 became delinquent, borrowers with scores about 700 are a good bet for lenders. And because lenders often reward borrowers by reducing the cost of a loan, it pays to have a good FICO score.
FICO, which stands for Fair Isaac & Company, scores are generated by three major credit bureaus TRW (Experian), Equifax, and Trans-Union. Because each bureau places emphasis on different factors, scores can be different for each agency, but FICO scores range from 350 to 850.
Delinquent payments, too many new credit accounts opened within the past 12 months, limited or no credit history, being maxed on the balances related to revolving credit and public records (tax liens, judgments or bankruptcies) impact your FICO score. And because too many recent credit inquiries can negatively impact your credit score, when you are looking for a mortgage or shopping for any big-ticket item that might require the potential lender to run a credit inquiry, try and settle on a lender before allowing numerous firms to run your credit.
To keep your credit healthy, pay your bills on time, limit your credit use, don’t apply for unnecessary credit cards, don’t max out your credit cards and limit credit inquiries.
If you have questions about your credit and financing, HomeLoan123.com is ready to help.
Keeping you informed.
Doctor Mortgage
To ask HomeLoan123.com’s Doctor Mortgage a question, e-mail: info@homeloan123.com
The chart below shows the likelihood of a 90-day delinquency related to specific FICO scores.
FICO Score Odds of a Delinquency
595 2.25 to 1
600 4.5 to 1
615 9 to 1
630 18 to 1
645 36 to 1
660 72 to 1
680 144 to 1
700 288 to 1
780 576 to 1
So while about 50% of borrowers with scores below 595 became delinquent, borrowers with scores about 700 are a good bet for lenders. And because lenders often reward borrowers by reducing the cost of a loan, it pays to have a good FICO score.
FICO, which stands for Fair Isaac & Company, scores are generated by three major credit bureaus TRW (Experian), Equifax, and Trans-Union. Because each bureau places emphasis on different factors, scores can be different for each agency, but FICO scores range from 350 to 850.
Delinquent payments, too many new credit accounts opened within the past 12 months, limited or no credit history, being maxed on the balances related to revolving credit and public records (tax liens, judgments or bankruptcies) impact your FICO score. And because too many recent credit inquiries can negatively impact your credit score, when you are looking for a mortgage or shopping for any big-ticket item that might require the potential lender to run a credit inquiry, try and settle on a lender before allowing numerous firms to run your credit.
To keep your credit healthy, pay your bills on time, limit your credit use, don’t apply for unnecessary credit cards, don’t max out your credit cards and limit credit inquiries.
If you have questions about your credit and financing, HomeLoan123.com is ready to help.
Keeping you informed.
Doctor Mortgage
To ask HomeLoan123.com’s Doctor Mortgage a question, e-mail: info@homeloan123.com
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