Times have changed in the housing, but most experts agree that if you can afford it, buying a home is a great investment. Still, with so much talk about foreclosures in the media, you might be wondering how to make sure the loan you choose is right for you.
Don’t worry. Despite recent media reports, experts say most home loan defaults result from life circumstance changes such as a significant adjustment of income from a job loss, health problems, marital changes or a death in the family. Bad loans amount for a small percentage, 1% according to some lenders, of problems.
• Still, here are a few things to consider when evaluating a home loan.
• Make sure you understand all the terms of your loan. Ask if and when the payment could increase and by how much. Find out about prepayment penalties, balloon payments due at the end of the loan, fees, increases in monthly payments tax and insurance implications related to the loan.
• Don’t overextend yourself financially. Make sure you can afford the loan.
• Keep a prudent reserve of funds for additional expenses such as unforeseen home repair costs, insurance and taxes.
If you have a financial change that requires attention, talk to your lender first or the lender’s loan mitigation department.
A notice of default is a public document and can be recorded by a lender when the debt is as little as 30 days late, making many borrowers subject to scams that range from people offering to talk to the lender for a fee paid upfront, of course – to scammers who encourage the owner to put the property in the scammer’s name as part of a lease and buy-back program that can result in the owner losing all rights to the home.
Even if your problems are temporary, let your lender know what is happening.
If you have questions about financing a home or concerns about your current loan, 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
Tuesday, April 17, 2007
Tuesday, April 10, 2007
Should I get a loan from a builder’s in-house lender or an unrelated lender?
While you can borrow from any lender who will take your business, buyers who go with a builder’s in-house lender often get inducements and financial incentives. So while a builder can’t list a home for $400,000 and raise the cost by $10,000 if you go with your own lender, that same builder can reduce the sale price of that same house by $30,000, for example, for a buyer who chooses the builder’s preferred or in-house lender. And while there is money to be made within the in-house lending arena, the real reason most builders promote in-house funding is to keep the sale from falling through.
For consumers, one of the advantages of working with a preferred lender is proximity to the developer’s team (design, construction and sales personnel), the lender and access to important documents such as public reports, appraisals for certain loans, purchasing agreements and information about any covenants, conditions and restrictions applied to homeowners who live in the area.
Being at the center of the transaction can provide a great buying-lending experience that comes from having all those involved working toward the same goal from the same platform. It also means the lender and the builder can amend some rules expediting the sale, for instance, buying down the mortgage to lower your interest rate and reduce your monthly payments for the first few years, paying closing costs or sweetening the pot with credit toward options like better carpeting and kitchen upgrades.
Still, when working with an in-house lender, make sure your loan covers any fees associated with those incentives, extras or upgrades. Lock in a good interest rate on the loan. And find out the best time to solidify your rate.
Although the line of communication between the builder and their in-house lender should be wide open, don’t assume it is. It is important to know where your loan is in the lending process. So be your own lending advocate, and make sure the in-house lender is in touch with the builder and you.
Ultimately, and no matter what the incentives or enticements, remember, you have a choice about your lender.
So do your homework, compare loans, rates, costs for every portion of the deal. And find the option that is best suited to your needs.
If you have questions about financing a 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
For consumers, one of the advantages of working with a preferred lender is proximity to the developer’s team (design, construction and sales personnel), the lender and access to important documents such as public reports, appraisals for certain loans, purchasing agreements and information about any covenants, conditions and restrictions applied to homeowners who live in the area.
Being at the center of the transaction can provide a great buying-lending experience that comes from having all those involved working toward the same goal from the same platform. It also means the lender and the builder can amend some rules expediting the sale, for instance, buying down the mortgage to lower your interest rate and reduce your monthly payments for the first few years, paying closing costs or sweetening the pot with credit toward options like better carpeting and kitchen upgrades.
Still, when working with an in-house lender, make sure your loan covers any fees associated with those incentives, extras or upgrades. Lock in a good interest rate on the loan. And find out the best time to solidify your rate.
Although the line of communication between the builder and their in-house lender should be wide open, don’t assume it is. It is important to know where your loan is in the lending process. So be your own lending advocate, and make sure the in-house lender is in touch with the builder and you.
Ultimately, and no matter what the incentives or enticements, remember, you have a choice about your lender.
So do your homework, compare loans, rates, costs for every portion of the deal. And find the option that is best suited to your needs.
If you have questions about financing a 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
Thursday, April 05, 2007
How much money do I need to buy a home?
Home prices and the type of mortgage you get factor into how much you need to buy a home. But a typical home purchase has three main costs a deposit, a down payment and the closing fees.
The deposit or earnest money tells the seller that you’re a serious buyer. When you submit your offer on the home, the real estate agent will take the deposit and put the money into an escrow account. If the seller accepts the offer, the deposit will be applied to your down payment. If the offer is rejected, the deposit should be returned to you.
The next cost is a down payment, a percentage of the price of the home that you fund directly. Some loans require a down payment to be 10% or 20% of the purchase price. And many programs allow qualified buyers to put as little as 0% or 3% or5%, so ask your lender about the various options. But the more you put down initially, the lower your monthly payments, so it is important to determine what you can afford.
To determine what you can afford, most lenders look at your ratio of debt to income. Today’s automated underwriting systems suggest monthly mortgage payments should not exceed 36% to 65% of monthly income.
Credit also can dramatically impact your mortgage options and down payment. So talk to a loan officer about how to improve your credit score before getting a mortgage, and ask them to run a credit report.
Closing costs cover various transaction, paperwork and processing charges incurred by the lender during the sale. These can include appraisal fees, title search and recording fees. Paid when the transaction is settled, closing fees average 1% to 4% of the price of the home.
During the closing, the buyer meets with a closing agent or escrow office, who explains and reviews a large stack of closing papers with the seller.
Take the time to read each document and understand exactly what it is before you sign. And before you leave, make sure you have copies of all the documents you signed to review at home.
Since closing costs are usually disclosed by the lender upfront, there shouldn’t be any surprises. But you might ask your real estate agent to join you for this meeting to make sure all your interests have been addressed as you review and sign the purchase documents.
In addition to initial costs, remember to factor some long-term expenses such as monthly utilities, homeowner’s insurance, association or condo association dues and property taxes. Taxes and insurance fees can be escrowed or rolled into your mortgage payments, but to get a clear picture of what that new home will cost in the first year, ask your broker to break down those costs in advance.
If you have questions about financing a 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
The deposit or earnest money tells the seller that you’re a serious buyer. When you submit your offer on the home, the real estate agent will take the deposit and put the money into an escrow account. If the seller accepts the offer, the deposit will be applied to your down payment. If the offer is rejected, the deposit should be returned to you.
The next cost is a down payment, a percentage of the price of the home that you fund directly. Some loans require a down payment to be 10% or 20% of the purchase price. And many programs allow qualified buyers to put as little as 0% or 3% or5%, so ask your lender about the various options. But the more you put down initially, the lower your monthly payments, so it is important to determine what you can afford.
To determine what you can afford, most lenders look at your ratio of debt to income. Today’s automated underwriting systems suggest monthly mortgage payments should not exceed 36% to 65% of monthly income.
Credit also can dramatically impact your mortgage options and down payment. So talk to a loan officer about how to improve your credit score before getting a mortgage, and ask them to run a credit report.
Closing costs cover various transaction, paperwork and processing charges incurred by the lender during the sale. These can include appraisal fees, title search and recording fees. Paid when the transaction is settled, closing fees average 1% to 4% of the price of the home.
During the closing, the buyer meets with a closing agent or escrow office, who explains and reviews a large stack of closing papers with the seller.
Take the time to read each document and understand exactly what it is before you sign. And before you leave, make sure you have copies of all the documents you signed to review at home.
Since closing costs are usually disclosed by the lender upfront, there shouldn’t be any surprises. But you might ask your real estate agent to join you for this meeting to make sure all your interests have been addressed as you review and sign the purchase documents.
In addition to initial costs, remember to factor some long-term expenses such as monthly utilities, homeowner’s insurance, association or condo association dues and property taxes. Taxes and insurance fees can be escrowed or rolled into your mortgage payments, but to get a clear picture of what that new home will cost in the first year, ask your broker to break down those costs in advance.
If you have questions about financing a 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
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