Category Archives: Mortgage

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Will your debt stop you from getting a mortgage? By Terence Loose

Do you carry debt and worry that it may stop you from buying a home someday? Well, you’re not alone.

“An alarming 35 percent of people with credit files have debt in collections,” according to a July 2014 report by the Urban Institute, a nonprofit organization that conducts research on social and economic policy.

If you’re in that group, it’s important to know how that will affect your ability to get a mortgage and even more importantly, what you can do to lessen the impact.

And even if you don’t find yourself behind in your debt payments, keep reading to find out how exactly your credit and payment history affect your ability to qualify for a mortgage.

If I Have a Delinquency or Bankruptcy, Can I Still Get a Mortgage?

It’s not news that being in poor standing with creditors or having the B-word associated with your finances will hurt your ability to get a mortgage. But the details do matter.

First, being behind on payments and placed in collections for anything from credit card debt to medical bills or having a bankruptcy will hurt your chances at qualifying for a mortgage.

“Simply put, banks are trying to determine whether or not you will pay them back. If your credit history shows evidence of irresponsibility or an inability to manage your finances, you aren’t a good bet for a bank,” says Ken Lin, CEO of CreditKarma.com, a site where consumers can access their free credit reports.

In addition to looking bad, a delinquency or bankruptcy can lower your credit score, which lenders use to determine your eligibility and the interest rate they’ll offer you, Lin says. That’s because a delinquency is when you are behind in your credit card or other loan payments – exactly what lenders are trying to make sure you avoid with them.

A bankruptcy is much more serious and a little more complicated, says Lin. Basically, it is a legal proceeding in which you declare that you are unable to pay your debts and need a “fresh start,” he explains.

However, your creditors do get a portion of what you owe them from any assets you may have, says Lin. Obviously, that will worry potential future lenders, he adds.

According to Lin, most lenders use your FICO score, which runs from 300 to 850, and the higher the better.

To get the best interest rates on a mortgage, you’ll want a score of 760 or above, according to FICO’s website. To qualify for a mortgage, even at a higher interest rate, you’ll want at least a score of 620 to 640, says Lin.

A bankruptcy and the delinquencies that lead to it can really take a toll on your score, says Lin. A delinquency and bankruptcy will stay on your credit report and hurt your score for seven years, he says.

“The amount will seem diminutive, though, because the actual bankruptcy itself only lowers your score by about 50 to 150 points, which might not seem like that much,” says Lin.

But don’t let that fool you. Bankruptcy is merely the final blow to your credit report after what was surely a long and damaging road, says Lin.

On the road to bankruptcy, you’ll have gone through being 30 days delinquent on payments, then 60 days, then 90, and so on, explains Lin. As that happens, your score gets hammered down for months or years. Hence, by the time you file for bankruptcy, you’re not going from 800 to 700 – likely you’re going from 600 to 500 and now can’t qualify for any mortgage, he says.

“There may be opportunities out there to get a mortgage without good credit, however potential buyers need to be careful. Those mortgage structures and rates may defeat the purpose of the mortgage, and you may end up paying a lot more for your house than you should,” he says.

Does My Credit Limit Matter?

According to Lin, there’s a commonly spread myth that if you have too high a credit limit – even if your outstanding balance is low – lenders don’t like it.

“The convention was if you’ve got all of this available credit it’s a little bit like a loaded shotgun, right? You might go off at any point in time and buy a whole bunch of stuff [and get into debt]. But what the statistics show and what the credit scoring companies have disclosed is that is not the case,” says Lin.

In fact, he says having a high limit can be a good thing, if you’ve handled it well.

“Say you’ve had $30,000 worth of credit for the last 20 years, and you’ve never abused that. How else could you attest to a better credit situation than someone who knows how to manage that much money for that period of time?” says Lin.

And mortgage lenders see that logic, he says. So Lin says don’t worry too much about your limit – worry instead about how well you’re managing it.

How Much Credit Card Debt Can I Have and Still Qualify?

This is actually a tricky question since the answer might vary greatly from person to person, depending on other factors, such as the home you want to buy, other types of debt, and your payment history, says Lin.

However, there are some general rules you may want to live by, such as the rule of 30 percent. In a nutshell, Lin says data shows that once your outstanding balance goes above 30 percent of your available credit, it can start to adversely affect your credit score, and therefore your ability to get a mortgage.

“If you go over [30 percent] for a short time – a month or so – a few times, that’s okay as long as you pay your balance down,” says Lin. But you shouldn’t go over 30 percent regularly, and especially when a lender is about to check your credit, he says.

So, for example, if you have a $1,000 credit limit, try to keep your outstanding balance below $300. For a $2,000 limit, the target number is $600, and so on.

But as we all know, life has a funny way of making us use credit – for everything from medical emergencies and car repairs to big screen TVs and big nights out. But fret not, because if you do go over 30 percent and can’t pay your balance down, there is an alternative: increase your credit limit.

There is one caveat to this “solution,” however, says Lin. The larger outstanding balance will likely result in a higher monthly credit card payment, which could adversely affect your chances at securing a mortgage by contributing to your overall debt.

How Do Student Loans, Car Loans, and Other Debt Factor In?

The short answer is that they factor in heavily. But there is actually a way to figure out how much – your debt-to-income ratio (DTI). It is simply the percentage of your gross monthly income that goes toward paying for your debt (credit card, car, and student loan payments, etc.). Food, gas, and incidentals are not included, but the monthly payment and taxes on your potential mortgage are. Ideally, your DTI should be 40 percent or lower, says Lin.

Every mortgage lender has a keen eye on your DTI, says Ellen Davis, a senior mortgage banker with Corridor Mortgage Group in Columbia, Maryland. In fact, Davis says your DTI is usually much more important than the type of debt you carry.

So, say your total debt obligations for credit cards, car and personal loans, and the mortgage for which you’re applying came to $1,500 a month. Your gross monthly income would have to be at least $3,750, making your DTI an acceptable 40 percent.

Your DTI is one important number that lenders use to decide not only if you qualify for a mortgage, but for other things such as how much they can safely lend you and at what interest rate, says Davis. Additionally, they use your DTI to determine how large your monthly payment can be.

It’s also an important number for you, says Lin, because, like the bank, you want to know that you can afford your dream house without it becoming a huge financial burden on you.

A Few Final Tips

Courtesy of Lin, here are some useful tips on credit, whether you land on the higher or lower end of the credit score range.

• Know your credit score and credit record, and if there are errors, dispute them. According to Lin, one in four credit reports have a meaningful error.

• If you’re not happy with your score, identify why it’s low. It could be due to any combination of the following: your payment history, your credit utilization, new credit cards (and applications), and the length of your credit history.

• Keep credit card balances to 30 percent or less of your available credit.

• Avoid applying for new credit cards more than once a year – credit checks can negatively affect your score.

• Keep and responsibly use up to three credit cards by paying on time and avoiding maxing out your cards. This establishes your credit and shows that you can manage credit responsibly.

• If your score is lower because you are younger and haven’t established credit, consider opening a secured credit card to start building credit. This is a credit card that has a limit that is a percentage of or equal to an amount of cash you place in an account, such as an interest-bearing savings account.

https://homes.yahoo.com/news/mortgage-with-debt-201625199.html

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Three ways to qualify for the cheapest mortgage possible By Terence Loose

https://homes.yahoo.com/news/Things-to-qualify-for-cheapest-mortgage-173655653.html

Do you want to buy a home now or in the future, but fear that it’s too expensive? Well, there may be ways to make it more affordable.

And while you may not be able to do much more than haggle over the asking price of your dream home, there are things you can do to make your mortgage cheaper.

“It’s all about showing the lender that you are financially solvent and a low risk to loan a large amount of money,” says Ellen Davis, a senior mortgage banker with Corridor Mortgage Group in Columbia, MD. In short, your lender wants to feel confident that you’ll pay them back.

So, keep reading for three things you’ll need to get the best deal on your mortgage.

1. A High Credit Score

You may feel that you are more than just a number, but according to Davis, your credit score is one of the first things a potential lender checks when going over your loan application. Most lenders use the FICO credit score, she says which ranges from a low of 300 to a high of 850.

To qualify for a mortgage at all you’ll probably need a credit score of at least 620, maybe even 640, says Ken Lin, CEO of CreditKarma.com, a site where consumers can access their free credit reports.

But to qualify for those great rates that are splashed all over lenders’ ads, in addition to other requirements, you’ll probably need a score somewhere above 720 and possibly as high as 740, says Davis.

In other words, the higher your score is the lower your interest rate and the cheaper your mortgage.

And the difference between a poor and strong credit score and your resulting interest rate could mean a lot over the course of your mortgage. In fact, according to an example provided by Credit.com, a website that educates people about credit, it could be enough to pay for your kid’s education or a nice new car.

Their example looked at the difference between interest rates offered to borrowers in three different credit ranges for a 30-year, fixed-rate mortgage of $200,000 in May 2014. Here’s what they found:

Credit Score Interest Rate Monthly Payment
(Principal & Interest)
Lifetime Cost Total Savings with Great Credit
740 and above 4.025% $958 $344,778
680-699 4.974% $1,070 $385,368 $40,591
620-639 5.481% $1,133 $407,950 $63,173

As you can see, having good or excellent credit could save you tens of thousands of dollars over the life of your mortgage.

To attain that great credit score, Lin says you’ll want a few things. One is to have a few credit cards.

“You are not born with good credit – you have to earn it,” says Lin. People sometimes believe that because they don’t have any debt or have never used credit that they must have great credit. Not true, says Lin. “You have to use credit to get good credit,” he says.

Next, in addition to never being late on your payments, keep your outstanding balance to 30 percent or less of your available credit limit, he says. So, if you have two credit cards with an available credit limit of $5,000 each, keep the outstanding balance on each below $1,500.

Finally, check your credit and correct any mistakes. Lin says 25 percent of all credit reports have a meaningful error on them, which could range from inaccurate late payment records to identity theft.

Lin also suggests checking your score at least six months before you apply for a mortgage, so you have time to work on improving it by doing a few of the things listed above.

He says that while a few late payments or a delinquency can lower your credit score fast, it takes time to raise your score more than a few points. He adds that six months before applying for a mortgage is not the time to close cards or get new ones – both can lower your score.

2. A Big Down Payment

A big down payment may sound like the opposite of “saving money,” but putting a lot of money down on your home could save you a bunch in interest and reduce your monthly costs.

First, it’s merely a math equation to see that a bigger down payment – and therefore, borrowing less – saves money. That’s because you will pay 30 years of interest on every dollar you borrow.

A larger down payment also helps with the interest rate you’ll be offered, says Jim Duffy, a senior loan officer with Primary Residential Mortgage, Inc. Just like with credit scores, the percentage you put down could affect the amount of risk the lender sees in you, he says.

The numbers are not as straightforward as with FICO scores, but a good rule of thumb for most loans is to shoot for 20 percent down. If your other factors hold up – good credit report and score, good income, etc. – Duffy says this is the magic number to get the best rates.

That’s because your down payment is the lender’s “cushion” against you defaulting on your mortgage, says Duffy.

Finally, putting 20 percent down gets you out of having to pay private mortgage insurance (PMI), for exactly the same reasons as outlined above: under 20 percent down and lenders begin to get nervous about you defaulting on your mortgage.

Calculating PMI is complicated and varies widely based on the amount you borrow, the amount you put down, as well as other factors, says Duffy, but it can really add up. In fact, it can range from .5 percent to 1 percent of the amount of the mortgage per year, he says.

Run those numbers for a $300,000 mortgage, and PMI could ding you for $1,500 to $3,000 a year, or $125 to $250 per month.

To see how much all this could cost, let’s look at a simple example of two 30-year mortgages. We’ll keep the sales price of the home ($300,000) and the interest rate the same (4.20 percent*), but change the amount of down payment.

Mortgage A Mortgage B
Down Payment Percentage: 20 10
Down Payment Amount: $60,000 $30,000
Total PMI (@.75 percent/year):* $0 $11,981 ($168.75 for 71 months)
Monthly Mortgage Payment: $1,174 $1,320
Total Cost of Interest and PMI: $182,511 $217,306
Total Cost of Home: $482,511 $517,306

Bottom Line: As this example clearly shows, that 10 percent extra in down payment pays off overtime to the tune of savings of nearly $35,000.

3. A Low Debt-to-Income Ratio

The amount of debt you have compared to the amount of income you have is another key area of interest for any lender. Remember, the thinner you are stretched financially, the more risky you are perceived to be by lenders.

One way lenders assess this is by calculating your debt-to-income ratio (DTI), which is simply the percentage of your gross monthly income that goes toward paying your debt.

“Any monthly payments on credit cards, student loans, car loans, personal loans, etcetera, is used in the underwriting process to help calculate the debt-to-income ratio,” says Davis. In addition, the mortgage payments, taxes, and PMI on the home you are trying to buy will also factor in.

When all that is calculated, you’ll want your DTI to be 40 to 43 percent or lower to qualify for a mortgage, depending on the institution, says Davis.

However, for the best rates, you’ll want your DTI to be in the mid 30s or below, all else being equal, says Duffy.

So, say your total debt obligations for credit cards, car and personal loans, and the mortgage for which you’re applying came to $1,500 a month. Your gross monthly income would have to be at least $4,286 to be considered for the best rates. That would be a DTI of 35 percent. Again, it’s not exact, but it’s a good start.

*According to Freddie Mac, one of the nation’s largest mortgage holders, for the week of September 25, 2014. In the PMI example, this figure is based on the fact that with most mortgages, you can stop paying PMI once you reach 20 percent equity in your home. Make all scheduled payments in the above example, and that happens after 71 payments.

What Is A VA Loan?

The VA Loan became known in 1944 through the original Servicemen’s Readjustment Act also known as the GI Bill of Rights. The GI Bill was signed into law by President Franklin D. Roosevelt and provided veterans with a federally guaranteed home with no down payment. This feature was designed to provide housing and assistance for veterans and their families, and the dream of home ownership became a reality for millions of veterans. The GI Bill contributed more than any other program in history to the welfare of veterans and their families, and to the growth of the nation’s economy.With more than 25.5 million veterans and service personnel eligible for VA financing, this loan is attractive and has many advantages. Eligibility for the VA loan is defined as Veterans who served on active duty and have a discharge other than dishonorable after a minimum of 90 days of service during wartime or a minimum of 181 continuous days during peacetime. There is a two-year requirement if the veteran enlisted and began service after September 7, 1980 or was an officer and began service after October 16, 1981. There is a six-year requirement for National guards and reservists with certain criteria and there are specific rules concerning the eligibility of surviving spouses.

VA will guarantee a maximum of 25 percent of a home loan amount up to $104,250, which limits the maximum loan amount to $417,000. Generally, the reasonable value of the property or the purchase price, whichever is less, plus the funding fee may be borrowed. All veterans must qualify, for they are not automatically eligible for the program.

VA guaranteed loans are made by private lenders, such as banks, savings & loans, or mortgage companies to eligible veterans for the purchase of a home, which must be for their own personal occupancy. The guaranty means the lender is protected against loss if you or a later owner fails to repay the loan. The guaranty replaces the protection the lender normally receives by requiring a down payment allowing you to obtain favorable financing terms.

Why Do Mortgage Interest Rates Change? Part II

If the demand for credit reduces, then so do interest rates. This is because there are more people who are ready to lend, sellers, than people who want to borrow, buyers. This means that borrowers, buyers, can command a lower price, i.e. lower interest rates.

When the economy is expanding there is a higher demand for credit so interest rates go up. When the economy is slowing the demand for credit decreases and thus interest rates go down.

 This leads to a fundamental concept:

Bad news (i.e. a slowing economy) is good news for borrowers as it means lower interest rates.
Good news (i.e. a growing economy) is bad news for borrowers as it means higher interest rates.


Another major factor driving interest rates is inflation. Higher inflation is associated with a growing economy. When the economy grows too strongly the Federal Reserve increases interest rates to slow the economy down and reduce inflation.

Inflation results from prices of goods and services increasing. When the economy is strong there is more demand for goods and services, so the sellers and producers of those goods and services can increase prices. A strong economy therefore results in higher real-estate prices, higher rents on apartments and higher mortgage rates.

Also lenders naturally want to see a positive return on their money as their reward for lending it. This leads to the concept of the “real” rate of return. This is typically 3% per year. If inflation is 4 % per year, lenders will want to earn 7% per year on their money.

Likewise, if prices are rising rapidly, people are inclined to borrow “today’s” money so as to repay it with “tomorrow’s” money, which will be worth less.

Mortgage rates tend to move in the same direction as interest rates. However, actual mortgage rates are also based on supply and demand for mortgages.

 There is usually an almost fixed spread between A credit mortgage rates and treasury rates. This is not always the case. For example, bank failures in the Far East in the late 90s caused mortgage rates to move up while treasury rates moved down as fearful investors fled to the safety of the treasury bonds and notes.

Bonds Rates

There is an inverse relationship between bond prices and bond rates. This can be confusing. When interest rates move up, bond prices move down and vice versa. This is because bonds usually have a fixed price at maturity––typically $1000. The bond will start off being sold for the face value, $1000 and at a set interest rate. If interest rates go down, then this bond will go up in price so that these bonds will remain fairly priced compared with current bond offerings. Obviously the longer before the bond matures for the face value, $1000, the greater the price premium will be to enjoy that higher than current yield for the rest of the bond’s term.

The inverse also applies. If interest rates move up, the bond seller will have to reduce his price to offer a similar yield to current bond offerings.

Questions? Contact us at info@mortgagelinkhome.com or visit our web site at www.mortgagelinkhome.com

Why Do Mortgage Interest Rates Change? Part I

To understand why mortgage rates change we need to know why do interest rates change and there is not one interest rate, but many interest rates!

Prime rate: The rate offered to a bank’s best customers.
Treasury bill rates: Treasury bills are short-term debt instruments used by the U.S. Government to finance their debt. Commonly called T-bills they come in denominations of 3 months, 6 months and 1 year. Each treasury bill has a corresponding interest rate (i.e. 3-month T-bill rate, 1-year T-bill rate).
Treasury Notes: Intermediate-term debt instruments used by the U.S. Government to finance their debt. They come in denominations of 2 years, 5 years and 10 years.
Treasury Bonds: Long debt instruments used by the U.S. Government to finance its debt. Treasury bonds come in 30-year denominations.
Federal Funds Rate: Rates banks charge each other for overnight loans.
Federal Discount Rate: Rate New York Fed charges to member banks.
Libor: : London Interbank Offered Rates. Average London Eurodollar rates.
6-month CD rate: The average rate that you get when you invest in a 6-month CD.
11th District Cost of Funds: Rate determined by averaging a composite of other rates.
Fannie Mae Backed Security rates: Fannie Mae, a quasi-government agency, pools large quantities of mortgages, creates securities with them, and sells them as Fannie Mae backed securities. The rates on these securities influence mortgage rates very strongly.
Ginnie Mae-Backed Security rates: Ginnie Mae, a quasi-government agency, pools large quantities of mortgages, securitizes them and sells them as Ginnie Mae-backed securities. The rates on these securities affect mortgage rates on FHA and VA loans.

Interest-rates move because of the laws of supply and demand. If the demand for credit (loans) increases, so do interest rates. This is because there are more people who want money, buyers, so people who are willing to lend it, sellers, can command a better price, i.e. higher interest rates. If you have questions about your mortgage please contact me or visit my web site at www.mortgagelinkhome.com.

Goldline Award: Most Dependable

Press Release


Ellen Davis, Mortgage Link, Inc. Selected as One of The Most Dependable™ Mortgage Brokers of the Washington D.C. Area

Gaithersburg, MD August 15, 2007: Ellen Davis, Mortgage Link, Inc. has been selected by Goldline Research as one of the Most Dependable™ Mortgage Brokers of the Washington D.C. Area. The list of the Most Dependable Mortgage Brokers of the Washington D.C. Area is scheduled to be published in the September issue of The Washingtonian Magazine.

“I am very honored to have been chosen as one of the Most Dependable™ Mortgage Brokers of the Washington D.C. Area,” said Ms. Davis. “In this industry, credibility and dependability are key factors for success. I strive every day to provide my clients with the most accurate and timely information available. Buying a home is a huge investment, and for most people, it is one of the biggest commitments they will ever make. It is inconceivable to me to be anything less than completely motivated and dependable with so much at stake. That means every time I work with a client I am there for them, holding their hand, throughout the entire process.”

“We are pleased to have Ellen Davis, Mortgage Link, Inc. on this list” said Ryan Kluft, Publisher of Goldline Research. He also said, “She exceeded all of our industry criteria and had outstanding client references.” Over 2,000 Mortgage Brokers were contacted regarding the list and the response was overwhelming.

Ellen Davis is committed to providing the most comprehensive mortgage solutions to her clients with the highest degree of trust, knowledge, respect and convenience.

Whether you are buying a new home, refinancing your current mortgage or consolidating debt, Ellen will provide you with professional, responsive, involved, dependable and ethical service. Serving Maryland, District of Columbia, Virginia, Delaware, Pennsylvania, North Carolina, South Carolina and Florida, your financial needs are addressed, creating a solution to reach your goals. With access to thousands of mortgage products from more than 150 investors, Ellen can customize a loan to fit your budget and meet your individualized financial goals.

Goldline Research is a list research and publishing company specializing in investigating the credibility and performance of companies in a variety of professional services industries for selective inclusion in their published The Most Dependable™ lists. Goldline Research works closely with leading professionals in professional services industries to develop criterion for each industry, which forms the basis for its selection process. Goldline Research’s lists have appeared nationwide for over 4 years in a wide variety of print publications such as Southwest Airlines SPIRIT Magazine, Texas Monthly, San Diego Magazine, United Hemispheres Magazine, Delta Sky Magazine, Forbes, LA Magazine and Phoenix Magazine. In order to be selected to a Most Dependable™ list, firms must meet all of Goldline Research’s industry criteria, have no consumer complaints, lawsuits or disciplinary actions and provide client references that are checked and scored based on a proprietary scoring system.”

Buying a Home! (Part 3)

Making the Offer

Once you find a house, you’ll want to make an offer. Most home sale offers and counteroffers are made through your realPhoto by Deb Duncan
estate agent. All terms and conditions of the offer, no matter how minute, should be put in writing to avoid future problems. Typically, your real estate agent will prepare an offer to purchase for you to sign. You’ll also include an earnest money deposit which shows the sellers that you are serious about buying their home. If the seller accepts the offer to purchase, he or she will sign the contract, which will then become a binding agreement between you and the seller. For this reason, it’s a good idea to work with a real estate agent that you can trust.

Check out our list of Referral Partners at my web site, Mortgage Link, to find realtors we recommend and trust.

Other Details

Once the seller has accepted your offer, you, your real estate agent, and I will get busy completing procedures and documents necessary to finalize the purchase. These include finalizing the mortgage loan, appraising the house, surveying the property, and getting homeowner’s insurance. Typically, you would have made your offer contingent upon the satisfactory completion of a home inspection, so now’s the time to get this done as well.

The Closing

The closing meeting, also known as a title closing or settlement, can take an hour to two hours to complete–but when it’s over, the house is yours! To make sure the closing goes smoothly, some or all of the following people should be present: the seller, the closing agent (a real estate attorney or the representative of a title company), and both your real estate agent and the seller’s. At the closing, you’ll be required to sign the following paperwork:

  • Promissory note: This spells out the amount and repayment terms of your mortgage loan.
  • Mortgage: This gives the lender a lien against the property.
  • Truth-in-lending disclosure: This tells you exactly how much you will pay over the life of your mortgage, including the total amount of interest you’ll pay.
  • HUD-1 settlement statement: This details the cash flows among the buyer, seller, lender, and other parties to the transaction. It also lists the amounts of all closing costs and who is responsible for paying these.

In addition, you’ll need to provide proof that you have insured the property. You’ll also be required to pay certain costs and fees associated with obtaining the mortgage and closing the real estate transaction. On average, these costs total between 4 and 5 percent of your mortgage amount in the Metro DC Area, so be sure to bring along your checkbook and driver’s license.

Thinking about buying a home or do you just want to know how much your current home is worth? Email me to request a CMA Report today.

Ellen

Today’s Vocabulary Lesson (and the last one!)

Title: Ownership of a property. A clear title is one without any outstanding liens or encumbrances. A cloud on title refers to any outstanding liens or encumbrances which could impair the title.

Title Insurance Policy: A policy designed to protect the buyer or lender after closing from financial losses arising from any defects in the title that may have occurred prior to purchase.

Title Search: A check of public record to disclose the past and current facts regarding ownership of a particular piece of property.

Transfer Tax: In some areas city, county or state taxes imposed when property passes from one person to another.

Truth-In-Lending: Federal law that requires lenders to disclose the terms and conditions of a mortgage, including the APR, based on certain charges incurred by the borrower. If the charges were $0, the APR would be equal to that actual interest rate on the loan.

Underwriting: The process of evaluating a loan application to determine the risk involved for the lender.

That’s it, that’s all I have. You are now one step closer to being a savvy mortgagor! For more mortgage information, go to my web site at Mortgage Link!

Ellen

Buying a Home! (Part 2)

Should You Use a Real Estate Agent?

A knowledgeable real estate agent or buyer’s broker can guide you through the process of buying a home and make the process much easier. This assistance can be especially helpful to a first-time home buyer. In particular, an agent or broker can:

  • Help you determine your housing needs
  • Show you properties and neighborhoods in your price range
  • Suggest sources and techniques for financing
  • Prepare and present an offer to purchase
  • Act as an intermediary in negotiations
  • Recommend professionals whose services you may need (e.g., title professionals, inspectors)
  • Provide insight into neighborhoods and market activity
  • Disclose positive and negative aspects of properties you’re considering

Keep in mind that if you enlist the services of an agent or broker, you’ll want to find out how he or she is being compensated (i.e., flat fee or commission based on a percentage of the sale price). Many states require the agent or broker to disclose this information to you up front and in writing.

Photo by Deb Duncan

Choosing the Right Home

Before you begin looking at houses, decide in advance the features that you want your home to have. Knowing what you want ahead of time will make the search for your dream home much easier. Here are some things to consider:

  • Price of home and potential for appreciation
  • Location or neighborhood
  • Quality of construction, age, and condition of the property
  • Style of home and lot size
  • Number of bedrooms and bathrooms
  • Quality of local schools
  • Crime level of the area
  • Property taxes
  • Proximity to shopping, schools, and work

Drop me a note for some expert advice on what to look for in a home and what you should avoid like the plague!

Ellen

Today’s Vocabulary Lesson

Second Mortgage: A loan issued on property that is already encumbered by an existing mortgage (ie: the first mortgage). The second mortgage is subordinate to the first.

Secondary Mortgage Market: The market wherein home loans are sold by the lender after closing to Fannie Mae, Freddie Mac or a variety of other institutional investors.

Survey: A map prepared by an engineer or surveyor charting a particular piece of real estate.

Go to the Mortgage Glossary at Mortgage Link to see the rest of the alphabet!

Ellen