Getting a Home Inspection

If you are in the process of purchasing a new home, it will definitely be in your best interest to have a home inspection done.
Not only will you want to have a home inspection done for your own sake, and peace of mind. But most lenders will require that you have a home inspection before they will proceed with the loan. The lending institution has just as much interest in the home as you do, so that is why they require a home inspection.
Getting a home inspection requires hiring a company to send out a home inspector to go through the home you are going to purchase. With you present, the home inspector goes through the home, and thoroughly inspects to make sure nothing in is need of major repair that cannot be seen with the naked eye.
Basically, a home inspector goes through a home and checks wiring, fixtures, plumbing, and the foundation of the home to make sure it is structurally sound. He will also inspect the outside of the home along with the roof to make sure there isn’t any exterior damage.
Along with the home inspection, it would also be in your best interest to inspect for wood boring insects, such as termites and beetles.
A pest inspection is also required by the lender before they proceed with a loan.
A pest inspection is done separately from the home inspection and is done through a different company that specializes in pest inspections.
Not only are home and pest inspections required by the lending institutions, but it would be in your best interest even if they were not. They cost anywhere from $300.00 to $400.00 depending on the size of the home, and you are aloud to be present and ask questions through the entire inspection.
Imagine if you found your dream home and loved it so much that you purchased it without having the home inspection done. On the day that you and your family move in, it is the happiest day of your lives. Than, three days after you move in, you get your first rain fall while in your new house. Than, the next thing you know, you have rain coming through the ceilings up stairs.
After something like this, you’ll be wishing you had the home inspected. Trust me.
Believe me, this stuff happens. So be smart, and get a home inspection. It beats paying $15,000.00 to $20,000.00 for a new roof.
In addition, once you have a home inspection done, you will have peace of mind that the house is sound and in good living condition. However, should anything happen to go wrong after you move in that was covered under your home inspection, you will have the home inspection company to hold accountable for the damage, and not have to pay it out of your own pocket.
To summarize, the home inspection is very important to both you and the lending institution. You both have an interest in the property, so have the home inspection done, you will sleep a lot easier.

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Locating a Down Payment

Locating a Down Payment
If you are a saver, and many of you are, than the need to locate a down payment will not be an issue for you.
But there are also many of us out there that have not had the luxury to save as much as we would have liked for various reasons. With this challenge at hand, we will need to track down a source for a down payment.
If you have excellent credit, and when I say excellent, I mean your credit history is perfect without a blemish on it, you will most likely be able to apply for a mortgage with 100% financing, if you choose to go that route.
A lot of lenders offer this product, and if you can swing it, than you won’t need to come up with any cash for a down payment, and you will only be responsible for closing costs.
If you are unable to go with 100% financing, here are a few ideas you might look into to come up with a down payment.
Retirement Plans
If your employer offers a retirement plan such as a 401k, you might want to consider borrowing from it to help out with your down payment. Most 401k plans offer this option for home purchasing reasons. You do however have to pay this money back on a monthly basis.
The down side to using a 401k plan is that when you pay the loan back, you are doing it with after tax dollars.
With that being said, it is still worth looking into, and a lot of people consider this option.
Family
When all else fails, ask family members to give you a helping hand. This is not an uncommon practice among newlyweds who often approach their parents for assistance with their down payment.
If this is not for you, I understand. It can be tough to swallow your pride and approach family members to help you out.
Save
If you are at the end of your rope, and there doesn’t seem to be any down payment money in sight. You just might have to bight the bullet, start saving, and wait it out.
A great way to jump start your savings is with your tax return money. Depending on what your return is and what percentage the lender requires you to put down, your tax return could have you in the door sooner than you think.

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Don’t Let Bad Credit Stop You

When I worked as a loan officer, it wasn’t unusual for me to come across people who thought they were out of luck because they had bad credit.

This is really not the case, although it is fair to say that you would not be able to walk down to your local bank, have a seat in the branch manager’s office and walk out with a mortgage.

However, there are alternatives, and you do have choices.

If you contact a broker, tell them your situation, be completely honest and up front with them, otherwise you are just wasting their time as well as your own, and believe me, whatever your situation may be, they have heard worse. Nine times out of ten they will be able to help you.

Conventional banks are not the only ones that lend money. Brokers have access too literally hundreds of banks with a wide variety of programs for people in unique situations from foreclosure buy outs, to 100% financing with poor credit scores.

I speak from experience, because when I was a loan officer I did mortgages for people in unique situations.

Foreclosure buy outs, bankruptcy, late payments on prior mortgages, the list goes on.

I would sit down with my customer, take down as much information as possible, than present their information to many different lenders for them to review. Most times I would find one with a program to help my customer.

Keep in mind, with unique situations, there is risk involved on the part of the bank, so you can’t expect to get the best rate in the world.  But if it is reasonable, and can put you into the situation you want to be in, than it is well worth it.

So if you think your credit, or a bad situation is preventing you from getting a loan, think again, there is probably a program out there for you, you have nothing too loose.

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No Cost Mortgages

When you are dealing with mortgages, it is important to check twice the calculation as well as the English when the lenders specify the word “No cost Mortgages”.

The fact is that no cost mortgage means it will cost something, now the question arises in your mind how much it cost the answer is the cost depends on what kind of mortgage you plan to go. There are two types of basic cost involved while getting mortgage, In one type of cost the lender cannot control that includes the appraisal cost, filing fees, title search, attorney fees etc, and the next type of cost is the lenders cost that is loan application fees, credit check, admin fees and processing fees etc, with out which nothing is possible.

To few lenders no cost means they do not want any cost from their pockets, all the cost will be added in the loam amount, for instance the loan cost is $5,000 and you plan to borrow $150,000 in this case the $3,000 gets added up with the loan, and ultimately you will be borrowing $1,53,000 that is with interest for the entire amount. In this case when you take 30 years loan at 6.25% rate interest the monthly interest with principal is $942.05 and the interest is $18.47, which is $18.47 per month more than $923.58 you would make on $153,000. You may not realize you are paying interest for $3,000 every month until you clear the entire amount, in addition to that this $3,000 wont be paid off till the 20th month of mortgage well into the subsequent year its only after 19th payment that the principal you owe will reduce below $150,000 to be exact $149,948.25.

How does this sounds to you, this is the way no cost mortgage works, you pay accumulated interest on unpaid balance of the loan every month and to pay off the $3,000
You would be paying $18.47 besides the interest you pay for $1,50,000. So if you have paid that $3,000 from your pocket you would be paying the interest with principal for the actual amount you are borrowing, just by the word no cost mortgage you don’t start paying the loan until your loan reached 20 months.

In some cases you may not pay any cost in the beginning but you will end up paying with closing cost and sometimes the lender will take in charge of paying all the cost like application fees, commission, attorney fees and then in turn charge the borrower with high interest rate.

By this time you could get a clear idea how much it will cost you for no cost mortgage
No cost loans are very expensive, just because its convenient that you don’t spend a penny from your pocket it is better, in a long run it cost you more than to spend from your pocket, so it is important to remember that you are not really saving money by opting for no cost mortgage.

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Finding a Mortgage Refinance Advisor

Finding a Mortgage Refinance Advisor

If you are looking to refinance your home for a lower rate, or you are interested in a refinance with cash out to do some home repairs, buy a new car, etc., you may want to consider finding a mortgage refinance advisor.

There are actually two ways you can go about refinancing your home. The first would be to do the shopping around for a refinance on your own. The second way would be to locate a mortgage refinance advisor.

A mortgage refinance advisor. Otherwise, known as a mortgage loan officer or mortgage broker are not at all hard to find.

The internet is perhaps the best resource for tracking down a mortgage refinance advisor. There are literally hundreds of them right in your own back yard, and the internet would be by far the best way to begin your search.

Once you have found a mortgage refinance advisor, don’t stop there, shop around. By shopping around with a few different loan officers and brokers, you will give yourself the ability to compare rates and prices.

Think of it the same way you would go about purchasing a new car. Shop around, test drive a few by going to different dealerships. Once you have test driven a few cars and compared pricing, base your decision on the best and most reasonable deal.

By shopping around as opposed to committing to the first mortgage refinance advisor you come across could mean the difference of thousands of dollars in closing costs and interest fees’ over the life of the loan.

By allowing no more than four loan officers or mortgage brokers to assess your situation, you are putting yourself in a much more ideal situation. Especially if your credit is challenged or your situation is unique, not only will the mortgage refinance advisors’ expertise come into play, you will be in a position to compare rates and pricing.

Remember, the majority of mortgage refinance advisors are paid on commission, so it is just as important to them as it is to you to get to the closing table. Good luck.

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Locking In The Interest Rate On Your Mortgage

Many people purchasing homes are surprised to learn how quickly interest rates can change. This brings up the subject of locking in the interest rate on your loan.

Locking In The Interest Rate On Your Mortgage

Contrary to popular opinion, interest rates for mortgage loans are not set by the Federal Reserve Bank. This assumption, however, is understandable given the uproar one tends to see in the media every time the Chairman of the Federal Reserve makes any mention whatsoever about raising or lower rates. Of course, you should understand he is discussing the rate that will be charged by banks to borrow from other banks. Interest rates on mortgages, on the other hand, are set by the bond markets among other indicators.

Since bond markets move every business day, the mortgage rates move in a corresponding matter. Even a tiny change can impact how much or little money a lender will recover given an assumed payback of a 30-year loan. To protect yourself from these fluctuations, you must understand how to lock in the interest rate on your loan.

A mortgage cannot be finalized until the interest rate is locked. If you don’t address the issue with the lender, the rate can move up or down every day from application to the actual funding of the loan. This can literally be two or three months if you are getting pre-approved before making an offer on a home. This kind of volatility is dangerous, particularly if you are pushing the limits of your cash flow in buying a home. If rates increase half a percent while you are shopping, you may be unable to make the monthly payments when you finally buy the property of your dreams!

Locking in a loan is all about points and the length of the lock. These issues are negotiable with the lender, to wit, there is no legally required standard. To lock in a rate, you often must agree to pay a percentage of points. The longer you want to lock in the rate, the more you pay. For a 30 day period, you can expect to pay a quarter to a half of a point. For a longer period, expect to pay half to a full point. A point is one percent of the total loan. If a lender tries to charge you more, take your loan elsewhere or get a mortgage broker involved.

Fluctuating interest rates are dangerous since they can impact your month payments. Locking in your rate gives you a definitive figure to work with when buying your dream home.

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Refinancing with Home Equity Loans

If you have lived in your home for a reasonable amount of time, you may be considering refinancing.

Refinancing can be done in a few different ways. One of the most popular recently has been the home equity loan.

A home equity loan is a loan used to pay off your existing mortgage at a lower rate.

Also, when refinancing with a home equity loan, you have the option of liquidating some of the equity you have established in your home through monthly mortgage payments and appreciation.

Lets suppose you owe $125,000.00 on the mortgage to your home, but your home is worth $200,000.00. This means you have $75,000.00 worth of equity that you can liquidate.

Realistically, you could get a home equity loan for $150,000.00, pay off your existing mortgage, and have $25,000.00 left for home improvement, a new car, college tuition, etc.

Home equity loans also come in the form of a line of credit, better known as a home equity line of credit.

The difference between a home equity loan and line is that the line comes with a variable rate, which means it will adjust with the prime rate, so be careful when deciding.

The home equity credit line can also be re-tapped once it has been partially paid off, or paid off in full, which makes for much convenience.

Before deciding on how you want to go about doing your refinancing, be sure to educate yourself as much as possible about the mortgage industry.

Also, shop around for the best rate and program that fits your needs and budget. The mortgage industry is a competitive one, so let them fight for your business. Good luck.

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How Lender's Set Mortgage Rates

Ever wonder how lender's come up with the rates they do? You can stop wondering, cause I'm going to tell you how. We all answer to a higher mortgage rate power, namely the secondary market. The secondary market is where Fannie Mae, Freddie Mac, and other mortgage lenders ply their trade. These government founded agencies purchase the loans that lenders make, then either hold them in their portfolios, or bundle them with other loans into mortgage-backed securities. Those securities are then sold to mutual funds, Wall Street firms, and other financial investors who trade them the same way they trade other securities and bonds.

As a result investors, rather than mortgage brokers and bankers, are in control of the rates. When economic news suggests the economy is heating up, investors demand higher yields from the lenders. This happens because they don't want to buy low yield bonds now, in case the Fed raises rates to cool the economy, which would mean they will make higher yield bonds later. The only way that lenders can get their loans sold in this situation is to raise the yields they offer investors. In turn, this drives the rates higher for consumers.

The same thing happens in reverse when it looks like the economy is cooling. Investors start clamoring for bonds, because they figure the Fed will have to cut interest rates in the future in order to get the economy going moving along again. If the investors wait, they'll end up with lower yielding bonds. Since investor demands are so strong, lenders who control loan supply can offer lower yields. The result is a lower rate for consumers.

To get the best rates out there, consumers really need to pay attention to financial news. Consulting with a mortgage lender or broker can also be very helpful. In most cases, the mortgage broker will be very knowledgeable and up to date on the economy.

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What is a Reverse Mortgage

Reverse mortgage is a new kind of loan against your home that you need not pay back as long as you live in that house. With reverse mortgage you can mortgage the value of your home in cash without repaying the loan every month and as well as without moving out of the house, and this cash can be repaid in several ways like you can pay at one stretch in single lump sum of amount, or in regular cash advance monthly, or in credit line account that is you can decide how much available cash can be paid or combinations of any of these methods.

No matter how you pay back this loan, as you do not need to pay back anything until your death or sell your home or move out of your house permanently. For the eligibility of reverse mortgage you should have own your home and your age should be 62 years or older.

For other kind of loans the lender check your income documents for the verification of your repayment status monthly, but in reverse mortgage there is no need of repayment of loan monthly, so you need not require any income proof, even if you have no source of income but still you are eligible of reverse mortgage.

With other kind of mortgages you may lose you home incase if you do not make your repayment monthly, but in reverse mortgage you may not lose your home by not making the repayment, mostly reverse mortgages does not require any repayment as long as you live and that is the reason reverse mortgage differs from other loans

With reverse mortgage your debt gets increased and the equity of your home decreases, as the lender lends you the cash and you don’t make the repayment, and the debt amount get increased as the interest is being added up with your balance loan amount and ultimately your debts increase and your equity decreases, unless the value of your home is getting increased. Incase if the value of your home decreased there will not be any equity left out except your loan amount so it is nothing but spending down your home equity while you live in your home with out the need of making repayments.

Exception in reverse mortgages are when you get the loan advance without interest charged on it your debt would remain the same and your equity would grow with the increase in home value. But normally home value does not grow at high rates and also the interest rate is also charged so finally the majority of the reverse mortgages ended up with “falling equity and rising debt” loans.

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Thinking Of an Endowment Mortgage?

Endowment mortgage is a type of mortgage where you need not pay the principal amount you have borrowed from the lender, during the term of the loan, you would be paying only the interest and as well as the premium for the endowment policy you have taken. The endowment policy grows large enough at the end of the mortgage period normally 25 years for the repayment of the mortgage loan. Within this package you would also be paying the life insurance that will repay the loan incase if you die as there is no guarantee for your endowment policy to pay off your mortgage.

The endowment policy has two parts in it, a life cover part and an investment part,  in life cover part it would pay off your mortgage debt incase if  you die during policy, and in investment part it will repay your mortgage when the policy get ended up if you live till the policy ends up. But this part is not guaranteed as people find the endowment policy is not in track and not sufficient enough to pay the mortgage debt at the end of the policy or mortgage , and this leads to think about the other laternatives to make up the amount, due to this endowment mortgages are not so popular as the other mortgages.

With endowment mortgage you pay only the interest and the principal will remain the same, if the endowment policy would perform well it will pay off  the mortgage debt at the end, incase if the endowment policy does not perform good it will leave you with the huge amount of debt to settle.

You may receive a letter from the endowment company that would tell you that you policy is not in track and so there is not sufficient fund for the repayment of the mortgage at the end of the policy, by seeing this letter you should not delay taking further action, you should not get worried and make any hasty decision, first you should check the facts, don’t cash in your policy, don’t ignore it at the same time as things would go worst if you don’t act immediately, you should think about the other options to make up the shortfall by switching the amount of shortfall for the repayment of mortgage, or asking the lender to convert the endowment loan to other type of loan where you can repay the principal with interest, or starting an additional saving to make it up the shortage, or you can plan to extend the endowment mortgage term or you can opt for top up of the endowment plan.

On top of everything you take up the advice of your financial advisor, or discuss the status with your lender

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Purchasing a Home with Bad Credit

If you would like to purchase a home but believe you are unable to because your credit has gone through some challenges, think again, there just may be some hope for you.

The mortgage industry is a very diverse one. And these days it is no longer a requirement to have perfect credit in order to purchase a home.

And no longer is it necessary to go down the street to your local bank in order to apply for a mortgage.

There are many lenders out there across the country known as wholesale lenders who specialize in different niches with specialty programs for people in all types of situations such as yourself.

The most important thing for you to do is to educate and familiarize yourself with the mortgage industry. This way you will have somewhat of an idea of what you are getting into, and a better understanding of what the people in the industry are talking about once you start to deal with them on a daily basis.

One thing you may want to consider is speaking with a broker if you are not comfortable finding a program for your needs on your own.

A broker is not a lender. They work as a liaison between the lender and the consumer. It is their job to find you a program to fit your needs and budget. They also will council and educate you through the entire mortgage process.

Remember, just because your credit is poor, it does not mean that you are at the mercy of the broker or the lender. Allow for a few of them to compete for your business, than base your decision on the one that best fits your needs and budget.

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Getting Pre-Approved for a Mortgage Makes Buying Easy

Whether buying or selling a home, the real estate transaction process can be seriously stressful. Hey, no pain, no gain. Getting pre-approved for a mortgage can seriously reduce stress levels.

Lender Approval

Many people make the mistake of going house hunting without knowing exactly how a large a mortgage they can get. This leads to incredible frustration when a dream home is found, but you can’t get a loan. For some shoppers, the frustration and stress leads them to throw their arms in the air and give up on the process. While an understandable reaction, the stress and frustration can be greatly reduced by getting pre-approved for a mortgage loan.

Getting pre-approved by a lender involves going through the full mortgage application process. You are going to fill out all the forms, provide tax returns or salary verification, have your credit run and so on. The bank will do a full analysis regarding whether you are mortgage worthy. It will also lay out the specific requirements it expects you to meet including the down payment amount and the specifications your potential home must meet. To this end, the pre-approval process is always contingent on the appraised price of the prospective home and any defects found in the home inspection.

Once a lender approves you for a loan, a magical thing happens. The lender will issue a pre-approval letter. The lender letter indicates the bank has approved you for a loan, the specific amount of the loan and often how long the pre-approval will last.

The pre-approval letter is the golden egg in the home purchasing process. It gives you a significant advantage over other people bidding on the same home. Imagine you are a seller who receives to bids within a few thousand dollars of each other. One bid has a pre-approval letter from the lender and the other does not. Which are you going to choose?

Getting pre-approved also has additional benefits. As you go through the process, the bank may alert you to problems. You can then go ahead and take the necessary steps to fix the loans. Compare this to trying to get a loan while in escrow. You are under a lot of pressure to get the loan in a thirty or sixty day period. If you fail to get the loan, you lose your good faith deposit, which is often thousands of dollars. Obviously, that is a disaster.

Whenever possible, get pre-approved for a mortgage before shopping for a home. It will save untold amounts of stress and make the buying process much easier.

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