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Posts Tagged ‘mortgage’
Graduated Payment Mortgages
If you are a first time buyer or just a buying that only has a certain amount of income right now, finding financing to help you purchase that new home may be a challenge. You do have options though and one of them is a graduated payment mortgage. This type of mortgage has a lower payment in the beginning to help you get started. This may be a good option, especially if this is your first home. Here are some tips about graduated payment mortgages to help you out. This way you can have less to worry about and just enjoy your new home and future.
Ask your Syracuse real estate agent for advice
Real estate agents know that financing a home plays a big role in whether or not you can afford to purchase a home. They can help you go over your options or help you find a lender that can help you out. They are a great first resource.
Starts out with lower payments
Graduated payment mortgages start out with lower payments that increase over the next few years. This allows you to have more money while you are looking for a better job or waiting on a promotion.
Allows you to save for later
This loan allows you to save money for later for home repairs or remodeling or just to budget more for those later increased payments
Good for starter homes
If you only plan to stay in the home for a few years and then move, this is the loan for you, because it has those lower payments in the beginning and may not increase until your income does, so it is good for first homes or starter homes.
Has a fixed rate and maturity
This loan has a fixed interest rate and maturity so that is good since the payments may increase over the years. Just make sure you budget well for the increases that will happen.
If you are just starting out and this is your first home, there is so much to think about and consider. Following these tips and advice about graduated payment mortgages will at least help get you started and give you one less thing to worry about. This way you can focus more on your future and your new home.
How Rising Interest Rates may Affect Your Mortgage
Like most homebuyers, you’re probably trying to take advantage of this buyer’s market. There are a lot of foreclosures available, and maybe you’re waiting for just the right one, hoping to save thousands of dollars on your new home, and still cash in on the first time buyer tax credit. But waiting too long could end up costing you thousands of dollars, a lot more than you’ll save on waiting for a low enough price.
The current average home price in the Syracuse area is right around $120,000. The current interest rate average, for someone with good credit and minimal debt, is somewhere around 5.5%. Assuming that you have saved the recommended 20% for your down payment ($20,000) and that you will be taking out a 30 year loan, your monthly mortgage payment will be right around $550. During the course of your loan, you will pay a total of $205,000, with $105,000 of that going for interest alone.
If you wait a few months, the average interest rate is expected to reach 6%. Take that same loan, and see how even a half percentage point can affect the amount of interest you’ll be responsible for over the next 30 years. At 6%, your total payment climbs to $216,000. Your monthly mortgage goes up to $600. With just a half interest point more, you end up paying a little over $10,000 more for your home.
That’s not too bad; a little less than $50 a month extra. But what if it takes you a while to find a great deal on a home? Now the interest percentages are up to 7%. Your monthly payment is just over $660, and the total cost of your home is $239,500. You are now paying almost $35,000 more for the home that would have cost only $205,000 total six months ago. That’s a huge difference for most people.
I’m not advising you to rush out and buy the first home that you see. A home is an investment, and you should take the time you need to find the right one. At the same time, don’t pass up a home that you love because you think that you might be able to get a better deal later on. There’s no guarantee that you will find something similar for a better price. At the same time interest rates start rising, home prices are also starting to go up again.
If you close a home before December 1st, and you’re a first time home buyer, you also qualify for up to $8,000 back (during the 2010 tax season). That means that the difference between buying a home now, instead of waiting until some point next year, could be around $43,000, not counting any increase in sale prices. That could be a new car, or significant remodeling, to get your update and improve your new home.
No one can say exactly how quickly interest rates will rise. Usually the changes are gradual, but even a small change can equal a significant difference in what you will be paying over the length of your loan. If you find a home you like now, don’t wait for a better deal. The sooner you act, the more you can save.
Mortgage Buy down Tips
When you are looking for a new home, there are many things to consider such as location, price, what type of home you want, neighbors, certain features and much more. One of the most important and sometimes difficult things though is figuring out how you will pay for the new home for you and your family. There are many financing options, but here are some tips and benefits of mortgage buy downs for you and your family to consider.
Ask your real estate agent for advice
Real estate agents have experience with all types of financial situations when it comes to buying and selling a home. They are a great resource of information and advice for financial options and choices.
Mortgage buy downs include principal and interest
This means that instead of your payment getting bigger as with some loan option, your amount that you owe actually gets smaller. This is nice for any buyer to hear and to see.
Payments are lower
Mortgage buy down payments are reduced and interest is figured out over a specific time period. The lowered interest rate is paid in cash by the buyer or seller of the home.
Thirty year fully amortized mortgage
This means that the interest rate interests 1 percent for the first three years and then has a fixed rate for the remaining mortgage.
Rates stay low for the first thirty-six months
For the first thirty-six months, rates stay low when a borrower’s income is expected to later increase. This is nice if you expect a raise later or move to a higher paying career because of a new degree.
Mortgage Buy Downs offer many benefits that other financial options may not. These tips and facts can help you and your family to figure out if mortgage buy downs are the best option for you when finding that new dream home. This way you can enjoy your future and have fewer worries and concerns later on.
FHA Is Having Busiest Year Ever
About 25 percent of all new mortgages are backed by the Federal Housing Administration in what will probably be the busiest year yet for the federal agency.
Applications for FHA mortgages rose 50 percent from last October through mid-August 2009 and approvals for purchases, refinancings, and reverse mortgages rose 70 percent to 1.67 million.
FHA loans “are one of the most important sources in this market,” says Mark Zandi of Moody’s Economy.com. “Without FHA, the housing slide would be much more severe. We wouldn’t be talking about a recovery now. We’d still be talking about a crash.”
Some analysts are concerned about the risk the FHA has taken on, but others point out that borrowers with FHA-insured loans now have an average credit score of 690, compared to 630 two years ago. Borrowers with a credit score below 500 must come up with a 10 percent down payment.
Source: USA Today, Stephanie Armour (09/02/2009)
Owner Financing
With the economy the way it is and money being tight for everyone, it has become more of a buyer’s market out there. However, when you find the home you want, the tricky part is figuring out how you are going to pay for it. There are many financing options, but one that most people do consider which actually may be very popular in a buyer’s market is owner financing. This is where the owner helps you as the buyer to pay for your new home. Now this may sound like it is not possible, but it actually can provide benefits to both a buyer and a seller. Here is some information and tips on owner financing to help get you started.
Ask your real estate agent for advice
Agents have experience with all types of financing, and what may be best for you and in which market. They also may be able to help you talk to a seller about this financing option.
Land contract owner financing
This is where the title is not given to the buyer but the buyer is given an equitable title. The buyer makes payments to the seller for a certain amount of time and the buyer receives the deed after the final payment
Promissory Notes
The seller can either carry the mortgage for the entire purchase price which may include a loan, this is called an “all-inclusive mortgage “and the seller receives an override of interest on any loans. The seller may also carry a junior mortgage which would mean that the buyer would take the title to an existing loan or a new loan. The buyer would receive the deed and give the seller a second mortgage for the balance of purchase price.
Lease Purchase Agreements
This is when the seller gives the buyer equitable title and leases the property to the buyer. After fulfilling this agreement the buyer receives the title and obtains a loan to pay the seller after getting a credit for all or part of the payments towards the price of the home.
After reviewing these options, you may consider owner financing. It means little or no qualifying based on your credit for a home, flexible payment options from a seller, flexible down payment options and much more. In a buyer’s market a seller also may be more willing to consider this option. So if money is tight or you are not sure about your credit, this may be the perfect option for you to finance that new home.
Preapproval versus Prequalified when Buying
When you are buying a home especially for the first time, you may not know that much about loans. So it is a good idea to shop around, look up information and make sure you are getting the best possible deal for your money. It is also a good idea to look around for loans before looking for a home, so you know how much you can afford and will not have to worry about surprises later. Many people may not know the difference between being preapproved for a loan and prequalified. Here are some tips to show you the benefits and to help make things easier for you in the long run.
Ask your real estate agent for advice
Especially if you are a first time buyer, it is a good first step to ask your agent for advice when deciding on a loan. They have experience and may be able to offer some good options you may not have considered.
Getting preapproved has many benefits
Getting preapproved for a loan versus prequalified can save you time and allow you to look at homes that are best for you and within your loan budget. They can also help you to gain confidence, increase negotiating power and more.
Prequalified loans may take longer and not offer as many benefits
If you are only prequalified for a loan, it could take longer to get approved which means you could waste time looking at homes you may not be able to afford, the closing period may take longer, and more.
Prequalified loans may charge additional fees
Since you are not preapproved and you just may qualify for the loan, when you actually do get approved there may be additional fees charged for the whole process and it may waste your time and money.
Preapproved loans provide more security
If you are already preapproved for a loan, this offers you as a buyer a feeling of more security and safety. You will feel safer especially has a first time buyer looking at homes knowing you can afford a house you look at that may be your dream home.
If you are a first time buyer or even if it’s been a while since you have applied for a loan, these tips will help the process easier and better for everyone involved. This way you can search for that perfect home with fewer worries and just enjoy the bright new future ahead.
Tips on what to ask your mortgage lender
So, you have decided to buy a home and you have even decided that you need a mortgage, you have picked out a good real estate agent, but you might be wondering what you do now. Well, a good next step is to figure out what you want to ask your lender, so that you make sure to get the best deal possible and the one that works best for you and your family. That way there will be less to worry about later on and more to enjoy. Here are some tips of some things to ask your lender to help make the process easier for everyone.
Ask your Real Estate Agent for Advice
A good first step before talking to a lender is to ask your agent for advice. They have experience dealing with lenders and can help you know what to expect. You may even want them to meet the lender with you, so you can get the best deal possible.
Ask your lender about the different loans
Talk with your lender about your money situation and the different types of loan options to try and figure out what would best suit you. Do not let them talk you into something you do not need or want or let your real estate help you.
Find out what the best APR and Interest Rate Is
The APR is the interest rate plus any fees from the loan and sometimes lenders do not calculate this correctly, so if you are unsure double check it yourself or ask for your agent’s help before signing anything.
Ask about Discount Points and any other Fees
Each point is equal to one percent of the amount of the loan. Some lenders charge other fees on top of the point fees, so be sure to ask about these and know the details if you are unsure.
Ask about any and all costs
Make sure to ask about all costs including: appraisal, taxes, credit report, lender’s policy, recording fees and more. Know exactly how much you will be paying for the loan you choose.
Ask about the Good Faith Estimate
A lender has three days after you have applied for a loan to share all the costs with you, but they do not have to guarantee to do this. Ask about any guarantee policies, and if the lender does not stick by their guarantee, go with another lender to get a better deal.
These basic questions to ask your lender will help the process go smoother for everyone and make sure there are no surprises or extra worries in the future. This way you can just enjoy your new home and future without worries and hassles.
FHA Loans Set Record
The Federal Housing Administration guaranteed 186,000 mortgages in June, a record number in its 75-year history.
FHA loans are popular because they are one of the few sources of low-down-payment mortgages. In the last year, they have accounted for about 46 percent of all mortgage applications.
Along with increasing numbers of FHA activity comes a rising number of delinquent loans, with the level of FHA mortgages in some stage of foreclosure reaching 7.4 percent in May.
Source: The Wall Street Journal, Nick Timiraos (07/20/2009)
No-Doc Loans Could Return
Bank attitudes toward risky lending is making it very difficult for the self-employed, even those with high incomes, to secure mortgages.
No-doc loans are particularly hard to get, locking out people whose incomes are derived from investments or who are able to tax-shelter significant dollars.
The California Mortgage Bankers Association spokesman Dustin Hobbs says the industry understands that banning most alternative financing isn’t the long-term answer.
“It’s a reaction to the current environment,” he says. “There’s such a lack of appetite for risk right now in general that any product viewed as having any sort of risk at all has a tough hill to climb.”
Chris George, president of CMG Mortgage, predicts that no-docs and other nontraditional loans will be back within the next six months as lenders gain confidence. “As with injuries, as with your credit, as with the economy, time heals all wounds,” he says.
Source: The San Francisco Chronicle, James Temple (07/09/2009)