Sponsors
Archive for November, 2007
Have you ever thought of buying a house? Do you think you could not afford it? Relax, there is always a way thanks to the miracle of FHA home loan.
What is FHA?
A loan provided by FHA allows anyone to purchase any house using a minimal down payment of three percent, instead of percentages that are higher usually required in other conventional and traditional loans.
Through the loan program of the FHA, buyers who are to purchase a house for the first time as well as those who are short of funds will be the beneficiaries of this program.
Take note that FHA loan programs are not the ones responsible for making home loans, what the FHA actually does is insure these loans.
At any instance a particular buyer defaults, the one lending will be paid. The payment will come from the funds of the insurance.
In order to acquire an FHA loan, one has to have a good if not excellent credit history as well as income that is sufficient enough to be qualified.
FHA loans, could you afford it?
In order to be qualified for a loan via FHA, the housing monthly costs must not go beyond twenty nine percent of one’s monthly gross income.
Total costs for housing also include principal mortgage, interest, insurance and property taxes.
These terms almost always go together and is referred as PITI.
The following formula is a big help to make this concept more understandable. Monthly income multiplied by .29 is equal to the PITI at its maximum.
So if one’s monthly income is $3,000, the maximum PITI is $870. The monthly total costs with the PITI added and the debt (in the long term) will not exceed 41% of your monthly gross income.
Included in these long debt terms are balances in credit card and car loans.
Acquiring a loan via FHA
In order to acquire a loan, your income must be able to pay your debt monthly. You must also have appropriate cash in order to place an initial down payment during closing time.
Also, the costs for closing must also be paid by you. This is normally two to three percent of the home’s price. Included in these costs are the homeowner’s insurance, the fees for the attorney, a title search fee, insurance title as well as a Private Insurance Mortgage (that is if your payment is 20% less than the down.)
All in all, an FHA loan is a big help for those who are seriously considering to have a home sweet home to call their own.
A house is not a home, a home is not a house without that feeling that you own it yourself.
Once you see the home that you want to see yourself living in, a price needs to be negotiated with the home seller and thereby have a contract all parties agree with.
Make an offer
Unlike those purchases which has a defined price tag, houses sell for the amount the seller and buyer have to negotiate.
The legal counsel or agent of your choice should assist in you in determining the amount that is best for your beginning offer.
As soon as the offer has been made, it is important that the negotiations be put in actual writing. Writing the details of the negotiation helps both parties have a clear idea of the agreement.
It is also a must that you have the pre-approval from your own lender in order for you to gain the maximum influence. This is because sellers actually prefer those buyers whose finances are secure.
Submit a money deposit
This is necessary and you must have one prepared in order to express your own commitment to the home transaction. This deposit is also called “good faith” for reasons that are obvious.
The purchase agreement contract
This contract is signed between the seller and buyer and one which describes the terms in the particular transaction. Just as in any other contracts, this specific document shows an agreement that is legally binding.
Therefore, a lot of care should be approached in creating it.
Usually, agreements include the following items: the address of the home, the legal property description, the selling price, the loan amount, the down payment, the deposit, the names of the parties involved in the transaction (this includes the agent, the broker, lawyer, etc.), the time limitation (this includes the acquisition of the buyer, the financing, the response of the seller, closing, the occupancy transition).
The closing of the negotiation
This part is the final aspect involved in home purchasing. During this phase, one should review all loan commitments with the lender and that all requirements are completely understood.
Set the time of the negotiation’s closing as well as the date as based on the contract of sales and the expiration of the loan.
Prior to closing, confirm if a survey has been ordered for the property. This could be checked with your attorney or agent.
All in all, Wells Fargo offers a home mortgage program that could meet the unique needs and wants of homebuyers.
Their consultants could help anyone find the perfect combination of loans that could support all your financial and home goals.
Choosing the mortgage that is right for you is essential when one is involved in the process of home purchasing. Thus it is important that all options are understood.
Basically, the two things one should consider when considering a home loan is what type meets best your home purchasing needs as well as which loan offers the most ideal schedule for repayment.
The fixed mortgage rate loan types
Fixed rate home mortgage loans have an interest rate that basically remain the same for the whole life of the loan.
These payments have predictable monthly fees yet you are immune to any rising interest rates. Therefore, your interest and principal payments will not increase.
The adjustable home mortgage rate
Mortgages that are adjustable in rate have rates of interest that adjust in a periodic manner as based on the exiting conditions of the market.
The rate is initially fixed during the period of its introduction (anywhere between one year to a decade) and is usually lower compared to a mortgage that has its rate fixed.
After this period, the rate then adjusts every year or about semi-annually as based on the index of the market, however it cannot go beyond the pre-determined cap adjustment.
Jumbo home mortgage loans
The amount given out on this type of loan exceeds the amount established by corporations. Since jumbo home mortgage loans are sold and bought on a scale that is smaller, they have rates that are a little high compared to other type of home loans.
B/C home mortgage loans
These types of loans are given to those borrowers that have filed recently for foreclosure or bankruptcy or those who have late payments on their reports of credit.
The purpose of B/C home mortgage loans is the offer of temporarily financing to applicants until they could qualify for type A conforming financing.
Government home mortgage loan programs
One type of government loan programs is VA loans. These types of loans are definitely guaranteed by the US Department of Veterans Affairs.
This allows service persons or veterans to acquire home mortgage loans with terms that are favorable (usually in the absence of a down payment).
RHS home mortgage loan programs
RHS means Rural Housing Service if the USDA or the US Department of Agriculture. This type of loan guarantees residents in the rural area with very minimum costs for closing. Down payments are also unnecessary.
All in all, there are a lot of home mortgage loan programs available. It all depends on your needs, wants and means.
There are several ways to finance your home. In order to choose the most appropriate home mortgage for your personality and lifestyle, assess the different type of financing for home mortgage:
1) Fixed-rate mortgage
Fixed-rate mortgage are those with interest rates that remain the same until the life of the loan ends. For consumers who are looking for a stable rate that will not experience interest rate fluctuations, this home mortgage financing is a great deal.
A favorite among first time home buyers and retirees, it can help in organizing and budgeting finances while protecting consumers from increase of interest rates. This kind of financing for home mortgage is best for consumers who plan to stay in their homes for more than 5 to 7 years.
2) Adjustable-rate mortgage (ARM)
Adjustable-rate mortgage, or simply ARM, is a kind of financing for home mortgage wherein the borrower and lender agrees on a certain interest rate that will periodically change. Interest rates will rise or fall, usually with regards to a specific index.
The advantage of an ARM is that the initial interest rate is usually lower than a fixed-rate mortgage. When the interest rate goes down, so will your payments. If you’re planning to keep a home for a short period, this mortgage financing is suitable for you.
3) Balloon Mortgage
A balloon mortgage is a loan that is amortized over longer period compared to the loan term. A balloon mortgage usually has a 15-year term, which is amortized over 30 years to make monthly payments controllable. When the 15-year term ends, you must repay the full principal due of the loan in one large sum, called the “balloon payment”.
When you plan to keep your home for a short time, this may be a practical financing plan. However, make sure to ask when the term ends to prevent possible financial problems.
4) Government loans
Through government lenders such as the Veterans Administration (VA) and the Federal Housing Administration (FHA), government loans often allows consumers with a lower down payment compared to traditional bank loans.
VA loans are perfect for veterans. Government loans are also suitable for consumers buying lower-priced homes with smaller down payments.
5) Convertible ARM (Adjustable-rate mortgage)
Convertible ARM usually starts out as an ordinary ARM, and then gives you an option to lock a fixed rate without refinancing. However, this option will only be offered after a specified time.
Knowing your financing options for home mortgage can save you money by preventing high interest rates and unworkable payment plans. Make sure to ask questions to learn which financing plan best fits your needs.
Refinancing your home mortgage comes with numerous advantages. Primarily, home mortgage refinancing could save you a lot of home on your payment. It can also allow you to pay off the full home mortgage faster, especially when you have feasible terms.
When you’re planning to refinance your home mortgage loan, make sure to consider these four important things to ensure it will not cause any problems afterwards:
* Learn the terms of your original mortgage
Before shopping around for the appropriate home mortgage lender, ensure that your original mortgage does not have pre-payment penalties or any kind of early payoff penalty.
Many people refinance their home mortgage not knowing that they will be charged for a pre-payment penalty. These penalties usually range from six months up to three years, plus another penalty for early payoff.
Although penalty amount varies, the average pre-payment penalty amounts to a six-month worth of mortgage interest. In order to justify refinancing mortgage loans with pre-payment penalties, you need to have significant payment and interest savings.
* Maximize your options
In order to ensure you’re getting the lowest rate in the market, apply for pre-approvals to several different lenders. However, make sure that the lender is not pulling out your credit history during an initial pre-approval application.
Be aware that every time your credit history is pulled, it slightly reduces your credit score. When your credit history has too many inquiries, this may prevent you from refinancing your mortgage loan with a low rate.
In addition, assess different lender offers concerning interest rate offerings and closing costs. Remember that these two factors will largely affect your lender choice. Choose a lender with feasible rates to maximize your mortgage refinancing benefits.
* Choose your lender
Once you have compared different lenders, you can now allow your choice of lender to pull your credit history. Then, make sure to get the interest rates and closing costs into writing. Ask your lender to provide you with a quotation in advance of all possible costs involved with your loan.
Ask for information about whether the refinancing loan, which you will be getting, has pre-payment penalties. Most lenders leave this important information out, knowing they might scare consumers away.
In refinancing home mortgage, make sure you shop around and assess different lending options. Do not grab the first opportunity that comes before you. Be a smart consumer and refinance your home mortgage with the lowest rate possible.
Once you decide to shop around for a certain lender, you have officially started the process of a home mortgage loan. However, it doesn’t end here. You will then have to sign a purchase contract and undergo through the credit approval process, which verifies your actual income, certain liabilities and your ability to repay the potential loan.
When you are invited for a loan interview, make sure to bring a signed copy of the purchase contract. This contract for your house loan specifies the down payment amount, price of the house and your proposed closing date. Typically, when you apply for a mortgage loan, the lender uses all these information to calculate whether the house you wish to buy could serve as collateral for the money you want to borrow.
Make sure to obtain your credit report and correct possible errors before applying for a home mortgage loan since this information will largely affect your ability to obtain the loan.
In order to be processed for a home mortgage as quickly as possible, remember to complete all the documents virtually all lenders require for the loan process.
For the verification of your income, you need to bring:
* Earning statements (w-2 forms, current pay stubs and tax returns for the past year)
* For self-employed (profit and loss statements and return tax for the past two years)
* Extra income (overtime, commission, veteran benefits, social security, and so on)
For the verification of your assets, you should have obtained:
* List of all bank account numbers (including branch address and checking or savings account statements for the past three months)
* All copies of any title to motor vehicles, which are paid in full.
* List of stocks, investments, and saving bonds (including approximate market value of each)
For the verification of your credit history, you need to bring:
* Copies of credit card statements for the past six months
* List of all consumer debts (including furniture, student or car loans and other co-signed installment loans with the creditor’s contact numbers and addresses)
* Evidence or copies of rental payments or mortgage
* Documents of child support or alimony
If you have not established your credit rating, provide the lender with other information showing payment histories. These include utility payments, canceled checks or any recurring obligations.
Having these documents could speed up the process of your home mortgage loan. However, take into account that different lenders may have different information requirements. For this reason, ask your lender in advance about what to bring for your initial home mortgage interview.
Since the advent of the worldwide technology that is the Internet, human life has never been the same. Internet did not only changed the way we do business, or how we communicate with one another, it has also changed the landscape of our lives and how we do things.
The Internet has provided a way to make things better and easier. So how does the Internet manifest itself in our daily lives? Let’s take a look at a very practical example- applying a home mortgage plan. During the days when the Internet was still being conceived, getting a home mortgage plan will take a very long time. One has to physically visit application centers and meet different kinds of brokers just to know which deal is the best. Now, with the Internet already established, everything has been cramped down into a world which can be accessed with a click of a mouse.
Another good thing about the Internet is that it has broken down the walls of information asymmetry. Back then, many lenders may resort to bringing interest rates up or creating a temporary market shoot up just to earn more money. They can do this because the people have no other source of information regarding the going rates of home mortgage plans except the lenders themselves. But now, because of the Internet, this information asymmetry has been broken down into pieces. People can access the Internet and find the best deals for a home mortgage plan. Now, that’s convenience and fairness.
A good number of the lenders who have Internet websites usually have a certain “mortgage calculator” which one can use to be able to have an idea as to what kind of loan he can avail. There are also calculators which can give good estimates as to how much one will be paying for a certain period of time throughout the payment period.
One has to make sure to make a good assessment of the different rates that the different lending institutions are offering. This is something that can be done easily with the Internet, since everything is already uploaded and readily made available. Once the initial research has been done, one can apply for the home mortgage plan of his choice online. This eliminates the need to physically apply for a home mortgage plan at a center.
Going online is the way to go in applying for a home mortgage plan. Just make sure that you did the necessary preliminary research about the company and the rates that they are giving out.
Mobile homes are getting more and more popular nowadays. As people become more and more enchanted by the excitement and flexibility that a mobile home provides, these homes have sprung up like mushrooms in subdivisions and parks.
If one is considering to buy a mobile home and have it financed through a typical home mortgage, he should know already that it would be very possible to do that nowadays. Most banks and lenders would not give a regular mortgage plan for people who are intending to buy a mobile home. Financing these homes would usually fall under the usual personal property loan arrangements.
The rule of thumb that most lenders employ in lending to buyers of mobile homes is that mobility means higher rates. This means that “wheels” whether installed or taken off, will definitely shoot up the lending rates for mortgaging it. In a recent study that was done by Bankrate.com which surveyed around 20 big lending companies showed that seven of these companies were not even willing to give any kind of lending schemes to buyers of mobile and manufactured homes. However, there is some hope for the whole market of lending for mobile home buyers as more and more people are getting into this bandwagon.
Lenders usually ask for a higher interest rate for mobile home loans. This is because they would like to be assured that they get some leverage when lending to people who have few assets to be able to repay the said loan. It is a basic fact that people who are experiencing budget constraints are the ones who are purchasing mobile homes. Another factor that contributes to the higher rates for personal property loans is that all the administrative and transactional costs are passed to the borrower.
The limited number of lenders for mobile home buyers makes it much difficult for them to finance their home. The best strategy is to try to get a mortgage for the mobile home. One should do an extensive research before settling for a personal property loan. If one cannot get a mortgage arrangement for financing the mobile home, the best way to go is to have a good credit rating. One should also be aware of the different laws that affect mobile home owners. One example is the Homeowner Initiative of President Clinton (circa 1996) which gives incentives to mobile home owners.
Sponsors
Blog Directories
Syndication
