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Archive for the ‘Purchasing a home’ Category

Are you applying for a mortgage? Make sure you come prepared to ask the right questions, as the more you know, the better decisions you can make. Here are the top ten questions to ask your mortgage lender – jot them down or program them into your smartphone today.

Question #1: What is the interest rate on this mortgage?

Currently, the interest rates are low, but just because the lender is flashing around low rates doesn’t mean you’ll get them. You have to qualify to get the lowest rates, and a low credit score can hurt your chances. So before you take for granted that you’ll be offered a low interest rate, be sure to ask what your specific rate is.

Question #2: What are the closing costs and will I receive a good faith estimate?

Most lenders will provide you with a good faith estimate that details the chargers you will be assessed for their services, also known as closing costs. Since many lenders expect you to pay for closing costs out of pocket, make sure you know what these costs will be as soon as possible.

Question #3: Are there any potential delays that may impact my closing?

As long as you provide honest, upfront information to the lender, the process should go rather smoothly. Some of the factors that can delay the process include changing jobs, having a decrease in your salary or changing marital statuses. Be sure to let your lender know of these changes immediately if they are to occur.

Question #4: What are the qualifications for the loan?

Generally speaking, conventional loans are the most difficult to receive, but other loans have less strict criteria. Be sure to ask about the various loan options and the qualifications for each. First-time homebuyer programs for example, have incentives for new homebuyers.

Question #5: What is the down payment for this loan?

The rate and terms of your loan will be dependent on how much you put down. Most lenders ask for 5 to 20 percent of the total loan amount, and the more you put down, the lower your payments will be and the better terms you’ll have.

Question #6: Can I lock in my interest rate?

If you’re approved for a low interest rate, ask your lender about locking in the rate, but do so with caution. There may be fees to lock in through your lender, and you never know, the interest rates may go down further.

Question #7: Will I have to pay points on my loan?

Many lenders charge prepaid mortgage interest points in order to lower your interest rate. Many of these points have little to no benefit to the borrower, so be sure to ask if you’ll be paying for points and what kind of points they are.

Question #8: What documents do I need to provide?

In order to keep the process moving along smoothly, you’ll want to have the necessary documents in place. Most commonly, these documents include proof of income, bank account information, IRS Form and credit reports, but ask your lender for more specifics.

Question #9: Is there a prepayment penalty on this loan?

Prepayment penalties can kick in when you go to sell your home, reduce the principal balance by a certain amount or refinance. If there is a prepayment penalty, find out how much the penalty is and how the amount is calculated.

Question #10: How long will the process take?

Although lenders may say two weeks, it’s best to expect 45 to 60 days to have the loan application processed. If there are any obstacles or changes along the way, that will slow the process as well. It’s always better to be safe than sorry!

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Getting behind on payments can happen to anyone, but not getting help to get caught up can mean a significant risk of losing your home. And for those who become behind or facing the prospect of foreclosure, there may be government help for late mortgage payments. Keep in mind that the government is not going to simply give you money to get your loan caught up.

However, today’s government regulations do offer some protection for homeowners, and many lenders are at least making an effort work with borrowers to get their loans back on track.

First steps you can take

The government suggests individuals to take their first step by calling their mortgage lender and determining if the lender can help them directly. Oftentimes, lenders are willing to adjust interest rates or to help individuals to get caught up by making home loan modifications. For example, the lender may agree to tack on the missing payments at the end of the loan or may agree to allow you to repay the missing payments over a period of time.

Making Home Affordable

Another option that may work if the lender is not immediately willing to work with you is the Making Home Affordable Modification Program , called HAMP. This is a form of government help for late mortgage payments. You may qualify under certain circumstances, if you meet the right requirements, such as the following.

• You are living in the home you are behind on mortgage payments (it must be your primary residence).
• You owe less than $729,750 on your mortgage and began it prior to January 1, 2009.
• Your payment on the loan is more than 31 percent of your gross income at this point.
• You cannot afford to make your mortgage payment due to some type of financial hardship, such as a job loss or because of medical bills.

In these situations, the lender may agree to work with you under this government help for late mortgage payments. You will need to apply for this type of help through the federal government’s website for the program. You may or may not receive help. It is important to consider your long-term goals here. In some situations, if you do not have the financial means of being caught up, you may lose your home due to the inability to pay your loan.

The thought of finally having your own home and not having to worry about throwing your money away on rent each month can be very exciting. Of course, before you get too enamored with the idea of becoming a homeowner, you need to temper that excitement with rational thinking. The following dos and don’ts can help buyers such as you save some money and be happier in the long run.

The Dos

Credit Check-Up: Even before you start your search for your home in earnest, you need to check your own credit and pull if from the three credit bureaus. You can get the information free of charge, and it won’t damage your credit. Rather than just looking at the credit score, you need to check and see if there are any mistakes. You will also want to know check for bankruptcies, tax liens, and judgments. If you notice any problems on your report, challenge them and make sure that the corrections show up on all three bureau reports.  If you have questions about items on your credit report ask us for help as we have years of experience dealing with these sort of issues.

Pre-Qualify: Once you know that your credit is in order, you need to know how much house you are able to afford, and this means contacting a mortgage company to get pre-qualified. Just because you might be able to get a loan for a large sum of money doesn’t always mean that you are going to be able to afford the home. You need to make sure that you will still be able to have enough money left over after paying the mortgage each month so you can pay all of your other bills and still live comfortably.

Be realistic: When choosing your home, make sure that you are living within your means. You might not need to have a house as big as the one that you’ve been looking at. It might be a better move financially to choose a smaller home that fits your current needs. It will almost certainly be closer to your budget as well. When choosing a home, consider the location in regards to schools and your commute.

The Don’ts

There are a long list of “don’ts” when it comes to buying a home, but these are 2 of the most common ones we see:

Take on new debt:  Don’t buy anything large right before you buy a house unless you are paying in cash. If you buy a car and have a large car loan, it can make getting a loan for a home more difficult.

Quit your job:  While many people dream of owning their own business, wait until AFTER you buy a home to do so if you are in the market.  If you are newly self-employed, you may have to wait a few years before trying to get a mortgage loan. During those first couple years of self-employment, it can be difficult to qualify for a home loan.

When you are shopping for a new home, it is important that you keep a few things in mind. The following are some of the things that you need to remember when you are on the hunt for a new place to hang your hat.

The Location

Of course, the location is going to be very important. The price of real estate varies in different areas, and you want to make sure that you are in an area that offers you the most convenience. Whether you are looking for a place that has great schools for your children, or you want a place that is close to your work, this can be one of the most important factors in buying a new home

The Price

While everyone knows that it is important to know the price of a home before buying, you might know about the price ceiling. This is the highest price of all homes in the area, and you want to make sure that you buy a home that is well below the ceiling. This way, you will be able to maximize your profit if you ever decide that you are looking to sell.

Your Finances

Before you go shopping for a home, you should get pre-qualified from a mortgage lender (link to home page) and know exactly what you can afford.  This will help narrow your search and keep the heartache to a minimum if you should happen to fall in love with a home then later you find out the home is out of your price range.

The Hidden Costs of Repair

Even if you want to buy a house that needs some fixing up, you need to consider just how much that is going to cost you. In some cases, you might be able to find another home in the area that doesn’t require as much work and that will be able to save you some money in the long run.

Hidden Flaws

These are things that you might not notice when you first look at the home. More than likely, you are going to be looking at all of the things in the house that you like, and you might overlook a few big problems. For example, consider the driveway. Is it too steep? It is large enough to allow more than one vehicle? Will getting out of the driveway be a problem? Another flaw that might not have anything to do with the house is the neighbors. Are the neighboring homes in bad shape and do they devalue the property? Are the neighbors loud or rude?

While these things might take some time to determine, it is in your best interest to know as much as possible about the house and area before you look for a loan.