· Before you get a mortgage, be sure you understand your personal financial situation. The amount of money a banker is willing to lend you isn’t necessarily the amount you can “afford” to borrow given your financial goals and current situation.
· Maximize your chances for getting the mortgage you want the first time you apply by understanding how lenders evaluate your creditworthiness. Don’t waste time and money on loans that end up rejected. Most obstacles to mortgage qualification can and should be overcome prior to submitting a loan application.
· Because the ocean of mortgage programs is bordered with reefs of jargon, learn loan lingo before you begin your mortgage-shopping voyage. This will enable you to hook the best loan and avoid being taken in by loan sharks.
· To select the best type of fixed-rate or adjustable-rate mortgage for your situation, clarify two important issues. How long do you expect to keep the loan? How much financial risk are you able to accept?
· Special situation loans — such as a home equity loan or 80-10-10 financing — could be just what you need. However, some “special” loans, such as 100 percent loans and balloon loans, can be toxic.
· Whether you do it yourself or hire a mortgage broker to shop for you, canvas a variety of lenders when seeking the best mortgage. Be sure to shop not only for a low-cost loan but also for lenders that provide a high level of service.
· Investigate when shopping for a mortgage on the Internet. Be cautious. You may save time and money. Or you could end up with aggravation and a worse loan.
· Compare various lenders’ mortgage programs and understand the myriad costs and features associated with each loan.
· Just as you must prepare a compelling resume as the first step to securing a job you want, craft a positive, truthful mortgage application as a key to getting the loan you want.
· After you get a mortgage to purchase a home, stay informed about interest rates, because a drop in rates could provide a money-saving opportunity. Refinancing — that is, obtaining a new mortgage to replace an existing one — can save you big money. Assess how long it will take you to recoup your out-of-pocket refinance costs.
· If you’re among the increasing number of homeowners who reach retirement with insufficient assets for their golden years, carefully consider a reverse mortgage, which enables older homeowners to tap their home’s equity. Reverse mortgages are more complicated to understand than traditional mortgages.
· If you fall on tough economic times and get behind on your housing payments, don’t resign yourself to foreclosure. Take stock of the situation. Review your spending and debts and begin a dialogue with your lender to find a solution. Make use of low-cost counseling approved by the United States Department of Housing and Urban Development.
source of funds for your down payment and closing costs. Most likely, you will be asked to provide statements for the last two or three months on any of your liquid assets. This includes checking accounts, savings accounts, money market funds, certificates of deposit, stock statements, mutual funds, and even your company 401K and retirement accounts.
Perhaps you become exasperated at your lender, but they are only doing their job correctly. To ensure quality control and eliminate potential fraud, it is a requirement on most loans to completely document the source of all funds. Moving your money around, even if you are consolidating your funds to make it “easier,” could make it more difficult for the lender to properly document.
Buying a foreclosure is often faster than purchasing a short sale. Plus, buyers often can negotiate closing costs and price in foreclosure sales, Elaine Zimmermann, a real estate investor in Memphis, Tenn., told Bankrate.com. However, abandoned homes in foreclosure can deteriorate very quickly so the buyer may need to weigh the condition of the home and whether they want a fixer upper. Scarred walls and carpets and appliances that were damaged by the former owner are not uncommon in a foreclosure, says David Richardson, an inspector in the Detroit area who’s certified by the American Society of Home Inspectors.
A short-sale home is still owned by the occupant, so it tends to be in better condition than a foreclosure, experts say. “The short sale is, in my opinion, far better than buying a foreclosure because the home is generally in better condition because it’s been occupied,” says Gwen Daubenmeyer, a certified distressed property expert with RE/MAX in Detroit. “The utilities have been maintained, usually the lawn is maintained, those kinds of things.” But short sales often can take a longer time than a foreclosure to close. However, the federal Home Affordable Foreclosure Alternatives program, may be able to help speed up the short-sale process since it has created a timeline to hold lenders accountable, but still “it’s not perfect by any means,” Daubenmeyer says.
decreasing to 2.89% and five-year adjustables falling to 3.13%, also a record low. A year ago 30-year fixed rates were at 4.44%. Attributed to Frank Nothaft, Vice President and Chief Economist, Freddie Mac, “Renewed market concerns about the European debt markets led investors to shift funds into U.S. Treasuries, pushing long-term yields lower. Further, in its August 9th Federal Open Market Committee statement, the Federal Reserve noted that economic growth so far this year had been considerably slower than it expected and that overall labor market conditions had deteriorated in recent months, leading the Committee to conclude that an exceptionally low federal funds rate should be maintained at least through mid-2013. These developments helped to ease rates on home loans lower this week. Lower rates will help to maintain the high degree of home-buyer affordability in the market. The National Association of Realtors® reported that its affordability index over the past three quarters has indicated the highest affordability since the inception of the index in 1970.
• The interest portion of your mortgage payment may be tax deductible — No portion of a rent payment is tax deductible. (Consult your tax advisor for details.)
2. Pre-approval – Pre-approval is similar to pre-qualification, except your debt, income and credit are all verified and you are actually approved for a loan, up to a specific amount and under certain conditions and terms. Becoming pre-approved means you can search for your dream home without worrying about whether or not you can afford it.
10. Processor’s Review – A loan processor will package all pertinent information to be sent to the underwriter, including any explanations that may be needed, such as reasons for derogatory credit.
16. Funding – A wire or check for the amount of the loan will be sent to the title company.
That said, continual but gradual improvement seems likely. As the economy finds firmer footing, so will mortgage rates. After being pressed to 56-plus-year lows in 2010 by various crises, deflation concerns and government manipulation, we may see a bit of the other side of the coin in 2011. Although the Fed will keep short-term interest rates low, it is unlikely to leave them at emergency levels forever; as the economy recovers, the market will probably demand that the Fed begin to raise short-term interest rates and back off on policy “accommodation” in order to avoid an inflation problem.
