Friday, July 28, 2006
Mortgage Points
Applying for a mortgage these days can be quite confusing. Especially when your lender starts talking about Points on your mortgage. If you are like most people, you are thinking to yourself, "what is he talking about?". To help clear up the confusion here is summary of mortgage points.
Your mortgage lender will use points as a type of up-front discount and tie them to the interest rate of the mortgage.
A point in a mortgage is equal to 1% of the loan amount. For example, for a mortgage on a $200,000 home, each point would cost $2,000. Each point would lower your interest rate by .125%.
Using the $200,000 mortgage example, your lender might offer you a mortgage with a rate or 7.0% with no points, or 6.875% with one point, or 6.75% with two points. Points can make a mortgage rate look low, while in reality the actual amount paid to the lender is higher because of a large number of points which must be paid.
Points are usually an up-front payment made at the closing on your new home. This is in addition to your down payment and other closing costs. However, due to customer demand, many lenders are now willing to allow you the finance the Point's costs over the term of the mortgage.
Should you pay Points up-front or finance them?
The answer is up to you. Paying more toward the mortgage up-front will lower your monthly payments. However, paying more at the closing will leave you with less money in the bank to remodel your new home.
Recommended Sites:
Ameriquest Mortgage (Click Here)
Get a FREE Mortgage quote from TheLoanPage.com (Click Here)
Until Next Time!
Jasmine
http://pickamortgage.blogspot.com
Wednesday, July 26, 2006
Mortgage Closing Costs will Cost You!
One mistake that many new home buyers forget to do is budget for the one-time closing costs. In an typical home purchase, closing costs amount to about 2-5 percent of the price of the property. These closing costs are in addition to your down payment.
Here is a list of some of the closing costs you can expect to pay on your new home.
1. Loan fees and Charges:
Your lender will charge you for all types of things such as: appraising the property, preparing loan documents, obtaining a copy of your credit report, and processing your loan. You may also be charged a fee for 1 to 2 percent of the loan for prepaid interest charges called Points. Warning: if you have to pay "points" on your mortgage, this will cost you thousands of dollars.
2. Escrow Fees:
These costs cover the preparation and transmission of all the money and documents related to the purchase of your home. The escrow fees will cost you anywhere from several hundred to over a thousand dollars.
3.Title Insurance:
This insurance protects you and the lender against the risk that the person selling the home does not legally own it. Luckily you only have to pay the premium on this insurance one time. This insurance should cost you between three hundred to a thousnad dollars depending on the value of your home.
4. Homeowner's Insurance:
Most lenders will require that you pay the first year premium on your home owners insurance at the time of closing.
5. Property Taxes:
If the sellers of the home have paid any property taxes in advance, you may have to reimburse them. For example, the closing date on your home is Nov 1 and the sellers have already paid the taxes on the home until the end of the year, you would have to reimburse them for the taxes they paid from Nov 1 until Dec 31.
6 Property Inspections:
Although it is not absolutely required to have your property inspected, it is highly recommended that you do so. You certainly do not want any surprises after you move into your new home. This inspection should cost you anywhere between two to four hundred dollars.
7. Private mortgage Insurance (PMI)
If you make a down-payment of less than 20% of the purchase price of your home, your lender will probably require you to take out Private Mortgage Insurance. This insurance will protect the lender in case you default on your mortgage. This should cost you a minimum of several hundred dollars. This insurance will be a yearly cost until you have 20% equity in your home.
8. Prepaid Loan Interest:
At the closing, the lender will charge you interest on your mortgage to cover the interest that accrues from the day the loan is funded up to the day your first mortgage payment is due. This interest payment will vary depending on the size of your mortgage. The sooner you make your first mortgage payment the less interest you will have to pay.
9. Miscellaneous Fees:
By now you are probably thinking that your mortgage lender has already charged you for everything but the kitchen sink. But wait there are a few more little pesky items to throw in.
We don't want to forget the fees to record your mortgage and deeds at the county courthouse, the Notary Fees, or the express mailing or courier fees. These little fees should cost you another $100-$200.
If you cannot afford to pay all of your closing cost fees, speak to your lender as he/she will probably allow you to finance these charges. It is now common to roll the closing costs into into your monthly mortgage payments.
A couple great online sources for mortgages are:
Ameriquest Mortgage (Click Here)
About to Purchase a New Home Up to 4 free quotes now! (CLICK HERE)
Until Next Time!
Jasmine
www.pickamortgage.blogspot.com
Saturday, July 22, 2006
Option ARM - The World's Most Dangerous Mortgage
Home prices have reached record levels, and in many parts of the country, homes have become nearly unaffordable. Real estate has replaced the tech stocks of the late 1990’s as the hot investment, and everyone has sold their stocks and jumped into investment property.
Real estate prices have increased at a far greater rate than salaries, and the lending industry has attempted to solve this problem by introducing a tremendous number of mortgage options for borrowers who are barely capable of purchasing a home. Most of these loan types feature adjustable interest rates and minimum down payments. One of these, the option ARM, is the most dangerous type of loan ever introduced. Borrowers who are considering an option ARM should be aware that this loan could leave them with a loan that is worth far more than the home it’s used to buy and with a loan that he/she cannot afford to pay. The option ARM is not for the squeamish.
So what, exactly, is an option ARM? An option ARM is a mortgage with an adjustable interest rate that typically gives the borrower four different payment choices each month. The first choice is based on a 30-year amortization table; the second on a 15-year amortization table. These would correspond to payments for adjustable-rate 30 and 15 year mortgages, respectively. The third choice is an interest-only payment, which pays the interest that accrues during the month but pays nothing towards reducing the loan amount. The fourth choice, the one that makes this loan so dangerous, is called the “minimum payment.” The minimum payment is calculated upon the first month’s interest rate, which is usually a very low “teaser” rate that can be as low as 1-2%. Most borrowers with an option ARM opt to pay the minimum payment each month, and that’s where the trouble comes in.
The loan carries and adjustable interest rate, and this rate can adjust as often as every month. If the borrower is paying only the minimum payment, then he or she isn’t even paying enough to cover that month’s interest on the loan. What happens then? The unpaid interest that has accrued is added to the loan principal. The principal can actually grow larger, and as interest due is calculated on the loan principal, the interest due will increase, as well. Interest rates are currently near all-time lows and are sure to increase. A buyer who continues to make minimum payments on an option ARM will find that the principal on the loan is actually increasing over time! This is known as negative amortization.
In a negative amortization situation, only bad things can happen. The lender can require refinancing under certain conditions stated in the loan agreement. The buyer may find himself unable to pay the loan and may have to default. And the lender could find himself holding a note that is worth far more than the house that it represents.
The option ARM is a loan that is best suited to investors and homeowners who only intend to keep the home for a short time. It is not a good choice for anyone who may be using it to buy more home than he or she can afford. Unfortunately, that describes a lot of buyers who are taking out this type of loan. Anyone who is considering a home purchase should be very careful if this type of loan is offered, as it could leave you both bankrupt and homeless.
Home equity rates are still LOW! Click Here to Compare up to 4 free quotes!
Until Next time!
Jasmine
http://pickamortgage.blogspot.com, http://barworks.blogspot.com
***************************************************
Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a site devoted to personal bankruptcy, debt consolidation and credit counseling, and HomeEquityHelp.com, a site devoted to information regarding mortgages and home equity loans. Article Source: http://EzineArticles.com/?expert=Charles_Essmeier
Real estate prices have increased at a far greater rate than salaries, and the lending industry has attempted to solve this problem by introducing a tremendous number of mortgage options for borrowers who are barely capable of purchasing a home. Most of these loan types feature adjustable interest rates and minimum down payments. One of these, the option ARM, is the most dangerous type of loan ever introduced. Borrowers who are considering an option ARM should be aware that this loan could leave them with a loan that is worth far more than the home it’s used to buy and with a loan that he/she cannot afford to pay. The option ARM is not for the squeamish.
So what, exactly, is an option ARM? An option ARM is a mortgage with an adjustable interest rate that typically gives the borrower four different payment choices each month. The first choice is based on a 30-year amortization table; the second on a 15-year amortization table. These would correspond to payments for adjustable-rate 30 and 15 year mortgages, respectively. The third choice is an interest-only payment, which pays the interest that accrues during the month but pays nothing towards reducing the loan amount. The fourth choice, the one that makes this loan so dangerous, is called the “minimum payment.” The minimum payment is calculated upon the first month’s interest rate, which is usually a very low “teaser” rate that can be as low as 1-2%. Most borrowers with an option ARM opt to pay the minimum payment each month, and that’s where the trouble comes in.
The loan carries and adjustable interest rate, and this rate can adjust as often as every month. If the borrower is paying only the minimum payment, then he or she isn’t even paying enough to cover that month’s interest on the loan. What happens then? The unpaid interest that has accrued is added to the loan principal. The principal can actually grow larger, and as interest due is calculated on the loan principal, the interest due will increase, as well. Interest rates are currently near all-time lows and are sure to increase. A buyer who continues to make minimum payments on an option ARM will find that the principal on the loan is actually increasing over time! This is known as negative amortization.
In a negative amortization situation, only bad things can happen. The lender can require refinancing under certain conditions stated in the loan agreement. The buyer may find himself unable to pay the loan and may have to default. And the lender could find himself holding a note that is worth far more than the house that it represents.
The option ARM is a loan that is best suited to investors and homeowners who only intend to keep the home for a short time. It is not a good choice for anyone who may be using it to buy more home than he or she can afford. Unfortunately, that describes a lot of buyers who are taking out this type of loan. Anyone who is considering a home purchase should be very careful if this type of loan is offered, as it could leave you both bankrupt and homeless.
Home equity rates are still LOW! Click Here to Compare up to 4 free quotes!
Until Next time!
Jasmine
http://pickamortgage.blogspot.com, http://barworks.blogspot.com
***************************************************
Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a site devoted to personal bankruptcy, debt consolidation and credit counseling, and HomeEquityHelp.com, a site devoted to information regarding mortgages and home equity loans. Article Source: http://EzineArticles.com/?expert=Charles_Essmeier
Tuesday, July 04, 2006
Buying A Home At Auction
Due in part to the popularity of the U. S. Department of Housing and Urban Development (HUD)'s home auction program, more potential homebuyers than ever are buying homes at auction. Homes for auction aren't limited to just HUD, however. Many government entities auction homes for payment of back taxes, and some homeowners even auction their homes on eBay!
Homebuyers considering buying a home at auction should take some steps in advance to help them with their bid price, and even whether to bid at all on a specific home. There will always be a degree of risk when buying a home this way, but with a little diligence, potential homebuyers could save a lot of money buying in this manner.
Before the auction, you should have your financing arranged, and have enough cash on hand or in your bank account to cover a deposit on your purchase.
You need to check the features, location, condition, and ownership history first. Afterwards, be sure to learn what the property is worth by looking at sales of comparable properties in the same area. Compare homes with the same number of rooms is possible, but be sure to allow for price differences due to pools, decks, carpeting, window treatments, etc.
At the auction itself, resist the temptation to get into a personal bidding war, just "to beat out the other guy". Have a set price limit and stick to it. Other houses will come along, and you don't have to win the first auction that comes your way.
You should know that the price of a home at auction is typically the loan balance (if foreclosed), plus any back taxes owed, plus legal fees and other expenses in foreclosing the property. This will typically be the opening bid amount, and the price will go up from there. Even so, it's possible to get a great deal in an auctioned house, with a little research and planning first.
Also, know that you probably won't be able to get an inspection, and are buying the home "as is". If you can't do any needed repair work yourself, or can't hire it done within your budget, you may not end up getting such a bargain in the end.
Nationwide Auction Homes Listings
Until Next Time!
Jasmine :)
About The Author
Jakob Jelling is the founder of http://www.cashbazar.com/. Visit his website for the latest on personal finance, debt elimination, budgeting, credit cards and real estate.http://barworks.blogspot.com/,
Homebuyers considering buying a home at auction should take some steps in advance to help them with their bid price, and even whether to bid at all on a specific home. There will always be a degree of risk when buying a home this way, but with a little diligence, potential homebuyers could save a lot of money buying in this manner.
Before the auction, you should have your financing arranged, and have enough cash on hand or in your bank account to cover a deposit on your purchase.
You need to check the features, location, condition, and ownership history first. Afterwards, be sure to learn what the property is worth by looking at sales of comparable properties in the same area. Compare homes with the same number of rooms is possible, but be sure to allow for price differences due to pools, decks, carpeting, window treatments, etc.
At the auction itself, resist the temptation to get into a personal bidding war, just "to beat out the other guy". Have a set price limit and stick to it. Other houses will come along, and you don't have to win the first auction that comes your way.
You should know that the price of a home at auction is typically the loan balance (if foreclosed), plus any back taxes owed, plus legal fees and other expenses in foreclosing the property. This will typically be the opening bid amount, and the price will go up from there. Even so, it's possible to get a great deal in an auctioned house, with a little research and planning first.
Also, know that you probably won't be able to get an inspection, and are buying the home "as is". If you can't do any needed repair work yourself, or can't hire it done within your budget, you may not end up getting such a bargain in the end.
Nationwide Auction Homes Listings
Until Next Time!
Jasmine :)
About The Author
Jakob Jelling is the founder of http://www.cashbazar.com/. Visit his website for the latest on personal finance, debt elimination, budgeting, credit cards and real estate.http://barworks.blogspot.com/,
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