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SaveMORE Loan » 2007 » January

January 25, 2007

Top ten questions to ask your mortgage broker

by @ 1:40 am. Filed under Mortgage

 

ASK YOUR MORTGAGE BROKER THESE VITAL QUESTIONS These are screening questions to see if you are comfortable enough with a broker to give him or her your business.

1. What kind of loan fits my situation?

You want the broker to ask you lots of questions before answering this one. You should understand these types of loans:
Fixed-rate
Adjustable-rate
Interest-only
Negative-amortization

2. How do adjustable rate mortgages work?

You will want the broker to explain:
How often the rate adjusts
How high your rate can go in a year
How high your rate could go over the life of the loan

Which index is being used to calculate the rate

3. What points and fees will you charge me?

A point is like a premium you are charged for getting the loan, and is tax deductible. One point = 1% of total loan. As your points go up, your interest rate goes down.

Try to find a lender who won’t charge origination fees, or who will reduce them to get your loan.

4. What will this loan cost me – grand total?

Lenders are legally required to supply you with a good faith estimate (GFE) that encompasses the following:
Appraisal
Credit report
Taxes
Title policy
Pest inspection
Escrow
Appraisal
Recording fees

5. Will you guarantee your GFE?
By law, a lender must give you the GFE within 3 days of your loan application. It is worthless unless it’s guaranteed, so you’re better off only patronizing lenders who will.

6. Do you lock rates for your clients?
If interest rates show signs of increasing, lock your loan! Some lenders don’t charge extra for a rate lock. Find out exactly which of the loan costs are covered by the lock, how long the rate can be locked and ask for a written agreement.

7. Is there a prepayment penalty?
First, check to see if your state has disallowed this penalty. Lenders charge prepayment penalties on the perceived loss of interest (which to them is income) if you repay your loan early.

If the penalty is still legal in your state, ask the amount, the terms and if it could be waived if you refinance through the same lender.

8. Do you underwrite your own loans?
Your loan will probably go through faster if the answer is yes. This factor is especially relevant if you are applying for an FHA or VA loan. If you are, you should ask specifically if the lender can approve either of these two without sending them to the relevant agencies.

9. How long will my loan take to fund?
The average amount of time is 3 to 7 weeks. In order to project a closing date, you need to know what might happen to hold up funding, and how long after your loan is approved it will fund.

10. Do you receive a bonus or commission on this loan (YSP)?
Try to find out if your loan officer’s YSP will make your loan more expensive.

January 21, 2007

Getting a Deal in a Depressed Market

by @ 10:34 pm. Filed under Buying

 

In any fluctuating market, it’s smart to buy when you can get a commodity cheaply. This applies to real estate as well.  Negotiating a good purchase price is only the beginning. Loan costs, parameters and circumstances change frequently. But you definitely have extra leverage when buying in a slow market.  
 
Here are some tips to get the best deal possible on your new home: 
Choose the Lender That Works for You 
You’re not tied to your seller’s lending institution. Although mortgage brokers fund over half of U.S. home loans, you can borrow from S&L’s, individuals, banks and even your mutual fund provider. 
Mortgage brokers can provide you with many options, as they deal with hundreds of lenders. Obviously, the quality of your deal will depend on the competency and contacts of the broker that you choose. Mortgage bankers are tied to one or more banks. Your local bank branch may give you a good rate if you open or maintain an account there.Savings and loans exist mainly to make home loans  (building, buying or improving) 
Lock in a Great Rate 
Loan gurus favor this strategy, because the Feds tend to lower interest rates in a declining real estate market. On a home loan of $500,000 or more, you can save a bundle if you hit the rate just right. But you can lose out completely if you hit an uptrend. Your loan will cost more if you lock the rate, because the lender is assuming that uptrend risk.  
These are the variables in a loan lock:
Points
Interest
Duration of lock 
There’s no downside, if rates go south again. Although lenders won’t advertise this fact, you’re always free to pursue a different loan or a better rate.  
Get the Seller to Reduce Your Interest Rate 
Mortgage buydowns tend to be more favorable for buyers than ARMs (Adjustable Rate Mortgages), because interest rates increase more gradually, and then become fixed. Key points of mortgage buydowns:
Monthly outlay includes principal and interestLower overall payment for a specified number of yearsSeller pays lump sum to lower interest rate5-10% down is common  
Try the New, Improved FHA if You’ve Had Credit Problems 
Born in the Depression, the FHA insures home loans against default. Their 2006 loan limits range from $200 to half a million dollars. One big advantage to this type of loan is that you can get one within a few years of a foreclosure or bankruptcy. Other advantages:
Eased debt-ratio restrictions
FICO scores not applicable
As low as 3% down
Interest rates are fixed
More lenient repair requirements (sellers love this one!)   

January 17, 2007

Why buy a home?

by @ 1:33 am. Filed under Buying


It seems really overwhelming, doesn’t it? Your homeowner friends spend every weekend doing fixit projects. And they seem to sink every penny into their homes. Better to remain a carefree renter, right? Wrong!

 

Freedom

No more overbearing landlord breathing down your neck. Get a dog. Get 9 dogs. Paint your rooms burnt umber. Blare your music. Drill a hole in the wall. Go nuts. It’s your place.

 

Value

It’s a sure thing. Your home will be worth more tomorrow than it was yesterday. It’s a good way to beat inflation.

 

Tax Advantages

One of the best tax shelters available today.

 

Property taxes: Deductible for both your primary and one vacation home

 

Mortgage Interest: Your may deduct mortgage interest if you owe less than you paid for your home. During the first years of your mortgage, when your payment is mostly interest, this is a huge deduction.

 

Capital Gains: You may deduct $250K if filing singly and $500K if married every two years. You must actually reside in the house for 2 out of 5 years.

 

Capital Asset: Deduct more than the capital gains limit if you’ve owned your home for more than one year.

 

Build Equity: Corny but true–every time you pay your mortgage, you’re building a nest egg to draw upon later. If you pay off additional principal, you build your nest egg faster. Equity loans can be used to pay down expensive credit card debt.

 

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