Looking for a Mortgage? Know Your Options.

Comments (21)


Buying a new home is an exciting time in everyone's life, but it can also be one of the most stressful. Unless you have done it before, it is important to know your options when selecting a mortgage. There are multiple choices when choosing the type of mortgage that best suits you doing a little research first, can save you money in the future.

There are several things to consider when shopping for a mortgage:

1.) How long do you want to stay in this house?
2.) Can you afford to make mortgage payments bi-monthly?
3.) How is your credit?

Answering the questions above, will assist you in determining what type of mortgage is right for you.

How long do you want to stay in this house? If your answer is 15 to 30 years, you may want to consider a non-variable rate mortgage. With this type of mortgage, your rate will be set from day one, and unless you refinance, the rate will never change. If your answer is 5 to 10 years, you may want to consider a variable rate mortgage. This type of mortgage, usually gives you a lower set interest rate for the first five years and then the rate becomes variable after that. With a variable rate mortgage you will benefit from the lower interest rate during your first years in the house.

Can you afford to make mortgage payments bi-monthly? Some mortgage companies give you the option of making your mortgage payments either once a month or splitting it in half and paying it bi-monthly. By paying bi-monthly, you lower the total amount of interest paid on your loan and decrease the time to pay off your mortgage. A mortgage of 30 years may be shortened by quite a few years if you pay your mortgage bi-monthly.

How is your credit? Many times people believe that having bad credit will make it impossible for them to obtain a mortgage. This is not true. There are lenders that specialize in developing mortgage programs for people with poor credit. Initially, you may pay a higher interest rate then someone with good credit, but over time, if you make regular payments and slowly improve your credit, your mortgage rate may be lowered.

The process of obtaining a mortgage can be simplified if you know what you are looking for. So good luck shopping!

About the Author

Ashlee Hovsepian is the successful publisher of http://www.anything-loans.com where you can find the right mortgage companies to finance your mortgage.

You may freely distribute or publish this article provided you publish the whole article and include this copyright notice and links in full.

Comments

nicofina 09.04.2009. 19:03

Where can I find a mortgage with no down payment? I'm looking for mortgage options that don't require a down payment. Ie. 100% financing, 80/20 mortgages, down payment assistance, separate financing for the down payment, etc. Where can I find anything like this? (I'm looking to buy my first home in the Fairfax County VA area.)

nicofina

Admin 09.04.2009. 19:03

Start by finding a good lender, ask people you know who own property or call a real estate office and ask for names.

I understand you have to walk on water to do a no money down loan these days. There are some grants for first time home buyers, so start by going to government websites, or local banks for advice.

Getting a loan is hard work, takes a lot of time and you have to shop around.

Perhaps a lender owned property would work, or you could look for a lease option while you save up some money.

please use this mortgage calculator...
http://www.porttownsendrealestatesearch.net/

and feel free to contact me for any other real estate needs you may have

Admin

tictickchick 02.07.2006. 21:16

Where can I find information about Government first time home buyers programs? I'm looking into all of my mortgage options. I've already been approved for a loan with 100% financing, but not sure I want to go that route. My score is around 630 right now, and slowly getting better. I've been at the same job for over 9 years, and at the same residence for 4 years. I don't have any money in savings, but if I waited a few years I could probably save a little. Would I qualify for a goverment FHA loan?

tictickchick

Admin 02.07.2006. 21:16

Hello -

I'd need more information to know if you truly qualify for an FHA loan.

Here though is an overview of what involved in getting financed for an FHA loan:

For some reason I've found that these nine documents listed below are enough to scare loan officers away from doing FHA loans. When I'm training loan officers who express fear about these FHA application documents, the first thing I ask them is, "Did you read them?" Honestly, in all my years of teaching loan officers, I don't think anyone has ever answered yes to that question. So the first thing I'll say to you is, take the time, on a Sunday morning when you don't have a lot in your schedule, grab a cup of coffee, relax, and just read through every word of these documents. Do it twice if you have to. Do it until you develop a level of comfort and confidence, one that you can use in explaining these documents to your customers.

The nine required FHA documents are as follows:

The Good Faith Estimate
The HUD Addendum, which is a four page document
The Important Notice To Homebuyers
The Home Inspection Disclosure
The Informed Consumer Choice Disclosure
The Assumption Notice
The Amendatory Clause and Real Estate Certification
The Lead-Based Paint Disclosure
The FHA ARM Disclosure, if you are originating an adjustable rate mortgage for your customer.
Let me briefly describe how I highlight the important aspects of these documents when I'm sitting with the customer at application. With the Good Faith Estimate, I never state the dollar amount verbally. I just circle the fees and show them all the amounts associated with that section of the good faith estimate. For example, I'll point to the origination fee and the appraisal fee and say, "These are the items payable in connection with your loan," and I'll just go right down the good faith estimate. I follow the same pattern with the title charges, the government recording and transfer charges, and the reserves deposited with the lender for the tax escrow.

There are a couple of additional items I would like to point out about the good faith estimate and FHA loans. The minimum amount of interest you need to quote for the borrower is fifteen days. Also, it's a good idea to put in thirteen or sometimes fourteen months for the tax reserves, so that you won't come up short at closing. In addition, if you're indicating a seller contribution or down-payment assistance gift in the "total estimated funds needed to close" section, it's important that you also record that same number in the "details of transaction" on page 3 of the 1003. This will ensure that the amount needed for closing comes out correctly in that section as well.

Next is the HUD Addendum, also known as the 92-900-A. Make sure that you are using the one that's dated "4 of 2004". That's the most recent version of this form. This is a four-page document that's often overwhelming to loan officers because it is so long. Most of it only pertains to the lender, and I'm going to point out here the sections that actually pertain to the borrower.

On page one of the HUD addendum, the borrower is only responding to box 18, which asks whether they're a first-time home buyer or not, and box 20, which identifies the purpose of the loan. In most cases, it's going to be "purchase existing home, previously occupied." The bottom part, part two, is a lender certification. I do advise that you read it so that you know what you're certifying. You will then need to sign that section.

On page two, the borrower is really only certifying a couple things. In item twenty-two, they are answering whether they've had an FHA mortgage in the last sixty months or not. In item twenty-five, they're acknowledging whether they know the value of the property as determined by an FHA appraiser. The borrower signs at the bottom of page two.

Page three is solely for the direct-endorse underwriter, and you don't have to have this document signed. At the top of page four, the borrower is certifying that they have not taken out any other mortgages in connection with this property and that they will occupy the property within 60 days of closing. Once again, the bottom is a lender's certification and you should take the time to read that as well. The borrower should sign at the top, and the lender should sign at the bottom.

The next document we will discuss is the Important Notice To Home Buyers, otherwise known as the HUD 92-900-B. This document was recently updated in December of 2004, so make sure that your company is using the current version of the form.

There are four main things that this two-page document covers. The first page indicates that the FHA does not warrant the condition of the property. It also points out that HUD does not regulate the interest rate or the discount points and that the lender does. It further advises the borrower not to commit loan fraud and identifies the penalties for doing so. On the second page, information is provided about a possible refund of some of the monthly mortgage insurance premiums that are financed into the loan. Finally, page two should be signed by the borrower.

Our next document is entitled "For Your Protection, Get A Home Inspection." This form was updated in December of 2004 and is also known as the HUD 92 564-CN. This document is disclosing to the borrower that the FHA does not warrant the condition of the property and that they should obtain a home inspection on their own. The only update made to this document was the FHA states that not only do they not warrant the condition of the property, but they do not guarantee the value as well.

We will now examine the Informed Consumer Choice Disclosure. What this item does is compare FHA financing to the closest conventional financing available. What I tell my borrowers is that this is the closest conventional product there is. However, it really doesn't compare to the FHA program because the credit scores required are higher, the mortgage insurance monthly is much higher, and it requires a larger down payment.

The next document is the Assumption Notice. This item explains to the borrower that if someone wants to take over their mortgage payments, this needs to be done in a formal manner. This will ensure that they are legally released from the liability of making those mortgage payments back to the lender. I express to my borrowers that if someone does want to take over their mortgage payments, they need to call the current lender to get instructions on how to legally perform this task.

The two documents we will review now are normally combined into one in most loan origination software programs. The first is the FHA Amendatory Clause. This states that if the home does not appraise for the value on the purchase agreement, then all deposit moneys will be returned to the borrower, and they are not required to fulfill that purchase transaction. The next item is the Real Estate Certification. On this form, the borrower, seller, listing agent, and selling agent are all acknowledging that the terms and conditions of the sales contract are true to the best of their knowledge and that any other agreements have also been included in the purchase agreement as well.

The next required document is the Lead-Based Paint Disclosure. Most often this item will come to you from the real estate agent, along with the contract and any other addendums. Any properties that were built prior to 1978 will require this disclosure.

The last document on our list is the FHA Adjustable Rate Mortgage Disclosure. This is just like any other standard ARM disclosure. It includes the ARM loan terms, the initial interest rate, the margin, and discount points. It's important that borrowers understand how this product works. Most first time home buyers are generally uneducated about mortgage loans, and they need to fully understand that their mortgage interest rate may increase in the future.

In closing, I want to make you aware that FHA does put restrictions on the fees that can be charged to borrowers. In addition, there are certain state requirements. So please consult with your FHA underwriter for a list of FHA allowable closing costs. This will benefit you greatly when it comes to structuring your loan correctly.

Please let me know if I can be of any further help.

Admin

Novice 07.09.2006. 05:32

How to best get a combination of mortage and line of equity to buy a second property? Hypothetical situation:

* I have paid off the mortage of my primary residence, appraised at about $600K

* I'm now interested in using the equity of the above house to buy a second/rental/investment property, sold price of $200K. How should I do it?

Option 1: apply for a home equity line from my primary residence, e.g. about $40K equity line to down payment for the second property and get a $160K mortgage.

Option 2: is there a way that I can apply for a $200K mortgage off the primary residence to pay off the second house? If possible, wouldn't this be better than option 1?

Thanks in advance!

Novice

Admin 07.09.2006. 05:32

I think you would have to compare terms to see which is more favorable. Lenders tend to treat investment properties differently than primary residences. You would have to find out the specifics.

If option 2 has better terms, I don't see what prevents you from going for it. When you refinance a primary residence, you wouldn't expect to face a lot of questions about what you intend to do with the money. I expect that wouldn't be of concern to the lender.

If you're looking for a quick and easy way to compare quotes from several top mortgage lenders, there's a free service you can access here - http://necessaryvirtues.com/go/4017/75

Admin

Bryce 21.06.2009. 15:20

When should I start looking for a house? My apartment lease ends 5/31/2010 and my wife and I want to buy a house, I was wondering when would be a good time to start looking.

I have heard from different people I should start looking at mortgage lenders now and then some have said in February 2010. What would be the best time and what all should I know before buying or getting a loan?

Bryce

Admin 21.06.2009. 15:20

The advice you have been given is good: first find a lender/broker who you trust and will find you the best possible rate. If this is your first home, talk to many brokers and make sure you are comfortable with every aspect of the process.
Next, decide what you want to really afford. The lending companies may approve you for much more than you can pay for (yes, even in this tight credit time). On our first home, my husband wisely insisted that we were pre-approved based on his salary only. I was working, but a year after our house was built, I became pregnant with twins...
Everyone has unexpected expenses. We were approved for two times as much as we ended up commiting to. Boy was I glad!
Thirdly, I would start going to open houses NOW and make a list of needs/wants in a home. There are many more decisions involved in choosing a home than you can imagine. It's a great time to buy, don't miss it! You may be able to target 3-4 houses and put in low bids.
Also - if you find the perfect house now, you could buy it and rent it back to the occupants until your move out date in May. You have a lot of options right now. The most important find is a great realtor and broker! God's Blessings to you both!

Admin

Brian E 22.05.2008. 19:32

How can I sell investment properties if I will probably get offered less than I owe on them? I have 5 duplexes that I would like to sell. I might not get what I owe on them. Is there a way to sell them for less than I owe without going to foreclosure. I am not currently behind on the mortgages, looking for options.

Brian E

Admin 22.05.2008. 19:32

Sure, you can sell them for less than you owe without going through foreclosure. But, at the closing of escrow you will have to make up any deficiency out of your own pocket or else the lender will not allow the sale.

Admin

Katie 08.04.2007. 03:26

Which is the best mortgage financing option? I am planning to buy a new home and rent out the house I currently own. Below are details of the mortgage financing I have been given, I don?t know what to choose?

5yr variable morg, 1st yr @ 4.5% 1.5% below prime then, .40% below prime for remaining 4yrs
Or
5yr 4.75% Fixed?

Also I will be useing some of the equity from my current home for a down payment on the new one. Should I do a Refi or Equity loan?

Katie

Admin 08.04.2007. 03:26

if your gonna sell the one you live in now anytime soon, get an adjustable. If your gonna keep it along with the other one your gonna purchase get a fixed on both of them. Refi and get cash-out to make the down payment. a equity line rate is a litte bit on the high side. look at what the rate will be if you refi and get cash out or just get the line of credit... do what ever makes financial sense for now and in the long run

Admin

catdragon6000 07.09.2008. 01:53

WIth the mortgage markets in trouble are there still ways to get loans? Is a balloon mortgage a better option for the mortgage company and the consumer in these trying times, or is there other loans that can help consumers to restructure their debt at this time?

catdragon6000

Admin 07.09.2008. 01:53

Of course there are still ways to get a mortgage loan.

Anyone with reasonably good credit, buying a reasonably priced property, and with enough income to cover the mortgage will be able to get a mortgage.

I would never recommend a balloon mortgage to anyone. Things change. What if you don't want to sell before the balloon payment is due? What if you can't refinance before the balloon payment is due? (This is the problem a lot of people in trouble are facing today - they can't refinance a mortgage that they can't afford.) What are you going to do then?

If you can't afford a 30 year fixed at a good market rate, then you can't afford the house. keep looking for something that you can afford.

Admin

Dan the man 21 22.05.2008. 03:59

I have a credit score of 648 i am 21 years old what are my mortgage options? I make 55000 a year and am looking to spend 150000 no higher. I dont have a down payment. I would be a first time home buyer do you think I would get approved for a loan.

Dan the man 21

Admin 22.05.2008. 03:59

Definately its a good score. if its below 325 and without a deposit then it can be a hassle. so i guess you wont have any problems. But it will be good to have a deposit of 10k to 15k. look for different options like joint mortgage/partnership if you can. be sure to go for competetive interest rates and other hidden costs involved with the finance organisation you go for. Also be sure to declare any outstanding debts you have.

Admin

Charlie 19.03.2013. 02:55

Is there any kind of mortgage option after a short sale that I can get one year after the short sale? We own our own property have money in savings and have almost perfect credit scores. But last year we had to do a short sale on our home to sell it. Now we are very eager to build on our property but are being told we have to wait 2 - 4 years! Is there any option for us?

Charlie

Admin 19.03.2013. 02:55

Pay cash...that's about it...after a short sale, your credit is no longer perfect (or even almost perfect). A short sale hurts your score almost as much as a foreclosure. So you are looking at two years minimum before requalifying for a mortgage/construction loan.

Admin

Copernicus 02.03.2007. 20:16

What is the best rate you have found for a mortgage loan in Dallas? My wife and I are looking to buy a home in the near future. What is the best rate that we should expect? We have great credit and even better street cred.

Copernicus

Admin 02.03.2007. 20:16

I know you have vastly different mortgage options in the US over what we have here in Canadam, but I would caution against some of them.

Avoid amortizations over 25 years - I know they give you a better monthly payment, but you are paying way more in interest and leaving yourself vulnerable if prices go down.

Avoid interest only mortgages, since you are only ever paying interest, never principal, thus you are not paying off your mortgage at all.

Avoid cash back mortgages, you get a higher rate in return for money up front, meaning more interest is being paid - by you!

Avoid anything over 100% financing, you are just asking for trouble if prices ever drop.

Get a nice and simple 5-year term with a 25-year amortization and stay in the safe zone. You have got to be able to get that with a rate in the 5.5-6.5% range.

And don't be afraid to shop around, make the banks work to get your business!

Laurin Jeffrey
Toronto Condos and Lofts
www.jeffreyteam.com

Admin
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