How does a Reverse mortgage work?
Zach, Amarillo, TXReverse mortgages typically are for seniors and it allows them to access their equity in their home while at the same time eliminates any monthly mortgage payments. As long as they remain in the home, they still own the home - not the lender. The amount of cash they receive is based upon their age and the value of the property. The loan balance becomes due if the person should pass away or move away from the property.
Is there a benefit to doing the 80/20 mortgage?
Shannon, PAThe 80/20 mortgage program is simply two loans for 100% of the purchase price of the property. This done, for the most part, to avoid having to pay PMI (Private Mortgage Insurance) on loans in which you are not putting at least a 20% downpayment. You also would receive the benefits of having more tax deductible interest at the end of the year as well as with your blended rates, you might have a lower interest rate than you would normally receive for a more conventional 100% financing loan.
Looking to purchase a vacation home in Canada. I live in Michigan and I am a US Citizen. Is this possible and what can I expect?
Lee, MIYes, US Citizens can get a Canadian mortgage. One difference is typically Canadian lenders will only lend up to 65% of the appraised value of the property. The process is very similar to a mortgage in the United States, income verification, front end and back end ratios, credit scores, etc. Canadian mortgage are often of a shorter term, usually a maximum of 25 years.
What is ACT 91 all about?
Paul K., Erie, PAIn Pennsylvania, ACT 91 refers to the: Pennsylvania Foreclosure Prevention Act 91 of 1983 - Homeowners' Emergency Mortgage Assistance Program (HEMAP). It is designed to assist homeowners who, through no fault of their own, are unable to make their monthly mortgage payments and are in danger of having their homes foreclosed upon. A HEMAP loan is created in order to bring the delinquent payments current.
What is meant by the term "balloon payment" in referring to a mortgage loan?
J.P., Baltimore, MDWhen you have a mortgage which has a balloon payment, it means that you have a balance remaining on your mortgage, hence your mortgage does not fully amortize of the life of the loan. Typically, you would make your monthly mortgage payments throughout the entire life of the loan until the last payment is due, when you will have one large, lump sum payment due. At this point you can either pay the amount due, sell the property or refinance the remaining balance into another mortgage loan which helps to spread out the payments into more reasonable amounts. It is wise if you have a balloon mortgage to keep an eye on interest rates and be prepared to refinance when the lowest possible rates are available instead of waiting until the balloon payment is due and be at the mercy of interest rates at that time.
Is there such a thing as a 10-year interest only loan? If so, what are the benefits and downfalls of this type of loan?
Mya, DENot exactly.
There is a 30 yr fixed rate loan that has an interest only feature for the 1st 10 yrs and then becomes a 20 yr fixed for the last 20 yrs. There is also a fixed/adjustable mortgage that has a fixed rate for the 1st 10 years and has interest only payments also due for the 1st 10 yrs. After the 10 yr period, the loan becomes 'amortizing' meaning principal is due to be paid along with interest as well as the loan then becoming a variable/adjustable.
What First Time Homebuyer programs might be available for me and my wife?
Vince S., Boca Raton, FLCheck with your mortgage lender. Most First-Time homebuyer programs are administered at the state, country or local level. FHA programs offer lower downpayment options which are often attractive for first time homebuyers. A great place to start is the HUD website (Housing and Urban Development).
But do your homework in advance and compare your alternatives. Some first time homebuyer programs have restrictions as to the value of the property or the amount borrowed. The house typically must pass some sort of inspection and usually must also be your primary residence and not a rental property. Compare any special program with a typical conventional mortgage program to weigh the pros and cons before any decision.
I need $30,000 to start my own business. I have over $200,000 in equity in my house. Do I need to disclose what I am doing with the money if I take out a home equity loan or line of credit on my home to buy the business? And, what is the difference between the two?
Clay, PAHello Clay,
Here are your 2 answers-
1. No, you typically don't need to disclose the need of your 30,000 loan/line request. Sometimes for a new 1st mortgage you will be asked, but not for a 2nd mortgage or line/loan.
2. A line of credit is typically a revolving line of available money that can be accessed not unlike a credit card. It is most often tied to the prime interest rate and therefore is a floating interest rate and not locked. You can draw on it at anytime.
A home equity loan acts much more like a fixed 1st mortgage. Its generally for a shorter term (often 5 or 10 yrs) It has a fixed rate.
Both have minimal closing costs.
My home is currently in the first stages of foreclosure - my credit is ruined and I cannot refinance. The mortgage company has denied my financial hardship application. What can I do? Is there a specific timeline here?
Anita D., CAThe most important thing you can do is stay in constant contact with your mortgage lender. There are possible alternatives you can try, and you should exhaust all means to prevent this from happening. You could try: Special Forebearance where lenders are willing to reduce or suspend payments for a short period of time, a Repayment plan, where a lender allows you to make payments over a period of time which includes current amount due and a portion of the amount in default until the debt is paid. Mortgage modification can be implemented which will allow to refinance the existing mortgage in order to extend the term of the loan and possibly reduce your monthly payments. If you qualify for a Partial claim with an interest free loan from HUD used in order to bring your payments current, or you can place your home for sale, using the profits to pay off the loan, avoid foreclosure and salvage your credit. A last case scenario is the Deed-in-lieu of foreclosure which allows you to give back your property to your lender.
The mortgage lender, typically and considering the current housing and real estate market, does not want to foreclose on your property. See if you can work together with them to find an alternative solution to a foreclosure.
My parents are both aging and entering into retirement homes- their current home is paid off. Would it be more beneficial for me to out right sell the property or have them do a reverse mortgage?
Tracy, WVIn this situation, with your parents leaving the property, it would be best to sell the home and divide the profits accordingly. With any mortgage there are fees associated with borrowing money which would be subtracted from the profits as well as the normal monthly fees (taxes and insurance) which must continued to be paid as long as your parents reside in the home. If your parents were going to continue to live in the property, it might be something to consider but do careful research prior to any decision.
Can I use IRA retirement funds for a downpayment on a house?
Pam, VAYes, if you liquidate the funds from your IRA you most certainly can use them for a downpayment for a home. Since the 1997 Taxpayer Relief Act went into effect, people have been able to withdraw funds to pay up to $10,000 in first-time homebuyer expenses without incurring any penalties. Such withdrawals are, most likely subject to being taxed.
Other restrictions include a 120 day time limit for buying the house from the day after the withdrawal is made, and the house must be purchased for use as the buyer’s principal residence. Just keep in mind that the $10,000 limit is a lifetime limit - if you do this now, you won’t do it again in the future.
Do you think the interest rates will go down soon, in the next week or so ?
George, NDGeorge, if I knew that answer I would not be working any longer but on an island enjoying spending all of my millions. There is no honest way of knowing the answer to this.
This week there are six economic reports that will effect the mortgage market as a whole, but only one of them is considered to be of high importance. But with data being posted all but one day of the week, we may see some fluctuations from day to day in mortgage pricing.
Friday brings us the release of two of the week’s most important reports. The first will come from the Commerce Department when they will post June’s Durable Goods Orders. Also being released is the final revision to July’s University of Michigan Index of Consumer Sentiment. Unless we see a drastic revision to the preliminary estimate, I think the markets will probably shrug this news off.
Overall, this is a moderately significant week for the bond market and mortgage rates. If we get weaker than expected economic results, we may see mortgage rates move lower for the week. However, stronger than expected results will likely lead to higher rates for the week. We also have a 5-year Treasury Note auction Thursday that may influence bond trading but will also give us an indication of investor appetite for bonds. Generally speaking, despite the lack of a data-packed calendar, I would still maintain constant contact with your mortgage professional.
What is a "GFE" and why is it necessary?
Lee, Riverside, CAWhen a mortgage lender refers to a "GFE" they are speaking about a Good Faith Estimate. RESPA (Real Estate Settlement Procedures Act) requires that a mortgage lender or broker provide a consumer with a Good Faith Estimate prior to settlement.
The Good Faith Estimate includes an accurate and itemized list of fees, costs and rates associated with the mortgage quote given (also known as closing costs or settlement costs). Some of the standard fees you will see on the GFE include, taxes, title insurance, home inspection, appraisal fees, and processing fees. Some of these fees are relatively standard in the industry, some vary greatly from institution to institution.
It is highly recommended that any consumer who is shopping for a mortgage loan get multiple GFE's in order to compare costs between lenders. But remember a Good Faith Estimate is exactly that, an estimate and the final numbers you see at closing might be different based upon a number of factors (credit scores, LTV ratios, appraised value of the property, etc.).
Do you have refi interest rates here also, if you do I did not find them.
King FrogThe rates listed on Shoprate.com should be applicable for both purchase loans and refinances. The rates quoted are typically for applicants with good credit and appropriate loan to value ratios. Sometimes lenders will have special deals or incentives for purchase or refinance programs which will vary from their quoted rates. Ultimately, the rate you will qualify for is based upon certain criteria including what is listed above as well as income, expenses, credit scores, equity of the property as well as its appraised value, etc.
Always check directly with a lender for the quote for your situation and get multiple Good Faith Estimates so you can best compare all of the fees and costs associated with the loan. Shopping for a mortgage loan is very similar to shopping for any big ticket item, the more time, effort, energy and research you do, the better off you may be in the long run.
Afer i locked in a rate with a mortgage company with a 60 days limit, can I unlock the interest rate after the rates have gone down. My closing date is Aug 21, 2008. Original rate was 6.75 no points. With 2 points and $4000.00 I obtained a rate locked in at 6.25. Did I make mistake? Any advise would be appreciated.
DennisIt all depends on that particular mortgage lenders policy. Some mortgage institutions offer a renegotiation to the original rate and some do not. It is best to discuss this issue with them up front.
I have a second home in Houston, TX that I just pulled off the
market after trying to sell for a year and leased. How long will I need to wait before refinancing? Is this state specific?
Christine, Houston, TXHello Christine,
The rules are 'lender specific' meaning different banks and lenders have different rules/policies for this. It isn't state specific though. If you are looking to lower your rate and not take any cash out then you need only to wait 30 days from 'de-listing' your home. If you are taking out cash, then you'll need to wait 60-90 days before you can refinance your mortgage, depending on the bank that you go to.
What does it mean if a lender tells me we are in a High Cost State?
Thanks
Linda, FLA 'high cost state' is one that has more strict regulations on the amount of points and fees that can be charged to the person taking out the mortgage- aka either the buyer or refinancer. Some states let you pay up to 8% of the loan amount in total costs where other 'high cost states' limit you to 4%.
Example: 50,000 loan 4% is $2000 total costs (Including title insurance lender fees etc) This is meant to protect the borrower but often makes lenders shy away and thereby less competition drives up the rate.
I have excellent credit, FICO of 722 last I looked. I have also owned my home for 17 years. I ALWAYS pay my bills on time. Now my wife, married less than a year, does not have good credit. She went through a divorce AND a forclosure last year. We'd like to purchase a new home. We bring home good money together, but I'd need to have her income included to be able to afford the home we want. Are there any lenders, and whom might they be, that would give us a break?
Todd, OHUnfortunately if you need your wife's income, you'll also be judged on her credit as well.
How can I find lenders who offer a 50 year mortgage?
Joe, ILThe 50 yr loan isn't presently a popular product. The rates are
significantly higher then the 40 yr and the payment is very marginally less. Very few lenders are offering it for that reason. You can search for a 40 yr on-line or on Shoprate.com or ask any of the particpants what long-term mortgage programs they may offer.
How, with the Fed rates so low, is there no trickle down effect to mortgage rates? It seems to me with the current housing crisis there should be some mandate to bring the mortgage rates down so people can refinance into fixed rate loans. I understand that mortgage rates used to be tied to the 10 year T-note and the Fed rate, but this doesn’t appear to be true any longer — Whats going on?
Unknown - ORThe Fed lowers short term interest rates and not 1st mortgage rates. It is how the bond and stock market react to these changes as well as the overall economy. Mandating lower mortgage rates would wreak havoc on our economy. The market has to have some level of self-governing or there would be no one in it. Recently, the 30-yr. mortgage backed securities have had a much greater influence over rates then the 10-yr. T-Bill.
We are thinking about buying a rental house next door to us. It is a older home but has been remodeled ... We have about $50,000.00 dollars saved, half of the money is in a short term CD at 4.65%, half in a savings account at 2.34%. Should we pay all...as a down payment. The house is selling for $70,000.00, and it can be rented...or should we pay 20% down and finance the rest?
Donna - INYou best bet might be to use the money in the low interest savings account and put 25% on the property to get the best pricing/rates and keep the CD for now.
As a rental, you will want to have a mortgage to offset any income and lower your taxable gains from a tax point-of-view.
Good luck with the purchase!
I live in...Massachusetts. My house has been for sale for 14 months. The current interest rate is low enough to think about refinancing…A mortgage company said I can not refinance to take this benefit because my house has been on the MLS…Is this true?
Effie - MAGenerally, if you are not taking cash out, you can refinance as long as the listing has been cancelled and expired for 30 days. If you are taking cash out, you’ll need to wait 90 days. Whether you feel it is in your best interest to cancel the “for sale” listing and refinancing, or keeping the house on the market is something you need to decide and talk over with your Realtor.
We wish you the best of luck either way!
I refinanced at a higher rate 6 months ago with...taking out some $ to pay off my cc debt, and repair my credit, with refinancing in mind for 6 months, which is now. Now in order to refinance with them I need to come up with 12,000 -15,000 since the market has gone down and my house may not be worth the same amount as it was 6 months ago. Does this sound right to you?? Please help me.
Gwen - Unknown StateI’m assuming that you refinanced your 1st mortgage and didn’t take out a 2nd mortgage. It does sound possible that your home has gone down in value over the last 6 months. Various parts of the country are experiencing a drop in home values. You may want to look at either an FHA loan which will allow you to mortgage a larger percentage of your homes value, or going to another bank other then Chase to see if they don’t require the $12,000 outlay.
Can you get a lower rate for a home loan in another state that may be lower than the one’s in your own state with good credit?
Lee - Unknown StateFor the most part, yes. Pricing is often regionalized. Certain states are more attractive for a bank to lend in. This works like car insurance in that there is more profit for a company and they therefore charge a lower premium.
What are the major factors to consider in trying to determine which way interest rates are likely to trend?
Lisa - New YorkThat is a great question, however, it is not one easily answered. There are innumerable factors that go into what the current mortgage rates are at. Personally, I always try to keep an eye on the 10-year Treasury bond. It is probably the best indicator of where rates have been and where they are headed. There are a variety of sites that keep you up-to-date on the current Bond prices and yields that might be able to help you in speculate which way the rates are going to trend. Also, our
Daily Mortgage Commentary will often drop hints on which way the market may be headed.
I am looking to purchase a piece of raw land that I have been leasing. What kind of loan do I need? I have several pieces of property with houses on them and they are free and clear, so would it be a mortgage loan or home equity loan?
M - WashingtonGenerally, Land and Lot Loans tend to be difficult to obtain and usually come with a high interest rate. Also, your write offs tend to be limited because the costs annually are low on vacant land. Your best bet might be to refinance or take out a home equity line of credit on one of your free and clear rental properties to maximize your investments and deductions while receiving a generally lower interest rate.
Visit the Home Equity Loans category under our Learning Center for more details on your Home Equity options. One particular article to check out is titled “
Home Equity Basics”.
What lenders offer 3% or 5% down instead of...20%?
Carol - ArizonaAlmost all lenders will do loans at 3% or 5% down payments as long as there is sufficient equity in the property to do so. If you are looking to purchase a home, down payments less than 20% will result in the addition of
Private Mortgage Insurance (PMI). However, sometimes there are ways to avoid PMI. Contact the lenders directly for a more detailed explanation that is suitable for your exact situation.
I currently owe 10 years on my house and would like to remodel. Would refinancing at this point in the loan be good? If I take a cash out loan will my interest rate go up? I would like to take it back to 15 years and borrow enough for the remodel.
Jack - AlabamaIt all depends on your current mortgage rate. However, depending upon your current interest rate, you might be better off refinance your existing mortgage and take cash out. That is as long as the interest rate is comparable to your existing interest rate. However, if the present value of your home is high enough and you have a rather high current mortgage rate, it might be in your best interests to get a home equity line of credit. In many cases,
home equity line of credit rates are often a little above the current prime rate.
What does "3/1" mean in an ARM mortgage?
Haley - ConnecticutSimply put the 3 in the 3/1 ARM (Adjustable Rate Mortgage) means that the rate stays fixed for the first 3 years of the life of the loan. During the 4th year and the rate will adjust. To what rate the mortgage will adjust to in the 4th year varies by market conditions, and what the margin and caps are. Be sure to ask your lending institution what the margin, periodic caps, and life cap is on your ARM.
Check out our Mortgage Financing section located in our
Learning Center for more information on Adjustable Rate Mortgages.
I am purchasing a residence and will be taking a fixed rate 30 year mortgage. I have until...to lock in my rate. How do I decide when to do that, and what should I be asking...the lender?
Cary - Unknown StateKnowing the exact time to lock in a rate is very difficult. Although we are looking to get that lowest possible rate, rates can change at a moments notice. Once minute you could lock in at a really low rate, and the next minute it could either drop or rise significantly.
Some lenders offer what is called a “float down” which allows you to lock in a lower rate if rates drop from the time you locked in your initial rate. Generally, lenders who offer this service usually allow you to only float your rate down once. Be warned that these float downs sometimes come with a fee attached, so ask your lender if they offer a free float down once your rate is locked.
How can I get a rate quote...without pulling my credit? Seems everyone wants to do an inquiry.
John - TexasWell John that is a tough one. The reason the mortgage companies want your information is that they want your business. They are accustomed to people calling up and asking for quotes and doing one of two things. Either the consumer calls up wanting a quote and hangs up shortly after getting the information they are seeking never to call again, or the lender is used to consumers calling up saying my credit score is one thing, getting the rate and wanting to lock in, when it turns out that their credit score is quite a bit lower or their credit is light. In the end, can you blame them for wanting your information?
Tell them you’d like a quote that you will not hold them to if your score is below 685, but that you will hold them to if it is. If you keep trying- you’ll get your quote. Or better yet, go to one of the credit reporting agencies and pull your own credit, keep a copy and provide it to any of the mortgage lenders with whom you might be working. That way the credit report is only pulled once and you will not penalized for multiple credit report pulls which often happens.
We are contemplating a Reverse Mortgage, Fixed Rate...appraisal HECM. What are the interest rates and are they going to change...higher or lower??...
Lal - FloridaPredicting where interest rates are headed is not something we do. It’s a little like predicting the weather, we can guess, but it might not turn out exactly the way you had predicted. Also, rates will vary from lender to lender.
However, there is a great site you should visit that was set up so that seniors would not be taken advantage of when contemplating a Reverse Mortgage. The web site is www.reversemortgage.org. You can also find a list of lenders on that site that can give you a current rate on your property. Like any mortgage, you should contact and compare the different companies. Even with Reverse Mortgages, you may find that different companies may be able to offer different deals.
Also, we suggest reading 2 articles we have posted in our Learning Center that you can read by clicking on the following links:
An Intro to Reverse MortgageHow to determine if a Reverse Mortgage is right for youWhat type of mortgages are available to me? I am three to four years post bankruptcy, have [an] auto loan for the past two years to re-establish credit. Fair credit...
Jill - WyomingObtaining that auto loan was definitely a great step in re-establishing your credit. Lenders go by the date of your discharge from bankruptcy. If you are 3 to 4 years post discharge, and have re-established credit with an auto loan, than there should be some financing options for you. Basically, the higher your credit score is the more options that are available to you. (Another way to bump that credit score up would be to take a credit card and making small purchases (like gas, etc.) and continue to make those payments on time.)
Your income level should be fine for your proposed purchase price, however, most if not all lenders are going to take into account the amount of money you have to put down on the house. The more money you have to put down on the house, the better interest rate you should receive. I would personally recommend a down payment of at least 10% or higher. You may be able to obtain a loan for less money down, but the rate will be much higher.
And as always, shop around to a few different mortgage companies and make sure to request a good faith estimate. This way you can compare the rates and fees from the different companies and choose the best one.
Hi, I am just wondering, is it right for a bank to tell you get a credit card to help improve your credit score? I am in the process of trying to get approved for a home loan for low income in IL and my credit score is 620 now. I have had bad experence with credit cards, and am afraid to get another one. Is there another way to improve credit score with out credit cards? I am paying my bills on time...for the last 4 to 6 months. I am a cash person with checking and savings accounts.
Penny - IllinoisObtaining a credit card and paying the balance in a timely manner is one way to begin to rebuild your
FICO (credit) score. The bank may be making this suggestion to build or rebuild your credit in a quick manner.
However, there are several factors that are used to calculate your FICO score. Your payment history makes up about 35% of that score. Unfortunately, negative items and late payments affect your credit rating much faster than positive items. Paying your bills on time is a great start and will significantly improve your credit score, but it will take some time. Four to six months of making all payments on time is a great start! However, it may take 6 to 8 more for you to really see a significant improvement. You may want to order a copy of your credit report and check it for any errors it may have on it. It is very important to correct any false information as this may affect your rating dramatically. Most states allow you to obtain a copy of your credit report for free annually – check out annualcreditreport.com. You can also contact the three major credit bureaus directly (TransUnion, Experian, EquiFax) for a copy of your credit report and to get their suggestions. It is important to remember that each inquiry to your credit history will slightly lower your FICO score. However, checking your own credit history will not be reported negatively.
I own a vacation house...which is worth $350,000. Its free and clear. I am remodeling the property and adding a bathroom and 2 bedrooms in the lower level. I am looking at a loan of $30,000 approx. Is there a product available?
Tom - West VirginiaWith the dollar amount you are looking to borrow, you best bet would appear to be to take out a
Home Equity Loan or Home Equity Line of Credit where you only pay interest on the monies you use. Home Equity rates are very similar to Conventional Fixed Mortgage Rates right now so that would probably make the most sense. Shop around your local banks and see which one has the best program to fit you needs.
Are Real Estate taxes based on market value or an assessment of the market value?
Sheila - DelawareThe answer of this question varies from state to state and even county to county. In the State of Delaware, Real Estate Taxes are based on the assessed value. However, the percentage depends on which county you reside.
I currently have about $100,000 and 9 years left on my current 30-year fixed mortgage. If I were to refinance, do I have to refinance to a 30 year fixed mortgage or can I refinance to a 15 year fixed mortgage?
Olivia – CaliforniaYou can refinance to either.
Generally, 15-year fixed mortgage rates are lower than 30-year fixed mortgage rates. Also, over the life of the loan you will pay less money in interest on a 15-year fixed mortgage rate. However, your monthly payments will be higher on a 15-year fixed mortgage than a 30-year fixed rate mortgage because the amount of the loan is spread out over a longer period of time.
Should I refinance my current mortgage?
Charles – MississippiWell Chuck, every situation is different, and not knowing your situation I can only give you a couple of hints and questions to ask yourself. First, what rate would you need in order for refinancing to make sense? That depends largely on your current interest rate, amount of principal paid off, and the fees to refinance. Remember, refinancing your mortgage isn’t a free process. You need to take into account the various fees involved in the refinancing process. Expect to pay in upwards of two to three percent of your total loan amount in fees and costs. Next, how long do you plan on staying in the house after refinancing it? You’ll need to choose between a fixed-rate loan (longer term) or an adjustable-rate loan (shorter term).
I hate to sound like a broken record, but I suggest signing up for our
7 step e-mail tutorial for a more complete answer. I believe e-mail #6 deals with trying to figure out when you should refinance your current mortgage. The tutorial was set up to help give people like yourself some basic hints and subjects to consider when purchasing or refinancing a home.
I currently rent, and am thinking about buying my first home. However, I am a single mother who does not know a thing about home maintenance, and am not really sure if buying a home is right for me. What are the main advantages of buying a home?
Monica - OklahomaFirst off, you can use all that money you receive by deducting your mortgage loan interest from your federal taxes towards the yearly upkeep and maintenance of your new home. Never forget that when you rent, you do just that, you rent. However, when you buy a home, you own that home. Homeownership is an investment. If the value of your home goes up and you decide to sell it, you will be getting a nice fat check at closing. Also, since you are a renter, you may have the worries of a yearly rent increase. With a fixed rate mortgage, the only increase may be a rise in your property taxes. Just think, at the end of the day, wouldn’t it be great to come “home” to something you own?
I am not sure exactly what a home equity loan is. Can I obtain one to help pay my credit card debt down?
Albert - GeorgiaThe answer to your question is yes. Home Equity Loans and Home Equity Lines of Credit are a second mortgage that allows the homeowner to convert equity in the home into cash. In both cases, your home is used as collateral for the loan. The equity in your home is based on the amount of principal left on your home as well as the current market value of your home. Consequently, you can finance up to the difference of what your home is worth minus the principal left on the home. These loans usually have shorter terms than a standard mortgage (usually between 5 to 20 years). Home Equity Loans and Home Equity Lines of Credit are often used by homeowners to make home improvements, pay for the college education of an offspring, or pay off credit card debt.
For more information like this, feel free to sign up for our
7 step e-mail tutorial!
I am looking to buy my second house. I have noticed that you can get a lower mortgage if you pay points. This leads me to my question, what exactly is a point?
Greg - FloridaA point (also know as a discount point) is basically a way of buying down the interest rate you will receive. They are a one-time payment made at the time of the origination of the loan. One point is equal to one percent of the mortgage amount. Ask the lender to quote the points in dollars ahead of time so you will know how much money upfront you will have to pay to receive a certain rate.
I don’t have good credit…can I still get a mortgage?
Declan - MarylandBelieve it or not some lenders specialize in bad and no credit mortgages. However, expect to pay a higher interest rate than someone with good credit. Also, be sure that you have saved a substantial amount of money for your down payment. Lenders will also look at your recent history so one tip might be to establish a SMALL amount of debt and make all your payments
ON TIME to show that you have turned things around. However, too much recent debt might make it even more difficult to obtain a mortgage.
I am behind in my mortgage payments due to a recent loss of job…how do I keep from defaulting on my mortgage?
Ashley - TexasThe first thing you should do is call your mortgage company. The longer you wait to call and the further you fall behind in payments, the more difficult it will be to work out an agreement with them. Most lenders will try and work with a borrower in a temporary financial bind. The deal they may be willing to give you will rely on how far behind you are on your payments and what your future financial situation may look like.
A second option, if you are not too fond of the home, is to try and sell the property and repay the loans. However, to do so you will need to sell it for enough to pay both the loan and the expenses of the sale of the house (Realtor fees, etc.).
I am looking to become a first-time homebuyer, and I am looking for a mortgage. I don’t have a lot of money to put down on a house, but my credit is good…are there any special programs for someone in my position?
Richard - New HampshireThere are a variety of first-time homebuyer programs out there for someone in your position. One good option is to investigate into an FHA loan. FHA mortgages are designed for homebuyers who do not have a lot of money to put down. Check and see if there are any other first-time homebuyer programs available for your specific state or county.
My monthly mortgage payment just went way up. I currently have an ARM (Adjustable Rate Mortgage) mortgage. How can I lower my monthly mortgage payment and keep it from going up?
Jessica - CaliforniaOne way of lowering your interest rate is to
refinance your current mortgage. You should look into refinancing to a Fixed-Rate mortgage if you do not want your rate to adjust after time. Also, be sure to sign up for our
7 step e-mail tutorial to buying or refinancing a house for more detailed information.