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Posts tagged ‘Banks’

Keep Your Closing Costs Low

Closing costs can surprise many homeowners if they aren’t prepared for them and can seriously deplete savings at a time when most people need money the most.  It seems that lenders are constantly finding new and creative ways to tack on a few dollars here, and a few dollars there to the tune of thousands.  However, by taking a few simple steps you can keep your closing costs low and know when to tell your lender that enough is enough!

First, you should always be a savvy consumer when it comes to title work.  You have the right to select any title company you want and not the one that the mortgage company wants to force upon you.  Of course, the mortgage company they want you to use always turns out to be one of the more expensive ones (because they are getting kickback fees).  Shop around for a title work company and you can often save 30% right off the bat, and if you are willing to really work at it, save upwards of 50%.  It’s not chump change either – a title company can easily charge $1,200 for basic title services.

Next, be on the lookout for junk fees.  Lenders love to pile on the document preparation fees, interest locking fees and anything else they can think of.  Often times they throw these fees onto mortgages that have no points attached to them.  Make sure that you ask your lender for a full disclosure of all the fees and then ask them about any that seem out of line.  If you aren’t happy with what they quote you, tell them you are looking around at other lenders.  The last thing a lender wants to do is lose 30 years worth of interest because of a $200 junk fee!

If you aren’t going to be in the house for more than a few years, ask the seller to pay the closing costs.  Sure, you’ll end up paying a higher interest rate, but if you plan on moving in a few years then the cost of the interest won’t match the closing costs you would have to pay up front.  Plus, you pay the extra interest off is small chunks each month rather than being out a lot of money up front. 

Watch out for lenders who try to sell you add-on products with your mortgage.  They love to try to get you to buy credit insurance (a total waste of money) and some lenders even try to sell you services such as “plumbing protection” or “whole house appliance protection”.  Just say no!

Remember, you have the power to say no thanks at any time before you sign on the dotted line.  If you don’t like the figures your lender is talking about for closing costs, shop around – in fact, you should around and get several mortgage offers before you even consider one.  Don’t be afraid to get up and walk away from the table.  After all, it’s your money – don’t let a greedy lender try to squeeze another $1000 out of you when you have enough stress taking place buying a home in the first place!

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Bank Foreclosures

Bank foreclosure real estate, also referred to as REOs (Real Estate Owned), is foreclosed real estate that is owned by the bank due to an unsuccessful foreclosure auction. There are several reasons the home may have not sold at the auction. The most common reason is negative equity the bank foreclosure real estate is worth less than the amount owed to the bank. Of course, the bank seeks to receive the outstanding balance of the original loan; therefore, the minimum bid for the bank foreclosure real estate is usually the amount of the outstanding balance of the original loan, plus interest and any additional fees. No smart investor or buyer will consider bidding on such a property.

Nevertheless, an unsuccessful sale will not stop the bank from trying to make an attempt to get the bank foreclosure real estate sold. The bank will consider removing some or all liens and fees on the bank foreclosure real estate in order to get it on the real estate market and resell it to the public. The resell process may be retrying an auction or working through a Realtor.

This is a hot market for real estate investors. Real Estate investors take an eager interest in bank foreclosure real estate property. The market of foreclosed homes may be large; but, not always suitable for some investors. The foreclosed property may not meet some important needs. Nowadays home buyers and investors alike are scrambling through the market of bank foreclosure real estate looking for better deals. Though, most bank foreclosure real estate property is in poor condition, the low sale price of the home highly compensates for the property poor condition.

Investing in bank foreclosure real estate property offers a great return for investors. Bank foreclosure real estate by far offers greater deals than typical foreclosed homes. As an investor you must consider all your options. Make sure you get the bank foreclosure real estate property at the best price. Hopefully, the bank foreclosure real estate that an investor chooses to invest in will give the investor rewards; such as a larger return in profit, either through renting the home out or through selling the home.

There are several ways to search for bank foreclosure real estate property.  You can search the Internet, magazines, and newspaper listings. The Internet can lead you to thousands maybe millions of connections. Here you can view listing by state, banks, county, and much more.

You should also invest time in finding a good real estate agent.  If they know what you are looking for, they can save you a lot of time and work.  They can also help you determine the true market value of the home you are considering investing in.

Home Finance – 20 Questions For Your Lender

Warning! Home finance has blossomed into an incredibly diverse and complicated industry. This is good and bad. There are at least a hundred ways to borrow the money for your next home now. There are also dozens of ways for lenders to take advantage of you, from hidden charges to prepayment penalties and more.

Let your lender explain all the various home loans and home finance options available. However, when you finally decide on a product you like, ask as many of the following as are relevant to your loan. These are the questions that will protect you.

Home Finance – Questions For The Lender

– What is the interest rate?

– What is the APR (annual percentage rate; includes fees, points and mortgage insurance)?

– What is the initial rate (if it is an ARM – adjustable rate mortgage)?

– What is the highest the rate can go to next year (ARM)?

– What are the annual and lifetime caps on the interest rate and payment (ARM)?

– How often is the rate or payment adjusted, and when (ARM)?

– What index is the rate based on (ARM)?

– What margin is added to the index (ARM – it might be the index plus 3%, for example)?

– Is credit life insurance required (this pays off the loan if you die)?

– How much would the payment be without it?

– Can any of the fees or costs be waived?

– Is there a prepayment penalty?

– How much is the prepayment penalty?

– For how long is the penalty in force?

– Are extra principle payments allowed?

– Is an interest rate lock-in available? (guarantees interest rate for a time)

– Can I have the lock-in in writing?

– Is the rate locked in at time of application or time of approval?

– If rates drop, can I get a lower rate locked-in?

– What inspections and/or surveys are required?

– Is a title search and/or title insurance required, and what is the cost?

– Can I get an estimate of prepaid amounts that I’ll have to pay at closing?

– Are there “points,” and what will these cost (discount points to reduce interest rate)?

– What state taxes, local taxes, stamp taxes and transfer taxes will I have to pay?

– Will a flood determination be required (to see if the home needs flood insurance)?

– What other costs will there be?

– Is there anything else I should know?

Lenders may not like getting two dozen questions thrown at them, but you have a right to ask before you agree to a loan. Did you know that a 1% higher interest rate on a $150,000 loan can cost you an extra $30,000 over the years? Home finance can be as important as a good price when it comes to saving money on your home.

Does It Pay to Re-Finance?

This is a question many homeowners may have when they are considering re-financing their home. Unfortunately the answer to this question is a rather complex one and the answer is not always the same. There are some standard situations where a homeowner might investigate the possibility of re-financing. These situations include when interest rates drop, when the homeowner’s credit score improves and when the homeowner has a significant change in their financial situation. While a re-finance may not necessarily be warranted in all of these situations, it is certainly worth at least investigating.

Drops in the Interest Rate

Drops in interest rates often send homeowners scrambling to re-finance. However the homeowner should carefully consider the rate drop before making the decision to re-finance. It is important to note that a homeowner pays closing costs each time they re-finance. The closing costs may include application fees, origination fees, appraisal fees and a variety of other costs and may add up quite quickly. Due to this fee, each homeowner should carefully evaluate their financial situation to determine whether or not the re-financing will be worthwhile. In general the closing fees should not exceed the overall savings and the amount of time the homeowner is required to retain the property to recoup these costs should not be longer than the homeowner plans to retain the property.

Credit Score Improvements

When the homeowner’s credit scores improve, considering re-financing is warranted. Lenders are in the business of making money and are more likely to offer favorable rates to those with good credit than they are to offer these rates to those with poor credit. As a result those with poor credit are likely to be offered terms such as high interest rates or adjustable rate mortgages. Homeowners who are dealing with these circumstances may investigate re-financing as their credit improves. The good thing about credit scores is mistakes and blemishes are eventually erased from the record. As a result, homeowners who make an honest effort to repair their credit by making payments in a timely fashion may find themselves in a position of improved credit in the future.

When credit scores are higher, lenders are willing to offer lower interest rates. For this reason homeowners should consider the option or re-financing when their credit score begins to show marked improvement. During this process the homeowner can determine whether or not re-financing under these conditions is worthwhile.

Changed Financial Situations

Homeowners should also consider re-financing when there is a considerable change in their financial situation. This may include a large raise as well as the loss of a job or a change in careers resulting in a considerable loss of pay. In either case, re-financing may be a viable solution. Homeowners who are making considerably more money might consider re-financing to pay off their debts earlier. Conversely, those who find themselves unable to fulfill their monthly financial obligations might turn to re-financing as a way of extending the debt which will lower the monthly payments. This may result in the homeowner paying more money in the long run because they are stretching their debt over a longer pay period but it might be necessary in times of need. In these cases a lower monthly payment may be worth paying more in the long run.