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Mortgage Points

If you have ever gone looking for quotes on a mortgage in order to find out just what a mortgage might cost you, you have probably had the term points thrown at you. So what are points?

Each point is a fee and it is based on one percent of the total amount of the loan. There are a couple of different points, there are discount points and then there are origination points and lenders do not all charge the same amount of these points. Some lenders will charge you one point while others may charge you three.

Discount points are the points that are like prepaid interest on your loan that you are getting for your new home. Every point that you purchase will lower your interest rate to some extent. Most borrowers will be able to choose just how many points they want to purchase. There is a limit of course, usually around four points. The number of points that you choose to buy will depend on how much you want to lower you interest rate. One especially good point of these points is the fact that they are tax-deductible.

Origination fees are different. These fees are used in order to pay for the costs of giving you the loan in the first place. You don’t get anything out of these points so most borrowers don’t like them as they are not even tax-deductible. If you can try to get a loan that does not require you to get these types of points. Discount points on the other hand can be useful to you.

The choices that you make concerning the points to get will be affected by a couple of different things. For example, how long are you going to be living in this house? And how much of a down payment are you going to be putting down? If you are thinking of settling into this house for the long haul then perhaps discount points are a good way for you to go. Lowering your interest rate for years to come is always a good thing. Before making your decision take stock of your situation and see what suits your needs best.

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Buyer Tips, Mortgages, Re - Financing, Real Estate News, Real Estate Tips, Seller Tips, SW Real Estate News

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The ABCs Of Refinancing

Since the advent of information technology, more and more people are enticed to engage in some activities that will make their lives easier and better. This is especially true whenever people get into trouble such as debts.

What they know is that they should find some ways on how to alleviate their problems, even if it means changing from one aspect to another with the risk of getting into another trouble.

Take for example the concept of refinancing. Some people instantly opt for refinancing thinking that this is the best way to eliminate those debts. What they do not know is that refinancing could be a better alternative. However, in reality, changes may take place if the process is employed with the wrong directions.

The Concept

Refinancing, basically, refers to the way people are given the chance to request for a “secured loan” with the purpose of paying off the existing primary loan.

The main reason why many people are opting to refinance their debts is base on the fact that these people can no longer afford to pay more interests. They want to lessen, if not eliminate, the amount of interest charges.

In most cases, the most widely known kinds of refinancing are those that involve home mortgages. This is because home mortgages are usually the ones that are hard to pay off. Hence, what happens is that they continue to accumulate debts because of the growing interest charges.

So for those who have some problems on their debts and wish to reduce or eradicate interest charges, it is best to use refinancing. But you should be aware of the pitfalls behind it so as to avoid further trouble.

Here is a list of some tips that will help you construct good refinancing plans.

1. Be wary of the money involve

There are instances wherein the people are not fully aware of the amount and the classification of finances involved in refinancing.

It is extremely important to take note of this because if not, the refinancing of some amount is limited to what they can afford.

2. Do your homework

There are no better ways in learning than to learn through experience. Hence, in order to foretell the future, it would be best to conduct some researches or information regarding the interest rates to be given by the company to the people.

3. Compare charges

Before deciding on a particular refinancing scheme, it is best to analyze the situation first. And the best way to do this is to shop around and compare their features and offers.

The point here is that through comparison, the consumer can tell the edge of refinancing plan over the other.

4. Clear things out before walking out of the room.

If there is one thing that is not clear to you, try not to dismiss the fact by asking questions instantly. This is the primary step in breaking the ice and solving the problems.

5. Require pertinent documents

These documents are generally used to provide enough proof for the mortgage maker whenever they are trying to close a deal with a client. These documents are your key to success, without it, you can never access any endeavors for that matter.

The best thing about having these is that people may have the chance to live a life out of debts. As long as the proper measures are made, refinancing may be a good solution to life’sfinancial problems.

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Understanding Mortgage

A mortgage is defined as a way in which property or jewelry is used as a security against the debt. The loan that is taken against mortgage is termed as ‘mortgage loan’. This loan is taken in many countries mainly for the purpose of purchasing home or for wedding in the family.

Mortgage can be taken from banks or money lenders in many countries. People involved in mortgage include-creditor, debtor and at times a legal representative. The term creditor can also be used synonymously with lender. Money lenders, insurers, banks or financial institutions are creditors who provide the money to the person in exchange of property or jewelry.      

A borrower is also known as debtor, obligor or mortgagor. A debtor gets the amount equal to the value of the mortgaged article. A mortgagor is required to abide by all the obligations or conditions of creditors. Or, else there are chances that as a way of recovering debt, the property may be taken away by the creditors. There are various properties as a result of foreclosure. These properties are available for reasonable costs for the other buyers.  

It is always that the legalities of mortgage are done under the supervision of a lawyer. All the conditions and the amount of money involved should be stated in written and signed by the creditors, debtors and lawyer present. It adds authenticity and removes any confusion if any.

Currently many Certified Financial Planners work in combination with Certified Mortgage Planners so as to provide mortgage loans to financially sound people.

In addition to creditors, debtors, legal representatives and government agencies, there is involvement of pension funds and life insurers. Terms involved in the legal process of mortgage loan are Disbursements, Mortgage Deed, Conveyance, Land Registration, Sealing Fee, Freehold, Leasehold, Seasoned mortgage and Legal Charge.

Freehold is defined as the land and property ownership. Disbursements include all the money involved as search fees, stamp duty and land registry. Legal Charge is a document that has all the minute details of the land or property owner. Conveyance is the document that transmits the possession of unregistered property. Sealing Fee is paid when the creditor discharges the charge over the land. Land Registration is also referred as title. This document contains the details of the ownership of land and property. Seasoned mortgage is linked with secondary market. In seasoned mortgage payment is made on regular basis. Mortgage Deed is a document that gives detail of possession of ownership.

Legal mortgage are of two kinds Mortgage by legal charge and Mortgage by demise. There are essentially two types of legal mortgage. A lender becomes the legal owner of the mortgaged land till the money is paid in full. A lender is free to auction or sell the mortgaged property. While under Mortgage by legal charge, a lender can not sell the mortgaged land. He may possess the land legally but the right of selling and buying of the land lies with the debtor. Also, to provide safety to the lender, the details of mortgage are recorded in a register.

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Who Is Responsible For Closing Costs

Buying or selling a home is a euphoric experience for both of the parties involved. This euphoria can cool when you learn which party is responsible for the closing costs.

Who Is Responsible For Closing Costs

When looking to buy or sell a home, every person eventually arrives at the question of funding closing costs on the transaction. To put it simply, both buyers and sellers typically are responsible for some of the closing costs. However, the exact amounts paid can vary significantly from area to area and depending on what agreements the buyers and sellers come to in the offer-counteroffer process.

It is important to research the area you are looking to buy or sell in and be knowledgeable regarding any laws and standards of practice for the area. Yes, the requirements are different in each state and often each city. Know what you will have to pay ahead of time so you can be prepared to cover these costs. Here are some examples of what buyers and sellers generally have to cover.

Buyers typically pay the following: fees charged for obtaining a mortgage; inspection fees; homeowner’s insurance (must be prepaid for one year at closing); transfer taxes if there are any (although the seller may pay these or they may be shared 50-50 between buyer and seller); title insurance and escrow fees (varies depending on the location); and attorney’s fees (if and where attorneys are involved in the transaction). If you are confused, a mortgage broker can tell you which fees are customarily paid for by the buyer in your area and how much they will cost. When buying a home, the use of mortgage brokers is highly recommended to both get a great deal on a mortgage and help with the transaction itself. The broker only gets paid if the deal goes through, so you know they will make every effort.

Sellers’ closing expense responsibilities typically include: loan payoff fees; the real estate commission (in some cases, a portion of this may be paid by the buyer); title insurance (depending on the location); termite repairs (this is negotiable in some areas); cash payments in lieu of repairs to the property; all or part of transfer taxes and escrow fees, if there are any; attorney’s fees where applicable; and other fees set by local custom or negotiated during the transaction.

Knowing and researching the area you are buying or selling in is critical to understanding who is responsible for closing costs. Educate yourself and you will avoid overpaying.

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Your Options in Car Financing

There are so many car financing options available how do you know which one is right for you? Read on to obtain information about all of the different options available and how to determine which one will provide you with the best benefits.

Many people take advantage of an option known as dealer financing. This is when you handle the financing of your new vehicle directly through the lender. Now, that doesn’t necessarily mean you’ll be making your payments directly to the dealer. Usually, they work with a finance company to provide the financing to you. There are definitely some benefits to this option. First, depending on your situation you may be able to obtain extremely low-interest rates; in some case you may be able to obtain a zero percent interest rate. In order to obtain this special rate; however, you will need to have excellent credit with no problems. If you have any problems at all on your credit history you will not qualify for the special interest rate although you will probably be able to still obtain a loan; just at a higher rate. When your credit report is not perfect ask yourself whether you could get a better deal at a bank.

Bank financing is an option that is typically available as long as your credit history is good. This means it doesn’t have to be perfect but you shouldn’t have any major flaws either. If you have already worked with the bank in the past this will increase your chances of obtaining a loan. While a bank interest rate may not be as low as what a car dealer can offer for individuals with excellent credit, it may be better than what you could obtain at the dealership if your credit is only ‘good.’

Another option you may wish to consider is credit union financing. Of course, this option is only available if you belong to a credit union. If you do happen to have a credit union membership; however, the rate available to you may be much better than what you can obtain through a bank or dealership.

These days it is also quite easy to simply go online and surf around for a quote from an online lender. This option has become so popular many lenders are now willing to compete with one another and offer very attractive rates. In the event you do not have perfect credit, this can be a good option for you; just make sure you fully understand all of the terms of the loan before accepting it.

Another option would be to simply borrow the funds from a family member of friend. Of course, this is extremely risky because it could cause problems in your relationship in the event that you run into a problem with the payments. But, if you can’t obtain a loan elsewhere because of credit problems this may be a good option.

Finally, you may wish to consider refinancing your home or taking out a home equity loan in order to finance the cost of your new home. This basically allows you to pay cash for your vehicle with the proceeds of the loan and then paying back the money through the refi loan. In some cases you may be able to get a better interest rate with this route than you would with a traditional bank auto loan. In addition, the interest you pay on the loan is tax-deductible. Like other options; however, there are some disadvantages. With this option, be aware that you could be putting your house at risk, not just your car, if you run into a problem and can’t make the payments in the future.

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Are You Considering Re-Financing?

Homeowners who are considering re-financing their home may have a wealth of options available to them. However, these same homeowners may find themselves feeling overwhelmed by this wealth of options. This process doesn’t have to be so difficult though. Homeowners can greatly assist themselves in the process by taking a few simple steps. First the homeowner should determine his refinancing goals. Next the homeowner should consult with a re-financing expert and finally the homeowner should be aware that re-financing is not always the best solution.

Determine Your Goals for Re-Financing

The first step in any re-financing process should be for the homeowner to determine his goals and why he is considering re-financing. There are many different answers to this question and none of the answers are necessarily right or wrong. The most important thing is that the homeowner is making a decision which helps him achieve his financial goals. While there are no right or wrong answer to why re-financing should be considered there are, however, certain reasons for re-financing which are very common. These reasons include:

* Reducing monthly mortgage payments * Consolidating existing debts * Reducing the amount of interest paid over the course of the loan * Repaying the loan quicker * Gaining equity quicker

Although the reasons listed above are not the only reason homeowners might consider re-financing, they are some of the most popular reasons. They are included in this article for the purpose of getting the reader thinking. The reader may find their mortgage re-financing strategy fits into one of the above goals or they may have a completely different reason for wanting to re-finance. The reason for wanting to re-finance is not as important as determining this reason. This is because a homeowner, or even a financial advisor, will have a difficult time determining the best re-financing option for a homeowner if he does not know the goals of the homeowner.

Consult with a Re-Financing Expert

Once a homeowner has figured out why they want to re-finance, the homeowner should consider meeting with a re-financing expert to determine the best refinancing strategy. This will likely be a strategy which is financially sound but is also still geared to meeting the needs of the homeowner.

Homeowners who feel as though they are particularly well versed in the subject of re-financing might consider skipping the option of consulting with a re-financing expert. However, this is not recommended because even the most educated homeowner may not be aware of the newest re-financing options being offered by lenders.

While not understanding all the options may not seem like a big deal, it can have a significant impact. Homeowners may not even be aware of mistakes they are making but they may here of friends who re-financed under similar conditions and receive more favorable terms. Hearing these scenarios can be quite disheartening for some homeowners especially if they could have saved considerably more while re-financing.

Consider Not Re-Financing as a Viable Option

Homeowners who are considering re-financing may realize the importance of evaluating a number of different re-financing options to determine which option is best but these same homeowners may not realize they should also carefully consider not re-financing as an option. This is often referred to as the “do nothing” option because it refers to the conditions which will exist if the homeowner does not make a change in their mortgage situation.

For each re-financing option considered, the homeowner should determine the estimated monthly payment, amount of interest paid during the course of the loan, year in which the loan will be fully repaid and the amount of time the homeowner will have to remain in the home to recoup closing costs associated with re-financing. Homeowners should also determine these values for the current mortgage. This can be very helpful for comparison purposes. Homeowners can compare these results and often the best option is quite clear from these numeric calculations. However, if the analysis does not yield a clear-cut answer, the homeowner may have to evaluate secondary characteristics to make the best possible decision.

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For Sale By Owner: Pre-qualifying A Buyer

A big issue and pressing question for a lot of For Sale By Owner sellers is how to determine if a potential buyer can afford to purchase the home for sale. This situation is known as pre-qualifying a buyer. At first glance, this may seem like a complicated process and a complex dilemma but in actuality it is relatively simple and involves crunching a few numbers in some basic mathematic equations.

 

It is important to determine the meaning of some terms that are involved in this process. The first term to understand is the acronym PITI. This stands for Principle, Interest, Taxes, and Insurance. This is a figure that represents the total cost, monthly, of the mortgage payment including principal and interest as well as the monthly cost of property taxes and homeowners insurance. The second term is Ratio. This is a number that most banks use in order to determine how much of a buyer’s monthly gross income they can afford to spend on PITI. The most commonly used ratio is twenty-eight per cent. This ratio is determined without considering any other debts such as credit cards or car payments. Sometimes this ratio is referred to as the front-end ratio. When other monthly debt is taken into consideration, a ratio of thirty-six to forty per cent is acceptable. This is called the back-end ratio.

 

The calculations are as follows:  the front-end ratio is determined by dividing the PITI by the gross monthly income. The back end ratio is determined by dividing the PITI combined with the debt, by the gross monthly income. Four things are needed in order to determine the PITI. The sales price, the mortgage amount, annual taxes, and annual hazard insurance. From the sales price you must subtract the down payment in order to determine how much is needed from your bank.

 

The mortgage amount is generally the sales price minus the down payment. To determine the principal and interest portion of the payment you must use a mortgage payment calculator and input the loan amount, the interest rate, and the term of the loan in years. Mortgage calculator websites are available and can be found without much difficulty. Annual taxes are divided by twelve in order to determine the monthly property tax payment. The annual hazard insurance must be divided by twelve in order to come up with the monthly property insurance payment.

 

All of these terms and figures seem daunting, but once put into practice, things become easier and more self-explanatory. This is the most complex portion of pre-qualifying your buyer. Other requirements include the standard credit check and job history check. A good credit rating as well as at least two years of consecutive employment are usually necessary in order to get the best terms for a mortgage and to get the lowest interest rate possible.

 

It is not as difficult as it sounds in order to pre-qualify a buyer. This can usually be determined by a simple conversation where figures are discussed. With a small amount of due diligence, this process can be much simpler than it sounds and a profitable transaction can be completed.

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Mortgages

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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.

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Mortgages

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Five Easy Steps to Owning Your Own Home

Buying your own home is one of the largest purchases you will ever make. What should you do to get ready?

The key to a successful home purchase is making your choice through your finances, not your emotions. This takes research and patience. Here are five steps that can help you make a good decision.

1. Decide how much you can afford.

You should look at your finances in order to determine how much you can afford to spend on a home. Look at your income, assets and current debt level. You aren’t looking at what percentage the lender says you can afford, you are looking at what your finances dictate. If your lender says you can spend $1,200 a month, but you know you are struggling with a rental of $1,000 a month, you probably know that you don’t need any more than you already have.

You should also consider the down payment and closing costs. Lenders are usually looking for a 5% to 20% down payment.

Don’t overlook other expenses, such as property taxes and homeowners insurance. Your total interest, principal, taxes and insurance payment should not exceed 28 percent of your gross monthly income according to lenders. Your total monthly debt, including your mortgage, autos, student loans and credit cards should be under 36% of your gross income.

You don’t have to have a house in mind before you apply for a mortgage. It is a good idea to be pre-approved when you are looking for a home It will give you the security of knowing that you have funding and the buyer will know you mean business.

2. Look for what you want.

Spend the time to find the home you want. Find a professional realtor that can help guide you through the home search. Start by checking out neighborhoods and then narrow it down to a house. You should consider the schools, parks, commuting times and availability of public transportation.

When choosing between homes, look at the size, number of bedrooms and baths, design and amenities. Decide what your “must haves” are and what the “nice to haves” are. For example, you might be willing to trade a large kitchen for a swimming pool.

3. Negotiate for the right price.

Once you have the funding in place and have found a nice home, make an offer. Your realtor will help you in submitting your purchase contract. This will include the offer price and any contingencies, such as home inspection and appraisal.

The seller will either accept your offer, reject it or make a counter-offer. Negotiations can go back and forth until both parties are satisfied. Don’t get caught up in having to get the home and lose sight of how much you can afford. You don’t want to pay more for the home than it is worth.

4. Pick out a mortgage.

There are many types of mortgages to choose from. The basic two are fixed rate and adjustable rate. Fixed-rate mortgages have interest and monthly payments that remain the same throughout the life of the mortgage, which is usually 30 years or less.

Adjustable-rate mortgages are also called ARMs. They come with a lower initial rate than fixed rate mortgages, but the rate and payment amount can move up and down with the financial index. This can happen as often as twice a year.

5. Close on your home.

The closing, or settlement, is the point at which you finalize the transaction. You walk in with a check and out with your keys and the property’s title. You can expect to pay between 2% and 5% of the purchase price towards closing costs. These costs include fees, services and points paid.

After closing, you can settle in to your home and enjoy all of your hard work. Five simple steps and the house you dreamed of is yours.

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