Welcome to Mortgage Loans on The Million Dollar Wiki! This page is your complete source for all mortgage related news. We also offer a tremendous resource for you to find a bank or lender that can help you Purchase a home or Refinance your mortgage regardless of where you are in the United States.
Consider this page your complete guide to: Mortgage Information including but not limited to; New Mortgage Products, How to get a Mortgage Quote, Mortgage Industry News, Buying, Mortgage Refinancing Tips, Applying for an Online Mortgage, First Time Home Buyer Tips, FHA Mortgage, Home Equity Loan Information, Resources to find a Real Estate Agent or Mortgage Lender and much more!
BUYING A HOME
The homebuying process can seem complicated, but if you take things step-by-step, you will soon be holding the keys to your own home! ***9 steps to buying a home courtesy of www.hud.gov.
Step 1: Figure out how much you can afford What you can afford depends on your income, credit rating, current monthly expenses, downpayment and the interest rate. The calculators below can help, but it is best to visit a lender to find out for sure. How much home can you afford? Need help with your downpayment and/or closing costs? Look for homebuying programs in your state. A housing counselor can help you figure out how to manage and pay off your debt, and start saving for that downpayment!
Step 2: Know your rights Be sure to read the following brochures: Fair Housing: Equal Opportunity for All, Real Estate Settlement Procedures Act (RESPA), Borrower's rights, and Predatory lending.
Step 3: Shop for a loan Save money by doing your homework. Talk to several lenders, compare costs and interest rates, and negotiate to get a better deal. Consider getting pre-approved for a loan.
Step 4: Learn about homebuying programs Be sure to research homebuying programs in your state. FHA loan programs offer lower downpayments and are a good option for first-time homebuyers. Look into HUD's special homebuying programs; Good Neighbor Next Door (formerly known as Teacher/Officer/Firefighter Next Door), Hurricane Evacuees discounted sales, Homeownership for public housing residents, and Indian Home Loan Guarantee Program (Section 184)
Step 5: Shop for a home Choose a real estate agent and write out a wish list - what features do you want? Check all homes for sale (including HUD homes), "Fixer-uppers" - home purchase and repair programs, Manufactured (mobile) homes, or you can choose to build a home. If you choose a home in a neighborhood with a Home Owners Association (HOA), be sure to request a copy of the HOA packet, so you can review before closing.
Step 6: Make an offer Discuss the process with your real estate agent. If the seller counters your offer, you may need to negotiate until you both agree to the terms of the sale.
Step 7: Get a home inspection Make your offer contingent on a home inspection. An inspection will tell you about the condition of the home, and can help you avoid buying a home that needs major repairs.
Step 8: Shop for homeowners insurance Lenders require that you have homeowners insurance. Be sure to shop around.
Step 9: Sign papers You're finally ready to go to "settlement" or "closing." Be sure to read everything before you sign!
Also, don't forget to visit the Real Estate Resource Center here on The Million Dollar Wiki for more Real Estate specific information!
REFINANCING YOUR CURRENT MORTGAGE
Right now is an unprecedented time in history! More ARM mortgages are set to adjust in October of 2007 than ever in the history of recorded home loans. What this means is that many, many people are in the market to refinance their Mortgage Loans before their payments adjust! If you are one of those many americans or you are in the market to Refinance your current mortgage for any other reason, you have come to the right place. There are many options for you!
Which mortgage refinancing option is best for you?
- There aren't quite as many mortgage loan programs as there are borrowers, but it seems like it sometimes! There are some general considerations you can have in mind in advance before you contact a Mortgage Professional for a refinance.
Are you refinancing your mortgage primarily to lower your interest rate and monthly housing payments?
- Then your best option might be a low fixed-rate Nevada mortgage. Maybe you have a fixed-rate mortgage now with a higher rate, or maybe you have an ARM -- adjustable rate mortgage -- where the interest rate varies. Even if it's low now, unlike your ARM, when you qualify for a fixed-rate mortgage you lock that low rate in for the life of your loan. This is especially a good idea if you don't think you'll be moving away from Las Vegas or Henderson within the next five years or so. On the other hand, if you do see yourself moving away from Nevada, within the next few years, an ARM with a low initial rate might be the best way to lower your monthly payment.
Are you refinancing your loan primarily to cash out some home equity?
- Maybe you want to pay for home improvements, pay your child's college tuition bill, take your dream vacation, whatever. Then you'll want to qualify for a mortgage loan for more than the balance remaining on your current mortgage. If you've had your current mortgage for a number of years and/or have a mortgage whose interest rate is higher, you may be able to do this without increasing your monthly payment.
Do you want to cash out some home equity to consolidate other debt?
- The Real Estate industry has been strong for several years so it may be a Good idea! If you have the equity in your home to make the loan work, paying off other debt with higher interest rates than the interest rate on your mortgage -- for example, credit cards, home equity loans, car loans, some student loans -- means you can save possibly hundreds of dollars a month. This may be a great opportunity to look at a Home Equity Line of Credit (HELOC).
Do you want to build up home equity more quickly, and pay off your mortgage sooner?
- Consider refinancing with a shorter-term loan, such as a 15-year fixed rate mortgage. Your payments will be higher than with a longer-term loan, but in exchange, you will pay substantially less interest and will build up equity more quickly. If you have had your current 30-year mortgage for a number of years and the loan balance is relatively low, you may be able to do this without increasing your monthly payment -- you may even be able to save! This is a great option for people whose main goal is not to save money on their monthly payment but rather want to build up equity and pay off their home more quickly.
FIRST TIME HOME BUYER
First Time Home Buyer (FTHB) is a status given to person or persons who have never purchased a home before. However, FTHB status is sometimes given to a person or person who has not owned a home in the previous three years.
There are two common misconceptions when it comes to First Time Home Buyer status when purchasing a home.
1. FTHBs are eligible for different unattainable programs than the rest of home buyers. In fact, nearly all programs are offered to both FTHB and repeat home buyers. Banks don't necessarily jump at the opportunity to lend to FTHBs because there is no record of how they pay a mortgage.
2. FTHBs need a very large down payment to qualify to buy a home. In fact, there are quite a few 100% Financing opportunities for FTHBs.
Due to recent events in the mortgage industry some banks and lenders are requiring FTHBs to take Homebuyer Education courses as a requirement of purchasing a home. These courses are designed to educate the new buyers in every aspect of their purchase from, budgeting to paying bills associated with their home and much more.
Finally, you can visit the Real Estate Resource Center here on The Million Dollar Wiki for more Real Estate specific information!
There are still several 100% Financing and Zero Down Mortgages still available. Here are the highlights of a few of them:
MY COMMUNITY MORTGAGE
This loan program offers low to moderate income borrowers that need certain underwriting flexibilities such as Non-Traditional credit reports, Boarder Income and higher LTV's to qualify for a home loan. It is a perfect fit for first-time homebuyers and allows the use of subsidized second mortgages with no additional price hit!
- Borrower Profile: Low to moderate qualifying income, No funds required for a down payment and closing costs on a 1 unit purchase transaction, Little or no established credit history, Access to non-traditional income sources (boarder income), First-time homebuyer
- Benefits: Qualify borrowers with lower incomes and no funds for a down payment on a 1 unit purchase transaction and limited contribution on all other transactions, Offer more monthly payment savings with reduced MI and subordinate financing options
- Features: Fixed or ARM options, LTV/CLTV up to 100%/105%, Reduced Mortgage Insurance requirements, No minimum borrower contribution for a 1 Unit purchase transaction and limited contribution on all other transactions, Income limits waived in FannieNeighbors® areas
This program is very similar to the previous two as far as qualifications but the Interest Rate is Calculated from the 30 Year Fixed Conforming Rate which is the industry benchmark for interest rates, the program utilizes Lender Paid Mortgage Insurance (LPMI) at a discounted rate and the program is manually underwritten.
A GOOD FAITH ESTIMATE, DID YOU GET ONE?
A Good Faith Estimate (GFE) is a document that identifies terms and itemizes all mortgage loan related fees in a Real Estate Transaction or a Mortgage Loan Refinance. By law, your licensed mortgage loan officer is required to provide you a GFE within 3 days of Loan Application. Any good loan officer will present you with your GFE within that time period AND take the time to go over it LINE-BY-LINE until you as a borrower fully understand.
A GFE will have details of the proposed loan including Applicants, Property Address, Preparer, Date Prepared, Loan Program, Loan Amount, Interest Rate, Term of Loan, Estimated Itemized Loan Related Fees, Estimated Title/Escrow Charges, Estimated Recording Fees, Estimated Pre-Paid Interest, Estimated Reserves, Purchase Price/Payoffs, Itemized Monthly Payment, and Estimated Funds Needed to Close. As a potential borrower, if your loan officer has not provided you a GFE within 3 days of loan application and/or pulling your credit report, you should request the document. A big red flag should go up if it is a challenge to obtain this within the specified three days!
A GFE helps to get everyone involved in the transaction on the same page AND when reviewed by the borrower will prompt important questions that the borrower may not thought of without this document. It is your right to know the specifics of the loan and the transaction. Another red flag should go up if your loan officer gets irritated with your questions. Remember who makes the payments and who is obligated to that loan, YOU, not the loan officer so you should be calling the shots and if you want more clarification ask for it! Believe me, there are a lot of loan officers out there that want your business. If the loan officer that you are dealing with is giving you problems, NEXT! Also, if a loan officer gives you a verbal rate quote and payment it means nothing if you do not know the other parameters and terms of the loan!
Typically when reviewing a GFE with borrowers the predominant questions have to do with the itemized fees. Below I have explained the most common fees by line item:
- 800 Loan Origination Fee: This is a fee paid to your loan officer for originating your mortgage loan
- 801 Loan Discount: Commonly referred to as points. One discount point is an upfront payment of 1 percent of the loan amount, paid at closing. Typically, you receive a reduction in the interest rate in exchange for paying discount points. Points are also used to pay additional banks fees for your particular loan i.e. Escrow Waiver Fee, Lock Extension Fee, etc.
- 803 Appraisal Fee: Charged by the appraiser for appraisal services. In Nevada, a Single Family Residence appraisal is usually around $350
- 804 Credit Report: This is the fee charged to pull your credit report. Credit reports usually start at $12 and go up depending on additional items needed i.e. supplements, verifications, re-scores, etc.
- 808 Mortgage Broker Fees: Paid to your Loan Officer's Mortgage Broker for facilitating your loan
- 809 Tax Related Service Fee: This is a fee paid to your Mortgage Note holder to file tax documents so that the Note payer, you, can receive the deduction for mortgage interest. THIS IS A FEE YOU SHOULD PAY WITH A SMILE!
- 810 Processing Fee: Paid to the Mortgage Originator for processing your loan application. Usually around $495.
- 811 Underwriting Fee: Paid to the Mortgage Bank that is underwriting the loan. This fee can range from $295 to $1495 and up
- 1101 Closing or Escrow Fee: Paid to the Escrow/Title Company to facilitate the transaction. This fee is based on loan amount/purchase price.
- 1108 Title Insurance: Paid to the Title Company. This Title Insurance Policy insures that upon transfer your homes title is free and clear of any encumbrances.
- 1201 Recording Fees: Paid to the county to record the applicable documents.
- 901 Pre-Paid Interest: Mortgage payments are due on the first of the month. If your loan funds on a date other than the first, daily interest is charged from the day you funded until the first of the next month. For example, if you fund on the 15th of June, you will be charged for 16 days of interest.
- 903 Hazard Insurance Premium: Commonly known as Homeowners Insurance. You are required to pay for a full year's premium in advance on a purchase transaction and some lenders require your renewal paid to a year in advance on a refinance.
- 1001 Hazard Insurance Reserves: When you have your Hazard Insurance impounded, or included, in your mortgage payment, the escrow company uses these reserves to establish your Escrow account. They take reserves in advance so that upon renewal there will be enough funds available to pay your premium.
- 1004 Tax Reserves: Again, when you have your Taxes impounded, or included, in your mortgage payment, the escrow company uses these reserves to establish your Escrow account. They take reserves in advance so that upon receipt of your property tax bill there will be enough funds available to pay your taxes.
Finally, keep in mind that a Good Faith Estimate is just that; An Estimate given in Good Faith. This document is not set in stone but should be close to what your loan fees and terms will be given that all of the information in your loan application is accurate and verified.
Getting Your Credit Report The information in your credit report has a huge impact on whether or not you qualify for a mortgage loan and what interest rate a lender will offer. Therefore, it’s important your credit report reflects a positive image of the way you manage your money. If you're getting ready to buy a home, or refinance your current mortgage, checking your credit report is the best way to ensure you get the loan and interest rate you deserve.
If you are interested in viewing your credit report before you contact a lender the easiest way to see what’s in your credit report is to contact the three national credit reporting agencies Equifax, Experian, and TransUnion and request a copy from each. That’s because the three agencies are independent of each other and the information may differ on all three reports. In addition, you may not know which agency your lender will use to check your credit, so it’s best to verify that all three have correct information about your credit history.
REAL ESTATE APPRAISAL
In most every mortgage loan transaction, weather it is a Purchase or Refinance, the lender requires an appraisal to be done on the property to determine value.
Real estate appraisal is the practice of developing an opinion of the value of real property, usually its Market Value. (Real estate appraisal is American usage; many other countries use the terms property valuation or land valuation.) The absence of a market-based pricing mechanism determines the need for an expert appraisal/valuation of real estate/property. A real estate appraisal is performed by a licensed or certified appraiser (in many countries known as a property valuer or land valuer). If the appraiser's opinion is based on Market Value, then it must also be based on the Highest and Best Use of the real property. For mortgage valuations of improved residential property in the US, the appraisal is most often reported on a standardized form, such as the Uniform Residential Appraisal Report.  See cite reference below.
Once the home is appraised and a value has been determined the lender can now justify lending money based because the fair market value has been supported.
1. Real estate appraisal. (2007, September 22). In Wikipedia, The Free Encyclopedia. Retrieved 20:54, September 22, 2007, from http://en.wikipedia.org/w/index.php?title=Real_estate_appraisal&oldid=159652887 - photo courtesy of stockxpert
TIPS FOR AVOIDING FORECLOSURE from HUD
The U.S. Department of Housing and Urban Development (HUD) released its top 10 tips for homeowners who are facing foreclosure.
"These guidelines will assist homeowners who are struggling to pay their mortgage and could be threatened with foreclosure," said HUD Secretary Alphonso Jackson. "We want to encourage homeowners to take action and use every resource available so that they can get control of their finances and stay in their home."
If you are unable to make your mortgage payment:
1. Don't ignore the problem.
The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.
2. Contact your lender as soon as you realize that you have a problem.
Lenders do not want your house. They have options to help borrowers through difficult financial times.
3. Open and respond to all mail from your lender.
The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notice of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court.
4. Know your mortgage rights.
Find your loan documents and read them so you know what your lender may do if you can't make your payments. Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office.
5. Understand foreclosure prevention options.
Valuable information about foreclosure prevention (also called loss mitigation) options can be found on the internet at http://www.fha.gov/.
6. Contact a non-profit housing counselor.
The U.S. Department of Housing and Urban Development funds free or very low cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance.
7. Prioritize your spending.
After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses-cable TV, memberships, entertainment-that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.
8. Use your assets.
Do you have assets-a second car, jewelry, a whole life insurance policy-that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income? Even if these efforts don't significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.
9. Avoid foreclosure prevention companies.
Many for-profit companies will contact you promising to negotiate a loan work out with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month's mortgage payment) for information and services your lender or a HUD approved housing counselor will provide for free if you contact them. You don't need to pay fees for foreclosure prevention help-use that money to pay the mortgage instead.
10. Don't lose your house to foreclosure recovery scams!
If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a HUD approved housing counselor or trusted real estate professional.
To find out more about HUD-approved housing counseling agencies and their services, please visit www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm or call toll free (800) 569-4287 on weekdays between 9:00 a.m. and 5:00 p.m. Eastern Standard Time (6:00 a.m. to 2:00 p.m. Pacific Time). The same number can give you an automated referral to the three housing counseling agencies located closest to you.
(Written by http://www.hud.gov/ at the following link http://www.hud.gov/news/release.cfm?content=pr07-105.cfm
CURRENT MORTGAGE NEWS
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