Posts tagged Home Finance
What is Foreclosure?

When a homeowner is unable to make payments on their mortgage, the lender gains the right to take control of the property, evict the homeowner, and sell the home. This legal process is known as foreclosure.

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What is a Mortgage Credit Certificate?

What’s a mortgage credit certificate? First, we have to talk about taxes. Nobody loves paying taxes -- and most people don’t love paying interest on their mortgage, either. Both are realities of life, but fortunately, you can use part of the interest you pay on your mortgage to reduce your tax bill.

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What is Pre-Foreclosure?

Pre-foreclosure refers to a specific period of time early in the foreclosure process. Pre-foreclosure is when the property is in the infant stages of being repossessed by the bank. This period begins when the lender files a default notice on the property, effectively letting the borrower know that legal action will be pursued by the lender should the borrower not submit the delinquent payment.

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What is a 5-Year Balloon Payment?

When it comes to getting a traditional home loan, most home loans are fully amortized, meaning that each payment a borrower makes goes to paying off both the interest and the principal. At the end of the loan period, the entire loan is paid off. Some loans, like balloon loans, are not fully amortizing -- meaning that there is still money due at the end of the loan period. One kind of balloon loan, a five-year balloon loan, has a loan life of 5 years. At the end, the borrower must make a large payment (known as a balloon payment) in order to repay the mortgage.

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How Do Balloon Payments Work?

A balloon payment is a large payment due at the end of a balloon loan. A balloon loan is a short-term mortgage, often lasting between 5 and 7 years, but with a payment plan typically based on a 15 or 30-year mortgage. At the end of the mortgage, the borrower still owes the rest of the unpaid principal and is required to pay it as a lump sum. Since most borrowers can’t afford this, they typically either sell the home or refinance the balloon loan before the balloon payment is due.

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PITI: Principal, Interest, Taxes and Insurance In regards to Home Loans

Pronounced the same as pity, the acronym PITI is a common term when dealing with home loans. The letters in PITI stand for principal, interest, taxes, and insurance. The term, however is typically used as a blanket term that covers the monthly sum of the total debt service (principal and interest), homeowners insurance, property taxes, mortgage insurance, and homeowners association fees.

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What Is the Mortgage Credit Certificate?

A Mortgage Credit Certificate (referred to as the MCC) is a federal tax credit that allows first-time home buyers to save money each year by receiving a conversion of a percentage of the annual interest paid on their mortgage into a dollar a tax credit. This program was created to assist first-time home buyers to qualify for a home loan by decreasing their tax responsibility. Typically this program is for low- to moderate-income families.

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Are closing costs included in the mortgage loan?

Closing costs are the fees charged for services provided by your lender to assist in closing on a property. The fees are typically required to be paid upfront at closing; however, depending on your specific loan to value ratio, and the equity in your home or loan type, you may be able to roll the closing costs into the mortgage loan. 

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How Do You Get a Home Loan?

Getting a home, and the mortgage that comes with it could be the most important financial transaction you ever make. But how do you go about getting a home loan?

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