Posts in Home Purchase
Can You Buy A Foreclosed Home with A FHA Loan?

The Federal Housing Administration, or FHA, insures mortgage loans to help home buyers who may not be eligible for a conventional home loan due to less-than-perfect credit or lack of savings for a down payment. An FHA loan can be used to buy almost any type of home including modular, manufactured, or mobile homes -- and can also serve to purchase homes facing foreclosure.

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What are Negative Points On A Mortgage?

Negative mortgage points, also known as rebates or yield spread premiums are portions of your mortgage fees that are paid by the lender, who in turn sets a higher interest rate on the loan. This is sometimes called a no cost mortgage. One negative point is equal to one percent of the overall home loan.

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What is Hazard Insurance?

Hazard insurance is not only the most obvious portion of a homeowners insurance policy, but an incredibly important one when purchasing a home. Hazard insurance is the area of coverage that deals with the insurance of the actual structure of the home against covered perils as listed in the policy. Standard policies list common hazards such as fires, lightning strikes, windstorms and hail to name a few.

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APR: Annual Percentage Rate in Regards to Home Loans

Unfortunately, when you get a home loan, you pay for more than just the interest rate each month. This is because there are other fees and charges involved in the mortgage process. The APR (annual percentage rate) of the loan reflects these charges, and is a broader measure of the cost of borrowing money to purchase a home.

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Low First Time Home Buyer Down Payment Options

Down Payments can be a sore subject for most home buyers. Getting a mortgage requires borrowers to meet many different criteria already, and having to fork out cold, hard cash on top of all of that is the icing on the proverbial home loan cake. This is specially true of first time home buyers. Even so, there are a few ways to escape the worst of down payment woes.

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Are Interest Rates on Mortgages Negotiable?

Due to the expense of mortgage interest, it only makes sense that you would want to do everything in your power to pay a lower interest rate. But how? Oddly enough, you could first try by asking! Negotiating with your lender to reduce your potential interest won’t work in every situation; but it can pay to know when and why it might work -- and what you can do to swing the results a little more in your direction.

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What Are the Least Expensive States to Get a Home Loan?

When it comes to getting a mortgage, some states are simply more expensive than others. And, while you might not want to move to a completely different state simply to get a better interest rate, if you’re considering making a big move (and buying a home in your new home state), it doesn’t hurt to know which states are more affordable than others.

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Will Buying a Home in Foreclosure Reduce Neighborhood Home Values?

One of the best ways to find a home selling for well under its market price is to try to buy a home that’s in foreclosure. While buying a home in foreclosure may be able to get you a fantastic deal, it can also come with some serious risks and considerations. One of the most important things to consider is how homes in foreclosure may reduce neighborhood home values.

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Which States Use Judicial Foreclosure? Which Use Power of Sale?

When it comes to home foreclosures, some states allow lenders to sell a home without going through the court system using a provision in a mortgage called “power of sale.” States which don’t allow power of sale force lenders to attempt a judicial foreclosure in order to repossess and eventually sell the property.

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How Does Rent-To-Own Work?

Rent-to-own is a rental agreement in which a property is leased, yet part of the money paid weekly or monthly goes to owning the property after a certain amount of equity has been accumulated. Rent-to-own is different from a regular lease agreement, in that the renter can buy the property at any time during the agreement (in a traditional lease agreement the renter has no such right).

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What Is the Underwriting Process of a Mortgage?

Mortgage underwriting is a process in which a lender examines a potential borrower’s eligibility for a loan. To do this, lenders typically look at three major factors: credit, capacity, and collateral. Now that you know these factors, let’s take a deeper dive into each.

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How do you qualify for a jumbo loan?

If you want to buy a particularly expensive home -- one above the conforming loan limits in the state and county where you’re buying -- you’ll likely need a jumbo loan. While jumbo loans can often allow you to purchase a bigger and better home, they can also be more difficult to qualify for. Here are the basics of qualification for a jumbo loan.

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FHA 5/1 ARM: FHA 5/1 Adjustable Rate Mortgage in Home Loans

A FHA 5/1 ARM is a kind of hybrid mortgage in which interest rates remain fixed for a 5-year period, but can then increase after that due to changes in market interest rates. Unlike regular ARMs, an FHA 5/1 ARM is insured by the government, which can give you some serious benefits.

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Can Student Loan Debt Prevent You from Getting a Mortgage?

Today, more than 44 million Americans have student loan debt, with an average balance upwards of $37,000. If you’re one of them, you may wonder if that student loan debt can prevent you from getting a home loan. The answer: it depends. While you might not think that your student loan payment affects your ability to pay a potential mortgage payment, your lender might -- and that could spell trouble if you’re trying to buy a home.

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What is the Home Affordable Modification Program (HAMP)?

The Home Affordable Modification Program, or HAMP, was a U.S. government program designed to help homeowners avoid foreclosure by reducing their monthly mortgage payments. The program, which began in 2009 and expired on December 31st, 2016, was specifically implemented after the 2008 subprime mortgage crisis, in order to help struggling homeowners keep their homes.

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What is Loan Origination?

The term loan origination encompasses the process that begins when a borrower applies for a new loan, through the processing of the application by the lender, and ultimately ends with either an approval and disbursement of funds, or a declination. If the loan is approved, the loan origination date is the date at which the loan is funded.

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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 HUD home?

HUD Homes are one- to four-unit residential properties acquired by the United States Department of Housing and Urban Development through foreclosures on FHA insured mortgages. Once HUD is in full ownership of the home, they put it up for sale in order to cover the loss on the foreclosure. HUD homes are available for purchase to anyone with the required cash or who qualifies for a home loan, including investors. Eligible one- to four-unit properties, as defined by HUD, are either a single-family, duplex, triplex, or fourplex.

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What Is a Rate Lock?

If you like the way interest rates are looking right now, you might want to consider a rate lock. A mortgage rate lock is a guarantee that your lender will give you a certain interest rate on your home loan, as long as your mortgage closes by an agreed-upon date. In addition to guaranteeing a specific interest rate, a rate lock can also “lock in” points, which are fees that you can pay to your lender upfront in order to obtain a reduced interest rate on your mortgage.

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What is Negative Amortization?

Most home loans are fully amortizing. This means that the borrower makes monthly payments of both interest and principal, typically, allowing the homeowner to build home equity over time. Despite that, some loans are negatively amortizing, meaning that the borrower is making payments that are actually less than the interest owed on the loan. This means that the principal owed on the loan increases over time -- which can often leave borrowers in a sticky position when it comes time to pay up.

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How is Property Tax Calculated?

Other than paying your mortgage (and perhaps your utilities), property taxes can be one of the biggest expenses involved with your home. But how are property taxes calculated? Typically, property taxes are set by a specific percentage, often referred to as a multiplier. When multiplied by the assessed value of your home, this determines your annual tax bill.

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How Long Does It Take to Buy a House?

Maybe you’ve been scouring the web for home listings in your area, but how long does it actually take to buy a house once you’ve decided you’re ready? It’s an excellent question -- especially because the length of the home buying process can vary significantly. It all depends on the area you want to buy a home in, your eligibility, and several other variables.

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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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Loan Estimate and Closing Disclosure Forms

Any time a potential borrower applies for a home loan in the U.S., the lender is legally obligated to send them a Loan Estimate within three business days of their application. A Loan Estimate can provide you with a variety of important information about the mortgage you’re interested in, including an estimate of the interest rate you’ll be charged, an estimate of your monthly payments, and an approximation of the closing costs you’ll face. And, within a minimum of three business days before a mortgage closes, a lender is legally obligated to give the borrower a Closing Disclosure form. This explains the actual, real terms of the mortgage.

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How Do You Prepare to Buy A Home?

Buying a home can be one of the biggest financial decisions you’ll ever make-- so how do you make sure you’re ready to make the leap? First, you need to make a plan: that means figuring out how to get your finances in order, examining your potential budget, and setting a timetable for home ownership. Keep in mind that home buying process can be a rough ride-- or easy sailing, and a lot of that depends on how much preparation you do.

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How long does it take to get approved for a mortgage loan?

It takes between 30 days and a few months to get approved for a mortgage loan. There are three steps to this process, but only the final two are required: prequalification, preapproval, and final mortgage approval.

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What is the best type of mortgage for me?

As a future homeowner, choosing the best mortgage for you is like choosing the best career path: there are tons of options, but only a handful that you’ll qualify for, and even fewer that will really make you happy. The good news is that by asking yourself which mortgage is best for you, you’re already thinking like a savvy consumer -- you recognize that you have a choice between many different mortgage products, and it’s just a matter of narrowing them down.

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What is Property Tax?

Homeownership can be an expensive venture. A mortgage is easily one of the largest investments the average person makes in their lifetime, but it isn’t the only cost of owning a home. It turns out, paying back the principal and interest on a home loan is only the tip of the iceberg. Property tax is another cost of homeownership that is not often talked about, yet it is a fee you will need to pay long after your home loan is paid in full. So what is property tax?

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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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What is the NHF Grant?

The grant, dispersed through NHF-approved lenders, is meant to assist homebuyers with down payments and/or closing costs that the home loan agreement may accrue. The NHF DPA Grant allows homeowners to build equity faster, and carry less of a financial burden by avoiding secondary mortgage options that are usually offered to cover the same costs, and involve pesky property liens.

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What is the Prepayment Penalty on a Mortgage?

There are clauses in mortgage contracts that stipulate penalties for repaying the loan too fast. That's right, you could get charged extra for paying back what you owe ahead of schedule. This can include paying off the loan through refinancing, or selling the home. Of course, the fee charged must clearly be stated in the loan agreement, as well as the period of time that prepayment fees may be applied. The details of the clause vary by lender, and not all mortgage agreements have prepayment penalty clauses.

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What are Graduated Payment Mortgages?

Graduated payment mortgages (GPMs) are a type of home loan with payments that start smaller and get larger as time goes on. These kind of mortgages have a fixed interest rate, and the payments often increase between 7-12% each year until a maximum payment amount is reached, which will continue for the rest of the life of the loan. Most GPMs are insured by the Federal Housing Administration (FHA).

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Prime Mortgage: A Complete Guide

The Prime Rate is often confused with the Federal Funds Rate, a rate at which banks lend money to one another and is determined by the Federal Reserve. This is what you hear about on the news when the Fed meets. It’s not the same as the Prime Rate, though the Prime Rate often follows the Federal Funds Rate.

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Where Can I Find a Mortgage Consultant?

Just like finding a mortgage broker or mortgage banker, finding a mortgage consultant can start online or in the fleshy real world. Check out your favorite bank first to see if they have a Certified Mortgage Consultant on staff. Many banks provide access to these professional consultations for free if you’re interested in a mortgage loan. If you want to look at mortgage brokers who have on-staff consultants, your Realtor may be your best resource. There are lots of small brokerages, so digging through their websites to see what job titles are in their offices can be real drudgery.

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What is a Mortgage Loan Broker?

There are two main sources of mortgage loans for the general public: banks and brokers. A bank loans its own money to a borrower, even if they end up selling that loan later. Brokers, on the other hand, help connect buyers with investors and banks by acting as an intermediary. A broker, then, is a person who brokers your mortgage loan.

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Mortgage Lenders for People with Bad Credit

Having less than perfect credit is not only inconvenient, it can become a huge roadblock to large purchases like a home. Since the damage from a few mistakes or an unfortunate accident can affect you for years, many people choose to try to find a lender that will work with their credit, rather than wait until they can buy more house with the same money using a more traditional mortgage loan.

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First-Time Home Buyer Credits for Home Loans

When you’re thinking about buying your first home, there’s a lot of information to process and way too many financial decisions to make. For a lot of buyers, coming up with money for a down payment or to fund closing costs can be a huge roadblock. These buyers may give up their home search because it just seems insurmountable.

There’s good news, though! There are plenty of home buyer assistance programs out there that offer first time home buyers like you grant money, soft secondary mortgages, or other types of credits to soften the blow of trying to save up a chunk that substantial.

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How Much Does it Cost to Close on a House?

Closing costs are the charges paid to purchase and settle on a property and are unrelated to reducing the principal loan amount. Usually, the amount paid for closing is between two and five percent of the price of the home, and typically the fees are listed on an estimate provided by the lender in response to your submitted application for the home loan.

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How Long Does it Take for a Closing on a House?

Your offer was accepted and you’ve now entered the closing period (dun dun dun!). The window of time it takes to close on a home may depend on many variables – I know, as if the process could actually get any easier. Generally speaking, the time frame for closing on a home should be noted on your sale contract to give you an idea and will typically take 30-45 days on a home that is financed.

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What is the Meaning of Amortization?

Amortization refers to a type of payment schedule that some home loans utilize. The payment schedule is made up of equal payment amounts that are stretched over a designated amount of time (the loan term). For the purpose of an amortization schedule, each payment is divided into two portions. There is a portion that is made up of interest (the cost of the loan), and a portion that is made up of principal (the value of the borrowed sum).

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What is an Interest-Only Mortgage?

When most homeowners get a mortgage, they start paying both the interest and the principal immediately -- but they don’t always have to. One kind of home loan, called an interest-only mortgage, allows the buyer to put off paying any of the principal for a number of years while they save money and strengthen their financial position. But, just because you don’t have to pay principal doesn’t mean you can’t; many homebuyers just like to have an option that frees up more cash for their budget.

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What Is Jumbo Adjustable Rate Mortgage Loan?

An ARM jumbo loan is an adjustable rate mortgage that exceeds the Fannie Mae and Freddie Mac loan-servicing limits. This amount, for most American counties, is $453,100. For more expensive areas, that limit can go as high as $679,650. Right now, ARM jumbo loans are becoming incredibly popular -- with statistics suggesting that around 75% of ARMs currently issued are actually for jumbo loans. Of that 75%, 47% of those home loans are for more than $1 million.

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FHA 7/1 ARM: FHA 7/1 Adjustable Rate Mortgage in Home Loans

An FHA 7/1 ARM is a kind of hybrid home loan that’s insured by the Federal Housing Administration (FHA). If you get a FHA 7/1 ARM, your interest rate will be fixed for the first seven years of the loan, and can then be adjusted afterward when the variable interest rate portion of the loan begins. Like other ARMs, FHA 7/1 ARM variable interest rates are based on a index rate -- which is usually the rate at which banks in a certain area lend money to each other.

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10/1 ARM: 10/1 Adjustable Rate Mortgage in Home Loans

A 10/1 ARM is one type of hybrid adjustable-rate mortgage. Much like other hybrid loans, a 10/1 ARM has a fixed period (in this case, 10 years) during which your interest rate won’t change. That makes it one of the safest types of hybrid mortgages, as it gives you a lot of time to figure out your financial situation and determine whether you want to continue owning your home after the adjustable-rate period begins.

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What are the Requirements for an FHA Loan?

In basic terms, an FHA loan is a government-insured mortgage. Due to the fact that these loans are being offered by the government, instead of a for-profit company, FHA loans have a variety of benefits that can make it easier for you to buy your dream home without breaking a big sweat.

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How do you calculate mortgage insurance?

Mortgage insurance is a type of insurance policy that covers the lender in case the borrower defaults on the loan. It is usually required in the form of private mortgage insurance (PMI) when borrowers don’t make a down payment of at least 20% on most conventional loans. For FHA loans, it’s called a mandatory mortgage insurance premium (MIP).  If you fit into either of those categories, then mortgage insurance is something you’ll have to deal with.

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What Is a Variable Interest Rate on a Home Loan?

Much like vanilla and chocolate ice cream, home mortgage loans come in two main flavors: adjustable rate home loans, and fixed rate home loans. While the interest rate on a fixed rate loan stays the same throughout the entire life of the loan, an adjustable (or variable) interest rate loan can go up or down, depending on market conditions.

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What is a Good Down Payment on a House?

A good down payment on a house largely depends on your circumstances and the loan you've applied for. Based on loan requirements and your risk profile the lender will determine the minimum down payment for the loan. In other words, it may not be up to you how much you pay -- though generally, a higher down payment will equate to lower fees and better loan terms.

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Is Private Mortgage Insurance (PMI) Required?

Lenders want to know they'll get their money back when they lend it out. In the event that a borrower can’t produce at least 20% down for a traditional loan, lenders will impose mortgage insurance on the borrower in order to protect the lender in default. Lenders turn to private insurance providers for this, hence the name -- Private Mortgage Insurance (PMI). 

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The Different Types of Mortgages

There are many different mortgage options for homebuyers to choose from. For starters, mortgages are usually categorized as either a fixed rate or adjustable rate. Then there are various loan programs to choose from including FHA Loans, VA Loans, USDA Loans, or Conventional Loans

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Criteria for First-Time Home Buyers for Home Loans

To help first-time home buyers, federal, state and local housing agencies have programs to make the home buying process easier and cheaper. The agencies and lenders in your area can offer you various FHA loans, VA loans, down payment grants, and other programs to make it easier to qualify and buy your first home. The definition of a first time home buyer

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What is a Fixed-Rate Mortgage?

A fixed-rate mortgage is the simplest and most common mortgage for homebuyers. It simply has a fixed interest rate, that does not go up or down, throughout its lifespan. Since it never changes, a fixed-interest-rate mortgage isn't associated with indexes, margins, floors, or caps. As the interest rate is fixed, the monthly principal and interest payment are the same throughout the mortgage’s lifespan.

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How to Calculate a Fixed Mortgage Rate

Calculating a fixed mortgage rate is relatively simple: You take the annual figure and turn it into a monthly figure. To calculate the monthly fixed mortgage rate, just do the following steps:

  1. change the annual rate to a decimal number by dividing it by 100;

  2. take the resulting decimal figure and further divide it by 12; and

  3. voila!, You have the monthly fixed mortgage rate.

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Home Loans for First-Time Home Buyers

Buying your first home is a challenging but important first step in securing your future. There are many financial products available on the market for first-time homebuyers. Each product has its target market, so it’s important to understand your needs so as to match them to the products on offer.

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Applying for a Federal Housing Administration (FHA) loan

Like with most housing assistance programs, you can start at your local housing agency. You’ll be provided with a breakdown of the FHA loan-approved lenders in your area, whom you can apply to. If you qualify for the program, simply apply to these lenders. If you get more than one quote, you’re more likely to find a better deal.

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FHA 7 year ARM: Federal Housing Administration 7 Year Adjustable Rate Mortgage

The FHA 7 year ARM is a hybrid mortgage that is guaranteed by the Federal Housing Authority. It is deemed a “hybrid” mortgage because it has a fixed interest rate in the beginning for 7 years and then switches to a variable interest rate. As with all adjustable rate mortgages (ARMS) the rate is composed of an index rate and the lender's margins.

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