Mortgage Advice - Checking your credit before applying for a mortgage loan is a very wise decision. By checking your credit before applying for a home loan you are able to see what your credit looks like, check for errors contained in your report, and make sure there are no accounts that do not belong to you appearing in your credit profile. Being prepared when you are ready to apply for a home loan and buy a house are key to ensuring a problem free mortgage transaction. You can check your credit report by contacting a mortgage professional or you are entitled to view your credit report once per year at no charge.If you are taking cash out of your home equity its good advice to try to use the cash to improve the value of your home. Adding a deck, pool, or guest house may be a wiser investment than a new car, motorcycle, or boat because home improvements make your house more valuable and preserve your home equity.
Ask your mortgage professional if the loan he/she is recommending has a prepayment penalty. You can sometimes get a better rate if the mortgage has a 2 or 3 year prepayment penalty. However, if you may refinance your mortgage during that time, you do not want a prepayment penalty. Additionally, hard prepayment penalties apply even if you sell your home. Soft prepayment penalties apply only if you refinance your mortgage, not if you sell your home. Make sure you understand the conditions of any prepayment penalty on your new mortgage.
If you are going to be in the loan for a while, consider paying to 'buy' your interest rate down. Your monthly payments will be lower, and eventually the savings will add up to the point that they make up for the expense of buying the rate down. If you are refinancing, points can be rolled into the new loan.
Holding Title - Before you reach the closing day, you will want to make a decision as to how you will "hold title" to the property. This decision has legal, tax and estate planning ramifications. Therefore, it may be prudent to consult an attorney or certified public accountant (CPA).
The following information is supplied for informational purposes and should not be relied upon as legal definitions.
Buying Alone
Sole Ownership
A single individual who has not been legally married.
An unmarried individual who was married and is now legally divorced.
A married individual who wishes to acquire title in his or her name alone. At the time of closing, the spouse of the buyer will be required to specifically disclaim or relinquish his or her right, title and interest to the property.
Living Trust
A living trust is created while an individual is alive and gives the individual control of the distribution of his or her estate. The individual transfers ownership of his or her property and assets into the trust.
Buying with Others
Tenancy in Common
Enables each partner in the property to sell, lease or will to his/her heirs that share of the property belonging to him/her.
Who can take title? Any number of individuals.
Ownership Division: Any number of interests, equal or unequal.
Who holds title? A separate legal title to his undivided interest is held by each co-owner.
Possession: Equal right of possession.
Joint Tenancy
Property owned by multiple individuals where if one of the owners dies, the remaining owners acquire the share of the deceased owner automatically.
Who can take title? Any number of individuals.
Ownership Division: Interests cannot be divided.
Who holds title? There is only one title to the whole property.
Possession: Equal right of possession.
Community Property
Property owned equally between a husband and wife. Each must sign all agreements and documents of transfer.
Who can take title? Only a husband and wife.
Ownership Division: Interests are equal.
Who holds title? Similar to title being in a partnership, title is held in "community."
Possession: Equal right of possession.
Additional Ways to Hold Title
Corporation
A corporation is a legal entity, created under state law, consisting of one or more shareholders but regarded under law as having essentially the same as those of an individual. The entity has continuous existence until it is dissolved according to legal procedures. Land owned by a corporation cannot be attached for personal debts or judgments rendered against any of its shareholders.
A Partnership
A partnership is an association of two or more persons who can carry on business for profit. A partnership may hold title to real property in the name of the partnership with partners having an equal or an unequal interest in the property.
A Trust
A trust is an arrangement whereby legal title to property is transferred by the grantor (or trustor) to a person called a trustee, to be held and managed by that person for the benefit of the people specified in the trust agreement, called beneficiaries.
Who picks the title company? - My lender is recommending that I use a specific title company. Do I have to use them or can I pick my own?
Should I get a pest inspection? - Although a pest inspection is not required except for government loans, it is a good idea to get one for the peace of mind knowing that your new home is not being damaged by termites or other wood destroying insects.
There is nothing worse than moving into a home and finding out your home is infested with bugs, mice, rats or any other unwanted guests. Problems that arise with these unwanted guests are often not apparent on the surface and thus could cost you thousands of dollars down the road.
Does my closing date make a difference? - By closing at the end of the month you can save in prepaid interest.
In contrast if you close at the beginning of the month, you will be paying more in prepaid interest. But you can effectively skip a month's payment. For example if you close on August 5, you will pay 26 days of prepaid interest, but your first month's payment won't be due until October 1st. Some lenders will give you a credit for those 5 days and expect a payment on September 1st. Ask your lender which option is available to you.
Choosing The Right Home For You - Choosing a home to purchase can be a daunting task. Most buyer want to know make a wise decision when purchasing a home. There are a lot of factors buyers need to take into account when choosing a home to purchase. The importance of each factor for each person or family will be different. So, Home Buyers before looking for a home should write down what factors they value the most; neighborhood, schools, price, taxes etc...
My HELOC is rising. What should I do? - If you have a Home Equity Line of Credit, you may have seen your payments and interest rate increase dramatically over the past few years.
If your HELOC rate and/or payment is increasing you have several options.
You can get a fixed rate equity or refinance your first and second mortgage into one mortgage loan.
Divorce and your credit rating. - Going through a divorce can be a difficult time emotionaly as well as financially. There are many things to consider when going through a divorce to help protect your credit rating due to a split up of incomes and assets.
Any credit cards, installment loans or any other debt may be in both spouses name and if no payments are made or payments are late it may affect both credit histories affecting your credit scores and the ability to get a mortgage on the terms that you would want.
Do I need a home warranty? - A home warranty protects homeowners against unexpected repairs of major systems and appliances in the home that could be otherwise costly to the homeowner.
Can wage earners get stated income loans? - Stated income loans used to be for the self employed or hard to prove income. That is not the case anymore.
FHA Streamline - If you currently have an FHA loan and want to reduce your monthly payment and interest rate an FHA Streamline mortgage might just be for you.
I dont want to lose my house...what can I do? - The best thing to do is call your mortgage broker or lender before you start to make late payments on the house. No matter how bad your debt has become, try to keep your mortgage payments current as it will have a great effect on whether or not you can refinance and what kind of deal youll get. Even if you have a few late payments, call a broker or lender immediately to figure out your options.
Many of the programs that you will be able to get will be subject to how late you are on your mortgage. Once you to 120 days late your loan to value may significantly decrease and your interest rate will increase.
Keeping Your Credit Report Clean - You should always monitor your credit report to make sure that there are no inaccuracies. If there are, you need to have them removed immediately. Its been said that 1 in 4 Americans have incorrect derogatory information on their credit report, and some would place this number even higher. This negative information on your report lowers your credit score, and can cost you thousands of dollars on your next mortgage loan if you dont have it corrected.
How Do Construction Loans Work? - Construction loans are temporary loans to finance the building of a home. Lenders will usually lend you 70% to 100% of the after completed value. The loans can be used to pay for land/lot, materials, and labor costs.
A construction loan will need to be refinanced into a permanent loan after the completion of construction. However, there are now construction-permanent loans that will automatically adjust to a permanent loan after the construction phase is completed. They are also referred to as one time close construction loans, because you don't need to get a different loan later on.
How do I know which mortgage is right for me? - Finding the right mortgage is more confusing than ever with the numerous home loan programs available today. So, how do you choose the right loan to fit your needs? First, you have to decide what you need now and in the future. This will help you get started on determining the right loan program that fits your situation the best.
Sitting down with your mortgage professional to go over all benefits of each program will help you decide which program works best for your financial needs. Having an understanding of what you want to accomplish in the long term will help you choose the right mortgage for your needs.
Many people think that a 30 year fixed rate loan is best for them. They like not having to worry about whether or not their payment will change in the future. What these people usually don't realize is that you can get an adjustable rate mortgage (ARM) that is fixed for the first several years. This initial fixed rate period usually has a lower rate than a 30-year fixed rate. Since most people only stay in one loan for a few years anyway, you can actually save money with an ARM over a Fixed Rate Mortgage.
There are many different mortgage loan programs available today. Choosing the right type of mortgage loan can make a drastic difference in your monthly payments.
Home Improvement Loans - Home improvements can easily be done by tapping into the equity from your home. The money can be used to make necessary upgrades and add value to the home.
Home improvement loans with low interest rates are available for most types of home improvement projects. From kitchen and bath remodels to landscaping and roofing.
A HELOC (Home Equity Line Of Credit) loan will allow you to draw equity from your home as you need it to pay for improvements.
