Refinancing a mortgage loan to get a lower rate has become a sport. Many people think that there is no reason not to refinance and then refinance again. All this activity based is on the concept that the transaction cost to lower the interest rate was zero, zip, nada. Where borrowers are correct is that it is easy to refinance a loan and not have to bring any money to the table. Where they are wrong is that the process is free.
Once you have signed the papers you’re every bit as responsible as the primary loan signer to make payments. To quote from the FTC’s Facts for Consumers guide “Co-signing a Loan“: “When you’re asked to co-sign, you’re being asked to take a risk that a professional lender won’t take. If the borrower met the criteria, the lender wouldn’t require a co-signer.”
Homeowners think there’s some magic to these bi-weekly payments that reduces the interest expense on their loan. The magic is in making the equivalent of 13 monthly mortgage payments per year. I don’t recommend that homeowners switch to a biweekly mortgage. It’s just not worth the bother or expense.
If you are a military veteran or are on active duty, a VA loan may be the perfect loan for you. The Veterans Administration provides guaranteed loans, made by VA-approved lenders to eligible military members. The VA guaranty protects the lender not the borrower from loss resulting from the loan not being repaid. The VA loan programs offer many advantages to veterans and can be obtained with little or no down payment with a competitive mortgage rate. Borrowers can choose a fixed or variable rate loan. The loan can be used to purchase a home or refinance an existing loan. The process is different from conventional loans.
The US population is aging, and as it does, older Americans want to age in their homes but need to access the equity for home improvement or other bills. Reverse mortgages were created as a way to convert a portion of an owners home equity into cash. While it is similar to a home equity loan, no monthly payment is required until the borrower no longer lives in the home as a primary residence or fails to meets the obligations of the mortgage (i.e. paying taxes). It’s important to know more about reverse mortgages in order to determine it is an option for you.
The FHA loan program is a government loan that was designed to increase home-ownership. Its guidelines allows for lower down payments than what is referred to as a conventional loan. It can be less expensive than other types of real estate mortgage home loan programs and have credit guidelines that include more people, however it does have strict mortgage amounts and documentation rules. This is a loan program that has specific rules and requirements. Its eligibility requirements are well documented; here are the basics of what is needed to know:
Second homes are often the place for furniture you no longer need and dishes from your first apartment. A second class citizen of sorts. The same theory applies when trying to get a loan on a second home. Statistically if a borrower comes under tight financial strains they will keep current on the primary residence leaving the second home to fall into default. All is not lost; there are two main financing techniques to acquire a second home. Before jumping into the second home market take a strong look at your what your long term goals are, this will be an important part of the picture. For instance if this second home will eventually be a primary residence using a mortgage instrument that has lower payments may suite the situation better knowing that the loan may be refinanced or paid off when the other residence is sold.
The residential home mortgage business is competitive. There are several types of lenders that can offer loans. They range from your local credit unions, to the online virtual bank, the large national bank and the local (and sometime virtual) mortgage broker. Take a minute to understand the role of a mortgage broker. Compare a mortgage broker with a credit union. The credit union that offers rates the credit union sets, a mortgage broker will arrange or broker a transaction between you and a lender. Brokers shop many different lenders to find the best one for you and will offer a range of product selections. They are not obligated to get the best deal for the borrowers. Always contact several banks and brokers to compare rates.
Committing to become a homeowner takes courage. It commits you to monthly payments, annual tax bill and all the unknown maintenance issues that may crop up. It is a fact that the larger down payment that can be put down on a property purchase the better rate (up to a point) a borrower can get. First time home buyers often do not have a large (20%) down payment to use toward the purchase of a house. Searching for rates on the internet or calling local lenders will result in a general idea of what rates are available. Luckily there are state and federal loan programs available for first time home buyers. These programs often make mortgages with low down payments and some provide grants to provide funds for down payments. Before deciding on a specific rate, first time home buyers should look into specific loan programs that allow for low down payments or are designed for first time home buyers. Once you understand the loan programs available then shop the lenders that offer the programs and compare rates and fees. Not all low down payment loan programs are offered by all lenders. Be prepared for the fact that the smaller the down payment the higher the interest rate.
Property insurance on your home is normally a requirement of getting a loan. A house is a person’s largest asset. Make sure that investment is covered in a way that makes sense to you. Insure the house itself and its contents. Things to consider before you purchase insurance:
Confused about your 401K? Not sure what to invest in for your child\'s future? Ask Dr Don, I\'m here to help.