Mortgage Blog

A “temporary buydown” is a mortgage program that can help you qualify for the home you have always wanted

You or a third party such as a builder, seller or realtor can pay a buydown deposit to qualify you at a lower rate.

Depending on the buydown program you choose the deposit buys down the interest rate by 1% or 2% for a specified period usually one or two years. With this temporary assistance your initial payments will be lower and will increase according to the buydown program selected

For example on a 2/1 buydown if your mortgage rate is 6.5% your buydown interest rate would be 4.5% for the first year and 5.5% for the second year. In the third year and thereafter your rate would reset to the note rate of 6.5%. With a lower monthly payment you will realize significant monthly savings during the buydown period.

While it’s easy to see the advantage to you the homebuyer, why would the third party be interested in this program? Builders participate in the program to move inventory at a faster rate. Realtors and sellers also have an incentive to help buyers purchase homes, especially when the market is slow or there is a large housing inventory in the area.

Call us today to see if the temporary buydown program can help you afford the house of your dreams.

You mortgage consultant can be reached at 800-461-2986

An Adjustable Rate Mortgage (ARM) offers a lower initial interest rate and monthly payments than a conventional fixed rate mortgage.

After an initial term, the interest rate on an ARM loan is re-set periodically to keep the rate in line with current market interest rates. For example, a 3/1 ARM loan offers a fixed rate for the first three years. The interest rate adjusts once a year thereafter. 5/1, 7/1, 10/1 ARM loans offer a fixed rate for the first five, seven or ten years respectively, adjusting yearly thereafter. The Lender sets the adjustable interest rate by adding a fixed percentage to an index rate. When the interest rate goes up, your monthly payment also increases.

Most ARM loans have a periodic rate cap and lifetime cap to limit the amount the interest rate can increase each adjustment period and over the term of the loan.

Speak with one of our loan Consultants today to find out how an adjustable rate mortgage, with initial lower monthly payments, may be the solution to your financing needs. Our Consultants are available 7 days a week and can be reached at 800-461-2986.

You may want to refinance your home if you can substantially lowering your monthly payments by doing so. Another reason might be to move to a different type of loan. For example if you have an adjustable rate mortgage it may be wise to move to a fixed rate loan instead.

When you choose to refinance you may borrow just enough to pay off the mortgage you owe. This is referred to as a “rate and term” refinance. Alternatively if you have enough equity you may choose to borrow more than you owe. This kind of transaction is referred to as a “cash out” refinance. This money can be used to payoff debts such as student loans, car loans and credit card bills. Many borrowers also use this cash to make improvements to their home.

Before you refinance be sure to consider all of the costs of refinancing such as

• Closing costs
• Possible lower tax deduction

Refinancing can help you reach your financial goals by lowering your monthly payment, consolidating your consumer debt and combining monthly payments. To find out if the time is right for you to refinance call one of our loan consultants today at 800-461-2986.

When buying a home, you should have a professional home inspection performed.

A home inspection will look at the systems that make up the building such as:

• Structural elements, foundation, framing etc
• Plumbing systems
• Roofing
• Electrical systems
• Cosmetic condition, paint, siding etc

If you are buying a home, you need to know exactly what you are getting. A home inspection, performed by a professional home inspector, will reveal any hidden problems with the home so that they may be addressed BEFORE the deal is closed. You should require an inspection at the time you make a formal offer. Make sure the contract has an inspection contingency. Then, hire your own inspector and pay close attention to the inspection report. If you aren't comfortable with what he finds, you should kill the deal.

To find a professional inspector in your area visit the website of the American Society of Home Inspectors (ASHI) at http://www.ashi.org/

A bankruptcy filing delivers a devastating blow to your credit and FICO score, but it doesn’t mean you have to wait 10 years before you can qualify for a mortgage. Many consumers who have filed for bankruptcy have been able to obtain a mortgage, although it is often at a higher rate than someone qualifying for a prime or "A-paper" loan.

While credit card companies may care about what happened before you filed for bankruptcy, many mortgage lenders are more interested in your recovery — what you’ve done since your filing. It won’t happen over night, but here are some tips and things to keep in mind when you inquire about a mortgage with a tarnished credit past:

Give explanations. No mortgage lender is going to ignore the fact that you’ve filed bankruptcy and he or she will likely want to know the cause of the filing. Your lender will be particularly interested in whether the same situation could happen again. Your chances of being qualified are much better if your bankruptcy was caused by a single event such as a loss of employment or a death in the family, than if it was the result of “just spending too much.”

If the bankruptcy resulted from a single event, it is important to show your lender paperwork describing the incident, such as the layoff notice or death certificate. You may also want to bring in court documents to indicate when the bankruptcy was filed.

Demonstrate good money habits now. Many people who file bankruptcy swear off credit altogether, however, it is important to re-establish your credit rating. Get a secured credit card or take on some sort of loan — furniture, a car or a major appliance — to demonstrate that you are able to make timely payments. Make sure you are making other payments (utility bills, cell phone, etc.) on time as well. You won't turn things around in a year but your credit score will improve ovr time.

Dispute any credit report errors. There’s no need to add to your troubled credit history with errors on your credit report. Get a copy of your credit report from each of the three major credit reporting agencies: Equifax, http://www.equifax.com; Experian, http://www.experian.com; and TransUnion, http://www.tuc.com. If you encounter any errors, inform the CRA in writing what information you believe to be inaccurate and request deletion or correction.

Save your money. Lenders may be more willing to loan you money if you’ve saved up a considerable amount of money for a down payment.

Live within your means. Even subprime lenders won’t risk loaning you money for an opulent oceanfront mansion. Think small when the time comes to look for a home. Smaller homes often mean smaller mortgages.