Most buyers do not have enough cash available to buy a home, so they need to obtain a mortgage to finance the purchase. Since you will probably make your purchase contingent upon obtaining a mortgage, the seller has the right to be informed of your financing plans in order to evaluate them. That is one of the major reasons that financing details are included in your offer.
Down Payment
As part of your offer, you will need to disclose the size of your down payment. Once again, this allows the seller to evaluate your likelihood of obtaining a home loan. It is easier to get approved for a mortgage when you make a larger down payment. The underwriting guidelines are less strict.
Interest Rate
Another reason for including financing information in your offer is to protect yourself. If interest rates suddenly become volatile and rise quickly, as sometimes happens, you may looking at a mortgage payment much higher than you anticipated. By putting a maximum acceptable interest rate in the offer, you are protecting yourself from such an occurrence.
At the same time, the seller will probably want to see that you have some flexibility in the financing terms you are willing to accept. If interest rates are currently at eight percent and you indicate this is the highest rate you will accept, you would be able to cancel the contract without penalty if interest rates rose past that point. The seller would suffer because they have lost valuable marketing time and may have made their own plans based on successfully closing the transaction.
Asking for Closing Costs and Financing Incentives
There may be times when, as part of your offer, you request the seller to pay all or a portion of your closing costs, or provide some other financial incentive. One common request is asking the seller to provide funds to temporarily buy down your interest rate for the first year or two. Such incentives can be especially effective if a buyer is tight on money or pushing their qualifying ratios to the limit.
Whenever you ask for incentives such as these, you will probably find the seller less willing to negotiate on price. After all, what you are really asking for is have the seller to give you some money to help you buy their house. The end result is that, for a little relief in the beginning, you are willing to pay a little more in the long run.
Seller Financing
Another occasional request is to have the seller "carry back" a second mortgage to help facilitate your purchase of their home. In cases when the seller does not need all the proceeds from their sale in order to purchase their next home, this is an option. The advantage to the buyer is that by combining your down payment and the second mortgage from the seller, you may be able to avoid paying mortgage insurance and save yourself some money.
If such a carry-back is part of your offer, you should include the terms you wish to pay on such a second mortgage. Keep in mind that your first trust deed lender needs to know this information so they can underwrite your loan, and they have certain minimum requirements. The minimum term of the second mortgage can be five years. The minimum payment can be "interest only." Longer mortgage terms and payments that also include principle are also acceptable.
Cash Offers
If you are one of those rare individuals making a cash offer to buy a home, it makes sense to provide some documentation with your offer that shows you have the funds available. A bank statement would be fine. If you have to liquidate stock or some other asset, your offer should give a timetable on when you will provide proof you have converted the asset to cash.
Other Financing Details in Your Offer
Your offer should also contain information on whether you are obtaining a fixed rate or an adjustable rate mortgage. It should also state whether you are obtaining conventional financing or obtaining a VA or FHA loan.
As always, if you would like to discuss the information in detail, or apply online please feel to visit my web site. www.ENMCMTG.com
The most common reason for refinancing is to save money. Saving money through refinancing can be achieved in two ways:
By obtaining a lower interest rate that causes one's monthly mortgage payment to be reduced.
By reducing the term of the loan, thus saving money over the life of the loan. For example, refinancing from a 30-year loan to a 15-year loan might result in higher monthly payments, but the total interest paid durring the life of the loan can be reduced significantly.
People also refinance to convert their adjustable loan to a fixed loan. The main reason for doing this is to obtain the stability and the security of a fixed loan. Fixed loans are very popular when interest rates are low, whereas adjustable loans tend to be more popular when rates are higher. When rates are low, homeowners refinance to lock in low rates. When rates are high, homeowners prefer adjustable loans to obtain lower payments.
A third reason why homeowners refinance is to consolidate debts and replace high-rate loans with a low-rate mortgage. The loans being consolidated may include second mortgages, credit lines, student loans, credit cards, etc. In many cases, debt consolidation results in tax savings, since consumer loans are not tax deductible, while a mortgage loan is usually tax deductible.
The answer to the question, "Should I refinance?" is a complex one, since every situation is different and no two homeowners are in the exact same situation. The conventional wisdom of refinancing only when you can save 2 percent on your rate is problematic. If you are refinancing to lower your monthly payments, the following calculation is more appropriate compared to the 2 percent rule:
Calculate the total cost of the refinance--example: $2,000
Calculate the monthly savings--example: $100/month
Divide the result in 1 by the result in 2--in this case 2000/100 = 20 months. This shows the break-even time period. If you plan to live in the home for longer than this period of time, it likely makes sense to refinance.
Sometimes, you do not have a choice--you are forced to refinance. This happens when you have a loan with a balloon payment and no conversion option. In this case it is best to refinance a few months before the balloon payment is due.
Whatever you're considering, consulting with a seasoned mortgage professional can often save you time and money. Make a few phone calls, check out a few web sites, crunch on a few calculators and spend some time to understand your options.
As usual, I want to build new relationships, and if anyone is interested in hearing old Football stories when I played Pro with Joe Montana or Dan Marino, give me a call or check out our web site. I'm not joking. WWW.ENMCMTG.COM
Bad credit is like a little black cloud that hangs overhead, coloring everything with a gloomy pallor. When trying to finance a home loan, bad credit is a major inhibitor to getting a decent loan with good interest rates. There are lenders who can provide various types of loans that can be adjusted to accommodate those with bad credit, like the California Bad Credit Mortgage. Adjustable Rate Mortgages (ARM), Fixed Rate Mortgages (FRM), Interest Only and No Documentation Loans can all meet the specific requirements of CA Bad Credit Mortgages. Terms and monthly payments will be set according to the specific borrower’s credit score, income and available cash for a down payment. Setting up payments that will match the borrower’s lifestyle will assist him or her in making regular monthly payments and in building better credit. Better credit means better interest rates so that the original loan can be refinanced when a sufficient level of equity has been acquired.
Even so, it is unwise to jump into the first offer that comes along just to secure a CA Bad Credit Mortgage. Evaluating all angles of the process and becoming familiar with the language of loan financing will assure a borrower that the loan decided upon is the right one. A good choice at the outset will be the foundation to practice making better financial choices in the future. The high interest rates associated with a not so healthy credit score cannot be avoided. Those who lend money in the form ofCA Bad Credit Mortgages consider someone who has defaulted on credit card payments or missed and ignored overdue bills a high risk. Assurance of recovering the loan in a CA Bad Credit Mortgage is rendered in the form of increased interest rates and stricter guidelines in qualifying for the loan. Knowledgeable brokers can guide someone with poor credit to the best home loan possible. No one sets out to be a bad credit risk or to go into debt. But if it happens, the CA Bad Credit Mortgage can lead to a sunnier outlook and a brighter financial profile.
Visit Eagle Nationwide online 24 hours a day 7 days a week www.eaglenationwideonline.com Our dedicated, knowledgeable loan officers will help to discover the best financing option for you.
Most homes with a mortgage in California have some sort of Equity, which is simply the difference from the value of the home, and the remaining balance on the home loan. Often, if the house is newer, (for example, a new condo south of Hollywood), or has been remodeled after purchase, the chances of a higher equity are in the homeowner’s favor. Home Equity can be used to finance purchases, with a California Second Mortgage.
Basically, a bank appraises the house, finding out how much the house is worth, re-checks credit in case situations have changed for the homeowner, and makes an offer to the homeowner. If the homeowner accepts, the disbursement begins. The funds can be used for practically anything, from repairing the home, or remodeling, to paying off high interest credit cards, to even paying off the difference of the first mortgage (*more on that in a second) relieving a little stress for the homeowner and possibly increasing the value of the property.
Realizing that financial distress has to be on the top 100 of painful experiences a California Second mortgage might actually be beneficial to a homeowner’s health. Studies show diseases affiliated with stress are agitated, if not provoked, by financial stress. When money is tight, especially today with rising fuel costs, food costs and general living, there are certain safeguards available to homeowners. This is what a California Second Mortgage was designed for.
When it comes time to pay for the loan, it is important to remember that the first mortgage needs to be paid off first. Which can lead to accruing interest that can later cripple the homeowner if left unprepared. Essentially, once the first mortgage is paid, with the terms set in the contract, the second lender expects a beginning of payment for the equity loan. Granted, the principal is much lower, however, the interest rate may be higher. In considering a California Second Mortgage, be sure to calculate the risks, including home foreclosure if in default. For more information on a California Second Mortgage, visit Eagle Nationwide Online 24/7 at www.eaglenationwideonline.com. Our dedicated loan officers are always available to assist you with all of your financing questions and needs.
California Mortgage Rates are no different than most of the interest rates charged on home mortgages throughout the rest of the United States. It is neither the lender nor the mortgage broker that sets mortgage interest rates that will be paid on any of the numerous home mortgage loans that are available today. As for every state, CA Mortgage Rates are birthed in Washington, DC, where the policies pertaining to money and monetary reserves are created. The New York Federal Reserve Bank is the chief of Federal Banks and is the seat of operations for putting monetary policy into practice in the United States. Twelve Regional Reserve Banks, one of which is in San Francisco, act upon the decisions that are made by the New York Federal Reserve Bank to apply the policies to CA Mortgage Rates.
Throughout the complicated process of setting mortgage rates, the economy also plays an important role. As the economy flourishes, mortgage rates rise to meet the demands of investors. Consumers enjoy lower mortgage rates when the economy slumps. Mortgage Rates are also tied into Ten Year Bonds; the rates amend as Bond rates fluctuate. Keeping a close watch on the progression of these factors will be a good indication as to when CA Mortgage Rates will be at a level that allows buyers to take advantage of the market to purchase a home.
In practical terms, lower CA Mortgage Rates will mean a lower monthly payment for those purchasing homes in California. That is, assuming that the credit rating of the borrower is in good condition and other factors that affect the monthly payment line up. Other items to consider when figuring onCA Mortgage Ratesare the type of loan, the loan amount and whether or not the interest will be based on fixed or adjustable rates. A knowledgeable broker can be a great source of information when trying to understand how lenders arrive at CA Mortgage Rates. The information can then be translated into a workable solution in deciding on the right loan for the right house and the right homebuyer at the right time.
Visit Eagle Nationwide online 24 hours a day 7 days a week www.eaglenationwideonline.com Our dedicated, knowledgeable loan officers will help to discover the best financing option for you.
Add up all the separate school loans leftover from college and grad school or the monthly payments from all those credit cards that promised 15 % off the first purchase and it equals a headache that no amount of aspirin can touch. One certain cure for the financial pain in the neck brought about by mismanagement of personal funds is the Debt Consolidation Loan California. Mailing off minimum payments once a week that don’t put a dent in the debt wastes valuable time. Add in the finance charges and a late fee or two and the headache becomes a money management migraine. A Debt Consolidation Loan CA can bring almost instant relief to an ailing budget.
Unsecure Debt Consolidation Loans CA requires no form of guarantee and organizes the many smaller debts, or loans, into one easily managed parcel. This type of loan will eliminate steep finance charges and the inevitable late fees when a payment is missed. Lower interest rates with a Debt Consolidation Loan CA will put that interest money back into the home budget by combining all those separate loans into one single loan.
A secure Debt Consolidation Loan CA can be in the form of a home equity loan, which means that the home is used as a guarantee, or security, in case the borrower defaults on the loan. Home equity loans can be negotiated as adjustable rate or fixed rate mortgage loans, with amortization payments variable according to the value of the home and the qualification of the homeowner. Secure Debt Consolidation Loans CA may even have lower interest rates than unsecure loans, since there is collateral involved. A tax break on the interest is available with some of these loans.
Debt consolidation sounds like good medicine for financial headaches, but it’s always best to consult with an expert before trying a cure. ‘Self medication’ can be dangerous, especially when what seems like a ‘quick fix’ actually turns out to be bad medicine. Sometimes the best medicine is sound advice and information that will help make the decision as to whether or not to consolidate an informed one.
How can I improve my credit rating before applying for an FHA loan?
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One of the most important aspects of getting your credit rating in shape before applying for an FHA home mortgage is time. If you believe your credit is in poor shape, you'll want to establish payment reliability over a period of at least one year before starting your FHA loan paperwork. Another smart idea is to eliminate your debt potential. If you have multiple credit cards, try to pay them down and get rid of one or two of them. This can improve your credit rating by showing you have less potential debt waiting to happen. The FHA loan process hinges on a good credit report. If you have erroneous items on your credit rating, challenge them in writing with the major credit reporting agencies. Be sure to get resolution before you begin work on the FHA mortgage. You may need several months to clear up contested entries on your credit report-its best to begin the contesting process early.
During the Great Depression of the 1930’s, one of the most affected markets in the country was the housing Market. Years prior, housing bids were flying, more money was being spent on not only new homes, but also refinancing, and additions. However, after the crash of the American Stock Market, home sales plummeted, the market was flooded with job losses, and foreclosures.
Part of Roosevelt’s New Deal for the country involved the installation of different agencies, which ranged from returning people to work, to creation of a Public Works System for maintaining infrastructure. One of these “alphabet organizations” as they were so called, was the FHA, or Federal Housing Administration.
The Federal Housing Administration provided insurance for banks and other lending institutions that were burnt from loans and mortgages in default due to the lack of work. Banks were closing by the massive thousands. It was chaos. Finally, as the country began to stabilize, and as more and more people decided to buy homes, the housing Market stabilized. The FHA remained, but with a slightly different usage.
Today, in California, the FHA is responsible for insuring lending agencies’ risks in mortgaging individuals who stand in the lower quadrant of the Credit Cycle. California FHA Loans are usually lower amounts, with low to nearly no down payment. These loans are ideal for the consumer, who has less-than-perfect credit, or for the consumer who has not had the opportunity to create credit, or save a down payment for their home.
At Eagle Nationwide, hundreds of customers everyday are in search for a better option in home financing. One of their best options for lower income families is the California FHA loan. For more information, the staff of Eagle Nationwide are available 24/7 at www.eaglenationwideonline.com
If you are looking to finance a home in California and are interested in a consistent monthly payment, a California Fixed Rate mortgage (FRM) may be an excellent choice for you.
A California Fixed rate mortgage is a financing option that makes no provision for a changing rate over the term of a loan.If your mortgage begins at 5.5% interest rate, it will end at a 5.5% interest rate.
There are several types of California fixed rate mortgages. The first is a fixed payment loan. With this type of loan, your intial interest rate is used to determine the total amount your loan will be over the term of your loan.Then the total amount is divided by the number of payments made during the term of your mortgage.
Another type of California Fixed Rate Mortgage is a fixed rate, fixed interest mortgage. With this type of loan, only your interest rate remains the same throughout the term. That interest rate is then applied to the remaining principle of your loan. As you pay down your loan, your payment will decrease as the interest will be on a lower amount.
Yet another type would be an interest only fixed rate mortgage. In an interest only fixed rate mortgage, the borrower will pay only on the interest of the loan for a predetermined amount of time, typically 5 or 10 years. After the initial term, the borrower will then begin paying payments on the interest and the principal of that loan.
The different types of California Fixed Rate Mortgages will be distinguished by specific mofifiers, such as interest only, fixed interest etc.. If your loan is a strict fixed rate mortgage (FRM) without any modifiers then it is a loan in which matching payments are made each month. For example on a $300,000 30-year 6% FRM, the 360 monthly payment made will all be $1798.66. If that payment is made every month, the 360th payment will reduce the balance to zero. On a strict fixed rate mortgage, an increased amount of your payment is put towards the principle balance each month. In the beginning of your loan, payments mostly go towards paying down the interest, however as you approach the closing months, your payments will primarily go towards the principal.
In our example above, in month $299 is put towards the principal, in month 12 that amount will rise to $316. California fixed rate mortgages are an excellent financing option if you wish to develop a consistent budget over the course of your loan, with unchanging payments.
Visit Eagle Nationwide online 24 hours a day 7 days a week www.eaglenationwideonline.com Our dedicated, knowledgeable loan officers will help to discover the best financing option for you.
Most offers to buy a house are accompanied by a check. This check is generally referred to as the "earnest money deposit." The basic reason for the deposit is to impress the seller that the buyer "earnestly" intends to purchase the property.
The amount of the deposit varies from purchase to purchase, depending on a variety of factors. If a property generates a lot of interest, a buyer may make a larger deposit to convince the seller that their offer is stronger than the others. During "hot" markets, deposits are generally larger than during slow markets.
In normal times, buyers should hesitate before making a deposit that is larger than two percent of the purchase price. Underwriting guidelines sometimes require strict documentation of such deposits. A buyer may often be required to show a bank statement just prior to the date of the check, plus evidence that the check actually cleared the bank. If you're closing quickly, this might require a trip to the teller window at your bank.
There are reasons to try and keep the deposit as small as possible, but not so small that the seller doesn't take it seriously. You see, once a buyer and seller agree to terms, the earnest money deposit is usually placed in a "trust" account. At that point it is no longer the buyer's money -- it belongs jointly to the buyer and seller.
Almost all deals close and the earnest money funds are applied to the buyer's down payment and closing costs. As the saying goes, however -- there are exceptions to the rule.
Some sellers think that if the deal falls through, the earnest money deposit is automatically forfeit. Some buyers think that if the deal doesn't close, they automatically get the money back.
Neither one is true.
Even when the failure to close is the buyer's fault, the seller doesn't have a "right" to the deposit as a way to "punish" the buyer. Nor does the buyer automatically get the entire deposit back, even when they are not at fault.
First, there are normally a small amount of cancellation fees that must be paid. These fees are collected from the deposit. Second, since the deposit is held in trust, both the buyer and seller must agree on the disposition of the funds. This is a quirk of law in most states and the real estate agents and their companies have no control over the situation.
If something goes wrong very early in the deal, the seller normally understands and the deposit is usually returned to the buyer without a fuss. When things go awry later in the transaction, both parties usually exercise common sense and negotiate a fair solution. In a few rare occurrences, the buyer and seller find it difficult to agree.
The point is that is always makes sense to reach an agreement. Failure to agree ties the money up for awhile, could possibly lead to further legal action and inconvenience, and it just becomes a frustrating mess for both sides -- more so than you realize at the time.
Serious problems are the exception, not the rule. Most "challenges" are routine to a qualified professional real estate agent. The situation may be new to you, but the agent may have dealt with it many times in the past.
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Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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