Many borrowers wonder, "when is the right time to refinance"? A simple answer to this question is to take the total cost of the refinance and divide it by the monthly savings. For example if the total cost to refinance is $2000 and the monthly savings is $100 the break even is 20 months or nearly two years. In this case, if you are planning on staying in the property (or the loan) for more than two years you should refinance.  But what if rates drop within that two-year break-even period? In many cases it is beneficial to look at a relative newcomer to the refinance arena - the no cost refinance.  If the cost to refinance is zero, as it is with a true no cost refinance program, than go ahead and refinance no matter how long you plan to stay in the property. Furthermore, if rates drop after you close, you can simply refinance again with no closing costs. The only downside of the no cost refinance is that you will pay a slightly higher rate than if you pay closing costs to refinance.  Mortgage rates have dropped in recent months and if your rate is 6.00% or higher (or you have an adjustable rate mortgage) now may be a good time to check into the best refinance options for you.

       In today's sophisticated marketplace it is not uncommon for a prospective buyer to shop around for a mortgage loan. In fact, with so many companies and options available, it is important to shop for the best overall fit. Always begin by making sure you are working with an experienced, professional mortgage officer.  The purchase of a home, one of life's largest financial transactions, is far too important to place in the hands of someone unfamiliar with the many nuances of modern day lending. Here are a couple of simple questions an experienced lender will be sure to know. What are interest rates based on? Many inexperienced mortgage officers will tell you the 30 or 10 year Treasury note. The correct answer is Mortgage Bonds or Mortgage Backed Securities.  Another question is what effect does the 'Fed Rate' have on mortgage rates? Though surprising to the general public, any seasoned mortgage officer will know that mortgage rates, on a short term basis, will often move in the opposite direction of the fed rate change.

     Although many people think of shopping for a mortgage as shopping for interest rates, it is imperative that you also shop for a knowledgeable mortgage professional. After all, the absolute lowest cost on the wrong mortgage plan does not save you money.

It is always a challenge for homebuyers to select a suitable loan program that comes with a great interest rate. Rising real estate prices, a national shortage of housing and climbing interest rates has increased the pressure to make a quick decision about mortgage financing. But buyers who want the right loan with the best interest rate know that they cannot afford to hurry through the process.

Make sure to work with an experienced mortgage loan professional at an established and reputable company.  Ask other trusted professionals like your accountant, attorney or Realtor for a referral. Remember, you will be relying on your mortgage banker to explain loan options and recommend a loan plan that you can live with.  You need to discuss your long-term goals and the details of your personal finances in an atmosphere of trust.

Remember, the best loan is not necessarily the one with the lowest interest rate.  A lender might offer you a very attractive note rate, but additional fees can push the total Annual Percentage Rate up significantly. Another common problem is unscrupulous lenders offering a low rate but then hiding fees or labeling them as Paid Outside of Closing (POC) so that they do not add to the final totals on the good faith estimate. Be prepared to ask about the lender's charges for escrow waiver and appraisal as these are often marked POC or TBD (To be determined). The best-case scenario is to find a loan that combines a low note rate and low (and adequately disclosed) closing fees.

Title insurance companies ensure that sellers have clear title to
the property they are selling. The title insurance company's agent performs
a thorough search of the public records and certifies that the proper
parties signed the paper work, paid the taxes and discharged all liens each
time the house changed hands. Why then, does a buyer need title insurance
if these searches are so meticulous?
Public records can be incorrect if a mistake was made when the legal
document was recorded. When you buy owner's title insurance, you are
protected against forgeries, misrepresentation and mistakes made at any
point during the chain of ownership. Someone may have forged a deed,
divorce papers or a death certificate. For a one-time premium, title
insurance provides protection against title claims even long after you sell
your home. Legal expenses and other costs are paid by the company to defend
your title. In Vermont, many title issues arise due to permit problems. One type
of owner policy insures against loss arising from failure to have certain
kinds of permits. Storm water issues are also making headlines and title problems

could arise due to the complicated permitting requirements.

Title insurance is like emergency oxygen on an airliner. You may
never need it, but if you do, you will be really glad that you have it!

Credit scores still confuse and frustrate many consumers, according to a study by the Consumer Federation of America.  "Despite all the news coverage about credit scores over the past year or so, many consumers still do not understand important facts about these increasingly influential numbers," said Stephen Brobeck, CFA's executive director. To provide consumers with basic information about credit scores, CFA and Fair Isaac Corporation (developer of the FICO credit score) have prepared a brochure that is being distributed by the Federal Citizen Information Center.  The brochure contains the most important information about the score most mortgage lenders and other businesses use, including what factors influence its rise and fall and how consumers can get their own scores. To obtain a copy of the brochure, titled "Your Credit Scores," contact the Federal Citizen Information Center at 1-888-878-3256 or online at: www.pueblo.gsa.gov.  It's important for persons shopping for a home to understand the basics of credit scores.  Accessing your personal score and learning how to improve it can put you in a much stronger position to obtain the best possible mortgage.

When a marriage ends in divorce, the lives of those involved are changed forever. During this time of upheaval, one thing that shouldn't have to change is the credit status you've worked so hard to achieve. Unfortunately, for many, the experience is the exact opposite. Unfulfilled promises to pay bills and a breakdown in communication can lead to unwanted credit issues. These issues may affect your ability to refinance your current loan or purchase a new home. The good news is it doesn't have to be this way. By taking a proactive approach and creating a specific plan to maintain your credit status, you can ensure that "starting over" doesn't have to also mean rebuilding credit. The first step is to obtain a valid copy of your credit report. Once you've gathered the facts, it's time to make a plan: Can you purchase a new home now or will you have to wait until everything is finalized? Can you refinance the house to pay off your spouse and consolidate debt? These are some of the questions that a trained mortgage professional can assist you with. Divorce is difficult for everyone involved. By having professional advice, both legal and financial, you can ensure that your credit remains intact.

Finally some good news among the endless news stories about the Financial Crisis. Conventional fixed rates dropped sharply after the Fed announced plans to purchase up to $600 billion of debt backed by Fannie Mae and others. This news caused mortgage rates to drop around .75% for a 30-year fixed 0 point loan. So when does it make sense to refinance? If your rate is 6.00% or above you should consider the benefits of refinancing. Also, if you have an adjustable rate mortgage or need cash for debt consolidation, college education or home improvement, now may be a good time. What about the costs to refinance? If the cost to refinance is zero, as it is with a true no-cost refinance program, than refinancing, even if you recently purchased your home, makes sense as long as the new rate is lower than your current rate. Furthermore, if rates drop after you close, you can simply refinance again with no closing costs. The only downside of the no cost refinance is that you will pay a slightly higher rate than if you paid closing costs to refinance. 

If you are saving for a new home, you may feel that it will take you
forever to come up with the cash necessary for the down payment and closing costs. Before you delay your purchase any longer, make sure you check into the latest low down and no down mortgage products. You may find that your dream is much closer to a reality than you imagined

If you have acceptable credit and a steady job, you may not need a lot of cash to purchase a home. Some loan programs still allow you to put as little as 0 down if you are a first time homebuyer or are a veteran. For example, in Vermont, the Vermont Housing Finance Agency (VHFA) still offers a 100% financing program when combined with Rural Development's mortgage insurance. If you are a veteran you can also obtain 100% financing through the VA's loan program. If you don't meet the above criteria you can purchase with as little as 3.5% down using Federal Housing Administration (FHA) financing and all of this money can even be a gift from family. By doing a pre-purchase credit check you can verify if you qualify for any of these programs or if you need to work on resolving any credit problems before you begin your search for a home. Buyers who thought they were years away from the purchase of a home are often pleasantly surprised to find that they don't have to wait to begin their search.

You may have noted the many recent news stories regarding rates being down due to the recent 'Fed cuts'. Unfortunately, the press often misinterprets the facts regarding how Fed cuts affect mortgage rates. Here is the way things really work: Fed cuts and mortgage rates are not directly related. In fact, when the Fed cuts short term rates, mortgage rates frequently spike (as Fed cuts are used to stimulate the economy which often drives money out of lower yielding bonds and into stocks). Aggressive cuts can also spark the fear of inflation which eats away at the value of bonds (pushing rates even higher). However, the Fed rate cuts do affect the Prime rate. The Prime rate is the short term rate that most home equity lines are tied to. So the good news is that borrowers will see an almost immediate drop in their equity line rates.

Are you thinking about becoming a landlord?  Single-family and multi family homes are popular real estate investments.  These properties can be an excellent source of income.  The number one question for prospective landlords is how to finance such a purchase. Typically non-owner occupied one through four unit properties are considered ‘conventional' loans by most Lenders while five plus units are considered ‘commercial'.  Conventional one to four unit properties are often much easier to finance. However, due to the recent financial and credit 'crunch', one and two unit investment properties now require a 20% down payment by many lenders.  Three- four unit properties typically require a 25% down payment. The Lender will determine the risk involved in acquiring rental property by looking at the buyer's personal finances and the projected rental income.  However, if you don't have landlord experience, many lenders will require you to qualify without using rental income. Finally, lenders will want to make sure that the borrower has sufficient reserves to handle contingencies, such as repairs, maintenance, and taxes and insurance.