Want to know more? Click on “Ask Your Own Questions” or call or e-mail us today with questions of your own. We can tell you how much house you can afford, and we can help you get into your first home.
For more information, ask your lender or call Fannie Mae’s public information office at (800) 7FANNIE.
The most important factor to lenders, however, is that you pay your bills on time.
Can you tell me some things I should consider when shopping for a loan?
Shopping for a mortgage loan is like shopping for a new coat – you need one that fits your lifestyle as well as your budget. Many different mortgage products are available today, and each suits a different set of circumstances. Match mortgage terms to your lifestyle.
To decide which to choose, figure all the costs over the time you expect to be in the home, and compare the bottom line. Also compare the monthly payments at each step to be sure they are manageable. Keep in mind the maximum allowable increases when calculating future payments under a worst-case scenario.
Our professionals are armed with the latest mortgage loan information plus more tips on how to choose the right loan for your circumstances. Just give us a call and we can start helping you right away.
What is a “no-cost’ loan and how does it work?
More accurately called a “no upfront-cost” loan, a “no-cost” loan is a mortgage that wraps the closing costs – such as application and credit check fees as well as appraisal and other settlement charges – into the loan amount. These expenses are often paid by including the costs into a larger total loan amount and charging a higher interest rate on the whole loan.
The no-cost loan could be a useful alternative for:
Another way to go is to pay the points and any other deductible closing costs in cash at settlement to secure the tax deduction. Usually this also means a lower interest rate, and therefore lower interest cost over the life of the loan.
Is it true VA loans are easier to get these days?
It’s not only true, it seems to be real estate’s best kept secret. Guaranteed mortgage loans for veterans are a lot easier to obtain since the Veterans Administration made its procedures more user-friendly a few years ago.
Some key changes in the VA Home Loan Guaranty Program are:
Also, thanks to a new ruling, VA buyers can now pay their own VA loan fees or points. Before the change, VA points could only be paid by sellers – which meant some sellers were turning away VA borrowers to avoid the extra costs.
The VA loan program can help qualified veterans save money when buying a home because the veteran can buy a home with no down payment and no monthly mortgage insurance. The debt-to-income proportion can be as high as 41%, and up-front costs are lower. Veterans can borrow up to a specific ceiling, and the loan is assumable. Check with your lender for full details.
How would you like to spend your money and save it, too? The Asset Integrated Mortgage, or AIM, lets you do just that.
A home buyer with an AIM loan invests part of the down payment in a life insurance annuity set up by the lender, and draws tax-deferred interest. The minimum is 10% down with 5% of it for the annuity; but if the down payment is 20%, up to 15% can be invested in the annuity, yet counted as collateral, so private mortgage insurance is unnecessary.
Currently, lenders in at least 50 cities offer AIM loans. For more information, contact Fannie Mae at (800) 732-6643. Fannie Mae is the nickname of the Federal National Mortgage Association, a quasi-governmental agency that makes mortgage funds available.
A GEM Of A Mortgage Loan
GEMs (growing equity mortgages) are making a comeback in the world of creative financing. Their early-1980s popularity gave way to ARMs (adjustable-rate mortgages). Their return to the scene was prompted by declining interest rates.
GEMs have the advantage of being fixed-rate loans with interest rates as low as – or lower than – the lowest ARM rates. Typically, a GEM has a fixed, 30-year rate that approximates the market rate at the time the loan is taken out. The payment for the first year of the loan, however, may be set at a much lower rate – interest only. The payment for the succeeding 2-8 years increases at an agreed-upon rate, typically 3%-7.5% per year, until your monthly payment reaches a specific level for the remainder of the loan.
As your payments increase on schedule, they will become more than the regular note rate. Then your “overpayments” go toward reducing the principal on the loan. You thereby shorten the life of the mortgage. That’s why, although figured on a 30-year basis, most GEMs are paid off in 15 to 20 years. That’s a way of building equity fast, once you get past the period paying only interest.
Biweekly Mortgages: A Good Value?
One of the newer twists in the mortgage industry is biweekly mortgages. Here’s a quick look at how they work.
For an up-front, non-refundable fee – typically several hundred dollars – the mortgage servicer will debit the homeowner’s bank account every two weeks – 26 times a year. This amounts to making an extra month’s payment each year.
The benefit for the mortgage servicer is they have the use of your funds without paying interest until they apply your payment to the mortgage at the end of the month. The benefit to the consumer is paying off principal debt and increasing home equity faster.
A word of caution, though. Before you jump on the biweekly bandwagon, remember to: