Question - Why won't Countrywide let me make weekly mortgage payments?

I would like to make WEEKLY mortgage payments in advance.  For example, I would send in a check for 1/4 my mortagage each Monday in January toward my Feruary 1 payment, then in Feruary send in 4 weekly payments toward my March payment.  I am not making any extra payments, just paying early.  Countrywide wants to hold these payment in a partial payment account until all 4 payments are received, then apply as payment for principle & interest.  This defeats the purpose.  I want these weekly payments posted to interest & principle accrued up to the day of that payment.  My loan documents clearly say that I have the right to prepay and have it applied on that day.  What rights do I have to make Countrywide follow their own contract even though they are saying that their system is not set up for this.  Am I the only one who has ever thought of paying weekly or even twice a month?

Answer:

I would guess your payment is taken automatically from your checking account. When the bank gets the request to transfer the funds they will either pay it and overdraw your account or not. That will depend on the bank and how much the overdraw will be. If they don't pay it the mortgage company will re-submit the request. If I were you, I would call the bank now and tell them that you know you are short and that you will be making a deposit in a few days. Be specific.

This is not really very hard to do if all you want to do is take sole title to the property. If you want or she wants to be removed from the mortgage, you will have to refinance your loan by yourself. To have her, "sign it over to you", means to have her sign a Quick Claim Deed as the grantor and you will sign as the Grantee. Call a Real Estate Closing Attorney, maybe call the firm that did the original closing and request them to prepare and then record a Quick Claim Deed between you and your sister. The charge might be as high as $250.00 and would be a good deal at $100.00. Shop around. You might call a Realtor to personally refer you to their favorite closing attorney as a favor. This way you might only be charged the hard cost of the $12.50 to $25.00 county recording fee. Closing Attorney's make their living from Realtor referrals. You could do it yourself by buying a Quick Claim Deed at an Office Supply store and then taking it to the county court house to be recorded. If you refinance the property, at that closing you and your sister should sign a Quick Claim Deed. Unfortunately, a refinance is the only way to remove your sister from the debt obligation of the mortgage. This might not be of concern as she is moving out of the country. When she decides to buy a property in the US she will have the mortgage debt included in her debt to income ratios. This might create a problem for her to qualify unless she just makes a ton of money and qualifying isn't an issue. If it is an issue and you can provide her with your last 12 canceled checks proving that you have been making the mortgage payments on time without her help, then her lender should remove the mortgage debt from her ratios.

Question - Where can I find mortgages that do not require PMI?

I have heard there are ways to get a mortgage with-out paying for Private Mortgage Insurance. Where can I find mortgages that do not require PMI?

Answer:

You may consider doing what is called an 80-10-10. This is where you get a 1st mortgage for 80% and a 2nd Mortgage of 10% and make a down payment of 10%. Might even find a 80-15-5. A lender that offers high "Loan-To-Values", LTV's with-out mortgage insurance is, NBC in Memphis, TN. Call 1- 866-452-6227. Good Luck!!

It sounds like you should look into a 2nd mortgage. With this grant as your down payment having to be repaid if you sell before seven years, it doesn't sound like you can refinance unless you can pay back the grant. You should be able to get a second mortgage for the funds you are looking. Good Luck and feel free to reply if you need more information or don't understand my answer.

Question - What can I do about phantom LATE charges?

My mortgage was sold about seven months ago. The new mortgage company sent me a statement last month showing an unpaid late charge. When I called to question the charge, they claimed it was from seven months ago and that they would waive it. I received a statement from them this month that shows the previous charge as waived, but now has an even larger amount showing for unpaid late charges (double the previous). When I called on this, they said it was from the old mortgage company. What can I do about this? How is it that these phantom charges can appear after six or seven months? What are my options?

Answer:

Just call the company again and explain that you haven't paid late. Show them prior statements that didn't have the late payments on them. Ask them to waive them again. If you were in fact late before then pay the late charges. You should be able to clear this up. Good Luck and thanks for using LoanIcons.com.

Question - What happens to my mortgage when I marry?

I am considering buying a townhouse as a single person, but what happens when I marry? I am currently dating someone and the subject is being discussed. My credit is good, his is not, although he is actively working to improve it. If we do proceed to marriage after I have purchased a house, will we need to add him to the mortgage and would his credit rating have any affect at that time? Could the loan remain in my name even though we are married?

Answer:

Nothing will happen when you get married. That is at least as far as the Mortgage you would have. You will not be able to add your husband to that Mortgage. If you allow him to make the payments or part of them then the question and answer below might help you understand how to share this. You could allow him to write the Mortgage check and pay it from his own account. This might help him build his credit back in that he could prove to a new lender that he paid a mortgage on time. It might not help at all in that he is not the responsible party to that mortgage. Anyway, both your credit and his would both be considered if you were both to borrow in the future as a Borrower and a Co-Borrower.

Question - Current rates are 1 point better, should I refinance?

My wife and I purchased our 1st home on Nov 30, 2000. The house cost $235,000. We did not have the 20% to put down on the house, so a mortgage company qualified us for the following. We put down 5% of our own money, and mortgaged 80% at 8.05%. We then took a second mortgage at 10.75% for the remainder 15%. This seemed smarter than paying PMI. Rates have come down significantly. Is it possible to refinance & if so does it make sense?

Answer:

It would seem unless your house has had some major appreciation that you would be unable to refinance at this time. You can only refinance in most cases with a 90% LTV (Loan to Value). Since you just purchased the house a few months ago at a combined LTV of 95%, I doubt your house will appraise for enough for a 90% loan to pay off the 1st and 2nd. You could ask the lender to allow you to subordinate the 2nd mortgage but you would not be able to exceed the combined LTV of 90%. In any case the 90% loan would include Mortgage Insurance that you have avoided thus far. I suggest you give it some time for your house to appreciate to the point you could refinance both loans at an 80% LTV. Good Luck and thanks for using LoanIcons.com.

Question - Should I "Rent" or do a "Lease to Purchase"?

My husband and I may be relocating for a job. My father-in-law has agreed to buy a home for us and we would pay "rent". The question is: Would my father in law have to travel to the new location for all of the mortgage "paper signing" or are there ways around that? I hope that my question was clear and I look forward to hearing from you. Thank You.

Answer:

Whether you father-in-law will have to come to the closing will depend on the title company or attorney settling the transaction. It also might make a difference what state your buying in. Call the agent selling the house and find out who would close the loan and then call them to see if they could make the arrangements necessary to allow your father-in-law to stay home. The title company is where your answer is. Also, you should not pay "rent". You should do a "lease to purchase". This is where you agree to have an option to purchase the house in the future at a price you agree on today. The good thing for you is that this arrangement will allow you to build up a down payment by having part of your lease payment go toward equity or eventually the down payment when you do purchase the house. You can also agree to make repairs to the house and have the specified cost and repairs go toward the down payment. The lease contract needs to spell out the repairs to be made and kept the receipts for you to get credit for this. It can be that some of the repairs might be done by you so kept it reasonable. An example might be in painting the house. Keep the receiptes where you bought the paint so you can prove you painted the house and put in the lease a reasonable amount to have the house painted. If you never execute the option to purchase then it would be just like the "rent" deal, but you might be able to sell or assign the lease to someone else. Since it's your father-in-law, he might be more interested in helping you out but there are some good things for him as well. He could set the price of the house higher than his purchase price and thus guarantee a return. He can be assured that there will be repairs made and at least know that the house won't deteriorate. The monthly payment can be set a little higher for an amount to go toward your equity build up. Depending on how much of a father-in-law deal this is will determine that split. The lender involved if and when you decide the purchase the house from your father-in-law will not allow this to be an un-reasonable amount. Be sure the have the lease purchase spell out this split payment and make it reasonable. In other words if you were going to rent the house for $1,000 per month set rent part at $900 and your equity part at $100.00. All of this depends on how you structure the "lease-to-purchase". You could have it be that what ever is happening to the original loan is happening to your equity build up. Have your father-in-law send a statement to you that matches the statement he receives form his lender to keep this simple. This whole deal depends on whether your father-in-law wants to make an investment in rental property or wants to help you out so you can make the break from renting to owning. It would be great for you father-in-law to just give you a bunch of money but I don't think that would be reasonable. What appears to me to be happening is that your father-in-law is trying to help you as best he can. I just trying to open the door for you to get the most out of his help and give him a way to protect his investment. Good Luck and thanks for using LoanIcons.com!

Question - Should the seller pay the purchaser's Discount Points?

I have a buyer for my house who would like me to pay his discount points. They come to about $5,000. He is going to pay me $5,000 above what the purchase price of the house is to cover it. This way he can finance them. Is this in any way going to come back to bite me? Can I lose out on something by doing this? We are selling by owner, so there are no realtors involved. Any help you can give would be appreciated. Thanks!

Answer:

This is a fine way to help your purchaser buy your home. The only down side could be that your house doesn't appraise for the increased sales price. So long as your house does appraise, then go for it. Make sure your borrower's lender is recommending this or at least aware of it. It's perfectly normal to have the seller pay up to 3% of the sales price for closing cost on a 95% loan and up to 6% on a 90% loan. Good luck and thanks for using LoanIcons.

Question - Can the seller can give a CREDIT AT CLOSING for repairs to be done after closing?

I am in the process of purchasing a home. The house will need to be painted and there are not any storm windows. The house needs a lot of cosmetic work. Someone told me that the seller can give a CREDIT AT CLOSING, which is an amount of money that can be subtracted from the buyers closing costs to be used for such things as painting the house. Is there such a thing? And is it really so simple? Often, when things seem to good to be true, they are.

Answer:

You cannot get a credit at closing for repairs to be made. If you plan for the seller to write you a check that would not be listed on the settlement statement, plan to go to jail because that's a "kick-back" and very illegal. There are two legal ways to accomplish your goals. Have the seller pay your closing cost instead of the repairs or put the repairs in the sales contract. You can have the seller pay your closing cost up to 3% of your loan amount if you are doing a 95% loan. If your doing a 90% loan the seller can pay up to 6% of the loan amount. Maybe this would be enough to cover the repairs you want to do. There is another way to go that would work and the seller could still pay part or all of your closing cost. If you list the repairs in purchase contract they become part of the deal. The down side is the repairs must be completed and inspected before you can close. Your seller won't like that and you can't close before the work is done. It all depends on how much this work really needs to be done. If your earnest money is enough to do the repairs and the house will appraise for the current sales price including the repairs then I would recommend that you list these repairs in the contract. A lot of times people have a hard time completing the repairs they would like to see done once they have purchased the property. There will always be a list of things that need to be done to your house.

Question - What is simple interest and amortizing loans?

What is the difference between a simple interest loan and amortized loan?

Answer:

Simple Interest means that interest is not compounding on top of the loan balance. In other words, interest would be paid at the times due and not added to the balance of the loan. Simple Interest just refers to how the amount of interest is calculated. For example less say you have an interest only loan of $1,000 at 10% to be paid annually for 3 years. You would make a $100.00 payment at the end of the first and second year and then make a final payment of $1,100.00 at the end of the third year or the end of the term.

An amortized loan pays off in time. The payments are set up to be equal and enough to pay the simple interest due and some amount of the loan balance or principal. After each payment, the loan balance is reduced so that the next payment pays more toward the balance. The lower loan balance used to calculate the amount of interest due is less after each payment and is why more of the payment goes toward the loan balance. An example of the same loan above but amortized would be like this:

Balance	Rate	Payment	Interest	Principal	New Balance
1000.00	10%	402.10	100.00	302.10	679.90
697.90	10%	402.10	69.79	332.31	365.59
365.59	10%	402.10	36.56	365.54	0.00

I hope this helps you understand simple interest and how interest only loans and amortizing loans work. Good luck and thanks for using LoanIcons!

Question - Should I burn the lender or is this deal too good to be true?

I am about to purchase a house and the lender knows I will refinance once I sell my current home. The lender has offered me a loan program that seems strange to me. It is a 30 year fixed, 9.0 %, with the lender paying me a 1.75 points credit ($2244). There is no penalty for early payoff. What's the catch? The lender knows I will be refinancing as soon as 5 months. That is not enough time for them to get their money ($2244) back.

Answer:

Wow! I love the question. It's a great deal for you and the loan officer. The guy or institution that ends up buying your loan or the right to collect the 360 payments gets burned. He really was just counting on 84 or so. But you're right, a much bigger number than 5. Lender or servicer screwed on this one. I hate it when someone buys something thinking they are going to make money and instead loses all of it. Oh well, you are probably not working with a bank directly. You are only one in a thousand. Your loan officer isn't running their mouth about something they think might happen. After all, he is only responsible for reporting what he can prove. Hearsay and what you say might happen, is of no concern. Just like when people say they are going to start paying on time. Who cares.

Maybe you should pull the plug on the deal. Find out who's going to end up servicing your loan, call them and explain how your deal is going to cost them over two grand. What do you think?

Another way to look at it is, what would happen if you don't sell and refinance. Are you stuck paying 9% for 30 years?

The real deal is, if the lender or loan officer gets a reputation for doing these type transactions, no one will want to buy their loans. Smart wholesalers put clauses in their contracts that require the originating lender to pay or refund a premium paid if the loan pays off in the first 12 months.

Good example of what you don't know won't hurt you, right?

Question - What effect does my husband's X have on our plans?

I have recently married a man who has been previously married. Before we met, I bought a house by myself. The mortgage on the house was for $125,000. My husband and I are currently living in this house but I am keeping the title to the house in my own name. Not long before my husband and his ex decided to divorce they refinanced their house. That mortgage was for $100,000. As part of the divorce agreement, my husband had to give away all rights to the house. His name was taken off the title to the house and he was given $1 for his share in the house. His name, however, remains on the mortgage and his ex wife refuses to refinance because interest rates are much higher now. My husband and my combined income is approximately $100,000. We plan on remaining in my house for three years and then want to get a larger house when we start having children. We estimate that are combined income at that time will be approximately $150,000 based on expected promotions. We think that the houses we will be interested in will be in the $250,000 to $300,000 range and that we will be able to have a 20% downpayment. Will a mortgage company consider us for that high of a mortgage if my husband is still listed on the mortgage to his "old" house? His ex wife is making payments on the house on time and we are certain that she will continue to do so in the future. How do lenders handle situaions such as these?

Answer:

With your income over $100,000 per year you should be in position to qualify for a house costing $350,000 or so. You could have around $1,500 in other monthly debt which would include your husband's X wife house payment. The X's mortgage might not be showing up on your husband's credit report. When you apply, don't include anything about that loan and if it comes up in the process, just explain he is not responsible for paying it and the lender may decide to not include it or at least allow for higher debt ratios than normal.

It's very important that you make sure his X doesn't make late payments and since your husband is on that loan he has a right to call the lender requesting this information. Good luck and thanks for using LoanIcons!

Question - Should we both apply, he's great and I'm not?

My boyfriend and I are interested in buying a house. Although his credit is A+ (has owned homes before, pays off credit cards each month, has money in the bank), mine is less than perfect including a defaulted student loan (I was a single mom for a long time, and it was tough financially). I have been employed in the same company for 10 years, and most of my loans have been paid off completely except that student loan. How might this effect a mortgage request? Are we better off being unmarried or married?

Answer:

It sounds like your boyfriend could buy a house on his own. You most likely need your income to qualify for a larger loan than he could by himself. Most lenders will average his credit score with yours so you could be OK to both apply. It doesn't make any difference whether you are married or unmarried as the lender will look to the parties on the loan for repayment.

Question - Was my half a "gift" from him?

My boyfriend and I are buying a house together. We want both our names to be on the deed. However, we will not be contributing to the mortgage payments equally (he will pay more than half and will make the down payment ($45,000.) Will we run into any problems with gift tax (e.g. since I didn't contribute to the down payment, my half was a "gift" from him? Or aren't we required to contribute equally?

Answer:

There is no gift yet and there may not be one. When you sell the property and pay off the loan you might make some money as you spit the proceeds. At this point you have a zero cost basis and your partner has a $45,000 cost basis. As you make your part of the mortgage payments you will start a cost basis as you pay down the loan balance. If you were to make one third of the mortgage payment you would then have 1/3 of the interest deduction for taxes each year and a cost basis of 1/3 of the amount the principle loan balance was reduced. To be fair to your partner you should decide how much of the mortgage payment you will make and stick to that percentage. To handle the down payment fairly when you sell, I would suggest that you give your partner the same down payment percentage of the purchase price as the first split of the sales price. In other words let say the purchase price is $100,000.00 and the down payment percentage is $20,000 or 20%. Years later you sell the property for a sales price of $200,000.00. Your partner should receive $40,000 first and then you should split the profit in the same percentage as you made the mortgage payments. Good luck and I hope this helps you set up a way to treat your partner fairly.

Question - What are mortgage points?

Could you please tell me what are mortgage points?

Answer:

Points refer to a dollar amount that is equal to a percent of the loan amount. One point is equal to 1% of the loan amount. So, one point is the same as 1%. In the case of a one hundred thousand dollar loan, one point would be one thousand dollars. A lot of times loan officers quote fees in terms of points. An origination fee should be no more than one point. The term "discount points" are the same in terms of percentages of the loan amount, but are use to buy down the interest rate. You might have heard of a "par rate". Par means zero points. The rate with no points is the par rate. An example today of a par rate is 7.5% with no points. A bought down rate would be 7.25% with one point. The one point is money up front used to lower the ongoing monthly payment or interest rate. If you plan to keep the new loan for a long time, it could make since to pay up front interest or "discount points" to lower the monthly payment. To see if it makes since to pay points or not you need to calculate the monthly payment at the par rate and then calculate the payment at the rate with points and find the difference. Then you divide the dollar amount of points by the difference. This answer is the numbers of months it takes to get back the points or number of months it takes before it make since to have paid points to lower the monthly payment.

I hope this helps. The lenders listed in LoanIcons would be more than happy to help you better understand points and do the calculations for your particular situation.

Question - Should I sign a fee agreement with a broker?

I'm a lender in this site. This guy Blackbune e-mails me his news letter promoting his mortgage site. Then he offers this advice for how lenders should teat a borrower to get a fee.

clipped from his news letter:

Let's talk about fee agreements. I just sold a bunch of them as a result of my last newsletter. Thanks, guys.

But how do you get the borrower to sign? Won't you scare the borrower away. Here's what I do. First I work the snot out of the borrower. I make him fetch this. I make him fetch that. I run him ragged fetching me stuff. Then, before I sit down and do the heavy work of assembling the package, when the borrower is totally exhausted, I explain that the last thing I need to go to Loan Committee is his signature on this little-bitty one page agreement. He's too pooped to start over elsewhere.

For more information about my famous $79 fee agreement, please click here: http://www.blackburne.com/feeagree.html. To order, simply hit your reply key and beam me your address and credit card info.


- Just what the world needs.. More sleazy loan officers!

Answer:

Wow... One down thousands to go... NO - You should not sign a fee agreement for a residential mortgage. Sign, Good Faith Estimates, Truth-in-Lending, applications, disclosures but not fee agreements. Pay up front for appraisals, credit reports, and with much scrutiny a rate comment or lock-in option. In commercial deals, not residential, you might sign a fee agreement or pay an up front fee to get the broker to work on a loan. On residential loans, a decent loan officer should be able to advise you on whether it is worth trying to do the loan or not. It is not up to the loan officer to decline your loan, in fact by government lending guidelines he or she must not discourage the application. But by being advised of qualifying ratios, amount of down payment, and property type and how you fit into all of this, you will know if you should get the loan or not.

Now to the question on whether the world needs any more sleazy loan officers. I could say that it is the sleazy loan officer that gives LoanIcons its value. Blackburn is out of LoanIcons due to his statements about working the snot out of the borrower and that LoanIcons is about recommending mortgage lenders that speed the process, follow-up and deal fairly with their customers. Blackburn is probably a nice guy who came to the residential mortgage business from the commercial mortgage business.

Question - Needs to Consolidate $35,000 Debt.

I'm searching desperately for a lending institution that will assist me in get out of financial debt. I'm a Cpt in the army, but have acquired more debt than I can handle as is. I need to consolidate and put it all into one payment. That will make life easier. I have tried banks, but my credit is sour due to late payments trying to make ends meet. I really hope I can find a lender to lend me about 35,000 dollars just like a car loan. This would eliminate my debt and set me back on my feet. I'm about at that desperate spot in life and don't want to file chapter seven due to my career in the military. Please if you can help or know of someone who can please refer me to them. I'm willing to set an account with a bank and direct deposit the return to guarantee my repayment.

Answer:

You're not the only one in this situation, I'll take your mail to someone else and see if I can get you a response.
I hope you own a home. You need to have a house for a lender to place a lien. There are lenders in LoanIcons that have programs that will do (14% or so) on a 20 year deal, at 125% LTV. LTV stands for "Loan to Value" or the amount of the Loan in relationship to the sales price or value of the home. This means you can get a loan for 1/4 more than your house is worth. Also, being in the military you can buy a home and get a VA loan at 100% LTV.
Your credit worries me - Borrow the money you need to pay the bills! Do this of course if only absolutely necessary. You must have current decent credit to consolidate it. Pay your bills timely. VA loans are not for 'slow credit problems', but for 'low or no down payment problems'. Protect your credit, and as a Veteran, you can buy a home with no down payment and make the seller pay the points. If the credit problems already exist, a FHA loan might be answer.

Question - Loan turned down for low Credit Score.

I was recently relocated to Texas with the company I work for. Unfortunately, I was just turned down for a new mortgage. The company I was working with said they could try the Money Store, but the interest rates would be around 10 1/2%. They used some sort of point system to qualify people, we had an average score of 616, they said the cut off was 620. I'm looking for options - I need a new mortgage, but don't want to pay that high of an interest rate. We are looking for a 3-1 ARM, can put between 15 % and 20% down and are looking at homes between $150,000 and $210,000. Do you have any suggestions for companies that might be able to help. Thank You!

Answer:

You should be able to do better. A credit score of 616 is not in it self a huge problem. Both the agencies for conforming loans, FNMA and FHLMC will buy loans with credit scores that low. FHLMC will not buy a loan with a credit score lower than 580. Their guideline is 620, so loans less than that need something to offset the low score. (ie., job history, debt to income ratios, down payment, cash reserves, reasons for the credit and so on) Call and shop around using LoanIcons. A 616 credit score alone should not keep you from getting a conforming loan. There are lenders listed in LoanIcons that can help you. Use ILoan to help you find the right program, points, and closing cost to apply for based on your particular situation.

Question - A question about Hazard Insurance.

We are in the process of purchasing a home in Port St. Lucie, FL. Closing is scheduled for January 15, 97. Our mortgage is already taken care of, but we are currently shopping for hazard insurance. Other types of insurance will also be needed. Do you have any suggestions or contacts.

Answer:

State Farm always does a great job taking care of the needs of both the lender and insured. It is first important to make sure you are covered or insured for at least the loan amount. This somewhat protects you that if your house was lost to fire, you would have money to pay the off the lender. Notice, I didn't say replace your house. Did your part or equity go up in smoke? Maybe. As I understand it, State Farm insures the house for replacement cost or loan amount whichever is greater. This insures that you get your home rebuilt. I have also seen State Farm process a claim. Check around, but I think State Farm is the answer.

Question - What is the differences between Loan programs?

What are the differences between the different loans, i.e. fixed, adjustable, 7 year adj. and all the other terms you guys use?

Answer:

30 Year Fixed. A simple-interest, 30 year fixed-rate loan. This program is offered by both Fannie Mae and Freddie Mac. If stability is important, this may be the program for you. Also, both agencies offer this program in an 'affordable' version requiring as little as 3 percent down, or 97 percent financing. This program is designed to help the first time home buyer and has income limits. If you do not fit the criteria, you may be required to make a larger down payment. 95 percent financing is available up to $207,000 or the conforming loan limit. 15 Year Fixed. This program is exactly like the 30 year fixed-rate program except that the loan amortizes over 180 payments rather than 360. The interest rate offered is about one-half point less than the rate offered on a 30 year fixed-rate loan. This loan will save you a substantial amount of money over the long run if you can afford it. The monthly payment is about 26 percent higher for 15 years, but it's definitely worth it because your loan is paid off in half the time.

ARM (Adjustable Rate Mortgage) Loans. There are several variations on this program - 1 year ARM, 5/1 ARM and 7/1 ARM. The loan term for all three ARMs is 30 years; however, after an initial period, (one year for the 1 year ARM, five years for the 5/1 ARM and seven years for the 7/1 ARM), the interest rate is adjusted at each anniversary date. This annual rate adjustment is based on current interest rates or some index, (usually the one year U.S. Treasury Bill). An additional amount, called the margin, is added to that base rate. (New Rate = Index + Margin). There are interest rate caps on these programs. For example, a 2/6 cap program means that the interest rate cannot rise more than two percentage points per year and never more than six percentage points higher than the initial rate. This program is particularly attractive if you are looking for the most affordable payment right now - with the expectation that you will be able to afford a higher payment in the next few years.

5/25 - 7/23. This program is a simple interest loan, amortized over 30 years with a one-time adjustment (called a balloon reset) at the end of either five or seven years. A balloon reset is actually a conditional right to refinance for the remaining term of the loan. The loan is at a fixed interest rate for the first five or seven years and then adjusts one time for the remaining 25 or 23 years. There are four conditions that should be met in order to allow the adjustment or refinance:

1. You must still occupy the home as your main house or primary residence.
2. You have not paid your mortgage payment late (over 30 days) in the proceeding 12 months.
3. You have not further encumbered the property.
4. The new adjusted rate will not be more than 5% higher than the initial rate.

A cautionary word about this type of loan program: You could find yourself in a situation at the end of 5 or 7 years in which you cannot meet the refinance conditions and might have to sell your home to pay off the mortgage. Do not take advantage of this program's lower initial interest rate unless you are confident about your long-term financial condition.

Use ILoan to help you find the right program, points, and closing cost to apply for based on your particular situation.

Question - What is a 'prequalification'?

Your industry seems to use the term 'prequalification' a lot. What is pre-qualified? Is it before you are qualified. Before you know anything worth while. No wonder people get so confused about the mortgage process. Do you have to get prequalified before you can get qualified?

Answer:

Prequalified is knowing that you could produce the necessary documentation to meet the guidelines of a particular loan program. It's really the first step in the process of getting a loan. Once you have selected the right loan program for your circumstance; income, down payment, and new monthly payment, then you can select the lender that offers that loan program at the greatest convenience and best rate. Lenders freely give away the service of pre-qualification. With out it, there would be no way to evaluate their deal. Plus it's what Loan Officers do best. Use the prequalification service to insure you understand the loan program you have selected and that your getting the best deal. ILoan to helps you find the right program, points, and closing cost to apply for based on your particular situation.

Question - How much do I need to buy $100000 house?

My husband just graduated from collage. We are planning to buy our first house. However, he doesn't have any deposits in his bank account. How much usually does he need in his bank account to show to mortgage company to buy about $100000's house?

Answer:

Both Fannie Mae and Freddie Mac offer loan programs especially designed for the first time home buyer. Fannie Mae's program is called a 'Community Home Buyer' and Freddie Mac's program is called 'Affordable Gold'. You can find lenders in LoanIcons offering these programs in the Mortgage section. Both programs minimum required down payment is 3% of the sales price. In your case that would be $3000.00 dollars. There would be a cost to close the mortgage transaction and you would need to have the seller agree to pay those costs. The loan program allows for the seller to pay up to 3% of the loan amount to cover the closing cost. You need to have some cash reserves after closing at least equal one new monthly mortgage payment. The monthly payment on a $97000 30 year fixed rate loan at 7.625% rate, including taxes ($1,000 per year), insurance ($500 per year), and mortgage insurance ($55 per month) is 866.55. So, you need a minimum of $3866.55 in the bank. You could not qualify for this type of low down payment loan program if you make above average income. In Georgia you would fall out if your household income exceeded $48,700. You need to be making around $35,000 a year with no more than $300.00 in other monthly debt like car payments. There are many lenders in LoanIcons that offer programs that could help you. Use ILoan to help you find the right program, points, and closing cost to apply for based on your particular situation. Good Luck.

Question - How do you calculate monthly payments?

It takes to long for me to sign on, go to the Web, find a mortgage calculator and load it just to calculate a mortgage payment. Is there a better way or some mortgage program some where I can download?

Answer:

Use ILoan to help you find the right program, points, and closing cost to apply for based on your particular situation. It's not that hard to write a spreadsheet that will calculate principal and interest or (PI) payments. Below is a formula you can use.

PI=( Interest Rate /((1-(1+( Interest Rate /12)*0.01)^- Number of Payments )/( Loan Amount /12)*0.01))/10000

Remember that a mortgage payment usually includes escrow payments for taxes and insurance. Add one twelfth of the total annual taxes and insurance to derive your total monthly payment or (PITI).

Question - Types of Loans?

I have seen the term "Conforming Mortgages" and "Non-Conforming Mortgages": - What is the difference?

Answer:

Conforming loans are the 'Standard', lowest rate, best credit, normal loan amount (ie. under $207,000), regular 1st mortgage loan. Non-conforming loans either exceed the $207,000 loan amount or the credit standards for a great rate 1st mortgage loan. If the loan amount is the only problem then the rate is worse by about a half a point. If your problem is bad credit, then your rate depends on how bad your credit is.

Question - Should I refinance for a shorter term?

I have 25 years left on an ARM with 105,000 balance. I want to refinance to a 15-year fixed mortgage. Would it be more beneficial for me to go with my current lender, as they are offering a $200 "valued customer" decrease in closing costs, and also in comparing their rates, they are very comparable.... This should be an easy call, but I'm not sure if I'm seeing the big picture. By the way, my ARM is at about 7.75 right now and that's about the rate I would refinance at. Any thoughts on this would be helpful. (I definitely want a fixed rate 15-year mortgage. I had not expected to live in this house for more than three years but now will be staying for another eight years). Thanks a lot.

Answer:

You do have an easy call. As the saying goes, "Time is Money", and that can be proved in a big way with a mortgage loan. You have realized that paying on a thirty year term is only good for affordability. In any loan it is wise to make prepayments to principal, as this will shorten the term and thus save you thousands of dollars in interest down the road. If you had 25 years left on a fixed rate loan at 7.75%, I would stay you should say put and start making additional principal payments now. In affect, run your own amortization schedule (note: one you can afford). Some people feel the need to have a fifteen year loan knowing that if left to them they won't make the prepayments - or need the lender to require the payment. Since you have a ARM and plan to stay in the house for eight years, I think you should refinance. If you know you can afford the higher payment, I think you should get a fifteen year loan. The rate on a fifteen year loan is about a half a point lower than a thirty year rate - today about 7.75%. You need to check around for the best deal. Your closing cost shouldn't exceed $2,800.00 with or without the $200.00 "valued customer&quote. Use ILoan to help you find the right program, points, and closing cost to apply for based on your particular situation. Good luck.

Question - How do you finance building a house?

My wife and I are thinking about building a home in Maryland. I talked to a lender today who claims I need a construction loan as opposed to a loan for a house which is already built. Is this true? I've never heard of such a thing. Also, the builder is offering us a finance package that offers a 5 year fixed which then converts to a 1 year arm of 7.25% with no points. is this a good deal? They offer a myriad of other finance packages but this one best fits my situation.

Answer:

I like the builders deal for your permanent financing. Can the builder do the financing for the construction? If not, someone must. For subdivision houses, the builder usually has a number of houses under construction and finishes a house once the borrowers are approved. If you are going to build a house then you must pay the contractors as the work is completed. Either you have the cash for the project or not. If not, you need a construction loan. A residential first mortgage loan is made on completed improvements to a property. The mortgage lender considers the collateral as a finished asset. (ie. nothing needs to be done to the property to make it sellable at its' sales price).

Question - Wants to buy, but credit history?

I am looking for some advice. My husband I have the opportunity of a lifetime to buy a home from a family member. We have been pre-qualified for a $154,000 mortgage, however, when they pull my credit history, they will see that I have a poor one. When I was in college, and for a period of time afterwards, I was untimely with some of my credit card payments due to some financial problems. My father had lost his job, and it ended up being a struggle between all of us. I am now married and have a very stable job, with my finances completely under control. However, I'm concerned that my recent credit record will influence any mortgage company that we apply to.
Are there any mortgage companies or lenders out there that will give a young, financially stable couple a loan? I hate to be continually scrutinized for an uncontrollable past.

Answer:

Your problem may not be as bad as you think. Past credit problems that occurred once because of uncontrollable events that are truly past (ie. two years maybe one) shouldn't keep you from getting a conforming 1st mortgage loan. If you have made late payments within the last year and have experienced problems before, you probably won't be able to get a conforming loan. There are tons of programs out there for people that continue to have credit problems. These programs are referred to in the mortgage industry as A,B,C loans. What happens is the underwriter simply counts the number and type of late payments and then grades the result. A few late payments and you're an A loan, a few more and you're a B, and so on. There are even D loans for people that have a general disregard for their credit standing. The worse the credit, the worse the interest rate, and the more down payment you would have to make.

Since you have a once in a lifetime opportunity, you need to apply with a lender that offers both conforming and non-conforming loans. Try for a conforming loan explaining your past credit problems, (ie. long time ago, back when you depended on someone else to pay your bills, back before you were married, before your life turned around , before you got your great job). Your lender should have your credit report within a few days of your application and be able to give you an opinion as to weather you will be able to get a conforming loan vs. a non-conforming loan. If you end up getting a A, B, C, loan try and have any prepayment penalty waived so you can refinance as soon as you get your problems behind you. There plenty of lenders offering both type loan programs in LoanIcons' mortgage section, use ILoan to help you find the right program, points, and closing cost to apply for based on your particular situation.

Question - Rates?

How are rates determined?

Answer:

Fannie Mae and Freddie Mac basically set the market for the conforming loans they buy. After that, it's up to the lender. Most lenders think of a 30 year fixed rate 1st mortgage loan as lasting seven years before the owner either sells or refinances. This being the case, pricing is usually done off the ten year treasury bill.

Question - What is a Closing?

When you buy a house is bought the transaction is called a closing. Why is that? What is a closing?

Answer:

A closing is the process by which title to the property is transferred and the loan is finalized. This occurs once the loan is approved, title work is complete, and no problems prevent completion of the transaction.

A closing in most states consists of all parties to the transaction meeting to execute necessary documentation under the direction of an attorney chosen by the lender. The closing attorney represents the lender if a loan is involved, and either buyer or seller in a cash sale. Any party to a closing may hire an attorney to represent them personally.

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