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Closing costs - where can I obtain information? |
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Please contact us to get an estimate on closing costs. Closing costs will vary from lender to lender. |
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What is the worth of a house? |
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A house is ultimately worth whatever you are willing and able to pay for it. All other considerations are only estimates of value. A licensed appraiser will usually be hired to provide his/her objective analysis of the home's worth.
Tha appraiser takes into consideration construction quality, square footage, design, floor plan, similar homes in the neighborhood as well as the availability of public transportation, shippping and schools. Lot size, topography, view and landscaping ar eincluded in the appraisal of the property.
The real estate broker's or agent's estimate of a home's market value, based on similar homes int he neighborhood, is called a comparative market analysis. You can do this cost comparison yourself by checking recent sales of comparable properties in similar neighborhoods by looking in the town's public records. To find these records you can go to your local assessor's office, check through private real estate information companies, or look on the internet. |
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How do you determine the home's value? |
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A licensed appraiser will provide a professional estimate of a property's market value based on recent sales of similar properties along with the location, square footage and the construction quality. There is a fee for this service which your mortgage broker will explain to you. This comparative market analysis is often required by the lender prior to your obtaining the mortgage. |
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Market Value and Appraised Value - how do they differ? |
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The appraised value of a home is a certified appraiser's opinion of the worth of the home at a specific moment in time and is required by lenders as part of the loan application process.
Market value is the price the house or property will sell for at any given moment in time. The comparative market analysis is an estimate of market value based on sales of similar properties as performed by a real estate agent or broker.
Both the appraisal and the comparative market analysis are accurate ways to determine the worth of the home. |
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To estimate value, what standards are used by appraisers? |
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Several factors are used to estimate the value of a home. These factors include the size of the home and its square footage, the condition of the home and the local neighborhood, sales of similar properties, historical information, sales perfornance and indices that forecast future value. |
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When should you refinance your home? |
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The decision to refinance is contingent on how long you plan to retain ownership of the home, if you have to pay fees to refinance, and how long you still have to pay off the current mortgage.
If you plan to resell the house shortly, refinancing may not be financially beneficial to you. If you are more than halfway along paying your current mortgage, you will not gain a lot by refinancing. However, if you plan to own the house for at least 5 years you will probably be able to recoup any refinancing costs you incur and be able to realize true savings on the lowering of your monthly mortgage payment.
Many lenders allow you to include the costs of refinancing in the new mortgage note and still reduce the monthly payments. You should consult with your lender or financial advisor before making the decision to refinance. |
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Refinancing - where do I obtain information? |
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Information on refinancing may be obtained fromt he following booklet: "A Consumer's Guide to Mortgage Refinancings" from the Federal Reserve Bank of San Francisco, Public Information Department, P.O. Box 7702, San Francisco, CA 94120; or call 415-974-2163 to order. |
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Explain the property tax to me. |
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Most homeowners in the United States pay a property tax on the real estate they own. This tax varies depending on the property's current market value and the tax rate of the city or town. These annual assessments by the city/town or county authorities help to pay for public services and are calculated annually. |
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May I deduct property taxes? |
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Property taxes on all real estate, including those assessed by state and local governments and the local school district are fully deductible on current income taxes. Please consult your accountant or tax advisor on this matter. |
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May I deduct the property tax on my second home? |
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Mortgage interest and property taxes are deductible on your second home if you itemize your taxes. Your accountant or tax advisor can assist you on this matter. |
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What is meant by a low downpayment? |
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The standard downpayment is 20%. A low downpayment is anything less than this. When obtaining a mortgage with less than a 20% downpayment, you often need to obtain private mortgage insurance, also called PMI. |
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Is there a no-downpayment home loan? |
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Yes, 100% financing is becoming more and more common. Please contact us to discuss these options. |
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What are the benefits of a 15-year vs. a 30-year loan? |
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The interest rate and the total loan amount affect the payments and overall savings between the 15 and 30-year loan. As an example, use a $100,000 loan. 7.25% interest rate with monthly payments of $912,86 for a 15-year loan. For a 30-year loan, the monthly payment on the same $100,000 loan would be $682.18.
A 15-year loan offers the consumer the ability to save a considerable amount of money over the life of the loan meaning that the total interest paid on a 15-year note is considerably less than on a 30-year note.
Keep in mind that when calculating the 15-year note vs. the 30-year note that the overall savings depends on several circumstances, such as the borrower's changing income status. |
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What is meant by guaranteed replacement cost insurance? |
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Guaranteed replacement insurance is a comprehensive policy. It may cost more but promises to cover complete costs - less deductible - of replacing your destroyed home. Limits on these policies are not as common as the complete coverage is more explicit. |
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Am I requried to pay PMI on low-downpayment home loans? |
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Private mortgag einsurance, PMI, is usually required on loans with less than a 20% downpayment. The Homeowners Protection Act states that PMI must be dropped on any loan taken after July 29, 1999 if it has a 78% loan-to-value ration. |
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Can you suggest what type of home insurance I need to obtain? |
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The standard homeowners insurance policy may protect the owner against fire, lightning, wind, storms, hail, explosions, riots, aircraft wrecks, vehicle crashes, smoke, vandalism, theft, breaking glass, falling objects, weight of snow or sleet, collapsing buildins, freezing of plumbing fixtures, electrical damage and water damage from plumbing, heating, or air conditioning systems. This information is obtained fromt he Insurance Information Institute which is a Washington, DC based nonprofit group for the insurance industry.
You should, however, consult your insurance agent for suggestion regarding the exact coverage you need. |
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Where are interest rate headed? |
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At any point in time, no one knows for sure whether rates will rise or fall. The Federal Reserve Board places some public policies but, beyond this, there are no laws that govern mortgage rates.
In the past, laws were used to prevent lenders from charging high interest rates when lending money. In certain states where these usury laws exist, banks, thrifts and other financial institutions are exempt from the law.
Interest rates are now governed solely by the financial markets and by the Federal Reserve Board's action, neither of which can be predicted. |
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APR, what is it? |
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APR, Annual Percentage Rate, is the relative cost of credit as determined in accordance with Regulation Z of the Board of Governors of the Federal Reserve System for implementing the federal Truth-In-Lending Act.
The APR is the actual yearly interest rate paid by the borrower, figuring in the points charged to initiate the loan and other costs. The APR discloses the real cost of borrowing by adding on the points and by factoring in the assumption that the points will be paid off incrementally over the term of the loan. The APR is usually about 0.5% higher than the note rate. |
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How do I choose between fixed and adjustable rates? |
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Adjustable rate mortgages, AR<'s, involve some risk as the rates may increase. A fixed rate loan offers protection against rising interest rates but the borrower is locked into the initial rate if interest rates drop.
According to statistics, buyers who have chosen ARM's since 1981 have saved thousands of dollars. For a while, the percentage of home buyers applying for ARM's rose significantly and then buyers and homeowners once again started to used fixed rate loans.
Choosing a fixed or an adjustable rate mortgage is a personal choice. Fixed rate mortgages offer stable, uniform payments; ARM's offer lower initial payments but no security that they will stay low.
The buyer needs to consider how long they plan to own the home when choosing thetype of mortgage they wish to utilize. If you only plan to own the property for a few years, an ARM makes perfect sense; if you plan to own the property for the long term, then the fixed rate may be preferable. |
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Mortgage lock-in - what is its value? |
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Locing in a mortgage rate with the lender is one way to ensure that same rate will be available when you need it to close your purchase.
Lock-ins make sense when borrowers expect rates to rise during the coming 30 to 60 days, the usual length of time lock-ins are available.
A lock-in given at the time of application is preferable as it may take the lender several weeks or longer to prepare the loan application.
Nonetheles, you may find that the lender requires the borrower to pay lock-in fees to assure a particular rate and terms. You must be sure to check that the rates and points are guaranteed and the lock-in period is long enough. Should your lock-in period expire, many lenders will offer the loan based on the prevailing interest rate and points.
Some lenders have preprinted forms to set out the exact terms of the lock-in agreement while others may only make an oral agreement for the lock either over the telephone or at the time of the application. |
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How can I lock-in my interest rate? |
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By locking-in the mortgage rate you ensure that the same rate will be available when you require it to close the sale of your property.
You may request a lock-in when you expect the rates to rise during the next 30 to 60 days, the normal length of time the lock-in is available. |
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Is a lock-in advisable on a home loan? |
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When you lock-in the mortgage rate, you are ensuring that rate to be available to you when you close the deal on your property.
The lock-in is advisable when the borrower expects the rates to rise during the upcoming 30 to 60 days, the normal length of time lock-ins are available. |
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Are there benefits to pre-paying the mortgage? |
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You may save thousands of dollars and cut years off the length of your loan by making additional payments towards the principal balance.
Principal payments over and above the minimum monthly amount required by the terms of the mortgage constitute a partial prepayment of the mortgage. Each mortgage has specific terms describing how and when prepayments may occur. Read your note to see if there is a penalty incurred for prepayment of your particular loan.
The total savings potential also depends on how long you plan to stay in your home. Borrowers who plan to move in the near future will not realize as significant a savings as do people who pay ahead of schedule until they own the home free and clear.
Your lender can provide you with specific ansers as to how the prepayment plan will shorten the life of the loan and what interest savings can be expected. |
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Are there any benefits to paying my mortgage bi-weekly instead of montly? |
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Some people choose to pay off their home loan early and reduce the interest charges may decide on a biweekly mortgage. Monthly payments are divided in half, being payable every two weeks.
Due to the fact that there are 52 weeks in a year, the program results in 26 half-payments or the equivalent of 13 monthly payments per year instead of the standard 12. Using this biweekly system, a homeowner with a $70,000, 30-year biweekly mortgage at 10% interest could save $60,000 in interest and pay off the balance in less than 21 years. |
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What does my credit report say? |
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To obtain a copy of your personal credit report, call one of the following three main national credit reporting agencies:
Equifax 800-685-1111
Experian 800-311-4769
Trans Union 312-408-1050
These offices will provide instructions on how to read their report and how to dispute any inaccuracies you may find in it. |
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What are "credit scores"? |
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Credit scores, also known as F.I.C.O. scores, are used by lenders to judge how "credit worthy" you are. You're marked on a scale that typically runs from 300 to 850. The scale is constructed from information in millions of credit reports. The completed information is then analyzed along with your credit habits. The more traits you share with people that have proven to be good credit "risks" the higher your score and the lower your interest rate.
Each lender has different cut off points for what is acceptable credit. Generally, excellent credit is 720 and above. Good credit starts at 680 and goes to 719. A credit score of 620-679 needs a closer look. Higher risk scores are 580 through 619 and below 580 indicates no credit or limited credit.
MORTGAGE/FAX has an array of mortgage products that fit Borrowers with excellent credit or limited credit. When lenders consider borrowers they look at credit, bank and saving account history, and employment and income history. |
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What If I find An Error On My Credit Report? |
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There is no fast or simple way to repair damaged credit that took years to occur and the law allows negative information to appear on the credit record from seven to ten years.
Credit problems ar ethe main reason that potential home buyers are denied a loan. To clear up your credit you should first obtain a copy of the credit report and make sure that the negative credit inofrmation is truly accurate. Some states now have mandatory timelines to respond to your inquiry or to remove the mistake. For a copy of your report, call one of the following three main national credit reporting agencies; Equifax at 800-685-1111; Experian at 800-311-4769, or Trans Union at 312-408-1050.
These offices will provide instructions on how to read their report and how to dipute any inaccuracies you may find in it.
If your credit report is correct, take care of any outstanding delinquent obligations first. Lenders usually won't consider any borrower who has had a delinquent payment in the past year. |
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What exactly is considered bad credit? |
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There are a number of types of credit report problems that would cause a lender to reject your loan application.
These problems include: missing a credit card payment, defaulting on a prior loan, and filing for bankruptcy in the past seven years or not paying your taxes. Other items against you include a judgement filed against you (possibley for non-payment of spousal or child support) or any collection activity.
If you consider your credit report to be in error, experts will tell you to take it up with the company or organization claiming that you owe them money.
If you've been late in paing your bills, you should pay them in full and on time for six months to a year to prove to the lender that the late payments were an abnormality. |
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What do I do about bad credit? |
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Credit problems ar ethe main reason that potential home buyers are denied a loan. To clear up your credit you should first obtain a copy of the credit report and make sure that the negative credit information is truly accurate. Some states now have mandatory timelines to respond to your inquiry or to remove the mistake. For a copy of your report, call one of the following three main national credit reporting agencies; Equifax (800-685-1111), Experian (800-311-4769), or Trans Union (312-408-1050).
These offices will provide instructions on how to read their report and how to dispute any inaccuracies you may find in it.
If your credit report is correct, take care of any outstanding delinquent obligations first. Lenders usually won't consider any borrower who has had a delinquent payment in the past year. |
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How do I clear up my bad credit? |
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There is no fast or simple way to repair damaged credit that took years to occur and the law allos negative information to appear on the credit record from seven to ten years.
Credit problems are the main reason that potential home buyers are denied a loan. To clear up your credit you should first obtain a copy of the credit report and make sure that the negative credit information is truly accurate. Some states now have mandatory timelines to respond to your inquiry or to remove the mistake. For a copy of your report, call on eof the following three main national credit reporting agencies: Equifax (800-685-1111), Experian (800-311-4769), or Trans Union (312-408-1050.
These offices will provide instructions on how to read their report and how to dipute any inaccuracies you may find in it.
If your credit report is correct, take care of any outstanding delinquent obligations first.
Resource: "Rebuild Your Credit: Law Form Kit," Nolo Press, Berkley, CA 1993 |
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Can bad credit prevent someone from getting a home? |
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There are numerous types of credit report problems, which may or may not be your fault, which would cause a lender to reject your application for a loan.
These problems include: missing a credit card payment, defaulting on a prior loan, and filing for bankruptcy in the past seven years, or not paying your taxes. Other items against you include a judgement filed against you (possibly for non-payment of spousal or child support) or any collection activity.
If you consider your credit report to be in error, experts will tell you to take it up with the company or organization claiming that you owe them money. |
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How long do bankruptcies and foreclosures stay on a credit report? |
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Bankruptcies and foreclosures can remain on a credit report for seven to ten years.
Some lenders will consider a borrower earlier if they have re-established good credit. The circumstances surrounding the bankruptcy can also influence a lender's decision. For example, if you went through a bankruptcy because your employer had financial difficulties, a lender may be more sympathetic. If, however, you went through the bankruptcy because you overextended personal credit lines, living beyond your means, the lender probably will be less inclined to be sympathetic and flexible with your loan application. |
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How much does a previous foreclosure affect current credit? |
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A property foreclosure is one of the most damaging events in your credit history. In terms of the effect on credit history, a deed in lieu of foreclosure or a short sale is not as adverse an event as is a forced foreclosure. |
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What can I do if I have bad credit? |
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While some people may rebound from a foreclosure to buy another home within several years, credit problems stemming from a foreclosure can continue much longer for others.
Real estate experts recommend that you be forthright with your lender in discussing these issues. If yur bankruptcy resulted from losing your job due to the employer's financial difficulties, a lender probably will look at your situation far more favorably than if the bankruptcy was caused by overextended credit cards.
For more information you may wish to obtain: "Rebuild Your Credit: Law Form Kit," from Nolo Press, Berkeley, CA; 1993. |
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