www.overtonfactor.com
Username:
 
Password:
Search All RealMega:

Powered By RealMega and MonsterDaata
.RealMega Home
.Monster Daata Home
.Neighborhood Find
.Monster Domain
.Mega Community
.Real Office
.Real Vision
.Real Venue
.Mega News Network
.Real Advisors
.Home Responder
.Mega Factor
.Factor Preview
.Real Neighbor
.Flash Mega
.Real Profiles 
.Multi MLS Search
.Real Owner
.RealMega Presentation
.Buy/Sell Multimedia
.Mega Hosters
.RealMega Site Map
.RealMega Site Index
.RealMega Database
.Contact Information
.Press Release
.RealMega 1 Blimp

Join RealMega
.Free - Join RealMega
.My RealMega
.Contact RealMega
.Send Us Feedback
.Recommend Us
.Mega FAQ
.Link to RealMega
.Mega Banner Links
.Mega Guestbook
.Mega Guestmap
.Mega Forum Page
.Mega Connects
.Make RealMega Home
.Spam Policy
.Advertising
.Terms of Use
.Privacy
.Recommend Us Cards

Entertainment
Entertainment Trivia Free Cards Horoscope Planetarium
Free Entertainment
From RealMega

Monster Domain Tools
Monster Domain Tools
Domain Names & Other
Related Products

Shopping
Shopping Books Real Estate School Web Hosting Domain Names Values
Your One Stop Shop
From RealMega!

Make Us Your Home!
Bookmark Us
Make RealMega My Homepage!

To see how to make RealMega the first page you see when you open up your web browser on your computer Click Here

Mega Selling
Mega Selling
Useful Homesellers Information

Mega Buying
Mega Buying
Useful Homebuyers Information

Real Vision / Real Daata
Real Vision and Real Daata
Real Vision & Real Daata

Real Office
Real Office Tools
Virtual Office Resources

Including:
Calendar
Address Book
Notepad
To Do List
and much more...

Mega Funnies
Image of the Hour

Send Your Friends One Of Our Free Mega Funnies Cards!
Click Here

Real Calculator
Real Calculator
12 Step System

Swami Knows
Swami Knows
Entertaining Advice

Mega Trivia
Mega Trivia Games
Entertaining Trivia

Mega News Network
Mega News Network
Netowrk News Source

Financial Information
Mega Financials
Financial Information

Overton Factor
Lowell Overton Lowell Overton
Lets Talk About Home Ownership

Mega Glossaries
Mega Glossaries
Mega Glossary Terms

Real Horoscope
Aries - From 21 March to 19 April Taurus - From 20 April to 20 May Gemini - From 21 May to 21 June
Cancer - From 22 June to 22 July Leo - From 23 July to 22 August Virgo From 23 August to 22 September
Libra - From 23 September to 23 October Scorpio - From 24 October to 22 November Sagittarius - From 23 November to 21 December
Capricorn - From 22 December to 19 January Aquarius - From 20 January to 18 February Pisces - From 19 February to 20 March

Weather
Mega Weather

Free Local and National Weather Reports!

Enter Your City, State, State or Zipcode:


Current Moon Phase
Current Moon Phase

World Weather From Mega Forecast

Real Book Source

Real Book Source

  
HOME FINANCING PRIMER
Printer Friendly Format | Tell A Friend | TeamOverton1 Media | OvertonFactor Home

HOME FINANCING PRIMER

THE HOME FINANCING PROCESS UNCOVERED

QUESTION: Do you have basic home financing process knowledge?

The following answers may help.

How large a mortgage will you be able to get?

A general rule is that you usually can qualify for a mortgage loan of two to two and one-half times your household's income. For example, if your family has an income of $30,000 a year, you can usually qualify for a mortgage of $60,000 to $75,000.

Lenders use many other factors to determine how large a mortgage they will give you. For example, lenders generally prefer that your housing expenses (including mortgage payments, insurance, taxes, and special assessments) not exceed 25 to 28 percent of your gross monthly income. Other long-term debt (monthly payments extending more than 10 months) added to your housing expenses should not exceed 33 to 36 percent of your gross monthly income. Federal Housing Administration (FHA) and Department of Veteran Affairs (VA) mortgage loan percentages may vary.

In addition, lenders want to know about your employment and credit history. This includes finding out about your job and income and how well you handled and repaid loans in the past.

Legal safeguards exist to ensure this information is used fairly. For example, the Fair Credit Reporting Act states that lenders must certify to the credit bureau the purpose for which this information is sought and that it will be used for no other purpose. The Equal Credit Opportunity Act prohibits discrimination in lending based on sex, marital status, race, national origin, religion, age, or because someone receives public assistance.

How much money will you need for a down payment and closing costs?

Lenders usually expect you to be able to make a down payment of between 10 and 20 percent of the house's price and to pay closing costs, often three to six percent of the loan amount. If you make a down payment of as little as five percent but less than 20 percent, the lender will require you to pay for private mortgage insurance. (Requirements for VA or FHA loans may differ.) Under the federal Real Estate Settlement Procedures Act, the lender must provide you with information on known and estimated closing costs.

How do you shop for mortgage loans?

Mortgage packages vary widely, and it is important to investigate several options to find the one best for you. If, for example, you are using a real estate agent or broker to shop for a home, you may want to consider their suggestions about lenders and mortgage packages. Check real estate or business newspaper sections, which may include brief tables on mortgage availability. Look in the Yellow Pages under "Mortgages" for a list of mortgage lenders in your area. Call several lenders for rates and terms on the type of mortgage you want. In addition, consider trying a commercial "computerized mortgage shopping service”, although such a list may reflect only a selection of lenders and you may be charged a fee.

Compare the mortgages offered by several lenders before you apply for a loan. Most lenders require you to pay a fee when you file your loan application. The amount of this fee varies, but it can be $100 to $300. Some lenders do not refund this fee if you are not approved for the loan, or if you decide not to accept the loan terms offered. Before you apply, ask the lender whether they charge an application fee, how much it is, and under what circumstances and to what extent it is refundable.

What kind of mortgage should you select?

There are two major types of mortgage loans -- those with fixed interest rates and monthly payments and those with changing rates and payments. However, there are many variations of these plans on the market, and you should shop carefully for the mortgage that best suits your needs.

Common fixed-rate mortgages include 30-year, 15-year, and bi-weekly mortgages. The 30-year mortgage usually offers the lowest monthly payments of fixed-rate loans, with a fixed monthly payment schedule.

The 15-year fixed-rate mortgage enables you to own your home in half the time and for less than half the total interest costs of a 30-year loan. These loans, however, often require higher monthly payments.

The bi-weekly mortgage shortens the loan term from 30 years to 18 to 19 years by requiring a payment for half the monthly amount every two weeks. While you pay about 8 percent more a year towards the loan's principal than you would with the 30-year, one-payment-per-month loan, you pay substantially less interest over the life of the loan. Keep in mind, however, that with shorter-term loans, you trade lower total costs for smaller mortgage interest deductions on your income tax.

Mortgages with changing interest rates and/or monthly payments exist in many forms. The adjustable rate mortgage (ARM) is probably the most common, and there are many types of ARM loans available. The ARM usually offers interest rates and monthly payments that are initially lower than fixed-rate mortgages. However, these rates and payments can fluctuate, often annually, according to changes in a pre-determined "index" -- commonly the rate of return on U.S. Government Treasury bills.

Some adjustable loans, for a fee, contain a provision permitting you to convert later to a fixed-rate loan. Another type of mortgage loan carries a fixed-interest rate for a number of years, often seven, before adjusting to a new interest rate for the remainder of the loan. A "buy down" or "discounted mortgage" is another type of loan with an initially reduced interest rate, which increases to a higher fixed rate or to an adjustable rate usually within one to three years. For example, in a "lender buy down," the lender offers lower monthly payments during the first few years of the loan.

What features should you compare with different mortgage loan packages?

Probably the single most important factor to look for when shopping for a home mortgage is the annual percentage rate, or the "APR”. The APR includes all the costs of credit, including such items as interest, "points" (fees often charged when a mortgage is closed), and mortgage insurance (when included in the loan). Lenders must disclose the APR under the Truth in Lending Act. The lower the APR, generally the lower the cost of your loan. Advertisements that state other rates such as "simple" interest rates do not include all the costs of the loan.

If you shop for a mortgage loan with interest rates or payments that change, be sure to compare:

  • Initial interest rates;
  • The "cap" -- or how much the interest rate can increase/decrease over the life of the loan, and how much the rate can change at each adjustment;
    how often the interest rate can change;
  • How much and how often the monthly payments and term of the loan can change;
  • What index is used to determine the rate changes;
  • What "margin" is used -- or how much additional a lender can add to the adjusted interest rate;
  • The limits, if any, on "negative amortization" -- the loss of equity in your home when low monthly payments do not cover fully the interest rate charges agreed upon in the mortgage contract; and

    Any "balloon" payments -- a large payment at the end of your loan term, often after a series of low monthly payments.



Contact Lowell Overton:
Visit Also:



TeamOverton1.com
Media.TeamOverton1.com
TeamOverton1News.com
TeamOverton1Cards.com
REO Socal.com
SoCalReports.com

Previous Overton Factor Articles

Information provided by this website is general and is not a substitute for professional advice. Please consult your investment advisor and/or attorney before entering into any transaction.

Home
| Join RealMega | Community Web Pages | Contact Us | Blog Page
Advertise on RealMega | Terms of Use | Privacy Statement | Spam Policy

RealMega Site Map | RealMega Site Index

© 1999-2006 RealMega.com. All Rights Reserved.
All Other Copyrights Remain The Property Of Their Respective Owners.

The RealMega Network is Proudly Hosted by Mega Hosters Inc.