Mortgage 101

Top 10 Mortgage Mistakes to Avoid

Even the most seasoned borrowers will admit that they’re guilty of errors in their approach to obtaining a loan for a new home. Here are the Top 10 mortgage mistakes to avoid, whether you’re a first time buyer or simply need a refresher course.

  1. Credit Problems: You don’t know what credit issues may be lurking in your history unless you run your report before applying for a mortgage. Do it early so you have time to address repairs and contest errors.
  1. Applying for New Credit: One of the major mistakes with mortgages is that homebuyers apply for a loan or credit card before or during the mortgage application process. Put off opening new credit accounts until after you buy your home.

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Do you need Lender Paid Mortgage Insurance?

If you’re currently shopping for a new home or considering it in the near future, it’s important to understand the various provisions of your mortgage. One term you may see in your documents is the arrangement for mortgage insurance, which is paid for by either the borrower or the lender. Lender-paid mortgage insurance does have certain benefits, so it’s worth considering for your home financing. Here are the answers to some common questions. 

What is Lender-Paid Mortgage Insurance (LPMI)? In general, mortgage insurance is intended to protect the lender if a borrower defaults on a home loan. Most lenders require mortgage insurance if a borrower pays less than 20% down payment for the loan. You can opt to get private mortgage insurance (PMI) or agree to lender-paid mortgage insurance. With LPMI, your lender pays the mortgage insurance premium on your behalf and passes the cost on to you, usually in the form of a higher interest rate.  (more…)

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What is Home Equity?

A thorough understanding of all the terminology related to your mortgage is critical, but many borrowers have only a general idea of what home equity means in the arrangement. In addition, there are many other factors that affect – and are affected by – the value of your home’s equity. Some basic information should help you grasp the concept of home equity and how this amount factors into your financial situation. 

Definitions: Understanding home equity starts with learning the terminology to hear how some of the different concepts work.  (more…)

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How does Foreclosure affect your credit?

Many homeowners have been hit hard by a variety of circumstances that make it difficult to pay their mortgage. Sickness, job loss, a tough economy and other factors may prevent you from keeping up with payments, leading your lender to foreclose upon your home. In some cases, being free of a mortgage can be a wise move; however, foreclosure has a significant impact upon your credit rating. Here are some answers to some common questions about foreclosure and credit scores.

How does the foreclosure process work? If you miss a mortgage payment, you can expect to start receiving phone calls and notices from your lender with demands for payment. After a certain amount of time, the bank will initiate pre-foreclosure proceedings with a “notice to accelerate,” “notice of lis pendens” or other documents; the exact process varies by state. (more…)

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5 Things You Need to Know About a 5/1 ARM

There are a number of different types of mortgages. Keeping them all straight can be confusing. Which kind is the best for you? Which one will cost you the least amount of money? Well, the two most basic types of mortgage are fixed rate and adjustable rate. A fixed rate mortgage sets your loan at one particular interest rate, which doesn’t change over the entire course of the mortgage. An adjustable rate mortgage (ARM) can have its interest rate raised or lowered at certain times, based on the fluctuations of interest rates in general.

If you’re getting a mortgage when interest rates are especially low, a fixed rate mortgage is a good option, as it will allow you to lock in the lower rate and not have to worry when they start to rise again. An ARM is a better option when rates are higher, as you can have the opportunity to lower your rate later on. (more…)

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Everything You Need to Know About VA Loans

Everything You Need to Know About VA Loans

Everything You Need to Know About VA LoansIf you’re a Veteran of the U.S. Armed Forces or in active duty, you might be aware of a specialized home loan program administered by the Veteran’s Administration. There are significant benefits to obtaining a mortgage backed by VA support for eligible borrowers, so the plan is worth looking into if you think you qualify. Some general information about VA loans, the advantages and the financing process will be helpful if you’re considering one.

What is a VA loan? It’s a home loan backed by the VA which is available to members of our nation’s military, either active duty or those who have served in the past. The federal government doesn’t actually provide the loan funds, but the Department of Veterans Affairs acts as a sort of co-signer on loans for those individuals who qualify. (more…)

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How Can an FHA Loan Help Me

How Can an FHA Loan Help Me

How Can an FHA Loan Help MeDespite the fallout from the mortgage crisis that developed a few years back, there are still many opportunities for people with less-than-stellar credit to obtain a mortgage to buy a home. The Federal Housing Administration (FHA) loan program may be an option for many individuals who thought their dream of owning their own place wasn’t possible. Here are the basics on FHA loans to help you determine if you’re eligible and how the program can benefit you.

FHA Loans 101: This type of mortgage is backed by the FHA, though the funding doesn’t come from that agency. In a nutshell, the FHA insures a loan for a borrower that secures a mortgage through an approved lender. The lender is motivated to provide the loan because the risk of loss is less if the borrower defaults. The FHA loan program enables people to own a home, despite the fact that they might otherwise not qualify – and interest rates are quite reasonable compared to traditional loans. (more…)

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The Mortgage: Start to Finish

Congratulations! You’re looking to buy your first home. You know what that means: an appreciating asset, a place to put down roots… and a mortgage. That last one seems a bit daunting. How do you go about getting a mortgage? What do you do? Will you end up buried in paperwork? Well, here to put your mind at ease, is the entire mortgage process, from start to finish, a “Mortgages 101”, if you will.

Step 1: The Application

Once you’ve found the lender that best fits your needs, you’ll complete a loan application. The lender will help you through this process, including what documents you need to have on hand for financial assessment. They’ll then verify your information and ask for additional info if need be. (more…)

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