The recent subprime mortgage crisis occurred because homeowners ignored a simple law of physics: What goes up must come down. This law pertains not only to the physical world, but to the world of real estate, as well. For the past decade, home values have been on what seemed to be a never-ending ascent. When the bubble burst, they came tumbling down.
Homeowners who had chosen adjustable-rate mortgages (ARMs) with teaser rates assumed that they could always refinance their mortgage out of a jam. Their modus operandi in the past was simple: When their introductory rate ended, they'd refinance to another ARM. With home values on the decline, however, they couldn't qualify for a new loan.
Now, when people are looking for a mortgage, both fixed rate and fixed term are at the top of the list
The most familiar types of home loans are the 30-year and 15-year fixed-rate mortgages. The 30-year fixed loan is more popular because it extends the payment term, resulting in lower monthly mortgage payments. However, since the payments are spread out over 30 years, these fixed-rate loans require greater long-term interest payments than its 15-year counterpart. The best part of the 30-year loan is the security of knowing that your rate won't increase.
A 15-year fixed mortgage has also been extremely popular for mortgage borrowers. It reduces the payback time to a lender, and saves you thousands of dollars in long-term interest. The monthly payments are relatively steep, however. A more affordable option might be a 20-year fixed mortgage.
Mortgage lenders are happy to give borrowers alternatives, especially if it hastens the sale of a loan. If people can't afford the traditional 30-year fixed mortgage or its cousins, they may opt for a 40-year fixed mortgage or a 50-year fixed mortgage. Recently introduced by some lenders, these types of loans aren't as widespread, but they can significantly lower monthly interest payments.
Other options are the 5-year fixed mortgage and the 10-year fixed mortgage. These are called balloon loans, because the rate is fixed for the introductory period, but the full amount of the loan is due at the end of five or 10 years. This type of loan is recommended only if you plan on paying your balance in full at the end of the introductory period, or if you have a guaranteed buyer for your home.
Fixed-rate mortgages have enjoyed a tremendous comeback as housing values have plummeted. The prices that went way, way up in recent years have gone down, down, down, and made ARMs an unreliable loan. As a result, the old standby, the fixed-rate mortgage, has returned. For homeowners who were burned by adjustable-rate mortgages, these fixed-rate loans may fix their mortgage problems for good.
Center State Mortgage is your #1 source for fixed-rate mortgages in Staten Island and New Jersey! They have the background and experience to get you the lowest interest rate on your perfect home loan! Choose Center State Mortgage for all you mortgage needs!
Monday, December 14, 2009
Refinance that Risky Mortgage
The statements on TV ads and direct mailers may have caught your eye: "Refinance Risky Mortgage," or "Refinance Mortgage...Before It's Too Late." Mortgage lenders are urging homeowners with bad credit loans to consider refinancing in the face of a poor housing market.
Their warnings are dire, and for good reason. The housing market has experienced a precipitous drop in sales and home values. If you hold a bad credit mortgage, such as an adjustable-rate mortgage (ARM) or a balloon mortgage, it may indeed be "refinance mortgage time" for you.
No matter how many times history repeats itself, Americans don't seem to learn their lessons. Stock markets have crashed, bubbles have burst, but still consumers deny the fact that what goes up eventually comes back down. The housing market is a prime example. After years of sustained growth, the appreciation of housing prices at double-digit rates seemed to be a fact of life, instead of what it truly was: a natural economic cycle.
When the market reached its apex, many short-sighted homeowners and lenders were faced with a bitter reality. Home equity, which had been the equivalent of money growing on trees, vanished overnight as values plummeted. For people who were set in their fixed-rate mortgage and weren't in any hurry to move, the drop in prices wasn't catastrophic. But for those who lived life on the edge in the form of ARMs, the subprime crisis hit with hurricane force.
ARMs include a teaser rate. Designed to entice a mortgage borrower with its low rate and subsequent affordable monthly payments, the rates eventually adjust upward after a period of one, three, five, or seven years. The adjustments can be between two to five interest rate points, a fact that never used to give homeowners pause. Their strategy was to refinance their mortgage prior to the adjustment.
This has been a cozy arrangement for homeowners who consistently refinanced their properties, year in and year out, jumping from one subprime mortgage to the next. However, when home values sank, these individuals found that they no longer had the equity to qualify for a new loan. They were stuck with their ARMs that, in many cases, adjusted to a higher rate that they could no longer afford.
If you're currently holding an ARM, it may be time to think "refinance mortgage." Rates are solid, relatively low, and may be for the immediate future (although there's no telling what will happen with inflation on the rise). To avoid foreclosure, refinance to a fixed-rate product, like a 15- or a 30-year home loan. You won't enjoy the spectacularly low rates previously available with ARMs, but you'll avoid the sad fate of subprime borrowers across America.
Center State Mortgage is your #1 source for home loans and mortgages in New Jersey and Staten Island! They have the background and experience to make sure you get the perfect home loan! Choose Center State Mortgage for all your home loand and mortgage needs!
Their warnings are dire, and for good reason. The housing market has experienced a precipitous drop in sales and home values. If you hold a bad credit mortgage, such as an adjustable-rate mortgage (ARM) or a balloon mortgage, it may indeed be "refinance mortgage time" for you.
No matter how many times history repeats itself, Americans don't seem to learn their lessons. Stock markets have crashed, bubbles have burst, but still consumers deny the fact that what goes up eventually comes back down. The housing market is a prime example. After years of sustained growth, the appreciation of housing prices at double-digit rates seemed to be a fact of life, instead of what it truly was: a natural economic cycle.
When the market reached its apex, many short-sighted homeowners and lenders were faced with a bitter reality. Home equity, which had been the equivalent of money growing on trees, vanished overnight as values plummeted. For people who were set in their fixed-rate mortgage and weren't in any hurry to move, the drop in prices wasn't catastrophic. But for those who lived life on the edge in the form of ARMs, the subprime crisis hit with hurricane force.
ARMs include a teaser rate. Designed to entice a mortgage borrower with its low rate and subsequent affordable monthly payments, the rates eventually adjust upward after a period of one, three, five, or seven years. The adjustments can be between two to five interest rate points, a fact that never used to give homeowners pause. Their strategy was to refinance their mortgage prior to the adjustment.
This has been a cozy arrangement for homeowners who consistently refinanced their properties, year in and year out, jumping from one subprime mortgage to the next. However, when home values sank, these individuals found that they no longer had the equity to qualify for a new loan. They were stuck with their ARMs that, in many cases, adjusted to a higher rate that they could no longer afford.
If you're currently holding an ARM, it may be time to think "refinance mortgage." Rates are solid, relatively low, and may be for the immediate future (although there's no telling what will happen with inflation on the rise). To avoid foreclosure, refinance to a fixed-rate product, like a 15- or a 30-year home loan. You won't enjoy the spectacularly low rates previously available with ARMs, but you'll avoid the sad fate of subprime borrowers across America.
Center State Mortgage is your #1 source for home loans and mortgages in New Jersey and Staten Island! They have the background and experience to make sure you get the perfect home loan! Choose Center State Mortgage for all your home loand and mortgage needs!
Avoiding Home Foreclosure
Foreclosure prevention tops the wish list for many American homeowners; but avoiding foreclosure in today's market can be extremely challenging. It is possible, however, and borrowers should pursue solutions to avoid foreclosure--especially opportunities for loan modification.
About a quarter of a million people per month face foreclosure across the U.S.; but with mortgage companies and credit counselors overwhelmed and backlogged, few homeowners know what to do to avoid losing their homes. Here are several ideas and insights intended to help those confronted by a looming foreclosure to sidestep the harsh outcome.
Many mortgage companies and banks lose as much as 50 percent of their stake in a property if it goes all the way to foreclosure. Therefore, they'd much rather use a loan modification for foreclosure prevention. Lenders don't usually have the best interest of the borrower in mind, but they still share the same common goal: foreclosure avoidance. When you communicate with your lender, keep their needs in mind, as well as your own. It may be easier to discover a mutually beneficial solution.
Any foreclosure prevention strategy will be based almost entirely on market data, credit scores, and other pieces of information. The person working with you on behalf of the lender may never actually see your home, but will determine possible paths to avoid foreclosure based on a file-or pile-of paperwork. Many homeowners trying to avoid foreclosure have two mortgages with the same lender. By demonstrating an inability to pay both, they may be able to talk the lender into waiving a portion of the principal. Or the lender may allow the homeowner to consolidate two loans into one with a lower interest rate. Another way documentation comes in handy is when a homeowner wants to show the ability to handle a fixed-rate mortgage if the lender is agreeable to refinancing out of a problematic adjustable-rate loan.
Those suffering a temporary setback due to circumstances such as illness, job loss, death of a spouse, divorce, or other hardship can write a letter to lenders explaining the situation. Many mortgage companies will provide some form of relief through a temporary suspension of payments or loan modification to assist the borrower until he recovers from the crisis and gets back on his feet.
When all else fails and foreclosure prevention seems impossible, homeowners may be able to do a so-called "short sale," which involves selling the property and giving the proceeds to the lender to cover the outstanding balance. In many cases, the money will not be enough to satisfy the entire mortgage debt, but lenders agree to forgive the amount that comes up short. The homeowner loses the home through this strategy, but at least he can avoid foreclosure and credit ruin.
Center State Mortgage is your #1 source for home loans and mortgages in New Jersey and Staten Island! They have the background and experience to make home loan wishes come true! Choose Center State Mortgage for all your home loan needs!
About a quarter of a million people per month face foreclosure across the U.S.; but with mortgage companies and credit counselors overwhelmed and backlogged, few homeowners know what to do to avoid losing their homes. Here are several ideas and insights intended to help those confronted by a looming foreclosure to sidestep the harsh outcome.
Many mortgage companies and banks lose as much as 50 percent of their stake in a property if it goes all the way to foreclosure. Therefore, they'd much rather use a loan modification for foreclosure prevention. Lenders don't usually have the best interest of the borrower in mind, but they still share the same common goal: foreclosure avoidance. When you communicate with your lender, keep their needs in mind, as well as your own. It may be easier to discover a mutually beneficial solution.
Any foreclosure prevention strategy will be based almost entirely on market data, credit scores, and other pieces of information. The person working with you on behalf of the lender may never actually see your home, but will determine possible paths to avoid foreclosure based on a file-or pile-of paperwork. Many homeowners trying to avoid foreclosure have two mortgages with the same lender. By demonstrating an inability to pay both, they may be able to talk the lender into waiving a portion of the principal. Or the lender may allow the homeowner to consolidate two loans into one with a lower interest rate. Another way documentation comes in handy is when a homeowner wants to show the ability to handle a fixed-rate mortgage if the lender is agreeable to refinancing out of a problematic adjustable-rate loan.
Those suffering a temporary setback due to circumstances such as illness, job loss, death of a spouse, divorce, or other hardship can write a letter to lenders explaining the situation. Many mortgage companies will provide some form of relief through a temporary suspension of payments or loan modification to assist the borrower until he recovers from the crisis and gets back on his feet.
When all else fails and foreclosure prevention seems impossible, homeowners may be able to do a so-called "short sale," which involves selling the property and giving the proceeds to the lender to cover the outstanding balance. In many cases, the money will not be enough to satisfy the entire mortgage debt, but lenders agree to forgive the amount that comes up short. The homeowner loses the home through this strategy, but at least he can avoid foreclosure and credit ruin.
Center State Mortgage is your #1 source for home loans and mortgages in New Jersey and Staten Island! They have the background and experience to make home loan wishes come true! Choose Center State Mortgage for all your home loan needs!
Improve the Chance to Sell Your Home
Desperate times don't always call for desperate measures; sometimes, they just call for innovation and intelligence. In today's housing market, selling real estate takes a mixture of all three.
Two methods for selling real estate have been gaining popularity. The first is home staging, a tried and true technique that can be used whether you're using a realtor, or if your home is "for sale by owner." The second method is the increasingly popular alternative of house trading.
Marketing is all about perception. Whether your house is "for sale by owner" or listed by a realtor, you still need to develop a strategy for influencing a buyer's perception of the house. Home staging can help.
Home staging is the art of transforming a home's décor so that prospective buyers can visualize themselves living there. While not always popular with homeowners who have an emotional attachment to their dwelling, this methodology helps buyers see themselves actually owning the house.
The key to this approach is to remove both clutter and any type of personal belongings from the home. De-cluttering gives the house a neat, clean appearance, and makes it feel larger. By removing such personal belongings, you take the first step in transferring ownership. Take down family pictures or religious artifacts that you have in the house. You'll also want décor that's very neutral, and doesn't feature one distinctive style.
As the housing market tightens, a new practice called house trading has become increasingly popular. Instead of listing your home on the market, you can visit a house trading website. These match prospective traders, not unlike the way a computer dating service works. To make a match, they take into account location, house style, and a variety of other preferences.
The matchmaking is an ideal way to remove a realtor's commission from the process. In many cases, the deal is simply worked out between the two parties. For a family who simply needs a change of venue, and doesn't want to go through the rigorous house selling process, this could be a viable alternative.
The real estate market is not for the faint of heart. Even industry veterans are reeling from the turbulent economy and the stagnant inventories. For the smart homeowner, alternatives to the traditional "for sale" sign are in order, and they include such breakthrough ideas as home staging and home trading. In today's market, only the smart will survive, and they'll do it by using these types of innovative tactics
Center State Mortgage is your #1 source for the lowest interest rates on home loans in New Jersey and Staten Island! They have the background and experience to ensure a perfect home loan for you and your family. Choose Center State Mortgage for all your home loan needs!
Two methods for selling real estate have been gaining popularity. The first is home staging, a tried and true technique that can be used whether you're using a realtor, or if your home is "for sale by owner." The second method is the increasingly popular alternative of house trading.
Marketing is all about perception. Whether your house is "for sale by owner" or listed by a realtor, you still need to develop a strategy for influencing a buyer's perception of the house. Home staging can help.
Home staging is the art of transforming a home's décor so that prospective buyers can visualize themselves living there. While not always popular with homeowners who have an emotional attachment to their dwelling, this methodology helps buyers see themselves actually owning the house.
The key to this approach is to remove both clutter and any type of personal belongings from the home. De-cluttering gives the house a neat, clean appearance, and makes it feel larger. By removing such personal belongings, you take the first step in transferring ownership. Take down family pictures or religious artifacts that you have in the house. You'll also want décor that's very neutral, and doesn't feature one distinctive style.
As the housing market tightens, a new practice called house trading has become increasingly popular. Instead of listing your home on the market, you can visit a house trading website. These match prospective traders, not unlike the way a computer dating service works. To make a match, they take into account location, house style, and a variety of other preferences.
The matchmaking is an ideal way to remove a realtor's commission from the process. In many cases, the deal is simply worked out between the two parties. For a family who simply needs a change of venue, and doesn't want to go through the rigorous house selling process, this could be a viable alternative.
The real estate market is not for the faint of heart. Even industry veterans are reeling from the turbulent economy and the stagnant inventories. For the smart homeowner, alternatives to the traditional "for sale" sign are in order, and they include such breakthrough ideas as home staging and home trading. In today's market, only the smart will survive, and they'll do it by using these types of innovative tactics
Center State Mortgage is your #1 source for the lowest interest rates on home loans in New Jersey and Staten Island! They have the background and experience to ensure a perfect home loan for you and your family. Choose Center State Mortgage for all your home loan needs!
Are Low Mortgage Rates Going to Stay?
Before the emergency Treasury Department takeover of Fannie Mae and Freddie Mac, mortgage rates were trending higher. As a result of the Treasury action, however, mortgage rates plunged. Rates on 30-year fixed-rate mortgages fell by the largest one-week drop in almost 30 years, and loan applications spiked as mortgage rates hit a four month low.
But low rates are probably not sustainable. Just as the credit score of a consumer shrinks as his debt grows, greater responsibility for saving ailing institutions hurts the reputation of the Treasury. The ongoing demise and bailout of other important financial institutions, in addition to Fannie Mae and Freddie Mac, reduces the quality and marketability of its monetary instruments as investor confidence in the Treasury erodes.
The chances of that happening are growing, because the Treasury may have to help other institutions or buy up tons of bad loans to get them off the market and stabilize our economy.
Here's why:
•American companies own approximately $22 trillion in risky financial instruments such as "securitized" mortgages.
•Because of a lack of government oversight, the whereabouts of this high-risk debt is nearly impossible to track.
•Many of these investments are now worthless, because the market for them has been completely wiped out.
•Which companies own these bad assets, and how long it will take before the worthless investments undermine their profits and leave them bankrupt, remains a mystery.
Until the Treasury gets some concrete answers to that $22 trillion question, and a more precise understanding of how it can remedy the situation even as the economy gets weaker, expect to pay higher mortgage rates. Those hoping to snag lower rates in the aftermath of the Fannie Mae and Freddie Mac takeover better hurry and do it while they're still available.
Center State Mortgage is your #1 source for the lowest interest rates in New Jersey and Staten Island! They have the background and experience to get you that perfect loan to give you your dream home! Choose Center State Mortgage for all your home loan needs!
But low rates are probably not sustainable. Just as the credit score of a consumer shrinks as his debt grows, greater responsibility for saving ailing institutions hurts the reputation of the Treasury. The ongoing demise and bailout of other important financial institutions, in addition to Fannie Mae and Freddie Mac, reduces the quality and marketability of its monetary instruments as investor confidence in the Treasury erodes.
The chances of that happening are growing, because the Treasury may have to help other institutions or buy up tons of bad loans to get them off the market and stabilize our economy.
Here's why:
•American companies own approximately $22 trillion in risky financial instruments such as "securitized" mortgages.
•Because of a lack of government oversight, the whereabouts of this high-risk debt is nearly impossible to track.
•Many of these investments are now worthless, because the market for them has been completely wiped out.
•Which companies own these bad assets, and how long it will take before the worthless investments undermine their profits and leave them bankrupt, remains a mystery.
Until the Treasury gets some concrete answers to that $22 trillion question, and a more precise understanding of how it can remedy the situation even as the economy gets weaker, expect to pay higher mortgage rates. Those hoping to snag lower rates in the aftermath of the Fannie Mae and Freddie Mac takeover better hurry and do it while they're still available.
Center State Mortgage is your #1 source for the lowest interest rates in New Jersey and Staten Island! They have the background and experience to get you that perfect loan to give you your dream home! Choose Center State Mortgage for all your home loan needs!
Know Your Mortgage Documents
Many of the mortgages written within the past decade were complicated, exotic, and highly risky. Homeowners signed documents pledging their homes as collateral for adjustable-rate loans (ARMs) with scheduled interest rate hikes. Some agreed to negative amortization loans, while others signed off on interest-only or hybrid loans that have now backfired. Now that these potentially toxic loans have precipitated a major foreclosure crisis, it's essential that homeowners study their mortgage documents and gain a full understanding of their legal obligations and options.
•Check your mortgage paperwork and most recent account statement. It will indicate how much you owe in principal and interest. Does your loan have a fixed or adjustable rate? See if there's a pre-payment clause in your mortgage agreement; if so, you could be penalized for selling your home and paying the loan off early.
•If you have an ARM, see what the maximum rate can be at the first adjustment period, and whether the new rate has a cap that limits it from rising beyond a certain level. Some loans, for instance, can rise no more than 2 percent in a single year.
•Next, figure out which underlying adjustable-rate index your mortgage is tied to. Some go up or down based on what United States treasury bills do, for example, whereas many mortgages react instead to the Libor index, which is based on monetary activity in London. Another is the COFI or cost of funds index. The specific treasury product or index that the loan rate corresponds to can play a significant role in determining how much actual interest you pay.
•One of the most important documents to hold on to and study is the HUD settlement statement that the lender gives you at closing. This will show a variety of useful information related to the cost basis for your property, and the closing costs and fees. Should you decide to sell your home, this could help you determine your tax gains or losses.
Center State Mortgage is your #1 source for the lowest interest rates on loan in New Jersey and Staten Island! They have the background and experience to nab you your dream home! Choose Center State Mortgage for all your home loan needs!
•Check your mortgage paperwork and most recent account statement. It will indicate how much you owe in principal and interest. Does your loan have a fixed or adjustable rate? See if there's a pre-payment clause in your mortgage agreement; if so, you could be penalized for selling your home and paying the loan off early.
•If you have an ARM, see what the maximum rate can be at the first adjustment period, and whether the new rate has a cap that limits it from rising beyond a certain level. Some loans, for instance, can rise no more than 2 percent in a single year.
•Next, figure out which underlying adjustable-rate index your mortgage is tied to. Some go up or down based on what United States treasury bills do, for example, whereas many mortgages react instead to the Libor index, which is based on monetary activity in London. Another is the COFI or cost of funds index. The specific treasury product or index that the loan rate corresponds to can play a significant role in determining how much actual interest you pay.
•One of the most important documents to hold on to and study is the HUD settlement statement that the lender gives you at closing. This will show a variety of useful information related to the cost basis for your property, and the closing costs and fees. Should you decide to sell your home, this could help you determine your tax gains or losses.
Center State Mortgage is your #1 source for the lowest interest rates on loan in New Jersey and Staten Island! They have the background and experience to nab you your dream home! Choose Center State Mortgage for all your home loan needs!
Bad Choices for Borrowing
Even if you're not an economist, the country's current financial slump has everyone thinking about the economy. The housing market crash and volatile stock market have caused everyone to reconsider their investments and their debt. The impulsive use of a home equity loan to pay for a vacation or a nice car has decreased, and budgeting and smart money management are on the rise.
People are wising up, and they're steering clear of four bad borrowing choices.
1. Buying bigger. When home values were booming, people didn't think twice about tapping their home equity to buy a bigger house or a nicer car. Now, homeowners are approaching their financial choices on a pay-as-you-go basis. Everyone now understands that home values aren't guaranteed to rise forever. If you tap into too much home equity to pay for the finer things in life, you could wind up trapped in your home, as you try to pay off a loan that's worth more than your house.
2. Using home equity for investments. There's a school of thought that if you borrow money at 8 percent, and put it in an investment that returns 10 percent, you'll come out ahead. That's a best-case scenario. In a worst-case scenario, the value of your home will decrease, along with your stock market portfolio, and you'll have nothing to show for it except excessive debt. Guess which scenario has struck people after the housing market collapse and the stock market nosedive?
3. Tapping equity for a tax deduction. Ask any accountant and he'll tell you: Don't spend your money to get a tax deduction. If it fits within the overall structure of your tax planning, a deduction is great. But spending a dollar to get 25 or 30 cents off your taxes makes no sense at all. Consider the deductibility of mortgage interest to be a nice perk, not a means to generate wealth.
4. Refinance to defer debt. A typical move by cash-strapped consumers is to use home equity for debt consolidation. This type of refinance works only if you change your spending habits after you've paid off those credit cards. If you continue to spend outrageously, those cards will get maxed out again, and you'll have even less home equity for another debt consolidation loan. Change your spending habits instead.
Center State Mortgage is your #1 source for the lowest interest rates on home loans and mortgages in New Jersey and Staten Island! They have the background and experience to get you pre-qualified for that perfect home! Choose Center State Mortgage for all your home loan needs!
People are wising up, and they're steering clear of four bad borrowing choices.
1. Buying bigger. When home values were booming, people didn't think twice about tapping their home equity to buy a bigger house or a nicer car. Now, homeowners are approaching their financial choices on a pay-as-you-go basis. Everyone now understands that home values aren't guaranteed to rise forever. If you tap into too much home equity to pay for the finer things in life, you could wind up trapped in your home, as you try to pay off a loan that's worth more than your house.
2. Using home equity for investments. There's a school of thought that if you borrow money at 8 percent, and put it in an investment that returns 10 percent, you'll come out ahead. That's a best-case scenario. In a worst-case scenario, the value of your home will decrease, along with your stock market portfolio, and you'll have nothing to show for it except excessive debt. Guess which scenario has struck people after the housing market collapse and the stock market nosedive?
3. Tapping equity for a tax deduction. Ask any accountant and he'll tell you: Don't spend your money to get a tax deduction. If it fits within the overall structure of your tax planning, a deduction is great. But spending a dollar to get 25 or 30 cents off your taxes makes no sense at all. Consider the deductibility of mortgage interest to be a nice perk, not a means to generate wealth.
4. Refinance to defer debt. A typical move by cash-strapped consumers is to use home equity for debt consolidation. This type of refinance works only if you change your spending habits after you've paid off those credit cards. If you continue to spend outrageously, those cards will get maxed out again, and you'll have even less home equity for another debt consolidation loan. Change your spending habits instead.
Center State Mortgage is your #1 source for the lowest interest rates on home loans and mortgages in New Jersey and Staten Island! They have the background and experience to get you pre-qualified for that perfect home! Choose Center State Mortgage for all your home loan needs!
Rent or Buy a Home?
Not too long ago, home buying was considered a safe bet. Buy a great house and live in it as a primary residence for two out of five years, and reap tax benefits from the mortgage interest payments while building home equity. When it was time to move on, you could sell the property and not pay taxes on capital gains up to $250,000 in profit. Then, the cycle would start over in the next, presumably larger and more expensive home.
That's not how it works anymore. Home prices that had been climbing steadily skyward for years hit a wall and then came crashing down. Many homeowners are sitting on larger loan balances than equity values. Suddenly, renters look very smart.
A house is probably the largest purchase you'll ever make, and almost always financed by the biggest loan of your life. For many years, the vast majority of your mortgage payments will do nothing but pay interest charges. The huge equity balance comes much later, and many owners will move before getting that far. The dream of home buying seems a bit silly from that perspective.
Furthermore, a homeowner has to worry about upkeep and maintenance, as well as property taxes and community fees. Those who rent don't have such headaches.
On the flip side, home buying can be incredibly profitable when the market isn't working against you. And in at least a few areas around the country, home prices may already have dipped as far down as they're going to go. Sure, the gravy train of the early 2000s won't magically restart again; but when you're truly at the bottom, the only way to go is up.
It's simple mathematics, really. If you believe that home prices will rise from here, at an annual rate that would beat the returns you'd expect from investing that cash elsewhere, it might make sense for you to buy a home. It's a great way to build a solid credit history, and the profit at the end of the road is extra gravy. And let's be honest-the stock market hasn't impressed anybody lately, either.
If you don't want the risk or bother of home ownership, renting a house, condo, or nice apartment would be the better way to go. While it's true that a homeowner can build a sun deck or repaint the walls anytime he chooses, many people aren't really into home improvement, and would rather leave upkeep and improvements to the landlord.
Center State Mortgage is your #1 source for the lowest interest rates on home loans in New Jersey and Staten Island! They have the background and experience to ensure that you get the right home loan for your situation. Choose Center State Mortgage for all your home loan needs!
That's not how it works anymore. Home prices that had been climbing steadily skyward for years hit a wall and then came crashing down. Many homeowners are sitting on larger loan balances than equity values. Suddenly, renters look very smart.
A house is probably the largest purchase you'll ever make, and almost always financed by the biggest loan of your life. For many years, the vast majority of your mortgage payments will do nothing but pay interest charges. The huge equity balance comes much later, and many owners will move before getting that far. The dream of home buying seems a bit silly from that perspective.
Furthermore, a homeowner has to worry about upkeep and maintenance, as well as property taxes and community fees. Those who rent don't have such headaches.
On the flip side, home buying can be incredibly profitable when the market isn't working against you. And in at least a few areas around the country, home prices may already have dipped as far down as they're going to go. Sure, the gravy train of the early 2000s won't magically restart again; but when you're truly at the bottom, the only way to go is up.
It's simple mathematics, really. If you believe that home prices will rise from here, at an annual rate that would beat the returns you'd expect from investing that cash elsewhere, it might make sense for you to buy a home. It's a great way to build a solid credit history, and the profit at the end of the road is extra gravy. And let's be honest-the stock market hasn't impressed anybody lately, either.
If you don't want the risk or bother of home ownership, renting a house, condo, or nice apartment would be the better way to go. While it's true that a homeowner can build a sun deck or repaint the walls anytime he chooses, many people aren't really into home improvement, and would rather leave upkeep and improvements to the landlord.
Center State Mortgage is your #1 source for the lowest interest rates on home loans in New Jersey and Staten Island! They have the background and experience to ensure that you get the right home loan for your situation. Choose Center State Mortgage for all your home loan needs!
Get a Down Payment from Your Parents
Wondering what to tell your folks to give you this holiday season? How about some down payment assistance to help you buy a home? It's not the kind of gift you can unwrap, but it will last a lot longer than a pair of slippers.
Homes are getting cheaper, but that doesn't mean they're more affordable. Consider the cost of a single-family home in Southern California's Anaheim-Santa Ana metro area: a year ago, it cost about $714,200. Today, the metro's median home price is $517,300. This 28 percent decline would be great from an affordability standpoint, if only mortgage lenders hadn't changed their loan underwriting policies.
The problem relates to changes in down payment requirements. A 2008 National Association of Realtors (NAR) study reports that median down payments by first-time home buyers increased to 4 percent of the purchase price, versus 2 percent in the prior year. While 4 percent doesn't seem bad, NAR chief economist Lawrence Yun has pointed out that this number is already outdated. "The study covers transactions through the middle of 2008," he says, "so we can assume the down payment numbers have shifted recently because credit tightened, and no-down payment loans all but disappeared around the close of the survey."
If the no-down payment mortgage has disappeared, that leaves homebuyers scrambling to come up with a 20 percent cash down payment. Continuing with the example above, 20 percent of $517,300 equates to $103,460.
Even if you did have $100,000 sitting in the bank, you might be reluctant to tap every last dime of your savings-particularly at a time when unemployment is on the rise. But it's more likely that you don't have anything close to that kind of money sitting around. Not many first-time buyers do.
Here's where your parents can help. Your lender will allow you to use gifted funds from a family member as your down payment. Parents are usually the most suitable donors because they're more likely to have the savings to spare. You'll have to document that it's truly a gift and not a loan. This is generally done with a gift letter that's signed by both you and your parents. Your folks may also have to provide the lender a bank statement to prove that the money is really there. And finally, your parents will have to file a gift tax return if the amount given exceeds the annual gift tax exclusion, which $12,000 in 2008. They won't have to pay gift taxes unless they exceed the lifetime exclusion ($1 million in 2008), but they still have to file the return.
Accepting the generosity of your parents is particularly attractive right now, because it enables you to take advantage of today's low home prices and relatively low interest rates. So this holiday season, ask for the ultimate holiday gift: a new home!
Center State Mortgage is your #1 source for the lowest interest rate mortgages in New Jersey and Staten Island! They have the background and experience to ensure that you find the perfect home loan for your perfect home. Choose Center State Mortgage for all your home loan needs!
Homes are getting cheaper, but that doesn't mean they're more affordable. Consider the cost of a single-family home in Southern California's Anaheim-Santa Ana metro area: a year ago, it cost about $714,200. Today, the metro's median home price is $517,300. This 28 percent decline would be great from an affordability standpoint, if only mortgage lenders hadn't changed their loan underwriting policies.
The problem relates to changes in down payment requirements. A 2008 National Association of Realtors (NAR) study reports that median down payments by first-time home buyers increased to 4 percent of the purchase price, versus 2 percent in the prior year. While 4 percent doesn't seem bad, NAR chief economist Lawrence Yun has pointed out that this number is already outdated. "The study covers transactions through the middle of 2008," he says, "so we can assume the down payment numbers have shifted recently because credit tightened, and no-down payment loans all but disappeared around the close of the survey."
If the no-down payment mortgage has disappeared, that leaves homebuyers scrambling to come up with a 20 percent cash down payment. Continuing with the example above, 20 percent of $517,300 equates to $103,460.
Even if you did have $100,000 sitting in the bank, you might be reluctant to tap every last dime of your savings-particularly at a time when unemployment is on the rise. But it's more likely that you don't have anything close to that kind of money sitting around. Not many first-time buyers do.
Here's where your parents can help. Your lender will allow you to use gifted funds from a family member as your down payment. Parents are usually the most suitable donors because they're more likely to have the savings to spare. You'll have to document that it's truly a gift and not a loan. This is generally done with a gift letter that's signed by both you and your parents. Your folks may also have to provide the lender a bank statement to prove that the money is really there. And finally, your parents will have to file a gift tax return if the amount given exceeds the annual gift tax exclusion, which $12,000 in 2008. They won't have to pay gift taxes unless they exceed the lifetime exclusion ($1 million in 2008), but they still have to file the return.
Accepting the generosity of your parents is particularly attractive right now, because it enables you to take advantage of today's low home prices and relatively low interest rates. So this holiday season, ask for the ultimate holiday gift: a new home!
Center State Mortgage is your #1 source for the lowest interest rate mortgages in New Jersey and Staten Island! They have the background and experience to ensure that you find the perfect home loan for your perfect home. Choose Center State Mortgage for all your home loan needs!
Layaway House Buying
"No money down" mortgage loans have gone out of style, like granny dresses and pet rocks. Homebuilders are scrambling to come up with new ways to put their inventory into the hands of consumers, so they're borrowing an idea from department stores. If layaway plans work for lawnmowers and evening wear, why not for real estate?
The down payment layaway idea for a new home purchase is both simple and elegant: sign a purchase agreement, and start saving up cash. When the escrow account holds enough to cover closing costs and the down payment, the builder will start constructing your new house. Or, if you picked out a pre-built model from existing inventory, you can sign the closing papers and pick up the key.
The builder will help you come up with a savings plan, set up the escrow account, and give you incentives for meeting your goals. Finish on time, and you might get a price break on the property, kitchen upgrades, or a better landscaping package. They'll even send you reminders to make those payments. While it's not really a monthly bill, those payment slips can help you overcome years of imperfect savings habits.
These builders aren't coming up with these programs out of some philanthropic desire to help you out. The homebuilding industry is pulling out all the stops to get buyers back into their open-house models, and then hopefully into a new home. With the mortgage side of the equation tightening up recently, it takes some creative thinking to come up with new incentives that actually work.
At least three of the largest homebuilders in the nation are setting up layaway programs right now, and you can expect more to come if they work. For some, it's a great way to start a savings habit.
Center State Mortgage is your #1 source for layaway house buying in New Jersey and Staten Island! They have the background and experience to make sure that you get your perfect home loan! Choose Center State Mortgage for all your home loan need!
The down payment layaway idea for a new home purchase is both simple and elegant: sign a purchase agreement, and start saving up cash. When the escrow account holds enough to cover closing costs and the down payment, the builder will start constructing your new house. Or, if you picked out a pre-built model from existing inventory, you can sign the closing papers and pick up the key.
The builder will help you come up with a savings plan, set up the escrow account, and give you incentives for meeting your goals. Finish on time, and you might get a price break on the property, kitchen upgrades, or a better landscaping package. They'll even send you reminders to make those payments. While it's not really a monthly bill, those payment slips can help you overcome years of imperfect savings habits.
These builders aren't coming up with these programs out of some philanthropic desire to help you out. The homebuilding industry is pulling out all the stops to get buyers back into their open-house models, and then hopefully into a new home. With the mortgage side of the equation tightening up recently, it takes some creative thinking to come up with new incentives that actually work.
At least three of the largest homebuilders in the nation are setting up layaway programs right now, and you can expect more to come if they work. For some, it's a great way to start a savings habit.
Center State Mortgage is your #1 source for layaway house buying in New Jersey and Staten Island! They have the background and experience to make sure that you get your perfect home loan! Choose Center State Mortgage for all your home loan need!
First Time Home Buyers
Nothing beats the thrill of buying your first home. One of the biggest purchases you'll ever make, a new home offers you the chance to build equity, while creating a place for family memories. But you can wind up overspending on your mortgage and home repairs if you're not careful.
A cardinal sin of the first time homebuyer is to fall in love with a home that's too expensive. It's easy to walk into a home that's outside your price range, set your heart on buying it, and then do whatever you can to make it happen.
Even in this subprime mortgage crisis, some banks may still be willing to lend you more than you can afford, especially if you have good credit. To avoid this pitfall, get yourself pre-qualified before you go house shopping. Create a budget to determine exactly how much you can comfortably afford. Don't overextend yourself, since there's more to home costs than just a mortgage.
When you find a home that you like, carefully consider all the potential expenditures-not just the mortgage. Take a look at the utility bills that the previous owner paid for the property. Ask your insurance agent how much it will cost to insure the dwelling. If there's a huge lawn and many gardens, think about all the potential landscaping costs you'll have. If there's a long driveway, consider the cost of snowplowing in the winter.
Plan future changes that you might want to make to the home, as well. If you want to add on a screen porch or a downstairs addition, it may be more cost effective to purchase a home that already has those amenities.
Many first time homebuyers purchase a fixer-upper, with grandiose plans of performing an enormous makeover. That's fine, but make sure that you have the money and time to embark on such an undertaking. Most home improvement projects wind up costing twice what you initially budget for. Plus, if you're not experienced at this type of work, it will suck up hours of your time.
You may want to consider splitting up the tasks. Perform some of the manual labor yourself, then hire a professional for skilled jobs like plumbing, wiring, or floor refinishing. It'll be well worth the investment.
You want to love your new home, not feel trapped in it. Before you sign any mortgage documents, take a step back, and budget your money and your time. Be realistic about what you can afford as a first time homeowner to put into your house. The smarter you are before you close on a new home, the happier you'll be when the deed is done and the deed is yours.
Center State Mortgage is your #1 source for mortgage and home loans for first-time buyers in New Jersey and Staten Island! They have the background and experience to get you the perfect home loan! Choose Center State Mortgage for all your home loan needs!
A cardinal sin of the first time homebuyer is to fall in love with a home that's too expensive. It's easy to walk into a home that's outside your price range, set your heart on buying it, and then do whatever you can to make it happen.
Even in this subprime mortgage crisis, some banks may still be willing to lend you more than you can afford, especially if you have good credit. To avoid this pitfall, get yourself pre-qualified before you go house shopping. Create a budget to determine exactly how much you can comfortably afford. Don't overextend yourself, since there's more to home costs than just a mortgage.
When you find a home that you like, carefully consider all the potential expenditures-not just the mortgage. Take a look at the utility bills that the previous owner paid for the property. Ask your insurance agent how much it will cost to insure the dwelling. If there's a huge lawn and many gardens, think about all the potential landscaping costs you'll have. If there's a long driveway, consider the cost of snowplowing in the winter.
Plan future changes that you might want to make to the home, as well. If you want to add on a screen porch or a downstairs addition, it may be more cost effective to purchase a home that already has those amenities.
Many first time homebuyers purchase a fixer-upper, with grandiose plans of performing an enormous makeover. That's fine, but make sure that you have the money and time to embark on such an undertaking. Most home improvement projects wind up costing twice what you initially budget for. Plus, if you're not experienced at this type of work, it will suck up hours of your time.
You may want to consider splitting up the tasks. Perform some of the manual labor yourself, then hire a professional for skilled jobs like plumbing, wiring, or floor refinishing. It'll be well worth the investment.
You want to love your new home, not feel trapped in it. Before you sign any mortgage documents, take a step back, and budget your money and your time. Be realistic about what you can afford as a first time homeowner to put into your house. The smarter you are before you close on a new home, the happier you'll be when the deed is done and the deed is yours.
Center State Mortgage is your #1 source for mortgage and home loans for first-time buyers in New Jersey and Staten Island! They have the background and experience to get you the perfect home loan! Choose Center State Mortgage for all your home loan needs!
How to Avoid Mortgage Management Problems
How well are you managing your mortgage? It’s an often overlooked aspect of home finance – many borrowers assume that once they sign the loan papers, their only remaining challenge is coming up with the mortgage payment each month. But there’s a lot more to it than that.
Having a mortgage is not like paying your cable or electric bill every month. For one thing, it’s much, much bigger – so it has a far greater potential impact on your life. Your cell phone bill you can simply pay and forget each month. But doing the same with your mortgage can be very costly.
There are a lot of serious mistakes that people make by treating their mortgage payment the same as any other bill, although a much larger one. Simply making your monthly payments isn’t enough – your mortgage is a bill that’s in a class all its own and demands special attention.
The following are some of the mistakes people commonly make in handling their mortgages.
Throwing away old billing statements. For most monthly bills, you can throw the old statement away as soon as the new one arrives, or in some cases, after one year. You don’t want to do this with a mortgage.
The reason? Those statements are your only record of the activity on your mortgage account. If your mortgage is sold to another servicer – as frequently happens – those records may not be transferred to the new bank, or may be incomplete. There’s no legal requirement to do so. As a result, you might not be fully credited for escrow payments you’ve made or get stuck with other charges – and be unable to obtain those records from your previous lender, particularly if that lender has failed. Saving your statements gives you a record of all the activity on your mortgage.
Failing to refinance when conditions are right. Although low interest rates generate a lot of interest in refinancing, many people still stick with their same old mortgage through sheer inertia. Remember, if you can reduce your current rate by a full percentage point and plan to be in the home another four years or more, it’s probably worth your while to refinance.
Remember too, that if you’ve been making regular mortgage payments for several years with no late payments on other bills, your credit has probably improved since the time you first took out the mortgage and you may have acquired equity in the property as well (although many homeowners have seen declining equity in recent years). Both will enable you to obtain a better interest rate relative to the market average than you were able to when you first took out the loan.
Center State Mortgage is your #1 source for mortgages and home loans in New Jersey and Staten Island! They have the background and experience to make sure that you're home loan is the perfect one for you! Choose Center State Mortgage for all your home loan needs!
Having a mortgage is not like paying your cable or electric bill every month. For one thing, it’s much, much bigger – so it has a far greater potential impact on your life. Your cell phone bill you can simply pay and forget each month. But doing the same with your mortgage can be very costly.
There are a lot of serious mistakes that people make by treating their mortgage payment the same as any other bill, although a much larger one. Simply making your monthly payments isn’t enough – your mortgage is a bill that’s in a class all its own and demands special attention.
The following are some of the mistakes people commonly make in handling their mortgages.
Throwing away old billing statements. For most monthly bills, you can throw the old statement away as soon as the new one arrives, or in some cases, after one year. You don’t want to do this with a mortgage.
The reason? Those statements are your only record of the activity on your mortgage account. If your mortgage is sold to another servicer – as frequently happens – those records may not be transferred to the new bank, or may be incomplete. There’s no legal requirement to do so. As a result, you might not be fully credited for escrow payments you’ve made or get stuck with other charges – and be unable to obtain those records from your previous lender, particularly if that lender has failed. Saving your statements gives you a record of all the activity on your mortgage.
Failing to refinance when conditions are right. Although low interest rates generate a lot of interest in refinancing, many people still stick with their same old mortgage through sheer inertia. Remember, if you can reduce your current rate by a full percentage point and plan to be in the home another four years or more, it’s probably worth your while to refinance.
Remember too, that if you’ve been making regular mortgage payments for several years with no late payments on other bills, your credit has probably improved since the time you first took out the mortgage and you may have acquired equity in the property as well (although many homeowners have seen declining equity in recent years). Both will enable you to obtain a better interest rate relative to the market average than you were able to when you first took out the loan.
Center State Mortgage is your #1 source for mortgages and home loans in New Jersey and Staten Island! They have the background and experience to make sure that you're home loan is the perfect one for you! Choose Center State Mortgage for all your home loan needs!
Saturday, December 5, 2009
So the Lender Rejects Your House
So you’ve found the house of your dreams. The price is right, the buyer accepts your offer and your lender has already prequalified you for a mortgage of that size. So you submit your paperwork, the lender takes it under consideration and then after a few weeks – rejects the sale.
So what happened? Getting that close to a sale, only to have it rejected by the lender, can feel like a punch in the gut. But it’s an increasingly common occurrence these days, as lenders take a more conservative approach to home loans and cast a wary eye on properties that they fear might not be up to snuff.
If your loan application for a home purchase is rejected after everything appeared to be in order, it could be due to any of several reasons. The bank may have decided that you’re a bigger credit risk than they initially thought. But another reason, one that’s becoming more common these days, is that they may have found some reason to be wary of the appraisal and the home itself.
So what can you do if the lender just doesn’t think the house will support the mortgage you’re seeking? Well, the first thing you should do is think again – if the bank is wary of this property, is it a home you really want to own? You can also order another appraisal, to see if it will support the first and hopefully persuade the bank to reconsider. Or, if it comes in lower, the seller might be persuading to lower the price.
Center State Mortgage has your back for getting your loan approved and with the lowest interest rates in Staten Island and New Jersey! Their experience in the business helps you get the loan to get the home of your dreams. Choose Center State Mortgage for all your home loan needs!
So what happened? Getting that close to a sale, only to have it rejected by the lender, can feel like a punch in the gut. But it’s an increasingly common occurrence these days, as lenders take a more conservative approach to home loans and cast a wary eye on properties that they fear might not be up to snuff.
If your loan application for a home purchase is rejected after everything appeared to be in order, it could be due to any of several reasons. The bank may have decided that you’re a bigger credit risk than they initially thought. But another reason, one that’s becoming more common these days, is that they may have found some reason to be wary of the appraisal and the home itself.
So what can you do if the lender just doesn’t think the house will support the mortgage you’re seeking? Well, the first thing you should do is think again – if the bank is wary of this property, is it a home you really want to own? You can also order another appraisal, to see if it will support the first and hopefully persuade the bank to reconsider. Or, if it comes in lower, the seller might be persuading to lower the price.
Center State Mortgage has your back for getting your loan approved and with the lowest interest rates in Staten Island and New Jersey! Their experience in the business helps you get the loan to get the home of your dreams. Choose Center State Mortgage for all your home loan needs!
Avoid Mortgage Pitfalls
Mortgage rates are low, low, low right now - close to all-time minimums. But those low rates can still cost you an awful lot of money if you're not careful to avoid some of the serious mistakes people make on home loans when buying a home or refinancing.
Not shopping around
Surprisingly, one of the biggest mistakes people make is failing to shop around when getting a mortgage. Shopping around means more than just looking online or in the paper for the lender advertising the best rate - you have to get down to the nitty gritty and compare details
Not checking your credit report
Before getting a mortgage, you definitely want to order copies of your credit report from the three major credit reporting companies - Transunion, Equifax and Experion - you're entitled to a free report once a year from each. You may discover errors or something straightforward you can do to quickly boost your credit, like reducing the balance on a credit card.
Borrowing too much money
This can affect both home buyers and those refinancing a current mortgage - the first group buys too much home, the second takes too much cash out of their home equity. In both cases, you're borrowing money you'll have to pay back through your monthly mortgage payments. Too many people don't take a close look at their finances and determine what they can really afford.
Center State Mortgage is always there for you with the lowest interest rates in Staten Island and New Jersey! They haver professionals who know the ins and outs of successfully getting the mortgage you need! Choose Center State Mortgage for all your home loan needs!
Not shopping around
Surprisingly, one of the biggest mistakes people make is failing to shop around when getting a mortgage. Shopping around means more than just looking online or in the paper for the lender advertising the best rate - you have to get down to the nitty gritty and compare details
Not checking your credit report
Before getting a mortgage, you definitely want to order copies of your credit report from the three major credit reporting companies - Transunion, Equifax and Experion - you're entitled to a free report once a year from each. You may discover errors or something straightforward you can do to quickly boost your credit, like reducing the balance on a credit card.
Borrowing too much money
This can affect both home buyers and those refinancing a current mortgage - the first group buys too much home, the second takes too much cash out of their home equity. In both cases, you're borrowing money you'll have to pay back through your monthly mortgage payments. Too many people don't take a close look at their finances and determine what they can really afford.
Center State Mortgage is always there for you with the lowest interest rates in Staten Island and New Jersey! They haver professionals who know the ins and outs of successfully getting the mortgage you need! Choose Center State Mortgage for all your home loan needs!
Don't Forget Maintenance Costs
How much will you need to spend on home maintenance? It's a crucial thing to know when figuring out what you can afford when taking out a mortgage to buy a house, but one that many potential homeowners pay shockingly little attention to.
Too many homeowners take a casual approach to budgeting for home repairs, figuring they can tighten their belts when occasional expenses like replacing the dishwasher pop up or borrowing for major expenses like replacing the roof or septic field. But that can lead to disaster, particularly in today's credit markets, when you can no longer count on simply tapping a home equity loan to cover major repairs.
These days, you want to be sure you can cover at least part of the cost of a major repair yourself, to improve your chances of being able to borrow the balance to cover a major repair. Other credit options, including borrowing against a credit card, may still be available, but are going to be much more costly than a few years ago, particularly if you take longer than a year to pay them off.
Center State Mortgage is your #1 source for mortgage services in the Staten Island and New Jersey areas! They have all the mrotgage tools and experience you will need to make sure the loan process is fast and easy! Choose Center State Morgage for all your home loan needs!
Too many homeowners take a casual approach to budgeting for home repairs, figuring they can tighten their belts when occasional expenses like replacing the dishwasher pop up or borrowing for major expenses like replacing the roof or septic field. But that can lead to disaster, particularly in today's credit markets, when you can no longer count on simply tapping a home equity loan to cover major repairs.
These days, you want to be sure you can cover at least part of the cost of a major repair yourself, to improve your chances of being able to borrow the balance to cover a major repair. Other credit options, including borrowing against a credit card, may still be available, but are going to be much more costly than a few years ago, particularly if you take longer than a year to pay them off.
Center State Mortgage is your #1 source for mortgage services in the Staten Island and New Jersey areas! They have all the mrotgage tools and experience you will need to make sure the loan process is fast and easy! Choose Center State Morgage for all your home loan needs!
Joint Mortgages
If you're thinking about buying a home, chances are you're not planning to do it by yourself. Most home purchases are two-person affairs - historically, by married couples but with unmarried partners making up an increasing share these days. In some case, two or more people who are not romantically involved will purchase a home together for financial reasons.
It's a bit more complicated than it used to be, when a couple would buy a home, but the husband was the sole breadwinner whose income and credit rating determined the terms of the mortgage. But having two incomes paying on a single mortgage definitely opens up more possibilities in terms of what you can buy.
So how do you go about getting a mortgage or buying a home by two or more people? There are two main ways to do it - either through a joint mortgage or by joint ownership. In the former, both parties (we'll assume it's a couple and not a larger partnership for now) are signatories to the mortgage and are equally responsible for making payments. In the latter, the mortgage may be in only one person's name, but both parties have their name on the deed and contribute toward making payments.
Center State Mortgage is your #1 source for joint mortgages in the staten island and new jersey areas! They have all the right people and tools to get the job done quickly and effectively! Choose Center State Mortgage for all your joint mortgage needs!
It's a bit more complicated than it used to be, when a couple would buy a home, but the husband was the sole breadwinner whose income and credit rating determined the terms of the mortgage. But having two incomes paying on a single mortgage definitely opens up more possibilities in terms of what you can buy.
So how do you go about getting a mortgage or buying a home by two or more people? There are two main ways to do it - either through a joint mortgage or by joint ownership. In the former, both parties (we'll assume it's a couple and not a larger partnership for now) are signatories to the mortgage and are equally responsible for making payments. In the latter, the mortgage may be in only one person's name, but both parties have their name on the deed and contribute toward making payments.
Center State Mortgage is your #1 source for joint mortgages in the staten island and new jersey areas! They have all the right people and tools to get the job done quickly and effectively! Choose Center State Mortgage for all your joint mortgage needs!
Paying Discount Points on Your Mortgage
Mortgage interest rates are unusually low right now, close to all-time lows for a 30-year fixed rate loan. So with rates already so low, is it worth paying points to try to get the rate even lower?
If you're thinking about buying a home or refinancing your current mortgage, you're probably at least somewhat familiar with points. Basically, paying points allows you to get a lower interest rate. In essence, you're paying some of the interest up front, so you don't have to pay as much over the life of the loan.
It's a fairly straightforward concept, but one that can be confusing for a lot of borrowers. Part of this is because mortgages can be fairly complex transactions, with a lot of other fees and terminology involved, and points are just another thing to keep track of. But the bigger challenge tends to knowing whether or not it's worthwhile to pay for points in the first place.
A point one percentage point - that's where the name comes from. When you take out a mortgage, either to purchase or refinance, each point you buy costs you 1 percent of the loan total - or $10 per $1,000 of the mortgage value. In return, each point you pay reduces your interest rate by a certain amount - usually 1/8th of a percent, but that can vary from lender to lender.
Center State Mortgage is your #1 mortgage broker with the lowest interest rates in Straten Island and New Jersey! Rely on them to make sure getting a new home is fast and easy! Choose Center State Mortgage for all your home loan needs!
If you're thinking about buying a home or refinancing your current mortgage, you're probably at least somewhat familiar with points. Basically, paying points allows you to get a lower interest rate. In essence, you're paying some of the interest up front, so you don't have to pay as much over the life of the loan.
It's a fairly straightforward concept, but one that can be confusing for a lot of borrowers. Part of this is because mortgages can be fairly complex transactions, with a lot of other fees and terminology involved, and points are just another thing to keep track of. But the bigger challenge tends to knowing whether or not it's worthwhile to pay for points in the first place.
A point one percentage point - that's where the name comes from. When you take out a mortgage, either to purchase or refinance, each point you buy costs you 1 percent of the loan total - or $10 per $1,000 of the mortgage value. In return, each point you pay reduces your interest rate by a certain amount - usually 1/8th of a percent, but that can vary from lender to lender.
Center State Mortgage is your #1 mortgage broker with the lowest interest rates in Straten Island and New Jersey! Rely on them to make sure getting a new home is fast and easy! Choose Center State Mortgage for all your home loan needs!
How to Get a Loan When Self-Employed
Getting or refinancing a mortgage when you’re self-employed can be a real challenge these days. With the virtual disappearance of stated income loans, it’s become much more difficult for anyone who doesn’t get a regular paycheck to qualify for a home loan. But it still can be done.
Stated income/stated asset loans, also known as Alt-A mortgages, used to be one of the most common ways for the self-employed to obtain a mortgage. You simply told the bank what your income was and the bank took your word for it. When housing values were rising, it really wasn’t that big of a risk for the lender.
But Alt-A mortgages got a bad reputation as “liar loans” during the housing bubble, when they were abused to exaggerate incomes for borrowers who otherwise would never qualify for a loan. When the housing market and economy went sour, stated income/asset loans accounted for some of the highest rates of defaults and foreclosures, and most banks simply stopped offering them.
But for the self-employed, what that really means is that you’re going to have to be more thorough documenting your income when applying for a mortgage; the same rules apply to refinancing a mortgage as well. And if you’re in business for yourself, you’re probably already accustomed to filing tax reports and documenting expenses, so documenting your income for a mortgage application won’t be that much different.
Center State Mortgage has all the tools you will need to obtain a loan if you are self-employed in the Straten Island and New Jersey area. They have professionals ready to assist you with purchasing your home! Choose Center State Mortgage for all your self-employed loan needs!
Stated income/stated asset loans, also known as Alt-A mortgages, used to be one of the most common ways for the self-employed to obtain a mortgage. You simply told the bank what your income was and the bank took your word for it. When housing values were rising, it really wasn’t that big of a risk for the lender.
But Alt-A mortgages got a bad reputation as “liar loans” during the housing bubble, when they were abused to exaggerate incomes for borrowers who otherwise would never qualify for a loan. When the housing market and economy went sour, stated income/asset loans accounted for some of the highest rates of defaults and foreclosures, and most banks simply stopped offering them.
But for the self-employed, what that really means is that you’re going to have to be more thorough documenting your income when applying for a mortgage; the same rules apply to refinancing a mortgage as well. And if you’re in business for yourself, you’re probably already accustomed to filing tax reports and documenting expenses, so documenting your income for a mortgage application won’t be that much different.
Center State Mortgage has all the tools you will need to obtain a loan if you are self-employed in the Straten Island and New Jersey area. They have professionals ready to assist you with purchasing your home! Choose Center State Mortgage for all your self-employed loan needs!
Saturday, November 21, 2009
Can I Afford a Home?
Mortgage lenders are chiefly concerned with your ability to repay the mortgage. To determine if you qualify for a loan, they will consider your credit history, your monthly gross income and how much cash you'll be able to accumulate for a down payment.
Mortgage lenders will calculate an affordability analysis of a buyers ability to afford the purchase of a home. Reviews income, liabilities, and available funds, and considers the type of mortgage you plan to use, the area where you want to purchase a home, and the closing costs that are likely.
They also use a debt-to-income ratio, which are the housing expense, or front-end, ratio; and the total debt-to-income, or back-end, ratio.
Front-end ratio: The housing expense, or front-end, ratio shows how much of your gross (pretax) monthly income would go toward the mortgage payment. As a general guideline, your monthly mortgage payment, including principal, interest, real estate taxes and homeowners insurance, should not exceed 28 percent of your gross monthly income.
Back-end ratio: The total debt-to-income, or back-end, ratio, shows how much of your gross income would go toward all of your debt obligations, including mortgage, car loans, child support and alimony, credit card bills, student loans and condominium fees. In general, your total monthly debt obligation should not exceed 36 percent of your gross income.
Center State Mortgage offers the lowest interest rate on home loans and mortgages in Straten Island and New Jersey! They have professional staff that work hard to get you the home of your dreams! Choose Center State Mortgage for your next home loan or mortgage!
Mortgage lenders will calculate an affordability analysis of a buyers ability to afford the purchase of a home. Reviews income, liabilities, and available funds, and considers the type of mortgage you plan to use, the area where you want to purchase a home, and the closing costs that are likely.
They also use a debt-to-income ratio, which are the housing expense, or front-end, ratio; and the total debt-to-income, or back-end, ratio.
Front-end ratio: The housing expense, or front-end, ratio shows how much of your gross (pretax) monthly income would go toward the mortgage payment. As a general guideline, your monthly mortgage payment, including principal, interest, real estate taxes and homeowners insurance, should not exceed 28 percent of your gross monthly income.
Back-end ratio: The total debt-to-income, or back-end, ratio, shows how much of your gross income would go toward all of your debt obligations, including mortgage, car loans, child support and alimony, credit card bills, student loans and condominium fees. In general, your total monthly debt obligation should not exceed 36 percent of your gross income.
Center State Mortgage offers the lowest interest rate on home loans and mortgages in Straten Island and New Jersey! They have professional staff that work hard to get you the home of your dreams! Choose Center State Mortgage for your next home loan or mortgage!
Acceleration Clause
Acceleration clauses help to define the terms of the loan covenant. There are a number of terms that can be included in an acceleration clause. For example, the loan covenants may prohibit the buyer from reselling the property without the express permission of the lender. This ensures that the lender is able to secure payment of the outstanding balance in the event that the borrower wishes to end the business relationship. Another example of terms that are commonly found in an acceleration clasue is the disposition of the collateral used to secure the loan. Prohibiting the sale of collateral for the duration of the loan also helps to make sure there is some sort of assets to collect in the event that the borrower defaults in some manner.
The acceleration clause can also be used to spell out some of the common terms of compliance of the loan, while outlining the consequences that will ensue if the terms are not honored. As an example, the acceleration clause may specify the due date of the payments, and also include a list of steps the lender will take in order to penalize the borrower for late payments or failure to pay at all. This may include the application of a fixed amount if the payment is not paid within a specified time after the due date, all the way through termination of the loan and demand for full payment.
Center State Mortgage is your #1 source for the lowest interest rates on home loans and mortgages in Straten Island and New Jersey! They have professional staff who work hard to get you that perfect home! Choose Center State Mortgage for all your home loan and mortgage needs!
The acceleration clause can also be used to spell out some of the common terms of compliance of the loan, while outlining the consequences that will ensue if the terms are not honored. As an example, the acceleration clause may specify the due date of the payments, and also include a list of steps the lender will take in order to penalize the borrower for late payments or failure to pay at all. This may include the application of a fixed amount if the payment is not paid within a specified time after the due date, all the way through termination of the loan and demand for full payment.
Center State Mortgage is your #1 source for the lowest interest rates on home loans and mortgages in Straten Island and New Jersey! They have professional staff who work hard to get you that perfect home! Choose Center State Mortgage for all your home loan and mortgage needs!
Thirty-Year Fixed Rate Mortgage
The traditional 30-year fixed-rate mortgage has a constant interest rate and monthly payments that never change. This may be a good choice if you plan to stay in your home for seven years or longer. If you plan to move within seven years, then adjustable-rate loans are usually cheaper. As a rule of thumb, it may be harder to qualify for fixed-rate loans than for adjustable rate loans. When interest rates are low, fixed-rate loans are generally not that much more expensive than adjustable-rate mortgages and may be a better deal in the long run, because you can lock in the rate for the life of your loan.
Will you pay a 30-year fixed mortgage in 15-years?
Dave Ramsey mentions the statistic that more than 97% of people who planned to pay their 30-year mortgage in 15-years do not. He has seen from his personal experience running his program that people lack the will power to keep up regularly with mortgage payments.
Ramit also observes that many people believe that they are the exception to the rule. This can lead some to not prepare properly. You may plan on paying your mortgage in 15 years, but if you rely on pure will power, you can set yourself up for failure.
Center State Mortgage is your #1 source for the lowest interest rates on Thirty-year fixed rate mortgages! They have professional staff who will work hard, so you don't have to! Choose Center State Mortgage for your next home loan or mortgage in New Jersey and Straten Island!
Will you pay a 30-year fixed mortgage in 15-years?
Dave Ramsey mentions the statistic that more than 97% of people who planned to pay their 30-year mortgage in 15-years do not. He has seen from his personal experience running his program that people lack the will power to keep up regularly with mortgage payments.
Ramit also observes that many people believe that they are the exception to the rule. This can lead some to not prepare properly. You may plan on paying your mortgage in 15 years, but if you rely on pure will power, you can set yourself up for failure.
Center State Mortgage is your #1 source for the lowest interest rates on Thirty-year fixed rate mortgages! They have professional staff who will work hard, so you don't have to! Choose Center State Mortgage for your next home loan or mortgage in New Jersey and Straten Island!
Hybrid ARM
What Does Hybrid ARM Mean?
These increasingly popular ARMS—also called 3/1, 5/1 or 7/1—can offer the best of both worlds: lower interest rates (like ARMs) and a fixed payment for a longer period of time than most adjustable rate loans. For example, a "5/1 loan" has a fixed monthly payment and interest for the first five years and then turns into a traditional adjustable-rate loan, based on then-current rates for the remaining 25 years. It's a good choice for people who expect to move (or refinance) before or shortly after the adjustment occurs.
An adjustable-rate mortgage blends the characteristics of a fixed-rate mortgage and an adjustable-rate mortgage. This type of mortgage will have an initial fixed interest rate period followed by an adjustable rate period. After the fixed interest rate expires, the interest rate starts to adjust based on an index plus a margin. The date at which the mortgage changes from the fixed rate to the adjustable rate is referred to as the reset date.
A borrower should carefully consider his or her time horizon when choosing a hybrid arm and recognize the risks associated with the reset date, or the expiration of the fixed interest rate period. If there has been a large change in interest rates, this reset could create substantially large payments; however, typically the amount by which the interest rate can adjust is subject to an interest rate cap.
Center State Mortgage is your #1 source for the lowest interest rates on Hybrid ARM loans in Straten Island and New Jersey! They have knowledgeable staff that will work hard to get you your loan, so you can take it easy! Choose Center State Mortgage for your next home loan or mortgage!
These increasingly popular ARMS—also called 3/1, 5/1 or 7/1—can offer the best of both worlds: lower interest rates (like ARMs) and a fixed payment for a longer period of time than most adjustable rate loans. For example, a "5/1 loan" has a fixed monthly payment and interest for the first five years and then turns into a traditional adjustable-rate loan, based on then-current rates for the remaining 25 years. It's a good choice for people who expect to move (or refinance) before or shortly after the adjustment occurs.
An adjustable-rate mortgage blends the characteristics of a fixed-rate mortgage and an adjustable-rate mortgage. This type of mortgage will have an initial fixed interest rate period followed by an adjustable rate period. After the fixed interest rate expires, the interest rate starts to adjust based on an index plus a margin. The date at which the mortgage changes from the fixed rate to the adjustable rate is referred to as the reset date.
A borrower should carefully consider his or her time horizon when choosing a hybrid arm and recognize the risks associated with the reset date, or the expiration of the fixed interest rate period. If there has been a large change in interest rates, this reset could create substantially large payments; however, typically the amount by which the interest rate can adjust is subject to an interest rate cap.
Center State Mortgage is your #1 source for the lowest interest rates on Hybrid ARM loans in Straten Island and New Jersey! They have knowledgeable staff that will work hard to get you your loan, so you can take it easy! Choose Center State Mortgage for your next home loan or mortgage!
Thursday, November 19, 2009
2/1 Buy-Down Mortgage
Mortgage buydowns -- what is that? You've probably heard the term before, but if you're like most people, it might not make a lot of sense to you. In part, the reason it may sound confusing is because a mortgage buydown rarely results in a permanent lower monthly payment nowadays; it's only temporary.
The 2/1 Buy-Down Mortgage allows the borrower to qualify at below market rates so they can borrow more. The initial starting interest rate increases by 1% at the end of the first year and adjusts again by another 1% at the end of the second year. It then remains at a fixed interest rate for the remainder of the loan term. Borrowers often refinance at the end of the second year to obtain the best long-term rates. However, keeping the loan in place even for three full years or more will keep their average interest rate in line with the original market conditions.
Center State Mortgage is your #1 source for a 2/1 Buy-Down Mortgage in New Jersey and Starten Island! They offer the lowest interest rates in the market and work hard to help you get your home loand and mortgage! Choose Center State Mortgage for your next home loan and mortgage!
The 2/1 Buy-Down Mortgage allows the borrower to qualify at below market rates so they can borrow more. The initial starting interest rate increases by 1% at the end of the first year and adjusts again by another 1% at the end of the second year. It then remains at a fixed interest rate for the remainder of the loan term. Borrowers often refinance at the end of the second year to obtain the best long-term rates. However, keeping the loan in place even for three full years or more will keep their average interest rate in line with the original market conditions.
Center State Mortgage is your #1 source for a 2/1 Buy-Down Mortgage in New Jersey and Starten Island! They offer the lowest interest rates in the market and work hard to help you get your home loand and mortgage! Choose Center State Mortgage for your next home loan and mortgage!
Negative Amortization (Neg. Am) Loan
Neg am mortgage loan programs are all the rage these days. Mortgage lenders offer 1% interest rates to applicants with deferred interest refinancing and negative amortization for cash out, home improvements, consolidating debts and equity credit refinance loans online. Many mortgage lenders are offering several variations of these cutting edge loan products for home purchasing and refinancing.
This is a deferred-interest loan which is very powerful -- and the most misunderstood mortgage program because of its many options. Basically, the lender allows the borrower to make monthly payments that are less than the accruing interest. Therefore, if the borrower chooses to make the minimum monthly payment, the loan balance will increase by the amount of interest not paid on the loan. The power of this loan lies in the borrower's ability to choose between making the full loan payment, or the minimum payment, or any amount in between. If a borrower's income varies throughout the year (due to commissions, bonuses, etc.), the borrower can make a lower payment during the "lean times", and then make higher payments when funds are readily available.
Center State Mortgage is your #1 source for Negative Amortization Loans in Straten Island and New Jersey! They offer the lowest interest rates and best home loan option on the market! Choose Center State Mortgage for all your home loan and mortgage needs!
This is a deferred-interest loan which is very powerful -- and the most misunderstood mortgage program because of its many options. Basically, the lender allows the borrower to make monthly payments that are less than the accruing interest. Therefore, if the borrower chooses to make the minimum monthly payment, the loan balance will increase by the amount of interest not paid on the loan. The power of this loan lies in the borrower's ability to choose between making the full loan payment, or the minimum payment, or any amount in between. If a borrower's income varies throughout the year (due to commissions, bonuses, etc.), the borrower can make a lower payment during the "lean times", and then make higher payments when funds are readily available.
Center State Mortgage is your #1 source for Negative Amortization Loans in Straten Island and New Jersey! They offer the lowest interest rates and best home loan option on the market! Choose Center State Mortgage for all your home loan and mortgage needs!
Adjustable Rate Mortgages (ARM)
How to Decide if an ARM Is Right for YouAn adjustable rate mortgage, called an ARM for short, is a mortgage with an interest rate that is linked to an economic index. The interest rate, and your payments, are periodically adjusted up or down as the index changes.
If my payments can go up, why should I consider an ARM?
The initial interest rate for an ARM is lower than that of a fixed rate mortgage, where the interest rate remains the same during the life of the loan. A lower rate means lower payments, which might help you qualify for a larger loan.
How long do you plan to own the house? The possibility of rate increases isn't as much of a factor if you plan to sell the home within a few years.
Do you expect your income to increase? If so, the extra funds might cover the higher payments that result from rate increases.
Some ARMs can be converted to a fixed-rate mortgage. However, conversion fees could be high enough to take away all of the savings you saw with the initial lower rate.
Center State Mortgage is your #1 source for all your adjustable rate mortgage needs in Straten Island and New Jersey! You will find the lowest interest rates and the best brokers to help you get your home loan! Choose Center State Mortgage for all your home loan and mortgage needs!
15 Year Fixed Mortgage
What is a 15-year fixed mortgage?
A 15-year fixed mortgage is a loan whose interest rate stays the same for the duration of the loan. For example, on a 15-year mortgage of $300,000 with an interest rate of 5.75%, the monthly payments would be about $3,097.90. So, the interest rate of 5.75% stays the same for the life of the loan.
Who should get 15-year fixed mortgages?
People who desire a predictable, fixed deduction from their monthly budget, want a shorter loan term, and can tolerate a higher monthly payment are well-suited for 15-year fixed mortgages.
What are the advantages and disadvantages of 15-year fixed mortgages?
The pros of a 15-year fixed mortgage: it's a predictable monthly payment; the paydown on a 15-year fixed is half the time of a 30-year fixed; the rates are usually lower than a 30-year fixed mortgage; and it's relatively simple and maintenance-free once you lock the rate (you don't need to worry about rate fluctuation).
The cons of a 15-year fixed mortgage: monthly payments are quite higher than a 30-year fixed mortgage, therefore making these loans more difficult to qualify for, and the mortgage tax deduction on a 15-year fixed is less than a 30-year fixed.
Center State Mortgage is your #1 source for 15-year fixed rate mortgages! Center State Mortgage works hard to help you get the home loan that is right for you and that helps you get that home! Choose Center State Mortgage for all your home loan needs in Straten Island and New Hampshire!
A 15-year fixed mortgage is a loan whose interest rate stays the same for the duration of the loan. For example, on a 15-year mortgage of $300,000 with an interest rate of 5.75%, the monthly payments would be about $3,097.90. So, the interest rate of 5.75% stays the same for the life of the loan.
Who should get 15-year fixed mortgages?
People who desire a predictable, fixed deduction from their monthly budget, want a shorter loan term, and can tolerate a higher monthly payment are well-suited for 15-year fixed mortgages.
What are the advantages and disadvantages of 15-year fixed mortgages?
The pros of a 15-year fixed mortgage: it's a predictable monthly payment; the paydown on a 15-year fixed is half the time of a 30-year fixed; the rates are usually lower than a 30-year fixed mortgage; and it's relatively simple and maintenance-free once you lock the rate (you don't need to worry about rate fluctuation).
The cons of a 15-year fixed mortgage: monthly payments are quite higher than a 30-year fixed mortgage, therefore making these loans more difficult to qualify for, and the mortgage tax deduction on a 15-year fixed is less than a 30-year fixed.
Center State Mortgage is your #1 source for 15-year fixed rate mortgages! Center State Mortgage works hard to help you get the home loan that is right for you and that helps you get that home! Choose Center State Mortgage for all your home loan needs in Straten Island and New Hampshire!
Mortgage Calculators
If you are looking to get a loan you might be wondering about how much your payments will be and what kind of interest rate you can get. You could just call a mortgage consultant to get the information, but that can often be cumbersome and the mortgage consultant may pester you to get a loan when you may not be ready. The way to offset this is to use a mortgage calculator.
The Center State Mortgage Calculator can be used to determine monthly payments of a home mortgage loan, based on the home's sale price, the term of the loan desired, buyer's down payment percentage, and the loan's interest rate. This calculator factors in PMI (Private Mortgage Insurance) for loans where less than 20% is put as a down payment. Also taken into consideration are the town property taxes, and their effect on the total monthly mortgage payment.
Center State Mortgage is your #1 source for mortgages and home loans in Staten Island and New Jersey! They offer a comprehensive mortgage calculator that can calculate an accurate answer for your mortgage questions without directly speaking with a representative! Choose Center State Mortgage for all your mortgage and home loans needs!
The Center State Mortgage Calculator can be used to determine monthly payments of a home mortgage loan, based on the home's sale price, the term of the loan desired, buyer's down payment percentage, and the loan's interest rate. This calculator factors in PMI (Private Mortgage Insurance) for loans where less than 20% is put as a down payment. Also taken into consideration are the town property taxes, and their effect on the total monthly mortgage payment.
Center State Mortgage is your #1 source for mortgages and home loans in Staten Island and New Jersey! They offer a comprehensive mortgage calculator that can calculate an accurate answer for your mortgage questions without directly speaking with a representative! Choose Center State Mortgage for all your mortgage and home loans needs!
Thursday, November 12, 2009
Mortgage Checklist
Getting a home loan can be a complicated process, so let Center State Mortgage help you breeze through it and take some of the stress off your shoulders. Most mortages require certain information to get started. The following information is usually required during the loan process:
-Your Social Security number
-Current pay stubs or, if self employed, your tax returns for the past two years
-Bank statements for the past two months
-Investment account statements for the past two months
-Life insurance policy
-Retirement account statements for the past two months
-Make and model of vehicles you own and their resale value
-Credit card account information
-Auto loan account information
-Personal loan account information
If you currently own Real Estate:
-Mortgage account information
-Home insurance policy information
-Home equity account information (if applicable)
Center State Mortgage is your #1 source for the lowest mortgage interest rates in Straten Island. Let them help make getting your home loan fast, easy, and affordable. Choose Center State Mortgage today!
-Your Social Security number
-Current pay stubs or, if self employed, your tax returns for the past two years
-Bank statements for the past two months
-Investment account statements for the past two months
-Life insurance policy
-Retirement account statements for the past two months
-Make and model of vehicles you own and their resale value
-Credit card account information
-Auto loan account information
-Personal loan account information
If you currently own Real Estate:
-Mortgage account information
-Home insurance policy information
-Home equity account information (if applicable)
Center State Mortgage is your #1 source for the lowest mortgage interest rates in Straten Island. Let them help make getting your home loan fast, easy, and affordable. Choose Center State Mortgage today!
Mortgage Glossary Part 3
Housing Expense Ratio
The percentage of gross monthly income budgeted to pay housing expenses.
HUD-1 statement
A document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing.
Hybrid ARM (3/1 ARM, 5/1 ARM, 7/1 ARM)
A combination fixed rate and adjustable rate loan - also called 3/1,5/1,7/1 - can offer the best of both worlds: lower interest rates (like ARMs) and a fixed payment for a longer period of time than most adjustable rate loans. For example, a "5/1 loan" has a fixed monthly payment and interest for the first five years and then turns into a traditional adjustable rate loan, based on then-current rates for the remaining 25 years. It's a good choice for people who expect to move or refinance, before or shortly after, the adjustment occurs.
Index
The index is the measure of interest rate changes a lender uses to decide the amount an interest rate on an ARM will change over time.The index is generally a published number or percentage, such as the average interest rate or yield on Treasury bills. Some index rates tend to be higher than others and some more volatile.
Initial Interest Rate
This refers to the original interest rate of the mortgage at the time of closing. This rate changes for an adjustable-rate mortgage (ARM). It's also known as "start rate" or "teaser."
Installment
The regular periodic payment that a borrower agrees to make to a lender.
Insured Mortgage
A mortgage that is protected by the Federal Housing Administration (FHA) or by private mortgage insurance (MI).
Interest
The fee charged for borrowing money.
Interest Accrual Rate
The percentage rate at which interest accrues on the mortgage. In most cases, it is also the rate used to calculate the monthly payments.
Interest Rate Buydown Plan
An arrangement that allows the property seller to deposit money to an account. That money is then released each month to reduce the mortgagor's monthly payments during the early years of a mortgage.
Interest Rate Ceiling
For an adjustable-rate mortgage (ARM), the maximum interest rate, as specified in the mortgage note.
Interest Rate Floor
For an adjustable-rate mortgage (ARM), the minimum interest rate, as specified in the mortgage note.
Center State Mortgage is your #1 source for the best mortgage rate loans in Straten Island including: Chelsea, Clifton, and Concord. They are experienced specialists who really care about you and will help you through the entire process to make it fast and easy! Choose Center State Mortgage for your home loan needs!
The percentage of gross monthly income budgeted to pay housing expenses.
HUD-1 statement
A document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing.
Hybrid ARM (3/1 ARM, 5/1 ARM, 7/1 ARM)
A combination fixed rate and adjustable rate loan - also called 3/1,5/1,7/1 - can offer the best of both worlds: lower interest rates (like ARMs) and a fixed payment for a longer period of time than most adjustable rate loans. For example, a "5/1 loan" has a fixed monthly payment and interest for the first five years and then turns into a traditional adjustable rate loan, based on then-current rates for the remaining 25 years. It's a good choice for people who expect to move or refinance, before or shortly after, the adjustment occurs.
Index
The index is the measure of interest rate changes a lender uses to decide the amount an interest rate on an ARM will change over time.The index is generally a published number or percentage, such as the average interest rate or yield on Treasury bills. Some index rates tend to be higher than others and some more volatile.
Initial Interest Rate
This refers to the original interest rate of the mortgage at the time of closing. This rate changes for an adjustable-rate mortgage (ARM). It's also known as "start rate" or "teaser."
Installment
The regular periodic payment that a borrower agrees to make to a lender.
Insured Mortgage
A mortgage that is protected by the Federal Housing Administration (FHA) or by private mortgage insurance (MI).
Interest
The fee charged for borrowing money.
Interest Accrual Rate
The percentage rate at which interest accrues on the mortgage. In most cases, it is also the rate used to calculate the monthly payments.
Interest Rate Buydown Plan
An arrangement that allows the property seller to deposit money to an account. That money is then released each month to reduce the mortgagor's monthly payments during the early years of a mortgage.
Interest Rate Ceiling
For an adjustable-rate mortgage (ARM), the maximum interest rate, as specified in the mortgage note.
Interest Rate Floor
For an adjustable-rate mortgage (ARM), the minimum interest rate, as specified in the mortgage note.
Center State Mortgage is your #1 source for the best mortgage rate loans in Straten Island including: Chelsea, Clifton, and Concord. They are experienced specialists who really care about you and will help you through the entire process to make it fast and easy! Choose Center State Mortgage for your home loan needs!
Wednesday, November 11, 2009
Mortgage Glossary Part 2
Balance Sheet
A financial statement that shows assets, liabilities, and net worth as of a specific date.
Balloon Mortgage
A long-term loan, often a mortgage, that has one large payment (the balloon payment) due upon maturity. A balloon loan will often have the advantage of very low interest payments, thus requiring very little capital outlay during the life of the loan
Biweekly Payment Mortgage
A plan to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one-half of the monthly payment required if the loan were a standard 30-year fixed-rate mortgage. The result for the borrower is a substantial savings in interest.
Bridge Loan
Short-term financing which is expected to be paid back relatively quickly, such as by a subsequent longer-term loan. also called swing loan or bridge financing.
Buydown
When the seller, builder or buyer pays an amount of money up front to the lender to reduce monthly payments during the first few years of a mortgage. Buydowns can occur in both fixed and adjustable rate mortgages.
Certificate of Eligibility
A government-issued document which indicates that a member of the armed forces who serves a certain number of days and is honorably discharged can apply for a Veterans Administration (VA) loan, such as a VA mortgage.
Closing Costs
These are expenses - over and above the price of the property- that are incurred by buyers and sellers when transferring ownership of a property. Closing costs normally include an origination fee, property taxes, charges for title insurance and escrow costs, appraisal fees, etc. Closing costs will vary according to the area country and the lenders used.
Compound Interest
Interest which is calculated not only on the initial principal but also the accumulated interest of prior periods. Compound interest differs from simple interest in that simple interest is calculated solely as a percentage of the principal sum.
Conversion Clause
A provision in an ARM allowing the loan to be converted to a fixed-rate at some point during the term. Usually conversion is allowed at the end of the first adjustment period. The conversion feature may cost extra.
Getting a home loan can be stressful and confusing, especially with so many forms to fill out and paperwork to sign. Luckily, Center State Mortgage is there to help! They will help make getting a home loan, fast, easy, and affordable. Choose Center State Mortgage for your home loan needs!
A financial statement that shows assets, liabilities, and net worth as of a specific date.
Balloon Mortgage
A long-term loan, often a mortgage, that has one large payment (the balloon payment) due upon maturity. A balloon loan will often have the advantage of very low interest payments, thus requiring very little capital outlay during the life of the loan
Biweekly Payment Mortgage
A plan to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one-half of the monthly payment required if the loan were a standard 30-year fixed-rate mortgage. The result for the borrower is a substantial savings in interest.
Bridge Loan
Short-term financing which is expected to be paid back relatively quickly, such as by a subsequent longer-term loan. also called swing loan or bridge financing.
Buydown
When the seller, builder or buyer pays an amount of money up front to the lender to reduce monthly payments during the first few years of a mortgage. Buydowns can occur in both fixed and adjustable rate mortgages.
Certificate of Eligibility
A government-issued document which indicates that a member of the armed forces who serves a certain number of days and is honorably discharged can apply for a Veterans Administration (VA) loan, such as a VA mortgage.
Closing Costs
These are expenses - over and above the price of the property- that are incurred by buyers and sellers when transferring ownership of a property. Closing costs normally include an origination fee, property taxes, charges for title insurance and escrow costs, appraisal fees, etc. Closing costs will vary according to the area country and the lenders used.
Compound Interest
Interest which is calculated not only on the initial principal but also the accumulated interest of prior periods. Compound interest differs from simple interest in that simple interest is calculated solely as a percentage of the principal sum.
Conversion Clause
A provision in an ARM allowing the loan to be converted to a fixed-rate at some point during the term. Usually conversion is allowed at the end of the first adjustment period. The conversion feature may cost extra.
Getting a home loan can be stressful and confusing, especially with so many forms to fill out and paperwork to sign. Luckily, Center State Mortgage is there to help! They will help make getting a home loan, fast, easy, and affordable. Choose Center State Mortgage for your home loan needs!
Mortgage Glossary Part 1
2/1 Buy Down Mortgage
The 2/1 Buy Down Mortgage allows the borrower to qualify at below market rates so they can borrow more. The initial starting interest rate increases by 1% at the end of the first year and adjusts again by another 1% at the end of the second year. It then remains at a fixed interest rate for the remainder of the loan term. Borrowers often refinance at the end of the second year to obtain the best long term rates; however, even keeping the loan in place for three full years or more will keep their average interest rate in line with the original market conditions.
Acceleration Clause
A provision that allows a lender to demand payment of the total outstanding balance or demand additional collateral under certain circumstances, such as failure to make payments, bankruptcy, nonpayment of taxes on mortgaged property, or the breaking of loan covenants.
Adjusted Basis
The base price of an asset or security that reflects any deductions taken on or improvements to the asset or security, used to compute the gain or loss when sold.
Affordability Analysis
An analysis of a buyers ability to afford the purchase of a home. Reviews income, liabilities, and available funds, and considers the type of mortgage you plan to use, the area where you want to purchase a home, and the closing costs that are likely.
Amortization
The gradual repayment of a mortgage loan, both principal and interest, by installments.
Annual Percentage Rate (APR)
Annual Percentage Rate. The yearly cost of a loan, including interest, insurance, and the origination fee (points), expressed as a percentage. Often applied to mortgages, credit cards, and automobile financing.
Appraisal
A written analysis prepared by a qualified appraiser and estimating the value of a property.
Appraised Value
An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property.
Assumability
A mortgage that can be transfered with no change in terms. If an assumable mortgage is transferred, the buyer assumes all responsibility for repayment. The original lender must agree to the transfer of an assumable mortgage.
All these terms may seem confusing! Let Center State Mortgage help you regain control and allow them to make your home loan process easy, fast, and affordable! Choose Center State Mortgage for buying your next home and give yourself peace of mind.
The 2/1 Buy Down Mortgage allows the borrower to qualify at below market rates so they can borrow more. The initial starting interest rate increases by 1% at the end of the first year and adjusts again by another 1% at the end of the second year. It then remains at a fixed interest rate for the remainder of the loan term. Borrowers often refinance at the end of the second year to obtain the best long term rates; however, even keeping the loan in place for three full years or more will keep their average interest rate in line with the original market conditions.
Acceleration Clause
A provision that allows a lender to demand payment of the total outstanding balance or demand additional collateral under certain circumstances, such as failure to make payments, bankruptcy, nonpayment of taxes on mortgaged property, or the breaking of loan covenants.
Adjusted Basis
The base price of an asset or security that reflects any deductions taken on or improvements to the asset or security, used to compute the gain or loss when sold.
Affordability Analysis
An analysis of a buyers ability to afford the purchase of a home. Reviews income, liabilities, and available funds, and considers the type of mortgage you plan to use, the area where you want to purchase a home, and the closing costs that are likely.
Amortization
The gradual repayment of a mortgage loan, both principal and interest, by installments.
Annual Percentage Rate (APR)
Annual Percentage Rate. The yearly cost of a loan, including interest, insurance, and the origination fee (points), expressed as a percentage. Often applied to mortgages, credit cards, and automobile financing.
Appraisal
A written analysis prepared by a qualified appraiser and estimating the value of a property.
Appraised Value
An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property.
Assumability
A mortgage that can be transfered with no change in terms. If an assumable mortgage is transferred, the buyer assumes all responsibility for repayment. The original lender must agree to the transfer of an assumable mortgage.
All these terms may seem confusing! Let Center State Mortgage help you regain control and allow them to make your home loan process easy, fast, and affordable! Choose Center State Mortgage for buying your next home and give yourself peace of mind.
Types of Loans
Thirty-Year Fixed Rate Mortgage
A 30 year fixed mortgage is possibly the most common type of mortgage loan. It has several characteristics that make it such a popular choice when financing a home purchase.
One of the key features of a 30 year fixed mortgage is its fixed interest rate. When you acquire the loan, the interest rate that you get at that time is the interest rate that you keep for the duration of the loan. Your only option to change the interest rate is if you choose to refinance. If you are able to lock a great interest rate when getting the mortgage, you are set. That is the rate for the next 30 years, assuming that you own the house that long.
Adjustable Rate Mortgages (ARM)
ARM. A mortgage with an interest rate that may change, usually in response to changes in the Treasury Bill rate or the prime rate. The purpose of the interest rate adjustment is primarily to bring the interest rate on the mortgage in line with market rates. The mortgage holder is protected by a maximum interest rate (called a ceiling), which might be reset annually. ARMs usually start with better rates than fixed rate mortgages, in order to compensate the borrower for the additional risk that future interest rate fluctuations will create.
2/1 Buy Down Mortgage
The 2/1 Buy-Down Mortgage allows the borrower to qualify at below market rates so they can borrow more. The initial starting interest rate increases by 1% at the end of the first year and adjusts again by another 1% at the end of the second year. It then remains at a fixed interest rate for the remainder of the loan term. Borrowers often refinance at the end of the second year to obtain the best long-term rates. However, keeping the loan in place even for three full years or more will keep their average interest rate in line with the original market conditions.
Negative Amortization (Neg. Am) Loan
A gradual increase in mortgage debt that occurs when the monthly payment is insufficient to cover the interest due, and the balance owed keeps increasing (at least in the first few years).
Center State Mortgage is your #1 source for home loans and mortgage needs! They have an experienced and successful track record to make your home loan process fast, easy, and affordable. Choose Center State Mortgage for your home buying needs!
A 30 year fixed mortgage is possibly the most common type of mortgage loan. It has several characteristics that make it such a popular choice when financing a home purchase.
One of the key features of a 30 year fixed mortgage is its fixed interest rate. When you acquire the loan, the interest rate that you get at that time is the interest rate that you keep for the duration of the loan. Your only option to change the interest rate is if you choose to refinance. If you are able to lock a great interest rate when getting the mortgage, you are set. That is the rate for the next 30 years, assuming that you own the house that long.
Adjustable Rate Mortgages (ARM)
ARM. A mortgage with an interest rate that may change, usually in response to changes in the Treasury Bill rate or the prime rate. The purpose of the interest rate adjustment is primarily to bring the interest rate on the mortgage in line with market rates. The mortgage holder is protected by a maximum interest rate (called a ceiling), which might be reset annually. ARMs usually start with better rates than fixed rate mortgages, in order to compensate the borrower for the additional risk that future interest rate fluctuations will create.
2/1 Buy Down Mortgage
The 2/1 Buy-Down Mortgage allows the borrower to qualify at below market rates so they can borrow more. The initial starting interest rate increases by 1% at the end of the first year and adjusts again by another 1% at the end of the second year. It then remains at a fixed interest rate for the remainder of the loan term. Borrowers often refinance at the end of the second year to obtain the best long-term rates. However, keeping the loan in place even for three full years or more will keep their average interest rate in line with the original market conditions.
Negative Amortization (Neg. Am) Loan
A gradual increase in mortgage debt that occurs when the monthly payment is insufficient to cover the interest due, and the balance owed keeps increasing (at least in the first few years).
Center State Mortgage is your #1 source for home loans and mortgage needs! They have an experienced and successful track record to make your home loan process fast, easy, and affordable. Choose Center State Mortgage for your home buying needs!
How to Get a Loan
Once you select us to obtain your home loan, you'll be amazed at how quickly and simply the loan process moves. With Center State Mortgage, you can expect professional service that is fast and easy!
Throughout the loan-application process, we provide you with regular updates. They are there for you, with updates and status inquiries sent to you on a regular basis. They are also available for any questions you may have and are ready to assist you with any problems you may run into.
Here's an overview of the loan-application process
STEP ONE -- Apply Now! Getting started is easy
Once you have selected a home to purchase and have a contract with the seller, expect Center State Mortgage to work quickly and efficiently to get you that loan. At the appropriate time they'll order a property appraisal for you.
STEP TWO -- Your Loan is Approved and Funded
Your Real Estate Agent or the Seller will choose an Escrow or Title company to give you the funding you need. Center State Mortgage will coordinate with the escrow team and you'll sign the final papers at their office.
Center State Mortgage is your #1 source for home loans and mortgages! They have all the tools you will need to make buying your home fast and easy. What's better than that? Visit Center State Mortgage today and get on track to buying your home!
Throughout the loan-application process, we provide you with regular updates. They are there for you, with updates and status inquiries sent to you on a regular basis. They are also available for any questions you may have and are ready to assist you with any problems you may run into.
Here's an overview of the loan-application process
STEP ONE -- Apply Now! Getting started is easy
Once you have selected a home to purchase and have a contract with the seller, expect Center State Mortgage to work quickly and efficiently to get you that loan. At the appropriate time they'll order a property appraisal for you.
STEP TWO -- Your Loan is Approved and Funded
Your Real Estate Agent or the Seller will choose an Escrow or Title company to give you the funding you need. Center State Mortgage will coordinate with the escrow team and you'll sign the final papers at their office.
Center State Mortgage is your #1 source for home loans and mortgages! They have all the tools you will need to make buying your home fast and easy. What's better than that? Visit Center State Mortgage today and get on track to buying your home!
Home Purchase Basics
Congratulations on your decision to buy a new home! As a homeowner, there are many important decisions to be made, especially if it is your first time purchasing a home. Here are some basic hints and tips.
A home purchase may be your largest financial transaction to date, so it's important to make the right decisions and to keep an eye on the details. By using a professional real estate agent the entire process should be smooth, efficient, pleasurable, and most importantly fast!
Your Real Estate Agent should:
1) Preview homes for you and decide which ones are the best for your price range.
1) Preview homes for you and decide which ones are the best for your price range.
2) Show you homes that fit your individual needs and wants
3) Help you make the right decision on which is considered a "good buy" by determining the market and probable causes that may increase or decrease the value of your home over time.
Negotiate the best deal for you. With a Pre-Qualification letter from us in hand, your Real Estate Agent will be able to demonstrate that you are a qualified and capable borrower. This is a very important step in the process, ultimately, it could determine whether or not you will get the home.
Your Mortgage Broker and Loan Officer should:
1) Help you make the right decision about which loan to choose from, depending on your needs and circumstances.
1) Help you make the right decision about which loan to choose from, depending on your needs and circumstances.
2) Keep you up-to-date on the entire loan process
3) Keep your Real Estate Agent informed of our loan progress
4) Get you the best loan at the lowest interest rates to save you money!
Center State Mortgage is your #1 source for home loans and home purchasing needs! Count on them to help the transaction go smoothly! Visit Center State Mortgage today and get on the road to your purchase of a new home!
Why Use a Broker?
Independent mortgage brokers have had a significant positive impact on the lending industry. Today, the use of a professional mortgage broker is one of the key strategies used by sophisticated borrowers because it helps them receive the best loan to fit their needs that they may not find utilizing other sources.
What is a Mortgage Broker?
A mortgage broker is an independent real-estate financing professional who specializes in the origination of residential mortgage loans. Mortgage brokers normally pass the actual funding and servicing of loans on to wholesale lending sources. By having access to multiple loan options and additional resources, you can be assured that a mortgage broker is an asset to any type of real estate transaction.
What Do Mortgage Brokers Do?
In the volatile home-lending market, mortgage brokers can serve as safeguards, offering their clients security, safety, and peace of mind. To many, the most important aspect of a mortgage broker is to ensure total quality care for the loan application and to make sure there are no kinks and that no problems will emerge. A professional mortgage broker can wade through the mountains of rate data and program options, researching current market conditions to find the most accurate and up-to-date information about cost-effective loan options. In short, brokers are responsible for handling the small, yet important details.
There are literally thousands of variables that can affect the outcome of your mortgage transaction. That's why you need a mortgage broker to act as a liaison between the title and escrow company, real estate agent, lender, appraiser, credit agency, the underwriters, the processors, attorneys, and any other services which may affect your transaction.
Center State Mortgage is your #1 Source for all your home loan and mortgage refinancing needs! You will find that they have countless resources to help ensure a safe and quality-laden transaction when you are looking to purchase a home. Visit Center State Mortgage Company today!
What is a Mortgage Broker?
A mortgage broker is an independent real-estate financing professional who specializes in the origination of residential mortgage loans. Mortgage brokers normally pass the actual funding and servicing of loans on to wholesale lending sources. By having access to multiple loan options and additional resources, you can be assured that a mortgage broker is an asset to any type of real estate transaction.
What Do Mortgage Brokers Do?
In the volatile home-lending market, mortgage brokers can serve as safeguards, offering their clients security, safety, and peace of mind. To many, the most important aspect of a mortgage broker is to ensure total quality care for the loan application and to make sure there are no kinks and that no problems will emerge. A professional mortgage broker can wade through the mountains of rate data and program options, researching current market conditions to find the most accurate and up-to-date information about cost-effective loan options. In short, brokers are responsible for handling the small, yet important details.
There are literally thousands of variables that can affect the outcome of your mortgage transaction. That's why you need a mortgage broker to act as a liaison between the title and escrow company, real estate agent, lender, appraiser, credit agency, the underwriters, the processors, attorneys, and any other services which may affect your transaction.
Center State Mortgage is your #1 Source for all your home loan and mortgage refinancing needs! You will find that they have countless resources to help ensure a safe and quality-laden transaction when you are looking to purchase a home. Visit Center State Mortgage Company today!
Center State Mortgage Company
Center State Mortgage has built a strong reputation as an outstanding mortgage brokerage firm, serving the lending needs of real estate professionals, builders and individual homebuyers throughout the state. Their professionalism and compassion for clients is what drives them to be even more successful.
They're a full service mortgage broker with an experienced staff offering expertise in every area of mortgage lending...from purchase to refinance to construction lending. We have access to a full range of mortgage sources and all of our lending specialists are dedicated to finding the right loan-with the best rates, terms and costs-to meet your unique needs. Throughout the entire process the employees are there with you, providing you updates, conflict resolution, and other services to ensure the transaction goes smoothly. They also offer a special Mortgage Manager service if you are considering refinancing your mortgage.
And, now it's their pleasure to offer all of their exceptional mortgage services online. This new service is specifically designed for the busy client, you can look up mortgages, loan options, and other services, any time you want.
They offer the best mortgage tools available on the Internet - easy, convenient, on-line shopping for the best loan programs and most current rates available, together with the assistance of an experienced, "live" loan officer who is there to guide through any or all steps of the loan process to ensure that your transaction is flawless and smooth.
They're a full service mortgage broker with an experienced staff offering expertise in every area of mortgage lending...from purchase to refinance to construction lending. We have access to a full range of mortgage sources and all of our lending specialists are dedicated to finding the right loan-with the best rates, terms and costs-to meet your unique needs. Throughout the entire process the employees are there with you, providing you updates, conflict resolution, and other services to ensure the transaction goes smoothly. They also offer a special Mortgage Manager service if you are considering refinancing your mortgage.
And, now it's their pleasure to offer all of their exceptional mortgage services online. This new service is specifically designed for the busy client, you can look up mortgages, loan options, and other services, any time you want.
They offer the best mortgage tools available on the Internet - easy, convenient, on-line shopping for the best loan programs and most current rates available, together with the assistance of an experienced, "live" loan officer who is there to guide through any or all steps of the loan process to ensure that your transaction is flawless and smooth.
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