Knowing that you’re ready to buy a home can be an exhilarating feeling, except it’s often followed by panic. While experience is the best teacher, there are some things you can do to regain control of the home-buying experience. One of them is getting accustomed to the terminology, especially when it comes to the various types of mortgages available.
LearnVest offers the following list of mortgage terms any first-time homebuyer should add to their dictionary:
- Adjustable-Rate Mortgage (ARM). An adjustable-rate mortgage is a home loan with fluctuating interest rates. ARMs are very much a game of chance, starting off with a period of 3 – 10 years of low fixed rates, followed by an adjustable roller coaster-rate period. In short, your interest rate will reflect whatever...
Since the warmer months are the busy months when it comes to real estate, you might not think about starting the buying process in the dead of winter, but there are a few good reasons why you should, especially if you’re hoping for a good deal.
More room to negotiate the price. Since there is less competition from other buyers in the winter (since few people enjoy moving all their stuff in the cold weather), it gives you a golden opportunity to get a good deal on a home. In the summer, there is less room for negotiation, so you’ll have better luck with a lower offer when you are the only offer on the table.
Easier to close the deal fast. Sellers have a lot to lose the longer their home is on the market, so it’s...
The way in which mortgage loan officers are compensated may be changing if rules proposed by the mortgage industry are adopted, and that could affect how much homebuyers pay in loan costs.
In 2014, the Consumer Financial Protection Bureau (CFPB) changed the rules for loan officer compensation by reducing financial incentives for loan officers to steer consumers toward riskier loan products that came with increased pay for the loan officers.
For example, mortgage loan officers couldn’t receive any compensation based on interest rate, loan terms or by recommending a customer to an affiliate third-party such as an appraisal or title insurance service. They also couldn’t receive money from a borrower and a related party for the same transaction.
As of late 2018, the Mortgage Bankers Association (MBA)...
Shopping for a mortgage can be overwhelming. Even if you’ve owned a few homes and have had a few home loans, chances are there are some mortgage options you don’t know about.
Here are four to ask a mortgage expert about:
1. A 20 percent down payment isn’t a must. The long-held view that at least a 20 percent down payment is needed to buy a home is outdated.
A loan approved by the Federal Housing Administration, or FHA, can have a minimum down payment of 3.5 percent. For a $300,000 home, instead of having to come up with $60,000 (20 percent) down, a 3.5 percent down payment requires $10,500 down.
2. Banks aren’t the only home lenders. Traditional lenders like banks and credit unions are just some of the places to get a home loan.
When it comes to buying a home, the decision to move near a school might not be as black and white as you’d think. Here are a few factors you’ll have to consider before taking the plunge.
Do you have or plan on having kids? It’s the obvious question, but one you should always be considering when it comes to buying your next home. Proximity to a school may not be a big factor for your family now, but will it be in a few years? Are you buying a starter home, or the home you want your family to stay and grow in? Do you have grandkids attending this school that you’d like to be close to? All of these matter when deciding if being in a school neighborhood is right for you.
Is your lifestyle conducive to the slower pace of these...
If you’re house-hunting and you have or plan to start a family, you’ll most likely want a house with a yard to give your kids a place to run and play, and give your pets enough space to exercise. A backyard can also be a great location for family dinners, parties, barbecues and a garden.
In your search for a new home, you might find a spacious house that seems ideal for your family but has a small yard, or you might find a smaller house with a huge backyard. You’ll then need to decide how much outdoor space is right for your family. There’s no one-size-fits-all answer.
Things to Consider
How much yard space you need depends in large part on how many children you have and their interests. If your kids like to spend a lot of time running around, or if they’re couch...
Many real estate investors purchase multi-family houses to generate a steady income. If you’re considering buying an apartment building, you may be able to earn a significant profit, but there are costs and other factors to consider.
If you want to purchase a multi-family property, you’ll most likely need to obtain a loan. Getting financing for a larger building might be easier than borrowing money for a smaller one. The more units there are, the less one individual unit will affect the amount of revenue collected. If one tenant in a large building moved out or fell behind on rent payments, you would likely still be able to meet your monthly mortgage payments. That means the larger building would be less of a financial risk from the bank’s perspective.
If you’re between jobs or retired—or not working and considering retirement—you can still buy a home and get a mortgage that will require you to make monthly payments.
While you don’t need a job to get a mortgage, what you do need is income. And there are many types of income that lenders will accept for a mortgage loan. You’ll likely need to have a few of them to qualify, and you’ll need to document them. Here are some sources of income beyond having a job:
Retirees aren’t the only people receiving Supplemental Security Income (SSI), which is a form of income. You may be on permanent disability or dependent on someone and receive SSI income.
If a former employer is sending you a regular check each month, it...
Shopping for a mortgage isn’t as fun as looking at homes to buy, but it’s an important step that will affect you for years.
There are many ways to shop for a lender. You can start by looking at online mortgage lenders. Or you can walk in to a bank and ask to talk to a loan officer. A mortgage broker or your real estate agent may be able to recommend lenders, as may friends and family. Online reviews may also be helpful.
Before you start talking to lenders, there are a few steps you may want to take first. If you have no credit or bad credit, or aren’t sure of your credit score, start by finding out your credit score and then work on improving it. This could take a month or more.
A low credit score is a sign that you’re a risky borrower, which will likely lead to a higher interest rate on the home loan.
Moving into a new place can be both exciting and overwhelming. In the midst of all the chaos, however, it’s easy to forget certain crucial tasks. To make things as smooth as possible for you, get these details taken care of first:
Document and photograph. If your property has incurred any damage since the home inspection, take notes and photos so you have proof if you decide whether to pursue this further. Renting? You’ll probably be asked to fill out a condition report, which is how your landlord will determine what needs fixing and potentially prove that you’ve made alterations or caused damage when it’s time to move out. Do a walk through, make some notes, take photos and save it all in a secure file.
Do a deep clean or a spot clean...