Home Loans
Home Mortgage Loan - Are You Really Ready For A Home Mortgage Loan
Owning a home is really one of the ultimate dreams of a lot of people. No one will deny the fact that such greatly reflects the fruits of hard work through the years.
However, owning a home is not that easy. Financially, the implications are not very simple. A significant amount of money must be available before one even makes the first move to attain this kind of a dream.
Everything must begin with the identification of what one can really afford. This involves scrutiny of savings and other existing funds as well as the entry of income in the coming years. If one intends to get a home loan, a clear forecast of income in the future must be in place.
A lot of people, so far, prefer to avail of home loans. These types of loans seem to be the lightest way to purchase a home since available funds are not squeezed out at once. The entire amount is being stretched for years in affordable terms, thus, achieving ones dream of having a home does not become so much of a burden.
However, although home loans lessen the burden, it remains very important that the owner specifically matches his criteria for a home and income potential. It is true that getting the best home is the most fulfilling. However, in reality, the best may not be appropriate for everyone.
Ones housing affordability is strongly dependent on money available for down payment, costs for closing a certain deal, and needs for a cash reserve. Normally, the greater the existing amount, the less that one has to file for a home loan which is much better.
Agents of home loans normally go through an intensive consultation with the potential home buyers. These discussions cover preferences as well as possible trade-offs given some budget constraints. These also aim to organize all factors involved at the very start of the transaction to avoid problems along the way.
At such stage, the buyer realistically asks himself, What do I want in a home which I can afford.
Indeed, searching for the right home is both subjective and objective. It is subjective because choices are strongly dependent on ones personal taste and objective because a lot of tangible factors must be taken into serious consideration.
As soon as preferences have been laid down well in the light of a realistic budget, one is ready to search for the actual home. There are realtors who can help in this stage as well as other service providers who can give an honest evaluation of the target neighborhood. However, this stage poses the temptation to go over the set budget so one must be very focused on what has been previously planned.
Getting the help of a real estate professional is indeed beneficial as they can help save time as well as effort as they know the ins and outs of the business. Proper communication of actual financial status and preferences should be in place. They can also suggest which loan providers are best in the industry.
On the other hand, having budget constraints does not automatically mean availing of a home of poor quality. One still needs to be very critical as he inspects each of the homes that he visits. There are so many choices out there and quality must not sacrifice with amount.
There are online loan calculators that one can easily use to regularly monitor the price range against what one can actually afford. These tools are updated and make use of current interest rates. Thus, one can immediately see how much the monthly amortization will be.
Indeed, in availing any home loans, a realistic evaluation is very important. Loan companies will not grant a home loan if finances and income potential are obviously not sufficient. This explains why an intensive credit investigation is being conducted first. This is a standard procedure in any loan provider.
Indeed, proper planning here is very essential. It is not enough that one simply wants a home. Ones dreams of owning a home can become a reality if and only if all factors involved have been well considered. Otherwise, the dream may turn out to be a nightmare.
Found your dream home? Just need the right loan? Let FSH1.com do the work for you! Our affiliates can give you a wide range of home loans/equity loans options on primary residences, second/vacation homes and investment properties.
We offer an online protal to:
- Loan amounts up to $1 million.
- Fixed or adjustable rate loans.
- Financing for single family homes for 1-4 properties
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Lower your monthly payments and have our staff offer you competitive interest rates! When rates fall steadily, refinancing may make sense even if you have done so once already. Mortgage rates at historic lows. Get a low rate on home equity mortgage loans, mortgage refinancing, or debt consolidation. Perfect Credit not required. Also 125% loans! Visit fidelitycenters.com to create your own online home loan center.
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Find your Current Situation relating to Home Financing or Debt Consolidation to decide which loan is best for you:
- You currently have a lot of equity in your home and your mortgage interest rate is higher than today’s cash out refinance rates: A cash out refinance will allow you to finance the loan at a lower interest rate than a home equity loan. A cash out refinance will pay off your current first mortgage and provide you with additional money to use at your discretion such as paying off existing loans.
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You currently have a lot of equity in your home and your mortgage interest rate is much lower than today’s rate. A Home Equity Loan is your best bet. Home equity loans generally have a higher interest rate than a cash out refinance, but you will only be paying the higher interest rate on the new loan amount, since you will keep your first mortgage with the lower interest rate. Click here
You currently DO NOT have a lot of equity in your home. A Home Equity Loan is your best bet. A home equity loan allows you to borrow up to 125% of your home’s value. Visit fidelitycenters.com to create your own online home loan center.
You currently DO NOT own a home. You should investigate an unsecured personal loan. Depending on your credit score and your income, you may be able to lower your monthly payments, your total interest payment, or both. Unsecured Credit Cards and Personal Loans - Any Credit History
You currently have Federal or private student loans. You should consolidate student loans into a single loan.
Search for a Home Loan See who’s got the lowest mortgage rates for yourself. Apply Online for a side-by-side comparison of the TOP national lenders.
The Home Buying Process
For years people shopped for a home with a real estate agent and didn’t involve the lender until after a house was selected. Today, there’s a much smarter way to shop.
They can help you determine how much home you can afford so you and your agent know your price range right away. Plus we can:
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Pre-approve you for a loan — a valuable negotiating tool when you’re bidding on a home* |
Here are 4 steps we recommend for selecting and purchasing a new home. Follow them and you’ll enjoy a better home buying experience. You’ll be hanging curtains and arranging furniture in your new home a lot sooner.
Determine your price range
Get pre-approved for a loan
Select a real estate agent
Shop for a home
*Pre-approval subject to satisfactory appraisal and title review and no change in financial condition.
Determine your price range
Use our “How Much Home Can You Afford” Calculator to figure out the loan amount and home price you could likely obtain from based on today’s rates and programs.
Get pre-approved for a loan
Decide how you’d like to work with us — in person, by phone or online. Then start by having us pre-approve you for a loan.*
Select a real estate agent
A real estate agent can help you throughout the buying process. What’s more, since an agent’s services are usually paid through a commission from the seller, they don’t cost you anything. A good agent will help you decide exactly what you want in a home, what’s essential and what’s less important, learn your likes and dislikes, and save you hours of fruitless searching. Agents are the first to know when new homes come on the market and can advise you throughout the home-buying process.
Shop for a home
Here’s the fun part. But remember to be a critical buyer. This is going to be your home — possibly for years. Here are some tips:
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Look beyond the cosmetics. Make sure the most expensive things to repair or renovate, things like the structure, plumbing, wiring, and heating and cooling system are all in good shape. |
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Think about how the home suits your needs. See our Home Checklist. |
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Do you like how the home feels? Is it you? |
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Drive around the neighborhood — is this an area you want to live? (Research businesses and other features of the neighborhood with Map Blast. |
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Are other homes around the one you’re considering comparable in value? Avoid buying a home considerably more valuable than neighboring homes — you may have trouble with the appraisal. You may also have trouble getting your value out of the home when you want to sell. |
Make an offer
Found a home? Decide what price you want to offer and present the price to the seller.
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Use a standard form real estate purchase contract (your agent will provide this). The agreement will have important clauses protecting you and the transaction. |
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In choosing a price, consider recent selling prices for comparable homes in the same area, how long the house has been on the market, how hot or slow the market is, and whether the home needs any major repairs. (Your real estate agent can help assess all these. You can also try homegain.com.*) |
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See what closing costs the seller might be willing to pay. An eager seller may share more of them. |
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Be sure the purchase contract releases you without penalty if a home inspection turns up major problems or the home doesn’t appraise for the sales price. |
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Write a realistic closing date into the agreement. While our loan process can be very fast (see our 10 Day Close Program), you’ll need time for the home inspection and negotiations resulting from that. |
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If you need to sell your current home, try to make your contract conditional upon the sale of your house. If this request is rejected, give yourself a later closing date. |
Once your offer has been accepted, you’ll need to provide earnest money. This is a cash deposit (several hundred dollars to several thousand depending on the value of the home and the market) towards the down payment that shows your commitment to buying the home.
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Raising limits: Will it help?
CONFORMING UP: Congressional leaders and the White House have agreed to raise loan limits on mortgages guaranteed by Fannie Mae and Freddie Mac. They have agreed to raise loan limits on mortgages insured by the Federal Housing Administration.
Housing Wire rounds up some details on their Web site.
I’m skeptical that these changes will help. My skepticism comes in three parts:
# By increasing the conforming loan limit (to up to $725,000 in high-cost areas such as California) for loans guaranteed by Fannie and Freddie, the government is allowing — no, encouraging — those companies to take greater risks at a time when the smart money is shying away from risky debt.
Nemo, a commenter on the Calculated Risk blog, put it best with this succinct tidbit: “I guess Fannie and Freddie weren’t too big to fail yet.”
Right now, the conforming limit is $417,000. In most of the country, that limit is ample to assure that mortgage money is available for lower- and moderate-income borrowers. In expensive areas in the Northeast, parts of Florida, and in much of California, it’s hard to find a habitable house for less than half a million dollars, and many homebuyers need mortgages of more than $417,000. They get jumbo mortgages.
For a long time, the typical rate on a 30-year, fixed-rate jumbo mortgage was about a quarter of a percentage point higher than that on a conforming loan. If a lender was offering conforming loans at 6.5 percent, a jumbo borrower could expect to get a loan at 6.75 percent, give or take.
But in August, there was a meltdown in the jumbo securitization market, as investors suddenly realized that they didn’t know how to assess the risks of the jumbo loans that they owned. In a matter of hours, everyone got scared of buying securities based on jumbo loans, and the market halted. Interest rates on jumbo loans skyrocketed. In this week’s Bankrate.com survey, the average rate on a conforming mortgage was 5.57 percent, and the average jumbo was 6.85 percent. In the old days, that jumbo rate would have been about a full percentage point lower.
Now political leaders are saying that Fannie and Freddie should guarantee some of those loans that private investors are afraid of. Fannie and Freddie are private corporations, but they are also government-sponsored enterprises, or GSEs, and a lot of investors believe that there’s an implicit guarantee that the federal government will bail them out.
What if you believed that the government would refund your money from an investment gone bad? Would you act less carefully? Of course you would.
In September, Fed Chairman Ben Bernanke testified before the House Financial Services Committee about mortgage lending. He said:
“Some have suggested that the GSEs could help restore functioning in the secondary markets for non-conforming mortgages (specifically jumbo mortgages, those with principal value greater than $417,000) if the conforming-loan limits were raised. However, in my view, the reason that GSE securitizations are well-accepted in the secondary market is because they come with GSE-provided guarantees of financial performance, which market participants appear to treat as backed by the full faith and credit of the U.S. government, even though this federal guarantee does not exist. Evidently, market participants believe that, in the event of the failure of a GSE, the government would have no alternative but to come to the rescue. The perception, however inaccurate, that the GSEs are fully government-backed implies that investors have few incentives in their role as counterparties or creditors to act to constrain GSE risk-taking. Raising the conforming-loan limit would expand this implied guarantee to another portion of the mortgage market, reducing market discipline further. If, despite these considerations, the Congress were inclined to move in this direction, it should assess whether such action could be taken in a way that is both explicitly temporary and able to be implemented sufficiently promptly to serve its intended purpose. Any benefits that might conceivably accrue to this action would likely be lost if implementation were significantly delayed, as private securitization activity would likely be inhibited in the interim.”
Congress didn’t totally ignore Bernanke. The politicians say that these increased loan limits are temporary, and they want to act swiftly.
Here’s the second reason that I’m skeptical that raising the loan limits will help:
# To get a conforming or FHA-insured loan, you have to document your income and assets.
Herb Greenberg, of Marketwatch, nails it here, pointing out: “Without stated income for wage earners, it’s tough to qualify for a $700,000 loan.”
Even in California.
Greenberg asserts that 70 percent of all jumbos from 2005 to 2007 were stated-income, and for good reason: Most of those borrowers lied about their incomes so they could qualify. Greenberg says 90 percent lied. In the subset of stated-income borrowers who were wage-earners and not small-business owners, he’s probably not far off.
# The third reason for my skepticism can be summed up with this quote from Greenberg: “Refis will still have trouble due to values dropping in jumbo areas by such a large amount. These are the ones that really need the help.”
Bingo.
Even if Fannie and Freddie and the FHA can guarantee or insure loans of upwards of $700,000, it won’t do you any good if you owe more than the house is worth. If you owe $600,000 on an ARM, and the house is now worth $500,000, no one is going to give you a $600,000 fixed-rate loan.
Once again, capital is getting more consideration than consumers. Banks are free to underwrite bigger mortgages, but they’re not being pressured to forgive debt that they should never have underwritten in the first place.
The fastest and cleanest way to get out of this housing and mortgage mess is to make lenders forgive debt on loans for houses that have lost a lot of value. Home prices in much of the country went unsustainably high during the bubble. Those prices need to fall in relation to incomes. Either prices will stagnate for a decade or more while median incomes rise, or prices will fall. By raising the conforming limits, Congress is encouraging prices to stagnate. That surely doesn’t do first-time homebuyers any favors. They’ll have to remain on the sidelines for a few more years. It doesn’t really help current homeowners much, either.
Mortgage Matters is a blog on housing and mortgage issues written by Senior Reporter Holden Lewis.
– Posted: Jan. 25, 2008
January 26th, 2008 at 7:22 am