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Tips for Buying in a Tight Market

Increase your chances of getting your dream house in a competitive housing market, and lower your chances of losing out to another buyer.

1. Get pre-qualified for a mortgage. You ll be able to make a firm commitment to buy and your offer will be more desirable to the seller.

2. Stay in close contact with your real estate agent to find out about the newest listings. Be ready to see a house as soon as it goes on the market  if it s a great home, it will go fast.

3. Scout out new listings yourself. Look at Web sites such as REALTOR.com, browse your local newspaper s real estate section, and drive through the neighborhood to spot For Sale signs. If you see a home you like, write down the address and the name of the listing agent. Your real estate agent will schedule a showing.

4. Be ready to make a decision. Spend a lot of time in advance deciding what you must have in a home so you won t be unsure when you have the chance to make an offer.

5. Bid competitively. You may not want to start out offering the absolute highest price you can afford, but don t go too low to get a deal. In a tight market, you ll lose out.

6. Keep contingencies to a minimum. Restrictions such as needing to sell your home before you move or wanting to delay the closing until a certain date can make your offer unappealing. In a tight market, you ll probably be able to sell your house rapidly. Or talk to your lender about getting a bridge loan to cover both mortgages for a short period.

7. Don t get caught in a buying frenzy. Just because there s competition doesn t mean you should just buy it. And even though you want to make your offer attractive, don t neglect inspections that help ensure that your house is sound.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

Making an Offer on a Short Sale What You Need to Know

Are you looking to buy a new home Are you thinking that now’s a great time to find bargains Before you make an offer, it pays to know a little about the seller’s situation.

If a home is being sold for below what the current seller owes on the property and the seller does not have other funds to make up the difference at closing the sale is considered a short sale. Many more home owners are finding themselves in this situation due to a number of factors, including job losses, aggressive borrowing against their home in the days of easy credit, and declining home values in a slower real estate market.

A short sale is different from a foreclosure, which is when the seller’s lender has taken title of the home and is selling it directly. Homeowners often try to accomplish a short sale in order to avoid foreclosure. But a short sale holds many potential pitfalls for buyers. Know the risks before you pursue a short-sale purchase.

You’re a good candidate for a short-sale purchase if:

* You’re very patient. Even after you come to agreement with the seller to buy a short-sale property, the seller s lender (or lenders, if there is more than one mortgage) has to approve the sale before you can close. When there is only one mortgage, short-sale experts say lender approval typically takes about two months. If there is more than one mortgage with different lenders, it can take four months or longer for the lenders to approve the sale.

* Your financing is in order. Lenders like cash offers. But even if you can t pay all cash for a short-sale property, it s important to show you are well qualified and your financing is set. If you’re preapproved, have a large down payment, and can close at any time, your offer will be viewed more favorably than that of a buyer whose financing is less secure.

* You don t have any contingencies. If you have a home to sell before you can close on the purchase of the short-sale property or you need to be in your new home by a certain time a short sale may not be for you. Lenders like no-contingency offers and flexible closing terms.

If you’re serious about purchasing a short-sale property, it’s important for you to have expert assistance. Here are some people you want to work with:

* Experienced real estate attorney. Only about two out of five short sales are approved by lenders. But a good real estate attorney who’s knowledgeable about the short-sale process will increase your chances getting an approved contract. Also, if you want any provisions or very specialized language written into the purchase contract, a real estate attorney is essential throughout the negotiation.

* A qualified real estate professional. You may have a close friend or relative in real estate, but if that person doesn t know anything about short sales, working with him or her may hurt your chances of a successful closing. Interview a few practitioners and ask them how many buyers they’ve represented in a short sale and, of those, how many have successfully closed. A qualified real estate professional will be able to show you short-sale homes, help negotiate the purchase when you find the property you want to buy, and smooth communications with the lender. (All MLSs permit, and some now require, special notations to indicate that a listing is a short sale. There also are certain phrases you can watch for, such as  lender approval required. )

* Title officer. It s a good idea to have a title officer do an initial title search on a short-sale property to see all the liens attached to the property. If there are multiple lien holders (e.g., second or third mortgage or lines of credit, real estate tax lien, mechanic s lien, homeowners association lien, etc.), it’s much tougher to get that short sale contract to the closing table. Any of the lien holders could put a kink in the process even after you ve waited for months for lender approval. If you don t know a title officer, your real estate attorney or real estate professional should be able to recommend a few.

Some of the other risks faced by buyers of short-sale properties include:

* Potential for rejection. Lenders want to minimize their losses as much as possible. If you make an offer tremendously lower than the fair market value of the home, chances are that your offer will be rejected and you ll have wasted months. Or the lender could make a counteroffer, which will lengthen the process.

* Bad terms. Even when a lender approves a short sale, it could require that the sellers sign a promissory note to repay the deficient amount of the loan, which may not be acceptable to some financially desperate sellers. In that case, the sellers may refuse to go through with the short sale. Lenders also can change any of the terms of the contract that you ve already negotiated, which may not be agreeable to you.

* No repairs or repair credits. You will most likely be asked to take the property  as is. Lenders are already taking a loss on the property and may not agree to requests for repair credits.

The risks of a short sale are considerable. But if you have the time, patience, and iron will to see it through, a short sale can be a win-win for you and the sellers.

* Not all real estate practitioners are REALTORS . A REALTOR is a member of the NATIONAL ASSOCIATION OF REALTORS and is bound by NAR s strict code of ethics.

Note: This article provides general information only. Information is not provided as advice for a specific matter. Laws vary from state to state. For advice on a specific matter, consult your attorney or CPA.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

Housing and Community Development (HCD) Programs

The mission of the Department of Housing and Community Development (HCD) is to provide leadership, policies and programs aimed to the preservation and expansion of safe and affordable housing opportunities and to promote strong communities for all Californians.

In accordance with its mission statement, HCD s main responsibilities are to:

  • Advocate and support housing development for all Californians. HCD develops the Statewide Housing Plan and assists cities and counties with the housing element of their General Plans. It also monitors the use of housing funds by local Redevelopment Agencies as well as provides technical assistance and statistical data to the Governor, members of the Legislature and the public. Although many parts of the department assist, the division of Housing Policy Development primarily carries out these tasks.
  • Develop, administer and enforce building codes, manufactured housing standards and mobile-home park regulations. HCD registers and issues titles on mobilehomes, oversees the construction of manufactured housing, licenses the professionals who sell manufactured housing and regulates mobilehome parks. The Department also works with industry and other governmental agencies to develop building codes for both conventional and manufactured housing. These functions are primarily handled by the Division of Codes and Standards.
  • Administer State and federal housing, community development and childcare facilities finance programs. HCD administers a number of loan and grant programs for these purposes. These loans and grants are awarded to local governments, non-profit and for-profit developers of rental and ownership housing, community infrastructure and childcare buildings. The Division of Community Affairs handles these programs.

To fulfill its housing administrative financing responsibilities, HCD has in place several programs that help the development and preservation of affordable housing. The programs offer loans, grants or both to localities, developers, non-profits and individuals that engage in the construction, development or rehabilitation of housing units. The overarching goal of this help is to produce more affordable housing and to increase the rates of homeownership of low- and median-income households.

HCD programs sometimes are multi-folded and thus, have funds available for more than one housing activity. For instance, a program like CalHome funds new construction, acquisition and rehabilitation of single-family and multifamily housing projects, and tenant-based assistance.

HCD works directly with local governments, counties, non-profits, for-profits, and in some instances, income eligible families and individuals, in order to allocate the financing resources needed toward specific housing uses. The best way to find the right program for a determined activity (and all of its requirements) is to consult the Loan and Grant Program Directory of HCD.

This directory lists all of the housing programs available for California by: purpose, assistance type, terms, eligible activities, eligible applicants, application procedures, and contact information for all the programs offered.

In addition to the links mentioned above, it is also important to visit HCD s website to become familiar with the housing resources the agency has developed:

  • Affordable Housing Preservation: Information on the preservation of government-assisted projects at-risk of conversion to market rate, state preservation notice requirements and charts, and status reports.
  • Building Codes and Standards: Information on the nine programs the Division of Codes and Standards administers which address manufactured and factory built housing issues; and employee housing, code enforcement and state housing law issues.
  • Financial Clearinghouse: A source of information on over 200 housing programs, government, private lenders and foundation grants, all of which are non-HCD funding sources.
  • HCD Loans and Grants: Contains a calendar of funding and links to recent developments in rental housing, guidelines for homebuyer programs, monitoring and management of HCD programs, proposition 46 and publications.
  • Housing Planning and Statistics: Information on housing topics technical assistance (i.e. NIMBY resources), state housing planning (i.e. housing element), state plans and reports (i.e. redevelopment agencies report), and links to federal plans and reports.
  • Income Limits: State income limits and income limits for California-administered CDBG and HOME programs.
  • Redevelopment Agency Data: Reports, activities, and technical assistance for form-completion
  • Registration and Titling: Laws, regulations, program activities, contacts, and investor links against fraud.

Other important HCD links:
Notices of Funding Availability: (NOFAs) Information on funding availability for HCD s programs.
Proposition 46 Programs List: Information on programs funded by the  Housing and Emergency Shelter Trust Fund Act of 2002 $2.1 billion dollar bond measure .

HOUSING PRIMER

Loan Types to Consider.

Brush up on these mortgage basics to help you determine the loan that will best suit your needs.

Mortgage terms. Mortgages are generally available at 15-, 20-, or 30-year terms. In general, the longer the term, the lower the monthly payment. However, you pay more interest overall if you borrow for a longer term.

Fixed or adjustable interest rates. A fixed rate allows you to lock in a low rate as long as you hold the mortgage and, in general, is usually a good choice if interest rates are low. An adjustable-rate mortgage is designed so that your loan s interest rate will rise as market interest rates increase. ARMs usually offer a lower rate in the first years of the mortgage. ARMs also usually have a limit as to how much the interest rate can be increased and how frequently they can be raised. These types of mortgages are a good choice when fixed interest rates are high or when you expect your income to grow significantly in the coming years.

Balloon mortgages. These mortgages offer very low interest rates for a short period of time  often three to seven years. Payments usually cover only the interest so the principal owed is not reduced. However, this type of loan may be a good choice if you think you will sell your home in a few years.

Government-backed loans. These loans are sponsored by agencies such as the Federal Housing Administration (www.fha.gov) or the Department of Veterans Affairs (www.va.gov) and offer special terms, including lower down payments or reduced interest rates to qualified buyers.

Slight variations in interest rates, loan amounts, and terms can significantly affect your monthly payment. For help in determining how much your monthly payment will be for various loan amounts, use Fannie Mae s online mortgage calculators.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

What You Can Do to Improve Your Credit

Credit scores, along with your overall income and debt, are big factors in determining whether you ll qualify for a loan and what your loan terms will be. So, keep your credit score high by doing the following:

1. Check for and correct any errors in your credit report. Mistakes happen, and you could be paying for someone else s poor financial management.
2. Pay down credit card bills. If possible, pay off the entire balance every month. Transferring credit card debt from one card to another could lower your score.
3. Don t charge your credit cards to the maximum limit.
4. Wait 12 months after credit difficulties to apply for a mortgage. You re penalized less for problems after a year.
5. Don t order items for your new home on credit  such as appliances and furniture  until after the loan is approved. The amounts will add to your debt.
6. Don t open new credit card accounts before applying for a mortgage. Too much available credit can lower your score.
7. Shop for mortgage rates all at once. Too many credit applications can lower your score, but multiple inquiries from the same type of lender are counted as one inquiry if submitted over a short period of time.
8. Avoid finance companies. Even if you pay the loan on time, the interest is high and it will probably be considered a sign of poor credit management.

This information is copyrighted by the Fannie Mae Foundation and is used with permission of the Fannie Mae Foundation. To obtain a complete copy of the publication, Knowing and Understanding Your Credit, visit www.homebuyingguide.org.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

Fannie Mae to offer 3.5 percent buyer assistance

Fannie Mae recently announced that people purchasing a Fannie Mae-owned HomePath property will receive up to 3.5 percent in closing cost assistance. The initial offer must be submitted on or after April 11, 2011; and the sale must close on or before June 30, 2011, to be eligible for the incentive. Additionally, buyers must reside in the home as their primary residence (sales to investors are excluded).

All Fannie Mae-owned HomePath properties are listed on HomePath.com and most listings include detailed property descriptions, photographs, community and school information, and more. In addition, many Fannie Mae-owned properties are eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing, which offers home buyers an opportunity to purchase with as little as 3 percent down.

Department of Housing and Urban Development HUD

The U.S. Department of Housing and Urban Development has in place several programs to help homebuyers and homeowners with homeownership issues. The site is divided in six broad categories: HUD News, HUD Homes, HUD Communities, Working with HUD, Resources, and Tools. From all of these sections and its links, there are some very useful for the homebuyer or the real estate professional.
Useful information for homebuyers

HUD Homes Section

  • Buying: Homebuyer rights, how much mortgage can you afford, home wish list, finding a real estate broker, mortgages, local homebuyer programs, and shopping for a home.
  • Owning: Maintaining and improving your home, energy and home environment, paying the mortgage, refinancing, reverse mortgages, manufactured homes, disaster relief and homeownership government links.
  • Selling: Advice about selling a home, tips on interviewing brokers, getting your house ready to sell, selling your home, settlement costs.
  • Renting: Renters kit, housing counseling, federal financial assistance, apartment shopping, renters insurance, programs/services in federal rental housing, rent your home.
  • Homeless: Information for homeless people, assistance providers, advocates, and other resources.
  • Home improvements: Federal repair and rehabilitation programs
  • HUD homes: How to buy HUD s homes.
  • Fair housing: Fair Housing Policy and Research Forum, news, Housing Discrimination Complaint Form, and other miscellaneous information.
  • FHA refunds: For homeowners who had a HUD/FHA insured mortgage previous to Sept. 1983.
  • Foreclosure: How to avoid foreclosure questions and answers.
  • Consumer info: Protecting consumers rights links, i.e. lead hazard control or land sales complaints.

Working with HUD Section
HUD does not offer direct grants or loans to individuals; it works through local governments and non-profit organizations to make financial assistance and counseling available. These are the main resources available for homebuyers:

  • Housing Counseling: List of HUD approved agencies.
  • The American Dream Downpayment Act: Program created to assist low-income first-time homebuyers in purchasing single-family homes by providing funds for downpayment, closing costs, and rehabilitation carried out in conjunction with the assisted home purchase.
  • Low Downpayment Information: This homepage will facilitate approval of downpayment assistance through secondary financing programs
  • Housing Choice Vouchers (Section 8): Allow very low-income families to choose and lease or purchase safe, decent, and affordable privately-owned rental housing.

HUD Homes – When someone with a HUD insured mortgage is unable to meet the payments, the lender forecloses on the home; HUD pays the lender what is owed; and HUD takes ownership of the home. Then HUD sells it at market value as quickly as possible using a bid system.

From those properties, HUD sets apart some for HUD approved non-profits and/or for officer/teacher purchase only. The general public can buy the rest. These properties are commonly known as HUD homes and are sold in a  as is condition. If the HUD home, once active in the bid system is not sold within a six-month period, then a local government can buy it for $1. These Dollar HUD Homes for local governments can then be fixed, and put back in the market at considerable savings. The fixing of the property is done either by the government itself or in a joint partnership with local non-profit homeownership organizations or by taping into existing local programs to resell the homes to low- and moderate-income residents of the community.

Homes located in revitaltion areas have an additional discount.

In general, the dollar HUD homes, the set-aside properties for non-profits, officers and teachers and the HUD homes for the general public allow for the revitalization of neighborhoods and help maintain the affordable housing stock.

To buy a HUD home, it is necessary to use a real estate broker who will submit the buyers bid. The bids are submitted at 100% of the listed price value, which equals the appraised value. Properties sold through this system have clear deadlines and are also available for the officers and teachers program. They can purchase a property off the General List and still receive a 50% discount if:

(a) the property is located in a HUD-designated revitalization area; and

(b) no other acceptable offers have been received. In the case that multiple offers are entered into the bidding system, a lottery process will decide the bid winner. Officers or teachers must submit a contract bid at 100% of the “Listed Price”. When bids are submitted by officers and teachers on properties in the General Property List that are above or below 100% of the list price, they will be treated as standard “owner/occupant” bids and will not be eligible for the 50% Officer Next Door/ Teacher Next Door (OND/TND) discount.

The 50% discount, applicable to the OND/TND program will be applied at closing.

Other HUD Homes links of interest:

  • General Information about HUD homes
  • Selling HUD homes
  • Frequently asked questions about Marketing and Management program
  • HUD homes for sale
  • About Communities

This HUD section provides links to maps and statistics about virtually any locality in the United States. Searches can be performed either by name place or by zip code. The information helps REALTORS answer accurately general questions about the location of educational facilities, environmental conditions, and demographic data of any given home.

  • Community maps: Maps provide information from HUD and the Environmental Protection Agency (EPA), i.e. community development projects and toxic release sources.
  • Facts about your community from the Census: Statistical information about the population that inhabits a place, i.e. age, education, income, race, home values, homeownership, mortgage and housing starts.
  • Facts about the environment from EPA: For those who want to know more about radiation, superfunds, watersheds and other highly technical environmental questions.

Look for schools, colleges, and libraries Information on local public and private schools, colleges and libraries. If you are looking for the school performance index (ranking), log into the California Department of Education s web page Academic Performance Index.
Look for child care Find the closest child care facility to any given location.

Other Important HUD pages

  • Descriptions of Single Family Housing Programs
  • Approved Appraisers List
  • HUD Approved Lenders
  • Maximum Mortgage Limits

Revitalization Homes’ area locator: It allows you to find out if a single family property is located within a Revitalization Area. This online tool can help verify if a particular location is eligible for the discount sale programs offered in revitalization areas.

HOUSING PRIMER

Incoming search terms:

Neighborhood Stabilization Program 2

The Neighborhood Stabilization Program2 (NSP2) was established to stabilize neighborhoods whose viability has been and continues to be damaged by the economic effects of properties that have been foreclosed upon and abandoned. NSP2, a term that references the NSP funds authorized by Title XII of Division A of the American Recovery and Reinvestment Act of 2009, (the Recovery Act) provides grants to states, local governments, nonprofits and a consortium of public and or private nonprofit entities on a competitive basis.

NSP Resource Exchange

NSP Resource Exchange is a one-stop shop for the information and resources needed by NSP grantees, subrecipients and developers to purchase, rehabilitate, and resell foreclosed properties. There are three primary components to the Resource Exchange site including:

  • Find a Resource – a database of policy guidance, practitioner support tools and training materials developed by HUD and technical assistance providers who specialize in NSP-related activities. It can be browsed by topic, audience, or type of information.
  • Ask a Question a feature that can be used to direct users to previously asked questions based on the user’s questions. It also provides users with a question form that can be submitted electronically for those questions and answers that are not listed on the website.
  • Request TA a mechanism by which users can communicate with technical assistance providers and request support in implementing NSP activities

The NSP Resource Exchange can also be used to learn about upcoming events related to NSP and coming soon the site will feature tool kits for designing programs and implementing activities. Selection of NSP2 Grantees

On January 14, 2010, HUD awarded a combined total $1.93 billion in NSP 2 grants to 56 grantees nationwide. This includes 33 consortiums at a regional level and four national consortiums carrying out activities in target areas throughout the country. These grantees were selected on the basis of foreclosure needs in their selected target areas, recent past experience, program design and compliance with NSP2 rules.

Debriefing

A request for debriefing must be made in writing or by email by the authorized official whose signature appears on the SF-424 or by his or her successor, and be submitted to the NSP Team. Information provided during a debriefing will include, at a minimum, the final score the applicant received for each rating factor, final evaluator comments for each rating factor, and the final assessment indicating the basis on which assistance was provided or denied.

Learn More about NSP2 Grantees 

The 56 NSP2 grantees selected have taken different approaches to designing their programs. Here aresummaries of each program based on the applications submitted to HUD. For more information on program design and implementation please contact the NSP2 grantees directly.

HUD Special For Police Officer, Teacher, Firefighters – GNND

The Good Neighbor Next Door (GNND) program offered is a great way for the everyday service heroes in the United States to purchase a home that has gone into a HUD foreclosure. These homes and their mortgages are insured through the FHA or Federal Housing Association and when the buyers who live in those homes can’t afford the payments go into foreclosure are offered to the public. Being on the list gives you an advantage in bidding for and obtaining these HUD homes.

Because the professions mentioned above are considered to be good neighbors, HUD offers the program to them as well as Emergency Medical Techs (EMT) and gives them the chance to own a home in the areas they work. There are some guidelines for the GNND rewards program in order for you to obtain a new home, let’s take a look at them and see how you can qualify if you are a firefighter, teacher, police officer, or EMT.

o Live Where You Work – The professionals who fall under the GNND program are restricted to those who choose to buy HUDhomes in the areas where they serve and work. For instance, if you serve in a certain neighborhood in a big city, and fall under one of the professions, you are eligible only to purchase within that neighborhood’s limits, unless you are a law enforcement officer. The live in/serve in rule does not apply to police officer.

o Time Limits and Employment – All people who wish to buy a HUD repo home must agree to make the HUD home their only residence for three years following the purchase and must be employed in their profession full time.

o Top Points – The rewards program offers these professionals a 50 percent discount off the listing price and the HUDhome must be in a revitalization area. All bidders are selected through a lottery program and offers must be submitted through a licensed real estate broker who is certified to sell. You must also be able to produce some earnest money at the time of your offer, which is returned to you if you do not receive the lottery bid win.

o Restrictions – If both you and your spouse fall into the professional rewards program, only one of you may apply and you can only apply once for the program.

o Descriptions of Each GNND – Each professional who qualified for the program has certain descriptions. Law Enforcement professionals or officers must be employed by a law enforcement agency of the federal, state, local or Indian tribal government and sworn to uphold their divisional or municipal laws. Law Enforcement Officers are not restricted to the work/live rule that other professionals must adhere to. Teachers must work in a state accredited public or private school teaching K-12 students and the serve students from the area where the hudhome is located. Firefighters and EMTs must be employed by a fire department or emergency medical services responder unit of the federal, state, town or local government or an Indian tribal government and serve in the area where the home is located.

o Owner Occupied – As stated above, you must agree to the restriction of living in the HUDhome in an owner-occupied manner for three years beyond the closing. If interruption of those three years occurs and is deemed as a hardship, you may be permitted to sell the HUD home. Long-term vacations must be in writing and you must agree to resume occupancy upon your return.

o Financing Incentives – You must finance all reasonable and customary closing costs and be able to make a down payment of at least one-hundred dollars and is not good for multiple properties, only one repo home may be purchased.

o Post Purchase Obligations – You must continue to own and live in the HUDhome you purchase and certify both initially and annually thereafter that you are continuing to reside in the home.

o Preliminary Interest – If no offers are made by any GNND during the preliminary interest on a HUDhome are made, HUD will release the property for general public bid on a competitive basis.

o Required Documents – If you utilize the program, along with your sales contract, you must complete and provide the following documents:

o Inspection Addendum
o Owner-Occupant Certification Form
o Radon Gas & Mold Notice and Release Agreement
o 9549-A if you are a law enforcement officer
o 9549-B is you are a teacher
o 9549-C if you are a firefighter or EMT
o 9549-E – Employer verification form
o Land Use Restriction Addendum
o Flood Zone Addendum
o Methamphetamine Disclosure Form from Seller in Minnesota and South Dakota only
o Mortgage Pre-Qualification Letter – this must be from a lending institution staring that an in-house credit check has been performed and you are pre-qualified to obtain a mortgage.
o Certification from the Financial Institution – this must state whether the purchase is cash or that funds will be available on the day of closing.

All professionals must follow these guidelines and submit the appropriate forms. Any real estate broker who is licensed to sell HUD homes will be able to help you understand and obtain all of these forms in order for you to complete your purchase. The Good Neighbor Next Door program is a great way for people who serve in certain professions to acquire these properties with discounts and guarantees.

HUD homes are explains at http://www.MNHUDhomes.org John Mazzara is involved with financial services in the Twin Cities, MN. Officing out of Edina, Minnesota-John is centrally located within the 7 county MN metropolitan area. John owns three separate businesses-a licensed real estate broker associate selling Minnesota real estate since 1986-affiliated with RE/MAX Associates Plus http://www.MinneapolisStPaulHomes.com , an independent CFP-certified financial planner since 1989 with an independent Minnesota financial planning firm-Financial Planning Associates and the owner of a Minnesota mortgage broker firm-Venture Development Inc-specializing in residential, commercial and investment mortgages for purchases of single family homes, investment properties and commercial property. Venture brokers FHA, VA, Conventional loans and lines of credit. If you are looking for someone to help you in the areas of real estate sales/purchase, mortgages, or and/or financial planning and insurance you should call John for a free 1 hour consultation to see if he can meet your needs. 952-929-2577. RE/MAX Associates Plus and Venture Development are located at 7300 France Ave S, Suite 410, Edina, MN 55435

Author: John Mazzara
Article Source: EzineArticles.com
Advice on AdSense

Deciphering Your Home Loans Good Faith Estimate

By: G. M. Filisko

Knowing how to read your good-faith estimate can help you save money on your home loan.

When you’re shopping for a mortgage loan, it’s sometimes hard to understand the jargon lenders use in the good-faith estimate explaining the costs and fees you’ll pay when taking out a mortgage.

When you apply for a mortgage, the lender has three days to give you a good-faith estimate of the fees and interest rate you’ll pay, as well as other loan terms.

Here are five tips for using the new three-page form to your advantage.
When you apply for a mortgage, the lender has three days to give you a good-faith estimate of the fees and interest rate you’ll pay, as well as other loan terms. Here are five tips for using the new three-page form to your advantage.

1. Know which fees can increase and by how much
In the past, lenders provided an estimate of the costs involved in getting your home loan, and if those costs rose by the time you closed on your home, tough luck. The good-faith estimate shows some fees the lender can’t change, like the loan origination fee that you pay to get a certain interest rate (commonly called points) and transfer costs.

The form also lists the charges that can increase by up to 10%, like some title company fees and local government recording fees. The lender must cover any increase over that amount.

Finally, the good-faith estimate lists the fees that can change without any limit, such as daily interest charges.

2. Look for answers to basic loan questions
In the summary section, lenders explain your loan’s terms in simple language. Can your interest rate rise If so, a lender must spell out how much the rate can jump and what your new payment would be if it does. Can the amount you owe the lender increase, even if you make your payments on time If it can, a lender must show you the potential increase.

3. Evaluate the “tradeoffs” on a loan
In the new “tradeoff table,” you can ask lenders to provide details on the tradeoffs you can make in choosing among home loans. If you’d like the same loan with lower settlement charges, how will the interest rate change If you’d like a lower interest rate, how much will your settlement charges increase

4. Compare apples to apples with the shopping chart
Included on the good-faith estimate is space for you to list all the terms and fees for four different loans, so you can make side-by-side comparisons.

5. Know what’s missing from the good-faith estimate
The new form lacks some key information, such as how much you’ll reimburse the sellers for property taxes they’ve already paid on the home. It also doesn’t tell you the amount of money you’ll have to bring to the closing table. Some lenders have created supplemental forms providing that information. If yours hasn’t, ask for it.

More from HouseLogic
More on the new good-faith estimate form (http://www.houselogic.com/articles/homebuyer-tax-credit-what-you-need-know/)

Other web resources
The new U.S. Housing and Urban Development good-faith estimate (http://www.hud.gov/content/releases/goodfaithestimate.pdf)

More on shopping for a loan (http://www.hud.gov/offices/hsg/ramh/res/Settlement-Booklet-January-6-REVISED.pdf)

G.M. Filisko is an attorney and award-winning writer who has encountered many settlement statements that bore no resemblance to the lender’s good-faith estimate. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS
Copyright 2010. All rights reserved.

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