child_n_light asked:


I am planning on leaving my job for another after the 13 of July but we are in the middle of buying a home and I don’t want to give the mortgage loan officers a reason to question if we can afford it ( WE CAN). Can I put in my resignation now to give two weeks notice or should I wait until after we close in case the mortgage people check my status. Do they do that?

CLEMENT

Teresa D asked:


We have 2 medical-related judgements and one from a credit card on our credit report. We spoke to a lender about buying a home and he said every mortgage companay would deny us because the people who have the judgements against us would put a lein on the property until they were paid. Is that true?

ETHAN

Kristin Abouelata - Home Loans asked:


We encourage our kids to plan for their future, but we seldom include buying a first home sooner than average as a path to building that future. Let them know buying a home is easier than they think.

Most of the people who read this column are not first time homebuyers. The fact of the matter is many of you that are first time homebuyers and reading this article are relatively mature individuals who are fighting off your commitment fears of being tied to a mortgage. But there is a huge segment of the population that could buy their first home, yet it doesn’t occur to them to do so. Who are these people? Well, it’s your 24 year old son or daughter, new to the work force, and is throwing away money on rent somewhere. Encouraging your children to buy a home when they are young is some of the soundest financial advice you can give them. Equity in a home is an easy way to grow one’s portfolio with very little investment. But the fact of the matter is it doesn’t occur to most of us to encourage the younger generation to buy early in their lives. And trust me, it rarely occurs to our kids themselves to consider buying a home in the early twenties. They are more concerned with buying a new Halo 3 for their Xbox.

Why do so many people miss the boat on this opportunity? It could be they plan to be in the area for only a short time because they will job hop to advance their career, thus viewing a mortgage as “too permanent.” I counter to simply sell the house when you move. Or maybe they expect their income to double or triple over the next three years. I say buy a home now, then upgrade to a new home; sell or rent the old house. Investing in real estate is a proven, safe and solid return on investment. And with the right combination of credit history (or a history of paying utilities, cable and your cell phone on time) and no money down, you or someone you care about can start investing in the future.

When Junior starts his new job at the company and 401(K) is available, he’s been informed by his folks, boss or peers to enroll and contribute at least a little something to it with every paycheck. Yet, he is rarely counseled quit renting that apartment for $750 a month and buy a $75,000 house. Where will he come up with the money to do it? There are multiple options for first time buyers that allow for 100% financing. Get the seller to kick in closing costs (up to 6% of sales price with some products), and one can close on a loan and bring no funds to the table. If your home value appreciates 4% in the next year, that’s a nice return on a no cash investment.

For some time, I’ve considered writing this series for first time buyers to let them know buying a home is easier than they think. But, the more I thought about it, the more I realized the advice I would offer would most likely not reach my target audience. So parents, it is up to you to supply your kids with this last little bit of advice and help to set them free to further establish their independence in this world. Clip this article out and tape it to their iPOD or the steering wheel of their car - someplace it will get noticed.

I think for most of us who have been through the experience, our first home buy was a very daunting experience. There are so many choices and unknowns - it can be overwhelming. In this series, I will try to break it down the process into small logical steps and make it easier understand the steps involved in financing your first home. Where do you start? That is perhaps the easiest part. Our newly established worker should first make a list of all his or her debt obligations such as student loans (unless deferred), car payments, credit card debt, etc. Hopefully at this age, this will be a small list. Then add what you think amount you could afford for a mortgage. Take that amount and divide it by your gross monthly income. If you come in at 43% or less, you’re in business. If you have something in your savings or checking - great. If not, don’t let it deter you. You have options.

Contact a mortgage specialist to drill out the details and find a good realtor who knows your market for housing you can afford. What next? Get ready to tell your landlord “Adios!.”



CARLOS

Kristin Abouelata - Home Loans asked:


Just out of school and considering buying your first home? You’ll be surprised how easy it can be to qualify for a loan. Too often, the newly minted workforce doesn’t realize the confidence lenders have in their ability to be responsible homeowners.

Ok, so Mom and Dad told you that you need to buy a house. You’ve graduated from college and you’re earning a decent income. Even though you don’t feel like it most of the time, you are officially all grown up. But you ask yourself, “I’m only twenty-four years old, who would possibly loan me money to buy a house?”

First time homebuyer programs are established with flexible guidelines to attract - you guessed it -first time homebuyers! You are in a great position to buy a home provided you have established some history of decent credit. Even if you don’t have traditional lines of credit to show for yourself, you may have established non-traditional credit and not even realized it. Do you have utilities, a cell phone and cable bill in your name? Have you paid them on time for 12 months? Then you have established non-traditional credit. Granted, many of you already have a credit card or gas card in your name. That’s why Dad wanted your name on it, too. Good thinking on his part. At the time, you were just excited to get the credit card “for emergencies.” It didn’t even occur to you that you were establishing a good credit history.

Most lenders want to see at least a year under your belt earning income. The majority of new job workers are making at or under the median income limit for their area. There are those that beat the curve, but then, if you’re making that much money on your first job, you don’t need a first time homebuyer program. You can probably take another route to your first home. Also, recent graduates can get credit for having a diploma. If you have a diploma and an employer who is willing to verify that you earn what you say and are likely to continue on with them, then you’re good to go -even without a year’s employment history to show for yourself.

Some lending programs ask that a borrower have maintained an excellent rental history, preferably a two year history. But, you don’t get penalized if you have been living at home. Especially, if home is in the same city that your school is located. You are simply asked to provide explanation as to how you managed to live rent free. Sometimes, Mom and Dad have to provide a written statement. They’re probably willing to do that to get you out of the house and off the payroll.

What about a down payment and closing costs? Most programs will allow a seller to chip in 3% of the sales price toward your closing costs. This allowance can cover most if not all of your closing costs. Your Realtor simply needs to be aware that you need this concession so she/he can negotiate it with your purchase contract. And how much do you have to come up with for a down payment? How about $0? Nearly all first time homebuyer programs are designed for empty pocket consumers with potential to earn more and maintain good credit. Some programs don’t require you to have any reserves in the bank. Since so many first time homebuyers live on a budget, these programs allow for the reality of life. And you can be rewarded for being a conscientious consumer with lower than average interest rates being available to you.

You may be ready to buy your first home and not even know it. A good mortgage specialist will pre-qualify you, find out what you can afford or what your comfortable paying. Then, you just have to find the right home. It’s easier than you think!



WADE

Kristin Abouelata - Home Loans asked:


Buying a home is a confusing process, and one of the most confusing prospects is settling on an interest rate.  Even when you decide what type of loan you want, you find you still have options as to what rate to lock.  Some of these options stem from whether or not you buy down the rate by paying a point.  A point is a fee that equals 1% of the loan amount.  For instance, if you are buying a $100,000 home, and your note amount is $97,000 (because you’re putting $3000 down), a point would cost you $970.

 

You can see the points you are being charged on line and 802 of your Good Faith Estimate, and later, on the same line on your HUD-1.  This line item reflects fees known as  “discount points”, but they truly aren’t interchangeable with origination fees (line 801) even if they sometimes serve the same purpose.  If you choose to pay a discount point, you should  expect a lower rate than if you didn’t.  So, if you’re quoted a rate of 6% 0 + 1, you are paying 1 discount point. If the quote is 6% 1+0, you’re paying an origination fee.  And 6% 0+0?  You’re paying no fees in either form.

 

What’s the difference between an origination fee and a discount point?  Well a few things.  Technically, an origination fee is what you pay the lender or the organization that takes the initial application and processes the loan.  A discount point is specifically paid to the lender to buy down or permanently lower the interest rate, and it’s usually a percentage of the loan amount.  You can also pay additional points to buy down your rate, not just a flat 1%.  You can pay a .5% or 2%.  It just has to make good economical sense for you.  And it shouldn’t be robbing you blind.

 

From a tax standpoint, there isn’t much difference.  An origination fee is generally tax deductible as long as it’s charged in the form of a “point” or percentage of the loan amount. However, you may ask your lender to charge you a discount point versus an origination fee to keep things neat and simple. Sometimes mortgage lenders charge you an origination fee when technically they should be charging you a discount point.  But they’re collecting all the fees anyway and happen to be giving you a lower rate.  It really matters most if you are working with a mortgage broker. Mortgage brokers can’t be paid discount points, only origination fees or broker fees. They can collect discount points to lower your rate, but  the discount point has to be paid to the mortgage lender with whom they’re doing business. And, this information should be disclosed properly on your Good Faith Estimate

 

 

A typical trade off is that a 1% discount point equals about .25% reduction in interest rate.  You should be able to easily decipher whether or not it’s worth it to buy your rate down.  How long do you plan to be in the home?  If not that long, then maybe you should think about a 0+0 quote.  If it’s your forever home, then dipping into your wallet and footing higher closing costs might be worth it in the long run.

 

However, if you look at your Good Faith Estimate and it seems you’re paying too much in origination fees and/or discount points, then you probably are.  Say something to your lender.  And if he doesn’t budge, you may want to look elsewhere.  Go with your gut instinct or call another reputable lender and get a second opinion.



YOUNG

IC asked:


When you want to buy a home you will generally need to look into home loans to see what your financing options are. You may have assumed, before you started looking into it, that there was just one sort of loan that people could get when they wanted to buy a home but when you start looking into it you will find that buying a home with a loan is much more complicated than that. There are a lot of different loan products out there for you to choose from and chances are you will not be able to navigate the world of loans all on your own. Instead, you may need to seek the assistance of a mortgage broker to help you understand what is what and also help you determine what sort of loan may be best for you and your specific situation.

Home Loan Basics

There are many different types of home loans for you to consider. You should try to learn about all of the different types of loans out there before you decide that one is or is not for you. The most common types of loans that you will find are the fixed rate loans. These loans are a great option for those that plan to stay in their home for more than three to five years. The reason for this is that the rate stays the same for the entire term of the loan. So, if you start off your mortgage with a 6% interest rate, it will continue to be 6% for the whole 10, 15, or 30 year loan term. This is a good idea if you plan to stay in the home for a long time because you will always be able to determine what your monthly payment will be.

Another very common type of loan that you will find is adjustable rate home loans. These loans are ideal for those that are planning on living in their home for less than five years. The reason why these loans are a great option for these people is because the interest rate starts off very low and then the longer you are in the home the higher it gets because it adjusts from time to time to meet the current market interest rates. Many people like these loans at first because they are very affordable but then if you stick with it, you can end up in trouble if you are unable to make your mortgage payment. The adjustable nature of the interest rate is what ends up getting a lot of people in trouble.

In addition, there are loans that are meant to refinance a home. Many people refinance a home to lower their mortgage payment, trade in an adjustable rate mortgage for a fixed rate, or get money out of their home to pay bills, update the home, or pay off debt. These home loans are for those that already have a home and would like a new one.

These are the basic types of loans but you should not confuse the type of loan for different loan programs. There are different loan programs that apply to different people based on where they live, how much money they make, how much they can afford, and what their credit score is. There are a lot of different programs out there for you to take advantage of, so shop around, learn all that you can, and then choose the right one for you.



EDDY

Carol Bell asked:


While mortgages are the most common way of buying a home, it is remarkable how few people actually understand what a mortgage is. The worst thing to call one is a mortgage home loan and while this expression is in common usage, it is totally incorrect. In fact a mortgage is like a contract whereby the person buying the property (mortgagor) arranges finance to cover the cost from a lender (mortgagee) and the property is used as security against the debt until it is fully repaid. However, it is easier to explain it as a legally binding document where the lender is protected from loss by using the property as security for the debt.

If it wasn’t for the availability of mortgages, individuals and businesses would need to find the full amount for a property in order to purchase it. The way this process works is presented in brief detail during the rest of this article. The problem arises because so many people refer to the buyer as the Borrower and the financier as The Lender, which leads people to believe that the money has been loaned, which is not the case. The security is in fact a lien, which means the mortgagee has legal possession of your property until the debt is repaid.

This system works so successfully because the risk of loss on the part of the mortgagee is all but eliminated as they have legal possession of the property until the debt is completely repaid. This lien is recorded within public records likely to be found at a county courthouse or similar establishment. The lien stays in force while the debt remains but the property is actually owned by the mortgagor. While the mortgagee has legal possession of the property, he does not own it or have the title to it, the legal owner is the mortgagor.

However if the mortgagor or the owner defaults on his or her payments, the mortgagee has the right to dispose of the property to reclaim funds. When this happens, the procedure that follows is called foreclosure but even at this stage it is required to go through the courts first. This is a legally recognized process that must take place often referred to as ‘judicial foreclosure’. This is only a short introduction as the subject is much more complex but this information should make this important issue much clearer.



JIM

AW asked:


I would like a 30 year fixed home loan in California. I need tips on anything related to buying a home.

CARLTON