Claudette asked:


I read some where on line if you want to be pre- approved for a home mortgage loan as a first time home buyer – if you have a judgement you won’t be approved for the loan.

Geraldine

Mohamad Alodah asked:




By the time you are finished finalizing the purchase of a home you are going to see so many forms that you may start to have dreams about them. One common myth is that these mortgage loan applications are standard across the industry but the truth is that they vary from one lender to the next. In many cases these forms are specifically designed to protect the interests of the lender.

Required forms for home purchases

While the forms that are used will differ between lenders, there are three loans that are all required for all residential transactions. The 1003, or the loan application, contains your financial information like your income, debt and credit history and is commonly used to qualify a buyer for a loan. Then there is the Good Faith Estimate which is simply an estimate of the closing costs of the home.

The last form is the Truth in Lending statement which is essentially a detailed summary of the loan including the interest rate, finance charges and the monthly payments. These forms will start to look the same after you are exposed to more of them. However, you need to be sure that you understand the details of each form before you sign your name on the dotted lines.

Some extra precautions to take

As mentioned above the types of forms that lenders use for residential purchases will vary so you will need to read through each of them thoroughly. In situations where you do not understand certain terms or if conditions are not clear then it is in your best interest to consult with a lawyer. In many cases you probably do not need a lawyer but taking precautions will only serve to benefit you.

When it comes to the big lenders in the industry most of the mortgage documents are standard but it is still a good idea to read through each form. Always ask for these documents ahead of time so you can examine them in detail before you finalize the transaction. Just remember too that signing any mortgage documents with inaccurate information could lead to mortgage fraud charges.

Jeff

Joseph Kenny asked:




Home loans and mortgages are asset-acquiring facilities that relieve an individual from making immediate lump sum payments. A home equity loan creates a debt against the borrower’s house. According to this loan, the borrower has equity in his or her home as collateral. ‘Collateral’, here, refers to assets or properties that create a debt obligation. In real estate, the borrower’s equity in an asset refers to the difference between the market price of a property, and the borrower’s home equity loan. Equity is the interest that a borrower pays on the loan.

A mortgage, on the other hand, is a process of using property as security for debt repayment. It is a legal device used for securing an asset. By arranging for mortgage, a borrower can acquire residential or commercial real estate, without the need to pay the full price right away.

Choosing between Home Loans and Mortgages:

- Most home loans require the borrower to have a very good credit history. Hence, individuals with an average credit history are likely to be denied this loan.

- ‘Closed-end Home Equity Loan’ levies a fixed rate of interest for a period of up to 15 years. The borrower receives a lump sum amount at the time of settlement, in the final steps of a transaction. No further loan can be given to the borrower once the final settlement of a real estate transaction is executed. The maximum amount of money that can be given as loan to the borrower depends upon his/her income, credit history and appraised value of collateral, and other finance related information.

- ‘Open-end Home Equity Loan’ is a revolving credit loan that generally levies a variable rate of interest. The borrower can decide when and how frequently to borrow money against the equity. This again is determined on the borrower’s good credit history, consistent income and other such criteria. This loan is available for a period of up to 30 years.

- Mortgage loans are of two types: Fixed Rate Mortgage (FRM) and Adjustable Rate Mortgage (ARM). Individuals can choose between the two depending upon their requirements, and the capability to repay loans.

- FRM has a fixed rate of interest, and a fixed amount of monthly payments towards the loan amount. The term of FRM can be for 10, 15, 20 or 30 years. However, some lenders have recently introduced terms of 40 and 50 years.

- ARM interest rate is fixed for a period of time (generally 15 and 30 years), after which it is adjusted according to the market index. ARM interest rates are adjusted periodically on a monthly or yearly basis. The initial rate of interest in ARM is levied in the range of 0.5% to 2%.

- Lenders sanction an ARM loan depending upon a borrower’s credit report and credit score. They prefer to approve loan to borrowers with high credit scores, because low credit scores indicate greater risk of money to lenders. In order to compensate for this increased risk, lenders levy a high rate of interest on loans approved for less creditworthy borrowers.

- ARM loans prove useful to borrowers who own a lot of equity on their home. ARM loans relieve a borrower from heavy monthly payments, and provide them the flexibility to choose the kind of payment to make every month. These loans have a fixed amount of minimum payment to be made every year for 5 consecutive years.

Prospective borrowers should gauge their options carefully before choosing a loan. A well-calculated move can save a great amount of money over the term of the loan.

Julio