shuffm1 asked:


I am considering applying for a home equity loan. In order to get the money I need, my house would need to be assessed at a higher value than it currently is because I have very little equity in the house. However, I have made many major capital improvements, so this won’t be a problem. If the bank’s assessor assesses the property at a higher value, will my house be subject to higher property taxes? I live in NY, so the property taxes are the highest in the country, and this would be a major problem.

I have considered and researched other alternatives to a home equity loan, so I just need to find the answer to this question. I can’t seem to find it on the Internet, and I have asked two mortgage people…and they don’t even know.
OK, if my property tax is based on the value of my property…let me pose this question/example:

Say, I bought my house for $170,000 and put no money down. My house is currently assessed by the town/county at $200,000. That is what I pay property tax on. Between rising property value and tens of thousands of dollars in capital improvements, say my house can be assessed for $250,000. That would be $70,000 more than the remaining principal. Excluding any other data or costs, a 100% home equity loan would provide me with $70,000. Now, if someone came out and said my house was valued at $250,000…this wouldn’t increase my taxes? So…the town/county would not find out about this loan or the re-assessment? My tax rate here is 3.5%. I have to be 100% sure.

Anita

Rony Walker asked:


You’ve been planning to buy a home of your own for such a long time now, but getting yourself into a home loan is the last idea on your mind. And so you wait forever until you have saved enough to buy it in cash at the same time you live terribly in your drafty apartment. The reluctance to get a home mortgage is understandable. I know how frustrating it is to be asked to pay for mortgage rates that we can hardly afford. But you also need to keep in mind that with the appropriate home mortgage lender, you both may work out what the great alternatives for you are. Home loan lending fees vary. Not all of them are expensive. You merely need to learn how and where to get them.

Before you decide to scout and search for a lender, evaluate your finances first. Know your paying capability. Deduct your regular monthly costs from your consolidated monthly household earnings and you obtain the accurate amount that you can afford for your monthly loan. When you have good credit score, you will most likely qualify for the lowest mortgage fees there is. But then, when you’re in a poor credit position, you might benefit from other choices such as a no money down home loan or a secured home equity loan. Specific lenders also give home loans for women with bad credit. It’s best to learn the available preferences for you and then search for suggestion from a professional on which option would work greatly for you.

Furthermore, it is a pretty logic to have an approximation of how much you’re going to be paying each month for a certain unit by obtaining a free mortgage quote in the Internet. Gather as much loan quotes and related information as you could. Get knowledgeable on the ins and outs of home loan lending. If you’re equipped with the correct information, you’re less likely to be conned by loan sharks who are merely out to pursue you. There are several of them around, so get me a favor and be vigilant for them. Or at least be prepared must they try to place you into their trap.

Mortgage standards vary from state to state. California mortgage lenders might process a mortgage application differently from a Florida home loan lender. Thus, skim on mortgage laws on the state where you are thinking planning to purchase your house. The federal mortgage rules might be similar, but how each state perform things can vary. This would prevent confusion and conflicts along the way.

So you’ve analyzed your finances, your credit rating has been restored, or at least you’ve studied your choices, and you discover you can afford a mortgage loan. You got yourself a mortgage quote or an estimate of how much you’ll be paying monthly and you’re well learned on the prevailing interest rates. Thirty-year mortgage charges differ from a fifteen-year mortgage charge or lower. Plus, you have read up on loan laws of the certain state you have in mind as well as the kinds of mortgage loans and you know your alternatives. Thus, I guess now you are prepared to seek for a lender. Again, be firm. This is your future you’re dealing with.



HOUSTON

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:


Did you ever wonder what a great credit score really gets you in the mortgage market? Many people think it means they get better pricing. Unfortunately, that’s not really the case. It mostly just means your lender won’t have to hassle you for as much documentation to do your loan. In fact, no documentation may be required from you at all if it’s a purchase and you put enough money down. I’ve heard many clients say, “I’ve got great credit, so quote me your best rate.” Good credit can’t directly influence the rate. But it can influence your mortgage loan officer to give you better pricing. If your lender can be assured your loan process is streamlined and smooth, and that they won’t have excessive hours to devote to the process, they may be able to quote you a more competitive rate. Much about a quoted rate depends upon the man hours it will take to make your loan, the loan amount itself and how quickly you can close.

Lenders usually have a minimum percentage of income they are supposed to make on a loan. That percentage is flexible, but only to a certain extent. For instance, the loan amount size is a huge contributing factor. If you’ve got a really large loan amount, your lender doesn’t need to have a feeding frenzy on your loan. The percentages lower because the payback is higher.

However, if you’ve got a really, difficult loan and a modest loan amount, you can expect higher rates or discount points. Or fees. Some lenders may raise your fees to make you think you’re NOT paying as much. But you are. You have to in order for the lender to cover the cost of doing business.

Here’s the secret. Closing a loan is actually a very involved process. Lenders can’t do the loans for free or break even profit because it’s a business and their in it for profit. Plus, there are many people involved in the loan process that you aren’t even aware exist. Processors, closers, post closers, insurers… a staff of thousands! Ok, so maybe not thousands, but your file is probably touched by 5+ different divisions (at minimum) within a mortgage company. Since it is a business, the lenders must make enough money on the loan to cover their costs and actually make money, too. The lender also pays outside parties for services too, like the appraisal, flood cert and automated underwriting system. Paying your originator is just the beginning of the mouths (and families) being fed by your business. It ain’t cheap to close and sell a mortgage.

When you examine all the fees and charges on a good faith estimate, your lender should be able to tell you exactly where that money is going and how it is to be spent. Your lender should have no qualms in telling you what costs are associated with your loan, or which funds cover third party expenses that your lender incurs by doing your loan. And some of that money will be profit. Much of it may be. But remember, you’re not just paying the salary of only one person. However, you shouldn’t pay too much for your loan. After all, the lender will make additional profit on the loan when it is sold on the secondary market.

A good lender will validate any fees and charges for you and should make you feel ok with the fees. If they don’t seem reasonable or fair, always ask questions. If you don’t like the answer, say so. And if you still don’t like the answer, than look for a new lender. Buying a home is such an important purchase and you should feel good about it.



MARCEL