karnotda asked:


About 5 months ago I paid off all of my outstanding debt (credit cards, overdue bills, medical bills, etc…) I now want to purchase a new home. How can I raise my credit score so that I can get a great quote on a mortgage loan?

RONNY

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

1st American Mortgage asked:


Shopping for a Colorado home loan quote isn’t much different than looking for mortgages elsewhere in the U.S.; however, the housing market in Colorado does present some unique needs. Buyers that work with and in-state Colorado home mortgage company will have an added advantage

Shopping for a Colorado Home Loan Quote

Buyers looking for the best Colorado home loan quote should begin with the basics.

First, gather the information needed to obtain an accurate quote from a professional. Providing as many specifics as possible will give you the most reliable Colorado home loan quote. Providing information about income, debt, and purchase price or refinance amounts will be helpful. Be prepared with a list of goals and questions.

To find reputable Colorado home mortgage lenders, search local ads and online.Make a list of prospective lenders, and then call for an initial consultation. It will likely take a day or two for them to thoroughly go over your information and provide your Colorado home loan quote.

When you shop for a Colorado home loan quote, you will be provided with a variety of terms and options. Your lender will help to decipher these options and fit them to your personal situation and goals to get you not only the best Colorado home loan quote, but also the most affordable Colorado home mortgage payment for you.

The following options represent what you may be presented with:

Adjustable Rate Mortgage – For the first 3-5 years, the ARM works similar to a Colorado fixed rate loan in that the payments will stay the same at a locked interest rate for a specified period. After that initial 3-5 years, your rate will adjust with market rates based on an index. An ARM works well for buyers that want lower payments in the short term and should be considered if you plan to refinance or sell the property in the near future..

Colorado fixed rate loan – The rate you lock in the beginning of a Colorado fixed rate loan is the rate you have for the life of the Colorado fixed rate loan. The Colorado home loan quote you get on a Colorado fixed rate loan will be higher than an ARM Colorado home loan quote, but it’s predictable and will never change predictable and will never change%%. A Colorado fixed rate loan is good if you plan to own your property for a long time. With a Colorado fixed rate loan, you won’t have to stress over interest rate increases.

Colorado jumbo mortgages – Colorado jumbo mortgages are those taken for any amount over $417,000. The Colorado home loan quote for Colorado jumbo mortgages will be slightly higher because of increased risk factors for lenders, but this shouldn’t dissuade you from products for Colorado jumbo mortgages. Very simply, many of the best Colorado home mortgages fall into the ‘jumbo’ category, and there is no other way to obtain such a property.

Like a standard Colorado home mortgage, Colorado jumbo mortgages come with options like variable ARMs and Colorado fixed rate loan 15-30 year terms. Shop for jumbo loans as you would a conforming loan. The same basic rules apply – short term ARMs have better rates than a Colorado fixed rate loan, but in the long term, the Colorado fixed rate loan is better.

Whether you’re shopping for an ARM or Colorado fixed rate loan with 30 year jumbo mortgage rates, the key is to find a reputable Colorado mortgage company you can trust to deliver the Colorado home loan quote as quoted. Particularly if you are locking into a 30 year Colorado fixed rate loan, you want good rates and reasonable fees. Several Colorado mortgage brokers have experience with 15 and 30 year jumbo mortgage and finding one will be well worth your effort.



STEVE