http://www.bmlee.com/bbs/board.php?bo_table=mortgage_en 테스트 버전 0.2 (2004-04-26) ko http://www.bmlee.com/bbs/board.php?bo_table=mortgage_en&wr_id=175
May 05, 2007
Here's a good comment left in response to my post titled Should You Pay Off Your Home or Not?:

Seems to me it's a great time to throw out the word "moderation". I am investing heavily in my 401K, investing in a ROTH, investing in a 529 plan and paying down my mortgage. By balancing all of these, I'm seeing my net worth increase pretty rapidly and also feeling like I'm making good headway on knocking down my mortgage.

This is both what I recommend as well as what I did (I say "did" because the mortgage is gone -- I still do the savings portions) as I outlined in When to Pay Off Your Mortgage. We were able to save like bandits as well as pay off our mortgage early because of one thing: we spent way less than we earned. To the extent that you spend less, you can save/invest/pay off more (kinda simple math, but it was worth saying.) ;-)]]> 평상심 Thu, 10 May 2007 01:07:23 -0700 http://www.bmlee.com/bbs/board.php?bo_table=mortgage_en&wr_id=174
Mortgage refinancing was practically a national pastime in recent years. And, because some people consider themselves an expert once they’ve done something once, a lot of mythology developed around the subject of mortgage refinancing. Before you consider a refinance in today’s market, be sure you’re working with facts — not fiction.

Mortgage refinancing facts

Fiction: If you can lower your rate by a half-percent, it’s always worth it to refi!
Fact: It all depends on what you pay in up-front costs, and how long you actually keep the home or the loan. If you pay 3% in closing costs to lower your rate by a half-percent—and then sell or refinance again the next year, the only one who’s probably making money by mortgage refinancing is your lender.

Fiction: If you have an adjustable rate (ARM), switching to a fixed rate should be your first priority when mortgage refinancing.
Fact: Many a mortgage professional — from the loan agent to the mortgage company owner — will choose an adjustable rate over a fixed rate mortgage, depending on their circumstances. That’s because they’re number crunchers by nature, and will run the numbers to determine whether their out-of-pocket costs in the first few years will be less with an ARM or a 30 year fixed rate mortgage. When the numbers favor an ARM, it can be the loan of choice.

Fiction: The only smart mortgage refinance is one with no up-front costs.
Fact: Again, it all depends. Lenders have to cover their costs, plus make a profit. If they’re not charging you up-front, they’re likely charging you with a higher interest rate, and possibly a prepayment penalty on the back end. Depending on how long you plan to keep the loan, the “no cost” loan could end up costing you more!

Fiction: Mortgage refinancing is all about the interest rate — the lower the better.
Fact: You guessed it! The truth, once again, is “it depends.” The very lowest interest rate will probably require higher points and fees. Someone will have to crunch the numbers to find the break-even point, when the costs you’ve paid up-front are offset by the reduced rate. Make sure your plan to keep the loan is consistent with the loan you choose.

Fiction: You’d be crazy to refinance from a fixed rate to an adjustable.
Fact: Hardly! Mortgage refinancing is done to achieve a number of goals — securing the lowest fixed rate is only one. For many, reducing their mortgage payment is the goal — and ARMs may be much better suited to that objective. Those who don’t plan to stay in a home for 30 years may not want to pay more for a feature they won’t use?]]> 평상심 Thu, 10 May 2007 01:06:11 -0700 http://www.bmlee.com/bbs/board.php?bo_table=mortgage_en&wr_id=173

Mortgage payment protection insurance is designed to do for your mortgage what disability insurance does for your pay check. Your disability insurance means you get paid even if you can't work; your mortgage payment protection insurance will make sure that your mortgage will get paid, again in the case that you can't work.

The difference between disability insurance and mortgage payment protection insurance is that the mortgage payment insurance will also cover you in the case of being laid off because of "redundancy", as well as accident, sickness or disability.

You need to get the level of coverage that properly covers you. Your mortgage payment insurance should provide enough income to cover all your monthly mortgage expenses. If you have a repayment mortgage, this should be your capital and interest repayment. If you happen to have an interest-only mortgage, the Mortgage Payment Protection Insurance should cover your interest payment as well as your normal monthly contribution to the investment vehicle that will repay your loan. It's that simple.

What are some of the reasons that some people are starting to take an interest in this kind of policy? Well, let's face it: our mortgage is likely our largest debt. Some two-income families could survive quite well on a single income if not for their mortgage payment. In the case when you or your spouse does not have disability insurance either through an employer or privately, a mortgage payment protection policy may be all that you need in order to ensure your family's financial stability.

Don't confuse mortgage payment protection insurance with mortgage protection insurance. In the US insurance market, these are two different products. Mortgage protection insurance is actually a kind of life insurance on your mortgage. For a flat monthly fee, if you or your spouse dies (assuming that there are two of you on the mortgage and deed to the home) then the mortgage will be paid off by the insurance company. In fact, it is really just a kind of life insurance, but the benefit is limited to the amount of your mortgage.

Since your mortgage is a declining balance and you pay a flat monthly fee based on the original amount, it can be very overpriced insurance. Also, it doesn't address any of your family's other financial needs in case of a death. So, you could end up needing both life insurance and mortgage protection insurance.

In most cases, you would be better off buying term life insurance for each spouse that covers the amount of the mortgage and whatever additional financial requirements that you have. As the mortgage balance declines, you can reduce your term life coverage and potentially save money. If only one spouse works, you may even find that it is sufficient to insure only the primary breadwinner with one policy that will address the family's total needs.]]> 평상심 Tue, 24 Apr 2007 01:45:24 -0700 http://www.bmlee.com/bbs/board.php?bo_table=mortgage_en&wr_id=172
If you are like most of us, the actual process that sets interest rates is a bit of a mystery.

Well, we're here to help dispel as much of the myth and misinformation as possible. Here are the three main factors that influence the interest rate that you pay:



1. The Federal Reserve Discount Interest Rate.

This factor is why everyone watches the current Federal Reserve Chairman.

Why would it affect you? Well, banks and other lending institutions get their money from the Federal Reserve Banks. They borrow money at a "discount rate". This rate is set by the boards of directors of the Federal Reserve Banks. The discount rate has a direct effect on the current "Prime Interest Rate". This is where you come in. The prime interest rate is the interest rate on short-term loans that banks charge their commercial customers with high credit ratings. What about you, the consumer? You will usually pay a rate based on prime, plus some amount of interest. This will depend on the lender's policy on consumer mortgages.

Frankly, you don't have much control over this one. All of us have to live with the "prime rate", whatever it is.




2. Your FICO Score and Credit Report.

The FICO score is a method of determining the likelihood that credit users will pay their bills. It condenses a borrower's credit history into a single number.

How is this score obtained? There are companies that gather and sell information about you, including many factors that affect your credit worthiness. These factors include where you work, your current address, your bill payment history, and whether you've been sued, arrested, or filed for bankruptcy. The companies that collect this information are called Consumer Reporting Agencies (CRAs). The most common type of CRA is the credit bureau. Potential lenders will get your credit report from a credit bureau.

You do have control over your credit worthiness and the health of your FICO score. Pay your bills on time. Don't abuse your credit cards or become financially over-extended. Most of the best advice is common sense financial planning. However, you can also help yourself by checking your own credit information from time to time and ensuring that false or outdated information is changed and corrected. And don't let companies do a credit check on you unless you are ready to buy. Too many requests for a credit report can actually drive your FICO score down.




3. Lender Business Factors.

Here's where your ability to be a smart shopper can make a real difference. While banks and other lenders are in business to make a profit, they also exist in a competitive market. They are competing for your business, since you (the borrower) are the lifeline for their business (lending). This means that you can get a better price with a bit of legwork on your part.

Always check out at least three lenders. Each lender will have unique guidelines for how they write loans, and one lender's guidelines could be more favourable to you than another. Also, some lenders are simply more competitive than others. If you know that you have a good credit history, you are a 'plum' client. Be sure to keep this in mind. It's to your advantage.

A reminder: While you need to shop around, you don't need to have too many lenders requesting credit reports. Three or four is typically a safe number. If you request an on line quote from several lenders, they won't typically run your credit report until after they have made their initial quote to you.]]> 평상심 Tue, 24 Apr 2007 01:44:32 -0700 http://www.bmlee.com/bbs/board.php?bo_table=mortgage_en&wr_id=171
 

First: determine the mortgage product

You need to determine which mortgage product will benefit you the most before the quest for the best rate begins. Why is this so important? Because when you shop for a mortgage loan you will run across many adds for extra low mortgage payment, great new program, etc. Don’t be bogged down with quotes you don’t need or “sold” on what might seem to be a great offer. To decide which mortgage loan product is best for you, There are several factors to consider of such as:

 

Current Market Conditions

Leading indicators of where interest rates are headed have shown an upward trend for the last few months. Experts expect an upward trend for some time (1 year or more).

As a result, Adjustable rate mortgages have been increasing quite rapidly. Fixed rates have increased as well, but at a slower pace. So right now adjustable rate mortgages do not offer much of an interest rate reduction compared to a fixed rate. Some adjustable rates are even higher than the fixed rate mortgage right now. 

 

How long you plan on owning your home

- Short term (0-5 years)

Advice: 3 to 5 year arm or fixed rate

An adjustable rate mortgage longer than 5 years won’t give you much of an interest rate reduction so its not worth it. Consider a low cost option or even no cost option to maximize value for the short term.


- Long term (5 years +)

Advice: Get into a fixed rate mortgage

With fixed rates as affordable as they are now, you will save in the long run. You may also want to take advantage of lower mortgage rate by paying points. Don’t go for the no cost option, it will cost you more over the life of the mortgage loan. If you plan on living in the home forever, this will save you 6 times the amount of the cost of paying points. Contact us and we will show you the numbers to compare these options and maximize your savings.

 


Income and Type of Income

- Salary or hourly pay

Advice: Get into a fixed rate mortgage.

Don’t chance your payments increasing over time. Don’t go for the interest only or adjustable rate mortgage just to lower your mortgage payment. There are ways to structure a fixed rate mortgage loan that can accomplish this without having to take an adjustable or fixed rate mortgage. Use our free search to compare 60 lenders instantly.

 
- Commission or self employed

Advice: Home Advantage Account or Option ARM

We are not suggesting that you should take this type of mortgage loan just because you have this type of income in itself. These mortgage loan programs were really designed for the borrower that needs or wants flexibility due to irregular income. These products can really be beneficial for the borrower that will utilize it for the purpose it was intended. Read all about the Home Advantage Account or Option Arm mortgage loan. When it comes to this type of income, Mortgage Search Experts excel at understanding all factors to structure the most innovative mortgage loan options within the industry. Start here to compare the mortgage loans that offer you the most benefit.


 

Financial Goals

It is difficult to suggest a mortgage loan for each goal individually because so many of us want to accomplish more than just one. There are so many innovative ways to structure mortgage loans to reach and exceed your financial goals. This factor deserves the attention of an expert to suggest the mortgage loan that will achieve the results you are looking for. You can quickly get this advice here. A Mortgage Expert can suggest the most rewarding mortgage programs based on the goals that are most important to you.

 

Second: Determine the mortgage loan structure

Considering the factors above, you need to determine the structure of your mortgage loan. Your loan structure is the way a mortgage loan is put together to include the options and benefits that are available that can be added to almost any mortgage loan such as: interest only, paying points, low cost, or no cost. There is a benefit and a sacrifice to each of these options. Mortgage Search Experts will review the pros and cons of each option to identify the mortgage loan that gives you the most benefit. Use our free search service and you'll also get all of the information for each option such as: monthly mortgage payment, the total interest paid over the life of the loan, and more informative statistics so that you can make the right choice. Have an expert structure your mortgage loan here with the options that save you the most.

 

Third: search for the best mortgage loan quote

Now that you know what mortgage loan you want, the search for the best mortgage rate begins. There are many questions to ask. Most people only ask two questions and those are: What is your rate and what are your closing costs? These are good questions to start, but keep asking. Here are the questions to ask each mortgage lender or broker:

 

- What is the interest rate for this particular mortgage product?

- What are the fees associated with this mortgage loan
 
- Is there a pre-payment penalty? If yes, how long? And how much?
 
- Do I have to lock-in in the interest rate? How long? Do you provide proof of that lock?

- Is there an application fee? If so, how much?
 
- If this is an adjustable rate mortgage, you must ask:
 
- When is the first adjustment period?

- What is the adjustment period thereafter?

- What is the index used?

- What is the margin?]]> 평상심 Thu, 19 Apr 2007 15:41:45 -0700 http://www.bmlee.com/bbs/board.php?bo_table=mortgage_en&wr_id=170

Many people don't know what title insurance is or what it can do for you. We've got a list of frequently asked questions about Title insurance that should help you decide if it's something you need to have.

What protection does Title insurance give me?

The primary purpose of Title insurance is that it insures that the "record" title is good. That means that the title is accurate, and the rightful owner is on that title. Title insurance does cover for a number of other problems with a title, including forgery, identity of parties, incompetence of former owners, interest of missing heirs, and status of individuals not having the "right" to sell property.


What risks aren't covered?

The standard owner's policy and standard mortgage policy are based on public records of the recording district in which the land is located. It won't protect you from problems that would only be revealed by an inspection of the property. This is only about problems that could be presented in the public records. Therefore, it does not insure against unrecorded easements, liens or money obligations, unrecorded utility rights of way, public or private roads, community driveways and other types of encumbrances, or against the rights or claims of persons in possession of the property which are not shown by the public records.


Can I get protection against matters not of record?

Yes, you can but it will be "extended coverage" and at additional cost. However, at your application the issuing company may specially cover matters that are disclosed by a physical inspection and/or a survey of the property, subject to any exceptions that the inspection will determine to be proper.


Can I get different kinds of policies?

Yes. Owners' Policies are issued to you as the owner. Purchasers' Policies are issued to you as the buyer of real estate under contract. Mortgage Policies are issued to mortgage companies. However, you can expect that if your mortgage company takes out Title insurance on your new purchase that this will be part of the fees that they pass on to you.

It may make sense for you to buy both the mortgage and owner's policy, especially if your lender will require it. You may find a better rate for the insurance. Also, special rates are available when both Owner's and Mortgage policies are applied at the same time.


When is my policy issued?

The Owners Policy is usually issued after the deed to the buyer is 'delivered' and recorded. A Purchasers Policy is usually issued after the signed contract has been recorded. The mortgage policy of title insurance is usually issued after the mortgage or deed of trust has been recorded.


How are my premiums determined?

Title insurance premiums are determined by the amount and type of coverage provided. Unlike other insurance premiums, however, the title insurance premium is paid only once. At that point, the policy is effective for as long as title or "ownership" remains in the name of the insured, or his heirs or devises. If you have a question about rates, you can get more information. Rates are filed with the insurance commissioner who regulates the activities of title insurers.]]> 평상심 Thu, 15 Mar 2007 08:54:49 -0700 http://www.bmlee.com/bbs/board.php?bo_table=mortgage_en&wr_id=169

Perhaps you have been renting the same place for a long time. The rent is cheap; the landlord or lady is nice. You've been able to paint it the color that you like. It feels like home. So why would you actually buy a place to live?

Well, it can be one of the smartest things you do.

Many financial experts have shown that homeowners come out ahead when it comes to funds for retirement. While this may not be a big incentive now, in most cases those who own homes are also doing better financially overall. For instance, if you buy your first home at 30 and upgrade once at 35, you could have your total mortgage debt paid off by age 60. That allows for a full 25 years to pay off your mortgage debt. Once that debt is paid off, you suddenly have the equivalent of your mortgage payment available for other things! Imagine how much easier life would be if at some point you had paid enough rent and didn't have to pay it anymore. That's the kind of deal you get with homeownership.

But there's even more in it for you. Consider:

Tax deductions.

Let's face it; we'd all like to save more on our taxes. While you pay rent, you get no tax breaks. However, if you buy a place to live, you can deduct the interest on your mortgage (and in the early years, most of what you pay is interest) and you can even deduct property taxes come April 15th! That could save you some money right off the bat.


An asset that appreciates in value.

If you stay in your home for 25 years, you have a very good chance of making money on it compared to what you paid for it. For that matter, statistics show that the US national median home price has risen every year since 1968! Not too many investments can boast that kind of return. Typically, the value of your home keeps up with inflation, plus 1 or 2 percent.


An asset in which you build equity.

You are working to pay off your home, right? As you do that, you build "equity" in your home. This means that you own more and more of it as you pay down your mortgage. Again, rent can't compete. Think of your mortgage as a "forced savings plans" that will pay you back down the road.


Additional borrowing power.

If you've ever needed to borrow money while renting, you know that it can be tough to do. If you do get approved for a loan, it's likely to be at a punishing rate of interest. However, if you own your home, you have something "to borrow against". Lenders consider you more secure. This is another side benefit of equity in your home. You are able to "secure" loans through that equity.


When you own you gain stability.

When you rent, the amount you pay is in the hands of the owner of your unit. You can't negotiate that you'll have no increase in rent for 5 years for instance. If you own, you can get a locked-in interest rate for up to 10 years. You'll know exactly what you'll be paying in each mortgage payment for that full period. Again, rent can't compete.


You have the freedom to have the home you want.

Do you like pink walls? Done. Are you a big fan of wallpaper? Go ahead. Perhaps you've always wanted to have wall-to-wall broadloom. You put together the money; you make the changes. When you own the place, you decide how it's furnished, how it's decorated and how much you spend on doing all that. There will be no fines for leaving scratches in the walls; it's simply up to you whether to fix them or not. If you plant your mother's perennials in the backyard, they'll be staying with you, rather than being lost to the next tenant.


If you are still thinking about buying, keep these things in mind!]]> 평상심 Thu, 15 Mar 2007 08:54:03 -0700 http://www.bmlee.com/bbs/board.php?bo_table=mortgage_en&wr_id=168

We've said this on other pages for this site and we'll say it again; the best way to start home shopping is buy getting pre-approved for a mortgage. While most of us would prefer to start by looking at houses, it can set you up for disappointment. How can you really shop effectively if you don't know what your budget will be? Getting pre-approved tells you what size of mortgage you can qualify for, and let's you start to do some of the math for yourself.

Frankly, you may also find that you can qualify for a mortgage amount that you really don't want or need. We've seen people who have qualified for up to 6 times their annual salary! While it's nice to know that the lender trusts you to be able to handle that amount, do you feel able to handle that amount? If not, take some time to figure out payments and interest costs and such, and then reduce your house-shopping budget accordingly. (We did. When buying our last home, we decided the size of mortgage we wanted FIRST. Then we went house hunting. Our mortgage payments are easy for us to meet, and we haven't had to give up our yearly vacations.)

The pre-approval process will give you a lot of information, if you ask the right questions. You'll be able to get your own credit score, and see how that translates into a good or better interest rate. As a prospective buyer, you should go to a reputable broker, lender or banker, who understands such things as credit, credit scores, mortgage funding and debt-to-income ratios, in order to get the best information possible. That lending professional can help you figure out very closely the interest rate your credit score entitles you to, how much you are likely to be able to borrow and how much cash you may need for a down payment and closing costs.

All this work up front can save you from some nasty surprises later.

Another really good reason to secure financing before beginning your home search is you may find out you are qualified for special programs! This can help you to have more budget for your home than you would have expected, and also save you money. For instance, a high credit score can qualify you for low down-payment loans or even no down-payment loans through programs such as the FHA. If you are short on cash, you might find that lower down-payment requirements allow you up to buy more house than you thought you could. Always keep in mind that a lower down payment is likely to translate into a higher interest rate.

A final good reason to set up financing first: what if the home of your current dreams comes up on the market, and you aren't prepared to make an offer? In such cases, you can lose a property to another buyer who is ready to make an offer.]]> 평상심 Thu, 15 Mar 2007 08:53:24 -0700 http://www.bmlee.com/bbs/board.php?bo_table=mortgage_en&wr_id=167

You're buying a house. You want it inspected before you buy, to ensure you know what you are getting into. How do you pick the right home inspector?

Well, the first thing to keep in mind is that the home inspector is a generalist. They can give you an overall review of the property that is unbiased and relatively thorough, but they do not have the expertise of an engineer or other professional. The opinion of the home inspector is unaffected by the outcome of your real estate decision because they get paid regardless of whether you buy or not. The opinion of your real estate agent is not necessarily as unbiased, since that person has a stake in the sale. If the sale doesn't happen, the real estate agent doesn't get paid.

The majority of people do hire home inspectors. In most cases, there will be a clause in their offer to purchase that makes the sale contingent on acceptable results of the inspection. This protects you as the buyer, because you can void the deal if the inspection turns up a significant problem.

The cost of the inspection will vary. As a result, it pays to shop around. However, don't just buy the lowest priced inspection, because it may be that you aren't receiving as complete an assessment if you do. Look for an inspector who will tell you what will be covered in the inspection. You should get a review of at least the following components in the home or property:

- The exterior of the building, including walls, soffits, decks, roof, chimneys, and drainage conditions of the property
- The interior of the building, including windows, doors, plumbing, electrical
- Major systems such as the cooling and heating systems
- Attic and basement or crawl space and whether these parts of the building are adequately insulated and ventilated


If your inspector isn't prepared to cover all these areas, you are choosing the wrong inspector.

Keep in mind that inspectors don't take things apart; they do a visual inspection only. This limits the problems that can be identified, and the kinds of comments that can be made. For instance, an inspector can tell you if the roof needs to be fixed now, but can't tell you how much time a roof has left. In order to do that, a more in-depth review, including samples of the shingles, would be required.

Home inspectors do not do specialized work. For instance, they won't check for termites for you. You'll usually have to hire specialists for features such as swimming pools, septic systems, underground storage tanks for heating oil, or the health of trees and shrubs on the property. There can be exceptions, so if you need a review of the swimming pool, you should look for a home inspector who is qualified to do that for you.

Do you need the appliances checked as part of the deal? Not all inspectors will deal with these either. Check if this is a concern of yours with your particular real estate transaction.

So how do you actually find a good inspector? Your real estate agent may be able to refer you to an inspector. However, a friend of the real estate agent may not be as unbiased as you'd like. If you want to find an inspector yourself, you can start with your local Yellow pages. You can also find a professional on the web, through one of the home inspector certification associations. If you find your own inspector, be prepared to ask for references and then check them!

Of course, a word of mouth referral from a satisfied customer is always a good way to find a good person.

In general, you should accompany the inspector as the inspection is made. They can explain things on the spot, and answer questions that you may have. Doing this can give you the best bang for the buck.]]> 평상심 Tue, 06 Mar 2007 06:05:02 -0700 http://www.bmlee.com/bbs/board.php?bo_table=mortgage_en&wr_id=166

What the heck is CLUE? No, it's not the board game you played as a kid; CLUE is the Comprehensive Loss Underwriting Exchange and it tracks insurance claim histories of both people and properties. As a result, it can be a roadblock to you and your dream of homeownership.

How can CLUE work against you? Well, even if you've never claimed on a homeowner policy before, you could find yourself being denied coverage on your new home because the home has a bad CLUE record! What this means for you is that you'll likely be denied a mortgage, as home insurance is a prerequisite for most lenders to give you a mortgage.

What if you don't need a mortgage? You can still have problems with a poor CLUE record on a home. If you are denied coverage, you have one of two options: you can pay excessively high premiums to get your property protected or you can go without insurance coverage at all. Either option can be expensive and risky.

This can be a real shock to people who have a good insurance history. Most of us who have had insurance assume that insurance on our new home will be routine. CLUE means that you can't depend on that. In fact, you may even have an insurance certificate issued and in hand, and find that the insurance is denied after you have closed. Then, you could be in breach of your mortgage contract, which generally requires home insurance.

So how does CLUE work? CLUE keeps record of a homeowner's insurance claim for 5 years. They actually report on claims for about 30 kinds of losses, from wind damage to dog bites. So, the database not only covers problems with the home itself, but liability claims too. More than 600 US insurers, or 9 out of every 10, provide and share data via CLUE.

An insurer will request a CLUE report just before issuing a policy. The timing causes a serious problem for the buyer. The insurer might be unwilling to issue a policy, or the premium might go up, substantially.

So, you can just ask the seller if any claims have been made, right? Wrong. If the seller has owned the home for less than 5 years, the claim may have been made previous to that person owning the property. Further, since CLUE is relatively new on the insurance market, it may not have affected that person's insurance. But it can still affect yours as the new buyer.

What can you do about this? At the present time, your best bet is to have your purchase contract written properly. It should say that you have the right to receive and review the CLUE report on the property to be purchased before closing the deal. A similar technique is to require in the contract that the owner provide a CLUE report well ahead of closing and that closing will be conditional on your review of the CLUE report.

What about if you are the seller of the home, and you've found out that your property has a negative CLUE report? The only thing that will fix this is time. It will be 5 years from when the claim is made until it ages off the report. You may have to hold onto your property for this time, in order to be able to sell.]]> 평상심 Tue, 06 Mar 2007 06:03:36 -0700 http://www.bmlee.com/bbs/board.php?bo_table=mortgage_en&wr_id=165

You're going to buy a house. You've shopped carefully, and asked all the right questions. You finally have found a place and you're putting in an offer. Now, all you have to do is head over to your cousin Harry's office and get a mortgage.

Well, maybe.

While it can be reassuring to deal with someone that you know, you should always make sure that you're carefully comparison shopping also applies to your mortgage. Why? Your mortgage is going to make a lot of money for a lender! And it's going to cost you a lot of interest. You'll want to get the right one.

Here are nine mistakes to avoid when finding a mortgage lender for you:


1. You didn't research your mortgage lender.

One of the most important and largest financial transactions is your mortgage. You need to be sure that your mortgage lender is reputable. If your cousin Harry fits the bill, that's great. However, for most of us, it means that we need to check up on the lender. Are their customers happy? Are there complaints about their handling of mortgages? This is critical to your happy relationship with the people you will be paying for a long time.


2. You got suckered by promises of low rates.

A low rate is good. But you need to understand whether this low rate is guaranteed for you, and for how long, especially if you are in the pre-approval process. This will factor into your house hunting process. After all, if a rate is only guaranteed for 1 week, it's not likely that you'll have the house you want to buy in that short a time. If a company does promise you a time period over which they will hold that interest rate, get it in writing! If you don't have it in writing, they may still try to switch interest rates at closing. A good lender will allow you lots of time in closing and will hold the rate for you.


3. You assumed a certain program would be right for you.

You will see several programs that offer special low-interest rates. Keep in mind that they may not be the best programs for you. Make your lender explain what programs they feel best serve your needs and more importantly, why.


4. You didn't bother to compare fixed versus ARM mortgages and just took a fixed rate.

Conventional thinking is that fixed is always better. However, you need to look at your situation. The key question is, "How long am I going to live at this property?" The average length a first time homebuyer keeps their mortgage is less than four years. An ARM can actually be a better choice if you are going to be in the home for a shorter time. Think fixed if you plan on being in your home much longer.


5. You tried to guess the mortgage market.

Timing the market is hard. That's why there is so much advice about investing; everyone is trying to make a good decision under uncertain conditions. The same thing applies to mortgage rates. Many people will choose to let their rate float, trying to guess when rates have hit bottom. Then they try to lock in. Unfortunately, a lot of times they will wait too long and end up with a much higher interest rate when they are ready to buy. While there is nothing wrong with floating, you do need to keep a close eye what's happening. As closing nears, it might be worth locking in.


6. You didn't negotiate problems before you closed on the home.

It happens all the time; something crops up before you've closed the deal. It could be that your inspection turned up a problem. It might be that your builder hasn't included a feature that you paid for. Now's the time to tackle the issue. Discussing a solution prior to closing will give both parties time to analyze and determine options.


7. You forgot to budget for closing costs.

Ouch. Closing costs can be between 2 to 6 % of your purchase, depending on your lender's fees and other factors. Lenders must provide you with a "Good Faith Estimate" of closing costs. This should give you a reasonable idea so that you know what to expect at closing. However, don't be surprised if your lender doesn't know all the costs that will impact you in your situation. Always allow for a little more than your Good Faith Estimate.


8. You closed early in the month.

Oddly enough, this can make a difference. Why? Upon closing, your lender will charge you prepaid interest for the date the loan is recorded through to the end of that month. Therefore, one way to lower your closing costs is to close in the latter part of the month. This will lower the amount of prepaid interest that you must pay.


9. You forgot to read the fine print and check for hidden fees.

Another ouch. Does your mortgage contract talk about fees that were not explained to you? Sometimes, hidden fees can mean hundreds of dollars in closing costs. Remember that this is your money at stake. Never should you be afraid to ask for explanations of fees you are being charged.]]> 평상심 Tue, 06 Mar 2007 06:01:40 -0700 http://www.bmlee.com/bbs/board.php?bo_table=mortgage_en&wr_id=164

Home buying mistakes are most people's nightmare. After all, your home is most likely to be your one biggest purchase in your lifetime. If you make a mistake, it can be costly.

Here is a list of 10 common homebuyer mistakes, as suggested by David Weekley's book "How to Buy a Home Without Getting Hammered":

1. You didn't do your homework!

You need to have some knowledge on your side before you go house hunting, otherwise an unscrupulous person in the process can take you. There are many places to find good information (including this site!) A little time spent becoming knowledgeable can save you a lot of heartache (and potentially money) later.


2. You were more focused on making a shrewd investment than buying the right house for you and your family.

Here's one that's easy to fall into. However, the bottom line is that you should be buying something to live in. The housing market is tough to anticipate, just like the stock market. If you buy to stay for a long time, you'll win over the longer term.


3. You've forgotten to keep good location in mind.

Let's face it; one of the most important things for you and your family is a good location. Your home should reflect your needs. However, no one needs to have a home on the busiest street or with a shopping center in your back yard. Pay attention to good access to services that you need, while also keeping in mind that you are likely to see a better return on your purchase with a good location.


4. You overlooked an inferior floor plan for an attractive exterior.

While you want your home to look good on the outside, the most important space is inside. You want a liveable home that gives you the space and amenities that your family needs.


5. You overlooked how the house will function for your family.

Let's take an example: you've purchased a home with a large formal dining room, but no other eating area, and you've got 2 children under the age of 5. Clearly, this house isn't going to work for your family unless you have children that are much cleaner eaters than the average. Keep in mind how you really live. Would you be happier with an eat-in kitchen? Do you need a home office? Pick your home accordingly.


6. You didn't have your resale home inspected before you bought.

Oh, oh. What if you just got a lemon? In the same way that you should have a second-hand car checked over by a mechanic, you should have your "new to you" home inspected. You don't want surprises when you are moving into a home. The cost of the inspection is a fraction of what a major repair could cost you.


7. You didn't check the builder's reputation when purchasing your new home.

The quality of your home is completely dependent on that builder. Get the wrong one and you can end up with serious problems. In our own file of builder problems is one woman who spent over 10 years trying to get a bad builder to fix all the problems in her home. Don't lose time and money. Talk to people who have purchased from the same builder. Check on the Internet for consumer sites that deal with homebuilders. Speak with your local Better Business Bureau. A bad builder can be a very costly mistake.


8. You've lost out because you lost your patience.

Buying a house is a big decision. Spend all the time you need. Many people spend weeks and months researching the latest digital gadget they've fallen in love with, and want to buy a house in a week! If you jump into the market because of impatience, you can make a bad decision.


9. You're waiting for a better market, or interest rates.

While this can be a good strategy in some situations, if you can get into the market, it's usually better to get in. Just buy within your means. As Warren Buffett, a well-known investment guru in the US says; the rear view mirror is always clearer than the windshield. Don't end up remorseful because you didn't buy when you had the chance.


10. You decided not to buy at all.

Really? If you can afford a home and you don't make the purchase, you'll lose the benefit of tax deductions, building home equity and appreciation. If you can buy, do!]]> 평상심 Thu, 01 Mar 2007 06:22:47 -0700 http://www.bmlee.com/bbs/board.php?bo_table=mortgage_en&wr_id=163

There are times when you shouldn't buy a house, no matter what your real estate agent or mortgage lender might think. It can be a good decision to continue renting and then buy, depending on your financial situation.

So, how do you know you should wait?

If your financial situation is at all shaky, don't buy. You should really be thinking twice if you work in a job that is not secure. It's true that most of us can't count on job security, but if you are on unstable ground with your employer or if there is a chance that your employer could be filing for bankruptcy soon, you aren't in the market.

You should even think twice about buying if you are planning on changing jobs soon. If you have your resume on the street and head-hunters calling, you could be half way through the home buying process and suddenly have another job. Lenders don't like this much. In general, lenders tend to treat a new job within the previous six months as a credit risk factor.

If you are buying a house solely for an investment, you might also want to think twice. If you need your money out quickly, you could end up taking a considerable loss, particularly if you have paid for points and other expenses in buying the property. If you are speculating and properties take a substantial drop in value, you could be ruined financially. If you buy a property for investment purposes, you should have reasonable expectations, and generally it's much safer if you are in it for the long haul. This means that any money you put into an investment property should be able to stay there for at least 10 years. Otherwise, don't buy.

If you are looking for the house of your dreams, and will have to sink every cent into it in order to buy it, don't buy. If every spare nickel you have is going into your house, you are unlikely to have money left over for needed repairs and emergency savings for you and your family. Unfortunately, when families get into trouble, often the first thing to go is the house. If you are renting, you can downsize into a smaller apartment fairly easily. If you own your home, you can get caught, especially if the market is not good for selling. Think twice if you will be stretched to your limit financially.

Have you just emerged from bankruptcy? Again, this is not the right time to buy. Taking even a couple of years to re-establish a good payment history and a solid credit footing is time well spent. You will end up with much better interest rates on your loan when you do buy; keep in mind that rates and terms on sub prime mortgages run considerable higher than they do on a "conventional" mortgage for a person with a better credit rating.

While you are re-establishing your credit history, be sure to check your credit report on a regular basis; it should be at least once a year. Make sure that your good payment history is documented. Also be sure that any credit problems are removed in a timely fashion. You want to ensure that you can finance a mortgage later at a good rate.

Another reason to wait? In 2005, many experts are saying that the US housing market is overheated and due for a major correction. While you are making sure your financial house is in order, you might just find that the house of your dreams has become more affordable.]]> 평상심 Thu, 01 Mar 2007 06:21:28 -0700 http://www.bmlee.com/bbs/board.php?bo_table=mortgage_en&wr_id=162
You can deduct more than the interest on your mortgage from your taxes. You can deduct interest for home equity indebtedness. Home equity indebtedness is the second kind of mortgage interest defined under the tax code; the first is acquisition indebtedness. It includes any and every kind of borrowing secured by your residence that is not used to acquire, build or substantially improve that residence

 Well, what does that mean? Home equity indebtedness typically includes your home equity loan or home equity line of credit. You might use this to buy furniture or other assets. It also includes the cash-out portion of a cash-out refinance, as long as the additional borrowing isn’t used to improve the home substantially. That’s already covered in your acquisition indebtedness type of deductible mortgage interest.

Why make the big fuss over the difference between home equity indebtedness and acquisition indebtedness? The difference is critical, because interest on home equity indebtedness is deductible for only $100,000 of debt principal, while acquisition indebtedness is for $1 million of debt principal. The good news is that you get up to $1.1 million of total debt of these two kinds, for which you can write off interest.

One caveat: your home equity indebtedness, when added to acquisition indebtedness, cannot exceed the total value of the home when the loan is incurred--excess interest above the value of the residence would be non-deductible personal interest.

Now, you might think you are laughing all the way to the bank. However, here’s where the alternative minimum tax (AMT) comes in. Home equity indebtedness deductions must be added back to income for AMT purposes as an adjustment item. Therefore, home equity indebtedness interest is not deductible at all for taxpayers subject to the AMT. So, don’t go out and buy that high-end furniture just yet, until you have a tax professional crunch the numbers for you.

In the context of mortgage planning, the AMT makes it critical that clients structure their mortgage borrowing so it qualifies as acquisition indebtedness, which is subject to higher debt limits and no AMT adjustment.

Also remember, that to be eligible under acquisition indebtedness, the debt must be secured by the same residence that the loan will be used for. If funds are borrowed against a primary residence to buy a second, the debt will not qualify!

So, what if you have to refinance? Well, there’s good news here. Under the tax code, if a mortgage was originally considered to be acquisition indebtedness, then any refinancing of that mortgage will continue to be considered acquisition indebtedness, but only to the extent of the original mortgage.

If you borrow more money than your existing mortgage amount, the additional borrowing will be treated like home equity indebtedness. This restriction will apply, regardless of what the additional borrowing was for, unless you can fully document that it was for a substantial improvement on the existing residence.

The rules around mortgage interest deduction are complex. As always, if you have any questions about how you should handle your specific tax situation, get professional advice.]]> 평상심 Fri, 23 Feb 2007 23:31:10 -0700 http://www.bmlee.com/bbs/board.php?bo_table=mortgage_en&wr_id=161
So, let’s start at the beginning. Mortgage interest is tax deductible. The first type of mortgage interest defined under the tax code is called “acquisition indebtedness”. As you might expect, this includes the cost of borrowing to acquire your home, but also includes debt incurred to build or substantially improve a residence, as long as the debt is secured by the same residence.

 What qualifies as a residence? In fact, it includes your principal residence as well as a second residence, like a vacation home. But here’s where you have to be careful. If your vacation home is used and reported as a rental property, you can’t treat it as a residence (although you may be able to deduct interest as a rental expense). A tax professional can tell you which approach will best benefit you on a second residence.

Assuming that your residences apply, how much interest can you deduct? Well, the interest is deductible on the first $1 million of principal, for your first residence. Whatever is left over from that first $1 million can be applied to a qualifying second residence. What does this mean? It means that if your principal on your first home is $500,000, then you have $500,000 of debt limit remaining. This remaining debt limit is available to claim for your second home. Now, keep in mind that the restriction applies to the amount of principle borrowed and does not relate to the amount of interest paid. In other words, no matter the interest rate on your mortgage, if your debt qualifies and falls within the $1 Million limit, you can claim the full amount of your interest costs.

So, in short, acquisition indebtedness includes all the money you borrow to buy your home, plus any money borrowed to substantially improve your home. Of course, you’ll have to be able to document it.

You can also deduct home equity indebtedness, but the rules will be different than acquisition indebtedness.]]> 평상심 Fri, 23 Feb 2007 23:30:40 -0700