Sedona Mortgage Tips - 2007
by Pam Bayles
Check Your Loan Caps -
Many people are sitting with adjustable rate mortgages that are ready to explode and they don’t know it. Why? Adjustable mortgages adjust interest rates at a predetermined time. This is known loosely as the cap. You must know your caps intimately so you can map out how your loan is going to be modified. The information on your cap can be found in your loan documents. It should tell you when and how much the interest rate can be increased or decreased. Don’t get caught blindsided!
Safeguard Your Credit -
Like it or not, your credit defines you from a financial perspective. If you can accept this, you need to take steps to get your financial profile in shape. The number one thing to do is to pay your bills on time and make absolutely sure that you make your mortgage payment at a minimum. It will show lenders you take your debt seriously. Many people pay bills late because they simply misplace them or forget. Avoid this by organizing your bills. Put them all in one place when the mail comes and sit down each week and pay the ones you must. Again, just make sure to avoid paying late.
Bumps In The Road -
Life comes at you fast and there are definite highs and lows. We all know this and have experienced it. If you run through a bad patch, it might be reflected in your credit via some blemishes. It makes sense to add statements to your credit report reflecting the problems you were having so that lenders are aware of them. If you were in the hospital for an extended period, make a note of it. If you were involved in a nasty divorce, state the same. Don’t expect lenders to just figure it out.
The Loan You Can Afford -
When figuring out what you can afford in a home, it is vital that you take into account all income and expenses. Income is fairly simple. It is just all sources of revenues you have coming in on a consistent basis. Expenses include the basics such as the monthly mortgage payment, credit card payments, and car payments and so on. One are many people fail to take into account is property tax. In some states, it can be a lot. Make sure you include it in your expense calculation so you are not surprised.
Nobody Is Perfect -
I have seen an endless number of people stress out over the prospect of applying for a mortgage. The first thing to realize is everyone has blemishes on their credit score. Nobody is perfect. Nobody! If you have a couple late payments or some other issue, don’t worry about it excessively. The credit scoring system is a sliding scale and you will be fine.
Preparing for the Mortgage Test -
When you are facing the prospect of taking a test, do you prepare for it or just wing it? Never make an offer on a home and then go strolling into a bank. Do it the other way. Head into a bank and see what you can qualify for. If there are problems with your credit or some other factor, do everything you can to resolve them. Then get pre-approved for your loan. At this point, you can go hunt down the home of your dreams
The Interest Only Mortgage Payment -
In the recent real estate market, a number of innovative loans came on the market to keep sales rolling. The interest only mortgage was one such loan. By paying the interest only each month, borrowers were able to squeeze into higher priced homes. Some of these buyers are finding their interest only period ending on the loan and their monthly payment going up. Be sure you are able to afford the home you are buying and can make the principal and interest payment.
Low Down Payment Mortgage -
Committing to a mortgage can be nerve racking at first given the hundreds of thousands of dollars usually involved. It can be worse when you realize how much money you need to come up with for a down payment. The traditional 20 percent down payment represents a lot of money, say $80,000 on a $400,000 home. The low down payment mortgage is your best option to get around this problem. FHA and VA loans can have a three percent or less down payment requirement. On a $400,000 loan, that equates to $12,000 – a bit lower than the traditional $80,000 down. However, you would need to do a 1st & 2nd mortgage to avoid Mortgage Insurance.
40 Year Mortgage Possibility -
When sizing up potential mortgages, many people fixate on the monthly payment amount. This has never been truer than now with interest rates up and foreclosures occurring because people can’t afford the relevant monthly payments. The 40 Year Mortgage may seem very attractive because payments are relatively low given the time period repayment is made over. But – your rate will be higher and you will be paying more interest for this long time commitment.
Buy-Down Mortgage -
In this weak real estate market, the buy-down mortgage is beginning to become common again. A buy-down mortgage is one where the interest rate on the loan is bought down by making some type of a payment to the lender. The twist in this case, however, is the party making the buy-down. It should be the seller and should be used as an incentive to move the property. This is particularly true for developers. If you are buying from a developer, try to make this part of the contract. Some programs will not allow this option.
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