Home Purchase Information

Preparing to Buy Real Estate in 2007

Planning Your Monthly House Payment

Ask Yourself These 5 Questions Prior To Buying A Home

What Is PMI?

How Do Interest-Only Mortgages Work?

Mortgage Links

Preparing to Buy Real Estate in 2007

The national housing market slowed in 2006, which means that most homes on the market are overpriced.  As sellers realize that potential buyers need lower prices to bite, the homeowners that have to sell will do what it takes.  Lower prices means lower neighborhood comps, helping to lower prices even further.  This scenario is currently happening all over the United States.

 

You might be asking, why is a company that connects current and potential homeowners to lenders telling me the realities of a slow housing market?  The answer is, FastMLA is honest and will not “sugar coat” the truth. 

 

From here, no one knows where the market will go.  However, in a buyers market, there are always people trying to skew the game in their favor.

 

House Hunting Tips You Won’t Hear From Other Mortgage Professionals:

 

• Find a realtor that won’t mind submitting multiple low offers in this slow market.  Some people have started to fish for a home.  To do this, soon-to-be homebuyers take all the homes in their price range and submit offers (with lots of contingencies) on all of them at 35-50% of their asking price.  Fishers wait patiently until a seller bites and then they hook them.
• 100% financing and interest-only mortgages are popular but there are only a few ways to build equity in a slow market.  In the 100% financing option, homeowners may want to concentrate on paying off their 20% second mortgage to build them an equity cushion.  Another way is to make improvements that increase the value of the property.  There are many books on the market that provide homeowners with the best “bang for the buck” renovations to increase value.  Keep this in mind prior to buying your new home. 
• Find a mortgage professional that will explain all of the pros and cons of your mortgage options.  No matter the mortgage program you choose, there are good and bad aspects that must be weighed.  The system is simple.  Financial institutions know that your home will often be your biggest asset.  Lending institutions will work with you to find the best program for you because they want you to make the interest payments. Lenders want you to be successful so that you will pay more interest on the next home.  So you must choose, either get pre-approved for a mortgage or sit out.  FastMLA can pre-approve individuals that want to play the game. 

 

With these tools, you can take advantage of a slower housing market.  FastMLA is here to help finance your dream of home ownership.  Let us know if we can help. 

< Top >

How to Apply for a Mortgage

At FastMLA.com, we have made a "one-stop-shop" that will not only provide you with a plethora of information but mortgage seekers can apply for a mortgage fast.  Simply use our online form to begin the pre-qualification process.  If you are looking to purchase a home or refinance an existing mortgage, we can help. 

< Top >

Planning Your Monthly House Payment

To begin looking for a home, soon-to-be borrowers should look for what they can afford.  It is generally recommended that mortgage payment should not exceed 28% of your gross income.  This figure includes your mortgage payment and homeowner’s insurance.  First time homeowners may often be surprised by how many mortgage options are available.  To learn about all of them without dealing with many different individuals, using a mortgage broker is recommended.

 

Some of the options that new borrowers learn about are the traditional and non-traditional mortgage programs.  The traditional 30-year fixed mortgage locks your interest rate and locks your payment.  The advantage of this option is stability however many non-traditional mortgage options cater to people that do not plan to be in their home for the long term or that do not have the down payment for a traditional mortgage. One example of a non-traditional mortgage option is a “piggy backed” loan.  The first loan would finance 80% of the purchase price.  The second loan would pay for the remaining 20% of the purchase price resulting in needing a down payment of zero.  A disadvantage of this loan option is that the closing costs may be higher than other mortgages.  Borrowers need to remember that each mortgage option has pros and cons.  A responsible mortgage broker will tell you the pros and cons up front. 

Ask Yourself These 5 Questions Prior To Buying A Home

Buying your first house is a huge decision and there are multiple factors to consider.  This article will outline 5 questions each future homeowner should ask.

 

1.  How long do you plan on living in the home?

 

Americans usually live in homes for about seven to nine years.  Each future homeowner needs to decide if they plan to move in just a few years or stick it out for the long haul.  Usually, the shorter amount of time that you live in a home, the less time your home has to appreciate in value.  Also, in a market where home prices continue to decline in certain markets, future homeowners need to assess the risk of a short-term buy. 

 

The length of time future homeowners plan to live in their first home will impact the mortgage option of best fit.  Homeowners that stay in their homes for more than 10 years, a long-term fixed-rate mortgage might be the best choice.  If you know that will be imminent within 5 years then an adjustable rate mortgage or ARM might be the best choice.  There are many options to choose within these basic categories.  Talk with your mortgage professional about the other options available and the loan products they have access to.

 

2.      Will the home you are about to buy meet your future needs?

 

Many life changes can affect the first time homebuyer.  Some will plan to have kids within the next couple of years.  Do you plan to start a business and run it out of your home?  These types of questions need to be asked prior to taking the plunge.  Be sure that the home you purchase will meet your needs for years to come.  In other words, you don’t want to outgrow the house too fast.

 

3.      How do your finances look to lending institutions?

 

It is possible to find a mortgage no matter the financial situation.  But, if your financial history is good, you will have more and better options.  For example, some late payments on a credit report won’t affect the score too much.  Most will be able to enjoy the lowest interest rates available.  If you have more issues on your credit report, many lenders will still provide you with a home loan, but because you are more of a lending risk, you will have to pay higher interest rates and fees.  Mortgage professionals at FastMLA.com can help people in both of these situations.

 

4.  Where do first time homeowners find the down payment and closing costs?

 

Most homebuyers need to pay for the down payment and closing costs to complete real estate financing.  Usually, you do not need a large down payment if credit scores are high.  Multiple mortgage options offer a zero down and low down payment home loans.  If you have less than perfect credit, coming up with 10-20% of the property cost for a down payment will open multiple mortgage options.  In a slower market, many homebuyers will negotiate that the seller pays for all closing costs.  Some even negotiate a “home improvement” credit that can be used as a down payment. 

 

5.      Do you know what the ongoing costs of home ownership are?

 

There are multiple ongoing costs of homeownership that need to be considered.  Some of these costs include maintenance, improvements, insurance, taxes, HOA fees, and more.  If you are concerned about these costs, you may need to look for home loan options that minimize fees and lower mortgage payments.  Make your realtor and mortgage lender aware of any concerns you have.

 

If you’d like to know more about the home buying process, send us a message and we’ll chat fast!  Fast Form

 

Interested In Applying for a Mortgage?  Apply Now Online

< Top >

What Is PMI?

PMI is an acronym for private mortgage insurance.  This insurance insures the mortgage lender against a default that can be very costly to the homeowner.  PMI is apart of prequalification usually when homeowners do not have a 20% down payment.  However, there are mortgage options that can eliminate paying this monthly fee.

PMI increases the monthly payment is often calculated by multiplying ½% of the total loan amount.  For example, the bank is funding $190,000 of your $200,000 home purchase.  The annual cost of PMI will be $950 a year, which adds $80 extra to the monthly payment.  But, if you avoid paying PMI, cost may actually be more depending on individual circumstances.

To Learn More About PMI:

 

If you are planning to purchase a home with less than a 20% down payment, be sure to contact us using our Fast Form.   A mortgage professional will teach you about the options available.

< Top >

How Do Interest-Only Mortgages Work?

Interest-only mortgages are comprised of two basic elements.  They give the homeowner the flexibility of paying “interest-only” or interest plus principal each month. Secondly, interest-only loans have either a fixed or adjustable rate.

 

With the ability to choose your payment each month, homeowners can deal with unexpected expenses or a temporary change in monthly income.  For example, if a sales professional traditionally has slow sales in the winter but bounces back in summer, they could pay less of a loan payment in the winter and more in the summer.

 

Interest-only loans are offered for periods of 3, 5, 7, or 10 years.  For most, the appeal of the interest-only loan is the flexibility in monthly payment.

 

Like any mortgage option, there are positive aspects as well as negative ones.  For example, your interest rate may or may not be lower than a fixed rate mortgage.  Also, in a slower market, when you do not pay the principal and your house value goes down then you may end up owing money if you sell to quickly.  It is best to consult your mortgage professional regarding both the up and downside of any loan option.

 

If you’d like to know more about the interest-only mortgages, send us a message and we’ll chat fast! Fast Form  

 

Interested In Applying for a Mortgage?  Apply Now Online

< Top >