Financing

Found 26 blog entries about Financing.

Credit Report

Credit scores range between 200 and 850, with scores above 620 considered desirable for obtaining a mortgage. The following factors affect your score:

Your payment history.

Did you pay your credit card bills on time? Bankruptcy filing, liens, and collection activity also affect your history.

How much you owe and where.

If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, spreading debt among several accounts can help you avoid approaching the maximum on any individual credit line.

The length of your credit history.

In general, the longer an account has been open, the better.

How much new credit you have.

New credit—whether in the form of installment plans or new credit

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Woman holding a piggy bank

Investigate local, state, and national down payment assistance programs.

These programs give qualified applicants loans or grants to cover all or part of your required down payment. National programs include the Nehemiah program, Getdownpayment.com, and the American Dream Down Payment Fund from the Department of Housing and Urban Development.

Explore seller financing.

In some cases, sellers may be willing to finance all or part of the purchase price of the home and let you repay them gradually, just as you would do with a mortgage. A similar option is the assumable mortgage, where a home buyer takes over the seller’s existing loan (with bank approval). This can be especially helpful when interest rates are on the rise.

Ask your family for

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Money changing hands

Term.

Mortgages are generally available at 15-, 20-, or 30-year terms. In general, the longer the term, the lower the monthly payment. However, shorter terms mean you pay less interest over the life of the loan.

Fixed vs. adjustable interest rates.

A fixed rate allows you to lock in a low interest rate as long as you hold the mortgage and, in general, is a good choice if interest rates are low. An adjustable-rate mortgage (ARM) usually offers a lower rate that will rise as market rates increase. ARMs usually have a limit as to how much and how frequently the interest rate can be increased. These types of mortgages are a good choice when fixed interest rates are high or if you expect your income to grow significantly in the coming years.

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Appraiser inspecting a property

Once you are under contract, your lender will send out an appraiser to make sure the purchase price is in line with the property’s value.

Appraisals help guide mortgage terms.

The appraised value of a home is an important factor in the loan underwriting process. Although lenders may use the sale price to determine the amount of the mortgage they will offer, they generally only do so when the property is sold for less than the appraisal amount. Also, the loan-to-value ratio is based on the appraised value and helps lenders figure out how much money may be borrowed to purchase the property and under what terms. If the LTV is high, the lender is more likely to require the borrower to purchase private mortgage insurance.

Appraised value is not a

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Calculator alongside budget

The first step in getting yourself in financial shape to buy a home is to know exactly how much money comes in and how much goes out. Use this worksheet to list your income and expenses below.

Income                   Expenses                      
Total Take-Home    Total Rent/Mortgage  
 Child    Child Support/Alimony  
 Pension/Social   Health Insurance  
 Disability/Other    Life Insurance  
 Interest/Dividend    Other Insurance  
 Other    Vehicle Insurance  
     Vehicle Payments  
     Vehicle Upkeep  
     Other Loans  
    Utilities  
    Credit Card
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Group stands outside home for sale

How long have you been in residential real estate? Is it your full-time job?

Like most professions, experience is no guarantee of skill. But much of real estate is learned on the job.

Do you have any designations or certifications?

Real estate professionals have to take additional specialized training in order to obtain these distinctions. Designations and certifications help define the special skills that an agent can apply to your particular real estate needs. One designation buyers should look for is the ABR®, or Accredited Buyer’s Representative.

What’s your business philosophy?

While there’s no right answer to this question, the response will help you assess what’s important to the agent and determine how closely the agent’s goals

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