Prequalifying and Preapproval – FAQ

Knowing what you can afford is the first rule of home buying, and that depends on how much income and how much debt you have. In general, lenders don't want borrowers to spend more than 28 percent of their gross income per month on a mortgage payment or more than 36 percent on debts. It pays to check with several lenders before you start searching for a home. Most will be happy to roughly [...]

Interest Rates – FAQ

No one knows for sure where rates are headed. Beyond public policies put in place by the Federal Reserve Board, there are no laws that govern mortgage rates. Historically, usury laws were used to prevent lenders from charging sky-high interest rates when lending money. But in some states where there are usury laws, banks, thrifts and a number of other financial institutions are exempt from the law. Today, interest rates are governed solely by [...]

Fixer-Upper Loans – FAQ

Are there gov't programs for rehab? The U.S. Department of Housing and Urban Development's Section 203 (K) rehabilitation loan program is designed to facilitate major structural rehabilitation of houses with one to four units that are more than one year old. Condominiums are not eligible. The 203(K) loan is usually done as a combination loan to purchase a fixer-upper property "as is" and rehabilitate it, or to refinance a temporary loan to buy the property [...]

Assumable Loans – FAQ

This method of seller financing is risky if the underlying first loan has a "due on sale" clause because the loan might be called due when the first lender becomes aware that the property has transferred title," says Dian Hymer, author of "Buying and Selling a Home, A Complete Guide," Chronicle Books, 1994. A seller usually will want to incorporate a late charge to encourage the buyer to make monthly loan payments on time. [...]

Reversed Annuity Mortgages – FAQ

What is a reverse mortgage loan? A reverse mortgage is a special type of loan available only to equity-rich, older homeowners. Such owners can borrow against the equity they have built up over the years, but no repayment is necessary until the borrower sells the property or moves elsewhere. If the borrower dies before the property is sold, the estate repays the loan (plus any interest that has accrued. These loans have become increasingly popular. [...]

Mortgage Considerations – FAQ

The following regulatory bodies oversee lenders: * Comptroller of the Currency, Compliance Division, Washington, D.C., (800) 613-6743. * Office of Thrift Supervision, Consumer Affairs, Washington, D.C., (202) 906-6237. * Federal Deposit Insurance Corp., Consumer Affairs, Washington, D.C., (800) 934-3342. Your state departments of real estate or commerce also may regulate the lenders in your area. For information on how to find the best home loan, check out this booklet: * "How to Shop [...]

Cash Home Buyer – FAQ

What about an all-cash offer? Although most home buyers could never buy a property with all cash, anyone considering such a move (or who has bought a lottery ticket lately) may be wondering how to approach such a deal. Because buyers sidestep the tedious and time-consuming loan qualification process, the deal can close very quickly. In addition to fewer hassles and a better position in price negotiations, the all-cash buyer's primary advantage is completely avoiding [...]

Bankruptcy – FAQ

Click on the question below to view the answer. There is no fast and easy way to repair damaged credit that took months or years to occur. The law allows negative information to appear on an individual's credit record from 7 to 10 years. The first step is to check your existing credit record. Anyone can obtain copies of their own credit report free of charge if they have been turned down for credit recently. [...]

Mortgage Credit Certificates (MCC) – FAQ

The Mortgage Credit Certificate program allows first-time home buyers to take advantage of a special federal income tax credit. This program allows buyers credit in qualifying for the tax advantage they'll receive after they purchase the home. The amount of the credit is tied to a local formula that every city with an MCC program must follow. An MCC credit, which can total $2,000 or more, reduces the borrower's federal tax liability by an [...]