With the market improving and real estate moving in what can only be described as an impressive rebound, many potential homebuyers are getting pre-qualified for a mortgage and seeing what they can afford.  But, there are some misconceptions out there regarding mortgages, qualifications and foreclosures that keep many would-be homebuyers on the sidelines instead of taking action. Remember, it is the smart consumer who investigates, educates themselves and understands their options.

Here are a few common myths about mortgages you should know about:

• Mortgages are too hard to get right now and it is better to wait a while – False.  Mortgage giants Fannie Mae and Freddie Mac, both are government-sponsored enterprises that back most of the loans generated in the country, about 90 percent, offer loans with little money down. There are several options out there and though qualifying for a loan may be harder than it was during the housing boom back in say 2004, it is still an obtainable goal for most potential homebuyers. Now is the time to secure that loan at a very low interest rate.
• My credit score may stop me from qualifying for a loan – False.  Though it has been harder to secure a loan since the housing bubble burst some FHA lenders have recently lowered the required FICO score (created by Fair, Isaac and Company these credit scores are the preferred brand used by most major lenders) from a required 620 down to a fairly low score of 580, though you may have to put a bit more into your down payment.  You can still qualify however so you should not write yourself off even if you have had credit difficulties.
• I can’t afford what is out there for sale – False.  Never assume you cannot afford to own rather than rent, partially in this recovering market.  The monthly mortgage payment of many properties that are currently for sale come in at about the same amount per month as rental costs of many apartments, condos and townhouses throughout the region.  But home prices are slowly on the rise so now is the time to make your move.
• The real estate market is improving, but I should wait a bit longer to buy – False.  Home prices have stabilized and are slowly rising. One of the greatest benefits of home ownership is that the money you pay each month goes into an investment, not the pocket of your landlord.  This investment builds your personal wealth through equity, or the value of your house vs. what you owe on it.  As the current market continues to improve, home values are expected to rise over the next several years, which means your equity will grow.  Remember that the same home you are looking at in today’s market could cost you that much more in a few years time.  It is like buying something at a good sale price knowing the price will continue to rise with each passing year.

Consumer confidence is steadily on the rise and it is a wise consumer and home buyer who takes the leap now to get a good price and financially favorable loan terms, like amazingly low interest rates, which may not exist years from now.

photo courtesy of Tax Credits

It’s safe to say that by this point, we’re all aware of the fiscal cliff and its status as the elephant in the room.  Everyone knows that some sort of decision has to be made by the first of the year and that it affects every taxpayer.  As for the specifics, however, a sizable chunk of the population only has a vague idea, and often the media outlets reporting on the decision-making progress don’t go into detail.

The fiscal cliff’s roots go back to changes made in the early 2000s, during which time tax cuts were implemented across a variety of areas.  Back in 2011, in an effort not to stifle economic growth, the cuts were extended until January 1, 2013.  The United States’ current economic and fiscal climate, however, is making for an extremely difficult situation: growth is still feeble enough that levying the originally planned taxes would likely do serious damage, but further extending the cuts would exacerbate the already massive deficit.

Needless to say, both the economy and the deficit are politically charged issues, which is why Congress is cutting it so close to that January 1st deadline.  Partisanship and negotiations aside, the options boil down to going ahead with the policy as it’s currently laid out, cancelling the scheduled tax increases and spending cuts, or compromising in such a way that doesn’t address the budget issue as comprehensively but that would negatively impact growth less.  It’s a very delicate balance complicated by a colossal number of variables, which is why Congress has been putting off the decision for about three years.

If the tax increases and spending cuts go into effect as originally planned, analysts predict that GDP would decline by 4%, officially landing the U.S. back into a recession, and that unemployment would increase by nearly 1%.  Consumption spending, which is particularly important when it comes to sustaining growth, would likely take a hit of around $1 trillion.  On the other hand, the deficit as a percentage of GDP would be reduced by half, which, given the budget trends, would be a welcome change indeed.

If you have any questions about the fiscal cliff and how it may impact your home loan situation, please don’t hesitate to contact Tammy.

For information purposes only and is not a commitment to lend as defined by Regulation Z, Section 226.2. Programs, rates, terms and conditions are subject to change at any time. Availability dependent upon approved credit and documentation level, acceptable appraisal, and market conditions. Residential Mortgage Services, Inc. is a Maine Corporation headquartered at 24 Christopher Toppi Drive, South Portland, ME 04106. NMLS ID# 1760; ME Supervised Lender License No. SLM2537; Licensed by the New Hampshire Banking Department, NH Mortgage Banker License No. 8816-MB; MA Mortgage Lender License No. MC1760; MA Mortgage Broker License No. MC1760; CT Mortgage Correspondent Lender License No. 14352; RI Lender License No. 20092626LL; RI Loan Broker License No. 20122931LB; Licensed Mortgage Banker – New York State Department of Financial Services, NY Mortgage Banker License No. B500942; FL Mortgage Lender License No. MLD232

image courtesy of gpoo

When it comes to buying a house you may discover a whole new world of terminology. Applying for a mortgage can be an exciting and nerve-wracking experience, so the smart buyer is armed with knowledge about what all those terms mean.   The following are some top terms buyers will likely encounter when it comes time to choose a mortgage and begin the application process.

• Adjustable Rate Mortgage (ARM)

When the lender can change a mortgage’s interest rate, after a period of time.

• Annual Percentage Rate (APR)

The Annual Percentage Rate, which must be reported by lenders under Truth in Lending regulations. It is a measure of

Article submitted by Brentt Taylor of Mortgageloan.com

When mortgage interest rates drop, it seems that ads for refining mortgages go up. Refinancing a home mortgage simply means you are going to get a new mortgage to replace your old one. Going through the “re-fi” process generally means you have found a mortgage at a lower rate than the one you have now and a re-fi could lower your interest rate,  reducing your costs and monthly payments.

What Are Some Things To Consider?

As with any mortgage, you will have a variety of fees to pay. This is the important consideration. You must know what the cost of refinancing your house will be and how long you have to keep your house to recover these costs. For example, if the total cost of the new loan is $12,000 and your monthly mortgage and interest payment is reduced by $375, you would have to stay in your house 32 months to realize $12,000 in savings. In this case, if you did refinance, after nearly 3 years of new payments, you would have recovered your costs.

When you refinance your house, the length of the term of financing may change. This will also affect your monthly payment. If the term is too short, you may end up with increasing the monthly amount and putting a strain on your budget. If the term is too long, you may end up with lower costs, but a much longer time frame. This could force you to make mortgage payments long after retirement.

There are many other factors in deciding to refinance. Consult your financial counselor or lending officer to determine what best meets your needs.

What Does It Cost to Refinance a Mortgage?

What are the costs associated with refinancing a mortgage? The Federal Reserve has estimated that these costs will most likely total

Financial planning is something that most of us need to do – but let’s face it – who is really eager to do some financial budgeting and allocation? If you are like most people, you list down receivables and expenses per month, make a list of bills to pay, and hope there’s something left over at the end for that extra cup of  coffee from the coffee shop every morning, or a well-deserved spa massage once in a while.

But with all these bills and expenses, it can be hard to balance everything out. If you have kids, then your expenses can fluctuate from week to week. If you are renting a house or an apartment, paying the rent is another major consideration that you have to prioritize every month.

If you or your partner are looking for a good investment and are simply tired of allocating money each month for a house or apartment you don’t own, then purchasing property is the solution for you. It’s not as difficult (or expensive) as you may think.

A plot plan is sometimes used by mortgage lenders and title insurers to determine if a house or other buildings/structures, such as sheds and pools, conform to local setback zoning laws or if there are encroachments on the property by a neighbor. These are the shortest form of property measurement and are often only used for broad estimates regarding work, property value, or other mortgage/title-related issues.

Measurements are taken with measuring tapes, and not with electronic surveying equipment and therefore, the accuracy is within 2 or 3 feet. Although these tape measurements are sufficient to make zoning determinations, they should not be used to locate boundary lines. A plot plan is not to be confused with a full instrument survey. It has a very limited purpose and costs generally in the neighborhood of $150 to $250. In circumstances where accuracy is required, for construction, fence locations, pools, or other improvements, a full instrument survey is highly suggested, and often required by contractors or builders.

For questions regarding plot plans and all other real estate related questions, please feel free to give us a call.

Karen Kelley is the President of Broker’s Title & Closing, LLC. For more information about plot planning, home titles, or home closing, call 603-434-1414, or visit BrokersTitleNH.com 

photo courtesy of jeff_golden

With all the talk about record-low interest rates, the wise homeowner who has been thinking about selling knows his or her next mortgage could be at an amazing interest rate. This means more house for your dollar, and big savings for the life of your loan. For buyers it means the time is right to secure financing and make that move into a new home. A major factor that will affect qualifying for a loan and how low your interest rate will be is a your credit score.

What is a credit score?

Your credit score is a three-digit number that carries a lot of influence over your ability to borrow money. It can dictate whether or not you will qualify for a home, car, or business loan. It can also be the deciding factor in whether or not you are offered the lowest interest rate available.

Your credit score is a tally of points, which when totaled, fall between 250 to 850, based upon your payment and borrowing history and worthiness. You get points for the positive things you do like paying bills on time and points taken away for negative things like being too deeply in debt for your annual income. Lenders use this figure to decide your credit worthiness and if you are a risky borrower. Here are some of the most influential factors that give and take away points on your credit score:

Positive point makers:

It’s a great time to buy a house based on the market, but before you go out with your REALTOR® to look at potential homes to buy, it is important for you to know exactly what you will qualify for when it comes to obtaining a loan, also known as mortgage financing. Most agents will tell you that it is better if you go a step beyond a simple pre-qualification amount and get a confirmed pre-approval. The difference between obtaining an amounts vs. the actual pre-approval, is the amount of information you give the lender, the amount of fact-checking the lender does, and the overall security you have for securing a mortgage.

A pre-qualification is very basic. It is based on what you tell the loan officer you earn in a given year, and your current credit rating. It is not a guarantee of a loan, but a general idea of what you would probably qualify for. You can hit a snag by stopping at this step if you are not totally accurate in your figures or have been at your job for less than two years. There are a number of things on which lenders’ underwriters may seek in documentation. Once you apply and lenders research your finances, the amount you will be allowed to borrow could change. But, by getting pre-approved you move a step closer to a guarantee of a certain amount of financing. So, what will you need to provide your lender for pre-approval?

Borrower Documentation

You must provide documentation to the lender before your loan can be granted.  Here are some items you will need:

When buying a property, once your Purchase & Sales Agreement has been signed, a title examiner will search the public records at the county Registry of Deeds and Registry of Probate to look for problems with the home’s title.

This search typically involves a review of the land records going back 35 years or more. More than one-third of all searches reveal a title problem that title professionals fix before you go to the closing. For instance, a previous owner may have had a mortgage that was not released on record. Or the previous owner may have failed to pay real estate taxes.

Whether you’re buying vacant land, a house or a condominium, there are title records to be examined and potential problems inherent with all of them. So make sure you contact a title company to perform a title search before you purchase your next property.

~ Broker’s Title & Closing, LLC provides comprehensive settlement services throughout the State of New Hampshire. We are committed to providing our clients with the highest quality of title and closing services and easing our buyers, sellers, agents and lenders through the entire closing process. At Broker’s Title & Closing, LLC, we know what we are doing and we care!