Tuesday, January 15, 2008

How to Get a Home Mortgage in New Mexico

Introduction

Don't be afraid that buying a home in New Mexico will be a huge hassle. Knowing the proper procedures will reduce the stress of getting a home mortgage loan. Here are the steps for getting a New Mexico home mortgage loan.

Instructions

Difficulty: Easy

Steps

1

Step One

Research your credit report. Clear up any inconsistencies before applying for a loan.
2

Step Two

New Mexico has programs for the disabled, veterans, low-income buyers, single parents, first-time buyers and rural home buyers, including the Home Equity & Required Occupation (HERO) program and the First Time Home Buyers program.
3

Step Three

Check out these government sites for specific New Mexico programs for state and federal assistance:
• New Mexico Homeownership Overview
• USDA New Mexico Rural Development programs
• New Mexico Homeownership Assistance programs
4

Step Four

Explore the home loan offerings from a variety of lenders such as credit unions, banks, mortgage brokers and online mortgage companies. Be selective, and find the best rates and terms.
5

Step Five

Obtain pre-approval for your loan from your lending institution. Collect all necessary documentation, like employment pay stubs, tax returns, and any other specific data.
6

Step Six

Hire for a real estate agent that has longevity in the business and have them help you find the right home for you.
7

Step Seven

Finalize your loan and submit an offer on the home.
8

Step Eight

Submit all realtor, attorney and closing fees. Your lender will contact you for payments after you move in.

Tips & Warnings

  • Be sure you shop around for the lowest rates. A small difference can save you thousands.
  • Have the house inspected by a third-party before you close. They may find structural problems or other things that change your mind.
  • Read the fine print, and be careful to understand all the terms of the loan before you sign any documents.
  • Never be pressured into paying a fee to apply for a loan. Also, be aware of predatory lending, the practice of intentionally coercing consumers into contractual loans with unusually high payment terms and interest rates, often directed at uninformed borrowers or those with poor credit.
  • Get an attorney to review any documents before you sign them.
  • Make sure that the home title is clear of liens before you purchase it.
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How to Get a Mortgage in Alabama

Introduction

Bound for Alabama? Obtaining a home mortgage loan can be a daunting process. But if you learn the process, and then break it down into steps, it's pretty easy to manage. Here are a few steps for getting an Alabama home mortgage loan.

Instructions

Difficulty: Moderate

Steps

1

Step One

Get a copy of you credit report and check for any mistakes. Clear up any blemishes before applying for a loan.
2

Step Two

Spend some time researching the type of lender that you want. Credit unions, private banks, online mortgage companies, mortgage brokers (individuals and agencies that arrange financing for borrowers with a variety of lenders) or state and federal programs.
3

Step Three

Know that in Alabama, mortgage brokers are not required to be licensed. In addition, they require no specific education or experience requirements. Ask the broker for references to ensure that the broker is legit.
4

Step Four

The state of Alabama has no state-wide lending laws to protect consumers from predatory lenders (lenders that intentionally coerce consumers into contractual loans with unusually high payment terms and interest rates, often directed at uninformed borrowers or those with poor credit). Several bills have been introduced in the past few years, but all have failed. However, the Home Ownership and Equity Protection Act of 1994 federal law applies to Alabama and all of the United States.
5

Step Five

Avoid Adjustable Rate Mortgages if you can. These move the interest rate risk away from the lender and onto the borrower. In essence, if interest rates rise, so will your mortgage payment. If interest rates go down, your payment will stay the same or decrease. If there is a huge increase in interest rates, you could lose thousands.
6

Step Six

Several programs exist in Alabama for low-income or first-time home buyers, the disabled, senior citizens, veterans, single parents and rural home buyers, such as The American Dream Down payment Initiative(ADDI), First Step, Access Alabama, Rural Alabama Mortgage Program(RAMP), Step Up and Mortgage Credit Certificate programs.
7

Step Seven

Get pre-approved for a home loan. Make a folder with all the info that your lender will want for the application, including last year's tax return, paycheck stubs, and any other relevant documents your lender will want; save yourself multiple trips.
8

Step Eight

Find an agreeable real estate agent and start your home search.
9

Step Nine

Finding the right home at the right price and put an offer on the home. Then pay all legal, realtor, and closing fees.
10

Step Ten

Finalize the sale and move in! Payments to your lender will begin shortly.

How to Get a Mortgage in Illinois

Introduction

Do you want to get your hands on a beautiful home in the state of Illinois? If so, it would be wise for you to get a good mortgage loan. The procedure for getting a home loan at a reasonable rate is not that difficult. Sure, it will take some time and energy but it will be worth it in the end. Here are the steps to getting an Illinois home mortgage loan.

Instructions

Difficulty: Moderately Easy

Steps

1

Step One

Get a copy of your credit report and be sure there are no inaccuracies.
2

Step Two

Investigate different types of Illinois housing loans available from a variety of lenders like credit unions, mortgage brokers (individuals and agencies that arrange financing from a variety of lenders), online mortgage lenders and banks. By comparing more than one lender, you can shop around for the best deals and rates.
3

Step Three

Be knowledgeable of state and local lending laws that apply to predatory lenders (lenders that intentionally coerce consumers into contractual loans with unusually high payment terms and interest rates, often directed at uninformed borrowers or those with poor credit). Know that in Illinois, mortgage brokers are required to be licensed. In addition, they must have three years experience, and hold a $100,000 fidelity bond and a $20,000 surety bond. Ask for proof of their license.
4

Step Four

Illinois has the "Illinois Fairness in Lending Act" that requires lenders to engage in fair and reasonable lending practices. Illinois also has the "Residential Real Property Disclosure Report" that requires sellers to disclose certain conditions of the property such as leakage, defects, unsafe conditions, etc. to potential buyers.
5

Step Five

Research various federal and Illinois loan programs, which are offered to low-income buyers, veterans, disabled, single parents, senior citizens, and rural home buyers, such as the Community I-Loan, Affordable Housing Trust Fund, and the Rural Guarantee Housing Initiative Program.
6

Step Six

Apply to get pre-qualified for the loan from your selected lender. Don't forget to bring all the necessary paperwork which includes proof of employment, tax returns, and investment information among others.
7

Step Seven

Find a good realtor, and begin looking at homes in your price range.
8

Step Eight

Complete a full mortgage application with the lender, and issue a formal offer for your desired home.
9

Step Nine

Pay the closing costs and all related attorney and realtor fees. The lender will pay the home owner or other banking institution for the home, and then you will begin payments to the lender.

How to Get a Wraparound Mortgage for a Home

Introduction

If the seller still owes money on the home you want to buy, a wraparound mortgage is a way to finance the purchase without the hassle of going through a lender. In a wraparound mortgage, you pay the seller the monthly payment on his or her existing mortgage, plus an additional payment to cover the balance of your purchase price for the home.

Instructions

Difficulty: Moderately challenging

Things You'll Need

Steps

1

Step One

Write an offer on a property. Include the amount of down payment you'll be making and subtract that from the purchase price. That will be the amount of the wraparound mortgage you're seeking.
2

Step Two

Agree with the seller upon an interest rate you're willing to pay on the wraparound mortgage. Typically the interest rate will be close to that of a rate from a regular lender, but it may be a bit higher to compensate the seller for his or her financial assistance. The seller may request a copy of your credit report.
3

Step Three

Get a copy of the note on the seller's existing loan. It's best if the existing first mortgage is a fixed-rate one, but you can still wrap an adjustable-rate first mortgage.
4

Step Four

Open an escrow with a title company or hire a real estate attorney to handle the transaction.
5

Step Five

Arrange a closing date.
6

Step Six

Establish the exact balance owed on the first mortgage as of the closing date. The attorney or escrow officer will calculate this information.

Tips & Warnings

  • The seller has to be willing to take your monthly payments for a number of years instead of a lump sum from the sale of the property in order for a wraparound to work.
  • A wraparound mortgage is ideal for people who have less-than-perfect credit.
  • If the existing first mortgage is an adjustable-rate one and the first mortgage payment has increased, the wraparound payment should change to compensate for the increase in payment. If there has been a decrease in the first mortgage payment, it's easier to leave the overall payment the same and put the additional money toward the balance.
  • Each year you should request a copy of the ending (year-to-date) statement on the first mortgage so you know exactly how much has been paid off.
  • The seller may want to see proof that the insurance and taxes are being paid. Be prepared to show this documentation.
  • Wraparound mortgages are not legal in all states, and some lenders forbid their loans from being wrapped.
  • Check with the seller's mortgage lender and read the existing loan documents to make sure doing a wraparound will not trigger a due-on-sale clause, which requires the loan to be paid off if the home is sold.
  • If you wrap a mortgage and fail to notify the lender, the lender can call the loan due and an arrangement must be made between the buyer and the seller to pay off the entire balance of the first mortgage.
  • The record keeping for a wraparound mortgage is complex. The seller must keep track of payments and how much of each payment goes to pay interest and principal on the first and wraparound. Each tax year, the seller must provide you with a form from the Internal Revenue Service reporting the amount of interest paid on a seller-financed mortgage.
  • When you make your payments to the seller, request that he or she provide a copy of the payment (receipt) made on the first mortgage. Buyers can get into trouble when they make their payment to the seller but the seller fails to make the payment to the original lender, causing the buyer to lose the house in foreclosure even if the buyer has made payments all along.

How to Know Which Mortgage Option Is Right For You

Introduction

It's important to know as much or more about the industry than your lender or bank.

Instructions

Difficulty: Easy

Steps

1

Step One

Everyone thinks they want a 30 year fixed loan at a great interest rate. This is a one size fits all prescription that may not be right for you. The problem is due to mortgage fraud and a lack of information people are afraid to pursue or consider other options. Most people don't know that the first 6 years payments on a 30 year mortgage pay almost nothing towards the principal. In addition every time you refinance you hit the restart button.
2

Step Two

Ask yourself these questions to determine which loan option is best for you, and be HONEST with yourself:

1. How long am I going to stay in this house?
2. Am I REALLY going to stay in this loan for the next 30 years?
3. Do I have enough saved for retirement
4. Do I need a band aid loan(3-7 year fixed) just to get me back on my feet?
3

Step Three

Answering these questions will guide you in the direction you need to go. If you think you are going to move, need money for the kids college, want a down payment for a vacation home or expect a decrease in earnings than you don't want a 30 year fixed. Interest only loans are a great choice if you have answered yes to any of the above questions. With an interest only loan you will not move forward or backwards and still have a lower payment that will allow you to use your money for bills, tuition etc. Most interest only loans also allow you to pay more than the interest only payment without any penalties giving you the best of both worlds. Hybrid option arms or Option arm loans are another option but very dangerous. These loans allow you four options:
1. A minimum payment of anywhere between 1 and 2.5% of the total loan amount
2. An interest only payment
3. A 15 year fixed payment
4. A 30 year fixed payment

A 1 to 2.5% payment on a $500,000 loan amount could be as little as $1600 and as much as $1900. The fully amortized payment would be roughly $2500 on a 30 year fixed at 6%. If you were to make a payment of $1600 a month you would be adding $900 a month to what you owe on the house. For example, you owe $500,000 on a home worth $700,000 and you make the 1% payment for 6 months. At the end of 6 months you would owe 505,400. This 1% payment essentially reduces the equity in you've built up in your property. I only recommend this type of loan for people looking for a reverse mortgage or that experience some kind of personal travesty.