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.

How to Payoff Your Mortgage Fast

Introduction

Ever wonder how you can pay off your home quicker? Here is the simple math...

Instructions

Difficulty: Easy

Things You'll Need

  • calculator
  • current mortgage info
  • calandar

Steps

1

Step One

How much do you pay monthly?
It is easy to just send the monthly minimum payment each month. However, with a little bit of planning you can cut the amount of interest you pay and how long it takes for you to pay off your home.
2

Step Two

By accelerating the payment structure on your loan, the life of the loan is reduced:

* In a normal 30 year fixed rate loan situation, your monthly payment is applied towards principle and interest. It is amortized over the course of 30 years.
* So any money above and beyond your normal payment is applied solely towards the principle of the loan.
* By reducing the principle of the loan, you are reducing the total amount of interest that must be paid, and that equates to an early loan payoff.
3

Step Three

All you have to do is make 1 extra monthly house payment a year. Do that and you reduce the life of your fixed rate loan by about 7 years!
4

Step Four

Click to enlarge

Budget that extra payment

You have 3 good ways to make that extra monthly mortgage payment:

* Bi-Weekly Payments: Normally, you make your house payment once a month, or 12 times a year. But with a Bi-Weekly payment structure, you take your normal house payment, and divide it by two. This is the amount paid every two weeks, instead of once a month. By doing this, you basically make 1 extra (monthly) payment a year.


* Double Payments: Double Payments simply means an extra house payment. Once a year, you write out a check for twice the amount. So, if your house payment is normally $1,000 a month, then on December 1st, for example, you’d write out a check for $2,000. This is the same as the Bi-Weekly Payments option.


* 1/12 increase in payment: Increase your monthly mortgage payment by 1/12, and you accomplish the same thing. Let’s say your house payment is normally $1000. 1/12 of your house payment is $83. So, you start making payments for $1,083. Guess what? Your loan is paid off in about 23 years instead of 30.

How to Save Big Bucks on Your Mortgage

Introduction

A home mortgage is the biggest ongoing debt most people will ever face. One of the easiest and most powerful money strategies you can employ is to pay off your mortgage early. It's a painless way to save thousands of dollars.

Instructions

Difficulty: Moderate

Steps

1

Step One

Look at the breakdown of your mortgage payment. Your monthly mortgage statement shows two elements: the principal payment, which is the portion of your debt that you're actually paying, and interest on the principal.
2

Step Two

Pay off your mortgage early just by adding more to your monthly payment. Calculate whatever you can afford, and simply add that each month.
3

Step Three

Make the equivalent of an extra payment each year. This requires simply adding an additional 1/12 of your payment to each mortgage check you write. Indicate on your mortgage payment slip that you're paying additional principal. For example, by paying an extra $50 a month on a 30-year, $100,000 mortgage at 6 percent interest, you slice six years off the life of the mortgage, and you save almost $25,000 in interest.
4

Step Four

Sending in biweekly payments, rather than one monthly check, is another strategy for more quickly reducing your debt, if your lender allows it. Signing up for an official biweekly mortgage may not be worth the fee, however.
5

Step Five

Renegotiate your mortgage rate by refinancing it if interest rates drop considerably. Typically it's not worth doing unless you can secure a rate at least 1 percent lower. See How to Refinance Your Home.
6

Step Six

Consider variable interest or shorter term loans. A 30-year fixed interest loan is not your only choice. Many lenders offer variable loans, or loans that have a short-term "teaser rate" that keeps the interest low for a set period. If you're thinking of selling soon, there are also interest-only loans for different periods, as well as loans that are fixed for 5 or 10 years, then go variable.

How to Understand 100 Percent Mortgage Financing

Introduction

Finding the money for a down payment on a home is difficult to do, especially when the price of homes keeps increasing. To overcome the challenges of saving 5 percent to 20 percent of a home's value, you can utilize 100 percent financing options to get into the home of your dreams.

Instructions

Difficulty: Moderately Easy

Steps

1

Step One

Know that 100 percent financing is simply a loan product that does not require a down payment.
2

Step Two

Learn about the 80/20 loan. One type of 100 percent financing loan is the 80/20 loan. With this loan product you take out two different mortgages to cover the cost of buying your home. The 80 portion of the 80/20 loan covers the first 80 percent of the home's value. This loan is considered your first mortgage and it is amortized at a regular mortgage interest that will depend on your FICO score. The 20 portion of your 80/20 loan will cover the remaining 20 percent of the home's value and it will be considered your second mortgage. The second mortgage will be amortized at a higher interest rate than your first mortgage. The advantages of the 80/20 loan are that you don't have to have a down payment and you don't have to pay private mortgage interest.
3

Step Three

Learn about the 100 percent loan plus PMI. The second type of 100 percent financing is to take out a 100 percent loan plus PMI. Again you don't have to have a down payment, however, in this case you do have to pay for private mortgage insurance, also known as PMI.
4

Step Four

Learn about the 100 percent loan plus lender paid PMI. The 100 percent loan plus lender paid PMI is perhaps the most ideal 100 percent financing option that is available. In this scenario you don't have to have a down payment and you don't have to pay for private mortgage insurance. The drawback of this loan product is that it is more difficult to qualify for and it may have higher closing points associated with it.
5

Step Five

Decide which 100 percent financing option is best for you. To determine which loan product to apply for you really need to compare the overall cost of the loan as well as which option you qualify for. To do this you can ask your lender to run a mortgage quote based on your FICO score and your employment status.

How to Determine the Best Time to Refinance Your Home Mortgage

Introduction

Determining the best time to refinance your home mortgage can take some effort on your part, but if you educate yourself on market trends, your research might help you save a lot of money on your mortgage. There are a number of circumstances that contribute to when and why you should consider refinancing your home mortgage. Do your homework, break out the calculator and in the end you just might just save yourself some money.

Instructions

Difficulty: Easy

Steps

1

Step One

Search online at Web sites like Monster Moving and Bank Rate (see below) to find current home mortgage rates, including time length of mortgages and required downpayments, if any.
2

Step Two

Call and verify the advertised loan rate. Make sure you speak to a loan officer who confirms the advertised rate. Better yet, ask to have the advertised loan rate mailed or emailed to you for your records.
3

Step Three

Compare your current mortgage rate with the advertised rates. If you can lower your mortgage by at least half a point, it may be time to refinance your home mortgage. If you can reduce it by two points, then it is almost assuredly time.
4

Step Four

Watch interest rates. If you currently have an adjustable mortgage interest rate that is a half to two points above the fixed current rates, the time might be right to refinance your home mortgage into a fixed rate.
5

Step Five

Decide how long you are going to stay in your current home, or at least how long you think you might stay in your current residence.
6

Step Six

Do the math. Will you pay more in closing costs than you will save on your remaining monthly payments in your current home if you refinance?
7

Step Seven

Choose the bank that offers you the lowest interest rate and best overall deal.

How to Find a Lender for a Home Loan

Introduction

There are literally dozens of home mortgage lenders in virtually every locale. So how do you find the right lender for you? You have two basic options: you can hire someone (a mortgage broker) to find a lender for you, or you can take the do-it-yourself approach.

Instructions

Difficulty: Moderate

Things You'll Need

  • Phone Books
  • Sunday Newspapers
  • Real Estate Agents
  • Online Mortgage/finance Services

Steps

1

Step One

Look in the Sunday edition of a local newspaper for the selected interest rates of lenders in your area. This is not a complete listing, but it will include a variety of different lenders and will serve as a good starting point.
2

Step Two

Look in your local phone book under 'Mortgages' for lenders approved for your area.
3

Step Three

Call lenders and ask about their interest rates, points that might be required and other closing costs.
4

Step Four

Ask about any low interest loans that may be available through local municipalities or the state.
5

Step Five

Find out about the amount of a down payment that is required for a loan.
6

Step Six

Ask how much the initial rate of an adjustable-rate mortgate (ARM) can go up in a single year (if you are considering an ARM), and the maximum it can be raised over the life of the loan.
7

Step Seven

Choose a lender based on who offers the best interest rate, who has the type of mortgage you are looking for and who is willing to work with you.

Tips & Warnings

  • One way to help cut down on the legwork of finding a lender is to work with a good real estate agent who has experience with many lenders and can give helpful advice. A good way to gauge an agent's advice is to compare that agent's short list with rates you have found on your own.
  • The most common mortgage lenders (or originators, as they are referred to) are traditional banks, savings and loan associations and mortgage bankers. Banks are probably the most visible since they advertise heavily and most everyone has a checking and/or savings account.
  • Because of bank consolidation, looking at smaller banks can prove worthwhile. They can offer very good rates, as do savings institutions.
  • Mortgage bankers do only mortgages, and the best ones offer very competitive rates.
  • For qualified low-to-moderate income families purchasing rural property, the U.S. Department of Agriculture offers loan guarantee programs. Contact the USDA/RA office in your area, listed in the blue pages of your phone book.
  • Low-to-moderate income, first-time buyers should also contact the National Council of State Housing Agencies (202-624-7710) to locate the agency in your state that offers low-interest loans to qualified buyers.
  • While real estate agents can be good sources for finding lenders, their word should not be taken as gospel. They may be experienced, but they may also simply be comfortable working with certain lenders and may not be up-to-date on the better lenders.
  • Mortgage lending is not the strong point of many banks, so often they don't offer the best rates.
  • Remember that the initial rates you get are not carved in stone. Rates can change quickly, particularly when interest rates in general are volatile.

How to Find a Mortgage Broker for a Home Loan

Introduction

If you want the best mortgage for you but don't know where to start, a mortgage broker can do the shopping for you.

Instructions

Difficulty: Moderately Easy

Things You'll Need

  • Real Estate Agents
  • Real Estate Brokers
  • Online Mortgage/finance Services

Steps

1

Step One

Contact state and local boards of Realtors for lists of mortgage brokers in your area. Ask your own real estate agent or friends for references.
2

Step Two

Call recommended brokers and ask how many different lending institutions they work with.
3

Step Three

Ask prospective brokers how they are compensated. Brokers work for either a flat fee or a percentage of the mortgage amount.
4

Step Four

Ask what types of institutions, or individuals, the broker works with. This can be particularly helpful if you are having trouble getting a loan through conventional local lenders.
5

Step Five

Ask about different loan programs that might be available. A good mortgage broker keeps a steady eye on the markets and can provide you with help getting a special deal, such as public money that is available for first-time buyers.

Tips & Warnings

  • Brokers do not make or approve loans. They only act as intermediaries, putting you in contact with a prospective lender. For this they receive either a flat fee from you, or you may have to pay an extra point (one percent) on the amount of mortgage you borrow. Determining how they are paid can save you money.
  • If the board of Realtors in your area does not have a list of brokers, contact the National Association of Mortgage Brokers for the location of your state's association. They will, in turn, be able to refer you to local brokers.
  • If you are a first-time buyer and are low on your down payment, look for a broker who will work for a percentage of the mortgage; this percentage will likely be about one percent of the loan, and can be included in your mortgage payment rather than paid as an out-of-pocket expense.
  • If you are torn about using a broker, ask yourself what type of person you really are. If you are the type that waits until the last minute to buy a gift because you dread shopping, chances are a mortgage broker will end up saving you money.
  • Brokers are of the greatest value to people who hate the drudgery of shopping, or who have marginal credit.
  • One way to protect yourself is to pay the broker's up-front fee (if any) with your charge card. If he fails to make good, you can dispute the charges and get your money back.
  • Some brokers have been known to push programs with high points or whopping interest rates - which means more money for them. This occurs most frequently with people who have problem credit.
  • Beware of anybody who tells you what you want to hear.

How to Get a Second Mortgage on Your Home

Introduction

For many people, a home is their largest investment - and potential source of capital. Getting a second mortgage, or a home equity loan, can tap that equity for college, home improvements or other pressing financial needs.

Instructions

Difficulty: Moderate

Things You'll Need

  • Online Mortgage/finance Services

Steps

1

Step One

Determine why you need or want a second mortgage. The level of need will determine how you proceed with your lenders since it will define how much you want to borrow against the appreciated value and built-up equity in your home.
2

Step Two

Be certain you can afford the additional payments involved in a second mortgage by running some hypothetical calculations through a mortgage calculator.
3

Step Three

Arrange for an appraisal of the home. (A second mortgage, like a first mortgage, will require an appraisal to determine the home's market value.)
4

Step Four

Ask your lender about closing costs.
5

Step Five

Ask if the lender requires private mortgage insurance (P.M.I.) on a second mortgage.
6

Step Six

Ask your lender to determine if you would be better off to refinance your house rather than to use a second mortgage.

Tips & Warnings

  • Because a home equity loan will rank as a lower or second loan to your original mortgage, expect to pay a higher interest rate than advertised mortgage rates.
  • A second mortgage is literally a loan on top of your existing mortgage, so it is always advisable to have a solid idea of what your house is worth compared to what you owe on it.
  • You will only have interest and principal payments on a second mortgage - taxes and insurance are only paid once, in your first mortgage.
  • Sometimes the holder of your first mortgage will be more accommodating than another lender on a second mortgage, since you are a known customer.
  • If used wisely, a second mortgage can be used to pay off credit card balances and other high-interest debt.
  • Lenders will sometimes reduce, or even waive, closing costs on a second mortgage. Be sure to ask.
  • If you have been in the home long enough and have built up enough equity, you might be better off to refinance your entire house rather than add a second mortgage.
  • It is generally a good idea to avoid lenders that are willing to lend money in excess of your home's value. While it may be enticing to be able to get your hands on that much money, remember that you have to pay it back even if the house is never worth that much.

How to Get Preapproved for a Home Loan

Introduction

Having a preapproved loan will put you at the top of the list when presenting an offer.

Instructions

Difficulty: Moderate

Things You'll Need

Steps

1

Step One

Call lenders and compare their loan programs and rates.
2

Step Two

Select a loan program that best suits your personal and financial needs. Consider such things as how long you plan on living in a home or if your income will be increasing significantly in the coming years.
3

Step Three

Provide your lender with the copies of the following information: most recent two years' W-2 forms; most recent month's pay stubs; the last two years' federal tax returns; your purchase agreement (if you already have it); profit and loss statements (if you're self-employed); most recent two years' corporate returns (if you own a corporation); your last three months' bank statements on all accounts (to verify down payment); bankruptcy papers (if applicable); and a completed loan application.
4

Step Four

Wait. The loan process from start to loan approval for a typical loan transaction will take anywhere from one and a half to three weeks, depending on the particulars of your transaction and your lender.

Tips & Warnings

  • Your lender may ask you to provide further information such as additional bank statements, pay stubs and other documents, especially if you're self-employed or have an unusual situation.
  • If you're divorced, the lender may need to see a copy of your divorce papers.
  • Depending on the lender, you may be required to pay an up-front fee for processing, application or appraisal. Shop around. Ask if fees are refundable if you don't complete the transaction.

How to Make an Offer on a Home

Introduction

You've found your dream home and you're ready to make your offer. Remember, the offer you make could become legally binding. Here are the steps you'll need to take.

Instructions

Difficulty: Moderately challenging

Things You'll Need

  • Inspectors
  • Real Estate Attorneys

Steps

1

Step One

Consult a lender or mortgage broker to find out how much you can afford to spend on a home, or use a calculator on a financial Web site such as Quicken.com (see "eHow to Determine How Big a Mortgage You Can Afford').
2

Step Two

Decide what type of financing you want: a fixed-rate or adjustable-rate mortgage.
3

Step Three

Know how much money you have for a down payment; typically 5 to 20 percent of the purchase price is required, depending on the loan terms.
4

Step Four

Get prequalified for a loan by a lender or mortgage broker.
5

Step Five

State what inspections you want to have done before you'll agree to buy the home. You can get general home inspections, as well as geological, roof, pool/spa, earthquake/flood and environmental inspections.
6

Step Six

State whom you want to pay for inspections, the termite report, required work, title insurance and escrow fees, and warranties.
7

Step Seven

Decide how long you want the escrow period to be.
8

Step Eight

Establish how long both parties should have to complete inspections, approvals and work.
9

Step Nine

Put a limit on the amount of time the seller has to respond.
10

Step Ten

Present your offer and a letter of prequalification for financing to the seller yourself or through your agent.

Tips & Warnings

  • Consult a real estate attorney or broker before you sign anything. What you agree to could severely limit the remedies available to you by law.

How to Shop for a Mortgage

Introduction

Unless you have a stash of cash, you'll need to get a mortgage to buy a home. As of this writing, interest rates are at historic lows, putting home ownership within the grasp of many more people. Engage a mortgage broker to shop around for you, or dive in yourself.

Instructions

Difficulty: Moderately challenging

Steps

1

Step One

Choose your mortgage rates and payment schedule. A fixed program keeps the same interest throughout. An adjustable rate mortgage typically starts out with a lower interest rate but can change, which generally means that it could change up or down periodically with lower rates for shorter periods, depending on the structure of the mortgage. Another option is the balloon payment, where early monthly mortgage payments are often lower, but then a large payment is required after a certain number of years. (These are generally chosen by people who know they'll move within five years.)
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Step Two

Calculate how much you can afford to pay every month and choose your terms. Terms may be for 15, 20, 25 or 30 years. Obviously, a 15-year program lets you buy the house outright in half the time, but the monthly payment is higher. Choosing a 15-year mortgage will save you tens of thousands of dollars in interest in the long run, but the increased monthly cost may be unaffordable. The traditional 30-year fixed mortgage may be the most popular because of the lower monthly payment. Adjustable interest-only loans are also available for certain terms with lower monthly payments.
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Step Three

"Buy down" the interest rate on a loan. For instance, paying a point on a loan--expressed as a percentage of the loan amount--may drop the rate by as much as one-quarter of a percent. Paying points makes financial sense only if you plan to remain in the house several years at least, enough time to offset the extra cost by paying lower interest. Finance the points to benefit from lower rates without paying for it out of pocket by adding such fees to the loan balance.
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Step Four

Get your credit report before you apply. This report is available from the major credit reporting agency sites, Equifax.com, Experian.com or TransUnion.com and will be used by your lender to review your mortgage application. Most charge $12.95 for this service. Make sure any defaults, mistakes, or missing or outdated information are corrected before you start shopping for a mortgage. Get changes in writing.
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Step Five

Contact the same credit reporting agencies to see your FICO score (Fair, Isaac & Co., the developer of the dominant scoring software used in the mortgage market), and to determine how much negotiating power you have with banks. The closer the score is to 800, the better. You may only get a single viewing of your magic number, which costs about $6.
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Step Six

Start by shopping where you bank. Your bank or savings and loan may offer attractive terms for existing customers.
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Step Seven

Contact a mortgage broker who has access to several lenders and can quickly compare rates to find you the best deal.
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Step Eight

Shop online. Many online lenders offer low rates and quick turnaround. LendingTree.com will send your request out to four lenders for free.
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Step Nine

Pay particular attention to loan closing costs, which are quoted once you are approved for a mortgage. These will differ from one lender to the next and can add considerable expense to obtaining a loan. Expect to pay anywhere from 3 to 6 percent of the overall cost of the mortgage. Credit unions often give their members great deals on closing costs.
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Step Ten

Review your good faith estimate in detail before signing on for a loan. Lenders are required to provide you with a detailed breakdown of all costs associated with the mortgage.

How to Compare Mortgage Interest Rates

Introduction

Many people going through the process of buying a home may think that the only thing they need to know about their mortgage interest rate is the monthly payment. Others believe it will take too much time to learn how to compare mortgage interest rates. Contrary to popular belief, it can be quick and easy to compare rates. Everyone wants to save money, but the purpose of shopping around for mortgage rates isn’t that simple. Do you want to keep payments super low, regardless of the principal you are paying off? Do you have a significant down payment and need a loan for less than 30 years? Do you expect to be able to pay the loan off early and want a penalty-free loan? Follow these steps to ensure that you get the mortgage loan that best suits your needs.

Instructions

Difficulty: Easy

Keep Payments Low

Steps

1

Step One

Call your bank, credit union or mortgage broker or search for interest-only mortgage rates at their Web sites (see Resources).
2

Step Two

Check out the Financial Calculators Web site with the following data points (see Resources):

- Mortgage amount
- Mortgage term
- Interest rate
- Mortgage start date
3

Step Three

Input the data and click "Calculate."
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Step Four

Find your payment at the top of the chart.
5

Step Five

Repeat with remaining loan terms that you’ve been offered.

Compare Loans Less Than 30 Years

Steps

1

Step One

Search for mortgage rates online or contact your bank or credit union for an adjustable-rate quote.
2

Step Two

Download an amortization chart for Microsoft Excel:

- Go to the Microsoft site (see Resources).
- Choose “Templates” from the menu along the horizontal bar along the top.
- Type “Mortgage Amortization” without quotes, then click "Go."
- Click on the amortization schedule, then download.
3

Step Three

Open your Excel spreadsheet amortization schedule and input the following data points:

- Principal loan amount
- Interest rate
- Loan period
- Loan start date
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Step Four

Repeat with the remainder of the interest rates that you’ve been offered.

Compare Traditional 30-Year Fixed Mortgages

Steps

1

Step One

Look for current rates for a traditional 30-year fixed mortgage.
2

Step Two

Visit the amortization calculator with the following data points (see Resources):

- Loan amount
- Mortgage term in months or years
- Interest rate
- Loan start date
3

Step Three

Input the data and click "Calculate." Find your payment in the field marked "Monthly Payments."
4

Step Four

Repeat with additional rates you’ve been offered.

How to Get a Home Mortgage in New Hampshire

Introduction

Set your mind at ease when getting a home mortgage loan in New Hampshire. Knowing what to expect will eliminate unwanted surprises that could cost you money. These easy steps will send you on the way to getting a New Hampshire home mortgage loan.

Instructions

Difficulty: Easy

Steps

1

Step One

Acquire a recent credit report and check it for any mistakes so it doesn’t affect your mortgage application.
2

Step Two

Look into getting homeownership assistance from New Hampshire or the federal government. There are programs in New Hampshire for veterans, disabled, rural home buyers, low-income buyers, single parents and senior citizens, such as: the Voucher Assisted Mortgage, the Home of Your Own program and the Philip S. Rader Divorced Borrower Initiative.
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Step Three

Visit these government web sites for specific assistance information:
• New Hampshire Homeownership Overview
• USDA New Hampshire Rural Development programs
• New Hampshire Homeownership Assistance programs
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Step Four

Compare loan rates and terms from several lending institutions such as mortgage brokers, credit unions, banks and online mortgage lenders.
5

Step Five

Take your pertinent financial information (such as proof of employment, tax returns, etc.) to your desired lending institution and obtain pre-approval for a home mortgage loan. Pre-approval simplifies and expedites the loan approval process.
6

Step Six

Use the services of a local real estate agent, and find the home that fits your budget and needs.
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Step Seven

Complete your mortgage loan after selecting a lender, and submit a formal offer on the home.
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Step Eight

Pay all closing costs, attorney fees, and realtor fees at the time of closing. The lender will provide you with a schedule for repayment of the mortgage loan.

Tips & Warnings

  • Make sure you shop around for the lowest interest rates. Even one quarter of a percent can mean thousands of savings over a thirty year mortgage.
  • Get your prospective home professionally inspected so as to discover problems that may exist before the deal is completed.
  • Do not let a real estate agent pressure you to buy a specific home, they may have another agenda.
  • Be sure that you understand the entire mortgage contract before you sign anything.
  • Never pay a lender to fill out a loan application. No reputable lenders engages in this practice.
  • There are many unethical lending and loan scams in the US. Have an attorney review any documents before you sign them. Beware of 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. This is known as predatory lending.
  • Check to see that the home title is clear of liens before you purchase it.