Mortgage Rate News

There are plenty of first-time homebuyer mistakes. Indeed, when it comes to buying a home and getting your home mortgage loan, it seems as though the pitfalls keep presenting themselves. Today and tomorrow, we are going to look at 10 first-time homebuyer mistakes.

Without further ado, here are 5 first-time homebuyer mistakes:

1. Not knowing what you can afford. Before you start house shopping, you need to know what you can afford. This is not the same as what mortgage lenders will let you borrow. It is about figuring what you can afford each month, and making a budget to see where your home mortgage loan payment will fit.
2. Failing to consider extra costs of owning a home. There is more to buying a home than just the home mortgage loan payment. There are closing costs, mortgage insurance, homeowner’s insurance (fire and flood sold separately), maintenance, taxes and interest charges. When you figure how much you can afford for your mortgage payment, take at 1/2 or 2/3 of that monthly figure and add it on again. That will give you a more realistic view of how much the house is going to cost overall.
3. Failing to get pre-qualification on your home mortgage. These days, what you think you can afford in terms of a home mortgage loan payment  may not be what the bank will give you. Make sure you shop around for rates and terms, and check with mortgage lenders to see what they will allow you to borrow. And remember, pre-approval does not guarantee that the loan will go through.
4. Not hiring an agent. One of the best things you can do as a first-time homebuyer is get a buyer’s agent. In most cases, the seller pays the commission for your agent as well as the seller’s agent. This means that you get these services for free when you are buying. And buyer’s agents in many states are required to act in your best interest. Plus, it can be helpful to have someone navigate you through all the paperwork.
5. Failure to consider the future. You need to do more than just pick a house. You also need to consider the future. Is it resellable? What are the plans for the neighborhood? What kinds of developments is the city planning nearby? These considerations should be looked as well as others.

Tomorrow we will address 5 more mistakes first-time homebuyers make.

Tags: first-time homebuyers, mortgage lenders, home mortgage loan, house shopping,
pre-qualification, mortgage loan blog, mortgage loan payment

With tighter lending standards across the board, it is no surprise that some mortgage lenders are requiring down payments. While many personal finance experts never stopped encouraging the 20% down payment rule, most people have gotten used to creative financing methods (such as piggyback loans) to effectively get a zero down mortgage. Now, though, some mortgage lenders are requiring as much as a 10% down payment. (You can still get FHA loans with a 3% down payment.)

So, if you need a down payment — no matter the amount — the key is getting the money. Luckily, there are some options for you in terms of helping you get a down payment together.

Ideas for getting money for a down payment

If you are looking for ideas for getting money for a down payment on your home mortgage loan, here are a few practical ideas that you can try:

• Savings plan. Figure out how much money you need to save for your desired down payment, and then decide how much time you need to meet that goal. Figure out how much money you need to set aside each month to reach your goal. Then re-do your monthly budget to make it happen.
• Sell some of your stuff. If you have a boat or a car or just a bunch of stuff you do not use anymore, sell it. Use eBay or have a garage sale. This can help you raise some quick cash to go toward your down payment.
• See if you can liquidate some of your investments. Now may not be the best time to sell stocks and mutual funds. But if you are looking for quick cash, and if your investments are worth enough, you can sell them.
• Borrow against your 401k. I wouldn’t do a withdrawal, since the taxes and penalties add up to destroy the value of what you withdraw. But you can borrow from your 401k and pay yourself back with interest. The bummer is that you miss out on the growth to your retirement fund from the capital that would have been sitting there.
• Ask for a gift. If you receive a true gift from relatives or friends, you can use it toward a down payment (it can’t be a loan).

Try one of these, or even combine some of them, to raise money for a down payment. You’ll save money in interest charges in the long run, and it may be the difference in whether or not you get the home mortgage loan.

Tags: down payment, 20% down payment, home mortgage loan, mortgage loan blog,
mortgage lenders, FHA loans, piggyback loans

It’s been an interesting morning in terms of the mortgage market and the financial market. Two very interesting trends are emerging: increased mortgage fraud and increased crackdowns on banks.

Mortgage fraud on the rise

Mortgage fraud is actually on the rise. According to the Wall Street Journal, the year over year rate of mortgage fraud is up 42%. That’s right, after everything we’ve learned about lending practices in the last year, mortgage fraud is still alive and well — specifically the brand in which borrowers inflate their assets in order to qualify for a home mortgage loan. And some banks are still going along with it.

Of course, I can see the attraction. With tighter lending standards overall in the mortgage industry, and the difficulty of getting a bad credit home mortgage loan increasing, it isn’t hard to see why some are inflating their incomes. And with home mortgage loan borrowers harder to approve, it is understandable that mortgage lenders and loan officers are willing to let some of the documentation slide.

On the other hand, this increase in mortgage fraud may actually be proof that banks are starting to crackdown on fraud, and are now properly reporting instanced of mortgage fraud.

Bank crackdowns

Bank regulators are showing their concern for the health of the financial sector, specifically banks. With the ninth bank failing this year, regulators are increasing the number of banks they put on probation. The probationary status is meant as a catalyst to encourage banks to change their practices so that they can avoid failure. The idea is that if the banks do not comply, they will be faced with closure and be taken over by the FDIC — a costly process for the bank.

With all of the news coming out, it meant that it might be a while before the mortgage market gets back on track.

Tags: mortgage market, bank failures, home mortgage loan, FDIC,
mortgage lenders, mortgage fraud, banks probation