Mortgage Rate News

Yesterday, I started a post on 10 first-time homebuyer mistakes, going through items 1-5. Today we’ll be addressing 5 more mistakes that first-time homebuyers make:

1. Lack of vision. Sometimes we think that we have to do everything to make the house “right” immediately after we move in. We bought a new construction home with no yard. It cost less than a home with landscaping. We knew we would have to put in a yard, but we can’t do it all at once. Instead, we’ve put together a plan. We know how we want it to look, and it will take another year to get it there, but we can afford it. The same goes for that ugly carpet or paint. The good news in that regard, though, is that it’s a buyer’s market and you can get the seller to take care of some of that.
2. Being too choosy. Another problem is being too picky. If it’s your first home, chances are that you can’t afford your dream house. Besides, there will always be something that could be a little bit better. It is important to realize that first-time homebuyers (and others, too) have to compromise on some things. The harder you are to please, the longer you will be renting.
3. Compromising on important considerations. While compromise is necessary when buying a home, you do not need to give away everything. Think about your life course, and what’s really important to you. If you are planning to have kids, you know you’ll need something with another bedroom. If you have a home business, you need that office space. Prioritize your wants, and compromise on the least important things.
4. Falling for staging. One of the things seller’s do to make their homes look good is something called staging. This is when they bring in cosmetic accouterments to make the home seem like it is better than it really is. Minor upgrades, such as new trim or new carpet in a couple of rooms, are another similar trick. These types of things cost about $2,000, but you can pay between $20,000 and $40,000 (or more) on the price of a home if you are not careful.
5. Failure to get a home inspection. It is vital that you have a home inspection before you buy a home. Make sure that contract you sign is contingent upon the home inspection showing that all is in order.

Can you think of any other first-time homebuyer mistakes?

Tags: first-time homebuyers, buy a home, home mortgage loan, homebuyer mistakes,
mortgage loan blog, home inspection

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

One of the retirement planning products that is gaining in popularity right now is the reverse mortgage. This product basically works in this way: You take out a second home mortgage loan that works the reverse of a regular loan in that the bank pays you. Your reverse mortgage does not need to be paid back until the home is sold, or until you move out.

While it can be helpful for many in terms of providing some needed cash flow, a reverse mortgage is also expensive (lots of high fees) — and it’s not for everyone.

Who should avoid the reverse mortgage when making retirement planning decisions?

There are some great points raised over at Saving to Invest regarding who should not get a reverse mortgage. Here are some guidelines that may help you decide that the reverse mortgage may not be the best retirement planning option for you:

• Younger spouse. The reverse mortgage cannot be taken out if one of the people on the title to the home is younger than 62. Taking the younger spouse off the title would mean that he or she would be displaced if there was not funding in place to pay off the mortgage loan.
• Poor health. With a reverse mortgage, it is important to realize that at least one of the borrowers must use the home as a residence. If the original borrowers are not in the home for 12 months, then the mortgage loan becomes due. If your health does not allow you to live at home, a reverse mortgage is not the best choice.
• Income too low. If you have a reverse mortgage, you still have to pay homeowners insurance, taxes on the property as well as maintenance and upkeep. If, even with the reverse mortgage, you are unable to do this, you may need to resort to other options.

Taking out a reverse mortgage is a big step, and a big financial decision. Make sure that you carefully consider all of your options before doing so.

Tags: reverse mortgage, mortgage loan, home mortgage loan, mortgage loan blog,
second mortgage, retirement planning, reverse mortgage retirement