Mortgage Rate News

With the news of the economy, and with (an almost certain to be passed) $700 billion bailout in the works, many people are rethinking the idea of home ownership. This is a good thing. Before you buy a home, it is important to ask yourself some very basic questions. Trees Full of Money offers 5 questions you should ask yourself before you buy a home:

1. Do you plan to own for at least three years?
2. Do you have an emergency fund?
3. Can you afford the payment?
4. Have you factored in taxes, insurance and maintenance?
5. Are you familiar with the area?

Right now, I think that #2 and #3 are the most important considerations. An emergency fund is a good idea because it can help you stave of foreclosure should something unforeseen happen while you are trying to make mortgage payments. An emergency fund also demonstrates that you are financial responsible, and that you are planning for future needs. A home mortgage is a huge obligation, and you should be prepared for it.

Can you afford your mortgage payments?

#3 is important — especially when viewed in light of the current financial crisis. And when I talk about affording your mortgage payments I mean two things:

• That you can afford the payment after the reset. You shouldn’t make a choice based on what happens with the mortgage interest rate now, unless you are getting a fixed rate. Mortgage payment decisions should be based on what you will pay each month after special rates and deals end.
• You can comfortably make payments. Your mortgage payment should be no more than 1/3 of your monthly income. 1/4 of your monthly income is better. You need room for other expenses in there.

If there is one thing we’ve learned from this meltdown, it’s that just because you can do something, and just because someone will let you do something, it doesn’t mean that you should.

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One of the trends picking up steam over the last few years has been that of developed properties. Condo and townhome communities, as well as gated or pre-planned single home communities are popping up all over the country. And many of these communities have a Homeowners’ Association (HOA).

What is a Homeowners’ Association?

A homeowners’ association (HOA) is a group of homeowners that pay fees for upkeep of communal amenities and areas. In some cases, the HOA also takes care of individual yards. Everyone in the development pays a monthly fee to help with the upkeep of such things as landscaping, snow removal, clubhouse, parks and any other amenities that might be included in the development. Obviously, the more amenitites that a development has, the larger the HOA fees will be.

You should also realize that the HOA has specific rules and restrictions. You should know what these are. They can govern how long your grass can be, what sorts of lawn ornaments you have, whether outdoor line drying of laundry is allowed, what kinds of window covernings you have and other things that affect the appearance and feel of the neighborhood. You should check with your real estate agent to see what sorts of HOA fees and rules there are before committing to development.

What to consider before joining the HOA

If you move into a neighborhood with a HOA, you will have to join. Before you make this decisions, consider this list from Investopedia about what to think about:

1. Learn the HOA rules.
2. Make sure that the home you plan to buy is in compliance with HOA rules.
3. Assess the environmental practices (such as fertilizer or type of lawn) of the HOA.
4. Think about your temperament.
5. Learn about the fees, and what they pay for.
6. Get a copy of the minutes from the last HOA meeting.
7. Be on the look out for under-management as well as over-management.
8. Does the HOA have catastrophe insurance on the building?
9. How will HOA fees impact your personal finances?

Some people really enjoy living in a neighborhood with an HOA. But for others, it is a poor fit. Make sure you know what kind of person you are before you commit.

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Right now, with tightened lending standards and wary mortgage lenders, many people are finding that they do not qualify for the home loan that they want. Indeed, many folks who would have found it easy to get a home mortgage loan in the freewheeling days before the subprime lending crash are having difficulty right now. You don’t have to despair if you are told you do not qualify for a home loan, though. Here are 4 things you can do in order to become more attractive to mortgage lenders:

1. Find someone willing to help you. This can be a cosigner or a copurchaser with an income. A cosigner lends his or her good credit to the case, and also may have a higher income. However, the cosigner is the one who becomes responsible for the loan if you bail, so it can be difficult to find someone willing to go this route. A copurchaser should be someone you trust and want to live with. You both share ownership of the home, and the extra income could be just what you need to qualify.
2. Buy a less expensive house. If the problem is that you do not qualify for the home loan amount, you might try a less expensive house. Downsize the number of bedrooms. Buy a condo or a townhome. Consider something with a smaller yard. Sometimes, just coming down in your expectations for your home (especially if it is your first home) can get you what you need from mortgage lenders.
3. Shop around. Some mortgage lenders are willing to do more than others. Visit different lenders and lay out your case. See whether or not they are willing to work with you. But beware: If you look desperate, you may not get a good loan. And watch out for loan sharks.
4. Wait it out. Right now, the economy is not being friendly to those who want to qualify for a home loan. You can always wait for the current worry to subside some, and then try again. In the meantime, you can work on improving your credit score and saving up money for a down payment.

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