Your Questions About Mortgage Loan Type

Susan asks…

I want to get a mortgage.?

I would like to get a mortgage. Are there any mortgage advisors or someone who could advise me on the best way to do this.

John answers:

In order to find out the type of loan programs you are qualified for you will have to fill out a loan application, with a mortgage broker, which you can find one in your local telephone book.

Make sure this mortgage broker or mortgage banker is able to do government loans such as FHA and VA loans if you qualify for one.

He will fill out this application, which takes awhile so grab your favorite beverage and sit down. Once you have completed the application, he will run your credit report which will have your credit scores. These credit scores will determine your interest rate.

The amount of your monthly debt payments you are required to pay as per your credit report and the amount of mortgage you can take on based on your income will determine the amount of house you will be able to purchase.

When you speak with the mortgage broker you will need the following documents to complete the loan application, there will be others, but this will get you started.

#1 One month of pay stubs for each person that will be on the mortgage.

#2 Six months bank statements from each bank in which you bank as well as statements from any 401K from you place of employment.

#3 Two years of federal income tax along with the W-2 that match.

Once he has all that he need to do he can then issue you a pre-approval letter so you can purchase a home. In this pre-approval letter will be the amount of house you are qualified to purchased.

Once he gives you this pre-approval you may now find a real estate agent to find yourself a home or he might have a referral.

Now make sure before you get your pre-approval you and your mortgage broker go over all your options as to the mortgage programs you qualify for, the interest rate, monthly payments.

If you are getting a FHA, fixed rate, two loans to eliminate PMI like an 80/20 or one loan, if you are qualified for and approved for a 100% loan.

You should select the loan that best suit your financial condition at the time. That could be an adjustable rate loan. It could be a fixed rate loan for 5 or 10 years and then adjust. Some adjustable rate mortgages only adjust once.

Make sure your mortgage broker explain all your options so you may make an intelligent decision.

What might be good for one person might not be good for you, in other words just because your friends and all your real estate buddies are telling you about the great fixed rate they got, your financial situation might call for something else.

So select the best option for you and your financial situation.

You should also get a Good Faith Estimate (GFE) which will indicate the cost you will have to pay for getting this loan. It will also indicate the amount of your down payment.

Once you have found a home the real estate agent will then prepare a contract for you and the seller to sign.

Your mortgage broker will now order an appraisal to show proof of the property value.

The mortgage broker might ask for additional information or documentation, don’t get all up tight this is normal, just supply the information or find the documents needed.

After the appraisal has been completed you will be called by your mortgage broker to sign your loan docs so you can take possession of your new home.

Before signing any loan docs make sure they say exactly what you and your mortgage broker went over when you decided on what mortgage program was best for you.

I hope this has been of some use to you, good luck

“FIGHT ON”

Mandy asks…

How does an investment loan differ from a mortgage?

Do you need a bigger deposit? Do you need a better credit score? Is the interest rate higher? I want to buy some real-estate and rent it out.

John answers:

Mortgage is a term for a type of loan always used in relation to land and buildings. In the situation you are describing the mortgage would be a buy-to-let mortgage and the terms for these are as negotiable as loans are. The real estate is an asset subject to it’s market value. This acts as backing for some of the security required and the amount of your deposit and personal security/guarantees to make good payments in the event of your inability to maintain the capital and interest repayments over the term of the mortgage (loan) will all affect the rate of interest, renewal period, fees and other costs.

Recently the quantity of buy-to-let mortgage products on the market has fallen because of credit problems, falling property values, rising defaults on rent and mortgage payments.

Investment loans typically don’t have as long time periods as mortgages, tend to cost more on a monthly basis and are normally more suitable where your exit strategy is clearly linked to selling the real estate at a profit within the short term. The fact that the rental income is a feature of the investment is included in the calculations you and your financial adviser will need to do to show a return on your investment that is attractive enough to cover all of your costs.

Robert asks…

Mortgage loan question….?

Hello, can someone please help me with this question. My husband and I just built a new house, we borrowed 286,000 for 30 years…We both get paid every two weeks (so every 14 days) we are getting a paycheck. We decided to pay our house note on a bi-weekly schedule, so every two weeks we are paying half the house note. This will allow us to make one extra house note a year…So by doing so, we are cutting our loan down from 30 years….But I would like to know how many years we are actually cutting off by doing this? Also, I would like to put 1300 extra dollars toward principle each year also…How can i figure all this out. Making one extra payment a year, plus 1300 extra toward principle will cut how many years off my loan??? Please HELP….Thanks!

John answers:

You might consider an online mortgage calculator to find the solutions you are seeking. These calculators have instructions that are easy to follow. In some cases you would be able to save your calculations for future use and changes.

You might also make contact with your lender to see if you are able to make bi-weekly monthly payments. Some lenders do not have a system in place to collect these type payments. I found this out by attempting to set up such payments for friends and clients. Bancorp South system does not allow bi-weekly payments.

You might also consider paying the additional $1300 over a one year period as oppose to a one time lump payment. Your mortgage coupon might have a line that would indicate you are paying an additional amount toward your principal.

You might enter this type information in you online mortgage calculator to see which method benefit you the best financially.

If you are one that make your mortgage payment through your bank or have it collected by your lender from your account you might be required to contact them to inform them of the additional monthly payments and follow them a couple of months to make sure things are as you would want them.

To answer your question normally you would be paying off your mortgage loan in approximately 27-26 years with a bi-weekly payment.

There is another program available to those paying a mortgage that might be helpful to you,if paying off your mortgage is a priority. Google paying off mortgage in 5 years. See if this is something that might interest you. Apparently there is no change in your mortgage payment. The details would be explained to you at the web site. Always be careful of using online companies. You might want to check them out thoroughly. A friend of mine has used this method for several years and is very happy with the program.

I have listed the site of a popular on-line mortgage calculator for your use.

I hope this has been of some benefit to you, good luck.

“FIGHT ON”

Paul asks…

Need some help understating different types of mortgages and loan stuff, help?

I need help understating that. Whats closing cost?
what are the different types of mortgages?
what is escrow?
any help would be appreciated.

thanks!

John answers:

HUD (Department of Housing and Urban Development) has a lot of great educational tools for homebuyers.
Here is a link to that page on their website:
http://portal.hud.gov/portal/page/portal/HUD/topics/buying_a_home

Closing costs include loan fees, prepaid interest, property taxes, service fees for the loan and title processor and a few other standardized fees.
Once starting the loan approval process you should have received a good faith estimate form (The HUD RESPA document) spelling out estimated closing costs.
All these fees usually add up to 1-3% of the purchase price of the home.
Escrow can be the time of the loan process when the title company handles all the documentation or it is also a term used for when the mortgage lender collects your property taxes in monthly increments which they then disburse to your county tax assessor on the due date.

There are many different types of mortgages, conventional, FHA (lower down payment), VA (for veterans), USDA, and so on.
Take the time to educate yourself before taking this big step of buying a home.
For many people this is the largest investment you will ever make; don’t go into it blind.

Thomas asks…

getting our first home and mortgage?

me and my boyfriend (and unborn baby) are wanting to get our first home, but neither one of us know exactly how to go about getting a mortgage and a house (we have one we like) but do we go get a mortgage first, or look at the house first and tell the guy we’re getting a mortgage? really we know nothing. any help would be greatly appreciated. thanks so much

John answers:

In order to find out the type of loan programs you are qualified for you will have to fill out a loan application, with a mortgage broker, which you can find one in your local telephone book.

Make sure this mortgage broker or mortgage banker is able to do government loans such as FHA and VA loans if you qualify for one.

He will fill out this application, which takes awhile so grab your favorite beverage and sit down. Once you have completed the application, he will run your credit report which will have your credit scores. These credit scores will determine your interest rate.

The amount of your monthly debt payments you are required to pay as per your credit report and the amount of mortgage you can take on based on your income will determine the amount of house you will be able to purchase.

When you speak with the mortgage broker you will need the following documents to complete the loan application, there will be others, but this will get you started.

#1 One month of pay stubs for each person that will be on the mortgage.

#2 Six months bank statements from each bank in which you bank as well as statements from any 401K from you place of employment.

#3 Two years of federal income tax along with the W-2 that match.

Once he has all that he need to do he can then issue you a pre-approval letter so you can purchase a home. In this pre-approval letter will be the amount of house you are qualified to purchased.

Once he gives you this pre-approval you may now find a real estate agent to find yourself a home or he might have a referral.

Now make sure before you get your pre-approval you and your mortgage broker go over all your options as to the mortgage programs you qualify for, the interest rate, monthly payments.

If you are getting a FHA, fixed rate, two loans to eliminate PMI like an 80/20 or one loan, if you are qualified for and approved for a 100% loan.

You should select the loan that best suit your financial condition at the time. That could be an adjustable rate loan. It could be a fixed rate loan for 5 or 10 years and then adjust. Some adjustable rate mortgages only adjust once.

Make sure your mortgage broker explain all your options so you may make an intelligent decision.

What might be good for one person might not be good for you, in other words just because your friends and all your real estate buddies are telling you about the great fixed rate they got, your financial situation might call for something else.

So select the best option for you and your financial situation.

You should also get a Good Faith Estimate (GFE) which will indicate the cost you will have to pay for getting this loan. It will also indicate the amount of your down payment.

Once you have found a home the real estate agent will then prepare a contract for you and the seller to sign.

Your mortgage broker will now order an appraisal to show proof of the property value.

The mortgage broker might ask for additional information or documentation, don’t get all up tight this is normal, just supply the information or find the documents needed.

After the appraisal has been completed you will be called by your mortgage broker to sign your loan docs so you can take possession of your new home.

Before signing any loan docs make sure they say exactly what you and your mortgage broker went over when you decided on what mortgage program was best for you.

I hope this has been of some use to you, good luck

“FIGHT ON”

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