RefiAdvisor. Mortgage Tutorial 2007 Edition

Size: px
Start display at page:

Download "RefiAdvisor. Mortgage Tutorial 2007 Edition"

From this document you will learn the answers to the following questions:

  • What is the cost of paying for a mortgage?

  • What kind of estimate does a lender give a buyer of a home loan?

  • What does a mortgage refinance cost?

Transcription

1 RefiAdvisor Mortgage Tutorial 2007 Edition

2 Table of Contents Five Things You Need To Know Before Refinancing a Mortgage RefiAdvisor.com (click the text to jump to that page) First: Should You Refinance? I. Introduction..3 II. Should You Refinance?...4 Second: What Does Your Credit Look Like? III. IV. Your Credit Rating 6 What is a Credit Score?...7 Third: What Will Refinancing Cost? V. Costs & Fees VI. Fee Chart 8 VII. 30 Year vs. 15 Year 9 VIII. Rates & Points.11 Fourth: Shop Around for the Best Deal IX. Lenders & Brokers. 13 X. Shop Compare & Negotiate.. 15 XI. Make Lenders Compete XII. Mortgage Shopping Worksheet.. 17 Fifth: Common Pitfalls to Avoid XIII. Fair Lending Laws...19 XIV. Protect Yourself From Predatory Lending XV. What Tactics do Predatory Lenders Use? 20 XVI. Options If Your Loan is Not Approved Online Resources. 23 Glossary of Terms 25 End User Agreement RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 2

3 Introduction Mortgage interest rates are still very low. If you have been considering refinancing your previous mortgage (especially if you have an Adjustable Rate Mortgage) or cashing out the equity in your home, there is no better time than the present to do so. Intense competition between lenders and ease of access from the Internet has made it much easier for everyone, even those with bankruptcies or poor credit ratings, to obtain financing that would not have been possible ten years ago. Internet has leveled the playing field and there are many free resourcess available to help you refinance your mortgage and get the best deal. Procrastinating however, can wind up costing you thousands of dollars. Have you been putting this off? Perhaps your concerns over credit are standing in the way. Do you have a Bankruptcy or poor credit? Are you in a real estatee contract and not sure how this will affect refinancing? purpose of this guidebook is to provide you with the knowledge and tools to find the best loan available while avoiding common pitfalls along the way. This course is organized into five sections. In each section you may find links to various resources available on the Internet. Clicking any of these links will open that resource in a new browser window. You should print out a copy of this document and refer to it while browsing the links in each section on your computer. re is also a resource page available online from our website (click to visit) and at the end of this e-book RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmitt this document. 3

4 Number One: Should you Refinance? If you are a mortgage holder who was fortunate enough to finance with a low interest rate, you may not want to refinance your present mortgage. Maybe you financed your home when mortgage rates were higher. Or perhaps you have an adjustable rate mortgage and would like to refinance under better terms. Consider also that if you lower your interest rate by refinancing you would also lower your monthly mortgage payment. By refinancing you could potentially shorten the term of your loan and pay less interest for your home. You could also borrow money against your home to pay off other higher interest debt. Should you refinance your mortgage? This book will answer some questions that may help you decide. If you do refinance your mortgage, the process will remind you of what you went through financing the original mortgage. That is because refinancing is simply taking out a new mortgage. You will have many of the same procedures, as well as the same expenses, during the refinance. Will refinancing be worth your while? Refinancing can be worthwhile, but it does not make sense for every mortgage holder. A general rule is that refinancing becomes worth it to you if the current interest rate on your loan is at least 2 percentage points higher than the current mortgage interest rate. This rule is broadly accepted as the safe rule of thumb when juggling the costs of refinancing a mortgage against your potential savings. re are other considerations, too, such as how long you plan to stay in your house. Most sources say that it takes at least three years to realize fully the savings from a lower interest rate, given the costs of the mortgage refinancing. (Depending on your loan amount and the particular circumstances you might choose to refinance a loan that is only 1.5 percentage points higher than the current rate. You may discover that you are able to recoup the costs in a shorter time.) If you want to shorten the term of your home loan it may not be necessary to refinance the mortgage. If you financed on a 30 year note when you purchased your home and have the cash on RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 4

5 hand to pay an additional amount each month, you can pay down the principal on the loan faster by making additional payments. If you are considering borrowing against the equity in your home to pay off other bills or make a purchase, the interest rate may not be the most significant factor for you to consider. If you are planning on paying off high interest rate credit cards it may be worth your while to refinance even if the rate is slightly higher than your current mortgage rate. Consider the Loan to Value of your home when making your decision to refinance. Loan to Value is the ratio of the mortgage loan amount to the value of your home. For instance, if your home is worth $200,000 and the loan amount is $150,000, then your Loan to Value is 75%. ($150,000 divided by $200,000 multiplied by 100 = the percentage) Your lender will consider this value when approving your loan as there is a maximum Loan to Value ratio they will loan to. Keep in mind that the interest rate you receive can be tied to the Loan to Value amount of your property. Generally, the higher the Loan to Value, the higher your interest rate will be. Your credit score may also be tied to the Loan to Value ratio that you are able to qualify for when the lender approves your loan. We will discuss how credit scores affect your mortgage in a later section of this book. To Summarize, refinancing a mortgage can be a good idea for any homeowner who: Wants to get out of a high interest rate loan to take advantage of lower mortgage rates. This is a good idea only if they intend to stay in the house long enough to make the additional fees worthwhile. May have originally purchased their home on a Real Estate contract and want to have the property and the mortgage in their own name. Have an adjustable rate mortgage and want a fixed rate mortgage to have the certainty of a fixed mortgage payment for the duration of the loan. Wants to convert to an ARM (adjustable rate mortgage) with a lower interest rate or more protective features (such as a better rate and payment caps) than the mortgage they currently have RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 5

6 Wants to build up the equity in their home more quickly by converting to a loan with a shorter term. Wants to draw on the equity remodel their home or to get cash for a major purchase or for their children's college expenses. If you decide that refinancing is not worth the expense, ask your mortgage lender whether you may be able to obtain all or some of the new terms you want by agreeing to a modification of your existing mortgage. Number Two: What does your credit look like? Your credit rating is one of the main considerations lenders use when deciding whether or not to approve your loan. This will also help determine your interest rate. Credit ratings have become much less restrictive when applying for loans today; however, excellent credit will guarantee a better interest rate. first thing you must do is ensure your credit reports are accurate. To do this you ll need to request a copy of your credit report from each of the three credit reporting agencies: Equifax, Experian, and TransUnion. Be careful when obtaining your credit reports as many companies providing these reports will almost always try and sell you services that you do not want or need. Recent legislation requires reporting agencies to provide one free copy of their credit history per year. You can sign up for this at AnnualCreditReport.com (click the link to visit the website). This site will allow you to receive one report for each of the reporting agencies every twelve months. If you are unable to use this service or need additional reports you will need to pay for them. An excellent resource for additional credit reports is Online Credit Info : (click the link to visit the website) You RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 6

7 will need to carefully review each of these reports for errors. If you discover errors you can dispute items on your credit report by contacting the individual credit agency. Contact information for each credit agency is listed below: Equifax (800) Experian (888) TransUnion (800) credit agencies use the information on your credit history to calculate your credit score. A credit score is a complex mathematical model that evaluates many types of information in a credit file. A credit score is used by a lender to help determine whether a person qualifies for a particular credit card, loan, or service. Most credit scores estimate the risk a company incurs by lending a person money or providing them with a service specifically, the likelihood that the person will make payments on time in the next two to three years. Generally, the higher the score, the less risk the person represents. free credit reports you receive online typically do not show your credit score. An excellent resource to view your credit score online is Free Credit Score : (click the link to visit the website). If you are concerned about a poor credit rating remember this: It is much easier to secure financing today with poor credit than it was ten years ago. You may pay a higher interest rate for your financing; however, you should not have a problem locating lenders that will work with you. Number Three: What Will Refinancing Cost? re are many costs associated with refinancing your mortgage. Some can be avoided. fees described below are the charges that you are most likely to encounter in a refinancing. Application Fee. This expense is imposed by your lender and covers the initial cost of processing your loan request and checking your credit history RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 7

8 Title Search & Title Insurance. This charge will cover the cost of examining the public records to confirm ownership of the property. It also covers the cost of a policy, usually issued by a title insurance company, which insures the policy holder in a specific amount for any loss caused by discrepancies in the title to the property. Be sure to ask the company carrying the present policy if it can re-issue your policy at a re-issue rate. You could save up to 70 percent of what it would cost you for a new policy. Because costs may vary significantly from area to area and from lender to lender, the following are estimates only. You may be able to avoid many of these fees by using documents from your previous closing. appraisal, survey, and title search from your previous closing may still be valid for your second closing. Make sure you have all of your closing papers in a safe place. Your actual closing costs may be higher or lower than the ranges indicated below: Application Fee $75 to $300 Appraisal Fee $150 to $400 Survey Costs $125 to $300 Homeowner s Hazard Insurance $300 to $600 Lender s Attorney s Review Fees $75 to $200 Title Search and Title Insurance $450 to $600 Home Inspection Fees $175 to $350 Loan Origination Fees 1% of loan Mortgage Insurance 0.5% to 1.0% Points 1% to 3% Lender s Attorney s Review Fees. lender will usually charge you for fees paid to the lawyer or company that conducts the closing for the lender. Settlements are conducted by lending institutions, title insurance companies, escrow companies, real estate brokers, and attorneys for the buyer and seller. In most situations, the person conducting the settlement is providing a service to the lender. You may also be required to pay for other legal services relating to your loan which are provided to the lender. You may want to retain your own attorney to represent you at all stages of the transaction including settlement. Loan Origination Fees and Points. origination fee is charged for the lenders work in evaluating and preparing your mortgage loan. Points are prepaid finance charges imposed by the lender at closing to increase the lender s yield beyond the stated interest rate on the mortgage note. One point equals one percent of the loan amount. For example, one point on a $75,000 loan would be $750. In some cases, the points you pay can be financed by adding them to the loan amount. total number of points a lender charges will depend on market conditions and the interest rate to be charged. Appraisal Fee. This fee pays for an appraisal which is a supportable and defensible estimate or opinion of the value of the property. An excellent online resource for an appraisal is: Electronic Appraiser at (click to visit) Prepayment Penalty. A prepayment penalty on your present mortgage could be the greatest deterrent to refinancing. practice of charging money for an early pay-off of the existing RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 8

9 mortgage loan varies by state, type of lender, and type of loan. Prepayment penalties are forbidden on various loans including loans from federally chartered credit unions, FHA and VA loans, and some other home-purchase loans. mortgage documents for your existing loan will state if there is a penalty for prepayment. In some loans, you may be charged interest for the full month in which you prepay your loan. Miscellaneous. Depending on the type of loan you have and other factors, another major expense you might face is the fee for a VA loan guarantee, FHA mortgage insurance, or private mortgage insurance. re are a few other closing costs in addition to these. To summarize costs: A homeowner should plan on paying an average of 3 to 6 percent of the outstanding principal in refinancing costs, plus any prepayment penalties and the costs of paying off any second mortgages that may exist. One way of saving on these costs is to check first with the lender who holds your current mortgage. lender may be willing to waive some of them, especially if the work relating to the mortgage closing is still current. This could include the fees for the title search, surveys, inspections, and so on. 30 Year vs. 15 Year Mortgage Terms Another thing to consider is the term of your loan. Typically, a 30 year loan will have lower monthly payments than a 15 year mortgage loan. If you decide on a 15 year mortgage, you will pay significantly less in total interest over the life of the loan, but your monthly mortgage payments will be higher. As a homebuyer, you will need to consider the implications of having higher monthly payments when accepting a 15 year loan. Can you consistently meet those monthly payments over time? See the table below: RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 9

10 Advantages Considerations Lower Overall Mortgage Cost Higher Monthly Payment 15 Year Builds Equity Faster You have Debt for Only 15 Years Must Qualify for Higher Monthly Payment You have Less Cash for Other Expenses Lower Interest Rate Less Money goes toward Tax Deductions Lower Monthly Payment Higher Overall Mortgage Cost 30 Year Qualifying is Easier You have More Cash for Other Expenses You Pay More in Overall Interest You have Debt for 30 Years More Money goes toward Tax Deductions Higher Interest Rate In addition to considering a 15 year vs. 30 year mortgage you should decide on fixed rate vs. adjustable rate mortgages. decision to finance with a fixed or adjustable interest rate comes down of several questions. First, how long do you plan to keep your home? If you know that you will be selling the house within 3 to 5 years then the clear choice is an adjustable rate mortgage. most common adjustable rate loans have fixed rates for the first 3 to 5 years of the loan. se 3 and 5 year adjustable rate mortgages will offer better interest rates than a 30 year fixed mortgage. same principal holds if you know you will be refinancing your mortgage in 3 to 5 years, for example to buy a vacation home. If you re not planning on moving or refinancing again with next 5 to 7 years, the question becomes: How comfortable are you with risks? If you are, choosing an adjustable rate mortgage will get you a lower interest rate; however, you re gambling that your rate won t go up significantly during that time period and take your payments with it. If you re a conservative person choose a 30 year fixed rate RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 10

11 mortgage. You might pay a slightly higher interest rate but your payments will not go up due to interest rate hikes. Rates and Points re are a number of factors that determine the mortgage interest rates for any given borrower. se factors include: the type of loan you are applying for, (fixed vs. adjustable) your credit score, the Loan to Value ratio of your home, your documentation, the type of property, and the points you pay. If you opt for a fixed rate mortgage your interest rate will be higher than an adjustable rate mortgage. Fifteen-year mortgage interest rates are also typically lower than 30 year interest rates. As mentioned earlier, generally speaking, the higher your Loan to Value ratio, the higher your interest rate will be. Your documentation can also affect the interest rate of your mortgage. Some programs require very little documentation of your assets or income; these programs serve a purpose, but typically charge much higher interest rates. more documentation of your pay stubs, tax returns, and bank statements you can provide, the easier it will be for you to quality for a low interest rate mortgage. type of property you are refinancing can also affect your mortgage interest rate. Interest rates are typically lower for your primary residence vs. second homes or investment properties. Points act to lower the interest rate you qualify for by pre-paying a portion of the interest before the loan. A "point" or "discount point" is equivalent to 1% of the loan and usually reduces or "discounts" the loan rate by an eighth of a percentage point. For example: You want to get a loan for $100,000 to buy a home. Each "point" would cost you 1% of $100,000 or $1,000 but would reduce your loan's interest rate by.125%. lender might offer you an 8.0% loan with zero points, a 7.875% loan with one point, or a 7.75% loan with 2 points. Points, like the down payment, are paid at closing. In some cases, lenders will allow borrowers to finance the points over the term of the loan. Lenders sometimes RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 11

12 use points to make their interest rates appear lower. Be aware that lower interest rate offered by a lender may translate into higher points requirements. Will You Have to Pay a Penalty? Be sure and check if your current mortgage has a pre-payment penalty. Many mortgage lenders do include pre-payment penalties in their offerings. Most prepayment penalties only last for the first three years of the loan, so if you have one and have been in your house for a while you may not have to pay it. re are two types of pre-payment penalties: hard and soft. hard pre-payment penalty goes into effect whether you sell your house or refinance the mortgage. A soft penalty only applies if you refinance the mortgage; not when you sell the house. If you think you might have to move within the first three years of owning the home, make sure you let the broker know you require a soft pre-payment penalty only. Obtain All Important Cost Information Closing costs can vary from a few hundred dollars to several thousand dollars. Mortgages advertised as No Closing Cost Loans can still require considerable out of pocket expenses to cement the deal. Pay careful attention to the Hud-1 statement from your original mortgage as it will outline all of your closing costs. You will see pre-paid expenses on this statement. Pre-paid expenses include prepaid interest, pre-paid taxes, and insurance. Even if you are rolling these expenses up into the mortgage amount, settlement charges can take you by surprise at the closing table. Other expenses such as origination points and title insurance are based on the amount of the mortgage loan you are borrowing. Title insurance offers no benefit to you as the homeowner and can be quite expensive. Title insurance only protects the lender from losses due to a defective title; and you have to pay for this insurance. Even though your title has been checked and re-checked and you ve already paid for title insurance on your first mortgage, you ll have to pay for it again when you refinance RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 12

13 You will often be able to roll your closing costs and pre-paid items into the loan amount of your mortgage, so you won t have to come up with all the cash at closing. Be sure to get information about mortgages from several lenders or brokers. Know how much of a down payment you can afford, and find out all the costs involved in the loan. Knowing just the amount of the monthly payment or the interest rate is not enough. Ask for information about the same loan amount, loan term, and type of loan so that you can compare the information. Number Four: Shop Around For the Best Deal Shopping around for a home loan or mortgage will help you to get the best financing deal. A mortgage whether it s a home purchase, a refinancing, or a home equity loan is a product, just like a car, so the price and terms may be negotiable. You ll want to compare all the costs involved in obtaining a mortgage. Shopping, comparing, and negotiating may save you thousands of dollars. Obtain information from several lenders. Home loans are available from several types of lenders thrift institutions, commercial banks, mortgage companies, and credit unions. Different lenders may quote you different prices, so you should contact several lenders to make sure you re getting the best price. You can also get a home loan through a mortgage broker. Brokers arrange transactions rather than lending money directly; in other words, they find a lender for you. A broker s access to several lenders can mean a wider selection of loan products and terms from which you can choose. Brokers will generally contact several lenders regarding your application, but they are not obligated to find the best deal for you unless they have contracted with you to act as your agent. Consequently, you RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 13

14 should consider contacting more than one broker, just as you should with banks or thrift institutions. Whether you are dealing with a lender or a broker may not always be clear. Some financial institutions operate as both lenders and brokers. And most brokers advertisements do not use the word broker. refore, be sure to ask whether a broker is involved. This information is important because brokers are usually paid a fee for their services that may be separate from and in addition to the lender s origination or other fees. A broker s compensation may be in the form of points paid at closing or as an add-on to your interest rate, or both. You should ask each broker you work with how he or she will be compensated so that you can compare the different fees. Be prepared to negotiate with the brokers as well as the lenders. Obtain the best deal that you can. Once you know what each lender has to offer, negotiate for the best deal that you can. On any given day, lenders and brokers may offer different prices for the same loan terms to different consumers, even if those consumers have the same loan qualifications. most likely reason for this difference in price is that loan officers and brokers are often allowed to keep some or all of this difference as extra compensation. Generally, the difference between the lowest available price for a loan product and any higher price that the borrower agrees to pay is an overage. When overages occur, they are built into the prices quoted to consumers. y can occur in both fixed and variable-rate loans and can be in the form of points, fees, or the interest rate. Whether quoted to you by a loan officer or a broker, the price of any loan may contain overages. Have the lender or broker write down all the costs associated with the loan. n ask if the lender or broker will waive or reduce one or more of its fees or agree to a lower rate or fewer points. You ll want to make sure that the lender or broker is not agreeing to lower one fee while raising another or to lower the rate while raising points RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 14

15 re s no harm in asking lenders or brokers if they can give better terms than the original ones they quoted or than those you have found elsewhere. Once you are satisfied with the terms you have negotiated, you may want to obtain a written lock-in from the lender or broker. lock-in should include the rate that you have agreed upon, the period the lock-in lasts, and the number of points to be paid. A fee may be charged for locking in the loan rate. This fee may be refundable at closing. Lock-ins can protect you from rate increases while your loan is being processed; if rates fall, however, you could end up with a less favorable rate. Should that happen, try to negotiate a compromise with the lender or broker. Remember: Shop, Compare, and Negotiate. When searching for a loan, it is important to shop around, compare costs and terms, and to negotiate for the best deal. Your local newspaper and the Internet are good places to start shopping for a loan. You can usually find information both on interest rates and on points for several lenders. Since rates and points can change daily, you ll want to check your newspaper often when shopping for a home loan. But the newspaper does not list the fees, so be sure to ask the lenders about them. Use the Internet to get lenders to compete for your business. re are several sites on the web you can use to do this. RefiAdvisor has an excellent mortgage tool for comparing loan offers. (See the link below) Be careful using sites that ask for your Social Security Number. Make sure the sites use Secure Socket Layer (SSL) when entering your information. Mortgage Tool only asks for your contact information and does not require a Social Security Number. Fill out one short form to receive multiple competitive quotes from a vast network of screened lenders and mortgage brokers. It s a simple, one page, no-obligation request form requires no sensitive information. Click here to access the Mortgage Tool: RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 15

16 Other resources include: re is a complete list of direct lenders and brokers available in the Resources Section. You should fill out the contact forms located on each of these sites to receive as much information and as many offers for your loan as possible. Credit Problems? Still Shop, Compare, and Negotiate. Don t assume that minor credit problems or difficulties stemming from unique circumstances, such as illness or temporary loss of income, will limit your loan choices to only high-cost lenders. If your credit report contains negative information that is accurate, but there are good reasons for trusting you to repay a loan, be sure to explain your institution to the lender or broker. If your credit problems cannot be explained, you will probably have to pay more than borrowers who have good credit histories. But don t assume that the only way to get credit is to pay a high price. Ask how your past credit history affects the price of your loan and what you would need to do to get a better price. Take the time to shop around and negotiate the best deal that you can. Whether you have credit problems or not, it s a good idea to review your credit report for accuracy and completeness before you apply for a loan. See item number three for more information on your credit rating. Use the Mortgage Shopping Worksheet on the next page when negotiating with lenders RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 16

17 Mortgage Shopping Worksheet2 Name of Lender: Name of Contact: Date of Contact: Mortgage Amount: mortgage 1 mortgage 2 mortgage 1 mortgage 2 Basic Information on the Loans Type of Mortgage: fixed rate, adjustable rate, conventional, FHA, other? If adjustable, see below Minimum down payment required Loan term (length of loan) Contract interest rate Annual percentage rate (APR) Points (may be called loan discount points) Monthly Private Mortgage Insurance (PMI) premiums.... How long must you keep PMI? Estimated monthly escrow for taxes and hazard insurance Estimated monthly payment (Principal, Interest, Taxes, Insurance, PMI) Fees Different institutions may have different names for some fees and may charge different fees. We have listed some typical fees you may see on loan documents. Application fee or Loan processing fee Origination fee or Underwriting fee Lender fee or Funding fee Appraisal fee Attorney fees Document preparation and recording fees Broker fees (may be quoted as points, origination fees, or interest rate add-on) Credit report fee Other fees Other Costs at Closing/Settlement Title search/title insurance For lender For you Estimated prepaid amounts for interest, taxes, hazard insurance, payments to escrow State and local taxes, stamp taxes, transfer taxes Flood determination Prepaid Private Mortgage Insurance (PMI) Surveys and home inspections Total Fees and Other Closing/Settlement Cost Estimates RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 17

18 Mortgage Shopping Worksheet Page 2 Lender 1 Lender 2 Name of Lender: mortgage 1 mortgage 2 mortgage 1 mortgage 2 Other Questions and Considerations about the Loan Are any of the fees or costs waivable? Prepayment penalties Is there a prepayment penalty? If so, how much is it? How long does the penalty period last? (for example, 3 years? 5 years?) Are extra principal payments allowed? Lock-ins Is the lock-in agreement in writing? Is there a fee to lock-in? When does the lock-in occur at application, approval, or another time? How long will the lock-in last? If the rate drops before closing, can you lock-in at a lower rate? If the loan is an adjustable rate mortgage: What is the initial rate? What is the maximum the rate could be next year? What are the rate and payment caps each year and over the life of the loan? What is the frequency of rate change and of any changes to the monthly payment? What is the index that the lender will use? What margin will the lender add to the index? Credit life insurance Does the monthly amount quoted to you include a charge for credit life insurance? If so, does the lender require credit life insurance as a condition of the loan? How much does the credit life insurance cost? How much lower would your monthly payment be without the credit life insurance? If the lender does not require credit life insurance, and you still want to buy it, what rates can you get from other insurance providers? RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 18

19 Number Five: Common Pitfalls to Avoid Fair Lending Is Required by Law. Equal Credit Opportunity Act prohibits lenders from discriminating against credit applicants in any aspect of a credit transaction on the basis of race, color, religion, national origin, sex, marital status, age, whether all or part of the applicant s income comes from a public assistance program, or whether the applicant has in good faith exercised a right under the Consumer Credit Protection Act. Fair Housing Act prohibits discrimination in residential real estate transactions on the basis of race, color, religion, sex, handicap, familial status, or national origin. Under these laws, a consumer cannot be refused a loan based on these characteristics nor be charged more for a loan or offered less favorable terms based on such characteristics. Protect Yourself from Predatory Lenders Buying or refinancing your home may be one of the most important and complex financial decisions you'll ever make. Many lenders, appraisers, and real estate professionals stand ready to help you get a nice home and a great loan. However, you need to understand the home buying process to be a smart consumer. Every year, misinformed homebuyers, often firsttime purchasers or seniors, become victims of predatory lending or loan fraud. What is Predatory Lending? In communities across America, people are losing their homes and their investments because of predatory lenders, appraisers, mortgage brokers and home improvement contractors who: Sell properties for much more than they are worth using false appraisals. Encourage borrowers to lie about their income, expenses, or cash available for down payments in order to get a loan. Knowingly lend more money than a borrower can afford to repay RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 19

20 Charge high interest rates to borrowers based on their race or national origin and not on their credit history. Charge fees for unnecessary or nonexistent products and services. Pressure borrowers to accept higher-risk loans such as balloon loans, interest only payments, and steep pre-payment penalties. Target vulnerable borrowers to cash-out refinances offers when they know borrowers are in need of cash due to medical, unemployment or debt problems. "Strip" homeowners' equity from their homes by convincing them to refinance again and again when there is no benefit to the borrower. Use high pressure sales tactics to sell home improvements and then finance them at high interest rates. What Tactics Do Predatory Lenders Use? A lender or investor tells you that they are your only chance of getting a loan or owning a home. You should be able to take your time to shop around and compare prices and houses. house you are buying costs a lot more than other homes in the neighborhood, but isn't any bigger or better. You are asked to sign a sales contract or loan documents that are blank or that contain information which is not true. You are told that the Federal Housing Administration insurance protects you against property defects or loan fraud - it does not. cost or loan terms at closing are not what you agreed to. You are told that refinancing can solve your credit or money problems. You are told that you can only get a good deal on a home improvement if you finance it with a particular lender. Remember: If a deal to buy, repair or refinance a house sounds too good to be true, it usually is! Reasons a Loan May Not Be Approved re are several common reasons why lenders deny a loan application. Poor credit report - A negative credit report generally indicates that the homebuyer has not established a good credit history. Your first step should be to verify that the credit information issued to the lender is accurate. Ask to see a copy of your credit report that the lender received, or obtain a copy of your credit report yourself from your local credit bureau. In addition, consult with a local HUD Housing counseling agency to determine what steps you can take to restore your credit to an acceptable level. Depending on your situation, rebuilding your credit may only delay your home purchase for a short time RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 20

21 Not enough income - Your ability to pay off a loan is reflected in your current earnings and your future income potential. Lenders may decline a loan if the homebuyer does not meet the income requirements or cannot show proof of stable income. It is to your advantage to establish a consistent and stable income. Too much debt - If your existing debts (credit cards, car loans, student loans) exceed the debt-to-income ratio for the loan, determine if you can pay off some of your debts before you apply for a mortgage. If you have credit cards you don't use, cancel them. Inactive credit cards are still considered potential debt. For more assistance with debt consolidation or other credit needs, contact a HUD Housing counseling agency. Options If Your Loan Is Not Approved A lender is required by law to explain in writing the reasons why your loan was not approved. An important thing to remember is that if the lender declines your loan application it does not necessarily mean that the purchase of a home is not in your future. You still have some options available: Consider another lender - You may want to research other lenders in your area. Fees and loan options vary by lender. You may be able to find another lender that offers more suitable loan packages or charges lower fees. Increase your equity - If you can increase the equity in your home, you will reduce the amount of money you have to borrow. This might help you qualify for the loan. Contact local HUD Office - Check with your local HUD office about additional programs and resources available to you, or Click here for a list of HUD programs available nationwide. Consumer Credit Protection Act (1960) - Guarantees confidentiality of credit reports and allows consumers to correct inaccurate information in their reports. Equal Credit Opportunity Act of Prohibits the discrimination in any credit action based on race, sex, marital status, color, religion, age, handicap, or national origin RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 21

22 Equal Housing Opportunity - Prohibits housing discrimination based on race, sex, marital status, color, religion, age, handicap, family status or national origin. Fair Housing Act - Prohibits the discrimination based on race, sex, marital status, handicap, or national origin in any real estate transaction. Federal Consumer Credit Protection Act (commonly known as the Truth in Lending Act) (1969) - Requires that lenders disclose the actual terms and conditions of a loan before an applicant commits to the loan. Home Mortgage Disclosure Act (1975) - Provides information to help determine whether public institutions are assisting the housing needs of their communities and neighborhoods. Real Estate Settlement Procedures Act of 1974 (RESPA) - Encouraging homeownership through consumer protection, this act regulates certain lending actions related to closing/settlement. Some of its provisions are: - RESPA requires lenders to provide buyers a good faith estimate of the cost of the loan, including disclosure of the Annual Percentage Rate (APR). - RESPA requires lenders to provide buyers with general information about settlement costs. - Lenders must provide buyers a copy of the Mortgage Servicing Disclosure Statement, regarding loan servicing and transfer. - Within three days after receiving the loan application, lenders must provide the buyer with an estimate of closing costs and monthly payments. - RESPA provides the borrower the opportunity to see the HUD-1 Settlement Statement one day before the actual settlement. - Prohibits kickbacks between Real Estate professionals for referrals and prohibits fee-splitting and receiving unearned fees for services not rendered. Regulation B of the Consumer Credit Protection Act - Requires lenders to inform potential borrowers of any adverse actions taken on their loan applications RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 22

23 Online Resources Fill out the contact forms at each of the links below to receive information and offers from the maximum number of lenders and brokers. Credit Resources Annual Credit Report Request a free copy of your credit history from each reporting agency. Available once every 12 months. Does not provide your credit score. Online Credit Info (Top Rated) Receive a free copy of your credit history and a free 30-day trial membership in the Credit Monitoring Program. This service provides important information about understanding and maintaining your credit history. Free Credit Score Get your credit score free and receive a free trial of the Privacy Matters service. Make Lenders Compete America s Lending Partners (Top Rated) Whether your Credit is Perfect or Less than Perfect, you can find the best deal on your home loan. It's personal, convenient, and secure. Service is free and there is no obligation. Complete one form and lending partners will call you directly. You compare the loan offers and decide which offer is best for you. Planet Loan Country-Wide Lender - Regardless of credit issues, Full Spectrum Lending will work with you to find the best loan for your situation RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 23

24 Online Resources (Page Two) RefiAdvisor Mortgage Tool (Top Rated) Fill out one short form to receive multiple competitive quotes from a vast network of screened lenders and mortgage brokers. It s a simple, one-page, no-obligation form that requires no sensitive information. Lender s Block Get up to four free quotes in minutes. Fast and easy application. Requires no sensitive information. No obligation. Low Cost Lending Free rate checks. No obligation, No Credit Check. Low Rate Source Search rates for a variety of different lenders. National Lenders ING Direct (Top Rated) Great Rates, No Points, Guaranteed low closing costs. Save thousands with ING s Orange Mortgage. Ameriquest Mortgage Ameriquest is the nation s leader in subprime mortgages with over 250 branches nationwide. Miscellaneous Resources Electronic Appraiser With Electronic Appraiser anyone can instantly determine the value of any home. It s quick & easy RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmit this document. 24

25 Glossary of Terms Select the first letter of the word from the list below to jump to the appropriate section of the glossary. A B C D E F G H I J K L M N O P Q R S T U V W X Y Z - A - abstract of title A historical summary provided by a title insurance company of all records affecting the title to a property. acceleration clause A clause that allows a lender to declare the entire outstanding balance of a loan immediately due and payable should a borrowerr violate specific loan provisions or default on the loan. adjustable rate mortgage (ARM) A variable or flexible rate mortgage with an interest rate that varies according to the financial index it is based upon. To limit the borrower's risk, the ARM may have a payment or rate cap. See also: cap. amenities Features of your home that fit your preferences and can increase the value of your property. Some examples include the number of bedrooms, bathrooms, or vicinity to public transportation. amortization liquidation of a debt by regular, usually monthly, installments of principal and interest. An amortization schedule is a table showing the payment amount, interest, principal and unpaid balance for the entire term of the loan. annual cap See: cap. annual percentage rate (A.P.R.) actual interest rate, taking into account points and other finance charges, for the projected life of a mortgage. Disclosure of APR is required by the Truth-in-Lending Law and allows borrowers to compare the actual costs of different mortgage loans. appraisal An estimate of a property's value as of a given date, determined by a qualified professional appraiser. value may be based on replacement cost, the sales of comparable properties or the property's incomeproducing ability. appreciation A property's increase in value due to inflation or economic factors. A.P.R. See: annual percentage rate RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmitt this document. 25

26 ARM See: adjustable rate mortgage. assessment Charges levied against a property for tax purposes or to pay for municipal or association improvements such as curbs, sewers, or grounds maintenance. assignment transfer of a contract or a right to buy property at given rates and terms from a mortgagee to another person. assumption An agreement between a buyer and a seller, requiring lender approval, where the buyer takes over the payments for a mortgage and accepts the liability. Assuming a loan can be advantageous for a buyer because there are no closing costs and the loan's interest rate may be lower than current market rates. Depending on what is in the mortgage or deed of trust, the lender may raise the interest rate, require the buyer to qualify for the mortgage, or not permit the buyer to assume the loan at all. - B - balloon mortgage Mortgage with a final lump sum payment that is greater than preceding payments and pays the loan in full. biweekly mortgage A loan requiring payments of principal and interest at two-week intervals. This type of loan amortizes much faster than monthly payment loans. payment for a biweekly mortgage is half what a monthly payment would be. bond A certificate serving as security for payment of a debt. Bonds backed by mortgage loans are pooled together and sold in the secondary market. bridge loan A loan to "bridge" the gap between the termination of one mortgage and the beginning of another, such as when a borrower purchases a new home before receiving cash proceeds from the sale of a prior home. Also known as a swing loan. broker An intermediary between the borrower and the lender. broker may represent several lending sources and charges a fee or commission for services. buy-down A type of mortgage which requires the buyer to pay additional discount points or make a substantial down payment in return for a below market interest rate. Another form of a buy-down is one in which the seller offers interest payment plans or pays closing costs such as the origination fee. During times of high interest rates buy-downs may induce buyers to purchase property they might otherwise not have purchased RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmitt this document. 26

27 - C - cap A limit in how much an adjustable rate mortgage's monthly payment or interest rate can increase. A cap is meant to protect the borrower from large increases and may be a payment cap, an interest cap, a life-of-loais a limit on the amount of the interest rate. A life-of-loan cap restricts the amount the interest rate can increase over the entire cap or an annual cap. A payment cap is a limit on the monthly payment. An interest cap term of the loan. An annual cap limits the amount the interest rate can increase over a twelve-month period. certificate of reasonable value (CRV) A Veterans Administration appraisal that establishes the maximum VA mortgage loan amount for a specified property. certificate of title A document rendering an opinion on the statuss of a property's title based on public records. closed-end mortgage A mortgage principal amount that is fixed and cannot be increased during the life of the loan. See also: open- se costs can be up to ten percent of the mortgage amount and usually include but are not limited to the end mortgage. closing costs Costs payable by both seller and buyer at the time of settlement, when the purchase of a property is finalized. following: Fees Paid to the Lender Fees Paid in Advance Other Charges Origination fee Interest from the closing date to Title search and title insurance Discount points the beginningg of the 1st Credit report fee payment Appraisal fee Hazard insurance premium Assumption fee if loan is Mortgage insurance premium assumed cloud Sales commissions Legal and recording fees Inspection and survey fees Property taxes and other adjustments Processing and document preparation fees A claim to the title of a property that, if valid, would prevent a purchaser from obtaining a clear title. collateral Something of value pledged as security for a loan. In mortgage lending the property itself serves as collateral for a mortgage loan. commitment fee A fee charged when a) an agreement is reached between a lender and a borrower for a loan at a specificc rate and points and b) the lender guarantees to lock in that rate RefiAdvisor.com. All Rights Reserved. You may not alter, post, or transmitt this document. 27

Looking for the Best Mortgage?

Looking for the Best Mortgage? Looking for the Best Mortgage? Shop, Compare, Negotiate Shopping around for a home loan or mortgage will help you to get the best financing deal. A mortgage whether it s a home purchase, a refinancing,

More information

Obtain Information from Several Lenders

Obtain Information from Several Lenders ESPAÑOL Shopping around for a home loan or mortgage will help you to get the best financing deal. A mortgage--whether it s a home purchase, a refinancing, or a home equity loan--is a product, just like

More information

Obtain Information from Several Lenders

Obtain Information from Several Lenders Shopping around for a home loan or mortgage will help you to get the best financing deal. A mortgage--whether it s a home purchase, a refinancing, or a home equity loan--is a product, just like a car,

More information

A Consumer s Guide to Refinancing

A Consumer s Guide to Refinancing A Consumer s Guide to Refinancing Have interest rates fallen? Or do you expect them to go up? Has your credit score improved enough so that you might be eligible for a lower-rate mortgage? Would you like

More information

Mortgage Shopper's Resource Kit

Mortgage Shopper's Resource Kit Mortgage Shopper's Resource Kit Consumer Information from the Federal Trade Commission and other Agencies Presented by the Michigan Department of Insurance and Financial Services, Patrick M. McPharlin,

More information

MORTGAGE TERMS. Assignment of Mortgage A document used to transfer ownership of a mortgage from one party to another.

MORTGAGE TERMS. Assignment of Mortgage A document used to transfer ownership of a mortgage from one party to another. MORTGAGE TERMS Acceleration Clause This is a clause used in a mortgage that can be enforced to make the entire amount of the loan and any interest due immediately. This is usually stipulated if you default

More information

BUYING A HOME. Looking for the Best Mortgage. Obtain Information from Several Lenders

BUYING A HOME. Looking for the Best Mortgage. Obtain Information from Several Lenders OFFICE OF THE STAFF JUDGE ADVOCATE 48 TH FIGHTER WING, RAF LAKENHEATH, UK Looking for the Best Mortgage BUYING A HOME Shopping around for a home loan or mortgage will help you to get the best financing

More information

Is now a good time to refinance?

Is now a good time to refinance? Is now a good time to refinance? Our Business Is The American Dream At Fannie Mae, we are in the American Dream business. Our Mission is to tear down barriers, lower costs, and increase the opportunities

More information

Helpful Information for a First Time Mortgage

Helpful Information for a First Time Mortgage Helpful Information for a First Time Mortgage Getting Started Many people buying their first home are afraid lenders don't really want to work with them. But that's simply not true. Without you, there

More information

FHA Home Loans 101 An Easy Reference Guide

FHA Home Loans 101 An Easy Reference Guide FHA Home Loans 101 An Easy Reference Guide Updated for loans on or after June 3, 2013 Congratulations on Starting Your Journey to Home Ownership This guide offers a quick look at vital information you

More information

Home Equity Loans and Credit Lines HELOC

Home Equity Loans and Credit Lines HELOC Home Equity Loans and Credit Lines HELOC If you re thinking about making some home improvements or looking at ways to pay for your child s college education, you may be thinking about tapping into your

More information

Instructor Guide Building: Knowledge, Security, Confidence FDIC Financial Education Curriculum

Instructor Guide Building: Knowledge, Security, Confidence FDIC Financial Education Curriculum Your Own Home Building: Knowledge, Security, Confidence FDIC Financial Education Curriculum TABLE OF CONTENTS Page Module Overview 1 Purpose 1 Objectives 1 Time 1 Materials and Equipment Needed to Present

More information

Glossary of Terms. Here are some helpful definitions to common terms.

Glossary of Terms. Here are some helpful definitions to common terms. Glossary of Terms Here are some helpful definitions to common terms. 1003 Loan application 4506 IRS form requesting copy of tax return Abstract of title A historical summary provided by a title insurance

More information

Assumable mortgage: A mortgage that can be transferred from a seller to a buyer. The buyer then takes over payment of an existing loan.

Assumable mortgage: A mortgage that can be transferred from a seller to a buyer. The buyer then takes over payment of an existing loan. MORTGAGE GLOSSARY Adjustable Rate Mortgage (ARM): A mortgage loan with payments usually lower than a fixed rate initially, but is subject to changes in interest rates. There are a variety of ARMs that

More information

Mortgage Terms Glossary

Mortgage Terms Glossary Mortgage Terms Glossary Adjustable-Rate Mortgage (ARM) A mortgage where the interest rate is not fixed, but changes during the life of the loan in line with movements in an index rate. You may also see

More information

Welcome. 1. Agenda. 2. Ground Rules. 3. Introductions. Your Own Home 2

Welcome. 1. Agenda. 2. Ground Rules. 3. Introductions. Your Own Home 2 Your Own Home Welcome 1. Agenda 2. Ground Rules 3. Introductions Your Own Home 2 Objectives If you are a pre-homebuyer: Explain the advantages and disadvantages of renting versus owning a home Identify

More information

Wondering how to borrow using the equity in your home? Ask a Citizen. The Citizens Guide to Home Equity Financing

Wondering how to borrow using the equity in your home? Ask a Citizen. The Citizens Guide to Home Equity Financing Wondering how to borrow using the equity in your home? Ask a Citizen. The Citizens Guide to Home Equity Financing We understand you have questions about home borrowing. We can help. At Citizens Bank, we

More information

Mortgage Facts: How to Get the Best Home Loan Deal

Mortgage Facts: How to Get the Best Home Loan Deal Mortgage Facts: How to Get the Best Home Loan Deal By BizMove Management Training Institute Click Here! for Other Free ebooks by BizMove.com Copyright by BizMove. All rights reserved. Table of Contents

More information

Your Step-by-Step Mortgage Guide. From Application to Closing

Your Step-by-Step Mortgage Guide. From Application to Closing Your Step-by-Step Mortgage Guide From Application to Closing Table of Contents In this guide, you will learn about one of the most important steps in the homebuying process obtaining a mortgage. The materials

More information

You Can Buy a Home The keys to Homeownership

You Can Buy a Home The keys to Homeownership You Can Buy a Home The keys to Homeownership The keys to homeownership Buying a home is one of the most important purchases you ll ever make. Owning your own home helps you build wealth, save on taxes

More information

Section 184 Indian Home Loan Guarantee Program FOR HOMEBUYERS

Section 184 Indian Home Loan Guarantee Program FOR HOMEBUYERS Section 184 Indian Home Loan Guarantee Program FOR HOMEBUYERS Q&As About Purchasing a Home with a Section 184 Guaranteed Loan 1. WHAT IS THE PURPOSE OF THE 184 LOAN GUARANTEE PROGRAM? A home is more than

More information

What You Should Know About Home Equity Lines of Credit and Important Terms of FlexEquity SM

What You Should Know About Home Equity Lines of Credit and Important Terms of FlexEquity SM What You Should Know About Home Equity Lines of Credit and Important Terms of FlexEquity SM Effective March 1, 2008 The Housing Financial Discrimination Act of 1977 Fair Lending Notice It is illegal to

More information

Fifth Third Home Buying Guide. A Guide to Residential Home Buying.

Fifth Third Home Buying Guide. A Guide to Residential Home Buying. Fifth Third Home Buying Guide A Guide to Residential Home Buying. Important Contacts and Numbers. Use this page to record important information as you move through the homebuying process. Realtor/Builder

More information

HOME BUYING101. 701.255.0042 www.capcu.org i

HOME BUYING101. 701.255.0042 www.capcu.org i HOME BUYING101 701.255.0042 www.capcu.org i This book is intended as a general guide to the topics discussed, and it does not deliver accounting, personal finance, or legal advice. It is not intended,

More information

Appraiser: a qualified individual who uses his or her experience and knowledge to prepare the appraisal estimate.

Appraiser: a qualified individual who uses his or her experience and knowledge to prepare the appraisal estimate. Mortgage Glossary 203(b): FHA program which provides mortgage insurance to protect lenders from default; used to finance the purchase of new or existing one- to four family housing; characterized by low

More information

Adjustable Rate Mortgage (ARM) a mortgage with a variable interest rate, which adjusts monthly, biannually or annually.

Adjustable Rate Mortgage (ARM) a mortgage with a variable interest rate, which adjusts monthly, biannually or annually. Glossary Adjustable Rate Mortgage (ARM) a mortgage with a variable interest rate, which adjusts monthly, biannually or annually. Amortization the way a loan is paid off over time in installments, detailing

More information

Participant Guide Building: Knowledge, Security, Confidence FDIC Financial Education Curriculum

Participant Guide Building: Knowledge, Security, Confidence FDIC Financial Education Curriculum Your Own Home Building: Knowledge, Security, Confidence FDIC Financial Education Curriculum TABLE OF CONTENTS Page To Rent or Own 1 Steps Involved in Buying a Home 2 Am I Ready to Buy a Home? 3 Patricia

More information

Table of Contents Introduction Purchasing Time-line II. Before You Buy

Table of Contents Introduction Purchasing Time-line II. Before You Buy Table of Contents I. Introduction Purchasing Time-line II. Before You Buy Are You Ready to be a Homeowner? III. Determining What You Can Afford IV. Shopping for a House Role of the Real Estate Broker Selecting

More information

Broker. Financing Real Estate. Chapter 12. Copyright Gold Coast Schools 1

Broker. Financing Real Estate. Chapter 12. Copyright Gold Coast Schools 1 Broker Chapter 12 Financing Real Estate Copyright Gold Coast Schools 1 Learning Objectives Describe the difference between a note and a mortgage Explain the benefits of having the first recorded lien on

More information

Glossary of Lending Terms

Glossary of Lending Terms Glossary of Lending Terms Adjustable Rate Loan or Adjustable Rate Mortgage (ARM) A loan with an interest rate that changes during the term of the loan. The payments generally increase or decrease with

More information

Consumer Handbook on Home Equity Lines of Credit

Consumer Handbook on Home Equity Lines of Credit Consumer Handbook on Home Equity Lines of Credit The Housing Financial Discrimination Act of 1977 Fair Lending Notice (CALIFORNIA RESIDENTS ONLY) It is illegal to discriminate in the provision of or in

More information

FAQ s in general VA Loans

FAQ s in general VA Loans Oscar Castillo - REALTOR - Broker Associate (858) 775-1057 CalBRE lic# 01140298 www.oscarsellshomes.com FAQ s in general VA Loans General questions regarding the VA Loan program. What is the History of

More information

Guide to Purchasing a Home

Guide to Purchasing a Home Your journey to homeownership starts at your credit union. Purchasing your first home is a big decision, and it may even seem overwhelming. Rest assured Beacon Credit Union is here to assist you in understanding

More information

Adjustment Date - The date on which the interest rate changes for an adjustable-rate mortgage (ARM).

Adjustment Date - The date on which the interest rate changes for an adjustable-rate mortgage (ARM). Glossary A Adjustable Rate Mortgage - An adjustable rate mortgage, commonly referred to as an ARM, is a loan type that allows the lender to adjust the interest rate during the term of the loan. Generally,

More information

brochure, you are entitled to a refund of any fee you may have already paid.

brochure, you are entitled to a refund of any fee you may have already paid. HOME EQUITY EARLY DISCLOSURE IMPORTANT TERMS OF OUR HOME EQUITY LINE OF CREDIT PLAN This disclosure contains important information about our Home Equity Line of Credit Plan. You should read it carefully

More information

Shopping for your home loan. Settlement cost booklet

Shopping for your home loan. Settlement cost booklet Shopping for your home loan Settlement cost booklet January 2014 This booklet was initially prepared by the U.S. Department of Housing and Urban Development. The Consumer Financial Protection Bureau (CFPB)

More information

Mortgage Terms. Appraisal An estimate of the value of property, made by a qualified professional called an "appraiser".

Mortgage Terms. Appraisal An estimate of the value of property, made by a qualified professional called an appraiser. Mortgage Terms Acceleration The right of the mortgagee (lender) to demand the immediate repayment of the mortgage loan balance upon the default of the mortgagor (borrower), or by using the right vested

More information

Mortgage Loans. Understand the Terms of Your Loan before You Sign. Mortgage Loans. Standard Home Equity Loans or Second Mortgages

Mortgage Loans. Understand the Terms of Your Loan before You Sign. Mortgage Loans. Standard Home Equity Loans or Second Mortgages Mortgage Loans Understand the Terms of Your Loan before You Sign This brochure can help you determine what is best for your situation, become familiar with mortgage loan terms, and learn what is involved

More information

Lesson 13: Applying for a Mortgage Loan

Lesson 13: Applying for a Mortgage Loan 1 Real Estate Principles of Georgia Lesson 13: Applying for a Mortgage Loan 2 Choosing a Lender Types of lenders Types of lenders include: savings and loans commercial banks savings banks credit unions

More information

DISCLAIMER. Page - 1 - of 17

DISCLAIMER. Page - 1 - of 17 DISCLAIMER The information provided in this presentation and any printed material is for informational purposes only. None of the forms, materials or opinions is offered, or should be construed, as legal

More information

Homebuyers Information Guidebook

Homebuyers Information Guidebook Homebuyers Information Guidebook Comparing Buying and Renting Getting Your Financial Picture In Focus Developing a Budget Determining Your Housing Needs and Wants Finding and Choosing a Real Estate Agent

More information

Definitions. In some cases a survey rather than an ILC is required.

Definitions. In some cases a survey rather than an ILC is required. Definitions 1. What is the closing? The closing is a formal meeting at which both the buyer and seller meet to sign all the final documentation required for the buyer's mortgage loan. Once the closing

More information

First Time Home Buyer Glossary

First Time Home Buyer Glossary First Time Home Buyer Glossary For first time home buyers, knowing and understanding the following terms are very important when purchasing your first home. By understanding these terms, you will make

More information

The. Path. Refinancing. www.totalmortgage.com October. totalmortgage.com 877-868-2503

The. Path. Refinancing. www.totalmortgage.com October. totalmortgage.com 877-868-2503 The Path Refinancing totalmortgage.com 877-868-2503 www.totalmortgage.com October 1 2012 The Path Refinancing Over time, many things change and need adjustment, and the reality is your home financing is

More information

Mortgage Fraud. Table of Contents. Home Equity Scams Choosing a Loan Home Equity Dos Home Equity Don ts

Mortgage Fraud. Table of Contents. Home Equity Scams Choosing a Loan Home Equity Dos Home Equity Don ts Mortgage Fraud Table of Contents Home Equity Scams Choosing a Loan Home Equity Dos Home Equity Don ts Reverse Mortgages Home Loan Law HOEPA Prevents For more information on Mortgage Fraud visit: You could

More information

Refinancing Your Home Loan

Refinancing Your Home Loan Refinancing Your Home Loan Part 1: Should You Refinance? Reasons and Strategies Related Topics Part 2: Refinancing Costs Part 3: Reconveyance A Final Step When You Pay Off a Loan Quick summary: If you

More information

HOME BUYING101 TM %*'9 [[[ EPXEREJGY SVK i

HOME BUYING101 TM %*'9 [[[ EPXEREJGY SVK i HOME BUYING101 TM i This book is intended as a general guide to the topics discussed, and it does not deliver accounting, personal finance, or legal advice. It is not intended, and should not be used,

More information

We ll help you open the door.

We ll help you open the door. We ll help you open the door. The Citizens Guide to Home Financing Lori Customer Table of Contents Before you look 4 The costs of purchasing a home 4 Getting a head start: Pre-approval 6 Choosing a mortgage

More information

Table of Contents How to Use the Closing Dis closure (CD)... 42 How to Compar e the Closing Dis closur e t o the L oan Estima

Table of Contents How to Use the Closing Dis closure (CD)... 42 How to Compar e the Closing Dis closur e t o the L oan Estima 1 Table of Contents Refinance Process Checklist... Refinance Process Timeline... Refinance to Lower Your Interest Rate... Refinance to Reduce Your Mortgage Term... Refinance to Convert Your Adjustable

More information

Chapter 13: Residential and Commercial Property Financing

Chapter 13: Residential and Commercial Property Financing Chapter 13 Outline / Page 1 Chapter 13: Residential and Commercial Property Financing Understanding the Mortgage Concept - secured vs. unsecured debt - mortgage pledge of property to secure a debt (See

More information

INTERACT WITH CAPITOL FEDERAL

INTERACT WITH CAPITOL FEDERAL TALK with an Associate in Capitol Federal s Customer Service Center 888-8CAPFED. EMAIL your questions to Capitol Federal securely online at capfed.com/contact. VISIT any one of Capitol Federal s convenient

More information

A Home Equity Loan: Is it right for you?

A Home Equity Loan: Is it right for you? A Home Equity Loan: Is it right for you? 2004 CBR. This document was produced by the CBR Foundation for Financial Education, Inc., in Racine, Wisconsin. CBR is a non-profit organization dedicated to providing

More information

HOME EQUITY LINES OF CREDIT

HOME EQUITY LINES OF CREDIT HOME EQUITY LINES OF CREDIT WHAT YOU SHOULD KNOW ABOUT HOME EQUITY LINES OF CREDIT: More and more lenders are offering home equity lines of credit. By using the equity in your home, you may qualify for

More information

Mortgage- and Lender-Related Settlement Costs. Charges for Establishing and Transferring Ownership. Amounts Paid to State and Local Governments

Mortgage- and Lender-Related Settlement Costs. Charges for Establishing and Transferring Ownership. Amounts Paid to State and Local Governments Mortgage- and Lender-Related Settlement Costs Charges for Establishing and Transferring Ownership Amounts Paid to State and Local Governments "All-in-One" Pricing of Settlement Costs Estimates of Settlement

More information

How To Get A Home Equity Line Of Credit

How To Get A Home Equity Line Of Credit A GUIDE TO HOME EQUITY LINES OF CREDIT Call or visit one of our offices today to see what products in this guide we have to offer you! TABLE OF CONTENTS Introduction What is a home equity line of credit

More information

Step 1 Getting Pre-Qualified

Step 1 Getting Pre-Qualified Step 1 Getting Pre-Qualified Now that you ve made the decision to purchase a home, the next step is to get pre-qualified from a lending institution, like Michigan Mortgage Solutions, to determine how much

More information

Table of Contents. I. Introduction. Purchasing Time-line. Before You Buy

Table of Contents. I. Introduction. Purchasing Time-line. Before You Buy Table of Contents I. Introduction II. III. IV. Before You Buy Purchasing Time-line Are You Ready to be a Homeowner? Determining What You Can Afford Shopping for a House Role of the Real Estate Broker Role

More information

Home Buyer s. Helpful Information to Find and Finance Your Next Home. www.colonialnationalmortgage.com 1-800-937-6001

Home Buyer s. Helpful Information to Find and Finance Your Next Home. www.colonialnationalmortgage.com 1-800-937-6001 Home Buyer s H A N D B O O K Helpful Information to Find and Finance Your Next Home www.colonialnationalmortgage.com 1-800-937-6001 The information herein is subject to change and is not an offer to extend

More information

A better way to buy a home.

A better way to buy a home. A better way to buy a home. Company NMLS : 227262 ABOUT USA MORTGAGE At USA Mortgage, a subsidiary of DAS Acquisition Company, LLC., our mission is the unrelenting pursuit of perfection, and we pride ourselves

More information

JANUARY 2014. Shopping for a mortgage? What you can expect under federal rules

JANUARY 2014. Shopping for a mortgage? What you can expect under federal rules JANUARY 2014 Shopping for a mortgage? What you can expect under federal rules You ll be offered a mortgage that s set up to be affordable. When you apply for a mortgage, you may struggle to understand

More information

HOMEOWNERSHIP: Understanding What You Can Afford, Mortgages, and Closing Costs. Illinois Association of REALTORS. Springfield, IL 62701

HOMEOWNERSHIP: Understanding What You Can Afford, Mortgages, and Closing Costs. Illinois Association of REALTORS. Springfield, IL 62701 Illinois Association of REALTORS 522 S. Fifth Street Springfield, IL 62701 www.illinoisrealtor.org www.yourillinoishome.com HOMEOWNERSHIP: Understanding What You Can Afford, Mortgages, and Closing Costs

More information

MORTGAGE BANKING TERMS

MORTGAGE BANKING TERMS MORTGAGE BANKING TERMS Acquisition cost: Add-on interest: In a HUD/FHA transaction, the price the borrower paid for the property plus any of the following costs: closing, repairs, or financing (except

More information

How To Buy A Home

How To Buy A Home HOME BUYER S H A N D B O O K Helpful Information To Find and Finance Your Next Home Buying a home is one of the most important financial decisions you'll ever make. A home can be an excellent investment

More information

GLOSSARY OF TERMS. Amortization Repayment of a debt in regular installments of principal and interest, rather than interest only payments

GLOSSARY OF TERMS. Amortization Repayment of a debt in regular installments of principal and interest, rather than interest only payments GLOSSARY OF TERMS Ability to Repay (ATR) The Ability to Repay rule protects consumers from taking on mortgages that exceed their financial means, by mandating the documentation / proof of income and assets.

More information

Financial Planning for a Home of Your Own

Financial Planning for a Home of Your Own Financial Planning for a Home of Your Own FAMILY PLANNING EDUCATION INVESTMENT RETIREMENT SAVING EQUITY FAMILY PLANNING EDUCATION INVESTMENT RETIREMENT SAVING EQUITY FAMILY PLANNING EDUCATION INVESTMENT

More information

HOMEPATH BUYERS GUIDE WWW.HOMEPATH.COM

HOMEPATH BUYERS GUIDE WWW.HOMEPATH.COM HOMEPATH BUYERS GUIDE WWW.HOMEPATH.COM Buyers Guide Buyers Guide For a Fannie Mae-owned Home Whether you re buying your first home or your fifth, the experience can be exciting, confusing, overwhelming

More information

Consumer Handbook on Adjustable Rate Mortgages

Consumer Handbook on Adjustable Rate Mortgages Consumer Handbook on Adjustable Rate Mortgages Federal Reserve Board Office of Thrift supervision EQUAL HOUSING OPPORTUNITY This booklet was prepared in consultation with the following organizations: American

More information

40 Technology Parkway South, Suite 202 Norcross, Georgia 30092-2906 www.franzen-salzano.com. November 12, 2008

40 Technology Parkway South, Suite 202 Norcross, Georgia 30092-2906 www.franzen-salzano.com. November 12, 2008 Jennifer L. Dozier Telephone: 770-248-2885, ext. 241 Facsimile: 770-248-2883 e-mail: jdozier@franzen-salzano.com 40 Technology Parkway South, Suite 202 Norcross, Georgia 30092-2906 www.franzen-salzano.com

More information

Home HOW TO BUY A WITH A LOW DOWN PAYMENT 3 % A consumer s guide to owning a home with less than three percent down. or less

Home HOW TO BUY A WITH A LOW DOWN PAYMENT 3 % A consumer s guide to owning a home with less than three percent down. or less A consumer s guide to owning a home with less than three percent down. 3 % WITH A LOW DOWN PAYMENT or less HOW TO BUY A Home If you re dreaming of buying a home, congratulations. You re in good company!

More information

Your rights as a borrower

Your rights as a borrower Your rights as a borrower A guide from the Better Business Bureau Protecting your home and the American dream What you need to know about predatory lending Commercials and door-to-door representatives

More information

How Do I Qualify for a Loan?

How Do I Qualify for a Loan? The three primary things a lender considers when approving a loan are: Credit - do you have a history of paying your bills? Income - do you earn enough to afford the mortgage payments? Assets - do you

More information

Outstanding mortgage balance

Outstanding mortgage balance Using Home Equity There are numerous benefits to owning your own home. Not only does it provide a place to live, where you can decorate as you want, but it also provides a source of wealth. Over time,

More information

Key Points: Conventional Loans:

Key Points: Conventional Loans: Key Points: Conventional Loans: Less regulation and more discretion than government loans. Can be cheaper than FHA and VA because FHA requires 2 mortgage insurances and VA requires VA funding fee. Sometimes

More information

The Guide to Single Family Home Mortgage Insurance

The Guide to Single Family Home Mortgage Insurance U.S. Department of Housing and Urban Development Office of Housing Office of Single Family Housing The Guide to Single Family Home Mortgage Insurance www.hud.gov espanol.hud.gov Becoming a Homeowner Many

More information

Home Equity Lines of Credit

Home Equity Lines of Credit The Federal Reserve Board What you should know about Home Equity Lines of Credit Board of Governors of the Federal Reserve System www.federalreserve.gov 0708 i What You Should Know about Home Equity Lines

More information

SHOPPING FOR A MORTGAGE

SHOPPING FOR A MORTGAGE SHOPPING FOR A MORTGAGE The Traditional Fixed-Rate Mortgage Key characteristics: Level payments, fixed interest rate, fixed term. This mortgage is the one which most of us know, and it is still the loan

More information

How To Get A Home Equity Line Of Credit

How To Get A Home Equity Line Of Credit WHAT YOU SHOULD KNOW ABOUT HOME EQUITY LINES OF CREDIT If you are in the market for credit, a home equity plan is one of several options that might be right for you. Before making a decision, however,

More information

Standard Mortgage Terms

Standard Mortgage Terms Page 1 of 45 Standard Mortgage Terms Filed By: Canadian Imperial Bank of Commerce Filing Number: MT160006 Filing Date: March 17, 2016 The following set of standard mortgage terms shall be deemed to be

More information

FHA Home Loans 101 An Easy Reference Guide

FHA Home Loans 101 An Easy Reference Guide FHA Home Loans 101 An Easy Reference Guide Updated for loans on or after January 26, 2015 Congratulations on Starting Your Journey to Home Ownership This guide offers a quick look at vital information

More information

Mortgage Terms. Accrued interest Interest that is earned but not paid, adding to the amount owed.

Mortgage Terms. Accrued interest Interest that is earned but not paid, adding to the amount owed. Mortgage Terms Accrued interest Interest that is earned but not paid, adding to the amount owed. Negative amortization A rise in the loan balance when the mortgage payment is less than the interest due.

More information

Mortgage Basics 101. Talk to your CIBC Mobile Mortgage Advisor today.

Mortgage Basics 101. Talk to your CIBC Mobile Mortgage Advisor today. Mortgage Basics 101 Mortgages are big investments that require financial stability and dedication. Start the process on the right foot by familiarizing yourself with different types of mortgages and rates,

More information

800.550.9435 www.pwsb.com

800.550.9435 www.pwsb.com 800.550.9435 www.pwsb.com Thinking of buying your first home? Bet you re pretty nervous, huh? Maybe even cold sweats nervous. How in the world are you going to afford it? Where do you start? All these

More information

It Is In Your Interest

It Is In Your Interest STUDENT MODULE 7.2 BORROWING MONEY PAGE 1 Standard 7: The student will identify the procedures and analyze the responsibilities of borrowing money. It Is In Your Interest Jason did not understand how it

More information

BUYING A HOME BUILDING A HOME REFINANCING

BUYING A HOME BUILDING A HOME REFINANCING Guide to Mortgages BUYING A HOME BUILDING A HOME REFINANCING Trust People First For Your Mortgage Needs People First is committed to providing our members with quality mortgage products that are both competitive

More information

Financing Residential Real Estate

Financing Residential Real Estate Financing Residential Real Estate Chapter 1: Finance and Investment Borrowing Money to Buy a Home Investments and Returns Types of Investments Ownership Investments Debt Investments Securities Investment

More information

CITY OF HUNTSVILLE, ALABAMA. DOWNPAYMENT ASSISTANCE PROGRAM - DAP Program Description & Guidelines

CITY OF HUNTSVILLE, ALABAMA. DOWNPAYMENT ASSISTANCE PROGRAM - DAP Program Description & Guidelines CITY OF HUNTSVILLE, ALABAMA DOWNPAYMENT ASSISTANCE PROGRAM - DAP Program Description & Guidelines Contact information: Community Development, 120 E. Holmes Ave, Huntsville, Ala. 35801, 256-427-5400, fax.

More information

NEW CFPB RULES FOR HIGH COST MORTGAGES AND HOMEOWNERSHIP COUNSELING February 3, 2013

NEW CFPB RULES FOR HIGH COST MORTGAGES AND HOMEOWNERSHIP COUNSELING February 3, 2013 NEW CFPB RULES FOR HIGH COST MORTGAGES AND HOMEOWNERSHIP COUNSELING February 3, 2013 On January 10, 2013, the Consumer Financial Protection Bureau ( CFPB ) issued a final rule that carries out changes

More information

Mortgage Glossary. Mortgage loans under which the interest rate is periodically adjusted based upon terms agreed to at the inception of the loan.

Mortgage Glossary. Mortgage loans under which the interest rate is periodically adjusted based upon terms agreed to at the inception of the loan. Adjustable Rate Mortgage (ARM): Alternative Documentation: Amortization: Annual Percentage Rate (APR): Appraisal: Appraisal Amount or Appraised Value: Appreciation: Balloon Mortgage: Bankruptcy: Cap: Cash-out

More information

Comparison of Section 32(HOEPA) Regulation; Current Rules vs. January 10, 2014 CFPB Changes As of 10/16/14

Comparison of Section 32(HOEPA) Regulation; Current Rules vs. January 10, 2014 CFPB Changes As of 10/16/14 Comparison of Section 32(HOEPA) Regulation; Current Rules vs. January 10, 2014 CFPB Changes As of 10/16/14 General Loan Type 1994 TILA amendments apply to homeowners that already owned their homes and

More information

When Your Home is on The Line:

When Your Home is on The Line: 515 Erie Boulevard West Syracuse, NY 13204 800-462-5000 When Your Home is on The Line: What You Should Know About Home Equity Lines of Credit If you are in the market for credit, a home equity plan is

More information

Homebuyer Education: What You Need to Know

Homebuyer Education: What You Need to Know Homebuyer Education: What You Need to Know Today s Objectives Prepare your finances for home ownership Steps to mortgage prequalification Shopping for a home- who are the major players? Choosing the correct

More information

Final RESPA Rule Requirements

Final RESPA Rule Requirements Final RESPA Rule Requirements The Department of Housing and Urban Development (HUD) released its final rule on the Real Estate Settlement Procedures Act (RESPA) on November 20, 2008. The final rule and

More information

An Easy Guide to Buying a Home

An Easy Guide to Buying a Home An Easy Guide to Buying a Home Dear Future Homeowner, You have just taken the first step on the road to realizing the American dream. Choosing your home loan is one of the most important decisions you

More information

This booklet was initially prepared by the Board of Governors of the Federal Reserve System. The Consumer Financial Protection Bureau (CFPB) has made

This booklet was initially prepared by the Board of Governors of the Federal Reserve System. The Consumer Financial Protection Bureau (CFPB) has made This booklet was initially prepared by the Board of Governors of the Federal Reserve System. The Consumer Financial Protection Bureau (CFPB) has made technical updates to the booklet to reflect new mortgage

More information

Debt Management Options

Debt Management Options Get and Stay on Track Debt Management Options Where should you start? The first step to determine which debt management tool is best for you is to review your financial situation and your financial goals.

More information

Understanding Vehicle Financing

Understanding Vehicle Financing Understanding Vehicle Financing Understanding Vehicle Financing With prices averaging more than $31,000 for a new vehicle and $17,000 for a used model from a dealership, you might consider financing or

More information

Consumer Handbook on Adjustable Rate Mortgages Published by: Federal Reserve Board Office of Thrift Supervision EQUAL HOUSING OPPORTUNITY This

Consumer Handbook on Adjustable Rate Mortgages Published by: Federal Reserve Board Office of Thrift Supervision EQUAL HOUSING OPPORTUNITY This Consumer Handbook on Adjustable Rate Mortgages Published by: Federal Reserve Board Office of Thrift Supervision EQUAL HOUSING OPPORTUNITY This booklet was prepared in consultation with the following organizations:

More information

Chapter 9 6/16/2010. Two Elements of a Mortgage Loan

Chapter 9 6/16/2010. Two Elements of a Mortgage Loan Some Effects of Mortgage Debt McGraw-Hill/Irwin Chapter 9 Real Estate Finance: The Laws and Contracts 9-1 Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved. More households can own

More information

MORTGAGE LOAN DISCLOSURE STATEMENT GOOD FAITH ESTIMATE NONTRADITIONAL MORTGAGE LOAN PRODUCT (ONE TO FOUR RESIDENTIAL UNITS (RE885) INFORMATIONAL SHEET

MORTGAGE LOAN DISCLOSURE STATEMENT GOOD FAITH ESTIMATE NONTRADITIONAL MORTGAGE LOAN PRODUCT (ONE TO FOUR RESIDENTIAL UNITS (RE885) INFORMATIONAL SHEET The fields in this document are filled in by Mortgage+Care Loan Origination Software. Please contact us at (800)481-2708 or www.mortcare.com for a list of mergeable documents. MORTGAGE LOAN DISCLOSURE

More information

Helping Elderly Homeowners Victimized by Predatory Mortgage Loans

Helping Elderly Homeowners Victimized by Predatory Mortgage Loans Helping Elderly Homeowners Victimized by Predatory Mortgage Loans Equity-rich, cash poor elderly homeowners are an attractive target for unscrupulous mortgage lenders. Many elderly homeowners are on fixed

More information