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ABOUT MORTGAGE & FINANCE |
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An important part of my job as your Personal Realtor is advising and guiding you through the home buying or home selling process. That includes financing. I hope the information here will be helpful in the process of applying for a mortgage loan, but there is no substitute for a direct relationship with a mortgage lender of your choice. A mortgage is a complicated transaction, but there is no reason for it be be difficult. Please don't hesitate to ask me and your lender for help if there is something you don't understand. We will be happy to give you the latest mortgage information and guide you through the process. Or apply online here. For a list of mortgage lenders in the Rockford area and this weeks interest rate information -- see my weekly mortgage rates page. If I can be of help to you in buying or selling a home please don't hesitate to call at 815-381-6850 or email. |
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| The Difference Between Being Pre-Qualified or Pre-Approved |
The Benefits of being Pre-Approved for your financing |
How You Can Save Thousands of Dollars in Interest
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What You Need To Bring With You When Applying For The Mortgage |
What is an FHA mortgage? |
What are "Points" in the Mortgage Transaction | |||||||
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First Time Home Buyer City of Rockford Homestead Partnership Program
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City of Rockford Buy It, Fix It Program | City of Rockford Down Home Program for Closing Costs and Down Payment Assistance | City of Rockford Rehab Programs for Low and Moderate Income Homeowners | City of Rockford Rehab Programs for the Investor-Owner | ||||||||
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| Buying a Home after filing for bankruptcy | Invest in Tax Deferred homes with Tax Deferred Savings – Tax Free Investing | Be Aware of Your Credit Score | What You Can Do To Help Your Credit Score |
Avoiding
PMI |
Refinancing Tip | |||||||
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What's The Difference Between Getting Pre-Qualified or Getting Pre-Approved for a Mortgage Loan?The basic process that takes place when you apply for a mortgage loan with a lender includes: 1. You complete the mortgage application form with a loan officer. 2. You furnish the necessary paperwork such as pay stubs, bank statements and income tax information. 3. Your application is sent to processing where the information in the file will be verified. Then your file goes to underwriting. The Underwriter is the person who will make the final decision whether to approve or turn-down your application. A Pre-Qualification does not go through all of the steps, which means that the Underwriter has not looked at your application or given final approval. A Pre-Qualification is no guarantee that you will actually get the loan. A Pre-Approval means that your mortgage application has gone to an Underwriter and a decision has been made about your loan application. If you are Pre-Approved by a lender, it means the person who makes the final decision about your loan has seen your application and approved your loan. If you get a Pre-Approval before you have selected a property, usually only an appraisal and title search on the property you select will still be required to complete the process. The Benefits of Getting Pre-ApprovedA common mistake made by people looking for a home is not knowing how much of a mortgage they can afford before they make an offer to purchase a home. The easiest way to avoid this mistake is to get Pre-Approved so you know exactly how much you will be able to afford. You will then be able to focus on the homes in your price range and know that you are ready and able to make an offer on the home of your choice. If you get your Pre-Approval before you start looking for a home you will have an advantage over most other people who are also looking but did not take the time to get Pre-Approved. A serious and ready Pre-Approved buyer has the negotiating advantage and can be ready to close on a home very quickly. Perhaps you didn't get Pre-Approved first and find the home of your dreams. You will put earnest money down with the signed contract and then apply for a loan. In addition to the earnest money you put down on the home, you may pay for the appraisal, credit report and application fee only to find out after some time that you do not qualify for the home because it is too expensive. You could easily be out all of the money you have invested. That should be more than enough reason to always get Pre-Approved before looking for a home. |
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Your Credit Score and how it will affect how much house you will be able to buy.A system called credit scoring is used by mortgage companies to rate a borrowers credit worthiness. Your credit report shows your debts and how well you make your payments as well as any public record information about you such as a bankruptcy, foreclosure or tax lien, etc. Taking all of this information into consideration, the credit score is a number that lenders use to help decide which types of loans you may be eligible for. Certain loan programs require a minimum credit score to qualify. Your credit score will change periodically based on how timely your payments are made, if you have opened any new credit, how long your accounts have been open, and if there is any public record information. What you can do to help your Credit ScoreMaking your monthly payments on time is the most important thing you can do. Not paying your bills on time will definitely have a very negative effect on your credit score. It is also smart not to apply for or open any new credit while you are in the process of buying your home. This could affect your ability to qualify for your loan. And that means don't finance a car, or make applications for credit anytime from the time you get pre-approved (or before) until AFTER YOU CLOSE on the house of your dreams. People have lost their home financing at the last minute because of too many credit inquiries on their updated credit report at when it comes to closing time on a home. Questions about using your credit or choosing a local lender to match your needs? Call me at 815-381-6850. Can I still get a mortgage if I have had credit problems?Today a good credit history is extremely important. The word "subprime" is used to describe loans to people who have credit problems that are serious enough to justify charging higher risk rates or to deny a loan altogether.. One or two 30-day-late credit card payments won't push you into subprime territory, but bankruptcy, foreclosure, repossession, a habit of late payments, a short credit history, and even eviction from an apartment could put you in the subprime category. Lenders today are looking for ways to help people who have had financial difficulties. If you have damaged credit talk to your lender, find out what you can do to improve your credit score. Need some help in choosing a lender? Call Bill Marek at 815-381-6850. |
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After You Get Your Mortgage, Save Thousands in InterestUsing a few easy strategies to make some extra principle payments can cut years off the life of your mortgage and save you thousands in interest. Getting a 15 Year Mortgage instead of a longer term is one of the best things you can do, if you can afford it. The interest you pay over the life of your mortgage could be cut in half. If you don't think you could handle a 15 year mortgage, you could consider getting the 30 year loan and making the same payments as you would have made on the shorter term loan. You will achieve about the same savings but you'll have the flexibility of not being stuck with the higher payment if your income should change. Rounding your payments up to the nearest hundred dollars is also a good strategy and the results can be amazing. For example, rounding up to the next $100 on a $100,000 loan for 30 years at 8% interest could save you over $48,000 in interest payments over the life of your mortgage and will also shorten the term of the mortgage by 7-1/2 years...at a cost of only about $66 extra each month. You may also be able to use your income tax refund to make one-time principle payments. Take the same $100,000 mortgage and apply your $1,000 tax refund to the principle one-time and you'll save over $8,600 and cut your mortgage by 13 months. Apply your $1,000 tax refund each year and pay off the mortgage in less than 21 years with an interest savings of $76,000. That's a pretty good return on your money. |
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What You Need To Bring With You When Applying For A MortgageThe best way to make the mortgage application process easier and faster is to be prepared for it and have the necessary information assembled and ready to use. Each lender has different procedures and requirements, so check with the lender of your choice first. Typically you will need the following: Pay stubs from recent paychecks and W-2 forms for the last two years. Also proof of any other income you rely upon (in the form of canceled checks, copies of leases, certification of benefits, divorce decrees, or other written evidence). Many lenders also require copies of your entire federal tax return for 1 or more years. If you are self-employed be prepared to provide complete tax returns and financial statements for the last two years along with a profit-and-loss statement for the current year. Bank statements for at least the last two months. When you have a sales contract on the home of your choice, you will need to provide a copy to your lender. It must include all addenda, signed by all parties; the full names of the sellers and buyers as they will appear on the new deed; the amount of earnest money deposited; and who will be responsible for the closing costs, origination fees etc. The mailing address and description of the property must be complete. Your Realtor can provide this information to your lender for you. You'll need to provide contact information (real estate agent and/or seller of the property) for access to the property by the appraiser. For custom-built new construction you will need a complete set of plans and architectural specifications. |
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How Do "Points" Affect Mortgage CostPoints are loan fees which mortgage lenders may charge for originating a loan. Paying points up-front will help you to get a lower interest rate (which will save you money over the long term). One point equals one percent of the amount borrowed. For example, it will cost $1,000 for 1 point on a loan of $100,000. You'll pay a higher interest rate on a no-point loan, but will conserve your up-front cash reserve. It may be cheaper to take a no-point loan and pay the higher interest rate if you don't plan to stay in the home for more than a few years. With loans guaranteed by the Veterans Administration, loan points are always paid by the seller. Generally points paid by the buyer at closing are tax deductible as interest. For further information on tax benefits consult a tax advisor. |
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Can you still purchase a home after filing for bankruptcy? The simple answer is yes. Bankruptcies may be part of your credit report for up to 10 years and they DO significantly drop your credit rating. "A" is a good credit rating for a borrower who is a good credit risk. But the ratings go from "A" to "E" depending on your credit score. If you have filed bankruptcy in the last 1 to 10 years you can expect to be rated "C" and you can also expect to make a hefty 20 to 35 percent down payment plus pay one to three percentage points higher interest. Today, credit issues are carefully looked at and it can be much more difficult to get a mortgage. Having said that, there are still some programs that help borrowers who cannot obtain conventional mortgages due to credit issues or a high debt-to-income ratio. For Help in Illinois |
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How Can You Use Tax Deferred Savings To BUY "Tax Deferred" Investment Properties? This is very exciting. With the stock market losing so much money for investors, and the terrible loses on 401(k) money invested in those stocks which have been in the news recently, the future for stocks and earnings on your tax deferred savings looks bleak, doesn't it. THERE IS ANOTHER WAY. If you are frustrated with the insecurity of stocks in your savings investment plan, and would rather build your future by investing in Real Estate WITHOUT LOSING YOUR TAX DEFERRED BENEFITS, then you need to contact me for the details. Another method for tax free real estate investing is using the 1031 Exchange to defer your taxes -- it's something every investor should be aware of and using as an important investment strategy. Contact me for information on tax free real estate investment solutions. What is PMI and can it be avoided?
Piggyback financing consists of two loans. The first is for 80 percent of the purchase price. Next is a second "piggyback" loan for the balance of the purchase price minus any down payment. An 80-10-10 has a 10 percent down payment and a 10 percent piggyback loan; an 80-15-5 has a 5 percent down payment and a 15 percent piggyback loan; and an 80-20 has no down payment at all. While the piggyback loan usually has a higher interest rate than the primary mortgage for 80 percent of the price, for those with good credit this form of financing has often cost less than getting one mortgage for more than 80 percent of the price and then paying for mortgage insurance. Check with your lender to find out if they offer piggyback mortgages. Keeping the term of your mortgage when refinancing When refinancing, you don't have to settle for a new loan that's due to be paid off in another 15 or 30 years. You can ask the lender to amortize the payments so the new loan will paid off when the original loan would have been. Compared to higher rates on mortgages of a few years ago, at today's interest rates your payment may still be lower than it was before, and you will save each month on the interest while not starting all over again with a longer term.
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If you have
less than a 20 percent down payment you are required to pay
an additional amount each month for Private Mortgage
Insurance (PMI). An alternative could be a piggyback loan
which lets you avoid paying for this mortgage insurance. |
FREE CREDIT REPORTS The Fair Credit Report Act now requires that each of the top nationwide credit reporting bureaus (Equifax, Experian, and TransUnion) provide consumers with one free credit report annually. Check your credit reports from the only government approved site. |
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Contact Bill Marek by e-mail | ||||||
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Recipient of the Illinois Association of Realtors 2001 President's Achievement Award Let me show you what I can do for you as your "Personal Realtor" |
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Bill Marek, Personal Realtor®, Rockford, IL
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