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Determine what you can afford
Each buyer is unique - and we'll help you find out just what you can afford.
Your income and your debts will typically play the biggest roles in determining
your price range. It's simple to make an estimate, just run the numbers for
yourself using our Affordability Calculator.
Figure out your funding
A range of mortgage options are available, and we'll help you determine
which can work for you - some loans require little money down. You'll also need
to consider closing costs and the escrow account for taxes and insurance. But
don't get overwhelmed: it's a snap to figure out how much money you'll need
using the Affordability Calculator.
Less-than-perfect credit report?
Don't worry; there are options that are ideal for those who have a few
"dings" on their credit report. Work with your lender to develop an
individual mortgage program based on your unique credit worthiness.
Loan Programs
Finding the best loan program for your needs depends on a number of factors,
including:
How long you'll stay in the home; how much money you'll put down; how you'll
finance the closing costs.
For information on the loan programs and rates available just visit Loan
Programs.
Tax Benefits
You may be able to deduct the interest you pay on the mortgage loan and some
of the financing costs of the home, such as points. And your property taxes
could be deductible. You should consult your tax advisor for more information.
~ Financing Your Next Home ~
Determine What You Can Afford
Each buyer is unique - and we'll help you find out just what you can afford.
You already know that monthly income and financial obligations are most
important in determining your price range. It's simple to make an estimate:
just run the numbers for yourself using our Affordability Calculator.
Buying a Second Home
You'll need to identify sources for your down payment, since you're not
selling your current house and using the proceeds, and you'll need to expect a
larger monthly obligation for housing expenses. Work with your lender to create
a customized loan program with the best combination of rate, points, and
closing costs for your needs.
Less-than-perfect credit report?
Don't worry; there are options that are ideal for those who have a few
"dings" on their credit report. Work with your lender to develop an
individual mortgage program based on your unique credit worthiness.
New Home Appraisals
Some situations may qualify for a more streamlined loan process. Your credit
history will help determine if your loan application can be completed without
an appraisal.
Private Mortgage Insurance (PMI)
Loan programs for down payments of 20% or less require you to purchase
Private Mortgage Insurance (PMI).
Selling Your Current Home
You may qualify for a new loan without even selling your current home. It's
simple to run the numbers for yourself on our Affordability Calculator. You may
also want to discuss a bridge loan with your mortgage company.
New Construction
If you are working with a builder within a sub-division or development and
just making carpeting, lighting and appliance selections for a brand-new home,
you can probably obtain a standard mortgage loan. But if you're hiring
contractors, electricians, plumbers, and painters, you probably need a
construction loan, which provides funds to pay subcontractors as work
progresses. For more information on construction loans, contact your real
estate professional, your Mortgage Company, or chat live with a mortgage
specialist now!
When to Refinance
Each homeowner is unique - and we'll help you determine if it's the right
time for you to refinance. Effective refinancing typically means lowering your
current mortgage loan rate by at least one percent. You might also want to
consider changing the length of your loan or receiving cash from the equity in
your house. It's simple to see what will work for you, just run the numbers for
yourself using our Refinance Calculator.
Benefits of Refinancing
If you want to increase cash flow, refinancing to lower your monthly payment
could help. To get a good idea of what your new monthly payment would be, use
our Refinance Calculator. Refinancing could also allow you to shorten your loan
term if you qualify.
Using Home Equity
Many people borrow against the equity in their homes and use the cash to
make improvements. Up to 90 percent of the appraised value of your home can be
used to make home improvements. The equity you can use is based on the value of
the home and what you currently owe, subject to applicable state laws. You can
still refinance if you don't have much equity -- up to 90 percent loan-to-value
(LTV) if you want to refinance your house for a new rate and term. A
reappraisal of your property may be required.
Refinancing Costs
You will have closing costs associated with refinancing your loan, including
points and processing fees. You may have the option of rolling these costs into
the loan amount to reduce your cash out of pocket. To evaluate your options,
use our Refinance Calculator.
~ Loan Programs ~
Fixed-Rate Mortgages
A fixed-rate mortgage means the interest rate and principal payments remain
the same for the entire life of the loan. (Taxes, of course, may change.)
Advantages include consistent principal and interest payments make this loan
stable your rate won't change, so you don't need to worry about market
fluctuations. A good choice if you're likely to stay in this house for a long
time. Disadvantages include a possibly higher cost - these loans are usually
priced higher than an adjustable-rate mortgage. Keep in mind that, on average,
most people move or refinance within seven years. If rates in the current
market are high, you're likely to get a better price with an adjustable-rate
loan.
30 Year Fixed-Rate Mortgages offer consistent monthly payments for
the entire 30 years you have the mortgage. So if the market is good, you can
benefit from locking in a lower rate for the full term of the loan. The best
choice if you're looking for a long-term, stable loan - for instance, if you're
planning on staying in your house for some time.
20 Year Fixed-Rate Mortgages allow you to make a consistent monthly
payment throughout the 20 years you have the mortgage. The shorter term means
you pay the loan off more quickly, and therefore pay less interest. And you'll
build equity faster than you would with a 30 year loan. (But remember the
shorter term means higher payments, when compared to the 30 year fixed-rate
mortgage.)
15 Year Fixed-Rate Mortgages mean consistent monthly payments for all
15 years you have the mortgage. By building equity even more quickly than with
a 30 year or 20 year loan, and paying less interest, you'll save money in the
long run. It's an ideal option if you can handle the higher payments and if
you'd like to have the loan paid off in a shorter period of time - for
instance, if you plan to retire.
Adjustable-Rate Mortgages
An adjustable-rate mortgage (ARM) means that the interest rate changes over
the life of the loan - according to the terms specified in advance.
With ARMs:
The initial interest rate is usually lower than with a fixed-rate mortgage.
The monthly repayment would also be lower. The interest rate may be adjusted
(up or down) at predetermined times. The monthly payment will then increases or
decrease.
Most ARM programs do offer "rate cap" protection, which limits the
amount the rate can be increased, both each year and over the life of the loan.
All ARMs are amortized over 30 years.
Advantages include lower costs - ARMs are usually priced lower than
fixed-rate mortgages so you can increase your buying power and lower your
initial monthly payments. If interest rates go down, you'll enjoy lower
payments. Usually an ARM is the best choice for homeowners who plan to relocate
(for example, with their company or the military), or for those who are
purchasing their first home and plan to be in the property only for three to
five years. Remember that, on average, most people move or refinance within
seven years.
Disadvantages include the possibility of increasing monthly payments if
interest rates go up. Keep in mind that ARMs are best for homeowners who aren't
planning on staying with a property for a long period. If you're on a fixed
income, an ARM (especially a short-term ARM) may not be your best choice.
10/1 Adjustable-Rate Mortgages provide a fixed initial rate of the
loan for the first ten years of repayment. After 10 years, the rate adjusts
every year thereafter for the remaining life of the loan. The loan is amortized
over 30 years, so you'll enjoy the stability of a 30 year mortgage at a lower
price than a fixed-rate mortgage of the same term. But an ARM is likely not the
best choice if you're planning on owning the same property for more than 10
years.
7/1 Adjustable-Rate Mortgages offer an initial rate that is fixed for
the first seven years of repayment, then the rate adjusts every year thereafter
for the remaining life of the loan.
5/1 Adjustable-Rate Mortgages mean the initial rate remains fixed for
the first five years of repayment, and then adjusts every year thereafter.
Remember that your rate and monthly payments may go up after only five years,
so this choice is best if you're expecting to sell or refinance the property
within that period.
3/1 Adjustable-Rate Mortgages provide three years at the initial
fixed-rate, then the rate adjusts every year for the remaining life of the
loan. A good choice if you expect to move or refinance in a relatively short
period of time. But a much shorter fixed-rate period means your interest rate
(and therefore monthly payments) may begin to fluctuate after three years.
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