First and foremost, you must have a mortgage consultant in your corner that is willing to take the time to know what your long-term goals are. Communication is the key factor here.

Curious prospective home buyers sometimes turn to Internet-based services just to see what current interest rates are. But a faceless web site will not take the prospect’s future financial planning into consideration or guide the potential borrower through the many nuances of the loan process. When shopping for a home loan, be wary of web-based services that offer programs to reel prospects in with attractive rates that are based upon unrealistic time frames.

If a lender is offering a terrific rate based on a 10-day lock-in period, it is unlikely that the potential home owner would actually be able to find their dream home, get through the negotiation process and win approval from a lender within such a short period of time. This is called short-pricing, and when it comes time to close the transaction, the rate that was originally offered is simply no longer available. As a result, the unfortunate prospect is bulldozed into a loan program with a higher interest rate.

It is highly unlikely that a qualified loan originator whose business is based upon referrals will use unscrupulous tactics such as this to get new customers in the door!

Once you have found a mortgage consultant that you feel comfortable working with, lay your goals out on the table because it will have a tremendous impact on choosing a loan program that meets your specific needs. One of the most important factors to consider is how long you wish to borrow the money for. For example, if you know you will only be in the home for five years, it wouldn’t make sense to opt for a 30-year loan program or pay points up front to secure a lower interest rate. You would not be in the home long enough to benefit from such action.

Your mortgage consultant should be able to narrow down a selection of programs based on the information that you have provided, and present you with an easy-to-read spreadsheet that clearly defines viable options for your interest rate and amortization schedule, monthly payment and any potential savings you may realize by paying points up front.

Moreover, a reputable loan originator will not hesitate to share this information with your tax consultant or financial planner so they may offer additional feedback on your behalf.

Home ownership imparts a rewarding vehicle for building wealth and a strong financial future. The mortgage consultant that you choose should be there not only when your loan closes, but should also provide you with ongoing service to assist you in managing that debt over time.

Michael Wolff

Yes, there are certain responsibilities associated with owning a home. Landlords will often argue the benefits of renting, and for obvious reason. If you are renting, you’re helping them make their mortgage payment.

The numbers are staggering if you look at it this way. If you are paying $1,000 per month for an apartment, and you know your rent will increase 5% every year, then over the next five years you will pay your landlord $66,309. If you are currently renting a house, you may be paying much more than that each month. Either way, you gain no equity by shelling out this monthly housing expense and you certainly won’t benefit when the property value goes up!

However, if you were to purchase your own home or condominium, you would be well on your way toward building equity within that same five-year period. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never go up. In fact, you would have the option of refinancing to a lower interest rate at some point in the future should interest rates drop, and this would cause your monthly mortgage commitment to go down.

In addition to building equity, there are tax advantages that come into play with home ownership. Depending on your tax bracket, owning a home is often less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and your mortgage consultant should help you evaluate the tax advantages of various loan scenarios, and share this information with your tax consultant to glean feedback on your behalf.

To find the loan program that is right for you, your mortgage consultant will need to evaluate your monthly household income, current assets and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the report of your credit score, will determine how much house you can afford and what interest rate you will pay for financing. It is also important to let your mortgage consultant know what your future goals are, because this will help narrow down which loan option is the best fit for your long-term needs.

There are many different types of loan programs available, including “low” and “no” down payment mortgage programs. These types of programs require the borrower to provide less than 3 percent of the loan amount as down payment. FHA lenders rule that the mortgage payment, including principal, interest, taxes and insurance (PITI) should not exceed 31 percent of your gross income, and the PITI plus other long-term debt (car payments, etc.) should not exceed 43 percent of your gross income.

Housing is an expense that takes a big bite out of the monthly budget. If you are a renter and feel that “home” is more than just someplace to hang your hat, think about the advantages of purchasing real estate. It may be time to take the step into building your personal net worth as a home owner.

A Qualified Mortgage Consultant Can Outline Your Options.

If you want more information, please do not hesitate to drop me a line!

Michael Wolff

michael@WolffFinancial.com

818-776-9272

888-989-6533

Everyday there are people just like you that have their mortgage loan turned down because of any one of these mistakes. By acquainting yourself with 10 Deadly Mortgage Mistakes you can save thousands on your mortgage.

1. Making Large Purchases Prior to Your Mortgage Application: On occasion people think that it is in their best interest to get major purchases out of the way prior to making a mortgage application. A key component to determining how much of a home you qualify for is outstanding debt. It is far better to wait until after purchasing your home before considering other major purchases.

2. Choosing a Lender Just Because They Offer The Lowest Rate: Your mortgage rate is an important factor with your loan. Remember that it is only one of several factors. You also need to keep in mind the APR and origination fees. Perhaps the most important factor is accessibility. Is the lender located locally? Can you go sit down and go over the details of your financing. If not, you should think long and hard about using that lender.

3. Not Getting Pre-Approved for a Loan: When you become pre-approved you become a cash buyer and have more negotiating power with the seller. Home buyers can save thousands or dollars in negotiating the home purchase by being pre-approved. Any good Realtor will require the pre-approval prior to showing any homes, because they don’t want to waste your time or theirs.

4. Not Planning for Closing Costs: On the day of your closing you will be expected to write a check to cover closing costs. Closing costs are a number of the expenses incurred when purchasing a home. Those typically include attorneys’ fees, taxes, title insurance, prepaid homeowners insurance, points and other lenders’ fees. These closing costs can amount to between 2% and 7% of the selling price of the home. Your lender should provide you with a good faith estimate early in the loan process to estimate these costs.

5. Not Providing Documents To Your Mortgage Company Timely: When your mortgage broker asks you for additional paperwork, get on it! Do not complain. They are trying to get you approved. If mortgage brokers don’t get the documentation timely, it can result in locks expiring and higher rates. Worst of all, it could mean a delayed or blown closing date.

6. Using An Interest Only Or Payment Option Adjustable Rate Loan: If you are using these types of loans to qualify for a more expensive home. A home that you could not normally afford, you may be going down the wrong path. There are some circumstances where these loans are useful, but care should be taken in this housing market with slower appreciation and falling prices in some markets. You could end up with a mortgage value higher than the value of the home.

7. Co-signing On Someone Else’s Loan: You could become a great friend or even a hero to someone by doing this. Before you do, ask yourself. Are you willing to assume that liability? Are you willing to forego getting your own home to co-sign? Those could be the ramifications.

8. Making Late Payments: Late payments (especially within the last year) make if very difficult to qualify you for the best terms and rates. It may even keep you from qualifying at all. It might seem unnecessary to say, but always pay on time.

9. Hiding Things From Your Mortgage Broker: Even though it could be embarrassing to discuss previous financial difficulties. Remember that your mortgage broker is there to help. Your mortgage broker can only help you with those things of which he is aware.

10. Over Using Credit Cards: Yes they are convenient, but if the balances are not kept low or paid off it may make getting the best rates and terms on your loan more difficult. Do not take on new debt without first discussing it with your mortgage broker.