Kerry Struif's Blog
Posted by Kerry Struif
An Option ARM is an adjustable rate mortgage that gives borrowers options each month on how they want to make their payments.
The first option is to make the entire payment.
The second choice is to make an interest-only payment, which pays the interest that accrues during the month but pays nothing towards reducing the loan amount.
The third choice is to make what is the “minimum payment.” This payment is less than the interest only payment.
This option calculates the "minimum payment" based on the first month’s interest rate. Most of the time that rate is a very low “teaser” rate (around 1-2%.) However, as time goes on, anywhere from one month to five years into the loan, that rate is adjusted to a realistic interest rate.
Unfortunately, most borrowers (about 80% of them, based on Fitch Ratings) with an option ARM decide to pay the minimum payment each month - and that causes problems. If borrowers pay the minimum payment month after month they are getting more and more in the red, and not paying what is actually due on the loan. The interest that isn't getting paid is being added to the loan balance.
Once the loan balance grows to a certain point, the lender can demand that the borrower pay the full principal and interest, which the borrower isn't used to having to pay, on a loan that is now larger than it was initially. In this situation, the borrower ends up in a negative amortization situation, owing more than what originally was borrowed.
With the Option ARM, many borrowers get a false sense of security by making a minimum payment each month. Actually, their loan balance is growing and will have to be paid at some point and they're heading to an upside down position.
Make sure you understand what type of loan you're getting BEFORE signing the papers.
See this article on ways to prevent identity theft: Protect Your Identity
Posted by Kerry Struif
Closing Costs
Closing costs can make up around 2 – 8 percent of your loan value - nothing to sneeze at! They include such things as:
Taxes
Title insurance
Points
Lender fees
Financing costs
Items that must be prepaid or escrowed
And other settlement costs.
These costs must be paid at the time you close on your loan.
Your lender should give you a Good Faith Estimate (GFE) so that you can review these costs. If he or she doesn't provide you with one, ASK, and then thoroughly review it.
See the article The Smart Way to Choose a Mortgage, Be Smart , for important questions to ask yourself about closing costs and other aspects of your home loan.
Posted by Kerry Struif
Credit reports are automated and rely on a credit “scoring” system that analyzes about 100 variables to gauge the likelihood that the borrower will make on-time payments.
The information used is obtained from retailers, lenders, credit applications, etc., and the main criteria and their approximate percentage of importance are:
Payment History – 35%
Amounts Owed – 30%
Length of Credit history – 15%
New Credit (Warning of Too Much Debt) – 10%
Types of Credit – 10%
Credit scores usually range from 400 – 900, although a score of “N/A” is also possible, meaning that no score is available.
Posted by Kerry Struif
10 Ways to Save Mortgage Money
1 - Shop around - Get a Good Faith Estimate from three lenders and compare rates and terms. Note: Don't let them all pull your credit or you'll have too many "hits" on your credit report, which can reduce your credit score. Instead, get a copy of your credit report to show them your middle score (the mid score from the top three credit reporting agencies.) You can get a free copy of your credit reports from Experian, Equifax and TransUnion once a year at www.annualcreditreport.com.
2 - Get out of Private Mortgage Insurance (PMI) by putting 20 percent or more down, getting a special no-PMI-loan, or doing a combination loan such as a 90/5/5 or an 80/20 loan (where, for instance, you get 100% financing with one loan for 80 percent and the second loan at 20 percent.)
3 - If you do have PMI, keep a close watch on the value of your home versus the balance of the loan. Once you have 20 percent equity in the home, request in writing that your lender remove your PMI.
4 - Negotiate - Many fees are negotiable. Go over each one with your lender and try to get them to remove or reduce the fees. While you're at it, try to get a reduced interest rate. Many times a mortgage broker can find you a better deal with a little checking around.
5 - If you're a Veteran, use your benefits and get a VA loan. These loans usually have excellent interest rates and NO monthly PMI. Yes, you can have more than one VA loan - just not more than one at a time.
6 - Get free down payment money if you need it from an organization that helps fund homebuyer's loans. Follow this link for a list: FREE MONEY
7 - Keep your credit score in tip-top condition. The better your credit, the better deal and interest rate you can negotiate.
8 - Assume a mortgage that has a lower interest rate. Many loans are assumable. If you find a home you love, have the seller check with his or her lender to find out if you would be able to assume their loan.
9 - Take out a 15- or 20-year loan instead of a 30-year (or longer.) You'll save thousands in the long run if you stay in the home.
10 - Pay your fees up front if you are able to. This will keep down the amount you'll finance over the long term, reducing your payment and the amount of interest you'll pay over time.
There are more ways to save coming up, so check back often! Click here for the latest in mortgage and loan articles: MORTGAGES AND LOANS - LATEST ARTICLES
Posted by Kerry Struif
If you sell your house in the first two years, there are some things you should consider:
Did you get a "forgivable" loan or anything similar for help with your down payment? If so, some of that may be required for repayment on a pro-rated basis.
Do you have a pre-payment penalty on your loan? If so, you might have to pay the penalty out of your proceeds (if there is enough money.) Read your original loan papers and/or call your mortgage lender to find out.
One bad thing about selling before two years is that you might not have had time to gain a lot of equity. If you're selling through a Realtor, make sure they give you a breakdown of all fees, including commissions, and show you what you'll net after all is said and done. You don't want to end up owing! I've seen sellers have to bring money to closing.
Another negative is that you might not be able to use the $250,000 capital gains exclusion for selling your primary residence if you aren't in the home for two years or more. (Check with your tax accountant for details on that issue, because I'm not a tax advisor.)
Good luck!
Click here for the latest in mortgage and loan articles: MORTGAGE AND LOANS - LATEST ARTICLES
Posted by Kerry Struif
1) ESTABLISH YOUR BUDGET
Take your net (after tax) income and deduct all of your fixed expenses, and savings or investment deposits. Then deduct your food, gas, entertainment and other flexible expenditures. See how much is left over to work with.
As a general rule, a maximum of 20 percent of your income should go towards your auto payment.
Don't forget you'll have other expenses with your car that you'll need to add into the equation: license, registration and title; insurance; monthly maintenance, etc.
2) DETERMINE YOUR FINANCING OPTIONS. Consider:
a. Banks
b. Credit unions
c. Car lot and car company financing.
Note: watch the "We Finance Here" lots on their finance charges and interest rates!
It's a good idea to get on the Internet and see what incentives the auto companies have for certain buyers and vehicles. There are often rebates or specials available.
d. Family/friends. Will someone you know loan you the money?
e. Credit card(s). These often have a higher interest rate, but are easier to qualify for
f. Home equity loan or mortgage refinance. (See our other articles about morgage loans.)
3) DO YOUR RESEARCH. Ask yourself these questions:
What type of vehicle is best?
What kind of gas mileage does the car get?
How many passengers will it hold?
How will you use the car or truck?
What are the safety ratings of this vehicle?
Has this car been in an accident or flood? You can go to CarFax.com for vehicle history reports on any vehicle.
4) VISIT CAR DEALERS and shop, shop, shop.
Compare what they have to offer.
See how the staff members treat you.
Test drive as many cars as you wish.
Ultimately you'll choose your car, negotiate for the best price and terms and sign the papers.
Finally get the keys and drive home in your new vehicle!
Click here for the latest in mortgage and loan articles: MORTGAGE AND LOANS - LATEST ARTICLES
Posted by Kerry Struif
Some lenders prey on home loan borrowers. Be aware of their tactics so you can avoid them.
1) Predatory Lenders charge extraordinarily high loan origination fees, or "points." If they're trying to charge you more than two points for a sub-prime mortgage or more than one point for a conventional mortgage, get a second opinion from another (reputable) lender.
2) Predatory Lenders try to force you into insurance or other add-on products in order to secure the loan.
3) Predatory Lenders might ask you to make a false statement on your loan documents, such as inflating your actual income or stating you have more cash reserves than you actually do.
4) Predatory Lenders might try to convince you to refinance again and again when it isn't in your best interest. Have a good reason to refinance, and if you have an uneasy feeling, ask your friends and relatives for referrals to lenders you can trust.
5) Predatory Lenders sometimes attempt to lend you more money than you can afford. Don't sign up for a loan if you feel you won't be able to afford it. Check around for alternatives.
6) Predatory Lenders often charge minorities more than they'd charge someone else.
7) Predatory Lenders might help sell properties for more than they're worth using bogus appraisals.
8) Predatory Lenders sometimes have you sign paperwork that is blank and not filled in.
9) Predatory Lenders will often tell you that they're your only hope and that without them you wouldn't be able to get a home loan or refinance.
An educated borrower is a happy borrower!
If you have any questions or concerns about predatory lending, please email me at mortgagesloans@suite101.com.
Read about What NOT To Do When Applying For A Home Loan! Click here: What NOT To Do
Click here for the latest in mortgage and loan articles: MORTGAGE AND LOANS - LATEST ARTICLES
Posted by Kerry Struif
A home equity loan is for a fixed amount, and you get the money at one time.
A home equity line of credit, on the other hand, will have a maximum amount, but you can take out cash when you need it. So if you have $20,000 in your home equity line of credit and want to take out $2000 to build a deck this month, you can. If next month you decide to pay off $6000 in credit card debt, you can then take out another $6,000. If you don't take anything out, you often won't make any payments at all, and if you do, you only make payments on the amount you've borrowed. This type of credit is typically revolving, which means you can borrow, and then pay back, and then borrow again when you need to.
The interest paid on either type of loan is normally tax deductible - but make sure you see your tax advisor for details.
Both types of loans use the equity in your home for things like remodeling, college costs, paying off high-interest debt, etc.
Make sure you visit the NEWEST articles section of Mortgages and Loans here at Suite101.com for interesting articles and discussions about the new 50-year mortgage. MORTGAGE ARTICLES
Posted by Kerry Struif
There's an innovative way to save on your monthly housing payment, the new longer-term mortgages. Purchasers and homeowners who refinance can now select a mortgage term up to 50 years! To find out more, click here
Posted by Kerry Struif
Often, simple steps can lead to an increase in the value of your home. Adding better lighting, freshening the paint, and getting rid of excess junk that has accumulated are some of the low-cost (or free) ways to make your home more valuable and appealing.
Try some of these ideas:
Freshen up your yard and improve its curb appeal by keeping your yard well maintained. Get rid of dead or overgrown trees or plants and in their place plant colorful annuals for summer and evergreen plants for winter color and texture. Keep the grass cut and the lawn weed-free.
Do a thorough cleaning. Use a "Magic Eraser" to remove fingerprints from around doors and light switches. Clean all of the windows in your home and enjoy the extra light that shines through. Make your home smell and look newer and fresh, with only a few cleaning products and a little elbow grease.
Replace or paint your mailbox; it's one of the first things someone sees when they come to your house.
Create a focal point in your living room using a framed piece of art or mirror that you picked up at a garage sale, and add plants and photos you have stored away.
Replace any broken fixtures, screens or windows. Nothing makes a home looked more run down than a boarded up window. It doesn't cost much. Measure, and then call your local hardware or glass store for an estimate.
Let the light in! Open up the window shades, blinds, curtains and drapes and let more light into your home. The natural light does wonders for brightening your house, and your spirits.
Take up any smelly, dirty old carpet and revert back to the wooden floors hidden underneath (if you're so fortunate.) All it takes is a little time and effort, and you'll have an easy-to-clean surface of beautiful, natural materials. Wood floors are all the rage!
Re-grout your shower or tub for a nearly-new look.
Add a dimmer switch to some of your main light sources for dramatic ways to change the look of a room.
Refinish or replace the front door for a beautiful new welcome!
Save energy. Statistics show that energy efficiency adds value to a home. So add some insulation, re-caulk your windows, and keep your thermostat set to a temperature that saves money yet is reasonable for you and your family.
Paint it up! Repainting in neutural colors (beige, off-white, light tan, taupe, etc.) really makes a house feel, smell and look clean and fresh. Paint your woodwork white against off-white or beige walls and watch it pop. This is one of the most effective ways you can spiff up your home and add value, and it's cost effective as well.
Make sure you check out my series of articles about mortgages and loans at http://mortgagesloans.suite101.com.
Or email me at mortgagesloans@suite101.com if you'd like further information or would like to suggest a topic for an upcoming article. Thanks!
Posted by Kerry Struif
VA mortgages require a little more paperwork and a little longer processing time, but have excellent benefits for the borrower:
NO Down Payment
NO monthly mortgage insurance
You can use your VA benefits more than once
VA loans are often assumable
VA loans limit fees lenders can charge
If you have bad credit, you'll probably get a lower interest rate with a VA loan than with a conventional mortgage.
Visit www.VA.gov for specific information, or talk with your loan officer today!
Check our LATEST articles for helpful, money-saving information on buying a home and getting your mortgage! Click here: NEWEST ARTICLES
Posted by Kerry Struif
Visit, and bookmark this site for helpful and money saving information about home buying and refinancing:
Posted by Kerry Struif
Use your tax refund
Reduce high interest debt - Move your balance to a zero- or low-interest credit card or refinance your auto loan to a lower interest rate (making your monthly payments lower and freeing up additional income)
Get a second job and save your part-time earnings
Skip your vacation this year
Stop buying coffee in the morning and save the money you'd normally spend - or stop smoking and really see your savings accumulate
Start a special savings account and put 10 percent or more into it each payday
Sell some investments
Take money out of your 401(k)
Ask the seller - In some circumstances it is acceptable for the seller to carry a second mortgage or work with you in other ways, like paying your closing costs, to help you get into the home of your dreams. Make sure you clear it with your loan officer!
Get a gift from family - Often family members are more than willing to give you help with your down payment
Email me at mortgagesloans@suite101.com if you have creative ideas about how to save for a down payment!
Check our LATEST articles for helpful, money-saving information on buying a home and getting your mortgage! Click here: LATEST ARTICLES
Posted by Kerry Struif
If you're interested in moving to the country, check out this link: USDA Rural Housing
for information on a 30-year loan with zero down payment.
The USDA Rural Development program offers programs for homeownership. The homes can be constructed, rehabbed, or purchased, and you can get funds to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities.
Bookmark our site for information and insider secrets about mortgages and loans. Hit CTRL D on your keyboard now! Or visit
Mortgages and Loans now and view our series of articles that can save you time, aggravation and money when you're buying or refinancing your home!
Check our LATEST articles for helpful, money-saving information on buying a home and getting your mortgage! Click here: LATEST ARTICLES
Posted by Kerry Struif
Buying, instead of renting, has financial benefits.
Some of the positives include:
1) You can write the interest off on your taxes. This offsets the price you're paying to live in your home.
2) Your payments will never go up if you choose a fixed rate loan (although your taxes and insurance probably will.)
3) You'll build equity. Your home is probably your largest, if not your largest, asset. It can be worth more than your stocks, checking, savings or retirement accounts!
Buying a home can ultimately save you money and add to your assets. Visit the mortgages/loans pages of Suite101 often for insider information on home loans and refinancing. Hit CTRL D to bookmark now.
Check our LATEST articles for helpful, money-saving information on buying a home and getting your mortgage! Click here: LATEST ARTICLES
Posted by Kerry Struif
Over the last few years your home's value has probably risen substantially. You might be surprised to learn just how much equity you have now. To find out, you can hire an appraiser or call an insurance agent and ask for a free Comparitive Market Analysis (CMA.)
If you want to pay off high-interest debt, you might consider a home equity loan or line of credit, or look into refinancing your loan to lower your monthly payment, pay off credit cards, or make home improvements.
Visit http://mortgagesloans.suite101.com/ for a series of articles about home loans and refinances to learn more. Bookmark our site to learn insider secrets of the home loan business.
Check our LATEST articles for helpful, money-saving information on buying a home and getting your mortgage! Click here: LATEST ARTICLES
Posted by Kerry Struif
Know your rights! The Equal Credit Opportunity Act protects you against discrimination on the basis of: race, color, religion, sex, national origin, marital status, age, and more. You cannot be charged more for a loan, given unfavorable terms of a loan, or denined a loan because of any of the things in this list.
Bookmark and come back often for more information about how to be SMART in your home purchase or refinance transactions. Hit CTL D now to bookmark this page, and visit the Mortgages/Loans sections of Suite101.com to learn more.
Check our LATEST articles for helpful, money-saving information on buying a home and getting your mortgage! Click here: LATEST ARTICLES
Posted by Kerry Struif
Did you know that you are entitled to a free credit report each year? To get your free report, you can log on to www.annualcreditreport.com.
There you will find out how to get your report from Equifax, Experian and TransUnion.
Note: If you're already gotten your free report for the year and want to pay for another, you can contact each credit reporting agency individually at: Equifax -www.equifax.com; Experian - www.experian.com; TransUnion - www.transunion.com.
To order your free annual report via the internet, visit www.annualcreditreport.com.
If you don't have access to the internet, you can write for your free credit report:
Annual Credit Report Request Service
PO Box 105283
Atlanta, GA 30348-5283
Or you can also order your report by phone:
Toll free: 1-877-322-8228
Hearing impaired consumers can access their TDD service at 1-877-730-4104.
Be sure to come back often to check our newest topics in loans and mortgages. Hit CTL D on your keyboard to bookmark this page!
Check our LATEST articles for helpful, money-saving information on buying a home and getting your mortgage! Click here: LATEST ARTICLES
Posted by Kerry Struif
Be sure to visit often! Topics We'll Included in the Mortgage and Loans Section of Suite 101:
The Mortgage Process, Step-By-Step
The Application Process and Required Paperwork
Steps to Buying a Home
Steps to Refinancing
How Much House Can You Afford?
The Down Payment
Your Credit and How it Affects Your Rate and Terms
How to Improve Your Credit
What Happens After a Bankruptcy
Understanding Fair Lending and Your Rights
Choosing Your Loan Officer, Bank, or Broker
Types of Mortgage Loans, Including Government Loans (FHA, VA,) Conforming, Non-Conforming, Conventional, Fixed, Adjustable, etc.
Understanding Interest Rates
The New 50-Year Mortgage
No Money Down and Low Money Down Solutions
Creative Financing
Purchasing Investment Property
Reverse Mortgages
...And Much More!
Check our LATEST articles for helpful, money-saving information on buying a home and getting your mortgage! Click here: LATEST ARTICLES