your prescription to mortgage news

Get your FHA Loan Today

Mortgage Doctor — Fri, 13 Jun 2008 09:09:23 GMT

Many homeowners are holding out hopes that rates will continue to drop. However with the recent increase in Gas prices as well as household items, Inflation is at an all time high for the month of May. Because of this rates for mortgages have been on a steady climb. Many economists are predicting 7% for 30 year fixed rates by the end of the year.

Also on the horizon are changes coming to the FHA. FHA used to offer one rate for all borrowers regardless of risk. Beginning July 14th the FHA will introduce for the first time credit risk base pricing. Currently Fannie Mae and Freddie Mac were the only GSE's to have risked based pricing. This will increase interest rates and costs for those looking to refinance. So if you are looking to cash out for the summer, update the house with home improvements or refinance out of your adjustable rate, do it before July 14th and save yourself some additional money. Also keep in mind that the increase in mortgage loan limits will expire at the end of the year.

Higher Loan limts for FHA

Mortgage Doctor — Tue, 25 Mar 2008 10:38:13 GMT

Finally relief is near for those with Jumbo mortgages. The FHA administration have now updated their mortgage limits per county see attached link for your county https://entp.hud.gov/idapp/html/hicostlook.cfm, loan limits raised anywhere from a few thousand dollars to several hundred thousand. Depending on your particular situation you find yourself with your mortgage amount you may find that your rate might be higher than what you see published. I will explain.

Prior to the recent changes in the loan limits anyone that had a mortgage balance of $417,000 or lower was considered a conforming loan amount; anything above $417,000 was a jumbo mortgage. With the increase loan limits most banks have the ability in some counties to lend up to $729,750. However all lenders are being tight as to actually lending to the higher loan limits. Many banks have yet to offer the higher limit and others are increasing the interest rates on those loans higher than 417,000. So in essence while it is a good thing to see the higher loan limits it will and you will be able to refinance be aware that the interest rate for FHA will more than likely be anywhere from a .25% to .375% higher than those with loan amounts less than $417,000.

The good news is that these new rates are much less than a typical jumbo interest rate and should provide necessary relief for homeowners with jumbo ARM mortgages.

Should you have a question on limits and what more information you can contact me at mpaul@directmortgageloans.com or visit www.directmortgageloans.com and visit the FHA page.

Fed Drops Interest Rates what about Jumbo Loans

Mortgage Doctor — Mon, 04 Feb 2008 23:21:40 GMT

In the past two weeks the Federal Reserve Board voted to reduce interest rates down. So why are 30 year mortgage interest rates not falling and why can't I get a loan for over $417,000 It is simple. Banks still do not want to lend their money because the only place they can sell their loans to currently are the GSE's- FHA, Fannie Mae and Freddie Mac which loan limits are $417,000 or lower.

The fed is lowering interest rates to try and help consumers and for the most part I see more loans that make sense for the borrowers in that they can save money and lock in at a fixed rate The problem with the credit crisis over the last 12 months that lowering interest rates can't cure is the willinginess to ease underwriting guidelines to help those consumers that truely need assistance. For the most part Homeowners with marginal credit are still struggling to get qualified as well as those with balances on their mortgage over $417,000.

So what do you do.... Over the next few weeks Congress will be packaging the stimulus package that will increase loan limits for FHA, Fannie Mae and Freddie Mac, once this passes I would expect applications for mortgages to rise and banks to loosen some requirements as now they will no longer have to hold the paper on the loans and will have someone to sell them to.

Talks of increasing the loan limit to 417,000 and above for FHA will do wonders for those in Option Arms or Neg Am Loans. Many of the homeowners in these particular loans are upside down on the loans. FHA will allow for you the homowner to secure a 2nd mortgage over equity and still take advantage of low interest rates.

If you are in the market for a home loan and owe more than $417,000 hope is around the corner hang tight and watch for this bill to pass. Once it does you might be able to get a loan again.

Feds reduce the Prime Rate

Mortgage Doctor — Mon, 04 Feb 2008 23:22:07 GMT

With the Fed announcing a reduction in the rates again as a borrower now is the time to get out of the adjustable rate mortgage you have and into a Fannie Mae or FHA fixed rate loan.

Look for rates to creep down over the next week so if you plan on locking in a loan I would wait to see how the markets play out over this week to see where the average 30 year fixed rates end up.

I have started my own mortgage company with the help of 3 very excellent colleges so look for many more updates to this blog as we begin to educate you and direct you the right mortgage. you can look us up at www.directmortgageloans.com

FHA vs. other loans

Mortgage Doctor — Wed, 19 Sep 2007 21:56:37 GMT

Which loan is right for you how do you know whether FHA or conventional Fannie or Freddie is the best for you. Where here is a quick guide to help you make your decision.

FHA max loan amount will depend on your area and currently in a few areas the max they will lend is $362,000 however should Congress and the current administration pass legislation FHA might be able to lend up to two times that loan limit.

FHA will carry mortgage insurance on all transaction except for 15 year loans where your loan amount is less than 89.99% of your homes value.

FHA closing costs are about the same as conventional financing the only difference is you end up paying up front mortgage insurance on FHA equal to 1.5% of the total loan amount.

FHA will allow you to borrower depending on your credit profile up to 95% of your homes value for cash out. Conventional Fannie Mae and Freddie Mac will cap you at 90%. Other companies that portfolio their loans can go up to 100%.

FHA appraisals are not as difficult as they used to be so chances are same rules apply for all loan types.

If your total loan amount is less than 80% and you qualify for a loan other than FHA that sells to Fannie Mae or Freddie Mac take this loan as you will not have to pay mortgage insurance.

Rates really are not any different for FHA vs other conventional financing.

For a more detailed list email me at mpaul@directmortgageloans.com

Good luck.

Going to Refinance what should you expect now

Mortgage Doctor — Wed, 15 Aug 2007 21:15:10 GMT

If you have applied in the last week for a refinance there are probably a few things you should know from a consumers perspective.

1. Act Fast - Guidelines and rates are changing faster than anything in our industry. If you like a loan lock it in that night and don't pay a rate lock fee or application fee to lock in. Ask for confirmation from the loan officer that you are locked in... (keep in mind this does not mean that your rate is set it is contingent of full approval but at least you are protected should the program change)

2. Once you are locked in get your documentation and appraisal done as fast as possible. Again lenders are requiring that loans be in underwriting to be protected from product or pricing changes. If you drag your feet on the loan and terms change right now it is probably not your loan officers fault.

3. If you want to shop have the loan officer you are working with quote you up to 3 options and maybe look one other shop. Right now most experienced loan officers can get back to you within a few hours if your credit situation is not so stellar if your credit score is 660 or higher you should here back from us within 30 minutes.

4. Second mortgages- are disappearing and getting harder to qualify for.

5. Stated Income loans- requiring with most companies a score in the 600 there are a handful still doing loans under 600 but it is becoming a marked line.

6. MTA or Option Arms- Finally we are seeing this product disappear. This was a terrible product for most borrowers. IF you have high income and are investor and know how to work this loan than you still have a few options left.

Still this market has a few bright spots in it...

If you can save a few months of mortgage payments in the bank it will probably improve your chances at getting approved.

The market is about done with the craziness, my thoughts are you will see a few more lenders go belly up before it is all over with.

Subprime melt down affects other prime borrowers

Mortgage Doctor — Wed, 04 Apr 2007 21:22:00 GMT

That was the headline I read today in one newspaper and on Yahoo Finance section. How scary for you the public to read something like that and not know how to interpret the information so you can act.

Well lets start by saying that yes the Subprime market will affect everyone else however those that have mortgage loans below 80% of their homes value will not be affected all that much. Also those borrowers that have FICO scores (credit scores) above 660 will not be affected.

If you are in the market for a mortgage you have probably heard a few phrases recently. You must take this loan otherwise the lender will no longer offer that program as of .... date or it might have went like this...

We had your loan in underwriting and because of the recent changes we can no longer offer product A but we have found a home with product b.

Things you should ask to determine if it is true that this has happened with your mortgage application.

1. What is my credit score - If below 600 FICO and you are going above 85% there is a good chance your loan officer is telling the truth.
2. What loan to value are we qualified for- see answer to question 1. Higher LTV loans are being eliminated from the market place. We just had 2 over equity (125%) lenders just say to us the other day that they no longer will guarantee a rate until you are approved...
3. Can I see a copy of my denial letter. By law Mortgage companies have to deny your mortgage loan and send you a copy as to why you are no longer qualified to receive the mortgage loan that you applied for. Ask them to fax you a copy as proof before you sign on the dotted line on a new deal. However if the company is eliminating your program and you must close by x period, see if they can forward you any information that would show you to act now.

Good luck in shopping for a mortgage and don't hesitate to ask some questions.. Remember it is your home.

Second Mortgages better off at you hometown bank

Mortgage Doctor — Sun, 25 Mar 2007 20:22:00 GMT

The next product to see backlash from the fallout of the mortgage industry is the familiar second mortgage loan. Typically many homeowners would get a second mortgage on a high loan to value loan where they wanted to avoid PMI and or were refinancing to pay off debts. Because these loans were typically adjustable or at a higher interest rate than a typical first mortgage. Second mortgage loans have carried a higher delinquency than first mortgage loans.

Currently if you are in the market for a HELOC or fixed rate second mortgage you have some options however limited they may be. For the most part if your credit score is not 680 or higher you are probably going to get a loan. You might find one or 4 companies left that are being competitive under a 680 credit score however I would say your time is limited in getting these loans.

Since the middle of the 1st quarter we have seen many lenders trim back that product line to the brink of extinction. I would venture to say that many lenders will move to a more traditional one loan program avoid a second lien on your home.

How does this affect homeowners- Well you still have your local banks equity line that you can count on for a quick cash influx if you are in the market for a second mortgage, the other option is that you will find banks forcing you to either refi your existing first mortgage or stand pat with your current loan.

If you are in the market for a second mortgage for either consolidating debt or taking some cash out you might look down to your corner bank first before you consider a mortgage broker. As I stated earlier I am in this business to do loans but at the same time I want to be smart about it for the consumer. If you currently bank somewhere they will typically waive the closing costs as long as you keep their loan for 3 years and you typically pay little or no costs. I have had 2 second mortgages and both I got from my local bank and I am in the business.

Subprime goes BUST?

Mortgage Doctor — Sun, 11 Mar 2007 21:51:00 GMT

It has been a while since I posted last. Too much chaos right now in the industry. For those undecided what to do at this point if you are shopping for a loan. I looked at a magazine article the other day and realized 5 of the top 10 Subprime loan companies have either 1. Shut down, 2. Possible Bankruptcy 3. Got rid of top management due to loan issues or plain are up for sale. Just last week a top company that we work with shut off access to programs for borrowers with less than 600 credit scores.

The market for mortgages is still very good. Meaning if you have a good credit, assets in the bank and low loan to value you can get some pretty good deals out there. However if you have a credit below 600 and must refinance due to cash needs my advice get a longer term than 2 years just in case. Also make your broker get a secondary loan ready and locked in just in case your loan becomes no longer available.

For the customers and borrowers out there reading this, it isn't doomsday however you need to be aware that these issues exist. What the US economy is facing right now with the way the mortgage industry is going, I would expect the following items to occur over the next 3 to 6 months.

1. Foreclosures and Bankruptcy filings spike as subprime lenders trim back there products forcing those with adjustable rate mortgages into a financial pinch as those rates increase.

2. Recession towards the start of summer to catch up to other industries. Here me out on this one.
People will not be able to free up cash flow by refinancing thus eliminating their buying power. Defaults will increase on those items that seem to help spur the economy.

3. Feds will have to reduce rates come Aug/September to curb off fears of a full blown recession however they will react a little too late forcing multiple rate reductions before years end.

Right now if you are shopping for a loan get your broker/loan officer to secure two loans with different lenders for you and make sure they are giving you a longer fixed period than 2 years. Focus on a 3 or 5 year fixed rate if you have to have one.

If you are in an adjustable rate mortgage currently and you are set to adjust within the next 6 months. Refi into a fixed rate loan now. Even though these are my thoughts about what might happen I am only giving you my opinion, when it comes to your finances it is always better to be safe than to risk a market where your payment keeps increasing and you can't refi because no one can qualify you.

Rates are low

Mortgage Doctor — Fri, 08 Dec 2006 00:22:00 GMT

So what are we to do. Here it is end of year tax time will be upon us sooner rather than later, Christmas bills will start coming in during the next 6 weeks. Where will I get the money for all of this.

If you are asking these questions and have a rate that is 6.875% or higher. You might consider refinancing now. Rates are at year lows currently and continue to spin downward. Now don't get too ahead and think we will see rates as low as we did during the refi boom. I will say that you will continue to see rates anywhere from 5.5% to 6.5% depending on your program and what you want to accomplish.

Market data suggests that rates will stay strong through the first of the year. So don't shop too long you just might shop outside of a rate thinking we will see the low 5% rates that we say in the beginning of 2004. Lock and relax. Then let the lender work for you.

welcome back

Mortgage Doctor — Thu, 23 Nov 2006 13:59:00 GMT

Welcome back lower rates!! As we finish out 2006 rates are at a 3 year low. Every day you see rates back in the high 5% range and wonder what is going on. IF you read a lot of the journals and magazines, there is talk of a mini refi boom. What is causing the boom is lower rates and homeowners who want out of adjustable rate mortgages.

There is even some speculation that the federal reserve board to lower interest rates beginning in 2007. If this were to happen it most certainly would be to avoid a larger looming crisis in the Real Estate market. If the Feds lowered the prime rate, some speculate that it would help jump start the home buyers and control some of the bubble speculation.

So as we end the new year. Now might the right time to look at starting fresh for 2007 by either refinancing or shopping for that home you have been looking for.

Credit card payments getting you in a pinch

Mortgage Doctor — Thu, 12 Oct 2006 07:41:00 GMT

So many clients I speak with everyday say well I have 0% interest on this credit card so I am fine. Then what happens is when this runs out they go get another credit card and play roulette with them. So many folks believe in the fact that their rate is fixed on the credit cards for life or at least long enough for them to pay them back.

The real issue isn't the fact that the credit card companies can and will change rates depending on what they need to do, it is the fact that clients of the credit card companies believe that they can pay them off. Statistics show that if you have a balance more than 12 months on a card the likelihood that you will pay it off in another 12 months is slim. In fact most cards if you are paying the minimum can't pay off in 10 years.

Each time your balance on any card is over 60% of the limit it can possible negatively affect your credit score. That said I have seen instances where credit can severely be impacted by having too many credit cards.

So what is the smart choice. Find a way to pay them off. Whether you refinance or accelerate your payments get those cards paid off and keep them down. In doing this you can affect your borrower power. Your credit score affects the rates you receive on your mortgages as well as anything you decide to finance.

Foreclosures

Mortgage Doctor — Tue, 26 Sep 2006 12:20:00 GMT

So many borrowers are becoming delinquent with their mortgages that Foreclosure talk is becoming the next hot topic in the industry. What do you do if you get behind on your mortgage payments and not lose your home.

There are a few things you can do that can assist. Normally someone is behind on their payments because of a life event that change their income situation or it is because of too much debt and they are having problems juggling their payments each month.

If you fall into the first reason as to why you are behind, call your mortgage company first. Normally they can work on a few things for you to get you back on time. One way they can do this is by doing a forbearance agreement. This agreement will allow for you to pay back what you owe them over time rather than in one lump some. Normally this will occur when someone is more than 60 days past due and having a hard time catching back up with their payments.

The other thing they can do if there is loss of income you could ask for a hardship cash where they will reduce your monthly payments for a time period ( keep in mind this will affect your credit score as many will report you late during the time period in which you make a lesser payment) This allows for you to bridge the gap to make payments without going past 30 days. Normally the payment that gets deferred is added to your principle amount that you owe so be careful over the long haul with this as you could end up owing more than you borrowed.

The other idea is if it is due to your current debt load and you have equity refinance with a mortgage company. Many times they can give you long term solutions to fix the bigger problem which is saving money and building some cash for a situation just like this. Many folks who are behind on their mortgage and have debt can save up to $1000 a month on their total bills each month. Think about this you make 50,000 a year which is 4166 a month gross income. You get a $1000 extra each month to save and put away you now make an extra $12,000 a year with this savings.

With rates still very low compared to their history, avoid using those Foreclosure companies until you have exhausted all your opportunities. In most cases these companies will loan you the money but you no longer own your home. PLease be sure to read all of the fine print and consult with a professional prior to entering into any agreements if you are in foreclosure.

refinance now

Mortgage Doctor — Tue, 12 Sep 2006 23:02:00 GMT

It has been awhile since my last entry, but one thing has not changed. The rates for fixed rate loans continue to improve. The way the current rate set up for a 30 year fixed I think we will go into the new year with rates still below 7%. Never have rates been so low for so long. This is will be a great time for folks who got into an adjustable rate mortgage in 2002 to 2004 to refinance into a fixed rate at what their first adjustment will be.

Most folks who took out ARM (adjustable rate mortgages) during this time period will see a rate increase of anywhere from 1 to 2% depending. Grab your fixed rate and lock in over the next 90 days and take advantage of getting some extra cash for the holidays.

The home buying market has cooled in Maryland, with prices staying flat or decreasing in many areas. A lot of folks seem to be looking for homes waiting to see how far the prices will fall.

I think the only thing that will spur a buying spree is if the rates continue to stand pat for some time. There is no pressure for anyone to jump right now because most folks are looking to see how far the rates will go. The longer the market stays flat on rates the more people will begin to speculate on the rates and might spur some buyers to take the plunge. At any rate it is definitely a buyers market and will continue to be for at least next 12 to 24 months.

what is my home worth

Mortgage Doctor — Mon, 28 Aug 2006 22:12:46 GMT

When you get ready to refinance one of the first things you do is get an appraisal. who pays for it, who gets the appraisal, what is my home worth. These are all questions that get asked during this initial period.

Things that really add value
   1. Additions
   2. Updated Kitchen and Bathrooms

Things that make the house look better
   1. New coat of paint
   2. Landscaping
   3.  New flooring/carpet

Each area has their own calculations on what in return you will get for certain updates. If you were to sell your home you might actually get more than what it will appraise for or you could get less. This is called marketability and is more connected to supply and demand than home values.  Which brings me to how much can I sell my home for. Currently with home prices falling you are probably not going to get list price in many areas nor will you receive what your neighbor sold for his last year or maybe even last month.

How you can make your home attractive is one thing making it attractive to buyers is another.   Hire someone to stage your home, tell you what needs to be hidden and moved out for quick sell. Also some sort of offer on helping with closing cost is becoming a popular option with many sellers to help with the rising cost of rates. If you have a loan talk with your lender about the assumability clause which allows for the buyer to assume the terms of your loan, most lenders don't offer it but a few do.

If you are refinancing and wondering what will happen. My guess is that you home will still appraiser for somewhere in between what your neighbor sold last year and what your other neighbor has it listed on the market for. This becomes an issue - which value is right? Probably all 3. What you will want to do is determine if the loan you are taking uses up all of your equity. If it is how long will you be in the home before you refinance or even move to a new home. Recouping costs is key in a market where sales are slow and the prices are dropping.

What is a balloon

Mortgage Doctor — Thu, 24 Aug 2006 06:37:00 GMT

No we are not talking about the one filled with helium. A balloon is just another type of mortgage that at the end of the term you have 2 options.
1. Pay it off the remaining principle balance
2. Refinance it into another mortgage

With all of the talk about exotic mortgages, this one seems to be one that gets left out. Currently most of the news is on the negative amortizing (option arm) and not the 40 year or 50 year mortgage. So lets talk about it here.

The 40 year balloon is just that, your payments are spread out over 40 years but the balloon is normally due after 30 years. The difference between this and the 50 year are just how long the payments are spread out over.

At the end of 30 years if the balloon is a fixed rate, you would have 2 options pay off the remaining principle or refinance into another term.

Most clients are choosing to take a 40 or 50 year balloon mortgage that is attached to an adjustable rate mortgage. You might ask why? Instead of taking a loan that is just interest only to get the lowest payment that is available that doesn't pay principle they decide to take the next lowest payment the 50 year mortgage or they might want the 40 year mortgage instead.

If you were to look at a grid of payments for the same loan..

1. Interest only would be the cheapest payment
2. 50 year Balloon would be the next cheapest
3. 40 year Balloon would follow
4. The traditional 30 year mortgage

In the 4 options, option 1 is the only one that does not pay anything to principle. You might say that if there is no risk why wouldn't everyone want to do a 40 or 50 year balloon.

The risk comes at the end of the term, Lets say that you were to have a 225,000 loan amount at the end of 30 years with a 40 year balloon you still might owe $137,000 in principle but in most traditional mortgage setting at the end of 30 years you would have paid off the full 225,000. SO why would I use a balloon.

Most are using it for temporary relief of cash flow, to help ease the blow of the rising payments of credit cards.

Most folks that refinance and pay off debt are looking for the lowest payment that they can have available so they can replenish that nest egg. The balloon allows for that if you want to pay towards principle and save some money. The real key is look at the payments. In most cases you the payment on the 40 year mortgage vs. 50 year mortgage are so close that it really doesn't make sense to stretch it to 50 year mortgage. Depending on the loan size it might not make that much different payment from the 30 to 40 year mortgage either. Ask you consultant to review all the options so you can make an informed decision.

Housing Market Cools

Mortgage Doctor — Sat, 19 Aug 2006 10:14:00 GMT

Just recently many reports show that home sales are down 20 to 30 percent in many areas. While this shouldn't come as a surprise, it does so a stronger trend towards a buyers market.

Some good news recently on rates, they are at a 4 week low. With the slowing of the economy, 30 year rates are back down to 6.67 (average 30 year fixed rate)

With slowing home sales and a dip in rates, I would expect that buyers might try and get aggressive with their offers to sellers. I would expect to see more seller help towards closing costs, and less multiple offers.

If we were to segment the market I would say homes from $100k to $250k will still be very competitive and could still fetch multiple offers as well as list price.

Rates will play a big factor over the last quarter of the year, currently if you are looking for a new home look at a 3 year or a 30 year, you will see the biggest difference in these rates. The longer the fixed term the more it will look like a 30 year fixed rate loan.

Good Luck!

NO rate increase

Mortgage Doctor — Wed, 09 Aug 2006 05:55:00 GMT

In what could be considered good news for real estate investors, the rates stood still yesterday as the Federal Reserve Board decided not to raise interest rates. This stopped 17 consecutive times they had met previously and raised rates.

SO what does this mean for you. Home Equity lines of credit will stay at their current rates for at least another quarter ( or until the next meeting), long term rates will hover from 6.5 to 6.875 for a 30 year fixed rate less than 80% loan to value rate and term.

This is good news for those in adjustable rate mortgages, it will give you time to lock into a fixed rate before your rates start to adjust. For many of you that are in adjustable in the 4 or 5 range, it would mean that you could lock in long term to a fixed rate at your first adjustment. You might want to consider it for cash flow planning down the line.

http://biz.yahoo.com/ap/060809/fed_interest_rates.html?.v=5
The rate hold should allow for prices to adjust and might help jump start some home buying at the tale end of the summer. There are some good bargains to be found in buying a new home, with rates standing still some folks will see it as their path to home ownership.

At any rate it is good news for those of you looking to buy, thinking about refinancing into a fixed rate but bad news for the economy as well as stock markets.

So what are these fees that I am paying

Mortgage Doctor — Mon, 31 Jul 2006 09:30:00 GMT

I hear this quite often with our clients and folks in general about closing costs, they are too high, why do I have to pay this and what is this for.

Well I am going to explain a few items to help understand the most important part. Costs and closing. At settlement you will be presented with a HUD-1 or what is referred to as a settlement statement. These costs that you see there should reflect what the lender or broker sent to you in a good faith estimate.

The key word is should. I see a lot of instances where we will review another brokers good faith and they left out all title costs, or better yet forgot to include your taxes and insurance in escrows. This is misleading to the consumer.

There is so much that go into closing a loan and some of the charges cannot be determined until all final payoffs are in and taxes/insurance updates are done.

1. Appraisal fee - normally the only out of pocket expense done on a transaction. Normally $300 to $500 and maybe more depending on the size of the property.

2. Attorney Fee(closing fee) - Normally charged by the title company and is required as at settlement you will have either an attorney or a notary to validate all documents and signatures.

3. Credit Report - this is normally not charged unless the particular state you live in requires all 3rd party fees to be listed.

4. Escrows ( insurance and taxes)- This normally is not figured into closing costs however they represent charges to restart your escrows with the new company. The good news is you should receive some sort of refund from your existing company upon settlement if you had been escrowing with them.

5. Loan Origination fee - This is the lender fee that is normally represented in a percentage of the loan amount. Normal fees range from 1% to 5%.

6. Discount Points - This is a bona fide point that is paid by you toward the reduction of your interest rate. For instance by paying 1 point your interest rate might decrease from 6.5 to 6.125 or something similar.

7. Recording fees - charges that are set to record your deed with the local offices and covers the administrative costs of this.

8. Title Search and Insurance - Title search involves reviewing the public records of your property looking for all existing liens, and judgments that might appear on your properties title.
Title Insurance protects the lender in case where the title company failed to secure proper title and protects you against mistakes made on record.

These are some of the charges that you may or may not see on your good faith estimate. There are more and I will cover those some other time.

Market takes a dip because of slow home sales

Mortgage Doctor — Thu, 27 Jul 2006 07:34:00 GMT

Lots of news this week on the housing inventory growing and lack of sales. Just this week I read three articles on how lack of sales is increasing the inventory and thus increasing talks of a bubble.

I still firmly believe in the bubble and even though as a home owner I wish there wasn't one, I do foresee it happening.

On an interesting note while watching CNBC yesterday, they were talking about the bond market. For those of you that don't know the bond market drives our interest rates on a day to day. They were talking about many investors will be holding on to their bonds while listening to the upcoming fed notes. Everyone is expecting at least 1 more rate hike by the end of the year. This will put home equity lines at 8.5% prime and we will probably see the bond market drive 30 year fixed rates close to 7%.

What does this mean for slow home sales. Well those that could afford a $300,000 at 6% interest a year ago now may only be able to qualify for that same house if they use an alternative product ( interest only, option arm, 50 year or 40 year mortgage). Since most of the country is pretty conservative in their money, they would more than likely wait to see if a home they like pops up at $250,000 or maybe even less.

This means that the buyers market for $300,000 homes will likely shrink.

So if you are looking what do you do.

1. Determine the length you will be in the home
2. Is this home a future investment property or long term stay.
3. Do you take risks. Remember you will not see 10 to 20% growth, you might see 3 to 5% in your homes value over the years.
4. How much can you put down including closing costs.
5. Can you get a gift to help towards down payment.
6. In a buyers market sellers might be willing to drop price and give a seller concession as well helping you put more of your money to the loan and not closing costs.
7. Determine your payment threshold.
8. Try to avoid bidding for a home, with a surplus on the market there is the right one for everyone out there.

Good Luck