Tehama Country Real Estate

Tehama Country Real Estate – 3 H o w To S h o p F o r A Mortgage Real Estate Spotlight By Alex Mason B uying a piece of property may be the biggest investment of your life, so it makes good sense to shop wisely when it comes time for your home financing. Mortgages are structured to meet and exceed most Sufficient financial arrangements and can be tailor-made to suit equity must in the your purpose and intent for keeping the property. property to re-fi, and the home must appraise accordWhether you wish to remain in the home for decades ing to local laws. or need funding for a home designated for short-term use, there's a mortgage plan that will help you FHA FUNDING accomplish your goals and meet your monthly bud- First-time borrowers and those who need financial get. assistance to get into a property may apply for FHA lending services. The FHA is a guarantor over a con- FIXED RATE MORTGAGES ventional loan to secure the funding if the buyer The life of the loan is important to establish your defaults. This type of funding will cover 96.5 percent monthly payment according to interest rates and how of the total loan balance, thus requiring a minimal much you can afford with the payments. Shorter term down payment of less than 4 percent. loans will have a higher monthly payment when opting for a 15-year payoff as opposed to a 30- or 40-year fixed rate. In addition, home buying applicants with challenged credit are encouraged to apply, and special discounts and incentives are made available for pub- The benefit of securing a fixed-rate long-term loan lic service employees with variable guidelines for enables the borrower to guard against fluctuating each state. The Federal Housing Administration is interest rates and surprise price hikes for the life of committed to making home buying dreams come the loan, a choice that is ideal for borrowers who plan true, so be sure to check with your loan officer from to remain in the property for many years. your bank or private brokerage firm to start paperwork on the FHA documents. The fixed-rate mortgage remains intact according to its contractual elements and provides peace of mind FHA loans are fast, easy to secure and carry mini- to the borrower with a stable monthly payment over mal applicant restrictions, making this type of mortgage option a popular choice for new buyers. decades. ARM LOANS GET THE FACTS The adjustable rate mortgage, or ARM loan, is set Before you sign on the dotted line, it is crucial that with the current interest rate that the borrower's cred- you understand your loan documents one page at a it score is qualified for. This type of loan may be des- time. Real estate paperwork is extensive and confusignated for a two-, five- or seven-year period and ing to even the most seasoned contract reader, and may be set with a very low rate. Although the month- once you sign the document before a notary, you are ly payment is lower at first, the ARM has a date when fully responsible by law to fulfill the terms and agreethe loan will adjust and therefore be subject to the ments. current interest rate at that moment. Your loan officer should be present at the time of In an economy where nothing is certain, an ARM signature and explain in detail what every loan docmortgage loan makes good sense for a home buyer ument page means. Make yourself vocal with plenty who does not intend to remain in the property for a of questions, and if something is vague and ambigugreat length of time. If the property was purchased ous, that's the time to put the brakes on. due to a job transfer, temporary residence or investment purposes only, then an ARM is a practical loan. Once your loan docs are signed and submitted it is nearly impossible to contest anything in court should However, if the borrower is entertaining the idea to your terms and conditions turn out to be an unwelstay put in the property, the ARM loan can be risky. come surprise. So use discretion and perform your Although a borrower may refinance their property due diligence to ensure you have signed a square and change the structure of the loan from an ARM to deal. a fixed mortgage payment, be aware that refinancing can be costly and the home does not always meet the conditions for a successful mortgage restructuring. Alex Mason is a former real estate agent and mortgage broker living in Los Angeles.

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