Tehama Country Real Estate

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

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