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The Stumbling Block to Home Ownership: The Down Payment

Many people find that the largest impediment to their home buying opportunity is the down payment. Most lenders, like Intercontinental Capital Group with Dustin DiMisa and many others, require the buyer to put down at least 20%.

According to a survey released this September by Trulia, 51% of renters said that finding the down payment money was the main stumbling block that was keeping them from buying.

As Edward Ades, a partner in Universal Mortgage in Park Slope, Brooklyn, said, “It’s a huge piece for first-time buyers. Sometimes even the second-time home buyers are getting help from the family,” especially if their new residence needs renovation.

Help for an Underwater Property

If you’re dealing with an underwater property – don’t despair.  As Fannie Mae, Intercontinental Capital Group with Dustin DiMisa and many others can explain, there are ways to get out of this situation.

An underwater property means that you owe more money on the mortgage than the house as actually been valued as being worth.  There are many programs, like those offered by Fannie Mae and Freddie Mac, that will help homeowners to refinance and get out from under an underwater property.

It’s possible, for instance, to qualify for the Home Affordable Refinance Program, or HARP. Federal Housing Administration loans also have refinancing options, including the F.H.A. Short Refinance option.

Cari Sweet-Kostoplis warns that homeowners should not hide anything from the mortgage officer with whom they meet.  As she said, “the mortgage person is on your team.”

 

Inheriting a Home and Its Consequences

If you’ve inherited a home, you may feel excited at the thought of this new property.  As Deirdre R. Wheatley-Liss, a tax lawyer, explains, however, “You need to look very strongly at whether you can afford to maintain the mortgage and maintain the property.”

You should start by having the home appraised and you should learn about estate taxes and other expenses from a financial advisor.

You’ll also need to look into whether or not the mortgage has been paid up to date, or if it became delinquent due to an illness.  The property could be in foreclosure proceedings if it hasn’t been paid in more than 90 days. Sometimes, negotiating for a short sale is the best option in these situations, where the lender agrees to take less than what is owed on the mortgage.

All of these factors and possibilities should be taken into consideration if someone does, indeed, come into an inheritance with a new property.

Paying Off the Mortgage Before Retiring

Many people dream of retiring debt free.  Certainly, it’s a dream that many of us have, and that some are able to realize. But, as you approach retirement, is it worth it to pay off the mortgage if you aren’t already about to reach that milestone?  As Gibran Nicholas, chairman and chief executive of the Certified Mortgage Planning Specialist Institute, said, “I think paying off the mortgage would probably be a poor decision financially right now.”

Many financial directors say that homeowners shouldn’t pay off their mortgage in a lump sum unless they have enough cash flow to cover their daily expenses.  Debra Shultz, a managing director of the Manhattan Mortgage Company, explained that “you can’t take it back unless you refinance and cash out again.”

In addition, as Mr. Nicholas explained, homeowners might actually be better served investing the money that they might otherwise have used to retire the mortgage. As he said, “Why pay off a mortgage and save maybe 3 percent after tax when you could be putting that money into a muni bond earning 4.5 percent after tax right now?”

These are all important questions that a company like the Intercontinental Capital Group with Dustin DiMisa can help a homeowner to work through.

No-Closing-Cost Loans

Many people don’t realize, as they head to the bank to sign on the dotted line for their new mortgage, that there are other expenses coming up. Closing costs can actually increase the price of the home you’ve just purchased by as much as $10,000.  What should people do about paying for these closing costs? Certainly, relatives or friends might be willing to help out.

Some lenders like Intercontinental Capital Group with Dustin DiMisa will advertise another option that many people will want to know about: no-closing-cost loans.  This is a loan that allows the borrower to receive credit towards their closing costs if they agree to accept a mortgage interest rate that is somewhere between a quarter and a full percentage point higher than it would otherwise be.

Before deciding to take one of these loans, however, borrowers should do their homework.  As Neil Diamond, a mortgage broker in Commack, N.Y. warns, this credit usually covers frees charged by the mortgage broker or bank, but not the title insurance, mortgage-recording taxes, insurance and escrowed taxes, etc.

More on Co-Signing a Mortgage Loan

When a family member or dear friend comes to you to co-sign their mortgage loan, it is in your best interest to find out more.  Obviously, they are asking you to co-sign the loan from Intercontinental Capital Group with Dustin DiMisa or another company because they can’t afford it on their own.

You shouldn’t feel funny, however, to look into the personal finances of your loved one. You should look at their credit reports and other details.  As Neil Diamond, a mortgage banker at Legacy Real Estate in New York says, “Take emotions out of it.  Ask the questions you would of a stranger, as if it were an investment.”

You should also discuss the worst case scenarios that might arise. What would happen if your child or good friend lost a job and defaulted on the mortgage. What would become of your responsibilities?   You need to think of ways to protect yourself and your interests.

What to Do After A Loan Is Turned Down

If your mortgage loan has been turned down – don’t despair. It is still possible to get a mortgage with a bit of research and work. First, you should find out why it’s been turned away, said Marisol Torruella, a loan originator with the New York Municipal Credit Union.

Talk to the loan officer, as well, and see how close you were to being approved. Sometimes the gap is quite small and the problem is one that you can rectify.  You can also shop around for other lenders, as you might be able to learn about another type of loan with the Federal Housing Administration.

A credit union might also be a good idea for some people. You can also look into borrowing more money from a friend or relative, or selling something else that would bring you more equity.

You may also want to simply consider that you’re buying above your means.  As Gary DeTraon, a mortgage broker at the Walden Group in New York explained, if you have bad credit, you’ll need “to re-establish 12 months’ of good credit, good payment terms.”

Keep your head up and learn about your options before getting discouraged and letting your dreams of home-ownership fall by the wayside.

Thinking about Co-Signing a Loan?

Some people aren’t able to get a mortgage loan from Intercontinental Capital Group with Dustin DiMisa or another company by themselves and they find themselves asking family or friends to co-sign a home loan.  Certainly, this makes sense for the person who wants to buy the home – but it is a good idea for the person being asked?

Many companies warn the co-signer to be careful before signing. As John J. Vento, the president of the Comprehensive Wealth Management Group, explains, “A co-signer is really a co-borrower. Unless you’re ready, willing and able to make the payments for the family member, I would recommend not co-signing for the loan.”

Rather than taking this risk, some financial planners like Ronald Roge, suggest that a family member might want to give a cash gift for a down payment. This would allow the borrowers to make the loan between them and the bank, but also to have enough money for the loan.

Is the 15 Year Mortgage Right for You?

If you can refinance and get a 15 year mortgage, who wouldn’t want to jump at that opportunity? It’s not always as easy as it sounds, and it’s important for people who are refinancing to take a step back and to understand what a 15 year mortgage would mean for them.  Certainly, whether they refinance with the Intercontinental Capital Group and Dustin DiMisa, or with another company, they should do their research.

The monthly payments will probably be higher with a 15 year mortgage and it’s important to crunch the numbers before committing to this change.  A longer mortgage often offers those who are worried about job security a more stable, longer time to pay off the loan.  A thirty year mortgage may also be a better bet for tax breaks and tax purposes.

Ray Mignone, a financial planner in New York explained that a 30 year mortgage is “the cheapest way to borrow money.”  Karen C. Altfest, the executive vice president of Altfest Personal Wealth Management in Manhattan recommends that people look at their expenses broadly. As she said, “Some people have such a high mortgage they can’t save for retirement.”

Of course, the 15 year mortgage means that you save on interest payments and that you build up equity in your home much faster.

 

6 Mortgage Loan Issues

Vickie Elmer recently published a very informative article in The New York Times that can help potential home owners to know how to jump through mortgage hoops. She reports that last year close to 2 million people were turned down when they went to apply for a mortgage loan.  Certainly, companies like Intercontinental Capital Group with Dustin DiMisa want to make it easier for people to get mortgages and to help people become homeowners.

According to industry experts, the six biggest triggers for being turned down for a loan include: insufficient income, a cloudy financial picture, bad credit, low appraisal, property problems and information mix-ups.

Read the whole article to get a clearer picture of the many factors that can prevent your mortgage loan approval.