Home Loans - Checklist

Buying a home should be an exciting time where when planned accordingly can come off like a well oiled machine. Preparing for the transaction ahead of time and taking care of all the paperwork at the beginning will help things move much smoother. Prior to looking at homes you should meet with your mortgage specialist to determine the monthly payment you are comfortable with, the down payment amount needed, and what costs are associated with the transaction. They will give you an idea of what kind of sales price you are looking at so you can begin looking at homes that fit the criteria. You can also discuss how much the seller can contribute in seller contributions (closing costs) with the program. You also need to be aware of the tax rate and insurance costs. When being pre approved go ahead and provide the lender with all of the paperwork upfront. This will include recent W2's, pay stubs and bank statements. You will also need to do a loan application. This can be done over the phone. This way you can have a pre approval vs a pre qualification. A pre approval states that everything has been verified, including income, assets and credit and that you are able to buy within a certain price range. A pre qualification states that the credit has been looked at but income and assets have not been verified. This can post a host of problems. Pre qualifications are basically a letter from the lender stating that you may be able to purchase but we are not sure.

When determining who to use to help with your mortgage financing there are several things to consider. Who is going to get the job done, what is their track record, do they have testimonials and will they provide you with a name and number of a closed client to call? Being the largest financial decision of your life it pays to speak with someone who is qualified and who has a proven track record of taking care of the clients. Don't be fooled by misleading advertising and promises that sound too good to be true.

Home Equity Loan - Advantages and Disadvantages

A loan taken out for the purpose of transforming the equity in your house into cash that can be used for other purposes is known as a home equity loan. A loan taken with the equity in your home as collateral can be structured in many ways. It is actually a second mortgage in many ways, and will result in less of your home's value being accessible should you decide to sell the property. It is an excellent way to obtain access to a sizable amount of cash, depending on the amount you owe on your home and the market value of your home. The difference is your home equity.

Advantages

Most borrowers determine that the home equity loan works to their advantage.

Single Payment

Using a loan against the equity in your home as opposed to trying to take out a combination of personal loans and increased credit card debt means that you will only have one payment monthly for the loan rather than a half dozen or dozen small ones. The home equity loan as a single unit is probably going to be easier to obtain than numerous smaller loans all at the same time. You only need remember the due date and amount on one loan and thus you can prepare for and budget well into the future.

Available Cash

When you take out an equity loan on your home, it usually results in a larger amount of cash available to you all at once. No matter what the reason for the lump sum cash is, having it in one sum often serves as a way to give you a clean start from financial problems that are eating away at your financial freedom and at your sanity.

Disadvantages

It is important that you not lose sight of the disadvantages of the loan against home equity.

Increased debt

When you obtain a home equity loan, even if it is to pay off other debt, you will almost always increase the total amount of debt that you owe. You should study carefully whether the increased debt is offset by the advantages that a single payment--possibly smaller in size is worth going even further into debt. If your goal is to change the ability of your family to meet future obligations or to add to the debt load as an investment toward the future, such as paying for a college education for yourself or your family, the debt load may be justifiable.

Economy of the area

Before taking out a home equity loan, it is important to look realistically at the area's economy. If housing prices in the community or in your neighborhood are beginning to fall, obtaining an equity loan to improve your home so that you can sell it and move on may not be a good idea. You may find that the increased asking price necessary to clear the loans on your house will mean no buyers will be able to qualify to purchase your house.