How not to buy a home
First, we go driving all over town to find all the houses we would like to live in and burn $50 in gas. We pay for take-out since we didn’t get home until late because we got lost, twice. Next, we try to remember where all these houses were and try to contact an agent to put in an offer on the one we like the most. Since the one we wanted just went under contract because we were not fast enough, we put an offer in for our second choice. The seller likes our offer and asks for a pre-approval letter from the bank, oops. After going to the third bank, we get pre-approved for a loan, but it is not for enough to buy the house we wanted and we don’t have enough money to meet the purchase price; bye-bye second choice. Now we are getting aggravated. Let’s put an offer on the third and fourth choices. The third choice seller takes our offer. We negotiate the finer details and set a closing date. Hurray for us. Two days before closing, the attorney calls and says the bank changed their policy last week and we no longer qualify for the loan. We can’t qualify for a loan now because our credit score dropped from all the other banks pulling our credit. This scenario can be typical...
view the listingAdvantages of an LOC (Line Of Credit)
Many people don’t understand the differences between a loan and a Line of Credit. Here is where you will be amazed. Loan – You go to the bank to borrow money. They pay for the item you are interested in (real estate, properties for sale, rental property, etc.) and you have to pay them back at scheduled intervals which include a set amount of interest and principle each month. The payment you send is only credited to your account once a month, no matter how many payments you send in a month. If you pay on the first and they credit that payment to your account on the 30th, that means they have your money to invest for free for 29 days. If that set payment becomes too much to handle, oh well, you signed a contract of some kind and you’re stuck. LOC – Lines of credit are very different. The bank qualifies you for a line based on the equity in an asset (home, rental property, IRA, etc) or the provable income you make. That money is placed in its own account at the bank until you need it. If you don’t withdraw it, you do not get charged. That money can stay on standby forever if you like. Also, an LOC, in most cases (or ask for it), is on a variable interest rate that...
view the listingMortgage 101
Mortgage 101 is for those of you who are new to the world of money. This should explain some details about a mortgage. When you are in the market for homes for sale, the first thing most people do is get pre-qualified from a bank. IMPORTANT: If you don’t like the terms from one bank, you can shop around. Most banks have different terms and rates in order to compete with others. Going to a mortgage broker can be helpful, just ask if they are a captive agent. Captive agents have contracts with certain mortgage companies and are not out for your interests. You want a non-biased, non-captive agent who can give you many options. When you find a company you want to deal with and get approved, you should walk out with a “Truth in Lending” statement once you have locked in an interest rate. This statement shows two important items – the annual percentage rate and the total payback. The APR can be locked in now before you leave or you can wait to lock it in if the rate is dropping like it has been doing for the last couple years. The lender can tell you what the rate is doing. If you’re getting a mortgage anyway, half a point can make a big difference. The total payback is not a typo, you will pay...
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