Mortgage Rate News

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So often, when we look at the purchase price of a home, that is all we see. We look at a home that costs $187,000, and think: “Not bad.” We talk about how much the home cost, and we use that number. However, the total cost of your home is more than just the purchase price. It includes a number of items from closing costs to homeowner’s insurance, to the monthly maintenance and utilities you are responsible for. But the biggest cost that is associated with your home is the interest you pay.

Interest is an awe-inspiring thing. It is a fee you pay for the privilege of borrowing money. You don’t get any sort of direct benefit in exchange for paying interest. It is a sum that you pay, just for the privilege of getting access to the funds you want in order to buy something. So, after paying interest for 30 years, you might find that the total cost of your home is something that is considerably more than $187,000. It could be as much as $300,000 — or more.

This very reason is why what interest rate you get is so important. Just a 1% difference in interest rate can mean tens of thousands of dollars over the life of your home mortgage loan. Interest is very powerful. The higher your interest rate, the more you pay. And the longer you are paying interest, the more you will pay in the long run. Your best weapon, of course, is to avoid paying interest altogether. In terms of buying a home, though, this is probably not practical. As a result, you should carefully consider the size of the mortgage you are getting, as well as try to get the lowest mortgage rate possible (by having good financial habits and a good credit score). You should also see if you can handle a shorter term. This may mean that you make larger payments on a monthly basis, but you will pay less in the long run as far as interest is concerned. In the end, it’s a trade off between what you can handle, and what will ultimately save you more over time.

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Foreclosure definitely affects your credit score. Indeed, since it is such a huge loan, a form of credit, your mortgage can make a big dent in your credit score. If you lose your home to foreclosure, then you could see a drop of between 200 and 300 points. That is a huge ding — especially if your credit score was already struggling in the mid-600 range. Not only that, but a foreclosure will stay on your credit report for seven years.

In order to avoid having a foreclosure on a credit report, you might try to get your lender to agree to some other options, such as a deed lieu of foreclosure or a short sale. It is important to be careful in these instances, since there is still an impact to your credit score.

Deed in lieu of foreclosure

In this arrangement, you actually return the deed to the mortgage lender. You still lose the house — the lender owns it — but you are forgiven the balance of the mortgage. But when you negotiate this option, you will have to convince the mortgage lender not to report it as a foreclosure. Some lenders will report this as a foreclosure, and that will then impact your credit score. Even if your mortgage lender does not report the transaction as a foreclosure, if it has been preceded by months of late or missed payments, you will find that your credit score has been impacted by that.

Short sale

A short sale is when the lender agrees to let you sell the home for less than you owe on it. The difference is usually forgiven by the lender. Again, if you have late or missed payments as a result of falling behind, you can see damage to your credit score.

It is important to note that after any of these transactions, it will take two or three years before you can buy a home again.

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When it comes to buying a home, it is important to consider your options. And it is important to be aware of some of the main issues associated with buying a home. This is especially true if you want to purchase a home that is in foreclosure. Buying a foreclosure can be a tricky proposition, and you need to be careful. There are definite advantages and definite bargains to be made. But if you aren’t careful, you could get way more than you bargained for. And not in a good way.

Real Estate Pro Articles offers these helpful guidelines to use when buying a foreclosure:

1. Finance: Real estate calls for huge investments, so check the availability of finances. See how much you have and how much will you need approximately. Ascertaining that, get yourself pre-qualified for securing a loan.
2. Look for available foreclosure homes: Search carefully for foreclosure listings available on various websites, real estate magazines and advertisements in newspapers. Contacting banks to get information is also a good idea, as banks are the most common lenders who sell foreclosed properties.
3. Know what you want: Be clear about what kind of a property you are looking for. This will help in choosing a property among the various available properties which matches your requirements the best. Think on parameters like, size, expected rate, locality, amenities, etc.
4. Knowledge about foreclosure laws: Buying foreclosed properties has its own intricacies, so it is very essential that you gain proper knowledge as to the laws and procedures governing foreclosures in your State.
5. Consulting a realtor: If you are not sure about how to go about making the investment in foreclosure homes, then consulting a realtor who has the requisite experience in dealing with foreclosed properties is a good idea as he will guide you and help in getting the right kind of property.
6. Thorough inspection: Examine the property that you wish to buy very carefully as there will be repairs that may be needed and for which you will have to pay. This will help you to negotiate better.
7. Closing the deal: Once you have made the offer and the seller accepts it, then on making the payment and finalizing the deal, carefully ascertain that all legal compliances are done with, necessary documents are in order and that you get a clear title to the property. Seek assistance from attorney if you feel the need.

It is still a good time to buy a home. Mortgage rates are low, and so are home prices. And if you are interested in something that is an uncommon deal, you might consider buying a foreclosure. Just make sure you are careful, and you know what you are getting into.