Posts Tagged ‘interest rate’

All offers to purchase must be reduced to writing. Verbal offers to a seller or the selling agent have no credibility and are not binding.

Your sales professional will use standard contract forms approved by the real estate commission for specific use. Your offer should be precise regarding terms, dates, and special requests. Since your sales professional is not licensed to practice law, only factual business details may be added. You may request that your offer be examined by your attorney.

All buyers should sign the initial offer. Your sales professional will take or fax the offer to the listing agent who will present it to the seller. The selling agent may be present at the time the offer is presented. Most times seller/agent location or schedules prevent this.

The listing agent will present the offer to the seller along with written proof of the buyer’s financial qualification. The seller will weigh the merits of the offer and the buyer, assess the bottom line, and make a decision. The seller can accept the contract ‘as is,’ reject the contract, or make a counter offer.

If the offer is accepted, all sellers should sign the contract and an effective contract date is set. If the contract is rejected, no further action is required except informing the selling agent.

If the offer is countered, the seller will change the terms that are unacceptable, initial all changes, and sign the contract. The countered contract is then delivered either in person or via fax to the selling agent for presentation to the buyer. The buyer can accept, reject, or make another counter offer. The offer does not become a binding contract until all parties have signed and all changes have been initialed by all parties.

For more information, call Prudential Vision Properties at 573-449-6200 to speak with a real estate expert without any obligation or cost. You can also email your questions to info@PrudentialVision.com (email responses usually come back within the hour)

Learn more about making the initial offer.

To reduce the risk of losing money, lenders select well-qualified buyers with a strong credit history, low income-to-debt ratio, and income stability.

Loan programs that help lenders reduce their risk are 80/10/10 or 80/15/5 loans. These combine a first mortgage and a second mortgage to spread the risk between two lenders. The numbers represent the first loan percentage, second loan percentage, and the down payment.

Here’s how it works. The first lender offers a mortgage for 80 percent of the value. Another lender offers a second mortgage for 10 percent of the value. The borrower puts down 10 percent. With 80/15/5, the second lender offers 15 percent and the buyer puts down 5 percent.

With only 80 percent of the loan invested, 80/10/10 and 80/15/5 loans reduce the first lender’s risk. The buyer makes a payment to the first lender and a second payment to the second lender.

Since neither lender lends more than 80 percent of the value, private mortgage insurance (PMI) is not required. PMI is only necessary when a lender lends more than 80 percent of the value. No private mortgage insurance means a lower monthly payment.

Ask your sales professional about 80/10/10 and 80/15/5 loan programs.

For more information, call Prudential Vision Properties at 573-449-6200 to speak with a real estate expert without any obligation or cost. You can also email your questions to info@PrudentialVision.com (email responses usually come back within the hour)

Your lender will counsel you on available mortgage choices and products. Basic mortgage choices are FHA, VA, or conventional loans. Within these basics are different mortgage products and programs that have been tailored to today’s buyer needs. Since one size does not fit all, some mortgage products will be better suited to your financial situation.

Fixed-rate mortgages are mortgages where the interest rate remains the same for the whole loan term. Thus your principal and interest will be the same every month until the loan is paid in full. Many home buyers choose this product because it minimizes uncertainty about the monthly payment. Home buyers can more readily budget around a house payment that they can count on.

Adjustable-Rate Mortgages (ARMs) are mortgages where the interest rate changes periodically according to a predetermined index. These loans initially have a lower interest rate. When borrowers qualify at an initial lower rate, they can afford more house.

ARMs vary according to how often the rate adjusts. Some ARMs have caps on the amount of rate change with each adjustment. ARMs are tied to one of a variety of market indexes. Your lender can show you how the index has behaved historically. This will allow you to gauge if there will be wide fluctuations in rate changes over the life of the mortgage. Some ARMs are hybrids with a fixed initial interest rate before they move into an adjustable mode.

No or Low Down Mortgages are mortgage products tailored to borrowers who are short on available cash but who have the income to support a higher payment. The risk to the lender is greater on this mortgage because the buyer has little cash investment. Thus these loans will require strong buyer credit histories.

For more information, call Prudential Vision Properties at 573-449-6200 to speak with a real estate expert without any obligation or cost. You can also email your questions to info@PrudentialVision.com (email responses usually come back within the hour)

There are basically three mortgage categories employed in a home purchase: FHA, VA, and conventional. Within these categories, there are many variations. Your lender’s role is to counsel you regarding your mortgage options.

An FHA loan is a mortgage insured by the Federal Housing Administration (FHA), administered by the Federal Department of Housing and Urban Development (HUD). FHA will guarantee the lender against loss if the buyer does not pay the investor back.

Buyers find FHA loans attractive because they require as little as 3 percent down payment. FHA qualifying guidelines are also more lenient for the buyer. This makes them more attractive for a buyer who has a heavier debt load.

VA loans are mortgages offered only to veterans. To obtain a VA loan, the veteran must have a Certificate of Eligibility verifying the veteran’s active duty status since September 16, 1940 and discharge papers from the service. VA loans require no down payment, have limited closing costs, and sometimes have lower interest rates. The Veteran’s Administration (VA) will guarantee the lender against loss if the buyer does not make payments on the loan.

Conventional loans are mortgages which conform to standards set forth by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). Investors remain at risk up to 80 percent of the value of the property. The amount borrowed above 80 percent of the home value is insured against loss by private mortgage insurance.

There are many different mortgage products within these three categories. Learn more about the various mortgage products.

For more information, call Prudential Vision Properties at 573-449-6200 to speak with a real estate expert without any obligation or cost. You can also email your questions to info@PrudentialVision.com (email responses usually come back within the hour)

The right fit between lender and mortgage products furthers your financial goals. Your lender will counsel you about the best mortgage product for your financial profile. You should be candid with your lender about the specifics of your financial information and share future goals and explore any concerns about your mortgage.

Your lender weighs how much money you have, your debt load, and your income. Other considerations should be the likelihood of a significant change in your income, future financial goals, your ability and willingness to save, your spending habits, and how mobile you will be in the near and long term.

The property itself may influence your choice. A property in need of major repairs may dictate the balance between the money for down payment and funds designated for repairs. Your lender can provide the best advice when you’ve provided a true picture of your situation.

Your lender provides the pathway to your mortgage by packaging information to showcase you to the underwriter. If your credit is tarnished, your lender can help you clear it up. If your credit has been damaged, your lender can work with you to design a repair strategy and obtain a mortgage at a later time.

Get more tips on how to choose your lender. Also, learn about your mortgage choices and the types of mortgage products available.

For more information, call Prudential Vision Properties at 573-449-6200 to speak with a real estate expert. You can also email your questions to info@PrudentialVision.com (email responses usually come back within the hour)