Mortgage and Loan Tips

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Mark Twain once wrote, “A banker is a fellow who lends you his umbrella when the sun is shining, and wants it back the minute it begins to rain.” In terms of a modern day interpretation, if you’ve been thinking of refinancing your mortgage, you might want to step it up because rain is in the forecast.

Beginning December 11, 2009, Fannie Mae will no longer buy a loan with a credit score of less than 620, so lenders are no not likely to underwrite them. The company also plans to increase fees and raise lending criteria, making it more difficult than ever to finance, or refinance, a home purchase.

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Actually, an 80-10-10 mortage is a little bit of a misnomer, because it's not really a mortgage, but rather two mortgages put together in a way that allows a buyer to avoid paying the monthly cost of Private Mortgage Insurance (PMI).

Most banks and lenders insist that a home buyer pay for private mortgage insurance if they do not have a down payment of at least  20% of the home's appraised value.  Of course,  If you can afford 20% down, you will not need PMI.  If you don't, however, have 20% to put down, the 80-10-10 is an approach that still allows you to avoid the PMI payment.

So, what is an 80-10-10 mortgage? ...

An 80-10-10 mortgage breaks up the mortgage loan into two separate loans. 80% of the loan is financed as a first mortgage, typically at current competative rates. 10% of the loan is then in a second mortgage, usually at a slightly higher rate. The final 10% comes from a cash down payment.Read the rest...

Choosing to pay even a little extra on your loans can save you thousands of dollars.  This strategy works the same for mortgages, student loans, auto loans, or really any loan that allows you to prepay interest.

For example, suppose you had a $10,000 student loan, at an interest rate of 7%, and a repayment period of 10 years.  If your first payment on that loan was January 1st, 2009, you would continue paying through January of 2019...your monthly payment would be around $116, and at the end, you would have paid $3933 in interest charges...Read the rest...

If you are getting ready to close on a loan for a house, keep a look out for those charges in the closing statement that are negotiable. Not all of them are, but insiders know the items that are up for haggling. Aubrey Clark points out how to save money by finding the most obvious places to negotiate. When you are working with your lender, they all use a standard form called a "good faith estimate". This form has numbered sections that correspond the various fees paid by buyers and sellers. The place to look at is the section numbered 800...Read the rest...