MONEY MATTERS How much do you know about home financing? If you are planning on buying a home for the first time, you probably have a lot to learn before you are ready to plunge into home ownership. Home financing is one of the single most important and typically least understood elements of the home purchasing process. Why is home financing so important? Two primary reasons: 1)Without financing you cant buy a home (unless you are cash rich) and...
2) you will live with your home loan for a long-long time, well after the thrill of home ownership has subsided. There are a wide variety of financial products (home loans) on the market today besides the traditional 15 year and 30 year fixed rate and adjustable rate mortgages (ARMs). Other loan types include government loans like VA loans, FHA loans and community development assistance loans/grants available in some areas. Lets not forget the Jumbo loans, bridge loans, negative amortization loans, balloon loans and interest only loans to name a few. Then you have to consider whether you will borrow your home loan from a bank or a mortgage company and does the lender service the loan or is the loan sold on the secondary market? Its important to know this information because home buyers (and home owners) can be surprised to discover they are sending payments to different lenders over time as their loans are sold on the market. The good old days when the S&Ls made portfolio loans are over. And then there is the financial speak. Terms like amortization, discount points, closing costs, doc prep fees, appraisals, zoning, good faith estimates, dowry rights, truth in lending, APR, HUD, originators, brokers, secondary market, hybrids, MIP, balloons, second mortgages, carry back mortgages, etc. Even seasoned homeowners who are selling and planning to buy a home may be taken back by all the financial terminology and buzzwords associated with the lending industry as a whole. The best strategy for wading through all this technical mumbo jumbo is start gathering information well in advance of a home purchase (or refi) because nothing is worse then having to learn all this information during the heat of a real estate transaction. There can be brisk movement during a real estate deal once your offer is accepted. You dont want to get hit with a tidal wave of information requiring your critical decision making (and your legally bound signature) when you are going to school on every issue, detail and term associated with home financing. For most first time buyers this can be overwhelming as they are forced to rely on real estate agents, bankers and mortgage brokers for advice. Keep in mind that when you are buying real estate you are SURROUNDED by sales people with an economic incentive called commissions! Do you really want to fly by the seat of your pants and trust commission driven sales people to give you advice? This is why I constantly advise all home buyers and sellers to have an attorney BEFORE they talk to a real estate agent-or at least a source of information to guide you through the process--we are talking about a BIG business deal right? If you want to know you can protect your basic legal and financial interests AND get guidance on selecting the right home loan to meet your needs I STRONGLY suggest you (at least) take the time to request the report below to help you through many of these complex issues. It's free! Our E-Report: 101 Tips For Homebuyers, Sellers And Money Borrowers will provide you with more information regarding this article topic-click on the Smart Books link below to request the report. Well send it to your email address within 24 hours-absolutely FREE during March. Another Ezine Article Exclusive! Until next time Copyright 2006 James W. Hart, IV All Rights reserved |
