Foreclosure
12 September 2007
Foreclosure doesn't just happen to people who don't make their mortgage payments. Your homeowner's association (HOA) can take your house or condo if you're not careful. In one case, a disabled California man lost his home in a foreclosure sale because he was $123 behind on his homeowner's dues. The house was worth $280,000. Unfair? Abusive? You bet!
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12 September 2007
Foreclosure doesn't just happen to people who don't make their mortgage payments. Your homeowner's association (HOA) can take your house or condo if you're not careful. In one case, a disabled California man lost his home in a foreclosure sale because he was $123 behind on his homeowner's dues. The house was worth $280,000. Unfair? Abusive? You bet!Read More »
Most Commonly Asked Questions About Mortgage Loans
By Sarah ClarkNFNS Columnist
If you're considering buying your first home, you're probably feeling confused about the many different decisions you have to make about mortgage loans. Here are answers to some of the most commonly asked questions about home financing.
Where do I get a mortgage or home equity loan?
Home equity lines of credit and mortgage loans are offered by commercial banks, mortgage companies, credit unions, and savings and loan institutions, at brick-and-mortar institutions and online. It's important to understand where these loans are offered so you can shop around for the best price and payment terms.What is the difference between a mortgage and a home equity line of credit?
A mortgage is just about any loan secured by a residential property. The rate may be fixed or adjustable, and the loan usually but not always requires payments calculated to retire the balance in anywhere from fifteen to thirty years. A home equity line of credit, or HELOC, is a specific type of mortgage with some unique features. A HELOC is a revolving line of credit that behaves somewhat like a credit card. Once approved for a specific loan limit, you can use as much as you like, paying interest only on the balance, and pay it off or reuse it repeatedly if you like. Your monthly payment depends on the adjustable rate and the amount of your balance.How do I find a loan with a competitive APR and payment terms?
This gets back to the first question--shop around at the many institutions that offer mortgage and home equity loans. Your credit history, the amount of equity in your home, and income affect your rate, which is disclosed on a form call a Truth-in-Lending disclosure, or TIL. The costs of obtaining your loan will be listed on a Good Faith Estimate, or GFE. Compare the figures on these disclosures between lenders--make sure that the programs are the same and negotiate the best deal you can.How much home can I afford?
Unless you expect a substantial increase in income or an influx of cash, take a loan with payments you can comfortably afford, even of you qualify for more. For example, if you are used to paying rent of $1000 per month, think twice about taking on a mortgage with payments of $2,000 per month--especially if you found yourself unable to put money away when you only had the $1,000 a month payment. A good ball park figure is that your housing payments should take up no more than 30% of your gross income, and all your payments no more than 42%.Source
The Federal Reserve Board
About the Author
Sarah Clark is a freelance writer specializing in a variety of consumer topics.
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