What is Mortgage Insurance
Homeowners Insurance is something every homeowner will need. Mortgage lenders require homeowners insurance in order to protect their interests. In the event that the homeowner defaults on the loan (fails to pay the mortgage), homeowners insurance protects the lender's investment.
Homeowners insurance varies from county to county. Differences include the type of insurance needed and, of course, the insurance costs. For example, if you buy a home in an area where hurricanes are a concern, your homeowners insurance premium will likely be higher as a result.
You will need to get your insurance in place prior to the closing. In most cases, you'll need to show proof that the first year’s insurance premium has been paid.
How Much Mortgage Insurance?
The lender will require that the amount of the policy be at least as high as the amount of your mortgage, though most homeowners choose policies that cover the full replacement of their home and contents.
Finding an Insurance Provider
When researching homeowners insurance, you might want to start with the company that handles your other insurance needs. Often, insurance companies will offer discounts for customers that have multiple policies with them. Umbrella policies can cover all of your insurance needs while saving you money at the same time.
Your real estate agent or attorney should be able to tell you precisely what you need in terms of homeowners insurance. As soon as possible, you should verify that the insurance company has provided you with sufficient coverage to satisfy the lender.
Asking the Right Questions
When selecting homeowners insurance, speak candidly with the insurance representative and ask pointed questions. It's the only way to understand what the policy does and does not cover, and what options you have in terms of coverage.
The most important thing to remember about homeowners insurance is that it must, at the very least, meet the lender's requirements. Once you've met the bank's requirements, you can shape the policy to meet your own needs.
About the Author
Brandon Cornett is publisher of Home Buying Institute, the Internet's largest library of home buying advice. You can learn more about the home buying process by visiting http://www.homebuyinginstitute.com
Monday, September 10, 2007
How to Buy a Home With a Low Down-Payment
It's no surprise that so many Americans are looking for ways to buy a home with a low down payment.
After all, with so many other costs associated with a home purchase -- like closing costs, furniture, moving expenses, etc. -- coming up with a large down payment isn't always an option. So the idea of buying a home with a low down payment can be very appealing to many buyers, especially first time home buyers.
Many people mistakenly believe that a down payment of at least 20 percent is required in all mortgage scenarios. This is the way things were for a long time. But these days, there are more flexible loan programs and terms available to home buyers. In fact, some mortgage lenders will extend loans to qualified buyers with a down payment as low as 5 percent of the purchase price.
Generally, a mortgage loan with a down payment of less than 20 percent is referred to as a low down payment mortgage loan.
But like all things in life (and in home buying), there are special conditions to buying a home with a low down payment. For instance, many mortgage lenders who grant loans with such a low down payment usually require that the loan be insured in some way. This insurance is aptly called mortgage insurance.
Mortgage Insurance for a Low Down Payment
Mortgage insurance is just what it sounds like -- insurance on a home mortgage loan. This type of insurance protects the lender financially in the event that a homeowner defaults (ceases to make payments) on the mortgage.
Mortgage lenders usually require mortgage insurance on loans with a down payment of 20 percent or less. In other words, some form of mortgage insurance is almost always required for a low down payment mortgage. The home buyer is usually required to pay the cost of this mortgage insurance.
Two Types of Mortgage Insurance - Government and Private
Let's recap what we have covered so far. We know that it's possible to buy a home with a low down payment, and that a 20 percent down payment is not always necessary. We also said that most lenders who offer mortgages with a low down payment (below 20 percent) will also require some form of mortgage insurance. Thus, buying a home with a low down payment almost always requires mortgage insurance.
With that straight, let's talk about the two types of mortgage insurance -- governmental and private.
Government Mortgage Insurance
Government-backed mortgages are usually insured by one of three federal organizations. These mortgages are either insured by (A) the Federal Housing Administration, or FHA; (B) the Department of Veterans Affairs, or VA; or (C) the Department of Agriculture's Rural Housing Service, or RHS.
Each of these agencies has its own criteria for the types of loans they will ensure. For example, the VA Home Loan program only applies to military veterans or their spouses, and RHS loans are usually reserved for people in rural areas.
The FHA requires a minimum down payment of 3 percent. They also limit the loan amount that they're willing to ensure based on geographic area.
So this is governmental path to buying a home with a low down payment. When you obtain a mortgage loan backed by one of the federal organizations listed above, you can make a down payment less than the traditional 20 percent.
Private Mortgage Insurance
In addition to the three governmental options above, there are also private companies willing to insure mortgage loans. This too can be a path to home buying with a lower down payment. Private mortgage insurance is aptly referred to as PMI. Private mortgage insurance is available to a much wider audience than the governmental options listed above. For instance, there are no restrictions regarding military service or rural residence.
Private mortgage insurance, or PMI, is available on a wide variety of low down payment home loans and there is no pre-determined limit on the loan amount (as there usually is with the government-backed mortgage loans).
Conclusion
These days, it is certainly possible to buy a home with a low down payment. In this context, "low" refers to a down payment of less than 20 percent. These types of home loans require some form of mortgage insurance, either government insurance or private mortgage insurance (PMI). Here are some resources to help you learn more about home buying with low money down.
* You may republish this article online if you retain the author's byline and the active hyperlinks below. Copyright 2007, Brandon Cornett.
About the Author
Brandon Cornett publishes a network of websites related to home buying and mortgages. For more tips on buying a home please visit the Home Buying Institute at http://www.homebuyinginstitute.com
After all, with so many other costs associated with a home purchase -- like closing costs, furniture, moving expenses, etc. -- coming up with a large down payment isn't always an option. So the idea of buying a home with a low down payment can be very appealing to many buyers, especially first time home buyers.
Many people mistakenly believe that a down payment of at least 20 percent is required in all mortgage scenarios. This is the way things were for a long time. But these days, there are more flexible loan programs and terms available to home buyers. In fact, some mortgage lenders will extend loans to qualified buyers with a down payment as low as 5 percent of the purchase price.
Generally, a mortgage loan with a down payment of less than 20 percent is referred to as a low down payment mortgage loan.
But like all things in life (and in home buying), there are special conditions to buying a home with a low down payment. For instance, many mortgage lenders who grant loans with such a low down payment usually require that the loan be insured in some way. This insurance is aptly called mortgage insurance.
Mortgage Insurance for a Low Down Payment
Mortgage insurance is just what it sounds like -- insurance on a home mortgage loan. This type of insurance protects the lender financially in the event that a homeowner defaults (ceases to make payments) on the mortgage.
Mortgage lenders usually require mortgage insurance on loans with a down payment of 20 percent or less. In other words, some form of mortgage insurance is almost always required for a low down payment mortgage. The home buyer is usually required to pay the cost of this mortgage insurance.
Two Types of Mortgage Insurance - Government and Private
Let's recap what we have covered so far. We know that it's possible to buy a home with a low down payment, and that a 20 percent down payment is not always necessary. We also said that most lenders who offer mortgages with a low down payment (below 20 percent) will also require some form of mortgage insurance. Thus, buying a home with a low down payment almost always requires mortgage insurance.
With that straight, let's talk about the two types of mortgage insurance -- governmental and private.
Government Mortgage Insurance
Government-backed mortgages are usually insured by one of three federal organizations. These mortgages are either insured by (A) the Federal Housing Administration, or FHA; (B) the Department of Veterans Affairs, or VA; or (C) the Department of Agriculture's Rural Housing Service, or RHS.
Each of these agencies has its own criteria for the types of loans they will ensure. For example, the VA Home Loan program only applies to military veterans or their spouses, and RHS loans are usually reserved for people in rural areas.
The FHA requires a minimum down payment of 3 percent. They also limit the loan amount that they're willing to ensure based on geographic area.
So this is governmental path to buying a home with a low down payment. When you obtain a mortgage loan backed by one of the federal organizations listed above, you can make a down payment less than the traditional 20 percent.
Private Mortgage Insurance
In addition to the three governmental options above, there are also private companies willing to insure mortgage loans. This too can be a path to home buying with a lower down payment. Private mortgage insurance is aptly referred to as PMI. Private mortgage insurance is available to a much wider audience than the governmental options listed above. For instance, there are no restrictions regarding military service or rural residence.
Private mortgage insurance, or PMI, is available on a wide variety of low down payment home loans and there is no pre-determined limit on the loan amount (as there usually is with the government-backed mortgage loans).
Conclusion
These days, it is certainly possible to buy a home with a low down payment. In this context, "low" refers to a down payment of less than 20 percent. These types of home loans require some form of mortgage insurance, either government insurance or private mortgage insurance (PMI). Here are some resources to help you learn more about home buying with low money down.
* You may republish this article online if you retain the author's byline and the active hyperlinks below. Copyright 2007, Brandon Cornett.
About the Author
Brandon Cornett publishes a network of websites related to home buying and mortgages. For more tips on buying a home please visit the Home Buying Institute at http://www.homebuyinginstitute.com
First Time Home Buying Tips
We are coming into the time of year when people move. Homes are bought and sold. If you are a renter you may be thinking of buying a home. It may be your first home and you are not sure about how to go about doing it. Here are some tips to consider when it comes to buying a new home.
First of all find a good realtor you can work with. You want it to be someone you feel comfortable with yet has the experience to do a good job as well. No sense having them learning the ropes on you.
Find a realtor that specializes in buying and selling homes in the area you are looking to buy in. This is important as they will be able to answer questions on everything from the average sale price, to where are the best schools in this area.
Next you will want to to get pre-qualified for a mortgage loan. Your realtor can recommend a good mortgage broker to work with if you do not have someone in mind. Getting pre qualified will give you the price range you can afford which will help when you start looking at homes.
The mortgage professional will look at your credit worthiness, your income, and your debt load and to determine what you can afford and what they are willing to lend you. They will also be able to offer you various loan packages to help you zero in the monthly payment you are looking to make.
Another thing to think about is whether you want to buy a new home or a resale. There are good things and bad things about both. Of course a new home has never been lived in so you get to build it the way you want.
An older home may need repairs and you will need to pay attention to things like the foundation and roof. New home have warranties where ana older home may not. An older home is probably already landscaped and has the yard in place where you may have to do that yourself on a new one.
Sometimes people who have never bought will look at condos and townhomes as a starter home. Price is a reason for that and they can be a good option for some people. The downside to a condo or town home can be having a place for kids to play and you have noise issues much like living in an apartment complex.
Buying a home is an exciting time, but you have to be smart. Do not let your excitement rush you into doing something you will regret later. If you feel unsure about anything get a second opinion.
Once everything feels right and you have found the right home consider using a real estate lawyer to review your contract before you sign it. A new home is the largest investment most people make and you want to be sure you understand what you are signing.
Jeff Schuman invites you to visit his article writer website for $10 articles and multiple article discounts. To see how he uses JV With Jeff to help you make money online please visit his web site here now: http://www.Team-Schuman.com
Article Source: http://EzineArticles.com/?expert=Jeff_Schuman
First of all find a good realtor you can work with. You want it to be someone you feel comfortable with yet has the experience to do a good job as well. No sense having them learning the ropes on you.
Find a realtor that specializes in buying and selling homes in the area you are looking to buy in. This is important as they will be able to answer questions on everything from the average sale price, to where are the best schools in this area.
Next you will want to to get pre-qualified for a mortgage loan. Your realtor can recommend a good mortgage broker to work with if you do not have someone in mind. Getting pre qualified will give you the price range you can afford which will help when you start looking at homes.
The mortgage professional will look at your credit worthiness, your income, and your debt load and to determine what you can afford and what they are willing to lend you. They will also be able to offer you various loan packages to help you zero in the monthly payment you are looking to make.
Another thing to think about is whether you want to buy a new home or a resale. There are good things and bad things about both. Of course a new home has never been lived in so you get to build it the way you want.
An older home may need repairs and you will need to pay attention to things like the foundation and roof. New home have warranties where ana older home may not. An older home is probably already landscaped and has the yard in place where you may have to do that yourself on a new one.
Sometimes people who have never bought will look at condos and townhomes as a starter home. Price is a reason for that and they can be a good option for some people. The downside to a condo or town home can be having a place for kids to play and you have noise issues much like living in an apartment complex.
Buying a home is an exciting time, but you have to be smart. Do not let your excitement rush you into doing something you will regret later. If you feel unsure about anything get a second opinion.
Once everything feels right and you have found the right home consider using a real estate lawyer to review your contract before you sign it. A new home is the largest investment most people make and you want to be sure you understand what you are signing.
Jeff Schuman invites you to visit his article writer website for $10 articles and multiple article discounts. To see how he uses JV With Jeff to help you make money online please visit his web site here now: http://www.Team-Schuman.com
Article Source: http://EzineArticles.com/?expert=Jeff_Schuman
Your Home Buying Checklist
A good home buying checklist, like any good checklist, can make things go more smoothly. You will have to put your own list together according to what your own needs, but here are some items that will be common to most home buying lists.
___ Prepare. Consider not only what monthly payment you can afford, but how much you want to afford, given your other goals. Check your credit report and take actions to improve your credit score. Make a list of what you want or need in a home, and prioritize it in case you can't get everything.
___ Choose an area in which to focus your search. What do you need in a town or neighborhood? Use online resources to investigate towns. Check crime rates online. Investigate schools. Look at local newspapers online to get a "feel" for a town.
___ Get preapproved. Gather pay stubs for the last few months. Find recent bank statements, tax returns, w-2 forms, proof of other income. Ask questions about loan options (take notes). Make copies of pre-approval letter to submit with offers.
___ Start home shopping. Browse online listings. Look in newspapers, and real estate guides. Find a real estate agent that is active in the area you are interested in, and with the types of houses you are looking for. Consider a buyer's agent. Explain clearly what you are looking for. If the agent shows you homes that clearly don't fit your criteria, fire him. Take notes on homes you see.
___ Look at the homes. Does the home meet your requirements? How does it feel when you walk through it? Look at the neighborhood. Ask the agent about any problems the home may have. Take a photo, or write a description, so you'll remember the home after looking at others. Ask a lot of questions. Use a home inspection checklist, taking notes to pass on to a professional home inspector.
___ Make a decision. Does the home work for you? Find out the appraised value if possible. Find out why the seller is selling. How does the home compare to others you have seen? What is the home worth to you, based on what you know of values at this point? Ask the agent if there have been other offers, and what happened with them.
___ Make an offer. Have the agent help, but don't reveal your thoughts on possible negotiations. Write your earnest money check to an agency, or the real estate broker if they have an escrow account. Be clear in the offer as to what stays with the home. Specify who will pay for each closing cost. Include contingencies for any necessary inspections.
___ Complete the purchase. Arrange inspections as soon as the offer is accepted. Satisfy any other contingencies in the offer. Get a loan commitment from a lender. Get a firm closing date. Buy home owners insurance. Get a closing statement. Obtain the cashiers check for the closing.
___ Prepare for the move. Once closing is certain, arrange for transfer of utilities to your name. Mail change of address forms to post office. Start packing. Hire a mover. Transfer prescriptions. Get kids registered in new schools.
As a final item on your home buying checklist, check out everything thoroughly when you arrive at your new home. It should be in the same (or better) condition as when you made the offer.
Copyright Steve Gillman. See a photo of the house we bought for $17,500 (home page), get a Home Inspection Checklist, and more, at: http://www.HousesUnderFiftyThousand.com
Article Source: http://EzineArticles.com/?expert=Steven_Gillman
___ Prepare. Consider not only what monthly payment you can afford, but how much you want to afford, given your other goals. Check your credit report and take actions to improve your credit score. Make a list of what you want or need in a home, and prioritize it in case you can't get everything.
___ Choose an area in which to focus your search. What do you need in a town or neighborhood? Use online resources to investigate towns. Check crime rates online. Investigate schools. Look at local newspapers online to get a "feel" for a town.
___ Get preapproved. Gather pay stubs for the last few months. Find recent bank statements, tax returns, w-2 forms, proof of other income. Ask questions about loan options (take notes). Make copies of pre-approval letter to submit with offers.
___ Start home shopping. Browse online listings. Look in newspapers, and real estate guides. Find a real estate agent that is active in the area you are interested in, and with the types of houses you are looking for. Consider a buyer's agent. Explain clearly what you are looking for. If the agent shows you homes that clearly don't fit your criteria, fire him. Take notes on homes you see.
___ Look at the homes. Does the home meet your requirements? How does it feel when you walk through it? Look at the neighborhood. Ask the agent about any problems the home may have. Take a photo, or write a description, so you'll remember the home after looking at others. Ask a lot of questions. Use a home inspection checklist, taking notes to pass on to a professional home inspector.
___ Make a decision. Does the home work for you? Find out the appraised value if possible. Find out why the seller is selling. How does the home compare to others you have seen? What is the home worth to you, based on what you know of values at this point? Ask the agent if there have been other offers, and what happened with them.
___ Make an offer. Have the agent help, but don't reveal your thoughts on possible negotiations. Write your earnest money check to an agency, or the real estate broker if they have an escrow account. Be clear in the offer as to what stays with the home. Specify who will pay for each closing cost. Include contingencies for any necessary inspections.
___ Complete the purchase. Arrange inspections as soon as the offer is accepted. Satisfy any other contingencies in the offer. Get a loan commitment from a lender. Get a firm closing date. Buy home owners insurance. Get a closing statement. Obtain the cashiers check for the closing.
___ Prepare for the move. Once closing is certain, arrange for transfer of utilities to your name. Mail change of address forms to post office. Start packing. Hire a mover. Transfer prescriptions. Get kids registered in new schools.
As a final item on your home buying checklist, check out everything thoroughly when you arrive at your new home. It should be in the same (or better) condition as when you made the offer.
Copyright Steve Gillman. See a photo of the house we bought for $17,500 (home page), get a Home Inspection Checklist, and more, at: http://www.HousesUnderFiftyThousand.com
Article Source: http://EzineArticles.com/?expert=Steven_Gillman
Home Buying Tip: 7 Ways to Avoid Unethical Lenders
Purpose of this home buying tip: To give you the information you need to protect yourself from unethical or "predatory" lenders during the home buying process.
What's a Predatory Lender?
Unethical lenders are commonly referred to as "predatory" lenders. It's a fitting description, because just like the lion preys upon the weakest of the herd, these lenders prey upon the most uniformed of home buyers.
Some predatory lenders lure you in with big promises, such as low rates, easy qualification and flexible terms. Others use the "only chance" ploy, trying to convince you that they are your only hope for a mortgage loan. By the time you realize what has happened, you've become a victim of loan fraud.
How Can I Protect Myself?
Common sense goes along way to protect you from predatory lenders. Trust your "gut" instincts during the home buying process. If something doesn't feel right, it's probably not.
Here are seven more ways to avoid predatory lenders:
1. Educate Yourself
Educate yourself before buying a home. Your education should include the types of mortgages, how the mortgage process works, what rights you have under the RESPA act and more. You can start your education by visiting HomeBuyingInstitute.com, the Internet's largest library of professional home buying advice.
2. Get Professional Help
Seek professional help from a real estate agent. Agent fees are nominal when compared to the price you'll pay for a new home. And the protection and advice they can offer are priceless.
3. Know Your Market
Start following real estate trends in your area. Get information about the prices of other homes nearby. Don't be tricked into paying too much.
4. Compare Lenders
Shop for a mortgage lender and compare their costs. By comparing several lenders, you'll be more likely to spot red flags, such as unusually low interests rates or other "to good to be true" promises.
5. Be Honest
Never let a mortgage lender persuade you to make false statements on your mortgage application. You are solely responsible for the information you put onto such documents.
6. Read the Fine Print
Take your time when reviewing mortgage documents. If somebody rushes you to sign something, tell them goodbye. Have your agent review the documents with you, or hire a real estate attorney if necessary. Never sign a document until you fully understand it.
7. Don't Sign Blank Areas
In your mortgage application, make sure there are no blank areas to be "filled in later." If there are blanks, mark them with "N/A" or cross them out.
Conclusion
Trust your instincts when buying a home, ask plenty of questions, and read all the fine print. If a deal sounds too good to be true, it probably is!
* Copyright 2006, Brandon Cornett. You may republish this article online provided you keep the byline, author's note, and active hyperlinks.
Learn more:
For more home buying tips, visit HomeBuyingInstitute.com -- the Internet's largest library of home buying articles and advice. Online at http://www.HomeBuyingInstitute.com
Article Source: http://EzineArticles.com/?expert=Brandon_Cornett
What's a Predatory Lender?
Unethical lenders are commonly referred to as "predatory" lenders. It's a fitting description, because just like the lion preys upon the weakest of the herd, these lenders prey upon the most uniformed of home buyers.
Some predatory lenders lure you in with big promises, such as low rates, easy qualification and flexible terms. Others use the "only chance" ploy, trying to convince you that they are your only hope for a mortgage loan. By the time you realize what has happened, you've become a victim of loan fraud.
How Can I Protect Myself?
Common sense goes along way to protect you from predatory lenders. Trust your "gut" instincts during the home buying process. If something doesn't feel right, it's probably not.
Here are seven more ways to avoid predatory lenders:
1. Educate Yourself
Educate yourself before buying a home. Your education should include the types of mortgages, how the mortgage process works, what rights you have under the RESPA act and more. You can start your education by visiting HomeBuyingInstitute.com, the Internet's largest library of professional home buying advice.
2. Get Professional Help
Seek professional help from a real estate agent. Agent fees are nominal when compared to the price you'll pay for a new home. And the protection and advice they can offer are priceless.
3. Know Your Market
Start following real estate trends in your area. Get information about the prices of other homes nearby. Don't be tricked into paying too much.
4. Compare Lenders
Shop for a mortgage lender and compare their costs. By comparing several lenders, you'll be more likely to spot red flags, such as unusually low interests rates or other "to good to be true" promises.
5. Be Honest
Never let a mortgage lender persuade you to make false statements on your mortgage application. You are solely responsible for the information you put onto such documents.
6. Read the Fine Print
Take your time when reviewing mortgage documents. If somebody rushes you to sign something, tell them goodbye. Have your agent review the documents with you, or hire a real estate attorney if necessary. Never sign a document until you fully understand it.
7. Don't Sign Blank Areas
In your mortgage application, make sure there are no blank areas to be "filled in later." If there are blanks, mark them with "N/A" or cross them out.
Conclusion
Trust your instincts when buying a home, ask plenty of questions, and read all the fine print. If a deal sounds too good to be true, it probably is!
* Copyright 2006, Brandon Cornett. You may republish this article online provided you keep the byline, author's note, and active hyperlinks.
Learn more:
For more home buying tips, visit HomeBuyingInstitute.com -- the Internet's largest library of home buying articles and advice. Online at http://www.HomeBuyingInstitute.com
Article Source: http://EzineArticles.com/?expert=Brandon_Cornett
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