Mortgage Financing Options in Your Best Interest

Boost buying power without the higher payments
Finance a 40-year mortgage and give yourself the flexibility of spending just a little bit more on the home you really want—with payments that are still affordable. A 40-year mortgage works similarly to a traditional 30 or 15-year fully amortized loan, but here is the difference—a 40-year mortgage payment is based upon a variable interest rate (3-year adjustable or 1-year adjustable) that is amortized over a 40-year period. This financing option not only gives you lower monthly payments than a traditional 30 or 15-year loan, but those lower monthly payments can also help you qualify for a larger loan amount.

Monthly savings comparison
(based on a $500,000 loan amount)

30-year-fixed rate at 6% APR $ 2997.75
40-year adjustable at 5% APR $ 2684.11

You could potentially save $313.64!


Pay off your mortgage and build equity much faster!
With a new Bi-weekly mortgage offered at Tech CU, every payment that you make gives you significant interest savings and builds your home equity much faster!

Here’s how it works:
With a Bi-weekly mortgage, payments are deducted bi-weekly and applied to your loan every 14 days—instead of a single monthly payment. What this means to you is that your mortgage will be paid off much sooner, resulting in significant interest savings over the life of the loan just for making bi-weekly payments!

Payments that Fit your Best Interest
Purchasing or refinancing your home is a big step for many homeowners. What’s most important is finding a monthly payment plan that fits your budget without over-extending yourself. Our solution—finance your home with interest-only payments!

Interest-only payments not only give you the benefit of helping you qualify for a larger loan amount with smaller payments, but they also help to reduce your monthly payment obligations. Because you are paying only interest, you can save yourself a little extra cash every month to put toward other expenses or allocate more towards the principle balance on your mortgage loan. Whichever you choose, you will have peace of mind knowing that you can lower your monthly expenses through interest-only payments.

To learn more about Tech CU’s mortgage products and services, visit our Mortgage Center or contact a Mortgage Consultant today!


http://www.techcu.com/learning/home_buying/interest.htm

Does It Pay To Refinance?

It can be tempting to jump at the next phone call or mailer you get offering to save you big dollars by refinancing your mortgage. Many times it is a good idea, but make sure to look before you leap.

The most important concept here is how to figure out when it makes sense to refinance. There are five key factors in this decision:

* What is the difference between your current interest rate and the new rate?
* What is the difference between your current monthly payment and your new monthly payment?
* How long do you plan to remain in your home?
* What are the closing costs you must pay for the refinance?
* How much time is left on your current loan?

You can use our online calculator (see Additional Resources section) to see how long you must stay in your home before you "break even" between the refinance costs and your new lower payment. After all, it doesn't make sense to drop your payment by $70 a month if it costs you $2,500 to do so and you will only be in your home for one more year. To do it yourself, simply divide the total refinance costs by the proposed difference in your monthly payment. This will give you the number of months you would need to stay in your home to break even. See the example below.

Lee has a 30 year fixed rate mortgage for $100,000 at 8%. By refinancing to a 6.5% rate, the payment will drop by $100 a month. The total cost to refinance is $2,000. Lee must keep the house for at least 20 months (2,000 divided by 100) to break even on the refinance. Thereafter, the $100 a month savings is money in Lee's pocket.

One good rule of thumb is to refinance anytime you can lower your rate by 2% or more, or to lock in a fixed rate if you are currently on an adjustable rate. But think twice about refinancing if you plan to be in your home less than two years - the costs to refinance may be more than the total amount you would save each month for such a short time. And it can be worthwhile to refinance for less than a 2% interest drop, but run the numbers to be sure.

If you are considering refinancing, pay attention to the total length of the loan. Using our example, if Lee has been paying on his current mortgage for five years, and then refinances for 30 years, Lee has financed his home for 35 years. If you are lowering your rate, it's best to see if you can match the remaining length of your current loan with the one you are considering (in the above example: a 25 year loan would be better than a 30 year loan).

If the numbers indicate that it makes sense to refinance, how do you choose what lender to use? Don't just go with the telemarketer that catches you the day you decide to refinance. Consider these ideas:

* Shop around for the best rate available to you. For tips on where to begin, see Looking for the Best Mortgage.
* Ask your current lender if they can offer you a "streamlined" refinance (which often has lower costs) - but check to see if their rates are competitive.
* Call the credit union or bank that you use for your checking or savings accounts - they may offer better rates for current customers.
* Consider online services that will try and find the best rate for you among various lenders.
* Have a mortgage broker shop around for you. A broker works with a number of different lenders and can sometimes get you the best rates.
* Make sure you compare refinancing fees and expenses as well as interest rates.

Once your refinance is final, confirm that the old mortgage is paid off. Then, sit back and enjoy your new, lower monthly payment!


http://www.techcu.com/learning/home_buying/refi.htm

Understanding the Fine Print of a Purchase Offer Takes the Fear Out of Buying

Unbiased Financial Information Provided by Financial Finesse

You've found a home you love and it's actually in your price range. Your real estate agent pulls out an offer form -- eight pages of legalese -- and you start thinking that renting wasn't so bad after all.

Don't let the fine print in the purchase offer, or sales contract, keep you out of your dream home. But do make sure you understand exactly what you're agreeing to and use the contract to protect yourself.

Earnest Money Deposit Proves Buyers Are Serious

Be prepared to hand your real estate agent a check, generally between half a percent to 2 percent of the purchase price, as soon as you sign the offer. This is known as earnest money. If the seller accepts the offer, the check is deposited with an escrow company to later be applied to your down payment.

If a buyer pulls out of the deal without cause allowed in the contract, the seller may keep some or all of the deposit as "liquidated damages." Some states limit the amount of liquidated damages if a deal is broken. In California, for example, the maximum is 3 percent of the offer price. The penalty for pulling out of the deal should be spelled out in the contract.

Contingencies Give Buyers a Way Out

Nearly every real estate offer will include contingencies -- things that must happen for the sale to become final. There will be a time period specified in which each contingency must be met. If any one contingency is not met on time, the buyer may be able to get out of the contract.

Common contingencies relate to appraisal, mortgage approval (often at a specified interest rate), buyer's approval/acceptance of the results of a professional home inspection and completion of needed repairs. You can even make your offer contingent upon selling your old home to get the money to buy the new one.

Government Offers Contract Advice

The U.S. Department of Housing and Urban Development (HUD) publishes a booklet called Buying Your Home: Settlement Costs and Information that includes an outline of many of the legal issues and consumer rights to be aware of in a real estate transaction.

HUD says any purchase offer should cover the following points in specific, clear language:

* The sales price
* Details on transfer of title, and procedures to ensure that the title is free and clear
* Financing arrangements, including deposits, the down payment, and mortgage arrangements
* Pest inspection
* Home inspection
* Disclosure of lead paint or other environmental hazards
* How closing costs will be paid (who pays what)
* Title company or escrow agent to be used

Most offers include a specific date when the offer expires, deadlines for each contingency to be met, and an ultimate closing date.

Do You Need a Lawyer?

In some parts of the country, the escrow or title company handles the closing process and attorneys are not typically involved. Of course, you always have the option of enlisting the help of a lawyer or other expert. If you decide to use an attorney, you can make the sale contingent on an attorney's review of the agreement if your offer is accepted. That way you don't waste time and money having a lawyer review offers that end up being rejected.

The purchase agreement doesn't have to be intimidating. If you've come this far in the home buying process, you've got enough on the ball to write a contract that protects you while still looking attractive to the seller.


http://www.techcu.com/learning/home_buying/fine_print.htm

Escrow Basics for First-Time Homebuyers

Unbiased Financial Information Provided by Financial Finesse

Escrow is like an engagement period. Both you and the seller have accepted the idea of marriage. If you can iron out the details, you'll both say, "I do." An engagement ring doesn't always guarantee a marriage, however. And an agreement on an offer doesn't guarantee a sale. Problems with the title, financing or inspections could lead to a break-up.

Analogies aside, escrow is the arrangement under which all documents and funds for your purchase go to a neutral third party, usually an escrow or title company, which coordinates and completes the paperwork, making sure that all conditions of the sale are met before the transaction is final. Expect escrow to take 30 to 45 days, though it is possible to do the whole thing in as little as a week.

What Happens During Escrow?

* A title search is done. A title search reveals the current legal owner of the home and any liens or claims against the property (e.g., tax assessments, outstanding home loans, and third party restrictions that could limit your use of the property). If there are no problems with the title and you agree to any restrictions there might be, the title is transferred to your name and recorded with the county. Title insurance policies are often purchased to protect you and the lender in case of problems down the road.
* Contingencies are removed. When you make your offer, you'll include contingencies that must be satisfied before the sale can be finalized. Examples of typical contingencies include successfully obtaining a mortgage at a particular interest rate, accepting the results of a property inspection, and, maybe, selling your current home. If any one of the contingencies is not met, the deal may be cancelled.
* The loan is funded. If you haven't applied for financing yet, you'll do it during escrow. Once the loan is approved, your escrow officer will work with the lender to make sure your mortgage papers are completed and all lender conditions are met.

At the start of escrow, call or meet your escrow officer and ask if there's any information you can provide. Be a polite pest throughout the process to make sure the necessary steps are happening and the process is not being delayed because someone isn't doing what they should be.

What Kind of Closing Costs Can You Expect?

Closing costs generally range from two to five percent of the home price. Who pays what usually depends on where you live, though there may be room for negotiation.

Closing costs include:

* Loan fees, which generally range up to three percent of the loan amount. The lender is required to give you a good faith estimate of closing costs within three days after you apply for a loan, then usually an update after the loan is approved and another just before you close. Typical charges may include property appraisal, credit reports, loan document preparation and points (loan-origination fees). Each point equals one percent of the loan amount.
* Escrow fees include title search, document preparation, overnight delivery, and notary charges. There will also be fees for transferring title and recording the deed of trust.
* Your lender may require you to pay up to a year's worth of homeowner's insurance before closing. You'll also make a one-time payment for title insurance policies for you and your lender. You might also be required to prepay some private mortgage insurance - a monthly payment apart from your mortgage payments - if you put less than 20 percent down (the insurance protects the lender if you default).
* And, of course, there are property taxes, which you'll reimburse the sellers for if they prepaid them.

Time to Move In

Just before the final papers are signed, your escrow officer will give you a closing statement outlining all the charges and accounting for all the money that exchanged hands in the sale. Read this carefully to catch any mistakes. You'll also have to pay any outstanding balance at this time. On the closing day, the escrow officer pays the seller and tells you the deed has been recorded.

Now you can put the bubbly on ice and try to find the champagne flutes in all those moving boxes.


http://www.techcu.com/learning/home_buying/escrow.htm

The sub-prime backlash—Why Prime lenders offer the safest mortgage solutions

The sub-prime mortgage market is seeing some tough times. Several heads of sub-prime mortgage companies have been summoned to appear before Congress. Freddie Mac is stepping in to help borrowers who are in bad loan situations. Fannie Mae is calling upon mortgage lenders to reduce rates and monthly payments for the thousands of borrowers nationwide with mortgages they can’t afford. While only 20% of all sub-prime loans are estimated to actually default to the point of foreclosure, everyone is pointing fingers at the sub-prime lending industry for today’s sluggish real estate market.

Why were so many people sucked into sub-prime loans? For people with less-than-perfect credit, sub-prime loans were a godsend. The original concept behind sub-prime loans was a good one—if you have troubled credit, you can get a sub-prime loan now, improve your credit, and refinance into a prime loan (at a lower rate) when your rate adjusts. The reason that sub-prime lenders were able to extend loans to borrowers with lower credit scores (typically FICO scores between 540 and 680) was that they were more willing to assume higher risk of default. To mitigate the risk factor and protect themselves, sub-prime lenders charged higher rates, depending on the borrower’s credit profile.

As the sub-prime market started to really pick up speed between 2003 and 2005, more competition for the same pool of borrowers caused sub-prime lenders to increase their risk-tolerance thresholds and make imprudent lending decisions. Loans offering more than 100% loan-to-value ratios, debt-to-income ratios above 50%, and loans that required no income or asset verification grew in popularity, attracting more borrowers who otherwise would not have qualified for a loan. Sub-prime mortgage brokers and real estate professionals with sales quotas added to the frenzy, matching borrowers up with loans that helped on the short term but ultimately eroded their financial health.

The difference between a sub-prime lender and a prime lender isn’t just in the rates they charge or the types of mortgage options they offer. It has to do with risk. While sub-prime lenders measure risk in terms of their own bottom line, prime lenders measure risk with the borrower in mind. Prime lenders look at the whole picture—while they want to help get borrowers into a loan they can afford on the short-term (offering one-year to five-year adjustable-rate mortgages that keep the rate low initially), they also look for ways to make sure that the borrower can stay in the loan or can easily refinance when their loans adjust (offering no-prepayment-penalty options, expedited refinancing options for existing borrowers, etc.).

And if a borrower doesn’t qualify for a prime loan, responsible prime lenders will help that borrower to understand why they didn’t qualify and what they can do to improve their chances for a loan (improve their credit score, reduce their debt-to-income ratio by paying off debt, increase or reduce their number of tradelines, seek out a more affordable home to buy, etc.).

During the height of the sub-prime boom, many credit unions and smaller lenders were pressured to start underwriting sub-prime loans—and many jumped on the bandwagon. Without the risk management infrastructure that most large sub-prime companies could afford, smaller financial institutions are now finding themselves in hot water with low demand for new loans and high default rates on loans in their portfolios.

Even though there was significant demand from the market, Technology Credit Union did not originate sub-prime loans. By holding true to our prime strategy, Technology Credit Union was not only able to avoid the sub-prime backlash, but was also able to increase our portfolio to over $1 billion in loans in 2006. While Tech CU does not originate sub-prime loans, Tech CU does offer opportunities for borrowers who may have faced financial hardship in the past. As a credit union, Tech CU looks out for what’s best for the member—including educating members about how to improve their financial situation and offering loans to them once they’ve got their credit on track.

For more information about Tech CU’s lending programs, please contact a Tech CU mortgage consultant.


http://www.techcu.com/learning/home_buying/SubPrime.htm

home buying - "Home Buyers: How to Avoid Costly Mistakes!"

There are some simple steps that homebuyers often miss when looking for their new home. Taking the time to consider these steps can save you thousands of dollars, but more importantly, can smooth the process of buying a new home, saving time and money, as well as alleviating stressful situations in advance.

1. Begin by being up front and honest with your REALTOR and lender about your credit history. Your credit, whether good or bad, affects everything from your down payment to your interest rates. Your REALTOR or a professional mortgage consultant can often advise you as to how you can get credit problems cleared up or completely eliminated from your credit report before you apply for financing or make an offer on a new home.

2. Getting pre-qualified for a loan by a professional lender before you begin your search for a new home will allow you to know in advance exactly what kind, and how much, mortgage you can afford. This makes it possible for you to make an offer on your new home with confidence that enough funding is available.

3. If the seller does not offer a home warranty on the house you want, ask your REALTOR to make it a part of the written offer that you make. A home warranty can save you thousands of dollars in repairs, and can often be obtained for a very nominal annual fee. A standard warranty covers the electrical, plumbing, heating and air conditioning systems as well as major home appliances.

4. Ask your REALTOR for a market analysis of the home, in comparison to similar homes in the neighborhood or throughout the city, before you make an offer. A home is not just a place where you live - it is also an investment. Take the time to view several homes before you make an offer so you know exactly what is on the market. Be certain you are making a wise investment.

5. Make your offer contingent upon a home inspection and ask the seller to make the required repairs. Hire a professional to inspect every aspect of the home thoroughly. This can save you thousands of dollars in costly repairs and many headaches in the future. A good inspection can also allow you to negotiate for any repairs prior to closing. If the seller is not willing to make the necessary repairs, remind them that the lender will also require the home to be in good condition before they make a loan for the purchase.

6. Take into account your present homeowner or renter status. If you already own a home and must sell it before you buy a new one, it is best to get a REALTOR to do a complete market analysis on your present home. This allows you to know how much you can sell your current home for before you make an offer on a new one. If you are leasing or renting, the lease's expiration date will give you a timetable for your new purchase. Review this with your REALTOR well in advance of when you want to move.

7. Choose your agent wisely. Working with a full-time professional real estate agent is a must. Ask questions of your agent. Find out how knowledgeable he or she is about houses currently for sale in your price range and also of houses that have recently sold. Can your agent recommend a good lender that has the reputation of excellent customer service and low rates? Does your agent ask questions of you to have a full understanding of what you are looking for and to help you get the most home for the money?


http://www.realestateinvestmentarticles.net/Article/home-buying----Home-Buyers--How-to-Avoid-Costly-Mistakes--/3100

Kenya's Middle-Class Home-Buying Boom

NAIROBI -- One recent Sunday, Paul Abeno, a mid-level computer sales executive, shuffled through aisles of brass cabinet pulls, colored tiles and tiny glass-encased models of three-bedroom homes landscaped with paper trees. He stared through the glass at Baobab Village.

"Too late," he said to himself, noting the sold-out sign.

But there were other offerings at the third annual home expo here, and he wandered over to Acacia Court, Simba Villas and Green Park, three of the many new developments along the Kenyan capital's edges.

"I was told all these are bought and everyone's moved in," Abeno said, looking down at the red roofs. "I've just come to see what's on offer so in the near future I can get one for myself."

Traipsing through the Nairobi Exhibition and Convention Center on this weekend were small-business owners, teachers, civil servants, farmers, recent college graduates and others, who make up a group of Kenyans often invisible to the outside world: neither desperately poor nor outlandishly rich but someplace in between.

On a continent where people are often trying to escape or simply survive, here were people perusing six-burner stoves who said they wished to stay, aspiring homeowners who have been fueling what amounts to a construction boom in this east African city of skyscrapers and rusted slums; leafy, moneyed neighborhoods; and lately, it seems, a thousand half-built cinder-block condominiums with pools, gyms and broadband Internet.

Although the Kenyan economy is growing at 6 percent a year, economists are uncertain whether the proliferation of new housing and accompanying mortgages reflects a growing middle class or simply a more prosperous one.

The dominant economic picture of the country, they say, is one of entrenched inequality, with the number of people slipping into poverty increasing and the gap between rich and poor widening.

But that statistical picture does not account for the sense of fragile optimism along the aisles at the convention center on a Sunday or, for that matter, around a city where billboards advertising mortgages promise "a new lifestyle" with images of a well-dressed man walking across a sun-splattered lawn.

"Looking at these houses, you see a whole life," said Nicholas Kinoti, a clothing designer with his own shop, which caters to a wealthy clientele. "I thought instead of paying rent, I could adjust and pay a mortgage."

He was among dozens swarming the booth for a new development of Kansas-made prefabricated houses called Green Park, whose managing director is a former aid worker who once dealt with the Ethiopian famine.

Kinoti counts himself among a relatively small but notable group of Kenyans who have climbed their way into a kind of life their parents barely imagined. His mother and father were subsistence farmers and managed to send their son to a university in Nairobi. He got a job with a travel agency afterward and, with help from brochures of Paris and heavy doses of television, developed a taste for fashion and an urban lifestyle.;


http://www.washingtonpost.com/wp-dyn/content/article/2007/06/18/AR2007061801621.html