If you’ve been shopping around for a home to buy, it can be difficult to know what price range to stay in. Unfortunately, you cannot look just at the sales price as the total amount you will be paying over the years; you must also calculate in the loan and interest rate on the mortgage to figure out the monthly and yearly amount you will be paying. Want a quick way to figure that all out? You can use this easy calculator below; just click on the picture to be directed to it.
Managing your finances before homeownership to save your home from a foreclosure
Are you planning to purchase a new home? If yes, you have to buck up your finances so that you don’t fall in trouble in the near future and then risk losing your home to a forced foreclosure. Managing your finances is the most important job that you have to do when you plan to take out a home mortgage loan from a bank. The mortgage loan entails your home as collateral so that when the borrower defaults to make the payments on time, the lender can foreclose the house and recuperate the money. “How much house can I afford” is the most important question a borrower should ask himself before taking the plunge. Here are some important steps that you should take in order to manage your finances once you plan to take out a home loan.
- Stop all the unnecessary expenses: Whenever you contemplate buying a new house and forget paying further rent, you should stop making all the unnecessary expenses that you can do without. If you don’t read magazines, stop the monthly subscriptions to magazines. If you can cook well, stop dining out every weekend as this will save your dollars in the long run. You can even do without the cable connection at home. If you can build an emergency fund, you can easily take out a mortgage loan at an affordable rate.
- Stop using your credit cards: Are you aware of the fact that the mortgage lender will check your DTI ratio or the debt-to-income ratio that is the ratio between the total monthly debt obligations with your monthly income. If you keep on purchasing things with your credit cards, you’ll drown in unsecured debt and thereby be forced to take out a home mortgage loan at an unaffordable interest rate. Therefore, stuff your wallet with cash so that you may stop buying things when you’re exhausted.
- Save enough money: Yes, this is the ultimate secret that will take you to the path of a smooth mortgage loan approval. The mortgage loan underwriter will check the amount you’re paying down while taking out the loan amount. The more you pay down, the lower will be the rate offered to you. You should save enough money so that you can at least pay down 20% of the loan amount and avoid paying PMIs later on.
- Keep track on your credit score: Don’t take any wrong step that can hit your credit score. Pull out a copy of your credit score time to time so that you know where you stand financially. Repair your credit as much as possible so as to grab the best mortgage loan at the most covetable cost.
When you’re dreaming of homeownership, make sure you follow the money tips mentioned above. By taking all the tips mentioned above, you can get the most appropriate loan in accordance with your affordability. Don’t forget to ask yourself “how much house can I afford” before taking out the loan.
If you know someone who is upside down or owes more on their property than it is worth of residential real estate, NOW is the time to really take a close, hard look at the law that has saved millions of homeowners over the past several years: the Mortgage Debt Forgiveness Relief Act that expires on January 1, 2013. Federal and California state guidelines are listed below.
For anyone you know in a modification, I strongly suggest you have your agreement reviewed ASAP with a real estate attorney if you haven’t already. For a referral, I can help; I keep in contact with several top-quality attorneys and accountants. The modification agreement in place may circumvent the Mortgage Debt Forgiveness Relief Act–causing liability for the difference of the home loan on your property of what it is worth, whether you let your home go to foreclosure, or sell the property as a short sale now or after this law expires this year.
Please do yourself, friends, and family a favor–YOU will always be remembered as the knight in shining armor to them if you help them out. And I can always help to answer any questions about this Mortgage Debt Forgiveness Relief Act and the effect it will have on you and them once it expires. Since short sales can take several months to process in some cases, immediate action is necessary, and with that a financial windfall is possible–even if there is no equity in your property. Call me now for details–(619) 890-3648!
Below you will find some of the details pertinent to the Federal and California government laws, but there are others as well (not noted here) that will also be expiring. I am here to help!
New law–Taxable years 2009 through 2012
California law conforms, with modifications, to federal mortgage forgiveness debt relief for discharges that occurred in the tax years of 2007 through December 31, 2012. The amount of qualifying indebtedness is less than the federal amount, and California imposes a state-only limitation on the total amount of relief excluded from the gross income. The following summarizes the differences between the Federal and California provisions.
Federal provision applies to discharges occurring in 2007 through the end of 2012, and:
- Limits the amount of qualified principal residence indebtedness to $2,000,000 for taxpayers who file as married filing jointly, single, head of household, or widow/widower, and to $1,000,000 for taxpayers who file as married filing separately.
- Does not limit the debt relief amount; it only limits the indebtedness amount used to calculate the debt relief amount.
- See the Federal law: Mortgage Forgiveness Debt Relief Act and Debt Cancellation for more information.
California provision applies to discharges that occurred in 2007 through 2012, and:
Taxable years 2009 through 2012
- Limits the amount of qualified principal residence indebtedness to $800,000 for taxpayers who file as married/registered domestic partners (RDP) filing jointly, single, head of household, or widow/widower, and to $400,000 for taxpayers who file as married/RDP filing separately.
- Limits debt relief to $500,000 for taxpayers who file as married/RDP filing jointly, single, head of household, or widow/widower, and to $250,000 for taxpayers who file as married/RDP filing separately.
Taxable years 2007 and 2008
- Limited the amount of qualified principal residence indebtness to $800,000 for taxpayers who file as married/(RDP) filing jointly, single, head of household, or widow/widower, and to $400,000 for taxpayers who file as married/RDP filing separately.
- Limited debt relief to $250,000 for taxpayers who file as married/RDP filing jointly, single, head of household, or widow/widower, ad to $125,000 for taxpayers who file as married/RDP filing separately.
You can read more about the Mortgage Debt Forgiveness Relief Act and Debt Cancellation via the IRS website.
If you’re confused still about this law, or need help getting the ball rolling NOW–please give me, John A. Silva, a call. I would love to help sort this all out for you and save you headaches in the future–call me! (619) 890-3648
Shoppers, I bet many of you scoured the Sunday ads and bounced to several stores for deals over Thanksgiving weekend.
What if you applied that same effort and vigilance to shopping for a new home loan or refinance? That same attention to detail could translate into hundreds to thousands of dollars in savings over time.
“People think nothing about going to many different stores to buy a toaster or oven or dishwasher,” said Norma Garcia, attorney at Consumers Union, publisher of Consumer Reports magazine. “They just don’t shop for (home) loans the same way they shop for other products, but they ought to.”
Consumers likely are more comfortable comparison-shopping for microwaves than mortgages because the home-loan process can be cumbersome, with reams of paperwork, unfamiliar jargon, and of course, the rush to close and move to a new place.
The U.S. government is working to make the process easier. Since May, officials have been trying to simplify and combine two required forms that show would-be borrowers their final loan terms and costs before closing. The “Know Before You Owe” campaign, spurred by sweeping financial reforms in 2010, has produced two drafts of the merged documents that are still in testing phase…
FORMS TO KNOW
This gives you an approximation of what you may owe at closing. It lists the basics including loan amount, interest rate and potential penalty costs. The form also shows you different loan scenarios to illustrate whether it would make sense, for instance, to buy points upfront to reduce your interest rate. (One point typically equals 1 percent of the loan’s value, or $1,000 for each $100,000 borrowed.) Click here to see the whole form…
FORMS TO KNOW
You get this at the closing table. The form lists every single expense and credit involved in the transaction. Click here to see the whole form…
You also get this at closing. The document breaks down how much you will owe in a different way. Perhaps the most important detail is the annual percentage rate, which rolls in all of your costs and is defined by HUD as the “true cost” of a loan. Click here to see the whole form…
TO-DO LIST BEFORE CLOSING
• If there’s a line item you don’t understand in any of the forms, ask about it.
• Scan for hidden costs. Third parties get proceeds from loans in the form of fees and commissions, said Norma Garcia, attorney at Consumers Union, publisher of Consumer Reports magazine.
• Know who’s going to service your loan. The holder of your loan can sell the loan to anyone, but they have to disclose the percentage of loans that are sold. “If you choose to go with that lender, just know that may not be the person you’re dealing with down the line,” Garcia said.
• If you sense your lender isn’t being upfront or answering your questions, find someone else. It may take interviewing two to three people to find the right lender.
• Get a second opinion on your loan documents from HUD-approved counselors at little or no charge. But be sure to do this before closing. For San Diego, you can call the Housing Opportunities Collaborative at (619) 283-2200 or (800) 462-0503. Someone will direct you to the right agency.
• Don’t sign anything unless you understand it.
Read the whole article by SignOnSanDiego.com here: “How to Bargain Shop for Mortgages“.