Borrower Q & A

Recently Asked and Answered Mortgage & Real Estate Questions

Q:  I am looking to refinance and would like to use a local lender like yourself. However, I notice that I can get lower rates outside of the area when I check the posted rates in the financial sections of several Chicago area publications. Is there a reason these lower rates are not being offered locally.

A:  You say that you are checking the financial sections of Chicago publications ... so I assume you are relying on these posted and printed rates as objective, fact based information. Unfortunately they are not - this information is advertising designed to look like objective consumer information.

 

As an example of what you were finding in the supposedly credible financials section of a major newspaper, I went to the Chicago Tribune web site and researched mortgage rates. On a day where truly deliverable rates for a 30 year fixed purchase mortgage assuming no points was at 6.250% ... the Chicago Tribune reported a rate of 5.750%. How could this be?!

 

The Chicago Tribune and most publications are 'for profit' companies that rely on advertising within their publications for a majority of their income. Advertisers such as Bankrate.com and in the case of the Chicago Tribune; Interest.com pay the publications to be the provider of "Average Mortgage Rates" in the financial and real estate sections of these publications.

 

So how do these 'providers' make money?! By teasing consumers with unobtainable rates of interest so that the consumer will enter into the loan process via their service. The information that consumer's provide toward obtaining this 'best rate mortgage' is either sold to mortgage companies as a "lead" or processed by the company itself toward a profitable mortgage transaction ... where the original posted rate will never end up being delivered.

 

Bottom Line: There is a price for money in today's world-wide market where total rates and fees on a mortgage transaction among credible/competitive lenders will only vary by as little as .125%. When a rate of interest is posted anywhere that is .25% to .75% lower than those posted by reputable lenders ... a couple of old sayings come to mind: i.e. "There is no truth in advertising", "If it sounds to good too be true, it probably is" and of course, "Caveat Emptor" (Buyer Beware).

 

As a consumer service, our own web site of www.baybridgesalem.com does provide truly objective "National Average Mortgage Rates". These rates are provided by an outside source that objectively surveys 200 reputable lenders daily ... as opposed to advertised and possibly misleading rates offered or promoted by less sincere lenders and/or other rate sources. Please use this resource as an indication of the current rate environment.

 

If you desire an actual deliverable rate quote for your specific borrowing situation, contact a State Street Mortgage Specialist for a FREE Proposal of Financing.

Q:  Hello Bill, I'm currently out of town but can you write back and tell me or give me an example on what you mean by -Wholesale, Retail, $350 Flat Rate and No Cost mortgages.  How different are the rates/costs???  Thank you

Q:  Bill, what do you think of Dave Ramsey? Is it worth looking into?  What are your thoughts?  Thanks for the input.

A:  Dave Ramsey is a radio talk show host and author of The Total Money Makeover: A Proven Plan for Financial Fitness.  Mr. Ramsey preaches a 'snowball' approach to paying down your debt by making minimum payments on all debts, except debt with the lowest balances.  In short, he advocates paying-off low balance debts and applying the former payments to the next remaining lowest balance debt until the next debt is paid-in-full.  Repeat this process until all debts are paid.  Pretty simple, right?!

For my money, if this were my only solution I can do better by eliminating my debts based on the highest rate of interest being charged … due to the fact that higher interest rate debts compound the money owed.  My lowest rate of interest on any debt happens to be my mortgage, which also has the built-in ability to reduce my income taxes due to the fact that the interest paid annually is tax deductible … so I'll work on my highest rate credit card debt first.

 

I'm not saying Ramsey's method is without merit, just that it can be maximized if used in conjunction with other means of debt elimination.  For most home owners, including (I'm assuming) Mr. Ramsey … Mortgage Refinance – Debt Consolidations are the most practical solution in jump-starting real debt relief.  A mortgage debt consolidation redistributes higher interest rate debt into a low rate/tax deductible structure that results in instant and many times substantial payment savings which can then be applied toward accelerated elimination of any remaining debts, including the mortgage itself.

 

In researching your personal situation, a new 15 year fixed mortgage paying off your existing mortgages and high rate/high balance credit cards results in a $1,410.32 monthly payment savings.  If you applied this savings to your remaining debt, you could pay-off your home and be debt free in 5 years!  Mr. Ramsey would be proud ;o)

Q:  Hi, I bought my house 4 years before I met my husband and I do not want his name on my deed, but I would like to refinance and he has better credit so I was wondering if he could do the refinancing without his name being on the deed or having to be put on the deed? I am trying to avoid having his name on my deed. Thanks for your response.

A:  You can refinance in your husband's name only being as he is married to you and you own the home ... however, being as your husband is 'refinancing' a mortgage using the home as collateral - he must have ownership interest during the process.

Once the refinance is complete, your husband can divest his ownership interest by removing his name off the deed via a recorded "Quit Claim". An attorney should be consulted regarding this step, being as the new mortgage holder may require notification of such a change in ownership with the option of demanding the balance of the new financing "due" upon such a change.

Additionally, you may want to discuss your husband's willingness to put himself in a situation where he will be responsible for the mortgage but have no ownership interest in the property securing the mortgage.

Q:  I have been receiving your emails for about a year now. I read them, copy many of them but am missing the one you sent about using a tax id number to purchase a house. I own a business and wondered if there is a loan where I can use the business tax id number, making the business the owner of the house?

A:  The Tax Identification mortgage program that you refer to does not use a business tax identification number ... it is a program for borrowers that do not have social security numbers, yet pay their U.S. personal income taxes via an Individual Tax Identification Number (ITIN). Without much exception, this is generally a situation where the borrower is not a U.S. citizen.

 

For more information on this program, click the following link:  Tax ID Mortgage Program; No SSN, No Visa - No Problem

If you have a social security number and desire to purchase a home using a conventional mortgage - the credit associated with your social security number will be considered for mortgage qualification purposes.

Please let me know if you would like me to explore your personal mortgage financing options.

Q:  I applied for a equity loan with my bank and although I have yet to decide if I want the loan, my mail box is suddenly overflowing with mortgage company post cards and mail pieces wanting my business.  I would like to work with a local lender like yourself to further research my options, but I am now nervous about giving out my information again ... is it my imagination or does everybody suddenly know I am looking for an equity line?

A:  Thanks for asking such a great question … you must be familiar with Caveat Emptor (buyer beware)! In a world of fierce competition and advertising – there appears to be little or No Truth In Advertising from many mortgage lenders.

Mortgage companies get their money from the same secondary market, making the price of money roughly the same for all lenders. With so many lenders standing in line to get your business, many lenders resort to less than honest advertising designed to get consumers into the loan process. What better way to make the phone ring than to advertise lower rates and fees than all the competition.

On a personal note, when I was first getting started in the mortgage business I worked for a mortgage company based in Aurora, Illinois. The company president would inform all loan officers when she was going to advertise lower than available mortgage rates in the local newspaper. The phones would be ringing and she wanted all loan officers manning their desks. This way of doing business is unfortunately not uncommon – and the above mentioned company continues to this day to find it's customers in this same fashion.

The best way to ensure you are getting the best available mortgage has been and always will be to work with a local, reputable mortgage specialist that can shop on your behalf and that actually has your best interest as their only goal. For more information on advertised mortgage rates please read the Fall 2006 edition of our Home Finance Newsletter or visit the Frequently Asked Questions of our site.

Q:  If I am selling house for $169,500.00 and requiring a $20,000 down payment, how do I apply the down payment when the buyer has paid me in full or is that up to me.

A:  With a Contract-for-Deed sale the Seller retains the legal title to the property and the Buyer becomes the equitable owner entitled to the benefits of the ownership. This is an important legal matter that should not be taken lightly.

 

I truly hope both you and the Buyer are represented by reputable real estate attorneys, that you are obtaining an owners title insurance policy assuring the Buyer a clear transferable title and that you plan on recording the contract-for-deed to ensure all parties are protected while facilitating the Buyers ability to obtain future mortgage financing on the property to pay the balance due in-full as soon as possible.

 

How you apply the down payment should be clearly stipulated within the legally binding Contract-for-Deed agreed to and signed by both you (the Seller) and the Buyer.

 

State Street Mortgage can "refinance" Contract-for-Deed's (aka: land contracts) for borrowers that have a recorded 1 year interest in a property and proof of 12 on-time payments.  Please ensure your Buyer makes the monthly payments via a personal checking account being as cash-payments to a private individual will not provide the necessary proof of on-time payments for future mortgage financing.

 

For more information on the critical issues both Sellers and Buyers must consider prior to entering into such a transaction, please read our special report titled "Rights and Obligations of Contract for Deed (or Land Contract) Home Buyers."

Receive a FREE copy of this report by simply clicking here:

Contract for Deed

We hope this information helps.  Best of Luck!

Q:  Can you tell me if my credit score has to be above 600 in order to get 100% financing?  I have been trying for 6 months to raise my credit scores but no matter what I do it's not going up. My middle score is 560.

A:  To give you a very general guideline as to the types of financing available for the purchase of owner occupied residential properties at different credit scores, please refer to the information below:

• 490 Credit Score = 70% Loan-To-Value
  • Buyer will need a down-payment of 30% of the purchase price.
• 500 Credit Score = 90% Loan-To-Value
  • Buyer will need a down-payment of 10% of the purchase price.
• 540 Credit Score = 95% Loan-To-Value
  • Buyer will need a down-payment of 5% of the purchase price.
• 575 Credit Score = 100% Loan-To-Value
  • No down-payment required!

For more information about Credit Scores and Credit Reports please visit the FAQ (Frequently Asked Questions) section of our baybridgesalem.com web site.  

 

Also, be sure to download and print a FREE copy of our Credit Scores and Bureau Repair Guide for step-by-step instruction.

A:  As you are aware, many factors go into the final mortgage rate of interest.

 

Consumer Credit Score (this is where we always start)

Type of Transaction (Purchase, Refinance, Cash-out, etc.)

Type of Loan Program (Conforming, Government, etc.)

Type of Rate (Fixed, Adjustable, etc.)

Loan Term (ie: 30 year, 15 year, etc.)

Loan-To-Value (Loan Amount vs. Value of Property)

Loan Amount

Taxes and Insurance Escrowed

Occupancy

Type of Property

Type of Zoning

Location of Property (programs can vary by State & zip code)

Type of Income Documentation

Type of Employment (Employee, Self Employed, etc.)

Time on Job (or same line of work)

Customer Debt-To-Income Ratio (Income vs. Expenses)

Amount of Reserves & Assets

Lock Term (ie: 30 days, 60 days, etc.)

Points or Fees Paid By Borrower

For discussion purposes, our office approved a $164,000 100% purchase mortgage just a few moments ago for a borrower with a 582 middle credit score.  The Buyer's rate ended-up at 8.95% ... however, the loan program was 100% of the purchase price and the loan program did not require expensive private mortgage insurance and the Seller has agreed to pay all the closing costs.  

The mortgage payments are comfortable for the buyer ... however, it is our goal to lower their payments as soon as possible.  We expect their credit scores to improve nicely once their on-time mortgage payments are reported to credit for 12 or more months.  Our office will be refinancing the mortgage as soon as it is advantageous to lower their rate & payments.

 

The new home buyer is thrilled that they will finally own a home 2 short weeks from now!  

Q:  Just curious, what is the difference between a mobile, manufactured or a modular home when it comes to getting a mortgage?

A:  This is a great question. Our mortgage offices get at least one phone call a month regarding this issue ... usually from potential mobile home buyers having difficulty in finding a lender that will finance such a property.

Mobile/Manufactured homes have steel reinforced joists and I-beams that allow it to be transported ON WHEELS from the factory to the eventual home site. It is actually towed to its final resting place where the wheels and tow bar are removed. Mobile homes placed semi-permanently within a ‘trailer park’ or ‘manufactured home community’ are NOT eligible for mortgage financing as they are considered “personal property” just like an automobile - as opposed to "real property" or “real estate”.

Modular/Manufatured homes by contrast are simply pre-built ‘stick’ homes that do not have steel reinforced joists or I-beams and are NEVER on wheels (they are transported on special flat bed trailers). Modular homes are also recognizable by a HUD identification number assigned to the unit - the HUD number is usually affixed to the electrical service box inside the home. 

If the manufactured home is placed permanently on a foundation that is on a property parcel owned solely by the home owner - mortgage financing may be available. This type of mortgage can be conventional or government financing – but either way the home must meet local guidelines for qualifying as actual real estate with a property parcel identification number.

I hope this clarifies the differences when it comes to mortgage financing for these different property types.

Q:  Does it do any good that I have been paying two mortgages & have a history with Washington Mutual when I am considering a new mortgage loan?

A: Your past mortgage payment history and your ‘history’ as a customer are actually two different issues … especially when it comes to acquiring a new mortgage.

Mortgage payment history assists you in acquiring future mortgage financing from any future mortgage lender – regardless of which company actually collected the payments.  This is due to the fact that mortgage payments are reported to the credit bureaus, helping to determine your future credit worthiness in the form of credit scores.  

Past ‘history’ as a customer to any single mortgage servicing company (ie: Washington Mutual, ABN AMRO, Wells Fargo, GMAC, CitiMortgage, etc., etc...) unfortunately results in no advantage when it comes to new mortgage financing.  

Mortgage company’s that both service and originate mortgage loans have two completely separate operating divisions. 

Mortgage Servicing Divisions:  Mortgage loans are commodities just like stocks and bonds.  The servicing-side of these companies purchase large amounts of loans from originating mortgage companies across the country.  These companies earn income from both the purchase and sale of mortgage loans.  They also earn income from individual loan servicing which involves collecting mortgage payments, administrating property tax escrow accounts, etc.

Mortgage Originating Divisions:  These same companies may or may not have an origination business that creates new mortgage loans.  When a consumer contacts the mortgage servicing company seeking any type of new mortgage (ie: purchase, refinance, second mortgage, equity line of credit, etc.) the inquiry is forwarded to one of the company’s affiliate regional or national origination call centers.  The borrower’s loan process starts from scratch with absolutely no benefit to the consumer for being a current or past customer.  

In fact, these same mortgage companies many times don’t offer the most comprehensive or competitive mortgage loan programs to their own customers – due in part to the fact that they consider such a consumer as a captive lead that may not shop for a better deal.  After all, as consciences consumers we all want to believe that our ‘history’ with any bank will be rewarded in the future.  These lenders take full advantage of this emotion and common misconception.  It’s a very proven and profitable way of doing business!

Mortgage brokerages that only originate mortgages pride themselves on keeping the big servicing banks as honest as possible by educating consumers as to where they can actually get the best deal … ensuring the best possible financing for your specific borrowing situation – regardless of which bank ends-up servicing the payments.

State Street Mortgage Specialists actually work on behalf of our customers by Shopping on Your Behalf … ensuring your good mortgage payment history reaps the most benefits.

Q:  Is owner financing legal?  Will it hurt your credit history?

A: Owner financing of a home purchase where the private owner agrees to accept monthly payments toward the pay-off of the agreed upon purchase price is perfectly legal ... but caution should be used as a borrower.

Such financing cannot hurt a credit history when (as in most cases) the credit is never reported to the traditional credit bureaus ... meaning a buyer/borrower that makes long-term, on-time private mortgage payments may never receive traditional positive credit for their efforts (which is a completely different kind of 'hurt).

That being said there are other critical issues that both a Buyer and Seller must consider prior to entering into a private mortgage transaction.

A home purchase that involves owner financing should include a Contract for Deed (otherwise known as a Land Contract) purchase agreement. This is where the Buyer agrees to purchase the home at an agreed upon sale price and down payment. The Buyer then makes monthly payments to the Seller with a stipulated term, rate of interest and date of final payment where the Contract for Deed must be paid in full.

A Buyer under a Contract for Deed has fewer rights than a Buyer who has obtained a traditional mortgage loan. A homebuyer should always consult with a local/reputable real estate attorney before signing any Contract for Deed.

Most Contract for Deed sales require only a small down payment. The Buyer agrees to pay the Seller or the Sellers real estate agency the total sales price plus an amount for interest monthly over a period of years. Only after the final payment, will the Buyer receive a deed and full ownership.

Some common and important questions regarding a Contract for Deed:

Should the Contract for Deed be in writing?
A Buyer must get a written contract which is signed by both Buyer and Seller that has all the terms agreed to. Without a written contract, the Buyer will not be able to enforce the agreement if the Seller refuses to perform his or her part of the agreement.

Should I record the contract?
Even if the contract states it cannot be recorded, every Contract for Deed should be recorded as soon as possible in the county where the property is located - in order to protect the Buyers interest.

Should I have the home appraised?
YES. Otherwise you may be buying a property for more than it is worth.

Who is responsible for repairs?
The Buyer of the home is generally responsible for making all repairs after the sale of the property. The Seller may be required to repair certain problems in the home that existed before the purchase date if:

1. The Seller has agreed to make the repairs; or
2. The Seller knew about the defects from city inspections and does not tell the Buyer; or
3. The Seller is guilty of fraud or misrepresentation.

Fraud and Misrepresentation: If the Seller of a home makes statements about the condition of the home which are untrue in order to convince the Buyer to purchase the home, the Buyer may be able to cancel the contract or force the Seller to repair certain defects. A Buyer should always make sure that the Sellers statements about the condition of the house are included in the written contract.

Who is responsible for real estate taxes and homeowners insurance?
The Buyer of a home must generally pay for real estate taxes and homeowners insurance on the property after the sale is closed. Sometimes the Seller owes back taxes. The Buyer should check to see if any back taxes are owed. If there are unpaid back taxes, the Contract for Deed should say who will pay them.

The Buyer should make sure who will receive the real estate tax bills and homeowners insurance bills and make sure that these are paid when due.

If the Buyer is paying the real estate taxes and homeowners insurance by an escrow account, the monthly payments to the account will increase each year, as costs increase.

How can I prevent the loss of my home?
A Buyer who receives a notice of foreclosure or a court summons should contact an attorney as soon as possible.

If a Buyer, under a Contract for Deed, fails to make the payments required by the contract, the Seller can declare an end to the contract and bring a court action to evict the Buyer from the house. The Seller will send, by mail, a written 30-day notice of ending the contract before the court case. Generally speaking, if the Buyer owes less than three-fourths of the purchase price, the court will allow the Buyer at least 60 days and may allow up to 180 days to pay the Seller the amount needed to bring the contract current. If the Buyer pays the required amount within this period, he or she will get contract rights back and he or she will be able to keep the house. Even if the Buyer owes more than three-fourths of the purchase price, the court may give up to 60 days to pay the amount and restore the contact rights.

How do I become the owner of my home?
As the homebuyer, you must pay the balance owed to Seller in order to receive the Deed to the property. This is usually accomplished by refinancing the Contract for Deed into a traditional mortgage.

As a general rule, the Buyer will be able to refinance a Contract for Deed into a traditional mortgage after the Contract for Deed has been recorded for 12 months. Buyers need to be sure that the original Contract for Deed allows enough time for final payment, especially if time will be needed to correct credit issues or any other issues that prevented the Buyer from obtaining a traditional mortgage at the original time of purchase.

Q: Need a lender doing stated loans w/a rate lower than 8%, w/no tradelines, 40K income, and a mid-score of 647. please help?????

A:  Stated Income mortgage programs are designed to reward borrowers that have good credit but have technical issues with proving their income. Originally only offered to self-employed borrowers, stated income products are now offered to W2 employees as well.

The fact that there is a credit score of 647 and at the same time “no trade lines” is confusing … unless you are indicating that all credit is past credit with no active/open trade lines due to the fact that all past loans have been paid-off. Stated income with no current trade lines is available at or below 8% given the proper circumstances.

A determination of available programs will require more information. Please understand that each listed item below is combined with all other applicable items for final program and pricing approval - making each scenario borrower specific:

• Type of Transaction (Purchase, Refinance, Cash-out, etc.)
• Type of Rate (Fixed, Adjustable, etc.)
• Loan-To-Value (Loan Amount vs. Value of Property)
• Loan Amount
• Occupancy (owner occupied, investment property)
• Type of Property (single family residence, 2 unit, 4 unit, etc.)
• Location of Property (programs can vary by State & zip code)
• Type of Employment (W2 Employee, Self Employed, etc.)
• Time on Job (or same line of work)
• Amount of Reserves & Assets
• Lock Term (ie: 30 days, 60 days, etc.)

As with any mortgage loan, a full review of a tri-merge credit report will be required … especially if there may be an issue of active or past trade lines.

Q:  Does anyone know of any lenders that will finance 90% LTV on investment properties or someone that will make Hard Cash loans on them?

A: N/O/O Investment mortgage loan programs are available up to 100% Loan-to-Value (LTV) given the proper borrowing circumstances. 90% LTV N/O/O mortgages are readily available as either single loan or two loan programs (ie: 90 LTV or 80/10 LTV programs).

'Hard Money' private investor N/O/O mortgage loans are also readily available ... however; this type of loan does not generally go beyond 75% LTV due to the higher risks involved in a typical ‘hard money’ scenario that falls outside of standard lending guidelines set-forth by any of the main-stream secondary market pools of mortgage funds.

Your specific borrowing scenario will dictate which (if any) mortgage loan programs you will qualify for. Seek the assistance of a local/reputable mortgage broker that has experience in lending this type of money for comprehensive answers to your questions - hopefully allowing you to purchase the property(s) you desire.

Q: What happens to the equity of a refinance with NO cash out. Give example.

A: Equity in a property for lending purposes is the appraised value of the property minus the total liens on the property. As a simple example; a home valued at $100,000 that has a mortgage lien of $80,000 has a remaining equity balance of $20,000.

The question of “what happens to the equity in a refinance with NO cash out” is similar to the above example based on what type of mortgage financing is completed. A refinance of an existing mortgage(s) with loan associated fees rolled into the new loan balance will leave an equity balance of the property’s appraised value minus the new loan amount (example: $100,000 value minus $83,000 new mortgage principle loan amount [existing loan pay-off of $80,000 + $3,000 rolled-in new mortgage fees & escrows] leaves $17,000 in remaining equity). If the borrower chooses a ‘no cost’ refinance or pays the refinance associated fees out-of-pocket … the remaining equity balance would remain at $20,000 as stipulated in the first paragraphs simple example.

Equity in a property for sale purposes is the sales price minus all lien pay-offs and sale associated costs (ie: Realtor fees, property tax credits to the Buyer, transfer taxes, etc., etc.). As a simple example; a home sold for $100,000 that has a mortgage lien pay-off of $80,000 and $10,000 in total sales related costs will have a remaining equity of $10,000 that will be netted to the Seller after close.

I hope this helps in your understanding of property equity.

Q: I have a credit score of about 650, however, I have a judgement that will fall off 12/06. I am very interested in buying investment property. Are there any lenders that might finance my purchase with the judgement or do I have to wait? I do not have any late pays on my credit... Thanks for any help.

Q: I am a senior citizen living on less than $700 a month in social payments. My question to you is that if I get a reverse mortgage then what will happen to the $18,000 I now own on a home equity loan? And my daughter says that I will lose all the equity in my home. Is it true?

A: After receiving several similar questions regarding Reverse Mortgages ... I thought a Reverse Mortgage overview could be helpful.

A Reverse Mortgage offers seniors 62 years of age or older the ability to retain their personal and financial independence by combining mortgage and debt consolidation payment savings with monthly income - realizing real financial flexibility!

Unlike a traditional mortgage where the borrower makes payments each month, Reverse Mortgages provide payments to the borrower - in effect "reversing" the direction of the mortgage payments.

Reverse Mortgage loan programs receive high praise from sources such as AARP, FHA, Fannie Mae and countless national media sources ... and for very good reasons!

Top Reasons to Obtain a Reverse Mortgage:

1. Never Make Another Mortgage Payment
2. "Tax Free" Income via Monthly Payments, or a Lump Sum Payment, or a Line of Credit (or any combination of the three)
3. You Still Own & Live in Your Home
4. No Restrictions on Use of the Money
5. No Income, No Medical and No Credit Qualifications
6. All Remaining Equity is Yours (or your heirs) To Keep
7. No Debt will be Passed onto Your Heirs or Family Members
8. Possible Greater Net Worth after repayment

Reverse Mortgages are only available to seniors 62 or older and in the case of a married couple, both borrowers must be at least 62 at the time of application. Reverse Mortgages are only available on HUD/FHA recognized real estate (ie: no mobile homes sitting on wheels). The home must be occupied by each borrower as their primary residence and the mortgage comes due under all circumstances where the borrowers no longer live in the home.

Reverse mortgage terms are conservative by nature due to the fact that the lender will be holding the loan for an undetermined amount of time and the ultimate sale or refinance of the property must produce enough money to repay the loan + interest and fees. For this reason, the maximum allowable Reverse Mortgage loan-to-value depends on the age of the borrower and the equity remaining in the home. For these reasons, a 63 year old home owner with a current mortgage of more than 70 percent of their home’s value will not qualify for a Reverse Mortgage being as they more than likely will remain living in the home for many, many years to come without sufficient equity to repay the total loan.

Reverse Mortgages do have higher fees than many traditional mortgages so careful consideration is prudent … this is one reason why borrower counseling is a mandatory part of the loan process.

And finally, the only way to determine a borrower’s ability to qualify for a Reverse Mortgage based on age vs. equity while getting a comprehensive quote on the fees and terms is to apply with an approved Reverse Mortgage lender.  I hope this helps!

Q: I tried hard and finally got my credit score in track. They are in 700's now. I am going to take a mortgage soon. Will this damage my credit score again?.

A: Congratulations on the achievement of good credit scores. It also appears you are taking the next logical step in utilizing your improved credit toward the best financial decision every consumer will ever make … buying a home will most likely be a large part of your future net worth and financial well-being.

Additionally your credit should further benefit once you acquire your new mortgage. There is no better credit than mortgage credit. On-time mortgage payments will ensure your credit scores remain favorable for many years to come.

Enjoy your credit and the new home it will allow you to own!

Q: I recently got a loan through [a heavily advertised national lender]. My first mistake was replying to the spam I got from them ... two of my loans [the loan officer] proposed to pay off in the refinance I now still owe money on because it was miscalculated how much I actually owe on the loans. He kept telling me he was getting better deals on the loans because of who he was ... the reason I think [the heavily advertised national lender] is unprofessional is more for the reason they sent me out the wrong loan it cost about $300 more a month then everything [the loan officer] and I discussed. I told them NO "I will not sign it". The girl that was doing the closing called her boss telling her I would not sign she then gives me the phone and she begs me to sign I say I cant its not the right loan. For the next few minutes they keep trying to tell me to sign the loan but I know I can not afford it. I thought this was very unprofessional. [The loan officer] calls me and tells me it's the wrong loan so they say they will bring out the right loan the next day and they do. I sign and get my loan then I find out I still owe money on two of my old loans. It just really sucks when you get a loan and have it spent to get you out of debt and it sinks you further. When I signed with [the original lender] they were just as bad they didn't tell me much and it ended up being adjustable interest rate which went up very quickly. While I am glad I got out of that loan. I would suggest not using [the heavily advertised national lender] they are a bunch of dirty spammers!

A: I am sorry to hear of your experience ... but I Thank You for sharing your experience so that others may understand the main issue in working with a lender that initially contacted you via online SPAM marketing.

There is no accountability for these companies. The loan officers are nothing less than cubicle sales people treating their sales leads as the potential income & bonuses that they are ... nothing personal, just business.

I highly recommend that consumers only seek the mortgage services of local/reputable mortgage brokers to acquire their mortgages. The financing will be custom fit for the specific borrowing needs of the applicant and the loan officer is a licensed professional that is a member of the same community - he/she will not do you wrong if they will be sitting next to you at the local Applebee's eating dinner sometime in the near future and depending on your referrals to earn a living for years to come

Thanks again for sharing your story for the benefit of others!

Q: I will be getting a divorce in a couple of weeks my name is not on the mortage however it is on the deed. I will be awarded the home what steps should I take as far as obtaining a mortage.

A: Very good question!  You will need to refinance the property. Many times the divorce agreement will stipulate a time limit in which you are required to complete the refinance – for the protection of the current mortgage holder (ie: if you don’t make the payments on-time this will damage the credit of your soon-to-be ex-spouse who’s credit is tied to the mortgage.).

Too often our mortgage offices see potential clients post-divorce stating they need to refinance within the next 90 days … and this may or may not be possible depending on their personal borrowing ability. There are also the situations where a refinance is possible - however, do to one or more circumstances the new terms drive the monthly payments substantially upward ... causing payment shock and unanticipated financial hardship to the spouse that remains in the home.

Consult with a local/recommended mortgage broker to ensure you have the short-term ability to complete the refinance with terms that you can afford.

If your mortgage broker advises you will need more time than your divorce documents stipulate due to credit or income issues ... discuss these findings with your attorney as you may want to amend the divorce documents to allow adequate time for refinance compliance. 

Q: We are looking to buy our first house from a family member who moved into the house about a 1 year ago, the question is what the prepayment penalty for the family member if he sold the house to us, he paid about $139,900 for the house.

A: A pre-payment penalty is part of a mortgage note that stipulates a pay-off of the principle loan balance prior to a certain date can result in a penalty based on a percentage of this balance. Not all mortgages have pre-payment penalties.

There are also two types of pre-payment penalties; a 'Hard' Pre-Pay and a 'Soft' Pre-Pay. The Hard pre-pay would have a penalty due if the property is either sold or refinanced prior to the pre-payment penalty date. The Soft pre-pay may have a penalty for refinancing but possibly no pre-payment penalty if the home is sold.

If your family member purchased the home with a mortgage, any possible pre-payment penalty would be detailed in the mortgage "Note". Your family member should have a copy of this Note from their loan closing. If they cannot locate the Note, they can request a copy from their current mortgage servicing company. Simply call the customer service number on their monthly statement.

To ensure you are interpreting the Note correctly, you can also order a mortgage pay-off from the servicing company by calling the same customer service number. The official mortgage pay-off will list any penalty in its calculation ... eliminating any doubts as to the amount due.

Q: Can a borrower qualify for a loan with higher debt to income ratio than required?

Q: I had applied for a Full Doc loan with my loan officer. The next day he told me that I can't qualify for the loan due to debt ratios. He suggested me to switch over to Stated Loan instead and show higher income. The reason behind is that they need not verify my income with the application. Will it be considered as a fraud if I do so? I am confused. Need advice.

Q: Hi, I was planning to buy a house in summer, could someone tell me the expected rates for house loans this year.

A: Predicting mortgage rates is like predicting the price of gas ... should you fill-up your tank today or wait until next Tuesday when prices may be lower?! Nobody REALLY knows!!

Much like gas price predictions, predictions for home mortgage rates are that they will continue to rise throughout the rest of year. Some economists believe rates on 30-year Fixed Rate mortgages could even reach 7 percent by the end of 2006.

The first action any potential home buyer should accomplish is being Pre-Approved by a local/reputable mortgage lender for purchase mortgage financing. The lender should use a higher than currently available rate of interest for this qualification ... to ensure you are still qualified if mortgage rates do increase during your search for a suitable home.

Your final rate of interest can only be "locked" once you have an accepted Contract to Purchase with a stipulated closing/possession date. Make sure any accepted purchase contract is forwarded to your lender as soon as possible so that your lock options can be presented - ensuring you lock-in the best available rate prior to any potential rate increase that may (or may not) occur between the date of your purchase agreement and your ultimate closing date. 

Q: Are zero point loans and a no cost loan the same thing?

Q: Hi, I will be on six months of employment when I apply for the mortgage. This is my first job. Will it be sufficient to get a mortgage loan?

A: Two years stable employment is the general minimum required for full-document mortgage financing.  6 months on your "first job" is generally not enough time to allow for mortgage financing ... unless this employment is post-college where you gained the employment as a result of your recently acquired college education.

Of course there are mortgage loan programs that don't even require proof of employment if your credit is good enough and you have a substantial down-payment ... so the best way to get a qualified answer to your question is to make application with a reputable/recommended mortgage broker with experience in lending to people with similar situations as your own.

Q: My wife and I built a new home 2 years ago and financed by means of 1yr ARM. At the time, rates were in the 4% range. With the recent change in the market, we need to find a suitable refinance option. Our current mortgage balance is $300,000 with a home valuation of approximately $350,000. We are considering the IO ARM but wonder how dramatic the payments will change after the IO period ends. Is there any way to forcast that figure realistically? My very reliable and secure income is 60% salary and 40% bonus with an annual income of approximately $110,000. Can you help me think through all the variables before I decide?

A: I just completed a similar comparison for a customer of mine. Choices included; Interest Only Adjustable Rate Mortgages, Interest Only Fixed Rate Mortgages, Monthly Payment Option ARM’s and the newer 40 year Fixed program.

All loan programs that allow for Interest Only payments have a built-in rate premium that somewhat affect the overall payment savings. Plus, as you mentioned - you are once again putting yourself into a product that will adjust over time.

Although the 40 year Fixed program has a higher rate of interest compared to a 30 year Fixed … the monthly payments are actually very similar to an Interest Only program due to the longer amortization period. Plus there is the built in stability of known payments for 40 years to come.

Having made the 1 year ARM mistake in the past, I would think that the stability of low payments for a long time to come would be quite appealing ... research the 40 year Fixed versus the other options side-by-side prior to making a final refinance program decision.

Q: I used the Low Rate Advisors search engine and the lowest rate it showed was a 30 year @ 4.2% from Coastal Mortage. Are there any other better search engines? Do you think I can do better?

A: Low Rate Advisors, Bankrate, Lending Tree, etc., etc. are nothing more than marketing companies selling your information as "leads" to mortgage companies.  There is no truth in advertising and the quoted rate you received is pure bait-and-switch advertising designed to get you into the loan process (after all - you won't call unless they have the lowest rate quote - right?!).

Every mortgage lender sets rates based on the same secondary market re-sale conditions and current no-load 30 year fixed conforming mortgages are ticking-up toward 6.375% ... this is a FACT, as opposed to advertising.

Some other facts about lenders, rates, published rates and rate quotes:

• All Lenders ARE Brokers: Regardless of advertising, all lenders (local banks included) sell or assign mortgages on the wholesale market and the cost of money is dictated by these sources.
• Wholesale Rates Post Daily At 9:30am EST; Quotes or published rates prior to this time are not accurate.
• Rates Change Throughout The Day; Like the stock market, mortgage rates change intraday as market conditions affect mortgage backed securities.
• Published, Faxed & Web Posted Rates are All "Old" Information by the time they reach consumers or real estate professionals.
• Quoted Rates Have No Real Meaning - unless the consumer is in a position to lock prior to a market change.

Published rates and rate quotes are an advertisement to get the borrower into the loan process. There is absolutely no guarantee that the published or quoted rate will be honored or that the final rate will reflect a possible improvement in the market (a better than quoted rate).

If you choose a lender based solely on the "Best Rate Quote", you are very likely to get a big surprise later. Make sure you shop smart - not just rate!

Don't gamble with something as important as your mortgage. Seek out a local mortgage broker that shops on your behalf, is competitive, makes the process easy and has a reputation for closing your loan as originally promised.

A: If you have a contract sale that has defaulted, you as the owner/financer have the right to reclaim the property. This must be done legally (at some cost) to ensure you have clear title and the ability to re-sell the property.  Once you have completely cleared the old contract, you are free to re-sell the property to another buyer. Please seek legal advice and services to avoid future title issues.

Q: Most lenders will not give me a consolidation loan since my townhouse is valued less then $50,000. Come on I got a loan for it in the first place why not a loan on now?   I checked with some of the online mortgage companys and some out of the phone book. One lending company seemed to be ready to give the loan but got turned off by my mortgage being 2 months late. I explained that I was on a repayment program and now my Staus should be current. Should I consider the bank I currently have my mortgage with? I figured my low credit score and history with them would not fit with the standerds for them. I was also considering a small local bank here in my area.

A: It appears to me that your mortgage loan is not an easy loan to approve based on the statements you have made. Otherwise, you would already have your consolidation.

I am concerned that you are ‘shopping’ for a loan on the Internet and by calling yellow page listings. Every time you repeat this step and provide a new company with your social security number they are pulling your credit and pulling your credit score down further … possibly eliminating your short-term chances of qualifying for a mortgage all-together.

Shopping for the best mortgage is a good idea … but there is a better way to do it. Apply a single time with a reputable/knowledgeable mortgage broker and allow them to shop on your behalf. The mortgage broker will only pull your credit one time and then forward your entire scenario and a copy of your credit to various wholesale banks and mortgage lenders. The experienced mortgage broker will know which lenders may most likely approve you for the loan based on your up-front situation. Many of the niche lenders you may require are only available through mortgage brokers being as they do not offer consumer direct retail loan products … so you will not find them in the yellow pages or on the Internet.

If you do not know of a good mortgage broker in your area, I suggest you contact your state’s Mortgage Broker Association for a broker recommendation. 
 

Q: How can i stop the student loan people from getting a judgement against my property, would a quickclaim deed to my son help?

A: Federal student loan debts are not bankruptcy dischargeable and will follow you for life - with the unique ability to recover their monies as no other debtor can.

You MUST consult with a reputable attorney on this issue ... you are risking too much by not. There is a decent chance that an attorney that specializes in Social Security/Tax law will be able to get a reduction or even elimination of fees that have been added to the original balance in conjunction with a negotiated re-payment plan. Do yourself a favor and seek legal counsel a.s.a.p.

Q: Can a seller sells his/her home via refinancing to his/her son and his wife?

A: No. You can give your son ownership interest in the property by Quit Claiming him onto the title – however, any existing mortgage that was taken in your name will remain solely in your name and your responsibility.

Without more information I do not have a clear understanding of exactly why you simply don’t sell the property directly to your son. If you are attempting to sell the property below market value to your son you can do this as long as the new purchase mortgage successfully pays-off any existing mortgages.

If you are attempting to convey ownership to your son while at the same time pulling some cash-out for home improvement or debt consolidation - you may be aware that purchase mortgage financing is based on the purchase price … pretty much eliminating the immediate ability to pull cash-out during this type of transaction. Assuming this may be the goal, you can sell your home below market value to your son as a conventional purchase transaction and your son can refinance his mortgage at approximately 6 months based on the full appraised value of the home … possibly taking cash-out at that time.

If your son does not immediately qualify for a mortgage, you can sell him the property on Contract and use the Quit Claim process to give your son immediate ownership interest. With 12 months of on-time/documented (ie: canceled check) payments from your son based on the Contract Sale, your son should be able to refinance the home based on the appraised value (as opposed to the purchase price).

Just ensure you hire a reputable real estate attorney for any sale process and be sure you record any Contract Sale & Quit Claim. Also, you should have a reputable mortgage broker pre-view the entire situation to ensure your son will qualify for financing now –or- within the 12 months based on credit, debt-to-income ratios, etc.

Q: On a construction loan, when does the interest rate that we purchased become effective? Is it upon the settlement? And is the Commitment letter binding.  Our lender is trying to back out of the contract/commitment we signed July. The closing was Sept. 1, the expiratin date of the commitment letter was Sept. 6. We rolled the closing costs into the loan, and began the payments as of the 1st of Oct. To me, that constitutes a binding contract. We are ready to modify this note from the construction phase, and the bank will not honor the interest rate previously set forth.

Q: I have my scores 640 with TransUnion and Equifax but Experian is showing 560. I am going to apply for a mortgage soon. Now, which score will be used by the lender?

A: As a lender I can tell you that the middle of your 3 scores, which would be 640, will be the primary score used.

Although a 640 may qualify you for most conforming loan programs (subject to other qualifying factors such as; mortgage program desired, loan-to-value percentage, debt-to-income ratios, amount of reserves, etc.) there is also the conforming requirement that all three credit scores be above 620 to qualify for the best rate of interest.

If Experian is so much lower than TransUnion and Equifax, there must be one or more reporting derogatory accounts that have only been reported to Experian. I would research your credit thoroughly and repair any derogatories prior to mortgage application - if possible ...with the goal of getting all three scores above 620.  Best of Luck!

Q: I am going to marry my long time friend. He has a poor credit. Is this going to affect my credit too?

A: Your future husband's credit will have no effect on your credit. Your credit is tied to your own Social Security number and everything you have done correctly in the past and will do correctly in the future will continue to benefit you.

When applying for a mortgage loan as a co-borrower with your husband, the credit emphasis is usually placed with the borrower that has the greater annual income (ie: if your husband makes more money, the qualifying credit scores will be based on his credit - possibly resulting in a program that has a higher-risk rate of interest or even a possible denial of credit).

Even if your income is the greater of the two, there are usually lending safeguards that require a co-borrower that has the lesser income still must have certain minimum credit scores for both borrowers to qualify for the mortgage.  I would make it an important issue to clean-up your future husband's credit as quickly as possible so that future credit needs, where you may be co-borrowers, are not jeopardized.

Please don't hesitate to ask further questions that will assist you onto the right track for your future together. Congratulations on your upcoming nuptials!!! 

A: Good News! A person may actually qualify for purchase or refinance mortgage financing up to 100% of the homes value and/or purchase price as little as One Day after the Bankruptcy is discharged.

Mortgage brokers have successfully changed the way bankruptcies are considered with respect to mortgage financing. There are many different mortgage programs offered to consumers with a bankruptcy in their credit history.

Some background: Congress and the US Supreme Court intended personal bankruptcy to provide debtors a fresh start. This new beginning is not a gift, but based upon mutual interest. The rationale is simple: productive citizens contribute more professionally, pay more taxes, and spend greater amounts fueling economic development. Productive citizens enable our nation to continue to thrive.

Post-Bankruptcy home mortgages are a big part of this mutual interest and productivity. After all, life does continue and all consumers look forward to days of better financial position, prosperity and the American dream of home ownership!

The key to obtaining a post-bankruptcy mortgage is the borrower's post-bankruptcy credit. Most times a person's credit will have reporting errors due to the discharge of debts that may still be showing-up on credit as open accounts with possibly amounts past due. Consumers should consult with a reputable, local mortgage broker with experience in post-bankruptcy lending. Some credit repair may be necessary prior to loan qualification - however, this process has also recently improved with Bureau Level Rapid Re-Score programs offered directly to borrowers by lenders. The future is bright!

Q: I own a home, behind in the mortgage, I have someone who is interested in catching up payments, then continuing to make monthly payments, on the home for me, until we can sell the house....what is the type of deed I need? Deed of trust or Quick deed????? I'm so confused .....thanks

A: I assume you are giving title interest in the property to this third-party for the recovery of their invested money once the property is sold. This scenario should include a legal contract stipulating the terms of the agreement as well as a modification to title that gives this third party rights to some or all of the proceeds from sale.

Any modification of title should be written for your specific situation, goal, State of residency, etc., etc. This should always be done by utilizing the services of a reputable real estate attorney. The cost for the title modification work is usually no more than a $100 including filing fees. Having legal council perform this task will give you the peace of mind knowing that your interest as well the interest of the third-party is protected as you expect them to be.  Best of Luck!

Q: My question is this. I am 67yrs old I have lung cancer and the doctor told me I have 6 month's to live. My wife is 57. Now if I take this reverse mortgage and I die in 3to6 month's. Do you kick my wife out and take my house or dose she still get to live here and the mortgage keeps untill she dies?

A: This is truly a heartbreaking scenario. The only good thing about any such situation is that you have some time to get your affairs in order so that your loved ones are taken care of once you have passed.

Both you and your wife must be 62 years old to qualify for a Reverse Mortgage. Even if you were to acquire a Reverse Mortgage on your own (ie: divorce, get the property in your name only, obtain a Reverse Mortgage, etc.) the Reverse Mortgage would become due upon your death and your wife would have to obtain a traditional mortgage to pay-off the reverse mortgage. So a Reverse Mortgage does not appear to be an option. 

There may be other options (ie: Interest Only Mortgage) that can pay-off any existing mortgages while allowing your wife to better afford the payments after you are gone. However, making an informed decision will require that you provide much more information to a reputable mortgage professional than you will want to divulge within a public forum such as this.

I suggest that you contact a highly recommend mortgage broker that can assist you with your options on a time-table that will benefit your specific situation. Take care of yourself and ENJOY the time you have left with your friends and family!

Q: I have a loan due with Wells Fargo which has been sent to a collection agency for collection. The collection agency set the payment at $300 per month with the total balance $2100. I started to determine how much I could pay after going through a strict budget. I found that I can afford only $100 and requested them to set the terms again with the amount that I can afford. But they denied from doing so? What can be done?

A: Paying the collection is important so that your credit can reflect your making good on the debt.

The collection agency wants the money as quickly as possible and they will attempt to set-up a payment plan on their time-table. It is their prerogative as to what terms they say they are willing to accept as far as repayment is concerned.

However, I know of no law that states you must accept the terms offered by the collection agency. Your credit has already suffered so the collection agency cannot hurt you any more by reporting your payments are not what they would like them to be. Also, once an account goes to collection, the balance is frozen (after collection associated fees are added) … so the collection agency cannot asses more fees if your repayment timetable does not match theirs.

Pay as much as you can afford to pay while ensuring your other debts are paid on-time.

Prior to making your last payment to the collection agency, I suggest contacting a collection agency representative and ensure that once your final payment is received you will get a notice on the collection agency’s letterhead that denotes a “paid” or $0.00 balance on the account. Make sure this notice references the original creditor (Wells Fargo) and the original creditors account number so that you can have the account reported correctly on your credit report as a paid collection. 

Q: I am a college student doing my graduation. Now, will it be better to start making repayments for the student loans while I am a student or shall I save money to build future assets like home which will require a down payment initially? 

A: If I understand your question correctly, you are asking if you should start making student loan payments now or continue deferring your student loan payments until after you have graduated while saving the money you would use for these payments for a down payment on a house … I will gear my answer toward this understanding of your question.  Buying a home is always easiest with good credit & some money to work with toward down payment & closing costs.

A great way to establish or improve upon existing credit is to make on-time student loan payments. Generally speaking, student loan payments can be structured to be very low compared with the amount of money borrowed. I have seen many combined student loan monthly payments in the $35 to $75 range … making student loan re-payment an inexpensive way to establish a solid credit rating.

So I would suggest that you do both if possible … start making payments on your student loans which will benefit your credit and save any additional monies toward the future purchase transaction at the very same time.

Q: We want to buy our first house as soon as we can. What is our first step? Should we approach a realty agent or a mortgage company to determine how much we can afford to pay for a house?

A: Your first home-buying step is to get pre-approved in writing by an actual lender who will issue you a pre-approval letter or certificate. Don't be fooled by any mortgage lender or realty agent offering to just get you pre-qualified.

A qualified pre-approval will require you to provide income, asset and other documented information to the lender for review.  A written pre-approval should have a stipulated expiration date based on the dates of these provided documents and is usually valid for 60 to 90 days. Then you can shop with confidence for a house you can afford to buy.

Q:  I’m moving back to Illinois but I do not want to rent so I’m looking to buy my first home. Do I have to be back in Illinois before I look for a home loan or can I start prior to relocating? Can you help me? Thank You.

A: Yes you can be pre-approved for a purchase mortgage prior to relocating from out-of-state.  In fact, you are being quite wise to look into your financing options prior to making the move.

 

As with any home mortgage, one of the factors associated with getting an approval is your ability to repay the loan. Stable and current employment with proof of how much income you earn is required for most “full document” loans. If you are transferring within a company you already work for or have employment already lined-up in a similar line of work with an established employer, your home loan may be pre-approved without much issue.

 

If however, you will be relocating prior to securing new employment and yet you still desire to immediately purchase a home ... acquiring a mortgage may prove to be slightly more difficult. Depending on your credit and assets, a mortgage specialist with extensive experience in relocation loans may be able to deliver what is called a “No Employment, No Income” mortgage (affectionately referred to in the mortgage industry as a ‘NINJA’ loan :o). For this type of loan the lender will not require that you disclose any employment or income information. This type of mortgage generally requires excellent credit, prior home ownership with a satisfactory past mortgage payment history, a 25% down-payment from provable assets and a minimum of 6 months in reserve assets after the completion of the purchase. Consult with a reputable lender for more details as to your specific relocation mortgage options.

Q: I understand the value of a professional home inspection to home buyers. But I have also heard of horror stories from the seller's viewpoint. Overzealous home inspectors have found minor defects. As the prospective seller of a 35-year old home, I expect our home has some flaws. What recourse, if any, do sellers have for overzealous home inspectors?

A: As a home seller, before putting your home on the market for sale, you should have your own professional inspection made (along with a termite inspection and other customary local inspections, such as energy efficiency, radon, building code compliance, etc.).

I have done this many times. Then I usually have the recommended repairs completed before the home is exposed to the market. If I don't want to make the repairs, I just disclose the defect to prospective home buyers.

This technique is very impressive to home buyers. My experience has been buyers usually accept my professional inspection reports. If they don't, chances of their own inspectors finding defects are very rare.

Q:  My husband had a bankruptcy filed one year ago.  Is a purchase mortgage possible at this point?  We have a home now that we have lived in for five years and have about 50K in equity at this time.

A:  Quite possibly yes ... depending on your post-bankruptcy credit scores.  I assume by the information provided, you did not include your house within the bankruptcy.  By simply keeping your mortgage and making on-time payments after the bankruptcy - your credit should have already gained some ground on the negative credit affects caused by the bankruptcy.

 

Mortgage financing up to 100% can be accomplished in as little as one day after the discharge of a Chapter 7 Bankruptcy.  A Chapter 13 must usually have been in repayment for at least a year or may be bought-out if necessary.  Of course, not every person will qualify for 100% financing, so the fact that you will have some equity from the sale of your current home for down-payment will increase your chances of qualifying for a new mortgage.

 

I wouldn't spend too much time seeking this type of financing from a local bank or credit union being as their lending restrictions usually require at least 3 years after a bankruptcy discharge.  Seek a recommended mortgage broker that has experience in post-bankruptcy lending.

Q: I have owned my house for about 10 years and have decided to buy a new one. What's the first thing I should do? Can I keep my current home and rent it out? If I decide to sell what are the pro's and con's of selling without a realtor. The market is really hot right now.

A: You have many really great questions. Assuming you are not going to pay cash for your new home, the first thing you need to do is discuss your purchase financing options with a reputable mortgage lender. There is no sense in even looking at new homes until you have figured out what you can afford to buy.

One of the scenarios you will want your lender to consider is the possibility of keeping your existing home for rental income while you purchase a new primary residence. From a lender's perspective, this means you want to qualify for a new purchase mortgage while keeping your existing home's associated expenses (ie: mortgage, taxes, homeowners insurance, association fees, etc.) figured into your ratios. If necessary, your lender should be able to offset at least a part of these expenses with a signed lease for your soon-to-be rental property. But keep in mind, only 75% of the rental income is usually considered due to most lenders' factoring out 25% of rental income for vacancies.

Selling your existing home without a Realtor is most certainly an option.  However, you should make this important decision based on more than one factor. If you absolutely need every penny from the sale of your home for a new purchase this decision may be out of perceived necessity.  Although it is true that using a Realtor to sell your home does come with additional costs, keep in mind that having an experienced Realtor market and sell your home generally maximizes your profits. You may want to get a recommendation from your mortgage lender for a good Realtor in which you can discuss your concerns and situation. An ethical Realtor will only recommend their sales services if they are actually beneficial. You might also want to consider asking the Realtor to sell your home at a discount if you agree to use the same Realtor as your buyer's agent for your new home purchase - with the added benefit that as a buyer, your Realtor will ensure you find a new home that meets all of your needs and desires at a price you are comfortable in paying ... at no additional expense to yourself. A true win-win-win situation.

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State Street Mortgage is an Illinois Residential Mortgage Licensee, a direct mortgage lender, a HUD FHA approved lending institution, a Mortgage Broker and a professional member of the National Association of Mortgage Brokers, the Illinois Association of Mortgage Brokers, the DeKalb Area Association of Realtors, the Sycamore Chamber of Commerce, the DeKalb Chamber of Commerce and the DeKalb County Building and Development Association. State Street Mortgage professionals provide home purchase, home refinance and home debt consolidation mortgage loan financing in the entire state of Illinois. Staet Street Mortgage professionals assist relocating home buyer due to job transfer or employment relocation situations with luxury or executive or custom home financing. Our Sycamore DeKalb County home mortgage lending team works with area homebuyers and homeowners in the following areas: Sycamor 60178, De Kalb 60115, Cortland 60112, Elva, McGirr, McGir, Lee County, Ogle County, Creston 60113, Malta 60150, Esmond 60129, Monroe Center 61052, Boone County, Boon County, Irene 61016, Cherry Valley 61016, Clare 60111, Kirkland 60146, Kingston 60145, McHenry County, Mc Henry 60050 60051 60296 60297, McHenrey, Genoa 60135, Hampshire 60140, Burlington 60109, North Plato 60123, Plato Center 60170, Udina, Bowes, Lily Lake, Wasco 60183, Elburn 60119, La Fox, Virgil, Kaneville 60144, Maple Park 60151, Elburn 60119, Burlington 60109, Burlinton, Huntley 60142, Kane County, St Charles 60174, Saint Charles 60175, Batavia 60510, Geneva 60134, South Elgin 60177, Elgin 60120 60121 60123, Bartlett 60103, Bartlet, Carpentersville 60110, Marengo 60152, Woodstock 60098, Crystal Lake 60012 60039, Chrystal Lake 60014, Fox Lake 60020, Fox Valley 60597 60599, Harvard 60033, Rockford 61101 61102 61103 61104 61105 61106 61107 61108 61109 61110 61112 61114 61125 61126, Belvidere 61008, Belvider, Freeport 61032, Winnebago 61088, Winnetka 60093, Byron 61010, Oregon 61061, Dixon 61021, Polo 61064, Mendota 61342, Waterman 60556, South Beloit 61080, Machesney Park 61115, Cherrie Valley, and Davis Junction 61020 housing markets. Our Yorkville Kendall County mortgage office originates mortgage loans for Yourkville Yorkvile 60560, Kendall Kendal County, Kane County, North Aurora 60542, Aurora 60504 60505 60506 60507 60568 60572 60598, Naperville 60540 60563 60564 60565 60566 60567, Eola 60519, Montgomery 60538, Frontenac, Wolfs, Oswego 60543, Bristol 60512, Normantown , Plainfield 60544, Lily Cache, Caton Farm , Shorewood , Minooka 60447, Central, Lisbon, Lisbon Center, Kentland, Pavillion, Pavillian, Millhurst, Millbrook 60536, Newark 60541, Millington 60537, Plano 60545, Sandwich 60548, Little Rock, Big Rock 60511, Hinckley 60520, Hinckly, Lasalle, La Salle County, Franks, Somonauk 60552, Northville, Sheridan 60551, Catharine, Catherine, Serena 60549, Blakes, Norway, Mendota 61342, Paw Paw 61353, Amboy 61310, Lee 60530, Lee Center 61331, Waterman 60556, Ottawa 61350, Marseilles 61341, Morris 60450, Shorewood, Streator 61364, Channahon 60410, Chanahon, Joliet 60431 60432 60433 60434 60435 60436, Tinley Park 60477, Bollingbrook, Bolingbrook 60440, Dwight 60420, Bourbonnais 60914, Bourbonais and Kankakee 60901 cities zip codes and surrounding communities. We also provide mortgage loans and mortgage financing for Purchase Refinance Debt Consolidation loans in areas such as Glenview 60025 60026, Evanston 60201 60202 60203 60204 60208 60209, Big Rock 60511, Shabbona 60550, Kaneville 60144, Winnebago DuPage Cook Du Page Cherry Valley Loves Park 6111 61130 61131 61132, Elgin 60120 60121 60123, South Elgin 60177, Sleepy Hollow, Dundee 60118, Carpentersville 60110, Crystal Lake Kane Saint Charles Winfield 60190 Wheaton 60187 60189 and Downers Grove 60515 60516 as a wholesale mortgage bank money source striving for quality and choice on behalf of our mortgage customers. We offer mortgage lending products in the following categories: Purchase, 100%, 80/20, Interest Only, Conventional, Conforming, Fixed Rate, Adjustable Rate, Adjustible Rate, ARM, ARMs, Rural Development, Rural Developement, HUD, FHA Fannie Mae, Freddie Mac, FNMA, Purchase Gift Money, IHDA, VA, Veterans Affairs, Home Equity Lines of Credit, HELOC, HELOCs, Bank Turn Downs, Purchases, Buy, Sell, New Construction, End Loans, Bridge Loans, Refinance, Refinances, Debt Consolidation, Debt Consolidations, Government Insured, Hybrid Mortgages, Monthly Payment Option ARMs, Specialty Program, Specialty Programs, Jumbo, FREE Purchase Gift and Grant Money, 125% Mortgages, Investment Property Financing to 100%, Bank Decline, Bi-Weekly Accelerated Mortgage Payments, Biweekly Interest Saving option, Home Improvement, Lot Loans, Lot Loan, Single Family, Condos, Townhomes, Mulit-Unit, Mixed Use, Farmettes, Commercial, One Loan, One Mortgage, New Home, Refinancing, Streamline Refinance, Customized Refinance, Cash-out, Cash Out, Cashout, Reduce Time, Reduce Paperwork, Easy, Mortgages, Morgages, Fixed Rate, Balloon, First Mortgage, Second Mortgage, 1st Mortgage, 2nd Mortgage, Home Equity, Home Equity Line, No Closing Costs, No Cost, 0 Point, No Points, No Fee, No Fees, Money, Fast, Quick, Easy Money, Best Mortgage, Best Rate, Lowest Rate, Private Mortgage Insurance, PMI, Mortgage Insurance Premium, MIP, No Private Mortgage Insurance, No PMI, No MIP, Professional, Trustworthy, Trust, Recommended, Referred, Preferred, Specialist, FHLMC, Non-Conforming and Reverse Mortgages or a senior borrower reverse mortgage solution with monthly or lump sum payment options. State Street Mortgage Specialists are real estate business consultants for Realtors, Builders, Contractors, Buyers, Home Owners, Borrowers, Consumers, Brokers and Service Professionals seeking customer referral sources. We offer mortgage solutions for homes for sale by owner, FSBO home listings such as FSBODeKalbCounty.com, FSBODeKalbCo.com, FSBOKaneCounty.com, FSBOKendallCounty.com, FSBODupageCounty.com and many other users of direct seller to buyer real estate transactions as the lender for both the home seller and home owner. Our expertise of De Kalb Sycamore Yorkville Oswego Northern Illinois Realtor business with mortgage financing makes State Street Mortgage the consultant you want. Other professionals we work with include: Attorney’s, Attorney, Real Estate Insurance, Mortgage Services, Property Investment, Insurance Companies, Title Companies, Attorneys, Lawyers Home Inspection Services, Appraisal, Appraisals, Appraisors, Appraisers, homeowner insurance, homeowners insurance companies. In Partnership with Housing & Urban Development, HUD, Federal Housing Authority, FHA, United States Department of Agriculture, USDA, Rural Development, RD and Illinois Housing Development Association and IHDA. State Street Mortgage searches National and Local Banks and Mortgage Lenders on behalf of our customers to ensure the best possible financing is found for each of our borrowers. National Wholesale Banks and Mortgage Lenders we work with include ABN-AMRO, ABN-AMRO Mortgage, Lasalle Bank, American Mortgage Network, Downey Savings, Draper and Kramer, DK Funding, Equity Mortgage, GN Mortgage, Guaranty Bank, New Millennium Mortgage, Argent Mortgage, BNC Mortgage, Chase Mortgage, First Franklin Mortgage, Freemont Investment and Loan, Long Beach Mortgage, First Horizon, Chase, Fifth Third, 5/3, 53.com, 5th 3rd, Washington Mutual, Wells Fargo Home Mortgage, New Century Mortgage, MILA, Meritage Mortgage, Aames Home Loan, AmerUs Home Equity, Aurora Loan Services, Bank One, Citimortgage, Cole Taylor, Countrywide, First American, First Magnus, Flag Star, GB Home Equity, Home Equity of America, Homecomings Financial, HSBC, Homeside, InterFirst, Irwin Home Equity, LIRA Financial M&T, Provident Funding, RBMG, Standard Federal, Temple Inland, Universal Funding, World Savings, Argent, Banc Express, DM Lending, Emigrant Mortgage, Finance America, Financial Freedom, Leman Brothers, First Capital, Mortgage USA, Saxon Mortgage, Title West Mortgage, Union Federal, WMC, Freedom Mortgage, SouthStar Funding, , First Franklin, AmeriQuest, Town & Country, Town and Country, Decision One, Option One, Bestrate.com, Cole Taylor, GreenPoint, Green Point, EquiFirst, Accubanc, Mortgage.com, Interest.com, Ditech, Lending Tree, Lending Express, Coldwell Banker Mortgage, Century 21 Mortgage, Cendant Mortgage, US Bank, USbank, GMAC Mortgage, Citi, Citibank, E-loan, eloan.com, mortgageselect.com, Renaissance Mortgage Corp, Illinois Mortgage Associates, AAXA Discount Mortgage, IndyMac Bank Home Lending, Marquette Bank, MortgageExpo.com, LenderLab.com, Weirdloans.com, Local Banks and Mortgage Lenders we compliment include DeKalb County Credit Union, Illinois Community Credit Union, American National Bank of DeKalb County, American National Bank, American Bank, ANBDC, Castle Bank NA, Castle Mortgage, Fifth Third Bank, 5/3 Bank, National Bank & Trust, National City Bank, National City Mortgage, Old Second Bank, Kane County Bank, Resource Bank NA, Resource Mortgage, Belvidere Bank, Citizens First National Bank, Farmers State Bank, Union Bank, Waterman State Bank, Stillman Bank, FNB, Belvidere Bank, Old Second, Old 2nd Bancorp, O2, Maple Park Bank, LNB, American General, NABATCO, NB&T, National Bank and Trust of Sycamore, Associated Bank, Rock River Bank, Mt. Morris Savings, Lincoln Bank, Holcomb State Bank, Farmers & Traders, Citizens, Blackhawk State Bank, Farmers State Bank, Farmer State Bank, Earthmover Credit Union, Harris Bank, Oak Brook Bank, TCF Bank, TCF Mortgage, Yorkville National Bank, Merrill Lynch, Primerica Financial Services, Benchmark Bank, American Bank & Trust Mortgage, Aurora Burlington Credit Union, Burling Bank & Mortgage, Capital Bancorp Financial Services, Citizens First National Bank, First Choice Bank, Mid America Bank and Union Bank. State Street Mortgage is a local alternative to National Brokers such as Charles Schwab, Edward Jones, EdwardJones, H&R Block Premium, H & R Block Mortgage, Security Finance, Wachovia Securities, State Farm Mortgage and American Home Mortgage. State Street Mortgage strives to offer superior service to other Local Mortgage Brokers such as Patt Hermann Mortgage, Maywood Mortgage, Countrywide Home Loans, Simplicity Mortgage, Source One Mortgage, Source 1 Mortgage, Cherry Mortgage, Cherry Creek Mortgage, Hartland Financial, Hartland Mortgage, Maple Park Mortgage, American General Financial Servcies, State Street Mortgage & Loan Company, State Street Mortgage & Loan Company, Allied Home Mortgage Capital, GSF Mortgage , RBC Mortgage, Citifinancial, Bay Mortgage, Hometown Mortgage, Mid-America Creative Mortgage, Silver Mortgage Bancorp, First Centennial Mortgage, TBC Mortgage, Compass Mortgage, State Street Mortgage and Financial Services Springfield Illinois IL, Executive Mortgage Corp, First Home Mortgage Corp., Legacy Mortgage, Metro Source Financial Group, Platinum Home Mortgage, Residential Loan Center of America, US Bank Home Mortgage, Park West Mortgage and Sterling Home Mortgage. State Street Mortgage works closing with area Realtors and Real Estate Brokers to provide their home buyers with the best mortgage financing while ensuring home sellers can sell their home to a financial secure buyer. We work closing with a diverse group of Realters including members of the Aurora Tri-County Association of Realtors, Belvidere Board of Realtors, Chicago Association of Realtors, Fox Valley Association of Realtors, Illinois Association of Realtors, Kankakee County Association of Realtors, Lee County Area Association of Realtors, Livingston Country Board of Realtors, Logan County Board of Realtors, McHenry County Association of Realtors, North Shore Barrington Association of Realtors, Oak Park Board of Realtors, Realtors Association of NorthWest Chicagoland, Realtor Association of West South Suburban, Rockford Area Association of Realtors, Sauk Valley Association of Realtors, Three Rivers Association of Realtors, West Towns Board of Realtors, Capital Area Association of Realtors, Iroquois Ford Association of Realtors and the Freeport Galena Association of Realtors. Individual privately owned and operated offices and their staffs include Adolph Miller Real Estate, Milner & Associates, Kettley & Company Realtors, Betsy Nelson, Scott Merchant, Deanna Merchant, Century 21 Elsner Realty, Diane Hammon, Bridgett Gilmore, Sandy Fiddler, Katie Morsch, Peggy Ireton, Patty Hamer, Susie Allen, Maria Pena Graham, Pat Elsner, Gayle Wuori, Dennis Maakestad, Suzi Warner, Sue Elsner, Jim Read, Matt Schmitt, Coldwell Banker Primus Realty, Laura Brown, Mary Coulter, Ruth Ranieri, Tony Young, Nancy Watson, NancyWatsonHomes.com, Mary Short, Linda Smith, ERA Elite Realtors, Rorry Heide, Tom Skora, Jana Whelan, Lynn Brown, Kelly Miller, Hoffman Realty, Trademark Properies, Joline Suchy, McCabe Realtors, Nedra Ericson, Nedra Ericson-Huntress, Sharon Rhoades, Cheryl Countryman, Jerry Wahlstrom, REMAX Gold, RE/MAX Gold, Jeff Rainwater, Nancy Marshall, Jacki McLaughlin, Karyn Dulin, Richoz-Sullivan, Richoz Sullivan Real Estate, Signature Real Estate, Jayne Menne, Rachael Alvarez, Century 21 New Heritage II, Coldwell Banker Residential Brokerage, Remax Excels, RE/MAX Excels, Prudential Doss Real Estate, Carpenter Realty, Century 21 Watson, Crown Point Realty, CrownPoint, DeKalb Realty, Sycamore Realty, Betsy Smith Realtors, DeKalb Area Association of Realtors, Elm Street Realtors, Nancy Edwards, Diana Morrasy, Barb Larson, Guio Realty, Pittsley Realty, Sally Pittsley, Century 21 Area, Coldwell Banker May, Hayden Real Estate, Myle Stone Realty, One-Stop Realty, One Stop Realty, Remax Rock Valley East, RE/MAX Rock Valley, Rochelle Realty, Remax Classic, RE/MAX Classic, Margy Hill, Century 21 Country North, Gambino Realtors, Baird & Warner, Baird Warner Real Estate, Home Town Realty, Vickie West, HomeTown Realty, Prairiefield Realty, Bradford Real Estate, ERA Tuscany Realty, Inland Real Estate, Midwest Executives, Remax Great American, RE/MAX Great American II, Remax Affiliates, RE/MAX Affiliates, Coldwell Banker Honig-Bell, Honig Bell, Remax Great American, Realty Executives Success, Legacy Real Estate, Century 21 Lemar Realty, McNamara Realty, RE/MAX Great American, Connie Graham Real Estate, Remax Way, RE/MAX Way, John Greene Realty, Weis Real Estate, Valencia Valley Class, Amalia’s Realty, 1st Choice GMAC, First Choice GMAC, Dream Works Realty, Liberty Park Realty, 2c Realtor, Buss Realty, Drake Realty, Platinum Real Estate Provessionals, Remax Town & Country, RE/MAX Town & Country and Century 21 Mohler Realty. We are a proud member of the DeKalb County Building and Development Association that represents fine developers such as Brian Grainger Construction, Ken Spears Construction, Anthony Homes, DeKalb Associates, Eagle Homes, Gardens of River Mist, L & S of DeKalb, Lennar Homes, Orgler Homes, American Homes, Kennedy Homes, Summit Homes, Weydert Homes, Wiseman-Hughes, Wiseman Hughes Enterprises, Briody Enterprises, Ivan Krpan Construction, Neumann Homes, Joe Heyob Construction, Ken Nelson Construction, Airport North LLC, Blackhawk Builders, B & B Enterprises, Elmer Larson LLC, Northwest Property Consultants, Richard Hoffman Development, Mark Suchy, Rood Development, Rood Construction, Ringland-Johnson, Landahl, AMG Homes, C/L Design Build, Cardinal Homes, Concord Homes, HRM Properties & Development, Land Developer, McCue Builders, Moser Enterprises, Prestige Properties Consultants, Richard Marker Associates, Wernsman Builders, Montalbano Homes, Alexander Homes, Lakewood Homes, Centex Homes, Kirk Homes, A good real estate attorney is essential in a buy sell transaction and some of the better area Attorneys include Boyle Cordes, Witheft & Brown, Cliffe Foster Corneille & Buick, Cebula Law Offices, Cosentino Law Firm, Gallagher & Slingerland, Smith Tucker & Brown, Klein Stoddard Buck & Waller, Charles Rose, Richard Turner, Daniel Kramer, Gregg Ingemunson, Joseph Fahey, Thomas Grant, Melissa Anne Maye, Pilmer & Barnhart, Homeowner hazard Insurance must accompany all real estate transactions and some of the better sources include Country Companies Insurance & Financial Services, American Carlstrom Insurance, Crum Halsted Insurance Agency, Munson Insurance, Pardridge Insurance, State Farm Insurance, Caywood & Associates, Horton Insurance, Van Riper Insurance Agency, All new mortgage financing requires a Title Insurance policy most often provided by tile companies such as American Title Guaranty, Chicago Title, Fox Title, Law Title, First American Title, Ticor Title, Northwestern Title, H.B. Wilkinson Title, Rockford Title, First American Title, Stewert Title, Stewart Title, Our mortgage office can also highly recommend many employment relocation opportunities such as Upstaging Inc., and Target or Firestone warehouses or even complementary home Service Providers to our mortgage borrowers from home service professionals like Kishwaukee Electric, Mascal Electric, Virgil Cook & Son, Elliott & Wood, DeKalb Mechanical, Kallal’s Sheet Metal, One Hour Heating & Air Conditioning, Theisen Roofing & Siding, Illini Security Systems, Floit Sand & Gravel, Floor to Ceiling Store, G&R Plumbing & Heating, Service Now Plumbing, ServiceNow Plumbing, Stock Building Supply, G&G Electric, Dahlquist Heating & Cooling, Carpetland USA, Door & Window Super Store, Arrow Exteriors, Midwest Concrete Cutting, Alexander Lumbar, Stock Lumber, Lowes Home Improvement, Home Depot, Manards, Artlip & Sons, Beery Heating & Cooling, L.A Genovesi Carpenter Contractors, Martin Plumbing & Heating, Premier Electrical Services, C & C Home Inspections, HomeTeam Inspections, Prestamista De Hipoteca. Corredor De Hipoteca. Hablamos Español. El español está disponible. Si Habla En Español. Latino. Recepción del americano mejicano y central. Prestamos para casas de Illinois MiCasaPrestamos .com . Intereses de Hipoteca han bajado. Haz clic aqui y refinancie ahora! See our advertisements in the Verizon Yellow Pages Directory, the McLeod Yellow Book, the Home HomePages, the DeKalb Daily Chronicle, the Kane County Chronicle, The Midweek, the DeKalb County News, Our Town free maps, the Kendall County Record, DeKalb Jewel shopping carts, the DeKalb based Signature Real Estate homes guide and our sister web sites located at www.HomeMortgageIllinois.com, www.MyHomeMortgage.org, www.DeKalbCountyHomesForSale.com, www.KaneCountyHomesForSale.com, www.KendallCountyHomesForSale.com, www.DupageCountyHomeForSale.com and www.BillClanton.com. As always we look forward to seeing you in the Sycamore Pumpkin Festival Pumpkin Parade the last Sunday of every October on our State Street Mortgage mini choppers motorcycle mini-chopper motorcycles and go-carts and with our State Street Mortgage popcorn machine during the annual DeKalb Home Show at Southe Pointe Centre or South Point Center banquet facility on Gurler Road in Dekalb. Be sure to visit our main web site of www.baybridgesalem.com to take advantage of the following Free services; Daily mortgage rates from 200 objectively surveyed lenders; our FREE Mortgage Market Guide Weekly which includes market news including timely information with a financial Week in Review, a mortgage Forecast for the Week and an Economic Indicator Calendar; our exclusive Loan Center with five 5 mortgage calculators including a Monthly Payment Calculator, a Payment Amortization Schedule calculator, an Extra Payment calculator, a How Much Can I Afford purchase calculator and a How Much Can I Borrow mortgage calculator along with the on-line ability to Pre-Qualify or Apply for a mortgage while making a request to have a State Street Mortgage Specialist contact you directly; our interactive Loan Center with a VeriSign secure on-line mortgage application; a Mortgage Products description page with detailed mortgage loan explanations; an About Us / Meet Our Team page with personal information about each of our Mortgage Specialists; our Frequently Asked Questions FAQ page which addresses reoccurring mortgage questions in an easy to understand format; a specific Home Buying Information Page with a great collection of information for first time and veteran homebuyers alike, a Testimonials page to review what past customers have to say about our mortgage services; and a Resources page with contact information and links to other professional services and information including Homes for Sale, Proven Trusted Realtors, Quality New Home Builders, Real Estate Attorneys, Appraisal Services, Home Inspection Services, Home Repair, Home Services and other Helpful Services & Sites such as local school districts, local health care providers and much, much more … we sincerely Thank You for your visit!