Maximize Your Savings with Good Real Estate Financing

Maximize Your Savings with Good Real Estate Financing

Article by Chris Blake

In shopping for clothes, groceries and other essential needs, it is human nature to look for bargains-bargains that would constitute savings for the buyer. Buyers would flock to the malls and shops with sale signs. Discounts and price-offs, freebies, and raffles are offered by the seller to boost the turn over of inventory.

The same thing goes in the real estate business. To lure the buyers, the seller would offer the most lucrative deals while the buyer on the other hand, would make comparison shopping to find the best mortgage financing program that would suit their financial needs.

Buying and selling a home is one of the biggest lifetime business deals a person can enter into. Mortgage financing to buy a home would mean the realization of a dream, the tangible result of hard work and the result of penny pinching to some. Selling a home on the other hand, would be emotionally draining most especially if the decision to sell is brought about by a pending foreclosure.

A prospective home buyer should bear in mind that lenders would naturally vie with one another and offer the “best” mortgage financing plan. Be wary though, to avoid mortgage pitfalls you have to choose the program that is within your financial capacity to pay.

Your income, your debts and the price of the house are the most vital factors you have to consider in buying a home. Of course you wouldn’t want to face the threat of foreclosure if you choose a house priced beyond your capacity to pay neither would you choose to be saddled with a house that is not to your liking though modestly priced.

In mortgage financing, the buyer can opt for the fixed rate mortgage or the adjustable rate mortgage (ARM). Because ARM are typically lower priced as compared to fixed rate mortgage, they have the advantage of lower initial monthly payments. In ARM, the interest rate is linked to an index-meaning if the index rises, monthly payment rises and a falling index would mean lower monthly payments. ARMS are less expensive but the risk of foreclosure will be borne by the borrower if increased monthly payments are no met.

Another kind of mortgage financing is the wraparound mortgage. If you have a less than perfect credit and you want to buy a house, the wraparound mortgage is ideal for you. In a wraparound mortgage, the seller of the home has an existing mortgage and you, the buyer will assume the monthly payment and the difference to cover the purchase price of the home. A word of caution: wraparound mortgage is not legal in most states; for your protection it is a must to ask the seller to provide you with receipts of the payments made because issues of fraud may arise when the buyer pays the monthly payment and the seller failed to remit the money to the lender.

A buyer has the option to take the 15 year, the more conventional 30 year or even a 50 year mortgage financing plan. Lower interest rate and quicker equity build up is possible with a 15 year mortgage financing plan due to its shorter term. Complete job and income security is necessary for this mortgage financing. You stand the risk of losing your home if the higher monthly payment is way beyond your financial means. Opting for the more common 30 year or even a 50 year mortgage is safer even though the repayment period is longer.

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Author: Chris Blake For further information about mortgages and home loans, please visit my website at

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Spike In It is a case of good news and bad news where foreclosures are concerned, for the month of April. But it’s the starting numbers for FHA foreclosures that captures the report released recently by the LPS. While foreclosure initiations increased only a slight bit in April, FHA Foreclosures that have begun, have shot up significantly. The Lender Processing Services, or LPS, reports that foreclosure starts actually dropped 2.6 percent in April, but FHA foreclosure starts spiked an incredible 73 percent during April. The reason given by LPS for this terrible number is being blamed on defaults in 2008 and 2009 vintage loans. While it’s true that all of the FHA vintage loans experienced increases in foreclosure beginnings in April, the more recent vintages from 2009 to current have experience improved credit performances. Herb Belcher, the senior vice president for LPS Applied Analytics explains that when the loan origination market basically dried up, the FHA tried to fill in. That is when FHA originated loans tripled, and even increased up to five times the averages in 2009. When you have high volume loans like that, Belcher explains, there are going to be large numbers of foreclosure starts, even when you are working with low default rates, which is not the case during these recessionary times. In fact, the 2008 vintage loans by themselves account for approximately billion worth of unpaid mortgage balances in foreclosure, and there is no
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