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FOR ALL YOUR REAL ESTATE NEEDS
2106 Stout Road
Menomonie WI 54751
Phone: 715-235-0635
Fax: 715-235-4461
Toll Free:
888-491-7055
Rassbach@wwt.net
*Menomonie
Real Estate
*Dunn
County Real Estate; Land
*Waterfront
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Mortgage Questions
Some of the most commonly asked questions
about mortgages
 What
are the differences between mortgage prequalification, preapproval and final
loan approval? Prequalification is the
process where the lender will look at a basic copy of your credit report and use
the information you supply to determine how much mortgage you can afford based
on your income. No accounts or employment information is verified. Preapproval
occurs when all credit and employment is verified and the mortgage is approved,
subject to the appraisal of the property you have chosen to buy. Final loan
approval occurs when the property has been appraised, all documentation is in
the hands of the lender and all contingencies have been met. For more
information, see the section devoted to
prequalification and preapproval.
What first-time buyer programs are available?
Many first-time buyer programs are locally developed and administered. Your
state, province or local community is much more likely to have a program
available than on a national level. Your Agent can generally review with you the
availability of programs in your area. For information on
selecting and choosing an Agent,
see the section devoted to that subject.
There seem to be so many mortgage
programs and offers available. How can I compare them?
This can be confusing! You will want to consult a
few sources, including a local bank that has mortgage availability and a
mortgage broker, who will deal with several different lenders. In addition, you
may want use one of the online sources such as
Lending Tree,
who deal with numerous lenders throughout the U.S. Through a single brief
application, you can get up to 4 offers from lenders competing for your
business.
More information.
Can I use my IRA retirement funds for a down payment on a house?
For most first time buyers, you can use the funds in these retirement accounts
without penalty.
According to the IRS, If both husband and
wife are first-time homebuyers, they each can withdraw up to $10,000 for
qualified acquisition costs penalty-free for a first home.
Qualified acquisition costs.
Qualified acquisition costs include the following items.
- Costs of buying, building, or rebuilding a
home.
- Any usual or reasonable settlement,
financing, or other closing costs.
First-time homebuyer.
A first-time homebuyer is, generally, any individual (and his or her spouse,
if married) who had no present ownership interest in a main home during the
2-year period ending on the date the individual acquires the main home to
which these rules apply.
Should I pay points?
Along with the interest rate, the number of points (up-front interest) is an
important consideration when comparing mortgages. See the guest article
Should I Pay Points?
by Randy Johnson, author of the best selling book on mortgages,
How to Save Thousands of Dollars on Your Home
Mortgage.
What mortgage options are there for
those with poor credit? There are
lenders available for many of those with tarnished credit records. One of the
mistakes commonly made by homebuyers involves their credit report. Some buyers
assume that their credit is worse than it really is, and may well have been able
to secure a more advantageous mortgage. Other buyers are unaware of problems in
their credit report and need to scramble to get the problems handled. You can
avoid many of these hassles by getting a copy of your credit report up-front and
examining it both for errors that need to be corrected and accounts that need to
be handled. You can get a
free copy of your credit report here
as well as 30 free days of the Credit Check Monitoring Service. If you are
looking for a mortgage and have less than perfect credit, then a good source
would be
Lending Tree where bad credit is no problem
Also, you will also find more information on the page
Buying a House When You Have Credit Problems.
I hear about these different "ratios"
when qualifying for a mortgage. What are front and back ratios?
Part of the mortgage application process will be the determination of how much
house you can afford based on your income. The two ratios that will be computed
are the front ratio
and the back ratio.
- Front Ratio:
The total mortgage payment including principal, interest, taxes and insurance
(PITI) as well as any condominium or homeowner association fees divided by
your total GROSS income. Traditionally this ratio must be below 28% Example:
With a gross income of $3700 per month, a total mortgage payment (PITI) of
$973, the front ratio would be 26%.
- Back Ratio:
The total mortgage payment PLUS any car payments, credit card and any other
loan payments divided by your total GROSS income. Traditionally must be below
36%. Example: With a gross income of $3700 per month, a total mortgage payment
of $973, a car payment of $212, 1 credit card payment of $59 and 1 credit card
payment of $43 for a total of $1287 with a back ratio of 35%.
What options are there for buyers with no
money down and no cash for closing costs?
Although there are some new programs that allow buyers to purchase a home with
little or no cash, you will generally need some funds for down payment, closing
costs or both. Since a mortgage payment will take a good percentage of your
income, lenders will usually want you to be "involved" (meaning having your
money involved) from the very beginning. There are options for low down payment
(5% or less) mortgages such as FHA mortgages and there is always the possibility
that the seller could absorb some of your closing costs (which are usually 3-5%
of the selling price) but to buy a home with
no cash
down is a rare occurrence. If you have cash for closing costs, though, and
excellent credit, there are new options in the conventional loan arena. See the
article on
buying a house with nothing down.
http://www.ourfamilyplace.com/homebuyer/mortques.html
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