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Architecture Guide
Cost vs. Value Report
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Take a Quiz
30 under 30
Young Professionals
REALTOR® Emeritus |  | MORTGAGE BASICS | | ||
|  Keep the Transaction on Track Advanced Tip Advanced Tip Advanced Tip Broker Tip Getting to Close Advanced Tip Mortgage Basics Advanced Tip Advanced Tip Advanced Tip Inspections and Repairs Broker tip Closing Countdown Advanced Tip Going for the Close Advanced Tip Advanced Tip Advanced Tip Commission Disbursements Broker Tips Broker Tip Post-Closing Strategies Quiz: Contract to Close Bright Ideas: Contract to Close Code of Ethics: Contract to Close More Resources: Contract to Close | It’s a rare home sale that doesn’t involve a mortgage, so knowing the basics can pay off. 6 Common Mortgages and Who They Fit 1. Conventional 30-year, fixed-rate mortgages Pluses: Good for buyers who want the security of a fixed principal and interest payment and plan to stay in a home long-term. Minuses: Higher overall interest than 15-year loans. May need to refinance if rates fall significantly. 2. Conventional 15-year, fixed rate mortgages Pluses: Appeals to buyers who can afford higher payments and want to build equity quickly and pay less interest across a loan’s life. Payments remain the same over the life of the loan. Minuses: Payments that are 25 percent to 30 percent higher can be a burden if income changes. 3. Bi-weekly mortgages Pluses: Good for buyers who want to reduce the time needed to pay off a loan. By paying half the monthly payments every two weeks, the approach produces 13 monthly payments, rather than 12, per year. Minuses: Little flexibility if income changes or emergencies arise. 4. Adjustable-rate mortgages Pluses: Low interest in the first year. Good for those who know their income will rise over the coming years or those who are moving in a couple years and aren’t concerned with a rate hike. Allows borrowers to qualify for a higher loan amount. Minuses: Monthly payments can increase significantly if rates rise, although most adjustables have some form of interest-rate cap. 5. Multi-year fixed, with balloon Pluses: Lower closing costs than fixed mortgages; low payments. Minuses: Need to refinance at end of fixed-rate period, no matter what interest rates are. 6. FHA and VA Pluses: Lower downpayment requirements than conventional loans. Often easier to qualify for for those with low incomes. Minuses: Requires additional inspections and insurance. In case of VA loans, limited to veterans. TIP: Conventional wisdom says lock in a rate right away. But in a volatile market, rates could come down. Advise buyers to talk with the lenders and consider their advice about when to lock. TIP: Some states prohibit real estate professionals from receiving referral fees for assisting lenders in loan origination. Other states require real estate practitioners to be licensed as mortgage brokers to receive this type of compensation. The U.S. Department of Housing and Urban Development also has issued a statement that individuals must do significantly more than just direct a borrower to a particular lender to earn a referral fee. Understanding FHA Loans > | |