Having to make monthly mortgage payments can be very stressful for anyone buying condos or other homes. Worrying about a $200,000 debt, especially if you are just scraping by, can be a problem.
But there are ways to pay off your debt quickly and save on interest without really paying any more than you do now. Splitting the regularly monthly mortgage payments in half and paying that amount bi-weekly, or every two weeks is one option.
With 52 weeks in the year, that means you are making 26 half-payments, or 13 full mortgage payments instead of the usual 12. This way, you can pay off a 30-year mortgage in as little as 26 years. On a typical 30-year mortgage with a 5 percent interest rate, you can save tens of thousands of dollars.
Some lenders allow you to build this option into your mortgage payments, but be careful because there are often additional fees involved. With your monthly condo assessments and other costs, this is the last thing you want. These extra fees cab ve avoided by doing it yourself. Lenders don’t have a problem processing two payments per month, as long as the full payment is received by the due date.
Adding a bit more to your monthly mortgage payment is another way to save money in the end. You can do this simply by rounding up, so instead of paying $927 per month, make it an even $1,000 whenever you can afford to do so Every little bit taken off the principal helps, and it is something to consider when financing condos.
When purchasing a home most people take out a loan. The question that a typical homebuyer may run into is what type of mortgage option would be the best? The real answer, is the type of mortgage that fits your financial situation. There are many types of mortgage loans out there and they all mean different things. Understanding all of the terms of your mortgage options will save you from trouble down the road. Too many people chose an option that isn’t right for them and as a result they end up in foreclosure!
There is a Fixed Rate Mortgage option. This is a mortgage that maintains the same interest rate throughout the entire life of the loan. The loan doesn’t fluctuate at all. Depending on the economic times, the fixed rate usually comes in 10, 15 or 30 year terms. This type of mortgage is good for the home buyer who needs the peace of mind with paying the same rate every month.
There is also an Adjustable Rate Mortgage. Another name for this is an ARM. This type of mortgage has rates that often change according to financial indexes that are determined by the current market. The mortgagee must be prepared that the rate on the mortgage may change year after year. This type of loan works for a home buyer who is willing to take the risk in getting the lowest rate possible at the expense of risking a higher rate and higher monthly payments. People typically choose an ARM for the lower initial interest rate and because they do not intend to own the property long-term.
Many times home buyers are presented with the Balloon Mortgage Option. This is considered a higher risk than an ARM mortgage because there can be a large payment when the loan is due in full. For instance, you may pay low rates for many years, but then when the amount is due, a large chunk of money is needed to cover the mortgage. The life of the loan can either be 3, 5, or 7 year balloons.
There are many other types of loans in addition to the few mentioned here, but these are the most common options that mortgage companies offer to homebuyers as mortgage options. Understanding your options is of the utmost importance when purchasing a home. Knowing this information could save you from the risk of not being able to pay your mortgage because of unknown factors with your loan terms. Always be sure to research your options before making your next home purchase.
The time has come when you are about to close on your new home and you are informed that you are going to have to come to the closing table with money. In order for you to better comprehend what the closing costs are, it is important for you to understand the Good Faith Estimate and the costs you are responsible for.
One of the sections on a Good Faith Estimate is an explanation of your loan terms. It will underline what you loan amount is, the term of your loan, and the interest rate. It also explains the initial monthly amount owed for principal, interest and any mortgage insurance. This will help you clearly understand the summary of your loan.
The next section is the Escrow Account information. When purchasing a home you can have two options for paying your taxes. You can either pay your taxes in a lump sum every year, or you can have the mortgage company escrow your payments into your mortgage. This way you are paying small amounts every month.
Following this section is the summary of the settlement charges. The first line item is the adjusted origination charge. This is the charge that you will pay the mortgage company for getting you the loan. The second line item is your credit or charge (points) for the interest rate. This amount depends on whether or not you used your money to pay off some points on your interest rate or whether you received a credit.
The second portion of the summary of settlement charges is the charges for all other settlement services. This may include required service fees. The mortgage company will charge a fee to complete your settlement. You will also pay a fee for title services and lenders title insurance and also for owner’s title insurance. The next time item you will need to pay for is government recording charges. These charges are for the state and local fees that you will have to pay to record your loan and title documents. The following charge is for transfer taxes. The charges are for state and local fees. You will also pay an initial deposit for your escrow account. This is a sum of money that will get you started with your escrows. You are also charged for your daily interest. It starts on the first day of your loan and you will pay up to the next month. The last line item is for your homeowners insurance. You must buy home owners’ insurance to protect your home from a loss.
Section B is a total of your charges for all other settlement services that were involved in the loan process. Closing costs are not cheap, so it is important you know exactly what you are paying for and where your money is going. Since recent changes have been made, all Good Faith Estimates have an instruction section that will explain the charges, which again will allow you to better understand what the settlement charges are for.
Condo financing can be difficult at times but not impossible. Most conventional financing programs will require the condo to be less than four floors and have more than 50% of the condo units be occupied by their owners. The loan limits must also be under the conforming limit currently at $417,000. With these restrictions you might think that all is lost if you are buying a condo but nothing is further from the truth.
As with all condo financing there are documentation requirements which may seem daunting but is not as difficult as you may think. Which mortgage you select will determine the exact documentation requirements and listed below are the most common.
- Last two years W-2 forms
- Last two paystubs (enough to cover 1 month)
- Last two years signed 1040’s and all schedules
- Last two months bank statements, all pages
- Current statement for 401K or IRA accounts
- Complete list of your current debts (usually taken from your credit report)
- Copy of the sales contract
- Copy of your driver’s license, picture ID or passport prior to closing
- Gift letters signed by the donor and proof of receipt and ability to gift funds
- Copy of the earnest money check, both front and back
- Your insurance agent’s contact information
This may look like a lot to ask but lenders who are providing condo financing need this information to make a reasonable decision which protects everyone involved, especially the buyer.
Once you have found the condo you wish to purchase and have contacted a lender there is another consideration, closing costs. It is wise to speak with several lenders to shop rates and closing costs. It can be as varied as there are lenders available. Listed below are some common examples of closing costs on most loans.
- Origination fee
- Discount points (sometimes used to get a lower rate)
- Application fees
- Lock in fees
- Underwriting or doc prep
- Flood certification (verifies the property is not in a flood plain)
- Tax service fees
- Appraisal
- Credit report fee
- Title search
- Title insurance
- Recordation fees (fee to record the new deed)
- State and county transfer taxes as required.
This all seems like a lot of information to ask for and a lot of cost, but look at it this way. For most people you are buying the single most important financial investment you will ever make in your lifetime. When all is said and done and you move into your new condo, you will be glad you did.
A sale is not a sale until it is closed, and in order for the closing to go smoothly, all parties need to be aware as to what the closing procedures are and what is to be expected of the clients before and at the closing. It is important that all parties are prepared for what to bring and how the closing will go. There are certain responsibilities of the buyer and other responsibilities of the seller.
Before the closing the Buyer needs to make share that he/she gets the correct numbers from the attorney on what amount of money should be brought to closing. The buyer needs to know this amount because a certified check needs to be provided at the time of closing. The buyer should get the amount first, then get a certified check. It is always a good idea to bring a checkbook in case there are any variations. It is important for the buyer to bring his/her drivers’ license to the closing for verification purposes as well. Always make sure that you confirm the time and date of the closing.
At the closing, the lender will typically deliver a package of documents to the title company. This package includes the note and mortgage and also disclosures and agreements. The buyer’s attorney needs to walk the buyer through all of the documents and explain what they mean.
Another part of the closing procedure is that the seller needs to come to the closing with a package of documents. This package will include the deed to the property. The buyer’s attorney will review the documents to make sure that the buyer is purchasing and the seller is conveying the property correctly, that there are no liens on the property and that the title is clear. This usually entails a review of the documents and a survey provided by the buyer.
At the actual closing, the closing agent conducts the settlement meeting and reviews to make sure that all the documents are signed and recorded and that the closing fees and escrow payments are paid and properly distributed. Typically in a closing, the buyer pays for fees charged for obtaining a mortgage, inspection fees, homeowners’ insurance, transfer taxes, title insurance and escrow fees. The seller typically pays the loan payoff fees, the real estate commissions, title insurance, termite repairs for the property and all or part of the transfer taxes and escrow fees.
All buyers and sellers should be aware of the closing procedures so that the transaction closes and both parties walk away with a win-win situation.
Condo financing can be difficult at times but not impossible. Most conventional financing programs will require the condo to be less than four floors and have more than 50% of the condo units be occupied by their owners. The loan limits must also be under the conforming limit currently at $417,000. With these restrictions you might think that all is lost if you are buying a condo but nothing is further from the truth.
More and more developers are looking to non-warrantable condo financing as a tool to grow their business. Developers are seeking qualified buyers and with today's uncertainty in the economy are finding it difficult to obtain financing for their projects. Traditional lenders today require a condo questionnaire as well as the condo association docs for each unit they are looking to sell but with non-warrantable condo financing all is needed is a one-time approval and then all subsequent loans can go through underwriting quickly. When you are looking to purchase that condo in the development that seems a little outside the box, don't despair, financing is available if you know where to look.
As with all condo financing there are documentation requirements which may seem daunting but is not as difficult as you may think. Which mortgage you select will determine the exact documentation requirements and listed below are the most common.
- Last two years W-2 forms
- Last two paystubs (enough to cover 1 month)
- Last two years signed 1040's and all schedules
- Last two months bank statements, all pages
- Current statement for 401K or IRA accounts
- Complete list of your current debts (usually taken from your credit report)
- Copy of the sales contract
- Copy of your driver's license, picture ID or passport prior to closing
- Gift letters signed by the donor and proof of receipt and ability to gift funds
- Copy of the earnest money check, both front and back
- Your insurance agent's contact information
This may look like a lot to ask but lenders who are providing condo financing need this information to make a reasonable decision which protects everyone involved, especially the buyer.
Once you have found the condo you wish to purchase and have contacted a lender there is another consideration, closing costs. It is wise to speak with several lenders to shop rates and closing costs. It can be as varied as there are lenders available. Listed below are some common examples of closing costs on most loans.
- Origination fee
- Discount points (sometimes used to get a lower rate)
- Application fees
- Lock in fees
- Underwriting or doc prep
- Flood certification (verifies the property is not in a flood plain)
- Tax service fees
- Appraisal
- Credit report fee
- Title search
- Title insurance
- Recordation fees (fee to record the new deed)
- State and county transfer taxes as required.
This all seems like a lot of information to ask for and a lot of cost, but look at it this way. For most people you are buying the single most important financial investment you will ever make in your lifetime. When all is said and done and you move into your new condo, you will be glad you did.
Condo lending is much different from residential home lending. There are many issues that lenders will look at when lending on a condominium versus a house. The best thing to do is to talk to a condo lender that focuses on condominiums exclusively. They will have the best knowledge of the financing programs available for first time buyers, renters that want to own through a rent-to-own program and jumbo loans.
Condo lending starts with doing a credit application to see exactly where you qualify. If you’ve had credit issues and have been late with several bill payments, the credit report will show this. Most lenders will report back to you immediately to go over a game plan of exactly how to clear these credit issues up, but this is the first step in obtaining a loan to purchase a condominium.
What happens if the credit report comes back fine and the lender says they would be interested in financing you? What’s next? They will go through all your credit history and your current income situation to evaluate how much loan you can afford today. They base everything on numbers. If you’re making 1en thousand dollars a month, you’ll be able to afford a condo mortgage different from someone that makes three thousand per month. If you make ten thousand per month and so does you neighbor but you have sixty thousand in credit card bills and he doesn’t, the condo lender will qualify him for a larger loan that you. All of these things will be taken into consideration when doing a condo loan.
Condo lending doesn’t end there. Once your credit has been checked and you’ve been pre-qualified for a loan amount, you’ll need to choose the program you’ll be financed under. There are all types ranging from adjustable rate mortgages to fixed rate loans. Adjustable rate mortgages means the interest rate that you’ll pay on the loan adjusts every so often. Because of this, you’ll normally see the rate lower in the beginning of the loan and then go up over time.
The biggest thing to remember about financing a condo is to make sure you’re in front of people that know what they’re doing. Work with a professional that’s been in the business for awhile and make sure they specialize in financing condos. Homes are one thing, condominiums are another. Pick a specialist! They’re worth their weight in gold.
The condominium market has long been an alternative housing option that is increasing in popularity each passing year. From the first time buyer to the step down condo buyer all are an attractive means for home ownership. To finance your condo in the current market can be challenging but not impossible. Fannie Mae, one of our government backed mortgage-finance companies has added some restrictions that can make it more difficult for developers to sell their properties. A new policy effective March 1st raised the amount of units sold from 51% to 70%. In addition, Fannie Mae will not back loans for sales in buildings where 15% or more of the current owners are delinquent on their association fees or where more than 10% of the units are owned by a single entity. Fannie Mae says these restrictions protect the developers and taxpayers from throwing good money into troubled developments but many condo developers disagree and have petitioned Fannie Mae for exemptions. To date more than 50 petitions have been filed and granted allowing condo buyers to purchase.
It is for first time home buyers but there are several things to consider before you can qualify. To finance your condo you cannot have owned a home in the last three years but your spouse has owned a principal residence, neither you nor your spouse would qualify for the first time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first time home buyer. A good example would be if a parent jointly purchases a home with a son or daughter. Also, ownership of a vacation home or investment property not used as a principal residence within the last three years would still qualify you for the tax credit. There is movement in the Congress now to enable the buyer to use the tax credit at time of closing their loan and not waiting till next year when taxes are filed. The final decisions have not been made yet but it looks like it could happen at any time, so stay tuned!
To finance your condo there are income limits for the program but they have been made generous to encourage more buyers into the real estate market. To receive the full $8,000 home buyer tax credit a single buyer cannot have more than $75,000 in modified adjusted gross income and married tax payers filing a joint return cannot make more than $150,000 in modified adjusted gross income. Now that does not mean that buyers making more than those amounts will not receive any benefit from this program, it only means they will receive a reduced amount based on their income level. In other words, almost anyone can benefit in some form with this program.   Interest rates are down, prices are very reasonable, and now $8,000 in tax credits, what are you waiting for!
The condominium market has long been an alternative housing option that is increasing in popularity each passing year. From the first time buyer to the step down condo buyer all are an attractive means for home ownership. Financing your condo today in the current market can be challenging but not impossible. Fannie Mae, one of our government backed mortgage-finance companies has added some restrictions that can make it more difficult for developers to sell their properties. A new policy effective March 1st raised the amount of units sold from 51% to 70%. In addition, Fannie Mae will not back loans for sales in buildings where 15% or more of the current owners are delinquent on their association fees or where more than 10% of the units are owned by a single entity. Fannie Mae says these restrictions protect the developers and taxpayers from throwing good money into troubled developments but many condo developers disagree and have petitioned Fannie Mae for exemptions. To date more than 50 petitions have been filed and granted allowing condo buyers to purchase.Â
Not all is lost with these restrictions because there is financing available which has long been available but not often used because credit was much easier to obtain. When financing your condo you may want to look into non-warrantable condo financing. Let's say you have a condo you want to buy and the project is new with few units sold. Fannie Mae will not finance your mortgage because not enough units have been sold but units cannot be sold because financing is not readily available. It's the chicken or the egg syndrome. Non-warrantable condo financing has no pre-sale requirements which means you could be the first buyer wanting to purchase in a development many times realizing updates and benefits not offered to the buyers coming later.Â
When you are financing your condo there are documentation requirements which may seem daunting but is not as difficult as you may think. Which mortgage you select will determine the exact documentation requirements and listed below are the most common.
- Last two years W-2 forms
- Last two paystubs (enough to cover 1 month)
- Last two years signed 1040's and all schedules
- Last two months bank statements, all pages
- Current statement for 401K or IRA accounts
- Complete list of your current debts (usually taken from your credit report)
- Copy of the sales contract
- Copy of your driver's license, picture ID or passport prior to closing
- Gift letters signed by the donor and proof of receipt and ability to gift funds
- Copy of the earnest money check, both front and back
- Your insurance agent's contact information
This may look like a lot to ask but when financing you condo the lenders need this information to make a reasonable decision which protects everyone involved, especially the buyer.
Is the right time to buy a condominium? Questions about the economy, and falling housing prices have kept the real estate market stagnant, but 2009 appears to be the year that this changes, and the housing market starts to rise again. Financing Chicago condos is now a realistic option for first time home buyers. Before you can finance your condominium, you need to find it first! OwnACondo.com allows you to search through thousands of listings within the Chicagoland and Northern Illinois region.
Once you find the right condominium, you need to look at home financing options. To begin, you can easily submit your information on-line to a mortgage professional for review. Then, let's explore home loan options...FHA or Conventional? FHA allows for more flexible debt to income ratios as well as a lower down payment. However, Conventional loans can often net a lower mortgage rate, and more condominiums qualify as they do not have to meet certain FHA guidelines. With interest rates now at historic lows, you need to take advantage of this unique opportunity to own a condominium. Also, for first time home buyers, you also can take advantage of the eight thousand dollar tax credit that is being extended for 2009. The combination of interest rates, loan opportunities, and a massive tax credit make 2009 the year for you to finally own a home of your own. Financing condos in Chicago and throughout Northern Illinois has never been better!
OwnACondo.com is ready to help you purchase a home of your own. Our experienced team of real estate agents will guide you through the home buying process, and our preferred mortgage lenders can assist in providing the right financing options that fit your specific needs. Buying a home is one of the most important purchases you can make, and home owners historically have a much higher net worth than do renters. Start building for your future today. 2009 is a great year to purchase a condo of your own, and financing your Chicago condo is now more attainable than you realize. Take advantage of low mortgage rates, and a eight thousand dollar tax credit, and live the American dream of having a home of your own.
