Mortgage Update

by Bill Bricka

Loan officer with Advantage Mortgage, Inc.

The higher your down payment, the lower your monthly mortgage payment and the possibility of qualifying for a better loan.

5. Plan for your new bills. Buying a home may increase your monthly bills such as your utilities, water, insurance, maintenance. You should also plan for possible repairs to your new home.

6. Avoid making any major purchases. A major purchase, especially such as a new vehicle, may cause you to have a difficult time getting a loan - or it could potentially lower the amount you could be approved for.

7. Keep an eye on interest rates. If they start to creep upward, you may want to make a decision to buy now.

8. Make a budget. As a new homeowner, you will now have a mortgage payment and the monthly expenses you may not have previously had to budget for.

9. Gather your paperwork. When getting a loan, you may be required to show your recent paystubs, tax documents for the past two years, bank account statements, etc.

10. Begin thinking about homeowners' insurance now. Again, make sure your credit report is accurate, credit histories are sometimes used to determine whether a company will insure you, and at what rate.

In today's mortgage environment, there are mortgage programs for just about every kind of borrower. One of my favorite programs right now is something called the "107% Solutions." It's a first mortgage program designed for borrowers who wish to purchase a home with little or no money down (program requires borrower to contribute $500 of his/her own money). Rate, term and debt consolidation refinances are also allowed. Loan proceeds in excess of 100% of the property value may be used for closing costs, prepaids and payoff of consumer credit (in the case of a refinance). One of my favorite features of the program is the absence of MI (Mortgage Insurance) which is typically required for loans that are greater than 80% of the value of the home.

Below is an example of how this program works:

107% SOLUTION PROGRAM

Purchase price of home_______$200,000
Closing costs______+____+_____$4,400
Prepaids_____________________$1,700
Total loan amount____________$206,100
Down Payment by Borrower________$500

If you would like more information or assistance in analyzing your current mortgage, you can contact Bill Bricka of Advantage Mortgage, Inc. at (770) 516-9500. You can also email Bill at mortgage@ginacarr.com.

Rates have remained at a relative standstill lately because there has been no economic news to move them. Thirty and fifteen year fixed rates are currently 5.375% and 4.875%, respectively. Alan Greenspan's recent economic testimony to Congress indicated that he expects the economy to expand briskly in 2004, with low inflation. Treasury yields which is a barometer for long-term mortgage rates dropped after Greenspan's speech.

The economy expanding briskly is questionable. The employment report in January, that indicated 112,000 jobs were created (76,000 of those jobs were in retail), was less than expected, but an improvement is anticipated in the coming months. The report certainly didn't hint of impending inflation, nor of a worsening economy, and the bond and mortgage markets responded with a business-as-usual shrug. Rates stayed about the same. The bottom line is we are in an election year and there is no significant job growth to date. Until that changes, rates will remain low.

10 Things You Can Do if You
Plan to Buy a Home in 2004

The decision to buy a house in 2004 may seem daunting. Will prices increase? Will interest rates rise? How will the economy fare this year? The process may seem overwhelming, especially if you're buying for the first time.

1. Check out your credit report. You don't want to be shocked if there are inaccuracies in your credit report - or if that bad debt you had in college is still on your record.

2. Get pre-approved for a loan. This way you'll know if you can get approved and how much you can spend on a house. It also puts you in a stronger position when you ultimately make an offer on a house.

3. Be realistic and look at your big financial picture. Just because you are approved for a certain amount, it doesn't automatically mean you should find a house for that amount. Factor in other debts and expenses, and long and short-term savings goals like college for the kids and retirement for you.

4. Determine how much cash you will need. How much money will you need for a down payment, closing costs, points (which are extra fees paid to secure a lower interest rate), origination fees, taxes, title insurance, and other financing costs.