MORTGAGE PROGRAMS

List all items of value starting with cash, investment assets, the current value of your house, and possessions to protect your house investment. List and total all liabilities. Determining the value of your stocks, bonds, and mutual funds is easy. The prices can be found in the financial pages of a newspaper or obtained from brokerage and mutual fund statements. Determining the current value of pension funds may be more difficult if the pension fund provides amounts of future income to be received. This means that for this type of plan, you would need to determine the present value of the plan. The human resources or department of your company can provide this information. If the cash surrender values of your whole life insurance policies and annuities are not shown on the latest statements you receive, call your insurance agent for this information.

In terms of mortgages, the importance of research cannot be stressed enough. These days, a mountain of information is available on the Internet that can help you understand the ins and outs of mortgages. Use all of the resources available and learn as much as you can.
One of the key factors in determining the size, rate, and type of your mortgage is the amount of down payment that you are able to make. If you are able to put down 20% of the purchase price for a home, you will have many benefits. First, your mortgage payments will be lower, and the amount of interest that you will ultimately pay on your loan will be less. In addition, and this is a big one, you will not have to pay Private Mortgage Insurance, or PMI.
PMI is great for people who cannot afford a 20% down payment, but it is insurance that is paid by the buyer. You will pay for it in your monthly payments until the value of your mortgage is reduced to 80% of your home’s value. This increases your monthly payments by a fairly substantial amount. That’s the downside. The upside is that it enables you to have the opportunity to buy a home when you otherwise might not be able to— if, for example, you were required to put 20% down.

If you are worried about making a down payment, there are programs and organizations that may be able to help you. In addition to PMI, you can look into some of the Federal Government Loan Programs. The Federal Housing Administration (FHA), the Department of Veteran Affairs (VA), and the Department of Housing and Urban Development (HUD) all have programs to help homebuyers. They may offer assistance for up-front payments, which could reduce your down payment requirements. Contact them for eligibility requirements and to learn more about programs and services available.

Your home is likely to be your largest asset, so its value should not be overin.ated or underin.ated. The .gure that you are looking for is the current market value; that is, what someone would be willing to pay for your house. Generally, the cost of the property is not particularly relevant if you have owned your house for a long period of time. The most recent selling prices of houses similar to yours in your area are a good indicator of the likely market value of your house. Real estate brokers can also provide you with an estimate of the value of your house.

Balloon Loans. This type of mortgage is both similar to and very different from a fixed-rate mortgage. With a balloon loan, your interest rate and, therefore, monthly payments, are fixed over the term of the loan. The difference is that a balloon loan is a short-term loan, usually five or seven years, and the interest rates are often significantly lower than traditional fixed-rate mortgages. However, a balloon loan is not fully amortized over the term of the loan. This can be confusing, but it is actually pretty simple.

A balloon loan may have a five-year term. Your payments throughout the term are fixed but after five years, when your loan matures, you have not paid off the loan. Instead, you will owe the entire remaining principal balance at the end of the term. Generally, people pay off the balance by refinancing, unless the original loan has a conversion program built-in. Balloon loans with a built-in conversion are usually called 7/23 Convertible or 5/25 Convertible. The first number represents the balloon part of the loan and the second represents the converted remainder of the loan.
When a loan is converted it is usually converted at the lender’s 30-year fixed-rate, plus an additional 3/8 of a percentage point. So you see, even though the loan began with an attractively low interest rate, it could end with something quite high.

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