When using a mortgage calculator, keep an eye on the interest rate and the term length you enter as these will greatly influence your results.

Also keep in mind that while a mortgage loan calculator gives you a quick overview and is great for comparing lenders, there are several other factors that will affect your quotes, such as your credit score. So don’t be surprised if you are quoted a slightly higher amount after talking to your lender.

A lender will always provide you more accurate information after considering your current financial situation, including up-to-date interest rates and loan programs. So don’t rely on a mortgage calculator by itself.

If you have any outstanding debt, the time to pay it off is now. Not only will a reduced debt load make it easier for you to qualify for a mortgage, but you will find that the costs of homeownership will quickly eat into any money you had planned on putting aside for paying old bills. Old debts also collect interest, which means the longer you hold on to them, the more they cost you.

But as far as homeownership goes, the biggest problem with old debt is the approval for a mortgage. Less debt and smaller debt payments will mean a mortgage company will trust you with a larger amount to purchase your home with. A higher debt load may limit the size of your mortgage, forcing you to look at smaller homes than you were hoping to see, or look in neighborhoods that you had hoped to avoid.

Either way, you should adjust your savings to unload some debt, and still have some savings left for the down payment.

Why is this such good news? Because there has never been a better time to purchase a home…but be careful because Congress has indicated this will be the last extension of this credit.

For First-Time Buyers:

First off, who exactly qualifies as a “first-time buyer”? Well, it’s pretty simple: anyone who has never owned a home OR has not owned a home for 3 years prior to your purchase.

The amount of the credit is still 10% of the purchase price up to a maximum of $8,000. The deadline has been extended to April 30, 2009, but if a written contract to purchase is in effect by April 30, 2010 the purchaser will have until July 1, 2010 to close.

People with higher incomes can now qualify for the credit, but this only applies to purchases occurring after November 6, 2009.

The income limits for sales occuring on or after January 1, 2009 and on or before November 6, 2009 are $75,000 for single taxpayers and $150,000 for married couples filing jointly.

For Current Homeowners:

Who qualifies for this credit? Buyers who have owned and lived in their previous home for five consecutive years out of the last eight years. The amount of the credit is 10% of the purchase price up to a maximum of $6500. 

However, if you make more than $125,000 as a single filer or $225,000 as a married filer you will not be eligible for this credit. 

Frequently Asked Questions:

1. What types of home will qualify? Any home that will be used as your primary residence, as long as the home is less than or equal to $800,000. But also note that you cannot purchase a home from any family members.
2. How do you claim the tax credit? You have to claim the tax credit on your federal income tax return. Remember this is not a deduction so you get the entire amount of the credit. Also, you do not get the credit at closing. No other applications are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for either tax credit by talking with a professional before moving forward.
3. Do you have to repay the tax credit? Not as long as you live in the home for at least 3 years. If you no longer use the property as your principal residence before that time, you are required to repay the credit. 

How They Got Started

The VA Mortgage started in 1944 with the GI Bill of Rights, signed into law by President Franklin D. Roosevelt, which provided veterans a federally guaranteed home with no down payment. It was designed to provide housing assistance for veterans and their families, and the dream of owning a home became a reality for millions of veterans returning from the war. Historically the GI Bill has contributed to the growth of the nation’s economy and the welfare of veterans more than any other program.

More than 25.5 million veterans and service personnel are eligible for VA financing. Eligibility changed after September 7, 1980 where a two-year service requirement was put into place for veterans enlisted, or if the veteran was an officer and began service after October 16, 1981. There is a six-year requirement for National guards and reservists with certain rules and criteria concerning eligibility of surviving spouses.

How They Work

VA Mortgages are home loans, made by private lenders to eligible veterans for the purchase of a home for their own personal occupancy. The home does have to pass certain inspections to qualify. The value of the home or the purchase price – whichever is less – plus the funding fees may be borrowed. Veterans must still qualify with debt to income ratios; it is not a guaranteed approval just because you are a Veteran.

Funding fees average 2.15%-3% depending on eligibility and veterans. Veterans receiving VA compensation for service disabilities, veterans that would be eligible to receive service connected pay if not for retirement benefits, and surviving spouses of veterans who died in service are exempt from the funding fee.

Closing costs can average 3%-5% but can be included in negotiations with the seller to pay, assuming the house appraises for the increased price. Additional costs associated with your VA mortgage would be appraisal costs, recording fees, credit report, prepaid taxes, and insurance and title examination in addition to the funding fees.

On the Good Faith Estimate you will see a breakdown of all of your expenses – what the house will cost you monthly along with any “escrowed” expenses, such as your taxes and insurance. If you have less than 20% down on your house you will be required to pay your taxes and homeowner’s insurance in your monthly payment. This protects you from getting stung when those bills come due, because you are paying 1/12th of the due amount every month in your payment.

However, if you have 20% down, by all means pay your own property taxes and insurance when they come due. That way YOU will earn the interest on your money during the time you are waiting to pay your taxes and insurance

Down Payment

As far as your down payment (which right now is substantive because of the lending fiasco going on nationwide), you will almost assuredly need at least 3.50% down if you are going on an FHA loan. If you are using a conventional loan, be prepared for at least a 5% down or more, from 10% to 20%. There is virtually no such thing as “zero -down” anymore.

Third Party Fees

You will also be paying third party fees – fees charged to you for functions performed on your behalf during the process, including the following:

• An appraisal to ensure you aren’t paying too much for your house.
• A title search to make sure old debts against the property get paid prior to closing so they do not become “clouds on the title”.
• A mortgage credit report.
• Other small fees for couriers, express mail, etc.

Additional Fees

Of course, there are always more fees that seem to materialize from thin air. These can include processing and underwriting, commitment fees, settlement fees, escrow agent fees, or any number of a combination of these. The lender is required to include these but you should always ask if you do not understand what they are.

But just as important is a thorough understanding of fixed-rate mortgages and what it could mean for you and your home investment in the long run. Here are some common fixed-rate questions you may be asking yourself.

What Does a Fixed Rate Mean?

A fixed-rate loan is one with a set interest rate over an established term of repayment. Typically, the gold standard for fixed-rate loans is the 30-year fixed rate loan. You can also find fixed-rate loans with 10-, 15-, and 20-year pay-off periods. When loan periods are shorter, you will have higher monthly payments, but slightly lower interest.

When Are Fixed Rate Loans Better?

Fixed-rate loans give you a stable payment, especially when interest rates are unpredictable. When interest rates rise, people with adjustable rate mortgages (ARMs) are faced with increasing monthly mortgage payments.

A fixed-rate loan means you will always know how much your home payment will be each month, regardless of what is happening with the economy or current interest rates.

What’s the Downside of Fixed Rate Loans?

With a fixed-rate loan, you’ll always pay the same amount of interest. That is great when interest rates are climbing, but if they drop below your interest rate, you will continue paying the higher amount of interest. Of course, you can always refinance a fixed-rate loan in order to get down to the best fixed rate mortgage.

Over the life of your fixed-rate loan, you will pay a substantial amount of interest. In fact, you will probably pay hundreds of thousands of dollars in interest. But there are ways to manage your mortgage so that it is an investment that works for you, and you can do this by talking to a mortgage specialist.

Are You Stuck with Your Repayment Schedule?

The best fixed rate mortgage works for you and your lifestyle. Sure, you can get a fixed-rate loan that pays off your home in 10 years, but believe it or not, that might not be the best investment. If your future financial plans change, you can always talk to a professional about changing your repayment schedule as well.

So, when buying real estate in this type of economy you want to make sure you invest in real estate that is going to prove valuable and help you make money when the housing market turns around, and it usually does. It may just take some time. If you want to purchase a home as an investment, you must know what to look for.

What To Look For

• Consider the location – location is often more important than the home itself. Most people move to a location not necessarily to a house. Where is the home? Is it central to a metropolitan area? Is it close to good schools? Is it in a bedroom community? Find out what you are looking for and what other people may be looking for in the future.
• Consider the lot – does the property have an incredible view? Does the property have great landscaping? Often the land itself is also more valuable than the house. Someone can always add on to a house. A great lot is well worth its weight in gold. Is it private? Does it offer privacy? Can the owners build in privacy by adding some bushes? Are trees well-planted?
• Look at the house itself – when you find a good location and a good lot, the next step is to find a great house. There are several things to look at here. These include the house size, the number of bedrooms, the number of closets, whether the house has a garage. The more amenities a home has the more likely it is to prove attractive. But remember different people want different things. Some people may consider a basement far more important when buying real estate than a detached garage. Three bedrooms are typically far more convenient than two. A home with more than one bathroom is usually more useful than one.

Here are 3 pieces of information I hope you will consider regarding your new or current home loan:

1) You should always aim for a fixed home mortgage rate. As you can see from the current economy, an adjustable rate loan can get you into trouble down the road by fluctuating up higher than you can afford.

2) It’s a good idea to meet with a home loan financial adviser you trust, and make sure they have the experience you need to make the right decision. By taking the time to build a relationship with them, you can more easily stay out of trouble. You want to work with a loan adviser you are comfortable calling at any time for answers and advice.

3) Never ignore any notices you receive from the bank. If you are currently in a bad mortgage, please know there may still be options to help you get into a better mortgage before your house goes into foreclosure.

In real estate, escrow provides a form of mediation between each of the parties involved. This includes the buyers, sellers, lenders, agents, and title company. So in essence, the escrow is simply a holding place for all funds, instructions, and documents necessary for the purchase of the home:

• the buyers funds for the down payment,
• the lender’s funds and documents for the new loan,
• and the sellers deed.

As a buyer, escrow will typically begin when your Realtor delivers the purchase contract and the buyer’s earnest money deposit to the escrow company. The escrow company will then prepare and deliver the initial escrow instructions and other related documentation.

Once your mortgage loan is in place and the new title has been recorded, the escrow agent will prepare and deliver the closing statements to both you and the seller. Be sure to review these statements in detail so you can resolve any inconsistencies before proceeding.

Finally, when the terms of your purchase agreement have been met, the escrow agent will assign the property title to you and distribute the funds to the seller, record the deed, and close the escrow.

Ultimately, the use of escrow is intended to provide security and peace of mind for buyers, sellers, lenders, and real estate agents alike by making sure no funds or property will change hands until all of the terms and conditions have been followed. Keep in mind, the rules and procedures around escrow and closing can vary by region, title company, and lender.

1) Set A Reasonably Comfortable Temperature – Don’t set the temperature to the lowest extreme or the air conditioner will never cycle off, which will rack up your bill in no time.

2) Have Refrigerant Levels Tested – A refrigeration mechanic or contractor can test your system to determine if you have a refrigerant leak. If your system appears to be either cooling or heating less than normal, it is a good sign that you may have a gas leak.

3) Learn How To Use Your System Properly – If you are not entirely sure how to use your air conditioning system, chances are you might be using it wrong. Talk with an air conditioning contractor or take the time to look over the users manual for some good advice advice on how to best run your system.

4) Clean Filters & Air Ducts -Finally, give your air ducts and filters a quick clean. You’ll be surprised how simple it is to do, and your air conditioner will probably run better because of it.