Month: August 2011

If you are planning to purchase a home, but have limited funds or credit challenges, a rent-to-own option may be the best way to go.

A rent-to-own option, also known as a land contract, has many benefits, some of which can include the application of some of your rent money toward a down payment, some type of seller credit at closing or a financial goal to strive for while you move toward the purchase of the property.

Another benefit is that there would unlikely be a commissioned real estate agent involved, meaning that the seller/landlord can pass that savings on to you.

By working with your mortgage professional, you can set a course of action so that you’ll be ready to go when the time comes to purchase the property.

This preparation may include the paying off, or paying down, specific debt to get your financial ratios in line with lender guidelines.

Another reason to hold off on the purchase of a property might be for some type of credit repair or restoration, allowing you to either qualify for a mortgage or qualify for a lower interest rate after specific steps are taken.

Contacting a local real estate agent to get a value on the property before signing a contract is a good idea, as your lender will send out an appraiser during the application process before lending money on it, and you want to make sure that your purchase price is in line with what the market will bear.

Always make sure that you have your attorney look at any contract and financing paperwork before you sign.

Did you know that you may still be able to refinance – even if you have little or no equity in your home?

With record-low interest rates holding firm, it might be wise to look at your options.

There are two big myths going around today about refinancing.

The first myth is that you need at least some equity in your home.

The second myth is that if you have less than 20% equity in your home, you will have to have mortgage insurance.

Both are false.

Which program you can use to refinance will depend on whose guidelines were used to underwrite your mortgage when you acquired it.

Chances are your mortgage was underwritten by Fannie Mae, Freddie Mac or the Federal Housing Administration (FHA).

Both Fannie Mae and Freddie Mac offer refinancing programs that allow homeowners to borrow up to at least what they currently owe on their mortgage, provided the property will appraise out to that amount.

The Federal Housing Administration has what is called a Streamline Refinance.

The Streamline Refinance allows owners to refinance without any appraisal at all, provided they meet other requirements.

For the Fannie Mae, Freddie Mac and FHA programs, owners will need to be current on their existing mortgages.

A good place to start is to call a real estate agent and get a comparative market analysis. This tells a homeowner what value an appraiser will likely return should the owner decide to refinance.

The analysis is normally done free of charge and will give the owner an in-depth analysis of what comparables are selling for in the same area, and for how much.