Page 93

Getting Your Home

could be as high as 14% in today’s market. The rules vary considerably between lenders on sub-prime loans. In addition to the money the borrower would pay for doing a credit check, getting title insurance, paying escrow charges and appraisal fees, there is also a cost to get most mortgage loans: points. Points refer to the cost of purchasing a loan. One point represents 1% of the loan balance. On a $100,000 loan this would be $1,000 to purchase the loan. If a credit score puts someone in the B or C range, the points could rise to 4, meaning it could cost up to $4,000 to purchase a loan. Other fees could rise from $275 to process the same paperwork for a typical A borrower, to $650 for a B or C borrower. Certain loans are specially targeted for first-time homebuyers and offer features such as low down payment (as little as nothing down), competitive interest rates, and the ability to have a cosigner or receive down payment assistance from another source. There are so many loan variables that it would be impossible to discuss them all here. Linda’s good friend, Lisa Crain of the Bank of Albuquerque gives this information: At the time of this writing, investment and second-home loans can be obtained for as little as 10% down (though 20% or more is most common), and the rate, if fixed, is the same as a primary residence. The fees are higher unless they want to roll the points into the rate which is an option. The majority of investors go with Adjustable Rate Mortgages (ARM) as the rates and fees are lower. The general rule is that the more risk you ask a mortgage company to assume, the tougher the rules are going to be for the mortgage you want. Government guaranteed loans (e.g., FHA, VA) take some of the burden off the lender, so that they can keep the rules easier for you to meet. But conventional loans (anything not guaranteed by an agency of the federal government) tend to follow this formula: The more money you put down, and the better qualified you are to repay 89

Profile for Linda DeVlieg Real Estate

How to Make Your REALTOR Get You the Best Deal - Albuquerque, New Mexico edition  

A guide through the real estate purchasing process - co-authored by Linda DeVlieg and Ken Deshaies

How to Make Your REALTOR Get You the Best Deal - Albuquerque, New Mexico edition  

A guide through the real estate purchasing process - co-authored by Linda DeVlieg and Ken Deshaies

Profile for lindadev