The program – originally announced in 2011 – seeks to connect private equity investors with government foreclosures to convert them into rental properties. Instead of the federal government serving as a virtual landlord to thousands of government homes – such as VA homes, HUD homes, and USDA homes – private investors would purchase them in bulk, rehabilitate the home foreclosures, and then turn them into rentals.

The plan would take advantage of an increased demand for rental properties over the last few years while also serving to relieve the government – and the American taxpayer – of the financial burden of maintaining thousands of non-performing assets. Over 200,000 foreclosure listings would be marketed by the government for the new pilot program, set to begin sometime this year.

Already, private equity investors are lining up around the block. The proposition has turned a decently-sized market worth millions into a huge potential market worth billions – a move that could inject much-needed capital into the housing market and potentially provide a boost to the economy as well.

Throw in the consideration that today’s sky-high rental prices could be reduced by increased demand and savings incurred through cheaper foreclosures and millions of American renters could receive a stimulus boost as well.

Lenders are cautiously optimistic about the proposal, at least as it concerns originating loans that are guaranteed by the federal government. This could lead to more home loan origination as well as a general check on declining home prices throughout the country – particularly in hard-hit areas like Florida, Michigan, California, New York, New Jersey, Georgia,Illinois. Already home prices have plummeted by 3.7% from November 2010 to November 2011, with the trend set to continue throughout the next year.

The federal government is currently working on initial partnerships and transactions with private-equity investors and firms that will be completed in the first quarter. Additional partnerships will be announced throughout the year, possibly with rent-to-own clauses included for many tenants. Time will tell if the program will be a success, but it is fair to say that the Obama administration needs a big-time victory with this initiative to both help repair the housing market and bolster its chances with elections in November.

HAMP, originally created in 2009, was designed to help American homeowners avoid foreclosure by working with lenders to modify their mortgages. The theory behind the program was that homeowners could keep their properties – and stop foreclosure from creating more destructive home foreclosures in already-depressed markets – with lower, more-affordable monthly mortgage payments and principal reductions.

But, the $29 billion program has not been without its critics, who allege the program has been too limited, too underfunded, and too ineffective in preventing foreclosure properties from flooding the market.

Largely because of these criticisms, the Obama administration is seeking to fix these and other problems by offering additional financial incentives to lenders for principal reductions. This means thousands of American homeowners could see their monthly payments drop by having lower principal balances. Such a move could have a stimulating effect on the economy, especially since the administration will also offer financial incentives to Fannie Mae and Freddie Mac for modifications. Since the two programs account for the vast majority of mortgages currently owned, the impact could be significant.

Whatever the future impact, the past performance of HAMP has been less than desired. Out of roughly 1.7 million program applicants, only about 900,000 have had their mortgages permanently modified – and a significant percentage of those have fallen through since.

Some of this failure has been blamed on the nation’s largest lenders, including JPMorgan Chase, Wells Fargo, and Bank of America. Others point the finger at the mass of red tape and bureaucracy that has plagued the program’s administration.

Whatever the cause of the problem may be, the nation’s foreclosure rate – hovering around 3.51% as of October 2011 – is still far too high for a healthy housing market. Serious gains have yet to be made in removing foreclosure listings and having homeowners fill vacancies, primarily due to reluctance by big banks to lend to most prospective homebuyers. Loosening a still-tight credit market is one priority, as is an Obama initiative to sell blocks of distressed properties to private investors for rehabilitation and transformation into rental units.

At any rate, the besieged program has another year to perform before Washington becomes serious about pulling the plug.

Today’s real estate market is still struggling to recover from the massive downturn it has experienced since 2007, when prices were soaring, new home starts were booming, and home loans were being written left and right.

Since then, housing prices have dropped like a rock and the torrent of new home starts has dried to a trickle. The real estate market has been struggling to recover and gain some semblance of normalcy before rebounding in 2013 or 2014 as most experts predict.

With news that housing starts spiked in November by 9.3%, though, there are promising signs of improvement with new home construction. If this trend continues to grow, what impact will it have on the real estate market as it stands today?

Current Market Outlook

The outlook for real estate in 2012 is better than it was at the beginning of 2011 (and definitely 2010), but there are a few areas of concern that could still have an impact on the market’s success and growth, even with new housing starts.

High Foreclosures

Foreclosure rates in the country are expected to remain elevated for the foreseeable future, with no real, significant improvement emerging until 2013 at the earliest. This is due to hundreds of thousands of foreclosure properties being delayed by the foreclosure fraud scandal that broke in 2010 and still has not been resolved.

Foreclosures will further dilute the market, erode prices, and increase the gap between supply and demand. Buyers will have to choose between buying cheap home foreclosures or going the distance and building a new home from the ground up – that is, if more buyers can be found.

Low Buyer Demand

Even with dirt-cheap interest rates, demand will still remain stagnant. An avalanche of new buyers is not expected, primarily because people still have to qualify for home loans before they can take advantage of really cheap interest rates. And with banks still reluctant to lend in a hostile lending environment, there isn’t much anyone can do to defrost a frozen real estate credit market.

Positives in the Market

With the above being said, there are promising signs in this market.

Low Mortgage Rates

Low mortgage rates haven’t revitalized the industry – not yet – but they have helped, especially when it comes to boosting consumer confidence and helping take people one step closer to being mentally ready to buy. The spike in new home starts that came in November, 2011 can be traced to historically-low interest rates, a trend that is expected to continue throughout 2012.

Low Prices, Great Upside Potential for Investors

A wealth of foreclosures ready for the taking, all priced well below market value in a healthy economy, is still there for investors who have the capital to enter the market. Investors have every reason and incentive in the world to capitalize on such a high inventory, and many of them are – especially when housing prices rebound and profit margins turn into realized gains.

Banks Loosening Lending Standards

It may be hard to believe, but it is true – banks are making it a bit easier to obtain a loan (if only just a little). The key reason is because they recognize that low interest rates cultivate demand – and demand, ultimately, generates profit that overcomes the risk of eating losses from defaulting loans. Of course, this still makes it difficult for many to obtain a home loan; many qualified loan recipients today still need sterling credit ratings and usually a guaranty of some sort. But, buying in 2012 will be easier than in 2011.

The Impact New Homes Will Have on the Market

One of the main ways new home starts will impact the market this year is by helping to balance out various factors in the equation described above – such as foreclosures, prices, and other effects.

Foreclosures in particular could actually drop – at least, existing foreclosures that are currently sitting vacant. People who want to build new homes are beginning to demolish foreclosure properties and build new homes on top of their lots, which has a double effect on the local market. For starters, it immediately helps increase the relative value of surrounding homes. Additionally, it removes a blight – a home foreclosure – from the ledger of a bank, which makes it easier for the bank to lend.

Also, more new homes eventually will decrease overcrowding caused by vacant homes, which has intangible benefits of more aesthetically-pleasing environments (as well as potentially less crime due to criminals lacking havens).

In the end, the rise in new home starts is a very good thing for the economy. The jury is still out as to whether or not it will continue to increase, but for now, any positive sign is a one to enjoy.

Homeowners have a lot of tough decisions to make when buying a home. Anything and everything from the size of the home, neighborhood, and price to the color of the walls, age of the kitchen appliances, and type of flooring in the home is debated intensely.

But perhaps one of the most important things to do with buying a home, one of the main factors to consider, is the type of mortgage loan you should pursue. That is a pretty big undertaking for any homeowner, since it represents a pretty significant difference in how much you will pay monthly and how much you will owe overall.

Here we will talk about the two main types of mortgage loans in terms of interest rates – adjustable or fixed – and the advantages and disadvantages of each, so you can make an informed decision for your loan.

About Adjustable Rate Mortgages

Adjustable rate mortgages, or ARMs, are mortgages that have a variable interest rate. This means that the interest rate – the percentage of your overall loan amount that is charged to you annually over the term of your loan – will fluctuate depending on various conditions or factors. If you have heard of a variable-rate mortgage, that is the same kind of mortgage, just with a different term.

How Adjustable Rate Mortgages Work

As a rule, ARMs are more complicated than a fixed-rate mortgage. There are several types of ARMs out there, with different characteristics. Here we will talk in general about how they work financially so you can have a better understanding of their overall impact.

An ARM has a fixed-rate term at the beginning of the loan. In other words, when you sign on the dotted line and start making payments, for a period of time you will pay the same flat rate. This is the initial rate, and it does vary from lender to lender.

Many people take out ARMs that have initial rates lasting 12 months. The interest rate for the first 12 months will be low, but beginning in the 13^th month, it will rise. You could have an initial rate last for as short as a month, or it could be longer. (The longer the initial period, generally, the higher the rate will rise over the term of the loan.)

The value of the interest rate, or how much interest you will pay, is generally tied to an index. Lenders will have various rates they use, such as the 1-year T-Bill, 6-month CD rate, 3-year T-Note, 6-year T-Note, etc. The most common index used today is the Treasury Constant Maturities (or TCM). An important note: If your loan is not tied to an index, it can be arbitrarily adjusted by your lender. Be cautious about those, and ensure you have caps on how much your rate can increase.

In essence, as the index goes up, so does your interest rate. Likewise, if the index drops, you can even pay less interest – although you shouldn’t count on it.

Common Terms of Popular ARMs

Here we will take a look at some common features of ARMs and discuss some common terms contained in the loan contract.

- Adjustment period: The time during which the interest rate changes from a fixed rate to a fluctuating rate

- Index rate: The value of the index to which the ARM is tied.

- Interest rate caps: A limit on how much your interest rate can increase. It is important to ask about caps on your loan, to avoid having a spike in your payment should the index go off the charts.

- Margin: Percentage points a lender adds to the index rate to calculate the ARM’s interest rate.

There are a few common terms in a typical ARM contract. For starters, you will determine the overall length of the loan, such as a 30-year loan, 15-year loan, etc. You will also see the adjustment period, and how often the interest rate will adjust over the course of the loan. Some contracts, for example, stipulate that your rate will adjust every six months, or every year.

The type of loan is another term. There are several different types of ARMs, from hybrid ARMs to option ARMs. Hybrid ARMs feature a fixed rate for a period of time at the beginning, following by an adjustable rate. Two common hybrid ARMs are 3/1 and 5/1, in which the initial period lasts for three and five years, respectively, followed by adjustment periods every year after.

Option ARMs allow you to choose between four monthly payment choices: a minimum payment; an interest-only payment; a 15-year payment; and a 30-year payment. Speak with your loan officer about the advantages and disadvantages of this particular type.

When Rates Change

The big feature about ARMs is the rate fluctuation. As discussed below, the interest rate fluctuates with the index rate to which the ARM is tied. When this change happens is determined by the loan’s adjustment period. The standard adjustment period is 1 year, so every 12 months after you begin your loan, your rate will change based off of the index.

Pros and Cons

Simply put, the pros of an adjustable-rate mortgage is flexibility. ARMs allow people to transfer the risk from the lender to the borrower in exchange for potentially-lower monthly payments for the borrower. Even if payments increase, sometimes the borrower still benefits from having an option to pay less in the first year than he or she would otherwise with a fixed rate.

The drawbacks to an ARM revolve around upside risk for the borrower. If the index rate increases – and it does happen – then the borrower could pay more monthly. Additionally, ARMs are inherently more complicated, especially some of the newer variants. It is easy to misunderstand the terms of the contract, and lenders aren’t always good at explaining them (or ethically ensuring that you understand them, either).

About Fixed-Rate Mortgages

Fixed-rate mortgages are far easier to understand for most people than ARMs, simply because they involve a fixed-rate that typically does not change over the course of a home loan. For this reason, they are the most popular type of loan between the two, especially for first-time homebuyers who are new to borrowing for a home.

How Fixed-Rate Mortgages Work

A fixed-rate mortgage has an index rate, an interest rate, and a loan term just like an ARM. That is where the two differ, though. A fixed-rate mortgage features the same flat rate throughout the term of the loan. That means for each and every payment, the interest rate will stay the same – thus allowing a borrower to more easily predict how much equity one builds up due to the amortization schedule. Plus, it allows a borrower to know the amount of overall interest one will pay by the time the term is over.

Let’s take a look at a standard type of fixed-rate mortgage. One popular FRM is a 30-year FRM at 4% interest (or whatever the current interest rate is). The interest rate is calculated by taking the index rate – usually the 10 or 30-year Treasury Note yield but potentially the prime rate that is tied to the Fed Funds rate – and adding margin, or additional percentage points, for creating the loan.

According to this loan, the borrower will pay 4% interest every month on the loan, each year, for 30 years. The exact proportion of interest to principal paid each month varies depending on the amortization schedule. Most today feature more interest paid on the front end of the loan and curving off until the final payments are almost all principal.

Common Terms of Fixed-Rate Mortgages

It is relatively easy to determine the terms involved with a fixed-rate mortgage. In essence, there are three factors that make up each FRM loan:

- Interest rate

- Compounding frequency

- Duration

The interest rate, as explained above, is the index rate plus margin. If you are being offered the prime rate, you are generally being offered the lowest rate the bank can offer you without losing money, which means prime rates typically go to the bank’s best or most qualified customers.

Compounding frequency is how often the interest on the total amount of your loan is compounded, or added to the principal. Most mortgages are compounded monthly.

Finally, duration is the term of your loan. Most are for 30 years, with 15-year terms a close second in terms of popularity. There are even 40 and 50-year terms out there, typically used with expensive housing that 30-year mortgages wouldn’t sufficiently cover.

The duration is of huge importance because it has a major effect on the size of your monthly payment. It also usually has a big impact on the interest rate that you will have to pay. A 15-year mortgage involves much-higher monthly payments than a 30-year mortgage, but the interest rate is often much lower. It is a trade-off, and people who take out 15-year FRMs want to pay off the mortgage faster. Doing so saves you more in the long run because you’ll pay less interest over the course of your loan, so while it is more expensive monthly, it is less expensive overall.

When Rates Change

As a rule, barring some form of intervention, fixed-rate interest rates do not change. They are intended to offer stable rates so the risk is transferred more to the lender than the borrower, which makes things, as a whole, easier on the borrower.

There are certain ways the rate can change, however. The most common method is through a refinance. When you refinance a fixed-rate mortgage, you are essentially paying off the old loan and taking out a new one with a lower interest rate, or a shorter term, or even a longer term (to reduce monthly payment amounts). People refinance because interest rates drop and they want to change the terms of their loan to take advantage of the lower interest rates.

The big drawback to refinancing for most people is the cost. Typically, most people pay 3-6% of their outstanding principal balance in fees related to the refinancing. This is due to loan origination fees, discount points (a one-time fee to get a lower rate), appraisal fees, and additional fees, charges, and penalties. You could also avoid refinancing if you have had the loan for a long time, or you have prepayment penalties, or plan to relocate within the next few years.

Rates can also be modified through a loan modification, undertaken generally when you are experiencing financial difficulties and are having a hard time making your payments. Since 2006, many people have had to pursue loan modifications because the interest rates when they purchased their home were far higher than after the housing market collapse in 2007-2008.

Choosing the Right Option

Overall, the type of mortgage loan you take out varies greatly depending on your individual circumstances. Evaluate your finances and consider why you are buying the home. If you do not want risk and intend to live in the home for a long time, a fixed-rate mortgage is probably best for you. If you do not mind risk and are willing to “gamble” a bit for a lower rate or more flexible payment options, an ARM might be your thing. You could even be a foreclosure investor who finds a foreclosure listing online and wants to finance it cheaply because you expect to sell it quickly.

In the end, it has been found that most borrowers pay less overall with adjustable-rate mortgages, that is not always the case – and even if it is, the risk and complication may not be your style. Your individual circumstances and situation will dictate which one is best for you. Use online mortgage loan calculators to make the best decision possible and pick out the type of mortgage loan that fits your financial needs, income, payment ability, and risk profile.

For those wanting to buy a home, finding lending can be tough. These days, private lenders are very tight with their purse-strings and are reluctant to lend at rates even remotely approaching pre-2006 levels. This can easily leave you in a bind as you try to find some way to purchase a home, be it a traditional home or a foreclosure.

Fortunately, the federal government has several avenues that you can take to obtain a loan from a private lender. Note that the federal government is not in the business of issuing primary loans. It does, however, guarantee loans issued by private lenders, which basically helps to make it far easier for you to obtain a private loan if you qualify for the federal program.

Types of Government Home Loans Available

There is a myriad of government home loans available to you, both at the state and federal level. State programs vary, so here we will discuss the federal options that you may qualify for when purchasing a new home.

Basic Federal Housing Administration (FHA) Insured Home Mortgage

This mortgage loan, sponsored by the Department of Housing and Urban Development (HUD), helps families purchase a single home for residency. You can apply through FHA-certified lenders, which involves almost all major lenders and most community lenders. First-time homebuyers can obtain an FHA loan with a down payment as low as 3.5% and receive up to 6% toward closing costs for the home loan.

Department of Veterans Affairs Mortgage Loan (VA Loan)

The VA loan is offered to eligible veterans and spouses and allows these individuals to purchase a home up to a certain limit with 0% down and a small funding fee of 0 to 3.15% of the loan amount. This means that qualified veterans could potentially buy a home without paying a down payment or closing costs.

U.S. Department of Agriculture Section 502 Loan

A Section 502 loan is a direct loan for low-income individuals buy homes in rural areas in the U.S. (as defined by the USDA). Applicants generally need to have no greater than 80% of the area median income (AMI) for the county in which they live. Those who have up to 115% of the AMI can qualify for a guaranteed home loan that is created with a private lender.

Indian Home Loan Guarantee

For those individuals who are of American Indian or Alaska Native descent, HUD offers a Section 184 home mortgage loan for those residing on or off of tribally designated housing entities, tribes, villages, and other lands.

Incentives for Pursuing Government Loans

One of the main incentives for obtaining a government home loan for your mortgage is the prospect of actually being able to buy a home, versus being declined by a private lender for a variety of reasons. Many people are ineligible without these home loan guarantees because they do not make enough money, or can’t put down a large down payment, or have poor credit or other negative circumstances. Since lending is tight, private lenders need some kind of reassurance that can only be provided by the government in most cases.

Another incentive is the prospect of obtaining a home loan with a very low or non-existent down payment. Typically, lenders like to see 10-20% of the loan amount paid down at the beginning, with 20% quickly becoming the norm as it once was. Not many people have 20% of a home loan saved up. With an FHA loan, for example, you can buy a home with just 3.5% down. A VA loan could potentially give you a 0% down payment.

Additionally, you can use government home loans to purchase a variety of homes that otherwise you would not be able to buy, including foreclosed properties. The allure of these properties – steep price discounts and widespread availability – means that they are affordable. But, private lenders do not always want you to buy a home foreclosure. Getting government guarantee for a loan could enable you to go to a foreclosure listing service, like ForeclosureDeals.com, and find a cheap home for sale.

Finally, you can use government funds to rehabilitate a fixer upper home, or even to rebuild a home that has been destroyed by a natural disaster. Did you know, for example, that the Section 203(k) program administered by HUD will give you money to not only buy a home, but to also rehabilitate it? It’s true – and that is something useful for homebuyers and investors alike.

Qualifying for These Government Loans

Qualifying for a federal loan involves more paperwork than a conventional, private home loan, but the benefits are worth it. You will need to provide, at a minimum:

- Proof of income for you and your co-signers, typically in gross monthly income format

- Addresses for your past and present places of residence (last two years)

- Social Security numbers

- Names and locations of your past employers (last two years)

- Financial info for your current checking and savings loans

- Financial info for any assets you have (stocks, bonds, real estate, etc.)

- Approximate value of your personal property

- Check stubs and W-2 forms (last two years)

- Info for any other current loans or debts

For VA loans, applicants will need to provide two things:

- Certificate of Eligibility (obtained from the Department of Veterans Affairs from their website)

- DD-214 (the official discharge paperwork from the military)

For additional requirements, you will need to talk to the appropriate loan official or representative for the specific loan you desire.

Quick Steps to Obtaining Government Loans

If you want to try for a government home loan to purchase a property, you are in luck. The federal government has made the process easier over the last few years as a way to give people an incentive to buy homes.

One of the best ways to get a great start is to assemble your paperwork completely and thoroughly. Take time to collect a total package, like the one outlined above. Then, do your research on the loan itself. What are the requirements? What are the loan limits? How much is a down payment? What specific things could disqualify you?

Next, make sure you contact the right lender. Not every lender is qualified to originate an FHA loan, for example. Use an online search to find an FHA-certified home loan originator. It further increases your chances if the lender manually underwrites its own loans, as opposed to having them automatically underwritten. That means the lender has a bit more discretion (or “wiggle room”) in who qualifies, and can work with you to get a loan accomplished.

Also, consider multiple lenders and shop around. Even if they are offering the same type of government loan, they could still offer various incentives that differ.

Finally, take some time to repair and boost your credit score if it is low. Those with scores below 500 do not qualify for FHA loans, and you really should have at least a 580 score. The higher, the better. Those who have at least a 620 score stand a much better chance of obtaining a government home loan than those with sub-par scores. Talk to a credit counselor. Pay off past debts, consolidate debt, and take on a second job if needed to boost your income. Sometimes, waiting a few months to boost your score is a great idea.

Government home loans are out there for the taking. With this guide, you hopefully will be one step closer to obtaining one and buying a home of your own.

The home buying process can be rather intimidating – especially if you are a first-time homebuyer. Rest assured, you can enter into the home-buying process with confidence by utilizing these essential tips to making home buying easier, regardless of whether you are a novice or experienced homebuyer!

Tip #1: Always Be Several Steps Ahead

When it comes to buying a new home, the most important part of the process is being prepared and staying a few steps ahead of the process.

First and foremost, it is essential that you have a general idea of what you are looking for in a new home. How many bedrooms do you desire? Bathrooms? What areas of the home are the most important? For example, if you spend a majority of your time cooking in the kitchen, then you may need to make finding a home with a spacious kitchen a priority.

Along with knowing what you want in terms of bedrooms and bathrooms, it is also important for you to know the type of home you desire. Do you want an apartment, a condominium, or a house? Would you like a rural home or one in a neighborhood? These are essential questions that must be answered before entering into the home-buying process. Furthermore, knowing these answers before you start looking for a home will allow you to quickly eliminate homes that are not a good match for your family, which will save you a significant amount of time.

Another essential part of staying ahead of the curve is knowing the area in which you desire to purchase a home. Do your research on the neighborhood. Is the area safe? What schools will your children attend? What is the closest grocery store? Make sure to obtain all of the essential information ahead of time to ensure that the area is truly where you desire to live.

Finally, being several steps ahead also involves knowing your budget. There are numerous foreclosure properties on the market that can be purchased for up to 60% below market value. You can utilize popular listing services like ForeclosureDeals.com to locate distressed properties near you at discounted prices. Regardless of whether you desire to purchase a foreclosure property or not, go into the home buying process with an estimated budget and look for properties that are within that budget.

Tip #2: Talk to an Agent

After answering essential questions and educating yourself on the home buying process, it is then time for you to talk with an agent.

Utilize the information you obtained from your research and provide them with detailed information on what you desire in a new home. Make sure you tell them your budget so that they can tailor the search to homes that are within your budget. Be sure to ask essential questions such as the agent’s availability and speed. You want an agent that will be able to provide you with individualized attention and are able to quickly find homes that meet your expectations. The last thing you want is an agent that is too busy to help you find a home in a timely manner.

While talking to an agent, you can also ask any questions that you may have about the home buying process. Experienced agents will be able to give you a detailed picture of what to expect throughout the process, which will better prepare you for the remainder of the process.

Tip #3: Avoid Certain Homes

When looking for a home, it is essential that you make sure to avoid properties that have a lot of damage and/or liens. These homes may come at incredibly low prices, but the amount of work you will have to put into doing all of the repairs or dealing with the liens may not be worth the discount. If you desire to get a great price on a new home and avoid messy negotiations, then you may also need to avoid homes that have a long list of people desiring to purchase the property. If several people are making offers on the home you desire, then you may have to pay more than you expected to purchase the property due to the competition.

In the end, you can enter into the home-buying process with confidence by utilizing these three essential tips. Do your research ahead of time and remain steps ahead of the process, talk to an agent, and avoid homes that may cost you time and money that are unexpected.

Imagine finding your dream home at an incredible price that is well below market value. The first thing you do is look for a lender that will provide you a great interest rate while also providing the best services possible. How, exactly, do you choose the right lender?

Reputation. Reputation. Reputation.

One of the easiest ways to determine if a lender has a good reputation is through word of mouth. If you have friends or family members that have purchased a house, ask them about their experiences with their lender. Word out mouth is often one of the quickest and most accurate ways to determine information about lenders you are considering.

After obtaining detailed information from family and friends, it is time to move your search online. If you have a list of lenders that you are considering, then utilize search engines to obtain even more reviews on the lender. Simply type in the name of the lender followed by “reviews.” Instantly you will find more than enough information to help you determine whether the specific lender has a great reputation or a bad one.

Keep in mind that public exposure through commercials and other forms of advertisement is not a good resource. Always conduct deeper research before pursuing a lender.

Interest Rates

After narrowing down your list of lenders to ones with good reputations, it is time to narrow your list down even further. One of the easiest ways to compare lenders involves comparing the interest rates. Aside from finding an incredible home well below market value by searching listing services like ForeclosureDeals.com, interest rates form the second best way to save money. Therefore, considering the interest rate when selecting a lender is the one of the most important things (second to lender’s reputation) to consider in your search for a lender.

Lender Options

Let’s assume that after checking the lender reputation and interest rates you have narrowed your search down to two lenders. It is now time to consider the approval process. Which lender has the easiest approval process? The lender with the least number of hurdles to jump through can have you approved for your home a lot quicker than ones with more rigid lending standards.

Some lenders may provide you a pre-approval immediately, which could drastically cut down on the amount of time it takes for you to move into your dream home. Also, other lenders might help with closing costs, or provide other, more flexible loan options to meet your needs.

In the end, choosing the right lender involves determining the lenders reputation, obtaining the best interest rate, and selecting the lender that can approve your home loan with the least number of hurdles. Do you research and select a lender today!

Those in the real estate market today looking to buy a home should use the best tools out there to make a smart purchase. After all, in today’s market, wise choices are at a premium – and tools like online mortgage calculators can help prospective homebuyers make the right decision.

Here is a brief guide to the benefits of using an online mortgage calculator to help you determine the finances behind purchasing the next home of your dreams.

How an Online Mortgage Calculator is Used

As with any tool, an online mortgage calculator is only as useful as what you use it for – and that is especially true with making a big decision like taking out a mortgage.

Planning for the Future

The main purpose of an online mortgage calculator is to help plan for the future. Heading into financial decisions – especially buying a home – without doing the necessary planning to plot a smooth course of sailing is ill-advised. A mortgage calculator allows you to project 5-30 years into the future and see what the costs will ultimately be for your new home.

Calculating for any Scenario

An online mortgage calculator also helps you calculate for any scenario. How much will it cost if your interest rate is 4.25% versus 4.5%? What if you decide to go with an adjustable-rate mortgage instead of a 30-year fixed-rate loan? What about a down-payment? All the variables are easily calculated and are at your fingertips for any scenario.

Deciding to Rent Versus Buy

One of the most important decisions facing prospective homeowners today is the decision to buy a home rather than rent one. It can be a tough decision, especially given the real estate market as it stands today.

Many people use online mortgage calculators to determine if the price of a mortgage is worth the venture – or if it is more expensive to buy rather than rent. In today’s environment, you might very well find that availability of discounted homes – particularly foreclosures – and low prices makes buying more attractive; if so, you can use an online calculator to make that decision.

The Benefits of Using an Online Mortgage Calculator

An online mortgage calculator delivers plenty of benefits to those who want a capable and versatile tool to assist in a crucial decision-making process.

One key benefit is the ability to use numbers that fit your situation, not those of other people. Everyone’s circumstances are different. Some people can put down a large down payment; others can’t. Some will be able to have access to super-low rates of below 4%; some will have to use higher interest rates, or will desire longer payment terms. Whatever your case may be, your circumstances can be accurately reflected in the tool.

Additionally, you can prepare several different scenarios and analyze them to find the right scenario for you. It gives you the ability, at a glance, to take in several paths to home ownership and find the most affordable or the most sustainable one. Maybe a fixed-rate, 15-year mortgage with 20% down at 4.25% is the best course of action for you. Unless you see all the numbers, though, you’ll never know.

Furthermore, an online mortgage calculator can give you something to take to the lender to demonstrate your ability to afford a particular mortgage. This not only saves you time but also allows you to support your argument if the lender disagrees and shows reluctance with the loan, as many are wont to do at this point in time.

An online mortgage calculator is a terrific tool that any prospective homebuyer should use before he or she makes a move in the market.

This is one of the most frequently-asked questions involving real estate that prospective homebuyers ask, especially in today’s environment of tight lending standards. Banks use a variety of factors to determine one’s eligibility for a loan, some of which are proprietary and not readily available. The general process, however, is similar across the industry.

Knowing the process and what factors are involved can help you when pursuing a loan for your next home purchase.

Credit, Credit, Credit

Credit is the first word most people utter when discussing mortgage loans and obtaining approval from the bank.

One’s credit score is not the be-all, end-all in terms of getting loan approval, of course – there are other factors in play – but by and large, your credit score plays a massive role in the process.

What factors play into your overall credit score, and which are of particular interest to banks when they sift through your financial record? They typically look at:

• Your overall available credit and the percentage of your available credit that you are currently using (called your credit utilization ratio, or debt-to-credit ratio). Today, if you are above 50%, you are in risky territory as far as a lender is concerned.
• The length of your credit history. If you have only had a few credit sources open for a few months, you will be penalized a lot more than if you have a couple of sources that have been in good standing for years.
• What types of credit you use. Do you just use credit cards and retail credit cards? Or, have you taken out vehicle loans and have a line of credit with another lender or entity? Bank credit cards are superior to retail credit cards, as are any other secured type of credit.
• Payment history. Have you been late on your payments? If so, expect a significant penalty – payment history is 35% of your score, according to most.

What is considered a minimum credit score and a “good” credit score for getting a mortgage loan approved? As far as the Federal Housing Administration is concerned, 580 is the minimum – and is by no means “good”. Good for most lenders is above 620. The best rates are given to people who have scores higher than 770, but anything over 700 is pretty good in this day and age.

What You Bring to the Table

There are other factors to consider, of course, and these are more heavily scrutinized than they have ever been. Formerly, you could obtain a mortgage loan with a good credit score and a signature. Now, you need to show proof of income – a big, big deal these days – and even some collateral or a significant down payment to secure approval.

First, proof of income. Banks need to know that you have the financial means to pay off the loan. It’s a big purchase, after all – and a big risk. You need to verify that you have a good annual income – for many lenders, that is at least 40% of the mortgage. Plus, you also need to show that this income is stable. Even high-income earners with unstable job security (like those who work multiple jobs) are being turned down by some lenders. Be prepared to show federal and state tax records, pay stubs, and other supporting materials.

Collateral and down payments are additional factors that you can bring to the table for consideration. Do you have any other non-cash, liquid or illiquid assets that can be used as collateral to help secure the loan? The more the merrier – and if you can make a good-sized down payment of 20% or more, you will improve your chance. Gone are the days in which any lender will sign off on a loan with 0% down, except in uncommon cases with certain types of loans (like a VA loan). A 20% down payment is again the norm.

All of these factors play into the decision-making process banks use to determine who is qualified for a loan and who isn’t. While some of it may seem unfair and unduly complicated or unnecessary, keep patient; getting qualified and owning a home is worth the effort.

The holiday season is a time when many Americans engage in gift giving as a way to express their love and appreciate for friends and family members. Especially with the incredible deals offered during Black Friday and Cyber Monday, the holiday season is in full swing.

Some families decide to wait in lines for numerous hours, often cutting into their Thanksgiving dinner time, in an effort to get the best deals on everything from the latest toys to computers and video games. Furthermore, flat screen and 3D televisions are also sold to the masses due to the unbeatable deals. However, it appears as though some parents (and even grandparents) are looking at slightly more expensive gifts for this holiday season – like real estate.

Real estate is apparently the best deal on the market right now, which is leading many parents and grandparents to the real estate market in search a new home for their children and grandchildren.

The S&P/Case-Shiller Index released information indicating now may be the best time for purchasing real estate with home prices falling 3.6% in September 2011 in comparison to September 2010. Clearly, home prices still remain incredibly low. In fact, home prices are not expected to increase anytime before the last half of 2012; therefore, real estate may continue to be gift options throughout the foreseeable future.

Furthermore, high foreclosure inventory offers many exceptional deals on foreclosed homes for sale ranging from multi-family homes to condos. Many parents and grandparents are actually already in the market of purchasing condos when sending their children and grandchildren off to college in an effort to capitalize on their investment, which would cost close to the same amount if the student was staying on campus in a residence hall.

With the continuously falling price of real estate, many other families are considering purchasing real estate for their family members this holiday season.

Imagine waking up on Christmas morning and finding a pair of keys—not to a car, but to your new home!

With the high unemployment rate, many just graduating from college (or even from high school) are having a hard time finding a job that allows them to pay for rent, let alone a mortgage payment. As a result, many Baby Boomers are utilizing their savings to help their children and grandchildren solve this dilemma with holiday real estate purchasing. Fortunately, these purchases help the real estate market while also providing a home for some of those who may be in need.