Last month HUD, the federal Housing and Urban Development agency, proposed an overhaul of the process for obtaining a mortgage. This overhaul would require mortgage brokers and lenders to supply borrowers with a “Good Faith Estimate” and more specific information about the mortgage or refinancing option they are applying for.

According to a HUD press release regarding the proposed overhaul, the new rules would make it easier for potential borrowers to comparison shop and find the least expensive mortgage available to them. It quoted HUD officials as saying that home buyers are not being properly informed about mortgage closing costs and terms.

The press release indicates that the proposed “Good Faith Estimate” included in the overhaul would oblige lending institutions to provide clear, specific details to borrowers on mortgage interest rates, rate adjustability, balloon payments, yield spread premiums, total closing costs, and pre-payment penalties.

The HUD overhaul would also mandate the reading of a “closing script” to mortgage borrowers by the settlement agent. The script would include major terms of the mortgage as well as any difference between the actual closing costs and those indicated in the “Good Faith Estimate”. This would help prevent borrowers from being confused or deceived.

A sample “closing script” supplied by the HUD web site appears to be straightforward and succinct. Other components of the overhaul include capping the amount fees can be adjusted after appearing in the estimate, and giving HUD the ability to penalize lenders or brokers who fail to comply with these new requirements.

HUD has also issued several example closing cost comparison forms, which would be used to indicate the difference between estimated and actual expenses. It appears that the following costs would be permitted to rise no more than ten percent after the estimate: credit reports, flood certifications, tax services, appraisals, mortgage ins., and title insurance.

If successfully enacted, the mortgage overhaul proposed by HUD appears likely to help home buyers more thoroughly understand the terms they are agreeing to, while preventing them from being charged excessive unexpected fees. However, the overhaul may face opposition from lenders and brokers who benefit from misrepresentations or unwarranted fees.

According to the Housing and Urban Development web site, responsibilities of HUD include the prevention of housing discrimination, reselling homes which have been foreclosed upon by the Federal Housing Administration, providing assistance to the homeless, and funding subsidized housing.

With the recent mortgage crisis, adjustable-rate mortgages are starting to get a bad reputation. However, ARMs still have some positive aspects. Most adjustable-rate mortgages have interest rates that change every month, quarter, year or 5 years. These time periods between rate changes are called the adjustment period. If you are disciplined with your money you can use an ARM to your advantage in a couple of ways.

Since ARMs tend to have lower rates and thus lower payments they provide savings on mortgage payments in the initial stages, before the reset of rates. As a homeowner you can use those savings for investments. If you place that money into a high-yield savings account you have the potential of building up quite a nest egg.

Another reason adjustable-rate mortgages tend to be a good idea is interest rates do drop. With a fixed-rate mortgage you are locked into your loan, but with and ARM you can refinance when the loan adjusts.

A final situation that is great for having an ARM is if you are planning on moving soon after taking out the loan. If you aren’t staying in a home for more than 5 years then you don’t need to worry about the loan resetting after that point in time. Unless of course, you have trouble selling.

Still, if you are considering an adjustable-rate mortgage there are some precautions you should take. First, make sure your loan doesn’t have any prepayment penalties. That way you can refinance into a different loan without it costing you. Also ensure that you have limited caps on both annual and total adjustment. These provide a maximum percentage increase, protecting you from astronomically raises in rates. And take your loan out with a reputable lender. ARMs can easily work for you and against you. It all depends on how you handle them.

The FICO score is a kind of credit score assigned to American individuals with a credit history. Its name refers to the Fair Isaac COrporation, which created this scoring system. Differences in a person’s FICO can impact what sort of interest rates they qualify for on home mortgages, credit cards, and other forms of credit. Read on to learn more about what the FICO score is, how it works, and the ways it can affect many different transactions.

The basic idea of a credit score is to give creditors a simple indicator of how likely someone is to repay them on time. Thus the FICO number reflects whether or not an individual has previously made payments which were owed, if these payments were received on time, and how much money is currently owed. According to the FICO web site, sixty-five percent of the number is calculated on the basis of “payment history” and “amounts owed.”

However, these are not the only factors which go into its formulation. Fifteen percent is attributed to how long a person’s credit history is. For example, someone who is thirty years old and didn’t buy anything on credit until the age of twenty-five might have a different FICO level than a person who started doing this when he or she turned nineteen. A longer length will also generally affect the previously mentioned category, because there will be a more substantial record of either on-time or late payments.

Two other factors which influence what sort of FICO score a person receives include the kinds of credit they have utilized and any efforts to open new accounts. FICO’s web site indicates that the quantity of information requests and/or new credit accounts established in recent days will affect an individual’s score as well. However, it states that there is no impact from inquiries initiated by the person that the score applies to, or from potential employers finding out what the number is.

Overall, a FICO score is determined using several types of data from multiple sources. It can be as low as three-hundred or as high as eight-hundred and fifty. Maintaining a good FICO score is important for anyone who borrows money in one form or another; some jobs or rental housing also cannot be obtained by someone with a low number. This gives it the potential to impact almost anyone’s life, especially when they do business with larger companies.

It can be more difficult for single parents to attain homeownership because it is harder to save for a down payment and make monthly mortgage payments with a single income, along with the additional living expenses of children to afford.

A variety of homeownership programs are offered by the government and non-profit organizations which can help people with relatively low incomes afford to own a home. Single parents are more likely to have eligibility for these programs, due to their typically lower household income. A few programs offer additional benefits or greater eligibility for single parents…

Single parents have a higher likelihood of acceptance in the Habitat For Humanity (HFH) homeownership program, and generally face a somewhat smaller work contribution requirement than families with two parents. Families help in home construction and are able to purchase a house at limited expense in exchange. According to their web site, the average cost to the owner of an HFH home in the U.S. is only about sixty thousand dollars. The USDA Direct Loan Homeownership Program (Section 502) operates on the basis of a similar concept to promote ownership among people with low or average income levels.

Some state and local government homeownership programs also benefit single parents. For example, the Georgia Dream mortgage program is available to people with a “moderate” income level; it also offers interest-free second mortgages to single parents (as well as first-time or displaced buyers), which provide assistance in paying for the closing costs and down payment. The San Jose city homeownership program has somewhat more favorable eligibility requirements for single parents, and similar programs exist elsewhere. According to FHA.com, a variety of other programs are available which help potential home buyers, including single parents, to afford making a downpayment.

Most other homeownership programs do not specifically favor one parent households, but are more likely to benefit these families because of their lack of a second income. Single parents who are also first-time home buyers or have had to relocate because of a natural disaster will have a better chance of qualifying for some home ownership programs. In general, these types of programs decrease the cost of a mortgage and/or make it less difficult to obtain one.

Regardless of help offered by homeownership programs, it remains important for the individual to carefully consider his or her ability to continuously afford the mortgage payments, property taxes, and other extra expenses associated with homeownership.

Although there are two different types of points in mortgages, most of the time people are referring to a discount point. Discount points are money you pay as a percentage of your loan. It’s basically prepaying interest in exchange for a lower interest rate over the life of your loan. The more points you pay the lower your rate will be.

A point is equal to 1% of your mortgage loan amount. If your loan is for $200,000 then one point would be equal to $2,000, two points would be $4,000 and so on. There are many different loans available with and without points from zero to three points. Basically when deciding how many points you want you have to decide if you’d rather (and can afford to) pay a higher amount upfront with lower monthly payments or a lower amount in the beginning, but higher monthly points.

The best way to decide how many, if any at all, points you should take is to honestly answer how long you believe you’ll stay in the home. Most point combinations have a break even point somewhere between 4-6 years into the loan. The average mortgage tends to last 7 years, but if you aren’t in a stable job or anticipate upcoming changes in your life then taking points may not be a good fit.

Basically, if you’ll be in your house for less than 5 years don’t pay any points. If you plan on being there longer, figure out how much you can afford to pay and then determine if the break-even point is worthwhile.

When you or a hired contractor carries out home improvement work, a permit may be necessary. You will need to determine who is responsible for obtaining it, whether or not the improvement in question requires it, and how large a fee must be paid. Here are some details on successfully getting a home improvement permit:

When contractors perform your home improvement, they will usually acquire any necessary permits for you. The Federal Trade Commission web site warns that contractors who ask the customer to obtain the permit might not have a license. This would also result in a greater cost to the customer, making him or her pay the fee. The FTC advises home owners to ensure that the contract they sign includes getting permits as one of the contractor’s responsibilities. It also indicates that the type of work which must be permitted varies from one municipality or state to the next.

A permit can be directly obtained by the home owner instead, if he or she plans to complete the improvement without a contractor’s involvement. The owner will have to contact the appropriate state or municipal authorities, ensure that the improvement will adhere to building codes, and pay a permit fee. According to BBB.org, the home will undergo an inspection to verify that the project is legally compliant. A few towns and cities list the fees on their web sites; the prices appear to start at about fifty dollars and range up to the hundreds or thousands depending upon the size and complexity of the permitted project.

Many types of home improvement projects need a permit. Even relatively minor improvements sometimes require getting one of them. According to the Michigan Dept. of Labor & Economic Growth, permits are generally mandatory for installing heating, air conditioning, plumbing, electrical, and ventilation systems, as well as fireplaces, decks, pools, water heaters, and fences. Getting a permit is also necessary for some types of renovations and the addition of new rooms. SierraClub.org indicates that many localities charge substantial permit fees on solar panel installations.

Basically, getting a permit is more time-consuming if you are conducting the home improvement yourself (rather than a contractor), it is necessary to obtain one for a wide variety of improvements, and rules vary from one area to the next. For a project to receive permission, it must follow all relevant building and zoning laws.

Attending an auction when buying a home can potentially save the buyer money, but there are some additional aspects to take into consideration which don’t apply with regard to typical real estate sales. Here are some details on how and where buying a home at auction is possible:

Various national government agencies sell homes at auction. According to USA.gov, these include the Internal Revenue Service, Housing & Urban Development, and the Federal National Mortgage Association. Additional agencies sell other types of real estate in this manner, such as non-residential buildings and acreage. Buying a foreclosed-upon home at an auction is another option.

Buying homes and other properties at auction on eBay.com is possible as well. After searching under the “Real Estate” category, for better results check the boxes on the left for “Buying Options: Auctions” and “Items Within … Miles”, then enter your zip code under the “Location” heading and select a a maximum distance. Some listings are actual auctions, others are only advertisements which don’t involve any bidding.

Numerous home auctions charge a “buyer’s premium” in addition to the sale price. Make sure you are aware of the amount before buying. The U.S. Treasury web site indicates that there is no buying premium at Internal Revenue Service real estate auctions. You should determine the acceptable payment methods and required deposit percentage beforehand as well.

Home inspections must be carried out somewhat differently; many auctions have a set series of times and dates when potential buyers can come to inspect them. Other sellers may request that bidders schedule a home inspection prior to the auction (perhaps during it, if it is a long-term auction such as on eBay), or offer other types of arrangements. A complete inspection is important, since these homes are generally sold on an “as is” basis.

As with other kinds of auctions, there might be a “reserve price” which applies when buying a home at an auction. The reserve may or may not be kept secret. If bidding fails to meet or exceed this price, the home will not be sold, and might instead be offered at a fixed price or re-auctioned at a later date.

Basically, when buying a home at an auction it is important to understand all of the financial terms and requirements, as well as carefully examining the home for flaws. Homes are offered at auction by a variety of businesses, government agencies, and individuals.

Selling your home by yourself, without the help of a realtor, has several pros and cons. The greatest advantage is with regard to overall cost, but there are some drawbacks in the areas of convenience and initial expense. Here is a full list of pros and cons involved in selling your home by yourself.

PROS

1. A large commission (usually six or seven percent) won’t have to be paid to a realtor when the home sells. This can produce savings in the thousands of dollars. If a seller spends $500 dollars to advertise his $425,000 residence, selling it will have cost him $25,000 less than a six-percent realtor’s commission.

2. The seller has complete control of where and how often the home is marketed to potential buyers. Realtors have to spend time and money advertising a large number of homes, so they don’t always put sufficient effort into promoting each property. They also might not use the best photos or wording to describe your home.

3. There is a possibility of selling the property yourself by using free or very inexpensive promotional methods, such as internet classified listings, advertisements on local bulletin boards, “word of mouth” about the home being for sale, or promotional signs around your residence.

CONS

1. Selling your home yourself is more time-consuming. Sellers must spend time answering phone calls, showing the house to potential buyers, responding to e-mail inquiries, photographing the property, obtaining necessary forms, and preparing real estate advertisements.

2. The selling expenses are lost if the property fails to sell or you decide not to sell it. These expenses include the cost of newspaper or internet advertising, “for sale” signs, photography supplies, and telephone calls. If you don’t already own this equipment, it will probably be necessary to purchase a quality camera, answering machine, and printer.

3. Some potential buyers are reluctant to consider purchasing homes which are offered for sale by owner. Others may only look at real estate advertising materials which realtors exclusively advertise in, remaining unaware that you are selling your home.

Basically, the pros of selling your home by yourself are that it lets you choose how to advertise it and can reduce costs significantly. The cons are that it has greater up-front costs and takes more time than using a real estate agent. The pros outweigh the cons more when the price of the home is greater, due to the higher commission a realtor would receive for selling it.

Several factors should be taken into consideration when you are looking to find the right real estate agent. This will provide a better idea of the agent’s effectiveness and the convenience of working with him or her. Here are some tips on how to find the best real estate agent for your needs.

1. Location: Is it convenient to visit the real estate agency’s office when necessary? If the office is located nearby, the agent is also more likely to know about the local area and can easily answer a potential buyer’s questions about it. It is beneficial if they have a local or toll-free telephone number as well.

2. Advertising: Look through local newspapers and real estate advertising publications to find out if the agent has many homes advertised in them. How attractive or large are the advertisements, and what sort of information do they provide about each property?

3. Person: When meeting the real estate agent, do you find this person friendly, knowledgeable, helpful, and non-pressuring? This is of importance because not only will you have to work with him or her until the contract expires, but the agent will also have an impact on potential buyers’ decisions.

4. Internet: Does the real estate agency have a web site, and is it well-designed? Are appealing photographs and thorough details displayed for each home? Also check to see if you can find properties listed with the agent on Realtor.com or other sites which display properties from multiple real estate agencies.

5. Promotion: Is the agent willing to offer any special promotional features to help sell your home, such as a “Talking House” transmitter or an online “virtual tour” of your home’s interior? These methods enable potential buyers to conveniently find more information about the property without having to schedule a showing or contact the agent.

6. Commission: Although the commissions charged by real estate agents do not vary greatly, even a slight difference considerably affects the cost. 1/2 percent of a $240,000 sale price produces an increase or decrease of $1,200. You will find that some realtors are willing to negotiate on this percentage.

Additionally, try asking friends who have sold (or are trying to sell) their homes as to what real estate agents they would recommend or discourage you from using. This can provide valuable information to help you find the best realtor in your area.

When you are applying for a loan there are many different things that can affect the mortgage rate you are offered. And a lot of these have to do with what your home buying abilities are. The first thing that affects your rate is the amount of money you can put down on your home. A down payment of 20% is the standard. If you put down less than this your rate will be higher. If you put down more, your rate will be lower.

The amount of the loan you take out is also a factor. Freddie Mac and Fannie Mae have loan limits for conforming loans. If you are trying to borrow more than this limit then your mortgage rate will increase.

Another factor is the length of the loan. If you have a longer loan your rates will be higher and a shorter loan gives you lower rates. However, even though your rate is lower with a shorter loan your monthly payments may still be higher.

Your credit score and history is also a factor, which makes sense. If you have better credit then you are less of a risk and borrowers will reward you with a lower rate. Along this line your income level is also important. If you make more money than you have in credit obligations then you’ll also be offered a better mortgage rate.

The final aspect of your mortgage rate is the closing costs associated with your home. If you can’t afford to pay all of the closing costs then you will likely have a higher mortgage rate. If you can afford to pay these costs it’s always a better idea to do so, rather than letting the lender pay them.