Also referred to as a “tandem” loan, an 80-20 mortgage involves taking out two loans to pay for the entire cost of a home. The first mortgage consists of eighty percent of the purchase price, while the 2nd loan pays for the twenty percent which would more typically be paid for with a down payment. The only up-front expenses are the closing costs.

An 80-20 mortgage is most attractive for someone who doesn’t have the money for a down payment, or desires to use these funds for a different purpose. It can provide a more realistic option for first-time buyers, as they do not have funds from the sale of a previous home. Another advantage of an 80/20 mortgage is that private mortgage insurance (PMI) usually isn’t needed.

A major downside of using this type of loan is the higher cost in total interest. With a thirty year term and six percent interest, it would cost a total of $664,714 to purchase a $345,000 home with a twenty-percent down payment. On the other hand, the total expense would be $744,642 with an 80-20 mortgage, almost eighty thousand dollars more. The actual cost may be greater; as bankrate.com points out, an increased interest rate often applies to the 20% loan.

Another disadvantage of an 80-20 loan is the lack of home equity it produces. Until a significant amount of the principal has been paid off, the owner will not be able to take advantage of home equity loans, equity credit lines, or reverse mortgages. If the home is sold, both loans will have to be paid back and it will be difficult to purchase a different property without using another 80-20 mortgage.

There is a greater possibility for negative equity with 80-20 mortgages, as the home’s value only has to fall slightly for this to happen during the first years of ownership. It should be verified that the home is worth at least as much as the purchase price; otherwise, a mortgage of this type could begin with negative equity.

Overall, an 80-20 mortgage offers a more convenient alternative for home buyers who cannot afford to make a down payment and don’t want to delay purchasing a property. However, in the long run, it is often less financially advantageous than making a down payment on a traditional loan. Lending institutions which offer 80-20 mortgages include Citizens Bank, National Penn Bank, and various local banks.

The long mortgage industry slump which began early last year was brought about by a combination of factors, including the subprime loan crisis, a weak real estate market, unemployment, and rising inflation. These conditions have diminished people’s ability to make mortgage payments or initiate new mortgages, resulting in continually fewer new applications and more foreclosures (based on recent data from the Mortgage Bankers Association). So how long will this mortgage slump last?

One possibility is that the slump will end after home prices have dropped enough so that more non-homeowners can afford to purchase them. However, owners who previously paid much more for their homes and/or have mortgages for more than the home’s value may remain unwilling to sell at a lower price, and might be unable to buy another home if they do sell. The higher standards banks are applying to borrowers’ credit records (part of the subprime crisis aftermath) also reduce new lending.

Expensive food, heating oil, and gasoline have made keeping up with mortgage payments or buying a home more difficult for many people, which has helped the mortgage industry slump last longer. With an increasing world population and rising demand for fuel in eastern Asia, it appears doubtful that this will change in the near future. However, its impact may reduce as more people adapt to these changes by using public transportation, purchasing smaller vehicles, and growing some of their own food.

It should be kept in mind that the previous “boom” partially consisted of fraudulent loans and risky high-interest lending to people with very poor credit scores, so it may not be realistic to attain this level of mortgage origination again. Federal government agencies have been introducing new regulations for lenders and brokers in recent months; hopefully this will prevent the next slump from lasting as long or having the same severity. Nonetheless, this slump will last at least until incomes increase substantially and/or living expenses decrease.

Basically, the problems which have led to the mortgage slump have a long term impact which is unlikely to be mitigated very easily. Unemployment has just risen again to one of the highest rates in recent years and oil prices are exceeding $130 per barrel, so the present situation seems liable to last for a substantial period of time. However, history shows that previous housing and mortgage downturns have occurred and eventually came to an end as economic conditions changed.

It is usually necessary for potential borrowers to thoroughly document their level of income when applying for a mortgage loan. This can be difficult and/or time-consuming for some borrowers, such as independent contractors. However, a type of loan called the Stated Income Mortgage is available and requires substantially less documentation.

Basically, the lending institution allows a borrower applying for this type of mortgage to state his or her income amount, rather than having to prove it. The lender relies more heavily on other financial information about the borrower, and often demands a significant down payment to reduce the greater perceived risk it faces. The responsibility of making sure monthly earnings are actually high enough to keep up with the mortgage payments is left up to the borrower.

An example of this type of loan is the Alternative Stated Income Mortgage offered by Freddie Mac through various lenders. Approval for this loan is largely based upon the borrower’s credit score, and either fixed or adjustable rate options are available. However, it can only be used for purchasing single unit residential properties, and mandates a twenty-five percent (minimum $25k) down payment. This kind of mortgage also involves less exposure of financial details.

Some people have accused Stated Income mortgages of encouraging dishonesty about personal income levels. Senator Chuck Schumer’s web site indicates that he introduced legislation last year to ban Stated Income mortgages, along with various other non-traditional mortgage types. It could be argued that borrowers need to be responsible and only take out loans they can genuinely afford to pay back. However, it remains to be seen whether or not Stated Income mortgages substantially add to foreclosures, which would be to the detriment of both the lender and borrower.

Additionally, many banks do not require the confirmation of assets (they are also “stated”) when Stated Income mortgages are applied for. A number of national and local lending institutions issue these loans, including Amerisave, Nationwide Mortgage Loans, and Florida Mortgage Corporation. Certain lenders, such as CommercialBanc, offer this type of mortgage on business properties as well. Such mortgages are sometimes referred to with other names, like “low doc.”

Stated Income mortgages can appeal to some people who are not self-employed, as well. They save time and provide greater confidentiality in the application process. Also, as the Amerisave web site points out, someone who just gained employment a short time ago (and cannot document wages) may find this type of loan desirable.

With the recent housing crisis many people are wondering if they should try to refinance their home into a lower rate or simply sell and walk away. Each option has its own benefits and downsides, so determining which is best really depends on your specific situation.

With refinancing you have the benefit of being able to stay where you are. Not only is moving a hassle, it’s also a fairly expensive endeavor. Staying in your current home also allows your family to stay in a familiar neighborhood with your favorite shops, schools and families around you already.

Another benefit of refinancing is that it’s possible to get into a better mortgage rate than your existing one. Plus it’s possible that your house’s value could have increased to give you a cash-out when you refinance.

One downside to refinancing however is that it is getting more and more difficult these days. Lenders today are looking very carefully at borrowers’ credit scores, credit histories and debt-to-income ratios. If your credit is less than good you may find you’ll have a hard time getting a better rate and may in fact only be offered a higher rate for a refinanced mortgage.

The other option is selling your home. If your family has experienced changes, such as children moving out or even having new additions to the family, then this could be the better option. Or even something as small as if you had a job change that resulted in a longer commute you may want to consider moving. These things all affect the quality of your life. When paired with a barely manageable mortgage it doesn’t make much sense to stay.

Selling also makes sense if you are trying to avoid an impending foreclosure. If this is the case remember to talk it over with your lender. Foreclosure is expensive for all parties involved and they’ll likely want to help you out as best they can.

But, be careful when considering selling. If you’re doing it only to lower your monthly payment you may be on the wrong track. You should also factor in the costs of moving, how long you’ll be in the new home and if the cost of living is higher in the new neighborhood.

Whichever way you’re leaning be sure to make two lists. One should have the financial pros and cons and the other the emotional pros and cons. Measure these two against one another and decide if staying or selling makes more sense for your family based on the results.

Property taxes are paid to local town and city governments by people who own homes, businesses, or other real estate. The way to determine these taxes generally remains the same throughout the United States, but tax bills for identical properties can vary greatly from one city to the next.

First, it is necessary to know the assessed value (or “taxable value”) of the property before you can determine how much your potential property taxes will cost. In some areas, this is often substantially lower than the price it would be appraised at or sold for. Owners can appeal this assessment if they feel it is inaccurate and want it to be reassessed.

Some major cities have automated systems on their web sites for checking the assessed value of a specific property. For example, New York City’s site allows any street address to be entered. If this is not an option, it should be possible to obtain this information from the local town office. You may be notified by mail of your assessed value annually, if you already own the property.

The other factor necessary to calculate potential property taxes is the tax rate for your city or town. This can usually be found on a local or state government web site. For example, the city of Portland, Maine’s rate is about 1.6 percent. Multiplying this in decimal form by the assessed value (0.016 * 85000) allows you to determine the tax amount ($1,360 dollars).

Some states or cities offer partial or full exemptions on property taxes to qualifying people and organizations. These may include military veterans, the elderly, individuals with low income levels, some types of disabled people, non-profits, and/or churches. In some cases, the state govt. will refund a portion of taxes which were paid to the town or city earlier in the year.

Basically, unless partial exemptions apply, all that is needed to determine your potential property taxes is a simple calculator and two numbers. Be sure to review real estate home listings thoroughly; these sometimes indicate how much this tax was for the previous year. Keep in mind that taxes are subject to change at any time as cities increase or decrease their spending and real estate values fluctuate.

A quitclaim deed is a legal form which can be used to indicate a person’s decision to end their claim to a piece of real estate. It also transfers the claim to a different individual, usually the person who is now in possession of the property.

The quitclaim deed is a short form (about 20 fields) which includes the signatures of both parties involved, their mailing addresses, the current date, the county and state where it was signed, and the amount of money paid (if any) for transferring the claim. It also includes a description of the relevant property. The signing of the quitclaim deed should be monitored by a qualified witness, who also puts his or her signature and seal on it.

Quitclaim deeds are generally not used in typical real estate sales, according to wikipedia.org. Among other uses, they are sometimes utilized in divorces where one partner retains full ownership of a property and the other does not. Quitclaim deeds are applicable to some types of property which do not include land ownership, in additional to typical homes and acreage. This type of deed should not be confused with a quitclaim bill of sale, which involves a substantially different form and only requires the seller’s signature.

Some web sites provide text based quitclaim deed forms for free; others offer higher quality printouts for a fee. Many legal form computer software packages include this type of form as well. One example is the CD-ROM based program “Personal Legal Forms & Agreements” from Made E-Z Software, which is inexpensively available for purchase online. Using a computer printer or typewriter to fill out the form will make it more readable and prevent words from being altered or erased. Yet another option is to pay for an attorney to obtain and fill out the deed for you.

Overall, a quitclaim deed is useful for relinquishing ownership (or any claim to ownership) to someone who already has other documents proving that they own the property. Other types of deeds are generally preferable for transferring ownership, such as when a home is sold. The involved parties should consult a lawyer if there is any question with regard to the best way of conducting such transactions.

Although it’s quite easy to find the average mortgage rates available those aren’t necessarily the rates you will qualify for. Your particular rate depends on your particular financial situation including your financial assets, debt-to-income ratio, credit score and how much house you’re trying to buy. These things combine to form a risk assessment for the mortgage lender to use to decide if you are a good investment.

One thing that affects your rate is your FICO score. Your credit score is the most important factor actually. The higher your FICO score, the better your rate/ The reason for this is because it summarizes how well you take care of your debt as well as showing how much debt you can handle.

Another aspect is how much of your budget is going back out to pay off current debt. Generally lenders don’t want to see more than 36% of your budget paying off debt for student loans, credit cards, car loans or any other installment payments. However, your monthly income also includes child support, alimony and income from a second job.

Owning financial assets is a positive thing in most lenders minds. If you have assets such as a 401k, owning your car outright or a college savings plan mortgage bankers see these as a huge positive. This is because these all contribute to your net worth.

Finally, the house you want to buy plays a role in your mortgage. If the house is in good shape, in an economically growing area, and amongst other well selling homes then your home is a less likely risk to finance and therefore that mean you’ll likely get a better rate.

Ultimately, there are lots of factors that help a mortgage lender decide what kind of rate to give you. If you are unsatisfied with what you are offered try talking with your lender to see how you can improve your rating to get a lower interest rate in the future.

Mortgage rates are a tricky thing to predict. They respond to changes in economic growth, wages, employment and oil prices among many of other factors. The federal funds rate happens to be a minor part of this calculation.

The Fed generally controls short-term fund rates. These rates establish what banks will charge each other for overnight loans. Long-term rates on the other hand are more closely tied to the 10-year Treasury yield and the demand for mortgage-backed securities. Generally mortgage rates are about 2 percentage points higher than the yield on the 10-year Treasury.

Long-term, fixed-rates like mortgages are more influenced by inflation and how fearful the market is of inflation. When the Fed cuts short-term rates their goal is to reduce borrowing costs for corporations so they will invest in the economy and hire people. Unfortunately this kind of economic growth can lead to inflation, which can create higher mortgage rates.

The bottom line is there isn’t really a distinctive connection between the Fed rate cuts and your mortgage rates. Sometimes their rate cuts cause mortgage rates to rise, sometimes to fall and sometimes there is no visible effect whatsoever. The rates will go down when banks are more willing to lend money because they aren’t afraid of inflation and they’ll go up when they are afraid and aren’t willing to offer borrowers mortgage loans.

Trigger leads are used by marketers in the mortgage industry for targeted advertising to people who are actively seeking a loan. Such leads are created when lending institutions check the credit records of people applying for mortgages, and usually result in promotional telephone calls to the borrower. Continue reading to learn more about the implications of trigger leads for the mortgage industry, along with details on how home buyers or refinancers can largely evade this type of promotion.

Some potential borrowers find it obnoxious to receive many telephone calls from different lenders and brokers after applying for a mortgage. There are a few options available for decreasing such calls. One is to sign up for the “Do Not Call” list at donotcall.gov; this stops most types of telemarketing after a month. Another option is to opt out of all “prescreened offers” (including not only mortgage trigger leads but pre-approved credit cards and various other promotions) at the web site optoutprescreen.com; this will also decrease the amount of “junk mail” you receive. The most thorough option is to purchase a Caller ID box and subscribe to this service, which might already be included in your regular monthly telephone bill.

As for their impact on the mortgage industry, trigger leads promote competition among lending institutions and increase the chance that a borrower might switch to a different lender than he or she initially applied for a mortgage from. A number of web sites offer to sell trigger leads, many of them providing options to filter the applicants by credit score, mortgage balance, location, and other borrower characteristics. This allows for the mortgage industry to better target promotion of mortgages catered to different types of people. Like most items, trigger leads are usually more expensive per unit when they are bought in smaller quantities. However, a larger staff may be necessary to utilize more trigger leads before they become outdated.

Basically, trigger leads are telephone numbers attached to mortgage application and credit report information, which can be filtered for particular criteria. Their highly targeted nature makes them much more desirable to the mortgage industry in comparison to random telemarketing, but such calls are still more likely to meet rejection than more voluntary forms of promotion. Borrowers who desire to avoid having their phone numbers sold as trigger leads should take one or more of the above-mentioned precautions before applying for mortgages.

The Federal Housing Administration’s home loan program makes it less difficult to gain approval for a mortgage, while decreasing the upfront expense for home buyers. The program accomplishes this by providing the lender with insurance against the borrower’s potential failure to repay the loan.

Borrowers with problematic credit histories can still qualify for an FHA home loan, according to HUD.gov. The program also only requires a three percent down payment, offers decreased closing costs, and sometimes makes it possible to receive a lower interest rate. The maximum loan amount the administration is willing to insure varies from one locality to another; these are generally higher in regions where real estate is more expensive.

The program includes loans intended for people who are purchasing their first home, buying “fixer-uppers”, making energy efficiency improvements to a house, or taking out a mortgage on a mobile/manufactured home. The housing administration offers a Reverse Mortgage program for home owners older than 61 as well. However, most U.S. citizens are potentially eligible for an FHA loan. A tool on the HUD/FHA web site enables visitors to search for affiliated lending institutions in their area.

The “FHA Resource Center” on HUD.gov includes a useful feature allowing users to ask questions and receive answers about the loan program. It indicates that in some states homes HUD has foreclosed upon can be purchased with only a one-hundred dollar down payment if the new mortgage is also insured by the housing administration. Also, some military veterans are not required to make as large a down payment on loans which are insured by the FHA.

Another program the government offers insures mortgages (including repair costs) on buildings in “older, declining” parts of cities. According to FHA.gov, this option is limited to costs of $18-21 thousand dollars, depending upon property values in the area. A wide variety of other FHA subprograms exist, including options for people purchasing property on Native American reservations, and teachers moving to localities designated as “revitalization areas.”

Overall, the FHA home loan program makes it possible for people who (due to lack of available funds and/or low credit scores) otherwise wouldn’t be able to purchase a home, or would have to accept a less desirable mortgage. Borrowers can contact one of the FHA affiliated lenders to help determine if they are eligible for this program.