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Home Buying 101 Archive


What are mortgage credit certificates?

A mortgage credit certificate, or MCC, makes it easier for eligible buyers to qualify for a mortgage loan. Offered by many city and county governments, they allow first-time buyers to take advantage of a special federal income tax write-off. ...


Can you tell me more about FHA and VA?

The Federal Housing Administration (FHA) is an agency within the Department of Housing and Urban Development (HUD). Its main goal is to help provide housing opportunities for low- to moderate-income families. FHA has single-family and multi-family mortgage programs but does not generally provide mortgage funds. Instead, it insures home loans ...


Do government programs exist that can help me finance a home?

Yes, although many are designed to assist first-time homebuyers, generally defined by lenders as people who have not owed a home in three years. ...


Is a home equity line of credit similar to a second mortgage?

A home equity loan, like a second mortgage, lets you tap up to about 80 percent of the appraised value of your home, minus your current mortgage balance. But because it is set up as a line of credit, you will not be charged interest until you actually make a ...


What is a second mortgage?

It is a loan against the equity in your home. Financial institutions will generally let you borrow up to 80 percent of the appraised value of your home, minus the balance of your original mortgage. ...


What is amortization and negative amortization?

When you amortize a loan you basically pay off the principal by making regular installment payments. This typically takes place gradually over several years. ...


What are subprime loans?

Subprime mortgages are made to borrowers, usually at a higher interest rate, who do not meet traditional credit criteria or who have unconventional borrowing needs. ...


What is a prepayment penalty?

Some mortgages have prepayment penalties written into them. This means you will have to pay the lender a percentage of the principal, or some other stated amount, if you decide to repay the loan early. ...


What is private mortgage insurance?

Also referred to as PMI, it is insurance you pay to protect the lender in case you default on the home loan. It is required when borrowers put down less than 20 percent of the purchase price. ...


What about equity?

It is the cash value of your property over and above what is owed on it, including mortgages, liens, and judgements. ...


What is a loan-to-value ratio?

The loan-to-value ratio, or LTV, is the loan amount expressed as a percent of either the purchase price or the appraised value of the property. It is an important factor considered by lenders before approving a mortgage. ...


What is APR?

The annual percentage rate, or APR, is an interest rate that differs from the loan rate. It is the actual yearly interest rate paid by the borrower, including the points charged to initiate the loan and other costs. ...


Is it possible to refinance following a bankruptcy?

It can be difficult to do after a bankruptcy, unless you are willing to pay very high interest rates and fees. However, if you are contemplating bankruptcy, first talk with your lender and explain your situation. If your mortgage payments are current, the lender may be accommodating and refinance your ...


Can I refinance a home loan more than once?

You most certainly can. During the most recent refinancing boom, for example, many homeowners refinanced their home loans two or three times within relatively short periods of time because interest rates kept treading downward, making it extremely attractive to trade in one loan for another. ...


When is the best time to refinance?

Many people flock to refinance while mortgage interest rates are low, particularly when rates are about two percentage points below their existing home loans. ...