The Complete Guide to Mortgage Loans, Short Sales, and Foreclosures

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Types of Mortgage Loans

“A” Paper Loans (aka Prime Loans) — To get the best interest rates, you need what’s called an “A” paper loan, or prime loan. Get the facts about qualifying criteria, including payment history, income, debt-to-income ratio, down payment, and credit score.

Balloon Loans — We tend to overestimate how much more money we’ll be making in the future. Thus, the danger of the balloon loan. In exchange for lower monthly payments, you make a big lump sum at the end of the loan. What happens if you can’t?

Adjustable-Rate Mortgage Loans — Before you sign on to an adjustable-rate mortgage, make sure you understand how lenders use an index to adjust rates, how they add a margin to the index, and how caps keep rates from skyrocketing.

Reverse Mortgage — If you are 62 or older, and your home is paid off, you may want to consider a reverse mortgage for extra cash you need to cover retirement or medical expenses. Find out if this alternative to selling your home is right for you.

Loan Modification — Are you unable to make your monthly mortgage payments? Before you consider foreclosure, find out if you qualify for a loan modification to change the terms of your loan.

How to Apply for a Loan Modification — Before you approach the bank about a loan modification, find out how to do it right. Get tips on writing your letter of hardship, including how to decide what kind of modification to ask for.

VA Loans — Are you a veteran? Get the facts about the Veteran Affairs Home Loan Program, including service requirements, the benefits of a VA loan, limitations on benefits, and the VA loan process.

FHA Loans — Are you unable to qualify for a conventional mortgage loan? You might want to think about applying for an FHA loan. Check out types of FHA loans and underwriting guidelines.

Understanding a Mortgage Loan

Detailed Descriptions of Mortgage Loan Fees and Costs – Title search? Land survey? Document preparation? Appraisal? Inspection required by lender? All of these come at a price. See a detailed explanation of these and more than a dozen other mortgage loan fees and costs.

What is the Real Cost of Your Loan? — Ever wonder how a mortgage broker makes their money off the deal? Find out.

Hidden Costs of a Mortgage Loan — Besides the upfront costs of a mortgage loan, beware of the hidden costs some lenders try to add to your home loan.

What is PMI and Mortgage Points? — Two of the most important mortgage costs to understand are Private Mortgage Insurance (PMI) and mortgage points. Get the facts.

Truth in Lending Statement — Within 3 business days of receiving your loan application, mortgage lenders are required to provide you with a breakdown of every cost associated with your loan. Learn more about the Truth in Lending Statement.

Uniform Settlement Statement — Right before closing, lenders are required to disclose the true interest rate and costs in the Uniform Settlement Statement, also known as the HUD-1 Form. Get the facts about this itemization of charges.

Broker vs. Banker — Should you use a mortgage broker or direct lender (e.g., bank, credit union) to buy a home? Weigh the pros and cons of broker vs. banker.

Why Does the Bank Keep Selling My Loan? — Do you keep getting notices in the mail that a new lending institution now controls your loan? Find out why.

How Your Credit Affects Your Mortgage Loan

Should You Apply for a Mortgage with Bad Credit? — Having bad credit does not mean you cannot buy a house. That said, it doesn’t mean it’s a good idea, either (or that you will even qualify). Weigh the pros and cons before you decide.

How to Improve Your Credit Before Applying for a Mortgage — While you may be able to buy a home with bad credit, it might be a better idea to improve your credit first. Get tips on the difference you could make in as little as 6 months’ time.

The Basics of “A” Credit — “A” credit, also known as Tier 1 credit, is the credit you need to qualify for the best interest rates. Take a look at factors that contribute to this prime credit rating.

Articles on Short Sales and Foreclosures

Foreclosure Alternatives — Yes, you do have options. Could any of these foreclosure alternatives work for you – forbearance, short sale, deed in lieu of foreclosure? Find out.

Short Sale As an Alternative to Foreclosure — If you are upside down on your mortgage, a short sale might be a good foreclosure alternative.

Will You Owe Taxes on a Mortgage Settlement Payment? — If you were affected by illegal mortgage loan servicing from January 1, 2009, to December 31, 2010, and you received a cash settlement — unfortunately, these payments were considered income for which borrowers were expected to pay income tax.

How to Get Relief Through the “Hope Now” Initiative — President George W. Bush announced this initiative in 2007 as a means of helping homeowners who are upside down on their mortgages. Find out if the Hope Now Initiative can help you.

Mortgage Relief Scams — The further you fall behind on your mortgage payments, the more desperate you get for mortgage relief. Unfortunately, scammers are ready and waiting for you. Watch out for these red flags.

What Can Affect Your Mortgage Loan?

Underwriting Guidelines — How likely are you to make on-time monthly mortgage payments? That’s what a bank wants to know when deciding whether to lend to you. Get the facts about underwriting guidelines, including the type of income, debt and liabilities, credit history, bank accounts, and debt-to-income ratio.

Locking in Your Mortgage Interest Rate — Are you worried about interest rates going up while you’re waiting on your mortgage to be approved? Find out how to lock a loan.

Paying Off Your Mortgage Early — You can save thousands in interest fees by paying off your mortgage early. Get tips on making extra payments, including the dollar-a-month plan, bi-weekly payments, the 15-year switch, lump sums, and making extra payments at the beginning of your mortgage.

Helpful Tools When Buying a Home

Homebuyer’s Dictionary — What’s an acceleration clause? Earnest money? General warranty deed? Find definitions to these and dozens of other need-to-know terms in our homebuyer’s dictionary.

Mortgage Calculator — How big of a mortgage can you afford? Break it down with our free mortgage calculator. Enter the amount borrowed, length of the mortgage, and interest rate to figure your monthly payments.

Need more information on buying a home? Check out our helpful articles on Real Estate.

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