Ray and Nimi Office: 651-486-5628 Cell: 651-398-6261 Res: 763-795-8979 Fax: 651-483-3681

Questions to Ask When Pursuing a Loan
Things to Consider When Buying a Home
How to Choose the Right Mortgage
The Home Financing Process

Down payment
Down payments vary depending on the type of loan program selected. FHA down payments are relatively minimal, designed for a first time buyer. FHA will permit the down payment to be a gift from a family member.

Conventional loans require a minimum down payment of 3-10%, depending upon the program. The borrower must demonstrate that at least 3% of the down payment is the borrower's own money, unless the down payment is a gift constituting 25% of the sales price. At 20% down, most conventional loan programs do not require insurance against default.

VA loans may be financed with zero down payment if the correct guidelines are met.

Points
Points are dollars paid to lending institutions at the time of closing to allow lenders to make loans at rates lower than existing money market conditions warrant. Points balance the yield or rate of return lenders get on money they loan.

One point equals one percent of a new loan amount. If a new mortgage calls for five points, it means that five percent of the amount of the loan needs to be paid to the lender at closing. Note that points are calculated on the amount of the new loan, and not on the sale price of the property.

The cost of borrowing money fluctuates according to the demand for money and the supply of money available at any given time. Heavy demands have a major effect on the availability of money. The result is that the supply of money for the home mortgage market is lessened, as it competes for available funds. As the availability of money fluctuates, so do the points lenders require to place their money in the home mortgage area.

Points needed to obtain FHA, VA or Conventional financing may be paid by either the buyer or the seller, and are therefore negotiable. FHA, however, limits the seller contribution to a maximum amount of points. Even though negotiable, in many instances buyers cannot afford financing a given house if they must also pay points. Therefore, sellers often see their best interests being served by agreeing to pay some or all of the points needed to make the sale. Points are tax deductible for the borrower whether they are paid by the buyer or seller paid. There are some limitations to the amount of seller contributions under all programs. For more information consult your Burnet Home Loans Loan Officer.

Closing Costs
Closing costs vary slightly with various loan programs. The chart below will illustrate the breakdown of items included. Please note that some of the costs are based on loan amount and will vary dramatically (i.e., origination fee, title insurance and mortgage registration tax).

Prepaid Expenses
The prepaid expenses include interest paid from the day of closing to the end of that month. This category also includes the first years homeowners insurance, the first years private mortgage insurance premium on an insured conventional loan and any tax and/or insurance escrows.

Information provided by http://www.cbburnet.com

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Ray and Nimi Singhal  (651) 486-5628 direct  Coldwell Banker Burnet 100 Village Center Drive St. Paul, MN 55127 (763) 795-8979 res CRS, ABR, GRI, e-Pro 500, ESA, SRES Platinum Producer (top 1% nationally)