What does it take to be approved for a mortgage? The Ideal -- YOU

Below are the characteristics of the IDEAL borrower. This is what a lender would like to see. How do you stack up? Verifying these requirements, justifying why you weren't perfect in these areas and making a case why certain deficiencies won't recur is the reason for the majority of the mortgage documents for which we ask. Don't get scared off while reading these descriptions. We rarely see the ideal borrower and write plenty of loans for our clients:

Can You Afford the Property You Want?

Your non-housing credit debt doesn't exceed 8-10% of your gross monthly income and the total of the proposed monthly housing payment (PITI) (see below) together with your non-housing credit debt doesn't exceed 36-41% of your gross monthly income. 

Income and Job Stability

You have been at the same job for at least two years and your income has been steady or increased. If you changed jobs or positions, the change was still in the same field, the same or a better position and there were no gaps, between jobs, of more than a few weeks. Your income is adequate after other credit expense to pay for the mortgage you require.  If you are self-employed, you can prove two years in the business with a CPA letter, tax returns, a business or professional license and/or insurance coverage.

Rental or Mortgage History

Two years of rental or mortgage history at the same address, with completely on-time payments for that period, and the payments having been made by check or money order so the timeliness can be verified. If you moved, you can still document a full two years of timely housing payments for that period. The utilities should have been in your name and paid on time as well.

Cash

Sufficient funds, deposited over time (showing good savings habits) into an account, to cover all expenses of the settlement including the balance of the down payment, the loan closing costs & the required "to-be-prepaid" items (such as up-front real estate taxes). Even with those types of mortgages that require only very small down payments, larger than minimal down payments look better to a lender. The best position you can be in is to have 20 percent down and all of the other costs. On the other hand, a qualified veteran can buy a home without a dime of out-of-pocket money. Most loans are in between those figures.  Check out the major types of mortgages.

Good Credit

No foreclosures, bankruptcies, repossessions, judgments, charge-offs, collection accounts, late payments. At the same time, you should be able to show that you have been extended credit at least a few times and that you are not maintaining balances near, at or over your credit limit. Too much credit--either too many accounts or accounts with balances--is a detriment. Lots of credit inquiries, without being extended new credit; and the new accounts themselves, hurt your credit score. Your non-housing-related credit debt will need to be less than about 10 percent of your gross monthly income if you want the maximum loan amount your income will get you.

 How Did You Fare? Did You Find Problems? 

YOUR PROBLEMS MAY NOT BE PROBLEMS!

If you don't meet the above requirements, it may be appropriate to wait before you buy a home. You may want to use this time to improve your situation as it will appear to us when you apply for a loan. But, you may have good reasons for information that appears detrimental. For example:

Can You Afford the House You Want?---In general, provided your non-housing credit debt does not exceed 10 percent of your gross monthly income, a lender will consider that you can afford to pay between 28-31% of that income on mortgage Principal, Interest, real estate Taxes and homeowner's Insurance (PITI). We call that the Primary or Front Ratio. Together with the non-housing credit debt, you would be allowed to spend 36-41% of your gross monthly income on the total of housing expense and credit debt. This is the Secondary or Back Ratio. The Back Ratio can not be pushed upward. So, if your credit debt exceeds 8-10% of your income, and you subtract the actual credit debt from the maximum Back Ratio for the loan type you want, you will see that the result is that the amount you can spend on housing is reduced from the maximum. 

If you are in the latter situation, you have several solutions: Pay down your credit debt with cash; Wait and keep paying your debts down monthly; choose a loan type that doesn't use ratios or allows higher ratios. The final solution, and the one that makes the most sense is to see if you realistically NEED all of the house you wanted. Maybe your eyes are bigger than your wallet. Consider buying a less expensive property until you can afford more. Try playing with some numbers using our mortgage calculators.

Job Stability---Was it less than perfect because of uncontrollable circumstances? Did a job terminate through no fault of your own? Were you injured? Did your company move or close down? If you can give an explanation like this, you may be fine.

Rental or Mortgage History---Were you in school &/or living with relatives? Was the rent or mortgage paid by someone else? This payment history is a good help in approving you for a mortgage because it shows you have already paid a large recurring monthly debt. But it isn't absolutely necessary.

Cash to Settle---This is not always as critical as you might think. VA loans often require no cash from the buyer. FHA allows the seller to pay most or all of your closing costs with only 3% cash investment from your pocket.  You may qualify for down payment assistance from a county or local economic development authority or the Nehemiah Program. The Rural Housing Service (RHS, formerly Farmer's Home or FmHA) requires little or no money out of pocket. There are a number of loan programs available that may let you borrow some, or all, of the closing costs even if the loan amount is larger than the sale price or appraised value of the property. You may be able to use a gift from relatives. You may be able to offset a portion of the cash requirement by asking for the Seller to hold a small second mortgage. You may be able to use a non-occupying co-borrower to enable your loan approval.

Credit History---If your credit history is less than perfect, and the credit reports are accurate, there may be no alternative but to wait while you correct and improve it. If your report has bad debts that aren't your own or other mistakes including paid accounts showing as still owing, incorrect balances, duplications, etc., ask us for help in documenting the mistakes and correcting them. We have the resources to determine what actions will result in the most improvement to your credit records. Read more about Credit and Credit Repair and talk to us before assuming your credit problems are insurmountable.

At Family Home Lending Corp we know that no one is perfect. Let us see what we can do for you. Contact Us!

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What does it take to be approved for a mortgage? THE PROPERTY

First, the property must be worth the amount you are buying it for. The property's market value is determined by the appraisal. If the mortgage you want is a refinance it must be worth the amount of the mortgage or the required loan divided by value that the particular loan type requires. In general, you can refinance a smaller portion of a property's value than if you were purchasing the same property. In any case, the mortgage amount can't exceed the amount you are approved for. 

With some loans, FHA and VA in particular, the appraiser determines what repairs are needed in addition to determining the value of the property. Those repairs must be made prior to settlement. If the seller will not make the repairs but allows you to do them at your out-of-pocket expense, BEWARE! You may not receive a reimbursement or price adjustment for those repairs. If the loan doesn't settle, you may not receive back the costs of the repairs. This is a good reason to have a lawyer on your side when your agreement is written.

An FHA 203K mortgage allows you to buy and renovate a property. The appraisal is a bit more complicated because the property's value must be there both "as-is" and after the renovation. In other words, the sale price of the property "as-is" must not exceed the market value which the appraiser places on it; and the purchase price plus the cost of renovations must not be larger than the market value of the property after the renovations are complete.

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Picking Out the Right Property and Inspecting It

There are a number of things you should check when considering a property. Not all of them are related the structure's design or condition. In terms of inspecting the property itself, nothing will replace a by warranteed inspection by a licensed and/or bonded home inspector. This is not the place to save a few dollars by asking a friend, your brother-in-law or some other "expert" to help you out. A good publication, free from FHLMAC, is their home inspection guide.

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The Agreement for Sale

Found the right property? Then it is time to approve and written agreement to buy it.

The Agreement for Sale of Real Estate; Purchase Agreement, or Sales Contract is often prepared and signed quickly without foresight on any of the parties. Because there may be an attorney review clause required in your state (ie: New Jersey), the agreement may be sloppily drawn, on the assumption that the attorneys will catch any mistakes. But many people do not go to an attorney. 

Remember, your agreement with the seller sets the stage for the entire transaction. Make sure it accurately and completely reflects both your, and the sellers, intentions and promises. Any verbal promises are generally "not worth the paper they are printed on"...in other words, they are worth nothing. An old English law called the Statute of Frauds has been incorporated into most of our states' law codes. It, in effect, closes the courts to you as a remedy for contractual disputes, when the contract involves the sale of real estate, if the contract was not in writing. So, it doesn't matter how nice everyone seems at first. GET IT IN WRITING and do so immediately.  Don't wait until a dispute arises. Even an attorney may end up telling you it is too late to remedy a dispute that arises from errors or ommissions to your contract.  

Family Home Lending cannot and will not step into a surrogate role which replaces the advice of legal counsel, but we can give these few suggestions and items that should be agreed to in writing: 

• the price and the details of payment of down payment(s) and purchase price;  

• the legal and common description of the property;

• what is included (things the seller is leaving behind as part of the sales price); 

• what repairs or work are to be completed which the seller has agreed to do at their expense; 

• what guarantees you have been given regarding title and zoning; 

• guarantees regarding the state and condition of the land and buildings (including the rights to get a survey, home inspection and other inspections); 

• guarantees of maintenance of condition until settlement; 

• the settlement date and what happens if settlement is not on time through the fault of either party or no fault; 

• contingency for mortgage approval and proposed mortgage details;

• any other contingencies or guarantees (ie: "Buyer only has to buy if such and such happens...")

• other seller's concessions (things the seller agreed to pay, such as closing costs, points, etc.)

• What will happen in the event things don't go as the agreement dictates or if contingencies are not met?

• other legal disclosures such as those regarding lead paint, "Megans Law", etc.

Make sure you get a copy of what you sign, WHEN you sign it and a FULLY executed agreement when it is available. Make sure that ALL of the sellers sign it. Make sure that any modifications made after anyone has signed the paperwork are initialed by everyone as proof they approved the changes. 

In general, your agreement is binding when it is fully executed (ALL parties have a fully signed it and have an original copy in hand). If there is an attorney review provision in your state (such as NJ), the agreement is binding upon expiration of the attorney review period that begins when the agreement is fully executed PROVIDED no changes were made which reset the start of another attorney review period.

We will require a fully signed agreement with original signatures as part of the mortgage application package. Be sure to get 2 fully signed originals so you can keep one for yourself.

From the above, it is hoped you can see how important the Agreement for Sale is. If you have any doubts, seek professional help before accepting one.

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PreQualifying for a Mortgage

From the previous sections, you should have seen that there are a number of items that are considered when you apply for a mortgage. An important part of your home-buying process is being pre-qualified by a mortgage professional. It is becoming so important that many real estate agents will not even show you properties unless you already have a written pre-qualification in hand. 

Pre-qualifications should not cost you anything and we, at Family Home Lending do not charge for it. It is also a fairly painless process that can be done on the phone or by fax. You can find a pre-qualification application in this website. You can print it, fill it out and fax it to us. Or call one of our loan officers. Frankly, while we encourage an online pre-approval, it will never replace the one-on-one situation that exists in a personal conference or call to a loan officer. We don't expect that you are a "rubber stamp" twin of anyone else. Your situation is unique. By not trying to put prospects in a pre-conceived mold, we believe we are able to turn more of them into satisfied clients.

When you contact us to be pre-qualified, we will ask for the Names, Addresses and Social Security Numbers of all borrowers and co-borrowers. We will want a contact phone number and the best time to call. We will inquire as to your Job and Earnings for the last two years and your Housing situation for the same period. We will ask whether you already have a property in mind &/or under agreement. We will ask if you are a military veteran and how much cash you have for down payment and costs.

Finally, we will ask if there is anything else, any special circumstances, we should know about. We will inquire as to your credit to minimize surprises when the credit report is pulled. If there are derogatory credit items you know about, let us know if there are good reasons or extenuating circumstances we should know about. Some answers from you may prompt other questions from the loan officer, but the whole conversation need not be more than 5-10 minutes, initially. On the other hand, feel free to ask any question or have the loan officer explain anything that you want.

That's all there is to asking for a pre-qualification. As we say, it's painless!

Depending upon your answers and comments to the above questions, the loan officer may give you an verbal opinion of whether you will receive a pre-qualification and for what type of loan and how large a loan. He may want to "hedge his bets" and see the credit report first. Regardless, the next step is to pull your credit report and that is done at no charge to you, though it does cost us money. One or more reports will be pulled and the loan officer will analyze them and determine if he can qualify you for a mortgage. Some of the what the loan officer considers is above. If you missed the information, click to go back to: What Does It Take To Be Approved-YOU and Your Problems May Not Be Problems.

Finally, the loan officer will get back to you and, hopefully, he will tell you he is sending, faxing or emailing a "pre-qual". If there are credit problems, whether or not they prevent the issuance of a pre-qualification, your loan officer will discuss some solutions you should pursue to improve your credit report. The loan officer will discuss the total costs of the transaction and suggest what mortgage is best for you if you qualify. If you do not qualify for any mortgage, at least you will have a plan for qualifying in the future. Your pre-qualification may be issued "subject to" you taking certain actions, such as paying off various credit items or coming up with a particular down payment, etc.

Remember, a pre-qualification is not a mortgage commitment. The documentation we use is not a complete mortgage package and various things you tell us may not be verified later. However, we at Family Home Lending pride ourselves on not issuing "swiss cheese" pre-qualifications. Provided that borrowers haven't been wrong or lied when they make certain statements and provide information to us, a large proportion of those pre-qualifications are capable of being turned into mortgage commitments.

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What Other Experts Do I Need to Help Me Buy?

We are Family Home Lending are pleased that you have chosen us, or are considering us, to help you get the financing you want. We are experts at our job with a desire to be of service to you. BUT, while we will give you the best answers we can on a range of home buying questions, we don't claim to be accountants, home inspectors, lawyers, real estate brokers, appraisers, etc. Only you can determine who else you need on your home-buying team. 

In general, if you find yourself asking if you need a particular expert (ie: "Do I need a lawyer?"), you probably do! 

An attorney, one who is familiar with real estate in particular, can be an asset, especially if things go wrong with the transaction. You may choose not to have one on future purchases if you feel confidant because you have "been there before". But if this is the first time for you and you find yourself lost in the intricacies of the process, a lawyer can be comforting. (All of the "dead lawyer" jokes, not withstanding, if the transaction is so shaky that a lawyer can "kill it", it probably should be "killed".) 

We strongly suggest a home inspection from a bonded inspector who warrantees his findings. You will most likely be required to have a pest control expert certify that there are not wood-destroying insects active on the property and no unrepaired damage from them. A survey and title search is usually required so you will need a land surveyor and abstract or title company to supply those items.

Don't sell yourself short. All of these experts certainly cost money. But their cost is small compared the purchase itself and big problems can arise if it turns out you needed them but didn't have them because you chose to save a few dollars..

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As Settlement Approaches:

[As always, the advice below, and anywhere in our website, is given in good faith, but can not be specific to every locality and transaction. It is general advice only and is not meant to replace the counsel which you should receive from your own attorney:]

Several things are of importance as the settlement or closing on your home approaches. 

If your mortgage commitment from us was conditional, make sure that all of the conditions have been met. One common problem is the buyer not supplying us with complete information about the pre-paid homeowners insurance policy. We need more than a receipt or "binder". Your Loan Officer or our closing department can tell you exactly what you need to get us. Make sure you order the insurance in time. Not all insurance companies will be able to get us the paperwork we need on only a couple of days notice.

Try to verify that repairs, if required, were done. We may require that a re-inspection of the property be done to verify repairs were done. Make sure that the repairs were done and the re-inspection was made.

We hope your "interest rate lock-in" was of a sufficiently long duration to continue long enough beyond the estimated settlement date in case there is a last minute problem. If you anticipate a delay, call our closing department immediately and find out if the lock-in can be extended. If you are told that it can be extended, ask if there will be a charge for extending it.

Your title search and survey should have been ordered long enough before the anticipated settlement to allow any problems, that they may have disclosed, to be corrected. If you have not received a copy of the title policy commitment or title abstract, call the title or abstract company, your attorney, your loan officer or our closing department to get one. Make sure the title company has received a copy of the survey. 

If the property you are buying is brand-new, find out if you will be getting a Home-Owners Warrantee (HOW). If it is less than 10 years old, try to find out if the HOW policy issued on the property is transferable to you. Various provisions of a HOW policy expire at different times. But some portions may last 10 years or longer.

Arrange for utilities to be turned on or transferred to your name. Don't assume that, because you find the electric, gas or telephone on, that it is in your name. Call the appropriate companies and verify that the utilities are in your name.

You will need to call us the day before the scheduled settlement to make sure there are no last minute problems and the settlement is still "on". 

Make sure you know the exact time and place of closing. Get complete driving instructions if you are unfamiliar with the area. It may not be your responsibility, but it won't hurt to take it upon yourself to make sure that all parties are aware of the time and place for settlement when you are sure it will actually take place.

While you are on that last call, ask your loan officer or the closing department for the exact amount of "cash" you need to settle. If you have a fax machine or email address, we can provide you with a revised (final) Good Faith Estimate of Closing Costs. Other than certain items that may show up at the last minute (your attorney's fee may not have been told to us, for example), it should be quite precise.

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Settlement Day:

You should make a final "walk-through" inspection of the property. Verify that the condition is as expected, that repairs that were to have been made have actually done as agreed, that items which the seller agreed to leave for you are actually at the property. If the seller or tenants in the property were to have been out of the property by the day of settlement and are still in possession, CAUTION! It has happened in the past that buyers expected to have possession after the closing and had to go to court to remove tenants that refuse to quit the premises. If the seller has to stay beyond the settlement and you haven't made a written agreement in that regard previously, do it now! Agree on how long they can remain, how much they will pay you, etc. They have, in effect, become your tenants. You may want to have a portion of the seller's proceeds remain in escrow until any of the above problems are resolved. That may be your only protection. 

If you are paying extra for the surveyor to put concrete monuments on the property corners, check to make sure they were actually installed when you do your final inspection.

At settlement, the purchase agreement is "merged" with the deed. In effect, your acceptance of the property and deed terminates the agreement. Don't settle unless everything is as promised or get an amended agreement that "survives the passing of title".

While you can come to the settlement table with actual cash, it is best to arrive with a certified check, or other guaranteed bank check of some sort (often called a Teller's Check). The settlement money must be guaranteed funds. If need be, money orders will suffice. Don't worry about bringing too much money. That is better than being short of funds. If you bring more than you need, the title company or other settlement officer (possibly an attorney is handling the closing) will return the excess to you in the form of a check. The check you bring to the closing can be made out to the entity handling the settlement (title or abstract company or attorney). It can also be made out to yourself. In the latter case, if the settlement is called off or postponed for some reason, you can simply redeposit the funds in your account as cash. BE CAREFUL with that check! It is almost as good as cash if lost. What if the certified funds are "short"? It is rare, but avoid a big problem by making sure you have a personal check or a money order or cash good for a several hundred dollars. The majority of settlement officers will accept up to that amount in uncertified settlement funds.

At the settlement, all of the money you bring and the money from the lender is used to settle all of the bills including paying the seller what is due. Taxes and utilities are prorated. You will receive the keys to the property if you don't already have them. 

A good thing to ask for at settlement is a "marked up" title report. This is a copy of the title report with most of the exceptions to the protection afforded by your title insurance (situations when your title insurance doesn't protect you) marked as "REMOVED" and initialed by the settlement officer. If items are not marked as "removed", they may remain on the actual title insurance policy and limit your coverage. If you have had a good survey, nearly all exceptions should be able to be removed. Removing them later can be a painful process. Some exceptions that must remain pertain to the "police powers" of the government (relating to its right to tax, condemn and zone the property), recorded right-of-ways or easements and riparian rights (public rights to land adjacent the ocean, etc.).

The seller signs the deed and you will sign the mortgage and note. The settlement officer will acknowledge that the real people signed them willingly in the officer's presence. Commonly called "notarizing the documents", that is really an incorrect term more appropriately called "acknowledgement". You will get photocopies of those documents after they are signed. After signing and being acknowledged, the mortgage and deed are sent to the County Clerks office to be recorded. After recording, the mortgage is sent to the lender. The recorded deed is sent to the buyer. It will take several weeks to get it back recorded. 

Remember, the note is the real IOU or evidence of the loan. The mortgage provides legal remedies if you don't pay the note and maintain the property. The mortgage is recorded, but the note is, generally, not+. There is only one original, signed copy and that goes to the lender. Theoretically, it should be returned to you when you pay it off in full. It is that document that was traditionally burned when the loan was paid off--because burning it destroyed the only effective copy of it. 

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Congratulations! You're a Homeowner!

Here are a few things to keep in mind:  (There is more information you can download HERE)

Decide whether you should change your locks, alarm codes if there is a security system, garage door opener codes, etc. You have no idea how careless the seller might have been with the keys and codes. There could be copies "floating around" all over. With an eye toward security, go all around the property checking the state of door and window locking hardware. Replace and upgrade it as appropriate. A hole drilled through both double-hung sashes with a big nail in it is more secure than most window locks. Have a deadbolt with a minimum 1.5 inch bolt on all exterior doors. Use a double-cylinder lock (no inside turn-knob) if a door has glass in it. Get a special overhead track lock and a drop-in track bar for sliding doors. Consider an in-wall safe for valuables and cash. Fire-resistant is best, but anything is better than nothing.

Cut down or trim overgrown hedges and shrubbery that provides hiding spots for intruders. Consider the outdoor lighting situation and add or update it as needed. Motion detector and auto-on-at-night lighting is very inexpensive now. If you are single and worry that you may be vulnerable, it may be good to use only a first initial in telephone listings and on a mailbox. Don't advertise when you go away by letting mail or newspapers pile up next to a dark house. If you travel frequently, get some timers to make some lights go on and off "randomly". When vacationing, rather than driving to the airport and leaving a car in the extended parking facility--leave the car in the driveway and take an airport shuttle. Use common sense in regard to security and you will be fine.

Within 5-6 weeks after settlement you should have received the recorded deed and title insurance policy. If not, call the settlement officer and ask about the documents. Check the deed to ensure that it was actually recorded. Check the title insurance policy to make sure no items that were marked "removed" at the settlement still appear as exceptions to your insurance.

Remember that you will be paying less income tax as a homeowner than as a renter. If you have gone from renting to owning, you may want to have your accountant/tax preparer determine how much income tax you will be saving each week. You can have your employer deduct that much less from your pay. Most people can use the tax saving each week rather than getting a big refund at tax time.

Don't forget to tell your tax preparer that you are now a homeowner. Your mortgage interest on first and second homes (and vacation homes, to some extent) is deductible from your gross income. Your real estate taxes are deductible also. Discount Points, even if paid for by the seller are also deductible by the buyer. Some other settlement expense, such as prepaid interest, is also deductible. The capital gains tax rules, and other tax treatment of properties that have been sold, have changed. Be sure to discuss this with your accountant when you are considering selling the property. Talk to him before selling. He may have some advice that can affect your decisions, but most of us can sell a home every 2 years, now, and pay no tax on any profit. 

About refinances: Don't hesitate to contact your Family Home Lending loan officer in the future. He can give you information on refinancing the property if the present interest rate goes down. You also may consider "pulling out cash" with refinancing. As your equity in the property increases, and its value grows, you will be eligible for a larger and larger "cash-out" refinance to make repairs or renovations or consolidate other debts. FHA loans allow "cash-out" refinances up to 85% of the property's value. Other types of loans vary from that percentage. While we don't offer home equity loans, you can still free up the equity with a cash-out refinance. Today's great rates will often save you money by getting a new larger first mortgage rather than adding a second mortgage/home equity loan to the existing loan.

Don't forget, you can deal with Family Home Lending regardless of who was the original lender. Even if you got the mortgage from us originally, your mortgage will probably have been transferred to a different mortgage company--one which is willing to "service" the mortgage for its full term. Don't worry about that. You can still come back to Family Home Lending for refinancing. 

With FHA or VA loans, if the current interest rates drop, or you want to convert from an adjustable to a fixed-rate loan, you will probably be able to do a "Streamline" refinance. This can cost virtually NO out-of-pocket money from you. This is possible because these streamline refinances involve less closing costs in the first place. Also, we absorb most of the closing costs that do occur or we give you a lender credit for your present escrow account balance until that balance is returned to you by your present lender. Finally, closing costs that exceed the lender credit, and the amount we can absorb, can be built back into the new loan (up to the original base loan amount). We generally structure streamline refinances so that the money you pay at closing is equal to the mortgage payment you have been paying anyway. If you want to lower your interest rate further, you can voluntarily pay an additional fee  to accomplish that. Talk to your Family Home Lending loan officer. Streamline calculations are complicated, but we are streamline experts. We do the math and the streamline process and paperwork, from your perspective, is a snap.

Consider paying extra principal each month. Everything you pay that is over the required payment must be credited to principal. A few extra dollars added to your payment on a regular basis can cut years off of your mortgage. Remember, your interest payment is based on the principal balance that you still own. If you lower your principal balance, then a smaller portion of your payment goes to pay interest. The extra part of the payment is automatically credited to paying off more principal. A good tip is to enclose a short note (even a tiny "Post-It") with any payment that includes moneys over the required payment. Most mortgages/notes require that you notify the lender when you send extra principal. All the note needs to say is "Extra principal enclosed". 

When your equity reaches 20 percent, you may be able to stop paying for mortgage insurance. If you paid up-front mortgage insurance premiums as part of an FHA loan, and you sell the property or refinance it in less than 7 years, a return of part of the up-front premium is probably due to you. If you sold an FHA home and didn't get that refund, investigate whether it is owed to you. There are companies that charge for the service, but you can get the refund without paying anyone. It can be substantial money. Don't forget about it.

Ask your loan officer about a bi-monthly payment plan. For a single fee, this plan is good for your whole life, not just this mortgage. It automatically deducts money from your account 2 times a month but the total payment is the same as you agreed to pay per month. The savings can be nearly ten years off of your 30 year mortgage.

You will receive your first mortgage payment coupon at the settlement. If you don't get subsequent payment coupons, be sure to contact us. Not getting the coupons is not a valid reason to pay your mortgage late.

Don't "blow" your credit just because you already have a mortgage. Timely mortgage payments are very important when possible creditors consider you for future grants of credit. Consider mortgage life insurance and loss of income insurance. These pay off the mortgage if a mortgagor (you or spouse dies) and pay you if you lose a job, etc.

How to Painlessly Save Money:  [Click HERE for more tips for New Home-Owners]

Your mortgage is a type of forced savings. But you will help your own peace of mind if you can save up at least a month of your total expenses in addition to any provisions for retirement. How do you do that? How do you save more? Here are some things you can do. It is estimated that these items will save the average single person over $4,000 per year: 

• Bring your lunch to work instead of ordering out. At $2.00 per day, versus $6.00, that is a monthly savings of over $85 per month. 

• Avoid carrying lots of hard change. Save it. We, on average, generate about $80 of coin change every month. 

• Just the above 2 items will generate nearly $2,000 in savings in a year. If you can, drop all "ones" into your piggy bank also. You won't miss them! 

• Establish direct deposit for your paycheck rather than cashing it. Establish an automatic withdrawal from your check for savings. You won't starve if your check is $20 or $25 less per week. You probably won't miss it.

• Start an IRA or 401K retirement fund, as appropriate. If you have a family, ask your accountant/tax preparer about the virtues of a Roth IRA.

• Make sure enough is deducted from your pay to cover your annual tax bill. On the other hand, don't let extra be deducted that is returned after you file your taxes.. You receive no interest on the refund and you are better off investing it yourself.

• In addition to a normal savings account, open a number of accounts and don't use the money in them for anything but the allocated purpose: Open an investment account, retirement account and emergency account. As money collects up at home or in your savings account, transfer the money to the other accounts.

• Limit your cash withdrawals to one a week. Figure out what you need for the week and stick to it. Stop using that bank cash card and avoid using a credit card to get cash. The charges for cash from cards can amount to several hundred dollars per year. If you do use a "MAC" card, make sure you enter the withdrawal in your checkbook as soon as possible. 

• Below, there is mention of mortgage late fees. Aside from spoiling your credit, paying bills late costs extra money you should be saving. 

• Determine whether your car NEEDS premium fuel. Most do not. 

• Don't avoid routine maintenance on your house, car or body. The cost, in the long run, from letting things go can be tremendous.

• When shopping, use store coupons and buy store brands. Check the internet for the new services that allow you to bid on and prepay for food market items. You may save up to 50%. Figure the money you saved up and deposit that in your piggybank also.

• Don't carry credit cards. Keep them in a safe deposit box. If you decide to put an item on credit, the time required to go to the bank to get the card may make you realize you don't really need the item. 

• Get a debit card, like American Express, that requires full payment at the end of the month. Only charge items for which you know you have the cash. When you get home, put away the cash for the items charged.

Do your best to make payments so that they get to the lender before the due date. The due date is almost always the first of each month. Regardless of what anyone may have told you, there are very few exceptions to that. If you must be late, remember that you will owe a late payment after about 15 days beyond the due date. Try not to get into the habit of always missing that 15 day deadline. While those payments will not affect your credit profile, they will add up to a full additional payment over about a years time. If you are 30 days late, that will show on your credit report and affect your credit for years to come.

The mortgage document merely "hypothecates the real estate". That is, it pledges the property as collateral for the loan (the note). If you don't pay the loan, the mortgage usually allows the lender to first accelerate the loan. Acceleration of a loan is the lender demanding that the entire balance of principal and interest that is owed be paid in full in one payment. If you do not pay that balance, the lender can begin foreclosure proceedings. If you get in trouble making the payments, talk to your lender immediately. If you are not getting cooperation from the mortgagee, contact your original loan officer here at Family Home Lending. Hopefully, he can help you. The worst thing you can do is "hide your head in the sand". 

Remember that your surveyor, title insurance company and home inspector are liable for relevant defects in the land configuration, state of the title and structure, respectively, for varying periods after you settle. Don't hesitate to contact them if a problem with one of those items arises. 

Maintain your property and make repairs promptly. As with an automobile, little problems and defects can add up to a major amount of repairs if you don't keep up with them. Try to put away some savings that are allocated just for future replacements you know will be needed. These are known as "deferred maintenance". The equity in your property is, most likely, one of your biggest assets in your net worth. That equity consists of the principal you pay off, but also includes the increase in value that comes with time. As is said, "Buying real estate is one of the best investments you can make...G-d isn't making any more of the stuff!"

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