What is the first thing I do when looking for a home loan?
- Check with several lenders before you start searching for a home. Most will be happy to roughly calculate what you can afford and prequalify you for a loan. The price you can afford to pay for a home will depend on gross income, the money you have available for a down payment, closing costs and cash reserves, any debts, your credit history, the mortgage you wish to have and current interest reates.

What are the different types of financing I can get?
- There are many different types of financing possible. 15, 30 and 40-year fixed rate mortgages are very common. As well, there are wrap around loans in which the seller continues to make payments on the existing mortgage and the buyer makes payments equal or greater than the mortgage to the buyer. Most lendes have a "due-on-sale" clause that prevents wrap around financing, but such terms are negotiable. "No-doc" loans are mortgages for which lenders require very little loan documentation as long as the borrower puts down a sizable down payment, generally 25 percent or more. There are many other types of loans that can be provided for you. To find out more, contact a local lender in your area, and they can further explain your options.

What is a lease option?
- A lease option is an arrangement with you and a seller to exercise the option to buy a house after you have rented it for a specific period. A portion of your rent would be applied toward the purchase if the ooption is exercised. This is referred to as rent credit, which most institutional lenders will accept as part of the down payment if rental payments exceed the market rent and if a valid lease-purchase agreement is in effect, a copy of which must be attached to the loan application. If you are a seller, lease options can give you several advantages, especially in a slow market. These include a monthly rent higher than market rent, top-market value for the property and tax-free use of the option consideration until the option expires or is exercised. Also, the renter is more likely to treat the property like an owner, tax-free use of option consideration until the option expires or is exercised.

When is the best time to refinance?
- It depends on how long you plan to hold on to your house and if you have to pay anything to refinance. In addition, it also depends on how far along you are in paying off your current mortgage. If you are going to be selling your house shortly, you probably will not recoup any costs you incur to refinance your mortgage. If you are more than halfway through paying your current mrtgage, you probably will gain little by refinancing. However, if you are going to own your home for at least five years, that's probably long enough to recoupl any refinancing costs you incur and to realize real savings on lowering your monthly payment. If it is going to cost you nothing to refinance, you can gain even more. Many lenders will allow you to roll the costs of the refinancing into the new note and still reduce the amount of the monthly payment. Also, there are no-cost refinancing deals available. In any case, it pays to consult your lender or financial advisor, or run the nubers yourself, before you refinance.

What is a reverse annuity mortgage?
- A reverse mortgage is a special type of loan available only to older homeowners with full or nearly full equity in their homes. Such owners can borrow against the equity they have built up over the years, but no repayment is necessary until the borrower sells the property or moves elsewhere. If the borrower dies before the property is sold, the estate repays the loan (plus any interest that has accrued.) These loans have become increasingly popular. If you believe you qualify for such a loan, be sure to have the document reviewed by an attorney or financial advisor.

What is the advantage of an all cash offer?
- All cash buyers have the advantage of sidestepping the long and tedious loan process, which means they can close quickly. Not only that, but they have a distinct advantage in price negotiations and fewer hassles to deal with, plus they save thousands in avoiding mortgage interest and other costs that occur in closing and are imposed by the lender. However, all cash buyers also miss out on tax breaks, such as deducting th cost of interest paid on your home.

What are assumable loans?
- Assumable loans permit one borrower to take over a loan from another borrower without any change in the loan terms. Such loans still exist but they aren't very common or popular (for buyers) in a low interest rate environment. Plus, today new assumable loans are almost always adjustable rate mortgages.

How can I clear up bad credit?
- Credit problems are the main reson would-be home buyers are denied a loan. The first step to clearing up your credit is to get a copy of your credit report to make sure that the negative credit information is indeed accurate. There is no fast and easy way to repair damaged credit that took months or years to occur. The law allows negative information to appear on an individual's credit record from 7 to 10 years. If the credit report is correct, take care of any outstanding deliquent obligations first. As well, talk to a local lender who can give you a few tips on how to build a better credit score.

How do you get a low interest rate loan?
- Price discounts and interest rate buydowns are common incentives offered by new-home builders trying to overcome slow sales. Buydowns are a financing technique used to reduce the monthly payment for the borrower during the initial years of the loan. Under some buydown plans, a residential developer, builder or the seller will make subsidy payments (in the form of points) to the lender that "buy down," or lower, the effective interest rate paid by the home buyer. State agencies often offer lower rate loans. But to qualify, borrowers usually must be a first-time home buyer and meet income limits based on the median income level of their county.

Are they negotiable?
- Some lenders are willing to negotiate on both the loan rate and the number of points but this isn't typical among established lenders who set their rates like large corporations set the prices on their goods. Nevertheless, it pays to shop around for loan rates and know the market before you go in to talk to a lender. You should always look at the combination of interest rate and points and get the best deal possible. The interese rate is much more open to negotiation on purchases that involve seller financing.

What is APR?
- The Annual Percentage Rate (APR) is the relative cost of credit as determined in accordance with Regulation Z of the Board of Governors of the Federal Reserve System for implementing the federal Truth-in-Lending Act. The APR is the actual yearly interest rate paid by the borrower, figuring in the points charged to initiate the loan and other costs. The APR discloses the real cost of borrowing by adding on the points and by factoring in the assumption that the points will be paid off incrementally over the term of the loan. The APR is usually about 0.5 percent higher than the note rate.

How do you choose between fixed and adjustable rates?
- There is risk involved in selecting an adjustable rate mortgage, or ARMs, because rates may go up. On the other hand, a fixed-rate loan offers good protection against rising interest rates but the borrower is stuck with the initial rate if interest rates drop. Statistics show that home buyers who have chosen ARMs since 1981 have saved thousands of dollars. For a period, the percentage of home buyers applying for ARMs rose substantially, then buyers and homeowners began flocking to fixed-rate loans. Whether to opt for a fixed or adjustable rate mortgage is a matter of personal choice. The first route offers stable payments; the second offers lower initial payments. Another consideration is the length of time a buyer plans to own the home. If you're planning on moving within three or four years, an ARM makes sense even if rates do nothing but rise during that period of time.

Can I buy a house with no money down?
- Though some real estate experts advise against it, home buyers interested in buying a house with nothing down can do so. But it's not easy finding these loans and in some cases they can be risky. Occasionally, a builder will offer no-down loans to induce sales in an otherwise slow-moving project. Desperate sellers also may agree to finance the full purchase price to get out from under a property. The Department of Veterans Affairs, or VA, loan program is one program that allows buyers to qualify for a no-down loan.

What are the benefits of seller financing?
- Seller financing offers tax breaks for sellers and alternative financing for buyers who can't qualify for conventional loans. If you are a seller, the risks you face are the same as those facing any lender: Is the borrower a good credit risk? Will the property hold enough value over time to allow for the repayment of all loans made against it? You should run a full credit check on the borrower, require hazard insurance on the property and include a due-on-sale clause. There also are financing, disclosure and repayment-term requirements that need to be met. It is wise to consult a lawyer when putting together ths kind of transaction.