Avoid Extra High Mortgage Financing Costs


While it is true that real estate property buyers and owners looking to refinance their mortgages want to avoid extra high financing costs, the question of how to avoid such costs and what action(s) one must take in order to to so. What costs are considered extra high? And when might a borrower find him/herself in a position to be chartged extra high financing costs in today’s – years AFTER the subprime mortgage era – real estate mortgage market?

You may or may not know that there are ways for you to pay less while you own more, but taking yourself out of a certain high-cost category may be another thing entirely. If you know exactly how to work within the real estate arena, then you can probably find ways to avoid extra financing costs being tacked on to your purchase or refinance mortgage.

For example, if you’re an investor, finding the right area to focus on for your investment can be an important element in paying lower amounts without extra charges. If you’re not an investor but you’re seeking mortgage financing for the first time or you wish to re-mortgage a home you already own, the work you do BEFORE signing a mortgage application will determine what kind of mortgage you obtain and at what costs.

One of the easiest ways to avoid extra costs is to make sure that you make your monthly payments on time. Usually, mortgage companies will add extra charges (late charge penalties) if you don’t pay by the date they have set for you. Over a period of time – if you continue to pay late – this can result in hundreds of extra dollars in extra costs at one time. Staying ahead and consistent will help you to keep costs stable and lower. But this is one of the easily identified extra costs which is similarly easy to avoid paying.

What about other charges you can be hit with? Like pre-payment penalties, discount points, origination fees (which are also considered points by most attorneys), warehousing fees, a higher-than-prevailing interest rate at closing, a longer-than-necessary loan term (30 years when you qualify for 15 years can cost tens of thousands of dollars, if not hundreds of thousands), getting locked (or talked) into a FHA mortgage when a conventional mortgage would be a better, more affordable mortgage loan (FHA rates are usually 1/2 percent higher than conventional and you’ll have to pay the MIP which is non-existent on a 80% LTV conventional mortgage).

So of course, knowing the mortgage financing options that are available to you can certainly help you to avoid extra high financing costs. Some homes will require that you invest more, and some loan programs will also ask that you invest a higher amount out-of-pocket, but this is not necessarily a bad thing. For example, if you are able to make a down paymwent of 20 percent of the home selling price, you immediately eliminate any kind of mortgage insurance (MIP AND PMI), making your monthly payment lower by those amounts.

As long as you put youself in a position to determine the type of financing that would be beneficial to you in the short term, and even more importantly, the long term – which is where many mortgage borrowers fail to spend enough time planning for – the decisions you make will be informed and thus guide your selection of a mortgage loan that will best suit your situation.

Keep in mind that until you commit to a mortgage type, you always have the choice of looking into a different type of mortgage program. The type of program that you decide upon for your mortgages will make a huge difference in how much you pay overall and how much you pay each month.

The finances don’t stand alone when you are trying to avoid extra costs. The value of the property that you are investing in will also make a difference. The goal for any real estate investment is a high quality home for a lower price. You want to get as close to this goal as you can. Even if you pay on the home for a while, it will allow you to benefit later on with the investment that you have made. You will have the ability to have more equity returned to you when you decide to invest in something bigger and better.


Real estate financing can be beneficial if you approach it correctly. Understanding how all the parts of your loan, your home and your individual needs work together can help you to find the best deal. Over time, you will not only have a home to live in, but will also have an investment that can help you to make the most of what you have. That is, of course, if you are buying a home to live in and not one to buy and flip in a short period, in which case your approach to buying real estate has to be totally different although the goal of avoiding extra high costs is the same.

Choosing A Lender For your Real Estate Financing Needs


When dealing with real estate property there are certain realities that cannot be escaped whether you are an individual consumer, investor or corporate entity. One such reality is financing, which is needed on about 99 percent of purchases by individual consumers.

It is true that real estate transactions require a number of specific services in order to satisfy federal and local laws, guidelines and ordinances, but for the home buyer choosing a lender is among the very first steps that should be taken.

Your lender maybe the only third-party entity that can make or break your transaction, either by agreeing to provide you the finances – approve your loan – to purchase your home, or to withhold those finances (deny your loan). So how exactly do you go about choosing a lender that you can work with and who will work with you?

Before you get involved with anyone that you are going to entrust with your most confidential information, your good name and your money it’s important to make sure that they are going to offer you the best treatment, loan program and service, as well as act in your best interests.

However, in order to make sure you will get the best treatment you need to know what questions to ask by comparison to what else is available in the mortgage marketplace. Once you know some of the basic concepts, you can begin to look for a lender that will work best with you.

The first set of characteristics that you will want to look for in a lender involves the type of loans that they offer, the lending policies they are guided by and the various agencies they are authorized to by, e.g. FHA, Conventional, VA, etc.

If, for example, you did a little preliminary research and learned that your monthly costs can be kept at a minimum by excluding any kind of mortgage insurance (PMI or MIP) if you put down 20 percent instead of the 15 percent you had intended, your question to a prospective lender might be, what is the best way to accomplish this?

The loan that is offered to you should fit your individual financial needs and give you the benefit of all the financial community has to offer. This doesn’t just include the loan types, it also includes the extra fees that are attached to loans and how these will affect with you, and whether or not they are all necessary. You should also ask about things such as pre-payment penalties and the cost associated with available rate locks your loan, if any.

You will also want to know how working with a given lender will be most beneficial to you. Sometimes you can have discount points added to your loan in exchange for a lower rate (this is known as a buydown of your rate), as well as any lender guarantees that may be helpful to you.


Buydowns and Lender Guarantees, Mortgage Insurance and Discount Points (in some cases) are all designed to either reduce your monthly payment or your down payment and, edpending on your particular financial profile, will help you to secure financing for your real estate purchase. So do your research – made easier on the Internet – and arm yourself with some basic information with which to interview prospective mortgage lenders.

The main idea when finding a lender for your home or to refinance is to make sure that you will get exactly what you want from the loan. This includes everything from the type of loan that you will get to the timing and type of mortgage insurance that will be offered to you. With any situation, go with your list of questions ready and be willing to listen to possibilities. However, if you aren’t satisfied with one lender you can find another that will be more receptive.

Even if it will be your first time buying a house or if you are trying to get some extra money from a refinance for debt consolidation or educational purposes , you should always walk into a lender’s office knowing exactly what you are getting into (with your eyes wide open?). In the long run, this will make a difference in your ability to live in a home of your choosing and benefit from the best that is being offered in the marketplace.

When True Real Estate Property Appraisals Count


During my early days as a real estate sales associate (circa 1981), the broker with whom I was associated was very fond of “old adages” and the historical aspect of real estate. As a newcomer to the business of real estate sales my thirst for knowledge was a leading factor in me clinging to every word (pearl of wisdom) uttered by the broker. One of those utterances was regarding a true appraisal.

He would often say that “the truest definition of an appraisal is what a “willing” buyer is willing to pay and a willing seller is “willing” to sell for”. This truest of true definition helped guide my own approach to doing business as a real estate agent in later years. Though, in the early days, I was unsure how much this “truest” definition was relied upon by appraisers who actually evaluated the homes we were selling, it was a lesson soon learned.

But first a two-part question: Does the data from an “all-cash” sale create a comparable for future sales of similar homes in the same community/neighborhood – and can that comparable be used by the lender’s appraiser to support a given value in his/her report? Answering no would be an indication that any “all-cash” sale comparable is to be ignored by property appraisers and therefore has no impact on future home values within the same neighborhood.

A “yes” answer would permit the use of these “all-cash” sale comparables in the appraisal reports thereby helping the appraiser to make neccessary adjustments in his final value because, not only is an appraisal based on the professional opinion of the appraiser, it must also reflect all recent sales activity in the area in which the subject property is located. Therefore any “all-cash” sales that were consummated within 3 to 6 months of the new sale must be taken into consideration, because they also have an impact on the community.

Overall, the appraisal will lead to the conclusion of what the market value is. If the market price can not be defined easily, then someone can look at the different parts of the property and determine what they believe the market price should be. Usually, this will be done by an inspector looking at the various mechanics that may have been swept underneath the rug. But this done ONLY in the absence of usable market data (prior sales activity).

An appraisal is a necessary requirement when a home is being sold and the buyer is obtaining financing from a bank or mortgage lender. The appraiser may use several external resources and definitions of what market value may include in relation to the opinion being made in order to determine the value of a home. When getting an appraisal, you can expect that the estimates will be based around various factors that are related to the particular market area at that time.

Instead of just examining the parts of the property, an appraiser will also examine the neighborhood and see what everything else is worth in relation to the property. So by appraising a property, you will know how much your home is worth in relation to your own needs as they relate to that property, as well as in relation to everything around it. Observing the standards that exist both inside and outside, you will have the knowledge you need to determine when the timing is right to put your home on the market.

What differentiates the “all-cash” property sale from a real estate sale that is financed by a bank/mortgage lender can be a number of factors, but two of the most important of those factors are: One, the lack of a “mortgage clause” in the contract and two, the absence of a bank-ordered certified property appraisal. This does not mean however, that private deal made between a willing seller and buyer in good faith should be ignored or even discounted.