Southeast American Financial Group Inc.'s Blog

Today, many individuals who are looking for a mortgage get taken in by not asking the right questions.  Many individuals want a particular home but do not realize that they cannot afford it, because they are not looking at what their total payment is compared to their total take home income.  Make sure you understand what your principal, interest, insurance and tax payments are and that your taxes and insurance can climb much higher than they are the following year when buying a home.

If you are getting a rate that is below the rate at which banks lend to each other, which is called the Fed Funds Rate, currently at 4.75%, something is wrong, ask questions?  Ask your lender how long is that rate going to last, when will it change as it is either an adjustable rate or more than likely it is a payment rate. Ask yourself if the bank is lending to each other at that rate, how can I get a lesser rate for my loan, and the answer is that you cannot. 

Don't get me wrong, there are times when you can buy down the rate for a year or two and you may get a 4.75% for the first year and a 5.75% for a second year, and then in the 3rd year you may pay 6.75%, but you have to pay for it as that is known as a buy down rate. Remember, there is no free lunch.

A payment rate is not an interest rate, it is the amount you can make as a minimum payment, it does not cover the full interest cost of the loan.  If you pay the minimum payment, you will be deferring the balance of the interest which will be added to your principal.  In most cases, these loans will carry a prepayment penalty for one, two or three years, any where from 2% of the loan amount or 6 months interest.  

Credit is frequently the reason for a higher interest rate, if you have credit issues, work to fix the issues before you enter into a contract to buy.  If you already own your home try to make your mortgage payments on time.  Do not wait until after they are past due before you seek help, because by then it will be two late and you will end up with higher rate loans which can be costly.

Contact Janette Davis at 954-967-0584 to learn if you can qualify for the loan and the home you want.

On 8/31/2007, President Bush announced that FHA will help an estimated 240,000 families avoid foreclosure by enhancing its refinancing program effective immediately. FHA Secure will allow families with strong credit histories who had been making timely mortgage payments before their loans reset - but have fallen behind on their payments as a result of the reset, to qualify for refinancing at traditional FHA rates.

There are many families that this is not assisting as many fell behind as a result of taxes and insurance and waited too long before seeking help. 

If you are falling behind, do not wait until you are past due before you seek help, talk with a lender or housing professional before you do.  While some lenders are working with their borrowers to assist in alleviating a crisis, most are only giving lip service to the idea,  Instead of trying to work to help these borroweres, many lenders are using aggressive collection tactics to have the loan brought current within a 30 to 60 day period.