Today interest rates on homes are terrific. The Fed rate cuts only effect short term rates. Todays interest rates are still extremely low compared to interest rates of 10 years ago. Depending on where you live, you can look into a State Bond program. If you review my other posting, I keep bringing up State Bond program because they are the best program for low to moderate income families and first time home buyers. They are normally lower than traditional mortgage rates because they are subsidized by state issued bonds.

There is MI involved, however if you look at the MI payment versus the 2ND loan payment, you might be surprised at the over all payment between the two. The more money you are able to put down, the cheaper your financing will cost you. Long Answer: In the early half ot the past century, buying a home was very difficult for the average American. Lenders did not want to lend that much money to someone that may not pay them back. That way if the borrower failed to pay as agreed, the lender could still get his money back from the property by selling it after foreclosure. 40,000 for a small home. The American government identified this problem and created a solution. FHA and get insurance that their loan would not default. The FHA is one of the best organized agencies in the United States Government. That means no tax dollars go to support this agency.

The agency actually makes money for the United States Government. They charge borrowers for their services. FHA loan will pay an FHA fee with their mortgage. The borrower of course does not have to pay it up front, but it is included in their loan.

They pay a funding fee at closing, then they also pay a monthly fee with their mortgage. With these fees and the profits from selling HUD homes the FHA makes money. Most PMI companies do not charge the initial funding fee, making many PMI loans sometimes cheaper than FHA loans. 200 a month depending on your credit rating.

This is in addition to the Principal and Interest on your loan. 87 a month on that size mortgage. Nearly all lenders offer a My Community Mortgage, but you have to qualify for the program being under a certain median income for your state. To avoid paying the FHA fees or the PMI fees, you can get two mortgages.

This kind of loan has no mortgage insurance, but there still is an extra cost. The interest rate on your second mortgage will be much higher than that of your first mortgage.

Lenders will pay your mortgage insurance for you. They, of course, charge a higher interest rate but then they will pay your mortgage insurance for you so you only have one loan and no mortgage insurance.

Lenders like to see 2 years of rental history, and the history will be verified to see if you have paid on time. If you just got our of college, than they need a college transcript. Can you afford a home.

Here are some things to consider. When you Decide to buy, decide on how much you want to spend, if you want to escrow the taxes and insurance. Now you decided on the price range you are looking into. Just depends on your credit. It is up the Lender what they offer you.

If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. Department Charge Card, Gasoline Card or make any major purchases, like a auto, etc. This will pull your credit down.

The TIL will tell you the terms, rate associated with your loan.

Cost associated with your loan. The seller can help you with up to 6 percent of closing cost. So the title fee, lender fees, underwriting fees, flood cert, etc can be paid for my the seller.

Check your good faith estimate that I mentioned above.

Mortgage rates are more flexible today than ever, and the tax laws favor home ownership like no other tax shelter. Although no one can say if a specific home will appreciate in value, generally speaking, the odds favor the homeowner. Numerous unique tax advantages are available to homeowners. The thousands of dollars you pay in mortgage interest is deductible. Basement, check the foundation for cracks or water marks. Flush toilet and turn on both hot and cold water faucets at the same time to test. Ask what type pipes are installed and their age.

If applicable, ask when the septic system was last inspected and cleaned. Stand near the tank to detect odor or soggy ground. Determine if proper insulation has been used. Be alert for small accumulation of sawdust in the basement.

This might indicate an insect problem. ARM, which works like a fixed rate loan for the first five years and an adjustable rate loan for the remainder of the term. ARMs usually have annual and lifetime caps to prevent the interest rate from changing too quickly or too much. Bankers want to lend money at prevailing interest rates and thus fixed rate mortgages present a dilemma due to their long terms.

When a bank issues a 30 year fixed rate mortgage, it commits its money for 30 years, knowing full well that prevailing rates will change. If prevailing rates go up, the bank looses, as it charging less than prevailing rates.

If interest rates go down enough, any borrower who can will refinance with another bank at the then prevailing rate. To discourage refinancing, banks charge closing costs and prepayment penalties. However, if prevailing rates go down enough, even these additional costs will not discourage borrowers. Borrowers can unilaterally refinance their loans, but banks cannot force borrowers to do so, and this asymmetry puts banks at a disadvantage. Banks offer ARMs as a way of correcting the imbalance caused by the borrowers ability to refinance. One way to think of an ARM is as a fixed rate loan that is automatically refinanced every year at the prevailing interest rate.

Since banks prefer writing ARMs over fixed rate loans, they offer discounts to entice borrowers into taking ARMs. Since ARMs disempower borrowers, a borrower must carefully consider the decision to take an ARM rather than a fixed rate loan. When the prevailing rate is high by historical standards and almost certain to drop, an ARM is a good choice. The borrower benefits from the subsequent drop in the prevailing rate without having to incur the costs of refinancing.