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Your #1 Defense Against Getting Ripped-Off on a Mortgage

Getting a mortgage and buying a house involves around 300 sheets of paper. And many people are intimidated by the monumental stack of formerly living trees or the terms they don't know printed on them. But with only a few key concepts, you can usually protect yourself from getting very ripped-off.

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When looking for a mortgage, most people know to look at the rate, terms, amortization, and monthly payments. While these are obviously very important characteristics of a loan, the key item to look out for — one that careful people good at math miss — is a prepayment penalty.

Jan.03.2007 [ Filed under: Bay Area Real Estate, Home Buyers, Mortgages ] 1 Comment »

Empowering Yourself Through Your Credit Rating

Your FICO score is the number makes-or-breaks your ability to buy a house and determines whether you get the best rates or get charged enormous fees. You can directly affect the strength of your credit and, in turn, how much your dream house really costs you.

FICO Score Breakdown

Jan.02.2007 [ Filed under: Bay Area Real Estate, Home Buyers, Mortgages ] Comment Here »

Opt-Out of Pre-Approved Credit Card Offers

Did you know you can opt-out of receiving those pre-approved credit card offers just like you can put yourself on the "Do Not Call" list for telemarketers?

There's good reason to do this. Besides the fact that they're annoying, these pre-approved offers also put you at risk for identity theft.

Credit Cards

In fact, MSNBC posed the question, "What if a desperate identity thief digging through your trash found a credit card application ripped into little pieces, taped it back together, filled it out and mailed it in?"

"Would he get the credit card?" The answer is one of those "You've got to be kidding me?!" moments.

So how do you opt-out of these pre-approved credit card lists, help protect your credit (especially if you're thinking about getting a mortgage), and get less junk mail in the process?

Dec.19.2006 [ Filed under: Mortgages ] Comment Here »

Ask Your Accountant: 2006 PMI Deduction

A basic benefit of buying a house is being able to deduct the interest you pay on mortgages from your income tax. This benefit not only applies to your primary mortgage but also to "piggy-back" loans like your home equity line of credit (HELOC) if you put less than 20% down.

In the article, How Much Should You Allocate as a Down Payment?, I also talked about another way of putting less than 20% down. (Again, putting a larger down payment on your house decreases your risk and may lower your interest rates and fees so there is a trade-off.)

Lobbyist

This involved taking a greater mortgage from your lender and paying for private mortgage insurance (PMI). The big disadvantage to PMI was that you couldn't deduct it like you could mortgage or HELOC interest.

Mortgage News Daily reports that, at the behest of happy private mortgage insurance lobbyists everywhere, the exiting Congress may have fixed all that…

Dec.17.2006 [ Filed under: Mortgages, Silicon Valley News ] Comment Here »

How Much Should You Allocate as a Down Payment?

A long time ago, people put 20% of the purchase price as a down payment when buying a home. You would pay this 20% upfront as a "cash" down payment through a cashiers check or by wiring money to the seller, and get a mortgage to pay them the remaining 80% of the price of the house.

These days, very few people expect the optimal 20% down payment. As a borrower, you have choices that provide you greater financial flexibility, or more stability at a higher upfront cost.

Piggy Bank