When taking out a mortgage loan, you may assume that all of the money you are borrowing came directly from the bank where the loan was completed. While it is true that mortgage loans were once issued in this way, times are changing and lenders no longer keep funding earmarked for mortgage loans sitting around in their bank safes. Furthermore, in most cases, the money that you borrow from the lender doesn’t actually come out of that individual bank’s funds. Instead, it comes from one of three different institutions. Whether interested in Maryland luxury homes or a home in Madison, it is a good idea for you to learn more about how the process works before you apply for a mortgage loan.

Obtaining a Mortgage Loan

When you apply for a mortgage loan, you typically talk directly with a lender located in your area. The lender then does all of the processing involved with the loan. This involves checking your credit report and score, verifying your employment and doing the necessary research regarding your financial accounts. Once your loan has been approved and the closing has taken place, you take ownership of the home and you begin making payments to the lender who approved your loan. While you never actually communicate with a middle man, the reality is that the funding actually comes from a third party.

Taking Ownership of Your Loan

Despite the fact that you applied for the loan with a particular institution and despite the fact that you are making payments to that institution, the lender does not retain ownership of your loan. Rather, the lender serves as the “servicer” of the loan, while ownership is retained by one of three different institutions. These institutions include:

Fannie Mae (FNMA – Federal National Mortgage Association)
Freddie Mac (FHLMC – Federal Home Loan Mortgage Corporation)
Ginnie Mae (GNMA – Government National Mortgage Association)

The loan that you received through your local lender is packaged with other loans into a “pool,” which is then sold off to one of these three institutions. The lender acting as the servicer receives a monthly fee from the company for processing the payments and otherwise overseeing the loan. Typically, this fee is just 3/8ths of a percent. While this may seem like a very small figure, the dollars do add up quickly. After all, servicers typically service over a billion dollars worth of home loans. As such, these fees comprise the majority of the money the lenders make.

When it comes down to it, you will actually have no direct contact with Fannie Mae, Freddie Mac or Ginnie Mae. Yet, these companies have far more to do with your mortgage loan than you may have ever realized.

About The Author – Kevin Koitz helps buyers and sellers with Georgetown real estate and other Maryland-area transactions as a Realtor and member of The Koitz Group.

Since mortgage interest rates have constantly kept themselves at approximately 5% for fixed rate mortgages, the idea of home refinance is attracting numeroushomeowners. Refinancing to a lower rate would reduce your monthly mortgage payments. The present day economy and troubled real estate market pose a number of risks to the homeowners.

When the real estate market is down, you should always try to refinance your mortgage. If you’re facing problems with your adjustable rate, higher mortgage payments, reduced equity or lower income, then home refinance is a useful means to get rid of your anxieties. When property values are going down and lenders are making stricter guidelines, it becomes more difficult to take out a new loan. Hence, if you get the chance to refinance even in this market condition, you must not lose it by any means.

What is home refinance?

When you go for refinancing, your existing mortgage is substituted by another mortgage with more affordable loan terms. Since you’re taking out a new loan, you normally have to pay the following fees:

* Escrow fees
* Title insurance
* Points (optional)
* Lender fees
* Credit reporting fees
* Appraisal fees
* Any amount necessary to get your tax and insurance obligations current

What the importance of home refinance is in today’s real estate market?

Homeowners resort to refinancing for various reasons, but following are some of the most familiar ones why refinancing is important in the present day real estate market:

Refinancing helps you save money by reducing your interest rate

If the interest rate of your existing mortgage is more than the prevailing market rate, you would save by refinancing.

Refinancing can reduce monthly payments

Even though the interest rates do not go down, home refinance can reduce your monthly payments by beginning a new loan term. For instance, if you obtained a 30-year FRM for $300,000 10 years back, you might just owe around $250,000 at present. However, if you refinance it to another 30-year FRM for $250,000, then you have a complete 30 years to pay it back. It signifies that your monthly payment would be lower. Had you retained your previous loan, you would have paid it off in 20 years. The drawback of reducing your monthly payments is that you would end up paying more on interest.

Refinancing lets you switch loan types

If you have an ARM Adjustable Rate Mortgage, your monthly payment might go up when the rate is adjusted. You might need to shift to a fixed rate mortgage that has a steady payment.

Home refinance helps you receive cash

When you go for a cash-out refinance, you obtain a new mortgage for an amount which is higher than you owe on your existing mortgage. Subsequently, you walk off by taking the difference. A cash-out refinance is quite hard to obtain in recent times though several homeowners opted for cash-out refinancing to fund home improvements in the last one or two years. For getting a cash-out refinance, you should have substantial equity in your home since it is likely the bank wouldn’t lend you an amount which is higher than your home value.

Though most borrowers have a tendency towards keeping their existing mortgages, refinancing in a tough real estate market can better your financial condition in various ways.

You’ve finally found the home that is just right and made an offer and it was accepted. Now you just wait for escrow to close, right?  Wrong.

Now is the time to have the home inspected to make sure you are aware of any possible issues in the home before it’s too late and the deed has been transferred. An independent inspector can evaluate your potential home on a structural and functional level and give you a full report, generally in under two hours. This report can help you feel at ease with your purchase and alert you to any areas of concern.

If there is a swimming pool or spa or unusual home appliance or fixture, you may want to have that inspected individually by a reputable repairman in that field. Questions and concerns relating to asbestos, lead or chemicals, mold and mildew, or pests will need to be directed to an inspector licensed in those specific areas of expertise.

Generally speaking, a home inspection on a property for sale will cover the following areas:

• An evaluation of the walls, ceiling, floor, roof, firewall, windows, foundation and slab.
• Inspection of the landscaping, looking particularly at grading and drainage, although drives and walkways, fencing, trim, doors, windows, and outlets will be checked as well.
• General framing as seen in exposed beams or attics, ventilation, duct and plumbing systems, and the condition of roofing materials, plumbing and rain gutters will be noted, too. Water heaters, fireplaces and the sprinkler system should be evaluated.
• The electrical sources and wiring in the home will be inspected, from circuit breakers and grounding systems to exhaust fans and receptacles.
• All appliances, including the garbage disposal, alarm system (if needed) and all smoke detectors.

Every county and state has different regulations in regards to home inspections, so it it best to use a local inspector recommended by someone you trust. If the inspection uncovers issues in the home regarding health and safety issues, a need for the roof or ventilation system to be replaced, a problem in the home’s foundation or significant drainage concerns, you will want to further explore the problem at the seller’s expense.

The adage “one shoe fits all” does not work when buying home.  It doesn’t work when shoe shopping, either, for that matter!  Homes, like shoes, are very personal, and often emotionally-based purchases.

Try as they might to create a home that will meet every need and every taste, home builders are aware that it just can’t be done.  As with shoes, versatility lies in key components – simple design, elegant tones, and a combination of shine, style and comfort.

As with your shoe purchase, buying a home requires you to consider what is most important to you and your future plans.

• Open design vs. cozy comfort?
• Modern storage options vs. vintage style?
• Planned, pre-designed landscaping vs. creative gardening?
• Modular vs. eclectic structure?

You should also consider how and who will be using the home.  Should it be tailored to you or is it an investment property?

• Primary residence or vacation home?
• Adults only? Adults and pets? Adults, children and pets? Renters?  College students?
• Will it be used to entertain often and is parking sufficient?  Do you need a guest room?

Of course, there are many other questions to be considered, so take your time with your home purchase. Enjoy the journey as you find the home that is the perfect fit for you and your circumstances. And when you find the home that makes you want to click your heels so you can return?  Make an offer!  As to shoes?  If the shoe fits… buy it in every color!

When a potential buyer considers a home for sale, they are looking for more than a home that “feels” good, they also want to make sure their needs and wants now and in the future can be met. One of these needs is often a concern for safety. Whether it is safety in regards to stability and workmanship of the home or safety in terms of investment potential or location, you can bet it is on their mind. Many first time home buyers are also looking at safety on a different level – considering possibly whether the home will be safe for their children or potential family.

Child safety may not be something that you reflect on when preparing your home for sale, but it really does matter in the minds of most buyers. While they won’t expect your home to be outfitted with the latest in baby proofing technology, they will expect some general safety parameters to be followed.  Most safety measures require little effort or cost, but contribute greatly to a sense of well being in the minds of potential home buyers.

The following questions may help your home for sale to be considered (at least subconsciously) as a safe place for their future home.

• Are your floors clean and walkways clear?
• Are cleaning supplies and garage materials placed together in a secure or out of reach cabinet?
• Are your windows and doors lockable and do your interior and exterior doors shut securely?
• Can you replace any corded mini-blinds with alternative window coverings?
• Are there modifications needed to fireplace hearths, concrete, or brick work that will make your home safer?
• Can you remove or secure any electrical or cable cords and are your electrical outlets in good condition?
• Are there areas in your home that can to be fixed or tightened up inexpensively? Children have a way of loosening and removing anything that is not absolutely secure.
• Have your knickknacks and fragile items been removed or packed up so that they are not harmed if children attend the open house?
• Have you removed or secured all toiletries (ie. razors, medicines and toothpaste) in your bathrooms so they are not generally accessible?
• Should you purchase a throw rug to deter the possibility of someone slipping in any area of your home?
• If you have a pool or spa, do you have the required number of barriers or gates in place to protect children?

Lastly, consider having someone crawl through your home on their knees, viewing it as a child might. If something looks enticing or potentially dangerous, eliminate it until your home is sold.  Considering these items will not only help sell your home, it will also help you to rest easy knowing your home and personal items are safe from harm when families view it during the selling process.

A key aspect of the home buying and selling process is obtaining a home appraisal.  A home appraisal is secured to estimate market value and can be quite complex. Recently there has been a change in the home appraisal process, resulting in more regulation, so work with your lender to confirm you have an experienced and knowledgable appraiser reviewing your home.

When selling your home, your appraisal can affect the home sales price, so make sure you know your “comps.”  ”Comps” are simply market comparisons that reflect other homes that have sold in your neighborhood, zip code, and area.  Review these comparisons by calling us for comparisons BEFORE your appraiser visits to make sure that all recently sold homes are included in the current statistics.  Often homes sold as For Sale By Owner (FSBO) may not be included by appraisers, which can alter statistics they use to determine your home’s value.

Next, look at your home as though you were a home buyer, as checking that your home appears well-maintained is vital.  Spend some time cleaning the home entrance and painting as necessary to spruce up the entry, making your best first impression.  The rest of your home should be clean and clutter-free, as well.

More importantly though, you need to create a “value-added” list of things that make YOUR home distinct.  Whether it be its size and views, or the condition of your property as compared to others in your neighborhood or any upgrades you may have made, these need to be explained to the appraiser.  Be sure to be respectful as you review these and other details regarding your property.  Review the information the appraiser has brought and suggest revisions if needed to account for changes you have made or errors in the report regarding your location (check the zip code!).

Once completed, an appraisal may take several weeks before you can request a copy.  It is wise to do so, however, to verify that the appraisal is accurate.   Ask your lender and follow the appropriate appeals process if you feel there are errors or omissions that would affect your property’s value.

Spring is in the air, making it a great time to focus on sprucing up your home.  Whether you have just purchased a home or are planning to sell, a little bit of effort spent and a few quick cleaning tips will help your home to sparkle!  Along with the need for general de-cluttering and cleaning, the tips below list easy fixes to resolve issues you may encounter in your new home or home for sale.

Before you start to spring clean, open up the windows so air can circulate throughout your home.  This will help remove any mustiness and you can use candles, essential oils, and other room fresheners to add a pleasant scent to your home.

Look at your walls and surfaces and use a melamine sponge to wipe away anything from soap scum to marker or crayon.  You will be amazed at how easily the dirt is removed with the sponge and a little water.  A popular brand of sponge is the Magic Eraser by Mister Clean, but there are many on the market today that act in the same way.

For the most painless and fast dusting method, use a microfiber cloth to capture the dust most effectively.  Follow up your dusting with a quick run of your vacuum, to clear away any particles that may have settled.  You can also reduce the amount of dust in your home by cleaning any filters on circulation systems in your home.

Remove the dust from curtains in your home by dry-cleaning or washing them (be sure to follow the label instructions) before rehanging.  There are many tools available for clearing dust from other window coverings, so spend a few minutes researching techniques here, if you have a question about the quickest method.  If you have a shower liner, add it to your laundry load.  Just make sure you allow it to air dry rather than dry in the dryer.

Hopefully these tips will inspire you and help you to get your home “Spring Clean” whether for your enjoyment or because you have a home for sale.