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TIP 1- Buying A home Is One Of The Best Investments You Can Make! Home equity remains the largest single savings vehicle for most Americans. In addition to the tax incentives of home ownership, and the ability to tap into your home equity if the need arises, buying a home is a wise and prudent investment for most people.

TIP 2- It Is Very Important To Buy A Home That Will Go Up In Value. Slow, steady home appreciation has been the rule over most of the nation’s history, and many real estate investors became quite wealthy in that environment. They did so by very carefully analyzing the appreciation potential of their investment, and they invested for the long term. You should too. Even if you plan on living in your home just a few years, you will want it to have gone up in value when you put it back on the market.

TIP 3- Use A Buyers Agent. If you’re going to work with a real estate agent, contract with a buyers agent rather than with a subagent. A buyers agent is paid by you and has a duty to represent your interests, while the subagent is paid by the seller and represents the seller’s interests. The subagent, which has been the traditional relationship between a buyer and an agent, is ethically required to disclose all relevant information (such as the fact that you’ll be willing to raise your offer if necessary) to the seller. Try as you might, it’s difficult to avoid saying things you shouldn’t to a subagent. While you are responsible for paying the buyers agent, the net cost can be zero if you put in your offer that the seller is to pay buyer agent’s commission (which the seller would have had to pay anyway if the offer had come from a subagent). An exception is if you’re buying from a self-seller. They often did not plan on allowing for a real estate commission. In those circumstances you face a subjective decision as to whether a buyers agent’s negotiating skills are sufficiently better than yours to justify the commission you will owe them.

TIP 4- Choose Your Agent Wisely. If you are using a real estate agent look for one with experience in working with buyers, with knowledge of the neighborhood(s) you are considering, and who does not have a reputation for being ‘pushy’. The purchase of a home is a serious long term commitment on your part and a good agent will recognize that buyers need time and patience so they can satisfactorily sort out the myriad's of factors involved in a purchase decision.

TIP 5- Current Home Prices Are A Less Important Consideration Than Interest Rates. Try to buy and/or sell when interest rates are low. The amount of mortgage you can afford (and thus the price of the home you will consider) will change as the interest rates rise or fall. A certain asking price may sound expensive to you, but at a lower interest rate you might be able to afford it. You may own several homes over your lifetime, and the factors that will limit or increase the value of the home you will be selling will similarly affect the price of its replacement. Since those factors largely wash each other out, interest rates remain the most important factor.

TIP 6- Always Have A Home Inspection Contingency In Your Offer and always hire a professional home inspector to provide you a written report, along with "ball park" estimates or ranges of repair costs. If the inspection turns up problems that weren’t readily noticeable, you can use it and the ball park estimates for negotiating leverage to get the seller to make the repairs or provide you a commensurate price reduction.

TIP 7- Learn As Much As Possible About The Seller’s Circumstances. There may be mutually beneficial opportunities. For example if you might face difficulty qualifying for a big enough mortgage, and the seller is worried about college costs for his or her sixth grader, then maybe the seller might be interested in accepting a second trust for part of the purchase price if the interest rate is above what they could otherwise earn and the loan is paid off the summer before the child's freshman college year. From your perspective the rate will likely be less than you could get from a traditional lender.

TIP 8- Research Your Mortgage Options Well Before You Make An Offer. You won’t have enough time in the five days sellers normally allow to get all of your paperwork together, determine the best kind of mortgage, who is offering the best rates etc. Consider getting a contingent letter of approval for a loan, or an actual loan commitment prior to making an offer. The former is not actually a loan commitment, but rather a contingent approval for a loan up to a certain amount. While it has relatively little enforceable value, it nevertheless can impress a seller, who might be more willing to accept a lower offer because of the perceived financial capabilities of the seller. Its also possible to get approved by a lender with a longer term "lock" on the interest rate in order to protect you from subsequent rate increases. While this should substantially increase your negotiating leverage, keep in mind that you pay more directly or indirectly for the longer commitment, either in terms of the rate and/or points.

TIP 9- Learn How To Negotiate Like A Pro. There’s more money involved in this negotiation than just about any other area you’ll encounter. Even if you’re using a buyer’s agent, you’re part of the team, and you’ll have to make the ultimate decisions about how much to offer and how much to compromise on a counter offer.

TIP 10- STUDY! The tips in this brochure are only the beginning. You’ll need to learn a lot more if you want to get the best possible deal. Read as much as you can on home buying, on negotiating, on neighborhoods in your area that might fit your needs, and on factors that impact long term appreciation like schools, infrastructure, major new business expansions or closing etc. Keep copies of everything you send the lender and everything the lender sends you.

Source: (www.americanhomeowners.org) American Homeowners Foundation - serving the needs of America's 70 million homeowners and future homeowners

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Tip 1: In strong markets, where demand outstrips supply, home sellers can old out for top dollar. In weak markets the reverse is true - there are many homes on the market and unless you price your home very competitively you'll be very unlikely to attract any buyers. Whatever the current market conditions you will be most likely to get the highest possible price if you are willing to take the time to understand each of the components of a successful home sales campaign so you can assure that you, or a real estate service provider who may be assisting you, are doing everything possible to maximize the effectiveness of the home marketing effort.

Tip 2: A good time to sell is during a period of low mortgage interest rates, because with lower interest rates more buyers will be qualified to buy your home. Low rates benefit buyers and sellers alike, and if you plan to purchase another home after selling yours, you will be both a seller and a buyer. A “sellers market”, where there are more buyers than homes available for sale, is also helpful. However, if you plan to purchase another home in the same area after selling yours, this competitive advantage will work against you when you become a buyer. The same principle applies in reverse to buyers markets, so if you plan to purchase another home in the same area after selling yours, it really makes little difference in the end whether it’s a buyers or a sellers market.

Tip 3: Shine Your Apple. Make your home look as nice as it can look. Have a presale yard sale and get rid of as much clutter as possible. Keep only a minimal amount of furniture in each room – it will make the room look bigger. Store any extra furniture. Clean up and repaint with neutral colors if necessary. Open blinds and replace light bulbs with brighter substitutes. If important parts of your home are outdated consider cost effective updates. If your kitchen or bath is old or in bad shape a prudent remodel can often return over 100% of the investment and help you sell the home faster. But don’t over improve. There’s not much point in adding a fourth bathroom to a home that is already worth more than most of the others in the neighborhood.

Tip 4: Study. More money hangs in the balance in the selling of your home than in most financial transactions in your life. It therefore makes sense to learn as much as you can about selling your home. No matter whether you’re a self seller, or have an agent, you need to learn enough to be in command of the process. There are many excellent books on the subject in libraries and bookstores. The real estate sections of local newspapers are great sources of information about your local marketplace. The difference between understanding the process as well as your local market, versus not understanding it, can be many thousands of dollars in the eventual selling price.

Tip 5: Decide whether to use a full service real estate broker/agent or sell it yourself. Although average full service real estate commission rates have dropped to a little more than 5%, that’s still a lot of money (a 5% commission on a $200,000 home is $10,000, for example). If you have the skills, time, and resources you may be able net more money by selling your home without a full service broker/agent. In many states some discount brokers will put your home in the local multiple listing service (MLS) for a few hundred dollars, and they may also have menu of individually priced additional services. A full service broker/agent may be a smarter choice when you are in a buyers market if you don’t have the experience or the time to learn about the process and your local market. The same applies if you don’t have the time to do all the things necessary to market a home effectively, if you are on a deadline to sell, or if you don’t have an instinctive bent towards advertising, marketing, and negotiating.

Tip 6: If you decide to use a full service broker/agent, first identify three experienced agents who are familiar with your neighborhood. Look for agents who have “for sale” signs placed in your neighborhood. Don’t use an inexperienced agent – entry standards are very low in the real estate field, and years of experience and contacts, as well as advanced professional designations, are valuable. Ask each to prepare a market analysis (how much is it worth?) and a marketing plan (how do you plan to market my home?). Ask lots of questions about both. Include the main points of your marketing plan in your listing agreement so that all parties will know what is to be expected (i.e. frequency of ads and the publications/websites where they’ll appear, frequency of open houses, etc.). Limit the length of the listing - two months or less is good, but no more than three months. If the agent is doing his/her job as set out in the listing agreement you can always renew the listing when it expires. If they’re not producing results you’ll be able to document the reasons if you decide to cancel the listing early or be able to show them why you aren’t renewing the listing with them.

Tip 7: If you decide to market the home yourself it is still a good idea to talk to three full service broker/agents before making a final decision. It will provide an additional reality check to make sure you really are prepared to market the home yourself, and the market analysis and marketing plan information will be helpful in any event. Even if you still feel good about selling the home yourself supplement your marketing efforts by using a limited service or flat fee broker who will list your home in the local multiple listing service (MLS) for as little as $200. This is extremely helpful to your mrketing efforts because the MLSs feed the listings to the consumer-facing websites of most of the other local real estate brokers and to realestate.com, the world’s largest real estate website. With 80% of home buyers now using the Internet, it’s important that your home gets broad Internet exposure. Both do-it-yourself sellers and real estate agents are also increasingly using free Internet-based real estate marketing alternatives like Craigslist.com, Zillow.com, and several others. There are also other modestly priced Internet alternatives like EBay and Yahoo that have real estate listings, which you should consider as well.

Tip 8: Price your property realistically, especially in slow markets. When markets are slow buyers are psychologically unprepared to overpay - and they apply stringent standards of value. They will heavily discount many expensive and unusual improvements unless they appeal very strongly to their own personal tastes.

Tip 9: Consider providing owner financing if you can, but be cautious. If you can provide some financing, even if it’s a small second trust, you may be offering ‘the’ deal maker. At the same time you can often earn a considerably higher interest rate than you would have earned with the same money otherwise. Caution: Fluctuating real estate markets can wipe out your security in the event of foreclosure. Foreclosures cost money and a second trust only gets paid after the first mortgage is satisfied, and then only if there's money remaining from the sale. Make sure to run a credit check on the buyer and make sure that they put up a substantial down payment if you’re providing owner financing.

Tip 10: Make sure you don’t prematurely give away any bargaining leverage. All home purchase agreements must be in writing to be binding. If someone asks if you would take a specific lower figure and you agree, that’s not an enforceable contract. All you have done is to lower your asking price. The correct response should be “I’ll consider all written offers”.

Source: (www.americanhomeowners.org) American Homeowners Foundation - serving the needs of America's 70 million homeowners and future homeowners

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Tip 1. Don’t Stretch Your Loan Qualification Limits To Buy A Home Beyond Your Budget. A home should be a source of satisfaction and an investment not a financial albatross, especially for first-time buyers. Borrowing heavily from family members, selling assets, and living poor just to own a bigger or better home, makes for larger mortgage payments and risks difficulties in the future.

Tip 2. Always Shop For Competitive Rates, Points, And Fees. Get at least three bids. The most competitive lender one week may not be next week so get (or reconfirm) quotes the same week you are ready to make the commitment.

Tip 3. Get An Immediate Written Confirmation Of Your Locked In Interest Rate And Interest Rate Terms (i.e. if you are locking the rate, can you relock if rates drop, etc.), points, and fees, you might find some discrepancies with the figures used on the final loan documents.

Tip 4. Don’t Agree To Prepayment Penalties. You may want to refinance or partially prepay part of the mortgage. If there is no mention of prepayment penalties, make sure you have an addendum attached to the mortgage specifying that no fees will be imposed.

Tip 5. Understanding All The Conditions Of Your Loan: You or a professional that you trust should thoroughly scrutinize each document. Ask questions if you aren’t sure what something means.

Tip 6. Pick The Right Kind Of Loan. Rates are higher on 30 year loans than on comparable 15 year loans. That's because there is a greater risk that rates will go up the longer the lender commits to a fixed rate. Lenders hate holding loans at below market rates. While there is an advantage to the predictability of fixed rates, if you expect to be transferred in 5 years, you’ll be paying more than you need for a 30 year fixed rate loan. If you want both the security of predictable payments and the lowest monthly payment consider "hybrid" loans - those with a fixed rate for the first five or seven years of their 30 year duration. If you are going to be there for a shorter period, or have confidence that rates will be dropping further, consider an adjustable rate mortgage.

Tip 7. If You Are Buying Rather Than Refinancing, Consider Getting A Pre-approved Mortgage Or Contingent Loan Approval Letter. The former is a binding commitment for a loan up to a certain amount. It can substantially strengthen your negotiating position with the seller, but it puts pressure on you to close a deal before the loan commitment expires. A contingent approval is a letter from a lender that states the largest loan you would qualify for, subject to confirmation of the financial information you’ve provided and formal approval. It will also give you additional negotiating leverage without binding you to the lender (or vice versa). Sometimes owner financing can work to both parties advantage. Ask the seller if it’s a possibility. If so explore further to see if there might be mutually agreeable terms before making an offer.

Tip 8. Save Everything. Lenders require and provide numerous documents. Some get misplaced, usually at the most critical time. Keep copies of everything you send the lender and everything the lender sends you.

Tip 9. Take Advantage Of The Deduction. The mortgage interest deduction is one of the few remaining tax deductible interest payments, and it’s also the cheapest form of long term financing. Consider financing/refinancing as an alternative source of funds for home improvements or other constructive long term investments like education. Don’t get in over your head, and never use it to finance your summer vacation or other short term pleasures.

Tip 10. Study! A lot of money is at stake You can’t learn too much, and you won’t have time to learn what you need, interview and select a lender in the five days allowed most buyers to apply for a loan. Read the real estate section of your local paper and books on the subject.

Source: (www.americanhomeowners.org) American Homeowners Foundation - serving the needs of America's 70 million homeowners and future homeowners

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Tip 1. Compare The Cost Of Moving To Remodeling. Moving is expensive, typically involving a 6% commission on the sale of your current home, plus another 2-4% for closing, moving, and other costs. If you like the present neighborhood then look into what improvements you could make with 8-10% of your home's current value before you decide to move.

Tip 2. Design Ahead. You don't want to come up with an additional brilliant idea right after the job is complete. You can reduce the risk by doing some advance research. Read up on design, talk to friends with knowledge and experience with the type of remodeling you're considering, and get suggestions (and references from architects and remodelers while you're in the early stages of planning. If you're changing current floor plans get some graph paper or a floor planning kit and play around. Start a file for literature about components and finishes.

Tip 3. Don't Over Improve. This may be of less concern if you plan to remain in the home for a long time, but it's very important if you're remodeling to sell your home. Some remodeling jobs, such as a prudent overhaul of a very dated bath or kitchen, or the addition of a second bath to a one bath home, can return more than 100% of the cost at the sale of the home, and help you sell it faster. However, if you want a different look, you'll probably not recover the investment in a home that is already significantly more valuable than most of the others in the neighborhood.

Tip 4. Allow Plenty Of Time For The Job. Murphy's law applies to remodeling. If you expert a contractor to compress a six week job into four weeks, you're asking for trouble. Also, you can save money and probably get the job done faster if you have the ability to schedule it in the off season when contractors have fewer jobs to bid on.

Tip 5. Check The Remodeler's Credentials- Carefully. Are they licensed and insured for workers compensation, property and personal liability? If in doubt, ask to see their insurance certificate. Do they belong to the National Association of the Remodeling Industry, the National Association of Home Builders Remodelers Council, and/or any of the more specific trade associations in the remodeling sector? That's a sign of commitment to the trade and to professionalism. Most also offer certification and/or management training and keep their members up to date on the latest products and techniques. Ask for recent references on similar jobs (employee and subcontractor turnover is often fairly high, so recent jobs are a reliable indicator of their current capability). Check their record with the Better Business Bureau while you're at it.

Tip 6. Request A Comprehensive Bid. It should detail as many of the specifications as possible. Get bids from three remodelers. If one of the bids is unusually low, make sure that they have included everything. If they have, make sure you've thoroughly covered tip #5.

Tip 7. Consider Doing Some Of The Work Yourself. If the bids are higher than expected and too much for you to afford, you might be surprised how much money you can save. But make sure you're not getting into something you don't have time to do. Things that come up near the end of the job, such as painting, finish carpentry, etc. are good bets since the other parts aren't dependent on their completion. Some can even be done after the issuance of the final occupancy permit.

Tip 8. Get A Comprehensive Written Contract. It will greatly reduce the likelihood of disputes with your remodeler. Most disputes arise over issues that were not resolved in advance. Make sure it covers the description of the project, timetable, payment schedule, etc., with general provisions defining the responsibility of the contractor and the subcontractors, defects and correction, change order procedures, warranties, right to termination, and alternative dispute settlement mechanisms (since more than half of the costs of lawsuits represent legal fees, homeowners and contractors will almost always be better off with mediation, conciliation, and/or binding arbitration clauses should a disagreement arise).

Tip 9. Consider Buying Certain Building Materials In Advance. Styles for appliances and other building materials and suppliers are subject to change and are often heavily discounted when they go out of production. If there's a style you like very much, it may not be available next year, so consider buying and storing them when you see a really good deal. With the advent of the larger super discount home improvement stores, prices are down to the point that remodelers often can't get much better prices from other sources, even with their business discounts.

Tip 10. Be Careful About Financing. If you're financing the project, you want the lowest rate possible and you want the interest to be tax deductible. Only certain types of loans will give you an interest deduction so check with an expert. In some cases, refinancing your mortgage can be the best bet.

Source: (www.americanhomeowners.org) American Homeowners Foundation - serving the needs of America's 70 million homeowners and future homeowners

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TIP 1. Don't ignore the problem. The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your home. If you are behind on your mortgage payments or have received notice that you are behind in payments, you need to contact your lender quickly and ask to speak with a loss mitigator. Typically, your lender will mail you a "loan workout" package. This package contains information, forms and instructions. If you want to be considered for assistance you must complete the forms fully and truthfully and return them to your lender quickly. Your lender will review the complete package before talking about a solution with you.

TIP 2. A smart simultaneous step is to contact a HUD approved local nonprofit counseling agency that may be aware of programs that could help you, may have personal knowledge of your lender’s flexibility in terms of available options, and may know the best person to contact with your lender. To find one click HUD-approved housing counseling agencies or call HUD at (800) 569-4287 on weekdays. Time is of the essence, so don’t let this step slow the process more than a few days.

TIP 3. At the same time, find out what your home is worth so you will know how much equity you have (or if its worth less than the mortgage balance). There are online home valuation tools on Zillow.com, Trulia, and several other websites, but an experienced and knowledgeable local real estate agent’s written market valuation is likely to be more accurate and will be helpful in discussing options with lenders. Modifications, forbearance and recasting are all possible if you have sufficient equity in your home, and if you have sufficient equity, selling the home if necessary may not be the worst idea if home values are dropping.

TIP 4. Avoid fee based for-profit mortgage prevention companies or counseling agencies – many are rip-offs that provide few if any meaningful services for distressed homeowners, and you can get quality counseling for free. Also be wary of investors who advertise offers of immediate cash for your home. Many of them are also unethical or outright crooks, seeking to strip home equity through a variety of techniques. If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property. Never sign any legal document without reading and understanding all the terms and getting professional advice from an attorney or a trusted real estate professional, or a HUD approved housing counselor.

TIP 5. Know your mortgage rights. Find your loan documents and read them so you know what your lender may do if you can't make your payments. Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office.

TIP 6. Foreclosures are expensive for lenders, so they are usually willing to listen to reasonable ideas that can reduce their potential losses, such as restructuring the loan at lower rates or accepting a “short sale” which occurs when the lender agrees to let the owner sell the home for less than the mortgage balance, and agrees to forgive the shortfall and not downgrade the homeowners credit. Your willingness to cooperate is a negotiating tool if your suggestions are likely to be less expensive than a foreclosure action.

TIP 7. Bankruptcy is an option, particularly if your lender is inflexible or your mortgage is on a second home or a rental property. Bankruptcy judges can reduce debts and modify interest rates on commercial loans, second home mortgages, and investment property mortgages when it is in the best interest of both parties. Unfortunately, they have no such latitude with the mortgage on your primary residence, but if your mortgage lender is inflexible, bankruptcy proceedings may be the wisest choice.

TIP 8. Even if you are current on your mortgage payments but have an adjustable loan, thoroughly review your mortgage documents, even if your reset date is many months in the future. Check the reset interest rate or formula for determining the reset rate and any future rate resets, and see if there are mortgage prepayment penalties.

TIP 9. If you think you could have trouble keeping up with the new payments on an adjustable mortgage, consider refinancing into a fixed rate mortgage if possible. Some lenders may be willing to forgive all or part of a prepayment penalty if that payment presents a problem and you qualify for their fixed rate product.

TIP 10. Don’t assume that you are immune to a foreclosure in the future. Don’t assume that a mortgage lender’s underwriting process will assure that you’ll not be approved for an unaffordable mortgage in the future. When lenders discovered that they could package and very profitably sell risky loans to investors, they became was less focused on responsible underwriting because they weren’t at risk if they sold the loans. Sound underwriting practices began to deteriorate, eventually causing the current mortgage meltdown. This could happen again. In the future you need to consider the total amount of likely monthly payments, including taxes and insurance, and be comfortable in your own mind that you can handle those payments. Adjustable rate loans are risky because you can’t control the future interest rate at the time they will be adjusted, so you need to assume the worst (in other words, a substantially higher index interest rate when they adjust) in deciding whether they will still be affordable.

Source: (www.americanhomeowners.org) American Homeowners Foundation - serving the needs of America's 70 million homeowners and future homeowners

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TIP 1. Don't ignore the problem. The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your home. If you are behind on your mortgage payments or have received notice that you are behind in payments, you need to contact your lender quickly and ask to speak with a loss mitigator. Typically, your lender will mail you a "loan workout" package. This package contains information, forms and instructions. If you want to be considered for assistance you must complete the forms fully and truthfully and return them to your lender quickly. Your lender will review the complete package before talking about a solution with you.

TIP 2. A smart simultaneous step is to contact a HUD approved local nonprofit counseling agency that may be aware of programs that could help you, may have personal knowledge of your lender’s flexibility in terms of available options, and may know the best person to contact with your lender. To find one click HUD-approved housing counseling agencies or call HUD at (800) 569-4287 on weekdays. Time is of the essence, so don’t let this step slow the process more than a few days.

TIP 3. At the same time, find out what your home is worth so you will know how much equity you have (or if its worth less than the mortgage balance). There are online home valuation tools on Zillow.com, Trulia, and several other websites, but an experienced and knowledgeable local real estate agent’s written market valuation is likely to be more accurate and will be helpful in discussing options with lenders. Modifications, forbearance and recasting are all possible if you have sufficient equity in your home, and if you have sufficient equity, selling the home if necessary may not be the worst idea if home values are dropping.

TIP 4. Avoid fee based for-profit mortgage prevention companies or counseling agencies – many are rip-offs that provide few if any meaningful services for distressed homeowners, and you can get quality counseling for free. Also be wary of investors who advertise offers of immediate cash for your home. Many of them are also unethical or outright crooks, seeking to strip home equity through a variety of techniques. If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property. Never sign any legal document without reading and understanding all the terms and getting professional advice from an attorney or a trusted real estate professional, or a HUD approved housing counselor.

TIP 5. Know your mortgage rights. Find your loan documents and read them so you know what your lender may do if you can't make your payments. Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office.

TIP 6. Foreclosures are expensive for lenders, so they are usually willing to listen to reasonable ideas that can reduce their potential losses, such as restructuring the loan at lower rates or accepting a “short sale” which occurs when the lender agrees to let the owner sell the home for less than the mortgage balance, and agrees to forgive the shortfall and not downgrade the homeowners credit. Your willingness to cooperate is a negotiating tool if your suggestions are likely to be less expensive than a foreclosure action.

TIP 7. Bankruptcy is an option, particularly if your lender is inflexible or your mortgage is on a second home or a rental property. Bankruptcy judges can reduce debts and modify interest rates on commercial loans, second home mortgages, and investment property mortgages when it is in the best interest of both parties. Unfortunately, they have no such latitude with the mortgage on your primary residence, but if your mortgage lender is inflexible, bankruptcy proceedings may be the wisest choice.

TIP 8. Even if you are current on your mortgage payments but have an adjustable loan, thoroughly review your mortgage documents, even if your reset date is many months in the future. Check the reset interest rate or formula for determining the reset rate and any future rate resets, and see if there are mortgage prepayment penalties.

TIP 9. If you think you could have trouble keeping up with the new payments on an adjustable mortgage, consider refinancing into a fixed rate mortgage if possible. Some lenders may be willing to forgive all or part of a prepayment penalty if that payment presents a problem and you qualify for their fixed rate product.

TIP 10. Don’t assume that you are immune to a foreclosure in the future. Don’t assume that a mortgage lender’s underwriting process will assure that you’ll not be approved for an unaffordable mortgage in the future. When lenders discovered that they could package and very profitably sell risky loans to investors, they became was less focused on responsible underwriting because they weren’t at risk if they sold the loans. Sound underwriting practices began to deteriorate, eventually causing the current mortgage meltdown. This could happen again. In the future you need to consider the total amount of likely monthly payments, including taxes and insurance, and be comfortable in your own mind that you can handle those payments. Adjustable rate loans are risky because you can’t control the future interest rate at the time they will be adjusted, so you need to assume the worst (in other words, a substantially higher index interest rate when they adjust) in deciding whether they will still be affordable.

Source: (www.americanhomeowners.org) American Homeowners Foundation - serving the needs of America's 70 million homeowners and future homeowners
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