Eight Important Things to Know about a Mortgage

So, you are ready to buy a home and want to understand basic points about a mortgage? Here is a simplified guide on important things you need to know regarding mortgage loans. For the full description of these terms, go to my source, The Smart Borrower Center on Lending Tree's website at lendingtree.com. Look under "Tools to help you borrow better."

Compare these important factors when choosing a mortgage:
1. Principal - The amount you are borrowing to buy your home. When you shop for mortgages, lending institutions will tell you how much they are willing to lend and help you determine what you can afford.
2. Type of mortgage - Usually fixed or adjustable rate mortgages. With a fixed rate, you usually pay the same amount each month for the life of the loan. This can mean less risk but a little higher interest rate. An adjustable rate mortgage (ARM) may provide a lower rate but change with the market, which can increase your risk and payment amount. Discuss options with your lender.
3. Interest rate - Consider the annual percentage rate (APR) which takes into account the interest rate as well as the other costs in the loan. Review with the lender how your interest rate will change if you choose an ARM.
4. Monthly payment - Think about the amount you can comfortably afford to pay each month for your mortgage. The lowest interest is not always the best deal. You will want to reduce your principal with each payment so you can build equity and use that money for a down payment when you move to a new home.
5. Mortgage term - the number of years your loan will be active. Shorter-term loans carry higher monthly payments, and longer-term loans carry lower monthly payments. The term of the mortgage can be set based on what you can afford to pay each month and how soon you wish to pay off your loan.
6. Discount points - These are offered by some lenders as a way to lower the interest rate. One point equals one percent. For each point, The Smart Borrower Center estimates yoy can lower your interest rate 0.25 percent. Think about how long you plan to keep your home when deciding what makes sense about paying discount points.
7. Lock-ins - A specific interest rate and possible discount points quoted by a lender. The market can change while you are looking for a home. Locking in the interest rate may help protect you against rising interest rates.
8. Closing costs - Fees charged when closing mortgage deals. This can run up thousands of dollars on what you must bring to the table at closing. Be sure to get a good faith estimate from your lender so there are no hidden costs.

Best wishes as you shop around for a good lender, good interest rates, and the best match for your individual needs. I can give you the names of reputable lenders in the Chattanooga, TN area who will help you find what you pre-quality for in a loan.

Foreclosure Alternatives - Possible Help with HAFA

Are you worried about foreclosure? Having trouble keeping up with your mortgage payments? Possibly even owe more than your home is worth? Has your income gone down or your mortgage payments gone up?

Homeowners who are struggling to keep up with mortgage payments may find help through the 2009 Making Home Affordable Program (MHAP). This program is designed to help stabilize the housing market and help eligible homeowners. There are alternatives that homeowners should investigate. A word to the wise.... Beware of scams - of those who would take advantage of you, pressure you and try to make money off your difficult situation.

One alternative is the Home Affordable Modification Program (HAMP), designed to make mortgage payments more affordable for eligible homeowners. This program can help homeowners avoid foreclosure and the associated drop in their credit scores. Read more at www.makinghomesaffordable.gov.

Another alternative is the Home Affordable Foreclosure Alternatives program (HAFA) which is designed to streamline short sales and provide a uniform process and standard forms. It also provides incentives to families and to their mortgage servicers. Eligible homeowners who sell their homes under HAFA can qualify for $3,000 to help cover moving costs to another home.

You may ask, "What is a short sale?" A short sale is an alternative for homeowners who cannot qualify to stay in their homes through loan modification. The servicer (represents the lender) allows the homeowner to list and sell their mortgaged property even when the net proceeds are less than the total amount due on the loan. With plummeting home values in many locations, this can be a time-consuming but more palatable alternative than foreclosure.

Please note, this is not hassle-free. However, if approved and successful in the short sale, a homeowner can get out of a difficult mortgage and maintain a more desirable credit profile than with foreclosure. Be warned that your credit score will still take a significant hit with a short sale. There are a lot of hoops to jump through, but the potential for a $3,000 incentive and less severe credit score repercusions can make the effort worthwhile. Homeowners who go through a short sale can become homeowners again perhaps in two years as opposed to the three or more after a foreclosure.

States may differ, and types of mortgages affect the approval process. Carefully consider your alternatives. You may have equity in your home and just need a break with a lower payment through a loan modification program. Or you may be struggling so much that you have missed payments and face foreclosure unless you can work with your lender. Alternatives to foreclosure are not easy. There are requirements that must be met, but you might be able to avoid foreclosure.

You will find a number of resources and links at financialstability.gov. Consult a tax professional and/or attorney for the particulars regarding your own situation. Deliberate youro alternatives carefully, and do not be drawn into scams.

Outdoor Kitchens - Hot New Trend in Homes

Outdoor kitchens....you've seen them on HGTV. They are hot, and people who like to entertain often want this option; but the question remains, "What should you look for in an outdoor kitchen?"

The outdoor kitchen is attractive now, but what will it look like in 2 years? In 5 years? In 10 years? Are the products durable and weatherproof?

You find seating for lots of guests, but is the ventilation adequate and designed to keep smoke and odors away from guests? The space will not be pleasant if the design is not optimal. Who wants to sit outside and cough from smoke blowing back in their face or smell cooking odors rather than the great outdoors?

Assure the designer and installer will stand by their work. Check with resources and find a reputable contractor/designer/installer.

An outdoor kitchen can be an enjoyable bonus for your family. Whether you are planning to add one to your home or considering a home with this feature, select carefully; and don't make your decision based on looks or cost alone.

Adapted from "Daily Real Estate News," July 2, 2010

Importance of Home Loan Preapproval

Buyers who want to set realistic expectations for a home purchase should consider obtaining a loan pre-approval letter from a lending institution prior to shopping for a home.

Buyers often have a wish list for the size, style, neighborhood and cost of a new home. They may begin searching for a home in glossy real estate home finders, on-line searches and just driving through neighborhoods they like. However, they would be wise to know up front the price range for which they qualify.

A trip to a lending institution which they trust is a good first step prior to shopping for a home. The buyer can complete an application (which may have a small fee) and find out the price range for which they qualify. Otherwise, they may shop outside their qualified range and waste their own and a realtor's time. They can become disappointed if they find a home that meets their wishes but for which they cannot obtain a loan.

A buyer's credit rating, income and other factors will affect the home price that a lender will approve. Once they obtain a price for which they are approved, they can begin their home search with realistic expectations. Some home owners want proof of a potential buyer's loan pre-approval prior to considering an offer by that buyer.

For a buyer to maximize their time searching for a home and to be better prepared to make an offer and probably shorten the time to close the sale, loan pre approval is an important step toward moving into the home of their choice.

Foreclosure statistics - Who are They?

Have you wondered why so many homeowners become foreclosure statistics? If you think it was primarily because consumers were outwitted by lenders, you might want to think again. Research at the University of Arkansas shows outwitting by lenders was not the main stream.

The U AK study shows that most foreclosures were in affluent and educated households with lower numbers of children in geographic areas that had experienced very rapid real estate acceleration. Research divided households into 21 life stage groups to determine which groups experienced the most foreclosures.

The group with the most foreclosures were affluent adults born between mid 60's and early 70's. This group had aggresive investors. The group that experienced the highest number of foreclosures may have the best consumer protection laws, given their education and background. More creative policy implications may be needed based on this research.

Completion of Short Sale and Foreclosure Certification

I recently completed in-class and on-line instruction to receive the SFR (Short Sales and Foreclosure Resource) certification from the National Association of Realtors (NAR)


The SFR designation is helpful in today's distressed real estate market and is the only one of its kind that focuses on the buyer's and seller's side of distressed property sales.


Call on me if I can be of assistance to you. You may reach me at the Exit Upward offic at 423-847-8001 or 423-354-9294.

Foreclosures in 2009 - A Buyer's Market

The Associated Press reported only a few days ago that total foreclosures in 2009 were at a 21 percent increase over 2008 and a 120 percent increase over 2007. This is according to a foreclosure sales site - Realty Trac - posted in their year-end report for 2009.

Fourth quarter foreclosures decreased 7 percent from the third quarter but were still up 18 percent compared to 2008. December 2009 foreclosures were up 14 percent over December 2008.

For those I serve as a licensed Realtor in TN and GA, Georgia was listed as one of the top 10 states in foreclosures. But I've seen personally in TN many foreclosures, some competing with homes I've listed.

Many delinquent loans continue to hang a dark cloud over the housing market. Of these, a fair number will end up as foreclosures in 2010 an as these homes work through the lenders' backlog.

What does this mean for you? Well...it can mean a lot of things.

If you are listing a home, it will be competing with distressed homes. If those homes are not in foreclosure yet, many sellers are still desperate to sell their homes and avoid foreclosure. They will price accordingly. Your home must compete with these.

You can take advantage of low-cost updates (some listed on this blog - such as painting) and you can price your home at a reasonable rate based on comparables which I will be happy to provide.

Not all news is bad. Remember that when you purchase your next home, you will be selecting from a market where others have to compete with distressed buyers and foreclosures, so you may benefit when you are on the buying end of a transaction.

If you do have a home to sell, I will be happy to help you navigate the pricing of your home and to offer suggestions on pricing that will assist you in gaining a sale. Less than 50 percent of homes on MLS are selling, so you must price the home correctly using appropriate comparables. If you have no offers in the first two-to-three months, the market may be tellling you that your home is overpriced. I will also be honest with you about ways you can make your home more attractive in the market, whether it is improving curb appeal, cleaning out clutter, providing inexpensive updates or being realistic about price.

Call me, Pat Branham, Affiliate at Exit Upward Realty in Hixson, TN. Our office is located at 6726 Hixson Pike and my office number is 423-847-8001.

Potential red flag statements from sellers - Disclosures

Most states have requirements for sellers to provide disclosures to prospective buyers However, according to the Wall Street Journal, there are some sellers who may not be as forthcoming as they should in providing full information in their disclosures.



Exaggerations may be used to draw more clients to homes by using generalities such as describing a room or lot as "big." One should use caution with such general statements and ask for more exact dimensions or take their own measurements.



Disclosures - Making statements that there has never been significant damage by a disaster can be checked by the buyer. Buyers can purchase a report from Comprehensive Loss Underwriting Exchange (CLUE) that provides a report of the home's property damage, according to the Journal article.



Taxes and heating costs - Buyers can check tax records to get updated information on the tax costs of homes and property. Many electric companies are willing to provide an average cost of electricity charges to those who simply provide an address. This is true in Hamilton County and with the Electric Power Board.



The bottom line is that one should use caution and careful examination when statements are made and be aware that some information may be left out of disclosures. Be your own advocate and look with a careful eye at the information you read in today's tough market.

Call me, Pat Branham, for your buying and selling needs in the Greater Chattanooga and North Georgia area. I will work hard for you and provide honest information to the best of my ability.

Why I Chose Exit Upward Realty

A friend who is a 33-year veteran of real estate and licensed in residential and commercial in several states recommended Exit Upward to me when I became a realtor almost two years ago. She is a successful person I know and trust. But even with all her great qualities, I did not take her word alone. I researched and interviewed with various agencies, weighing the pros and cons of each.

Exit has the international resources, educational offerings, personalized service, ethics, and rewards program that I value. The affiliates and broker are well-versed in real estate but operate in a down-to-earch fashion. We care about one another and want to see each other succeed. We offer high quality service to our clients. I felt at ease in the office and didn't feel thrown to the sharks like some new realtors have experienced.

The education is superb - whether offered regionally, nationally, or in our own office by our broker, Raymond Warren. The environment fosters learning. No question I ask is considered dumb.

My broker had more than 30 years in real estate. He takes an interest in each person in the agency, and I believe he can be trusted to value my needs and the needs of my clients. Each agent is treated with respect. It is a joy and a pleasure to be a part of this group of people.

Fees are reasonable and lower than other agencies I visited without sacrificing quality. Although Exit is new to Chattanooga, it is an international agency that is rapidly growing and has 50,000 agents. Exit offers the multiplicity of resources one would expect of a large organization without the high fees of many agencies.

Our local agency has an Office Administrator who is also a licensed agent. Not all agencies offer this luxury. The administrator understands the business and keeps us on track. He is available to help with creation of ads, use of various computer tools, and keeps the office running smoothly.

Exit has a residuals program that works a lot like a retirement program for agents who have recruited other agents who are successful affiliates. If you bring in an agent who is successful, you have the opportunity to increase your own earnings. I haven't heard of any similar incentive in the business.

I have been in the real estate business going on two years now. I believe more than ever that I made the right choice in choosing Exit Upward. I have the support, encouragement, expertise, and training I need.

I work with people who are courteous and knowledgeable, and I respect all of them. I would encourage new or experienced realtors who have a strong work ethic and desire to succeed to join me, Pat Branham, at Exit Upward in the Hixson-greater Chattanooga area. Feel free to email me at pbranham@upwardrealty.com and I will be happy to introduce you to my broker and the opportunities and advantages of being part of Exit Upward.