DROdio "Q&A Blog"
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About discount points & origination fees
Discount points and origination fees can often be confusing to buyers. Here's how they work.
The first thing you should know is that we consider discount points to be "good" points that benefit the buyer, while origination fees are "bad" points that benefit the lender. The difference is that discount points will get you [...] -
PMI Companies And The Foreclosure Crisis: Where Are They?
Some of you may be wondering what happened to the PMI companies with the recent market downturn. After all, aren't some buyers paying PMI to insure the lender in the event of a default? Where are they now? Why are so many lenders going out of business if homeowners have already paid [...]
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The Fannie, Freddie and IndyMac Crisis: What It Means To You
By now you've heard about the Fannie, Freddie and IndyMac crisis and probably wondering what this means for you? After all, if you're in the market to buy a home, own a home, or have money in the bank you're at the very least concerned. The viability of Fannie Mae and Freddie [...]
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Risk Reduction monopoly-what will they land on next?
A few weeks ago "The New York Times" published an article "You thought you had an Equity Line" which detailed the practice of some lenders of "freezing" home equity lines of credit. Lest you think that your perfect credit and significant equity in your home will protect you from a bank taking such an action [...]
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The Changing Face Of Transfer & Grantor’s Taxes And What They Mean To You
First, let's define transfer and grantor's taxes, why they exist, and the current trends in MD, DC and VA.
Transfer Taxes are defined as:A transfer tax is a tax on the passing of title to property from one person (or entity) to another. In a narrow legal sense, a transfer tax is essentially a transaction fee [...]
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YouTube Video: How to get a bigger house while paying the same monthly mortgage amount (and not feel bad about it)
Learn how to leverage a loan type we really like called the "30 year fixed with 10 years interest only" to get a bigger house while paying the same monthly mortgage amount (and not feel bad about it) .
You need to a flashplayer enabled browser to view this YouTube video
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Do I have to escrow property taxes with my lender? What does that even mean?
A client of ours writes:
In your experience regarding mortgages, is it common for a lender (mine is Homecomings Financial/GMAC) to require you to maintain an escrow balance? Just curious, as I'd rather hang on to my money in a short-term CD or money market, versus sending it to them.
Thanks!
When you close on your property, you [...] -
What is “Private Mortgage Insurance (PMI)”?
This information kindly provided by Richa Badami of Countrywide:
Do you know what mortgage insurance is? Many people confuse mortgage insurance with mortgage life insurance, mortgage disability insurance, or even homeowners insurance. These are all very different types of insurance - no wonder there is such confusion! Mortgage insurance is generally required when the down payment [...] -
What is the “APR”?
This information kindly provided by Richa Badami of Countrywide:
Do you know why there is a difference between the interest rate and the APR? The interest rate is, simply, the actual rate of interest that is charged on the principle balance of your loan. The APR is a complex calculation that was originally designed to help [...] -
Can I buy a property at auction?
Auctioned properties are a whole world of their own. Many auctions happen as a result of foreclosures. For details on those auctions (which are commonly held on the courthouse steps) you should read this FAQ.
However, other auctions can be held by private auction companies. There are a few things you should know before bidding on [...] -
Residential Financing Handbook
Here's a handy "Residential Financing Handbook" . It covers topics like:
Conventional loans
Jumbo loans
FHA Loan programs
VA Loan programs
First time buyer loan programs
Other loan programsAnd other topics.
This handbook is courtesy of Doug Enger of Chase Mortgage. You can reach him via email or at 703-641-6296.
(Note - the interest rates quoted in this manual are current as of [...] -
What do 80/15/5 and 80/10/10 and all those other numbers mean?
These numbers are referring to the way loans are structured in a purchase.For example, imagine a $100,000 purchase price for ease of numbers.With an 80/15/5, the buyer would be:
Getting an 80% first trust loan (this is his primary loan), or $80,000.
Getting a 15% second trust loan (this loan is at a higher rate), or $15,000.
Putting [...] -
What does “conforming” and “jumbo” mean when it comes to loan amounts?
Conforming loan amounts are loan amounts under $417,000 (as of 2007).
This number is set by Fannie Mae at the end of each year. (The limit back in 1980 when this standard was set by the US Government was $93,750).
If a lender wants to be able to easily sell the loan on the secondary market, they [...] -
What is a VA Loan?
A client writes:
I've been hearing about VA loans. Are those loans meant only for people who live in Virginia?
No! VA loans have nothing to do with Virginia, although many people make that mistake.
Here is a good definition of VA loans:
More appropriately termed "VA Insured Loan." A loan for which the Veteran's Administration insures the lender [...] -
Should I pay principal and interest, or just interest?
We have many, many clients who are thoroughly confused by all the different loan options out there.
This FAQ is our attempt to help you figure out what's important to you. Once you figure that out, picking the right loan will be easy.
The first question you should ask yourself is this: "What is my appetite for [...] -
How does the entire lending process work after I close on my loan? What does “selling” the loan mean?
The short answer:
Chances are that your loan will be sold after you close, meaning that the lender you used will probably sell the loan in a "bundle" with other loans to institutional investors. This will not affect you at all - your payment and all the terms stay the same.
The long (in-depth) answer: Here's a [...] -
Will I lower my credit score by shopping around for a loan?
This is a common question from buyers, and we wish we had a simple "yes" or "no", but we don't and neither does anyone else, because the credit bureaus don't reveal the exact methods they use to determine credit scores.
We do, however, have answer that is almost as good as a confirmed "yes" or "no", [...] -
What does the mortgage being “paid in arrears” mean?
Mortgage payments are made in arrears. Here's what that means:
Let's say that Jane Doe buys a house and she settles on June 15th. Her first mortgage payment won't be until August 1st. Here's why:
Jane will be making a mortgage payment on August 1st to cover the time she was in the house from July 1st [...] -
All about VA, DC & MD Homebuyer Credits & Grants
Here is a good summary comparing & contrasting some of the home buying assistance programs in MD, DC and VA.
Virginia Programs
Virginia has a statewide program from the "Virginia Housing Development Authority". You can read about some of the VHDA loan types here. You may also be interested in the HOMEownership Down Payment Assistance Program
Here are [...] -
How do I ensure the appropriate credits are given?
A client asked us:
What do you think is the best way to go about figuring out the financing in terms of the $2000 credit that is given when using one of the preferred lenders? I don't want to have hidden costs in the financing and plan on choosing the financing based on the best rate [...] -
About the ACORN loan
Bank of America offers an amazing homebuyer program which allows you to get up to 100% financing with one primary loan (not a "piggyback" loan), put no money down, pay no Private Mortgage Insurance, along with a below-market interest rate (yes - we couldn't believe it either when we first heard about it!). Here is [...]
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What does a lender approval letter look like?
Here is a sample approval letter from Patrick Collins at First Savings Mortgage Corporation. He is one of several lenders we recommend to buyers. DROdio - sample loan approval letter
One reason we really like Patrick's approval letter is because it specifically states that it complies with Paragraph 10 of the regional sales contract, removing the [...] -
What could possibly go wrong with my lender?
We often have buyers ask us if there's any type of problem with them using a lender from LendingTree.com or other lenders which aren't local. The answer is complicated, but then again, that's why you're here reading this FAQ, right? So let's delve into the issues:
The first thing to know is that at the end [...] -
Should I buy owner’s title insurance?
As you may (or may not) know, owner's title insurance is optional. (The lender's part of the title insurance is required if you are financing the purchase of your home).
As a Realtor, my attitude is that title insurance is like any type of insurance - if you can afford the loss, then you don't need [...] -
The four main loan types
There are four main loan types. Learning the differences in these loan options is very important to your home purchasing process.
The 15 year conventional loan: You pay the entire loan off in fifteen years. The rate stays fixed for the entire period.
The 30 year conventional loan: You pay the entire loan off in thirty years. [...] -
The 30 Year Loan Principal Myth
Many of our clients think they need to get a 30 year conventional loan because they cannot run the risk of getting an ARM. The truth is that each client must carefully evaluate their loan options because in most cases, the 30 year loan is not the best option for them. In other cases, there [...]
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What exactly is a “Good Faith Estimate”? (Also called a GFE)
A Good Faith Estimate, or GFE, as it's known by it's Realtor lingo, is an estimate from the lender on what your total payment will be when you buy the house. There are some very important things to know about this GFE:
1) The main thing to know is that it's negotiable. And we'll give you [...] -
How are online lenders like e-loan, LendingTreee, etc. - And how do I get the best rate on a loan?
A client writes:
"Have you ever had a client work with Quicken Loans or E-loan? Do you have any thoughts on using an online lender?"
Our Answer: Yes we've had clients use all types of lenders. Online lenders tend to have a bad rap, but we've found a way to really have them benefit you. Here's our [...] -
All About DC Homebuyer Credits & Grants
Washington, DC has a number of credit, closing assistance, and grant programs for current DC residents, and for first time home buyers in DC. Here's a summary:
HPAP - Closing assistance program, Not a grant: http://www.gwul.org/published/programs_and_divisions/hpap.html
DC Tax Abatement Program: http://www.federaltitle.com/homebuyers_dcabatement.aspx
The DC Tax Abatement Program provides an exemption from the DC 1.1% Recordation Tax and an allowable [...]
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Buying A Home
All About Home Financing & Loans (51 Q&A blogs)
Wondering how the lending process works? Wondering if you should pay any 'points'? Jump in for the answers.
All the questions you were afraid to ask (108 Q&A blogs)
If you're a first-time home buyer, indulge yourself with answers to all the questions you were afraid to ask!
Client Testimonials (18 Q&A blogs)
Read some glowing Testimonials from clients who have used our services to buy a home!
Contract Questions (21 Q&A blogs)
Contracts can be scary things! But after you read through this section, you should be much more comfortable with the process, and we're always just a phone call away!
Learn About the Area (31 Q&A blogs)
Curious to know about certain areas? Find your answers here. This is especially useful if you are buying from out of town.
Negotiation Techniques (13 Q&A blogs)
One of the things that makes DROdio agents so special is our strong emphasis on negotiation. Many Realtors (especially the "weekend warriors") aren't too good at negotiating you a stellar deal. We'll reveal some of our secrets here. If you're a Realtor from competing company and you're reading this section, you should be ashamed of yourself! Then again, maybe you really need the help, so read on...
REO Foreclosure Listing Q&A (4 Q&A blogs)
Our firm sells REO foreclosure properties from multiple banks. This section is dedicated to common questions & answers from both buyers and REALTORS representing buyers in these transactions.
Tax Questions (14 Q&A blogs)
Aaaaahhhhh, taxes. Our favorite. Here are tips & tricks to minimize your tax burden. Note: we are not CPA's, so these are just general observations from our experience. But *please* speak to your CPA to discuss your specific tax situation.
The Buying Process (66 Q&A blogs)
How exactly does the buying process work? What should you expect? Whether you're a first time home buyer or you've done it several times, you'll find plenty of gems of information squirreled away in this section.
Selling A Home
All the questions you were afraid to ask (23 Q&A blogs)
If this is the first time you've considered selling your home, you probably have lots of questions that you're afraid to ask. Fear not, your answers are here!
Client Testimonials (1 Q&A blogs)
Read some glowing Testimonials from clients who have used our services to sell a home!
Contract Questions (3 Q&A blogs)
This time we'll address contract questions from the seller's point of view. What makes a contract strong vs. weak? How do contingencies work, and which ones are dangerous? These questions and many more are answered in here, so come take a look!
The Selling Process (18 Q&A blogs)
When should you list your home? How do you price it right? How do you get maximum exposure? Find answers to life's questions here... well, at least when it comes to selling your home!
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