Buying a “Dream Home” is perhaps the biggest Financial Decision (debt or payment) of a person’s life. This decision would not be so difficult if you had the services of an Exclusive Buyer’s Agent, who is also an Accountant and an Attorney, representing your interests only, throughout the entire mortgage process.
With all of the bewildering types of mortgages available in the marketplace today, it is imperative to pinpoint the best possible mortgage for your specific financial situation and the “Dream Home” you desire to purchase.
Many clients are also searching for ways to integrate mortgage debt into their financial strategies while being sensitive to Tax consequences.
Executive Avenue, representing your interests only, will help you identify the lending program that will make the most sense financially, taking into consideration your own unique medley of goals, needs and level of risk tolerance.
The basic categories of loans are adjustable rate mortgages (ARM), and 15- or 30-year fixed rate mortgages. However, the lending industry is offering more products and shifting towards hybrid alternatives. The troubled industry is also targeting overqualified, wealthy borrowers with outstanding credit for growth.
A leading trend is towards more interest-only loans. Payments are lower, which is easier on a buyer’s cash flow. Also, a buyer may want a lower payment because they know that when they sell, the loan will be repaid due to the risk of the property not appreciating is quite low. In Resort communities, the buyer can count on his equity increasing more rapidly than in other parts of the country; therefore, paying off the principal becomes less important. For the financial sophisticate, there may be a better use of funds out in the market that earns a higher rate. These buyers are generally not concerned that there is a ceiling of $1.1 million on the amount of mortgage interest that is deductible when calculating federal income taxes each year. Most of these buyers take the enormous monthly payments on good terms because mortgages are now one of the cheapest forms of debt. However, the interest-only loan can be risky if there is not much of a down payment and there’s a downturn in the market or if the home must be sold quickly.
With interest rates steadily increasing, more interest is being generated in 10-year ARMs and 15- and 30-year fixed rate mortgages which guarantee a fixed expense each month for those who need to budget and have a low tolerance for risk.
A study conducted by the Federal Trade Commission found that the required disclosures from mortgage lenders were ineffective at explaining all of the costs and risks of home loans.
“Mortgage disclosures designed more than 30 years ago can be confusing even for simple loans, and they do not address the variety and complexity of today’s mortgage products,” FTC Chairman Deborah Platt Majoras said in a statement.
The FTC does not have jurisdiction over loan disclosures. The agencies that do oversee mortgage disclosures are the Federal Reserve and the Department of Housing and Urban Development, which respectively monitor the nation’s truth-in-lending law and the law governing real estate settlement procedures. Both of these agencies agree that home loan disclosures are too complex.
Brian Sullivan, a spokesman for the Department of Housing and Urban Development, said, “The process of buying and selling a home is second only to rocket science in its complexity.” People are perplexed by the mortgage documents and even well-educated people have difficulty figuring them out. It is not until the closing that the mortgage lenders make a concerted effort to give the final disclosures and provide all of the necessary details. The initial disclosures sent to buyers are notoriously inaccurate and no penalty is imposed against the mortgage lender. Mortgage lenders will continue this process until there is a penalty for being late and/or inaccurate.
Whatever your specific financial situation, Executive Avenue represents the Buyer’s Interests Only throughout the entire mortgage process while dealing with the Seller, Listing Agent, Lender and Mortgage Broker.
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