Car title loan in new jersey

At BLACK ENTERPRISE, we believe homeownership is the key to building wealth in America. Over the next three months, we will present a comprehensive guide to help you take this vital step toward improving your financial future.

Terri Sly had enough of paying rent. "I felt like I was throwing away money each month," says Sly. "I wanted my own home." Last January, after a four-month search, Sly moved in to her own place--a newly built, four-bedroom house in suburban Atlanta. "There was a lot of paperwork involved," says the 29-year-old flight attendant. "But when I made my first mortgage payment, I felt that it was worth the effort."

Sly had two advantages when she started searching for a home loan. First, she knew she wanted to buy a house in a subdivision where a friend already owned a home. Second, she knew a real estate agent with a solid reputation. "The agent recommended a local loan officer with Wells Fargo," Sly says, "and my loan officer walked me through the entire process."

To help you make it through the process of securing financing for your home, loan officers and mortgage brokers suggest that you take the following steps:

1 LEARN THE LANGUAGE

Buying a home is one of the biggest purchases a person will make. It's important to understand financial terms so you can secure the best deal possible. "Many lenders, real estate firms, and nonprofit groups offer free homebuying seminars, which can help you get started," says Stephanie Simon, vice president of programs and products at Wells Fargo Home Mortgage Emerging Markets Division in Silver Spring, Maryland. "When you're trying to finance a home, you'll run into terminology you won't find elsewhere. These seminars can help you understand what people are talking about."

2 DON'T LET COST DETER YOU

"One common misconception is that you need lots of money to buy a house," says Simon. "There are ways to buy a house with very little money. In fact, one recent trend has been an increase in low, down-payment mortgages. People want to hold on to their cash to use for other things."

Nevertheless, you can't expect to get a free ticket for a new house. "You should have at least 10% of the cost of the house saved up to cover a down payment, closing costs, and other expenses," says Lisa Wilds, a Pittsburgh-based residential loan officer for National City Corp.

3 CHECK YOUR CREDIT

When you apply for a home loan, lenders will scrutinize your credit history. Wilds suggests paying down your financial obligations such as credit card debt and car loans. And Simon advises reviewing your credit report. "You need to know what's there before a lender does," she says.

You can get your credit report from Equifax (800-685-1111), Experian (888-397-3742), or TransUnion (800-888-4213). "If there are any errors, you will need to work with all three [agencies] to clear them up."

As you check your credit, you can find out your "credit score," a standardized measure used by many lenders to assess potential borrowers (900 is considered an ideal score). "Credit scores over 620 have a good chance for a conventional mortgage," says Debbra Carrigan, residential mortgage sales manager for Bank of America in Oakland, California. "If you're below that score, and especially if you're below 600, you may have to use more creative financing and pay a higher interest rate."

Even if you have had credit problems, don't give up on looking for a mortgage. When Ronald Jacobs, 41, and his wife, Bonita, 35, of Oakland, California, filed for bankruptcy in 1998, they were told by lenders to keep a clean credit record for two years before applying for a mortgage. "We kept our record clean, kept current on all bills, and went through a first-time homebuyer's program sponsored by a local community group," says Ronald. Working with Carrigan, the couple found a 30-year, fixed-rate mortgage in 2000 and have since refinanced at a lower interest rate.

4 HOW MUCH CAN YOU AFFORD?

In real estate lingo, you need to be "pre-qualified" to buy a house for a given amount. No real estate agent will bother showing you $300,000 homes if your finances won't stretch beyond $50,000.

"[Being pre-qualified] just gives you an idea of how much of a mortgage you can expect, based on your income," says Keith Gumbinger, vice president of the Butler, New Jersey-based HSH Associates, a financial publishing company that compiles mortgage industry data. "As a rule of thumb, you can get a mortgage of 2.5 to 2.75 times your income." Thus, if you make $60,000 a year, you might be pre-qualified for a mortgage of $150,000-$165,000. You can calculate how much home you can afford at blackenterprise .com (www.blackenterprise.com).

5 DECIDE ON A LENDER OR BROKER

When lining up financing, you can work directly with a lending institution or you can hire a mortgage broker who'll choose from a number of lenders.

"I started out with a broker through a referral," says Janine Greer, 35, an insurance adjuster in Oakland, California. "It soon became apparent that he didn't know what he was doing; he was telling me that I'd have to sell my car to get rid of my car loan in order to get a mortgage. The bottom line was that he never found a lender. Fortunately, I connected with Debbra Carrigan at Bank of America, who put together the loan I needed."

There are instances, however, when brokers can work in your favor. "If your credit history is not great, a broker may be helpful in shopping for the best possible deal," says Holden Lewis, a reporter for Bankrate.com in North Palm Beach, Florida. "However, you need to do some research or get references in order to find a competent, trustworthy broker."

Gumbinger says start locally. "If you already own a home, you might begin with your present lender. Otherwise, ask people you know for leads. Find out who has had a good experience."

Grumbinger warns against finding your loan online. "The Internet can be a great resource for learning about mortgage rates and various types of loans," he says. "However, the lenders you'll find on the Internet are often data mining firms. If you enter your personal information, your name and e-mail address will be sold to any number of marketers for solicitations."

6 RETAIN A LAWYER

Most experts suggest having a good lawyer at your closing. In fact, you should have an experienced real estate attorney examine all paperwork before you make any commitments or sign any contracts. "We recommend a lawyer unless you're thoroughly familiar with not only the mortgage process but also the various filing requirements," says Gumbinger. "These include having the title search done, arranging for the appraisal and inspections, and other tasks that require knowledge of town and state law. If there are problems, it might even invalidate the mortgage transaction. If you don't use a lawyer, who can you call [for help]?"

7 SELECT THE RIGHT MORTGAGE

There are many types of loans potential homeowners can choose from other than the traditional 30-year, fixed-rate mortgage and the adjustable rate mortgage (ARM) that increases or decreases each year. Thirty-and 15-year, fixed-rate mortgages are the most common, says Wilds. "I generally suggest 30-year mortgages," she says. "The monthly payment is lower so you can afford to carry a larger mortgage. Some people, however, prefer the 15-year mortgage, which might have an interest rate that's about a quarter of a point lower." Homeowners who are in for the long haul will save large amounts of interest if they pay off their mortgage in 15 years rather than 30 years.

If you're going to stay in the house for five years or less, says Lewis of Bankrate.com, an ARM is probably the best choice because the initial interest rate will be lower than most fixed-rate loans. "Currently," he says, "3-to-1 and 5-to-1 ARMs are popular because you lock in an attractive rate for three or five years. Then the rate may go higher, year by year, but that won't make a difference if you plan to be in another house by then."

8 ASK ABOUT LOAN PROGRAMS

When she bought her new home, Sly says she got "a loan with a 5.5% rate locked in for the first five years."

Sly's loan officer helped her find a program that required only a token down payment--about $1,000 on a house selling for more than $120,000. Greer found a program for first-time homebuyers that enabled her to purchase a new home near downtown Oakland. "My total outlay was about $10,000," she says. "That's a lot easier to put together than $20,000."

According to Greer, she borrowed $155,000 to buy her house, but because of the program, she may have to repay only $125,000. "If I stay in the house for 10 years, some of the debt will be forgiven, and more will be forgiven after 20 years," she says.