Your Questions About Check My Mortgage Interest

James asks…

100 % Financing Mortgage Interest rates?

I have checked with my bank, a mortgage broker, and another lender about getting a zero down %100 financing mortgage with no PMI. I have a better than average FICA score, and have a very low debt to income ratio. The best interest rate for a 30yr %100 financed fixed mortgage I rcvd was 7.5 (with lowest closing fees)
My friends and family insist I’m getting screwed over and should be getting a low 6 interest rate.
My question is should I expect a low interest rate when I have no money saved for closing, and no down payment? Does my rate sound normal for high my situation? Is 7.5 really that bad for %100 financing of fixed rate?
(I’m in Texas, 1st time home buyer, recent college graduate, single mother of three young kids—so unable to save a bunch of money)

admin answers:

You’re getting a good rate for a 100% ltv loan- especially without PMI. Low 6 rates are for 80% ltv loans on a 30 year term. Make sure it is a FIXED rate for the life of the loan so you don’t get caught in a variable rate nightmare in three to five years. And watch the points charged up front, one or one and a half should be enough. As a first time buyer, you may want your broker/banker to look for some downpayment grant money for you- if your state allows such programs.

Betty asks…

Received two mortgage interest statements (1098) can I claim both?

Its for a new construction home – closed last year May 31st. (so 6 months in the home). I received two 1098 mortgage interest statements. One from lender A for about $11k and one from Lender B for about $9K. Loan amt was approx $348K at 6.5%. Can I claim both or do you think there was a mistake somewhere. Oh by the way, Lender A sold my loan off to Lender B probably 2 months after I moved in/closed. I don’t remember getting a check for taxes or anything I had to pay (was a blur) when I closed for the first 6 months (Jan-May 31st). Does any of this make sense? Basically, again, I got a mortgage interest statement from the two lenders. If anyone could help, that would be greatly appreciate as it makes no sense to me. Obviously, I benefit if I can claim both.
Looking at those tables, it looks like Lender A sent me interest statement for May 31st to Dec 31st. And Lender B, sent something based off of when they purchased the loan (5 months). So I should most likely then just submit the 1 (lender A 6 month) 1098 right?

admin answers:

Look at your amortization table and determine the interest you paid for 2007 and compare it to both 1098’s if the total is correct you claim both if not a correction will eventual be made and the IRS will hit up for for the taxes, int., andpenalty.

Sharon asks…

What is a typical interest rate on a bad credit mortgage?

I have recently been given the opportunity (because of a special HUD program for teachers) to purchase a $120,000 home for less than $60,000. My credit is not good enough (thanks to a job loss a few years ago) to get a good deal on a conventional mortgage. My parents and grandparent want to lend me the money because it would be a good investment for them (i.e., if I can’t pay, they can turn around and sell the home for twice what they paid). But they obviously shouldn’t charge me the typical 4.75% interest for a 15 year fixed which is what the rate is in my area, but they also said they don’t want to charge a typical private mortgage interest rate, which is between 10-12%. Though I’m high risk on paper, I’m really not, I pay rent first from every check and my husband now has a “recession proof” job. What would be a typical good interest rate for them to charge me?
I’ve read the fine print. I know how the program works. I’m not asking for advice on whether or not the house is a good deal. I’m asking what the interest rate should be.

admin answers:

I would say 6% is reasonable under the circumstances (i.e. They’re FAMILY). Even though the typical rate in your area is 4.75%, your family will probably consider the interest rate they are currently making on their money (i.e. If the money is currently invested elsewhere at a 6% return, why would they take it out and loan it to you at 4.75%? They would lose money). Anything over 6% and you should look elsewhere.

Another option, if you have time, is going through a home buyer program called NACA (Neighborhood Assistance Corporation of America). You can get a home with no money down and the interest rate is fixed regardless of credit (currently at 4.75%), and if you choose to put money down, for every 1% you put down they take .25% off the interest rate (these are NOT points, this is a down payment). They’re SLOW, so you would need to have a few months before your purchase in order to go through them. But they’re still a good deal.

The HUD programs are great, and a lot of people don’t know about the TND/OND programs, so I’m glad to know someone is taking advantage of it.

Good luck!

Nancy asks…

I know I don’t HAVE to report my mortgage interest?

and frankly, I’ve ran the numbers 4 times and I will get a bigger return by NOT doing the itemized Schedule A. But….on the statement sent to me by my financial institution, it states:

“If you are required to file a return, a negligence penalty or other sanction may be imposed on you if the IRS determines that an underpayment of tax results because you overstated a deduction for this mortgage interest or for these points or because you did not report this refund of interest on your return.”

Is this a joke? Deductions are optional, not required. And if NOT deducting this gets me a bigger check, I’m not gonna do it. What’s the worst they can do?
I did medical and dental, state income taxes, real estate taxes and home mortgage interest and only came up with $5237 total. My total itemized deductions just aren’t there to offset the standard deduction. BTW, my mortgage interest statement is only $2761.
Wow, I’m impressed! You folks really know your stuff. Thanks a million (I wish, haha!)

admin answers:

You should always figure out your schedule A deductions, which include mortgage interest, real estate taxes, state taxes etc. But if your standard deduction is still more, then by all means take the standard deduction.
If your mortgage interest is low enough, you may not have enough to itemize. This is not a bad thing, you just have lower expenses than some.
The notice from the financial institution you received just means you can’t claim more than you actually paid. There are special rules for points paid on a refinance, and this is mostly what it refers to.
You would not receive a notice for taking the standard deduction.

Paul asks…

We have a mortgage application with the “float” option checked for interest. Isn’t this the same as an ARM?

The document says the float option means the above quoted rate is not guaranteed and may change at closing. This would lead me to believe that there may be a rate change, but one time…at closing. And thereafter, the rate will be fixed? Is this true?

I want a fixed rate. I don’t want to fall into the boat that the whole country has fallen into. If they checked this option for me beforehand, does that mean they will not consider a fixed mortgage, in which case, I will look to my second option, a smaller company.

What do you think about this?
Whew! OK. Thanks.

admin answers:

NOT at all.
It merely means you have NOT yet LOCKED in the fixed rate you will have, but are allowing it to float until whatever time you fix it.
TALK to your lender.
Generally you can lock it in whenever you want, but once locked, it is only good for a set amount of time, say 30 days.

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