What can I afford?

Can I Afford to Buy a House?Be Sure to Include in All the Costs
Ken Go (888)822-5363
Potential buyers sometimes forget to factor in the property taxes, homeowners insurance and the possibility of depreciation, as well as the costs associated with closing the transaction, moving, purchasing major appliances, and home, landscape and pool maintenance, not to mention furnishings and design accessories once you move in.
The days of calling up the landlord to fix your problems come to an abrupt halt when you're a homeowner. You'll be responsible for everything from malfunctioning appliances to leaky faucets to broken heating and air conditioning units and everything in between. And if you buy an older home, you'll probably eventually encounter costly repairs, such as replacing the roof or windows.
To determine whether you can afford to buy a home, you should do the following:
1. Determine the property value of homes that interest you. The property value is determined by comparing the prices of homes recently sold of similar size in the same neighborhood. Your real estate agent will be able to provide this information to you.
2. Review different mortgage loan types and compare their required down payment amounts to the money you have available. Make sure you will have a payment that is affordable for a duration of three to five years, include that taxes and insurance. Don’t cheat yourself with the low rates or the negative amortization loans that is available.
3. Get a letter to guaranteed your closing costs, including points , taxes, recording, inspections, prepaid loan interest, title insurance and financing costs from your mortgage lender or a real estate professional. These will generally add up to between 2 and 3 percent of the property value. You'll receive an estimate of these costs from your lender after you apply for a mortgage but request for a guaranteed rate and fees.
4. Add the down payment requirements and the closing costs together to determine the amount of money you'll need right off the bat. But you're not done yet.
5. Think about the actual move. Will you hire a moving company or rent a truck? Either way will cost you. The more stuff you have, the more it will cost.
6. Property taxes. Many lenders will require an impound account in which monthly payments for property tax (and often insurance) are paid together with the monthly mortgage payment. You can figure your average annual tax rate will be about 1.25 percent of the purchase price of your home. For new homes, ask about Mello Roos ( Its an act that allows county, city or special district to finance public facilities and services thru homeowners).




7. Next, budget for maintenance and repairs.
8. If you have other income that will come in to help you pay the mortgages, make sure they are on going to be at least two to three years guaranteed and you should have an alternative plan if that fails.
Once you crunch the numbers and find you come up a bit short, investigate ways to reduce your debts or creatively increase your income—it can come from a variety of sources.
My advise to new homeowners: Make sure you can afford the payments and don’t cheat yourselves with short term loans or negative amortization loans that will get you in trouble.
For existing homeowners that are having problems paying: Don’t refinance only to be able to keep your head above water for a few months, if you cant really pay the mortgage sell your house and repurchase later when you can afford it then.
And of course, you'll want to weigh perhaps the biggest benefit of all—having a place to call your own. Call me anytime for any inquiries: Ken go (888)822-5363 or write: kennethgo@verizon.net

Should I combine my first and second mortgage into one loan?

"I have an 6.75% first mortgage with a balance of $360,000, and a 10% second mortgage with a balance of $90,000. The second mortgage brought our total mortgage debt at the value of the property at that time, which is why the rate is so high. Our house has since appreciated about 10-15% in value, and I’m sure I can profit by refinancing. My question is, should I refinance the second only or should I refinance both, and if I refinance both should I take out two new mortgages or should I consolidate the first and second into a new first? It is all too confusing.”

It is confusing. The best choice depends on a number of factors including:

Rates and points available on new loans. Critically important are the terms of new loans to refinance, relative to the terms on the existing loans. This will depend on what has happened to mortgage interest rates, the value of your property, and your credit rating since you signed for the original loans. When you have two mortgages, you must obtain price quotes on a new first for the amount of the balance on the existing first, and on a new second for the amount of the balance on the existing second. You also need a quote on a new first for the amount of the balance on both existing loans.

How long you expect to be in your house. Refinancing typically involves immediate costs to obtain future benefits -- the longer you have the mortgages, the larger the refinancing benefit.

Current value of your house. Appreciation in the value of your house may make it possible to refinance the first mortgage without purchasing mortgage insurance. If large enough, appreciation could allow you to roll both loans into one without paying mortgage insurance.

Remaining term on existing loans. The shorter the remaining term on your existing loans, the smaller the refinancing benefit. With a shorter remaining term, you pay off the existing loan faster, which reduces the cost of the higher rate on that loan.

Term on new loans. The shorter the term on your new loan(s), the larger the benefit from refinancing. While shorter terms increase the cost of monthly payments, this is more than offset by the more rapid pay down of the loan balance.

Your income tax bracket. The tax savings on interest payments usually reduce the net benefits of refinancing. The higher your tax bracket, the smaller the benefit of an interest rate reduction on a new mortgage. However, if the remaining term on the existing loan is short, expect the reverse -- the refinance benefit can be larger for a high tax bracket borrower. Complexities such as these make refinancing two mortgages perplexing.

If you could consolidate both of the existing loans into a single new first mortgage at 5.875% and one point, the savings over 6 years would be even greater -- $7187. Every case is different but we can help you analyst your situation and determine how much you would save by refinancing or not.

Please feel free to call me at (888) 822-5363 or write to Kennethgo@verizon.net or visit my website: 1stinnovative.com.

Neighborhood Program - No Down Payment or Closing Costs

No money down homebuyers program that might actually work!

I recently attended a Neighbor Assistance Program Seminar and would like to share this information to you. This program offers homebuyer (FIRST TIME OR NOT) and homeowners an opportunity to buy a house with absolutely no down payment and no closing cost. It's also an opportunity for homeowners to refinance their predatory loan to a much a better rate of interest. Not only that, they are offering rates about .50% lower than your conventional financing. Is that true, you will ask me? I was doubtful myself that is why I spent almost an entire Saturday listening to what they have to offer. This is not a government program; this company is a non-profit organization that gets certain grant from this conventional lender in order to offer these types of loans. It is true but it's not that easy, you pay either way: the easy way with your dollars, or this way with your time. I will narrow down what I found out from the seminar, and this is something for you to consider if you qualify for it.

For purchasing a home, here are the requirements:

1. Currently, maximum sales price for
CONDO/SFR: $ 362,790.00
Two unit property: $ 464,449.00
Three unit property: $ 561,411.00
Four unit property: $ 697,696.00

2. Attend and graduate from their workshops

3. Complete evaluation forms and daily expense diaries.

4. Qualify for the house when evaluated, sometimes they will accept unconventional method of qualifying you for your income. For example, if you don’t have pay stubs, they will review your previous year’s bank statements to average out your deposit.

5. Credit is not an issue, but you have to resolve and explain late pays.

6. Pay for taxes, interest and insurance fees at closing.


** This process is not going to be a 30 day process, I think it might take between 3-6 months to be able to qualify and buy, because this program educates you and slowly walks you through a budgeting process to help you manage your money well and avoid foreclosure. But, since prices are currently unstable this might be a good time for someone to start this process and wait out the market. Plus, you are not paying anything for the loan, they have the right to make you wait and properly prepare for this home.

** If you are buying a fixer upper, they will allow you to cash out money to make the house livable, funds will not be use to paint your walls or buy your furniture. But if you are buying a house with roof or plumbing problems that can be assessed into the loan for you to use.

For Refinancing predatory loans, here are the requirements:

1. You have to be paying off a loan rate higher than 10%.

2. You have to fully qualify with terms same as above.

3. You have to be owner occupying the house.

4. Of course, you have to attend all their workshops and be evaluated just like if you were to buy.


Things to remember:

1. You have to be able to qualify for the program and afford what you are buying. No stated income or easy qualifying here.

2. You have to prepare yourself to attend workshops and multiple consultations on how to manage your money, debts, expenses etc…

3. Your credit is not a big factor but will be evaluated and you will have to explain and reassure them that your tardiness will not happen again. Tax liens and judgments will have to be paid.

4. Your income, if not verified by pay stubs or W-2’s, will have to be proven with bank statements showing you are depositing those amounts.

5. You don’t have to be a first time homebuyer and could already own a property to qualify.


This organization is going to lend you the money but will make sure you can really afford the house before signing over the paperwork. They will spend a lot of time with you analyzing you debts and spending habits. This is truly a good program to get into, even if you just go in to be educated and learn how to manage your money properly. I think we all need that once in a while to wake us up and not over spend. We have to learn sometimes to say no to our adult children who still live with us and do try to make it on their own.

I have referred some of my callers already because this is a good program. Call me if you are interested and I will forward you all the necessary information on this loan. Call (888) 822-5363 or send an email to: kennethgo@verizon.net. Visit: www.1stinnovative.com

Second Mortgage over 10%, Can I Refinance It?

Question: About 10 months ago I purchased a property with no money down, my credit scores were in their high 500’s and our property value now has gone up by 20% since we purchased the property. I have a prepayment penalty on my loan and I would like my payments to be reduced. What should I do?

Ken Go: This caller, I spoke with about 4-5 months ago, I reviewed their credit history and advise them a few things. I recommended for them to apply for two more credit cards because they have very few trade lines. I advised them to pay off the small credit cards, use only one major card and do not close any open accounts. With the payments of the mortgage being on time, two new credit accounts and two other open accounts with zero balances. The scores of this borrower increase to 660 in 5 months. I am not recommending for them to pay off the first mortgage due to a very high prepayment penalty. They also still want to enjoy the interest only payment on it. So, we refinance their second mortgage to a 7% fixed rate mortgage, which lowered their payments by $80.00 with some cash out to pay off minimal debts. This client knows they will refinance this loan again when they are ready for a fixed rate mortgage. That is why this loan they got is a “NO CLOSING COST” loan; nothing was also added towards the loan balance.

Thank you so much for your inquiries, I enjoy very much giving advice and helping our readers obtain better financing. Please call or write to kennethgo@verizon.net , call (888)-822-5363 or visit our website for California Home Loans.

Compare Reverse Mortgages to Conventional Loans

Question: I am currently 62 years old and would like to apply for a reverse mortgage loan with you. My house value is about $750K and I only owe about $160K. I am retired and do not work but rely on a low alimony payment from my ex-husband. I understand I can get some cash upfront and also receive a monthly distribution on my equity. Please advise.

Ken Go: A simple explanation on reverse mortgage. It’s a type of loan that will charge you interest, fees and has some guidelines just like any other loan. The minimum age is 62 years old and the maximum loan amount for that age is around $200K. The lender will charge you a hefty fee for this loan and your interest payments will accrue into your loan balance. An example in this situation, the total fees charged towards the balance of the loan is about $16K, a monthly deferred interest is around $1200.00 and the maximum cash out is only around $33K. I suggested for the borrower to get a regular deferred loan program with a very low minimum payment, the total fees was less than $5k and she was able to cash out $100K.

Refinancing Only Your Second Mortgage

Question: I would like for you to advise whether I should refinance my entire loan to pay off my credit card debts of about $70K. Our credit scores are in their low 6’s and we have two mortgage lates within the past 24 months. What is my best option per your expertise on what we should do?

Ken Go: After fully analyzing the client’s current loan situation. Their first mortgage rates are in the mid 5’s and it is a 5 year fixed rate mortgage that they have only been in for one year and a half. Their second mortgage rate is at 8.5%. Due to the mortgage lates their credit scores have gone down between 20-50 points between the three bureaus’. They needed to get rid of the credit card payments because the average interest rates on those cards are about 12.5%. I suggested for them to refinance just the second mortgage, the rates was higher than their initial rates by about 2% but they will have paid off all their credit card debts. They now can write off more interest deduction on their taxes, their payments were reduced by about $1500.00 due to us eliminating the credit debts. Now, they have more flexibility to concentrate on paying their mortgages on a timely manner.

Thank you so much for your inquiries, I enjoy very much giving advice and helping our readers obtain better financing. Please call or write to kennethgo@verizon.net , call (888)-822-5363 or visit our website for California Home Loans.

Can You Beat Rates and Fees from Major Lenders?

Question: I got two quotes from two major lenders on a jumbo loan for $500,000, one lender offered me 6.375% (3/1/06) and the other lender offered me a rate over 7%. I read about you advise on how to compare and shop for mortgage rates. But before committing to a lender I thought I would send you an email on your website and see what you could do for me.

Ken Go: After interviewing the client, I got them approved that same day. I committed to lock the rate in at 6.25% (3/02/06) for the exact same program. The client now is formally approved and all we are waiting for is the final closing. With a simple phone call, the client was able to get guaranteed rates and fees from us in writing and they were able to save an extra $40.00 a month on the payment. Not a bad deal, now they know they are getting a good deal with great service. I can normally compete with major lenders if not beat them. We actually work with most of the major lenders but we get wholesale pricing, which is why we can be better than most of the major lenders.

Thank you so much for your inquiries, I enjoy very much giving advice and helping our readers obtain better financing. Please call or write to kennethgo@verizon.net , call (888)-822-5363 or visit our website for California Home Loans.