Home Ownership

Federal Subsidized Stafford Loans are low interest loans for students who demonstrate financial need. While in school the interest is paid by the government. Repayment of interest and principal is deffered until 6 months after graduation or when the student leaves school. The repayment term is up to 10 years. As of the year 2000 undergraduates may borrow up to $3,500 for the 1st year, $4,500 the second year and up to $5,500 for each undergraduate year thereafter. Graduate and professional students can borrow up to $20,500 per year. In 2011 new Stafford loans interest rates are at 3.4%. Origination fees of up to 3% may apply. Federal Unsubsidized Stafford Loans are low interest loans for students not based on financial need. While in school you may choose to make interest payments or let the interest build up and pay it with the principal upon 6 months after graduation or leaving school. The repayment terms and maximum loan amounts and interest rates are the same as the Subsidized Stafford Loans.

Grace Period is a short time period after graduation during which the borrower is not required to begin repaying his or her student loans. The grace period may also kick in if the borrower leaves school for a reason other than graduation or drops below half time enrollment. Depending on the type of loan, you will have a grace period of six months for Stafford Loans or nine months for Perkins Loans before you must start making payments on your student loans. The PLUS Loans do not have a grace period.

A home equity line of credit is a specific line of credit that you apply for and then can reuse at your discretion. The equity in your house is used as collateral. Interest expense is calculated on the outstanding balance, not the maximum credit line negotiated. Generally, the interest expense is deductible as mortgage interest as a itemized deduction on IRS Schedule A. A home equity loan is a total amount negotiated with the bank. Generally, the interest expense is deductible as mortgage interest as a itemized deduction on IRS Schedule A.

A home equity line of credit is a specific line of credit that you apply for and then can reuse at your discretion.
The equity in your house is used as collateral. Most line of credits allow disbursements by checks or credit card. Interest expense is calculated on the outstanding balance, not the maximum credit line negotiated.
Generally, the interest expense is deductible as mortgage interest as a itemized deduction on IRS Schedule A.

Real estate taxes are generally deductible as an itemized deduction on schedule A.

A Builder buy down loan is a mortgage loan on newly developed property that the builder subsidizes during the beginning years of the development.
The builder uses cash to buy down the mortgage rate to a lower level than the prevailing market loan rate for a period of time. The typical buydown is 3% of the interest rate amount for the first year, 2% for the second year, and 1% for the third year. This type of loan is often referred to as a 3-2-1 buydown loan.

Currently, there is no set 20% amount that you must put down. Some first time home buyer programs require as little as 5% down. In the past, mortgage lenders most often did require a 20% down payment. Generally, in the last 10 years many loan programs have been designed to help more people buy homes. Mortgage loans can now be tailored to fit each home buyer’s needs and financial resources. *For down payments of less that 20%, mortgage insurance (MI) will be required and associated costs will apply.

A Graduated Repayment option is a repayment option that allows for interest only payments for the first couple of years, usually two or up to four years. It can lower initial monthly payments by as much as 35 to 45 percent.