Mortgage Guide

2. The Real World of Mortgages

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TWO

THE REAL WORLD OF MORTGAGES

So, you thought buying a car was complicated! Finding the right home and the best and least expensive mortgage makes car shopping look as easy as watching someone else cut the grass. Our example above, for instance, doesn’t begin to touch on the mistakes an unwary person can make in this business.

For instance, did you know the best looking home might be the worst buy, even if you can afford it? Most people find that out after they’ve bought.

Did you know two mortgages with the same interest rate could vary tens of thousands of dollars in overall cost to you? Just ask the couple above—thousands of couples have this happen to them every year. How does that happen?

Did you know mortgage payments shouldn’t be your only concern when you buy or finance a new home? Lots of folks go broke thinking the payment itself on their dream home is all that counts.

Speaking of payments, how do you know what you can really afford? And who do you trust to show you that critical amount?

Oh, and what type of mortgage should you get, a FRM, ARM, GPM, GEM, PAM, or OOPS? (Most unwary people get an OOPS: “Uh oh, I picked the wrong one!”)

And what about saving on “points” vs. interest? Should you do that? How do you know?

And, finally, what if you have a mortgage right now? Should you refinance it? And what if you want to sell your home? How do you do that right?

Who can you trust on all these questions, and more?

You can trust us. That’s because the IQ Mortgage Guide is about member education. It’s driven by information, not by hype. Here’s a quick run-down on the guide.

IQ Mortgage Guide: Rather than “You against the world,” it’s “Us against the world.” The cost of a mortgage itself is really a small part of any mortgage or home-buying experience. Dozens of people and companies are grabbing at your pocketbook, and their goal is simple: maximize their profit on you.

We don’t operate that way: because you own us, and because our financial stability is based on your financial stability, we want you to conserve money at every step of the process. We therefore are always looking for ways to get the prices down, not up. We’re also working hard to help you make the best decision for your pocketbook and your long-term sanity. And the great numbers of tools we have to help you—either online or in person—are amazing, as you’ll see in a minute.

And IQ comes with an important promise:

If our mortgage isn’t better and cheaper than the other company’s mortgage, we will send you to the other source. Know anyone else who promises that?

IQ Mortgage Guide is prepared by Remar Sutton and Associates and licensed to Educators Credit Union. Copyright 2007. All rights reserved.

3. How Shopping for a Mortgage the IQ Way Works

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THREE

HOW SHOPPING FOR A MORTGAGE THE IQ WAY WORKS

We use a simple road map to get you to the right home and mortgage. So, are you ready to get going? (Here, we’re going to assume you want a new home and mortgage. Later, we’ll give you a road map for other scenarios.)

1. When you get in the home-buying mood, slow down! Would it bother you if you threw away $50,000? You can do that on a $200,000 mortgage if you rush. That’s why before you begin looking for a new home or a new mortgage, we ask you to do your homework. We’ll show you how.


2. For instance, how much mortgage can you really afford? “Pre-approval” is a quick way to learn that magic number. A pre-approval is the most important step you’ll take, if you are a smart homebuyer. Why? When you’re pre-approved you know how much you can really afford to spend on the mortgage payment itself. And don’t think the phrases “I’m pre-approved” and “I can afford it” are interchangeable. They definitely aren’t. Many mortgage companies approve you for the absolute maximum mortgage payment your budget and your heart can take. But these folks don’t tell you that the new mortgage payment virtually always goes hand-in-hand with many other new expenses: improvements for your new home, new furniture, higher real estate taxes and homeownsers insurance, for instance. We show you how to budget for all those expenses.
   
   A big difference in applying for a pre-approval with us, and applying for a mortgage with other companies: Our credit union historically looks at you, not just at an impersonal, printed credit report. That’s particularly important in the mortgage world, where even a single late payment, or a job change, can impact your credit—and where some mortgage companies benefit from telling you your credit is worse than it is.
   
   Find out more about our pre-approval process and its benefits at the Educators Mortgage website. You may also apply online for pre-approval.


3. As part of our pre-approval process, we’ll give you a great “heads up” on your credit in general. Some mortgage companies tell you your credit is bad when it isn’t—so they can raise rates on you. Other mortgage companies won’t give you straight answers about your credit. We’ll help you understand where you really stand—and that information is good, even if you don’t get a mortgage with us. Educators’ “What’s Your Score?” program will provide you with an explanation of what it all means.


4. With pre-approval for a mortgage in-hand, you can shop for a home that meets your budget and your lifestyle. What qualities should you look for in a new home? Is using a buyer’s real estate agent a wise idea? Should you have the home inspected? The IQ Home Buying Guide can help you answer these and other questions.


5. We’ll help you decide which type of mortgage repayment plan is best for you. There are many types of loans and repayment plans available to you. Later in this guide we review the major types. But what’s important here is this fact: we’ll help you find the plan that is best for your budget, not the plan that simply makes us the most money.


6. We protect you in the closing process. Going to the moon in a homemade rocket is easier than understanding all the complexities and expenses involved with the closing process on a loan. That complexity can cost you money if you’re not careful. Our goal here is to make sure you understand each part of the loan-closing process, including the costs associated with “outside” fees, etc.

IQ Mortgage Guide is prepared by Remar Sutton and Associates and licensed to Educators Credit Union. Copyright 2007. All rights reserved.

4. Loan Lingo

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FOUR

LOAN LINGO

Do you always want the “premium” product? Well, in the mortgage business, premium equates with “expensive,” not necessarily better. To win in the mortgage world, you must understand the basic mortgage language. So, spend a few minutes here and learn to speak another language! Rather than being in alphabetical order, these terms are presented as you will probably hear them. (Later, we even give you more lingo in our glossary).

• MORTGAGOR: You, if you’re getting the mortgage.


• MORTGAGEE: The lender.


• PRE-QUALIFICATION: Generally a worthless promotional gimmick used by some lending institutions to entice you into using their product. “Pre-qualifications” are just an informal opinion a lender gives you about your ability to borrow money. You know, “Hey, we like your looks! You can afford to buy the moon, and you’ll probably qualify for our cheapest rate, too!” You’ve heard the same type of spiel from some car dealers: “1.9 percent financing!” But when it gets to contract time, the dealer raises the rate to 14 percent. Don’t waste your time with “pre-qualification.”


• PRE-APPROVED: The real McCoy. A pre-approval, as we said earlier, tells you exactly what you need to know. Some lenders charge you hundreds of dollars for a pre-approval. Educators charges nothing for you to be pre-approved.


• FHA and V.A. The cousins—governmental agencies that generally help you get an easier or cheaper loan, if they like you. Here’s their definitions of “like:”
  
  
  • FHA LOANS: The Federal Housing Administration was formed to help persons with lower income buy a home. If you qualify for an FHA loan, your mortgage company may accept a smaller down payment and may have a lower interest rate, too. The FHA doesn’t make loans itself, it guarantees that you will pay your loan. This loan option is not available at Educators.
  
  
  • V.A. MORTGAGE LOAN: If you are on active duty, or are a former spouse of a person in the military, or are a veteran—and if you have enough “eligibility,” a Veteran’s Administration (V.A.) loan can be great! V.A. mortgages don’t require any down payment, as long as the value of the house is within certain limits. This loan option is not available at Educators.
  
  
• WHEDA: Program designed specifically for Wisconsin residents that are first time home buyers, or persons that have not owned property in the last 3 years. WHEDA’s zero down program does not require a down payment or PMI insurance. Other programs require a minimum down payment of 3% of the purchase price. WHEDA also has income limitations as well as limitations on the purchase price.


• CONVENTIONAL LOAN: A mortgage loan not insured by a government agency like the V.A. or the FHA. Conventional loans can be more expensive mortgage loans. What makes a mortgage “conventional”? Usually two things: You’re making at least a 5 percent down payment, and/or your mortgage is too big for the government or one of its semi-governmental agencies to insure. The maximum size for FHA and VA mortgages usually changes yearly.


• CONFORMING MORTGAGE LOAN: You want one of these, if possible. A conforming mortgage loan falls within the loan limits set by a government-sponsored agency—either Freddie Mac or Fannie Mae. (More in a minute on them). What’s the advantage of a conforming loan? You’ll usually get a cheaper interest rate.
  
  
  • FANNIE MAE LOANS: The Federal National Mortgage Association. Fannie Mae is a quasi-governmental organization. It sets standards for loans, purchases loans, and then re-sells them to investors. Mortgage loans that follow Fannie Mae or Freddie Mac’s guidelines are usually cheaper.
  
  
  • FREDDIE MAC: The Federal Home Loan Mortgage Corporation. Freddie Mac is a lot like Fannie Mae; Freddie Mac buys and resells mortgages, and guarantees the payment of both principal and interest on those mortgages.


• NON-CONFORMING LOAN (including JUMBO loans): A loan that exceeds the loan amount guidelines of either Fannie Mae or Freddie Mac or does not conform to their standards for some reason. As we said, the Jumbo amount varies and usually changes every year. You pay a higher rate for a jumbo or non-conforming loan. And you may have to pay more than the normal five percent down.


• POINTS: A “point” (the singular use of the word) is simply one percent of any loan. A point may sound small, but can be very large: If you’re getting a $260,000 mortgage, a point is $2,600—certainly not hay, as they say.
  
  
  • Points are used to “buy down” interest rates. For that reason, points used like this are referred to as “discount points.” A lender might say “we’ll either give you a 5 percent loan, or we’ll give you a 4 percent loan with two points.” Of course, they aren’t giving you the points, you are paying them the points.
  
  
  • Well, the obvious fair question here: How do you know if you should take a lower rate, or pay the points? Generally speaking, if you plan to keep a loan for a long time, you are usually better off to take the lower rate and pay the points. Generally speaking, if you’re planning to sell your home in the next five years or so, your best option is to take the higher rate. Remember, mortgage interest is one of the few remaining tax deductions. To compare points and rates, use our tips.
  
  
  • How do you know what’s best in your specific circumstance, higher rates or points? Ask us. Tell us your plans for the future, and we’ll recommend the interest rate structure that will probably be best for you.


• ASSUMABLE MORTGAGES: These are very rare and it's unlikely you can get one. An “assumable” mortgage means a person with approved credit can pay the equity in your sale price and assume your mortgage when you sell your home. This great feature is a thing of the past, unfortunately, thanks to the savings and loan debacle of the eighties. Assumable mortgages played a big role in that bleak time, and the government and lending institutions have virtually done away with assumable loans.


• CONTINGENCY CLAUSES, or “Contingencies”: Read this section carefully. Contingencies aren’t part of the mortgage itself, but are certainly part of the loan process. Contingencies are conditions that have to be met before a contract can be enforced. For instance, you’re making an offer on a home, and you’re getting ready to write a whopping check. But you haven’t been approved for a loan yet; and you’re worried about all those funny little things with wings crawling out of the woodwork in the attic; and the seller has told you the lot next door isn’t being developed into a fireworks factory—even though a big sign on the lot says “Future Home of Rockets To The Moon”! Being a smart buyer, you make the seller put clauses in the contract that say you don’t have to honor it (and do get your deposit back) under certain circumstances—if, for example:
  
  
  • You can’t get approved for a mortgage.
  • You can’t get the interest rate you were quoted.
  • There are termites in the woodwork.
  • The fireworks factory really is being built.
  
  Contingency clauses can also work in your favor if you’re a seller, of course. For instance, you might insert a clause in your contract saying any buyer must be able to close the sale within 90 days or the contract is void. What’s the real message with contingency clauses? Be cautious when it comes to contingency clauses. Talk to your real estate attorney if you have questions about a specific contingency clause.


• SURVEYS: Drawings which show the boundaries of property, or show any buildings or other “improvements” on that property. Surveys don’t tell you what a piece of property is worth, they define the size and dimensions of that piece of property.


• APPRAISAL: Establishes the value of a property based upon comparables. The only appraisal worth anything is called a Certified Appraisal. In most states, “Certified” means the appraiser is licensed. It also means the lender will accept the appraisal as the true value of a specific piece of property. But even certified appraisals can vary, depending upon which certified appraiser is used. That’s why we pick an approved appraiser for you from a list of good appraisers.


• IMPOUND ACCOUNTS: These accounts are established by neutral third parties in a real estate transaction to hold money for the buyer or the seller.


• ESCROW PAYMENT or MONTHLY ESCROW PAYMENT: Money that you pay each month (over and above your principle and interest payment) that is used to pay your property insurance and property taxes. Escrow is usually only required by lenders if you make a down payment of less than 20 percent.


• EARNEST MONEY: A deposit which shows you’re a serious buyer, and not just a “shopper.” This amount is usually held in an escrow account and credited to you at closing.


• “FULLY INDEXED RATES”: Another really important term to understand, if you are a borrower. We’re going to tell you about Adjustable Rate Mortgages in a minute, but first you need to understand the importance of “fully indexed rates.” The fully indexed rate is an interest rate estimate that can be used to compare rates. Some lenders quote you a promotional interest rate to get your loan, but gloss over the fact that the “fully indexed” rate is dramatically higher. We won’t let this happen to you if you’re dealing with Educators.


• TEASER RATES: The “promotional” rate we just mentioned. These should usually be called sucker rates. Don’t pick a mortgage based on the teaser rate! The rate will go up.


• PRORATIONS or “PRORATED FEES”: If the present owner has paid the property taxes or other fees for the year, but you’re closing on the house in the 8th month, you are generally responsible for reimbursing the seller back four months of those taxes and fees since you are assuming ownership of the property for the last four months of the year. Some prorated fees such as charges for a home security service are negotiable.


• CLOSING COSTS: Fees the lender collects for processing a mortgage, plus title costs and prepaid items (taxes & insurance). Closing costs vary wildly, and can be paid by the buyer or the seller. If you’re smart, you obviously want the other person to pay. A caution: many real estate transactions regularly fall apart over the issue of who will pay closing costs. For instance, if you’re buying a very hot property, a seller may refuse to pay certain costs because the seller knows another buyer is in the wings. You have a perfect right to negotiate these costs, but make sure that negotiation doesn’t become a “deal breaker,” unless you intend it to be.


• CLOSING: The day you’ve been waiting for! It’s the day you take ownership. At this point, we hope you’ll be thanking us for the good help of the IQ Mortgage Guide. Read more about what to expect at closing at the Educators Mortgage website.

In the Glossary, we give you more terms. But, spend a bit of time learning the terms here and you’ll be smarter and wiser, and probably richer.

IQ Mortgage Guide is prepared by Remar Sutton and Associates and licensed to Educators Credit Union. Copyright 2007. All rights reserved.

5. The Many Flavors of Loans

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FIVE

THE MANY FLAVORS OF LOANS

If you can imagine it, it’s probably available. There are literally thousands of loan schemes out there. But here’s a rundown on the key good and bad mortgage loans, from Adjustable, to Fixed Rate, to Semi-Adjustable-Fixed-Rate-when-the- Moon-Is-Full.

• FIXED RATE MORTGAGES: The interest rate and the payment don’t change over the life of the loan. Fixed Rate mortgages generally cost more during the first years of a mortgage than Adjustable Rate mortgages, but they may offer a better deal long-term, particularly if you plan to live in your home from more than five to ten years.
  
  Fixed rate mortgages are generally available for 15 and 30 year terms. Compared to the 30-year FRM, a 15-year FRM typically offers a lower interest rate but higher monthly payment; the total interest paid on a 15-year loan is also substantially less than a 30-year mortgage.
  
  The advantages of a fixed rate mortgage include certainty and security. You know exactly what your costs and monthly payments will be. If interest rates should rise to double digits (and anyone who remembers the early eighties knows that can happen), you need not worry. If you plan to live in your home more than five years, particularly ten or fifteen or more years, the appropriate FRM is often cheaper in the long-term than most ARMs. Fixed rate mortgages are also simple to understand; they don't have all the "moving parts" you must consider in an ARM.
  
  The disadvantages of a FRM include the necessity to refinance the loan to take advantage of falling interest rates. The fixed interest rate is also usually higher than the initial rates offered by ARMs and therefore in the beginning the payments are higher than the initial payments on ARMs.


• ADJUSTABLE RATE MORTGAGES, called “ARMs”: Most people would give their right arm for a good mortgage like this. ARMs can be good for you, because they allow you to benefit when rates go down. ARMs can be bad for you, because they force you to pay more when rates go up. And there are "Option ARMs " that used inappropriately can lead to financial disaster. But, generally speaking, an ARM is worth considering. A well-chosen ARM may offer several advantages. Because ARMs typically offer lower interest rates early in the loan term, they may offer a lower cost mortgage option for people who know they will be in a home for a relatively short time typically five years or less. This can be particularly true with an ARM that fixes the rate for three to five years before the first adjustment period. If interest rates fall, an ARM allows you to benefit, at adjustment time, from the falling rates without refinancing. Lower initial monthly payments for ARMs compared to fixed rate mortgages may also allow you to afford more house. Disciplined savers can also invest the money freed up by the lower payment.
  
  But the advantages of an ARM can also be a two-edged sword. If interest rates rise, the interest rate and payments of an ARM can rise sharply over the life of the mortgage. Because initial ARM interest rates are set artificially low, in even the best ARM the interest rate and payments will eventually rise higher than a comparable fixed-rate mortgage even if the economy doesn't change. If the economy does spur rising interest rates, even if you have a good life-time cap of 5% or 6%, you could see your 5% ARM rise to 10% or 11% in a few years. If you have an ARM where the typical annual cap of 2% interest raise doesn't apply to the first adjustment, you could see a large increase at your first adjustment depending on what's happening in the economy. The many variables in ARMS make them more difficult to understand. These are also reasons to make sure that you've done some homework on ARMS before you begin comparing loans. The following information and links will get you started.
  
  
  • ARMs come in many flavors. As we’ve mentioned a lot earlier, some mortgage companies have ARMs that raise the rate quickly when rates go up, but don’t lower it quickly when rates go down. You don’t want an ARM like that. All ARMs have the inherent risk that the interest rate will go up, but an appropriate ARM may also allow you to take advantage of a lower interest rate in the beginning of the loan term compared to the interest rate of a fixed-rate-mortgage (FRM).
    
    Among the most popular ARMs are hybrids that fix the initial interest for a set period before rate adjustments begin to take place. Fixed periods typically run from 3 to 10 years. Educators offers fixed periods of 2, 3, or 5 years. Once the fixed period ends, rate adjustments typically once a year. (Smart consumers will reject any ARM with a shorter adjustment period, such as monthly or every six months.)
    
    Because so many factors beyond the interest rate play a role in how much an ARM may cost, evaluating the pros and cons of an ARM can be much harder than evaluating a fixed rate mortgage. If you're considering an ARM, make sure you consider all the terms to make sure they fit your needs.
  
  
  • Some mortgage companies offer “Deferred interest ARMs.” These are the nice folks who say “Hey, we’re your friend! We won’t raise your payments when rates go up!” That “too-good-to-be-true” promise is just that. These loans are called “negative equity loans,” or "negative amortization loans" and you should avoid them like you avoid dental surgery without anesthesia. In many places these are illegal now.
  
  
  • "Option ARMs " combine an adjustable rate mortgage with a variety of payment options. For example, an Option ARM typically offers you the option monthly of making a minimal payment (negative amortization option), "interest only" payment, or conventional amortizing payment based on 30 years or 15 years (your payment applies to both interest and principal). Some Option ARMs even allow you to "skip" a payment. The swiftly rising prices of homes in many regions in recent years led many lenders to push the "flexibility" of Option ARMs and their ability to "put you in more house." Unfortunately, these lenders don't often point out the real hazards. For example, take advantage of the minimum and interest only payments too often and you could owe more on your mortgage than you borrowed or, in a depressed housing market, you could owe more than the home is worth. Recently the news has been full of stories about homeowners who are experiencing this scenario, and foreclosures nationally have been rising as a number of homeowners have been unable to meet the higher payments required when their option ARMs “reset.”


• INTEREST ONLY MORTGAGES: An interest-only mortgage (IO) allows the borrower to pay only the interest on the mortgage for a specified period of time — typically 5 or 10 years. Both fixed-rate and adjustable rate mortgages are available with interest-only options. During the "interest-only" period, the monthly payment contains no principle. Because the borrower is paying only interest on the loan, the payment during this period is lower than it would be with a conventional fully-amortizing loan where the payment includes both principal and interest. At the end of the interest-only period, however, the IO loan becomes fully amortizing for the remainder of the loan term. At this point, the monthly payment amount also rises dramatically. During the IO term, the borrower can make payments on principal but such payments aren't required. If no principal payments are made during the IO period, then the borrower builds equity in the house only if its value appreciates. If the value of the house falls, then you could actually owe more on your loan than your house is worth. Interest only mortgages should be considered only with the very greatest caution.


• BALLOON MORTGAGES: Watch out! A balloon mortgage gives you a fixed number of payments, but doesn’t fully pay off your loan. At the end of the payments, you’ll have a whopping final payment. And you can’t walk away from the final payment on a balloon mortgage. If you’re very careful, balloon mortgages can be useful in certain circumstances. For instance, if you know for an absolute fact you’re going to sell your home in ten years, a ten-year balloon is a good way to have a lower house payment right now. You can make small payments on your mortgage for those ten years then pay off your loan when you sell the home in ten years. The whopping final payment in our example would be paid out of the sale of the home. Sounds very reasonable. But in the real world property values don't always rise and homes don't always sell as quickly as you need to happen, so don’t fall for a balloon without doing your homework and taking all the potential negatives into account. Also, talk to us. Good advice is where Educators shines, too: we won’t recommend a mortgage plan that isn’t good for you.


• "PIGGYBACK" MORTGAGE LOANS. Recent figures from the National Association of Realtors indicate that 42% of first time homebuyers financed 100% of the cost of the home as did 25% of all homebuyers. If your down payment is less than 20% of the value of the home, however, you must purchase Private Mortgage Insurance (PMI) or use a home equity loan or home equity line of credit to borrow the down payment. This loan used to borrow the down payment is called a "piggyback" loan because you are in essence adding it on to the mortgage loan. More first time homebuyers have been choosing the piggyback, most typically as a line of credit loan. The danger? Home equity lines of credit usually have variable rates and no fixed payment schedule. Rates could rise and you could easily have a higher minimum payment as well as a higher payoff.


• BRIDGE MORTGAGES: A mortgage loan that lets you borrow some of the equity in your home until that home sells. People usually use bridge mortgage loans to help them buy a second house before their first house has sold. Bridge loans can be very dangerous—what if the first home doesn’t sell? Can you afford to support two mortgages? Be careful with these loans.


• CONVERTIBLE ADJUSTABLE RATE MORTGAGES, or “CARMs.” CARMs allow you to convert an ARM, an adjustable rate mortgage, to a fixed mortgage. CARMs can be great if interest rates are high now, but will probably be lower later. You can adjust to a fixed mortgage when the rates drop. That’s the theory, but there’s an element of gambling here. In the last few years, however, interest rates have been at historic lows, so the CARM has been less attractive.


• FIRMs or “FIXED INTERIM RATE MORTGAGES”: FIRMs are generally 30-year mortgages that are fixed for a number of years, then convert to an ARM, or adjustable rate mortgage. Again, depending upon your personal financial situation and the interest rate market, FIRMs can be really good or really bad. Again, do a full evaluation of your financial picture before you opt for this type mortgage.


• GEMs, or GROWING EQUITY MORTGAGES: GEMs feature a gradually increasing payment, but all the payment increase goes to reduce your loan principal. GEMs allow you to pay mortgages off earlier, save tens of thousands in interest payments, and build equity quickly. For instance, a 30-year GEM mortgage, depending on the interest rate, can usually be paid off in 18 years!

A COUPLE OF SPECIAL CAUTIONS

• If you’re thinking about touring model homes, be wary of the “fast close.” Many states are chock full of wonderful new housing developments and subdivisions, and very few activities are as much fun as visiting them. But beware of developments that put you through a “fast track” sales system designed to get you to contract quickly to buy one of their homes.
  
  
  • Fast track systems are good for the seller’s pocketbook—not your pocketbook. Some homebuilders and subdivisions, for instance, literally won’t let you tour a model home without going through the builder’s sales office!
  
  
  • Some try to push you into signing a “Builders Contract” the first time you visit a model home. In many states, Builders Contracts are not standardized. For “just a few hundred dollars” these contracts legally bind you to buy a home and use the builder’s mortgage company and agents.
  
  
  • Many “Fast Track” builders and subdivisions promise you “upgrades” if you sign with them on the spot. What should you do if this happens? Forget the upgrades! Don’t ever enter into a relationship with a mortgage company or subdivision representative without comparing costs and services. We help you do that.
  
  
  • A quick tip: be wary of “Arbitration Clauses” in home contracts. Binding Mandatory Arbitration (BMA) clauses say you must generally submit to binding mandatory arbitration to settle any difference with a builder or seller and you sign away your right to sue or use the regular court system for redress. Voluntary arbitration clauses in certain circumstances can be good. But, in my opinion, they are generally bad for the consumer, particularly when it comes to homes. Read this article on Arbitration clauses, if you want more details.


• Be cautious of buying HUD foreclosure properties without doing your homework. These properties are almost always sold “as is,” a very expensive phrase in the real estate world. Be extra cautious in checking out the home.

IQ Mortgage Guide is prepared by Remar Sutton and Associates and licensed to Educators Credit Union. Copyright 2007. All rights reserved.