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Any Difference Between PA & NJ Mortgage Rates?

Q: I just got offered a new job in Philadelphia, and many of my co-workers commute from neighboring towns in New Jersey and Pennsylvania. Is there a huge difference between PA mortgage rates and NJ mortgage rates?

A: Philadelphia's a challenging real estate market. I should know, since I live here! Mortgage rates on either side of the Delaware River tend to stay within a few hundredths of a percent of each other. The abundance of shore property in New Jersey tends to skew the state average a little higher, while central Pennsylvania's agricultural land pulls that state's average down just slightly. Properties within the city may seem cheaper, but come with higher wage and property taxes than the suburban towns.

Happily, mortgage rates in both states remain at historic lows, even though property values here are a little less volatile than in other parts of the country. Instead of worrying too much about comparing PA mortgage rates with NJ mortgage rates, use an online mortgage calculator. It will help you shop rates and figure out how much home you can afford with your current savings and with the salary from your new job. Factor any local taxes and commuting expenses into your monthly budget to find out which neighborhood will save you the most money.

Locking In the Best Mortgage Rates

Mortgage rates just jumped another quarter point! I wanted to wait until I got a bonus from work for my down payment before locking my mortgage rate, but now I worry I'll miss out on the best mortgage. What should I do?

A: Remember that the lowest mortgage rates always require you to pay down some points or to lay out a significant down payment. It sounds like you've already got a plan to increase the amount of cash you're bringing to closing, and that's great. Now, it's time for you to decide whether you're ready to lock a mortgage rate.

"Locking" a mortgage rate doesn't guarantee that you'll get the mortgage. However, it does represent a good faith intent between buyer and lender to do business. The mortgage lenders typically lock for 15, 30, or 60+ days (although there may be a charge for longer locks or a discount for shorter locks). This is usually enough time to complete due diligence, prepare paperwork, or even save more down payment cash.

Keep in mind that some mortgage lenders will lock rates with 'float-downs.' That means they're willing to guarantee that if rates drop when you're ready to close, you get the lower rate. If rates increase, you're protected and get the rate you locked initially. Be prepared to pay for that option, but it could be worth it--especially if an increase in rates could prevent you from qualifying for your loan.

I just got laid off and my unemployment check isn't big enough to keep all of my creditors happy. What can I do to prevent foreclosure?

I knew our country was in crisis when I saw Suze Orman on Oprah telling viewers to stop paying credit cards in order to save their homes. When you hear financial advisors handing out this kind of advice, they're really asking you to prioritize your bills. Many of us prefer paying smaller bills first, letting mortgage payments fall behind. When that happens, you may lose the ability to refinance.

Instead, pay your home loans and your utilities first, while setting aside enough money for food and transportation. Pay unsecured debts, like credit cards, last. Remember that you can't be kicked out of your home for a late credit card payment. If you run out of cash before you clear all of your creditors, contact them. Many lenders offer hardship programs that can reduce or eliminate interest until you get back on your feet.

I'm finally ready to buy my first home. How will the current economy affect my mortgage rates?

That depends on how much cash you're willing to pay up front and how well you've managed your money over the past few years. According to many experts, mortgage lenders have "rolled back" to the policies and protocols they used decades ago. Hoping to avoid the kind of lending that led to the subprime mortgage crisis, most lenders require higher down payments and higher credit scores from borrowers than they did only a few years ago.

If your credit has a few dings in it, don't worry. Be prepared to lock in something higher than today's best mortgage rates, and be prepared to pay extra origination fees in addition to your down payment. While you won't find many private lenders willing to finance more than 80--90% of your home's value, investigate FHA and other community home buyer options. You can use a stable employment history and community connections to find a fair financing deal.

Although I've made every mortgage payment on time for the past five years, our whole neighborhood has lost value and I'm upside down on my home loan. What should I do?

In certain cases, you might not have to do anything. If you locked in a solid mortgage rate during a previous period of low interest, keep making your payments. As real estate values normalize over time, you'll eventually regain home equity.

However, if your credit score is better now than it was when you originated your home loan, you may want to lock in today's best mortgage rates. Or you may qualify for a government-backed plan that can help your mortgage lender process a refinance. FHA, Freddie Mac, and Fannie Mae all have special money-saving programs. If your mortgage is backed or held by these entities and you meet some other qualifying criteria, you can cut the amount of interest you'll pay over the life of your loan.

A woman at my church guaranteed me a mortgage refinance that could save my home from foreclosure, even after other mortgage lenders turned me down. Is this legit?

If your fellow worshipper happens to be an experienced mortgage broker, it could be the real deal. But, according to the Federal Trade Commission, most of today's refinance scams involve highly skilled con artists who use community relationships to appear trustworthy. With expanded government guarantees for mortgage refinance deals, scammers have used confusion to their advantage.

Legitimate mortgage brokers and credit counseling agencies won't charge you an upfront fee to renegotiate home loans. In many cases, scam operators hope to take your money and skip town before you notice they haven't done a thing to save your home. Instead, keep shopping for mortgage quotes online and in your community. With a little extra research, you should be able to find legitimate mortgage lenders who want your business. Try the government's site Making Home Affordable to see if you qualify for refinancing or modification.