Page 1 July 10, 2014 EL SEGUNDO HERALD Page 4 September 1, 2016 Finance 5 Interest Rate Terms Every First-Time Homebuyer Should Know (BPT) - You’ve saved enough for a down payment, your budget is looking good and you’re earning steady income. You’re at the point in your life where you feel confi dent you’re ready to buy that fi rst home. Congratulations! Buying a home is one of the most exciting and rewarding purchases you’ll ever make. However, if it’s your fi rst time shopping for a mortgage, you may not be super knowledgeable about some of the fi nancing terms you’ll hear, including “interest rates.” If you’ve used any kind of credit before, you probably have a basic understanding of interest - it’s the money lenders charge in exchange for allowing you to use their funds to make a purchase. While the basic concept is simple, mortgage interest rates can be complex and differing. “Many factors go into determining the interest rate your lender will offer you,” says Eric Hamilton, president of Vanderbilt Mortgage and Finance. “By understanding the factors that infl uence your interest rate, you can obtain the best possible mortgage plan and get into the home of your dreams quicker.” A variety of factors determines your interest rate, including: • Down payment - Just as you put money down on a new car, mortgage lenders like to see down payments from homebuyers. A down payment not only reduces the total amount you need to borrow, but it also shows the lender you are able to manage money. Different lenders require different amounts for a down payment, but most would likely view 10-20 percent of the home’s purchase price to be a good down payment. • Collateral - This is the property you agree to “put up” in exchange for the loan and serves to protect the lender against a borrower’s default. If you’re buying a manufactured home, you can collateralize the loan with either the home itself or with the home and a piece of land together. For site-built homes, the loan would be collateralized with the home and land together always. • Loan amount - The amount you need to borrow is calculated by taking the purchase price of the home, less your down payment, and adding any other expenses that will be fi nanced as part of the loan, which could include closing costs, discount points and third party fees. • Credit score - Lenders will want to review the credit reports and scores for everyone who is listed as a borrower on the mortgage application. With your written permission, the lender will obtain your credit report from a credit reporting agency. Generally, the better your credit score is the more likely you will be approved, plus qualify for the best available interest rate from the lender you choose. • Origination cost - This is the amount the lender charges to process the loan application, which includes gathering and reviewing all loan application documents, underwriting and closing your home loan. This expense typically appears on your loan documents as a “loan origination fee.” “After you apply for a mortgage, the lender should be able to give you an idea of the interest rate you’ll likely qualify for,” Hamilton says. “With that information, you can use a monthly mortgage payment calculator to estimate just how much the mortgage payment will be each month. Knowing the monthly payment can help homebuyers make better decisions about budgeting, savings, spending and investing.” To learn more about mortgages for manufactured homes, visit www. vmfhomeloan.com. • Aetna Customers from front page government health-care premium assistance is based on the federal poverty level. Consumers will can review their new rates and change plans for their 2017 health coverage when renewal notices arrive starting in October, officials said. Lee warned consumers to be ready to shop the marketplace for comparable coverage at the best price. Enrollees who automatically re-enroll in the same plan and skip any price comparisons could regret it. “Some consumers who choose to keep their plan will see a significant increase in their premium for 2017, while others will see a more modest increase, depending on where they live and what insurance plan they have,” Lee said. While the federal formula is complicated and estimating next year’s costs for individuals is difficult because everyone’s circumstances are different, Lopez said the less a person makes, the more assistance they can receive through California’s exchange. The state was one of 16 states, plus the District of Columbia, to create health-care marketplaces in 2014 when the Affordable Care Act, known as “Obamacare,” and its individual-coverage mandate became law. There is no connection between the ACA marketplace and the rate outrage among employer-sponsored health plan participants and the self-employed who buy their own coverage, spokeswoman Lopez with Covered California said. Any suspicions that insurers are passing along higher costs to insure previously uninsured people through the government-mandated coverage system is unfounded, she said. Health-care premiums for ACA participants have increased on average by 7 percent a year, and even steeper rate increases preceded the creation of the health-coverage marketplace three years ago, Lopez said. The outrage “is not new and not attributable to the ACA,” she said, stressing that rates paid by consumers for health insurance were going up by double digits before the ACA happened. Aetna Health was never a participant in Data provided by Covered California. the California exchange, so its decision to stop offering coverage in 11 states that operate health-insurance exchanges has no effect on the plans or rates offered here. However, California may have played an indirect role in the widely reported pullback from the government-mandated health care program, which Aetna has backed and publicly endorsed before doing an about-face last week. Media reports that followed Aetna’s announcement suggested the company was making good on a threat by its top executive to quit the three-year-old ACA unless federal regulators approved a merger with Humana. Federal regulators rejected the merger, and one of those opposed to the creation of an Aetna-Humana health-care juggernaut was the California insurance commissioner. Commissioner Dave Jones urged the Department of Justice in late June to reject the merger plan, calling it anti-competitive. Following a study of the effects on consumers if the two health insurers combined, Jones gave it a thumbs down, citing the state’s “already highly concentrated” health insurance market, and the likelihood of reduced consumer choice, reduced quality, and increased prices for individual, group and Medicare supplemental plans. The commissioner reported that a combined Aetna-Humana would control 26 percent of all Medicare Advantage enrollees in the country, more than any other health-care insurer. The Department of Justice on July 21 blocked the merger, prompting California’s insurance commissioner to issue a congratulatory announcement to federal antitrust regulators who agreed with him. The original health plans in the state’s exchange are still participating, and a 12th company joined after the first year and has since dropped out, according to Covered California’s spokeswoman. The existing plans are offered by Anthem Blue Cross of California, Blue Shield of California, Chinese Community Health Plan, Health Net, Kaiser Permanente, L.A. Care Health Plan, Molina Healthcare, Oscar Health Plan of California, Sharp Health Plan, Valley Health Plan, and Western Health Advantage. They are competing for 1.4 million residents enrolled with Covered California. Almost all California enrollees will have three or more plans to select from next year, officials said, and even without Aetna the state’s health-insurance marketplace is strong for low-income and improverished residents, according to officials. The concern elsewhere in the country is that insurers are retreating from states and communities, where health coverage is needed most and where poverty rates are among the highest. “This is really going to be felt in Southern states and rural areas,” predicted Cynthia Cox, who is associate director of health reform and private insurance the Kaiser Family Foundation. •
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