I love this great MasterCard commercial from a couple of years ago. It features Homer Simpson using MasterCard to, uh, run errands.

Happy Friday!

Buying a home is a big commitment. You are agreeing to make a mortgage payment for anywhere between 15 and 30 years. In some cases, this mortgage payment may be more than you are used to paying in rent. This means that it is a good idea to to practice making a mortgage payment before you commit.

Before you start practicing your mortgage payment, you need to first figure out what you are likely to pay. You can use a mortgage calculator to help you figure out monthly payments. The best mortgage calculators also include property taxes and homeowners insurance in the calculations. You can get estimates for these numbers from a mortgage broker or from a real estate agent. You should also add about 30% of the monthly payment you come up with to estimate utilities and maintenance.

Next, you begin practicing to make the payment. Let’s say you pay $700 a month in rent and utilities. Your costs with a new mortgage, including estimated taxes, insurance, utilities and maintenance, are about $1,350 a month. That means that there is $650 difference between what you pay now, and what you will pay with a home mortgage loan. Take that $650 and put it in a savings account. Do this for at least six months. If you can make those “payments” for six months without trouble (still saving and making other bills), then you can probably afford a home.

Plus, you can use the money you saved up to help cover closing costs or augment your down payment.

When getting a mortgage, it is important to do your homework and consider some important factors that could mean a big difference in terms of paying back your loan. Your overall costs will mostly be contained in these three mortgage loan factors:

1. Mortgage term: This is how long you are paying your mortgage. The longer the term, the more you pay. You will have lower payments over a longer term, however, which can affect the immediate affordability of a loan. It is best, though, to avoid getting a mortgage loan for more than 30 years.

2. Interest rate: This is how much you pay for the privilege of borrowing the money to buy a home. Your interest rate is annual percentage of the balance of the mortgage loan. The higher the rate, the more you pay overall. You can get a lower mortgage interest rate by having good credit, making a larger down payment and choosing a modest home.

3. Closing costs: These are extra costs that are part of your mortgage loan. These include origination fees, recording fees, appraisal fees, title fees, credit report fees and other costs. Watch out, though! Some mortgage lenders will try to include unnecessary junk fees. Also watch out for property transfer fees, which are starting to creep into agreements.

One of the bits of fallout from the mortgage crash and the credit crisis is that many banks have tightened lending standards. Many of the big banks have lending standards that are much tighter than they used to be, and more onerous requirements if you want the best mortgage rates. One way you can get better service — and possibly better rates — is to turn to local banks.

Many local banks did not go through the same problems experienced by the big guys. Local banks, by and large, had reasonable lending standards and did not have the same level of exposure to risky investments as the “big guys”. This meant that they have largely been able to continue “business as usual” throughout.

Consider a credit union

Another thing to consider is the local credit union. While you still have to have reasonably decent credit to get a home mortgage loan, it is often easier to qualify for a better mortgage when you go through a credit union. Additionally, many credit unions have special programs aimed at encouraging you to borrow from them.

There are still options when it comes to getting a home mortgage loan. You are still going to have to show that you can afford it, and you will still have to have fair to good credit. But there is a chance that you can find approval at a local bank — approval that you may not get from the big banks burned by the recent crisis.

New home sales data for June is in, and it shows an unexpected gain for home sales. This is good news for those looking for signs of a housing bottom. MarketWatch reports on the latest numbers for housing:

Richard Moody, chief economist and director of research at Forward Capital, cautioned that home sales are still at “exceptionally low levels.

“While sales of both new and existing homes appear to have moved off of their cyclical bottoms, we see limited upside over coming quarters, particularly as the labor market continues to deteriorate, albeit at a slower rate,” he wrote in an email.

As you can see, though, even if a bottom has been reached, new home sales are likely to be limited by other economic factors. However, this also means that if the housing market is on the road to recovery some markets may not have the same type of deals that we have been seeing late.

FTC spoofs the freecreditreport.com commercials with one of its own for annualcreditreport.com.

Happy Friday!

Foreclosure continues to be a very real concern. Indeed, Fed Chair Ben Bernanke thinks that the foreclosures will peak in the second half of this year. So we’re not out of the woods yet. If you are concerned about foreclosure – and think you might be facing it — there are some things you can do.

First of all, you should contact your mortgage lender. The sooner your lender knows about the problem, as well as your desire to prevent foreclosure, the more likely you are to find a solution of some sort. Cash Money Life rounded up some good suggestions from a number of sources about what you can do if you are are facing foreclosure:

* Loan modification.

* Short sale.

* Refinance.

* Rent out the house or take on a boarder.

* Save more money.

* Look for ways to earn more money.

Of course, foreclosure still remains an option. It is vital, though, that you determine how far you are willing to go to save the house. If you aren’t willing (or wholly unable) to do what it takes, a foreclosure might be your only option. Just remember, though, that a foreclosure can be devastating to your credit score, and remain on your credit report for up to 10 years (although it is usually removed in 5-7 years). It is possible to buy another home after a foreclosure, but it usually takes at least 3 years of serious work on your credit score to do so.

Mortgage applications are on the rise right now, heading higher as people become interested in taking advantage of relatively low interest rates. While mortgage rates have risen recently, they are still low as compared to last year. It appears as though some are realizing that the low rates won’t last forever, and are hurrying to take advantage of what they can. MarketWatch reports on the increase in mortgage applications:

The volume of applications seeking to refinance existing mortgages was up 4.0% last week compared with the week before, while applications filed for loans to purchase homes also increased, up a seasonally adjusted 1.3%. …

Refinancings made up 55.5% of all applications last week, up from 54.9% the week before. Adjustable-rate mortgages accounted for 4.8%, down from 5.0%, the MBA said.

It is clear that many homeowners are interested in refinancing. Refinancing can lead to lower payments, and less money paid overall in interest costs. Additionally, for those with ARMs, refinancing can mean the avoidance of an expensive reset. It is interesting that ARMs are declining in popularity. It appears that some have learned a lesson about adjustable rate mortgages and teaser rates.

You know that your credit score is important when it comes to buying a home. However, someone stealing your credit card is only one form of identity theft that could derail your home mortgage loan hopes. The Finamark Group offers these other forms of identity theft that can cause problems for your good name:

1. Driving records: In some cases, thieves pretend to be you and when they are pulled over for some infraction — such as DUI — you are the one who ends up with the problem on your driving record.

2. Medical records: This can be related to credit identity fraud. Could you get stuck with the hospital bills, even though you never went in. Another issue is that someone assuming your identity could be treated for a serious problem that could inhibit your ability to get proper insurance coverage.

3. Employment: If someone uses your Social Security Number to get work, you might end up being pursued for extra taxes on income made by someone else.

It is important to be aware of these problems, and be on the look out for suspicious activity in all walks of life. While there are identity theft insurance programs out there, the fact is that if you are vigilant, you can take care of most of these problems yourself. However, no matter the protection you have, once your identity has been stolen, it can be difficult to straighten things out — even if you have identity theft insurance.

Starting on July 30, mortgage lenders have new disclosure rules to be concerned about. Mortgage lenders will have to be more transparent about the total costs of a home mortgage loan, providing consumers with more information to make better-informed decisions. The Boston Herald reports on some of the new mortgage loan disclosure rules:

The new Federal Reserve guidelines require lenders to disclose estimated mortgage costs within three business days of receiving your loan applications.

Required disclosures include Truth-in-Lending Act calculations (a breakdown of your mortgage’s monthly and overall costs), as well as an annual percentage rate (APR) for the loan.

In addition, mortgage lenders can only charge credit check fees prior to the disclosures. None of the application fees, origination fees or other fees can be charged until mortgage loan disclosure has been made. Mortgage lenders also have to provide a seven-day waiting period before the loan closes so that you can be sure that you are satisfied that the mortgage loan is right for you.