Posts Tagged ‘mortgage’

• Feb 3

  Foreclosure Crisis Takes the Spotlight in Newest Political Rhetoric

  It looks like the presidential candidates are finally paying attention to the housing crisis. In this Tuesday’s State of the Union speech, President Obama touted his settlement with big banking. The settlement would dampen the startling foreclosure rate by giving $25 billion to homeowners who are underwater on their mortgages. Immediately after the speech, White House staffers and the GOP candidates began talking about how to fix America’s housing crisis. Here’s what they had to say.

  • Mitt Romney. Romney stuck to his guns in last Thursday’s Jacksonville GOP debate. As president, he would repeal the Dodd-Frank Act, which Republicans believe is preventing the housing market from realigning itself naturally. “Let [the foreclosure crisis] run its course and hit the bottom,” he said. “Allow investors to buy homes, put renters in them, fix the homes up and let it turn around and come back up.” Romney also said that he wouldn’t be opposed to working with banks to renegotiate the mortgages of homeowners in default.
  • Newt Gingrich. Newt’s proposal for fixing the housing crisis is simple: he wants to colonize the moon. Yes, we’re serious. The former speaker of the House first advocated repealing the Dodd-Frank Act. “If they would repeal it tomorrow morning,” he said, “you would have a better housing market the next day.” He then advocated lunar colonization as a way to ease the housing crisis while jump-starting the stagnant economy. Former senator and astronaut John Glenn called Gingrich’s space case “optimistic at best.”
  • Ron Paul. Although Paul only has 12% of the vote, he’s starting to gain serious support within the GOP as the only candidate with a definite plan to cut government spending. He’s proposing a $1 trillion cut to the budget, including giving the axe to the Department of Housing and Urban Development. He also supports repealing the Dodd-Frank Act.

  What exactly the GOP contenders would do about the housing crisis isn’t yet fully clear. We’re waiting, but at least they’re beginning to talk about it. Look for the housing crisis to stay in the spotlight throughout the Nevada and Maine primaries, and remember to stop back here for even more tips, tricks and news from the world of real estate.

  Tags: foreclosure, mortgage
  Posted in Uncategorized | No Comments »

• Jan 31

  Should I Rent a Home or Take out a Mortgage?

  Buying a house used to be easy. You found a home you liked, applied for a mortgage and then paid it off over 30 years. That’s not the case in today’s market. Mortgages today are harder to obtain, and favorable terms are more difficult to come by. That’s why many Americans are choosing to just rent a home and wait until the housing crisis improves. In some cases, they’re actually saving more money than they would with a mortgage.

  It all comes down to how long you plan on living in the house. If your job requires you to move every year, you should obviously rent. If you’re planning on raising a family in the house you’re currently living in, you should buy. However, if you’re one of the 72% of Americans that plan on buying a house eventually, then you need to do some math.
  Using this handy New York Times calculator, you can see that paying $1,000 per month to rent a home that is worth $172,000 is cheaper than paying a mortgage up until the fifth year of residence. At that point, a mortgage with a 5.5% interest rate and a 20% principal becomes exponentially more affordable than continuing to rent the house.

  Since there are so many variables to consider with this type of calculation, there’s no rule of thumb that we can recommend following. What’s important to remember is that there will always be a point at which renting becomes more expensive than paying off a mortgage, even if you’re planning to ultimately move into a different house than the one you’re renting. Play around with the figures to find when your turning point will be. When you get your answer, you should decide whether you intend to live in the house for that long or not.

  There’s no denying that more families are choosing to rent in this economy. They want to stay upwardly mobile until they find a job that’s secure enough and enjoyable enough to settle down. However, with mortgage interest rates at record lows, you could save more than $100,000 by taking the plunge now rather than 10 years down the line. In the end, it’s up to you to crunch the numbers, weigh your options and make the call.

  Tags: buying a house, mortgage
  Posted in Home Buying | No Comments »

• Jan 26

  More Americans Are Walking Away From Their Mortgages

  Are you selling a house that isn’t worth as much as the balance remaining on your mortgage? Then it may be time to walk away. With the real estate market not expected to recover until 2023 and foreclosure rates abysmally high, more and more Americans are choosing to let their lender repossess their home even though they’re ahead on the mortgage. It’s a strategy that the lending industry calls “strategic default,” and if you’re struggling to build equity in your home, it might be worth a closer look.

  Strategic default used to be portrayed as something deadbeat homeowners did when they couldn’t keep up with the mortgage. That changed in 2009, when the Wall Street journal ran a piece on a couple who cut their monthly living expenses from $4,000 to $2,000 by defaulting on their home and renting a new one. As the real estate market continued to slide, homeowners around the country – many of whom had never missed a loan payment in their lives – started to seriously weigh their options. According to “Underwater Home” author Brent White, right now “a large number of Americans who are underwater on their mortgages would be better off financially if they walked away from their homes.”

  Strategic default works for a few different reasons. Many people who are thinking about selling are close to retirement and want to downsize anyway. Since they won’t apply for a home loan ever again, they can stand to take the hit of a foreclosure on their credit score. People might also choose to walk away if they live in a state like California, where lenders are allowed to foreclose but are not allowed to sue for the balance of the mortgage. But the biggest reason is this: banks simply don’t want to deal with the paperwork. They’re so backed up thanks to the robo-signing scandal that they’re willing to accept a loss on a short sale to save them the effort of pursuing your debt.

  If you think that a strategic default would benefit you, research your local real estate laws or get in touch with a professional defaulting agency today. After all, if you’re drowning in your mortgage, starting a new life could be as easy as walking away.

  Tags: foreclosure, mortgage, selling a house
  Posted in Financing, Home Buying | No Comments »

• Jan 22

  What a Good Faith Estimate Means to Your Mortgage

  If you’re buying a house, you’re entitled to a “good faith estimate” when applying for a mortgage. However, sometimes these itemized rundowns of the estimated costs of a home loan aren’t made in good faith at all. They can be misleading, and they can bait a homeowner into paying thousands more than they had anticipated. In order to protect yourself from predatory lending, here a few things you need to know about good faith estimates:

  • They don’t tell you exactly what you’ll be spending. The good faith estimate forms that lenders use were revamped about a year ago, but, according to industry experts, they still don’t disclose exactly what borrowers will be paying for their loans. For example, the form doesn’t include down payments in its estimate, nor does it mention seller-paid costs like transfer taxes.
  • They might not be official estimates at all. Providing an official good faith estimate locks lenders into agreeing to the loan terms described on the form. In order to bypass this obligation, some unscrupulous financers provide buyers and homeowners with “work sheets” instead. These documents look a lot like good faith estimates, but they aren’t legally binding. They also allow the lender to change their terms at closing. As a responsible buyer, you should always confirm that every good faith estimate is delivered on the official, legally mandated form.
  • Lenders never know the exact cost of a loan. Some of the expenses associated with buying a house aren’t decided until closing, so there’s no way your lender will be able to tell you exactly how much your loan will cost. This is typically not a problem for many buyers, but there are some lenders who will use that little cushion of uncertainty to jack up their rates behind your back.

  A good faith estimate can be a useful tool when buying a house, but only if you take it with a grain of salt. Instead of relying on these estimates to tell you the total cost of your home, use them as a way to compare the loan terms of different lenders in order to decide which mortgage is right for you.

  Tags: buying a house, mortgage
  Posted in Financing | No Comments »

• Jan 19

  The White House Wants You to Rent Out Foreclosures

  Forget about flipping houses. If you want to make some real money on the housing market in 2012, help out the White House and start renting out foreclosures. This past Tuesday, the Obama administration announced that it’s working on a pilot program to sell off batches of Federal Housing Authority-owned foreclosures around the country – as rental properties. While there are many questions that need to be answered before the program becomes active, there’s also a lot of money to be made for real estate investors who have the cash and the work ethic to succeed.

  The White House’s plan makes sense when you think about the data. The desire for owner-occupied properties is still weak, thanks in large part to the banking industry’s reluctance to approve new mortgages. At the same time, the popularity of both rental properties and rent-to-own properties is climbing steadily as the children of the new millennium get older, have kids and outgrow their apartments. Turning otherwise useless foreclosures into rental properties seems like a pretty good solution to the problem.

  The only catch for private investors is that the government wants to unload these properties in bulk. They’re planning to sell off the foreclosures in batches of 25 to 500. Although the properties are going for 20% less than their current market value and the government is instituting financing plans for the program, buying that many houses might still be too expensive for many individuals. On top of that, you’ll also have to deal with rehabbing and managing more than 10 foreclosures at once, making business partners and employees a necessity.

  However, if you keep your eye on the prize, it could end up paying off. Rental income builds up slowly, but once you amass enough properties, you can easily earn six figures a year for a minimal amount of work – especially if you pay for your foreclosures up front.

  We’ll deliver all the details as the plan progresses, so make sure to check back often. After all, this could be the investment opportunity of a lifetime.

  Tags: foreclosure, mortgage
  Posted in Uncategorized | No Comments »

• Jan 16

  3 Reasons to Consider an Adjustable-Rate Mortgage

  Although financial experts usually advise buyers to avoid adjustable-rate mortgages like the plague, there are a few instances when choosing this type of home loan over a fixed-rate mortgage can actually be beneficial. If you’re buying a house in the near future and you don’t know which type financing you should be looking for, here are a few reasons why you might want to consider an ARM.

  1)    You’re expecting a promotion. If you’re anticipating an increase in your annual income over the next few years, it could behoove you to take out an adjustable-rate mortgage on your new home. You’ll be able to save money on your low initial payments, and when your interest rate starts to increase, you’ll have the resources to handle it.

  2)    You don’t plan on living there for long. If you’re buying a house that you don’t plan to inhabit for longer than five years, an adjustable-rate mortgage is actually a better option than fixed-rate financing. As long as you put your home up for sale before the fixed-interest period expires on your ARM, you’ll end up paying much less than you would have at a higher permanent rate.

  3)    You want to attack your mortgage. Adjustable-rate mortgages can also be attractive to homeowners who want to aggressively pay off their homes. If you’re determined to own your house in half the time your loan period dictates, then you can use the low initial interest rates of ARMs to your advantage. Keep in mind, though, that paying off a house in seven years or less isn’t a viable option for many homeowners.

  Adjustable-rate mortgages aren’t right for everyone buying a house, but there are definitely times when they have an edge over fixed-rate financing. If you find yourself in any of these scenarios and want to know if an ARM is right for you, contact your loan officer today. If you’re smart about it, you can save yourself thousands of dollars with one of these home loans.

   

  Tags: buying a house, mortgage
  Posted in Financing, Home Buying | No Comments »

• Jan 6

  3 Ways to Get the Best Interest Rate on Your Mortgage

  If you’re buying a house this season, you’re in luck. Due to the sagging market, lenders are giving new homeowners lower mortgage rates than they have for the past 10 years. However, you’re going to need to do more than just show up to a lender’s office if you want to minimize your interest. Before meeting with your loan officer, make sure that you’ve taken these three steps to strengthen your portfolio.

  1)    Pay off all of your debts. Your credit score is the most important factor in determining the interest rate your lender will offer you. Don’t even bother applying for a mortgage until the majority of your credit card debts and other loans are paid off. Believe it or not, a 40-point ding on your credit score can result in a 1% higher interest rate on your mortgage. That can mean a house that costs you $20,000 more than it would have otherwise.

  2)    Explore different lenders. A good rule of thumb when looking for a home loan is to meet with five different lenders before accepting an offer. Exploring different options will give you some leverage when meeting with a loan officer. After all, if one financer offers you a good interest rate, the other ones you visit are likely to match it.

  3)    Get a fixed-rate mortgage. Adjustable rate mortgages might seem like better deals at first, but their variable interest rates will always cost you more in the long run. Unless you’re planning on selling a house within five years of moving into it, you should always, always, always get a fixed-rate loan. Fixed interest rates seem higher at first, but those rates will stay the same throughout the entire period of the mortgage.

  The two keys to securing a good interest rate on your mortgage are presentation and competition. You want to present yourself as a reliable and trustworthy applicant while encouraging different lenders to compete for your mortgage. If you remember these two key things when buying a house, you can be sure to get a great offer for your home loan.

  Tags: buying a house, mortgage
  Posted in Financing | No Comments »

• Jan 2

  Want to Pay Less for Your House? Refinance Your Mortgage.

  If you want to save some real money this holiday season, why not give yourself the gift of a home loan modification? In this buyer’s market, refinancing your mortgage can save you tens of thousands of dollars on your interest, and it can even reduce the period of your loan by five or more years. Here are a few ways you can adjust your mortgage to best work for you:

  • Lower your interest. If you originally took an adjustable rate mortgage on your home and aren’t planning on moving any time soon, it pays to refinance and opt instead for a lower-interest fixed-rate mortgage. By renegotiating your 6% interest ARM to a 5.5% fixed-rate home loan, you can save more than $100,000 in interest over a 15-year period.
  • Shorten your period. With defaults on home loans at an all-time high, the number-one priority for lenders is getting back the money they lent you. They’re often willing to give up a few years of interest in order to shorten the period on your mortgage, and this is always in your best interest if you’ve got the income to handle it. While shortening your loan’s period might increase your monthly payments, it will save you thousands on interest in the long run.

   

  • Turn your equity into a cash out. Your equity is the difference between what your home is worth and how much you’ve got left to pay. If you undergo a home loan modification for an amount greater than what you still owe on the home, you can “cash out” on part of your equity. This means you’ll get a sum of money in exchange for receiving less cash when you sell the home. This is a good idea if you want to build an addition or start a college fund for your child. This is not a good idea if you need the cash to pay off unsecured debts, like credit cards.

   

  The weak housing market has given homeowners a variety of home loan modifications to choose from. By refinancing your mortgage, you can pay less for your house, pay off your house faster or even cash out on part of its value. If you want to know more about these modifications, contact your loan officer today.

  Tags: home loan modification, mortgage
  Posted in Financing, Home Buying | No Comments »

• Dec 14

  3 Reasons Why You Should Consider a Home Loan Modification

  It’s a buyer’s market right now, which means that it’s a perfect time for people who have bought a home in the past 10 years to refinance their mortgage. While many people are put off by the idea of refinancing, undergoing a home loan modification now could save you thousands of dollars in the future. If one of the following scenarios is true for you, a home loan modification could make sense.

  1)    You’re having trouble making your payments. If you’re struggling to keep up with your mortgage payments every month, a home loan modification is definitely a good idea. By renegotiating your mortgage you can extend the term of your loan in exchange for lower monthly payments. It will take you longer to pay off your real estate investment, but eliminating the chance of foreclosure is always worth an extra few years of debt.

  2)    You plan on living in your house for a while. People who don’t plan on living in a house for a long time will often get an adjustable-rate mortgage (ARM) because of the reduced down payment and lower initial interest rates. While this is typically a good idea, if you have an ARM and decide to live your house longer than you initially planned, you should modify your home loan to a fixed-rate mortgage. While the term on a fixed-rate mortgage is typically longer than the term on an ARM, they have much lower interest rates overall. If you keep up with your mortgage payments, then you’ll end up saving money in the long run.

  3)    You want to pay off your house faster. If you recently received a promotion or a substantial amount of money from an inheritance or contest winnings, then a home loan modification is the key to paying off your house faster. By increasing the amount of your monthly payments, you can lower your interest rates and shorten the term of your loan by as much as 10 years.

  In the current economy, your lender should be more than willing to renegotiate your home loan. Even if you’re falling behind on your payments, a lender would rather refinance your mortgage to lower the payments than to go through the hassle of trying to collect your unpaid debt. If any of these three conditions apply to you, contact your mortgage broker today to discuss how a home loan modification can help you achieve your financial goals.

  Tags: home loan modification, mortgage
  Posted in Financing | No Comments »

• Dec 9

  3 Ways to Survive a Foreclosure

  When your lender decides to foreclose on your home, it’s easy to feel like the world is ending – but a foreclosure doesn’t mean that you’ll never be eligible for a mortgage again. There are plenty of steps that you can take to get back on the right financial track, if you’re willing to work hard enough. Here are three things you can do now.

  1)    Understand your rights. Although your lender will hound you to pay your mortgage even after they foreclose on your house, they can only pursue your debt within the bounds of the law. Under the Fair Debt Collection Practices Act, a lender isn’t allowed to call your house outside of business hours, inform your employers of your debt or otherwise harass you into paying. If they try any of these underhanded tactics on you, find a lawyer and take them to court.

  2)    Use your credit cards. If you still have credit cards open after your foreclosure, then you should make sure to use them as often as possible. You might not have much money, but spending a little and paying it off in full every month will help pull your credit rating out of the well. If you use the cards responsibly – in other words, if you don’t carry a balance – your credit rating will improve markedly after the foreclosure on your credit score expires.

  3)    Hound your lender to clear your credit score. In some cases, harassing a lender as much as they harass you can be a good thing. If you call, send emails and write letters to your lender every day demanding that they remove your foreclosure from your credit score, you might bug them enough that they’ll clear your credit rating just to get rid of you. Remember, though, that if you’re going to try this, it’s important to stay within the boundaries of the law – just one overzealous message could land you in court.

  Surviving a foreclosure isn’t easy, but it isn’t impossible either. After seven years your foreclosure will be removed from your credit score, so use the time wisely to build up a solid credit rating through responsible credit card use, and don’t be afraid to sue your lender if their collection practices start getting unethical.

  Tags: foreclosure, mortgage
  Posted in Financing | No Comments »