Monday, June 29, 2009

Mortgage Advice For Frequently Asked Mortgage Questions

As you start your search for a mortgage, there are a few questions you need to ask yourself in order to narrow your search and know what you're looking for. Unfortunately, the answers to those questions aren't always easy. For some honest mortgage advice on the answers to your mortgage questions, keep reading.

Fixed Rate Mortgage or ARM?

If you plan to stay in the house you're planning to purchase for longer than 7 years or simply want stability in your monthly payments, pick the fixed rate mortgage if you can afford it. A fixed rate will allow you consistent payments month-after-month for the duration of the mortgage loan.

Alternatively, an ARM (Adjustable Rate Mortgage) is great for families who know they'll be out of their house in less than 7 years. Before you take on an ARM, ask your lender what your worst case scenario would be based on your annual rate adjustment cap. Make sure you could financially handle a potential sharp spike in your monthly mortgage payments.

How Large Should My Down Payment Be?

Ask yourself how much of an interest rate reduction you'll get with a higher down payment and whether a lower down payment will result in having to pay expensive private mortgage insurance. Mortgage insurance is often required by the lender to cover their risks when the buyer's down payment is too low.

Typically, investing in a larger down payment results in a return on the investment that's equal to the mortgage interest rate. Now, if dropping your down payment puts you in a different category (for example, below 20% or below 5%) that can affect the return significantly.

Do I Want an Interest-Only Mortgage?

An interest only mortgage offers homeowners an option to pay only interest, but for a specified period of time. This results in a lower required monthly payment and the buyer is still free to make payments on the principal.

Interest only mortgages should only be used though by borrowers who actually need them. For example, a good candidate might be a freelancer or contractor who has a fluctuating income and wants the freedom to make extra payments on the principal while still having a smaller monthly commitment.

Other examples include individuals who need the cash flow for high-yielding investments (earning more than 9% over the long term) or families who are expecting to make higher incomes in a few years, at which point they can begin making some significant principal payments.

Should I Accept a Pre-Payment Penalty?

A pre-payment penalty is a clause in your mortgage agreement that says you'll pay a penalty if you pay off the mortgage too early or seek to make extra payments. On the surface, you might assume the lending institution would welcome the faster repayment of its loan. However, doing so actually results in some financial loss through lost interest payments.

Typically, prepayment penalties disappear after a few years. If you opt for a fixed rate mortgage and plan to remain in the house for a long time, you can often exchange a pre-payment penalty for a lower rate!

Saturday, June 27, 2009

Keep Your Mortgage Under Control..

Homeowners who are planning to re-finance their home may find the Internet to be a very worthwhile resource. The Internet is useful because it can give the homeowner a wealth of information as well as the ability to compare different rates from different lenders at their convenience. While these options have made re-financing a more convenient process there is more potential for danger. However, homeowners who exercise a small amount of common sense in using the Internet for re-financing often find they are not at any additional risk.

Comparison Shop at Your Convenience

One of the most popular advantages to researching re-financing online is the ability to comparison shop at the homeowner’s convenience. This is important because many homeowners work long hours and often find they are not able to meet with lenders during regular business hours because of job restraints. The Internet, however, is open 24 hours a day and allows homeowners to research their options, make important calculations or receive online quotes at any time of the day through the use of automated systems.

Homeowners can also take their time comparing the quotes they receive from these lenders online instead of feeling pressured to provide an immediate response. While homeowners may have some additional time available to them, these same homeowners should realize they do need to act relatively quickly to lock in estimates they receive as interest rates are often time sensitive in nature and cannot be guaranteed for long periods of time.

The Internet has greatly simplified the process of re-financing a loan. Years ago homeowners had to go to a lender during regular business hours for lengthy consultations and would have to visit several different lenders to determine which one would offer the best rate. The Internet has not only simplified the process but has also given homeowners the luxury of investigating re-financing options at their convenience and also receiving multiple quotes form different lenders by filling out one simple online form.

Researching Re-Financing Online

The Internet has not only made it easier for homeowners to re-finance but it has also greatly simplified the process of learning more about re-financing. Again homeowners from past generations might have to rely on industry professionals and published books on the subject of re-financing. However, today’s homeowners can look up re-financing and find a wealth of useful information regarding the different types of loans and re-financing options available. Homeowners can also use the internet to access calculators which perform the complicated equations homeowners previously had to leave up to the trained professionals. These same calculations which may have taken a considerable amount of time to complete and correct are now solved within a fraction of a second.

Select a Reputable Lender

Homeowners who are doing the majority of their re-financing research and searches online should carefully consider the lender they choose. This is important because whether a lender is found online or offline, care should be taken to ensure the lender is reputable. The easiest way to do this is to stick with a well established lender who comes highly recommended by friends and family members. This does not mean new lenders and smaller lenders are not reputable but there is significantly less risk involved in selecting an established lender than there is in selecting a new lender.

Homeowners who are investigating their re-financing options online may find the website to be a very valuable resource. This website offers articles and calculators which the homeowner can use to gain the knowledge they need to make an informed decision. The articles on the website are written in clear and concise language which is easy to understand and the calculators are extremely user friendly and allow require the homeowner to enter in a few variables to obtain the desired results.

Another great feature of this website is the inclusion of a link which provides access to obtaining a free credit report. The process is very simple although it does require the homeowner to verify their identity. This is done to protect homeowners from identity theft or other acts of fraud. This is significant because homeowners are likely to realize the terms of their mortgage re-finance will depend largely on their credit score. Homeowners who have good credit will likely be offered favorable rates and terms while homeowners with less than perfect credit will not be offered favorable rates and terms.

However, the most significant feature of this website is the ability to obtain up to four quotes from qualified lenders by filling out one simple form. The information required is rather basic in nature and is information which most homeowners have readily available. Once this information is submitted into the system, the responses are received from up to four lenders almost instantly. The information contained in these reports is customized for the homeowner according to the information inputted into the system.

Use Only Reliable Resources

Homeowners who are using the Internet to research re-financing options and obtain quotes should carefully consider their sources when making important decisions regarding the subject of re-financing. Homeowners who stick with well known lenders and established websites will not likely encounter problems but those who select a new lender may be surprised by the results of the re-financing attempt.

Homeowners who are unsure about the reliability of a particular resource or lender should do additional research on the company. One of the easiest ways to do this is to consult the Better Business Bureau (BBB). The BBB may be able to provide the homeowner with valuable information regarding the number of previous complaints against the company. A company who has a large number of unresolved complaints should be considered an unreliable company. However, homeowners should not assume companies without a significant number of complaints are reputable unless the company has been in existence for a number of years and is a member of the BBB.

Homeowners should also take care not to be fooled by fancy web design. A website which looks very professional is not necessarily a website which is accurate and informative. Many skilled website designers can create websites which are both attractive and professional looking. These website designers can also optimize a website for particular mortgage related keywords so users find the page easily when searching for these terms but this does not necessarily make the website designer knowledgeable about the subject to re-financing.

Confirm Loan Terms in Person before Committing

While shopping for re-financing options online is certainly easy and convenient, homeowners should consider completing the application process either in person or over the phone instead of relying on an automated system. While the Internet is good for research purposes, homeowners can take advantage of face to face meetings or telephone conferences to ask all of their relevant questions. Asking all of these questions will help the homeowner to ensure he fully understand the loan terms as well as all of his available options.

Completing the re-financing process in person or over the phone can also prevent the homeowner from being surprised by any elements of the mortgage re-finance. This may include additional fees which are tacked on during the processing of the application, rates which are only available in certain situations or other elements of the re-financing agreement which could significantly impact the homeowner’s decision making process.

By: falle

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Thursday, June 25, 2009

Fixed Rate Mortgage - Past, Present And Current Market Status

Mortgage loans and fixed rate mortgage history:-

The fixed rate mortgage can be understood as a type of mortgage for which the interest rate has been fixed, or made constant, for the entire length of the mortgage term. Simply, it a mortgage loan with a constant interest rate, which does not change over the entire tenure of the loan. Mortgage loans are traditional types of loans, and have been in existence since centuries. In the past, moneylenders and lords (Europe 16th to 18th century) offered low mortgage rate refinance to needy people, often the pheasants and laborers. However, the middle class families too borrowed money to satisfy their financial needs, and later repaid the amount. In such cases, the lender generally decided the final fixed interest mortgage rate to be charged for the credit amount lent. The rate of interest was more or less standard, and did not change, but it was at the discretion of the moneylender to decide and fix the net chargeable home mortgage loan amount, since there was no controlling authority which decided which moneylender should charge what interest rate, and what kind of benefits the debtors should avail from the creditor, apart from the loan facility. So, to summarize the mortgage loans scenario of the past, the loan procedure and working was not standardized or streamlined. There was little or no authority to question the creditor on fair practice or ethical trade related issues. The rule was quite simple. The moneylender was rich and had surplus money, and was ready to offer some amount at a particular rate of interest. It was for the borrower to decide how badly the credit facility was needed, and whether it was possible to accept the terms and conditions. If yes, the lender would give the money, and the borrower repaid the home mortgage refinance amount as per convenience.

Mortgage and fixed rate mortgage status now:-

Things are different now. Democracies and republics play the part of deciding how fixed rate mortgage and credit finances should be lent, and recovered. And since the governments are composed of common people, financial market has been greatly influenced by how creditors should lend their money, and what kind of protection the debtor should have while paying back the money borrowed. There are regulations in place, along with checks and counter checks, which balance the market economy, and ascertain that creditors do not harass their debtors, and also help the lenders to recover their capital in case the debtors fail to redeem. It has to be a two way street, a path which can be used by both the creditor as well as the debtor, in a harmonious manner?

Mortgage and fixed rate mortgage current market conditions:-

As far as the current mortgage indices are concerned, mortgage rates are indicating yet another strong move higher this week. This is owing to the focus amongst bond investors, who have strong concerns regarding the budget deficits and inflation. Even with the prevailing market conditions, mortgage rates still remain well below the 6 percent mark. The rates do not pose an impediment to deserving borrowers. The Federal Reserve currently has a $1 trillion deficit in terms of outstanding mortgage payments, and if this deficit is catered to, it is possible to bring the mortgage rates down. No further announcements are likely to take place before June, this year, by the Federal Open Market Committee meeting. Mortgage rates sharply increased last week, indicating that the average 30-year fixed mortgage rate increased up to 5.65 percent. As per the national survey, the average 30-year fixed mortgage is associated with an average of 0.44 discounts, as compared to its origination points. The average 15-year fixed rate mortgage rose to 5.06 percent, and the average jumbo 30-year fixed rate rebounded back to 6.68 percent. As far as the average adjustable rate mortgages are concerned, the rate decreased to 5.01 percent while the 5-year ARM jumped to 5.20 percent. Everything said and done, the mortgage rates still remain significantly lower as compared to what they were a year ago. At this time last year, the average 30-year fixed mortgage rate was availed at 6.52 percent, indicating that a $200,000 loan would ideally carry a monthly payment of $1,266.77. With the average rate remaining stable at 5.65 percent, the monthly payment for the same loan amount would be $1,154.47, suggesting a savings of $112. 30 per month.

Wednesday, June 24, 2009

Introducing The Two Types Of Homeowner Loans

Homeowner loans generally come in one of two varieties. The vast majority of new home buyers obtain a primary mortgage, or first loan at the point of purchase. As most home buyers do not have the cash required to pay the full amount of the purchase price of a home, financing is obtained. Even for those that do have available cash, financing is often used as the low interest rate tied to secured loans makes it a good way to borrower money. By obtaining a mortgage, the home buyer is giving a lien on the property to the lender in exchange for the loan.

Another common type of homeowner loan, and often the more often referenced form or the two, is second charges, or a loan obtained based on the equity and value of the home. Many existing homeowners turn to homeowner loans as a low rate financing option. Loans are commonly used to fund home expansions, renovations and repairs, vacations, business startups, and other major expenses. Similar to first mortgages, since the property is offered as collateral to the bank in exchange for the loan, homeowner loans are usually available in higher amounts, at better terms, and with lower interest rates.

There are certainly risks associated with homeowner loans. Because the property is offered as collateral in order to secure the loan, the borrower could lose the property if he fails to meet the loan repayment terms and obligations. Despite of this risk, many borrowers opt for the lower rates and more flexible terms associated with homeowner loans. Borrowers with bad credit often do not even have a choice. Many banks require borrowers with bad credit to secure financing with a property.

Another popular and growing use of secured loans is debt consolidation. Revolving debt and credit card debt are on the rise in the UK. As more and more borrowers become burned by high interest debt and multiple creditors, lenders are promoting homeowner loans as a form of debt consolidation. This offers many benefits, especially for borrowers that do have good credit, thus more leverage with lenders. Borrowers can sometimes take debt with multiple creditors at significantly high interest rates, and pay it off with one lump sum secured loan. This reduces the hassle of managing relationships with many creditors and it can also save the borrower significant interest, and even reduce the length of repayment on the debt.

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Sunday, June 21, 2009

Death And Taxes: The Language Behind Mortgages And Amortize

It is interesting to look at real estate and see the etymology behind the words we use so casually today. Two of these are “mortgage” and “amortize”, words that are based on medieval Romance language terms for death. Why death? And why, when we are speaking English, are we using a term based on Old French? The answer can be traced back over a period of a thousand years.

The “mort” of “mortgage” and “amortize” is derived from Latin via Old French. “Mori”, Old Latin for ‘to die’, became “mort” in Old French and travelled in that form to the present-day usage in modern English words. The Norman conquest of England in 1066 brought a large number of French loan words from Anglo-Norman, which displaced Old English as the language of the upper class. Nearly 1000 years later, we still use the language forms introduced to the British Isles by an ancient conqueror.

The term “mortgage” appears as “gage mort” in Old French in 1267, but by 1283, the terms were reversed. In 1390, “mortgage” as one word appears in written English text. The “gage” in mortgage comes from a term referring to a forfeit if a debt is not paid. As a homeowner today can be levied fines, lose a good credit rating or have to declare bankruptcy if unable to meet mortgage payments, this is still an appropriate reference today! “Mortgage”, then, means “dead pledge”. If the mortgage loan is defaulted on, the property is “dead” to the borrower. If the loan is paid in full, the pledge to repay it was “dead”.

“Amortize” also comes from the root word of “mort”. In this case, the term refers more to the action of effecting death. 1375 saw Middle English use the term “amortisen”, literally “to kill”, “die”. What people are doing by paying off a mortgage loan is “killing” the loan and the interest by steady application of payments calculated to pay off both in a set number of years. Upon the “death” of the loan, the debt to the lender was reckoned “dead” and had no power to exert influence on the living, in this case, the lucky medieval person who managed to avoid death long enough to become a property owner outright.

While today’s real estate speculator might think that this mode of thought was somewhat morbid, one must remember that the generally abysmal state of health care of the medieval period and you had societies where death was a lot more up close and personal than it is for today’s Western world. The Black Death had peaked in Europe in the mid 1300s, when the first references to “mort” as something to do with real estate emerged on paper. The culture of a conquering and a conquered people also makes this usage appropriate; often winning and losing was as simple as living and dying.

Owning or having the rights to use land was what kept a person alive. The loss or despoilage of it meant the death of the former owner or tenant was a very real possibility. Land was and still is power - whoever controlled it had the best chance of living; whoever lost it was cut off from the one tool that furnished them with the resources to survive. There was no welfare or walk-in clinics; there was only land and property. So, in a very real sense, the "death" of a mortgage meant life for the person who was responsible for it. We may have moved on from medieval times, but the language of survival still lurks within the terms that we may think only extends to money.

By: Carolyn Capalbo

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Saturday, June 20, 2009

A Cheap Mortgage Insurance Quote Can Help You Maintain Your Mortgage

Many things have been said about payment protection insurance of which mortgage insurance is one part. One of the things said about it is that it is nothing but a huge "rip-off". In some cases this was proven true as policies have been sold to individuals for large premiums and they could not even claim on them. However it is not the policies that are to blame but those who sell them with little experience. If you wish to take out mortgage protection then shop around and get a cheap mortgage insurance quote with a specialist in payment protection.

A specialist will offer the lowest premiums for a policy and will make all the information available to you so you can decide if a policy is suitable. This you can easily do by checking the terms and conditions and in particular the exclusions against your circumstances. All payment protection has exclusions in the small print and they vary in how many are included with some providers just putting in the most frequent ones and others many.

In order to get the best deal on mortgage payment protection insurance you also have to take into account how long you would have to wait before you are able to put in a claim on the policy. The time frame differs depending on the provider. Some providers could make you wait for a maximum of 30 days and then allow you to put in a claim. Others might ask 90 days of waiting and some providers would backdate your policy to day one of you first becoming unemployed or incapacitated.

The policy would payout on unemployment which was brought about through reasons not of your own such as by being made redundant. Incapacity would include such as being injured if you were involved in an accident or if you became sick and are unable to work. It would not payout if you took voluntary redundancy or caused yourself to be let go. There are also other exclusions which you do need to check to ensure that you would be able to make a claim on the policy.

Once the provider has started to pay you benefit they would continue to do so for a certain period of time before the policy expires. The amount of time it pays would usually be between 12 months and 24 months. Again you have to check this in the terms of the policy before taking it on.

Covering your mortgage repayments is essential as if you do not have an income you could struggle to find the money each month. Even if you could you probably would have to cut out many things in your life and perhaps fall into debt with other outgoings. Life could become very difficult for you and it need not be if you get a cheap mortgage insurance quote with a standalone provider. If you did get behind even by just one missed mortgage repayment you would have to arrange to pay it back while at the same time keeping up with the repayments. Failure to do so and more missed mortgage repayments and you could find yourself in court facing repossession.

Thursday, June 18, 2009

Adjustable Rate Mortgages and Its Features

An adjustable rate mortgage, or ARM as it is popularly known as, is a mortgage loan[1] in which the interest rate on the note[2] is periodically adjusted based on a variety of indices[3]. Different lenders use different indices to calculate their interest rates, or their adjustable rates. Some of the commonly used indices are the 1-year constant-maturity Treasury (CMT) securities, the Cost of Funds Index (COFI), and the London Interbank Offered Rate (LIBOR). However, a few lenders prefer to use their personal or own indices to determine the rates. Lenders may choose to do this to avail a steady margin from the borrower, and their own cost of funding is related to the index. As a result, the payments made by the borrower may also change over time in accordance to the fluctuations in the resultant interest rates. Typically, the adjustable rate mortgages are characterized by their index and their limitations on charges or caps[4]. In many countries, the adjustable rate mortgages are the standard means of availing finance by offering the homes as securities, and in such cases, the credit facility is simply referred to as a mortgage.

Basic features of ARM or adjustable mortgage
The main features of ARM are:
  1. The initial interest rate
    It is the rate of interest associated with the ARM at the time of conception of the loan facility. The initial ARM rate is generally well below the existing current ARM market rates charged during subsequent years.
  2. The adjustment period
    This is the actual length of time, of the total loan period of the ARM, which is scheduled to remain constant or unchanged. The interest rate is reset at the end of the adjustment period, and the monthly loan repayment options are recalculated.
  3. Index rate
    Majority of the lenders prefer to associate the ARM mortgage interest rates changes with changes occurring in a particular index. As stated previously, lenders generally set the ARM rates on a variety of indices. The most common index rate used is one, three, or five years treasury securities index. Another commonly used index is the national or regional average cost of funds to savings and loan associations index.
  4. The profit margin
    The profit is calculated by adding a certain percentage of the loan amount to the amount of the base index rate. The difference of the net payable loan amount minus the base index amount is the actual profit enjoyed by the lender in an ARM.
  5. Adjustments and interest rates
    ARMs provide a unique adjustment period for borrowers during the inception of the loan facilities. The rate structure can change at the end of the adjustment period. However, several lenders provide more than one adjustment periods. It is possible for the borrowers to change certain aspects of the net payable interest rates with each new adjustment period. So there is an advantage to avail different interest rates with individual adjustment periods. If the borrower is market savvy, he or she can select different indices or interest rates and save money, provided the lender agrees to the rates and indices.
  6. Initial discounts
    Initial discounts are interest rate concessions, and are very commonly used as promotional aids to attract customers for ARMs. Such discounts are only offered during the first year of the ARM loan. The discounts help to reduce the interest rate below the prevailing rate for a certain duration of time so the borrower can save some money through temporary reduced rates.
  7. Negative amortization[5]
    Ideally, the net chargeable interest rate decreases with a regular payment of monthly dues against any credit borrowings. In case of mortgages the rates decrease over a period as loan pay offs occur. However, in case of ARMs, the reverse happens, and the mortgage balance actually increases whenever the ARM base index rates climb up. As the ARM base index increases in magnitude, its associated interest amount and repayment cap also increases, and the borrower ends up paying a greater amount to redeem the loan. This is a negative feature of ARMs and the borrower may suffer a certain loss over the loan tenure until redemption occurs.
  8. Conversion to a different loan format
    ARMs have an agreement according to which the borrower can convert the ARM to a fixed-rate mortgage at designated times. This is often a fall back facility in case the ARM does not work in the borrowers favor and the buyer wants to revert to a safe option of a steady rate of interest.
  9. Loan prepayment
    In majority of loans and credit facilities, lenders prefer the borrower redeem their dues as soon as possible, to recover the original lending amount. However, in case of ARMs a prepayment can result into a potential loss for the lender in the long run. So lenders generally include a clause in the ARM agreement which may force the buyer to pay special fees or penalties in case the borrower decides to pay off early. ARM prepayment terms are usually negotiated in the beginning before the credit facility is availed.
Even though ARMs have a low starting interest rate, there is no indication that the future cost of borrowings will be maintained at the same rate, since the base index rate is likely to change. If the indices rise, the net ARM cost will also be higher, and the borrower will have to pay a higher loan amount. So there is an inherent risk involved with ARMs. Certain studies indicate that on average, the majority of borrowers opting for adjustable rate mortgages save money in the long term.

[1] A mortgage loan is a specific type of loan, which is secured by some property or a fixed asset value having a certain financial value through a lien, or a legal written commitment empowering the creditor to sell the security offered in order to recover the outstanding dues, in case the creditor is unable to pay or redeem the borrowed amount. The word mortgage when used alone, in day-to-day life, is often used to convey a mortgage loan.

[2] A written promise to repay or redeem a specified borrowed sum of money, along with its interest at a predefined rate and length of time.

[3] An index rate is a widely used rate of interest generally used by lenders to set the interest rate on loans and credit cards.

[4] Loan capital or amount.

[5] Amortization is a gradual reduction in the value of an asset or liability by some predetermined process. In case of loans, it means a gradual or specific decrease in the magnitude of the net payable interest amount over a period, until the entire loan amount becomes void and is deemed as paid.

Wednesday, June 17, 2009

Mortgage Protection Insurance, A Way To Maintain Your Mortgage Commitment

Being able to maintain your mortgage commitment at all times no matter what happens is essential unless you want to give up your home to the lender through repossession. If you were forced to leave work after suffering an illness, accident or unemployment in an ideal world the lender would have total sympathy. They would send you a get well card, flowers and tell you not to worry. However we live in the real world, and the reality is no lender is going to do this, however patient and helpful they might be. The hard truth is that a couple of missed repayments could very well mean the lender would seek a repossession order. Following this would come the court hearing and if the judge rules against you, you could only be around 28 days away from eviction. The way you could avoid this scenario is to take out mortgage protection insurance.

Mortgage protection can be your saviour if you find yourself without an income following an accident that meant you were unable to work. It would also apply if you should become sick and have to take time off from work to recuperate. Unemployment would also be covered, providing that it was brought about through reasons not of your own making. It wouldn’t pay out if you simply gave up your job for example. Mortgage protection insurance would be the closest thing to a "fairy godmother" at this time.

With a policy behind you there would be no struggle each month and no juggling other bills in the hope that you could gather enough money together. Having to do this each month you remained out of work, especially if this was for any length of time would cause stress beyond belief. At this time all you need to be thinking of is recovering or finding work again.

You do have to shop around for the cheapest premiums when considering a policy. Some providers, usually high street banks, charge sky high premiums, which makes protecting your mortgage very expensive. Others give far cheaper quotes for cover. This means that everyone can afford to take protection and these are the providers you should look for. The terms of the cover also vary considerably and again need taking into consideration.

You could be waiting as little as 28 days after being unable to work before you are able to put in a claim. However some providers will extend this to 90 days, the same applies with how long a policy would payout. With some providers you could be looking at receiving 12 months of protection, others could give 24 months cover.

All providers should give an adequate explanation of what a policy can and cannot do and make you aware of the vital facts and small print. This information of course should be given to you before you buy; after all it would useless and unfair to give it you afterwards.

Lenders on the high street will very often try their hardest to get you buy their mortgage protection insurance when taking out the borrowing. This might seem like one of the best choices, especially if you got a good deal on your mortgage. Usually you could not be more wrong and high street lenders premiums are among some of the highest premiums. Nine times out of ten a standalone provider will offer the cheapest quote and provide one of the best quality policies to fall back on.

Sunday, June 14, 2009

Mortgage Loan Modification Tips and Suggestion for Approval

wish you could lower your monthly payments to stay in your home, and still avoid foreclosure? Many Americans desire this, and you're not alone. You need to become eligible for a mortgage loan modification, to avail the benefits. To find out whether you're eligible for a mortgage loan modification program, the following points can help you prepare for your credit facility provided by your bank or lender.

As per law, no bank is obligated to offer you a mortgage loan modification plan, but as per the new federal guidelines, lenders find it profitable to offer the facility, and generally all genuine applications benefit from the facility. The primary reason why lenders provide home mortgage loan modification is a steep drop in home and real estate values, and when banks work out the cost of foreclosure versus a modified loan offer, a modification facility turns out to be a better option.

Many loan modification companies provide credit to suit your needs, and to start with, you need to fill up some application forms, include a letter describing your current financial hardship. In addition, it's recommended you provide your lending bank all necessary documentation to support your claim. Your lender ideally prefers to see in "black-and-white terms" that you're qualified for a modified payment plan. You also have to prove that you can afford and maintain a "restructured agreement". Once your bank is convinced, you automatically increase your chances of availing credit. Your lender generally considers your ability to repay the borrowed loan. If your total debt is greater than your house's current value, then letting you "stay" in your current home under new modified terms is the best choice.

You can avail loan modification services to settle your mortgage issues. Alternately, you can have a realtor prepare a comprehensive market analysis report if you're unsure of your home's current valuation. This report can be an excellent tool for presenting your application with your lending institution. To succeed in your search for a mortgage loan modification, your lender desires to see a package which "cannot go wrong". So your paperwork needs to be completed correctly, and be in order to meet the bank's approval guidelines. The lenders prefer to evaluate all necessary documents on the "first pass", so your file can move quickly through its system process. Submitting incomplete or inaccurate files can lead to rejections. And it's difficult to apply again for your loan modification. So prepare your forms to increase the odds for an approval.

About The Author:
At, provides you mortgage loan modification facilities for all kinds of debtors and arbitrate on their behalf to avail successful mortgage loan options for our clients. Get competitive mortgage refinance interest rates as compared to the others.

Own A Full Service Mortgage Bank Cooperation With Out Stressing Yourself Out

Have you seen a net branch of any company function? There is so much happening behind the scenes and the client is never aware of it. In a similar manner when you become a retail outlet for the products of SouthWest Funding you get all those services that they can offer in the mortgage field to a loan officer loan broker as a bonus. So what are these advantages that you can look forward to? Here’s a list of the key things that you as a mortgage banker will be able to get from SouthWest Funding.

Team Support – There is a trained group of individuals who can help you do employment mortgage and with all other financial products of SouthWest Funding and all the required areas of operations in the branch. Mortgage Employment can ease you out when you have a great team working round the clock to support you. Specially when this is a highly specialized team of supporting staff who can help you with loan scenarios and lender set-up. What more could a loan officer look for in his team? For this excellent team support alone it would be worth while being associated with this company.

Multi-State Licensing – This is a major advantage that you would have compared to regular mortgage brokers. Getting mortgage licenses for so many states is difficult if not impossible for an individual, but as a branch office of SouthWest Funding it is served up to you on a platter. If you have tried getting the license on your own as an individual you will really appreciate this. Not to forget the enhanced prestige of working with a national company. You, as a member of the SouthWest Funding team get the same national brand recognition as the other branches in the country do.

Caring Parent Company – As opposed to being a direct lender it makes sense to be part of a larger company as a mortgage broker when it gives you all the benefits that SouthWest Funding does. For instance you can actually look forward to less overhead costs as a functioning unit as you will be offloading many key and expensive functions to the parent company. The areas that will get off loaded include certain infrastructure costs, accounting and payroll costs, conducting audits and other such functions. This mortgage company makes life as simple as possible for its associates.

Specialized Help for each Branch – The DO and LP automated underwriting is available in all the offices. FHA and VA approval is sought for and received by the parent company for all its branch offices. It also makes sense financially to become a mortgage broker for SouthWest Funding as they also give a 100% pay out on the fees that you earn. There is even a smaller per file administration fee that you need to pay. Plus you have the solid financial support of a well established company which will not roll over in the next financial crisis and die giving you additional tensions.

This is the best way to own your own bank and be stress free.

By: Southwest Funding

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Thursday, June 11, 2009

Confronting Mortgage Fraud With Mortgage Database Software

Each day financial institutions are confronted with mortgage fraud risk. Mortgage fraud has become one of the fastest growing financial crimes in the history of the United States. As a result, the federal government has created a special task force to treat mortgage fraud as a type of white collar crime.

Too often the public is ill-informed about how mortgage fraud schemes work. Two types of mortgage fraud are “fraud for profit” and “fraud for property.” Each type of fraud has several schemes and misrepresentations that are characteristic. Mortgage fraud is far reaching and can involve buyers, sellers, mortgage brokers, real estate agents, appraisers and other industry professionals looking for financial gain from property sellers and legitimate lenders.

Mortgage Fraud for Property:

Mortgage fraud for property (also known as housing fraud) usually involves single borrowers who intend to repay loans, but misrepresent themselves and their financial qualifications in order to secure a mortgage.

Mortgage Fraud for Profit:

Mortgage fraud for profit typically involves professionals in the real estate, appraisal or banking business. These individuals committing fraud may engage in numerous illegal activities in effort to skim equity. Activities may include overstating income, assets and/or collateral value. Individuals may look to steal identities to secure or transact loans, overstate appraisal values for purposing of selling a property on multiple occasions and even invent fictitious properties and buyers to help secure loans.

The following three examples of mortgage fraud illustrate current fraud schemes and the parties that might be involved:

1. Real Estate Fraud: In this scenario, a perpetrator may use fraudulent documents to steal the title or deed to the property of a legitimate owner. Often, this individual will then obtain a loan on the property with intent to commit mortgage fraud. The perpetrator typically will then take the money and default on the loan, leaving the legitimate owners with the outstanding debt.

2. Appraisal Fraud: This is a type of fraud that involves property flipping. In appraisal fraud situations, a property is purchased using an initial mortgage. The property is then appraised at a much higher value, using an unscrupulous appraiser who overvalues the property. Finally, the property resold quickly for maximum profit. Other forms of appraisal fraud consist of inflating the value of a property in order to obtain a second mortgage or to pad the commissions of real estate brokers or agents.

3. Mortgage Loan Fraud: In this situation a potential buyer obtains a loan using fraudulent income, credit, employment or appraisal documents to obtain a mortgage for which they are not qualified. Mortgage loan fraud hurts lenders as many unqualified buyers are eventually forced to default on their loans. In many instances, these buyers are assisted by professionals who hope to increase their profits.

Combating Mortgage Fraud:

There are several approaches you can take to help mitigate mortgage fraud and loan fraud risk. It starts with being vigilant. Being aware of potential mortgage fraud risk helps keep you alert to potential schemes and deceptive individuals. In the early phases, you may want to work only with reputable professionals whom you can verify. To further reduce mortgage fraud risk, you may want to consider using mortgage fraud software.

Using Mortgage Fraud Software:

Mortgage fraud software can help industry professionals reduce the risk of mortgage fraud. Database software such as MIDEX (Mortgage Industry Data Exchange) exists as an industry-contributed repository used for verifying, credentialing and monitoring professionals and companies. Mortgage fraud software has also evolved and now can help with identity verification, credit checks, Social Security fraud checks and criminal background checks.

Mortgage fraud hurts everyone. Being proactive and taking the proper steps may help reduce your risk of being a victim of those that look to perpetrate mortgage fraud.

Monday, June 8, 2009

The Mortgage Modification Agreement – Know Your Facts

Once you have taken the step to improve your monthly financial situation by signing that mortgage modification agreement, things will feel a lot less stressful. But before you put pen to paper, be sure you know what’s going on. Although financial institutions are forced to maintain totally legal and above-board agreements, it doesn’t mean there aren’t loop-holes.

1. If it feels wrong, question it:

Too many of us have learnt to ignore our gut instincts in modern life. Often, because we are just so relieved to have the financial stress taken from our shoulders, we ignore items in contracts that are patently unfair. Once you have signed the contract, you have said that you are happy with the terms. No matter how desperate you are, do not allow this to happen. There is also the classic situation where you don’t understand everything written in fancy legal-speak and are forced to depend on the lender to explain it to you.

This is a very bad move as he will only highlight the good things and simply skip over things that might not benefit you. A rising trend seems to be when even totally legitimate institutions make people sign a “mortgage modification agreement” and somehow manage to put very high legal fees in there, without ever being clear on that fact.

Suddenly you may find yourself having to pay the original exorbitant monthly payment that you’ve been struggling to pay in any case, just to pay off some vague, random legal fee levied by the lender. Sometimes, it turns out that the monthly payments have not been lowered at all, and interest rates have risen to some impossible level.

2. What’s in a name?

It is very important to find a legal advisor with a good name to review the contract for you before you sign it. Even if that means calling him up, asking what he charges per hour and physically sitting there while he reads it. People in the legal profession are trained to look out for dangerous phrases and questionable terms. Do not depend on the lender’s legal representative. Although they are probably mostly fine, they don’t have your best interests at heart. Always remember that just because this thick, impressive document has the name “Mortgage Modification Agreement” written on the front, it doesn’t mean that’s what it is. What you see is not always what you get.

3. Use a lender you trust:

If you have been a member of a certain bank for a long time and they offer this service, rather go to them. They are far more likely to nurture an existing customer who has banked with them for a long time rather than an unknown person.

By: Lindsy Emery

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Saturday, June 6, 2009

A Commercial Mortgage Broker Can Save You Money On Your Mortgage

Even when you have taken the fact into account that you will have to pay fees for the luxury of getting help choosing your mortgage, you can still save a great deal of money with a commercial mortgage broker. One of the biggest advantages of allowing a broker to search on your behalf is the amount of time that can be saved when it comes to getting borrowing. A broker can do this easily as they will know where to look and can go directly to the lender who specialises in the type of mortgage you are looking for.

When it comes to saving time then the broker has many advantages over you looking yourself. The majority of lenders will work far more quickly with a broker. This is usually down to brokers sending a lot of business their way and if dealt with quickly the lender will be at the top of the list. However despite the many bonuses that a commercial mortgage broker can give, around 70% of those looking for commercial finance stick with high street lenders. One of the reasons could be that they do not want to add on costs or that they are too proud to let anyone know they need help.

However the costs of the broker can be outweighed by the huge savings that a they can give you. Lenders will usually give the best rate of interest to brokers through negotiation. The high street lender will almost certainly quote you a much higher rate of interest than a specialist could find you. Even if you chose to shop around yourself for the cheapest deal you probably would not have access to the same lenders that a broker does and it would take a great deal of time.

Financial matters are usually confusing and a commercial mortgage is no exception. There are terms and conditions which must be read and understood and along with this there can be hidden costs associated with the mortgage. A broker will be aware of these and also will understand the technical jargon and so choose mortgage quotes that offer the best value with no nasty surprises attached.

If you want to find a commercial mortgage broker then look online, a specialist can help to find you the best deal while at the same time offer valuable information on all aspects of commercial mortgages. However while the broker will find you the quotes for your mortgage it is down to the individual to go through the terms and conditions to ensure that they have the right commercial mortgage. Finding and understanding information can seem like looking for a needle in a haystack but it should be all laid out for you on a specialists website. Never jump into the deals that the high street lender offers until you have looked into what a mortgage broker can find for you. It can make the difference between hundreds of pounds over the term of the mortgage.

Friday, June 5, 2009

Daily Mortgage Rates Going Higher?

Over the last two weeks we have seen mortgage rates tick upward almost .1%. While this may not seem like a big deal; it is if you have a loan with the value of $300,000 or more. Many home owners are trying to time the exact bottom before refinancing but this is not the best idea. If you feel you are talented enough to time the bottom of any financial market, it is likely you would be extremely rich from these abilities. While most of us cannot do this, it is smart to refinance when rates are low and you have the ability to get a rate that is pleasing to you.

Overall, you may save some money if you pick the exact bottom on overall rates, but your risk is enormous if you miss with your prediction. If the government feels that the housing market is on solid footing and we have seen a bottom, it is likely that rates could shoot all the way back up to 6% within a matter of months. While this is not likely to happen anytime soon, no one knows for sure with this market. As soon as the government stops buying up all the mortgage backed securities, it is likely we will see a steady increase in mortgage rates.

With this knowledge, it is advisable to start planning for that refinance now. It very likely that you will have an interesting time with the appraisal step so you might as well do it now and get it over with before the housing market takes any more crazy moves.

By: Jesse W.

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Wednesday, June 3, 2009

Get the Mortgage Today & Buy Your House

Mortgage can be defined in general term as a loan of money. It is a lenders security for a debt. In simpler terms, mortgage is a security for the loan that the lender makes to the borrower in against of its property. And the property is returned to the borrower when the borrower successfully repays the interest to the lender. Mortgage is a form of hypothecation of the property to the bank as a security for a loan against your house, car, property etc.

But now a day’s whole scenario of mortgage has changed due to career breaks in the recession period. Before people have fixed salary and used to work in a standard working hours but now people are working in flexible hours, no job security, lower salary, incentive based pay, paternity payments and so on. And due this reason their monthly income fluctuates greatly.

In today’s working environment, many borrower demands flexibility from their mortgage products and lenders continuously introducing several products in the market to accommodate their demands. Many lenders have introduced several flexible mortgage programs for the borrowers to purchase a property of their own with several other benefits.

The best mortgage program is the flexible lifestyle and this mortgage program was introduced in the mid-90. They are generally known as Aussie mortgages because it was introduced by Australia. In the flexible lifestyle mortgage, borrower can pay money at his own convenience if he is having extra money for the repayment towards his mortgage, he is allowed to pay the extra amount and also he can skip the payment when he is not able to pay.

That is why it is known as the flexible pay. It should have an option to settle your payment early without any penalty. They also offer a facility which allows you to re-mortgage and release cash without the need for additional paperwork. They also offer interest rate on a daily or the monthly basis and also on an annual basis. That means if any borrower makes an extra payment then his liability reduces for the next payment.

There are many other options available in the mortgage market apart from the flexible mortgage. So study the various options available in the mortgage markets and then decide which method you want to go for it for purchasing of the property. There are many comparative websites available over the internet which can check the best deal for you as per your conditions.

About The Author:
Maple Tree Funding offers Capital District NY mortgage brokers services for new homes and mortgage refinance. Check out current Albany NY mortgage interest rates presented by New York's Maple Tree Funding.

Tuesday, June 2, 2009

Tips for getting bad credit mortgage refinancing online

- Introduction to Mortgage refinancing for People with Bad Credit:-

Having bad credit is no longer seen as a reason to turn a borrower down for mortgage refinancing. Today, online lenders are specializing in bad credit mortgage refinance for persons with poor to bad credit ratings. There might be some risk involved for the lender in giving a bad credit mortgage refinance loan, and this is typically reflected in higher rates and interest rates offered. However, with increasing competition online, these rates have been continually decreasing and becoming more favorable for persons with bad credit.

- How bad credit mortgage refinancing online will help you in worst financial periods?

Getting bad credit mortgage refinancing online is becoming easier as competition increases. It is certainly more possible to get this type of loan online than with traditional off line lenders like banks or credit unions who do not want to risk taking on such debt. Online it is easy to get no obligation quotes from a variety of lenders and to evaluate their offerings, benefits and disadvantages quickly without ever having to leave home. You will be surprised at how willing online lenders are to help you out in your worst financial periods.

- Tips for getting bad credit mortgage refinance easily online:-

# To get bad credit mortgage refinance that best suits you, shop around and see what is on offer in this category. Many lenders have different packages or can tailor one for your needs. Weigh the pros and cons of each offer before you decide.

# Make sure you know your credit score and that it is accurate. Any items that have been resolved and can be removed will increase your rating and could result in decreases in the interest rate that you are offered.

# Look out for fees and prepayment or other penalties so that you can avoid making a bad decision that can further harm your credit or cost you more. Utilize any rewards offered, as these could help further reduce your interest rates and make payments more manageable.

# Be sure you can comfortably repay the loan based on your income. You do not need to get into more debt and fall behind payments, which are how you got here in the first place.

About the Author

Obtaining a mortgage refinancing for bad credit, bad credit mortgage refinancing or poor credit refinance is easy. Simply fill in the online application form with all the relevant details pertaining to your current loan and an agent specialized in bad credit mortgage refinance will assist you in finding the best deal.

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