How to Achieve Loan Modification Successfully

Here are four simple steps that have been compiled by expert housing counsellors who are genuinely concerned about homeowners who are financially troubled:

Go to a counsellor

When you are not in a position to make your monthly mortgage payments, it makes sense to consult a housing counsellor. The experience and expertise of such a counsellor can help you make a counter offer to your mortgage lender that will make him consider your loan modification request.

Housing counsellors deal with such problems day in and day out. They know what needs to be done and how. Also, they have a lot of contacts that will help them achieve what they wish, in the fastest and the easiest way.

Whether your loan modification request has been denied or you have no idea about how to make this request, going to a counsellor can help you get your issue resolved, without wasting much time or money. Finding such a housing counsellor may however prove to be a challenge that you need to overcome.

An online search on a Housing counsellor should lead you to many such professionals who claim to help you with purchasing properties, renting out properties, resolving credit issues and offering proper advice on defaults and foreclosures. However, there is no way you can be sure that all these counsellors can be trusted with your details.

This is a delicate situation where you have defaulted on making your mortgage payments and you want to make your mortgage servicer agree to your loan modification request so as to prevent a foreclosure. Ideally you will need a housing counsellor who is experienced in helping out home owners get loan modifications. Do some research, get a few referrals and talk to a few people to make sure you have hired a perfect housing counsellor who can help you get out of this mess.

Go for the right type of loan workout

A loan modification can help you get a lower rate of interest, an extended payback period or even a forgiven debt, if approached in the right way. This is a great chance to save your mortgage. The different types of loan workouts include:

Forbearance: This type of workout allows you to pay partially or even skip payments during the period of your temporary hardship. You can resume full payments once you are back in a sound position and also pay an extra amount to cover your missed payments. At times your lender may even consider an extension of the forbearance agreement in case you need some more time to get back your finances.

Repayment plan: In case you have missed out on a few monthly mortgage payments, you can cover them up by entering into a repayment plan with your lender. The amount that you have missed out paying will be divided by a certain number of months. This amount will be added to you regular monthly payments. After the repayment period ends, you will resume back to paying what you would normally pay as your monthly mortgage payment.
Whatever type of loan workout you choose, make sure it is sustainable over the long haul.

Provide accurate information to your Mortgage Servicer

You are in this situation because you failed to pay up your monthly mortgage payments. So, one thing you need to stick to is honesty. Do not underestimate your income or inflate your monthly expenses while reporting to your mortgage servicer. You don’t want your mortgage servicer to lose his trust in you.

In order to be eligible to obtain a loan modification, you will have to prove that you are not able to pay up the monthly mortgage payments because of a certain financial hardship. You will also have to assure that you will be in a position to pay up the new monthly amount after a specified period of time. You will have to submit a list of documentation that will include:
• Your proof of income
• A financial statement
• The tax returns that you have filed recently
• Your bank statements
• A letter that explains your hardship clearly

Make sure you give accurate information through these documents. Also there is one thing you need to remember here. Your mortgage servicer is in no way obliged to give you a generous handout. Therefore, your expectations need to be realistic when it comes to loan modification. There is an extent up to which your counsellor can negotiate and if you try going beyond that you may end up losing that one last opportunity to avoid foreclosure.

Try getting financially literate

Yes, you may have a counsellor to represent your interests; but it doesn’t stop there. You may need some mortgage workouts in future too. A bit of financial literacy will help you take things in your own hands and handle them the way they should be handled. This does take some time and a lot of your efforts; but at the end it is all worth the trouble.

There are many lenders and counsellors who are ready to help homeowners come out of such situations. A couple of them may even contact you by getting your details from lead generation firms that sell top-quality loan modification leads and loan modification live transfers. Don’t hesitate to talk to them if they call you. Their services may be of immense help to you in resolving your issues.

At the end if nothing works out, you may even consider alternate options such as taking out a reverse mortgage, making someone else assume your mortgage, approaching a bankruptcy court, reducing your mortgage obligation and so on.

Home Mortgage Loans

Buying a home will be, for most people, the biggest financial investment of one’s life. Being that 99% of us cannot afford to buy a home outright, we will need to take out a home mortgage loan from a bank or other financial lending institution. There are many mortgage options out there and an inexperienced home buyer can feel quickly overwhelmed when looking at hundreds of thousands of dollars and decades-long commitments. This article should serve as a simplified guide to the different types of home mortgage loans in order to educate the home buyer.

Some of the various kinds of mortgages include Fixed Rate Mortgages, Adjustable Rate Mortgages, Government-Insured Loans, Conventional Mortgage Loans.

Fixed Rate Mortgages carry the exact same interest rate for the entire lifespan of the loan. This means that your monthly payment to the bank will be the exact same every month, year after year. These types of loans are often packaged as 15 year or 30-year loans. A 15-year package will naturally have higher monthly payments than a 30-year package because it must be paid off in less time.

Adjustable Rate Mortgages, or ARM’s, are loans whose interest rate is in flux according to the market. Some ARM’s remained fixed for a certain number of years and then switch to an adjustable rate, while some ARM’s carry an adjustable rate for the initial years and then remain fixed. These are Hybrid ARM’s. An example of a Hybrid would be a 5/1 ARM loan where there is a fixed rate for the first five years, after which that rate will adjust every year to the market.

A conventional loan just means that it is not backed by the government. A Government-Insured loan is a loan that is backed by the government, ensuring the lender from borrower default. There are a few different kinds of Government-Insured Loans; VA loans, FHA loans, USDA/RHS loans.

A VA loan is a loan that is offered by the U.S. Department of Veterans Affairs. A Va loan is offered to former or current military service members and their families. A great advantage of this type of loan is that a borrower can receive 100% of the loan upfront, meaning no down payment.

An FHA loan is a loan given by the Federal Housing Administration and managed by the Department of Housing and Urban Development (HUD). This type of loan allows you to pay a very low down payment, as low as 3.5% of the total loan, unfortunately, this means you have to pay more in monthly payments.

A USDA/RHS loan is a loan from the United States Department of Agriculture, this program is overseen by the Rural Housing Service (RHS). This loan is designed for borrowers with low income that live in rural areas that have trouble getting financial assistance from traditional lenders.

Tips To Choose a Mortgage Lender

No matter how rich you are emergency situations can crop up at any time. Thus, you have to consider taking a loan either from an individual or from a financing company or a bank. Most of the people of now like to opt for the latter options rather than going for the first option. This is because the financing companies or banks are more reliable than a person. But the high interests that are charged on the loans are really a burden. So, a better alternative that you can look for is mortgaging your property against the loan you take. This will relief you from being taxed with high charges and you can pay the loan amount at your convenience within the time limit that the company has offered you. To choose a proper loan lender you can follow some of the tips that we have provided in this article.

Prepare a List

While you consider risking your personal property, why plan everything in haste. Some companies would try to persuade you to take quicker decisions by offering attractive rates but let them be as they are and take your time to take your decision. Research well and make a list of the companies that you find.

Check the Terms and Conditions

Not only choosing the company but knowing the terms and conditions through which the loan to be completed are important. Remember that you are risking your property for money and the slightest carelessness in this respect can cause you to lose your money.

How Quickly They Respond

The next thing that should be your determining factor is that how quickly they respond to your queries. Emergency situations don’t give you a lifetime opportunity. A delay can make the problems to increase. So, instead, you should go for the ones that respond quickly to your needs.

Compare and Choose

After you check with several companies you can compare the interest rates and also the time period they are allowing you to make the repayments. You also have to ensure that the company that you are thinking of dealing with should have a good reputation in the market. Check their client reviews and the years the company has been in the market. If you find that the company is a genuine one then you should go ahead with finalizing the deal with the company.

We hope that just by reading this article you have got an idea about choosing the mortgage provider. This will help you in choosing a better lender for your needs.

5 Key Mortgage Differences/Factors

The vast majority of homebuyers, depend, to a variety of degrees, on securing a mortgage, for a percentage of their payment. Even in so – called cash deals, we observe, it generally means the buyer is purchasing, without any mortgage contingency, rather than meaning he is not taking out any loan. This article will attempt to briefly discuss, 5 of the key differences, in the types of mortgages, one might secure, and various considerations. There are differences in terms of type of loan, length, how much one will put down, whether there will be any points involved, and, of course, the rate paid.

1. Term/ Length: The more popular mortgage terms are 15, 20, 30, and 40 year loans. While adjustable or variable term loans, generally adjust at different intervals, the precise length, is often a determining difference, in the monthly expenditure, as well as the overall, total costs. The shorter, the term, the lower the rate, usually charged! On the contrary, longer – terms, translate to slightly higher percentage loans.

2. Fixed or adjustable: When one takes a fixed – rate mortgage, he pays the same interest rate, throughout the term of the loan. On the other hand, adjustable or variable loans, usually have a fixed rate for an introductory period, which change, based on specific indexes, at preset intervals. When interest rates have been high, variable loans are usually popular, because, often, they involve a significantly lower monthly expenditure.

3. Downpayment: We generally consider 20% down, to be the norm, when it comes to the amount, to be paid, by the homeowner, where the rest is mortgaged. However, some loans, such as for non – owner – occupied multi – family homes, or commercial properties, usually require a higher downpayment. There are also, several types of loans, where the homeowner, does not need, to put as much down!

4. Points: We often observe, some loans come with points. A point equals 1% of the amount of the loan, and must be either prepaid, or folded into the loan, adding to the amount of the principal. When one looks at the costs of a loan, you must factor – in, these additional costs and expenses.

5. Rate: Different loans come with differing percentage rates. This will determine the amount of one’s monthly payment.

Since, for most people, their home represents their single – biggest, financial asset, doesn’t it make sense, to better understand your options and costs. The more you know, the better you will be prepared, and ready!

4 Key Benefits Of Adjustable Mortgages

Since the vast majority, of those purchasing a home of their own, whether a private, condominium, or cooperative one, take advantage of some sort of mortgage loan, as part of their payment, doesn’t it make sense, they should understand their alternatives, and examine, which might best, fit their needs, and situations? In over a decade, as a Real Estate Licensed Salesperson, in the State of New York, I have witnessed, few who actually do so, rather focusing on the selling price, they pay, and the amount of their monthly commitment/ expenses. While there are multiple considerations, including lengths, points, etc, one of the major ones, is whether to seek a Fixed or Adjustable Mortgage. This article will, therefore, briefly examine and review, 4 key benefits/ reasons, for using an adjustable mortgage.

1. Qualifying: Sometimes, one may find it easier to qualify for an adjustable, rather than a fixed mortgage, because, the lower payments, are used, as part of the financial qualifying and qualification process. This may be the difference, for some, especially middle class, first – time homebuyers, between being able to, or unable to purchase one’s dream house, or home, of their own!

2. Monthly costs: If the adjustable type, creates a lower monthly payment, because of the initial lower interest rate, it may make it somewhat less stressful, to go that way! Especially, when one purchases a property, and has an excellent chance of having a substantially higher income in the future, this may be a suggested approach.

3. More house: If the introductory rate, either permits one to qualify for a higher amount of loan, or permits him to buy a more expensive house, which he desires, an adjustable mortgage, might be the preferred approach! While one should not buy or pay, more than he can somewhat comfortably afford, one’s future financial consideration and status, might suggest, this is the best course, to follow!

4. How long you’ll live there: If you plan to reside in this house, for under ten years, the lower rate, often available, with an adjustable loan, versus a fixed mortgage, may be indicated! For example, imagine, someone, aged 60 – 65, who has excellent earning power and income, and could qualify for either type, whichever offers the more attractive, lower rate, might be the best, for his life situation, and needs.

Ever since interest rates have dropped (remember when nearly every mortgage had an 8.5% rate), the vast majority of individuals, have sought and used fixed – rate borrowing. However, there are conditions, where the variable approach, might be the better alternative!

What Length Fixed Mortgage Is Best For You?

In today’s historically, low – interest environment, the vast majority of home mortgages, issued, are of the fixed – rate variety. In most instances, individuals want to lock – in these low rates, for the entire term of their loan, and therefore, opt to proceed, in that manner. Once you determine you are better served, using this type of mortgage, rather than a variable type, and you qualify, you must decide, which term, and/ or length, is best for your needs, conditions, and/ or situation. This article, therefore, will briefly discuss, which length, makes the most sense, for you.

1. 15 Years, or less: The main advantage of this term, is the interest rate, is almost – always, lower than longer – term, ones. Fewer payments over less years, combined with lower rates, translates to far lower, total payments. One’s asset accumulation grows more quickly, and payments go, far faster, towards paying – down principal, rather than simply, paying interest. However, there are also some draw – backs, or limitations, involved. One of these is they require possessing a higher income, less overall debt, and others assets, to qualify. In addition, the monthly installment payments, are obviously higher, because of the shorter – term/ period.

2. 20 – 25 Years: These are generally used, as a compromise, and/ or middle – ground, which stands between the shorter (15 years, or less), and longer – term mortgages. Although interest rates may be slightly lower than longer – period, ones, they are generally a little higher than shorter ones.

3. 30 Years: Traditionally, the 30 – year, length, is the most commonly used, type of mortgage. Although the interest rate may be a little higher, today, these rates are still, historically low. They generally provide an excellent opportunity for qualified individuals, to acquire the necessary financing, needed, to purchase a home. Especially in today’s market, where home prices have been rising for a couple of years, they often provide the best option available!

4. 40 Years: This extended term was rarely used, until recently. However, with the increasing prices of houses, extending the number of years, to repay, lowers monthly installments, even though it increases the overall payments. Since qualifying for a mortgage is based on several factors, including percentages based on that monthly installment, obviously, this term, makes it easier for some, to be able to qualify.

Deciding which term, and length, of a mortgage, is an individual decision, based on several factors, including financial, one’s comfort zone, monthly, as well as overall total costs/ expenses. Which length do you think, might best serve your needs and purposes, and why?

Why Home Appraisals May Be Wrong: 5 Possibilities

While there are many challenges, in terms of effectively selling a house, it must be recognized, most potential buyers, are only able to afford, buying a home, by taking advantage of acquiring a mortgage! We often discuss the need to assure, a potential buyer, possesses a quality credit rating, in order to qualify, as well as have proven, a responsible approach to taking care, of his personal finances, and obligations. However, one potential, stumbling block, which is often overlooked, is whether the subject property, will be assessed, for a high – enough, price, so a lending institution, will often the most favorable loan! Unfortunately (but the reality is), the appraisal process and procedure, is far from perfect, containing flaws, which sometimes creates, undesirable challenges and/ or obstacles! This article will briefly examine 5 of these possibilities, which might negatively impact, a potential transaction.

1. Price higher than what the market, indicates: There are times, when a buyer, either because he doesn’t know the marketplace, or loves a particular home, offers considerably more than what the market, might dictate. When the lending institute assesses the house, it shows a lower value, and thus, the LTV, or loan – to – value, ratio, creates resistance to obtaining the best terms, or, even, the loan, at all. A prepared buyer understands this, and, if he stills wants the house, should put considerably more down, so it doesn’t become a negative factor!

2. Wrong “comps”: There are times, when an appraiser, improperly, under – values, a subject property, because he, either uses the wrong properties, to compare the home, to, and/ or, is not fully familiar with the local real estate market. Beware if the assessment compares a Colonial style house, to Capes, etc. Look closely at the characteristics of all properties, and, either the buyer, and/ or his real estate agent, should help, guide the assessor, to the most appropriate houses.

3. Appraiser doesn’t know local market: Every real estate market has certain specific characteristics, and, in some cases, there may be several micro – markets, even within a local area. If the appraiser isn’t familiar, he may compare a house in a more desirable market, to one, in a less valuable one. Remember the edict, Location, location, location!

4. Errors: Check carefully, to discover and learn, if there are any errors, involved, in describing the features, etc, of the subject home (yours). Typical areas to check, include, conditions described (windows, doors, HVAC, bathrooms, kitchens, patio, deck, etc). Has the appraiser subtracted when he should have added, etc? Remember, if you believe there’s an error, you have the right to contest it!

5. Inaccuracies: Is lot size, properly listed? Has only the size mentioned, even if one lot, is fully usable, when another is not? Have any of the competitive (“Comps”) properties, overlooked the condition of another home, and its impact, etc.

While the appraisal process is important and essential, potential homebuyers should beware, they are not necessarily accurate or complete. Either, you or your agent, should contest any inaccuracies!

5 Tips to Consider When Refinancing Your Mortgage

Here are 5 tips to consider when refinancing your mortgage.

Is it the right move?

When conditions are right, financially and economically, you might be considering a refinance of your mortgage. Before you jump into what seems like a good idea, it’s best to know exactly what the refinancing process is, and just what it entails. You should know that when you are going to refinance, it involves starting the loan application process right from the start, as if you are buying a new home. Will you be taking the loan with a new lender, setting up a new deal, or should you shop around and see what’s on offer from other loan providers? The best person to lead you through what is now a veritable minefield of lenders, is your mortgage broker. They are far more up to date with what’s on offer than if you spent hours scouring the internet looking for the best deals.

Why Refinance?

What are your reasons for refinancing? There could be a variety of reasons. Lower interest rates on offer? A difference of a point or two in the rate may seem small when you look at it, but that couple of points can save you thousands over the years because your repayments will go on for 15 to 30 years for a typical mortgage.

Another reason some may decide to refinance is to get a shorter term, which also saves thousands of dollars. For example, things have never looked rosier personally, and both you and your partner are working, and your income is higher. So, a change in your financial situation can be used to save money on higher monthly payments. Conversely, you might be after a lower monthly payment or have that fixed rate changed to a variable rate, or vice versa.

Refinancing Costs

There are some obvious things to look at when considering refinancing. One of the first things is the actual cost of refinancing. Look at the fees you will be paying and divide it by the months of your mortgage and see whether there is a saving as a result of the refinancing. Sometimes you are ahead straight away, other times you might have to work out when you will hit the break-even point.

Penalties

Are there any penalties in your mortgage terms and conditions that apply if you pay out the mortgage early? Lenders do NOT like mortgages paid out early. Remember, when you refinance, you are paying off one loan and applying for another completely new loan. Add any penalties to your total costs for refinancing and calculate that break-even point again. Be certain that you are not losing money overall when you refinance.

Your Equity

An important factor in this whole process is to work out the equity you have in your home. A negative equity is when you owe more on the home than what the house is worth. If you have been in your home for a number of years, the annual increase in your home’s value will stand you in good stead. But if this is a refinance taken out after only a short time into your mortgage, price fluctuations may have worked against you. If your lender is offering less than the equity, you will not be able to get the refinance, unless, of course, you have the money to pay the difference. Current markets indicate an overall rise in prices, but there have been some downward movements as well over the year and that may have had a negative effect on your home’s value.

See your Mortgage Advisor

With so many variables to look at with a refinance, you can get some quick answers by putting it into the lap of your Mortgage Choice advisor who probably got you the initial loan. With up to date calculators and current interest rates available from many lenders, you can get a fast answer to any refinance query.

Getting A Mortgage: 5 Steps For Ease And Success

Whether you are a potential home buyer, looking to find a home, of your own, or an existing homeowner, who seeks better terms, and/ or rate on your mortgage, it’s important, to know a little more about the process of getting the best one, at the best terms, which fits your needs, priorities and situation. Since the vast majority of individuals, use a Mortgage loan, to pay for their house, I felt it might be helpful, to review, some things to consider, from the onset. With that in mind, this article will attempt to briefly examine and consider, 5 steps, you might wish to consider following, to ensure this often – tense, stressful process and period, becomes somewhat easier, and more successful.

1. Check, and fully review, your Credit Report: Especially in today’s atmosphere and environment, where there is so much Identity Theft, it’s smart to begin, by doing this. First, review the report for accuracy, etc. Then, look at the items, and report, the way the lending institution might. Begin, by looking at your debt – to – income ratio. The desirable maximum for this changes, periodically, but if you keep it to about one – third (maximum), you’ll probably be somewhat safe. Prepare about 3 months, or more, before you begin the process, and pay – down, your debt. Do not wait to the last – minute to do so. If you can do this, a year or more before, ir’s even better! Look at the report, and consider, whether, if you were the lender, would you consider you, to be a good risk?

2. Repair: One of the primary reasons to begin Step One, as far in advance, as possible, is to give you the opportunity, to make any necessary repairs, and to enhance your credit rating, as much as possible. Be careful to avoid requesting or taking out any new credit during this period, because doing so, might harm or reduce your credit score!

3. Patiently wait after steps one and two: Optimally, waiting a year, will get you the best results, but you should always wait, at least 3 or more months, after you’ve made your repairs and/ or fixes, and/ or paid – it – down, to best position yourself.

4. Stay away from any credit offers, etc, during this period: That offer you get in a retail store, which will give you, immediately, an extra discount on your purchase, is not harmless, but, rather, might negatively impact your overall credit. Keep your eyes on the target!

5. Be prepared for the down – payment: Most lenders will want to know where your down – payment, and other funds, come from. At least 3 or more months in advance, place your probable down – payment, in an account, you can clearly provide statements for, demonstrating your ownership, etc. Also, realize, most lenders seek borrowers, with a significant amount of other assets, etc.

A little bit of preparation, and paying attention to some relevant details, will generally make the process, go smoother and easier, and more successfully, If you really want and/ or need that mortgage, do, all you can to be prepared!

What Length Of Mortgage Is Best For You? 5 Options

Since, for most people, their house, represents their single, largest, financial asset, it makes sense, for potential homeowners, to become as knowledgable, as possible, in terms of their options, regarding financing, and purchasing their homes. The vast majority of Americans take advantage of using a mortgage, but, few, fully consider, realize, and recognize, their options, and opting for the length of mortgage, which best serves, their needs, and personal situations. With that in mind, this article will attempt to briefly examine, consider, review and discuss, 5 options, and some of the potential, pros and cons, of each of these.

1. Traditional 30 – 40 year term: The vast majority of fixed mortgages, have a term of between 30 and 40 years. This is beneficial to most, because it usually offers a compromise between the rate of interest paid, and affordability of monthly payments. In addition, because most mortgages have no prepayment penalties, one can pay additional amounts, as is most beneficial, and, thus, reduce the length of the mortgage’s life. One should understand, however, is, when one uses this term, his total principal and interest payments, will be considerably greater than the amount borrowed. This is remedied, to a certain degree, because mortgage interest, within certain limits, is tax – deductible!

2. 15 – 20 years: Reducing the length of the term, normally creates a lower rate of interest, being charged. However, it also translates, to higher monthly payments, and lower, total payments.

3. 7 – 10 years fixed rate/ then adjustable rates/ term: Those who are intending to remain in their present home for a shorter period, often benefit from this type of mortgage. It provides lower rates, and, often, makes qualifying for a particular amount, easier to do. The drawback, potentially, is after the initial period, if one remains in the present home, their rate will change, according to pre – determined terms, or they will need to refinance.

4. 1 year – adjustable: These types of loans generally offer the lowest initial interest rates, but, also, the least predictability, for the future. Of course, if one can only qualify, presently, using this form, or, intends, to relocate, very soon, this might be the best way to proceed.

5. Balloon/ interest – only: There are sometimes interest – only loans available, for a specific period of time, and of course, since one is not paying down the principal, the monthly cost/ payment, will be lower. However, it should be realized, you are not paying – down, what you owe, and doing so, brings the risk of future undesirable ramifications/ results. In addition, these are usually referred to as balloon loans, because, at a specified period, the full amount of the principal of the loan, becomes due, and, one, must, either repay it, in full, or secure a new mortgage.

Based on one’s individual circumstances and needs, it becomes possible to determine, the best mortgage to secure. Remember, the more educated and knowledgable, you become, the better decisions/ choices, you will probably make!