A mortgage will always be your largest monthly commitment and is always also a long-term loan. Mortgage insurance exists so that you have peace of mind that your monthly mortgage repayments will be met if you are unable to keep up your repayments. There is a wide range of plans from most insurance companies that will mean you won't lose your family home if the worst happens.
A mortgage insurance policy is basically designed to pay your mortgage and to keep your family and your property safe when you are unable to work either because of an illness, accident and involuntary unemployment (only some policies cover the last one). Mortgage protection is less likely to be a requirement imposed on you, however if you feel that you might have difficulties or that you will not be able to repay your mortgage if you become unable to work for some reason, than one of these policies might seem like an attractive and viable proposition for you to consider. If one is unsure about the purchase of an insurance, the following questions can help in demystifying the question of buying or not buying.
If you lost your main source of income, would you be able to meet all of your financial obligations?
Could your partner cover all the financial obligations if you were unable to?
In an unfortunate event of your unemployment for whatever reason, would you be able to find another job fairly quickly?
Do you have savings that can last you at least three months?
It is clear that answering one of these questions in an unsatisfactory fashion will imply that you should acquire some sort of insurance policy since it will help you cope with the difficult situation that has befallen you.
Mortgage insurance will basically cover repayments on any type of mortgage or loss of income through some unfortunate event. Premiums that are paid for the policies that one chooses are flexible and they allow some calculation space, however the less you want to pay the smaller coverage you will have.
When contemplating insurance policy one needs to know to which companies he or she can turn for such a service, the following list contains top 10 insurance companies, the order doesn't denote the rating of the company, the companies are arranged alphabetically for easier following and usage.
Assurant Intermediary LTD
ASUdirect
Berkley Alexander
BIBA
British Insurance
Columbus
First Call Payment Protection
Iprotect
Openwork
The One Account
Sunday, May 20, 2012
Mortgage Payment
Most people are usually not ready when they apply for a mortgage loan. Of course they know that they require a down payment to buy a house but there are other costs as well as down payments. In this article, I will be talking about the first payments you will make to get a mortgage loan, as well as the monthly installment you make and what they are composed of.
The first payment you will make when making an offer to buy a house is "earnest money". This is to let the lender know that you are serious about your offer and willing to buy the house. This money is put into an escrow account until your offer has been accepted. If it has been accepted, it will then be put towards your down payment and closing costs. If not, the money will be returned. There is no fixed amount to deposit for earnest money to buy a house. Some states have a minimum requirement, but they usually fall between 1 to 3 percent of your offer. If you are making an offer for a house that is likely to sell quickly, a larger earnest money may help get your offer accepted.
The next payment is the down payment. This is a percentage of the agreed price that you pay to reduce the amount of money you have to borrow. You can put as much money down as you want. The traditional amount is 20 percent of the purchasing price but it is possible to find mortgage loans that require as little as 3 to 5 percent. Any down payment lower than 20 percent would require you to purchase a Private Mortgage Insurance which is added to your monthly installment. This is to protect the lender if you default on the mortgage. PMI can be cancelled as soon as you have built equity equal to 20 percent of the value of the house. The more money you put down, though, the less you have to finance and the lower your monthly installment will be.
The third payment you will make is for closing costs which covers all the paper work needed to buy the house. Closing costs are usually between 3 to 4 percent of the purchasing price of the house.
The monthly mortgage installment you will make is composed of the following costs, appropriately known by the acronym PITI.
Principal - The total amount of money you are borrowing from the lender (after your down payment). In the early years of a fixed rate mortgage, you pay more of interest. In the later years you pay more of the principal.
Interest - The money the lender charges you for the loan. It is a percentage of the total amount you are borrowing. Principal and interest comprise the bulk of your monthly installment in a process called amortization, which reduces your debt over a fixed period of time. With amortization, your monthly payments are largely interest during the early years and principal later. In addition to your principal and interest, your mortgage payment could include money that is deposited in an escrow account to pay certain taxes and insurance.
Taxes - Money to pay your property taxes is often out into an escrow account, a third party entity that holds accumulated property taxes until they are due.
Insurance - Most mortgages require the purchase of hazard insurance to protect against losses from fire, storms, theft, floods and other potential catastrophes. If you own less than 20 percent of equity in your home, you may also have to buy Private Mortgage Insurance.
Equity is the value of your home minus your remaining principal balance.
In my next article, I will be talking about fixed rate mortgages.
The first payment you will make when making an offer to buy a house is "earnest money". This is to let the lender know that you are serious about your offer and willing to buy the house. This money is put into an escrow account until your offer has been accepted. If it has been accepted, it will then be put towards your down payment and closing costs. If not, the money will be returned. There is no fixed amount to deposit for earnest money to buy a house. Some states have a minimum requirement, but they usually fall between 1 to 3 percent of your offer. If you are making an offer for a house that is likely to sell quickly, a larger earnest money may help get your offer accepted.
The next payment is the down payment. This is a percentage of the agreed price that you pay to reduce the amount of money you have to borrow. You can put as much money down as you want. The traditional amount is 20 percent of the purchasing price but it is possible to find mortgage loans that require as little as 3 to 5 percent. Any down payment lower than 20 percent would require you to purchase a Private Mortgage Insurance which is added to your monthly installment. This is to protect the lender if you default on the mortgage. PMI can be cancelled as soon as you have built equity equal to 20 percent of the value of the house. The more money you put down, though, the less you have to finance and the lower your monthly installment will be.
The third payment you will make is for closing costs which covers all the paper work needed to buy the house. Closing costs are usually between 3 to 4 percent of the purchasing price of the house.
The monthly mortgage installment you will make is composed of the following costs, appropriately known by the acronym PITI.
Principal - The total amount of money you are borrowing from the lender (after your down payment). In the early years of a fixed rate mortgage, you pay more of interest. In the later years you pay more of the principal.
Interest - The money the lender charges you for the loan. It is a percentage of the total amount you are borrowing. Principal and interest comprise the bulk of your monthly installment in a process called amortization, which reduces your debt over a fixed period of time. With amortization, your monthly payments are largely interest during the early years and principal later. In addition to your principal and interest, your mortgage payment could include money that is deposited in an escrow account to pay certain taxes and insurance.
Taxes - Money to pay your property taxes is often out into an escrow account, a third party entity that holds accumulated property taxes until they are due.
Insurance - Most mortgages require the purchase of hazard insurance to protect against losses from fire, storms, theft, floods and other potential catastrophes. If you own less than 20 percent of equity in your home, you may also have to buy Private Mortgage Insurance.
Equity is the value of your home minus your remaining principal balance.
In my next article, I will be talking about fixed rate mortgages.
Six Reasons Not to Pay Mortgage
While it may go against your natural instincts, it is not always a good idea to pay off your mortgage as quickly as possible. This may seem like a major contradiction to anything you have been taught in the past about debt. We are trained to be responsible and that means paying off your debt. Nevertheless, before you start making extra mortgage payments, it is important for you to evaluate your immediate financial situation. There may be better actions to take with your money at this period so that you can clear up other debt or increase your savings. Six reasons to hold off making that extra mortgage payment include:
Credit Cards
Many people have credit cards and the media is full of credit card debt horror stories. Even though you may not be swimming in this type of debt, it is important to remember that your credit cards often have a higher interest rate than your mortgage. This means that if you are not careful, you will end up paying more to your credit card company when you could have caught up and nipped the debt in the bud. Think about it: Why would a person consider paying down a 5% mortgage loan when they are sitting with a 16% credit card interest rate? If you have a bit of credit card debt, consider putting your extra cash towards lowering it.
No Emergency Funds
If you have extra money, you might consider starting a savings fund, which can be used for unforeseen emergencies. Not having emergency funds is dangerous, as many things could happen. For instance, you could lose your job, get into an accident, or become disabled. All of these things can result in a dramatic loss of income, as well as an increase in bills. Everyone should aim to have a minimum savings account amount equal to about three months' worth of salary. Instead of paying off your mortgage early, take the time to cover your bases for the future.
A Bare Retirement Fund
Many people may feel that a 401K is enough to retire on successfully. This is not always the case especially with the economic changes affecting the country. There are many other options to help supplement your retirement fund like using an IRA. Consider talking to an accountant about your current investing situation, so that you know whether you need to consider setting up other accounts.
Your Children have no College Fund
It can be very tempting to pay off your family home early. Unfortunately, there are always things to pay for in life. While owning a home is a top priority, it is important to make sure that your other financial obligations are handled. College expenses are quickly on the rise and unless you want you and your child to accrue a large amount of student loans, you should consider starting a college fund if you have not already. There are college fund options out there that earn tax-free interest. Your money can safely grow and your child's future can be secure.
Mortgage Earns no Interest
One reason that you may want to pay off your mortgage early is that you may be close to retiring and would rather not have an extra bill every month. Unless you are in this category, your money would be better off invested. Paying your mortgage early is the same thing as throwing your money away. You make no money on your mortgage payments and you are passing over interest earning opportunities. Even a normal savings account will make you more money than putting an extra payment towards your mortgage.
Are You Moving Soon?
We all want to own a home, but many people do not actually stay within the same residence for more than ten years. Therefore, you need to ask yourself if you plan to stay within that house for the next thirty years. If you do not plan to stay for the full duration of your mortgage, then trying to pay it off quickly is a waste of time. While you will get this money back at the time of the sale, it will have not have gotten any interest and you are in essence getting back the same money you put in. To make it worse, inflation can be a serious problem and can result in you actually losing money when you take into consideration how much that money was worth at the time you made the payment and how much it is worth at the time it is returned. If you know, there is a chance you may be moving, put your money to better use.
The fact of the matter is that many people are not in a situation where paying off a mortgage quickly is the most financially sound option. If you are unsure as to how you should proceed with your finances, consider talking to a professional. They will be able to put all your options on the table in front of you so that you can at least make an educated decision as to whether you should make that early mortgage payment.
Credit Cards
Many people have credit cards and the media is full of credit card debt horror stories. Even though you may not be swimming in this type of debt, it is important to remember that your credit cards often have a higher interest rate than your mortgage. This means that if you are not careful, you will end up paying more to your credit card company when you could have caught up and nipped the debt in the bud. Think about it: Why would a person consider paying down a 5% mortgage loan when they are sitting with a 16% credit card interest rate? If you have a bit of credit card debt, consider putting your extra cash towards lowering it.
No Emergency Funds
If you have extra money, you might consider starting a savings fund, which can be used for unforeseen emergencies. Not having emergency funds is dangerous, as many things could happen. For instance, you could lose your job, get into an accident, or become disabled. All of these things can result in a dramatic loss of income, as well as an increase in bills. Everyone should aim to have a minimum savings account amount equal to about three months' worth of salary. Instead of paying off your mortgage early, take the time to cover your bases for the future.
A Bare Retirement Fund
Many people may feel that a 401K is enough to retire on successfully. This is not always the case especially with the economic changes affecting the country. There are many other options to help supplement your retirement fund like using an IRA. Consider talking to an accountant about your current investing situation, so that you know whether you need to consider setting up other accounts.
Your Children have no College Fund
It can be very tempting to pay off your family home early. Unfortunately, there are always things to pay for in life. While owning a home is a top priority, it is important to make sure that your other financial obligations are handled. College expenses are quickly on the rise and unless you want you and your child to accrue a large amount of student loans, you should consider starting a college fund if you have not already. There are college fund options out there that earn tax-free interest. Your money can safely grow and your child's future can be secure.
Mortgage Earns no Interest
One reason that you may want to pay off your mortgage early is that you may be close to retiring and would rather not have an extra bill every month. Unless you are in this category, your money would be better off invested. Paying your mortgage early is the same thing as throwing your money away. You make no money on your mortgage payments and you are passing over interest earning opportunities. Even a normal savings account will make you more money than putting an extra payment towards your mortgage.
Are You Moving Soon?
We all want to own a home, but many people do not actually stay within the same residence for more than ten years. Therefore, you need to ask yourself if you plan to stay within that house for the next thirty years. If you do not plan to stay for the full duration of your mortgage, then trying to pay it off quickly is a waste of time. While you will get this money back at the time of the sale, it will have not have gotten any interest and you are in essence getting back the same money you put in. To make it worse, inflation can be a serious problem and can result in you actually losing money when you take into consideration how much that money was worth at the time you made the payment and how much it is worth at the time it is returned. If you know, there is a chance you may be moving, put your money to better use.
The fact of the matter is that many people are not in a situation where paying off a mortgage quickly is the most financially sound option. If you are unsure as to how you should proceed with your finances, consider talking to a professional. They will be able to put all your options on the table in front of you so that you can at least make an educated decision as to whether you should make that early mortgage payment.
Reverse Mortgage Defined
There has been a great deal of media attention offered to reverse mortgages today and this has left people wondering, what exactly a reverse mortgage is and how it can help them. As you may or may not know, the target audiences for reverse mortgages are those who are ready to retire or aging home owners in particular. So let's get right to it; a reverse mortgage is a special type of home loan that allows home owners to withdraw a certain amount of their home equity in cash. Seniors are most commonly qualified for this type of loan and they are the ones who can benefit the most from this unique home equity loan.
Now that you know what a reverse mortgage is and who qualifies you may be wondering what to do if you still owe money on your current mortgage if you can still qualify for the reverse mortgage. The answer to this question is yes. What will happen is you will use however much of your new home equity loan or reverse mortgage to pay off your initial mortgage and you will be given whatever funds are left in one lump sum, or in monthly payments or even as a line of credit depending on which option you prefer. An additional bonus to this loan is that the money is tax-free and you as the borrower have no restrictions when it comes to what you want to use this money for; making it perfect to add to a retiree's investment portfolio.
Another great benefit for seniors is that you will not have to make another mortgage payment for the rest of your life! How the reverse mortgage works is it defers any payment from the borrower until after they die, sell their home or move outside their home for over a year. This means that if you have no intention of moving from your home you are mortgage payment free for the rest of your life and you get to utilize the cash from your home to make your retirement life that much more enjoyable. To clarify if there are two borrowers, a couple, the payment is not required until both borrowers have died.
Now let's talk about how to qualify for this great investment opportunity. First, applicants must be at least Sixty two years old and have no outstanding debts to the government. Next, you must have enough equity within your home that the funds you receive from it are enough to cover your existing mortgage. Of course the equity within your home will be determined by your age and the current property value of the home.
Even if you are not of retirement age yet, there is no time like the present to investigate this reverse mortgage option. The benefits of this home equity loan can really help improve the quality of living within your retirement years. Although you will still have to pay property taxes and insurance the mortgage payments go out the window and this provides you with more cash to work with.
Now that you know what a reverse mortgage is and who qualifies you may be wondering what to do if you still owe money on your current mortgage if you can still qualify for the reverse mortgage. The answer to this question is yes. What will happen is you will use however much of your new home equity loan or reverse mortgage to pay off your initial mortgage and you will be given whatever funds are left in one lump sum, or in monthly payments or even as a line of credit depending on which option you prefer. An additional bonus to this loan is that the money is tax-free and you as the borrower have no restrictions when it comes to what you want to use this money for; making it perfect to add to a retiree's investment portfolio.
Another great benefit for seniors is that you will not have to make another mortgage payment for the rest of your life! How the reverse mortgage works is it defers any payment from the borrower until after they die, sell their home or move outside their home for over a year. This means that if you have no intention of moving from your home you are mortgage payment free for the rest of your life and you get to utilize the cash from your home to make your retirement life that much more enjoyable. To clarify if there are two borrowers, a couple, the payment is not required until both borrowers have died.
Now let's talk about how to qualify for this great investment opportunity. First, applicants must be at least Sixty two years old and have no outstanding debts to the government. Next, you must have enough equity within your home that the funds you receive from it are enough to cover your existing mortgage. Of course the equity within your home will be determined by your age and the current property value of the home.
Even if you are not of retirement age yet, there is no time like the present to investigate this reverse mortgage option. The benefits of this home equity loan can really help improve the quality of living within your retirement years. Although you will still have to pay property taxes and insurance the mortgage payments go out the window and this provides you with more cash to work with.
Mortgage & Real Estate Bailouts
It used to be that we in the States lived by a rule of effort and reward, and for as long as we didn't breach conscientious norms of human dignity and liberty we were unhindered by any large, singular imposition in the personal quest for gain and merit. In the world of Real Estate, the now-inextricable role of politics has ruined the paradigm.
In an economic sense, we had been free to apply our God-given characteristics to explore entrepreneurial pursuits. We understood that we could lose all that we invested, or improve to the boundaries of our personal limits. The principles behind this were free enterprise capitalism, an original and enduring fixture of our American Soverignty, and the acknowledgement and appreciation for life, liberty, and the pursuit of happiness. Our will and intellect could be purely applied, without onerous regulation, to the endeavors contrived from the essence and depth of our personal fabric and innate gifts.
Further, if a person or family was in grave need of basic necessities, the neighborhood Church and its endemic outflow of Christian Charity were ever present to supply to those hit by hard times. Though this element of American quality remains alive, Christianity has seen a steady, ever-burgeoning and oft-surging competitior for the "biggest giver" award - the Federal Government.
Of course, the designers of our constitutional republic never intended for this to be extant in American culture. In fact, quite the opposite was the veritable intention of our Framers. Small central government with limited powers, chief among these being the protection of soverignty, had always been the intention. Jefferson and his contemporaries are rotating continuously in their respective graves at the overreach of our federal government in the present fullness of its overreaching bloat. The fat hanging over the belt of recent administrations is staggering, and sickening.
As we have come to collectively realize, by and large, the centralized government has meddled to such a degree in Real Estate as to have substantially fractured the economy at large. By urging, if not forcing, bad mortgage loans through private banks for many years under the auspice of insuring these loans through the Treasury and under the guise of fairness to all, we became [unwitting?] drones in a bubble of unsustainable growth. Via fantastic surges in real estate "value", the entire country was swimming in leverageable 'equity" overnight. The American Dream of home ownership became a farcical effigy as citizens eschewed their trailers and tenement houses for a mortgaged home in the suburbs, burning away the residue of the hallowed, historical mortgage prerequisites of respectable income and savings. Happily we floated along in this surreal picture of prosperity. We were so blinded by money and growth that nary was it considered that the foundation for expansion was purely sand. Sand upon sand.
In the dark days of 2008, and since, America has been in continuous, painful realization of the repurcussions of greed and licentiousness. Tragically few, though, it seems, have been astute enough to recognize the source of the fictitious and superimposed growth as the federal government itself. As a result, the masses turn to the "man behind the curtain", the very originator of the disease, for resolution to the economic apocalypse it has perpetrated. Dr. Kevorkian is now taking patients.
When we look for real estate and mortgage "bailouts", whether for mortgage default, student loans, or otherwise, we're signing a new contract with our indenturers for more time in captivity, and by consequence, in assent to the financial imprisonment of our fellow Americans.
Desperation and its affiliated emotions usually prompt irrational reactions. In the helplessness of our own personal, microsmic personal and familial economic failures, we no longer own up to our bad investments as would have our predecessors of tougher American mettle. Nowadays, we require that there be SOMEONE ELSE TO PAY FOR OUR MISTAKES. It matters little that we're metastasizing our singular debt upon our neighbors who never broke the rules of scrupulousness.
As a simple diagnostic assessment of the anti-bailout platform I am hereby developing, ask simply, "From where does the money come to bail out a collapsing mortgage giant?". Or, "When John Doe is pardoned of a value-to-mortgage deficit, from where does the mortgagee (bank) gain the funds to accept the culmination of these losses?". The answer, of course, is the very institution gratuitously insuring these bad loans in the first place - the US Treasury and the tentacle departments in the federal system. And from whence does the monies originate to fund the disease propagated by the tangled web of affiliated federal bureaucracies? The taxpayer - you and me. And as a final tasty piece of rhetoric to chew on, consider why the Federal Housing Administration continues its prolific reign as mortgage insurer extraordinaire, despite its overwhelming role in the buildup and collapse of the housing bubble from which we continue to collectively struggle. To those active in brokering house sales these days to owner occupants, do you not agree that the FHA is involved in the lion's share of mortgage loan activity? Are we not then funding the next bubble while still in the deadly grasp of the last one? "Recovery" is being fabricated by the very same player as masterminded the first cancerous mass of government-backed mortgages.
Summarily, when the federal government subsidizes the bailout of banks and homeowners, taxpayers bear the burden. While our taxes increase to mitigate this unpayable bill, our national debt increases (which we can NEVER afford to repay) and dollar weakness grows nearer to its inevitable bloodbath. Those conducting this absurd charade understand that money is just numbers in an abstract computer with no physical location. The end game has nothing to do with balancing the budget and paying down our national debt so much as kicking the can down the road and flooding the markets with money supply to delay the inevitable. We're in a load of trouble.
We in the Real Estate business are mostly neutral players in the broader scheme. Mortgage brokers don't generally distribute FHA-insured product with the malice to grow government control and destroy what remains of our economic stability. Realtors don't sell houses to folks using FHA subsidy with the intent to build another government-backed bubble. We're just trying to pay the bills and put food on the table. But when we endorse bailouts in preclusion of the natural consequence of bad decisions and illicit business, we're aligning ourselves with the Federal Government in its effort of self-aggrandizement and improper role as savior of the people. We must be allowed to fail, personally and corporately, in order for the seeds of natural correction find root and nurture. And if the FHA wants to do legitimate business, it needs to align with the principles of conservative, private banks - home loans based on strong income and substantial, un-subsidized down payment. Otherwise, we're lining at Dr. Kevorkian's pharmacy counter.
In an economic sense, we had been free to apply our God-given characteristics to explore entrepreneurial pursuits. We understood that we could lose all that we invested, or improve to the boundaries of our personal limits. The principles behind this were free enterprise capitalism, an original and enduring fixture of our American Soverignty, and the acknowledgement and appreciation for life, liberty, and the pursuit of happiness. Our will and intellect could be purely applied, without onerous regulation, to the endeavors contrived from the essence and depth of our personal fabric and innate gifts.
Further, if a person or family was in grave need of basic necessities, the neighborhood Church and its endemic outflow of Christian Charity were ever present to supply to those hit by hard times. Though this element of American quality remains alive, Christianity has seen a steady, ever-burgeoning and oft-surging competitior for the "biggest giver" award - the Federal Government.
Of course, the designers of our constitutional republic never intended for this to be extant in American culture. In fact, quite the opposite was the veritable intention of our Framers. Small central government with limited powers, chief among these being the protection of soverignty, had always been the intention. Jefferson and his contemporaries are rotating continuously in their respective graves at the overreach of our federal government in the present fullness of its overreaching bloat. The fat hanging over the belt of recent administrations is staggering, and sickening.
As we have come to collectively realize, by and large, the centralized government has meddled to such a degree in Real Estate as to have substantially fractured the economy at large. By urging, if not forcing, bad mortgage loans through private banks for many years under the auspice of insuring these loans through the Treasury and under the guise of fairness to all, we became [unwitting?] drones in a bubble of unsustainable growth. Via fantastic surges in real estate "value", the entire country was swimming in leverageable 'equity" overnight. The American Dream of home ownership became a farcical effigy as citizens eschewed their trailers and tenement houses for a mortgaged home in the suburbs, burning away the residue of the hallowed, historical mortgage prerequisites of respectable income and savings. Happily we floated along in this surreal picture of prosperity. We were so blinded by money and growth that nary was it considered that the foundation for expansion was purely sand. Sand upon sand.
In the dark days of 2008, and since, America has been in continuous, painful realization of the repurcussions of greed and licentiousness. Tragically few, though, it seems, have been astute enough to recognize the source of the fictitious and superimposed growth as the federal government itself. As a result, the masses turn to the "man behind the curtain", the very originator of the disease, for resolution to the economic apocalypse it has perpetrated. Dr. Kevorkian is now taking patients.
When we look for real estate and mortgage "bailouts", whether for mortgage default, student loans, or otherwise, we're signing a new contract with our indenturers for more time in captivity, and by consequence, in assent to the financial imprisonment of our fellow Americans.
Desperation and its affiliated emotions usually prompt irrational reactions. In the helplessness of our own personal, microsmic personal and familial economic failures, we no longer own up to our bad investments as would have our predecessors of tougher American mettle. Nowadays, we require that there be SOMEONE ELSE TO PAY FOR OUR MISTAKES. It matters little that we're metastasizing our singular debt upon our neighbors who never broke the rules of scrupulousness.
As a simple diagnostic assessment of the anti-bailout platform I am hereby developing, ask simply, "From where does the money come to bail out a collapsing mortgage giant?". Or, "When John Doe is pardoned of a value-to-mortgage deficit, from where does the mortgagee (bank) gain the funds to accept the culmination of these losses?". The answer, of course, is the very institution gratuitously insuring these bad loans in the first place - the US Treasury and the tentacle departments in the federal system. And from whence does the monies originate to fund the disease propagated by the tangled web of affiliated federal bureaucracies? The taxpayer - you and me. And as a final tasty piece of rhetoric to chew on, consider why the Federal Housing Administration continues its prolific reign as mortgage insurer extraordinaire, despite its overwhelming role in the buildup and collapse of the housing bubble from which we continue to collectively struggle. To those active in brokering house sales these days to owner occupants, do you not agree that the FHA is involved in the lion's share of mortgage loan activity? Are we not then funding the next bubble while still in the deadly grasp of the last one? "Recovery" is being fabricated by the very same player as masterminded the first cancerous mass of government-backed mortgages.
Summarily, when the federal government subsidizes the bailout of banks and homeowners, taxpayers bear the burden. While our taxes increase to mitigate this unpayable bill, our national debt increases (which we can NEVER afford to repay) and dollar weakness grows nearer to its inevitable bloodbath. Those conducting this absurd charade understand that money is just numbers in an abstract computer with no physical location. The end game has nothing to do with balancing the budget and paying down our national debt so much as kicking the can down the road and flooding the markets with money supply to delay the inevitable. We're in a load of trouble.
We in the Real Estate business are mostly neutral players in the broader scheme. Mortgage brokers don't generally distribute FHA-insured product with the malice to grow government control and destroy what remains of our economic stability. Realtors don't sell houses to folks using FHA subsidy with the intent to build another government-backed bubble. We're just trying to pay the bills and put food on the table. But when we endorse bailouts in preclusion of the natural consequence of bad decisions and illicit business, we're aligning ourselves with the Federal Government in its effort of self-aggrandizement and improper role as savior of the people. We must be allowed to fail, personally and corporately, in order for the seeds of natural correction find root and nurture. And if the FHA wants to do legitimate business, it needs to align with the principles of conservative, private banks - home loans based on strong income and substantial, un-subsidized down payment. Otherwise, we're lining at Dr. Kevorkian's pharmacy counter.
National Mortgage Settlement
The $26 billion mortgage settlement announced by the U.S. Government and state Attorneys Generals on Thursday, February 8, 2012 is causing some concern among pension investors and bond fund managers. The settlement "is cheap for the loan servicers while costly for bond investors including pension funds," according to Pacific Investment Management Co.'s ("PIMCO") Scott Simon as first reported by Bloomberg BusinessWeek.
Five leading U.S. banks are participating in the agreement, including Ally Financial Inc. (formerly GMAC), Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co. and Wells Fargo & Co. Together, the five banks service loan payments on approximately half of all home loans outstanding, or about 27 million mortgages, according to Inside Mortgage Finance. Other loan servicers are expected to join the program, thereby raising potential benefit levels.
Fannie Mae and Freddie Mac, which together guarantee about 50% of all mortgages in the U.S., are excluded from the settlement.
Of the $26 billion settlement, only $5 billion will be paid in cash by the banks to borrowers who lost their home due to foreclosure. The balance of benefits is calculated as follows:
Principal reduction. Underwater borrowers - meaning those who owe more on their mortgage than the loan is worth - will receive at least $10 billion in loan reductions if they are at risk of default.
Refinancing. Homeowners who are current on their mortgages may be able to reduce their interest rate by refinancing under more lenient loan-to-value ratios. The value of the refinancing option is targeted at $3 billion
Special relief programs. Up to $7 billion is targeted for unemployed borrowers, anti-blight programs, short sales, and service member assistance.
These new mortgage relief programs will be available to homeowners for up to three years. Incentives for loan servicers are written in a way to encourage fast action within the first 12 months.
The settlement will provide direct benefits to borrowers in excess of $20 billion, according to a government fact sheet, since servicers will receive only partial credit for every dollar spent. Some estimates project the economic impact may be equivalent to $32 billion.
Homeowners in Florida and California are expected to be major beneficiaries of this historic mortgage settlement, based on the volume of delinquent loans and a precipitous drop in home values.
Pensions Face Lower Returns on Mortgage Holdings
Pensions, 401(k) plans, and insurance companies are unwitting victims of this record-setting agreement, according to fund managers like PIMCO. Institutional investors lose out when the value of their mortgage-backed securities ("MBS") decline due to government-induced principal reductions, below-market financing, and forced assistance for the unemployed or military veterans.
Critics Question Projected Mortgage Settlement Benefits
Some critics say the mortgage settlement is too little, too late. While millions of people have lost their homes, for example, the settlement will only affect a relatively small number of them. There is also concern about "moral hazard," or the danger that more homeowners will default in order to get relief.
In Summary
As states and municipalities struggle to close an already existing $1 trillion gap in unfunded pension liabilities, a potential further reduction in the value of assets is troubling. Plan sponsors and fiduciaries will need to work closely with accountants and auditors to identify any adverse financial impact of the mortgage settlement, and determine off-setting measures to protect funding levels.
February, 2012
Five leading U.S. banks are participating in the agreement, including Ally Financial Inc. (formerly GMAC), Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co. and Wells Fargo & Co. Together, the five banks service loan payments on approximately half of all home loans outstanding, or about 27 million mortgages, according to Inside Mortgage Finance. Other loan servicers are expected to join the program, thereby raising potential benefit levels.
Fannie Mae and Freddie Mac, which together guarantee about 50% of all mortgages in the U.S., are excluded from the settlement.
Of the $26 billion settlement, only $5 billion will be paid in cash by the banks to borrowers who lost their home due to foreclosure. The balance of benefits is calculated as follows:
Principal reduction. Underwater borrowers - meaning those who owe more on their mortgage than the loan is worth - will receive at least $10 billion in loan reductions if they are at risk of default.
Refinancing. Homeowners who are current on their mortgages may be able to reduce their interest rate by refinancing under more lenient loan-to-value ratios. The value of the refinancing option is targeted at $3 billion
Special relief programs. Up to $7 billion is targeted for unemployed borrowers, anti-blight programs, short sales, and service member assistance.
These new mortgage relief programs will be available to homeowners for up to three years. Incentives for loan servicers are written in a way to encourage fast action within the first 12 months.
The settlement will provide direct benefits to borrowers in excess of $20 billion, according to a government fact sheet, since servicers will receive only partial credit for every dollar spent. Some estimates project the economic impact may be equivalent to $32 billion.
Homeowners in Florida and California are expected to be major beneficiaries of this historic mortgage settlement, based on the volume of delinquent loans and a precipitous drop in home values.
Pensions Face Lower Returns on Mortgage Holdings
Pensions, 401(k) plans, and insurance companies are unwitting victims of this record-setting agreement, according to fund managers like PIMCO. Institutional investors lose out when the value of their mortgage-backed securities ("MBS") decline due to government-induced principal reductions, below-market financing, and forced assistance for the unemployed or military veterans.
Critics Question Projected Mortgage Settlement Benefits
Some critics say the mortgage settlement is too little, too late. While millions of people have lost their homes, for example, the settlement will only affect a relatively small number of them. There is also concern about "moral hazard," or the danger that more homeowners will default in order to get relief.
In Summary
As states and municipalities struggle to close an already existing $1 trillion gap in unfunded pension liabilities, a potential further reduction in the value of assets is troubling. Plan sponsors and fiduciaries will need to work closely with accountants and auditors to identify any adverse financial impact of the mortgage settlement, and determine off-setting measures to protect funding levels.
February, 2012
Mortgage Modification
It is very stressful when you own your own home and are having financial difficulties. If those difficulties are making it impossible to pay your mortgage you are not alone, you may find yourself facing foreclosure. Although it is difficult to associate foreclosures with good news, there is some. In most states, regardless of where you are with the foreclosure proceedings, there is always a way to stop a foreclosure.
When it comes to stopping a foreclosure, there are many ways of doing this, and the best chances are in the pre-foreclosure stages. This is before the courts have approved the proceeding and ruled in favor of the mortgage lender. Until this point in time, you are still the resident and owner of the home in question. If you do not feel that you can come into money, either by getting a second job or a loan from those that you know, now is the time to try for a mortgage modification.
First let's look at the advantages of a mortgage modification. If you are behind on your mortgage and it does not matter if you are 6 months, 1 year or longer, you could be eligible for a mortgage modification. When you receive a mortgage modification your bank will modify your mortgage and note with new terms. These new terms could be an interest rate as low as 2%, reduced principal, a 40 year mortgage and the best part is you will be caught up and starting fresh with monthly payments cut almost in half. A mortgage modification does not cost anything and they do not look at your credit.
A mortgage modification is the best option for saving your home. You can get a modification through the Home Affordable Mortgage Program (HAMP) or if you do not qualify for HAMP you can get what's called an inhouse modification (which is through your own bank). With a modification they will bring your mortgage current with a new lower interest rate, as low as 2%. Now pay attention, I'm going to give you an idea of what the banks are looking for to get you approved for a modification. This could be a little complicated. Let's say you owe $200,000 on your mortgage and you're behind $50,000 in arrears for a total of $250,000 (this number represents what you owe the bank today, including late payments, in other words if you sold the house this is what you have to pay the bank). Take the amount you owe and figure what your qualifying payment will be by amortizing it over 30 years by using today's mortgage interest rate and add your escrows (monthly property taxes and insurance) to the amount. THIS IS NOT YOUR NEW PAYMENT, it's your qualifying payment (to see if you qualify for a modification). Banks are only allowing 31% of your income to go towards the mortgage, so what you must do is take your qualifying payment and divide that by.31. This number will represent how much money you should be making each month to qualify for a modification. Hopefully you are making that much money every month. Your new payment will be lower than your qualifying payment, you could get as low as a 2% interest rate. There is much more you need to know to get a successful modification, there are many more tips and secrets you would need to know, but this will get you started. You can stop a foreclosure with a modification up to 7 days before the auction date. They will only stop it if they believe you qualify for a modification.
As a last resort, you may want to schedule an appointment with an attorney that specializes in foreclosures and real estate. Many will suggest filing for bankruptcy. Some states offer protection to homeowners. This protection may exclude their home as an asset or at least temporarily stops the foreclose proceedings.
When it comes to stopping a foreclosure, there are many ways of doing this, and the best chances are in the pre-foreclosure stages. This is before the courts have approved the proceeding and ruled in favor of the mortgage lender. Until this point in time, you are still the resident and owner of the home in question. If you do not feel that you can come into money, either by getting a second job or a loan from those that you know, now is the time to try for a mortgage modification.
First let's look at the advantages of a mortgage modification. If you are behind on your mortgage and it does not matter if you are 6 months, 1 year or longer, you could be eligible for a mortgage modification. When you receive a mortgage modification your bank will modify your mortgage and note with new terms. These new terms could be an interest rate as low as 2%, reduced principal, a 40 year mortgage and the best part is you will be caught up and starting fresh with monthly payments cut almost in half. A mortgage modification does not cost anything and they do not look at your credit.
A mortgage modification is the best option for saving your home. You can get a modification through the Home Affordable Mortgage Program (HAMP) or if you do not qualify for HAMP you can get what's called an inhouse modification (which is through your own bank). With a modification they will bring your mortgage current with a new lower interest rate, as low as 2%. Now pay attention, I'm going to give you an idea of what the banks are looking for to get you approved for a modification. This could be a little complicated. Let's say you owe $200,000 on your mortgage and you're behind $50,000 in arrears for a total of $250,000 (this number represents what you owe the bank today, including late payments, in other words if you sold the house this is what you have to pay the bank). Take the amount you owe and figure what your qualifying payment will be by amortizing it over 30 years by using today's mortgage interest rate and add your escrows (monthly property taxes and insurance) to the amount. THIS IS NOT YOUR NEW PAYMENT, it's your qualifying payment (to see if you qualify for a modification). Banks are only allowing 31% of your income to go towards the mortgage, so what you must do is take your qualifying payment and divide that by.31. This number will represent how much money you should be making each month to qualify for a modification. Hopefully you are making that much money every month. Your new payment will be lower than your qualifying payment, you could get as low as a 2% interest rate. There is much more you need to know to get a successful modification, there are many more tips and secrets you would need to know, but this will get you started. You can stop a foreclosure with a modification up to 7 days before the auction date. They will only stop it if they believe you qualify for a modification.
As a last resort, you may want to schedule an appointment with an attorney that specializes in foreclosures and real estate. Many will suggest filing for bankruptcy. Some states offer protection to homeowners. This protection may exclude their home as an asset or at least temporarily stops the foreclose proceedings.
Morgage Services and Brokers
Whether you are acquiring your first property or adding to an extensive portfolio it is always advisable to speak to a professional mortgage service company to help choose the best mortgage for your situation.
A wide range of mortgages are available for a large number of financial situations, and what was right for you the last time round may not be the best option for your new purchase. Fluctuations in the market, mortgage trends and financial stability of your current situation all play a part in deciding the best mortgage for you, and you need a professional mortgage services company to give you the best and most up to date information available.
Otherwise known as mortgage brokers, these professionals have access to a range of mortgages based on deposit, term, financial situation, and any offers the mortgage company may be offering that would not be available to you as an individual. A broker may have an agreement with one or more mortgage companies giving them a better rate than you may find elsewhere.
There are various types of mortgage broker available to you, often at no charge. A broker who can offer free mortgage and financial advice by charging their fee to the company you decide to go with, however each broker is different and you will need to check their terms and conditions before committing to your mortgage. Tied mortgage services are companies who's advice is limited to the products of a single company. Banks and building societies are an example of a tied mortgage broker. Multi-tied mortgage services are companies who are tied to a small number of mortgage companies. Many estate agents operate a multi-tied system. Whole of market, or independent mortgage brokers are those who are not tied to any specific mortgage company, and can offer you the full range of products available. It is advisable for all mortgage applicants to visit an independent mortgage broker before committing to a new mortgage to ensure you are getting the best deal available at the time.
Your mortgage services provider should explain and advise you throughout the process, and every step should be confirmed in writing. They will keep you informed of progress throughout the process from start to finish, and offer to review your financial situation as regularly as you wish. If you are looking to expand your portfolio of properties it may be worth speaking to your mortgage services company about your long term plans and goals, to help them find the best mortgage solution for you. Running a number of properties for rent is very different to purchasing your own home, and different mortgages are available.
Your mortgage broker will be able to guide you every step of the way from initial enquiry to completion. Their services should cover every aspect of your mortgage application and any queries you may have regarding the application. It is a lengthy and at times complicated process, so be sure to listen to your mortgage broker and respond quickly to their requests to make sure you get settled into your new home as quickly as possible, and with the least hassle.
A wide range of mortgages are available for a large number of financial situations, and what was right for you the last time round may not be the best option for your new purchase. Fluctuations in the market, mortgage trends and financial stability of your current situation all play a part in deciding the best mortgage for you, and you need a professional mortgage services company to give you the best and most up to date information available.
Otherwise known as mortgage brokers, these professionals have access to a range of mortgages based on deposit, term, financial situation, and any offers the mortgage company may be offering that would not be available to you as an individual. A broker may have an agreement with one or more mortgage companies giving them a better rate than you may find elsewhere.
There are various types of mortgage broker available to you, often at no charge. A broker who can offer free mortgage and financial advice by charging their fee to the company you decide to go with, however each broker is different and you will need to check their terms and conditions before committing to your mortgage. Tied mortgage services are companies who's advice is limited to the products of a single company. Banks and building societies are an example of a tied mortgage broker. Multi-tied mortgage services are companies who are tied to a small number of mortgage companies. Many estate agents operate a multi-tied system. Whole of market, or independent mortgage brokers are those who are not tied to any specific mortgage company, and can offer you the full range of products available. It is advisable for all mortgage applicants to visit an independent mortgage broker before committing to a new mortgage to ensure you are getting the best deal available at the time.
Your mortgage services provider should explain and advise you throughout the process, and every step should be confirmed in writing. They will keep you informed of progress throughout the process from start to finish, and offer to review your financial situation as regularly as you wish. If you are looking to expand your portfolio of properties it may be worth speaking to your mortgage services company about your long term plans and goals, to help them find the best mortgage solution for you. Running a number of properties for rent is very different to purchasing your own home, and different mortgages are available.
Your mortgage broker will be able to guide you every step of the way from initial enquiry to completion. Their services should cover every aspect of your mortgage application and any queries you may have regarding the application. It is a lengthy and at times complicated process, so be sure to listen to your mortgage broker and respond quickly to their requests to make sure you get settled into your new home as quickly as possible, and with the least hassle.
Mortgage Rates in Calgary
When it comes to Real Estate in Canada, Alberta is among the top provinces for selling and buying. Even though Alberta's home costs are the third most expensive in the country, the average income of an Albertan is enough to pay for the mortgage in full; about $2,000 per two weeks.
Calgary is the ninth most expensive real estate market in Canada. However, Calgary also offers its citizens higher incomes, plenty of career opportunities, great school systems, and many more luxuries. You and your personal circumstances depict whether the two sides of Calgary's market balance out to your advantage. A mortgage broker is pretty handy to figure out if Calgary is the right place for you to buy a home.
As Canada faces a drop in the affordability of houses, Alberta's housing costs remains commendable. Even though the rates rose between 0.5% and 1.3%, Alberta is one of the most affordable provinces in the country. The average Albertan family spends 36% of their gross income to pay the cost of mortgage payments, property taxes, and utilities for a standard two storey house, and only 21% to be spent on a condominium. The CREA predicts a higher resale activity in Alberta as sales grew by 7.3% in 2011 and is presumed to reach another 6.8% in 2012. This is a hefty raise in re-sales, estimated at about 53, 000 new home owners per year.
According to figures from September 1, 2011 by the Calgary Real Estate Board, the sales are on the rise for Calgary's higher-end homes. From the beginning of 2011 up to the end of August, 948 single family homes costing $700,000 and up were sold. This beats last year's 779 homes sold. Sales for condos ranging from $200,000 and under also received a steady hike. 843 condos, $200,000 or below were sold in 2011 compared to 596 in 2010.
"We are seeing a lift in sales at both ends of the market." Sano Stante, past president of the Calgary Real Estate Board states: "Improving economic conditions coupled with affordability and price stability has given Calgary a boost in buyers for upper-end homes and entry level condos."
Before jumping into the Calgary real estate market, consider how long you are going to reside in Calgary. Since Calgary is growing at such a speedy rate, it's almost impossible to tell where the real estate market will be in five, ten, twenty-five years from now. If you live in Calgary long enough, then your property is likely to be worth a lot more to you. Taking advantage of the Calgary real estate market takes time, so plan ahead and determine whether or not this is a long-term or short-term investment.
Calgary is the ninth most expensive real estate market in Canada. However, Calgary also offers its citizens higher incomes, plenty of career opportunities, great school systems, and many more luxuries. You and your personal circumstances depict whether the two sides of Calgary's market balance out to your advantage. A mortgage broker is pretty handy to figure out if Calgary is the right place for you to buy a home.
As Canada faces a drop in the affordability of houses, Alberta's housing costs remains commendable. Even though the rates rose between 0.5% and 1.3%, Alberta is one of the most affordable provinces in the country. The average Albertan family spends 36% of their gross income to pay the cost of mortgage payments, property taxes, and utilities for a standard two storey house, and only 21% to be spent on a condominium. The CREA predicts a higher resale activity in Alberta as sales grew by 7.3% in 2011 and is presumed to reach another 6.8% in 2012. This is a hefty raise in re-sales, estimated at about 53, 000 new home owners per year.
According to figures from September 1, 2011 by the Calgary Real Estate Board, the sales are on the rise for Calgary's higher-end homes. From the beginning of 2011 up to the end of August, 948 single family homes costing $700,000 and up were sold. This beats last year's 779 homes sold. Sales for condos ranging from $200,000 and under also received a steady hike. 843 condos, $200,000 or below were sold in 2011 compared to 596 in 2010.
"We are seeing a lift in sales at both ends of the market." Sano Stante, past president of the Calgary Real Estate Board states: "Improving economic conditions coupled with affordability and price stability has given Calgary a boost in buyers for upper-end homes and entry level condos."
Before jumping into the Calgary real estate market, consider how long you are going to reside in Calgary. Since Calgary is growing at such a speedy rate, it's almost impossible to tell where the real estate market will be in five, ten, twenty-five years from now. If you live in Calgary long enough, then your property is likely to be worth a lot more to you. Taking advantage of the Calgary real estate market takes time, so plan ahead and determine whether or not this is a long-term or short-term investment.
Mortgage Gambling
I start with the Last considerations on most investor's list - the ability to extend or swap a mortgage or mortgage product with the same lender. Boring! Not if you are one of the victims described below! Our focus zooms in on any number of apparently more important considerations when considering a mortgage for Buy to Let - BTL. The loan to value ratio, loan-to-rent ratio, interest rate, arrangement fees; all are important and relevant to this topic as you will see:
High interest rates mean some struggle to pay mortgages.
Affordability fluctuates with interest rates.
Affordability today might actually CAUSE bankruptcy tomorrow.
What is this unseen hazard looming in the distant misty horizon.
100 years ago the Titanic sunk; is there a present parallel? Oh yes!
The seven fat and thin cows is another pertinent analogy.
Interest rates are at an all time low, this may last some time if economic pessimistic predictions come true.
But for some the time bomb fuse has already been lit - and from what I can see - few even know! Presently enjoying good fortune they remain blissfully unaware of the Cassandra crisis creeping up on them.
A routine call to Mortgage Express (MX) in 2012 revealed the extent of the crisis already being encountered by some investors. Had I not pre-empted and enquired then there is no evidence I would have been fore-warned. Unlike those unaware and thus unprepared, I am one of the fortunates who now have time to phone the lifeboat. Compassion compels me to throw this lifebuoy to fellow investors ultimately facing the same crisis. To remain silent would be a speedy way to sink the competition.
In 2018, I will see some mortgage terms come to an end. These were set up in the good times when no one thought the bubble would ever burst. It was already normal to regularly mortgage-hop saving a fortune on interest rates even after any arrangement fees. So the likelihood of remaining with the same lender more than a few years was almost zero. There were invariably other lenders offering more competitive rates making a future mortgage-swap not only likely, but also very prudent.
No I am not an Oracle, nor a pessimist, merely cognisant of some fatalistic facts:
Many borrowers who took mortgages with e.g. Mortgage Express MX prior to 2008 will have a loan term of x years before repayment.
This might not now suit some then short sighted borrowers who planned to swap loan products or lenders or extend the loan term.
MX has stated that it will demand full repayment upon expiration of the term! No extensions! No exceptions!
This is because following the economic crash in 2008 the government bailed out this lender and taxpayers want their money back - so no sympathy for landlords who in the main have done very will out of MX.
This is a ticking time-bomb awaiting many landlords who were expecting to be able to transfer but now cannot, during a time of poor funding and quadrupled fee increases. Any such transfers will be very costly. But the complexities continue as the implications unravel.
The other side of this bittersweet coin is that borrowers will want to keep these low interest mortgages for as long as possible. Provided at a time when lenders were unprepared for the '7 thin cows' these bygone bargains can neither be retained nor repeated. We desperately wish we could hold onto them until the last possible moment when we have to get rid of them frantically seeking alternatives before bankruptcy beckons.
The big dilemma is timing the optimum point at which to jump ship and escape drowning? Too soon and we suffer the premature loss of a very favourably low interest rate potentially jeopardising any dependent cashflow. Likely to continue for the duration of the recession (which shows no sign of ending) low rates currently rescue highly geared borrowers. Hold onto this hot potato too long and borrowers may get their fingers burned. If they are too late there may not be a rescue ship passing when their's is sinking!
AND the EU if successful in amending mortgage lending rules, could further stymie any future BTL mortgages.
This means that for some landlords, even if there is a ship passing, they may not be permitted to jump under more stringent lending rules.
Some will have no option but to sink with their ship. Glug!
And it gets worse! Gulp, glug and gargle! Recent 'leaks' from George Osborne the Conservative chancellor might mean mortgage interest tax allowances could face cuts or caps.
This would send a liner load of landlords into the depths of the deepest ocean.
One can only imagine that such an own goal is unthinkable, but... didn't they say something very similar about the Titanic...?
High interest rates mean some struggle to pay mortgages.
Affordability fluctuates with interest rates.
Affordability today might actually CAUSE bankruptcy tomorrow.
What is this unseen hazard looming in the distant misty horizon.
100 years ago the Titanic sunk; is there a present parallel? Oh yes!
The seven fat and thin cows is another pertinent analogy.
Interest rates are at an all time low, this may last some time if economic pessimistic predictions come true.
But for some the time bomb fuse has already been lit - and from what I can see - few even know! Presently enjoying good fortune they remain blissfully unaware of the Cassandra crisis creeping up on them.
A routine call to Mortgage Express (MX) in 2012 revealed the extent of the crisis already being encountered by some investors. Had I not pre-empted and enquired then there is no evidence I would have been fore-warned. Unlike those unaware and thus unprepared, I am one of the fortunates who now have time to phone the lifeboat. Compassion compels me to throw this lifebuoy to fellow investors ultimately facing the same crisis. To remain silent would be a speedy way to sink the competition.
In 2018, I will see some mortgage terms come to an end. These were set up in the good times when no one thought the bubble would ever burst. It was already normal to regularly mortgage-hop saving a fortune on interest rates even after any arrangement fees. So the likelihood of remaining with the same lender more than a few years was almost zero. There were invariably other lenders offering more competitive rates making a future mortgage-swap not only likely, but also very prudent.
No I am not an Oracle, nor a pessimist, merely cognisant of some fatalistic facts:
Many borrowers who took mortgages with e.g. Mortgage Express MX prior to 2008 will have a loan term of x years before repayment.
This might not now suit some then short sighted borrowers who planned to swap loan products or lenders or extend the loan term.
MX has stated that it will demand full repayment upon expiration of the term! No extensions! No exceptions!
This is because following the economic crash in 2008 the government bailed out this lender and taxpayers want their money back - so no sympathy for landlords who in the main have done very will out of MX.
This is a ticking time-bomb awaiting many landlords who were expecting to be able to transfer but now cannot, during a time of poor funding and quadrupled fee increases. Any such transfers will be very costly. But the complexities continue as the implications unravel.
The other side of this bittersweet coin is that borrowers will want to keep these low interest mortgages for as long as possible. Provided at a time when lenders were unprepared for the '7 thin cows' these bygone bargains can neither be retained nor repeated. We desperately wish we could hold onto them until the last possible moment when we have to get rid of them frantically seeking alternatives before bankruptcy beckons.
The big dilemma is timing the optimum point at which to jump ship and escape drowning? Too soon and we suffer the premature loss of a very favourably low interest rate potentially jeopardising any dependent cashflow. Likely to continue for the duration of the recession (which shows no sign of ending) low rates currently rescue highly geared borrowers. Hold onto this hot potato too long and borrowers may get their fingers burned. If they are too late there may not be a rescue ship passing when their's is sinking!
AND the EU if successful in amending mortgage lending rules, could further stymie any future BTL mortgages.
This means that for some landlords, even if there is a ship passing, they may not be permitted to jump under more stringent lending rules.
Some will have no option but to sink with their ship. Glug!
And it gets worse! Gulp, glug and gargle! Recent 'leaks' from George Osborne the Conservative chancellor might mean mortgage interest tax allowances could face cuts or caps.
This would send a liner load of landlords into the depths of the deepest ocean.
One can only imagine that such an own goal is unthinkable, but... didn't they say something very similar about the Titanic...?
Mortgage Debt Settlement
After a long battle over unlawful foreclosures and the mortgage debt crisis, a settlement agreement was reached just earlier this year. As this news came as a good sign for homeowners, some aren't quite as impressed and many are even skeptical the settlement is sufficient.
The Debate Continues
Much of the criticism made over the $26 billion mortgage settlement comes in the from the fact that a large portion of the funds are going to lenders, the same people who were considered to be the problem in the first place. Designed to provide incentives for lenders to open up lending practices and offer foreclosure alternatives to borrowers they would have previously denied, the mortgage debt settlement funds allocated to lenders is quite a large sum. In comparison to what homeowners victimized by the unlawful foreclosure practices will see in the way of restitution, the lender incentive money seems very generous.
Further, many states are either not participating the settlement and pursuing their own litigation against lenders or are using some of the funds for other purposes. Many states have received their portion of the $26 billion settlement, only to toss around whether some of the funds will be used for balancing the budget. If approved, some states could use some of the mortgage debt settlement funds to pay for education or road projects, government employee salaries or even government assistance funds. This latest development has many homeowners concerned about the fate of their restitution checks and left with a feeling that the state is being unfair with the use of the money. Instead, homeowners feel the state should be using the money to pay for foreclosure counselors and help support underwater or unemployed homeowners.
Not All Bad
Where there is challenge and adversity, there also lies good. Many states have used a significant portion of the settlement to help fund their own foreclosure alternative programs. State programs designed to help homeowners find legitimate help with reviewing their options and securing a plan to avoid foreclosure. Some state programs have even gone so far as to put on free workshops and seminars to educate homeowners and put them in touch with lending officers that can help design a solution to save their homes.
Although the mortgage debt settlement is far from perfect, it is a step in the right direction. Further, any help is better than no help and this agreement could just be the foundation for major industry change. Part of the deal has also created efforts to increase lending regulations and change lending practices to prevent unlawful foreclosure practices in the future.
The Debate Continues
Much of the criticism made over the $26 billion mortgage settlement comes in the from the fact that a large portion of the funds are going to lenders, the same people who were considered to be the problem in the first place. Designed to provide incentives for lenders to open up lending practices and offer foreclosure alternatives to borrowers they would have previously denied, the mortgage debt settlement funds allocated to lenders is quite a large sum. In comparison to what homeowners victimized by the unlawful foreclosure practices will see in the way of restitution, the lender incentive money seems very generous.
Further, many states are either not participating the settlement and pursuing their own litigation against lenders or are using some of the funds for other purposes. Many states have received their portion of the $26 billion settlement, only to toss around whether some of the funds will be used for balancing the budget. If approved, some states could use some of the mortgage debt settlement funds to pay for education or road projects, government employee salaries or even government assistance funds. This latest development has many homeowners concerned about the fate of their restitution checks and left with a feeling that the state is being unfair with the use of the money. Instead, homeowners feel the state should be using the money to pay for foreclosure counselors and help support underwater or unemployed homeowners.
Not All Bad
Where there is challenge and adversity, there also lies good. Many states have used a significant portion of the settlement to help fund their own foreclosure alternative programs. State programs designed to help homeowners find legitimate help with reviewing their options and securing a plan to avoid foreclosure. Some state programs have even gone so far as to put on free workshops and seminars to educate homeowners and put them in touch with lending officers that can help design a solution to save their homes.
Although the mortgage debt settlement is far from perfect, it is a step in the right direction. Further, any help is better than no help and this agreement could just be the foundation for major industry change. Part of the deal has also created efforts to increase lending regulations and change lending practices to prevent unlawful foreclosure practices in the future.
Brokers
Finding a new home is not easy. There are various factors which play their part. Firstly, one needs to find out the right property with a long term potential and secondly, one needs to search for mortgage brokers who can help one have the best deal. Given that it is such an important decision (especially when most mortgages run into two to three decades), it becomes imperative that one dexterously looks at the available options and takes one's decision. Therefore, having the right mortgage broker is a landmark step in the process and one can follow some of the following tips to search for that ideal mortgage broker for one's requirement.
The first step will always be to have referrals. You can ask your friends and family members about mortgage brokers they would have worked with in the past and their experience. It is always good to work with a broker who has worked with a known one in the past. This way you manage to generate the right information about the broker and know what to expect.
However, it is not always that you will have friends or other people in your social network who would know about a worthy mortgage broker. You can, in that case, slightly alter your search. If you have your trusted financial advisors, you can request them to offer you suggestions and recommendations. Given that they are in the finance industry, they are sure to be in knowledge of various local and national mortgage firms.
You can also, on the other hand, check with an assortment of accreditation agencies. Accreditation leads to trust being built about a service provider. Hence, you can look for those mortgage brokers who have some kind of accreditation with reputed bodies.
The next step, then, is to ask for the credentials of the brokers that you might have shortlisted for your work. Accreditation, referrals and recommendations are good ways of short listing but your final decision has to also be based on your understanding of the credentials of the broker. The credentials can first be reflected in the amount of experience that the broker garners. Moreover, you should also look for testimonials for the agency. Through such testimonials, you will be able to find out what clients, of the broker, have been saying about him / her.
Over and above these ways of gauging the shortlisted brokers' credentials, there are a few others too. You can find many certification agencies in town. Some of them are reputed and are known to offer quality training. The certification, that the shortlisted brokers hold, therefore, can also be a barometer of judging the credentials of the brokers.
Finally, all of this boils down into how convinced you are with a broker. You have to speak to them, find out what they can do for you as also their willingness to work with you. It is imperative that the two of you get along well for the project to run smoothly from start to finish.
The first step will always be to have referrals. You can ask your friends and family members about mortgage brokers they would have worked with in the past and their experience. It is always good to work with a broker who has worked with a known one in the past. This way you manage to generate the right information about the broker and know what to expect.
However, it is not always that you will have friends or other people in your social network who would know about a worthy mortgage broker. You can, in that case, slightly alter your search. If you have your trusted financial advisors, you can request them to offer you suggestions and recommendations. Given that they are in the finance industry, they are sure to be in knowledge of various local and national mortgage firms.
You can also, on the other hand, check with an assortment of accreditation agencies. Accreditation leads to trust being built about a service provider. Hence, you can look for those mortgage brokers who have some kind of accreditation with reputed bodies.
The next step, then, is to ask for the credentials of the brokers that you might have shortlisted for your work. Accreditation, referrals and recommendations are good ways of short listing but your final decision has to also be based on your understanding of the credentials of the broker. The credentials can first be reflected in the amount of experience that the broker garners. Moreover, you should also look for testimonials for the agency. Through such testimonials, you will be able to find out what clients, of the broker, have been saying about him / her.
Over and above these ways of gauging the shortlisted brokers' credentials, there are a few others too. You can find many certification agencies in town. Some of them are reputed and are known to offer quality training. The certification, that the shortlisted brokers hold, therefore, can also be a barometer of judging the credentials of the brokers.
Finally, all of this boils down into how convinced you are with a broker. You have to speak to them, find out what they can do for you as also their willingness to work with you. It is imperative that the two of you get along well for the project to run smoothly from start to finish.
Mortgage History
In simple terms, a mortgage is a loan in which your house functions as the collateral. The mortgage lender loans you a huge sum of money (usually 80 percent of the value of the house) which you must pay back with interest over a set period of time. If you fail to pay back the loan, the lender can take your home through a legal process known as 'foreclosure".
You might be thinking that mortgages have probably been around for hundreds of years. Wrong, it was just in the 1930s however that mortgages actually got their start. Although banks are the traditional mortgage lenders, it would surprise you to learn that they weren't the ones that came up with the idea. Yea that's right insurance companies did. These daring insurance companies came up with this idea not with the aim of making money no, but with the hopes of gaining ownership of properties if the borrowers fail to keep up with the payments. That was somewhat a smart but greedy idea don't you think?
It was actually in 1934 that modern mortgages came into existence. The Federal Housing Administration (FHA) initiated a new kind of mortgage aimed at people who could not get under the existing mortgage programs. Mortgage loan terms were limited to 50 percent of the property's market value, and the repayment schedule was spread over three to five years and ended with a balloon payment. An 80 percent loan at that time meant your down payment was 80 percent (not the amount you financed). With loan terms like this it's no wonder most Americans were renters. FHA started a program that lowered down payment requirements. They set up programs that offered 80 percent Loan To Value (LTV), 90 percent LTV and higher. This for sure forced commercial banks and other mortgage lenders to do the same, thereby creating much more opportunities for average Americans to own houses. The FHA then went further to begin a trend of qualifying people for loans based on their actual ability to pay back the loan, rather than the traditional way of simply knowing someone. The FHA also lengthened the loan terms, instead of the traditional length of five-to-seven-years loans, the FHA offered 15 year loans which eventually stretched 30 year loans.
The FHA then pulled of a smart move, they set standards for the quality of the construction of houses rather than just financing any house, the FHA set quality standards that the houses had to meet in order to qualify for the loan; of course they wouldn't want the loan outlasting the building, this started another trend that commercial lenders eventually followed. Before FHA, traditional mortgages were interest only payments that ended with a balloon payment which amounted to the principal of the loan. This was the main reason why foreclosures were so common. The FHA then came into action again, this time they started the amortization of loans, which meant that people got to pay an incremental amount of the loan's principal amount with each interest payment, reducing the loan gradually over the loan term until it was totally paid off.
You might be thinking that mortgages have probably been around for hundreds of years. Wrong, it was just in the 1930s however that mortgages actually got their start. Although banks are the traditional mortgage lenders, it would surprise you to learn that they weren't the ones that came up with the idea. Yea that's right insurance companies did. These daring insurance companies came up with this idea not with the aim of making money no, but with the hopes of gaining ownership of properties if the borrowers fail to keep up with the payments. That was somewhat a smart but greedy idea don't you think?
It was actually in 1934 that modern mortgages came into existence. The Federal Housing Administration (FHA) initiated a new kind of mortgage aimed at people who could not get under the existing mortgage programs. Mortgage loan terms were limited to 50 percent of the property's market value, and the repayment schedule was spread over three to five years and ended with a balloon payment. An 80 percent loan at that time meant your down payment was 80 percent (not the amount you financed). With loan terms like this it's no wonder most Americans were renters. FHA started a program that lowered down payment requirements. They set up programs that offered 80 percent Loan To Value (LTV), 90 percent LTV and higher. This for sure forced commercial banks and other mortgage lenders to do the same, thereby creating much more opportunities for average Americans to own houses. The FHA then went further to begin a trend of qualifying people for loans based on their actual ability to pay back the loan, rather than the traditional way of simply knowing someone. The FHA also lengthened the loan terms, instead of the traditional length of five-to-seven-years loans, the FHA offered 15 year loans which eventually stretched 30 year loans.
The FHA then pulled of a smart move, they set standards for the quality of the construction of houses rather than just financing any house, the FHA set quality standards that the houses had to meet in order to qualify for the loan; of course they wouldn't want the loan outlasting the building, this started another trend that commercial lenders eventually followed. Before FHA, traditional mortgages were interest only payments that ended with a balloon payment which amounted to the principal of the loan. This was the main reason why foreclosures were so common. The FHA then came into action again, this time they started the amortization of loans, which meant that people got to pay an incremental amount of the loan's principal amount with each interest payment, reducing the loan gradually over the loan term until it was totally paid off.
Jumbo Refinance Mortgage Loan
You are thinking of a jumbo loan for a home refinance while rates are low but you've been told, "Do not to waste your time applying. Not now, because the banks aren't lending!" Most banks aren't too keen on approving jumbo loans. The jumbo loans are considered a higher risk loan, especially in a stagnant economy. Some banks may offer jumbo loans but their underwriting process is so strict that getting the jumbo loan to the closing table is impossible. There are a few banks that handle jumbo loan efficiently and will hold these loans in their portfolio. Finding this type of bank may be the first step in your quest to have your jumbo loan refinanced. The right bank will have the widest array of terms and have the most flexible underwriting guidelines. There are other points that should be considered in choosing the right bank.
Despite the inherent risks posed by higher loan amounts, the basics of mortgage loan underwriting still apply. Like mortgage loans with amounts below $417,000, the 5 Cs of lending remain intact, (capacity, credit, capital, collateral, character.) So what's different with jumbo loan underwriting?
A residential jumbo loan is any home mortgage loan where the loan size exceeds GSE's (Government Sponsored Enterprise such as Fannie Mae and Freddie Mac) limits. Currently, the GSE's loan limits are capped at $417,000.00 or $625,500 in Alaska or Hawaii. Any mortgage loan exceeding these limits is considered a jumbo loan. This is of course the first obvious difference between a standard home mortgage and the jumbo loan. With higher loan amounts comes a lower LTV (loan to value) Expect to have at least a 20% equity position on a rate/term refinance.
The loan terms will vary from lender to lender and it's always prudent to look for a lender that has a variety of options that can be tailored for your specific needs, whether you need a 30 year fixed rate, a 15 year fixed rate or a 5/1, 7/1 or 10/1 hybrid ARM or interest only. The interest rates on these higher loan amounts are not as high as some borrowers think they would be. They generally are a little bit higher than conventional mortgage rates and in some cases they may be lower than some conventional loans after their rate adjustments.
Many borrowers have unique situations and the bank that you should turn to is one that has a clear understanding of the uniqueness of the higher loan borrower. For example, although many borrowers have a standard salary and W2 income, there are a disproportionate number when compared to lower loan amount applicants that have a W2 income that include bonuses or commissions. With the higher loan values, there are also a larger number of self employed borrowers and professionals. Different calculations should be used for this type of borrower to allow for depreciation, depletion, bonuses and commissions. For a borrower's best shot at loan approval and efficiency, the higher loan amounts require a bank that has a staff of underwriters and originators who have a higher skill set and proper training for this type of loan origination and underwriting.
In order to be approved for a jumbo loan, you must be prepared with support documentation. Income documentation, documentation of reserves, letters of explanation, tax documents, etc. In short, you will need two years tax returns with all schedules, one month's most recent pay stubs, two months most recent bank statements, schedule of real estate owned, most recent statements of stocks, bonds 401k and IRA accounts. A professional loan originator who is accustomed to this type of loan will give you insight on what documents you need for your application.
Despite the inherent risks posed by higher loan amounts, the basics of mortgage loan underwriting still apply. Like mortgage loans with amounts below $417,000, the 5 Cs of lending remain intact, (capacity, credit, capital, collateral, character.) So what's different with jumbo loan underwriting?
A residential jumbo loan is any home mortgage loan where the loan size exceeds GSE's (Government Sponsored Enterprise such as Fannie Mae and Freddie Mac) limits. Currently, the GSE's loan limits are capped at $417,000.00 or $625,500 in Alaska or Hawaii. Any mortgage loan exceeding these limits is considered a jumbo loan. This is of course the first obvious difference between a standard home mortgage and the jumbo loan. With higher loan amounts comes a lower LTV (loan to value) Expect to have at least a 20% equity position on a rate/term refinance.
The loan terms will vary from lender to lender and it's always prudent to look for a lender that has a variety of options that can be tailored for your specific needs, whether you need a 30 year fixed rate, a 15 year fixed rate or a 5/1, 7/1 or 10/1 hybrid ARM or interest only. The interest rates on these higher loan amounts are not as high as some borrowers think they would be. They generally are a little bit higher than conventional mortgage rates and in some cases they may be lower than some conventional loans after their rate adjustments.
Many borrowers have unique situations and the bank that you should turn to is one that has a clear understanding of the uniqueness of the higher loan borrower. For example, although many borrowers have a standard salary and W2 income, there are a disproportionate number when compared to lower loan amount applicants that have a W2 income that include bonuses or commissions. With the higher loan values, there are also a larger number of self employed borrowers and professionals. Different calculations should be used for this type of borrower to allow for depreciation, depletion, bonuses and commissions. For a borrower's best shot at loan approval and efficiency, the higher loan amounts require a bank that has a staff of underwriters and originators who have a higher skill set and proper training for this type of loan origination and underwriting.
In order to be approved for a jumbo loan, you must be prepared with support documentation. Income documentation, documentation of reserves, letters of explanation, tax documents, etc. In short, you will need two years tax returns with all schedules, one month's most recent pay stubs, two months most recent bank statements, schedule of real estate owned, most recent statements of stocks, bonds 401k and IRA accounts. A professional loan originator who is accustomed to this type of loan will give you insight on what documents you need for your application.
Sell Commercial Mortgage Notes
People sell commercial mortgage notes for many reasons. The most common is that they would rather receive a lump sum cash payment than increments of money over time. Perhaps their financial situation changed, maybe they cannot compete with low interest rates from banks, or maybe they have caught wind that the payer is financially unstable. Whatever the case, they are interested in selling the note and are looking for someone to purchase it.
A professional note buying company is one of the first places they approach. This organization pays the commercial note holder to purchase the note and it typically pays the closing costs involved in the transaction. Unlike the process of obtaining a mortgage, selling a note is quick and painless. When the seller knows what to expect, the deal progresses even more smoothly.
To sell the note, the holder must first gather some information. This includes the address, type, and acreage of the property. Date of sale, sales price, down payment, first or second mortgage amount, and payment details including the schedule, amount, interest rate, balance and first and most recent payment due should also be compiled. If a balloon payment is part of the financing, the balloon date should be on hand.
Once the documents and information are gathered, the commercial note holder should contact several buyers of commercial notes and request a free written quote. After all quotes are received, these should be compared. However, a decision should not be based on price alone. Service is a very important factor because a company providing poor service can make the transaction very unpleasant. It may be difficult to get an accurate answer to questions or even to get any answer at all. It is better to deal with a company staffed with knowledgeable workers, even if the quote is slightly less competitive.
The selected note buyer will provide a purchase agreement for the individual to sign. The note holder should read the document carefully and make sure it clearly explains which party will pay the expenses involved in this transaction. The document should also detail what happens if the sale does not go through. Note holders should make sure that they will not be responsible for any related costs. If they are, they could find themselves paying thousands of dollars and still holding the note.
If a choice of closing locations is provided, the note holder should request to close the sale at the local title company. This allows the individual to leave the closing with the proceeds from the sale of the note. Some note holders offer this service at no charge, while others assign an independent title company to act as an escrow agent on behalf of the seller.
As this process reveals, selling commercial mortgage notes is not difficult but it does require some due diligence. Note holders should take time to gather the needed information and compare quotes from several buyers to get the best price. Following these steps results in a transaction that is fast, convenient, and financially lucrative.
A professional note buying company is one of the first places they approach. This organization pays the commercial note holder to purchase the note and it typically pays the closing costs involved in the transaction. Unlike the process of obtaining a mortgage, selling a note is quick and painless. When the seller knows what to expect, the deal progresses even more smoothly.
To sell the note, the holder must first gather some information. This includes the address, type, and acreage of the property. Date of sale, sales price, down payment, first or second mortgage amount, and payment details including the schedule, amount, interest rate, balance and first and most recent payment due should also be compiled. If a balloon payment is part of the financing, the balloon date should be on hand.
Once the documents and information are gathered, the commercial note holder should contact several buyers of commercial notes and request a free written quote. After all quotes are received, these should be compared. However, a decision should not be based on price alone. Service is a very important factor because a company providing poor service can make the transaction very unpleasant. It may be difficult to get an accurate answer to questions or even to get any answer at all. It is better to deal with a company staffed with knowledgeable workers, even if the quote is slightly less competitive.
The selected note buyer will provide a purchase agreement for the individual to sign. The note holder should read the document carefully and make sure it clearly explains which party will pay the expenses involved in this transaction. The document should also detail what happens if the sale does not go through. Note holders should make sure that they will not be responsible for any related costs. If they are, they could find themselves paying thousands of dollars and still holding the note.
If a choice of closing locations is provided, the note holder should request to close the sale at the local title company. This allows the individual to leave the closing with the proceeds from the sale of the note. Some note holders offer this service at no charge, while others assign an independent title company to act as an escrow agent on behalf of the seller.
As this process reveals, selling commercial mortgage notes is not difficult but it does require some due diligence. Note holders should take time to gather the needed information and compare quotes from several buyers to get the best price. Following these steps results in a transaction that is fast, convenient, and financially lucrative.
How to Locate a Dependable Mortgage
Performing complex financial transactions is not everyone's cup of tea. There are loads of complicated processes involved in mortgage loan processing, which can consume a great deal of resources, while adding little to direct revenue generation. It is best to leave these processes to an expert and dependable mortgage loan processing company that can handle all such processes with ease.
At the same time, a lender must be extra cautious before handling this important task to any mortgage loan processing company. It is necessary on his or her part to perform thorough checking of credentials of the company and collect requisite information regarding its experience, talent pool, cost of services and security measures put in place. These aspects are detailed in following lines.
Collect plenty of information and verify credentials: Business owners can start by collecting requisite information about a couple of mortgage loan processing companies, which they think will be ideal for them. Next, they need to verify the claims made by such companies by asking friends; cross checking with references, if any, or by visiting internet chat forums, where they can get the information that they seek.
It would be a good idea to have a chat with customer support executives or raising support tickets, if this facility is provided. The quality of support that they might provide can be a small indication of how things are going to fare once their services are hired. Having said that, quality of customer support need not be the only criterion for choosing a service provider; it is one of many such aspects.
Cost of services: Outsourcing mortgage loan processing to a third party is always going to save you a lot of money. But one must not stop looking for a better deal. At the same time, try maintaining a fine balance between quality of services and price being quoted by the service provider. Contacting a number of companies offering similar services and comparing their costs is an ideal way to proceed.
Almost all of them will be pretty happy to provide a free quote. Collect as many of those as you can and create a sort of database. Now compare their services, price quoted and other salient features. This will give a clear idea of which one of them is the best one for you and fits your budget perfectly. Try striking a fine balance between cost of services and quality of the same in order to have your needs addressed while not burning a hole in your pocket.
Security: Financial transactions are often vulnerable to theft and internet fraud. It is thus very important that suitable measures are in place to ensure security of confidential data of the company. Check whether the service provider is going to use appropriate hardware and software to ensure the same. In addition, enquire whether the mortgage loan processing company in question will update its systems in accordance with rising threats and whether there will be an impact on billing as well.
At the same time, a lender must be extra cautious before handling this important task to any mortgage loan processing company. It is necessary on his or her part to perform thorough checking of credentials of the company and collect requisite information regarding its experience, talent pool, cost of services and security measures put in place. These aspects are detailed in following lines.
Collect plenty of information and verify credentials: Business owners can start by collecting requisite information about a couple of mortgage loan processing companies, which they think will be ideal for them. Next, they need to verify the claims made by such companies by asking friends; cross checking with references, if any, or by visiting internet chat forums, where they can get the information that they seek.
It would be a good idea to have a chat with customer support executives or raising support tickets, if this facility is provided. The quality of support that they might provide can be a small indication of how things are going to fare once their services are hired. Having said that, quality of customer support need not be the only criterion for choosing a service provider; it is one of many such aspects.
Cost of services: Outsourcing mortgage loan processing to a third party is always going to save you a lot of money. But one must not stop looking for a better deal. At the same time, try maintaining a fine balance between quality of services and price being quoted by the service provider. Contacting a number of companies offering similar services and comparing their costs is an ideal way to proceed.
Almost all of them will be pretty happy to provide a free quote. Collect as many of those as you can and create a sort of database. Now compare their services, price quoted and other salient features. This will give a clear idea of which one of them is the best one for you and fits your budget perfectly. Try striking a fine balance between cost of services and quality of the same in order to have your needs addressed while not burning a hole in your pocket.
Security: Financial transactions are often vulnerable to theft and internet fraud. It is thus very important that suitable measures are in place to ensure security of confidential data of the company. Check whether the service provider is going to use appropriate hardware and software to ensure the same. In addition, enquire whether the mortgage loan processing company in question will update its systems in accordance with rising threats and whether there will be an impact on billing as well.
Mortgage Broker
Buying a home using a mortgage is a long commitment which should not be taken lightly, as a loan tenure may last up to 30 years. First time homebuyers who need a loan to make a purchase need to have qualified help to deal with the pressures involved with buying a home. These professionals can be found anywhere and may also be mortgage brokers from Perth.
These professionals are knowledgeable and have access to various lenders services. The services they offer are retail banking, corporate banking, private banking, investment banking, business banking and land mortgage banking. They can thus help an individual to find the most convenient loan which meets his financial requirements. Most people do not know the basic requirements of obtaining a home loan, so these financial specialists step in to help out home buyers get the best deals in the market.
It is essential to talk to several experts in the field to know the services on offer and to reach a confident decision on which one among them one can place complete trust. One way of finding a reputable broker is by talking to friends or colleagues who have bought a home recently. They may provide suggestions on how they selected their broker, and they may also recommend a specific broker. An individual can also search through popular search engines and websites for brokers in his area. It is also beneficial to talk to several brokers and compare their prices and experience in the field. By talking to various brokers, he might also have exposure and will become familiar with various home loan options available in the market.
A home buyer can also talk to various brokers to know what deals they have to offer, and the terms and conditions of a loan they intend to take. A client should also keep a record of all the information he gains through talking to various brokers, as it would safeguard him in case there might be problems and disputes. A client should also provide the broker with all the relevant information like credit history, tax returns, banks statements and pay slips among others, because this will quicken and make the process easier.
The broker will also easily assess a clients financial status and know how much he is able to borrow with such information. These financial specialists are commonly connected in the industry; thus they may use their knowledge to get a client the best interest rate on his loan. A reputable broker should be ready to answer all the clients questions honestly and should be willing to go out of his way to offer the best deal for the client.
These professionals are knowledgeable and have access to various lenders services. The services they offer are retail banking, corporate banking, private banking, investment banking, business banking and land mortgage banking. They can thus help an individual to find the most convenient loan which meets his financial requirements. Most people do not know the basic requirements of obtaining a home loan, so these financial specialists step in to help out home buyers get the best deals in the market.
It is essential to talk to several experts in the field to know the services on offer and to reach a confident decision on which one among them one can place complete trust. One way of finding a reputable broker is by talking to friends or colleagues who have bought a home recently. They may provide suggestions on how they selected their broker, and they may also recommend a specific broker. An individual can also search through popular search engines and websites for brokers in his area. It is also beneficial to talk to several brokers and compare their prices and experience in the field. By talking to various brokers, he might also have exposure and will become familiar with various home loan options available in the market.
A home buyer can also talk to various brokers to know what deals they have to offer, and the terms and conditions of a loan they intend to take. A client should also keep a record of all the information he gains through talking to various brokers, as it would safeguard him in case there might be problems and disputes. A client should also provide the broker with all the relevant information like credit history, tax returns, banks statements and pay slips among others, because this will quicken and make the process easier.
The broker will also easily assess a clients financial status and know how much he is able to borrow with such information. These financial specialists are commonly connected in the industry; thus they may use their knowledge to get a client the best interest rate on his loan. A reputable broker should be ready to answer all the clients questions honestly and should be willing to go out of his way to offer the best deal for the client.
Mortgage Calculator
A reverse mortgage calculator is a tool used to estimate the amount of money an individual might be able to receive through a reverse mortgage. To use a calculator, seniors simply input their age, home value, existing mortgage balance and estimated interest rate. The calculator will use this information to determine whether the individual could qualify for a loan, as well as how much the person stands to receive.
Use a Reverse Mortgage Calculator to Determine Whether Now Is the Right Time for a Loan
To qualify for a loan, seniors must either own their home outright or have a small remaining mortgage balance. While many seniors are aware of this fact, few know exactly how much equity they need to qualify for a loan. To determine how much equity one needs, seniors are welcome to use a free online reverse mortgage calculator. Using a senior's age, existing mortgage balance and estimated property value, the calculator will determine the individual's eligibility.
Once seniors determine whether they have enough equity to qualify for a loan, they can continue their research by calculating their payout based on different factors. To get an idea of how their age and equity will impact their payout, seniors can use a calculator to see how much more money they could receive if they waited a few years to apply for a loan. Prospective borrowers can also explore their options by calculating their potential payout based on a higher property value, different interest rates and a smaller remaining mortgage balance. This should help borrowers determine whether now is the best time to get a loan, or if it is in their best interest to wait.
Is a Reverse Mortgage the Best Option? Use a Reverse Mortgage Calculator to Find Out
While reverse mortgages are popular among senior homeowners, these loans are not the only way to access a person's home equity. Seniors can also borrow against their home equity using a home equity loan or a home equity line of credit (HELOC). While these loans will require borrowers to make monthly payments to their lender, they tend to carry smaller upfront costs. Before getting a loan, seniors should consider both of these alternatives.
One way to determine the benefits and disadvantages of each loan is to calculate the possible outcome of each option. Calculators are not only available for reverse mortgages; these tools are available for almost every type of loan. Before making any decisions, seniors should calculate how much they could receive through a home equity loan or HELOC, their potential closing costs and their estimated monthly payments. Comparing different loan products can help seniors determine whether a reverse mortgage is their best option.
The great thing about using a reverse mortgage calculator is that these tools are completely free. Calculators are designed to help seniors educate themselves and gain a better understanding of these loans. While no reverse mortgage calculator can promise to provide entirely accurate results, they can help seniors figure out whether they want to continue pursuing a loan.
Use a Reverse Mortgage Calculator to Determine Whether Now Is the Right Time for a Loan
To qualify for a loan, seniors must either own their home outright or have a small remaining mortgage balance. While many seniors are aware of this fact, few know exactly how much equity they need to qualify for a loan. To determine how much equity one needs, seniors are welcome to use a free online reverse mortgage calculator. Using a senior's age, existing mortgage balance and estimated property value, the calculator will determine the individual's eligibility.
Once seniors determine whether they have enough equity to qualify for a loan, they can continue their research by calculating their payout based on different factors. To get an idea of how their age and equity will impact their payout, seniors can use a calculator to see how much more money they could receive if they waited a few years to apply for a loan. Prospective borrowers can also explore their options by calculating their potential payout based on a higher property value, different interest rates and a smaller remaining mortgage balance. This should help borrowers determine whether now is the best time to get a loan, or if it is in their best interest to wait.
Is a Reverse Mortgage the Best Option? Use a Reverse Mortgage Calculator to Find Out
While reverse mortgages are popular among senior homeowners, these loans are not the only way to access a person's home equity. Seniors can also borrow against their home equity using a home equity loan or a home equity line of credit (HELOC). While these loans will require borrowers to make monthly payments to their lender, they tend to carry smaller upfront costs. Before getting a loan, seniors should consider both of these alternatives.
One way to determine the benefits and disadvantages of each loan is to calculate the possible outcome of each option. Calculators are not only available for reverse mortgages; these tools are available for almost every type of loan. Before making any decisions, seniors should calculate how much they could receive through a home equity loan or HELOC, their potential closing costs and their estimated monthly payments. Comparing different loan products can help seniors determine whether a reverse mortgage is their best option.
The great thing about using a reverse mortgage calculator is that these tools are completely free. Calculators are designed to help seniors educate themselves and gain a better understanding of these loans. While no reverse mortgage calculator can promise to provide entirely accurate results, they can help seniors figure out whether they want to continue pursuing a loan.
Financed Mortgage Loans With Bad Credit
Having bad credit can lead people to think their loan options are very limited. In fact, most home buyers tend not to know the fully array of loan options available, or even the areas different lenders can specialize in. The result is they miss out on opportunities, like 100% financed mortgages.
There are lenders who specialize in loans with bad credit and who even offer 100% mortgages approved with bad credit. These lenders have different ways in dealing with applicants with low credit scores, so as to off-set the risks that turn most lenders off the idea of approving them.
Applicants with low credit ratings are better off applying to lenders who specialize in the low credit financing because most traditional lenders would easily disregard them. And even worth those willing to accept bad credit applicants, the chances of securing mortgage loans financed at 100% are very slim indeed.
Approval with Bad Credit
Applying for a mortgage is not difficult as long as the applicant can find the right lender to apply to. Many applications gain approval if the necessary criteria are met, but the lender must also be suitable. In this case, sub prime lenders are ideal.
Sub prime mortgage lenders offer different forms of loans, such those for the self employed, for down payment assistance, for closing cost assistance and many other types that help an applicant achieve a 100% mortgage, approved with bad credit.
Often, these sub prime lenders are a better option simply because of their expertise. They also tend to charge above the general rates of interest, but are also known to offer better rates and terms than mortgage loan financed at 100% offered by the alternatives.
Advantages of Sub Prime Lenders
For first-time home buyers who may have no financial history, sub prime loans are perfectly suited. Unfortunately, a low credit score still means that the applicant cannot qualify for a prime rate, but the fact that the possibility of securing a 100% financed mortgage with good terms still exists does make up for that drawback.
The vast majority of traditional mortgage lenders expect applicants to have full-time employment for at least two years. With sub prime lenders, the condition is half that for an applicant to qualify for a 100% mortgage approved with bad credit.
Of course, not all sub prime lenders approve mortgage loans financed at 100%. In such cases, an applicant will need to have access to a lump sum in order to make a down payment and cover the closing costs of purchasing the property.
Getting Mortgages Financed at 100%
If an applicant manages to acquire a mortgage broker, then that broker is well placed to find the right sub prime lender - ideally, one that will approve 100% financed mortgages with poor credit with good terms. In some situations though, the applicant can qualify for a 103% financing, so closing costs can also be accounted for.
Of course, a 100% mortgage approved with bad credit is one that requires no down payment. But no everyone can expect to secure one. This is because in order to qualify to get a mortgage loan financed at 100% the applicant must have a credit score of 580 or more. For anything above 100%, an applicant must have a FICO credit score of at least 600.
There are lenders who specialize in loans with bad credit and who even offer 100% mortgages approved with bad credit. These lenders have different ways in dealing with applicants with low credit scores, so as to off-set the risks that turn most lenders off the idea of approving them.
Applicants with low credit ratings are better off applying to lenders who specialize in the low credit financing because most traditional lenders would easily disregard them. And even worth those willing to accept bad credit applicants, the chances of securing mortgage loans financed at 100% are very slim indeed.
Approval with Bad Credit
Applying for a mortgage is not difficult as long as the applicant can find the right lender to apply to. Many applications gain approval if the necessary criteria are met, but the lender must also be suitable. In this case, sub prime lenders are ideal.
Sub prime mortgage lenders offer different forms of loans, such those for the self employed, for down payment assistance, for closing cost assistance and many other types that help an applicant achieve a 100% mortgage, approved with bad credit.
Often, these sub prime lenders are a better option simply because of their expertise. They also tend to charge above the general rates of interest, but are also known to offer better rates and terms than mortgage loan financed at 100% offered by the alternatives.
Advantages of Sub Prime Lenders
For first-time home buyers who may have no financial history, sub prime loans are perfectly suited. Unfortunately, a low credit score still means that the applicant cannot qualify for a prime rate, but the fact that the possibility of securing a 100% financed mortgage with good terms still exists does make up for that drawback.
The vast majority of traditional mortgage lenders expect applicants to have full-time employment for at least two years. With sub prime lenders, the condition is half that for an applicant to qualify for a 100% mortgage approved with bad credit.
Of course, not all sub prime lenders approve mortgage loans financed at 100%. In such cases, an applicant will need to have access to a lump sum in order to make a down payment and cover the closing costs of purchasing the property.
Getting Mortgages Financed at 100%
If an applicant manages to acquire a mortgage broker, then that broker is well placed to find the right sub prime lender - ideally, one that will approve 100% financed mortgages with poor credit with good terms. In some situations though, the applicant can qualify for a 103% financing, so closing costs can also be accounted for.
Of course, a 100% mortgage approved with bad credit is one that requires no down payment. But no everyone can expect to secure one. This is because in order to qualify to get a mortgage loan financed at 100% the applicant must have a credit score of 580 or more. For anything above 100%, an applicant must have a FICO credit score of at least 600.
Evaluating Mortgage
Anyone who has looked into their mortgage debt options knows how confusing it can be, especially if foreclosure is looming around the corner. Although there are several options available for avoiding a foreclosure, they aren't all equal and certainly not beneficial to everyone. Before considering which option is best, a review of the risks and benefits can go a long way.
Loan Modifications
One of the most desirable options by homeowners is a loan modification. However, there is much to learn about modifications and some homeowners may not benefit to the extent they think. Although loan modifications are designed to lower payments by reducing principals, lowering interest rates or extending the life of the loan, the modification offered isn't always significant enough to keep a homeowner out of danger. Lender are often hesitant to approve modifications, especially if the homeowner has already missed a payment or the home is worth less than what is owed. Even if a lender does approve a homeowner, the reduction in payment may not be enough to prevent the risk of default and foreclosure in the long run. For homeowners to benefit from a modification, they need to review how each type of outcome could affect their payment and request the greatest reduction.
Refinancing
As the more preferred option by lenders, refinancing a mortgage can lower the monthly payment for homeowners. However, refinancing isn't for those who have already missed a payment or at risk of default. Why? Because refinancing a mortgage comes with additional closing costs on the new loan, which are often out of pocket expenses. Anyone already suffering from financial trouble is not likely to be able to afford these expenses. Some lenders now offer refinancing without fees or costs, but there is still one issue to consider. When a loan is refinanced it begins a new loan and extends the life of the loan. Therefore, a refinanced 30 year loan will mean that the payments start at year one all over again, losing any progress the homeowner made towards their previous loan duration. While this isn't necessarily problematic, it should be considered whether extending the loan another 20 or more years is worth the decrease in payments. In general, refinancing should only be considered if it can lower the interest rate by 2 or more points or change the interest rate from a variable to a fixed rate.
Short Sales
Most homeowners would never choose a short sale over pursuing a modification or refinancing, but they have gained popularity in recent years. Although a short sale requires the homeowner to give up the home after the sale, it does produce an immediate relief from liability over the mortgage debt and protects one's credit from a foreclosure. Homeowners who cannot afford to maintain their mortgage payments or were unable to secure a modification or refinancing option, may find that short sale is an easier way out of their mortgage debt. However, it should be noted that the sale of the home can take months and the homeowner will be liable for payments until the home is sold. A good rule of thumb for a short sale is to enter the process with patience and the understanding that the lender wants the best offer possible.
Loan Modifications
One of the most desirable options by homeowners is a loan modification. However, there is much to learn about modifications and some homeowners may not benefit to the extent they think. Although loan modifications are designed to lower payments by reducing principals, lowering interest rates or extending the life of the loan, the modification offered isn't always significant enough to keep a homeowner out of danger. Lender are often hesitant to approve modifications, especially if the homeowner has already missed a payment or the home is worth less than what is owed. Even if a lender does approve a homeowner, the reduction in payment may not be enough to prevent the risk of default and foreclosure in the long run. For homeowners to benefit from a modification, they need to review how each type of outcome could affect their payment and request the greatest reduction.
Refinancing
As the more preferred option by lenders, refinancing a mortgage can lower the monthly payment for homeowners. However, refinancing isn't for those who have already missed a payment or at risk of default. Why? Because refinancing a mortgage comes with additional closing costs on the new loan, which are often out of pocket expenses. Anyone already suffering from financial trouble is not likely to be able to afford these expenses. Some lenders now offer refinancing without fees or costs, but there is still one issue to consider. When a loan is refinanced it begins a new loan and extends the life of the loan. Therefore, a refinanced 30 year loan will mean that the payments start at year one all over again, losing any progress the homeowner made towards their previous loan duration. While this isn't necessarily problematic, it should be considered whether extending the loan another 20 or more years is worth the decrease in payments. In general, refinancing should only be considered if it can lower the interest rate by 2 or more points or change the interest rate from a variable to a fixed rate.
Short Sales
Most homeowners would never choose a short sale over pursuing a modification or refinancing, but they have gained popularity in recent years. Although a short sale requires the homeowner to give up the home after the sale, it does produce an immediate relief from liability over the mortgage debt and protects one's credit from a foreclosure. Homeowners who cannot afford to maintain their mortgage payments or were unable to secure a modification or refinancing option, may find that short sale is an easier way out of their mortgage debt. However, it should be noted that the sale of the home can take months and the homeowner will be liable for payments until the home is sold. A good rule of thumb for a short sale is to enter the process with patience and the understanding that the lender wants the best offer possible.
Defining the Mortgage Options
When it comes time to make that big purchase, it is important you are aware of the many different home mortgage options available to you. This type of knowledge can save you a great deal of money when you get the perfect mortgage for you, your home and your financial situation. Did you know that two families who live side by side are not likely making the same mortgage payments each month? Hard to believe that they would be different but this is because there are many mortgage options and the rates are constantly changing. Shopping around can save you a lot of money and understanding how a mortgage works can allow you to refinance in the years to come as better rates present themselves.
First, let's start with the fixed rate mortgage option. This is by far the most popular mortgage option because it safe guards you against rising interest rates and it also provides you with a very predictable payment each and every month throughout the duration of your term. Fixed rate mortgages can range anywhere from one to thirty years; the choice is yours. The downfall to any fixed mortgage loan is that when the interest rates fall you are not in a position to take advantage of these rates and savings.
Next is the adjustable or variable rate mortgage option. As the complete opposite to the one listed above this mortgage loan will give you the absolute lowest interest rate today but if rates go up in the future so will your mortgage rate and payments. You have to really consider the market when you are thinking about a variable rate mortgage. Today, interest rates are at an all-time low so even when they do go up they will still be in an affordable arena so many people are choosing this mortgage option to take advantage. Ten years ago, the rates were much higher than they are now and any amount of raise may have been too much for a homeowner to handle which is why the fixed mortgage was always the best option.
There are also mortgages which offer graduated payment options. What this means is you will pay extremely low monthly payments throughout the first few years of your term but as the years progress your payments will get larger and larger until they reach a set maximum you will agree on when you sign your mortgage contract. This is a great option for people looking to pay down their mortgage in fewer years, but is not quite financially ready to do so from the start.
Lastly, I want to mention the convertible-adjustable rate mortgage. This type of mortgage allows you to start off with adjustable rates and when you feel you have reached the best rate and are expecting them to rise you can instantly switch to a fixed rate mortgage and lock in that rate. This is a great option for those home buyers who are a bit weary of the adjustable rate mortgage; it provides a sense of control and security while you still get to enjoy the lowest rates possible.
First, let's start with the fixed rate mortgage option. This is by far the most popular mortgage option because it safe guards you against rising interest rates and it also provides you with a very predictable payment each and every month throughout the duration of your term. Fixed rate mortgages can range anywhere from one to thirty years; the choice is yours. The downfall to any fixed mortgage loan is that when the interest rates fall you are not in a position to take advantage of these rates and savings.
Next is the adjustable or variable rate mortgage option. As the complete opposite to the one listed above this mortgage loan will give you the absolute lowest interest rate today but if rates go up in the future so will your mortgage rate and payments. You have to really consider the market when you are thinking about a variable rate mortgage. Today, interest rates are at an all-time low so even when they do go up they will still be in an affordable arena so many people are choosing this mortgage option to take advantage. Ten years ago, the rates were much higher than they are now and any amount of raise may have been too much for a homeowner to handle which is why the fixed mortgage was always the best option.
There are also mortgages which offer graduated payment options. What this means is you will pay extremely low monthly payments throughout the first few years of your term but as the years progress your payments will get larger and larger until they reach a set maximum you will agree on when you sign your mortgage contract. This is a great option for people looking to pay down their mortgage in fewer years, but is not quite financially ready to do so from the start.
Lastly, I want to mention the convertible-adjustable rate mortgage. This type of mortgage allows you to start off with adjustable rates and when you feel you have reached the best rate and are expecting them to rise you can instantly switch to a fixed rate mortgage and lock in that rate. This is a great option for those home buyers who are a bit weary of the adjustable rate mortgage; it provides a sense of control and security while you still get to enjoy the lowest rates possible.
Mexico Real Estate on a Mortgage
One of the most important tools for those buying Mexico real estate is a mortgage. This has become especially significant for Americans, Canadians and Europeans buying in Mexico over the past decade since mortgages have just recently come available to non-Mexican real estate buyers.
As with all financing tools, buying by means of a mortgage from a bank in Mexico has distinct advantages and disadvantages. Each buyer should carefully consider if it is the right tool for them.
If a buyer intents to buy real estate in Mexico by means of a mortgage, it is advisable that they mention this to their agent as soon as they make contact so they can discuss the feasibility and be pointed to an appropriate mortgage provider. It is best to seek pre-approval as early as possible.
Advantages of buying through a mortgage in Mexico include:
In most cases, 70% of the value of the property being bought will be covered by the mortgage.
The property being bought can be used as collateral and therefor all potential risk is tied into the Mexican property rather than another property back home.
Home equity on properties in the U.S. and Canada is left free.
There is flexibility in payment options - fixed and variable rates, 10-20 year terms, etc.
Disadvantages include:
Longer wait times and more paper work involved than with North American banks
More time is added to the purchasing process, increasing the space between the offer and the finalization of the deal; this can be minimized through pre-approval
Higher credit score requirements (and higher down payment percentage)
Stricter property requirements than in some parts of the U.S.
Interest rates tend to be slightly higher
There is usually a minimum purchase price of $100,000 USD
Most who wish to finance their Mexico real estate purchase choose this option because of the advantages of tying leveraging the same property being purchased to the mortgage. Those looking for really inexpensive properties (less than $100,000 USD - of which there are plenty in Mexico )will not have this as an option; on the other hand, with just a down payment of $30,000 USD, buyers on smaller budgets now have a much larger range of property options to choose from.
Buying by means of a mortgage at a bank in Mexico is an excellent way for Americans and Canadians on a lower budget to fit a very nice property in Mexico into that budget. It may not be for everyone, but it most certainly opens up many new doors of opportunities for investment, retiring and owning property in Mexico.
As with all financing tools, buying by means of a mortgage from a bank in Mexico has distinct advantages and disadvantages. Each buyer should carefully consider if it is the right tool for them.
If a buyer intents to buy real estate in Mexico by means of a mortgage, it is advisable that they mention this to their agent as soon as they make contact so they can discuss the feasibility and be pointed to an appropriate mortgage provider. It is best to seek pre-approval as early as possible.
Advantages of buying through a mortgage in Mexico include:
In most cases, 70% of the value of the property being bought will be covered by the mortgage.
The property being bought can be used as collateral and therefor all potential risk is tied into the Mexican property rather than another property back home.
Home equity on properties in the U.S. and Canada is left free.
There is flexibility in payment options - fixed and variable rates, 10-20 year terms, etc.
Disadvantages include:
Longer wait times and more paper work involved than with North American banks
More time is added to the purchasing process, increasing the space between the offer and the finalization of the deal; this can be minimized through pre-approval
Higher credit score requirements (and higher down payment percentage)
Stricter property requirements than in some parts of the U.S.
Interest rates tend to be slightly higher
There is usually a minimum purchase price of $100,000 USD
Most who wish to finance their Mexico real estate purchase choose this option because of the advantages of tying leveraging the same property being purchased to the mortgage. Those looking for really inexpensive properties (less than $100,000 USD - of which there are plenty in Mexico )will not have this as an option; on the other hand, with just a down payment of $30,000 USD, buyers on smaller budgets now have a much larger range of property options to choose from.
Buying by means of a mortgage at a bank in Mexico is an excellent way for Americans and Canadians on a lower budget to fit a very nice property in Mexico into that budget. It may not be for everyone, but it most certainly opens up many new doors of opportunities for investment, retiring and owning property in Mexico.
Buy Mortgage Life Insurance
Are you a middle class or a low income person on whom the family is financially dependent? You might buy a house with a loan but paying off the loan can be a real problem at times. This is especially true if you die in a few years and leave behind a family deep in mortgage debt. One of the best ways to avoid this unfortunate situation is to purchase mortgage life insurance. In other words, mortgage life insurance is usually a term life insurance which will pay off your mortgage loan in the event of your premature death or that of the co-borrower. Usually, it is offered by most private insurance companies and lenders.
There are many kinds of mortgage insurance available in the market. It is important to get all details regarding each plan before you make a choice. Some plans pay in case of an accidental death. Some mortgage life insurance plans decrease in value as your mortgage debt decreases. Some protection insurance plans allow you to transfer the insurance to another lender. A declining death benefit plan is very popular in the market today. The death benefit of the policy is equal to the mortgage balance that is outstanding on your home. Over the years, as you make your mortgage payments, the mortgage balance declines. These plans are highly popular among people today.
In earlier times, protection insurance was meant only for the family after your death. However, nowadays, mortgage protection insurance can also cover if you should have a critical or terminal illness or become disabled permanently. It will provide your survivors with a tax-free benefit to pay off the entire mortgage and any other expenses. The cost depends on the amount of your mortgage, your age, health conditions and other factors including occupation and lifestyle.
While purchasing any kind of mortgage life insurance, you are entitled to the knowledge of all benefits you accrue. Make sure that all the details are enclosed within the policy you receive. You can also request a copy of the master policy, if you buy the insurance from a private lender. There are many other things you need to take care of while purchasing such life insurance. Reading the fine print of the policy is essential to see that the coverage is just what you asked for. Mostly, additional benefits can be obtained by paying only a little more than the default monthly premium amount.
While mortgage insurance is a term life policy, you can also opt for cash life insurance. With a cash value insurance policy, you get coverage for the rest of your life or until you stop paying the premiums. Part of the premiums that you pay goes towards the death benefit. The other portion goes towards the cash value of the policy. The portion that goes towards the cash value is invested by the insurance company. A team of professional money managers ensure that the money continues to grow, providing your family with a way to live with dignity after your death.
There are many kinds of mortgage insurance available in the market. It is important to get all details regarding each plan before you make a choice. Some plans pay in case of an accidental death. Some mortgage life insurance plans decrease in value as your mortgage debt decreases. Some protection insurance plans allow you to transfer the insurance to another lender. A declining death benefit plan is very popular in the market today. The death benefit of the policy is equal to the mortgage balance that is outstanding on your home. Over the years, as you make your mortgage payments, the mortgage balance declines. These plans are highly popular among people today.
In earlier times, protection insurance was meant only for the family after your death. However, nowadays, mortgage protection insurance can also cover if you should have a critical or terminal illness or become disabled permanently. It will provide your survivors with a tax-free benefit to pay off the entire mortgage and any other expenses. The cost depends on the amount of your mortgage, your age, health conditions and other factors including occupation and lifestyle.
While purchasing any kind of mortgage life insurance, you are entitled to the knowledge of all benefits you accrue. Make sure that all the details are enclosed within the policy you receive. You can also request a copy of the master policy, if you buy the insurance from a private lender. There are many other things you need to take care of while purchasing such life insurance. Reading the fine print of the policy is essential to see that the coverage is just what you asked for. Mostly, additional benefits can be obtained by paying only a little more than the default monthly premium amount.
While mortgage insurance is a term life policy, you can also opt for cash life insurance. With a cash value insurance policy, you get coverage for the rest of your life or until you stop paying the premiums. Part of the premiums that you pay goes towards the death benefit. The other portion goes towards the cash value of the policy. The portion that goes towards the cash value is invested by the insurance company. A team of professional money managers ensure that the money continues to grow, providing your family with a way to live with dignity after your death.
Reverse Mortgage Advantages
Even if you've saved for retirement, receive social security, and enjoy money from other avenues, it's nice to have an additional paycheck coming in every month. Or maybe you're looking for a lump sum of money with which to downsize to a smaller home now that your kids are grown and off on their own. Both of these advantages can be provided by a reverse mortgage on the home you already own.
This Type of Loan, Explained
A reverse mortgage allows those who are 62 years of age or older to cash in on the value accumulated in their current home. The original loan taken to purchase the home must be paid in full, so that no money is owned on the home. This plan allows the owner to receive either a lump sum or monthly payments up to the appraised value of their home. This balance is paid off when the home is sold or when the occupants can no longer live there.
In case you need a visual image to help with this explanation, think of a balloon. With a typical loan, you begin with a full balloon and release air as you make each payment. This type of loan begins as an empty balloon which fills up each time you are paid your monthly payment by the lender.
The amount of money received through this type of payment system is dependent on the ages of the home's occupants (the older they are, the more money they can receive), the appraised value of the home, the current interest rate, and the amount of upfront cost that need to be taken care of before the loan can be processed. There are very few out of pocket expenses associated with this type of loan since any insurance fees can be paid up front.
The most common type of reverse mortgage is an HECM - Home Equity Conversion Mortgage. It's given through a private bank, but insured by the U.S. Government Department of Housing and Urban Development. Typically the borrower is charged 1.25% interest from the loan balance each year. This money will be used once the lender is no longer able to make a payment, or if the home doesn't sell for enough to meet the loan.
Finding a Professional Lender
When you're looking into a reverse mortgage, you don't want to get information from the very first banker or loan manager that mentions the option. You'll want to find a lender who is certified through the National Reverse Mortgage Lenders Association. This organization requires its members to pass some rigorous requirements before they're allowed to be considered professional lenders. The requirements include:
- No less than two years of experience in this field
- Participation in closing at least 50 reverse mortgages
- At least 12 hours of continuing education courses related to this field
- Successful completion of NRMLA's Ethics course
- A background check
- A three-hour exam
Once these requirements are completed, the individual is certified for up to three years. After that he will need to take an additional 12 hour of continuing education classes if he wishes to remain certified.
This Type of Loan, Explained
A reverse mortgage allows those who are 62 years of age or older to cash in on the value accumulated in their current home. The original loan taken to purchase the home must be paid in full, so that no money is owned on the home. This plan allows the owner to receive either a lump sum or monthly payments up to the appraised value of their home. This balance is paid off when the home is sold or when the occupants can no longer live there.
In case you need a visual image to help with this explanation, think of a balloon. With a typical loan, you begin with a full balloon and release air as you make each payment. This type of loan begins as an empty balloon which fills up each time you are paid your monthly payment by the lender.
The amount of money received through this type of payment system is dependent on the ages of the home's occupants (the older they are, the more money they can receive), the appraised value of the home, the current interest rate, and the amount of upfront cost that need to be taken care of before the loan can be processed. There are very few out of pocket expenses associated with this type of loan since any insurance fees can be paid up front.
The most common type of reverse mortgage is an HECM - Home Equity Conversion Mortgage. It's given through a private bank, but insured by the U.S. Government Department of Housing and Urban Development. Typically the borrower is charged 1.25% interest from the loan balance each year. This money will be used once the lender is no longer able to make a payment, or if the home doesn't sell for enough to meet the loan.
Finding a Professional Lender
When you're looking into a reverse mortgage, you don't want to get information from the very first banker or loan manager that mentions the option. You'll want to find a lender who is certified through the National Reverse Mortgage Lenders Association. This organization requires its members to pass some rigorous requirements before they're allowed to be considered professional lenders. The requirements include:
- No less than two years of experience in this field
- Participation in closing at least 50 reverse mortgages
- At least 12 hours of continuing education courses related to this field
- Successful completion of NRMLA's Ethics course
- A background check
- A three-hour exam
Once these requirements are completed, the individual is certified for up to three years. After that he will need to take an additional 12 hour of continuing education classes if he wishes to remain certified.
Mortgage Terms
Everyone who's looking to buy a home needs to be able to access a mortgage library. Educating yourself on the do's and don'ts of buying a home is important. Everyone wants to wrangle the best possible deal and mortgage terms are definitely confusing.
1) Broker: Broker is the first term in a mortgage glossary to understand. This is the person that is going to bring you together with the bank to create the mortgage transaction. In real estate terms, an agent will work for a broker. There are some terms which deal specifically with the property itself.
2) Mortgage: A legal document that connects the property to the lending party.
3) Deed: Then there is a deed, which is the legal document of title for a property.
When looking at a mortgage library, there are some other terms to be aware of when deciding what kind of loan to get, as well.
4) Escrow: An escrow is a money deposit that will be delivered to the seller after a transaction has been closed.
5) Amortization: Amortization refers to the way the loan payment is divided between principal and interest to ensure it is paid off within the terms of the mortgage.
The part of buying a property also involves familiarizing yourself with some of the words in the mortgage glossary.
6) Appraisal: An appraiser will examine the home and the property and determine a value for the property based on multiple factors including the values of other homes in the area.
7) APR: When obtaining a loan, the APR or annual percentage rate is important. This is the percentage that will be paid to the loan, which can have a significant impact on the total cost of the mortgage payment each month. You want to try and get the lowest APR possible, and this is where your broker may be able to assist you.
8) Closing: There is also the closing. When all documents are signed, money changes hands and a mortgage has officially been signed, this is referred to as a closing.
In the event that your mortgage doesn't work out as planned, the final two mortgage terms you need to be familiar with is refinance and bankruptcy.
9) Refinance: You may be able to refinance by creating an entirely new loan of the same property at a lower interest rate. This may involve paying new closing costs, however, it can help with debt and lower monthly obligations.
10) Bankruptcy: In a mortgage library, bankruptcy is the worst term because it means that a person is unable to make payments and files a motion with the court to be absolved of financial obligations.
These are but a few of the most basic terms you'll want to know when looking for a mortgage. There are many other important terms, and finding a good source for mortgage information will provide the confidence and knowledge you need to proceed.
1) Broker: Broker is the first term in a mortgage glossary to understand. This is the person that is going to bring you together with the bank to create the mortgage transaction. In real estate terms, an agent will work for a broker. There are some terms which deal specifically with the property itself.
2) Mortgage: A legal document that connects the property to the lending party.
3) Deed: Then there is a deed, which is the legal document of title for a property.
When looking at a mortgage library, there are some other terms to be aware of when deciding what kind of loan to get, as well.
4) Escrow: An escrow is a money deposit that will be delivered to the seller after a transaction has been closed.
5) Amortization: Amortization refers to the way the loan payment is divided between principal and interest to ensure it is paid off within the terms of the mortgage.
The part of buying a property also involves familiarizing yourself with some of the words in the mortgage glossary.
6) Appraisal: An appraiser will examine the home and the property and determine a value for the property based on multiple factors including the values of other homes in the area.
7) APR: When obtaining a loan, the APR or annual percentage rate is important. This is the percentage that will be paid to the loan, which can have a significant impact on the total cost of the mortgage payment each month. You want to try and get the lowest APR possible, and this is where your broker may be able to assist you.
8) Closing: There is also the closing. When all documents are signed, money changes hands and a mortgage has officially been signed, this is referred to as a closing.
In the event that your mortgage doesn't work out as planned, the final two mortgage terms you need to be familiar with is refinance and bankruptcy.
9) Refinance: You may be able to refinance by creating an entirely new loan of the same property at a lower interest rate. This may involve paying new closing costs, however, it can help with debt and lower monthly obligations.
10) Bankruptcy: In a mortgage library, bankruptcy is the worst term because it means that a person is unable to make payments and files a motion with the court to be absolved of financial obligations.
These are but a few of the most basic terms you'll want to know when looking for a mortgage. There are many other important terms, and finding a good source for mortgage information will provide the confidence and knowledge you need to proceed.
Mortgage Lending Training
Mortgage lending training is often used as a stepping stone for professionals to pursue or advance a career in the mortgage industry. In many states, there are certifications requirements in place that must be met before you can work in certain job positions, and many employers require additional training for employees, too. There are different types of courses and training options you can pursue, however, and each can open up different opportunities for your career.
Loan Processing
You can consider specialized training in the area of loan processing. Professionals working in this area often act as a liaison between the borrower and the underwriter. He or she may work with real estate agents, title or escrow companies, appraisers, property inspectors and other professionals who are instrumental in the loan process as well. Training for this area of the field provides you with an education on topics such as Debt-to-Income (DTI) ratios, Loan-to-Value (LTV) ratios, employment verification, deposit verification and more. Coursework in this area can help you to work more effectively and efficiently in your position.
Underwriting
Mortgage underwriting is generally the behind-the-scenes work that is involved in the loan approval process. This is a professional who reviews the entire loan file, runs the calculations for DTI and LTV, and verifies that the request meets all mortgage underwriting guidelines in place by the lender or financial institution. Generally, this is the person who gives the final nod on loan approval. As a result, this professional has a job that is infinitely important to both the lender and the borrower. Mortgage training for this position is often more detailed and financially oriented.
Once you decide you do want to pursue a career as a loan processor or underwriter, you may wish to sign up for mortgage training courses so you can gain knowledge in these very important areas. You may find these courses to be helpful if you work in other areas of the lending or real estate fields as well, including as a real estate agent or real estate assistant. This is an industry that does offer a lot of unique, niche positions, and you will find that the greater your level of experience and training, the more doors are opened for career possibilities now and the in future. In addition, taking coursework in these various areas can help you to be more educated and therefore more knowledgeable when working with clients and other industry professionals, too.
Loan Processing
You can consider specialized training in the area of loan processing. Professionals working in this area often act as a liaison between the borrower and the underwriter. He or she may work with real estate agents, title or escrow companies, appraisers, property inspectors and other professionals who are instrumental in the loan process as well. Training for this area of the field provides you with an education on topics such as Debt-to-Income (DTI) ratios, Loan-to-Value (LTV) ratios, employment verification, deposit verification and more. Coursework in this area can help you to work more effectively and efficiently in your position.
Underwriting
Mortgage underwriting is generally the behind-the-scenes work that is involved in the loan approval process. This is a professional who reviews the entire loan file, runs the calculations for DTI and LTV, and verifies that the request meets all mortgage underwriting guidelines in place by the lender or financial institution. Generally, this is the person who gives the final nod on loan approval. As a result, this professional has a job that is infinitely important to both the lender and the borrower. Mortgage training for this position is often more detailed and financially oriented.
Once you decide you do want to pursue a career as a loan processor or underwriter, you may wish to sign up for mortgage training courses so you can gain knowledge in these very important areas. You may find these courses to be helpful if you work in other areas of the lending or real estate fields as well, including as a real estate agent or real estate assistant. This is an industry that does offer a lot of unique, niche positions, and you will find that the greater your level of experience and training, the more doors are opened for career possibilities now and the in future. In addition, taking coursework in these various areas can help you to be more educated and therefore more knowledgeable when working with clients and other industry professionals, too.
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