Real Estate TGIF May 23, 2014
The weekend is just around the corner. Learn about Mario Batali, #Seattle, and Home Buying. Discover how much buying power your have and where current mortgage rates are. #TGIF #RealEstate #MortgageRates
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FHA Back to Work – Extenuating Circumstances program allows borrowers to apply for a new mortgage loan only one year after losing a home. Previously, this waiting period was three years. In the program, borrowers may …
Recently, the 30-year fixed home mortgage (by far the most popular home loan available) has come under some scrutiny. Some argue that the loan should no longer be subsidized by private lenders, while others argue that it is the only way that most individuals would ever be able to eventually own a home. For now, though, the 30-year mortgage is here to stay, so here are some pros and cons of the loan that might help you decide if this is the right loan for you.
Pros: Affordability and Stability
One of the biggest draws of the 30-year mortgage is that in terms of monthly mortgage payments, it is often the most affordable. While many lenders recommend a 15-year mortgage, as the shorter loan term will reduce interest rates and help you pay off the loan more quickly, the increased monthly payments are simply not an option for many families. Moreover, the 30-year mortgage is offered at a fixed rate, meaning that your interest rates and payment amounts will not change over the life of the loan, unless you opt to refinance. This can be incredibly useful to those who need to do some long-term budgeting.
Pros: Initial Payments and Refinancing Options
The 30-year fixed rate mortgage also draws most homebuyers due to its low down payment requirements: often, buyers only need to put down 5% of the overall cost. These decreased down payment amounts generally apply even for those who qualify for hefty mortgages (loans can reach $3 million). Another benefit of the 30-year mortgage is that due to the long repayment period, it is fairly simple to arrange for refinancing when necessary. Thus, if interest rates improve over the life of the loan, you can refinance partway through to reduce your overall interest payments. The refinancing option can also be helpful if your house needs repairs, or if you need to consolidate debt under a lower interest rate.
Cons: Issues of Retirement and Major Expenses
For some, the 30-year mortgage option might be ideal. Yet this particular home loan might present some drawbacks to other homeowners, depending on their life stages, job situations, and family plans. For example, a 30-year mortgage would not be the best option for someone who is 15 years away from retirement. It might also present some difficulties to families who will be sending their children off to college at some point, since paying a mortgage on top of college tuition can be incredibly taxing on a family budget.
In an age when people move frequently for work and family-related matters, a 30-year mortgage can also be somewhat of a hassle. Of course, the biggest drawback of the 30-year mortgage is the amount of interest paid over a long term. In short, this mortgage is not the best way to save money on a home loan. To decide if this is the right home loan for you, take the time to plan out a long-term budget, and consider career, family, and retirement plans as well.
At some point or another, many people face unexpected financial trouble that makes it difficult, if not impossible, for them to make their mortgage payments. In the face of these financial difficulties, whether they arise from job layoffs or other added expenses, some fear that foreclosure is their only option. This, however, is not the case—these days, loan modification is available as an alternative.
What is Loan Modification?
Loan modification is similar to mortgage refinancing in that the terms and conditions of the loan and/or loan payments are altered partway through the repayment. Whereas a refinance replaces an existing mortgage with a brand new one, however, loan modification simply adjusts the monthly principal and interest payments to accommodate drastic changes to a homeowner’s financial situation. Typically, loan modification periods are only temporary, intended to help homeowners just until they can recover from their financial issues. Some programs may last several months, while others can last a couple of years.
Government Loan Programs
In order to assist those families who are falling behind on their mortgage payments, and who thus may require a loan modification, the government has designed a program called The Home Affordable Modification Program (HAMP). This program was set up in response to the mortgage crisis of 2008, when thousands of individuals faced possible foreclosures. To help such struggling families keep their homes, HAMP sets forth guidelines to help mortgage lenders and borrowers as they navigate the ins and outs of loan modification.
HAMP Requirements for Borrowers
In order to qualify for HAMP assistance, homeowners must first be able to demonstrate clear evidence of financial struggle. To be eligible, the original mortgage must also have been approved no earlier than January 1, 2009. Homeowners must owe less than $730,000 on their mortgage (interest not included), and must also be able to prove that their current mortgage payment is at least 31% of their monthly gross income. Homeowners will also need to provide a significant amount of financial info, from income report documents to receipts from social security and disability payments, depending on the scenario.
HAMP Requirements for Lenders
As mentioned above, HAMP also sets forth guidelines for mortgage lenders, to ensure the smooth and efficient processing of any loan modification plans. For example, lenders are required to collect specific information from borrowers, including at least two of the most recent pay stubs from each person listed on the original mortgage, a detailed outline of the homeowner’s budget, the previous year’s tax returns, and a signed affidavit provided by HAMP. The servicer or lender in charge of the modification then submits all of the required documentation to HAMP coordinators.
If an applicant is approved for a loan modification, it is typically on a trial basis. For instance, most borrowers get the green light for a 3-month conditional modification; if they are able to successfully make the required payments during this time, then they can begin the official modification term. If they fail to make these payments, then foreclosure may unfortunately be the only alternative.
While many potential homebuyers choose to obtain their mortgage through a bank or other lending institution, it is also possible to receive a home loan from an independent seller. This option, referred to as seller financing, keeps all financial transactions between the buyer and the seller, removing the participation of a third party lender. While this can be a risky enterprise with a few drawbacks, there are a number of benefits to selecting this route for your mortgage.
Expedited Sale
One of the benefits of obtaining seller financing as opposed to a bank loan is that it can speed up the sale process. The process of applying for a loan through a bank can be quite time consuming, particularly if a loan applicant goes through a pre-approval and pre-qualification process before finally signing into the loan. When a seller manages the mortgage financing, the application is simplified, with fewer steps required to obtain their approval.
Simpler Qualifications
Another reason that seller financing can expedite the process of closing on a home is because the qualifications for the loan are much more relaxed. Part of the reason that applying for a bank mortgage can take so long is because of the stringent standards and restrictions for approval. An independent seller will most likely run a credit check to ensure that the buyer’s history isn’t a disaster, but that is typically the extent of financial background checks. Moreover, an seller will also grant loans to those with lower credit scores, which can be a saving grace to those with a spotty credit history.
Reduced Costs
Opting to go with seller financing can also reduce or entirely eliminate the fees associated with closing on a home. When a homebuyer receives a loan from a bank, he or she will have to pay closing costs to the lender and broker who have helped finance the loan and drawn up the mortgage papers. These costs are eliminated in a seller-financed mortgage. An independent seller who is anxious to sell will also be more likely to cut applicants a deal in other areas as well, and thus may accept lower down payments.
Drawbacks
There are specific reasons why seller financing is not more popular, however. First of all, though a legal and binding contract is still drawn up and signed by both parties, entering into business with a seller as opposed to a bank can be risky, since the transaction does not have the backing of a large and reputable institution. Moreover, while some sellers will grant home loans to those with a less than stellar credit history, in return they may significantly increase the asking price or the interest rates.
Homebuyers who need to purchase a home quickly without the hassle of working with a bank or those who fear their applications may be rejected due to a poor credit history may find seller financing to be a viable option. To reduce the risks involved with this kind of mortgage, applicants should be sure to have all papers reviewed by a lawyer or real estate professional, to ensure that the rates and loan terms are fair and reasonable.
Quicken Loans and Lending Tree are both rated as an A+ company by the Better Business Bureau(BBB), but does that really reflect the service customers have been getting? Customer reviews show that these sites are not as easy and cheap as they advertise.
Users of Quicken Loans complain about the lack of professionalism and communication during the process of finding loans. They often had to send in documents they had already sent before, such as credit reports, or fill out paperwork that did not pertain to them. Many of them said each time they called the company, they spoke with a different representative, who knew nothing of what had already occurred in the process. “The ‘so called fixed rate’ changed often depending on to whom you were speaking,” one customer wrote, and it was has been agreed with by others.
Others complain of a $400 deposit that they lost when they were denied a loan by the company that promised to help them. The BBB says that the company resolves these issues, but from the reviews that I read, these issues still seem to be happening.
The biggest issue customers had with Lending Tree was the amount of spam emails and phone calls they were receiving. Even after unregistering from the email and phone lists, many of the customers still receive this spam on a daily basis. Also, customers report that Lending Tree gives out their information to other companies. One customer complained of receiving calls from Sears, Home Depot, and other companies about window repairs after having a conversation with a representative from Lending Tree about finding a loan for home repairs.
As with Quicken Loans, the customers are also losing their appraisal fees, deposits, and processing fees when lenders suddenly back out of deals, or the customers never hear from their lenders.
Sure, the BBB believes that these two companies are A+ companies. But have they ever had to use one of these companies to find a lender? Customer reviews give potential users a better view of what kind of companies Quicken Loans and Lending Tree are.
Consumers are simply leaving thousands of dollars on the table by not shopping for a mortgage effectively. Such negligence was reported in November 2012 by Fannie Mae in a recent study on the topic of Mortgage Shopping. The research shows those that make efforts to get multiple quotes and use available tools have the advantage. Once you have analyzed all the information you’ve gathered, you can feel confident that you are making the best decision and getting the best rate you possibly can for such an important purchase.
Savvy buyers when it comes to mortgages save thousands of dollars. They tell you not to rent the first apartment you look at, and there are many mortgage companies to consider. Don’t be afraid to shop around and get multiple quotes so you can make an informed and educated decision. Continue reading
Bacon Shortens Mortgage Term
Applying extra dollars or “bacon” toward mortgage payments is an economical method to rid of one’s mortgage early. When closing on a home loan, most mortgage borrowers go into shock when they discover the total amount they will be paying to finance their home. There are several ways to shorten the mortgage term to save thousands.
Borrowers can use simply make use of the 52 weeks in a year to add an extra payment to the principal. A Bi-Weekly program has 26 opportunities to make payments to the bank using what adds up to a payment annually. The extra “bacon” applied annually as a payment will reduce a mortgage term by a little over six (6) years.
Homeowners can inquire with their lender about a bi-weekly payment program to save on their payments over the long run. The Bi-Weekly program is excellent for borrowers who want an easy to manage payment option. Continue reading
Search on Google’s Hot Trends today and leprechaun is the top surging topic. Since it is St. Patrick’s Day, the celebration has many curious about the relevant subject matters of Leprechaun Tossing to local Irish Pubs. Interestingly enough, the largest spike in results David Aronchick’s Huffington Post Article, 20 Years Later: Jennifer Aniston and the Leprechaun.
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Movie cover
It was twenty years ago that Jennifer Aniston made her movie début in the movie, “Leprechaun”, a low budget horror/comedy movie about an evil, sadistic Leprechaun going on a killing rampage in search of his beloved pot of gold. Aniston, at the time, supported herself with several part-time jobs, which included working as a telemarketer, waitress, and bike messenger.
Aniston, lived in Los Angeles, CA in 1993. According to HSH Associates, Financial Publishers, the mortgage rate for a 30 year fixed then was 7.57% for 30 year Fixed Rate Mortgage, 7.10% for a 15 year Fixed Rate Mortgage. These home loan rates are double current mortgage rates today. Based on what Aniston’s income what may have been at that time, a 30 year fixed rate would have been best. The national median home price was $129,900, the average was $146,600 according to the US Census.
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Home insurance is mandatory for homeowners and property investors. Combine an essential product with some creativity and imagination, you get a very entertaining perspective on a product required to go along with your 30 year fixed mortgage or 5/1 adjustable rate mortgage.
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Mortgage Auction 