Mortgages

When is it time to refinance your home mortgage? or, Are the Mortgage Rates Ripe for a Refinance?

Are the mortgage interest rates near historical lows? Could today’s rates be close the lowest that any of us have ever seen? Guess what, they are. What can this mean for those of us who are worried about the economy and our own financial future? There is an opportunity for home owners and investors to save money on their mortgages. This is also an opportunity to save money on a mortgage for a new purchase. Did you know that a 1% change in rate can increase (or decrease if the rates go up) your purchasing power by 10%.

So what about a refinance? When is it time to refinance? There is the old tale of needing a 1% reduction in rate for a refinance to make sense. Could this be true? NOT! Sorry, I learned that from my kids.

There are many things that can make a refinance good or bad. The key factor is the “Recapture Period”. How long will it take to recapture the cost of the refinance through the “savings in interest rate”? This quote is very important. A sales person has the capacity to make a bad refinance look like a good one. If you look only at the reduction in monthly payment you not be getting the whole story. The re-amortization of a mortgage could save you hundreds of dollars in cash flow but not really save you any money through true savings on the new rate. Mortgages are re-amortized when they are refinanced. This means that if you are 8 years into a 30 year fixed rate the payment could be reduced significantly by the addition of another 8 years of payments without having any significant savings in interest rate.

So how can you really know if you are getting the good deal on a refinance? Can you really trust your salesperson loan officer? That is a hard question to answer. If you know the right questions to ask you will be able to find out exactly how much you are going to save on your refinance. I’ll bet you are thinking “Sure buddy, what are the questions?”. Here we go.

1. What is the recapture period of this refinance? This tells you how long it will take to recoup the upfront costs of the loan through the interest savings, not the savings in cash flow from a lower payment. This is important even if you roll all of the costs into the loan. When rolled into the loan they are still real and it is money spent. There are times when a lower payment is sufficient reason to refinance.

2. Always ask what the recapture period is with points and no points. When paying points the industry standard is 2.0%. Please remember that Origination fee, Points and Discount are all the same thing. They are fees that the borrowers pay to get a lower interest rate.

3. What is the benefit to you if you do pay points? Does it increase or decrease your recapture period? Does the payment of points put you into a higher loan to value that could increase your interest rate or mortgage insurance?

4. How long do you think you will be in the house? If you are not sure about how long you want to stay you could be throwing thousands of dollars away. I would recommend that you have a plan to stay in the home several years beyond the recapture period.

5. If everything looks good at this point it is time to look at future financial needs. A refinance is a great time to get some cheap money for projects, new vehicles or possibly a rebuild of an older vehicle. I have even seen people us this opportunity to pull some cash to max out their retirement accounts for the year. I call this forced savings as you will now have to make payments on this money that you “Saved”.

This is all great information if used. Going back to the beginning of this blog, remember the interest rates are great right now. If you are not sure where to start try your Realtor. Realtors rely on reputable lenders to help them get buyers into houses. These same lenders can help you evaluate your refinance potential. Most lenders can tell you if you are in a good position to refinance with a simple 5 minute phone call. I hope that you found this information helpful . If this saves one person from getting a bad deal I will be happy. Sincerely, Jack DeCook Sr. Home Mortgage Consultant. Please feel free to give me a call for a free recapture analysis.

“An opportunity is never lost, it is simply found by someone else” Benjamin Franklin

Short Sales, What They mean to Your Credit as a Seller

Short Sales have been made to seem like a really good thing. They help the seller out of a financial bind. They enable a Buyer to get a good deal on a home. They enable Realtors to sell a home that would otherwise not be saleable. A short sale even gets a bad loan off of a bank’s books. This all sounds really good and I believe that it is. There has been something left out of the equation though.

What does this do to the seller’s credit rating? In all of the articles, blogs and press releases that I have read the subject has not come up. Why is this? I am not in a position to say. I can let you know what it does to a seller’s credit. A Short sale shows up as a foreclosure. I have been told by many that a Short sale is not as bad as a foreclosure.

This is true in a moral sense. A short sale allows a home owner to take the high road. To do the job of the banks REO department in helping to dispose of a troubled asset. As for the Sellers ability to get a loan after taking this “High Road”. They will have a foreclosure on their credit report and will have to wait a minimum of 2 years before another lender will talk to them about getting a new home mortgage. If you look you will find that there are some lenders who are making exceptions to this rule.

So why not just let it go to foreclosure? Because we are “Americans” and want to do the right thing! So how about just toughing it out by making the payments even if they hurt? I understand that many people are in positions which make this option impossible. There are many that are going the short sale route as an easy out. You can stop making payments on your home. Live there for free. Why not everyone else is? When and if the home does sell the lien holder will eat the cost of carrying the house during the sale period because the Seller is doing the right thing.

I hope that you have found this blog thought provoking. I applaud those who are genuinely trying to do the right thing by helping the owner of the mortgage loan get out with a smaller loss than they would have realized if the home where to go through a traditional foreclosure. To those of you who are in a genuine bind due to loss of income or value in your home and those who got swindled into a bad loan with increasing payments, I offer my condolences. In this case I would recommend that you talk to a Realtor who specialises in distressed properties. You will find their assistance to be quite valuable.

Sincerely, Jack

What is a Short Sale?

Everyone’s talking about this new phenonemum called the Short Sale.  What is it you ask?  A short sale in real estate is not always a pleasant transaction.  In times of declining home values, a homeowner can be caught in a position of negative appreciation.  In other words, the current market value of the home is less than what is owed to the bank.  This causes a problem if the homeowner experiences a hardship such as loss of work, or if he/she needs to relocate for any reason.

At this point the homeowner has 4 options available to him/her: 
 

• Continue making payments until market conditions improve to sell the home.
• Do a Deed in lieu of foreclosure.  Give the keys back to the bank and walk away.
• Quit making payments and allow the home to be foreclosed on by the bank.
• Do a Short Sale

A Short Sale is when the homeowner procures a buyer that is willing and able to purchase at a price less than what is owed to the bank.  Next you have to get the bank to agree to take this lesser (or short) amount.  This is where having a trained professional on your side makes all the difference.  The bank won’t want to let you off the hook too easily, and not without plenty of proper documentation. 

As a Real Estate agent, I am not licensed as a lawyer nor a CPA and cannot advise on those consequences. Except for certain conditions pursuant to the Mortgage Forgiveness Debt Relief Act of 2007, be aware the I.R.S. could consider debt forgiveness as income, and there is no guarantee that a lender who accepts a short sale will not legally pursue a borrower for the difference between the amount owed and the amount paid. In some states, this amount is known as a deficiency. A Real Estate lawyer can determine whether your loan qualifies for a deficiency judgment or claim.

If you are considering purchasing a property listed as a Short Sale, I can offer you some advice and strategy.  With a little patience, the upside in many cases is getting the Home you want for less than market value.

Call me…let’s talk Real Estate,

Dale Kreiser 360-319-6365

4.5% on a 30 Year Fixed TODAY!

I have a local lender that I recommend, did my own loan actually, who told me today “I did a 30 year fixed rate loan today for 4.5% and he didn’t even have the best credit!” Wow, that is so fabulous!

We have never had a better time to buy Real Estate. If you have ever wanted to own a home, BUY NOW! 

If you have ever wanted to invest, BUY NOW!  There are so very many amazing options for you and I am really enjoying helping every step of the way.

Won’t you join me?!

Jenny Johnson

YOUR Bellingham, Whatcom County Real Estate Agent 360-303-3699

Save Your Home by Stopping Foreclosure

Author: Jane Anthony

There would be less home foreclosures if people would work harder to stop a foreclosure before it even starts. The problem is that lenders up until now were unwilling to help people to have their loans modified to better suit their new economic status and refinancing wasn’t always an option due to the decline in real estate value.

So, how do you stop a foreclosure before it starts now? The first thing you need to do is talk to your lender if you are having trouble making your payments. The first time your mortgage is due and you are struggling to pay the entire amount is when you need to be on the phone discussing your alternate payment options. If you have never been late before, your lender may not believe you are hitting an economic crisis, so you may need to provide proof, but you have many options now that you might not have at a later date, so as soon as you wind up struggling to make your mortgage payment, you need to act so that you can stop a foreclosure before it happens.

• If your crisis is a short term thing, see if you can make part of your monthly payment for a couple of months and stretch out the remaining balance over a period of time. This will help protect your credit rating and ensure that your lender knows exactly what your plan is and how you plan to repay your back amount owed.
• Another thing you can do is see if your lender will let you skip a couple of monthly payments now and put them on the end of your loan, or re-amortize your mortgage. This option is only for short term financial crises and you may still be required to pay something toward your mortgage in the mean time.
• Look into refinancing if you have some equity in your home, so that you can have a lower monthly payment that you won’t be struggling to pay each month.
• If you’re looking at a long term financial crisis, such as a layoff and want to stop the possibility of a foreclosure, you should consider a loan modification, which can change the terms of your loan, or stretch the term of the loan out a little more so that you can afford to keep your home and make your payments on time, even without your job.

These are the ways to stop foreclosure, by attacking the problem before it begins and making sure to stay in contact with your lender at all times so they are aware of your efforts to ensure that you are not faced with a foreclosure in your future. Lenders want to help if you will let them and even though sometimes your customer service representatives may not be able to help you, a supervisor probably can either help you or can refer you to someone who works with your lender who can help you to stop foreclosure.

To lower your rate, remove your late payments and stop foreclosure, contact a professional today. You can Stop a Foreclosure on your home.

About the Author:

Jane Anthony offers advice and information on a wide range of subjects, from auto loans to wedding photography – and everything in between.

Article Source: http://www.articlesbase.com/mortgage-articles/save-your-home-by-stopping-foreclosure-741109.html

How to Choose a Relevant Home Loan

Author: Gary

For most people, getting a home would be the most expensive investment ever made in one’s lifetime. That’s simple because of the long term financing required.

A home loan (or mortgage loan) is considered a term loan, secured on a property that you purchase. And depending on which part of the world you live in, the lending bank will have first charge on the property, followed by your local government’s provident funds board.

Before you go about hunting for a ideal home loan, do consider the following basic factors:

a) As a general rule of thumb, your requested home loan monthly instalments and other long term debts, such as car loans, etc, should not exceed more than 35% of your gross monthly income (note that by the definition “gross”, we are referring to prior deduction for local taxes);
b) Always allow a percentage for foreseeable contingencies, such as a potential increase in your requested bank home loan over the defined loan period;
c) If your state or country you live in allows for government interest free loans, find out what is the limited percentage you can utilize;
d) Remember to factor in the bank’s defined overdue interest rate should there be a possibility of you defaulting the current month’s loan repayment;
e) In case you’re not aware, in the event that if you fail to pay your instalments within the stipulated timeframe, the bank has the right to exercise the option of recalling the loan and repossess your purchased property as well; and,
f) In the event of a repossession, and the sales of your property are not able to cover the loan amount and interest from your agent bank, you may be made a bankrupt, should you not be able to compensate on the shortfall amount.

As a general principle, home loans can be classified under two broad categories: Fixed rate loans, and Floating or Variable rate loans. Let’s examine the main differences in these two types of loans.

Fixed rate loans as the name implies, indicates that the interest rate is guaranteed and fixed in the first few years on the borrowed principal sum. This is a good option to consider during economic periods where the interest rate is low, or if your want to budget with certainty over the first few years, since the interest rate will not fluctuate nor change, even if interest rates rise or fall during that defined initial period. As such, this form of loan is ideal for newly-wed couples or folks who have just landed a stable monthly based income job. However, do note that after this period, the interest rate will be recalculated to factor existing market conditions.

Floating or Variable rate loans on the other hand will fluctuate in accordance to the economic market. However, before you go assuming that if the market goes down and expect the banks to lower their interest rates, think again! Trends have often shown that banks usually take awhile to adjust the lending interest to home owners downwards, but are often quick to adjust upwards in possible times of uncertainty. And depending on where you live in, banks are usually obligated to inform borrowing parties with a thirty day advance notification before adjusting this lending interest. Likewise, as a home owner, you have the right to re-adjust or exercise your refinancing options.

As a word of consideration, you should speak with the bank only when you intend to shorten your home loan period, rather than if you wish to lengthen it since this will likely have an effect on the overall interest rate and period.

Do visit our link to find out more on how you can further reduce your home loans and other related loans as well.

About the Author:

Gary is currently pursuing his MBA and majors in business continuity and loans finance. He is also currently working in the homelands security industry. To find out more about home loans and related loans, do visit: http://www.bizenginesite.com/loans

Article Source: http://www.articlesbase.com/mortgage-articles/how-to-choose-a-relevant-home-loan-748418.html

Top 5 Reasons People Get Reverse Mortgages

Author: Justin Narin

Once you’ve done your research on reverse mortgages and gained a more complete understanding of the product, the next step is to decide if a reverse mortgage is right for your situation. If you’re eligible (a homeowner 62 years of age or older with equity in your principal residence), this may be a quick decision or one that requires a bit more consideration. Below are the top 5 reasons people get reverse mortgages:

~ Retire in style! – Most homeowners getting close to retirement age have spent that last thirty years or more making mortgage payments; depending on where you live, this monthly obligation could be anywhere from a few hundred dollars a month to a few thousand dollars a month and beyond – phew! Every month that one big check goes out the door to the bank and leaves you with that much less cash to save, invest or spend on the items you need and want. How great is it to finally turn the tables on Main Street Bank, where they now send you a check each month? Most retirees have steady monthly costs, such as housing, medical, insurance and other necessary expenses. For non-working retirees, those expenses are managed with a fixed income from retirement accounts, pension plans, social security or other plan.

The reverse mortgage allows a retiree to increase their fixed income and provide cash to do some things that they might otherwise not be able to afford to do. Typically, the personal quality of life is the number one reason people get reverse mortgages.

~ Pay hospital or medical bills – For many older Americans and retiree’s medical issues are an increasing reality in their daily lives. With the ever rising cost of healthcare, this can put tremendous demands on a fixed income. Ongoing medical treatments, prescription drug regimens, or a large one-time (possibly unforeseen) medical bill are all top reasons that people get reverse mortgages.

~ Improve or modify a home – While this may not be an expansion of the home, the early part of retirement is a great time to re-purpose your house to accommodate the way you will be living for the next ten, twenty, thirty years and on. Maybe it’s time to expand the kitchen, widen the hallways or remove some steps, or exchange the old pool in the backyard for a beautifully landscaped garden. As we get older, a top reason people get reverse mortgages is to outfit their house for their new lifestyle.

~ Dream vacation anyone? – What better time to just get away than when your working days are behind you and the weather turns a bit gloomy? Proceeds from a reverse mortgage have allowed many homeowners to take that vacation they’ve always dreamed about, but never had the time or resources to take. Bon voyage!

~ Pay off high interest rate or problematic debts – With the large amount of debt that the American consumer accumulates over a lifetime, it should be no surprise that this is a top reason people get reverse mortgages. Whether its high interest rate credit cards, a relative’s student loan debt, or even a potential foreclosure that must be dealt with, reverse mortgages can be a very effective way to get a large sum of cash to manage other debts.

These are the top 5 reasons people get reverse mortgages – once you’ve made a decision to move forward with a reverse mortgage, send us your top reasons and we’ll add them to the list!

For more articles on Reverse Mortgage visit: http://www.bills.com/reverse-mortgage-info-article/

About the Author:

Justin has 5 years of experience as a financial adviser; his key areas are loan consolidation, debt relief, mortgages etc. For more free articles and advice visit http://www.Bills.com.

Article Source: http://www.articlesbase.com/mortgage-articles/top-5-reasons-people-get-reverse-mortgages-751314.html

Costs of a Foreclosure Procedure

Author: Jill Borash

The price included in a foreclosure procedure are many and can be heavy in terms of money and emotions. You do not get to rewind time after foreclosure has already been started so if you are on the brink of foreclosure, I encourage you to do everything that you can to end it. The costs involved once it has started are great and best averted.

The monetary costs in a foreclosure procedure come in numerous forms. Once foreclosure has begun there are lawyer fees that start adding up. Bringing lawyers into it means that court costs are not far behind. Because I allowed my foreclosure procedure get as far as it did, I wound up having to fork over money for the publication of my foreclosure in local papers. This was only one of many of the costs that the county evaluated that I wound up having to pay. I also wound up having to pay the attorney fees for my lenders. All of these costs ended up being well over $4,000.

I had a insane number of “miscellaneous fees” in my foreclosure procedure. It was ludicrous the sum of money that they expected me to pay them for all of these “miscellaneous fees.” They never even told me what they were for or why I had to pay them and in the end it was over $2,000. To this day, I have no idea what those fees were.

I highly recommend you to look for legal guidance to to try to avoid some of the costs in your foreclosure procedure. A decent lawyer can help you protect your rights in a manner that you just cannot on your own.

If you are already in the heart of your foreclosure procedure, I do not need to tell you about the emotional costs that is part of foreclosure because you already have experienced them. You live with them on a routine basis. If the foreclosure is on the house that you are living in, the price is extremely high. Because then foreclosure is not just worrying about losing a house but it is about losing a home. You worry about where you will live if you lose your home. The struggle for enough money to live and pay the bills is a daily struggle and it can often feel like a constant uphill struggle. But no matter what your foreclosure procedure position, there is bound to be a continuous worry and stress over money.

Finding a means to deal with all of these emotions during your foreclosure can be hard but you have to find a way. One of the greatest paths to help you deal with the emotional fallout of your foreclosure procedure is to have family and friends close by who love and support you.

About the Author:

The toll in terms of money and emotions are high in foreclosure. If you want to get those costs as small as possible, you have to find a path to end your foreclosure procedure as speedily as you can. The longer you let it drag on, the higher those costs get. For more assistance to stop mortgage foreclosure on your house, go to http://www.stopping-home-foreclosure.com/ForeclosureProcedure.html

Article Source: http://www.articlesbase.com/mortgage-articles/costs-of-a-foreclosure-procedure-752027.html