Mar
27
Mr Hanna asked:
MIAS, the Mortgage and Insurance Advisory Services (http://www.mias-ltd.co.uk ), is concerned that, despite the recent publicity and various campaigns in the press, borrowers are still being stung by punitive exit fees.
Lenders charge exit fees when customers redeem their mortgage in full, for example, by switching their mortgage to a rival lender. Exit fees can also be termed administration charges, sealing fees or deeds-release fees and are raised to cover the cost of taking property deeds out of storage, sending them to a solicitor and producing a final account statement. Borrowers are warned when they sign up that if they switch lenders, they’ll have to pay a fee – but the size of that fee is not guaranteed to stay the same.
Within the last few years, lenders have increased their exit penalties steeply, with some now topping the £300 mark (http://www.mias-ltd.co.uk/news-index.htm ). Firms have claimed that these hikes are necessary because of their increased costs and extra work, yet this justification appears hollow when one considers that property deeds are now held electronically at the Land Registry.
Alistair Good, Managing Director of MIAS said: “One client, whose penalty had increased from £85 to £195 compared it with entering a car park where the prices were clearly displayed, only to find that they had more than doubled when it was time to pay.
He added: “While we appreciate that lenders need to recoup the costs incurred when a mortgage is redeemed, borrowers need to be informed about these costs at the outset. If the fee is excessive, then the client can look elsewhere.”
Although exit fees make up a tiny percentage of overall mortgage costs, it is unfair to hit a customer with an unexpected charge, which can reach £300. MIAS would like to see lenders state their exit fees clearly – and fix them at the outset of deals. In this way, the client is treated fairly, in line with FSA guidelines.
One example is Northern Rock. Although they charge the relatively high fee of £250, they do commit to charge the fee stated when the client signs up for the mortgage. MIAS would like to see more lenders adopt this approach.
Commenting, Roger Milbourn, Director of MIAS, said: “Exit fees, though unpopular with customers, are here to stay. But if lenders are to lose the tag of “back door charging” and reduce the flow of complaints to the Financial Ombudsman Service, they must be more transparent about these fees.
“We see no good reason why the exit fee cannot be fixed for the life of a mortgage, so that the client would be aware of the charge from the start. Under the current system, exit fees can increase by more than 350% by the time the client comes to redeem his or her mortgage. This makes a mockery of the FSA’s requirement to treat customers fairly despite their claims that they are not a pricing regulator.”
In the absence of fixed exit fees, it is imperative for mortgage brokers to go through closing charges carefully with the client. The adviser should explain that the borrower may incur a punitive charge if they switch lenders or pay off their mortgage early (http://www.mias-ltd.co.uk/faqs.htm ) and in this way, broker and client can compare products fairly.
For further information, please contact:
MIAS Ltd
0845 833 0878
Managing Director: Alistair Good
alistair@mias-ltd.co.uk
Director: Roger Milbourn
roger@mias-ltd.co.uk
Notes to Editor:
The Mortgage and Insurance Advisory Service (MIAS Ltd) is a firm of impartial mortgage advisers, offering a comprehensive service to clients seeking residential and commercial mortgages and mortgage protection.
Founded in 2002, MIAS has quickly gained a reputation for providing straightforward, impartial mortgage advice, matching clients up with some of the most competitive deals around. MIAS’s experienced brokers have expertise in all sectors of the mortgage market and look after the whole transaction from beginning to end, making the process as smooth and as headache-free as possible.
For further information on the services MIAS offers, please visit http://www.mias-ltd.co.uk
WILBURN
MIAS, the Mortgage and Insurance Advisory Services (http://www.mias-ltd.co.uk ), is concerned that, despite the recent publicity and various campaigns in the press, borrowers are still being stung by punitive exit fees.
Lenders charge exit fees when customers redeem their mortgage in full, for example, by switching their mortgage to a rival lender. Exit fees can also be termed administration charges, sealing fees or deeds-release fees and are raised to cover the cost of taking property deeds out of storage, sending them to a solicitor and producing a final account statement. Borrowers are warned when they sign up that if they switch lenders, they’ll have to pay a fee – but the size of that fee is not guaranteed to stay the same.
Within the last few years, lenders have increased their exit penalties steeply, with some now topping the £300 mark (http://www.mias-ltd.co.uk/news-index.htm ). Firms have claimed that these hikes are necessary because of their increased costs and extra work, yet this justification appears hollow when one considers that property deeds are now held electronically at the Land Registry.
Alistair Good, Managing Director of MIAS said: “One client, whose penalty had increased from £85 to £195 compared it with entering a car park where the prices were clearly displayed, only to find that they had more than doubled when it was time to pay.
He added: “While we appreciate that lenders need to recoup the costs incurred when a mortgage is redeemed, borrowers need to be informed about these costs at the outset. If the fee is excessive, then the client can look elsewhere.”
Although exit fees make up a tiny percentage of overall mortgage costs, it is unfair to hit a customer with an unexpected charge, which can reach £300. MIAS would like to see lenders state their exit fees clearly – and fix them at the outset of deals. In this way, the client is treated fairly, in line with FSA guidelines.
One example is Northern Rock. Although they charge the relatively high fee of £250, they do commit to charge the fee stated when the client signs up for the mortgage. MIAS would like to see more lenders adopt this approach.
Commenting, Roger Milbourn, Director of MIAS, said: “Exit fees, though unpopular with customers, are here to stay. But if lenders are to lose the tag of “back door charging” and reduce the flow of complaints to the Financial Ombudsman Service, they must be more transparent about these fees.
“We see no good reason why the exit fee cannot be fixed for the life of a mortgage, so that the client would be aware of the charge from the start. Under the current system, exit fees can increase by more than 350% by the time the client comes to redeem his or her mortgage. This makes a mockery of the FSA’s requirement to treat customers fairly despite their claims that they are not a pricing regulator.”
In the absence of fixed exit fees, it is imperative for mortgage brokers to go through closing charges carefully with the client. The adviser should explain that the borrower may incur a punitive charge if they switch lenders or pay off their mortgage early (http://www.mias-ltd.co.uk/faqs.htm ) and in this way, broker and client can compare products fairly.
For further information, please contact:
MIAS Ltd
0845 833 0878
Managing Director: Alistair Good
alistair@mias-ltd.co.uk
Director: Roger Milbourn
roger@mias-ltd.co.uk
Notes to Editor:
The Mortgage and Insurance Advisory Service (MIAS Ltd) is a firm of impartial mortgage advisers, offering a comprehensive service to clients seeking residential and commercial mortgages and mortgage protection.
Founded in 2002, MIAS has quickly gained a reputation for providing straightforward, impartial mortgage advice, matching clients up with some of the most competitive deals around. MIAS’s experienced brokers have expertise in all sectors of the mortgage market and look after the whole transaction from beginning to end, making the process as smooth and as headache-free as possible.
For further information on the services MIAS offers, please visit http://www.mias-ltd.co.uk
WILBURN
Mar
22
Refinancing a Home or Condo Mortgage
Filed Under Mortgage | Leave a Comment
M Petrone asked:
Typically when applying for a mortgage loan, you quickly find out how many types of information you will need to provide. To begin with, you will need proof of income, checking or savings account information that goes back as much as 3 months to verify someone did not borrow you the down payment just for the looks, you will also need to provide tax returns. Also, you will need to bring a copy of the deposit that you gave to your realtor when you decide you found the perfect condo or home to finance. Almost all the time, the bank will send an appraiser out to the property your looking to finance, they also send an inspector out to make sure there is no significant costly damage that will need to be repaired within the first few months/years of your mortgage. You will also need to provide proof of home owner or condo owners insurance once the loan is approved.
Meanwhile, in the time between applying for either financing or refinancing you should not use any credit sources. Do not get anything financed or refinanced while the loan is awaiting approval. Refinancing loans are pretty strict and may take a few weeks to months depending on your personal financial situation. To receive refinancing in some instances you must pay off an old debt or two in order to turn that corner so the bank will refinance.
When your refinancing approval goes through it is all down hill from there. Meeting the bank and the realtor one more time is needed before closing on the house or condo. Make sure to bring your downpayment with you and anything else your realtor or banker asked you to bring in. Remember after the closing goes through the property taxes are now in your name, including any back taxes that were due on that property. You now will be the official condo or home owner!
-M Petrone
BOBBIE
Typically when applying for a mortgage loan, you quickly find out how many types of information you will need to provide. To begin with, you will need proof of income, checking or savings account information that goes back as much as 3 months to verify someone did not borrow you the down payment just for the looks, you will also need to provide tax returns. Also, you will need to bring a copy of the deposit that you gave to your realtor when you decide you found the perfect condo or home to finance. Almost all the time, the bank will send an appraiser out to the property your looking to finance, they also send an inspector out to make sure there is no significant costly damage that will need to be repaired within the first few months/years of your mortgage. You will also need to provide proof of home owner or condo owners insurance once the loan is approved.
Meanwhile, in the time between applying for either financing or refinancing you should not use any credit sources. Do not get anything financed or refinanced while the loan is awaiting approval. Refinancing loans are pretty strict and may take a few weeks to months depending on your personal financial situation. To receive refinancing in some instances you must pay off an old debt or two in order to turn that corner so the bank will refinance.
When your refinancing approval goes through it is all down hill from there. Meeting the bank and the realtor one more time is needed before closing on the house or condo. Make sure to bring your downpayment with you and anything else your realtor or banker asked you to bring in. Remember after the closing goes through the property taxes are now in your name, including any back taxes that were due on that property. You now will be the official condo or home owner!
-M Petrone
BOBBIE
Mar
12
Gloria de Gaston Boone asked:
A new Reverse Mortgage Limit (FHA/HECM) has been announced. This new limit, a part of the FHA Modernization Act (which was part of the overall Housing & Foreclosure Rescue Bill) will be a nationwide limit – not the old county by county limit. It has been raised to $417,000.
By making the reverse mortgage one national lending amount, it will simplify things considerably for both the lender and the borrower. This is welcome news as it brings the lending limit more in line with current housing prices (in spite of the downturn of the last couple of years).
A reverse mortgage is for seniors who are 62+, own their home (with or without a mortgage), and use it as their principal residence. There are no mortgage payments; no credit, income or asset qualifying; it does not affect Social Security or Medicare; the funds are non-taxable.
Seniors may take the funds (after paying off any current mortgage) as lifetime monthly payments, a lump sum or as a credit line, or any combination. If they wish to makepayments, that is OK, too.
The mortgage is good for as long as any of the borrowers live in the property. In addition it is a non-recourse loan, meaning that the lender cannot attach other assets if the loan ever exceeds the value of the home.
If that happens, then when the house is sold FHA pays the difference to the lender. Most of the time, the loan does not reach the value of the home, and when it is sold, the seniors, or their heirs receive the difference.
Starting in April, 2007, certain members of Congress, FHA and NRMLA (National Reverse Mortgage Lenders Association) and AARP started working together to make the Reverse Mortgage loan amounts catch up to the real market prices, lower fees, enable it to be used for purchases (instead of only refinances), and to include Co-Ops in the program. Now, finally, some of these goals are in effect.
BACKGROUND OF THE REVERSE MORTGAGE
Over the years, since 1987, when President Reagan signed FHA Home Equity Conversion Mortgage (HECM) bill into law, FHA and others such as Congress, AARP, and NRMLA have worked to improve this financing instrument. For those who need to use part of the equity in their homes to get cash to cover rising living and medical costs, and, yet, have no mortgage payment, it has been a valuable program.
It was part of the overall program called “Aging in Place” because studies and polls had shown that over 85% of seniors wanted to live in their homes, and neighborhoods. Many were “house rich, but cash poor”, yet wanted to stay where their friends and relatives were, and where they had raised their children.
Due to the rise in home prices, even downsizing was often over their financial means since their home price, less their mortgage didn’t leave enough to buy smaller place close to the old neighborhood, and smaller incomes did not allow them to qualify for a regular mortgage to make up the difference.
They also desired to retain as much of their independence for as long as possible. When they got sick, they wanted to invite home-care workers in, rather than going to an assisted living facility or other care facility. Sociological studies have shown the health of the elderly and the quality of neighborhoods is enhanced by keeping people of all ages in a neighborhood.
Prior to the government getting involved in the reverse mortgage program, some unscrupulous brokers had taken advantage of seniors by going on title and sharing in the homes’ appreciation, or steering seniors with new cash from their reverse mortgages into unsafe, irresponsible investments that made the broker more money – but punished the seniors.
Often, seniors, especially those who were older did not understand, nor have the details of the reverse mortgage explained to them. Some even lost their homes. And, today, while these practices are minimal, the rumors persist.
Those old practices have been curtailed by requiring mandatory counseling by HUD approved counselors, and required disclosure forms in the loan package – and by constant encouragement by professional lenders to have the seniors bring a relative, advisor, attorney or trusted friend with them when applying and closing a reverse mortgage.
Now, new laws and enforcement have all but stopped these practices – and further new laws passed to close any loopholes.
From time to FHA reviews the program. For instance, when the program first started, only detached, single family homes were included, but over the year’s owner-occupied 2-4 unit buildings, condominiums and even some modular-type homes were added to the program.
WHAT DO THE NEW FHA MODERNIZATION ACT CHANGES MEAN?
It means that for certain seniors who have wanted to get a reverse mortgage to pay off their older, higher loan-to-value mortgages, but were a bit short of the equity to qualify (or would have to have come to the settlement table with cash), this problem may now be solved. Also, people with higher value homes will receive larger loans, or credit lines. In addition, the lender origination fee has been reduced and is also effective now.
There had been hope that there would be a limit of $625,000 for high-cost areas, but according to sources involved in the negotiations, just how that would be done created very complicated and uneven solutions.
So, the $417,000 was settled on as the final number.
Several other changes mandated by Congress for changes in the Reverse Mortgage are still forthcoming – such as being able to use the Reverse Mortgage for purchases, instead of only refinances; and including Co-op’s in the program.
These changes will be announced when details have been worked out. Will there ever be a differing high-cost area limit? That remains to be seen over time.
To begin with it depends on where you live. Here in Northern Virginia, and Washington, D.C. the old county FHA HECM (Reverse Mortgage) limits ranged from a high of $362,790 down to a low of $264,100.
Below are a few examples; they are based on a couple aged 70, who own a $450,000 home with interest rates between 4.5% and 5.5%. These are examples only, and to see what you would might qualify for:
1. If you have been living in a county (D.C., Arlington, Fairfax) where the lending limit was $362,790, you would have received $208,000-$218,000 in net proceeds (after costs, but prior to paying off your current loan, and depending on which HECM you chose). Under the new program your net proceeds would be about $281,800, giving you approximately $62,000-$69,000 more.
2. If you have been living in a county (Frederick) where the lending limit was $361,000, you would have received $206,000-$216,000 in net proceeds (after costs, but prior to paying off your current loan, and depending on which HECM you chose). Under the new program your net proceeds would be about $281,800, giving you approximately $76,000-$86,000 more.
3. If you have been living in a county where the lending limit was $290,319, (Culpeper) you would have received $165,000-$175,000 in net proceeds (after costs, but prior to paying off your current loan, and depending on which HECM you chose). Under the new program your net proceeds would be about $281,800, giving you approximately $109,000-$117,000 more.
4. If you have been living in a county (Prince George) where the lending limit was $264,100, you would have received $149,500 – $156,700 in net proceeds (after costs, but prior to paying off your current loan, and depending on which HECM you chose). Under the new program your net proceeds would be about $281,800, giving you approximately $126,000-$133,000 more.
The new limit of $417,000 is targeted to be effective on November 1, 2008. Taking a Reverse Mortgage application, doing the mandatory counseling, getting an FHA approved appraisal and setting up settlement takes about 30-45 days. So, if you have been waiting for this limit increase, or feel the reverse mortgage would be even more beneficial to you now, it’s not too early to get started.
Also if you currently have a reverse mortgage and want to se if it makes sense to refinance it and ge more of our equity in cash, or to put in a credit line, or have lifetime monthly payments, please see a reputable lender. If you refinance a reverse mortgage, the cost of the FHA Mortgage Insurance is lower, too.
If you are interested in the way a Reverse Mortgage works, please come to my blog at http://reversemortgagesnow.blogspot.com and look in the left column. Under the title Reverse Mortgage Basics you will find pages that explain how the reverse mortgage works, FAQ’s, who uses reverse mortgages, and more.
ALLEN
A new Reverse Mortgage Limit (FHA/HECM) has been announced. This new limit, a part of the FHA Modernization Act (which was part of the overall Housing & Foreclosure Rescue Bill) will be a nationwide limit – not the old county by county limit. It has been raised to $417,000.
By making the reverse mortgage one national lending amount, it will simplify things considerably for both the lender and the borrower. This is welcome news as it brings the lending limit more in line with current housing prices (in spite of the downturn of the last couple of years).
A reverse mortgage is for seniors who are 62+, own their home (with or without a mortgage), and use it as their principal residence. There are no mortgage payments; no credit, income or asset qualifying; it does not affect Social Security or Medicare; the funds are non-taxable.
Seniors may take the funds (after paying off any current mortgage) as lifetime monthly payments, a lump sum or as a credit line, or any combination. If they wish to makepayments, that is OK, too.
The mortgage is good for as long as any of the borrowers live in the property. In addition it is a non-recourse loan, meaning that the lender cannot attach other assets if the loan ever exceeds the value of the home.
If that happens, then when the house is sold FHA pays the difference to the lender. Most of the time, the loan does not reach the value of the home, and when it is sold, the seniors, or their heirs receive the difference.
Starting in April, 2007, certain members of Congress, FHA and NRMLA (National Reverse Mortgage Lenders Association) and AARP started working together to make the Reverse Mortgage loan amounts catch up to the real market prices, lower fees, enable it to be used for purchases (instead of only refinances), and to include Co-Ops in the program. Now, finally, some of these goals are in effect.
BACKGROUND OF THE REVERSE MORTGAGE
Over the years, since 1987, when President Reagan signed FHA Home Equity Conversion Mortgage (HECM) bill into law, FHA and others such as Congress, AARP, and NRMLA have worked to improve this financing instrument. For those who need to use part of the equity in their homes to get cash to cover rising living and medical costs, and, yet, have no mortgage payment, it has been a valuable program.
It was part of the overall program called “Aging in Place” because studies and polls had shown that over 85% of seniors wanted to live in their homes, and neighborhoods. Many were “house rich, but cash poor”, yet wanted to stay where their friends and relatives were, and where they had raised their children.
Due to the rise in home prices, even downsizing was often over their financial means since their home price, less their mortgage didn’t leave enough to buy smaller place close to the old neighborhood, and smaller incomes did not allow them to qualify for a regular mortgage to make up the difference.
They also desired to retain as much of their independence for as long as possible. When they got sick, they wanted to invite home-care workers in, rather than going to an assisted living facility or other care facility. Sociological studies have shown the health of the elderly and the quality of neighborhoods is enhanced by keeping people of all ages in a neighborhood.
Prior to the government getting involved in the reverse mortgage program, some unscrupulous brokers had taken advantage of seniors by going on title and sharing in the homes’ appreciation, or steering seniors with new cash from their reverse mortgages into unsafe, irresponsible investments that made the broker more money – but punished the seniors.
Often, seniors, especially those who were older did not understand, nor have the details of the reverse mortgage explained to them. Some even lost their homes. And, today, while these practices are minimal, the rumors persist.
Those old practices have been curtailed by requiring mandatory counseling by HUD approved counselors, and required disclosure forms in the loan package – and by constant encouragement by professional lenders to have the seniors bring a relative, advisor, attorney or trusted friend with them when applying and closing a reverse mortgage.
Now, new laws and enforcement have all but stopped these practices – and further new laws passed to close any loopholes.
From time to FHA reviews the program. For instance, when the program first started, only detached, single family homes were included, but over the year’s owner-occupied 2-4 unit buildings, condominiums and even some modular-type homes were added to the program.
WHAT DO THE NEW FHA MODERNIZATION ACT CHANGES MEAN?
It means that for certain seniors who have wanted to get a reverse mortgage to pay off their older, higher loan-to-value mortgages, but were a bit short of the equity to qualify (or would have to have come to the settlement table with cash), this problem may now be solved. Also, people with higher value homes will receive larger loans, or credit lines. In addition, the lender origination fee has been reduced and is also effective now.
There had been hope that there would be a limit of $625,000 for high-cost areas, but according to sources involved in the negotiations, just how that would be done created very complicated and uneven solutions.
So, the $417,000 was settled on as the final number.
Several other changes mandated by Congress for changes in the Reverse Mortgage are still forthcoming – such as being able to use the Reverse Mortgage for purchases, instead of only refinances; and including Co-op’s in the program.
These changes will be announced when details have been worked out. Will there ever be a differing high-cost area limit? That remains to be seen over time.
To begin with it depends on where you live. Here in Northern Virginia, and Washington, D.C. the old county FHA HECM (Reverse Mortgage) limits ranged from a high of $362,790 down to a low of $264,100.
Below are a few examples; they are based on a couple aged 70, who own a $450,000 home with interest rates between 4.5% and 5.5%. These are examples only, and to see what you would might qualify for:
1. If you have been living in a county (D.C., Arlington, Fairfax) where the lending limit was $362,790, you would have received $208,000-$218,000 in net proceeds (after costs, but prior to paying off your current loan, and depending on which HECM you chose). Under the new program your net proceeds would be about $281,800, giving you approximately $62,000-$69,000 more.
2. If you have been living in a county (Frederick) where the lending limit was $361,000, you would have received $206,000-$216,000 in net proceeds (after costs, but prior to paying off your current loan, and depending on which HECM you chose). Under the new program your net proceeds would be about $281,800, giving you approximately $76,000-$86,000 more.
3. If you have been living in a county where the lending limit was $290,319, (Culpeper) you would have received $165,000-$175,000 in net proceeds (after costs, but prior to paying off your current loan, and depending on which HECM you chose). Under the new program your net proceeds would be about $281,800, giving you approximately $109,000-$117,000 more.
4. If you have been living in a county (Prince George) where the lending limit was $264,100, you would have received $149,500 – $156,700 in net proceeds (after costs, but prior to paying off your current loan, and depending on which HECM you chose). Under the new program your net proceeds would be about $281,800, giving you approximately $126,000-$133,000 more.
The new limit of $417,000 is targeted to be effective on November 1, 2008. Taking a Reverse Mortgage application, doing the mandatory counseling, getting an FHA approved appraisal and setting up settlement takes about 30-45 days. So, if you have been waiting for this limit increase, or feel the reverse mortgage would be even more beneficial to you now, it’s not too early to get started.
Also if you currently have a reverse mortgage and want to se if it makes sense to refinance it and ge more of our equity in cash, or to put in a credit line, or have lifetime monthly payments, please see a reputable lender. If you refinance a reverse mortgage, the cost of the FHA Mortgage Insurance is lower, too.
If you are interested in the way a Reverse Mortgage works, please come to my blog at http://reversemortgagesnow.blogspot.com and look in the left column. Under the title Reverse Mortgage Basics you will find pages that explain how the reverse mortgage works, FAQ’s, who uses reverse mortgages, and more.
ALLEN
Mar
8
You Can Get A Mortgage After Bankruptcy
Filed Under Mortgage | Leave a Comment
Ken Charnly asked:
It is possible to obtain a mortgage after bankruptcy. In fact, it may be easier to get a mortgage after bankruptcy than other forms of credit. Many prospective homeowners who have a bankruptcy on their credit jump onto a high rate home loan. However, if you can wait 24 months after you case has closed you can usually qualify for an FHA loan.
When you get a mortgage after bankruptcy, you should be very careful about the cost of the house you are purchasing. A house payment that is too big may be just a recipe for another bankruptcy. If you have already been through a bankruptcy you know how hard it is to try to make ends meet when they don’t.
A mortgage payment that leaves you overextended may mean you will not have money for other things, such as retirement, college funds, vacations and emergency purchases. It can also leave you vulnerable to another bankruptcy and foreclosure. You should not rely upon your mortgage loan officer or real estate agent to guide you into an affordable purchase.
Getting a mortgage is your decision and the right decision will help keep you away from a second bankruptcy. Do not be pushed into buying more of a house than you can really afford, it is your finances and it is you who will be obligated to make the payments.
When you are obtaining a mortgage after a bankruptcy, you should keep three things in mind: the lending industry, inflation and the two income couples.
* The lending industry of our parent’s generation is gone. Years ago it was hard to get a mortgage. Today, most anyone can obtain a mortgage and lenders will give you a loan even if they know it will trash your finances.
* Inflation is on the rise and income is not.
* You should not base the price of the house you are purchasing on two incomes. If one of the breadwinners in the family became ill, what would you do? Purchase a house that is affordable if only one of the individuals in a couple were working.
MARION
It is possible to obtain a mortgage after bankruptcy. In fact, it may be easier to get a mortgage after bankruptcy than other forms of credit. Many prospective homeowners who have a bankruptcy on their credit jump onto a high rate home loan. However, if you can wait 24 months after you case has closed you can usually qualify for an FHA loan.
When you get a mortgage after bankruptcy, you should be very careful about the cost of the house you are purchasing. A house payment that is too big may be just a recipe for another bankruptcy. If you have already been through a bankruptcy you know how hard it is to try to make ends meet when they don’t.
A mortgage payment that leaves you overextended may mean you will not have money for other things, such as retirement, college funds, vacations and emergency purchases. It can also leave you vulnerable to another bankruptcy and foreclosure. You should not rely upon your mortgage loan officer or real estate agent to guide you into an affordable purchase.
Getting a mortgage is your decision and the right decision will help keep you away from a second bankruptcy. Do not be pushed into buying more of a house than you can really afford, it is your finances and it is you who will be obligated to make the payments.
When you are obtaining a mortgage after a bankruptcy, you should keep three things in mind: the lending industry, inflation and the two income couples.
* The lending industry of our parent’s generation is gone. Years ago it was hard to get a mortgage. Today, most anyone can obtain a mortgage and lenders will give you a loan even if they know it will trash your finances.
* Inflation is on the rise and income is not.
* You should not base the price of the house you are purchasing on two incomes. If one of the breadwinners in the family became ill, what would you do? Purchase a house that is affordable if only one of the individuals in a couple were working.
MARION
Mar
7
When Looking For A Mortgage For Property Development Use The Experience Of A Broker
Filed Under Finance | Leave a Comment
Sean Horton asked:
When looking for a mortgage for property development and want the cheapest rates of interest then use the experience of a broker. A broker will be able to work alongside you from the very start to the end of your venture whether you are looking for a commercial or residential development loan. While they are able to search the whole of the market place which you do not have access to, for the majority of time they will know from past experience which lenders are most suited to your particular needs.
A mortgage for property development will be tailored to the specific needs of the individual. This means your experience in property development will be taken into account when it comes to the rate of interest you will pay; typically you can expect to be offered a rate of around 1.5% to 2.5%. Not only is experience taken into account but also the proposed plans for the mortgage and the sector at that time.
Getting a lender to finance your project 100% is extremely difficult. The majority will offer 70% to 75% and this will be based on the size and type of project, the assessment of the property and what you intend to do with it. If you have a lot of experience in the development sector and can show success in the past then a broker may be able to find you 100% when looking for a mortgage for property development.
One of the most important points that all property developers should remember is to wait for financing until they have got all the necessary planning permission. A lender will want to see that you have clearance in your proposal and very few will lend you any money if you are waiting for permission to go through. By choosing to look for financing without it you could be wasting your time and that of the broker.
When it comes to the term for the mortgage then this can be anything from 1 year to several years. Again the size of the project will be taken into account. A large project that needs hundreds of thousands of pounds would probably be taken over 20 years plus and be taken on as an interest only mortgage. A property development mortgage can be taken as either a repayment or interest only. There are advantages and disadvantages to both.
The interest only mortgage will come with cheaper payments each month. However the repayments will only be taken off the interest that occurs on the capitol. This means that when you have paid the full term of the mortgage the capital will still be outstanding and you will have to pay this off in full. Most lenders will want to see proof you have the money to do this before they will agree to the mortgage.
If you take the mortgage on as a repayment then the monthly repayments will be dearer. However the advantage over the interest only is that you will repay both the capitol and interest during the term. If you need help when choosing a mortgage for property development then a specialist website will offer this by way of articles and FAQs.
BLAINE
When looking for a mortgage for property development and want the cheapest rates of interest then use the experience of a broker. A broker will be able to work alongside you from the very start to the end of your venture whether you are looking for a commercial or residential development loan. While they are able to search the whole of the market place which you do not have access to, for the majority of time they will know from past experience which lenders are most suited to your particular needs.
A mortgage for property development will be tailored to the specific needs of the individual. This means your experience in property development will be taken into account when it comes to the rate of interest you will pay; typically you can expect to be offered a rate of around 1.5% to 2.5%. Not only is experience taken into account but also the proposed plans for the mortgage and the sector at that time.
Getting a lender to finance your project 100% is extremely difficult. The majority will offer 70% to 75% and this will be based on the size and type of project, the assessment of the property and what you intend to do with it. If you have a lot of experience in the development sector and can show success in the past then a broker may be able to find you 100% when looking for a mortgage for property development.
One of the most important points that all property developers should remember is to wait for financing until they have got all the necessary planning permission. A lender will want to see that you have clearance in your proposal and very few will lend you any money if you are waiting for permission to go through. By choosing to look for financing without it you could be wasting your time and that of the broker.
When it comes to the term for the mortgage then this can be anything from 1 year to several years. Again the size of the project will be taken into account. A large project that needs hundreds of thousands of pounds would probably be taken over 20 years plus and be taken on as an interest only mortgage. A property development mortgage can be taken as either a repayment or interest only. There are advantages and disadvantages to both.
The interest only mortgage will come with cheaper payments each month. However the repayments will only be taken off the interest that occurs on the capitol. This means that when you have paid the full term of the mortgage the capital will still be outstanding and you will have to pay this off in full. Most lenders will want to see proof you have the money to do this before they will agree to the mortgage.
If you take the mortgage on as a repayment then the monthly repayments will be dearer. However the advantage over the interest only is that you will repay both the capitol and interest during the term. If you need help when choosing a mortgage for property development then a specialist website will offer this by way of articles and FAQs.
BLAINE
Mar
2
Bill Gatton asked:
People who work in the lending industry know all about home loan modifications, but homeowners – the very people who stand to benefit the most from this process – typically know nothing about it at all. The following FAQ lays out the basic facts behind this option and can help mortgage holders make an informed decision about whether or not a modification is a good option for them.
1.) What does it mean when you modify a loan?
When you enter a loan modification agreement, you and your lender agree on changes to the terms of how you will repay it, typically by agreeing to lengthen the period of time you have to pay back the money you borrowed. For example, a 15-year loan might be turned into a 20-year loan. You still have to repay the same amount of money – plus interest – but you have more time to pay, meaning that each of your monthly payments will be smaller. Loan modifications are one way that financial institutions can make it easier for mortgage holders beset by financial difficulties to stay in their homes.
2) How does a homeowner benefit from loan modification?
Modification can reduce the size of your monthly mortgage payment. Obviously, that adjustment can be crucial to your ability to keep your home if you lose your job or experience other financial distress. A typical restructuring gives you an additional five years to pay off your mortgage. It may also be possible to re-negotiate your borrowed advance to reduce your interest rate.
3) Is loan modification the same thing as refinancing?
No. When you refinance a loan, you are in essence retiring – paying off – your original loan with money you get by taking out a second loan. But when you modify it, you keep the original loan but change some of the repayment terms. Refinancing can help you save tens of thousands of dollars on the lifetime cost of your home, but you need a good credit record and reliable income to qualify for the second borrowed amount. Loan modification, by contrast, is an option for homeowners who are under financial duress and who would have difficulty qualifying for refinancing.
4) My credit score isn’t the best. What are my chances of getting a loan modification?
You can have a less-than-perfect credit history and still qualify for a loans modification, although you may have to work harder to get your lender to agree to it. The companies that broker the modification agreements will be looking at different things to decide whether you’re a good bet for a modification or not. These companies will certainly look at whether you’ve been paying your mortgage on time in the past. But they also understand that people may going through hard times for reasons that are beyond their control, such as losing a job or seeing their hours or compensation cut. You won’t necessarily get the same sympathy if you apply to refinance.
5) I ‘m falling behind on my mortgage payments and am terrified of losing my home. Can a loan modification prevent that?
Here, modifying might keep you from having to default on your mortgage by making your monthly payments smaller and easier to handle on a reduced income. It’s important to understand, though, that modifying a loan does not mean taking it off the books. You will still have to repay your lender the amount of money you borrowed, plus interest. You should make sure that you understand what your financial obligations would be under the terms of a loan modification before you agree to one.
6) Where can I find out more about getting a loan modification?
There are public agencies that help homeowners figure out whether a loan modification is the right option for them and advise them on how to secure modifications. There are also private companies that specialize in negotiating these type deals.
ANTHONY
People who work in the lending industry know all about home loan modifications, but homeowners – the very people who stand to benefit the most from this process – typically know nothing about it at all. The following FAQ lays out the basic facts behind this option and can help mortgage holders make an informed decision about whether or not a modification is a good option for them.
1.) What does it mean when you modify a loan?
When you enter a loan modification agreement, you and your lender agree on changes to the terms of how you will repay it, typically by agreeing to lengthen the period of time you have to pay back the money you borrowed. For example, a 15-year loan might be turned into a 20-year loan. You still have to repay the same amount of money – plus interest – but you have more time to pay, meaning that each of your monthly payments will be smaller. Loan modifications are one way that financial institutions can make it easier for mortgage holders beset by financial difficulties to stay in their homes.
2) How does a homeowner benefit from loan modification?
Modification can reduce the size of your monthly mortgage payment. Obviously, that adjustment can be crucial to your ability to keep your home if you lose your job or experience other financial distress. A typical restructuring gives you an additional five years to pay off your mortgage. It may also be possible to re-negotiate your borrowed advance to reduce your interest rate.
3) Is loan modification the same thing as refinancing?
No. When you refinance a loan, you are in essence retiring – paying off – your original loan with money you get by taking out a second loan. But when you modify it, you keep the original loan but change some of the repayment terms. Refinancing can help you save tens of thousands of dollars on the lifetime cost of your home, but you need a good credit record and reliable income to qualify for the second borrowed amount. Loan modification, by contrast, is an option for homeowners who are under financial duress and who would have difficulty qualifying for refinancing.
4) My credit score isn’t the best. What are my chances of getting a loan modification?
You can have a less-than-perfect credit history and still qualify for a loans modification, although you may have to work harder to get your lender to agree to it. The companies that broker the modification agreements will be looking at different things to decide whether you’re a good bet for a modification or not. These companies will certainly look at whether you’ve been paying your mortgage on time in the past. But they also understand that people may going through hard times for reasons that are beyond their control, such as losing a job or seeing their hours or compensation cut. You won’t necessarily get the same sympathy if you apply to refinance.
5) I ‘m falling behind on my mortgage payments and am terrified of losing my home. Can a loan modification prevent that?
Here, modifying might keep you from having to default on your mortgage by making your monthly payments smaller and easier to handle on a reduced income. It’s important to understand, though, that modifying a loan does not mean taking it off the books. You will still have to repay your lender the amount of money you borrowed, plus interest. You should make sure that you understand what your financial obligations would be under the terms of a loan modification before you agree to one.
6) Where can I find out more about getting a loan modification?
There are public agencies that help homeowners figure out whether a loan modification is the right option for them and advise them on how to secure modifications. There are also private companies that specialize in negotiating these type deals.
ANTHONY
Mar
2
Cash Back Mortgage Refinancing
Filed Under Mortgage | Leave a Comment
M Petrone asked:
Are you thinking of getting a home equity loan but have less then favorable mortgage terms, a cash out refinance might be a good solution. This method, allows you to utilize the cash value of your homes equity, while receiving the added bonus of having a lower monthly payment.
The mortgage you have been paying on is a source of instantly available cash that can be used by you in exchange for some of the equity you have built up (lets you get some cash from the increasing home value of your current home, without having to sell it). As far as the easiest way to acquire a sizable amount of instant cash, a cash out refinance is often a great low cost, solution of using your homes equity. The advantages of a cash back refinance are often greater then other options such as a home equity loan, second mortgage, or extended lines of credit.
The Basics Of A Cash Out Mortgage Refinance
All refinancing is, is taking a new loan with better rates, and for an amount greater than your currently owe. For example. If you owe $50,000 on a $75,000 home and refinance into a $65,000 loan, you can use that $15,000 difference for whatever you want. This is better due to the fact that you still only have 1 mortgage on your home. Also, theres a good chance your credit has improved since owning a home, therefore you will qualify for better rates.
How much can I borrow with a cash out mortgage refinance?
Typically, you can borrow up to 100% of your homes value. There are even some lenders in the market who will give you more than that. This, however is not recommended. You are risking losing your house for some quick cash, You need to weigh all the risks before refinancing with a cash back option.
Make sure to shop around for the best mortgage rates and terms.
If you decided a cash back refinance on your mortgage is right for you, it is verysmart to shop your mortgage terms around to a variety of lenders. Often you will find a much better rate or terms with one lender over another. Internet ads for refinancing are a good way to start this process. Shopping for quotes is easy these days.
-M Petrone
-Refinancing FAQ Advice
ROBERTO
Are you thinking of getting a home equity loan but have less then favorable mortgage terms, a cash out refinance might be a good solution. This method, allows you to utilize the cash value of your homes equity, while receiving the added bonus of having a lower monthly payment.
The mortgage you have been paying on is a source of instantly available cash that can be used by you in exchange for some of the equity you have built up (lets you get some cash from the increasing home value of your current home, without having to sell it). As far as the easiest way to acquire a sizable amount of instant cash, a cash out refinance is often a great low cost, solution of using your homes equity. The advantages of a cash back refinance are often greater then other options such as a home equity loan, second mortgage, or extended lines of credit.
The Basics Of A Cash Out Mortgage Refinance
All refinancing is, is taking a new loan with better rates, and for an amount greater than your currently owe. For example. If you owe $50,000 on a $75,000 home and refinance into a $65,000 loan, you can use that $15,000 difference for whatever you want. This is better due to the fact that you still only have 1 mortgage on your home. Also, theres a good chance your credit has improved since owning a home, therefore you will qualify for better rates.
How much can I borrow with a cash out mortgage refinance?
Typically, you can borrow up to 100% of your homes value. There are even some lenders in the market who will give you more than that. This, however is not recommended. You are risking losing your house for some quick cash, You need to weigh all the risks before refinancing with a cash back option.
Make sure to shop around for the best mortgage rates and terms.
If you decided a cash back refinance on your mortgage is right for you, it is verysmart to shop your mortgage terms around to a variety of lenders. Often you will find a much better rate or terms with one lender over another. Internet ads for refinancing are a good way to start this process. Shopping for quotes is easy these days.
-M Petrone
-Refinancing FAQ Advice
ROBERTO