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Posts Tagged ‘mortgage’

The FHA Streamline Refinance is a mortgage program designed to reward borrowers with existing Federal Housing Association mortgages by making the refinance process simple, quick and painless. However, in 2011 increases in the FHA mortgage insurance rates and new requirements for particular benefits to the borrower in the FHA guidelines caused the program to become almost impossible for homeowners to qualify for. These problems are being corrected in 2012.

To understand how the FHA streamline refinance works, you need to know a little bit of the behind the scenes workings of the mortgage business. In order to encourage lenders to make loans to more borrowers, the FHA program was created not to actually lend money, but to insure mortgages made by lenders. In other words, FHA is an insurance program for lenders. When a loan is underwritten according to FHA guidelines by an FHA approved lender, FHA guarantees the lender that if the borrower defaults then FHA will pay off the loan.

This encourages lenders to make loans which they would not approve otherwise. Once FHA has insured a loan, FHA is already on the hook to pay off the loan if the borrower defaults. As long as a borrower has already been making their loan payments on time, when market interest rates go down it is in FHA’s best interest to make it easy for borrowers to get the lowest payments possible.

Since real estate values have collapsed, many homeowners have found refinancing to be impossible since their homes are worth substantially less than the price they originally paid for the home. This is not a problem for homeowners eligible for the FHA streamline refinance. No appraisal is required for this loan. Therefore, it doesn’t matter if your home is worth half the price you paid for it. FHA allows you to refinance based on your original purchase price.

In addition, FHA does not require verification of your job, your income or your credit score. FHA assumes that if you are making your mortgage payments on time already, you will be capable of making a lower mortgage payment once you refinance.

There are, however, still some qualifying standards:

• You must have a perfect payment history on your loan for the last 12 months and you must be current on your mortgage now.

• You must have made at least 6 payments on your current mortgage and you must wait at least 210 days from the time you closed your present mortgage before you apply to refinance.

• You must be lowering your total mortgage payment by 5 percent or more, or you must be converting from an adjustable rate mortgage to a fixed rate mortgage. Because FHA mortgage insurance rates were raised in 2011, this “net tangible benefit” requirement made it impossible for many homeowners to use the streamline refinance because although they obtained a lower interest rate, higher mortgage insurance costs prevented their payment from going down. This problem has been corrected in 2012.

• Your loan balance cannot be increased to cover closing costs on your new loan.

FHA loans require two different types of mortgage insurance premiums. The first is an upfront mortgage insurance premium (UFMIP) which is paid at closing. This amount is usually simply added to your FHA loan and financed. The second type of FHA mortgage insurance premium is the annual premium due each year. This amount is divided into 12 equal installments each year and added to your payments.

Mortgage insurance rates for standard FHA mortgages are being increased again in 2012. Because of this increase, FHA is now instituting a different set of mortgage insurance premiums for streamline refinances. This new premium schedule provides a substantial mortgage insurance discount for loans which were originally insured when mortgage insurance premiums were lower.

This makes it possible for those borrowers to refinance to lower interest rates without having the new insurance premiums actually increase their payments. If you have attempted to obtain an FHA Streamline Refinance in 2011 and you were prevented from qualifying by the net tangible benefit requirements, you should contact your lender to see if the new guidelines will allow you to refinance now.

When purchasing a home, you have the option of buying it outright, or you can get a mortgage from a lender.

Over ninety-five percent of home buyers choose to get a mortgage for their home, especially due to the high costs in our society today.

A mortgage is simply a loan that used to purchase some sort of property that is known to increase in market value over the future.

The mortgage rate will signal the cost of borrowing the money from the lender. If you take a look at the amortization schedule for the payment of your mortgage, you will see that much of the payments from the first few years go towards paying down the interest incurred.

Throughout this context, we will be looking at the various ways you can save money on your mortgage by paying the lowest amount of interest in the long run. The most common method is to make the mortgage payments come up even more frequently. If you talk to a mortgage broker, you will be able to learn more about how this concept really works.

When you make weekly payments on your mortgage, you will be paying much less in the long run. If your monthly mortgage payment is eight hundred dollars, and you switch to a weekly payment schedule, you will be only required to pay one hundred and ninety dollars, which will save you ten dollars every month.

A huge portion of your mortgage payment is put down towards the interest and not towards the principal. Your goal should be to pay down the principle as soon as possible. Keeping an open mortgage will allow you to make extra payments without getting charged a penalty fee. At the end of the year, you will have the option to make a lump sum payment on your mortgage.

This lump sum payment will be paid towards the principle, which is great as you will be decreasing the overall interest paid for the mortgage. Paying down as little as ten thousand dollars a year would save you over five thousand dollars in the long run.

You would be able to save the most amount of money when you are first getting your mortgage approved by the lender. It is important that you use a mortgage broker when getting a mortgage, as they could help you get a better mortgage rate. Brokers and advisors have access to market information and would be able to find you the best rates in town, without you having to spend time and money.

Brokers do not work for a specific lender, so regardless of which lender they select, they are still making their money. Going straight to a lender would not technically give you the best rate, so you will be paying more money in the long run for interest payments. Being able to get the lowest possible mortgage rate and taking advantage of special promotions is the smart thing to do.

Have you fallen behind on your monthly mortgage payments or do you think you will not be able to make the future mortgage payments on the home?.

Regardless of what your current situation is, you have a number of options to choose from which will help you steer away from a foreclosure.

The one thing you have to keep in mind is that you need to take action right away. If you have fallen behind on your mortgage payments, you should do something right after the first missed payment. If you keep on waiting expecting some solution would come about, you will just be making things worse in the short run.

As a rule of thumb, it is always advised to get a line of credit through your lender which will be used in the event that you do not have enough money to pay down your mortgage payment. Some people choose to have a line of credit solution which will cover at least six to ten months of the mortgage payments. If for any financial reasons, you are not able to get approved for a line of credit, you do have some other forms of options. In the first two to three years of purchasing your home, it should increase in overall value. The extra value is known as the equity in the home, and using this equity you can get a line of credit. The risk is just greater, now that you have two loans on one home.

If you have no source of funds to finance the mortgage payment, the best option is to get in touch with your lender ASAP. The worst thing you can do is not get in touch with your lender, as it will leave a bad impression of you on them. By getting in contact with your lender, it would tell them that you are taking initiative to actually resolve this issue. The financial institution will reanalyze your financial situation and come up with a new payment arrangement that works best for you. For a vast number of people heading for a foreclosure, this new payment arrangement has helped them get out of the financial troubles.

Before you get into a really bad financial situation, you can simply refinance your home for a second mortgage. This second mortgage would give an excess of funds, which will resolve your mortgage crisis. A mortgage refinancing option is preferred by many people as it allows them to get back on track with their income generating efforts. The other option that mortgage brokers advise is a mortgage loan modification. A mortgage loan modification will change the agreements on your current mortgage such as the interest rate, payment frequency and overall life-cycle. In essence, the lender is trying to reduce your mortgage payments in an effort to help you catch up on missed payments.

The last option is to sell your home and move out of the home. However, if you owe money on the home, you will not be able to sell it. In such cases, you can arrange for a small loan from friends/relatives which would help you catch up on payments. The next step is to sell the home for lower than the advertised market price, as it will help sell it quickly. Once the home is sold, the bank will be paid off and you just have a small loan to pay off to your friends or relatives. The one thing to remember is that, you should never wait for a solution, but rather make the right decision and try to fix the issue.

There are various things you need to consider when purchasing a home and one of the most important issues is getting approved for a mortgage.

You may think that you will get approved for a mortgage, but after the lender analyzes your financial standing, he/she could deny your application for one or more reasons. In order to help home buyers with the mortgage process, there are mortgage brokers who work privately and not for a specific lender.

The goal of the mortgage broker is to help you find the best mortgage rates and plans in the area. As the home buyer, you could certainly do this on your own, but it will not be as resourceful as the mortgage broker.

How Could a Mortgage Broker Help You?

The internet is the one place many people go to for help regarding real estate and mortgage problems. With the level of internet based innovations, it is now possible to apply for and get pre-approved for a mortgage from the comfort of your home. Although these factors may seem like benefits to you, there are far more advantageous benefits when you deal with a qualified mortgage broker. A mortgage broker will have an extensive knowledge on the industry and the various lenders available in your region. The mortgage market is quite large, with the vast number of real estate sales and lenders, and as a result, there are changes occurring every day.

Some lenders offer promotions and special offerings and mortgage brokers are one of the first people to know about it. Mortgage brokers and advisors have access to databases with rates from all the major lenders you could possibly think of. Depending on your situation, the mortgage broker will know exactly which lender to go to for the highest rate of approval.

All these factors are quite beneficial to you as a new home buyer. Mortgage advisors have a ton of experience in the field, so based on past transactions, they will know exactly what needs to be done and when it needs to be done. With their professional connection with lenders and financial institutions, you could get access to information and rates that would otherwise not be provided.

When you approach a lender on your own, you are not technically getting the best rate in town. There are a vast number of firms offering mortgages, so only mortgage brokers will be able to better compare mortgage rates for you. Another advantage is that mortgage brokers give lenders a ton of mass business. When the mortgage broker gives the lender a lot of qualified business, he/she will receive a preferred rate for their customers.

In essence, you will be getting a better interest rate as opposed to if you went directly to the same lender. As you can see, a mortgage broker will save you a time and money. Whether you are buying a small property or large investment property, a mortgage broker is the right way to go.

Do you have debt that you need consolidating, or to reduce the investment that you need to finance your first mortgage? A second mortgage could be an option for you. However, second mortgages cone with certain consequences. It is best to learn about them, and what they entail before you go searching for one.

What is a second mortgage?

Basically, the name is quite self-explanatory. A second mortgage is an additional loan that you can take which supplements your first loan. A second mortgage can be used on any kind of property. This article will focus on second mortgages that affect houses. Its quite common for people to not even know they are eligible for a second mortgage.

It doesn’t mean you can be irresponsible with your mortgage

A second mortgage doesn’t mean you can forget about responsibility or fail to pay your mortgage and hope for a second one. This isn’t the case at all. If you struggle to meet the payments of your first mortgage, it’s unlikely that the lender will provide you with a second one. Banks are in it to make money after all. These days, due to the economic situation, lenders don’t even touch people who will be unable to pay off their current debt.
If you’re able to show that you are responsible with your original loan, obtaining a second one could prove an excellent way for you to consolidate debt. It could also allow you to finance upgrades to your property.

Second mortgages have high interest rates

It is important to note that any additional loan is subordinate to the primary loan. If you default on your home financing, any foreclosure will go straight to paying off debt owed on the first mortgage, before the second one. Therefore, for lenders, a second mortgage is a much higher risk. As a result of this, you can be expected to pay higher rates of interest on these second loans, even if you have a good credit score. This then means that you’ll be paying back more each month because of the increased interest rates.

It is important not to forget about the option of a second mortgage, but make sure that you understand what you are putting yourself into before committing to anything. Remember that a second mortgage will have a higher rate of interest and a riskier investment.