Andre Savoie asked:




Mortgage Takeover of Fannie/Freddie: Good For Borrowers?

Government officials dropped a bombshell last week when they announced the seizure of mortgage giants Fannie Mae and Freddie Mac. Wall Street rallied, interest rates dropped and the politicians and pundits are claiming this will mark the end of the suffering brought on by the mortgage mess.

This is good news, right?

In the short term yes but everyone should stop and consider what the long term implications are of the government running the mortgage industry.

What’s Really Going On?

In a nutshell – Uncle Sam just co-signed for all of our loans.

Officials announced the move would involve placing these mortgage operations into a “government conservatorship” in hopes of stabilizing the housing / credit markets. In a conservatorship, like bankruptcy, common stockholders are expected to lose their investments.

Essentially this is the equivalent of a giant “bail out.” Investors have been scared to death of a worsening “meltdown” and this move basically puts the governments money (your and my money) behind the mortgage industry to make sure it doesn’t fall down.

With the housing and credit markets continuing to slump and with fears of the “meltdown” getting worse this move was the governments best bet to shore up markets.

Impact For Borrowers:

Good News:

1. Lower interest rates in the short haul. Who doesn’t like lower rates?
2. Investors get a shot of confidence. Now that Uncle Sam is the co-signer investors feel more confident that the mortgage backed debts will remain solvent.
3. The government owns your loan. How bad can that be?

Bad News:

1. The government owns our loan – uh, oh. Ever tried negotiating with the IRS? While the government has had FHA, VA and other programs it does not have experience managing the type of operations that Fannie and Freddie run.
2. Future uncertainty about management / guidelines. Our inside sources are telling us that the future of guidelines……
3. Long term implications…..

What Should Borrowers Do?

Borrowers should be looking to capitalize on the temporary drop in rates and stabilization of credit markets. In the week since the announcements rates have steadily declines as investors are feeling the relief of the government bailout.

Our suggestions:

1. Make sure your mortgage in process can drop down to the new rates
2. Make sure your loan officer is fully educated about the changes and how it might impact your loan.
3. Check your Good Faith Estimate (GFE) and Truth in Lending (TIL) to make sure your mortgage company is not “up selling” your loan to take advantage of the lower rates to make a higher commission.

What Does the Future Hold?

We believe that the housing market recovery will probably determine when the credit markets regain their health. Why? Because decreasing home values resulted in the inability of homeowners to sell or refinance their house to get out of financial trouble – which is how this mortgage issue all got started.

Here are some recent facts:

Maybe the housing marketing isn’t so bad in many areas. The Office of Federal Housing Enterprise Oversight’s (OFHEO) House Price Index (HPI) reported in May that 35 states saw a positive home value price change in the first quarter of 2008. In addition, 164 MSAs showed positive first quarter appreciation when compared to the same quarter of 2007.

California, Florida, Nevada, and Arizona are still the largest statistical problem areas for home prices. Industry experts acknowledge that these markets were the most speculative during the 2000 – 2005 mortgage mayhem. And because the values in these areas are very high relative to the rest of the country it has a larger impact on the overall numbers.

Just because four states are still falling, and 11 other states continue to try and stabilize doesn’t mean the entire market will continue to take the plunge. According to PMI Mortgage Insurance Company’s “Economic & Real Estate Trends” recent report, almost 68% of the nation’s 322 remaining MSAs experienced positive appreciation everywhere other than California, Florida, Nevada, and Arizona.

So while no one has a crystal ball it appears things are not quite as bad as the media would have us believe. If the credit markets can begin to stabilize and home prices hold steady we may yet see the end of this “mortgage crisis.”

Joe

Ryan asked:


I am a graduate student nearing graduation and have a heafty student loan around 160k. In addition, my credit score is poor because of a few missed payments. I would like to talk with someone who can give me unbiased advice on how to tackle my student loans as well as provide insight on possibly buying a house, consolidating my debt and raising my credit score.

Tamara

Leslie Gonzalez asked:




In the past, the mortgage loan originator never used to get a license. This was because there was no need for them to have the license. But those days are gone. Now the people realize that they are taking such a huge mortgage which is going to happen only once in the whole lifespan. Thus they definitely require the mortgage loan originator. However the government has also understood the situation and hence they are now asking them about the license. It is now compulsory that you as an originator should have the license. However you will have to follow some steps in order to get the license.

Some of the requirements are as follows:

1. The first thing which you will have to make sure of is related to education hours. You need to make certain that you have at least 20 hours training period under your belt. This is definitely very important. Similarly you will also find out that this can be done through regular classes as well as through online training. However, the regular courses are supposed to be far better than the online courses.

2. The second point is related to the exam. Most of the state conduct the state exams. They are definitely required to pass this exam and this is certainly a must for you. You need to realize this fact. You will certainly find out that the loan originator are quite a great professionals and if you want to be one then you will have to pass the state exam. Passing the state exam is definitely not an easy task and you need to realize this fact. Only then you will come to know about the work which you will have to do. In fact if you will pass the exam then this will definitely mean that you have the right knowledge about various loan schemes.

3. When you will pass the examination then you will be required to do the internship in some company. Generally you will have to do at least 30 days of internship. You will get a certificate at the end of the course and this is very important thing for you. You will definitely find out that you are updated with knowledge as well as preparation. Once you will do all this then you will feel quite comfortable with all kinds of loan mortgages.

Thus after doing all this you will become the mortgage loan originator.

Ron

Dispirited asked:


I am 20 yrs old I bought a duplex 4 months ago for 147,600 its appraised at 148,000 so I got it at top dollar. I got financing on 80/20 80%@7.5 adjustable rate (will go up in 2 years guaranteed) and 20%@10.75 fixed rate. I will be paying interest for the first 2 months. I am losing $200 on this monthly w/ tenants living there. It’s suppose to be my primary residence. Refi penalty for the 80 loan is $3600 and no penalty for 20%. So my question is I got a loan on stated income, I figured I am losing $200/month*24=4800 in 2 years interest only from my own pocket. If I refi now $3600 penalty and maybe $3000 closing cost (estimation) so that’s $6600 loss which I can live with 6600-4800=1800 difference I can live with that. But if I refi 30 yr fixed rate I have very low income i am a college student can I get possibly better rates to lower my down payment, I want to refi 0% down fixed 30yr rate is that possible? I want some advice plz I don’t want to go bankrupt in 2 yrs when rates go up!
I’v been reading lately on the internet about
the dangrous 0% down ARM loans mortgage companies
give out so easily, I thought I was just a lucky one
pft, no way, I got caught into it. But I want to keep
the property I don’t want to sell. Are my numbers correct
or am I just a bad dreamin investor wannabe? My credit
score when I got the loan was 700, I’v been paying
everything on time so it should have gotten up there
I hope I can get the fixed loan. I deeply appreciate
your advice. Thank You in advance

Ron

lookingforajob asked:


Help, my parents are in deep trouble and they need help, with our mortgage and other debt. Im doing this for my parents, because they dont speak English. They can no longer afford to pay for out house, and would like to consolidate loans/lines of credit/credit cards…are there any non profit company that can help us for some advice.

Thanks in advance

Shannon

bela429 asked:


I originally applied for a loan and was able to qualify for only 70k since then I have made a few changes such as pay off some furniture I had financed and paid off my car loan and now I am looking to try again and my dad wants to gift me his 10 acres of land he owns if I pay off 1,200 so I want to do what is best either keep the cash as a down payment if its not gonna make a difference or pay it off and hope it makes me look better to the lender? Any advice that will help me get a better chance of getting approved for a better loan will be much appreciated, Thank you! by the way I’m looking for homes in the Hesperia area
I was wondering if having the land in my name take away the chances of getting the new homeowners credit?

Derek

John Paytten asked:




Many people wonder what they can do to qualify for a home loan modification, or whether they are even eligible in the first place. Recent legislation has loosened the rules governing a home loan modification, and as long as you are staying in contact with your lender, no matter what the situation, you should have a great chance at receiving a home loan modification.

Obviously the terms of the modification all depend on the situation surrounding your personal desire to refinance, but you do have certain rights and privileges guaranteed by federal and local statutes. By being aware of these statutes and following a few simple steps you increase the strength of your position.

Here are some tips to follow in order to be accepted into a home loan modification program.

1. If you are in good standing and wish to modify your loan for the sake of lowering your monthly payment or reducing your interest rate, be sure to remind your lender of your current status. Also be prepared to deal with fees associated with the refinancing; the bank is, after all, in it to make money.

2. If you are in a negative situation, or have missed payments in the past, have a detailed record of your payments available to remind the mortgage company of the payments that you have made. Also have detailed financial records available to demonstrate your current economic hardship. ” I lost my job” is not going to cut it. They will require a detailed list of your expenses and income in order to demonstrate that you are making a good faith effort to pay your bills, and you simply cannot afford it at your current payment schedule.

3. If you received your initial mortgage at a higher rate due to poor credit be prepared to demonstrate to the company that you have not only made your initial payments on time, but that you have worked to improve your credit score and pay off your negative debt.

4. Contact government counselors. The government has provided a plethora of resources to help you in your situation. Take advantage of them.

The process is relatively simple if you are a self-advocate and know your rights.

Duane

louie d asked:


I live in CA, will the bank go after me of my wife’s unpaid mortgage, I did a quit claim in our house, I am not in the mortgage loan, Will I face any legal recourse for putting quit claim? Can I buy another house, this time more affordable. Which way should we go, foreclosure or short sale? Pls give a sound advice….

Stacy

Bradley A. Barbee asked:




Many businesses nowadays require finance to achieve their business objectives. Whenever businesses do not have the necessary funds to finance a new project like construction of a new building or acquisition of property for commercial purposes, they resort to acquiring money from lending institutions. These institutions have now become extremely cautious when it comes to lending money and they will check a number of things before they approve the loan.

Commercial mortgage lenders nowadays are very careful with whom they give their money to and they perform a number of checks to make sure they will get their money back within the time period set.

Here is a list of things they look at before approving any mortgage loan:

Your Business Character: Commercial mortgage lenders will check how well you met past credit obligations. They will check if you have paid previous loans according to the terms agreed upon. How interested you are in meeting the business objectives and goals. They will also have a look at your management quality and capabilities and check to see whether your management will be able to handle the growth of the business.

The Businesses Ability to Pay the Debt: The Lender will also check to see whether your business is capable of paying the loan according to the terms and conditions given by them. They also check the debts that you owe to other people and see whether you are able to pay off those debts. The way they check this is by looking at your financial statement. Your financial statement will give them the total of your net profits. They also see if you are able to pay off the debt in an up-market.

Value of Collateral: In the event that you business defaults in payment, the lender sells the property given as collateral. For this reason the lender checks the value of the collateral you are offering for the mortgage. The value is checked at the time of loan approval, during the period of the loan and also at the end of the term.

Current Conditions: The Commercial Mortgage Lenders will examine the current economic conditions in order determine the viability of the credit. Economic conditions can affect companies depending on the sector they are in. This is why the commercial mortgage lender will have to foresee the conditions of your business according to the future economic conditions.

Because of all these checks it is quite hard to get a commercial mortgage for business purposes. But if you already have made a plan yourself, and complete all these checks yourself and find your business project viable, you will have no problem in getting a loan for your business projects.

Diane

Paul Hockney asked:




For first time buyers the financial commitment of a house purchase is both frightening and exciting at the same time. And this is even more so if you are working in an urban area where you will end up paying a premium for even the smallest properties.

So as a first time buyer what are the things you should watch out for to make the whole house buying experience that much easier.

Do your homework

With so many lenders offering mortgages there are literally thousands of mortgage deals on offer across the UK. So it’s important that you research the market thoroughly and don’t get drawn in by all the hype and marketing you see on the TV, Online, on the side of buses etc. You should also speak with friends and relatives who have also been through the process recently to get their valuable opinion on what you should and even more importantly shouldn’t do.

Mortgage Advisor

After having done your own homework you still feel that you are no closer to deciding on which company to use for the mortgage then you should consider the help of a mortgage advisor. Although they will cost you money for the advice they also have access to 100′s more mortgage deals from across the UK. Obviously you need to find one, which is not associated with any of the lenders so they can offer you truly independent advice. They will also be able to advise you on First Time Buyer Deals which may not even be advertised by some of the main lenders in their normal marketing drives.

Decision making

Once you have all the information in front of you make sure that you ask loads of questions before making the final decision. So whether you are speaking directly with the bank or using an independent advisor make sure and be thorough with your questioning.

You should also look at the fine print. For example are there any penalties for paying off or moving your mortgage early. For example on some mortgages there may be a ‘redemption penalty’, which is enforced if you move lender within 2-5 years of taking out the mortgage. This penalty can run into

Rob K. Blake asked:




You have to understand that refinancing your mortgage can offer a lot of benefits for you as a homeowner. Unfortunately, there is scant information about refinancing which makes this option seems too intimidating. There are also some techniques that you should know in order to further cut the costs and charges of obtaining new loans. The good news is that there are practical steps that you can do right now to guarantee success in mortgage refinancing.

Immediately Improve Your Credit Score

Your credit score plays a big factor when you apply for refinancing of your home mortgage. Unfortunately, there is little you can do to immediately improve your credit score. However, there is a good method to immediately see a change in your credit score and it does not involve complicated steps.

As you may notice, your credit score may be adversely affected if you have several active credit card accounts. If you do not have a very nice credit score, your capability to get favorable refinancing terms may be affected also. What you can do is to let credit companies know that you intend to close your accounts. You will be surprised that an immediate positive change in your credit score will become more apparent. Many people are not aware of this technique. You can try it so you can improve your score and get better refinancing rates.

Check Your Credit Report after Closing Your Credit Lines

One month after you make the request to close your credit lines, it is advisable to check your credit report. You should see a special line in the report indicating that your credit lines have been closed “at customer’s request.” You should let the mortgage refinancing company know that you have personally requested the closing of the credit lines in order to get better credibility. This will have a good impact on your application for refinancing.

There are also other benefits that can be enjoyed if you check your credit report. There are times that errors can manifest in your report. Look for such errors in order to further improve the score of your credit. A better score means you could easily secure better terms for refinancing.

Avoid Private Mortgage Insurance

As much as possible, you have to avoid getting involved in private mortgage insurance. This will surface if you apply for refinancing especially if the amount of the loan is more than 80 percent of the value of your home. What you can do is to simply pay-off your credit card debts and to make improvements to your property. These steps will help your get better deals from refinancing companies.

By following these tips, you will be able to improve your prospects of getting good mortgage refinancing. These tips could help you secure lower interest rates and better terms. Exploring your options therefore can really make a big impact on your refinancing application.

Duane

Katharine Norman asked:




Mortgage refinancing can make good sense if you want to make improvements on the house, pay those college fees, or pay-down higher-interest loans. As property prices have gone up and up, homeowners often find they have more equity than they ever dreamed of when they first bought. Richard Syron, CEO and Chairman of the Federal Home Loan Mortgage Corporation — or ‘Freddie Mac’ — says “more than a dozen years of sustained growth in housing prices have turned many middle class homeowners into millionaires; put countless children through college; and made the family home the most valuable egg in the American nest”. Maybe we can’t all be millionaires but, even so, “for the typical family, home equity accounts for the bulk of their wealth,” agrees Frank Nothaft, chief economist at Freddie Mac.

It all looks good, so far. But now that you’ve started to look for that home equity loan — most likely a fixed-term second mortgage, or a line of credit — maybe you’re starting to wonder why home equity rates are generally higher than all those great first mortgage packages?
There are quite a few reasons. For a start, you’re comparing apples and oranges –they’re different breeds of loan, and the interest rates reflect the different features offered by each. But how, exactly, are those interest rates set? Frank Nothaft explains that “home equity loans are typically linked to the prime rate … many home equity loans have rates that are 1 percent or more above the prime rate” and, by comparison, “most 30-year first mortgages are typically below prime”. The interest rate for a typical home equity loan needs to take several factors into account: the risks to the lender, the duration of the loan, the flexibility offered to the borrower, and the amount of the loan in relation to the amount of equity available (referred to as the Loan to Value (LTV).

The first mortgage, of whatever kind, is just that — it’s the first lien on your property, and the first in line if you default on your loans. When you got your first mortgage you put your home up as collateral against the loan. If you can’t make the payments, the mortgage company can proceed with a collection action — in a worst-case scenario, you lose the house to pay off the loan. And, because it’s the primary loan, your first mortgage has priority in any collection action. Essentially, the mortgage company is confident that they’ll get their money back if you default. For a second mortgage, the situation’s different: whether it’s a conventional repayment mortgage or a line of credit (or any other kind of loan), it’s second in line if things go wrong. So that’s a bit more of a risk to the mortgage company, particularly if the value of your house depreciates, or you take out yet more loans.

And then there’s the time factor. The term, or duration, of a home equity loan is usually far less than that of a first mortgage. Most first mortgages are for a period of maybe 15, 20, or even 30 years. That’s because most people want to minimize their mortgage payments as much as possible, especially at the outset, and they’re in it for the long-haul. And, just think about it: while you’re making the payments, you’re paying interest, and you’re making the mortgage company money. You’re a good bet. That’s why, when it comes to first mortgages, companies compete with each other so aggressively to get your custom. And they pass that competition on to you, through lower interest rates.

A standard home equity loan is effectively a second mortgage, and can be a fixed or adjustable rate mortgage. The money is loaned in one lump sum, and payments are made over a pre-arranged duration — just like a first mortgage. But a home equity loan is typically for a short term, possibly only for a few years. Usually it’s for a specific purpose — home improvements, or paying of a debt — and the higher interest rate means most people prefer to pay it off as soon as they can, rather than mount up large amounts of interest. The mortgage company doesn’t have your custom for the long-haul, and it takes this into account when setting the interest rate.

Even so, this kind of mortgage can be far cheaper than the interest rates on credit cards or unsecured loans. As interest rates rise, pushed up by the Federal Reserve’s successive increases in the prime or ‘index’ rate, more and more borrowers are seeing the value of fixed-rate home equity options, in the 10-15 year range. Although these still have higher interest rates than first mortgages, homeowners have the best of both worlds: the comfort of knowing the rate won’t rise, and the ability to improve their quality of life by releasing the equity in their home.

With the other kind of home equity loan, the line of credit, you can draw cash whenever you want, up to your limit. When you pay money back, that credit is released again for you to use, immediately. In that sense it’s an “open account”, a bit like having a credit card, but with lower interest rates. This freedom to dip in and out of the loan can be a boon for the homeowner, who only pays interest on the amount owed, and nothing more — but it is more unpredictable, and less lucrative, for the mortgage company. So you pay that bit more for the flexibility of being able to use the loan as you wish, and that comes in the form of a higher interest rate.

But, given the ability to release your equity and use your wealth when and where you want, it can certainly pay to refinance. Don Taylor, of Bankrate.com, agrees, saying that a home equity loan, or a home equity line of credit (HELOC) can “allow you to restructure your debts or finance something that’s important to you,” and adds that both kinds of loan typically have much lower closing costs than a first mortgage.

Maurice

bruno_rs asked:


hey all,

i’m a 21 year old college student majoring in music (production/recording). i just purchased my 1st home cash/outright.
i lost my mom in 2001 when i was 13 and used the modest life insurance policy she left for me to purchase the home. after losing my mom i moved in with my grandmother and lost her in 2004 after a year long battle with cancer. she left me a 1400/mo inheritance which i have been using for my education and related expenses. this $ is from her interest in a family business and will continue uninterrupted until her siblings sell the 2 commercial buildings they own and rent out. unfortunately i am a silent partner with no voting power and/or the ability to borrow and/or cash out of my interest in the co.

i have 100% equity in this property and its TAX ACCESSED value is 200k. just before i purchased the property i bought (cash/outright) 50k of landscape equipment and will be self employed/full time in the spring of 09. my education is almost complete…1 more semester and will continue on a part time basis. at this moment i have 10 weekly customers (800/wk or 3200/mo) and am looking to increase that # to 20-25 by spring. my property will also generate income…it consists of a 4br house, 2 br cottage, 2 car garage and is zoned “village commercial”. with this zoning, there is an option to rent part or all of the property to certain types of business… pottery shop, general store, real estate office, bar/restaurant, etc. i have a couple ready to sign a contract for the cottage (1200/mo) and 2 roommates to share the house with me (600ea/mo). i also have the option to rent out a small commercial suite on the 1st floor of the house (1000/mo). my long term plan is to use this (comm) space for my professional recording studios… not ready ($).

although i do not “technically” have a declared income (yet), can i get a 100k loan using my property as collateral? moreover, can i use the rental, inheritance and landscape as income NOW, or how long do i have to wait to “technically” be considered a landlord and/or small business owner? i know i can handle this loan without any problem just with what i make right now. sad thing is… had i closed just a few months prior, it would have been “rubber stamped” by any bank and/or mortgage co. the way i found the property right up to the closing was done unconventionally… i am UNAFRAID to think and/or act out “outside of the box”. any information and/or suggestions will be greatly appreciated. hope all is well. have a good one.

Florence

Sean Horton asked:




There are many good second property mortgage offers around, that is providing you know what you are looking for and you know where to go to dig them out. By far the best way to go about getting the best deal when it comes to your second mortgage is to go with a specialist broker. A broker knows the ins and outs of second home mortgages and knows exactly where to look to get the best deal for your needs.

When it comes to getting the best second property mortgage offers then you will of course have to decide what it is you are buying the property for, the type of mortgage will differ according to the fact of if you are thinking of letting the property or are going to be using it as a holiday home for yourself.

Another difference for the two is the insurance you will need to cover your second property; if you are going to be letting it then you will need to take out landlord insurance which will cover the tenants and yourself. If going for a buy to let mortgage then you will have to meet certain requirements set out and these include making sure the property is fully furnished, it has be available to rent for at least 140 days out of the year and you must let it for 70 days within a specific period of time. Of course you can discuss this with your broker to make sure that you get the best deal on your mortgage.

Lenders will calculate the mortgage on different factors, for example if the property is going to be used as a holiday let then the lender will want to know that it is in an area that is going to draw in renters. One of the main factors taken into consideration by the lender of a holiday let mortgage is that you will be able to bring in around 130% of the mortgage from the rent. If you are going for just a second mortgage for your property then the biggest factor will of course be the amount of income that you earn.

Whichever type of property and mortgage you are going for the easiest way to get the best second property mortgage offers is by going to and taking advice from a specialist broker. While you will have to pay for the services of the broker when you take into account that they have the expertise in finding the best deals and giving the best advice you could in the long run save yourself money if you should make a huge mistake by going it alone.

Dustin

answers for people! asked:


I’m creating a debt reduction plan, and one of the questions I have is this: is it better (financially) to eliminate mortgage debt before educational loan debt? I want to pay the least amount of interest so I would think the higher interest rate (mortgage) is what I should pay. However, there are tax advantages to both mortgage debt and school loan debt, and I’m not sure if I would be missing out on better tax advantages by keeping mortgage debt until I have eliminated school loan debt.

Any advice is appreciated.

Vanessa

Jared Lee asked:




Several types of mortgage loans are being floated in the market by multiple financial institutions. However, it is advisable to have information regarding various criteria that are taken into consideration by mortgage lending firms while determining the eligibility of a borrower for a mortgage home loan. As these criteria determine the interest rate on the loan, knowledge about them is even more vital.

The most important criterion that lenders usually go for is about the repayment capability of the borrower. Credit history and FICO scores of the borrower provide ample information regarding financial status and the repayment history of the borrower. Lenders usually give prime importance to borrowers having a reasonable credit history with credit scores of more than 600. Credit reports of the borrower can be obtained from any of the three leading credit bureaus in the U.S.. Credit reports contain details such as the income of the borrower, his credits, and any late payments made towards rent, mortgages and credit card bills.

Another important criterion is the debt-to-income ratio of the borrower that determines the eligibility and interest rate on the loan. Borrowers having a debt-to-income ratio of 28/36 are considered ideal for a mortgage loan. However, certain lenders entertain customers with a poor debt-to-income ratio. But, loans to these customers are provided at a higher interest rate and require a high down payment.

Apart from these, the customer is expected to have a steady income and a satisfactory employment record so as to multiply his chances of getting a mortgage loan approved. The customer must be employed with a single employer for a minimum period of 2 years in order to be eligible for a loan.

Interest rates on the loan also vary if the loans are federally insured or assured by any private mortgage insurance companies.

Earl

michelle asked:


I would like to purchase my first home within the next 9 months. I have saved for the down payment and have increased my credit score to 654 with new accounts that I always pay on time and I never carry a balance on my cards. However I have 8 accounts that are about 5 years old that have all been charged off. Combined the charged off accounts total around $2000. I have read that paying these now will damage my credit score. So if I don’t pay them is it still likely for me to get a mortgage loan? Any advice on what my choices are?

Howard