Cyrus Zahabian asked:




For the average person who does not work in the mortgage industry, the mortgage jungle is very overwhelming. Mortgages are complicated! This article is a small collections of tips and advice of what an average person should know when looking for a mortgage. We kept it simply, but informative.

Reverse Mortgage Funding

As we grow older, living expenses seem to increase drastically, it is for this reason a great number of elders choose to seek a reverse mortgage to provide help with these expenses. This option typically works well for those who have fully paid for their home, and have no mortgage upon it. Simply speaking, when you take advantage of a reverse mortgage you will receive a monthly stipend from the equity that your home carries. This is especially useful to the elderly, sometimes securing a reverse mortgage aides them with living expenses, that alone could help in allowing them to remain within their own home. It is wise to request to a mortgage broker that the cost of closing should be paid out of the money received from the reverse mortgage loan. Essentially meaning, no expenses directly out of pocket.

Mortgage Options – Interest Only

Interest only mortgages are specifically designed to substantially decrease your payment amount over the first years of the mortgage term. The way this program works is that for these first few years you are only making payments towards the interest of the mortgage. This keeps the mortgage payments lower than other mortgage options because you are not required to pay on the principal of the loan. Eventually the time will come that you will be required to pay both the interest and the principal. It is wise to fully investigate this mortgage option prior to choosing it. Very carefully make some calculations and determine rather or not you will be able to afford the payments once both interest and principal are required.

The Right Mortgage Broker for you.

With the vast presence of the internet, obtaining the proper mortgage broker has never been easier. Additionally the internet allows you to locate mortgage brokers from all over your area. You are not limited to using a local broker or company in any way. The mortgage brokers you can find on the internet are in great competition with each other. What does this mean for you? It is simple because they are so competitive, you will win with excellent program and competitive rates. To choose the proper mortgage broker for you, you first must be comfortable in choosing them. Choose a mortgage broker that gives you confidence in their guidance. Take your time in finding the perfect mortgage broker for you; make sure their goals and your goals match, thoroughly research all your options before making a choice.

Obtaining a Mortgage Loan the Fast way.

Obtaining a mortgage loan through the internet is easier than ever before. The benefit of an online mortgage broker is that generally, they have a wider spectrum of lenders and various programs that a typical mortgage broker might have. More often than not, they have the ability to process request more quickly, as well. Online mortgage brokers can even aid you if there is urgency because of a fast approaching closing date or you are in need of speedy refinancing. All of this is thanks to the technology of automated credit checks, verification of income and online loan applications. You can find mortgage brokers through various measures such as using a popular search engine like Google, simply type in mortgage broker and you will be amazed with the results. A better option is to search for reviews about the mortgage broker or seek the advice and referrals from your friends and family. The best mortgage broker will possess the seal of the Better Business Bureau.

Adjustable Rate Mortgage and What you should know about it.

If you opt for an adjustable rate mortgage ensure that you are fully aware of these facts , this will help you be ready when the time comes for your fixed rate mortgage ceases.

1) You should know when the first rate adjustment will occur and how much the adjustment will be. Knowing the specific date will prepare you for the event.

2) You should know that the adjustable mortgage rate fluctuates with the changes of interest rates. Find out what index your rate is associated with, so you can investigate the interest rates on your own.

3) Know all of your options when it comes to refinancing. If a adjustable rate mortgage proves to be unbeneficial for you, you have the option of refinancing with a fixed rate mortgage. To get a good interest rate on a fixed mortgage you should watch the rates closely and if you choose to refinance, do so when the rates are comfortable to you.

Obtaining Flexible Interest Only Mortgages

For those that practice self-discipline, a flexible interest only may be practical. This option provides a payment arrangement that is flexible in regards to the payments that you make. This does not mean they are flexible on the timely manner in which you pay them, this simply means when your payment date arrives you are required to make a minimum payment of at least an amount towards the interest on the loan. However, with this flexible option you can opt to pay an additional amount towards the principle of your mortgage. Generally, your flexible interest only coupon book will include an area that determines the amount needed to be applied towards the principle if you should choose to do so. This is where that self-discipline comes in handy, it is wise to apply as much as possible towards the principle, bringing the amount down and coming that much closer to paying off your mortgage.

Dora

Louie Latour asked:




A well known author named Theodore Sturgeon once said “Ninety Percent of Everything is crap.” This became known as Sturgeon’s law and is even quoted in the Oxford dictionary. Sturgeon’s law is alive and well when it comes to the Internet and the mortgage advice you find online is no exception. Here are several tips to help you separate the wheat from the chaff when it comes to online mortgage advice.

I recently read an article online offering suggestions on how one could save money when refinancing. The article suggested that you should concentrate your efforts on finding a mortgage broker that worked on a non-commission basis. The author stated that non-commission loan representatives are less likely to overcharge you and have your best interest at heart when refinancing. While this sounds like good advice, it’s actually complete rubbish. If a mortgage company or broker tells you they work on a non-commission basis, you are guaranteed to pay too much refinancing with that company. Calling someone a “Non-commission loan representative” is just a slick marketing trick to gain your misplaced trust.

Here’s what that author doesn’t understand about the mortgage industry. Mortgage loans are simply retail products, just like televisions. Just as an electronic store marks up the price of your TV, the mortgage company or broker marks up your interest rate without telling you. This is in fact, how mortgage companies and brokers make the majority of their profits. It’s not commission; they make money from retail markup. You’re already paying origination points to this company for the new loan, so why should you pay double?

Here’s a summary of how it works. You qualify for an interest rate based on your credit and the details of your application. That interest rate is not set by the mortgage company; it comes from the wholesale lender. The mortgage company receives a written guarantee of your rate from that wholesale lender. Your mortgage company turns around and provides you a separate written guarantee for a higher interest rate. This markup by the mortgage company is called Yield Spread Premium. Homeowners that learn to recognize Yield Spread Premium when refinancing their mortgage loans can avoid paying it.

Can you see how the advice this author gave in their article could result in overpaying for a new mortgage loan? To learn more about mortgage refinancing while avoiding bad advice, costly mistakes, and Sturgeon’s law, register for a free mortgage guidebook.

Jo

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

Mary Ny asked:




Fannie Mae was chartered in 1938, as the Federal National Mortgage Association (FNMA), with the responsibility of creating a secondary market for home mortgages. It operated under direct federal control. In 1968, the Federal National Mortgage Association was partitioned into two separate entities- one wholly owned by the government and known as the Government National Mortgage Association (Ginnie Mae), and the other to retain the Federal National Mortgage Association (Fannie Mae) name. It was privatized by legislation enacted in 1968 and became fully private in 1970.

Fannie Mae (along with Freddie Mac) sets the limit each year on the size of a conforming loan based on the October to October changes in mean home price. Mortgages above this limit are considered jumbo and super jumbo loans because Fannie Mae and Freddie Mac only buy conforming loans to repackage into the secondary market, making the demand for non-conforming loans much less. Thus, interest rates for jumbo and super jumbo loans are higher than for conforming loans.

According to the Office of Management and Budget (OMB), borrowers see mortgage rates 25-50 basis points lower because of what Fannie Mae and Freddie Mac do. This is reflected in lowered interest rates of up to a half percentage on each individual homebuyer’s mortgage, which translates to lower payments and increased consumer cash flow for other purposes. Fannie Mae and Freddie Mac also were the agencies that recommended that FICO scores be used in mortgage lending. Now, FICO scores are the mortgage industry standard for originating conventional loans, adjustable rate mortgages (ARMs) based on various prime rate indices, jumbo loans and 2nd home purchases as well as the popular cash out mortgage refinance loans.

Today, Fair Isaac estimates that more than 75% of all mortgage originations in the U.S. involve the FICO credit score. FICO scores are being used in almost every sector of the nation’s economy, and largely determine whether or not you will be approved for credit (including mortgage loans), what interest rates you will pay and what loan terms are available to you. This is why it is important to maintain a high FICO. But, if you’re a homeowner who’s had credit issues in the past, a timely mortgage refinance or home equity loan (second mortgage) for debt consolidation can help raise your score substantially and save you a lot of money.

Pauline