Posts tagged with Mortgage Companies

Keeping your Home Despite a Job Loss

  • Posted on November 29, 2010 at 11:26 am

Job loss is a grim specter for a mortgage holder. For most of us, that mortgage payment is at the top of the monthly bill payment list. You can talk almost any creditor into short term relief and even long term restructuring the phone company, your car loan(s), credit card companies; they deal with delinquent payment plans daily. Mortgage companies get nervous much more quickly, but most are willing to consider at least one skipped payment if your unemployment is for a short period.

Mortgage Insurance?

You may not remember this in the flurry of documents and signing sessions that accompanied your home purchase, but you may well have an insurance policy that protects your lender against mortgage default. If you have a loan that is more than 80% of the homes value when purchased, you probably are also paying for mortgage insurance. Its incorporated into that list of particulars you pay on every month: principal, interest, taxes, homeowners insurance and mortgage insurance. Its meant to protect the lender; see what protection it provides for you.

Talk to your Lender

It is important to talk to your mortgage lender. Job upheaval is sufficiently commonplace in this country that many mortgage holders have become flexible about restructuring loans, as long as you are prompt in informing them and honest about your job prospects.
A typical restructuring will allow for lesser payments until your income is reestablished, at which point the bank will again restructure to get you back on schedule. Keep in mind that prospective new employers are almost as likely to check your credit rating as prospective lenders.

Before you enter into discussions with your lender on this prospect, decide what you can afford. Dont be grateful for whatever is offered, and agree to a financing plan that you cant meet. Tell your lender that your maximum temporary mortgage payment has to be 60% of the norm, not the 75% they are proposing. If you lose the house, it costs them money too.

Bankruptcy The Poison Pill

The long term answer to keeping your home while unemployed is filing for bankruptcy. The unattractive fallout from exercising this option is known to most of us, although the hard and fast rules have changed somewhat. What used to be seven years of no credit at all has become credit card eligibility after two years. Depending on the circumstances of your bankruptcy, you may be eligible for high risk auto loans and other debt within two to three years after bankruptcy. That assumes, of course, that you have regained employment status and are once again making mortgage payments. Also, bankruptcy has become so common that the Federal Government is on the verge of making it a much less attractive option for consumers.

Near Term Borrowing

With near-term unemployment and an unclear future, many people have put mortgage payments on their credit cards until the limits on those cards are reached. It may blow holes in your credit rating, but it will keep you current on the mortgage and stave off bankruptcy. You can attempt to obtain a home equity loan to fill the hole in your monthly budget, but those are much harder to come by when youre unemployed. If there are others in the household who are employed, the home equity loan may be a viable option.

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Interest-Only Or 50 Year Mortgages – Do They Really Make

  • Posted on November 22, 2010 at 11:26 am

Interest-Only Or 50 Year Mortgages – Do They Really Make Sense?

With hotspots like Las Vegas, much of California and Florida still enjoying a good real estate market, many banks and mortgage companies are now spreading out payments over 50 years to make them more affordable. Prior to these 50-year mortgages, interest-only mortgages were promoted and sold as the way to go. The real question here is which is better?

Lets first digress on what an interest-only mortgage is. Interest-only home loans or mortgages arent as a general rule permanently interest-only. The bank or mortgage company will normally offer the borrower 2 to 5 years at interest-only; after that they must start paying off the principle. During this time, the principle has grown. A great many borrowers may find themselves unable to pay the higher payments that come at the end of this interest-only period. In this case, interest-only loans are similar to ARMs, and have similar default and foreclosure rates (higher than for regular fixed mortgages where the payment stays the same throughout).

The 50-year mortgage simply spreads your payments out over a longer time period and greatly increases the amount of interest you will payback; this also tends to reduce your build-up of equity. Alex Diaz Jr., Vice President of Statewide Bancorp in Rancho Cucamonga, stated that the 50-year mortgage has particular appeal in California because prices are higher than the rest of the country. The 30-year fixed mortgage is great, but with gas prices so high, people we’re dealing with are concerned about making prices work, and the 50-year mortgage is something they’re starting to consider.” The real estate market has grown by leaps and bounds in California with the average home selling in excess of $300,000.

The 50-year mortgage was designed to do three things. First, it makes it much easier for someone to buy a home in these high price areas. Second, it can help buffer and insulate the borrower against a housing bubble or possible localized deflation. Third, it keeps the selling prices high. However, many so-called real estate experts will tell you that the interest-only loan does the same thing, but does it? The main problem with the interest-only loan is that it does not insulate or offer any protection for the borrower from increasing principle, negative equity (which can happen should there be a drop in housing prices), and, of course, those increasing payments when the term you agreed is over.

Keeping this in mind, plus the fact that there is only a very minor difference in initial payments (payments over the interest-only period), clearly the 50-year mortgage should be a better way to go.

If your budget allows, a good tactic to use is to make bi-monthly payments which will reduce the interest and term of the loan saving you many thousands of dollars. There are many lenders out there now offering this option to their borrowers. As they say, the real money in real estate is made from buying low and selling high.

The problem is that in most of these hot communities, the selling price often ends up being much higher than the asking price, plus houses do not stay on the market for very long at all. So, buying low is normally out of the question. Just try finding a bargain foreclosure or HUD homes for sale in California, it’s a little like trying to find gold in the old days. In these hot communities, the real money is made by buying and holding for a number of years allowing for the yearly increases and returns on additions and upgrades. Money can be made for sure, but with a uncertain future. It is really best to have a payment program set in stone always use a fixed term and rate mortgage. You can still sell in five years or less, make money, and have the added comfort of a fixed payment.

Have an opinion or a question you would like me to answer, then write me! http://www.CarlHampton.com

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General Information Regarding Self Certification Mortgages And Remortgages In The

  • Posted on September 27, 2010 at 11:26 am

General Information Regarding Self Certification Mortgages And Remortgages In The UK

Self certification mortgages and self certification remortgages are useful financing options for those individuals looking to buy a new home or obtain a new mortgage in the UK. Those individuals who will find a mortgage of this type most useful are those who are gainfully employed yet may have a difficult time showing where the money comes from and how much money they receive on an annual basis. Examples of individuals who may experience this problem include those who are self-employed, contract workers or freelance workers. Obtaining a self certification mortgage or self certification remortgage is a way for these individuals to obtain financing on their home and not have to go through the hassle of persuading hesitant lenders to give them a loan.

Defining Self Certification Mortgages and Remortgages

A self certification mortgage UK is one which is given to an individual that is not able to prove that they are steadily employed. Although some individuals have a 9 to 5 job, 5 days per week with the same company, there are a large amount of people who work for various companies and perform various tasks which produce different amounts of revenue. For these individuals, showing a set income with one particular company is quite difficult and can be met with some resistance at regular mortgage companies who offer straightforward mortgages. A self certification mortgage or self certification remortgage gives the self-employed individuals peace of mind by helping them to obtain a mortgage or remortgage without all of the hassle attached.

Ways to Find Self Certification Mortgage Lenders

When looking to find a self certification mortgage or a self certification remortgage, an individual will need to obtain a lender who deals with mortgages of this type. There are a few ways in which to obtain a self certification mortgage lender. One way in which to peruse ones self certification options is via the Internet. One can search online to see if any self certification mortgage lenders are based in their area of the UK.

Another way to locate a self certification mortgage lender for a self certification mortgage or remortgage is by way of recommendations. One may have friends or family members in the UK who have obtained a mortgage of this type in the past. By obtaining recommendations, one will not only be able to find a lender but may also learn about good or bad attributes of the lender as well.

Conclusion

Self certification mortgages and self certification remortgages are extremely useful lending options for those self-employed individuals or independent contract workers. This provides a way for the individual to obtain home financing and not have to go through all of the problems they would experience with a regular mortgage lender regarding employment.

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