Homeowners Options for Mortgage Assistance: Home Refinancing or Modification?
July 29, 2010 by admin
The recent economic recession has affected many American homeowners in keeping up with their monthly mortgage obligations. Due to the fact that many people have been laid-off from their employment, many have incurred lapses in their mortgage payments. Others were on the brink of foreclosure because of financial difficulties in their home mortgage. The U.S. government addressed this nationwide issue through a loan modification program. The program is mainly divided into two parts: home modification and refinancing.
The common denominator between the two is the goal of helping homeowners who have a hard time paying their monthly mortgages due to high interest rates or inability to do so. Yet, they have differences in the way they are structured and the nature of the program itself.
Home Refinancing
Home refinancing is a mortgage assistance that replaces an existing mortgage with a new loan under new terms and adjusted rates. A home is refinanced so that homeowners can take advantage of lower interest rates and reduced monthly repayments. During tight economic conditions, a good option is to refinance home mortgage loans since interest rates usually go down with slow economy.
The government’s refinancing program allows the new loan amount to go higher than 80% of the market value of the home, which was not the way it used to be. With an increase in the home value, one can consolidate or take advantage of better equity through refinancing.
Home Loan Modification
Loan modification’s are also a form of mortgage relief, but it does not phase out the existing loan. It simply modifies or restructures the existing loan with adjusted terms. The mortgage lender is the one who performs modification of the loan terms in order to address the financial inability of a borrower to pay the monthly mortgage. Normally, a loan modification involves reduced interest rates, an extension of the loan terms, and a different mortgage plan.
There are eligibility requirements for a troubled homeowner to qualify for this type of mortgage assistance. The most common of these qualifications are:
• The home is owned and occupied by the primary resident
• The homeowner missed three monthly payments or more
• The homeowner has not filed bankruptcy
• The homeowner is going through a difficulty in financial situation
Which is a Better Mortgage Relief Deal?
If the main problem is on financial hardship or inability to pay the monthly mortgage due to lack of financial capacity, the better option is loan modification. In fact, this is what the U.S. government is pushing for to American homeowners who badly needed financial assistance on their home mortgage. Many of them are now taking the risk of getting their homes foreclosed. But the loan modification program can uplift them from their circumstance.
Low mortgage rates help drive June home sales
July 26, 2010 by admin
The housing market showed a bit of improvement in the month of June, as existing home sales were about 30,000 units higher than most economists had predicted. Historically low mortgage rates are certainly on of the variables that helped drive home buyers to re-enter the housing market. Good news has been hard to find for the real estate market which took a big step backwards when the elimination of the home buyer tax credit ended in April. The improved housing numbers could be a key component in helping to stabilize a very shaky U.S. economy of late. The mortgage industry has benefited by low rates for the last two years as consumers who have been able to refinance have continued to ride the market and rates to historic low levels. The impact of the low rates has not been significant to home sales, but the June report may offer a glimmer of hope that great rates can help buyers return to the marketplace.
The June housing numbers represent over a twenty percent improvement for the market compared to May 2010. The improved numbers caught most of housing experts off guard, who previously indicated that the market would remain soft for the balance of the year. The June numbers are 17% lower than in June of 2009, but the positive news could be a signal of strength from the U.S. consumer base.
The housing market will be closely followed for the balance of 2010 to help predict the stability of the U.S. economy. Housing and Jobs remain the two largest obstacles in the recovery and good news on either front will be welcomed by the balance of the markets.
Following these tips when negotiating your new home mortgage
July 23, 2010 by admin
Getting a mortgage for your home is a wise decision to make when you want to remain stable with your finances. It allows you to own a property with an affordable and convenient payment method. Unless of course if you are a high roller who can afford to purchase your own residence with cold cash, you need not apply for the mortgage plan. But in most cases, people would go for ways that will offer them a good stretch of their finances.
Banks and lending companies set eligibility requirements for borrowers who wish to get a home mortgage. Individuals with good credit history, stable employment, and those who can provide a considerable amount as security or deposit are the priority of the lenders. Finding out the do’s and don’ts for mortgages is a smart thing to do especially when you have little knowledge of how the industry works and how the mortgage process goes. At least, you will understand the financial requirements of your lending company such as monthly interest rates, home equity, and other things.
The Do’s Of Mortgages
For the best mortgage interest deals, here are some do’s you can follow:
• Gather sufficient information from several mortgage agencies.
There are many lenders in the market that offer home loans and mortgages. It could be commercial banks, credit unions, lending agencies, and many other financial institutions. When scouting for a good mortgage deal, check with several lenders to compare quotes and rates.
• Get all necessary information on cost and pricing
When canvassing for the home mortgage rates, ask questions especially with terms, pricing, and fees involved.
• Keep a good credit score.
If you have existing loans, make sure that you pay promptly and regularly in order not to stain your good credit records.
• Complete the loan application form with truthful information.
During the process of loan application, be honest as possible in disclosing needed information. The lender will still have to conduct a credit investigation. Falsified information will only disqualify your application.
The Dont’s of Mortgages
• Don’t go for housing properties that are beyond your financial capacity to pay. Choose a home property with a monthly mortgage that is suitable to the budget.
• Avoid making huge purchases before applying for a home mortgage. Lesser loans mean bigger chances of getting a good mortgage deal and getting qualified or approved, not just pre-qualified.
• Do not quit your current job once you are still planning to get a mortgage. Lenders will not consider applicants who lack stability in their work.
• Do not just agree to pay any fee that your lender requires you to without understanding what it is for, and most importantly don’t hesitate to try and negotiate fees with lenders shopping around and bargaining can help you lock in the best rates and terms.
The do’s and don’ts for mortgages will help you make wise decisions when it comes to your mortgage deal. In the same way, it will also be a great help to handling your finances.
July 21, 2010
July 21, 2010 by admin
The roller coaster market ride took another sharp turn down on Wednesday as the “double dip” recession sentiment appears to be gaining momentum. The DOW dropped over 100 points and the yield on the ten year treasury dropped forty basis points, in one of the largest intra-day moves of all time for the closely followed treasury bond. The market continues to receive news regarding the weakening housing markets as home sales appear to have grinded to a halt following the governments decision to end the home buyer tax rebate at the end of April. The weak housing numbers, combined with disappointing earnings reports from key DOW companies have been the fuel of the fire for the market pullback over the last week.
The Fed, and Ben Bernanke were back in focus on Wednesday, with the head of the Federal Reserve attempting to reassure the markets the Fed would take necessary steps if necessary to help contain the present economic dip. The major challenge facing the Fed is what options they have to try and rejuvenate the economy. The Senate this week moved to extend jobless benefits for unemployed workers, but their is a growing sentiment that most members in Congress would like to see additional government stimulus, but are too afraid of their re-election positions to move forward with more government spending. The $800 billion in previous spending has run its course and helped to prop up the economy over the last 12 months, but also added substantially to the deficit. The reality facing the country is there is no magic pill that will bring the economy back and a recovery is likely going to take years moving forward.
The dip in equities and sharp drop in the bond yield should help drive mortgage rates to move lower again. Thirty year loan terms could be headed back down to the low four percent range and fifteen year loan terms are likely to dip below four percent. The rates could help spur mortgage refinancing again, but realistically will have no impact on driving home purchase. Today’s Fed briefing did little to shed light on the direction of the Feds policy regarding rates, but there appears to be zero chance of a rate increase in the foreseeable future.
Tips to improve your chances of obtaining a personal loan
July 19, 2010 by admin
Getting your hands on a personal loan is becoming more difficult. Lenders are a lot more cautious than in the past but following a few tips can greatly increase your chances of securing that personal loan. As a result of a lower supply of personal and signature loans available, more consumers have turned to payday loans, which tend to offer higher interest rates and shorter repayment terms. Expectations differ between one lender and another but what follows are some general recommendations that will hopefully help you get your hands on that money you want.
Have a good reason for the loan and be able to clearly explain how you will pay it back
The days of getting huge loans for the vaguest of reasons are over. It is now a lender’s market and you will have to convince them of your need for a loan and be able to also explain how you will be able to pay it back. Expect to be asked to provide exact details about your personal spending and if you can’t provide these you should expect to be refused. Lenders these days want to be fully reassured about your ability to pay back before they will even consider you; it is your job to do this. If you don’t have a really good reason for applying for a loan the best advice would be not to apply in the first place.
Ensure that you have a high FICO credit score
Your FICO score is your reputation and without a good one a lender is unlikely to touch you. There are different ways you can go about improving your FICO score but basically these can be boiled down to having a good history with borrowing money in the past. If you have a history of late and missed payments or defaulting on loans then you are going to really struggle to even get the loan of a pen from one of these institutions. It is a good idea for you to become familiar with your credit report; that way you won’t be wasting your time by applying for loans you have no chance of getting. If your FICO score is low you should do all you can to improve it before applying for a loan.
Ask for the lowest amount you need
Don’t overestimate the amount you need to borrow; you want it to be as small amount as possible. This is not just to save you money on interest but also because the lower the amount the more likely it is that the lender will give you it. Asking for the lowest amount needed also shows the lender that you have thought things through and are not just picking figures from your head.
Michigan announces new program aimed at keeping homes out of foreclosure
July 15, 2010 by admin
Heavily tied to the auto industry, the State of Michigan has been amongst the hardest hit areas over the past four years as the economy has eroded. In a move to help keep property owners in the their homes and avoiding foreclosure the state rolled out another band-aid approach recently. The first day of Michigan’s plan to assist unemployed residents keep their homes began with long waits on the telephone and a lack of information. The Michigan Hardest Hit program could help nearly 17,000 homeowners who are without jobs or underwater borrowers hold onto their homes with over $154 million in federal funding. However, it is not mandatory for lenders to take part in the program which led the state to wait to hear from large mortgage lenders such as Citibank and Bank of America.
On the first morning of the new program , the State of Michigan had received 30,000 telephone calls and just a few hours later, the system crashed. A list of banks who are participants in the program is available at the Michigan State Housing Authority website. This list is being updated each day. Officials from the state are urging interested parties to apply for the program through their banks first.
The Michigan’s Hardest Hit program kicked off on Monday July 12th with a great many residents eager to apply. The program is designed so that home owners will receive anywhere from $5,000 to $10,000 toward their mortgages. The details of the program states that Michigan residents receiving unemployment benefits could receive half of their monthly mortgages up to $750 a month for up to one year or a total of $9,000. For those homeowners who are behind on their mortgages due to medical emergencies or employment layoffs, the state would provide up to $5,000 per family. The program also would match the funds for principal reductions for those homeowners who cannot manage to meet their mortgage payments because they received a cut in their income. This would give residents up to a $10,000 principal reduction from the state and one that the lender would match.
The new Michigan program will operate on a first-come, first-served basis until the money runs out. So far the list of participating lenders is sparse as only eight lenders were on the list as of Monday. So far no one knows if the major lenders who many of the eager homeowners borrow through will actually participate.
Michigan Governor Jennifer Granholm, along with the Housing Authority announced the program back in April, just eight weeks after President Obama announced that $1.5 billion in aid would be given to the five states that took the worst hit by the recent housing crisis.
How to get the lowest rates when applying for a new loan
July 13, 2010 by admin
When borrowing money, one of the first things in your mind probably is: Will I be able to afford the repayments? This question is coupled with: “What is the interest rate going to be?†Finding the lowest rates is not always the easiest thing for consumers to accomplish as they are often met with high pressure sales pitches and uncertainty whether or not alternative financing will be available.
Before you take that loan, there are a few things that you need to know and understand.
When you decide that you need a loan, shop around. Different financial institutions may offer you different interest rates, depending on who their target clientele is and what services they market themselves as excelling in. Also find out if the interest rate is nominal (i.e. not compounded and therefore a simple rate) or a compound rate which is more difficult to calculate.
There are also a few other things you could do to help you negotiate a better interest rate on your loan/mortgage/credit card etc:
• Good credit record: It is important to lenders that you have a good record when it comes to debt repayment. If you are a good payer and there has been no problem in keeping up with your payments, a lender may consider you a ‘good risk’ and offer you a lower interest rate.
• Debt: Having debt is a good thing – as long as it is managed appropriately. Having existing ‘good’ debt assures the lender that you are used to managing your money responsibly and that you are therefore also a ‘good risk’
• Income: How much you earn and how frequently you earn money are very important factors that lenders take into consideration. If you don’t earn a salary or a regular wage, the chances are that you may be considered a higher risk than a person who does have a wage / salary. The frequency of your income also makes a difference. If you are paid regularly you have a better chance at getting a favorable interest rate. If you receive lump sum payments at irregular intervals, lenders may not look on your risk profile favorably.
• Income vs. Debt: It is important that your income is big enough to comfortably service your debt. If you have to stretch your income to make the repayments on your current debt, you may not be considered a good risk and may then be the recipient of a larger interest rate.
Making debt is serious so make sure that you are prepared for it.
July 9, 2010
July 9, 2010 by admin
The stock market showed some resolve this week posting the largest percentage gain of the year as the Dow climbed nearly six percent in trading. The market managed to post gains every day except for Monday when the market was closed for the 4th of July Holiday. The strong jump up in equities is in stark contrast to where the market finished up last week, when the June jobs report sank the market last Friday.
The change in the market appears to have been driven primarily by investors regaining some confidence and looking to lock into equities before the start of earnings season which begins in full force in the upcoming weeks. A better than expected report from the job markets signaled some hope that the labor market could regain some stability in hiring, which would be a great boost to the overall economy. The jump up in the equity markets helped drive the yield on the ten year treasury past 3.05% for the week, over ten basis points higher and worked to push fixed mortgage rates back into the mid four percent range for thirty year loan terms. Home mortgage rates had previously dropped to levels not seen in over thirty years, helping to drive consumers to refinance their existing mortgage loans, but doing little to boost interest in home purchases.
The mortgage industry saw both of the flagship secondary lenders (Fannie Mae and Freddie Mac) lose their ability to trade in the New York Stock Exchange and forced onto the over the counter exchange, a telling sign for two of the most historic companies in market history. For years, corporations would invest capital into these two companies with the certainty of a healthy dividend and capital certainty, when the market collapsed in 2008 numerous large corporations lost hundreds of millions of dollars when the stock values diminished.
Financing options for borrowers with bad credit
July 8, 2010 by admin
Today’s financial climate is leaving many people with low credit scores and in severe debt. Foreclosed homes, bankruptcy, and late payments are becoming a normal scenario in many households across the country. Good people are finding themselves in bad financial situations. Because of bad credit ratings, many consumers are finding it hard to find loans to help them overcome this situation. Now, there is a new option available specifically for people with low credit scores. These bad credit loans are relatively easy to obtain and can really help a down and out person in need.
Many lending companies are offering these bad credit loans to people who are having financial hardships. This assistance is making it possible for these consumers to slowly work their way out of the debt, and ultimately raise their credit score. Most lenders know and understand that these people have debt and financial problems. They offer alternative methods that most banks and commercial lenders do not offer. These can come in the way of secured or unsecured loans.
An unsecured loan is exactly as it seems; it is a loan that does not require any type of collateral or asset. If you do not have a home or a car to show as an asset, you will probably want to consider an unsecured loan. Generally, these loans carry higher interest rates and they are only meant to be a short-term fix, so they are also usually smaller loans. Many payday loans and cash advance loans are considered to be unsecured. Because the lender has a higher risk, these loans can end up being quite costly. If you are in a time sensitive bind, this might be your only option.
Another option is the secured loan. If you have a low credit score but also have some object that can be used as a security, this is probably your best option. Many people will use their home, car, boat, or investment portfolio as security. If you are late on your loan payments and default, the lender has the right to take whatever you used as your security or collateral. If you simply have bad credit but know that you will not default, this could be a definite option. It is important to be prepared for any situation and not put up an asset that you are not willing to give up.
Just because you have bad credit does not mean that you should be denied a loan. Because of the helpful lending agencies, there are many new options available. The financial crisis that we are facing does not necessarily make people feel positive. Consumers should feel a bit better knowing that they do have options available to them.
Three Things That Affect Your Mortgage Rate
July 7, 2010 by admin
With July mortgage interest rates hitting a fifty-year low this week, those who have been thinking of buying a new home or refinancing an existing mortgage may not have a better opportunity. Many forecasts are predicting rates will begin to increase near the end of summer and into the fall, so now might be the time to take the plunge.
If you’re a new home buyer it’s important for you to know how your personal credit and current finances will affect your mortgage rate. In the simplest of terms, the better your past history and current financial standing, the greater your chance of getting the best rate possible. The opposite is, of course, is true also. At the current U.S. average rate of just over 4.5 percent, the range in real numbers is between 4.375 and 4.625 percent. Where you fall in this range will depend on several factors.
Credit Score
When you apply for a home loan, one of the first things the lender considers is your credit score. It’s easily obtainable and will give the bank an immediate feeling for what kind of borrower you will be. A credit score of 740 or better will be essential to get the lowest possible rate. It might be beneficial to get a copy of your credit report before you begin house hunting or pre-qualifying for a mortgage. The fewer surprises the smoother the mortgage process will go.
Down Payment
When writing a mortgage, lenders consider what’s called the loan-to-value ratio. In plain English it simply means the amount the borrower is requesting as a percentage of the home’s value. A borrower seeking $80,000 on a home valued at $100,000 would have a loan-to-value ratio of 80 percent. The lower that ratio is, the lower the risk is for the lender. The more money you can save ahead of time to use as a down payment, the better your ratio and interest rate will be.
Closing Costs
Closing costs are the additional fees needed to pay the expenses of completing a sale. They include, but are not limited to, attorney fees, title abstract and insurance, inspection fees, loan origination fees, appraisal fees, broker commissions, survey fees, and so on. They can add up to quite a bit, especially as the size of the mortgage increases. The more of these fees that can be paid up front by the buyer and seller, the better the interest rate. You may need to negotiate with the seller to help cover these costs; it is a buyer’s market right now, so don’t be afraid to ask. Make sure when you are shopping for a new mortgage loan, you look at all of the variables, including the apr and not dont simply focus on the rate that is offered.