Senin, 23 April 2012

A New Solution on the Housing Market - The Equity Modification

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Unfortunately, in recent years due to the situation in the housing market in the USA, more and more homeowners are facing crucial problems with making their monthly mortgage payments and risking to be kicked out of their homes. One of the ways to help homeowners to solve their mortgage problems without having to leave their houses is the equity modification program that has been widely developing since February 2009. During the procedure of the loan modification the lender and the borrower renegotiate their mortgage agreement lowering monthly loan payments and making the loan terms more comfortable for the homeowner. The forms of the loan modification can be different and vary from case to case. Usually the first step is the interest rate reduction; it can be lowered to as low as 2 percent and sometimes even less. The loan term can also be increased considerably.

To apply for a modification, the borrower should satisfy a number of rigid requirements, the most important of them are verified financial difficulties that are caused by such valid reasons as health problems, job loss, loss in income and some others. At the same time, the borrower also has to prove his financial capacity to serve the loan in case it is modified.

To find out whether your loan meets the requirements for a loan modification, you should contact your lender and fill a loan modification application. Next, you will be required to describe in detail your financial situation and prove it by official documents. During the loan modification process you should be ready to do a considerable paper work and prepare a great number of written documents. The lender will inspect the description of all your assets, the information on all sources of the household income (before taxes), the last tax returns, the information about the second mortgage on the house if any, the balances on all your credit cards and debts, the application for the equity modification describing all the reasons that led to your financial hardships and proving the necessity of the loan modification.

In each case of loan modification the lender conducts a special test, also called a modification net value test in order to determine whether it's gainfully to perform a particular loan modification. The lender takes into consideration the expected cash flows that can be received in case of the loan modification (taking into account the new interest rate, the new loan term and other changed essentials). After that, the test compares the resulting sum of these cash inflows to the potential earnings in the case of loan foreclosure. In this instance, the lender should include in the potential costs calculation such expenditures as the costs of home repairs, real estate agent fees, legal fees for sales registration, discounts to sell the house in case of further price decline in real estate market and so on. In the end, if the calculated sum of the potential cash flows after the loan modification exceeds the returns from foreclosure, the lender gets profit from restructuring the at-risk loan and performing the mortgage modification.

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How To Find The Best Deals On Homeowner Loans

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Homeowner loans are a special type of loan. As the name suggests they are available only to people who want to own a home. So, what exactly is the difference between those loans and a personal loan? Basically, a Homeowner loan is secured on the property. The lender puts a legal charge on the property and the loan is, in effect, a second mortgage.

If the homeowner should ever default on the loan the lender can seek reparation from the value of the homeowners property. Does this mean that the lender can repossess the property in order to repay the loan? Actually, no. Because the homeowner already has a first mortgage and the lender of the first mortgage always has the stronger claim. All the charge really means is that if the property is ever sold the loan is automatically paid off by the solicitor handling the sale.

So what does all this mean to you?

Because a homeowner loan puts a charge on your property this acts as a kind of guarantee to the lender that the loan will eventually be repaid. Even if you stop making regular payments, when the property is eventually sold, the lender will get their money back. Because of this, lenders usually consider homeowner loans to be much less risky than ordinary personal loans. A lender will lend much more money on a homeowner loan for longer terms and at much lower interest rates.

Being able to borrow a larger sum than usual could be very handy. This makes possible things like substantial home improvements - maybe you want to completely redo the entire house or build an extension or loft conversion - and it makes sense, surely, that your property should pay for it's own upgrades by making a loan that size possible in the first place. Maybe you need a large amount of capital to start a business.

Lower interest rates are always a bonus and these types of loans can be taken for longer terms - such as ten, fifteen, twenty or even twenty fives years - it is a second mortgage after all! Lower rates and longer terms helps keep the monthly payments reasonable. There's not much point with a monthly payment that you can't afford to pay!

So how do you find the best loan?

These days the best place to start is probably on a loan comparison site. As with any comparison site, this will compare many different loans from many different lenders. You will be able to compare, at a glance, the interest rates and fees. Pay particular attention to the fees, as with some homeowner loans these can be varied and substantial. Also be careful to check the loan to value - which is how much the lender will lend against the remaining equity in your home after your first mortgage is deducted. It will do you no good if the lender will not lend up to the value you need!

Using the comparison site it should be an easy task to prepare a short-list of homeowner loans lenders and then slowly whittle this down until only one lender remains. This should be the homeowner loan lender for you.

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The Benefits Of Using A Certified Mortgage Broker

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A mortgage is extremely burdensome and every way that would assure you the best terms overall must be sought. Most of the time, this assistance comes from a mortgage broker - a certified professional who can find the best mortgage terms by getting in touch with a wide network of creditors, who provide them with interest rates almost daily - therefore allowing them to provide you with the most current and comprehensive information for decision-making.

A mortgage broker saves you the trouble of approaching various lending institutions, and dealing with a lot of bankers. Instead, you get personalized service that will put you at ease and that will take the place of many painful meetings in unfamiliar environments. These both mean saving time and sweat.

A mortgage broker will also allow you to look into more choices, all of which are relevant to your needs and paying ability. And since choosing the right loan is not as simple as finding the lowest interest rate, a broker's services are most important in examining and understanding your circumstances, and matching it with the most ideal loan.

A good broker will provide you a wealth of information and make sure that they are understood before setting out options. Some points you may want to ask your broker about include: the various types of loans, how interest and annual percentage rates are computed, discount points and origination fees, guarantees by the lender, penalties, and all the costs that would go into the mortgage such as fees for appraisal, the credit report, the lender's title policy, pest inspection reports, escrow, recording fees, and other taxes.

An important thing to understand about how mortgage brokers work is where they get their income. Common sense will dictate that their loyalty will belong to that person who pays them. There is no one model that applies to all, but most of the time, brokers don't charge payment for their service.; it's the lenders that pay them a commission for the loans they write. But this does not always mean that lenders ask for a higher interest or mark-up rate from borrowers. These commissions that lenders offer brokers range from 0.5 to 1.25 percent of the mortgage amount, and it is computed into the lenders costs of doing business.

An added value that a mortgage broker may bring is that he or she may be able to find you a lender from another part of the country for better terms. Sometimes, a broker is also able to help out borrowers, especiall those whose credit status is not yet solid, with institutions that would not otherwise be willing to transact with such borrowers. A broker's experience with evaluating paying capacity and with matching debtors to creditors, as well as his or her good reputation may open up possibilities that you may not be able to get for yourself.

Obviously, you are not immune from risk or dirty tricks when dealing with mortgage brokers. It's good to be aware of the ways of some unscrupulous brokers so you could protect yourself from them.

The most common dirty trick is what some call "bait and switch." A broker will publish stunning terms to get you to communicate with them, and once you're in, these terms will change and you will soon realize that he or she was not willing or able to provide them anyway. If a deals sounds too good to be true, it probably is.

There are also some brokers who play the market and take advantage of the lag between the time when the loan application is submitted and the time when the loan transaction is actually perfected. If market rates rise during this period, you would indeed see your interest rate rise. However, if the rates fall, some brokers leave the rate on the loan unchanged and earn from the decline. Make sure to monitor the market and don't forget to let the broker know that you are doing so.

Remember that as the buyer, you are not under any obligation to accept what your mortgage broker offers. While they may have done a few things to arrange the best terms for you, this does not bind you to any agreement (and remember that this is what they are really expected to do). You will always have to find the most competitive rate, and you will have to do some level of checking and searching even if you have hired the services of a broker - do not accept the first rate that is offered to you. Keep in mind that at the end of the day, brokers will work for their interest. But the good thing is, providing excellent service is in their interest because it makes them more competitive. So it will also pay to scan the competition and compare rates with other lenders. Prepare to do some heavy research as a mortgage may make or break your wealth.

When Dennis purchased his first house (quite recently) he started out trying to organize the financing himself. Then quite by chance a friend introduced him to a local mortgage broker who arranged a way better loan in no time, and Dennis was stoked. Since then he's been an advocate for using professionals like those you will find on

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Information About Reverse Mortgage Loans for Canadians

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In Canada, reverse mortgages are loans that provide a safe and easy way to access the funds that are currently locked into your mortgage. There are several similarities and differences between regular Canadian mortgages and a reverse home equity loan. You can apply for one through a Canadian mortgage company, as you would with a regular mortgage. However there are more restrictions for qualifying for one in Canada than with a regular mortgage. The payment flow is another difference between these two types of mortgages. In Canada, unlike a regular mortgage the lender pays you, rather than you paying the lender.

In order to qualify for such a specialized mortgage you must meet certain criteria. You have to be a Canadian homeowner. You can only qualify if you are over 55 years of age. A key financial qualification has to do with your current mortgage, which must be less than 40% of your home's total value. Of course, just like with a regular mortgage, qualifying isn't everything. Just because you qualify for a reverse mortgage won't mean that it is the right choice for you. Carefully weigh the pros and cons to see if it's a good financial decision for you and your family.

There are a number of benefits to these types of mortgages. Canada does not tax the cash you receive. This means that you can turn part of your home's value into tax-free cash. Another benefit is that you can choose the type of payment you will receive. Whether you prefer a monthly payment, credit or a lump sum, this tax-free money is yours to do with as you please. You don't need to make payments until you sell your home, as long as you and your spouse live there. The main benefit is the financial freedom that you are provided. This could be the freedom to retire early, travel, do home improvements or make a large purchase. The decision is yours.

As with any financial decision there are restrictions that may or may not work for you. It's important to understand all the ins and outs. In Canada, reverse mortgage interest rates tend to be higher than a line of credit because you have the option of never making an interest payment until you sell your home. There are set up fees involved too. Although these fees will vary depending on the broker you deal with you will want to include them in your plan as they will factor into your decision.

There are a number of different people you should consult when considering a specialized mortgage. Talk to your financial advisor as well as a mortgage specialist. You should also consider discussing the decision with a legal specialist to ensure that you understand all the intricacies of the arrangement before you sign anything. This would be no different than the process you took when you contacted a real estate lawyer before you bought your house and signed your initial mortgage. You also want to discuss the decision with your family and make sure that everyone is clear and on the same page. Only when you have a clear understanding of the benefits and disadvantages of reverse mortgages will you be able to truly make a good decision about whether it is the right financial move for you.

ReverseYourMortgage (a division of Mortgage Edge) are Canadian Reverse Mortgage experts and have specific experience helping retirees make important financial decisions.

ReverseYourMortgage only recommends safe and secure products like the Canadian Reverse Mortgage and their client's interests are always their primary concern.

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Home Loans: What Are the Steps to Do If Your Home Loan Application Is Rejected?

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Before submitting the application, we know for a fact that there is a high percentage of being rejected. The truth hits us hard when it happens. People who have been rejected may give up to this point.

If you're application was rejected what will you do next?

At this point we finally grasp what our lenders are trying to say to us which is the percentage of failing is indeed much larger than the approval. The next move here is to find out where we failed.

Right now you have to think whether you want the loan or not. You are at a crossroad.

You have to think things through this time. Gauge if you really want to move or just give up. Set things in to perspective and do not waste time.

If you decide to go on then you have to set a new plan this time. A plan that is formed to get better results. In order to do that you have to know where you failed. Asking your lender on this matter is a good start.

To help you further, below are good tips to get you going.

Cheaper properties can help your loan get approved:

When your application is for a property that's too expensive then lenders will reject that application. You have to get a property that is much suitable for you. Shop for cheaper properties, that's the key!

Your chances of getting approved is base on your ability to pay your dues. If the lender sees that you can't afford the loan then obviously you will be denied. So weigh your plans and go for something that you can handle.

Think and see if things are better and then that's the time you'll decide.

If the banks says that the property is no good then find another affordable one.

If a house and lot is too much then try out the condominiums or town houses.

Ask the bank to evaluate your application again:

If you doubt the results then have someone inside the agency to re-evaluate your application. This can be done if you just ask nicely.

Re-evaluation starts with the applicant writing the agency a letter. This letter must be good and true since your application's future relies on it. You have to set everything straight. Do not set excuses and just tell the whole story as it is. In the event that something bad happened make sure it's real and a one time event.

Right now is the best time to know that your re-evaluation can go smoother when you have good credit scores.

Most of the time things do not go the way we want it in a loan application. The odds are against us. So when we get rejected we should remember that we shouldn't give up. Push forward and set a better plan. Ask for another evaluation. Get things done.

To discover pitfalls in obtaining home loans, don't hesitate to contact us on

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How Do Reverse Mortgages Work - 5 First Steps For A Senior Newbie

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When you try to understand, how do reverse mortgages work, it is important to understand the basic system. The reverse mortgage is a loan, which will be taken against the equity of the home. This means, that the lender will not check the income nor the credit information. The loan will simply eat a part of the equity step by step.

1. How Much You Can Borrow?

The absolute maximum is $ 625.500, says the law. But a more typical system is to use three elements, which influence on the amount. The age of the youngest borrower, the appraised value of the home and the interest rate. Roughly speaking, the older the borrower, the lower the interest rate and the higher the home value, the more a borrower will get. If there are the maximum a mount of borrowers, three, then the age of the youngest is used.

The borrower will select, how he wants the lender to pay. The alternatives are one lump sum, the monthly payments, a credit line or the combination of all these. Concerning the taxes, it is wise to make sure, that the borrower will not have to pay taxes, especially if he will choose the lump sum alternative.

2. Will You Qualify?

If you are at least 62 and own your home, where you live permanently and where you have equity left you will qualify automatically. Some mobile homes are not accepted. If there are more than one borrower, three is a maximum amount, all must qualify, i.e. to be the owners of the home and live there permanently.

3. When Is The Time To Pay Back?

The target of reverse mortgage is to arrange cash money for the seniors. This means, that a senior has not to pay back anything during the loan running time. When a borrower, or the last borrower, will sell the home, move away or pass away, the home will be sold and the selling price is used to pay away the loan capital, accrued interests and all the costs. The obligatory mortgage insurance guarantees, that the other assets of the borrower, nor the heirs, will never be used to pay the reverse loan.

4. The Secret Is In The Facts You Know.

A senior must research, what are his financial needs and what products there is in the market, which would fit to him. Because he is not usually an expert, his role is to define his needs at the moment and in the future. Because we do not know the future, it is important to keep some reserves for it. After he has the need list, he must use experts, like the bank manager, other seniors, reverse mortgage counselor and to study by himself, how the reverse loan could serve him.

5. Are The Reverse Mortgages More Expensive?

They are, because the upfront fees are quite high. However, it depends on the needs. If the need is urgent and the home equity is the only source of the extra money, is there any other choice? And because the senior will stay as a home owner, the future home price increases will help quite a lot.

Juhani Tontti, B.Sc., Marketing, Helps The Seniors To Get A Picture About How Reverse Mortgages Work. And Do Reverse Mortgages Work Best In His Situation.

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Are Mortgage Rates Today Influencing Your Decision to Buy?

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When we make a purchase, trends and prices make a big impact on the decision we make. Even when it comes to smaller purchases, we would tend to wait it out for a few weeks if we know of a sale that is soon to come up. We buy from wholesale stores to save the extra pennies. When it then comes to large purchases like houses which not only make an impact on our immediate financial status but also that in the future, there is a lot more that goes into the decision making process.

Depending on the kind of budget and needs that we have, we look at housing options in certain locations. Another determinant is the size of the property that we need. What we look to achieve is a balance in terms of the area that we select, the timing of purchase and the size of the house we buy.

There are some locations and market trends that are normally followed. We know that certain areas come at a premium, and also know that there are highs and lows where property prices peak and hit a low. We always attempt to catch property when it is at a more attractive rate, which could be when the market is slow, or even when the property is only in its initial phase of construction.

Most people look for financial assistance when they consider buying property. The mortgage rates today are constantly fluctuating, and availing the best mortgage rates are also important in determining the final payout.

While mortgage rates today are largely market driven, a little like property prices themselves, they are also guided by the position of property. Mortgage rates differ on the duration of the loan that you take, and also on the kind of property that you buy. There are various ways in which you can avail the best mortgage for yourself.

While it may not be easy to decipher the mortgage rates today, it may be valuable to take professional advice, as this will give you a clear indication on when the best time to buy will be, and what kind of property you can look to opt for given your needs and limitations.

The option of loans and mortgage rates today can help you in a big way. Look at the options you have, and make the most of what home finance can give you.

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