When You're Behind on Your Mortgage Mortage Problems Plague Homeowners The mortgage meltdown in the United States means that right now, many honest, hard-working people are behind on their mortgage payments, and don't know what to do or where to turn. People who have always felt that "other people" fell behind in their payments are now facing the tough reality of a serious downturn in the economy that does not show any signs up becoming an upturn soon.
Many Homeowners Face Difficulty The most important thing a homeowner can do is realize that there are a record number of distressed homeowners in the United States right now. "You're not alone" may sound like a cliché, but in terms of homeowners facing foreclosure, it's a statement of fact. What Not to Do Some homeowners, when they realize that they are unable to make their payments, decide to "walk away." This is absolutely the worst thing a homeowner can do. A tanning salon owner recently posted on an Internet forum that one of her clients had announced, "We're just going to stop paying the mortgage and rent." This client was, incidentally, having her nails done for $50 at the time.
There are three problems with this strategy of walking away. First, homeowners like the tanning client often do not take the opportunity to change spending habits and learn to manage finances. These people will merely exchange their current financial difficulties for future debt and difficulty. . Many homeowners are financially responsible and still find themselves with mortgage payment problems, but many of the homeowners who are currently abandoning their mortgages are either starting or continuing a pattern of financial irresponsibility. The second problem with mortgage abandonment is that an abandoned mortgage on a credit report can wreak havoc on the homeowner's entire life for many years in the future. Many people think, "Oh, we'll just rent," but with the housing crunch, real estate owners can be even more choosy about who they rent to. If a rental applicant has made an honest attempt to pay their mortgage but finally lost the struggle, the rental agency will be more sympathetic than if the prospective renter just decided to ignore their largest financial obligation.
Creditors are not anxious to extend new obligations, including leases, to people who have demonstrated that they do not take their responsibilities seriously. Many people walking away from a mortgage think only in terms of not needing to finance another home, and don't consider the consequences of an abandoned mortgage on the rest of their lives. Aside from purchasing or renting a car, renting an apartment, and other financial transactions, a negative credit report can actually impact a person's employment. Employers can, and many do, check credit reports, and an abandoned mortgage is not a good employment reference. The third problem with walking away from a mortgage is emotional. Some people truly won't suffer any remorse or regret, but those who are honest with themselves will probably suffer some emotional stress and regret. Facing foreclosure is traumatic and stressful enough, without making that stress and trauma worse unnecessarily. The Worst That Can Happen For homeowners unable to pay the mortgage, facing that reality can bring emotional relief and make it easier to look for a solution to the problem. Many homeowners find that when they think through the worst that can happen, they realize they can deal with the worst.
They won't like it, but they can survive the worst that can happen. This frees up energy to try to avoid that worst. Work with Your Lender The last thing most distressed homeowners want is to communicate with their lender. This is understandable, but the homeowner's best hope to save the home is to try working with the lender. The real estate crunch has hit lenders very hard, as well, and some may be unable or unwilling to work with their mortgage holders. Many lenders, however, are willing to try to help the homeowner heal the debt and avoid foreclosure. Especially now, when foreclosed homes are flooding the market, banks prefer not to foreclose. Banks are not in the real estate business; they're in the mortgage business. When they foreclose on a home, that puts them in the real estate business, owning a home which they then have to find a way to sell, at a loss. Workout Options Lenders often offer workout options to rehabilitate a loan. Reinstatement, a common workout solution, may allow the homeowner to bring the mortgage current if they know they will be getting a lump sum of money at a specific time--for instance, a salary bonus, tax refund or insurance settlement. The lender will reinstate the loan after payment of the total amount due. Reinstatement is often accompanied by forbearance, which means that the lender will allow the homeowner to either reduce payments or suspend payment for a specified period of time.
A forbearance is always accompanied by agreement to another method to bring the loan current, such as a reinstatement. Lenders may agree to a payment plan in which the homeowner pays the monthly mortgage payment and a portion of the past due amount. This is helpful if the financial difficulty was short-lived, due to a job loss or medical problem, for instance. Payment plans are not as helpful for homeowners with long-term payment difficulties. For homeowners whose mortgages whose payments have become unaffordable, for instance because of adjustable rate mortgages, a mortgage modification may be the best option for saving the home. Communicating with the lender and attempting to resolve the situation is the best way to save the mortgage and avoid the extremely unpleasant consequences of foreclosure. Getting Out of a Mortgage When the homeowner cannot pay the mortgage and it is not salvageable, a lender may agree to a sale of the home. This is difficult in the current real estate market, but a "short sale" may be possible. This involves selling the house for less than the outstanding mortgage amount, but for an amount agreed to by the lender. The homeowner pays the lender the sale amount and is released from the mortgage.
Another option is an assumption, in which another buyer assumes, or takes over, the mortgage and takes possession of the home. This is a very unlikely option in the current real estate market, but is still worth investigating. Avoiding Scams Many homeowners fall prey to scammers who take advantage of people who are desperate enough to try anything if it sounds plausible. One of the most common fraudulent schemes is called equity skimming. A "buyer" approaches a homeowner and promises to take over the mortgage if the homeowner signs over the deed to the house and moves out. The fake "buyer" then takes possession of the house, but the homeowner is still responsible for the loan, as no assumption papers were signed, and has no home. Another favorite scheme is to offer real estate "counseling" for a fee. The federal government offers free and low-cost real estate counseling through the FHA. Most "counselors" approaching distressed homeowners in fact offer no real assistance, and take advantage of strapped mortgage holders. Weathering the Storm Looking at the checkbook and the paycheck and realizing that the house payment can't be made is one of the most difficult situations most people face. Knowing that an obligation can't be kept is stressful, and losing a home is extremely traumatic. It can rip a family apart, and cause lasting emotional damage as well as the damage to the homeowners' credit reports. So what should homeowners do in this situation? How can they get through this difficult time with their credit reports and emotions relatively intact? The most important thing a homeowner can do in this situation is to communicate with the lender. Many homeowners start discarding mail from the lender rather than opening and dealing with it. This is a serious mistake, because early letters will often offer assistance in making the mortgage good, and later letters (if the early ones are ignored) often contain legal notices. Ignoring the mail will not impress a foreclosure judge.
It is easy to feel desperate and believe "nothing can be done." The fact is, something can always be done, but that something may not be the preferred thing. The only way to know is to reach out to the lender, try to resolve the situation, and make a genuine effort. Some homeowners are losing their homes right now despite their best efforts. Many lenders simply can't help homeowners who fall into default, and many borrowers have no financial options for rehabilitating their debt. That is a sad fact, but it is a fact. Knowing that other homeowners are facing foreclosure and actually losing their home, and knowing that everything that can be done, has been done, are the two greatest advantages a homeowner has. As for the future…many homeowners who lose their homes will be able to recover and own a home again someday. Damage to the credit report is not permanent, and many future lenders will be sensitive to the situation, providing the homeowner has made a solid attempt to save the mortgage, rather than simply walking away.
About the Author
Seth is author of this article on Denver Mortgage. Find more information about Colorado Mortgage here.
by Seth Taylor
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When You're Behind on Your Mortgage
High Risk Home Mortgage Lenders Online
Online high risk home mortgage lenders specialize in offering loans to people with adverse credit due to bankruptcy or other financial problems. By analyzing online quotes, you can find a reasonable mortgage loan even with poor credit. Loan approval is then just a matter of filling out your online application and reviewing some final paperwork.
High Risk Home Mortgage Lenders
High risk home mortgage lenders, also called sub prime lenders, provide a service for people with poor credit. Through slightly higher mortgage rates and fees, lenders are able to offer mortgage loans to high risk lenders. There are predatory lenders who charge extremely high rates and fees, but you can avoid them with comparison shopping.
Finding Lenders
The internet makes finding high risk home mortgage lenders easy. Through mortgage comparison websites, you can request quotes from several lenders by answering a few basic questions. You commit to no obligations when you requests quotes online.
These generic quotes will help you narrow down your list of possible mortgage lenders. Once you have picked a few possible mortgage lenders, you will need to request a detailed quote from them to make real comparisons.
Comparing Financing
Many factors besides your credit score are used to determine a mortgage rate. You will need to fill out an application with detailed information in order to receive a real mortgage quote. These applications can be filled out online for speedy processing.
Once you receive your mortgage quote, compare both rates and fees. Fees often hide the true cost of a loan. The easiest way to compare mortgage loan costs is to add up fees and the interest you will pay over the course of the loan.
Online Application
After you pick the best mortgage financing offer, you can quickly finish the application process online. After your application has been reviewed by your mortgage lender, you will receive final paperwork in the mail for your approval.
Think About The Future
With a high risk mortgage loan, consider refinancing after establishing good credit history for three years. Making regular payments, building cash reserves, and lowering your debt will allow you to qualify for lower interest rates in the future.
By Carrie Reeder
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First-Time Buyer Mortgage Deals
First-time home buyers are those who are planning to buy a home for the first-time in their life. They are usually inexperienced at buying a home and are often cheated if they are not careful enough.
Since most first-time home buyers are not aware about the formalities while availing a mortgage, it is necessary that they familiarise themselves with the rules and regulations in the market so that their investments are not at risk. Often they do not have the nettle to sort the good from the multitude of bad mortgage offers that are available in the market. This is because first time buyers are often young professionals who would be too eager to buy a house that they have no time and inclination to assess deals on their merit. Therefore, such people often rush through the process of availing a mortgage and at the end suffer from availing mortgage plans that are not planned specifically for their needs.
First of all, it is very important to know how much one can borrow from a mortgage lender. The amount of money that one can borrow depends on many parameters. It is a good idea to visit mortgage lenders and ask for a written quote of how much they are ready to offer as a mortgage. This will ensure that a borrower can separate the hype from reality. Many lenders offer generous deals to first-time home buyers and therefore it is up to the borrower to capitalise on these deals.
The amount that one can borrow will be based on the size of the deposit and how much one earns. Lenders may offer around three times one's annual earnings. Similarly, if one is planning to borrow as a couple, three times the first income plus the second income, or two and a half times the joint income may be borrowed.
By R Rama
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California Mobile Home Mortgage Lenders
A mobile home, as the name suggests, is a moving residence. These can be readily purchased just like buying a fixed home. A mobile home is perfect for people constantly on the move, as it gives the convenience of a fixed home on the road. It is no surprise that today an increasing number of people are opting for a mobile home.
In California, as in the rest of the United States, it is not possible to acquire a mortgage for a mobile home. If mobile home owners require a mortgage, they have to approach official lenders. These lenders provide financial assistance. California mobile home mortgage lenders are persons or groups that lend money for mortgage purposes from their own capital and funds.
California mobile home mortgage lenders are not funded or regulated by the government. Due to this reason, these loans are high-interest loans. However, interest rates depend upon current market rates. Given that a private body funds the loan, it is possible for people with poor credit ratings to acquire the loan. Consequently, people have to pay a higher interest rate.
Even though California mobile home mortgage lenders are private bodies, lending institutions have specified a few prerequisites. This specifies that the home that is financed is the main residence of the person applying for the loan. These regulations also predetermine the maximum loan amount and tenure. This is decided based on the locality, and can differ in high-cost areas. Loan periods vary between 15 to 25 years.
Specialized dealers or retailers mostly sell mobile homes. For the most part, these dealers themselves provide buyers with the names of California mobile home mortgage lenders. At times, these dealers may even arrange for meetings with mortgage lenders. While purchasing a mobile home it is important to remember that there are no government-aided California mobile home mortgage lenders.
By Kent Pinkerton
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There's A Silver Lining In The Clouds Of The Nationwide Mortgage Mess
It's a cloudy and murky storm now hovering over the once clear blue skies of the real estate market. Due to the sub prime and adjustable rate fiasco, foreclosures have dramatically increased and home values nose diving like huge drops of descending rain and creating a mortgage mess.
Here's the current real estate weather report.Foreclosures increased by 75% in 2007 with more than 2.2. million filings nationwide. The largest clouds hover over the states of Nevada, Florida, Michigan, California and Colorado respectively, with California alone having a record number of 481,392 foreclosure filings. 2008 is expected to follow suit and will likely be more ominous than 2007.
As foreclosures increase, more homeowners are feeling desperate and discouraged. Authorities in economic stressed cities like Detroit, Michigan see a correlation between pending foreclosures and homes burning. The conclusion is arson is on the increase due to motivation by stressed out homeowners to fix their situation by torching the premises and hopefully cashing in on insurance proceeds and relieving themselves of going through the foreclosure process.
The mortgage meltdown has caused some neighborhoods across the nation to be plagued with blight because homeowners, unable to make mortgage payments because of bad or ill advised adjustable rate loans that have caused their payments to balloon beyond affordability, have abandoned properties leaving them vacant and becoming havens for insect infestation and stray animal hangouts.
Some homeowners, angry over the whole muddy mortgage situation, have taken it even further by deliberately causing damage to the property before they abandon it by leaving water running and creating mold and mildew problems or just physically destroying portions of the home.
Currently, the FBI is investigating 14 companies related to the mortgage crisis on claims of mortgage fraud, SEC inside trading and other alleged illegalities associated with the sub prime real estate market.
The Mayor of Baltimore, Maryland sued Wells Fargo Bank on claims that the bank is guilty of "reverse red lining" actions - making deliberate high risk sub prime loans in minority neighborhoods under circumstances that the bank knew or had reason to know would fail. This is the opposite argument made against banks years ago when they were found guilty of drawing a red line around areas that they deliberately would not make loans in - predominately ethnic minority neighborhoods, hence the term redlining. The Mayor claims minorities hold more than 60% of the adjustable rate loans made by Wells Fargo and now the majority of those loans are failing and the foreclosure grim reaper is taking its toll.
The above facts provide more than enough evidence to support the premise that the real estate industry is caught up in a stormy situation. The dark clouds of sub prime failures and the gale wind force of foreclosures make the future look bleak and dim.....But, there is a silver lining amidst all the dark clouds.
Where's the silver lining? The evidence is beginning to show itself already. There is and definitely will be good times ahead for the real estate market sooner rather than later. It depends on the lenses you're looking through.
Interest rates on federal funds dropped to 3% on January 30, 2008. Mortgage rates are reacting and starting to fall too. This will prompt more refinancing and help many homeowners that can still refinance troublesome adjustable loans into 30-40 year affordable fixed rate loans thus avoiding the likelihood of future foreclosure or other financial problems.
Congress is contemplating and most assuredly will make legislation or regulatory changes in the maximum amount of the loans that can be acquired with FHA insured backing. The current loan limit of $417,000 is unrealistic in the current market. The democrats are seeking loan limits of more than $700,000. The Republicans suggest limits in the $600,000 range. The obvious observation here is that both parties agree the $417,000 limit must be raised. Once that happens home buyers will be able to access more loan funds and buy houses that are not available right now.
Home prices are down and new home sales are at a record low. Sellers are very motivated and willing to assist buyers with financing. This all adds up to A BUYER'S MARKET. That's the silver lining.
Home buyers, especially first time home buyers will be a huge factor in weathering the storm of the mortgage mess. The winds of change are upon us. History will repeat itself. Out of the dumps of the real estate market the proverbial Phoenix will rise.
Roy Landers, attorney and successful real estate broker/investor teaches how to stay informed on what's working and making money in the real estate market with FREE content from The Real Estate Playbook. The place where savvy home buyers, sellers and investors gather information to build a solid financial foundation. By.Roy Landers |
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