How to Avoid Foreclosures

It’s amazing how many families lose their homes needlessly. When a family encounters financial problems and can’t keep their mortgage payments up to date, they could explain their situation to their lender or mortgage servicer and probably work out a special plan to resolve the problem. But in most cases they just let the problem worsen until their home is taken in foreclosure.

That’s the finding of a recent survey taken by Freddie Mac and Roper Public Affairs and Media, a noted market research firm. In over half of all home foreclosure cases the homeowners never contacted their lender about their problem, it was found. It was also noted in the survey responses that about 75 percent of the delinquent mortgage borrowers recall being contacted by their mortgage servicers. But most of them gave a variety of reasons for neglecting to follow-up with those servicers to discuss workout options. Mortgage servicers collect monthly housing payments on behalf of the lender or other owner of the mortgage.

“The results of the survey are a wake-up call to delinquent borrowers everywhere,” said a Freddie Mac vice president. “Its message is clear: when you get a phone call or letter from your servicer, don’t ignore it - act on it. Pick up the phone, call your servicer and talk to them about the possibility of forbearance or some other repayment alternative because it just may be your best chance to avoid foreclosure. Part of the problem, as shown in the survey responses, is that there’s a dangerous knowledge gap. People are definitely interested in the options available to them, but their awareness of those options is low.”

Copyright 2006 TheLowQuote

Jim Woodard Syndicated real estate columnist and feature writer
Mortgage / Real Estate Update Report

http://www.TheLowQuote.com

Know Your Mortgage Fees, and You’ll Never Pay Too Much for Your Loan

If you buy new windows, you’ll not only pay for the windows, you will also pay an installation fee. When you purchase a car, you pay tax, title, assumption fee, etc. Just about every major purchase comes with extra costs or fees, and home loans are no different. Most people think they don’t have to pay costs on a loan, because they are paying interest on the loan (they figure this is their fee - a premium on the money). A mortgage, however, does not come free.

While some are mandatory, others are not. Follow these guidelines, and you’ll never pay too much for your purchase mortgage or refinance loan.
The origination fee — The fee that bothers people the most is the origination fee, or what some mortgage people call a broker fee. This is often confused with points, but should not be. Points are something completely different. The origination or broker fee is what you pay the loan officer to originate or create and complete your home loan, whether it’s a purchase or a refinance. All mortgage people charge them, whether they work for a mortgage brokerage or for a bank.

Remember, if you’re told there is not a broker or origination fee, chances are you’re paying a higher interest rate, and this is how they’re making this fee. The origination fee is the primary way mortgage brokers make money. The company gets the entire fee, and your broker or loan officer gets a percentage of that fee - somewhere between 30 and 65 percent.

So, if your mortgage broker charges you two percent on a $100,000 loan, this is $2,000 for his company or bank and up to $1,300 for him. You may think this is an outrageous amount of money, especially considering that this is just one of the costs you have to pay, in order to complete you loan. It might be, and then again, it might not. It depends on what type of loan you get, how much work is involved in closing it, and the quality of the service you get. Here are a few guidelines on what you should be willing to pay in origination or broker fees.

Bad credit’s effect — If you are a sub prime borrower, or someone with credit problems, expect to pay more - up to $3,000 or $4,000. Remember, sub prime, or non-conforming, borrowers have some type of baggage that makes them difficult to get approved, which is a huge part of the mortgage professional’s job. They may, for example, have a recent bankruptcy or foreclosure on their record, or a civil or criminal judgement, tax liens on the property, or very little equity in their home. These are problems that good mortgage professionals can get around, but it takes a lot of time and effort.

I once helped an elderly gentleman on a fixed income refinance his home, and he had 14 liens against his home, all of which had to be satisfied, before his mortgage could be paid off, and he could get a new loan. I had three weeks, and probably 25 hours of time, just clearing these liens. One of them was a defaulted car loan on a car he didn’t even have. He owed $3,000, hadn’t made a payment in three years, and the bank was still after him. I had to negotiate with the collection agent from that bank, and get them to take $1,800 to satisfy the loan, which I would work into his new mortgage. After many telephone conversations and some very hard selling, they agreed, and I wound up getting it done.

Now, I would have normally charged a minimum of $2,500 (over five percent of the loan amount, in this case) for this type of work, but there was not enough equity in the house to get that much origination in the loan. I actually did it for less than $1,000 ($500 of which was mine), just because I wanted to help this man, who needed the cash he was going to get from the new loan to put a new roof on his dilapidated house. This is just one example of when it’s acceptable to pay more in origination fee, even though this man didn’t have to do so.

Conversely, let’s assume you’re refinancing your home in a
perfect scenario. You have perfect credit, lots of equity in your home, plenty of cash reserves, and the paperwork is very easy. The loan officer says he can complete your loan in two weeks, most of which will be consumed by the work of other people, such as title agents and an appraiser. This origination should not be much more than one percent of the loan amount and even smaller, if the loan amount is over $150,000. This is a loan that mortgage people refer to as “A Paper.” It is very easy to close, and takes very little work, so the loan officer can make his money on volume, by doing lots of these types of loans. I always charged $1,500 or less for an A Paper loan.

So, begin learning your closing costs by finding out what the origination fee is (remember, most of the time it’s negotiable). One to two percent of the loan amount is acceptable, unless extraordinary circumstances exist.

Mark Barnes is the author of the new novel, The League, the first work of fiction, based on fantasy football. He is also an investment real estate and home loan finance expert. Learn more about his suspense thriller at http://www.sportsnovels.com Get his free mortgage finance course at http://www.winningthemortgagegame.com

Home Mortgage Lenders - How to Find A Good Mortgage Lender Online

A good online mortgage lender can make the home mortgage shopping
experience bearable if not pleasant. With competitive rates and good
customer service, a home mortgage lender can help you buy your home within a
reasonable timeframe. To find such a lender, start by researching
recommended lenders. Ask questions about loan rates, terms, and payment
process. Once you find a perfect match, start the application process to
lock in rates.

Start With Recommended Sites

While you can easily find lenders through a search engine, a better
choice is to look at different recommended lending sites. Mortgage broker
sites offer convenience, providing you with multiple mortgage loan
quotes in almost no time. Individual lender sites also provide loan quotes,
along with financing information.

Take advantage of loan estimates since they don’t hurt your credit
report - as long as you don’t give them permission to access your report.
By requesting personalized quotes, you get a realistic picture of your
loan costs. You can also find the most competitive offer.

Check Out The Details Before You Sign

Rates are important, but so are fees and terms. Analyze the closing
costs and any additional fees that might be associated with the home loan.
You should also ask about additional loan features, such as refinancing
options or interest reductions for automatic payment.

Selecting terms will not only affect your interest rates, but also your
monthly payment. While most lenders will quote a 15 or 30 year term,
more options are available to you if you ask.

Evaluate The Service

Requesting loan quotes is also a test run of the lender’s customer
service. Did the company respond in a timely manner? Did they answer your
questions? Was the information clear and complete? If you answer yes to
these questions, then you can reasonable trust that future questions
will also be answered.

Finally, give yourself enough time to find the best lender. In a few
hours you can have dozens of mortgage offers waiting for your review.
Spend a few minutes looking over each to find the one that meets your home
buying needs.

View our recommended
Online Mortgage Lenders or view all of our Recommended Bad Credit Lenders.

Curb Appeal: Home Sellers, You Only Get One Glance to Make an Impression

If you’re selling a fixer for a rock-bottom price, investors love ugly houses. However, if you want to get top-dollar for your home, you must make home shoppers get out of their car and see what’s inside.

Every home seller wants two things: a quick sale at the highest possible price. Neither of those desires is unreasonable, but in order to achieve those goals, you’ll need to do a few things to make you home more saleable and different from your competition–all the other homes for sale in your neighborhood and price range.

Curb Appeal

First, look at the outside of your home, since that’s what prospective buyers will see first. If you’ve ever bought a home, you know that you passed up potential homes simply because they looked shabby and unkempt from the street. It’s just a quirk of human nature that makes a person think that if a home looks bad from the street, it will be just as bad on the inside–so don’t let your home make a negative impression on the outside.

Keep the lawn and landscaping as well-manicured as possible. Keep perennials looking good, and if possible, plant some nice-looking annual flowers to dress up the appearance of your home. Make sure your front door creates a warm, inviting feeling. If it needs a coat of paint, do it. Paint is cheap, and the rewards will be worth the effort.

You don’t have to spend a huge amount of money to make your house appealing to potential buyers. However, as the old saying goes: you only get one opportunity to make a good first impression. So walk around your house, inside and out, and try to look at it as if it’s the first time you’ve ever seen it. What things do you see that would make a less-than-favorable impression on YOU if you were looking at them for the first time? Those are the things you want to address–long before the first potential buyers pull up in front of your home.

Copyright © 2006 Jeanette J. Fisher

Jeanette Fisher, interior design instructor, helps home sellers with color psychology to make their homes more saleable. She offers FREE Home Staging Information. Jeanette teaches home sellers FIVE ways to get more money from their home sale. http://sellfast.info

Borrowers facing problems with the Mortgage Industry

Mortgage industry is playing an important role today to meet the people’s needs. The industry is constantly engaged in making changes and bringing new ways to assist people in some of their most important personal and financial decisions. The industry is involved in making changes to suit people’s requirements keeping in mind their financial conditions. Along with conventional fixed rate products mixtures of typical adjustable rate mortgage products, interest-only and payment option type ARMs, high LTV financing and FHA products have been introduced. This expansion and variety in the products is intended to help larger number of people to qualify for the home ownership. There is a fair competition among the lenders to provide customers with the best rates staying within the boundaries of State law. Customer satisfaction is paid maximum importance today. This trend has helped the borrowers belonging to all levels as the positive affect is now reaching people on a wider range. People have got the opportunity to take advantage of a wide range of products available in the current market. This has raised the buying process with a greater mass being able to participate in the program. But with this positive feature there has been a recent trend of increase in the number of fraud cases in the industry which is a growing problem in the industry today.

According to the National Mortgage Complaint Center, the number of fraud cases in the mortgage has increased over the recent years. Mortgage companies have been using false documents and getting them signed by borrowers. Many of them have even charged high interest rates and borrowers have been making such high interest payments due to lack of awareness on recent market trends.

It is found out that an average homeowner in the United States has to pay $1250 more in sub-prime mortgage industry. Sub-rime mortgage are offered to high risk borrowers who may have been rejected by other lenders. In recent years this industry has seen a considerable growth with a lot of consumers getting qualified for this loan. Consumers who face difficulty with the credit market are generally availing this loan. But, this growth has simultaneously given rise to predatory lending affecting the most vulnerable lenders. This kind of abusive lending is generally directed to the lower income and minority borrowers. Generally the elderly homeowners with reduced incomes become the target of these sub-prime home equity lenders as they often have considerable amount of equity in their homes. The most harmful practice begins with a loan based on the home equity rather than on borrower’s ability to repay. These borrowers often fail to repay and the lenders acquire the borrower’s home equity and ultimately the borrower loses his home through foreclosure or by signing a deed to the lender in lieu of the foreclosure. There are some other kind of abusive practices which are illegal under various federal or state laws.

Considering the growing rate of predatory lending in the mortgage industry, the National Mortgage Complaint Center has decided to have an audit service for protecting homeowners from abusive lending practices. But borrowers should also be aware of such unlawful activities and keep themselves away from such lenders.

Borrowers should consider some preventive measures to protect themselves from predatory lenders. They should not go by the rates that lenders often advertise. These rates are in fact, much lower than the actual fees charged by such lenders. The lenders advertise such low rates just to lure consumers so that they can approach them for loans.

Borrowers should demand a written copy of the fees that they keep paying to the lender on a monthly basis. This is because lenders often provide an estimate of fees at closing and later they charge higher fees pretending that they have forgotten to include these charges. But keeping the proofs of such documents will help borrowers in case of any discrepancies in the mortgage process.

If there is a rise in rate in the market during the time period between the application and closing, the lenders charge higher rate to borrowers. On the other hand if the rate falls downwards, the lenders try to ignore it and the borrowers are deprived of the advantage of the lower rate. So, the borrowers should monitor the market during this period.

The borrowers should try to keep a track of all the documents involved during the process and ask for proper clarifications wherever they have a doubt. Going this way will minimize the problems of being cheated by the mortgage companies to some extent. The borrowers should try to consult an Attorney or a professional known to the borrower and get the documents verified by them.

Lance Williams, who wrote this article, is an accomplished contributing writer presently working in association with mortgage. His current work includes bankruptcy and second mortgage.

Home Equity Loan Basics You Need to Know

If you are a homeowner considering a home equity loan for any reason, there are several things you need to know before applying. Doing your homework and researching mortgage lenders will help you avoid common mistakes that could cost thousands of dollars. Here is what you need to know to avoid these costly mistakes.

Home equity, when used correctly, is one of the most powerful financial tools available to homeowners today. When home equity is abused it has the potential to land you in serious financial hot water. Taking out a home equity loan is simply a second mortgage loan secured by your property. If you default on the home equity loan the lender will foreclose and take your home.

Types of Home Equity Loans

Home equity loans come in two flavors: home equity lines of credit and second mortgages. A second mortgage pays a lump sum similar to your primary mortgage at a fixed interest rate. Home equity lines of credit allow you to borrow by writing checks or using a debit card against your equity. Equity lines of credit come with variable interest rates and are typically more expensive than a second mortgage. Home equity lines of credit have the advantage of allowing you to borrow smaller amounts that you can repay quickly; this could save you money depending on your reasons for borrowing equity.

How Much Can You Borrow?

The amount of equity you will qualify to borrow depends on the appraised value of your home, the balance of your principal mortgage, and the amount of equity you have in your home. The mortgage lender will evaluate the loan to value ratio of your home, the appraised value of the property, and your credit rating when determining how much you can borrow.

Other Options

Refinancing your primary mortgage with cash back is another option that could save you money over a home equity loan. You will need to carefully consider the costs associated with taking out a second mortgage or refinancing. Both options have similar costs: application fees, lender fees, and closing costs are a part both of home equity loans and refinancing with cash back. To avoid overpaying for your home equity loan you need to do your homework and research home equity lenders. To learn more about avoiding common mortgage mistakes that will cause you to overpay for your home equity loan, register for a free mortgage guidebook using the links below.

To get your free mortgage guidebook visit RefiAdvisor.com using the link below.

Louie Latour specializes in showing homeowners how to avoid common mortgage mistakes and predatory lenders. For a free copy of “Mortgage Refinancing: What You Need to Know,” which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.

Claim your free guidebook today at: http://www.refiadvisor.com

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