There are a variety of different ways to finance a mortgage, but I’d like to focus on two specific channels, “mortgage brokers versus banks.”
There are mortgage brokers, who work as middlemen between banks/mortgage lenders and borrowers on the wholesale end to secure financing for homeowners. And there are banks and lenders, that work directly with the homeowner to provide financing on the retail level.
There are pros and cons to both, and sometimes you will have little choice between the two if you have poor credit or a tricky loan scenario.
The majority of homeowners turn to banks when it comes time to get a mortgage. They are the most obvious choice, mainly because home loan services are usually offered at the customer’s primary banking institution.
However, borrowers who have trouble qualifying or need to finance tricky deals will often get turned away at banks. So for these people, using a mortgage broker is often the next best option. Of course, pricing with mortgage brokers can be just as competitive as a bank, so long as the broker doesn’t take too much off the top. Wholesale rates are actually much cheaper than retail interest rates you’ll get with banks.
source: http://www.thetruthaboutmortgage.com/mortgage-brokers-vs-banks/
How to Pay Mortgage off Early by Paying More Principal
Some people get a 30 year mortgage with the intentions of paying if off earlier but the time just never rolls around for that extra payment or principal curtailment because of added housing expense for something else. It is not that hard a thing to do if one makes the decision, follows through and more than likely you will never miss the extra money. Let's just say; don't eat out on Friday night and multiply it by four and you've got an extra amount to put on the principal balance of your mortgage loan. Sounds hard? It really isn't just takes a little effort to deny yourself a little something at the present and give yourself an exciting moment when you realize that you have 25 year not 30, remaining on your mortgage. Of course the more you pay the shorter your maturity will become.
Not only does this help pay your loan off early, it can help you get rid of the mortgage insurance premium (MI) quicker, if your loan to value was greater than 80 percent to begin with. It also will grant you more equity in your home and more profit in your pocket should you need to sell or move. It also stands true for 15, 20, and 25 year amortization periods.
As we know not everyone intends to stay in their current home for 30 years or even 15 years. At any rate; the more equity you have in your home, the better off you are and in our current housing market; this will shield you should the value of your home decline like so many in the past two to three years.
Way's to make it Happen!
Bi-Weekly Mortgage Payment:
A bi-weekly mortgage allows you the ability to pay your payment every two weeks. Some banks do not offer a bi-weekly mortgage up front, but will invite you at some point to enjoy the benefit of paying your payment bi-weekly. *not all banks do this, but you can check with your servicer. This is an advantage for you to payoff your loan approximately 6 years early.
Instead of making 12 payment yearly, you are making 26 payments which actually is making 13 payments instead of 12. It is argued that you can reap the same benefits by making an extra principal and interest payment during the year. You CANNOT skip a payment if you have made an extra payment and it went to the principal of your loan. The payments are due once monthly; you can pay your payment ahead of time and get ahead, but you never skip a payment from your statement or your coupon book. This would indeed get you into credit issues.
Example: $250,000 mortgage principal - 30 years amortization - 6.5% interest rate
Monthly payment: $1,580.17 Bi-Weekly paymkent $790.09
Pay-off date: 12/01/2039 Pay-off date: 01/01/2034
Time saved: 5 years 11 months
Interest paid: $318,816.22 Interest paid: $245,383.31 =
Total Interest Savings of 73,477.91
Normally bi-weekly payments are deducted from your checking or savings account every two weeks and is a requirement to obtain the benefit of making bi-weekly payments. There may be some fees and you might have to pay an additional payment upfront. Servicers have different guidelines and requirements. Check with your lender to see if they offer this option.
The benefit to you initially will depend upon the upfront charges; if any and your current financial situation. This is neither recommended nor discouraged; it is only an option that one may choose.
A Principal Curtailment
Not eveyone has the ability to afford a lump sum principal curtailment to their mortgage. But some do, so therefore I will explain this as well.
A principal curtailment can actually be any amount over and above your principal and interest payment or it can be a larger principal payment. You can, as mentioned above pay your payment a month or two ahead of the regularly scheduled payment, but in doing so, you never skip a payment. You can make a habit of payment an extra $100 toward the principal balance or for instance if you have saved some extra money and want to reduce the principal of your loan you by $5000, you may do so at any times. Unless of course you have a pre-payment penalty clause which restricts this. In general, Agency loans (Fannie Mae/Freddie Mac) do not carry a pre-payment penalty). You should check your note and mortgage for pre-payment clauses.
Paying extra curtailments on your loan does not change your regularly scheduled payment or payment amount. This can only be done by a modification or refinance of the principal balance over the remaining term.
Whatever you decide to do concerning the above; always make sure that you specify the extra money should go to the principal balance of your loan and not get place in escrow or something else by mistake.
http://hubpages.com/hub/paymortgage-off-early
Not only does this help pay your loan off early, it can help you get rid of the mortgage insurance premium (MI) quicker, if your loan to value was greater than 80 percent to begin with. It also will grant you more equity in your home and more profit in your pocket should you need to sell or move. It also stands true for 15, 20, and 25 year amortization periods.
As we know not everyone intends to stay in their current home for 30 years or even 15 years. At any rate; the more equity you have in your home, the better off you are and in our current housing market; this will shield you should the value of your home decline like so many in the past two to three years.
Way's to make it Happen!
Bi-Weekly Mortgage Payment:
A bi-weekly mortgage allows you the ability to pay your payment every two weeks. Some banks do not offer a bi-weekly mortgage up front, but will invite you at some point to enjoy the benefit of paying your payment bi-weekly. *not all banks do this, but you can check with your servicer. This is an advantage for you to payoff your loan approximately 6 years early.
Instead of making 12 payment yearly, you are making 26 payments which actually is making 13 payments instead of 12. It is argued that you can reap the same benefits by making an extra principal and interest payment during the year. You CANNOT skip a payment if you have made an extra payment and it went to the principal of your loan. The payments are due once monthly; you can pay your payment ahead of time and get ahead, but you never skip a payment from your statement or your coupon book. This would indeed get you into credit issues.
Example: $250,000 mortgage principal - 30 years amortization - 6.5% interest rate
Monthly payment: $1,580.17 Bi-Weekly paymkent $790.09
Pay-off date: 12/01/2039 Pay-off date: 01/01/2034
Time saved: 5 years 11 months
Interest paid: $318,816.22 Interest paid: $245,383.31 =
Total Interest Savings of 73,477.91
Normally bi-weekly payments are deducted from your checking or savings account every two weeks and is a requirement to obtain the benefit of making bi-weekly payments. There may be some fees and you might have to pay an additional payment upfront. Servicers have different guidelines and requirements. Check with your lender to see if they offer this option.
The benefit to you initially will depend upon the upfront charges; if any and your current financial situation. This is neither recommended nor discouraged; it is only an option that one may choose.
A Principal Curtailment
Not eveyone has the ability to afford a lump sum principal curtailment to their mortgage. But some do, so therefore I will explain this as well.
A principal curtailment can actually be any amount over and above your principal and interest payment or it can be a larger principal payment. You can, as mentioned above pay your payment a month or two ahead of the regularly scheduled payment, but in doing so, you never skip a payment. You can make a habit of payment an extra $100 toward the principal balance or for instance if you have saved some extra money and want to reduce the principal of your loan you by $5000, you may do so at any times. Unless of course you have a pre-payment penalty clause which restricts this. In general, Agency loans (Fannie Mae/Freddie Mac) do not carry a pre-payment penalty). You should check your note and mortgage for pre-payment clauses.
Paying extra curtailments on your loan does not change your regularly scheduled payment or payment amount. This can only be done by a modification or refinance of the principal balance over the remaining term.
Whatever you decide to do concerning the above; always make sure that you specify the extra money should go to the principal balance of your loan and not get place in escrow or something else by mistake.
http://hubpages.com/hub/paymortgage-off-early
Top 7 Reasons Not To Pay Points On Your Mortgage
Nearly any time you apply for a mortgage loan, you’ll be presented with a loan where you have an option to pay points, and an option to decline to pay points. Incidentally, one point on a loan equates to 1% of the loan amount. The benefits to paying points are many, including reducing your interest rate, paying down your loan faster in the early years, qualifying for a larger loan amount and so on. But while there are plenty of reasons why you might decide to pay points on your loan, there are many of reasons why you wouldn’t want to choose this option. Here are the top 7 reasons not to pay points on your mortgage loan.
You’re Certain You’ll Sell Your Home Or Refinance Within 2-4 Years.
If you’re sure that you’ll sell your home within a few years of purchasing it, paying points may not be your best bet. For example, if you are buying what is commonly known as a “starter home,” or if you’re taking a temporary or contract job assignment, and will only be in the home for a short period of time; paying points won’t likely benefit you. This is because when you pay points to reduce your interest rate, it will generally take between 2-4 years to recoup the upfront cost.
Similarly, if you’re certain that you’ll want to refinance your current mortgage within that same time period, you may want to avoid paying points. However, it’s wise to remember that just because you think you might refinance in that time, things in life do happen which may not make doing so possible. Don’t make a hasty decision.
You Feel Confident That Interest Rates Will Decrease.
If you feel confident that interest rates will be decreasing, you may consider choosing a loan with no points. Again, because it will take you a few years to recoup the cost of paying for points, you might lose out if rates decrease and you decide you’d like to refinance. But, as we all know by now, the only thing certain in our economy, is that trying to predict what the markets will do is just plain impossible. So, use common sense. If rates are at or near historic lows, they’re not likely to decrease much further. However, should we see interest rates climb into the double digits, there’s a good chance they’ll decrease again so you may consider avoiding paying points at a time like that.
You Need The Money For A Down Payment
There’s no getting around the fact that most lenders are requiring larger down payments these days (with VA and FHA loans being the major exceptions). So, if you are ready to buy a home, be prepared to have a sizable down payment (20% is not uncommon). If you’re having trouble coming up with the down payment, a loan with no points is probably a good option for you.
You Need The Money For Reserves.
We all need to have extra cash on hand. If you find that you have to dip into your personal reserves in order to pay for points on a loan, you should consider a loan with no points. You should also be aware that many lenders require that borrowers have a minimal amount of reserves on hand, to ensure that the mortgage payment will be made. Check with your mortgage broker about what type of reserves you’ll need to show the lender, and how much you personally need in reserves to feel comfortable before deciding to pay points on a loan.
If You Can’t Finance The Cost Of Points, And Can’t Afford To Pay Them.
Plain and simple, if you can’t afford to have the cost of points financed into your mortgage, and you can’t afford to pay them upfront, steer clear of loans with points. This should be an easy decision though, as the lender won’t approve you for a loan with points if you can’t afford to pay them!
If The Loan To Value Is Too High To Finance The Points
When you decide to purchase a home, or refinance your home, the lender will look closely at the “loan-to-value” of the property. This means that they will need to determine how much they are willing to lend you, versus the total value of the property. The higher your loan to value, the more the points will cost.
For example, consider that you want to buy a home that is $300,000, and you have 20% for a down payment. The loan to value of this home then is 80%, which you need financed, bringing the total amount of a loan you need (before closing costs, fees, etc) to $240,000. If you wanted to pay points on this loan, one point would cost $2,400, and two points would cost $4,800. Unfortunately the bank is only willing to finance $240,000. They will not finance the additional points. In this case, obviously, you don’t have much choice, making it another great reason not to pay points on your mortgage.
If The Money Would Be Better Spent Elsewhere
If you have higher interest rate loans, or credit cards, and the money that you would apply towards paying points would be better spent paying off other debts, opt for a loan with no points. You can reduce other debt now and likely refinance into a new loan for your home later down the road, where you may refinance into a loan with a lower interest rate, by paying points at that time.
http://top7business.com/?Top-7-Reasons-Not-To-Pay-Points-On-Your-Mortgage&id=11844
You’re Certain You’ll Sell Your Home Or Refinance Within 2-4 Years.
If you’re sure that you’ll sell your home within a few years of purchasing it, paying points may not be your best bet. For example, if you are buying what is commonly known as a “starter home,” or if you’re taking a temporary or contract job assignment, and will only be in the home for a short period of time; paying points won’t likely benefit you. This is because when you pay points to reduce your interest rate, it will generally take between 2-4 years to recoup the upfront cost.
Similarly, if you’re certain that you’ll want to refinance your current mortgage within that same time period, you may want to avoid paying points. However, it’s wise to remember that just because you think you might refinance in that time, things in life do happen which may not make doing so possible. Don’t make a hasty decision.
You Feel Confident That Interest Rates Will Decrease.
If you feel confident that interest rates will be decreasing, you may consider choosing a loan with no points. Again, because it will take you a few years to recoup the cost of paying for points, you might lose out if rates decrease and you decide you’d like to refinance. But, as we all know by now, the only thing certain in our economy, is that trying to predict what the markets will do is just plain impossible. So, use common sense. If rates are at or near historic lows, they’re not likely to decrease much further. However, should we see interest rates climb into the double digits, there’s a good chance they’ll decrease again so you may consider avoiding paying points at a time like that.
You Need The Money For A Down Payment
There’s no getting around the fact that most lenders are requiring larger down payments these days (with VA and FHA loans being the major exceptions). So, if you are ready to buy a home, be prepared to have a sizable down payment (20% is not uncommon). If you’re having trouble coming up with the down payment, a loan with no points is probably a good option for you.
You Need The Money For Reserves.
We all need to have extra cash on hand. If you find that you have to dip into your personal reserves in order to pay for points on a loan, you should consider a loan with no points. You should also be aware that many lenders require that borrowers have a minimal amount of reserves on hand, to ensure that the mortgage payment will be made. Check with your mortgage broker about what type of reserves you’ll need to show the lender, and how much you personally need in reserves to feel comfortable before deciding to pay points on a loan.
If You Can’t Finance The Cost Of Points, And Can’t Afford To Pay Them.
Plain and simple, if you can’t afford to have the cost of points financed into your mortgage, and you can’t afford to pay them upfront, steer clear of loans with points. This should be an easy decision though, as the lender won’t approve you for a loan with points if you can’t afford to pay them!
If The Loan To Value Is Too High To Finance The Points
When you decide to purchase a home, or refinance your home, the lender will look closely at the “loan-to-value” of the property. This means that they will need to determine how much they are willing to lend you, versus the total value of the property. The higher your loan to value, the more the points will cost.
For example, consider that you want to buy a home that is $300,000, and you have 20% for a down payment. The loan to value of this home then is 80%, which you need financed, bringing the total amount of a loan you need (before closing costs, fees, etc) to $240,000. If you wanted to pay points on this loan, one point would cost $2,400, and two points would cost $4,800. Unfortunately the bank is only willing to finance $240,000. They will not finance the additional points. In this case, obviously, you don’t have much choice, making it another great reason not to pay points on your mortgage.
If The Money Would Be Better Spent Elsewhere
If you have higher interest rate loans, or credit cards, and the money that you would apply towards paying points would be better spent paying off other debts, opt for a loan with no points. You can reduce other debt now and likely refinance into a new loan for your home later down the road, where you may refinance into a loan with a lower interest rate, by paying points at that time.
http://top7business.com/?Top-7-Reasons-Not-To-Pay-Points-On-Your-Mortgage&id=11844
Mortgage Payment Problems: What If You Can't Pay?
"I lost my job and have been making my mortgage payment from savings. At some point, I will run out of savings. What should I do?
Some variant of this letter is appearing in my mailbox with increasing frequency. The problem is probably going to get worse before it gets better.
Many homeowners faced with this situation do nothing, allowing the problem to overwhelm them when it hits. That is not smart. When you know a tidal wave is coming, you should minimize the damage by preparing for it the best way you can.
In this article, I consider how borrowers who anticipate that they soon will be unable to make their mortgage payments can make the best of a bad situation. The best approach depends importantly on whether or not you have significant equity in your home.
Mortgage Payment Problems When You Have Significant Home Equity
Don’t Practice Denial: If you stick your head in the sand and allow yourself to miss payments, you lose one potentially valuable option: the ability to stay current by raising cash against your equity. So long as your credit is good, you can take out a second mortgage or do a cash-out refinance on your first mortgage. Once you miss payments on the first mortgage, however, you lose this option. No one wants to make a second mortgage to someone who can’t make the payment on the first.
Don’t Expect Help From the Lender: If your ability to pay is impaired but you have substantial equity in your house, informing the lender of your problem is risky. Some lenders will respond positively to help you find a solution, but too many others won’t. A common response is “come back and see us when you have missed two payments.”
The brutal fact is that if you have substantial equity in your house when your income drops, you and the lender are in a conflict situation. (Equity is the current market value of your home, less the balance of all existing liens against it.) Your equity protects the lender against loss. If the lender forecloses, your equity covers not only the loan balance, but also the foreclosure expenses and unpaid interest. The last thing the lender wants, when your ability to pay has been impaired, is to have this equity depleted by your taking out new loans.
Telling borrowers to return after missing two payments removes the danger (to them) of equity depletion. When borrowers return after missing two payments, their credit is shot and they can’t borrow anywhere else.
Using a HELOC to Make the Payment: Borrowers who are current on their mortgage can stay current by borrowing against their equity. The best instrument for this is a HELOC, a credit line, which you can draw on as needed. This doesn’t solve your problem, but it buys time while you find a solution. Within the limited time you have available, your financial situation must recover to the point where you are able to service both loans.
You can estimate how much time you have by dividing 90% of the line by your monthly payment. If your line is $20,000 and your payment $500, for example, you have about 36 months.
Selling the House: If you aren’t confident that your income will be restored during the period a HELOC can keep you afloat, sell the house. At least then you realize the equity in cash. You may still want to use a HELOC to keep the first mortgage current while you sell the house. Obtaining full value sometimes takes some time and you don’t want to be forced into a fire sale.
Forbearance Agreement: If your financial stringency is temporary but you have lost the ability to borrow by falling behind in your payments, there is one other possible option that will keep you in the house: a forbearance agreement with the lender. Under such an agreement, the lender suspends and/or reduces payments for a period, usually less than 6 months, although it can go longer.
At the end of the reduced-payment period, a repayment plan kicks in. You agree to make the regular payment plus an additional agreed-upon amount that will cover all the payments that were not made during the forbearance period. The repayment period is usually no longer than a year.
If the plan is successful, you will be brought current and the lender will suffer no loss. However, the lender will only consider this approach if convinced that your problem is temporary. The burden of proof is on you to document the case.
A forbearance agreement is a second best solution because you won’t get one until you are delinquent. The lender will dictate the terms because you have no place to go.
Your Payment Problem Is Caused or Aggravated By Non-Mortgage Debt
Borrowers with significant equity in their homes, whose payment problems are caused or aggravated by a heavy burden of non-mortgage debt, may be able to extricate themselves by consolidating their non-mortgage debt into a new mortgage. An alternative is consolidation under a Chapter 13 bankruptcy.
The advantage of being your own consolidator is that you stay in charge of your finances, and your credit rating is not materially affected. The disadvantage is that you lose the partial debt burden relief that a Chapter 13 bankruptcy provides.
Being Your Own Consolidator: When you have equity, you can pay off other debts with cash obtained through a cash-out refinance or a second mortgage. Do it if the prospects for success are good.
Consolidation does not reduce your debt, rather it replaces other types of debt with additional mortgage debt. Consolidation will reduce your required monthly payments, however, because mortgage rates are usually lower than non-mortgage rates, the interest is tax exempt, and the term is probably longer. The critical question is whether or not your debts will be manageable after you consolidate. I have three debt consolidation calculators on my web site that should help you answer that question.
You must go this route before you fall behind on your payments. If you fall behind, your credit rating will deteriorate and the terms at which you can consolidate will become increasing onerous. Very quickly the option of being your own consolidator will disappear.
Consolidation Under Chapter 13: Under Chapter 13, you are subject to a debt reorganization and payment plan approved by a court. The plan eliminates interest payments and schedules affordable principal payments to eliminate all non-mortgage debts within a 3 to 5-year period. During this period, you make one monthly payment to a court-assigned trustee, who makes the payments to your various creditors. The creditors are required to accept the plan. When the payment plan has been successfully completed, you are discharged from bankruptcy, but the stain will remain on your credit report for 7 years.
If you do go into Chapter 13, any arrears in your mortgage payments will be added to the other debts that are consolidated. This is so even if you are in foreclosure, provided your house has not been sold. Entering Chapter 13 will stop the foreclosure process. Your mortgage balance stays outside of the Chapter 13 process, however, and you continue to be responsible for the regular scheduled mortgage payments.
Refinancing Out of Chapter 13. If you are in Chapter 13 and have substantial equity in your house, the possibility exists of using it to buy yourself out of Chapter 13.
Some lenders consider people in Chapter 13 with equity in their homes excellent loan prospects. While they wouldn’t touch a debtor who was unable to cope before declaring bankruptcy, the same person can become a good prospect by demonstrating a capacity to handle a reduced burden under Chapter 13. Usually, a lender will look for a perfect Chapter 13 payment record of at least a year.
Ordinarily you would not want to accept such an offer if it meant that your required payments under Chapter 13 would rise as a result. This could happen if your mortgage payments were lower after the refinance and if you have not completed your third year in Chapter 13. Speak to your Chapter 13 trustee before considering a refinance.
Assuming a refinance would not affect your Chapter 13 payments, it may or may not pay to wait, depending on the urgency of your need. Lenders who will limit their loans to 70 or 75% of property value when you are in Chapter 13, may go to 90% or 95% after you are out. Bear in mind, though, that your loan will be classified sub-prime in either case and it will be pricey. To graduate to a higher-quality status and better price, wait another 2 years after exiting Chapter 13.
If You Don't Have Significant Home Equity
Borrowers with no equity can’t open a credit line and draw on it to stay current on their mortgage, nor can they consolidate non-mortgage debts in a new mortgage. The options they have all require the concurrence of the lender.
But that does not mean that they have no leverage. The lack of equity makes foreclosure an unattractive option to the lender. With no equity, the lender who forecloses is not reimbursed for lost interest, foreclosure expenses or real estate sale commissions. Further, the process takes time, during which the borrower lives rent-free. Even if the borrower has other assets, in most states they are beyond the reach of lenders who have foreclosed a mortgage that arose in a home purchase transaction. Hence, lenders are usually receptive to alternatives to foreclosure that cost less.
The most attractive of these to the lender is a forbearance agreement, where payments are suspended for a period, to be made up by larger payments scheduled for the future. If forbearance works, it costs the lender nothing. On the other hand, if it doesn’t work, delaying the foreclosure will raise the cost. For this reason, a lender will only consider forbearance if convinced that the borrower’s problem is temporary.
A temporary reversal is one where, if you are provided payment relief for up to 6 months, you will be able to resume regular payments at the end of the period, and repay all the payments you missed within the following 12 months. If you believe that that is the case, prepare to document it.
If your problem is not temporary, the lender may still be receptive to alternatives that are less costly than foreclosure. The most attractive of these to a borrower, because it allows the borrower to remain in the house, is a loan modification that reduces the payment. This could be a lower interest rate, longer term, a different loan type, or any combination of these. Unpaid interest may be added to the loan balance.
Loan modification might be acceptable to a lender if the borrower’s income has been reduced to the point where the current payment is not affordable but a smaller payment is. A lender is likely to be most receptive to a loan modification if convinced that the borrower’s inability to pay is completely involuntary, and that modification would be less costly than foreclosure. For a more extended treatment of this topic, see Mortgage Loan Modifications.
Borrowers with no prospects of a turn-around in their fortunes, who are unable to pay even with a loan modification, must resign themselves to giving up their houses. Even then, lenders will consider alternatives to foreclosure, especially if they are convinced that borrowers are operating in good faith. If the borrower can find a qualified purchaser who will take title in exchange for assuming the mortgage, the lender is likely to allow it. This is called a workout assumption.
Alternatively, the lender may be willing to accept either a short sale or a deed in lieu of foreclosure. In the first, the borrower sells the house and pays the sales proceeds to the lender. In the second, the lender takes title to the house. In both cases the debt obligation usually is fully discharged. (Note the modifier "usually". In early 2010, I came across cases of short sales in which the lender retained the right to pursue the borrower later for any deficiency.) Both a short sale and a deed-in-lieu appear on the borrower’s credit report, and as far as I can determine, they reduce the borrower's credit score as much as a foreclosure.
In some jurisdictions, foreclosure is so costly for the lender relative to short sale or deed-in-lieu that borrowers have bargaining leverage. I have heard of cases in which the borrower got the lender to agree not to report the transaction to the credit bureau if they did a deed-in-lieu.
Most lenders, however, are averse to making such deals with borrowers who have the capacity to continue making payments but would like to stop because they have negative equity – their loan balance is larger than their house value. Borrowers who try to rid themselves of negative equity through short sale or deed-in-lieu may get a chilly reception.
http://www.mtgprofessor.com/a%20-%20payment%20problems/what_should_you_do_when_you_can't_pay.htm
Some variant of this letter is appearing in my mailbox with increasing frequency. The problem is probably going to get worse before it gets better.
Many homeowners faced with this situation do nothing, allowing the problem to overwhelm them when it hits. That is not smart. When you know a tidal wave is coming, you should minimize the damage by preparing for it the best way you can.
In this article, I consider how borrowers who anticipate that they soon will be unable to make their mortgage payments can make the best of a bad situation. The best approach depends importantly on whether or not you have significant equity in your home.
Mortgage Payment Problems When You Have Significant Home Equity
Don’t Practice Denial: If you stick your head in the sand and allow yourself to miss payments, you lose one potentially valuable option: the ability to stay current by raising cash against your equity. So long as your credit is good, you can take out a second mortgage or do a cash-out refinance on your first mortgage. Once you miss payments on the first mortgage, however, you lose this option. No one wants to make a second mortgage to someone who can’t make the payment on the first.
Don’t Expect Help From the Lender: If your ability to pay is impaired but you have substantial equity in your house, informing the lender of your problem is risky. Some lenders will respond positively to help you find a solution, but too many others won’t. A common response is “come back and see us when you have missed two payments.”
The brutal fact is that if you have substantial equity in your house when your income drops, you and the lender are in a conflict situation. (Equity is the current market value of your home, less the balance of all existing liens against it.) Your equity protects the lender against loss. If the lender forecloses, your equity covers not only the loan balance, but also the foreclosure expenses and unpaid interest. The last thing the lender wants, when your ability to pay has been impaired, is to have this equity depleted by your taking out new loans.
Telling borrowers to return after missing two payments removes the danger (to them) of equity depletion. When borrowers return after missing two payments, their credit is shot and they can’t borrow anywhere else.
Using a HELOC to Make the Payment: Borrowers who are current on their mortgage can stay current by borrowing against their equity. The best instrument for this is a HELOC, a credit line, which you can draw on as needed. This doesn’t solve your problem, but it buys time while you find a solution. Within the limited time you have available, your financial situation must recover to the point where you are able to service both loans.
You can estimate how much time you have by dividing 90% of the line by your monthly payment. If your line is $20,000 and your payment $500, for example, you have about 36 months.
Selling the House: If you aren’t confident that your income will be restored during the period a HELOC can keep you afloat, sell the house. At least then you realize the equity in cash. You may still want to use a HELOC to keep the first mortgage current while you sell the house. Obtaining full value sometimes takes some time and you don’t want to be forced into a fire sale.
Forbearance Agreement: If your financial stringency is temporary but you have lost the ability to borrow by falling behind in your payments, there is one other possible option that will keep you in the house: a forbearance agreement with the lender. Under such an agreement, the lender suspends and/or reduces payments for a period, usually less than 6 months, although it can go longer.
At the end of the reduced-payment period, a repayment plan kicks in. You agree to make the regular payment plus an additional agreed-upon amount that will cover all the payments that were not made during the forbearance period. The repayment period is usually no longer than a year.
If the plan is successful, you will be brought current and the lender will suffer no loss. However, the lender will only consider this approach if convinced that your problem is temporary. The burden of proof is on you to document the case.
A forbearance agreement is a second best solution because you won’t get one until you are delinquent. The lender will dictate the terms because you have no place to go.
Your Payment Problem Is Caused or Aggravated By Non-Mortgage Debt
Borrowers with significant equity in their homes, whose payment problems are caused or aggravated by a heavy burden of non-mortgage debt, may be able to extricate themselves by consolidating their non-mortgage debt into a new mortgage. An alternative is consolidation under a Chapter 13 bankruptcy.
The advantage of being your own consolidator is that you stay in charge of your finances, and your credit rating is not materially affected. The disadvantage is that you lose the partial debt burden relief that a Chapter 13 bankruptcy provides.
Being Your Own Consolidator: When you have equity, you can pay off other debts with cash obtained through a cash-out refinance or a second mortgage. Do it if the prospects for success are good.
Consolidation does not reduce your debt, rather it replaces other types of debt with additional mortgage debt. Consolidation will reduce your required monthly payments, however, because mortgage rates are usually lower than non-mortgage rates, the interest is tax exempt, and the term is probably longer. The critical question is whether or not your debts will be manageable after you consolidate. I have three debt consolidation calculators on my web site that should help you answer that question.
You must go this route before you fall behind on your payments. If you fall behind, your credit rating will deteriorate and the terms at which you can consolidate will become increasing onerous. Very quickly the option of being your own consolidator will disappear.
Consolidation Under Chapter 13: Under Chapter 13, you are subject to a debt reorganization and payment plan approved by a court. The plan eliminates interest payments and schedules affordable principal payments to eliminate all non-mortgage debts within a 3 to 5-year period. During this period, you make one monthly payment to a court-assigned trustee, who makes the payments to your various creditors. The creditors are required to accept the plan. When the payment plan has been successfully completed, you are discharged from bankruptcy, but the stain will remain on your credit report for 7 years.
If you do go into Chapter 13, any arrears in your mortgage payments will be added to the other debts that are consolidated. This is so even if you are in foreclosure, provided your house has not been sold. Entering Chapter 13 will stop the foreclosure process. Your mortgage balance stays outside of the Chapter 13 process, however, and you continue to be responsible for the regular scheduled mortgage payments.
Refinancing Out of Chapter 13. If you are in Chapter 13 and have substantial equity in your house, the possibility exists of using it to buy yourself out of Chapter 13.
Some lenders consider people in Chapter 13 with equity in their homes excellent loan prospects. While they wouldn’t touch a debtor who was unable to cope before declaring bankruptcy, the same person can become a good prospect by demonstrating a capacity to handle a reduced burden under Chapter 13. Usually, a lender will look for a perfect Chapter 13 payment record of at least a year.
Ordinarily you would not want to accept such an offer if it meant that your required payments under Chapter 13 would rise as a result. This could happen if your mortgage payments were lower after the refinance and if you have not completed your third year in Chapter 13. Speak to your Chapter 13 trustee before considering a refinance.
Assuming a refinance would not affect your Chapter 13 payments, it may or may not pay to wait, depending on the urgency of your need. Lenders who will limit their loans to 70 or 75% of property value when you are in Chapter 13, may go to 90% or 95% after you are out. Bear in mind, though, that your loan will be classified sub-prime in either case and it will be pricey. To graduate to a higher-quality status and better price, wait another 2 years after exiting Chapter 13.
If You Don't Have Significant Home Equity
Borrowers with no equity can’t open a credit line and draw on it to stay current on their mortgage, nor can they consolidate non-mortgage debts in a new mortgage. The options they have all require the concurrence of the lender.
But that does not mean that they have no leverage. The lack of equity makes foreclosure an unattractive option to the lender. With no equity, the lender who forecloses is not reimbursed for lost interest, foreclosure expenses or real estate sale commissions. Further, the process takes time, during which the borrower lives rent-free. Even if the borrower has other assets, in most states they are beyond the reach of lenders who have foreclosed a mortgage that arose in a home purchase transaction. Hence, lenders are usually receptive to alternatives to foreclosure that cost less.
The most attractive of these to the lender is a forbearance agreement, where payments are suspended for a period, to be made up by larger payments scheduled for the future. If forbearance works, it costs the lender nothing. On the other hand, if it doesn’t work, delaying the foreclosure will raise the cost. For this reason, a lender will only consider forbearance if convinced that the borrower’s problem is temporary.
A temporary reversal is one where, if you are provided payment relief for up to 6 months, you will be able to resume regular payments at the end of the period, and repay all the payments you missed within the following 12 months. If you believe that that is the case, prepare to document it.
If your problem is not temporary, the lender may still be receptive to alternatives that are less costly than foreclosure. The most attractive of these to a borrower, because it allows the borrower to remain in the house, is a loan modification that reduces the payment. This could be a lower interest rate, longer term, a different loan type, or any combination of these. Unpaid interest may be added to the loan balance.
Loan modification might be acceptable to a lender if the borrower’s income has been reduced to the point where the current payment is not affordable but a smaller payment is. A lender is likely to be most receptive to a loan modification if convinced that the borrower’s inability to pay is completely involuntary, and that modification would be less costly than foreclosure. For a more extended treatment of this topic, see Mortgage Loan Modifications.
Borrowers with no prospects of a turn-around in their fortunes, who are unable to pay even with a loan modification, must resign themselves to giving up their houses. Even then, lenders will consider alternatives to foreclosure, especially if they are convinced that borrowers are operating in good faith. If the borrower can find a qualified purchaser who will take title in exchange for assuming the mortgage, the lender is likely to allow it. This is called a workout assumption.
Alternatively, the lender may be willing to accept either a short sale or a deed in lieu of foreclosure. In the first, the borrower sells the house and pays the sales proceeds to the lender. In the second, the lender takes title to the house. In both cases the debt obligation usually is fully discharged. (Note the modifier "usually". In early 2010, I came across cases of short sales in which the lender retained the right to pursue the borrower later for any deficiency.) Both a short sale and a deed-in-lieu appear on the borrower’s credit report, and as far as I can determine, they reduce the borrower's credit score as much as a foreclosure.
In some jurisdictions, foreclosure is so costly for the lender relative to short sale or deed-in-lieu that borrowers have bargaining leverage. I have heard of cases in which the borrower got the lender to agree not to report the transaction to the credit bureau if they did a deed-in-lieu.
Most lenders, however, are averse to making such deals with borrowers who have the capacity to continue making payments but would like to stop because they have negative equity – their loan balance is larger than their house value. Borrowers who try to rid themselves of negative equity through short sale or deed-in-lieu may get a chilly reception.
http://www.mtgprofessor.com/a%20-%20payment%20problems/what_should_you_do_when_you_can't_pay.htm
Mortgage Amortization - Not as Scary as It Sounds Article Source: http://EzineArticles.com/164616
Amortization describes the process of dividing mortgage payments over the term of the loan between interest paid and principal repayment. Mortgages loans are front loaded with interest; this means at the beginning of the loan you are paying more in interest than you are repaying on the principal balance. This works in your favor at the end of the mortgage because the interest is calculated on the remaining balance. The smaller your outstanding balance, the less you will pay in interest.
For example, if you were to borrow $100,000 for your home at 6.5% interest over 30 years your monthly payment would be $630. When you make your first payment $540 of the $630 will be paid to interest. This means you will only pay $90 towards the principal balance of your loan. This front loading of interest makes it very difficult to build equity in your home during the early years of your mortgage.
Every month that you make a payment the amount of interest you pay is based on the outstanding balance of the mortgage. In this case, the second payment you make the interest will be based on a balance of $99,910. By using an amortization table you will be able to see how the interest amount you pay decreases as the principal balance is paid down.
By the time you reach the halfway point in repayment of the mortgage, you will have made 256 monthly payments over the course of 21 years. The remaining balance will be paid back in 9 years. The fact that you will not pay back half of a 30 year mortgage for the first 21 years is a strong case for making bi-weekly mortgage payments. By making bi-weekly payments you can significantly reduce the amount of interest paid over the life of the mortgage, and pay off the balance much faster.
source: http://ezinearticles.com/?Mortgage-Amortization---Not-as-Scary-as-It-Sounds&id=164616
by: Louie Latour
For example, if you were to borrow $100,000 for your home at 6.5% interest over 30 years your monthly payment would be $630. When you make your first payment $540 of the $630 will be paid to interest. This means you will only pay $90 towards the principal balance of your loan. This front loading of interest makes it very difficult to build equity in your home during the early years of your mortgage.
Every month that you make a payment the amount of interest you pay is based on the outstanding balance of the mortgage. In this case, the second payment you make the interest will be based on a balance of $99,910. By using an amortization table you will be able to see how the interest amount you pay decreases as the principal balance is paid down.
By the time you reach the halfway point in repayment of the mortgage, you will have made 256 monthly payments over the course of 21 years. The remaining balance will be paid back in 9 years. The fact that you will not pay back half of a 30 year mortgage for the first 21 years is a strong case for making bi-weekly mortgage payments. By making bi-weekly payments you can significantly reduce the amount of interest paid over the life of the mortgage, and pay off the balance much faster.
source: http://ezinearticles.com/?Mortgage-Amortization---Not-as-Scary-as-It-Sounds&id=164616
by: Louie Latour
Buffett predicted game over for Fannie and Freddie
For Fannie May and Freddie Mac the game is over. The Sage of Omaha has spoken.
Warren Buffett, the world’s richest man, said it was no longer feasible for America’s two biggest mortgage finance companies to exist independently. He went on to forecast that the US economy would remain in the doldrums for at least five months.
Fannie and Freddie, which underpin America’s mortgage market by buying home loans and packaging them into bonds, did not have any net worth, Mr Buffett told CNBC. Both face losses of tens of billions of dollars on the bonds.
Analysts said they look increasingly likely to need a cash injection from the Government and Mr Buffett said they were too big to fail, predicting: “You will see some action fairly soon.”
Expectations that the Government will bail out Freddie and Fannie have been growing since Congress granted permission for it to inject money into the two groups if required.
However, any government infusion would see it buying newly issued shares in a transaction that investors believe would wipe out the value of its previously issued stock. As a result, investors are fleeing the groups’ shares, both of which are down by more than 90 per cent this year.
Mr Buffett was also downbeat about the housing market and, in turn, the broader economy. “What we’re seeing in business, in our retail business, or anything having to do with housing, is a further slowing down in June and July, both in terms of credit experience where people first got into trouble with house payments, and now credit card payments,” he said. “In my judgment, it [the economy] won’t be any better five months from now.”
Mr Buffett, who runs the Berkshire Hathaway investment group from its headquarters in Omaha, Nebraska, added: “You always find out who’s been swimming naked when the tide goes out. We found out that Wall Street has been kind of a nudist beach.”
Mr Buffett said he expected more banks to fail, especially in areas where there was a housing bubble. “We will see failures where the bankers were dumb in what they did,” he said.
source: Tom Bawden
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4589755.ece
Warren Buffett, the world’s richest man, said it was no longer feasible for America’s two biggest mortgage finance companies to exist independently. He went on to forecast that the US economy would remain in the doldrums for at least five months.
Fannie and Freddie, which underpin America’s mortgage market by buying home loans and packaging them into bonds, did not have any net worth, Mr Buffett told CNBC. Both face losses of tens of billions of dollars on the bonds.
Analysts said they look increasingly likely to need a cash injection from the Government and Mr Buffett said they were too big to fail, predicting: “You will see some action fairly soon.”
Expectations that the Government will bail out Freddie and Fannie have been growing since Congress granted permission for it to inject money into the two groups if required.
However, any government infusion would see it buying newly issued shares in a transaction that investors believe would wipe out the value of its previously issued stock. As a result, investors are fleeing the groups’ shares, both of which are down by more than 90 per cent this year.
Mr Buffett was also downbeat about the housing market and, in turn, the broader economy. “What we’re seeing in business, in our retail business, or anything having to do with housing, is a further slowing down in June and July, both in terms of credit experience where people first got into trouble with house payments, and now credit card payments,” he said. “In my judgment, it [the economy] won’t be any better five months from now.”
Mr Buffett, who runs the Berkshire Hathaway investment group from its headquarters in Omaha, Nebraska, added: “You always find out who’s been swimming naked when the tide goes out. We found out that Wall Street has been kind of a nudist beach.”
Mr Buffett said he expected more banks to fail, especially in areas where there was a housing bubble. “We will see failures where the bankers were dumb in what they did,” he said.
source: Tom Bawden
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4589755.ece
The Mortgage Story You Haven’t Heard
If you were Fannie Mae or Freddie Mac how would you answer the various news stories which question your financial health?
FHALoanPros.com has obtained the letter below. It’s a response by Peter Federico, Freddie Mac’s senior vice president of asset and liability management, to recent news coverage in the Wall Street Journal and offers a perspective which does not seem to be getting much attention.
The points made are important because with few facts, little balance and great haste we are quickly moving toward the nationalization of both Fannie Mae and Freddie Mac. Before this happens it might be good to consider the consequences — both intended and otherwise — that are likely to emerge from the take-over of either company.
Right now we have a functioning secondary market that buys local loans, packages them and then sells mortgage-backed securities to investors worldwide. Fannie Mae and Freddie Mac are crucial to the secondary market, disable one or both companies, have them taken over by federal stewards, and the result could be a smaller secondary marketplace, one that buys far fewer local mortgages.
If you want to see home values shudder and fall, if you want to see the value of your house tank, then damaging the secondary market would certainly accomplish that task, especially now when the National Association of Realtors says existing home prices in June fell 6.1 percent from a year ago and loan applications are down 34 percent from a year earlier according to the Mortgage Bankers Association.
Mr. Federico’s letter is below:
Freddie Mac and The Wall Street Journal agree on at least one thing: our successful $3 billion debt auction on August 19 demonstrates we are able to fund ourselves. But while the Journal sees the results of the auction as a sign that Freddie Mac is in poor health, the facts instead suggest quite the opposite.
The housing market is in terrible condition, with default and credit loss rates not seen since the Great Depression. Throughout the past year, much of the mortgage market has either shut down or is operating at a fraction of its capacity as most mortgage investors have fled the market. The one part of the market that continues to operate well is the conventional conforming market served by Freddie Mac and Fannie Mae. Throughout the crisis, Freddie Mac has fulfilled our mission of providing liquidity and support to the market, purchasing nearly $300 billion in mortgages during the first half of 2008 alone.
Freddie Mac, of course, is not immune to the problems in the mortgage market. Like other companies involved in residential mortgage lending and investing, we have reported losses. But our mortgage default and charge off rates are a fraction of industry averages. We continue to maintain capital above regulatory requirements. Our mortgage guarantee and investment businesses are experiencing strong revenue growth - with net interest income in the second quarter up more than 90 percent. And contrary to the Journals story, we have a strong liquidity position with continued access to the debt markets.
Our August 19 debt auction of 5-year notes was priced to yield 4.172 percent, or 113 basis points above yields on Treasury notes. This was the highest spread Freddie Mac has had to pay on such debt. The Journal interpreted this as indicating a loss of confidence in Freddie Mac.
But the Journal failed to consider that spreads to Treasuries have widened on all securities, and often by a much higher amount. For example, spreads on securities issued by AA-rated financial companies have risen from around 50 basis points in early 2007 to more than 300 basis points in April 2008 and about 250 basis points today. It is not surprising that spreads to Treasuries on all kinds of securities are rising, given the turmoil in financial markets and the resulting flight to Treasuries by many investors.
Consider these facts, as well as that the offering was oversubscribed at a time of both high market volatility and generally slow summer activity in the markets. Consider also that a few hours later, when the issue was freed to trade, the spread narrowed 5 basis points a vast move in a market typically known for swings of 1 to 2 basis points. Based on all these facts, an objective observer would likely conclude that Freddie Mac is in a much healthier financial position than the Journal would have one believe.
The Journal also suggested that rising debt borrowing costs for Freddie Mac and Fannie Mae’s could lead to higher mortgage rates for consumers and prolong the housing slump. In fact, mortgage rates are affected by a variety of factors, and primarily by pricing of credit risk. While mortgage rates have risen in recent months, they remain near historic lows. For example, rates on 30-year fixed-rate loans currently are about 6.5 percent, according to Freddie Mac’s Primary Mortgage Market Survey. That is lower than the average annual 30-year rates in 32 of the prior 37 years.
It may make good copy to portray Freddie Mac as losing the confidence of investors and thus raising mortgage rates for borrowers. But in truth, agency debt investors know we are still money good- and we continue to pump billions of dollars in liquidity into a housing market that badly needs us.
source:
Peter G. Miller
http://www.fhaloanpros.com/2008/08/the-mortgage-story-you-havent-heard/
FHALoanPros.com has obtained the letter below. It’s a response by Peter Federico, Freddie Mac’s senior vice president of asset and liability management, to recent news coverage in the Wall Street Journal and offers a perspective which does not seem to be getting much attention.
The points made are important because with few facts, little balance and great haste we are quickly moving toward the nationalization of both Fannie Mae and Freddie Mac. Before this happens it might be good to consider the consequences — both intended and otherwise — that are likely to emerge from the take-over of either company.
Right now we have a functioning secondary market that buys local loans, packages them and then sells mortgage-backed securities to investors worldwide. Fannie Mae and Freddie Mac are crucial to the secondary market, disable one or both companies, have them taken over by federal stewards, and the result could be a smaller secondary marketplace, one that buys far fewer local mortgages.
If you want to see home values shudder and fall, if you want to see the value of your house tank, then damaging the secondary market would certainly accomplish that task, especially now when the National Association of Realtors says existing home prices in June fell 6.1 percent from a year ago and loan applications are down 34 percent from a year earlier according to the Mortgage Bankers Association.
Mr. Federico’s letter is below:
Freddie Mac and The Wall Street Journal agree on at least one thing: our successful $3 billion debt auction on August 19 demonstrates we are able to fund ourselves. But while the Journal sees the results of the auction as a sign that Freddie Mac is in poor health, the facts instead suggest quite the opposite.
The housing market is in terrible condition, with default and credit loss rates not seen since the Great Depression. Throughout the past year, much of the mortgage market has either shut down or is operating at a fraction of its capacity as most mortgage investors have fled the market. The one part of the market that continues to operate well is the conventional conforming market served by Freddie Mac and Fannie Mae. Throughout the crisis, Freddie Mac has fulfilled our mission of providing liquidity and support to the market, purchasing nearly $300 billion in mortgages during the first half of 2008 alone.
Freddie Mac, of course, is not immune to the problems in the mortgage market. Like other companies involved in residential mortgage lending and investing, we have reported losses. But our mortgage default and charge off rates are a fraction of industry averages. We continue to maintain capital above regulatory requirements. Our mortgage guarantee and investment businesses are experiencing strong revenue growth - with net interest income in the second quarter up more than 90 percent. And contrary to the Journals story, we have a strong liquidity position with continued access to the debt markets.
Our August 19 debt auction of 5-year notes was priced to yield 4.172 percent, or 113 basis points above yields on Treasury notes. This was the highest spread Freddie Mac has had to pay on such debt. The Journal interpreted this as indicating a loss of confidence in Freddie Mac.
But the Journal failed to consider that spreads to Treasuries have widened on all securities, and often by a much higher amount. For example, spreads on securities issued by AA-rated financial companies have risen from around 50 basis points in early 2007 to more than 300 basis points in April 2008 and about 250 basis points today. It is not surprising that spreads to Treasuries on all kinds of securities are rising, given the turmoil in financial markets and the resulting flight to Treasuries by many investors.
Consider these facts, as well as that the offering was oversubscribed at a time of both high market volatility and generally slow summer activity in the markets. Consider also that a few hours later, when the issue was freed to trade, the spread narrowed 5 basis points a vast move in a market typically known for swings of 1 to 2 basis points. Based on all these facts, an objective observer would likely conclude that Freddie Mac is in a much healthier financial position than the Journal would have one believe.
The Journal also suggested that rising debt borrowing costs for Freddie Mac and Fannie Mae’s could lead to higher mortgage rates for consumers and prolong the housing slump. In fact, mortgage rates are affected by a variety of factors, and primarily by pricing of credit risk. While mortgage rates have risen in recent months, they remain near historic lows. For example, rates on 30-year fixed-rate loans currently are about 6.5 percent, according to Freddie Mac’s Primary Mortgage Market Survey. That is lower than the average annual 30-year rates in 32 of the prior 37 years.
It may make good copy to portray Freddie Mac as losing the confidence of investors and thus raising mortgage rates for borrowers. But in truth, agency debt investors know we are still money good- and we continue to pump billions of dollars in liquidity into a housing market that badly needs us.
source:
Peter G. Miller
http://www.fhaloanpros.com/2008/08/the-mortgage-story-you-havent-heard/
US Bank Home Mortgage Review
Fixed rate mortgages are available for 10, 15, 20, or 30 year terms, and can be bought down by paying points (or percentages of the balance owed). US Bank Home Mortgage offers three or five year ARMs, also with the option to buy down the rate, and Jumbo 15 or 30 year fixed rate mortgage loans for balances exceeding $417,000 (or $625,500 in Alaska or Hawaii).
Twenty percent down payments are required for conforming and Jumbo fixed rate or ARM mortgages in order to qualify for US Bank’s Home Mortgage division’s best rates. They also write FHA mortgage loans with 3% down, and VA loans with 0% down. It’s refreshing to see such straightforward mortgage terms listed by a major bank.
They also provides lots of good solid general information at their website, such as a clear, simple explanation of the difference between the interest rate and the APR (annual percentage rate), and explanation of how home mortgage interest is calculated, a percentage for estimating origination fees, and the approximate dollar amount of monthly payment per $1000 borrowed for each separate type of mortgage.
US Bank Home Mortgage has weathered the subprime loan crisis better than a lot of other mortgage lenders, perhaps because of their more traditional approach to mortgage underwriting. US Bancorp stock has held steady the first quarter of 2008, unlike a number of other financial institutions that are currently all over the map and extremely volatile.
Warren Buffett actually increased his stake in US Bancorp in February of 2008, and analysts have been recommending its stock as one of the few good places in the financial sector to park money. Dick Bove, an analyst at Punk Ziegel recently put it this way, “…these guys were not at all innovative in banking. [U.S. Bancorp] did not become involved with the capital markets activities of their peers. The net result is that few problems are being handed to the current management team. This is a huge benefit in today’s markets.”
While US Bank may not offer all the bells and whistles of some of the more creative financing options that other financial institutions advertise, their rates are quite competitive and their willingness to disclose and explain their policies and procedures is exemplary. When searching for a mortgage, finding a lending institution with that kind of transparency should be as vital to a new borrower as finding a decent rate and palatable terms.
source: http://www.personalfinanceanalyst.com/us-bank-home-mortgage-review/
Twenty percent down payments are required for conforming and Jumbo fixed rate or ARM mortgages in order to qualify for US Bank’s Home Mortgage division’s best rates. They also write FHA mortgage loans with 3% down, and VA loans with 0% down. It’s refreshing to see such straightforward mortgage terms listed by a major bank.
They also provides lots of good solid general information at their website, such as a clear, simple explanation of the difference between the interest rate and the APR (annual percentage rate), and explanation of how home mortgage interest is calculated, a percentage for estimating origination fees, and the approximate dollar amount of monthly payment per $1000 borrowed for each separate type of mortgage.
US Bank Home Mortgage has weathered the subprime loan crisis better than a lot of other mortgage lenders, perhaps because of their more traditional approach to mortgage underwriting. US Bancorp stock has held steady the first quarter of 2008, unlike a number of other financial institutions that are currently all over the map and extremely volatile.
Warren Buffett actually increased his stake in US Bancorp in February of 2008, and analysts have been recommending its stock as one of the few good places in the financial sector to park money. Dick Bove, an analyst at Punk Ziegel recently put it this way, “…these guys were not at all innovative in banking. [U.S. Bancorp] did not become involved with the capital markets activities of their peers. The net result is that few problems are being handed to the current management team. This is a huge benefit in today’s markets.”
While US Bank may not offer all the bells and whistles of some of the more creative financing options that other financial institutions advertise, their rates are quite competitive and their willingness to disclose and explain their policies and procedures is exemplary. When searching for a mortgage, finding a lending institution with that kind of transparency should be as vital to a new borrower as finding a decent rate and palatable terms.
source: http://www.personalfinanceanalyst.com/us-bank-home-mortgage-review/
The Best Advice For Mortgage Bankruptcy
Mortgage Bankruptcy is designed to help people have filed for bankruptcy. This is a special type of product, which is also known as subprime mortgages. The options are also different from those who want the results of this kind. For others, this could increase the mortgage loans with a status as a product of credit repair.
This is a statement of the law really need financial support. When activated, at least be sure you have plenty of file and you can with the help of family and close friends to get. You can have a Mortgage Bankruptcy note that financial constraints to consider a mortgage. Here are some tips that you need to find the financing you.
Here you find a mortgage after bankruptcy is high, you can even finance day discharge after Mortgage Bankruptcy. The catch is that the recent bankruptcy, is a high level of interest and costs. You must also choose the mortgage that specialize in mortgage for your situation.
Advice For Mortgage Bankruptcy
To avoid paying too much for the financing of the new mortgage, you should do your homework and research mortgage lenders. If you have bad credit or Mortgage Bankruptcy, you might think it’s impossible to get a mortgage. But they are wrong. In fact, you can do yourself a better Mortgage Bankruptcy, what if you only bad credit on.
To a Mortgage Bankruptcy, you have to do certain things. The first thing to do to fulfill the terms of its bankruptcy. Once you start to receive offers of credit, be careful. It may be tempting to go out and find a new use credit to something that you can buy to do without it during the bankruptcy. But you do not.
If you apply for a mortgage, you know, you were presented with the finance charge. You want to make sure that you learn from bankruptcy and you can pay off your mortgage. You want to ensure that the cash advance. But if you can not afford to save for a deposit, you can seek help fund a program of community in your area.
You can lose through bankruptcy, bankruptcy or are thinking, and you may be wondering how to affect this on your credit card. You must clearly understand that your credit history once again takes time, so it must be tolerant, if you have complications in the street. Do not forget the Mortgage Bankruptcy as a financial network, see, you can use to create a stable foundation for your financial future.
Source: www.thefutureidea.com
This is a statement of the law really need financial support. When activated, at least be sure you have plenty of file and you can with the help of family and close friends to get. You can have a Mortgage Bankruptcy note that financial constraints to consider a mortgage. Here are some tips that you need to find the financing you.
Here you find a mortgage after bankruptcy is high, you can even finance day discharge after Mortgage Bankruptcy. The catch is that the recent bankruptcy, is a high level of interest and costs. You must also choose the mortgage that specialize in mortgage for your situation.
Advice For Mortgage Bankruptcy
To avoid paying too much for the financing of the new mortgage, you should do your homework and research mortgage lenders. If you have bad credit or Mortgage Bankruptcy, you might think it’s impossible to get a mortgage. But they are wrong. In fact, you can do yourself a better Mortgage Bankruptcy, what if you only bad credit on.
To a Mortgage Bankruptcy, you have to do certain things. The first thing to do to fulfill the terms of its bankruptcy. Once you start to receive offers of credit, be careful. It may be tempting to go out and find a new use credit to something that you can buy to do without it during the bankruptcy. But you do not.
If you apply for a mortgage, you know, you were presented with the finance charge. You want to make sure that you learn from bankruptcy and you can pay off your mortgage. You want to ensure that the cash advance. But if you can not afford to save for a deposit, you can seek help fund a program of community in your area.
You can lose through bankruptcy, bankruptcy or are thinking, and you may be wondering how to affect this on your credit card. You must clearly understand that your credit history once again takes time, so it must be tolerant, if you have complications in the street. Do not forget the Mortgage Bankruptcy as a financial network, see, you can use to create a stable foundation for your financial future.
Source: www.thefutureidea.com
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