May 2010 Archives
A mortgage for first time home buyers or people who are looking to refinance their homes has become much easier in later years thanks to the internet and the ability to obtain a mortgage on-line.
Of course there is your local bank, where you can go, walk in, sit down with the branch manager, and have him set up an appointment with the banks mortgage representative.
Thats all fine, but not everybody has time for that. So they resort to the internet, which isnt such a bad idea considering that there are literally thousands of lenders looking for your business across the country and using the internet as a tool to get it.
Using the internet for obtaining a mortgage on-line has its benefits because it gives you the opportunity to shop lenders and rates.
By filling out a simple on-line form with limited information, you will be putting lenders at your service within twenty-four hours of your submission.
The mortgage industry is a very competitive one, so these lenders will be fighting for your business, forcing them to offer you the lowest rates possible. You can than base your decision on the one that is most ideal for you, and most of all, the one that best meets your budget.
Also, if your situation is unique or special, such as having bad credit, no money to put down, or your looking for a specific program such as interest only, the internet is perhaps the best resource for you to find what you need.
For loan officers and mortgage brokers on the market for mortgage leads, the quality of the lead should be a top priority when determining which company to invest in.
For this reason, before you invest, be sure to do a little research. After reading about the lead company on their web site, be sure to call and speak with someone in customer service.
The best way to find out about the quality of the leads before you purchase them is to ask some specific questions.
Ask where they obtain their leads from.
The best answer you can get to this question is that they own and operate the web sites where customers visit and fill out the on line form.
If a lead company is obtaining their leads from a third party vendor and than reselling them to loan officers at a profit, than they are basically recycling leads. Better put, they are selling junk.
And you never know how many times that third party vendor sold those leads to other lead providers.
Another question to ask is about their delivery method.
The most efficient way to have leads delivered is by way of e-mail.
Especially if you are purchasing real time leads, the lead will literally end up in your mail box within seconds of the customer hitting the submit button on the on-line form.
To sum it all up, a good quality lead is one that is fresh, not dated, or recycled.
And remember, you work hard for your money, so make sure you are getting what you pay for.
The following is a short story about an old couple who were abandoned by their children and family to fend for themselves. After having sacrificed for several decades to raise their family, all they had in return were debts and mortgages, which appeared impossible to settle since they could no longer afford to pay them off. They owned nothing except their home, which they cherish for the memories it gave them.
Hope beckoned in the form of Reversed Mortgage and this discovery led them to relocate their dignity and self-confidence to survive for as long as they exist.
Usually, I would blame my ageing cells for the sleeplessness and take a pill to induce sleep. But this night I felt calm and relaxed. Reversed Mortgage has given me hope when everything else failed. My wife of 34 years was sitting next to me, with her head resting against my tired, droopy shoulder. The thought of how the chatter and laughter which was usually heard throughout the day and late into the night has been replaced with the numbing silence, brought a deep sorrow from within me.
When I turned 68 a few months ago, there were no birthday wishes or greeting cards in the mailbox. Neglected by our three children and relatives, we have been fending for ourselves over the past few years. The debts kept piling up and mortgages forced me to seek for employment even after my retirement years ago.
Due to my ailing health, I could not work for long hours and had to quit after a few weeks. We sought financial aid from our children. None of them were willing to part with their money for us. Social security hardly met our requirements. All we had to call our own, was our the place we live in and everything in it.
It was only a couple of weeks ago, my wife and I decided that the only way we could overcome this financial problem is to sell our house. We could not bear to part with it since we have so many memories, which are engraved within its walls and our hearts, but we did not seem to have another option.
Thankfully, we received some timely advice from a close friend when we were in the brink of putting up our house for sale, he suggested that we opt for a Reverse Mortgage. At first, we were pessimistic when the word ‘mortgage’ came up and we refused to listen further but when he insisted that we trust his opinion; we obliged.
What got us excited was that we did not have to sell our house! We could live in it for as long as we wanted and we did not have to repay as long as we stayed there. We could even resell the house whenever we wanted. We are not required to have any credit or income either!
He took us to a Reversed Mortgage counselor who gave us more details. We were told that I would not be under any pressure to make monthly repayments. There were also various options in terms of interest rates and I could use the funds, which I obtain from the Reversed Mortgage for any purpose. I could receive the cash in one lump sum or as monthly payouts or both.
Since I am over 62 years of age and own my home, I was told that I am eligible for a Reverse Mortgage.
Although the initial fear about how my debts would rise, as the equity would fall, the counselor convinced me that the equity would rise with time as the value of the house goes up.
With over 300,000 senior citizens opting for Reversed Mortgage, it seemed suitable and convenient for us too. I could even pay the various loan fees through the mortgage fund.
Well, we did realize that this facility did have its disadvantages. For instance, we will have to make the repayment if we fail to pay our property taxes, the house is not well maintained or if we fail to keep our home insured.
After completing the research we did together and the counseling we attended, we decided to opt for Reversed Mortgage. Having weighed the advantages and those that are against it , we knew that this was by far a much better solution than to sell our home or seek for a loan elsewhere.
I held my wife closely and sighed in relief. She looked up and I saw hope embedded in those gray eyes. Smiling at each other, we knew that we extended ourselves another milestone together. This time, we could leave our worries behind.
Interest Only Mortgages FSA Makes Move To Protect Homeowners
Abbey recently stated that over 25% of homeowners decide to take out an interest-only mortgage. It’s not hard to see why the monthly payments are significantly less, just look at this example based on a 25 year 125,000 mortgage at 5%. The interest only mortgage will cost 525 per month – but the repayment mortgage is 735 per month an additional 210 a month that’s a lot of money!
At the root of the issue are the first time buyers they simply can’t afford the repayment mortgage, so take the interest only option as an easier way out. However, the interest only mortgage must be accompanied by a suitable savings vehicle to cover the outstanding capital at the end of the mortgage term, and it is this that many are failing to do as many as 37% in fact.
Now the Financial Services Authority (FSA) has stepped in, concerned that many homeowners will face a shortfall at the end of their mortgage term. It is now necessary for lenders to see firm evidence from new borrowers that they have set up a savings vehicle to cover the capital. Previously, borrowers just had to state their intention, for example, they would sell the property to raise the capital. However, that will no longer be good enough. The lender will need to see a proper plan set up they are not allowed to set you up on an interest only mortgage without that proof. If they did, they would be going against regulations and would be penalised by the FSA.
The lender will now need to see proof of a personal equity plan (PEP), an Individual Savings Account (ISA), or evidence that 25% tax-free cash from a personal pension plan (PPP) will ultimately cover the outstanding capital. It will no longer be good enough to say that you will set it up you must show that you have already sorted it out!
In the short time that the new regulations have been in force, individual lenders are already making their own interpretations of the rules. The Nationwide Building Society is not allowing borrowers to use a future inheritance, or future pay rises as a basis on which to set up an interest only mortgage. Similarly, expected bonuses will not be good enough either, not unless you can prove that you will definitely be receiving them. Bonuses based on performance can’t be guaranteed, so would not count.
People that already have their own home will not be subjected to the same rigorous checks however. As long as you are borrowing less than two thirds of the new property’s value, and you have 150,000 of net equity in your current home, then Nationwide will accept you as a customer.
On the whole, mortgage advisers will not recommend interest only mortgages, agreeing that they represent too much risk. Repayment mortgages guarantee that all monies owed are paid at the end of the term, but a separate savings vehicle could fail to live up to expectations, and you could end up with a shortfall. Most mortgage advisers will recommend a repayment mortgage to bypass that risk.
On the other hand, the interest only mortgage is a useful short term solution, and if you can assure your mortgage adviser that you intend to switch over to a repayment mortgage as soon as you can afford to, they may well support your decision. Even in this case however, you will still need to provide the same details as if you were intending to stick with it for the full term. You simply won’t be able to get an interest only mortgage without providing the right paperwork.
The best all round solution is to get an interest only mortgage that allows you to overpay. So if you find that you have some extra capital, you can put it onto your mortgage, and reduce the capital. These types of mortgage are widely available, and many allow you to repay 10% or more in a single year. Of course, if you can’t afford it, then you don’t have to at least you have the choice. Just make sure, before signing up, that you can overpay without penalty.
When looking for additional funds for retirement, seniors can turn to a financial tool called HUD reverse mortgages. Seniors can have access to their equity from their homes without the worries of making monthly repayments.
In order to be eligible for a HUD reverse mortgage, there are a few basic requirements to fulfill. Homeowners must meet the following criteria in order to be eligible for a HUD reverse mortgage:
1.) The home must be a principal residence.
2.) Homeowner must be age 62 or older.
3.) The home must be owned free and clear or have a mortgage balance that can be paid from equity.
4.) The property must be a single-family home, a one-to-four unit dwelling with one unit occupied by the applicant, a manufactured home (mobile home), or a unit in condominiums or Planned Unit Developments.
5.) The property must meet minimum property standards.
Homeowners that qualify can receive payments in a lump sum, on a monthly basis, or on an occasional basis as a line of credit. At a later date the payment options can be restructured if circumstances change.
The amount that can be borrowed on a HUD reverse mortgages is determined by the borrowers age which in any case the older the borrower the more that can be borrowed against the value of the home and the lower the interest rate the more that can be borrowed.
There is no hard limit for home value to qualify for a HUD reverse mortgage, but the amount that may be borrowed is capped by the maximum FHA mortgage limits for an area. This means that owners of a high priced home can’t borrow any more than the owners of homes valued at the FHA limit. There are no asset or income limitations on borrowers receiving a HUD reverse mortgage.
Unlike ordinary home loans, a HUD reverse mortgage does not require repayment as long as the home remains the borrowers primary residence. When the home is sold the Mortgage company recovers their principal, plus interest, and the remaining value of the home goes to the homeowner or to his or her survivors. Should the sales proceeds not cover the amount owed, HUD will pay the mortgage company for any shortfall.
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