How to make money buying and selling foreclosed homes – Part 12

Who wouldn’t like to make some “gentle cash” right now? You can if you have the know-how and the investment capital to begin buying and selling homes that are have been taken over by the banks in foreclosure. Homes that have been foreclosed are “take now” bargains which can lead you down the avenue of adventure, risk, and prosperity if you know what you are doing. Hopefully, you have been saving your money, and are now looking for an avenue involving some risk, but profitable gain. If you feel you would like to begin swimming in this sea, know that you have a lot to gain, and much to learn. .

If you are not a realtor, you will need to be in league with a savy, licensed one in your area. Realtors know the “tricks of the trade” to put you in line to negotiate with banks and sellers. There are a variety of packages which will help you get started, and several methods which can work for you in your state. The main thing you must think about if you are headed in this direction is that you want to buy low and sell at a modest price. Today, the market is glutted with foreclosed homes, and in many areas, homes are just not selling fast. Homes, however, are selling, and always believe that you can be the one who makes it happen.

First get lists of foreclosed property either from your local banks. Each bank has an updated list of properties which have cleared and are have been legally foreclosed. These properties can be viewed at the potential buyer’s discretion. The list will show how much money the bank is asking for the property, its address, and a few details describing each home. The bank’s list is not as detailed as a regular MLS listing might be. You will have to set up a time to view the listings you qualify to purchase. These properties are usually considered “raw” in that many of them have not been cleaned or prepared for viewing. The bank does not put a lot into refurbishing these homes. They will leave that up to the buyer. Some banks, however, do maintain the grounds surrounding the homes. They also may do minor repairs such as patching a few leaks and fixing a few windows. The properties are sold in “As Is” condition, which allows you to purchase at the low price asked for by the bank.

Home auctions are often held when owners neglect to pay back taxes. They are usually given a period of several years to pay up, and when the home goes to the state, the property is sold at a public auction. These auctions are generally advertised

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About Shared Ownnership Mortgages

Owning a home is never easy these days, especially with the rising costs in the real estate industry. This is the reason why there are a lot of mortgage options and home loan payment schemes that you can take advantage of. You just need to learn all that you can about the payment options that are available for you so that you can decide which one will best suit your needs.

How does a shared ownership mortgage work? Shared ownership mortgage is a term used to describe a method by which an individual can have his or her own home without having to share the house’s occupancy with another individual or family. Not all individuals or families as a whole can afford to purchase a house right off the market, and this is mostly caused by their financial capabilities. Thus, payment schemes and options to own a home have been developed to give everyone a fair chance of owning a residential property that they can rightly call their own. With a shared ownership mortgage, you are entitled to own a ’share’ of the property where you will have exclusive residential rights for. The other part of the property’s share that you do not own is what you will be renting out. For example, if there is a property that is worth an amount that is represented with the letter A. With a shared ownership mortgage, you can own 50% of the A amount while the other half will be your monthly rent. As you become more financially stable, you can gradually work your way towards buying part of the remaining 50% while still needing to pay the other part as a monthly fee until you have fully purchased the property.

What are the characteristics of a shared ownership mortgage? A shared ownership mortgage assists those who cannot afford to buy a home right off the market. With a shared ownership mortgage, although you may not have not fully purchased the property where you are residing at, you still have the complete rights like that of a regular homeowner. As compared to the United States where a shared ownership mortgage can exist between friends and relatives whose rights for the portions of the house are subdivided equally, in the UK, the terms are much less complicated. Just imagine what will happen if four friends move in together and they have fully purchased a house which was previously under a shared ownership mortgage. What will happen if they part ways? This scenario will be avoided because in the UK, it is only the housing association and the borrower who have ownership rights to the property. However, the right to live in the house is retained solely by the home owner although part of the property is still owned by the housing association.

Through which establishments are shared ownership mortgages available? Cooperatives, housing trusts and housing associations are the establishments where you can take advantage of a shared ownership mortgage. They are the ones who own the remaining property rights for the part of the share that you do not own.

What are the advantages of a shared ownership mortgage? Those who do not have a chance of owning a home or a piece property all in one purchase will benefit from a shared ownership mortgage. This is because the borrower is given more leeway when it comes to paying for the property in full. If you are not yet capable of paying for the full amount, then you can already own part of the share of the property while paying rent for the remaining share that you do not own. Unlike a fixed amount mortgage, for example, you need to pay for interest rates and penalties if you are unable to make a payment for the monthly premium. With a shared ownership mortgage, you can just buy the remaining share of the property when you are able to do so. The rest of the time, you will need to shell out money for the monthly rent.

One other advantage of shared ownership mortgage is that you have a total of 99 years to purchase the property in full which basically means that you have the rest of your life to buy off the property.

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Tips for avoiding foreclosure – Part 3

Finally, after presidential candidate Hillary Clinton speaks of addressing the foreclosure dilemma throughout the United States, with California being one of the hardest hit states, it looks like the current administration might be ready to address this issue.

This was announced today through the Associated Press. The proposal, addressing sub prime borrowers, may provide them with an interest rate freeze of up to five years. Home loans that increased their interest rates before January 1, 2007 and folks that bought way over their financial head even without sub prime programs will not be eligible. Bush indicated that 1.2 million people could be eligible for help, however only a fraction of those will be eligible for a rate freeze. Others would get help in refinancing with their lenders or moving into a home loan secured by the Federal Housing Administration. Finally, any help will only come to those that ask for assistance. Bush urged folks to contact a hot line number 1-888-995-HOPE. It is projected that this will provide relief to about 300,000 families. This is a voluntary private sector arrangement that involves no government money.

Right now, nearly one million homes are in foreclosure. President Bush states that if this increases, this could have dire consequences on our economy. Bush has been widely criticized as moving too slowly on this issue.

Per the Ventura County Star, first quarter foreclosure sales in 2006 for Ventura County, California, were 62. For the same period in 2007, foreclosure sales rose to 548. That is a increase of 784%. In Los Angeles County, foreclosure sales increased this first quarter at a rate of 675%. Santa Barbara saw an increase of 768%.

Too bad this was not addressed when folks were being offered these impossible home loan programs. Countrywide is one of the current lenders offering to re-negotiate interest rates with borrowers, but as this author understands, this is only once the borrowers have entered foreclosure and not all borrowers will qualify for this assistance.

If you either have or are going to face these types of rate increases over the next two years, it would be wise to be proactive and start looking for any available options and watch government statements. Letters of concern to local representatives, congress persons, and senators will help keep the focus on this serious issue that so many are facing. Checking out the above hot line number for further information may be helpful as well.

Have a Look at the Reverse Mortgage and its Various Facts

A typical mortgage is formed when a lender gives you with a lump sum total of money to buy your house. In concern of this, you agree to pay back the advance on a monthly basis for a definite time phase at a particular rate of interest. The duration of the refund phase and interest rate, whether adjustable or fixed, decide the monthly amount of the repayment.

A reverse mortgage works in a related approach, but in reverse direction. The process is same lender lends the money to the borrower and charges certain amount of interest on that amount. But in reverse mortgage you get the amount first and you don’t to pay back. It will pay back when you died or when you sell out your home. The lender provides you a lump sum amount or pays you a fixed amount on monthly basis against your home equity. Though you don’t have to pay back but the amount you borrow is deducted form you house equity.

Most of the lenders are providing this service as it has a low risk factor in comparison to other mortgages as in this mortgage the loan amount never overtakes the house value so their money remains safe in the form of house. Reverse mortgage becomes a due after the death of the owner and if the heirs wish to keep that house with them they have to pay off the previous amount. Reverse mortgage is the best option available for the persons with no immediate family in this case the bank sells the house and recovers its money.

The advantage with this type of mortgage is that you don’t have to take care of your monthly mortgage payments or you don’t have to take care of your home equity. In reverse mortgage once you signed the agreement you just have to sit and receive the payments form the lenders. The sum of a reverse mortgage is reliant on many factors.

The appraised value of the house from a certified appraisal, age of the owner, interest rates on the current mortgage and the equity in it are the chief factors on with the amount of the reverse mortgage depends. All of these factors contribute in one or the other way. Reverse mortgage don’t have any income or credit requirements. For numerous persons, reverse mortgage is a great option to opt.

Mr Mortgage – Home Equity Delinquencies Surge

Check out my new blog… mrmortgage.ml-implode.com S&P, bofa and Fitch all concur that the ‘Home Equity Implosion’ is knocking on, or kicking down rather, the front door.

Subprime Mortgage Lending – Expanded Guidance

In June 2007 the federal financial regulatory agencies together issued a Statement on Subprime Mortgage Lending.  This statement contained references to an earlier document issued by the Comptroller Office’s for Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision.  The latter document, the 2001 Expanded Guidance for Subprime Lending, is recommended unequivocally by the agencies as the defining document to which lenders should turn to find the criteria for considering a borrower “subprime”.

Even in the late 1990s, subprime lending was becoming more and more of a problem. The 2001 Expanded Guidance was an expansion of earlier statements about this issue. The agencies’ focus was the responsible use of subprime lending to assist subprime consumers to win back their credit ratings. Regaining lost credit would enable these people to enhance their financial situations.  At the same time, the agencies stressed that lenders who assume a greater risk by lending to subprime individuals must also show evidence of ability to maintain their duty of upholding the public’s trust in financial matters.  It is the lender’s responsibility to assess most carefully whether or not the borrower is likely to be able to repay the debt incurred.  Painstaking effort is required to create strict rules of underwriting to assist in such assessment. Only when controls like this exist will both borrower and lender enjoy minimized risk of loss.

This Expanded Guidance clearly defined for the first time the criteria used to decide whether a potential borrower will be classified as “prime” or “subprime.”  It states that at least one of these issues will characterize a borrower as subprime when the person applies for a loan:

·  Low credit score

·  Bad credit history, including

·  collection accounts

·  repossessions

·  late payments of invoices

·  bankruptcy

·  debts that have been written off as uncollectable, called “charge-offs”

·  high ratio of debt to income

·  decreased ability to pay off the loan.

Further, the document describes these attributes of the subprime borrower:

·  has a Fair Isaac Corporation (FICO) credit score of less than 660;

·  has collection activity, liens, charge-offs, or judgments within the past two years;

·  within the past year, has had two late payments;

·  within the past two years, has made a payment that was more than 60 days late;

·  has a ratio of debt to income of at least 50%;

·  has declared bankruptcy in the past five years;

·  has been assigned a score by another credit rating service that would equate to a FICO score of 660.

All lenders use these standards to identify subprime borrowers.  Bear in mind that even if you have a FICO score that is better than 660, you will still be considered a subprime borrower if you possess a single one of the attributes listed above.

Expanded Guidance offers a clear definition of lending practices to be considered “predatory.” The agencies in no way insinuate that predatory lending practices characterize all subprime lenders. In fact, it is their belief that benefits for both the borrower and the lender come from using subprime loans that are administered properly.  Nonetheless, the public should be made aware that predatory lending practices do exist, and that borrowing at subprime may leave them vulnerable to such practices.  In predatory lending, the exchange between borrower and lender is very unequal: the lender gets the borrower’s money and the borrower gets not much of anything!

Most  predatory lending practices fall into three categories.

·  Many car loans and housing mortgages are made based on assets pledged by the borrower as collateral, rather than on the borrower’s actual ability to fulfill the debt.

·  “Loan flipping” occurs when a lender coerces or talks a borrower into refinancing a mortgage, at no advantage to the homeowner, but at great advantage to the lender, who may collect sizeable fees for the transaction.

·  Failing to reveal to the borrower all the hidden fees and costs of a loan, and concealing information or providing fraudulent information to the borrower.

·  Very often, these practices are perpetrated on vulnerable borrowers, like the elderly, minority homeowners, or low-income families. In many cases, these people would actually have qualified for a mortgage at prime rates; but they are at a disadvantage because of their lack of knowledge.

If you are thinking of borrowing at subprime for a mortgage, you should familiarize yourself with the 2001 Expanded Guidance for Subprime Lending.  It is available on the Internet, and is definitely worthwhile reading. It laid a fine foundation for further definition of the responsibilities of subprime lenders and the needs and rights of subprime borrowers.

Adjustable Mortgage Rates For Beginners

Adjustable rate mortgage are popular for the reason that they allow you to afford bigger mortgages. For instance if you know that your income would be rising in the future, and you have accordingly planned to sell your house in say, another five years, adjustable rate mortgages may be a good financial option, for you. This is where adjustable rate mortgages have gained popularity of fixed rate mortgages, where the amount to be repaid as interest remains ‘fixed’, as the name suggests, irrespective of market conditions. In case of a fixed rate mortgage, even in the case of fluctuation in interest rates, you need to pay only the amount, agreed upon in the beginning. It is not so in the case of a adjustable rate mortgage, where your interest rate will be adjusted, based on the fluctuations in the interest rates. One stands to gain if the interest rate were to drop.

If the interest rates were to fall, you need not go in for refinance, as your payments will be automatically be recalculated, based on the lower rates of interest. Similarly if the interest rates were to go up, your repayments can also go up significantly, during the life of the loan. This can happen even with caps in place. This is where one needs to be careful while going in for adjustable rate mortgages.

The rate is usually decided by something known as ‘money market index’. Depending on the fluctuation of the index, you can end up paying more or less. The rate for an adjustable rate mortgage usually begins lower than fixed rate mortgages, available at the same time. The rates are dependent upon the prevalent economic conditions. You can find out more about the rate adjustments, in the beginning itself, by going through the terms of the loan.

Mortgage loans have enabled higher purchasing power. People can now for instance, realize their dream of owning houses, right in the beginnings of their career. It would not have been possible without mortgage loans. When it comes to mortgages adjustable mortgage rates are perhaps the more preferred choice among people. With almost every lender proclaiming to offer low adjustable mortgage rates today, you are bound to be confused, while making a decision.

The thing with low adjustable mortgage rates is that even though they are ‘low’, you still have to pay them. Although they may be low to begin with, with the fluctuations in the market or economic conditions, they could suddenly go up, with you end up feeling sorry, for having falling to the bait. One has often heard of lenders offering rates that are even lower than the sum of the index. Such rates are known as discounted rates. They come with a catch though, in that they are often combined with a large initial loan fees and with much higher interest rates, after the discount expires. This is one reason why it makes sense to make a prudent decision while going in for low adjustable rate mortgages today.

It is therefore important that you decide on the correct low initial rate, based on your ability to repay the same. You should be careful enough to consider, whether you will be able to afford payments, after the discount expires and the rate is adjusted. Remember for one thing, with low adjustable mortgages, your low initial payment, will not probably remain low, for long. You can be in for what is known as a ‘payment shock’, when the mortgage payment rises very sharply at the first adjustment, itself.

Adjustable mortgage rates today are perhaps one reason for the booming real estate business. People are literally bombarded with advertisements proclaiming the lowest adjustable mortgage rates, through literally every kind of media available.

Adjustable rate mortgages mostly come with a ‘cap’, which decides the maximum amount a rate can change at one given point of time. The maximum amount can vary from the original rate over the life of the loan. This is where adjustable rate mortgages are considered a risky proposition. Market conditions are never so easily predictable, more so, over a long period of time. With repayment terms increasingly getting longer, sometimes, even as long as 30 years, as in the case of housing loans, one can never be sure , what will happen down the line. Therefore it is necessary; you take into consideration several factors before going in for adjustable rate mortgages.

Several lenders also offer something known as ‘conversion option’. This option allows you to convert your adjustable rate mortgage to a fixed rate mortgage, during a future point of time. Check whether your lender offers this option because it is a good thing to go in for, in case interest rates begin to rise.

Low Mortgage Rates – Part 1

Low mortgage rates have been instrumental in realizing the dreams of a home of millions around the world. One reason for the real estate boom could be attributed to low mortgage rates. With increasing competition among banks and other financial institutions, loans are literally being pushed down the consumer’s throat. People are buying homes at a young age and are willing to splurge like never before. There are plenty of players in the market who are wooing potential customers with offers, which till now, weren’t even heard of. From ‘low interest rates’ to increased time span for repayment of loans, customers are virtually being bombarded with promotional material, left, right and center.

Most of the loans available are mortgage loans, where you mortgage something, till such time you repay the entire amount, which consists of the principal and the interest. Interest rates fluctuate depending on market conditions. It is also not uniform across geographical areas, varying from place to place. Increasing competition has meant that banks and financial institutions wooing potential customer’s with never before rates, which in turn means, better purchasing power. What is more, you have a choice of repayment options, in terms of money as well as time. You can pay a particular amount as interest over a period of time, which could be 5 years, 10 years, even 30 years and so on and so forth. With such flexibility available in repayment options, increasingly people are going in for these mortgage loans, lured by the so called ‘lowest interest rates’.

Mortgages have become increasingly popular propositions, thanks to the constant wooing of customers, virtually through every available media by financial institutions, lenders and brokers. Most of their ad copies scream about the ‘lowest interest rates’, to make their offer attractive. Many aspiring executives, just starting out on their career are able to afford purchasing, palatial houses, thanks to the advent of ‘lowest mortgage rates’. Mortgage rates vary across places. They may also vary from one lender to another. It is advisable that you compare low mortgage rates, before taking a final decision. You can get comprehensive information on the best mortgages at the lowest interest rates, on the internet. Whether it is lowest first mortgage rates, lowest fixed mortgage rates, lowest interest only mortgage rates, lowest commercial mortgage rates, lowest second mortgage rates, you can get all the possible information online.

You can search for the current mortgage interest rates from online lenders and brokers. Most of these lenders update their rates on a daily basis. Various ‘loan calculators’ are also available to determine a loan amount and mortgage payment. Using them you can find out about what’s right for you. Most of the online mortgage calculators are also easy to use. All you need to do is to fill out the relevant data and leave the rest to the calculator. The mortgage rates would be then displayed on the screen in a matter of minutes, if not less. Not only this , you can surf through the net for information on mortgage rates, points, rate locks, closing costs, to mention only a few. Alternately you can always get in touch with your very own personal financial advisor for details. It makes sense to sit and discuss with your financial advisor, rather than cutting a sorry figure later on. Ask your lender for a detailed prospectus and go through it. Find out about the repayment terms and any other added tax benefits. Check who is offering what. Once you have done a comparative analysis, there is no stopping you. You can now go ahead and live in that dream home of yours. Seeking information from all possible sources enables you to ‘talk the talk’ with potential lenders.

One thing that you should remember while going for mortgage loans with low interest rates is , even though the interest rates are low, you still have to repay it. And along with the interest, you have to repay the principal also! Therefore you should carefully consider all every aspect of your purchase decision. You can also consult your friends or colleagues, who may have availed of these loans in the past. They are suitably placed to advice you honestly on a particular loan.

Adjustable mortgage rates: the risks involved – Part 1

Adjustable rate mortgages are attractive to buyers because they are always lower than the current fixed mortgage rate and thus will create a lower house payment. They are inherently risky because of the potential for your house payment to balloon up to a point where it becomes a significant financial strain. The question then is: When is the risk worth the initial savings? Here is my take on the answer to that question:

First consider the history of rising and falling interest rates over the last few decades. You will notice a gradual rise and fall. This pattern will continue, as interest rates will never be a solid, stable number.

When interest rates are fairly low, history tells us that they are most likely to go up. Interest rate are fairly low now, and have been showing a slow increase over the last year or so. In today’s economy I would assess ARM’s as being a very poor strategy. The statistics say that you will be the looser in the end. For now, a fixed rate mortgage offers you the most protection from an upward trend in rising interest rates.

When interest rates are fairly high, (and they can get extremely high, with the record set in the late 70’s and early 80’s of over 18%), history tells us that they are likely to fall. If you think (and yes, it is a guessing game) that interest rates are peeking then by all means buy into an ARM. If your guess is correct you can always refinance when rates fall by two or three percent and easily recoup your refinance charges in a fairly short period of time.

One addition situation that would put an ARM into a favorable position is when you plan to live in a home for a short period of time. If you plan to buy, remodel, then flip the home (sell it for a profit), then an ARM is a good choice. The payments will add to the profitability or net gain when you do resell the home.

In general, ARM’s are just short of a gimmick, designed to lure the purchasing public into a situation that can be quite risky, depending upon the current economic climate and tends. So while there are times when an ARM makes sense, for my money, a fixed rate is usually a better choice.

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Explaining the concept of the reverse mortgage – Part 1

What is a Reverse Mortgage?

A reverse mortgage is a new type of mortgage loan that works just the opposite of your typical mortgage loan. Instead of you

paying the mortgage company, the loan company pays you. This is a new concept to consider if you are at least 62 years old

and own your home. If you are needing money for medical bills, home improvements, or other reasons. This type of mortgage

can give you the cash you need without you having to make monthly payments to pay them back. If you plan on living in the

home for the duration of the loan, you do not have to make payments or you will not be forced to move. You are paid in cash

the equity value of your home to do with as you see fit and you don’t have to worry about making more monthly payments

that you really cannot afford.

With the reverse mortgage, you will not lose your home because you didn’t make a monthly payment on it. However you or

the co-signer must continue to live in it. You will be paid the equity value instead of you paying the mortgage company. You

have a choice on how you wish to be paid your reverse mortgage loan. You can be paid cash all in a lump sum , you can be

paid on a monthly basis receiving a payment each month, you can be paid through an account where you decide when and

how much you will be paid in any given time, or you can choose a combination of any or all of the mentioned options. You

have the control over your equity cash and how much you will receive and how you will spend it.

There are several advantages of the reverse mortgage and they are: You do not need to make monthly payments (instead,

you receive them) and you do not have to have an income to apply for a reverse mortgage. They are also tax free and should

not affect your Social Security or Medicare benefits. Who can’t use a tax break?

There are three types of reverse mortgages but you may or may not qualify for all of them. They are single-purpose, HECMs,

and proprietary mortgages.

The amount you will owe on a reverse mortgage will increase over time and there will be interest charged on the balance of

the loan. There will also very likely be charges such as closing costs before you receive the loan and possibly fees during the

term of the loan. Your debt will increase and your home equity will decrease.

The loan is required to be paid back after the last borrower dies, sells the home, or doesn’t live there anymore. You are required

to continue

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