Should you inherit a house that needs more work than you can afford, here are some money-saving tips:
Loans: If you must borrow, get a fixed-rate loan, not an adjustable rate, so the amount won't fluctuate should interest rates rise. Look into rehab and refinance loans from Neighborhood Housing Services, the only non-profit mortgage lender in Illinois
Grants: Bungalow owners should check into energy-saver grants and low-income assistance from the Historic Chicago Bungalow Association Owners of Chicago greystones built between 1890 and 1930 should check into facade renovation grants from the Historic Greystone Initiative .Redstone, brownstone and sandstone single-family homes recently have been added to the list of eligible buildings.
Taxes: Should restoration costs of a historic home in a landmark district equal one-quarter its fair-market value, you may qualify to have property taxes frozen for eight years. Get feedback before you move ahead on your plans from the Illinois Historic
source:http://www.chicagotribune.com/business/chi-sun-housebound-tips-cashed_ojul13,0,1107667.story
Sunday, July 13, 2008
Friday, March 14, 2008
Bad Credit Mortgage Refinancing - Solution To Financial Crises
Getting bad credit mortgage refinance is a good option if you are going under debt. Debt situations can trouble us at any stage of our life – whether you take a loan for higher education, getting married, for renovating the home, or paying medical expenses. Another debt trap people fall into often is credit card loans. To repay the credit card bill, you need to take out another loan. This continues until it becomes a vicious debt cycle.
Refinancing Options
Today, you have more refinancing options that ever before. The most popular is to consolidate all debts into one, and then working towards repaying the debt. The best way to repay debt is to work towards having a flexible payment plan that allows you to manage financial matters better with the help of the best mortgage refinance rate.
In order to repay the consolidated debt amount, you may need to take out another loan. The best way to do this is to go for refinancing, as they are also available as no cost mortgage refinance.
Poor Credit
Many lenders may refuse to do business with you if your previous credit report is not good. If you have loan arrears, delayed payments, and other repayment issues showing on your credit record, you may have lost all chances of getting debt relief – except in the form of bad credit mortgage refinancing.
This kind of loan helps you make good even if your credit record is poor. You need to search online before you can find a lender willing to lend you the amount you need. You also need to work out a plan with the lender that allows you to repay previous debts through Second mortgage refinance.
Raising The Credit Score
Understand that the sooner you clear your debt, the better your credit rating will be, and the faster your financial recovery. You also need to work out a bad credit mortgage refinancing plan that results in the most savings. You may also need to pay closing costs, in which case you have to take a look at your funds. A good credit plan will help you repair your credit record. If you pay your new loan faster, it will show in your favour in your credit report.
There are many advantages of going in for a bad credit mortgage refinancing plan, from raising your credit score to helping you deal with financial problems. So if you have a debt situation you cannot manage, don´t wait. Start working out a repayment plan as soon as you can.
A bad credit mortgage refinancing plan can get you out of sticky debt situations. Second mortgage refinance can also come in handy when the money is tight and most lenders will shy away from lending to you owing to a poor credit rating. No cost mortgage refinance is the perfect solution to get rid of your financial worries.
source:http://www.losangeleschronicle.com/articles/54972
Cash In On The Value Of Your Home
If you find you're a little strapped for cash in retirement you may be tempted to cash in on the value of your home using an equity release scheme. But beware: not all schemes are the same...
Last week I looked at how to use a lifetime mortgage to release equity from your home in A Mortgage With No Monthly Repayments. Although these plans can provide much needed cash they're not a perfect solution. Because there are no repayments, the interest you owe rolls up quickly and could eventually wipe out all the equity in your home.
Today, I want to look at an alternative way of releasing equity: a home reversion scheme. This involves selling all or a share of your property to a home reversion company, usually in return for a tax-free cash lump sum.
Unfortunately this sum is likely to be significantly below the market value of the share. But you will retain the right to live in your home for as long as you need to. On death (or when you move into long-term care) the property is sold and the company receives the percentage of the proceeds from the sale that they are entitled to, while your estate retains the rest.
In other words, if you sell a 50% share in your home to a home reversion scheme provider, your estate will receive half of the proceeds from the sale of your home after you die, while the reversion company receives the other half. In this way, a home reversion scheme allows you to ensure your property will provide an inheritance for your family, which you cannot do with a lifetime mortgage.
This is because, with a lifetime mortgages, interest accumulates continually until all the equity in the property has been eaten up, potentially leaving your estate with no inheritance from the sale of your home at all. By contrast, home reversions are not a loan and no interest is payable, so the home reversion provider's equity stake in your home cannot increase.
What's more, if you have chosen to keep a share of your property, your estate will benefit from any rise in the value of your property. And if you retain a portion of the property, some plans will allow you to take extra cash advances, as long as there's enough remaining equity.
source:http://www.fool.co.uk/news/property-home/2008/03/14/cash-in-on-the-value-of-your-home.aspx
Wednesday, March 5, 2008
GenEquity Mortgage Selects Guardian Mortgage Services
GenEquity Mortgage Inc., a division of Paragon Global Resources, has selected Guardian Mortgage Services (GMS) to provide closing, loan funding, line management and post-closing services to support its exiting business and its new national retail operation.
GMS, a national provider of back-office outsource closing services for lenders, is a division of Lakewood, Colo.-based Guardian Mortgage Documents, a provider of document preparation and customized outsourced solutions to the national financial services industry.
GenEquity says it selected GMS to accentuate the expertise it has developed in creating efficiencies in the mortgage process through its work for the relocation market. The company anticipates being able to more than double its product offerings as a result of the improved efficiencies.
source:http://www.mortgageorb.com/e107_plugins/content/content.php?content.1412
GMS, a national provider of back-office outsource closing services for lenders, is a division of Lakewood, Colo.-based Guardian Mortgage Documents, a provider of document preparation and customized outsourced solutions to the national financial services industry.
GenEquity says it selected GMS to accentuate the expertise it has developed in creating efficiencies in the mortgage process through its work for the relocation market. The company anticipates being able to more than double its product offerings as a result of the improved efficiencies.
source:http://www.mortgageorb.com/e107_plugins/content/content.php?content.1412
Thursday, February 14, 2008
Be Careful With Loans For Bad Credit
Those who attack bad credit personal loans can´t begin to imagine how many people have taken advantage of such loans and how many situations have been solved by using a bad credit personal loan. Nevertheless, even if their bad popularity is a bit unjustified, there are many reasons why you should be careful when applying for a bad credit personal loan.
Claims against bad credit loans are nothing but mere exaggerations, for each one who has suffered the consequences of a growing debt due to continually applying for bad credit loans without being able to repay them, there are hundreds of people who have used bad credit loans to face financial difficulties and have succeeded in solving their problems.
Debt Trap is Debtors Fault
The debt trap is probably the only trap set by the same one who falls into it. Failing to understand that a loan should not be used to finance purchases or payments unless you have certainty of a surplus in your budget, can easily lead to debt accumulation. When requesting a loan, you should also make sure that your income to expense ratio will remain positive on your income´s side for the duration of the loan.
Unexpected situations always rise and you need to arrange savings in order to face them. You can´t be sure why you will need extra cash but chances are that you´ll need it. So, it is best if you are prepared. Otherwise, late payments or missed payments will make you incur in punitive fees, higher interests, you´ll be forced to refinance on worst terms or request additional funding and eventually you may have to file for bankruptcy unless you learn to take control over your finances.
A Temporary Solution but not Cost-Free
Personal Loans for people with bad credit should only be taken in order to solve a financial problem. The repayment plan should be as short as possible which will reduce the overall cost of the loan. If due to a small income you need to apply for a loan with a long repayment program, as soon as your credit gets better, you should refinance your loan in order to get better terms.
The idea is to flee as soon as possible from a loan which won´t only be expensive but will also affect your ability to get finance because a bad credit personal loan on your credit report isn´t a good mark in the eyes of other lenders.
Search Online for the Best Terms Available
Don´t go for the first offer you receive, there are many lenders out there dealing with bad credit personal loans. Each one has different requirements, different interest rates and different repayment plans. Request loan quotes from them and compare what they have to offer. Be careful with hidden fees and costs that some lenders like to conceal in the fine print of the loan contract. If you do this, you´ll be able to get the best deal available for you and cut the loses due to bad credit to a minimum.
Source:http://www.americanchronicle.com/articles/51589
Claims against bad credit loans are nothing but mere exaggerations, for each one who has suffered the consequences of a growing debt due to continually applying for bad credit loans without being able to repay them, there are hundreds of people who have used bad credit loans to face financial difficulties and have succeeded in solving their problems.
Debt Trap is Debtors Fault
The debt trap is probably the only trap set by the same one who falls into it. Failing to understand that a loan should not be used to finance purchases or payments unless you have certainty of a surplus in your budget, can easily lead to debt accumulation. When requesting a loan, you should also make sure that your income to expense ratio will remain positive on your income´s side for the duration of the loan.
Unexpected situations always rise and you need to arrange savings in order to face them. You can´t be sure why you will need extra cash but chances are that you´ll need it. So, it is best if you are prepared. Otherwise, late payments or missed payments will make you incur in punitive fees, higher interests, you´ll be forced to refinance on worst terms or request additional funding and eventually you may have to file for bankruptcy unless you learn to take control over your finances.
A Temporary Solution but not Cost-Free
Personal Loans for people with bad credit should only be taken in order to solve a financial problem. The repayment plan should be as short as possible which will reduce the overall cost of the loan. If due to a small income you need to apply for a loan with a long repayment program, as soon as your credit gets better, you should refinance your loan in order to get better terms.
The idea is to flee as soon as possible from a loan which won´t only be expensive but will also affect your ability to get finance because a bad credit personal loan on your credit report isn´t a good mark in the eyes of other lenders.
Search Online for the Best Terms Available
Don´t go for the first offer you receive, there are many lenders out there dealing with bad credit personal loans. Each one has different requirements, different interest rates and different repayment plans. Request loan quotes from them and compare what they have to offer. Be careful with hidden fees and costs that some lenders like to conceal in the fine print of the loan contract. If you do this, you´ll be able to get the best deal available for you and cut the loses due to bad credit to a minimum.
Source:http://www.americanchronicle.com/articles/51589
Mortgage Options For People With Poor Credit
People with poor credit do not have to resign to a life of ever-increasing debt and dwindling funds. Obtaining a loan, especially by way of a home mortgage, is an option for escaping debt for those with bad or no credit. A person with poor credit only has to keep a few things in mind to lessen the travails of her/his loan search. The right loan for someone with bad credit is only a strong will, a little patience and a lot of diligence away.
A homeowner with poor credit has to be willing to sift through anywhere from a couple to a dozen mortgage company offers before settling on one. Just because a person gets turned down by one does not mean the next will do the same. There is a company willing to give a person with bad credit a mortgage, albeit one with higher interest rates. But that is to be expected and the rates do not have to be that much higher than the going rate for good to excellent applicants for mortgages. A person just has to be willing to put in the time for a proper and thorough search.
Since a search for a mortgage has developed in recent years to come to include companies that specialize in people who have bad to no credit, a person has to also evolve in their financial habits. Before seeking a mortgage lender, a person should take steps to better her/his credit score. It is important to pay off any debt especially overdue debts, if any. Furthermore, save up as much money as possible. Savings can handle a down payment or the higher interest rates on a mortgage that will inevitably be attached to a mortgage given to someone with poor credit. Moreover, if there are available funds, clear up any overdue or outstanding debt so that there are not any credit problems that could hinder the mortgage application process.
Get several references and reputation reviews on several mortgage companies free of charge from friends, families and coworkers. Similarly at no cost, an online search for a mortgage lender could prove a timesaver plus result in the perfect mortgage company. Although untrue in some cases, most regular mortgage lenders can be tepid in dealings with people with bad credit. Conversely, online bankers are a little bit more lenient, with some of them specializing in handling poor credit cases.
Before applying for a mortgage, a homeowner should try improving her/his credit score by reducing his/her total debt. Even the smallest reduction could be interpreted by a mortgage company as an example of good faith in personal finances. Additionally, try spending under the maximum limit on credit cards to demonstrate that you are not an extremely risky candidate for a mortgage. And even though a person with poor credit may still receive an offer with higher interest rates, once her/his credit score improves, she/he may refinance the mortgage for a better rate.
Retaining a mortgage broker to apply for a loan, if the funds are available, is a viable option. A mortgage broker can inform her/his poor credit client of all options in securing a mortgage. And whether with the assistance of a mortgage broker or not, a person seeking a mortgage should definitely review her/his credit report for errors. A mortgage company will no doubt carefully comb the credit report to figure out a potential client's responsibility toward her/his finances.
By ensuring there are no mistakes on the credit report that would draw favor away from her/him while making the effort to clean up her/his credit, a homeowner with poor credit is taking the first steps towards a mortgage and a more secure financial future.
Source:http://www.bestsyndication.com/?q=20080212_bad_credit_home_loan.htm
A homeowner with poor credit has to be willing to sift through anywhere from a couple to a dozen mortgage company offers before settling on one. Just because a person gets turned down by one does not mean the next will do the same. There is a company willing to give a person with bad credit a mortgage, albeit one with higher interest rates. But that is to be expected and the rates do not have to be that much higher than the going rate for good to excellent applicants for mortgages. A person just has to be willing to put in the time for a proper and thorough search.
Since a search for a mortgage has developed in recent years to come to include companies that specialize in people who have bad to no credit, a person has to also evolve in their financial habits. Before seeking a mortgage lender, a person should take steps to better her/his credit score. It is important to pay off any debt especially overdue debts, if any. Furthermore, save up as much money as possible. Savings can handle a down payment or the higher interest rates on a mortgage that will inevitably be attached to a mortgage given to someone with poor credit. Moreover, if there are available funds, clear up any overdue or outstanding debt so that there are not any credit problems that could hinder the mortgage application process.
Get several references and reputation reviews on several mortgage companies free of charge from friends, families and coworkers. Similarly at no cost, an online search for a mortgage lender could prove a timesaver plus result in the perfect mortgage company. Although untrue in some cases, most regular mortgage lenders can be tepid in dealings with people with bad credit. Conversely, online bankers are a little bit more lenient, with some of them specializing in handling poor credit cases.
Before applying for a mortgage, a homeowner should try improving her/his credit score by reducing his/her total debt. Even the smallest reduction could be interpreted by a mortgage company as an example of good faith in personal finances. Additionally, try spending under the maximum limit on credit cards to demonstrate that you are not an extremely risky candidate for a mortgage. And even though a person with poor credit may still receive an offer with higher interest rates, once her/his credit score improves, she/he may refinance the mortgage for a better rate.
Retaining a mortgage broker to apply for a loan, if the funds are available, is a viable option. A mortgage broker can inform her/his poor credit client of all options in securing a mortgage. And whether with the assistance of a mortgage broker or not, a person seeking a mortgage should definitely review her/his credit report for errors. A mortgage company will no doubt carefully comb the credit report to figure out a potential client's responsibility toward her/his finances.
By ensuring there are no mistakes on the credit report that would draw favor away from her/him while making the effort to clean up her/his credit, a homeowner with poor credit is taking the first steps towards a mortgage and a more secure financial future.
Source:http://www.bestsyndication.com/?q=20080212_bad_credit_home_loan.htm
Sunday, February 3, 2008
Darkom signs its first agreement with Cairo Amman Bank
This agreement is the first of its type to be signed by the housing loan insurance company 'Darkom' with a bank in the kingdom. This agreement will give community members regardless of their socio-economic background the opportunity to have long-term housing loans with competitive interest rates, flexible payment terms, reduced down payments, and reduced monthly installments.
Cairo Amman Bank was prompted to sign this agreement with Darkom based upon the latter's demonstrated ability to provide innovative financial products that in turn provide community members with low and medium sized income earnings with access to affordable housing solutions.
Darkom's strategy is to make the ownership of real-estate properties attainable for all segments of the community regardless of their socio-economic background. It achieves this goal by allowing buyers to purchase real-estate properties through funding solutions that harbor payment terms that extend up to 25 years. The company's solutions also serve to reduce risks incurred by banks and to make the monthly installments incurred by homebuyers more affordable.
Since its launch Darkom has worked to provide lenders, banks and other financial institutions with protection against losses they may incur as a result of a payment default on a mortgage loan.
'We are very glad to be signing this agreement with Cairo Amman Bank as this marks a milestone within our operation. Cairo Amman Bank's decision to collaborate with us serves to further prove the high level of confidence and belief its management has in our services. We are confident that our joint collaboration will serve to enhance Jordan's real-estate sector, as this agreement will serve to invite more people to invest in real estate. We look forward to many positive outcomes to being reaped from this partnership and we look forward to working closely with Cairo Amman Bank to make our vision for this sector a tangible and attainable reality', explained General Manager of Darkom, Mr. Waseem Wael Zurub.
Mr. Kamal Al-Bakri, GM of Cairo Amman Bank said, 'We are proud to be signing this agreement with Darkom. We believe that our cooperation will be very fruitful and all the sectors in the Kingdom will benefit from this cooperation.'
source:http://www.ameinfo.com/145453.html
Cairo Amman Bank was prompted to sign this agreement with Darkom based upon the latter's demonstrated ability to provide innovative financial products that in turn provide community members with low and medium sized income earnings with access to affordable housing solutions.
Darkom's strategy is to make the ownership of real-estate properties attainable for all segments of the community regardless of their socio-economic background. It achieves this goal by allowing buyers to purchase real-estate properties through funding solutions that harbor payment terms that extend up to 25 years. The company's solutions also serve to reduce risks incurred by banks and to make the monthly installments incurred by homebuyers more affordable.
Since its launch Darkom has worked to provide lenders, banks and other financial institutions with protection against losses they may incur as a result of a payment default on a mortgage loan.
'We are very glad to be signing this agreement with Cairo Amman Bank as this marks a milestone within our operation. Cairo Amman Bank's decision to collaborate with us serves to further prove the high level of confidence and belief its management has in our services. We are confident that our joint collaboration will serve to enhance Jordan's real-estate sector, as this agreement will serve to invite more people to invest in real estate. We look forward to many positive outcomes to being reaped from this partnership and we look forward to working closely with Cairo Amman Bank to make our vision for this sector a tangible and attainable reality', explained General Manager of Darkom, Mr. Waseem Wael Zurub.
Mr. Kamal Al-Bakri, GM of Cairo Amman Bank said, 'We are proud to be signing this agreement with Darkom. We believe that our cooperation will be very fruitful and all the sectors in the Kingdom will benefit from this cooperation.'
source:http://www.ameinfo.com/145453.html
Sunday, January 27, 2008
Drowning in debt over mortgages? You have options
t's the new version of the American dream: Give the bank the keys to your house and walk away with that load of debt off your back.
"I'm 26 years old and I feel like I'm going to have a heart attack," said Carmen Goodwin of Tarpon Springs. "I'm to the point where I feel like sending the key to the mortgage company and saying, 'Here, you take it.'"
She and her husband each owned a modest house before they married. Now one baby and two failed businesses later, both houses sit empty. The Goodwins are living with her mom, trying to find tenants for the houses even though previous renters stiffed them for $3,000. Although each of them is working two jobs, she says they can't keep up. Their payments skyrocketed because their interest rate went up and they are being required to catch up on missed payments from the past. They haven't decided what to do next.
Many property owners can't sell their homes for enough to pay off their mortgages and are ready to throw in the towel. They face a set of difficult options, the best-known of which are foreclosure and bankruptcy. However, some lawyers and real estate agents are helping homeowners with two less well-known outs: short sales and deeds in lieu of foreclosure. The methods don't always work, mainly because some lenders won't cooperate. But when they do work, the outcome is likely to be less damaging to credit than foreclosure or bankruptcy.
"There is no snake oil here," said St. Petersburg lawyer Richard Dauval. "You need to pay for your debts or handle them in some way. We have found a way that has been quite successful to help people get from this horrible spot that they're in to a spot that's much more manageable."
His approach: deeding the property to the lender. He sends the lender the deed as part of a package that includes completed forms for a Chapter 13 bankruptcy filing, documenting the borrower's sorry financial condition.
"It's a really good way of seeing what this person is capable of paying," he said. "We're not saying we'll file bankruptcy if you don't accept it, but we're saying if we did, this is what it would look like. At the very least, it triggers the conversation."
The objective is to get the lender to consider the matter before the buyer is behind on payments, something many lenders routinely refuse to do.
"The quicker homeowners start dealing with problems and start to find a solution, the better," said Tampa lawyer Scott Stamatakas. "It's all about stopping the bleeding."
That's not to say it's easy. Stamatakas said many lenders won't consider a compromise until a borrower is in default and until the property has been listed for sale for a certain number of days. And, he says, lenders really don't want your property. If you can find a buyer willing to pay a reasonable price for the property, even though it is less than the amount of the mortgage, the lender may agree to the deal, known as a short sale. Negotiations can drag on for months.
The lender's acceptance of a deed or agreement to a short sale does not cancel the borrower's obligation to repay the loan. However, both Dauval and Stamatakas said their experience is that most lenders cancel the debt under those circumstances.
If there is a second mortgage or other lien on the property, the lender typically will foreclose to legally wipe out those secondary interests. Dauval says that if you've already recorded the deed transferring ownership, you might be able to show the judge you are no longer the owner and keep the foreclosure off your credit record.
However, if the lender gets a court judgment against you for the balance of the loan, you'll probably have to bite the bullet and file for bankruptcy, he said.
If a lender does cancel debt, the borrower will get a 1099 form showing the amount as taxable income. However, a recent change in tax law makes mortgage debt forgiveness tax-free if the debt was to acquire a primary residence. Owners of investment homes face a tax bite unless they can show they were insolvent when the debt was forgiven.
What to do
But what if you really want to keep your house even though you can't make the payments? Here's what to do next.
- Get advice from a pro. Go to www.hud.gov or call toll-free (800) 569-4287 to find a HUD-approved housing counselor near you. Or call the Project HOPE hotline at (888) 995-4673. The earlier you ask for help, the better. A counselor can help you evaluate your options and review your budget to see what's financially feasible for you.
- Refinance or ask your lender to modify the terms of your mortgage if that would bring the payments to a level you could afford and you can qualify. If you have an adjustable rate mortgage that recently reset or will soon, talk to any FHA lender about the FHASecure program to see if you can qualify. The drawback: If you have no equity in your home, you probably will have to put up some cash to refinance.
source:http://www.sptimes.com/2008/01/27/Business/Drowning_in_debt_over.shtml
"I'm 26 years old and I feel like I'm going to have a heart attack," said Carmen Goodwin of Tarpon Springs. "I'm to the point where I feel like sending the key to the mortgage company and saying, 'Here, you take it.'"
She and her husband each owned a modest house before they married. Now one baby and two failed businesses later, both houses sit empty. The Goodwins are living with her mom, trying to find tenants for the houses even though previous renters stiffed them for $3,000. Although each of them is working two jobs, she says they can't keep up. Their payments skyrocketed because their interest rate went up and they are being required to catch up on missed payments from the past. They haven't decided what to do next.
Many property owners can't sell their homes for enough to pay off their mortgages and are ready to throw in the towel. They face a set of difficult options, the best-known of which are foreclosure and bankruptcy. However, some lawyers and real estate agents are helping homeowners with two less well-known outs: short sales and deeds in lieu of foreclosure. The methods don't always work, mainly because some lenders won't cooperate. But when they do work, the outcome is likely to be less damaging to credit than foreclosure or bankruptcy.
"There is no snake oil here," said St. Petersburg lawyer Richard Dauval. "You need to pay for your debts or handle them in some way. We have found a way that has been quite successful to help people get from this horrible spot that they're in to a spot that's much more manageable."
His approach: deeding the property to the lender. He sends the lender the deed as part of a package that includes completed forms for a Chapter 13 bankruptcy filing, documenting the borrower's sorry financial condition.
"It's a really good way of seeing what this person is capable of paying," he said. "We're not saying we'll file bankruptcy if you don't accept it, but we're saying if we did, this is what it would look like. At the very least, it triggers the conversation."
The objective is to get the lender to consider the matter before the buyer is behind on payments, something many lenders routinely refuse to do.
"The quicker homeowners start dealing with problems and start to find a solution, the better," said Tampa lawyer Scott Stamatakas. "It's all about stopping the bleeding."
That's not to say it's easy. Stamatakas said many lenders won't consider a compromise until a borrower is in default and until the property has been listed for sale for a certain number of days. And, he says, lenders really don't want your property. If you can find a buyer willing to pay a reasonable price for the property, even though it is less than the amount of the mortgage, the lender may agree to the deal, known as a short sale. Negotiations can drag on for months.
The lender's acceptance of a deed or agreement to a short sale does not cancel the borrower's obligation to repay the loan. However, both Dauval and Stamatakas said their experience is that most lenders cancel the debt under those circumstances.
If there is a second mortgage or other lien on the property, the lender typically will foreclose to legally wipe out those secondary interests. Dauval says that if you've already recorded the deed transferring ownership, you might be able to show the judge you are no longer the owner and keep the foreclosure off your credit record.
However, if the lender gets a court judgment against you for the balance of the loan, you'll probably have to bite the bullet and file for bankruptcy, he said.
If a lender does cancel debt, the borrower will get a 1099 form showing the amount as taxable income. However, a recent change in tax law makes mortgage debt forgiveness tax-free if the debt was to acquire a primary residence. Owners of investment homes face a tax bite unless they can show they were insolvent when the debt was forgiven.
What to do
But what if you really want to keep your house even though you can't make the payments? Here's what to do next.
- Get advice from a pro. Go to www.hud.gov or call toll-free (800) 569-4287 to find a HUD-approved housing counselor near you. Or call the Project HOPE hotline at (888) 995-4673. The earlier you ask for help, the better. A counselor can help you evaluate your options and review your budget to see what's financially feasible for you.
- Refinance or ask your lender to modify the terms of your mortgage if that would bring the payments to a level you could afford and you can qualify. If you have an adjustable rate mortgage that recently reset or will soon, talk to any FHA lender about the FHASecure program to see if you can qualify. The drawback: If you have no equity in your home, you probably will have to put up some cash to refinance.
source:http://www.sptimes.com/2008/01/27/Business/Drowning_in_debt_over.shtml
Thursday, January 24, 2008
Refinancing lures, isn't easy
Another mortgage-refinancing boom is under way. But this time around, many homeowners will be watching from the sidelines.
For the first time since 2005, mortgage rates have slipped well below 6 percent. As rates drop further - and some expect that to happen if the economy continues to weaken - increasing numbers of consumers will find refinancing their existing mortgage worthwhile.
But here's the catch, and it's a big one: Many homeowners won't benefit, either because their mortgage is too big or their credit score is too low. In other cases, falling home prices will make it tough for them to refinance.
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In reviewing his portfolio of clients, Kevin D. Herthel, a mortgage broker with AFS Mortgage of Blue Ash, said he believes fewer than 25 percent will likely qualify for a lower rate. "The lower rates are great, but again, because qualifying criteria have changed, it's not as great as it seems," he said.
The average local rate for a 30-year fixed rate mortgage was 5.75 percent on Monday, down from 6 percent just two weeks ago, according to the Cincinnati Area Board of Realtors.
The average U.S. rate for a 30-year fixed mortgage fell to 5.31 percent Wednesday, the lowest since March 2004, when the Fed's benchmark rate was 1 percent, according to Bankrate Inc., a research firm in North Palm Beach, Fla.
"Even before the Fed's action, I felt it was a good time to lock in a long-term mortgage rate," said Covington financial adviser Mackey McNeill. "Any time you can borrow money at under 6 percent, it's a great deal," she said, noting some 30-year fixed rate mortgages locally were in the 5.62 to 5.7 percent range before the Fed's move.
This week's drop in interest rates may encourage up to 7 million homeowners to apply for new mortgages, many to avoid resets of adjustable rates, Tony Crescenzi, chief bond market strategist at Miller Tabak & Co. in New York, said in a report Wednesday.
Indeed, at these levels, about 37 percent of homeowners could refinance their mortgages and save money on their monthly payment, estimates investment bank Bear Stearns Cos.
Consumers clearly are watching interest rates and are eager to attempt to refinance.
"Refinance applications are up 92 percent since the beginning of November and purchase applications are up 7 percent," said Jay Brinkman, vice president of research and economics at the national Mortgage Bankers Association. "With tighter credit conditions we do not know how many of these applications will become loans, but it is clear that borrowers are responding to the 40-80 basis-point drop (0.4- 0.8 percentage points) in rates we have seen since Nov. 2 across products."
Bob Lewis, president of Fifth Third Mortgage Co., said that January mortgage applications at the downtown-based bank's offices across the nation have jumped 200 percent from December. He said consumers have responded strongly to seeing rates dropping. "All lenders have seen their refi activity increase over the last two weeks," Lewis said.
TIGHTER CREDIT STANDARDS
But while interest rates have dropped, making refinancing attractive, banks have been tightening credit standards.
About 40 percent of U.S. banks tightened underwriting standards on prime mortgages in 2007's third quarter, according to the most recent Federal Reserve Senior Loan Officer Survey, issued in October.
For most borrowers, the stricter rules mean a return to standards that were typical in 2001, the beginning of five record-setting years for U.S. home sales and prices, said Henry Savage, president of PMC Mortgage Corp. in Alexandria, Va.
"You're going to have to make copies of your pay stub and some tax documents and fax them to your broker," Savage said. "If you have good credit and some equity in your house, you can still get a loan. The people who are stuck are the ones who bought near the peak and now owe more than their houses are worth."
CREDIT SCORE AND EQUITY
Many consumers "will be left out in the cold this time because underwriting is back in vogue," said Ron Hermance, chairman of CEO of New Jersey's Hudson City Bancorp Inc. Many homeowners will find that during the previous housing boom "they originally got credit they weren't entitled to," he said.
To get the best rates under the new risk-based guidelines, homeowners "need a credit score over 679, or equity of greater than 30 percent," says Michael Menatian, president of Sanborn Mortgage Corp. in Hartford, Conn. But as home prices fall in many markets, homeowners' equity sinks alongside it - making it tough to get more-attractive rates.
source:http://news.enquirer.com/apps/pbcs.dll/article?AID=/20080124/BIZ01/801240340/1076/BIZ
For the first time since 2005, mortgage rates have slipped well below 6 percent. As rates drop further - and some expect that to happen if the economy continues to weaken - increasing numbers of consumers will find refinancing their existing mortgage worthwhile.
But here's the catch, and it's a big one: Many homeowners won't benefit, either because their mortgage is too big or their credit score is too low. In other cases, falling home prices will make it tough for them to refinance.
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In reviewing his portfolio of clients, Kevin D. Herthel, a mortgage broker with AFS Mortgage of Blue Ash, said he believes fewer than 25 percent will likely qualify for a lower rate. "The lower rates are great, but again, because qualifying criteria have changed, it's not as great as it seems," he said.
The average local rate for a 30-year fixed rate mortgage was 5.75 percent on Monday, down from 6 percent just two weeks ago, according to the Cincinnati Area Board of Realtors.
The average U.S. rate for a 30-year fixed mortgage fell to 5.31 percent Wednesday, the lowest since March 2004, when the Fed's benchmark rate was 1 percent, according to Bankrate Inc., a research firm in North Palm Beach, Fla.
"Even before the Fed's action, I felt it was a good time to lock in a long-term mortgage rate," said Covington financial adviser Mackey McNeill. "Any time you can borrow money at under 6 percent, it's a great deal," she said, noting some 30-year fixed rate mortgages locally were in the 5.62 to 5.7 percent range before the Fed's move.
This week's drop in interest rates may encourage up to 7 million homeowners to apply for new mortgages, many to avoid resets of adjustable rates, Tony Crescenzi, chief bond market strategist at Miller Tabak & Co. in New York, said in a report Wednesday.
Indeed, at these levels, about 37 percent of homeowners could refinance their mortgages and save money on their monthly payment, estimates investment bank Bear Stearns Cos.
Consumers clearly are watching interest rates and are eager to attempt to refinance.
"Refinance applications are up 92 percent since the beginning of November and purchase applications are up 7 percent," said Jay Brinkman, vice president of research and economics at the national Mortgage Bankers Association. "With tighter credit conditions we do not know how many of these applications will become loans, but it is clear that borrowers are responding to the 40-80 basis-point drop (0.4- 0.8 percentage points) in rates we have seen since Nov. 2 across products."
Bob Lewis, president of Fifth Third Mortgage Co., said that January mortgage applications at the downtown-based bank's offices across the nation have jumped 200 percent from December. He said consumers have responded strongly to seeing rates dropping. "All lenders have seen their refi activity increase over the last two weeks," Lewis said.
TIGHTER CREDIT STANDARDS
But while interest rates have dropped, making refinancing attractive, banks have been tightening credit standards.
About 40 percent of U.S. banks tightened underwriting standards on prime mortgages in 2007's third quarter, according to the most recent Federal Reserve Senior Loan Officer Survey, issued in October.
For most borrowers, the stricter rules mean a return to standards that were typical in 2001, the beginning of five record-setting years for U.S. home sales and prices, said Henry Savage, president of PMC Mortgage Corp. in Alexandria, Va.
"You're going to have to make copies of your pay stub and some tax documents and fax them to your broker," Savage said. "If you have good credit and some equity in your house, you can still get a loan. The people who are stuck are the ones who bought near the peak and now owe more than their houses are worth."
CREDIT SCORE AND EQUITY
Many consumers "will be left out in the cold this time because underwriting is back in vogue," said Ron Hermance, chairman of CEO of New Jersey's Hudson City Bancorp Inc. Many homeowners will find that during the previous housing boom "they originally got credit they weren't entitled to," he said.
To get the best rates under the new risk-based guidelines, homeowners "need a credit score over 679, or equity of greater than 30 percent," says Michael Menatian, president of Sanborn Mortgage Corp. in Hartford, Conn. But as home prices fall in many markets, homeowners' equity sinks alongside it - making it tough to get more-attractive rates.
source:http://news.enquirer.com/apps/pbcs.dll/article?AID=/20080124/BIZ01/801240340/1076/BIZ
Now Is the Time to Refinance
If you haven't refinanced your mortgage recently, do it now.
Loan rates have slumped again in the past few days amid the world-wide stock market rout, but it's anyone's guess how long this opportunity will last.
Earlier this month I pointed out that rates on 30-year loans had fallen below 6%. But if that was a deal, what has happened since is a bargain. The rate on a typical 30-year fixed rate loan has now fallen to as little as 5.31%, according to Bankrate.com.
And you can find one or two rates down around 5% a year. That's for people borrowing $417,000 or less, with good credit, and a down payment of at least 20%.
The current averages are among the lowest seen in recent history, and they're a full percentage point or more below levels seen as recently as last fall.
Some borrowers are already taking advantage. Veteran mortgage broker Paul Sapienza, a partner of Boston-area Drew Mortgage Associates, says business has skyrocketed this week. "It's very busy -- it's night and day from a week ago," he says. Borrowers are grabbing 30-year fixed loans, he says. "I've written more [new mortgages] in the last day than I did in the previous three weeks."
(One big problem still facing the housing industry: This is only true for "conforming" loans below $417,000, which benefit from indirect subsidies from Freddie Mac and Fannie Mae. Rates on bigger "jumbo" loans, which have no such support, are still much higher.)
Mr. Sapienza's advice: Look closely at all the closing costs, as well as interest rates, before deciding to refinance. Unless you are saving half a percentage point on your loan, it may not be worth it. Also, if your home's estimated value has below the value of your mortgage, you likely won't be able to refinance.
He adds: Right now, you also need to take extra care to make sure your borrower can actually deliver a mortgage in time. Many lenders have slashed staff to the bone, he says. You don't want your application to get held up in a back-office suddenly swamped with too much work to handle.
If history is a guide, low rates on conforming loans may not last.
Why is this happening?
Long-term mortgage rates reflect the interest rates on long-term government bonds. Those have just collapsed, as one of the initial knock-on effects of the stock-market drubbing.
But the Fed's big cut in short-term rates this week may end up sending those long-term rates the other way. The housing bust and the debt crisis have forced the Fed to put short-term problems ahead of long-term inflation worries.
Federal Reserve Chairman Ben Bernanke may not like it, but he is going to end up doing whatever he has to in order to prevent a full-blown crisis.
The gold market already knows this. The price of gold has risen 6% since the start of the year to nearly $900 an ounce. The dollar has been bouncing around but it is notable that it continues to fall against the solid Swiss franc.
Yet, sticking out like a sore thumb, here are the yields on long-term Treasurys.
These will only turn out to be reasonable investments if we actually see deflation -- an era of falling prices. That is possible, but very unlikely. It is interesting that neither the gold market nor currency markets are factoring it in much at all.
source:http://online.wsj.com/article/SB120113218983711667.html?mod=googlenews_wsj
Loan rates have slumped again in the past few days amid the world-wide stock market rout, but it's anyone's guess how long this opportunity will last.
Earlier this month I pointed out that rates on 30-year loans had fallen below 6%. But if that was a deal, what has happened since is a bargain. The rate on a typical 30-year fixed rate loan has now fallen to as little as 5.31%, according to Bankrate.com.
And you can find one or two rates down around 5% a year. That's for people borrowing $417,000 or less, with good credit, and a down payment of at least 20%.
The current averages are among the lowest seen in recent history, and they're a full percentage point or more below levels seen as recently as last fall.
Some borrowers are already taking advantage. Veteran mortgage broker Paul Sapienza, a partner of Boston-area Drew Mortgage Associates, says business has skyrocketed this week. "It's very busy -- it's night and day from a week ago," he says. Borrowers are grabbing 30-year fixed loans, he says. "I've written more [new mortgages] in the last day than I did in the previous three weeks."
(One big problem still facing the housing industry: This is only true for "conforming" loans below $417,000, which benefit from indirect subsidies from Freddie Mac and Fannie Mae. Rates on bigger "jumbo" loans, which have no such support, are still much higher.)
Mr. Sapienza's advice: Look closely at all the closing costs, as well as interest rates, before deciding to refinance. Unless you are saving half a percentage point on your loan, it may not be worth it. Also, if your home's estimated value has below the value of your mortgage, you likely won't be able to refinance.
He adds: Right now, you also need to take extra care to make sure your borrower can actually deliver a mortgage in time. Many lenders have slashed staff to the bone, he says. You don't want your application to get held up in a back-office suddenly swamped with too much work to handle.
If history is a guide, low rates on conforming loans may not last.
Why is this happening?
Long-term mortgage rates reflect the interest rates on long-term government bonds. Those have just collapsed, as one of the initial knock-on effects of the stock-market drubbing.
But the Fed's big cut in short-term rates this week may end up sending those long-term rates the other way. The housing bust and the debt crisis have forced the Fed to put short-term problems ahead of long-term inflation worries.
Federal Reserve Chairman Ben Bernanke may not like it, but he is going to end up doing whatever he has to in order to prevent a full-blown crisis.
The gold market already knows this. The price of gold has risen 6% since the start of the year to nearly $900 an ounce. The dollar has been bouncing around but it is notable that it continues to fall against the solid Swiss franc.
Yet, sticking out like a sore thumb, here are the yields on long-term Treasurys.
These will only turn out to be reasonable investments if we actually see deflation -- an era of falling prices. That is possible, but very unlikely. It is interesting that neither the gold market nor currency markets are factoring it in much at all.
source:http://online.wsj.com/article/SB120113218983711667.html?mod=googlenews_wsj
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