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
Sunday, January 27, 2008
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.
ADVERTISEMENT
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.
ADVERTISEMENT
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
Sunday, January 13, 2008
New FHA mortgage options extend relief to cash-poor buyers
As home foreclosures accumulate in what looks to become a year-long crisis, Congress is poised to enact a government mortgage alternative.
The pending FHA Modernization Act intends to help low-income borrowers who've been stuck in the commercial subprime market with exorbitant adjustable interest rates they can't sustain.
The Federal Home Administration would be allowed to grant mortgages up to 100 percent of appraised home value. And the down payment requirement would drop from 3 percent to 1.5 percent.
The FHA mortgages would also be fixed at about 6 percent for the present, compared to the adjustable loans that are going sky-high.
And the government application process would be made easier and quicker. The legislation's sponsors note that from 1996 to 2005, the subprime market went up 13 percent to exactly match the decline in FHA mortgages during that real estate boom.
Rep. Michael Castle and Sen. Thomas Carper of Delaware, who both serve on banking and finance committees in Congress, are backers of these changes. The Senate and House of Representatives passed different provisions for FHA reform, and they must be reconciled now.
Hundred-percent mortgages have been criticized as stretching borrowers' limits. But the sponsors argue that FHA has a better track record with loss mitigation counseling for payers to fall behind, and a much lower foreclosure rate.
There's also an experimental option for credit granted on the basis of ordinary bill payment, for people who don't have much credit history.
Rep. Castle said that while expanding FHA loans likely won't help homeowners already facing foreclosure, they would open the housing market to poorer people who still aspire to buy.
And some homeowners who are slipping behind could try to refinance with the government. That would be welcome relief, too.
Source:http://www.delawareonline.com/apps/pbcs.dll/article?AID=/20080113/OPINION11/801130307/1112/OPINION
The pending FHA Modernization Act intends to help low-income borrowers who've been stuck in the commercial subprime market with exorbitant adjustable interest rates they can't sustain.
The Federal Home Administration would be allowed to grant mortgages up to 100 percent of appraised home value. And the down payment requirement would drop from 3 percent to 1.5 percent.
The FHA mortgages would also be fixed at about 6 percent for the present, compared to the adjustable loans that are going sky-high.
And the government application process would be made easier and quicker. The legislation's sponsors note that from 1996 to 2005, the subprime market went up 13 percent to exactly match the decline in FHA mortgages during that real estate boom.
Rep. Michael Castle and Sen. Thomas Carper of Delaware, who both serve on banking and finance committees in Congress, are backers of these changes. The Senate and House of Representatives passed different provisions for FHA reform, and they must be reconciled now.
Hundred-percent mortgages have been criticized as stretching borrowers' limits. But the sponsors argue that FHA has a better track record with loss mitigation counseling for payers to fall behind, and a much lower foreclosure rate.
There's also an experimental option for credit granted on the basis of ordinary bill payment, for people who don't have much credit history.
Rep. Castle said that while expanding FHA loans likely won't help homeowners already facing foreclosure, they would open the housing market to poorer people who still aspire to buy.
And some homeowners who are slipping behind could try to refinance with the government. That would be welcome relief, too.
Source:http://www.delawareonline.com/apps/pbcs.dll/article?AID=/20080113/OPINION11/801130307/1112/OPINION
Wednesday, January 9, 2008
40-year mortgages are here
If you're buying a home, you should find it easier than ever to get a mortgage.
While the U.S. mortgage market is troubled, Canada's mortgage market is still healthy, competitive and innovative.
Several changes introduced last year make it easier for buyers with a good credit record to move into their dream homes more quickly.
But don't take all the financing you're offered just because you qualify for it. Some mortgage products are too expensive and benefit lenders more than borrowers.
You can now pay off your mortgage over 30 to 40 years, instead of up to 25 years as before.
This allows you to reduce your monthly payments or buy a bigger house for the same monthly payment.
"A surprising number of existing homeowners are looking at this as an opportunity to purchase `more house' while leaving their monthly payments unchanged," says mortgage broker Elisseos Iriotakis, a principal with Safebridge Financial Group.
Extending the mortgage amortization to 30 to 40 years doesn't mean locking in an interest rate for that long. You can get a fixed rate for up to 10 years – though most borrowers opt for five – after which you must renew the mortgage. This means negotiating with your current lender or switching to a new one.
You can now get a conventional mortgage by putting down 20 per cent of the purchase price.
Until last year, you needed a 25 per cent down payment to avoid a "high-ratio mortgage," one that was insured against default by the Canada Mortgage and Housing Corp. or Genworth Financial Canada.
Mortgage default insurance protects the lender from losses in case the loan is not repaid.
If you have a down payment of 20 per cent or less, you must pay an insurance premium ranging from 1.75 per cent to 3.1 per cent of the loan value. This premium is usually added to the total mortgage amount and spread over the same repayment period.
Those with low down payments can get a mortgage without default insurance from some non-bank lenders. However, they pay a much higher interest rate and extra administrative fees.
Mortgage insurance is no longer dominated by two players, CMHC and Genworth.
AIG United Guaranty, a subsidiary of New York-based American International Group Inc., made a splash when it came into Canada's mortgage insurance market last year. AIG offers new options, such as a product for buyers who can put down only 3 per cent of the purchase price. The payments can be spread over 30 to 40 years.
Cash-strapped borrowers once needed a 5 per cent down payment to get the same flexibility.
Though insured "no money down" mortgages are also available, they require a higher credit score and higher fees.
AIG's 3-per-cent-down mortgage insurance product is attractive to people buying in Toronto, says mortgage broker Ann Pope-Todd of Assured Mortgage Services.
"Because the city imposed a new land transfer tax ... many people don't have a 5 per cent down payment," she says.
You can now qualify for a low-down-payment mortgage if you're self-employed or work on commissions. CMHC has introduced self-employed simplified insurance, which allows you to buy a home with as little as 5 per cent down. And you don't have to hand over your tax returns for the last few years to qualify.
"A self-employed person used to need a down payment of 15 per cent to 25 per cent to get a conventional mortgage from a bank," says Bill Nugent, a broker with Mortgage Intelligence in Newmarket.
Self-employed simplified insurance is available for mortgages with a payback period of up to 40 years.
You can now qualify for a mortgage if your total debt load is more than 40 per cent.
When looking at whether you can afford to buy a house, lenders look at the gross debt service (GDS) ratio. Monthly housing costs, including mortgage, property taxes and heating, shouldn't exceed 32 per cent of gross household income.
They also look at the total debt service (TDS) ratio, which takes into account debts such as bank loans, car loans and credit card balances.
If your total debt load exceeded 40 per cent of your monthly gross income, you used to be turned down when applying for a conventional mortgage.
Today, many lenders will give you one if your total debt load is 42 per cent of household income. Some go up to 44 per cent.
"The thing that gets missed is that these are maximums," says John Schipper, president of Mortgage Intelligence Inc.
He believes lenders should require borrowers to do a monthly budget for a realistic view of their income and expenses.
Schipper is also concerned about the longer payback periods.
"My daughter is 23 and wants to buy a condo. I'd suggest a 40-year mortgage. I see a place for them if they're effectively managed," he says.
"But they can be used by unscrupulous lenders or brokers. Say, offered to 50-year-olds."
When you stretch out the mortgage payments for so many years, your total costs are much higher.
Suppose you buy a $375,000 house, put down $75,000 and take out a $300,000 mortgage at 5.99 per cent (the lowest current five-year rate).
You'll pay almost $784,000 with a 40-year mortgage, compared with $575,000 on a 25-year mortgage (assuming the rate stays the same).
That's more than $200,000 in extra costs – and for what?
By extending the payback period, you'll save only $285 in your monthly payments.
You could get the same bang for the buck – about $9 a day – by bringing your own lunch to work or taking public transit instead of your car.
Will Dunning, a housing economist in Toronto, believes Canadians "borrow conservatively, especially for homes," and there's no danger yet of Canada heading down the same road as the U.S.
source:http://www.thestar.com/columnists/article/292254
Sunday, January 6, 2008
Gearing up for Bad Credit Mortgages
Mortgages would have never happened, had mortgages been a no profit venture for the mortgagees or the mortgage providers. The lender receives much more than he had actually lent. And you feared that you would not qualify for the mortgages having a bad credit history. Mortgagees somehow find ways to match borrowers with the offers available with them in order to have your business.
Bad credit mortgages are mortgages offered to people whose credit history has been adversely tainted. Sub-prime lenders make a special provision for people with an adverse credit history. But, it is crucial to escape lenders who pose as sub-prime lenders, but are actually overcharging them. There is a misconception in the minds of people that having a bad credit lessens their chances of getting a mortgage. In fact they take the offer as if it is the best that they can get.
We cannot expect the mortgage providers to not differentiate between those with a good credit history and those who have not. This however does not mean that the borrower must accept all terms on the mortgage without questioning their validity. There are many mortgage providers in the UK and the case will match some or other lender if a proper and exhaustive search is made. There are a few tips which could be used to reduce the intensity of the differentiation.
The trust having been botched because of the bad credit can be restored somewhat by advancing a certain percentage of the mortgage amount as a deposit. The lender is more concerned about the security of the amount lent when he decides to not offer mortgages to people with a poor credit history. With the borrower offering a part of the mortgage, the lender can be assured that the borrower will not default.
A mortgage protection will also go a long way in instilling faith in the lenders. However these will involve an extra payment from the borrower. This often deters the borrowers from taking mortgage protection. The borrower already burdened with the monthly repayments to the mortgage feels mortgage protection as a nuisance. However, one must take mortgage protection as a bitter pill which will be helpful in crisis situations like death, illnesses, and unemployment. Lenders get the impression that the borrower is more concerned about the repayment of the mortgage.
The decision to advance mortgages is made after viewing the credit report. The credit report is prepared by the credit reference agencies. Many a times there are discrepancies in the credit report. It is necessary to apply for a correction in the credit report as many lenders may disqualify at the very sight of a bad credit. It is also necessary to get the credit report from all the credit reference agencies as there might be differences between them.
Before planning to not pay the next installment on the bad credit mortgage, the borrowers must keep this in mind. There is not always a second chance available. While lenders had faith on you in offering mortgages this time, they would not have it the next time. So, it is better to be regular in making payments to the mortgages. This will also help in an improvement in the credit history.
source:http://www.articlefeeder.com/Business__Finance_and_Management/Gearing_up_for_Bad_Credit_Mortgages.html
Bad credit mortgages are mortgages offered to people whose credit history has been adversely tainted. Sub-prime lenders make a special provision for people with an adverse credit history. But, it is crucial to escape lenders who pose as sub-prime lenders, but are actually overcharging them. There is a misconception in the minds of people that having a bad credit lessens their chances of getting a mortgage. In fact they take the offer as if it is the best that they can get.
We cannot expect the mortgage providers to not differentiate between those with a good credit history and those who have not. This however does not mean that the borrower must accept all terms on the mortgage without questioning their validity. There are many mortgage providers in the UK and the case will match some or other lender if a proper and exhaustive search is made. There are a few tips which could be used to reduce the intensity of the differentiation.
The trust having been botched because of the bad credit can be restored somewhat by advancing a certain percentage of the mortgage amount as a deposit. The lender is more concerned about the security of the amount lent when he decides to not offer mortgages to people with a poor credit history. With the borrower offering a part of the mortgage, the lender can be assured that the borrower will not default.
A mortgage protection will also go a long way in instilling faith in the lenders. However these will involve an extra payment from the borrower. This often deters the borrowers from taking mortgage protection. The borrower already burdened with the monthly repayments to the mortgage feels mortgage protection as a nuisance. However, one must take mortgage protection as a bitter pill which will be helpful in crisis situations like death, illnesses, and unemployment. Lenders get the impression that the borrower is more concerned about the repayment of the mortgage.
The decision to advance mortgages is made after viewing the credit report. The credit report is prepared by the credit reference agencies. Many a times there are discrepancies in the credit report. It is necessary to apply for a correction in the credit report as many lenders may disqualify at the very sight of a bad credit. It is also necessary to get the credit report from all the credit reference agencies as there might be differences between them.
Before planning to not pay the next installment on the bad credit mortgage, the borrowers must keep this in mind. There is not always a second chance available. While lenders had faith on you in offering mortgages this time, they would not have it the next time. So, it is better to be regular in making payments to the mortgages. This will also help in an improvement in the credit history.
source:http://www.articlefeeder.com/Business__Finance_and_Management/Gearing_up_for_Bad_Credit_Mortgages.html
Bad Credit Mortgage
Many people can find themselves in difficulties with mortgage or other loan repayments, which can result in a bad credit rating and problems borrowing money in the future. When you apply for a new mortgage or remortgage this might be refused, even though the problems are in the past.
However loans, mortgages and re-mortgages can often be obtained for those with past or present credit problems, even County Court Judgements (CCJs), as long as you own your home and it is of sufficient value. For many people, obtaining a fresh loan and reorganising their finances can bring large savings. If you are having difficulties, it is always a good idea to approach a specialist mortgage provider in order to give you professional advice and avoid damaging a credit rating even further.
There are specialist lenders who have experience with bad credit mortgages and may be able to assist you, provided you own your own home, with or without an existing mortgage. You may be advised to take out a fresh mortgage in place of your existing mortgage, giving you some spare cash to repay outstanding loans and at the same time making savings in your monthly payments.
source:http://www.ukpropertyshop.co.uk/bad-credit-mortgage.shtml
However loans, mortgages and re-mortgages can often be obtained for those with past or present credit problems, even County Court Judgements (CCJs), as long as you own your home and it is of sufficient value. For many people, obtaining a fresh loan and reorganising their finances can bring large savings. If you are having difficulties, it is always a good idea to approach a specialist mortgage provider in order to give you professional advice and avoid damaging a credit rating even further.
There are specialist lenders who have experience with bad credit mortgages and may be able to assist you, provided you own your own home, with or without an existing mortgage. You may be advised to take out a fresh mortgage in place of your existing mortgage, giving you some spare cash to repay outstanding loans and at the same time making savings in your monthly payments.
source:http://www.ukpropertyshop.co.uk/bad-credit-mortgage.shtml
Subscribe to:
Posts (Atom)
