What is a Streamline FHA Mortgage Refinance?

Streamlining is not really a term that explains the loan product so much as it refers to the amount of paper that the borrower is required to provide to the lender. Generally speaking, the amount of paperwork that is usually demanded during the initial mortgage application is virtually cut in half during a streamline refinance. Appraisals are optional, but in cases where there is little equity built up, the bank may mandate the appraisal of the property prior to issuing a loan. This protects the lender from financing a property that might put the borrower upside down into the property from the get go. Streamlining also refers to the paperwork processing that is required from the lender, and as such the fees associated with a streamline FHA refinance are generally lower than those that are charged for other refinances.

On the flipside, there are some downsides associated with a streamline FHA refinance. For one, this kind of mortgage loan does not permit the homeowner to take out any money. Thus, for homeowners who are hoping to pay off some bills with their built up equity, this is not a possibility. In addition to the foregoing, there are closing costs associated with this kind of loan. They are often a lot less than other loans, and therefore at times give rise to ambiguous advertisements, such as ads which promise no cost refinancing. In fact, these costs may be rolled into the loan – if there is sufficient equity – or they may take the form of a slightly higher than average interest rate to offset the fees.

This kind of semi creative financing makes FHA loans an attractive mortgage for those borrowers who simply want to take advantage of lowered interest rates, but who have no need for any cash-out refinancing. In some cases it shows that the costs rolled into the loan actually add too much money to make this a profitable undertaking and consumers are urged to find alternative means of paying the closing costs. Financing the fees over the course of 30 years adds more eventual costs than the consumer is actually saving. A loan broker or reputable bank can quickly and easily disclose the actual cost of the loan with the help of an amortization schedule that sheds light on the amount of money the consumer is expected to pay as opposed to the amount s/he will expect to save.

Other loan products receive a lot more airtime on radio and television than streamline FHA refinancing, in part because these fiscal vehicles are a lot more profitable for the lender. At the same time, the consumers who actually benefit from a streamline FHA refinance are not as plentiful as you might think. There are plenty of reasons why a refinance should be advantageous to both consumer and lender, and in this case only a select number of homeowners can actually benefit from a redo of their FHA mortgage without the ability to tap into the cash and use it for expenses.

To find and compare the lowest mortgage rates, visit our site at Lender411.com.

How to Keep Your Home With Mortgage Loan Workout Plans

A mortgage loan requires meticulous attention to budgeting and planning for fiscal disasters and changes. While a consumer may not be looking like a potential default risk when the loan is initially granted, the fact that life can change, jobs can be lost, and appliances can break all factor into the reasons why a mortgage may enter default. A mortgage in default is a loan that may be leading to a home foreclosure. Lenders have precious little interest in taking back the home that they helped their customers buy, but — in the cases of consumers who are over their heads in debt — this is oftentimes the only option that appears to be open. There is, however, another way to go: the mortgage loan workout plan.

A mortgage loan workout plan is a legal agreement between the mortgage lender and the borrower. It is usually entered into when the mortgage default jeopardizes continued homeownership, but the borrower is responsible and makes contact with the lender and keeps the bank appraised of the financial situation s/he is facing and what the plans are for coming up with a way to undo the default. The center piece of a mortgage workout plan is the intent to keep the homeowner in the home. To this end, the lender and the borrower covenant and enter into a side agreement that gets tied onto the initial promissory note of the mortgage loan.

This agreement details the steps the borrower will take to repay the defaulted amount. It also outlines under which conditions the lenders will accept these payments, what deadlines have to be met, and how such a situation will be avoided in the future. In addition, the lender agrees not to foreclose on the customer who is trying to make things right and actually pay off the debts owed. Each workout plan differs from the next; these plans are uniquely crafted for the benefit of the borrowers. To some, as little as three months forbearance is all that is needed for getting back on their feet. In such cases a lender may agree to move three months worth of payments to the end of the loan, thus actually extending the loan.

In other cases the default may be more serious and the lender and borrower could work out a plan that would give the borrower up to 24 months to pay off any default plus costs, penalties and other amounts indicated. This agreement is just as legally binding as the initial mortgage, and it has the advantage of allowing the borrower to once again make normal mortgage payments without the staggering weight of late fees added to them. Budgeting of the secondary payment is also made easier, since the repayment is spread over a sufficient amount of time to not actually adversely affect the borrowers overall budget. Whatever option works for the homeowner, it is crucial to remember that only a borrower, who is in contact with the lender when things go wrong, can hope for such deals.

To find the best mortgage rates, visit our site at Lender411.com.

Mortgage Driven Bankruptcy Filings against the Backdrop of an Amended Bankruptcy Code

Bankruptcy used to be the stigma laden option for consumers who were simply too deep in debt to find a way out. In the past Chapter 7 filings could lighten the debt load for filers by simply doing away with credit card bills and other unsecured loans. In some cases, homeowners could even keep their homes and cars, depending on their ability to repay the loans and of course also the amount of equity contained within the asset.

When changes to the bankruptcy code were submitted – making it much more favorable for unsecured creditors like credit companies – and kept consumers repaying outstanding balances as part of their filing requirements, the fast paced return to a life without fiscal woes was greatly curtailed. As the housing boom bottomed out, and a waning economy sent more and more homeowners into bankruptcy, the amounts of seized parcels of real property skyrocketed and empty homes litter residential streets, driving down home prices.

Since there is hardly a waiting number of consumers for these foreclosed properties, a number of state attorneys general have now come out in favor of a further amendment to the bankruptcy code that would put the bankruptcy court in the position to order banks to proceed with mortgage loan modifications. Proponents believe that this step will protect large numbers of bankrupt homeowners from actually having their homes seized and added to staggeringly high inventory of already foreclosed homes.

Bankers and mortgage investors are not too keen on the idea, since it essentially places the risk of bad mortgages back on them, leaving them to figure out how to make a home affordable for a debtor who is essentially out of disposable income. Banks argue that such a move would greatly increase the cost of mortgages for all consumers, since banks would have to protect themselves against the potential for high impact costs this kind of program might have for them.

The current political climate in Washington, however, does not have a lot of sympathy for creditors and for banks that are crying foul and as such the Obama Administration is favored to see this measure through. What is more, since proponents crunched the numbers, they came to the realization that the actual increase would only be about 0.15 points to current mortgage rates, keeping them still rather competitively priced for those considering the purchase of a home or the refinance of an existing home.

With so much opposition, it is not surprising that banks might find themselves in the unenviable position of having to change their business practices. While thus far they have been extremely slow to let go of the bailout money they previously received for the funding of consumer loans, they might before long find themselves to be court ordered to do so. It is anyone’s guess what the long tern effect of this kind of financial climate will be. As it stands, beleaguered homeowners appreciate the opportunity to remain in their homes, even as their finances are in shambles.

In order to compare the lowest mortgage rates, you can visit our site www.lender411.com.

Important Facts on Mortgage Prequalification

Obtaining a mortgage prequalification is the single most important step to ensuring that you are seen as a serious contender for a piece of real property. Moreover, it provides you, the consumer, with the amount of money that a bank is willing to lend for the sake of obtaining a home. Going above and beyond this figure requires the consumer to make up the difference between the amounts arrived at during the prequalification period and the more expensive home the consumer has chosen. Real estate sellers look for bids from those who have gone through the trouble of becoming prequalified, in part because this provides some peace of mind with respect to not entering into a business relationship and open escrow when the transaction may actually not be finished. As such, prequalification benefits both the buyers and the sellers.

There are some shortcomings associated with mortgage loan qualifications, however, which must be disclosed ahead of time. For example, a prequalification is not a loan guarantee. While the lender is making an educated guess based on information obtained from the would-be borrower and from the credit profile, there are times when a prequalified loan cannot be granted. This usually occurs when the borrower cannot verify income, length of employment, or eligibility to contract for such a large amount of money in the United States. This information does not usually show up on the credit report but is discovered after a prequalification letter is issued.

Another problem with a prequalification letter is the fact that it is only applicable to the moment in time when the applicant requested it. Job losses, a change in professions, and also other factors may adversely affect a would-be borrower’s ability to qualify for the actual loan, prequalification letter or not. In the cases of troubled financial institutions, there is also the danger that a bank may not have the funds needed to follow though on the mortgage loan for which it prequalified a consumer, and while this is an exceedingly rare occurrence, recent economic turmoil shows that it can happen. Of course, if the applicant is a good credit risk, the prequalification letter may be honored by any of the bank’s competitors, and there is a chance that the real estate transaction will still go through.

There are also other reasons that influence a real estate transaction, with or without a prequalification letter. For example, if the piece of real property fails to appraise at an amount that is close to the sale amount, then there is a good chance that the bank will refuse to fund such a loan. Generally speaking, a bank will fund a loan up to the amount of the real estate appraisal, but will not go beyond. If a consumer insists on purchasing a property that is sold for more than it is worth, s/he will have to come up with their own funding to make up the difference. This might discourage a good many consumers from pursuing the transaction, and thus escrow may still fall through, even though the would-be borrower presented a prequalification letter to the would-be seller.

In order to compare the lowest mortgage rates, you can visit our site, www.Lender411.com.

A Guide to Finding and Getting That Perfect Mortgage Online

The soaring popularity of the online marketplace has changed the way mortgage lenders and aspiring homeowners do business. While in the past there was a lot of face to face contact or at least a lot of personal interaction via the telephone, today’s mortgage is often done entirely online and via email. A changing business environment has brought with it a lot of advantages consumers are enjoying, but there are also some pitfalls they need to be aware of. A guide to finding and getting that perfect mortgage online will try to make that process for getting the online loan just a bit easier and safer.

First things first: you need to find out how much house you can afford. There are several free online mortgage calculators that let you play around with the overall loan amount, different interest rates, and also various lengths of time. In most cases these calculators will also reveal if fit into the debt to income ratio that lenders want to see before offering their home loans to consumers.

Next, evaluate your credit. If you have not ordered your credit report in a while, now is a good time to do so. Know what is found in your credit file and correct and mistakes that you find. In some cases potential borrowers were denied loans or advantageous interest rates because of derogatory notations in their credit profiles that did not even need to be there! Correcting any mistakes is quickly and easily done.

At this juncture you know how much you can afford and what your credit looks like. This will influence the lenders you might choose. Essentially there are two kinds of lenders doing business online: the established banks with an online presence that let you submit your application via the Internet, and the web-based that does not have a brick and mortar building and does business exclusively online. There are good and bad ones of both ilk and it is a good idea to check their Better Business Bureau rating before committing to one and putting in an application. As a general rule, established and well known lenders are less likely to cause any problems than the unknown ones.

Be wary of supplying too much information up front. The initial contact with an online lender should be a general fact finding mission where you test the waters to see what the lender can do for you. Social security numbers and such information should not be offered at this juncture, nor should it be demanded by the lender. The goal is to find out which loan products the lender has available and – if all the fact you provide are correct – what the bank can do for you.

When you do choose to go ahead with the application process make every effort to find the best deal that will work for you now and in the future. Using online mortgage brokers is one method of weeding out lenders that have rates which are simply too high. In other cases you will find that the direct competition between lenders online has led to amazing deals you can take advantage of.

Beware the teaser rates that some online mortgage companies use to entice new homebuyers to write up their mortgage with them. Compare and contrast the aspects of various different loan products and know exactly what it is that you are choosing. If a package is considerably cheaper at one lender than at another, peruse the fine print carefully.

The final suggestion for finding that perfect mortgage online is the same that accompanies any big purchase: whatever is agreed to, get it in writing! While the individual broker may promise that she will take one half point off your overall interest rate, ask to have it put in writing into the loan papers. Once signed, notarized, and submitted, they are binding and if the special deal you were offered is not part of the agreement, it simply does not exist.

What the Obama Administration Offers to do for Homeowners

Bailouts are in the news every single day, but more and more homeowners and those hoping to qualify for a mortgage loan any time soon are wondering what is in it for them. When Treasury Secretary Geithner finally came out with a mortgage plan and bank bailout scheme, it seemed like it might have held the answers needed, but unfortunately the wording did not help those not well versed in legalese. This keeps those with an eye on mortgage rates wonder what the Obama Administration truly offers to do for homeowners.

In an effort to explain the plans the Obama Administration has for homeowners and those aspiring to hold a mortgage soon, Mr. Geithner held a press conference that discussed TARP, the current status of the mortgage industry, and also the urgent need to halt runaway foreclosures. In stark contrast to the protestations of change stood the seemingly indiscriminate bailout package that supplied much needed funds to struggling financial organizations without actual oversight.

Rather than compelling bankers to turn around and use the funds to lend to consumers in dire need of help, recent scandals have revealed that a good portion of the funds has been allocated to back pay and also bonus payments promised to employees and officers of the corporations. In other cases, these funds have been used to shore up the banks’ position in the business world and to ensure that they would be competitive and could hold on to some investments that perhaps otherwise would have had to be liquidated.

Consumers, in the meantime, found themselves on the short end of the stick. Elizabeth Warren, in charge of TARP oversight, reported back that taxpayers actually lost about $80 billion in the recent bailout transactions and rather than helping consumers, banks took the money and ran. Business that failed to receive loans closed their doors or cut jobs, while homeowners that could not get the mortgage bailout they required are facing bankruptcy. Those who would have purchased a home had to move on and continue renting, while banks have greatly curtailed their mortgage lending practices.

In the meantime, the Obama Administration is working on its deal to ensure a refinance package that allows homeowners in danger of foreclosure to get out from under oppressive mortgage packets. At this stage it is uncertain what the actual fiscal impact will be, whether the US Treasury is going to discover the one surefire means of fixing and overseeing a banking system that has been out of controlled for a prolonged period of time, and of course what the lending lull will continue to do to the American economy.

It is a sad state of affairs that banks feel little gratitude to the American taxpayers for the lifesaving infusions of cash into the companies and corporations, and rather than returning the favor are looking for ways to make lending even harder. On the flipside, the fact that banks have been burned by consumers fudging numbers and a mortgage industry bent on helping them, most likely accounts for the reasons why there seems to be little love lost between banks and loan hungry consumers.

In order to find out more about mortgages, you can visit our site www.lender411.com.

Can a Bankruptcy Law Adjustment Stop the Mortgage Meltdown?

With the number of home foreclosures spiraling out of control, Congress is desperate for a means to stop the hemorrhaging of the losses banks and investors undergo. At the same time, the taxpayer underwritten cash infusions are doing precious little to counteract the financial disaster and while it may seem like grasping for straws, lawmakers are now taking a good hard look at current bankruptcy codes. The problem that market watchers and opposed lawmakers see, however, is the law of unintended consequences.

For example, if Congress were to change the rules of the bankruptcy game now, could they actually be borrowing trouble in the years and decades to come which – were the bankruptcy codes untouched – would be little more than a blip on the radar screen. What is more, is there a chance that in the effort to bail out consumer today, Congress might actually set in motion another set of problems that will hit the stock market and the national as well as international economies in years to come.

Banks claim that bankrupt borrowers who cannot afford their mortgage payments any longer will lose their homes to foreclosure, and it is this market safeguard that keep mortgage rates affordable. Thus far there was precious little a bankruptcy judge could do to help a homeowner, other than go by the book and encourage the debtor to see if there was any way of restructuring debt payments that would permit her or him to keep the home. Short of that, the bank would take over the property.

A movement is now underfoot that would actually give bankruptcy judges the ability to order mortgage modifications, and thus would force banks to comply and change the loan terms rather than simply taking back the property in question. Lenders state that this kind of move would have serious ramifications and unintended consequences, leading to a hike in the cost of mortgage loans, and also decreasing the banks’ willingness to underwrite new mortgages even further.

After all, if the investor or the banks are stuck with losses they neither anticipated nor planned for, there is little incentive to write any loans other than to those consumers with stellar credit, more than sufficient debt to income ratios, and of course also shy away from loans that might even give a hint to future troubles. While the arguments on both sides of the aisle sound compelling, there is some evidence that proponents of a change in the bankruptcy laws as well as proponents in the maintenance of current bankruptcy codes do not truly understand the depth of the arguments.

When the bankruptcy codes were last tinkered with in 2005 – at the request of the credit card industry – it was made harder for consumers to get out from unsecured debts and this forced repayment now makes it harder to actually repay the debts and keep a mortgage current. This showcases the shortsightedness of those supporting bankruptcy reforms then. Could that have been a precursor of the current debate?

Have Mortgage Delinquencies Hit Rock Bottom?

It is baffling just how many homeowners are going belly-up in their loans, especially considering that there are copious mechanisms in place to save those who are facing foreclosure or even see themselves nearing the road to foreclosure. The foregoing not withstanding, there is a school of thought that suggest that mortgage delinquencies have not yet hit rock bottom. Economists state that seven out of 100 homeowners are currently delinquent on their mortgage loans.

What makes matters is the number of those who are barely hanging on to their homes and who are being laid off, overtaken by consumer debt, and also fell victim to the lure of easy equity when they could ill afford to take out any money from their homes. Now upside down in their loans, there is no chance of refinancing and rescue is available only by qualifying for one of the government programs. Perhaps it is the notion that homeowners are finally seeking help that makes the Mortgage Banker’s Association comment on a decline in new foreclosure filings.

Unfortunately, investors are not buying the good news, especially since the drop in foreclosures could be the loans currently on hold while awaiting a decision to see if homeowners are eligible to participate in any one of the governmental programs. Thus, there is a good chance that the actual number of halted foreclosures may be unduly watering down the foreclosure rates, seeing that not all halted foreclosures will actually result in saved loans. In these cases, the halted foreclosures may buy some time, but eventually become foreclosures nonetheless.

With the upset in the housing market, the upset in the employment numbers does not bring any good news. As a matter of fact, states that are considered ground zero for the mortgage meltdown – Nevada, Florida, Michigan, and California – also report skyrocketing unemployment as well as projected job losses that are yet to hit the ailing economies of these states. Speculations are rampant that further economic downturns are likely to happen. When this occurs, the next wave of foreclosures is going to continue dragging down the markets locally but also nationally.

As such, it is a safe bet that mortgage delinquencies have not yet hit rock bottom, and may actually still be in the mid stages of their freefalls. This is especially true considering that other forms of mortgages are now beginning to also join the subprime mortgages in their foreclosures. With so many consumers living from paycheck to paycheck, even the loss of only one or two such paychecks can hail fiscal disaster for the consumer, and by extension for the lender who holds the mortgage papers.

Although not saying so loudly, investors are leery to once again jump headfirst into the mortgage market and not even the government incentives are sufficient to have them change their minds. This of course begs the question what it will take to once again make them comfortable to invest in the housing market. Some speculate that only governmental coercion could accomplish this feat, while other hope that a slowdown in foreclosures will be enough for the more daring ones to once again infuse cash into the housing market.

Borrowers Beware: Credit Scores Are Only The Beginning!

It is true that a consumer’s credit score greatly factors into the type of deal that she or he may be able to get from a mortgage lender. Low interest rates are tied directly to a high credit score as it implies a heightened creditworthiness. Interestingly, the credit scores are only the beginning and there are other factors lenders are considering before extending credit to hopeful homeowners.

Take, for example, the consumer’s ability to meet monthly loan obligations. Low credit scores may be a tip-off of a bad credit risk, but in some cases banks are willing to take into account the trends in a consumer’s credit profile before denying a loan application. While missed payments are a serious black mark on any consumer’s credit profile, a consumer who had a stellar credit history, subsequently experienced adverse conditions of a temporary nature, and has since recovered and is once again following the already established pattern of making timely payments, may be rewarded with a loan at a decent rate. The lender may sometimes elect to accept the borrower’s explanation for any uncharacteristic blemishes on the credit file.

However, in other cases, even the presence of a great credit score and payment history may be insufficient to persuade a lender to take on a borrower. The problem may lie in the debt to income ratio the borrower’s finance evidences. Lenders get nervous when more than 40% of a borrower’s monthly income is allocated to consumer debt such as credit card payments and car loans.

This may be offset by a borrower’s liquidity. If there is 401(k) account that could be tapped into for ready cash, an IRA, a savings account holding 3-6 months of living expenses, and any other source of emergency cash, mortgage lenders find that the consumer will most likely have the liquidity and wherewithal to find the money needed to meet mortgage payments, even if there are some temporary financial setbacks.

In short, consumers shopping around for low interest mortgage rates should not be discouraged if one lender chooses to pass on their business. There are still plenty of ways to obtain that loan, and different lenders have different ways of looking at qualifying data.

Read This before Refinancing Your Mortgage Online

It is no secret that the Internet has changed the way future homeowners obtain their mortgages. Along the same lines, it is also a well known fact that the online marketplace is seeking to woo the business of those in need of a refinance for their exiting loans. Like with any other online business venture, mortgage lenders and even heavily marketed refinance offers are not always as they hold themselves out to be; homeowners would be wise to be very careful before signing on the dotted line.

Thus far the best way of doing business online for the homeowner wanting to refinance is to contact well known lenders and ask about their refinance products. Some companies actually work with different lenders and will find you the best deal possible. Individual mortgage lenders also offer online application processes, and it is up to the buyer to shop smart and beware.

It is interesting to note that sometimes you will save money by doing the entire refinance process online versus walking into your bank. The reason is obvious: there is less overhead, and the decrease in operating expenses can be translated in better deals when it comes to interest rates for mortgage loans. At the same time, failure to read disclosures carefully may cost you dearly, particularly in little nickel and dime fees that add up and may eventually cost you thousands more than you would have had to pay at the bank where you already have established a business relationship.

Diligently comparing different loan products, the features of various loans, and also reading the fine print is the basis for getting a great deal on an online refinance. If you do not feel comfortable doing business this way, or if the technical language of the documents is overwhelming, set up an appointment with a mortgage broker at your local bank and ask for explanations of the terms. Once you know exactly what you are dealing with and what the bottom line figures are, you can make an educated choice with respect to your mortgage refinance. You can shop for the best mortgage refinance rates on our site www.lender411.com.