Loan Modification, a better option than foreclosure. by GT Wilson

There is a common misconception is that lending institutions are opposed to granting loan modifications because they do not benefit a great deal from them. Contrary to this belief, banks and lending institutions do grant loan modifications, as an instrument to stop foreclosure, as it is more favorable financially to keep the home owner in the property. Recent findings reported by FDIC indicate the average value of a modified loan exceeds the average value of the same foreclosed loan by more than $50,000. This means, banks and lending institutions will lose $50,000 or more per foreclosed property. If they hesitate to consider loan modifications, it is mainly because they are not yet common among lending institutions and anything that is new is always frowned upon in the credit industry. The same applies to the lending industry.
Following foreclosure, there is no guarantee, at what price, a given property will resell. The reintroduction of so many foreclosed properties has also increased the likelihood that properties will stay on the market for an extended period of time. Lending institutions enjoy a number of long-term benefits through loan modifications. A loan modification will at least guarantee they can recover most of the loan amount even with revised rates and lower monthly payments for the home owner.

The largest problem most home owners will encounter, concerning loan modification, is being able to negotiate new affordable terms for their existing loan. The bank will do everything they can to keep their profit level as high as possible. Their concern does not usually include the home owner being able to make a comfortable and affordable monthly payment. At the present time there is little, if any, regulation ensuring home owners receive a favorable deal when negotiating their own loan modifications.

The entire mortgage crisis was enabled by regulatory oversight of the lending industry. This was compounded by the real estate boom allowing millions of new loans and refinance loans to be created and sold to larger institutions within a very short time. History will show, GREED contributed greatly in the creation of many sub-prime loans and ultimately caused the mortgage crisis. It is believed, between 2001 and 2006, one out of every four new loans fell victim to Predatory Lending. In order to attract more customers and to keep their profit levels high, some lending institutions engaged in a wide variety of predatory lending practices. When lending institutions engage in this, their customers are treated unfairly and are subject to over paying on interest rates, they lose a lot of their hard-earned money and inevitably their home. Most consumers were unaware of these practices or never realized they had been a victim until their payment escalated so high they are now unable to afford to live in their own home. Home Loan Crisis Center - Tampa, Florida specializes in performing loan modifications, assisting homeowners in danger of losing their homes to foreclosure, assembling the needed documentation for a successful loan modification, providing expert negotiations and if necessary performing a Forensic Mortgage Analysis. Forensic Mortgage Analysis is an excellent tool to stop foreclosure proceeding while allowing time to detect inconsistencies and or violations with respect to RESPA and TILA guidelines created to prevent/shield homeowners from Predatory Lending Practices, Toxic Loans, Out of control ARM mortgages and Interest Only mortgages. The advantage of having this assistance is invaluable, since for many home owners the loan modification process is the last chance to save a home, that might otherwise fall victim to foreclosure. Home Loan Crisis Center offers a Free Consultation and never charges any up front fees. www.HomeLoanCrisisCenter.com 888.273.3144

About the Author
Author: GT Wilson http://www.HomeLoanCrisisCenter.com

Buying a home with no money down has become easier than ever. Unfortunately, it has also become more necessary than ever, thanks to ever-falling savings rates. With that in mind I would like to respectfully suggest that if you need to buy your home with no money down, you may have a more general problem with your finances that needs to be worked on. In any case, there are times when it makes sense to have a lower or non-existent down payment, so let’s look at four ways to accomplish this.

1. Have the seller finance part of the deal. For example, if you can get a mortgage loan for 90% of the purchase price, and the seller lets you make payments on a second mortgage note for the other 10%, you have a no money down deal - especially if the seller pays closing costs. Some sellers will be willing to do this if you pay full price or close to it. The lenders on the first mortgage may not agree to this, though, so ask them.

2. Get the seller to finance it all. Sellers need at least some cash, so how can they provide all the financing and still get cash? By creating two notes and selling one. Let’s look at an example.

Suppose the seller is asking $220,000 for his home. He expects to get about $210,000 for it, and he needs at least $150,000 in cash to pay off his $130,000 mortgage and have a little left over. You offer him $240,000 for the home, in the form of two mortgage notes. The first is for $200,000 and the second for $40,000. As part of the deal, you have arranged for a “note buyer” to buy the first from him for $170,000.

Now he has $170,000 at closing, plus you are making payments to him on the other $40,000, meaning he got the $210,000 he expected out of the sale. Of course, you had to overpay for the home due to the steep discounting ($30,000) on the sale of the first note, and you will have payments on both. In other words, there are only certain times when this technique will make sense. (Certainly it would if you could rent a property for more than the two payments and other expenses added up to.)

3.  Borrow the down payment on your credit cards. This is either a great way to get into more financial trouble or, if you handle it right, a good way to stop renting. If you can get a $95,000 loan on a $100,000 condo, for example, you only need $5,000 for the down payment. Why not get a cash advance on a credit card when there is a low-interest deal?

Since you can’t “borrow” for a down payment according to many lender’s rules, get the advance a few months earlier for a “vacation.” Take a taxi downtown for your vacation and leave the rest of the money in your checking account until it is time to buy a home. A lender can’t read your mind to know what your intent was, so this is legal, but is it unethical? First, I would like to remind you that lenders encourage you to take out unsecured loans for vacations and depreciating assets like cars and boats, while saying you shouldn’t borrow for a down payment on a home that will likely go up in value. That may be unethical. Playing by the rules and repaying everything you owe is not unethical.

Just be sure that you have a plan to quickly repay the credit card balance. For example, if you commit to using $2,000 of your tax refund to repay the balance, and otherwise paying $150 on it each month, you should have it paid in less than 2 years. If you can’t do that, you are probably just creating more problems for yourself using this strategy.

4. Get a 100% first mortgage loan. There are still some lenders doing these (it is mid-2007 as I write this), and if the seller will pay closing costs, you won’t need much cash at all. The catch? You will probably pay higher interest rates for these loans.

Sellers will almost always want some cash when they sell. Notice they get it in every example above. You might have also noticed that it doesn’t have to be your money. So think about “no money down” as “How do I give the seller what he wants without using my cash.” That is how you buy a home with no money down.

No Tags

Source: real estate

First time buyer mortgage deals are designed to get people who probably couldn’t afford a down payment on a house or traditionally wouldn’t be able to get a mortgage loan to buy their dream house. There are several different types of first time buyer mortgage deals out there, and if you are looking into buying your first house, knowing about these bonuses is going to help you to get the best deal possible for your needs.

One thing that many first time buyers get offered to them is the opportunity to pay a lower down payment on their new house. Most first time buyers just don’t have the required 20% of the purchase price of the home saved up. Some banks are allowing their first time buyers to put down just 5% or 10% of the price before they move in.

You may be wondering whether or not this is a good deal for you, and the answer can be yes and no. It can get you into a house a lot faster, saving you years of time that you would normally have to spend getting your down payment up to twenty percent. On the other hand, you are probably going to have to carry mortgage insurance to cover you for the rest of that twenty percent that you weren’t able to come up with. That’s going to cost you a little bit extra money every month and is going to reduce the amount of money that you are actually paying off of your principle every month. In addition, a lot of times these reduced down payment amounts are going to make you think that you can afford a more expensive house than you probably should purchase. This means that you may end up in trouble in the future if your finances change.

Banks may even offer first time buyers the opportunity to have an introductory rate for a set period of time. This gives the first time buyer the opportunity to save their money for other things that come up during this introductory period. Often first time buyers find themselves facing a financial crisis when the introductory rates go away because they got used to the low rates.

First time buyers forget to plan for the rest of the mortgage when they are going to have to pay a higher interest rate because they got used to the lower payment. They find that they can’t afford their current lifestyle when they have to pay the higher interest. You probably even gave yourself the goal to save that extra money and put it towards your mortgage. The goal is never reached because you spend so much money on redoing your home and buying furniture that matches.

Sometimes banks just offer first time buyers offers like no closing fees or gifts when you take out your first mortgage with their bank. They want your business and are going to offer first time buyers special services in order to gain their loyalty.

First time buyers have a lot of power when getting their first mortgage, but it’s also a very stressful time. A lot of times banks will want their first time buyers to get a more expensive mortgage than they can afford, because a bigger mortgage means more money for them. When you are getting your first mortgage make sure you are going to be able to afford it.

Source: Finance