Problems With Reverse Loans

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Reverse loans have certainly been on the forefront of the media in the last year or so, haven't they? It seems that all of a sudden we are seeing lots of ads on television, newspapers and magazines; people are talking about them quite a bit, too. There is certainly a great deal of information on them through the Internet as well and there are "experts" everywhere, touting their benefits.

It seems that you can't get away from hearing about them, as apparently they are the next best thing "to fresh sliced bread".! There are lots of amazing claims about how a senior can change their life and in the process, short-change their kids' inheritance, too!

"Hey! Where's the money Mom and Dad are supposed to leave to us? How come they blew it all and didn't tell us anything? After all, this was our inheritance, we've been waiting for it and we deserve to have it."

Now as everyone knows (supposedly), the evil Bank actually takes back the house at the end of the loan and the poor, poor heirs end up with only furniture, old clothes, a garage filled with even older Life magazines and the detritus of many years of living in the same house. And possibly their parents dog or cat...

The confusion is acerbated by newer "experts" in the industry, who will say anything to get a loan app. They lack training and experience and they are in many cases, extremely pushy. Totally turning off a Senior and making a very bad impression in the process.

So, I just addressed ever so briefly, the "problems" with Reverse loans. It's perception. And it's wrong.

Now if the parents chose to not leave their estate to their kids, well...that's their choice. But it's important to know, that when the loan does become due (after they have passed, away ) the home does go to the designated heirs.

Now the bank is expecting to be repaid what they advanced to the borrowers, plus interest and depending on how much of the money they used and interest rates; the loan might be large or it could be small. And in spite of another misconception, there is always equity left over for the heirs. It's not all "used up"!

In any event, the kids still get the house. Senior parents don't have to move in with their adult children (Trust me, they don't want to live with you), they maintain their independence and can call their own shots without asking permission. Plus they're not asking their kids for financial help.

"Whew, what a relief! Everyone is a whole lot happier!

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Getting a Home Morgage

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So, you're interested to get a mortgage for your dream house. In order to do this, there are some steps you need to get the right home mortgage for you.

The initial step is to order your credit report from the country's three major credit reporting agencies which are Equifax, TransUnion and Experian. Your credit report is very important in your home mortgage because this determines your ability to pay off the home mortgage you are applying for. Your credit report reflects how up to date you are on paying your credits, your outstanding balance and the amount of money you still owe. A good standing on your credit report assures the lenders that their risk in investing with you will assure them that they will get their money back and assures you that your home mortgage loan gets approval.

In relation to this, financial experts recommend that it is wise for you to check the credit reports once you have them for errors before submitting these to lenders. The reason for this is that, these errors can cost you thousands of dollars more in interest or it could deny you the home mortgage you are applying for.

The second step in taking a home mortgage is to know the current home mortgage rates. Mortgage rates fluctuate and looking at certain economic key indicators such as bonds and Treasury notes can help you decide if it feasible to go for a home mortgage now and can help you get interest savings.

The third step in taking a home mortgage is to decide which mortgage program is best for you. There are so many kinds of programs and loans that are available. These include government loans and non-governmental loans called conventional loans. It is best to be educated and knowledgeable about all these home mortgage options in order to get the best for your situation. Some things that you need to consider when you're in this stage are:

- the amount of money you have for down payment for your home mortgage

- the amount of monthly payment on your home mortgage you can afford without worry and with security

- the number of years you plan to stay on the house or with the home mortgage

- the importance of paying off the home mortgage early

- the ability and an objective to give extra principal payments and,

- your projection of your income's stability or its possibility to increase in order for you not to have difficulties in paying off your home mortgage in the future.

These should all be considered because remember, a home mortgage is a long period investment and requires huge amounts of money.

The fourth step is to check and compare interest rates among the various lenders. This is the most difficult part but this is where you can usually save off in interests when you are already in the middle of a home mortgage program. Be wary also of terms that different lending companies use that may be pointing to the same thing. Other companies might waive off some fees and then add another one, which might cost you more. Take time to know all the figures behind the names they use for the fees that they give.

The fifth step is to look at the whole home mortgage package. Aside from interests, you need to consider other factors in the package such as the type of mortgage, the type of down payment, the presence of prepayment penalties, lock-in period, mortgage insurance, payment schedule, and other features.

And lastly, when you have decided on the lender for your home mortgage, determine the required documents for your loan. These typically include a completely filled up Uniform Residential Loan Application and your credit report fee. Fees are usually collected when submitting a home mortgage applications. Some of which are application fee and appraisal fee. Other requirements and fees needed to be paid for your home mortgage application may vary from one lending institution to another.

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Getting a Home Morgage

Image : http://www.flickr.com

So, you're interested to get a mortgage for your dream house. In order to do this, there are some steps you need to get the right home mortgage for you.

The initial step is to order your credit report from the country's three major credit reporting agencies which are Equifax, TransUnion and Experian. Your credit report is very important in your home mortgage because this determines your ability to pay off the home mortgage you are applying for. Your credit report reflects how up to date you are on paying your credits, your outstanding balance and the amount of money you still owe. A good standing on your credit report assures the lenders that their risk in investing with you will assure them that they will get their money back and assures you that your home mortgage loan gets approval.

In relation to this, financial experts recommend that it is wise for you to check the credit reports once you have them for errors before submitting these to lenders. The reason for this is that, these errors can cost you thousands of dollars more in interest or it could deny you the home mortgage you are applying for.

The second step in taking a home mortgage is to know the current home mortgage rates. Mortgage rates fluctuate and looking at certain economic key indicators such as bonds and Treasury notes can help you decide if it feasible to go for a home mortgage now and can help you get interest savings.

The third step in taking a home mortgage is to decide which mortgage program is best for you. There are so many kinds of programs and loans that are available. These include government loans and non-governmental loans called conventional loans. It is best to be educated and knowledgeable about all these home mortgage options in order to get the best for your situation. Some things that you need to consider when you're in this stage are:

- the amount of money you have for down payment for your home mortgage

- the amount of monthly payment on your home mortgage you can afford without worry and with security

- the number of years you plan to stay on the house or with the home mortgage

- the importance of paying off the home mortgage early

- the ability and an objective to give extra principal payments and,

- your projection of your income's stability or its possibility to increase in order for you not to have difficulties in paying off your home mortgage in the future.

These should all be considered because remember, a home mortgage is a long period investment and requires huge amounts of money.

The fourth step is to check and compare interest rates among the various lenders. This is the most difficult part but this is where you can usually save off in interests when you are already in the middle of a home mortgage program. Be wary also of terms that different lending companies use that may be pointing to the same thing. Other companies might waive off some fees and then add another one, which might cost you more. Take time to know all the figures behind the names they use for the fees that they give.

The fifth step is to look at the whole home mortgage package. Aside from interests, you need to consider other factors in the package such as the type of mortgage, the type of down payment, the presence of prepayment penalties, lock-in period, mortgage insurance, payment schedule, and other features.

And lastly, when you have decided on the lender for your home mortgage, determine the required documents for your loan. These typically include a completely filled up Uniform Residential Loan Application and your credit report fee. Fees are usually collected when submitting a home mortgage applications. Some of which are application fee and appraisal fee. Other requirements and fees needed to be paid for your home mortgage application may vary from one lending institution to another.

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Before the restructuring your mortgage Ensure that you meet the minimum requirements

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For obvious reasons the qualification requirements for a mortgage restructuring are quite different than those for a first time home buyer. The homeowner's attempt to restructure usually indicates some current, or recent, financial duress on the homeowner's part, who in all likelihood is trying to save the home and stop foreclosure. Understandably a lender will likely be very strict, even unforgiving, depending on the homeowner's circumstances.

Similar to a first-time home buyer, a homeowner attempting to restructure has to be able to prove they can in fact afford the new monthly payments. Unlike the first time buyer those attempting to restructure typically experience a harder time proving to the lender that even though they have recently suffered a financial set-back, they are in fact "back in the saddle" and have adequate monthly cash flow to enable them to afford what is likely to be a higher monthly mortgage payment.

It is proving to be a bit more troublesome for people with bad credit when applying for a restructuring of loans in recent times. Conventional loans are generally not in this circumstance, so that only the bonds with interest rates much higher. The restriction is that along with higher interest rates is a higher monthly payment (unless the house has a lot of money to buy points), which could "kill the deal" if the borrower is not conclusive to demonstrate that they can afford to collectthe new, higher mortgage payments.

Income

Income requirements for restructuring are the same as that for a first time conventional mortgage loan. The maximum amount of income allocated to a mortgage payment cannot exceed 28%. As mentioned previously the difficulty comes with proving to the lender that the monthly income will be sufficient to cover the higher monthly mortgage payment.

A word of caution is in order. As tempting as it may be to inflate your income or downplay your debts and other financial commitments in order to improve your position, it is a fraudulent offence to lie about your income on a mortgage application form.

Employment

Lenders all seem to follow the same guidelines regarding employment. Regardless if the borrower has a job or is self-employed, they still have to provide the following documentation:

For all loans:

o Complete last year and the previous years signed federal tax return forms, and last year and the previous years W2 federal forms.

o Two most current pay stubs within 30 days for each borrower.

o Last three bank statements for all savings and checking accounts.

o Evidence of additional income (rental agreements, child support, alimony, military allowance).

For self-employed borrowers:
o Last year and the previous years signed federal corporate tax returns.

o Last year and the previous years signed federal partnership tax returns.

o Last year and the in recent years and current year (calendar or fiscal) year to date (YTD) signed and Loss statements.

Or the current year to date (calendar or fiscal), signed forms of state tax return.

Conclusion

In what was an act of "too little, too late", the government intervened and began to investigate some of the questionable lending tactics, which began the sordid mess. As a result, lenders have been forced to impose more stringent requirements adopted in the form of loans and financingobligations to negate the need for government legislation. While this strategy has provided a stop-gap measure to reduce future abuses and irresponsible actions, it offers very help to those borrowers who are struggling to stop foreclosure and keep their homes.

Homeowners and buyers today can expect much more stringent requirements from the lenders. Credit score requirements are becoming increasingly strict. If you're looking to restructure an existing mortgage, make sure you have money for closing costs and a substantial down payment along with solid documentation of your income. And above all, don't let the clock run out on your efforts.

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Problems With Reverse Loans

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Reverse loans have certainly been on the forefront of the media in the last year or so, haven't they? It seems that all of a sudden we are seeing lots of ads on television, newspapers and magazines; people are talking about them quite a bit, too. There is certainly a great deal of information on them through the Internet as well and there are "experts" everywhere, touting their benefits.

It seems that you can't get away from hearing about them, as apparently they are the next best thing "to fresh sliced bread".! There are lots of amazing claims about how a senior can change their life and in the process, short-change their kids' inheritance, too!

"Hey! Where's the money Mom and Dad are supposed to leave to us? How come they blew it all and didn't tell us anything? After all, this was our inheritance, we've been waiting for it and we deserve to have it."

Now as everyone knows (supposedly), the evil Bank actually takes back the house at the end of the loan and the poor, poor heirs end up with only furniture, old clothes, a garage filled with even older Life magazines and the detritus of many years of living in the same house. And possibly their parents dog or cat...

The confusion is acerbated by newer "experts" in the industry, who will say anything to get a loan app. They lack training and experience and they are in many cases, extremely pushy. Totally turning off a Senior and making a very bad impression in the process.

So, I just addressed ever so briefly, the "problems" with Reverse loans. It's perception. And it's wrong.

Now if the parents chose to not leave their estate to their kids, well...that's their choice. But it's important to know, that when the loan does become due (after they have passed, away ) the home does go to the designated heirs.

Now the bank is expecting to be repaid what they advanced to the borrowers, plus interest and depending on how much of the money they used and interest rates; the loan might be large or it could be small. And in spite of another misconception, there is always equity left over for the heirs. It's not all "used up"!

In any event, the kids still get the house. Senior parents don't have to move in with their adult children (Trust me, they don't want to live with you), they maintain their independence and can call their own shots without asking permission. Plus they're not asking their kids for financial help.

"Whew, what a relief! Everyone is a whole lot happier!

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Current rates of FHA guides

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From the beginning in 1934, FHA has helped almost 35 million homeowners, making it the biggest insurer of mortgages in the world. The 109th Congress introduced the Expanding American Homeownership Act in June 2006 which would enable FHA mortgage loans to be a safe option for more underserved low-and moderate-income, and minority families so they can achieve the American Dream of homeownership. President Bush also urged Congress to quickly pass the Administration's FHA modernization proposal to help more families in need. The Current FHA mortgage rate has dropped to 5.500% - APR 5.830%. This is great news for those seeking a mortgage from FHA.

The FHA home loans have been helping many borrowers seeking a low down payment mortgage program, and also for those that need a bad credit mortgage. FHA mortgages can help a 1st time home buyer or 2nd time home buyer. You're able to use the FHA loan as many times as you move to a new home.

FHA home refinancing has also been helping those borrowers in 2/28 ARMs, and someone who is just looking for a low FHA mortgage rate. FHA cash out refinances may go up to 95% of the loan to value, and FHA rate/term refinances may go up to 97.75% of the loan to value.

The (HUD) Department of Housing & Urban Development is the federal agency responsible for national policy, and mortgage programs that address the housing needs of United States. The (FHA) Federal Housing Authority which is under HUD plays a major Role in the assessment of residential property for owners of residential properties at low and moderate income. FHA assists first home buyers and others who can not meet to take in order to establish the guidelines for conventional payment / mortgage loans through insurance (PIP) for banks, private guides.

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Getting a Home Morgage

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So, you're interested to get a mortgage for your dream house. In order to do this, there are some steps you need to get the right home mortgage for you.

The initial step is to order your credit report from the country's three major credit reporting agencies which are Equifax, TransUnion and Experian. Your credit report is very important in your home mortgage because this determines your ability to pay off the home mortgage you are applying for. Your credit report reflects how up to date you are on paying your credits, your outstanding balance and the amount of money you still owe. A good standing on your credit report assures the lenders that their risk in investing with you will assure them that they will get their money back and assures you that your home mortgage loan gets approval.

In relation to this, financial experts recommend that it is wise for you to check the credit reports once you have them for errors before submitting these to lenders. The reason for this is that, these errors can cost you thousands of dollars more in interest or it could deny you the home mortgage you are applying for.

The second step in taking a home mortgage is to know the current home mortgage rates. Mortgage rates fluctuate and looking at certain economic key indicators such as bonds and Treasury notes can help you decide if it feasible to go for a home mortgage now and can help you get interest savings.

The third step in taking a home mortgage is to decide which mortgage program is best for you. There are so many kinds of programs and loans that are available. These include government loans and non-governmental loans called conventional loans. It is best to be educated and knowledgeable about all these home mortgage options in order to get the best for your situation. Some things that you need to consider when you're in this stage are:

- the amount of money you have for down payment for your home mortgage

- the amount of monthly payment on your home mortgage you can afford without worry and with security

- the number of years you plan to stay on the house or with the home mortgage

- the importance of paying off the home mortgage early

- the ability and an objective to give extra principal payments and,

- your projection of your income's stability or its possibility to increase in order for you not to have difficulties in paying off your home mortgage in the future.

These should all be considered because remember, a home mortgage is a long period investment and requires huge amounts of money.

The fourth step is to check and compare interest rates among the various lenders. This is the most difficult part but this is where you can usually save off in interests when you are already in the middle of a home mortgage program. Be wary also of terms that different lending companies use that may be pointing to the same thing. Other companies might waive off some fees and then add another one, which might cost you more. Take time to know all the figures behind the names they use for the fees that they give.

The fifth step is to look at the whole home mortgage package. Aside from interests, you need to consider other factors in the package such as the type of mortgage, the type of down payment, the presence of prepayment penalties, lock-in period, mortgage insurance, payment schedule, and other features.

And lastly, when you have decided on the lender for your home mortgage, determine the required documents for your loan. These typically include a completely filled up Uniform Residential Loan Application and your credit report fee. Fees are usually collected when submitting a home mortgage applications. Some of which are application fee and appraisal fee. Other requirements and fees needed to be paid for your home mortgage application may vary from one lending institution to another.

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The Easiest Mortgage Loan You Will Ever Get

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Picture a refinancing option that is lightning fast, extremely easy to qualify for, and guaranteed by a government agency to benefit YOU! This is exactly what the VA Streamline program does for homeowners. It makes the home loan process easy and safe for veterans.

Going by the official name IRRRL, or Interest Rate Reduction Refinancing Loan, this incredible loan program was introduced by the VA as a way to keep veterans in better mortgages. It is available to anyone with a current VA mortgage. What makes this loan so amazing is that as long as you have kept on top of your monthly mortgage payments and have not had any more than one reported 30-day late payment on your loan in the last twelve months, then you are most likely eligible to LOWER YOUR INTEREST RATE without having to re-qualify!

Streamlines are used primarily by veteran homeowners that want to get out of their current Adjustable Rate Mortgage or Variable mortgage that will be adjusting to a higher rate soon, or by a homeowner that sees an opportunity to lower their current fixed rate mortgage to a new rate and thus lower his or her monthly mortgage payments. A few of the benefits of the VA Streamline Program are:

No Appraisal needed

No income or employment verification

Credit score doesn't matter

Possibly skip 2 mortgage payments

Get a cash refund of any escrow balance with current lender

Get a Lower Interest Rate

Get a lower monthly payment

No out of pocket costs

If you are in a VA Mortgage it would be wise to consult a VA loan specialist in regards to whether or not there is a benefit for you in the VA Streamline Program.

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Before Restructuring Your Mortgage Make Sure You Meet The Minimum Requirements

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For obvious reasons the qualification requirements for a mortgage restructuring are quite different than those for a first time home buyer. The homeowner's attempt to restructure usually indicates some current, or recent, financial duress on the homeowner's part, who in all likelihood is trying to save the home and stop foreclosure. Understandably a lender will likely be very strict, even unforgiving, depending on the homeowner's circumstances.

Similar to a first-time home buyer, a homeowner attempting to restructure has to be able to prove they can in fact afford the new monthly payments. Unlike the first time buyer those attempting to restructure typically experience a harder time proving to the lender that even though they have recently suffered a financial set-back, they are in fact "back in the saddle" and have adequate monthly cash flow to enable them to afford what is likely to be a higher monthly mortgage payment.

It is proving to be a bit more troublesome for those with damaged credit when applying for a mortgage restructuring in recent times. Conventional loans are usually not available in this circumstance, leaving only those loans offering much higher interest rates. The caveat here is that along with the higher interest rates comes a higher monthly payment (unless the homeowner has accumulated a substantial amount of cash to buy points), which may possibly "kill the deal" if the borrower cannot prove conclusively they will be able to afford the new, higher mortgage payments.

Income

Income requirements for restructuring are the same as that for a first time conventional mortgage loan. The maximum amount of income allocated to a mortgage payment cannot exceed 28%. As mentioned previously the difficulty comes with proving to the lender that the monthly income will be sufficient to cover the higher monthly mortgage payment.

A word of caution is in order. As tempting as it may be to inflate your income or downplay your debts and other financial commitments in order to improve your position, it is a fraudulent offence to lie about your income on a mortgage application form.

Employment

Lenders all seem to follow the same guidelines regarding employment. Regardless if the borrower has a job or is self-employed, they still have to provide the following documentation:

For all loans:

o Complete last year and the previous years signed federal tax return forms, and last year and the previous years W2 federal forms.

o Two most current pay stubs within 30 days for each borrower.

o Last three bank statements for all savings and checking accounts.

o Evidence of additional income (rental agreements, child support, alimony, military allowance).

For self-employed borrowers:
o Last year and the previous years signed federal corporate tax returns.

o Last year and the previous years signed federal partnership tax returns.

o Last year and the previous years and current (calendar or business year) year to date (YTD) signed Profit and Loss Financial Statements.

o Current year to date (calendar or business year) signed state tax return forms.

Conclusion

In what was an act of "too little, too late" the government stepped in and began examining some of the questionable lending tactics which started the whole sordid mess. As a consequence lenders have been forced to enact stricter loan requirements and funding obligations to negate the need for government legislation. While this strategy has provided a stop-gap measure to reduce future abuses and irresponsible actions, it offers very help to those borrowers who are struggling to stop foreclosure and keep their homes.

Homeowners and buyers today can expect much more stringent requirements from the lenders. Credit score requirements are becoming increasingly strict. If you're looking to restructure an existing mortgage, make sure you have money for closing costs and a substantial down payment along with solid documentation of your income. And above all, don't let the clock run out on your efforts.

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Mortgage Forgiveness Act Provides Income Tax Relief To Foreclosed Homeowners

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What's positive about being foreclosed upon or selling your home for less than you owe? Well, for most people, not much. Yes, you are relieved of an onerous mortgage loan and you are now free to find housing that is more affordable within your budget. But not everyone fully understands the lingering effects of a foreclosure as it pertains to the mortgage debt forgiveness. This applies to foreclosures, short sales and a deed in lieu of foreclosure.

Foreclosure can be one of the most devastating things a homeowner can face. At a minimum, they will end up with damaged credit. Until recently, the tax laws further penalized homeowners who were relieved of mortgage debt obligations with additional taxation. Homeowners owe taxes on the amount of the debt obligation from which they are relieved. For example, let's look at a short sale. If a bank agreed to accept $200,000 as payment in full to satisfy a mortgage where the homeowner owed $250,000, the homeowner would owe taxes on $50,000. They were relieved of repaying $50,000 in mortgage debt. When you are relieved of debt, you are actually benefiting because you no longer have the obligation to pay it back. Hence you must pay tax on this "unrealized income" even if there was no direct corresponding benefit, such as equity proceeds from a sale. At the same time, how is the homeowner who just lost everything going to be able to pay tax on the differential of the satisfied mortgage obligation when they received no tangible proceeds from the sale?

As we have just seen, the amount of debt forgiveness is considered income. All debt forgiveness, not just mortgage debt, results in reportable taxable income. Many people who've walked away from their homes have found this out the hard way. Many found out at the end of the year when they opened their mail and found they'd received a 1099C. The 1099C is the IRS form that the creditor gives the debtor when they have forgiveness of debt.

Today we have a record number of foreclosures. When banks and lenders sell homes they've gotten back during the foreclosure process they are less concerned about the bottom line and more concerned about being rid of the collateral. This can result in spiraling downward values in areas or communities where foreclosures are high. Large numbers of foreclosures like we are currently experiencing are hurting our overall real estate market valuations.

One solution to the problem has been to encourage those homeowners in distress to work with the bank to sell the home while they continue to occupy the property. This may result in a short sale, whereby the bank agrees to accept less than is owed on the outstanding mortgage. Together, the bank and homeowner work to sell at the highest possible price given the conditions of the prevailing market. Working together allows the home to be maintained and occupied during the course of the sale. This generally is less costly to the lender and is one of the reasons why they entertain short sales.

In general, short sales are less "shocking" to the market values in comparison to a lender going through the foreclosure process and then reselling the property as an REO. This should be encouraged where possible.

Tax wise, homeowners still receive a 1099C. From a credit report perspective, the lender usually won't report a foreclosure against the homeowner if they sell with a short sale. A short sale in that instance will be beneficial to the seller's credit and may be helpful when the seller becomes a buyer and wants to obtain another mortgage in the future.

In Minnesota we have a unique situation regarding foreclosures. For owner occupied properties, we have a 6 month right of redemption from the date of the Sheriff's sale. Because of the long redemption period, during which no payments are due, many in Minnesota are opting to be foreclosed upon instead so they can live in the home for free. You see this occurring most often where preservation of a one's credit rating is no longer important to the homeowner.

To encourage lenders and homeowners to work together, the government has just created a new law. The law is H.R. 3648, entitled Mortgage Forgiveness Act of 2007 and was signed into law as of mid December 2007. Here's what the law does: it waives taxes for debts forgiven from the beginning of 2007 to the end of 2009. This means no more 1099C, at least during this time frame.

Can you see the implications? This means that homeowners and lenders can work together to either sell or refinance the existing mortgage debt, without having to recognize the taxes due on the amount forgiven. It provides an incentive to protect your credit and work out an acceptable solution, such as a short sale. Income taxes are taken out of the equation since there isn't anymore inherent tax liability from mortgage forgiveness.

This should slow down the foreclosure crisis and allow values to stabilize. This is a good law that should help ease the mortgage and real estate crisis we are facing today.

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How to Pay Off Your Mortgage Faster

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Paying for a new house can last a long time. You could start your mortgage payments on your wedding day and by the time baby goes to college, you could still be at it.

A $120,000 mortgage loan with an 8% interest will have cost you about $300,000 after 30 years and that is no small amount. It's no surprise then that people not only negotiate for the best and lowest interest rates, but also aim to finish paying their mortgages in the shortest time possible.

Here are some ways to pay off your mortgage loan faster.

Make bi-weekly payments.

If you have been looking for ways to pay off your mortgage faster, then you've probably heard of this one before. The problem is, most people think bi-weekly means twice a month. All this does is pay off the interest each month and hardly touch the principal.

To be effective, bi-weekly payments must result to a reduction of the principal by more than 1%. Otherwise, at the end of one year, you will still be stuck with a principal that is still 99% of the original loan. Your goal must be to reduce the principal and therefore reduce the rates.

Instead of paying twice a month, pay half of your mortgage every two weeks. At the end of 12 months, you would have paid 13 times instead of just twelve. One extra payment can easily shave off five and a half years from your loan term and help you pay your mortgage faster. Make sure also that you inform your mortgage company that the payment is intended for the reduction of the principal.

Double your payment.

If you can afford it, why not double your bi-weekly prepayment? Say you're paying $700 bi-weekly, pay $1,400 if you can spare the money. Again, remind the mortgage company that it should be applied to the principal.

Add a little extra.

If your monthly mortgage payment is $1,400 a month, adding just 1/12 to it will make a big difference later. Instead of paying that regular amount, pay $1,516. The extra $116 will help reduce your loan term by six years.

Making regular prepayments set at a percentage can also help. For example, paying an additional 10% a year with a $250,000 loan will come out to $25,000 a year. This would seem like a big amount, but again, if you have the means then you have all the ways to shorten your loan period.

Keep track of your payments.

Check with your mortgage company if they applied your payment against the principal. Then take note of your mortgage balance. If the company makes the mistake of taking your payment and applying it to your next, it wouldn't do anything in reducing the principal.
There are companies that offer a service to do the tracking for you and it may be more convenient, but this is really not necessary, as long as you can keep accurate records and be organized about your checkbook.

Do it now.

If you must begin gradually chipping away at your loan, now is the right time to do it. Postponing your plan of attack will keep you stuck with your old loan. So tell yourself to act now.

Set your goals and stick to them.

Start by making small goals that are easy to accomplish, then work your way to bigger goals. If you take this one step, doing the rest will be a lot easier than just shooting blind.

Save.

Unless you have wealth stashed somewhere, paying off a mortgage faster will demand that you have money to spare. For some of us, that might mean taking in a second job and clocking in more hours but you can squeeze out more wealth from that which you already have.

Spend less than you can afford. If you got along fine on a budget five years ago before that salary raise, then you can do it again. Postponing your reward may seem disappointing at first, but think of the savings that it will get you in return. Cutting your budget and getting rid of unnecessary expenses will mean more money for payment of your loan.

Be open to possibilities and don't be afraid to talk to your mortgage company to negotiate your terms. A little sacrifice can go a long way to help you pay off your mortgage faster, save you money and let you enjoy the big dividends in the future.

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Loan Officer Training - in This Microwave World, a Mortgage Broker is the Slow Cooking Oven

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Fast Food and microwaves dominate our society. Everyone wants this or that right away. You, as a Loan Officer, have to understand this when dealing with your borrowers. Some folks want the whole finacing process to take 37 minutes and they don't understand why it takes longer.

For us in the Mortgage Business, we get it. We understand that one of the biggest financial purchases of our borrower's life takes a bit longer than microwave popcorn. The trick is to relay that to our borrowers.

A good Loan Officer will sit down with the borrower and lay out the entire process; from the first phone call, to the follow up phone calls; from the collecting info from the application to gather documents for the processor; from the contacting of the appraiser, to the paying the appraiser at the door. (oh, if you don't have your clients pay for their own appraisal you may be missing a HUGE piece of the "business relationship" puzzle)

Once this process is clearly define things go more smoothly. Once it is established what is expected of the borrower and what the borrower can expect from the Loan Officer or Mortgage Broker, the whole concept of a "Microwaved Mortgage" is discarded and business as usual can proceed as usual.

Too many Loan Officers in our industry want to rush, rush, rush and get the clients in and out. Folks, this is NOT a revolving door industry. Oh sure, if you work at a "chop shop" as I call it (like in the movie "Boiler Room") then all this stuff is of no use to you. But if you're in this for the long haul, and you're a Loan Officer looking for referral business, you may want to pay attention.

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How To Figure Out Mortgage Payments Without a Mortgage Calculator

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In today's world, taking out a mortgage is necessary for anyone who wants to invest in real estate or simply wants to put a roof over his head. Usually, to find out what a mortgage payment will be on a particular property, a potential buyer needs to contact a realtor or bank to get a quote.

By contacting either one, the buyer risks harassment from a realtor who won't let go of a qualified buyer, or a lender who needs to lend mortgage money to stay in business. Any buyer in his right mind will only go to one of these salespeople when he is ready to go full speed ahead toward a closing.

So, what does a person who is in the early thinking stages of buying a home do? How do you know what the payment will be on a house a seller is asking $250,000 for when the bank is advertising 30-year mortgages at 7%?

By the end of this article you will be making such a calculation in your head. You will be sprouting out the answer to complicated home buying scenarios just as fast as you can find the terms on the mortgage and the price on the house.

$66.53 a Month

First, remember this: $10,000 borrowed for 30 years at 7% will require a monthly payment of $66.53. So, it stands to reason $100,000 for 30 years at 7% requires a monthly payment of $665.30. Also take note you could figure out on a piece of paper with a pencil, $50,000 for 30 years at 7% is $332.65.

Knowing these figures, you automatically know a $250,000 mortgage at 7% for 30 years will require a payment of $665.30 (for $100,000) and another $665.30 (for the next $100,000) and $332.65 (for $50,000). This means the payment will be $1,663.25, or really, really close. A mortgage calculator gives the answer as $1,663.26, but for a wild guess, I'll take it.

A 6% or an 8% Mortgage

Of course, here you ask, "What if I find a mortgage with a lower interest rate?" Well in that case, remember this, $10,000 borrowed for 30 years at 6% costs the borrower $59.96 a month. This means a $1,000,000 mortgage for 30 years at 6% will be 100 times $59.96 or, a monthly payment of $5,996.00. Now, certainly that was easy. All we had to do was add 2 zeros!

Okay, what about if the interest rate is 8%? Here, a 30-year mortgage for $10,000 is $73.38 each month. So a $300,000 mortgage will come at a cost of 30 times that or, $2,201.40 a month.

How About a 7 1/4% Mortgage?

In reality, most times interest rates will not be exactly 6 or 7, or 8%. Even when this is the case, you still don't need a mortgage calculator. If you read about a 30-year $260,000 mortgage at 7 1/4%, for instance, and you want to know what the monthly payment will be, here's what you do. Are you ready? Guess!

That's right! Just guess! You know 7% will cost you $66.53 per $10,000 a month and 8% will cost $73.38 per $10,000 a month. You also know 7 1/4 is somewhere on the lower side between 7 and 8 so take a guess how much 7 1/4% will cost per $10,000 a month. My guess would be maybe, $68.50?

I'll go with that. So, since it is a $260,000 mortgage we're trying to figure the payment for, we will multiply 26 (260,000 / 10,000) X $68.50. The answer is: $1,781.

When I run $260,000 at 7 1/4% for 30 years through a mortgage payment calculator the answer comes out $1,773.66. So, our answer wasn't precisely right, but it was pretty close.

In a case like this, even if we came out with an answer that is $20-$30 off, who cares? Before the real mortgage payment is determined, the cost of a homeowner's insurance policy and property taxes will have to be calculated anyway. So, the best anybody can do at this point is guess.

There you have it. Now, you're a human calculator! As long as you're only concerned with 30-year mortgages, and today's going interest rates, which are 6% to 8%, you can figure out mortgage payments in your head, or maybe with just a little help from a pocket calculator. Congratulations!

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Current FHA Mortgage Rates

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From the beginning in 1934, FHA has helped almost 35 million homeowners, making it the biggest insurer of mortgages in the world. The 109th Congress introduced the Expanding American Homeownership Act in June 2006 which would enable FHA mortgage loans to be a safe option for more underserved low-and moderate-income, and minority families so they can achieve the American Dream of homeownership. President Bush also urged Congress to quickly pass the Administration's FHA modernization proposal to help more families in need. The Current FHA mortgage rate has dropped to 5.500% - APR 5.830%. This is great news for those seeking a mortgage from FHA.

The FHA home loans have been helping many borrowers seeking a low down payment mortgage program, and also for those that need a bad credit mortgage. FHA mortgages can help a 1st time home buyer or 2nd time home buyer. You're able to use the FHA loan as many times as you move to a new home.

FHA home refinancing has also been helping those borrowers in 2/28 ARMs, and someone who is just looking for a low FHA mortgage rate. FHA cash out refinances may go up to 95% of the loan to value, and FHA rate/term refinances may go up to 97.75% of the loan to value.

The (HUD) Department of Housing & Urban Development is the federal agency responsible for national policy, and mortgage programs that address the housing needs of United States. The (FHA) Federal Housing Authority which is under HUD plays a major role in helping homeownership by evaluation homeownership for lower-and moderate-income homeowners. FHA helps first-time home buyers, and others who might not be able to meet down payment guidelines for conventional/conforming mortgage loans by providing mortgage insurance (MIP) to private mortgage lenders.

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Get a No Credit Check Mortgage

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There are many reasons you may need a no credit check mortgage. Some of the most popular reasons you may need such a mortgage are having no verifiable income, or having a great income, but poor credit score or no credit history. If you have your own business, especially if it's fairly new, you may have a very high income, but you may not have either the income history or documentation required by most mortgage lenders. The same is true if you did very well in investments at an early age or are a professional athlete early in your career. What are you supposed to do? Unless you have enough cash on hand to actually purchase a property outright, you're going to need a mortgage. Unfortunately, many mortgage lenders won't give you the time of day unless you can verify your income and credit history. If you don't have either, you'll be out of luck.

Fear not, there is hope if you want a mortgage but don't want to get a credit check first. It won't be as easy as running to your neighborhood bank or mortgage broker, but you'll be able to get that mortgage and purchase your house. You will probably have to do more legwork to find a mortgage lender that is willing to loan money to you without performing a credit check.

Look at it from the lender's perspective. It is much easier, less expensive and more accurate for them to assess your ability to repay your mortgage if they can check your credit. Any lender is interested in your ability to repay their money. The more difficult it is for them to determine weather or not you can do so, the higher interest rate you'll typically pay for your mortgage. You can still get a mortgage if you don't allow them to run a credit check however.

They may require a larger down payment in addition to a higher interest rate. In some cases they may not give you a higher interest rate, but you may have to have at least 20% down. The larger your down payment is on the property, the lower the risk for the mortgage lender. If they need to foreclose, they stand to have your equity to recover their costs. In addition, experience has determined that the larger your down payment, the less likely you are to default on the mortgage. Again, it's about the lender lessening their risk.

You'll probably have to approach many lenders in order to find those willing to work with you, and to get the best interest rate and fee structure for your loan. In any case this is a good approach to take. You want to be able to compare the loan package from several different lenders, especially in the case of a no credit check mortgage. Lenders know your options are limited compared to a conventional mortgage. That's another reason you stand to pay higher interest rates and fees.

So, don't give up in your search for a no credit check mortgage. There are lenders that will make your dream a reality. Weather you work with a mortgage broker, or other service that looks at mortgages from several lenders, you probably have to compare what you are offered from multiple different lenders. They key to getting a great mortgage is to get out there and look.

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Renegotiate Your Mortgage Terms - Think It's Impossible, Think Again

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If your mortgage due date arrives and you're not able to make your mortgage payment don't panic, or conversely, disregard the whole event entirely. Often individuals are incapable of making their mortgage payment because of a job loss or another cause beyond their control. It is at this time, one must pick up the phone and call their lender because they can, in all probability, help protect your credit rating, keep you in your home and give you peace of mind. You can renegotiate your mortgage terms with many lenders when hardship strikes.

When you call your lender, they will want to know if your income loss is temporary or more serious. If you have lost your job, and future payments are in jeopardy, advise them immediately of the exact nature of your financial distress. There are certain steps that you can take quickly that will reduce or prevent the possibility of foreclosure on your cherished home. How much help a lender can provide depends on the nature of the loan you have.

If you have a conventional loan, it is possible for some lenders to look at your financial position and work out some resolution that is advantageous both to you and the lender. If you have a loan that is backed or underwritten by the US government, lenders may be precluded from offering any advice until your loan falls to ninety days in arrears. Regardless, you have to communicate with your lender given the severe consequences that may result otherwise.

Your lender may be able to help you in one of seven ways: 1) By providing you with interest rate or principal reduction on your current loan, 2) By providing you with a re-amortization or loan refinancing on your current loan, 3) By granting you a special interest-free or low interest personalized loan based on the amount of money due on your missed payment, 4) By moving your current payment to the end of your loan, giving you time to get your finances straightened out, 5) By willing to accept a partial mortgage payment instead of the normal full payment, 6) By giving you an extended time period to get caught up on your mortgage payment. The time period may be as long as 1 to 2 years. This is achieved by appending a fraction of your unpaid loan payment remainder to your payment on a monthly basis until you are finally up to date with the payments, 7) By dispensing with the harsh late payment penalties that are often imposed as late fees.

Lenders actually have no vested interest in foreclosing on your home; they only have a vested interest in keeping you in your home making monthly mortgage payments on time. Lenders are aware of the many fiscal difficulties borrowers have in making their mortgage payments when hardships arise. Your lender likely won't volunteer their help, specifically if they don't recognize you're having problems making your payments. That is why, as a responsible homeowner, you must take the initiative and contact your lender and give them a heads up on your current financial hardship.

Many lenders do not offer borrowers all 7 of these possible renegotiation alternatives, however, it is likely that your lender has access to several of these methods. Generally, you do need to qualify for this type of help from your lender. Often it consists in the form of a detailed financial statement and substantiation of income loss. It is sometimes hard for certain individual's ego to have to admit to financial difficulty, but if doing so helps maintain you in your home, it certainly is worth the admission. I would think that you would rather make a phone call to your lender if it keeps you from the chance of losing your precious home and part of the American Dream.

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How Long Will it Take to Get Your Mortgage License?

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Do you want to get a mortgage broker or lender license? Do you need to get it NOW? I am frequently asked how long it will take for a mortgage company to get a mortgage broker or lender license. Unfortunately, it depends upon which state you are asking about.

There are the less populous states, which also tend to be the less popular states, such as Iowa, New Hampshire, Arkansas, and Mississippi, where the first review takes less than 3 weeks. If the application is perfect, then you have a license in your hand in less than one month. The other end of the spectrum is New York, which can take 8 to 9 months, and I've never seen a perfect application submitted to New York.

Many times, the problem is that the mortgage company is so eager to get that application in to the Banking Department that they do not submit each document that is requested or answer every question. The licensing reviewers will not let you skip a question or leave out one of the required back-up documents, i.e., letter of reference, current financial statement, or official bank or certified checks instead of company checks for the fees. The devil is always in the details. You cannot be too detail-oriented when submitting a license application.

Another issue that slows down the application process is the time of year in which you submit your license application. If the banking department is also in renewal season, you will experience a slower-than-usual timeframe. A few states have licenses that never expire so that is not always an issue. However, most states issue licenses that need to be renewed every year or every two years. Most licensing departments are under-staffed. When renewal season comes around, a reviewer may be pulled from new applications and re-assigned to processing renewal applications. That means a new application sits in a corner for maybe a month until the backlog of renewals has been cleared. Or the banking department will ask you if you want to wait until all new licenses are issued to avoid the need for instant renewal on a license that you've held for maybe a month.

If you consult with a company or law firm that specializes in mortgage company licensing and you get an answer to the question "how long will it take" that sounds much shorter than the responses you have been receiving from other companies or law firms, find out why they can give you such a favorable answer. It's better to know upfront that the process is slow than to gear up and hire loan officers for a license that won't be in your office for several months, no matter what you have been promised. But sometimes, a law firm has a good relationship with the application reviewers and the reviewers will make sure that the application is sped through the review process.

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