Articles

Understanding Escrow and Your Mortgage

When you get a mortgage loan, your arrangement may involve an escrow account. If you are unfamiliar with the term, it is important that as a homeowners you understand how an escrow actually works.

What Is an Escrow?

An escrow account is opened on behalf of the homeowner. When money is deposited into an escrow account it is held by a neutral third party generally known as the escrow agent who works for both the borrower and the lender. The role of the escrow agent is to release the money per the terms of the loan agreement instructions. Continue reading →

Wanna Screw Up Your Loan Closing? Take This Advice

The closing of your mortgage loan is a big day to look forward to because when it is successfully complete, you will officially be a homeowner. Getting to closing can be a rough process because of all the inspections, paperwork, documentation, insurance searches, and so on. Purchasing a home can be an exhausting but rewarding experience and closing is the final step.

But never take for granted that a mortgage closing is a done deal just because the date is set. For some people, they actually get to the closing appointment only to find out something has gone wrong, the realtor has made a mistake, or the attorney’s office missed something. It can be quite a fiasco. Continue reading →

Pros and Cons of Adjustable Rate Mortgages

Adjustable rate mortgages (ARMs) have gotten a bad rep since the mortgage meltdown. ARMs aren’t bad though, which is why so many homeowners signed up for them during the housing bubble. There are good points and bad points to an adjustable rate mortgage loan.

Con: Unpredictable Payments

An ARM is a mortgage loan that has a variable interest rate. The interest rate on the mortgage changes on some periodic basis, like monthly or annually. Since the mortgage rate changes, so does the monthly mortgage payment. That’s one of the downsides of an ARM, you won’t always know what your mortgage payment will be from one month to the next. That makes it hard to budget for your mortgage. Continue reading →

Mortgage Loan Lock-Ins

One of the first rules of getting a mortgage loan is shopping around and negotiating the best deal. You should do this before you start shopping for the house because the size of your mortgage dictates the house you buy. When you’ve done all that shopping and negotiating, you want to make sure the deal is still on the table once you’ve found the house. To make that happen, you should get a lock-in.

When to Get a Lock-In

There are basically two times in the mortgage loan process that you should get a lock-in. The point at which you actually lock-in your mortgage terms will depend on your lender. Some lenders let you lock-in mortgage terms when you’re pre-approved for the mortgage. Pre-approval usually happens before you start house shopping. Continue reading →

Mortgage Scams: How to Protect Your Best Interests

There are predators of nearly every industry but when it comes to the mortgage industry, a potential homeowner can lose big time financially if taken for a ride by a professional scam artist.

Due to the recession and the tanking of the mortgage and housing industries, many current homeowners may also find themselves in a predicament a good con artist will target.  Desperate times can trigger the increase of mortgage-related scams. Continue reading →

How to Outsmart a Mortgage Con Artist

Mortgage scams are being invented and upgrading every day with the intent of the con artists gaining access to the equity in your home or even to the home itself. Avoiding these kinds of mortgage scams is essential for your financial well-being, not to mention your state of mind.

It is not an easy task to pinpoint what is a scam and what is legitimate assistance for mortgage-related problems because the scheming individuals have developed many complex, deceptive practices to snag a homeowner facing foreclosure. But once you have discovered you have been victimized, the emotional toll of what occurred may cloud your ability to use good judgment in rectifying the situation. Continue reading →

7 Things First Time Homebuyers Should Know

Buying a home for the first time stirs plenty of emotions. You’re elated to be purchasing your first home, but a little wary of the buying and mortgage process. As you’re shopping and searching for your house and your mortgage loan, keep these things in mind.

You shouldn’t make an offer on a home until you’ve been pre-approved.

Know that there’s a difference between getting pre-approved and pre-qualified. Pre-qualified means you’ve been given an estimate based only on information you’ve told the lender. Pre-approved means your credit and income have been checked and you’re more likely to get a loan for that amount. If you make an offer before you get pre-approved, your offer may be higher than what a lender is willing to loan you. Continue reading →

How A Mortgage Loan Recast Can Help Homeowners

Despite the well advertised loan modification programs designed to help homeowners who are having trouble making their monthly mortgage loan payment, millions continue to come up short when that payment date arrives.  There are some homeowners who are so underwater, foreclosure is unavoidable.  Many others however would be able to get back on track financially if they could just lower their monthly payments.  Traditionally the only way to accomplish this was through the refinancing of a mortgage loan.  Unfortunately not all homeowners qualify for a refinance and for those who do, the costs put that option out of reach.  The good news for homeowners is that there is another way to lower mortgage payments beyond refinance.  This option is known as recasting or re-amortizing and here we will look more closely at this option and how it can help homeowners stay in their house. Continue reading →

Mortgage Loan Companies Making Foreclosure Mistakes

The nation’s largest mortgage loan companies are starting to delay foreclosures and determine whether or not they have rushed the foreclosure process for thousands of homeowners without following proper procedures.  Employees of Bank of America, GMAC Mortgage and JPMorgan Chase have admitted to signing documents in a large number of foreclosure cases without verifying information contained in the documents.

In a document obtained by the Associated Press on Friday, Renee Hertzler of Bank of America said in a February deposition that she signed around 7,000 or 8,000 foreclosure documents a month, and said “I typically don’t read them because of the volume that we sign.” Continue reading →

5 Signs You Aren’t Ready for a Mortgage

For years, home ownership has been considered the American dream. Before you take on this huge responsibility, you should assess whether you’re ready for that dream to come true. As much as you may want to purchase a home, the truth may be that you simply can’t handle the financial responsibility. It’s better to wait to buy a home, than to get one you can’t afford.

Do you plan to move soon?

Home ownership makes the most sense for people who plan to live in their homes for more than five years. That’s because during the first few years of your mortgage loan, you’ll only be paying interest. You won’t have gained enough equity in your home until you’ve been paying for several years. If you happen to make some money off a home sale within the first couple of years, you may owe capital gains taxes on the profit. Continue reading →

Features of an Adjustable Rate Mortgage Loan

Two major types of mortgage loans exist: the fixed-rate mortgage and adjustable rate mortgage. A fixed-rate mortgage is pretty straightforward – the interest rate stays the same for the life of the loan. Adjustable rate mortgages, or ARMS for short, are far more complex. These mortgages have interest rates that fluctuate over the life of the loan. Because the interest rate for an ARM changes, so does the monthly payment.

Adjustment period

The adjustment period is the period of time between interest rate changes. Interest rates on an ARM can change anywhere from monthly to annually, sometimes even every five or fifteen years. The shorter your adjustment period, the more often your interest rate will change. Continue reading →

Why Some Borrowers Consider Strategic Default

These days, it’s becoming a common situation for homeowners to have upside-down or underwater mortgages. This situation happens when the home value drops below the outstanding mortgage balance. More and more, home owners in this situation are simply walking away from their mortgages – and their homes – rather than holding onto something they can’t afford.

There are different degrees of strategic default. Some homeowners hold on to their mortgages for as long as they possibly can before they finally let go. Others call it quits early, before they’ve exhausted savings and retirement on what could become a hopeless situation. And there are borrowers who walk away from mortgages they can afford to repay, but choose not to put money into a losing investment. Continue reading →

How To Use a Second Mortgage Wisely

During the mortgage crisis, second mortgages got a bad rap. During the heyday of the housing boom, borrowers were finding it relatively easy to get into the home of their dreams without a single dollar sown. They were using second mortgages on top of the first mortgage to get in the door and no one was particularly worried about it all because home prices were sure to stay on the rise.

But then the bottom fell out. The housing process fell drastically and those with adjustable-rate mortgages found themselves unable to afford the higher payments each month. Since many homeowners were underwater on the mortgage, owning more than their homes were worth, refinancing the loans was not a possibility. Government assistance programs were also an unusable option because most only help out with first mortgages. Continue reading →

Are Mortgage Modifications A Sure Thing?

When President Obama set out to establish an assistance resource for homeowners that could not afford their payment any longer, many people grabbed on to the glimmer of hope. But the Home Affordable Modification Program, in effect since 2009, did not produce exact results. In fact, many people were left worse off then where they started.

What Is a Mortgage Modification?

Under the Home Affordable Modification Program, homeowners who could no longer afford their current loan payments could seek relief from lenders. Mortgage providers were basically required to open the door for modification considerations on existing loans in order to make payments more reasonable. The terms of the original loan were reworked so homeowners could secure a smaller, more manageable monthly payment. Continue reading →

Six Mortgage Mistakes to Avoid

When you’ve never applied for a mortgage loan before, the process can be quite confusing. A mortgage is the biggest loan most people will ever get, so it goes without saying that the mortgage process is pretty intense. That being said, as you take the steps to getting a new mortgage loan, make sure you avoid the most critical mistakes.

Not checking your credit first.

Well before you start applying for mortgages, when you’re in the “I want to by a house” stage, you should check your credit. It’s best to get rid of any credit problems before you apply for a mortgage since it can take months to clear up some errors. If you have errors on your credit report, you can dispute them with the credit bureaus. You’ll also need to take care of unpaid delinquencies and collection accounts if you want to get a mortgage. Continue reading →