Government Mortgage Deposit Plan

Government’s New Mortgage Scheme for First Time Buyers At a time when you may be considering a remortgage for your home The government in the UK has decided to step in to boost the housing market by helping first-time buyers get access to the property market and mortgages with a range of schemes that represent …

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Home Loans for Landlords

Home Loans for Landlords or Buy to Let Mortgages Strange as it may seem this is a great time to buy to let. Rents are at ridiculous heights 600 a month (900 $) for a room in somebody else’s house. The Council of Mortgage Lenders statistics show that both volume and value of buy-to-let loans …

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Time to Refinance Your Home Loan?

Time to Refinance Your Home Loan? U.S. home loan rates have fallen to their lowest levels in 50 years, which has led to a lot of people considering remortgaging or refinancing their loans. Officials at Freddie Mac reported that the average thirty year fixed rate averaged 4.15%, the lowest it’s been in over 50 years. …

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Time to Remortgage ?

Are Mortgage Rates Heading Lower? Is it time to consider mortgage refinancing of your home loan? Mortgage applications soared 21.7% in the week ending August 5, says the Mortgage Bankers Association Market Composite Index. This was used in large part to a 30.4% jump in the group’s refinancing index. “In a few years, these (low) …

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Reverse Mortgages a Good Idea?

Is a Reverse Mortgage a Good Idea? Wells Fargo and Bank of America are pulling out of reverse mortgages. The two banks account for more than 40% of all this type of home loan. The news has left some elderly borrowers, who rely on reverse mortgages to fund their retirement concerned. Both banks say that …

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Government Mortgage Deposit Plan Home Loans for Landlords Time to Refinance Your Home Loan? Time to Remortgage ? Reverse Mortgages a Good Idea?

Nov
21

Government Mortgage Deposit Plan

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Government’s New Mortgage Scheme for First Time Buyers

At a time when you may be considering a remortgage for your home The government in the UK has decided to step in to boost the housing market by helping first-time buyers get access to the property market and mortgages with a range of schemes that represent a $600 (£400M) million property initiative.

Build more homes

Not enough homes are being built for the demands of a growing population. In 2010-11, 121,200 new homes were built, a drop of 6% over 2009 the lowest number of houses built in peacetime since the 1920s.

The government therefore wants to help construction sites where work has stopped due to cash problems, but otherwise everything is ready to go. A new fund called ‘Get Britain Building’ will be established, developers can apply for funds. To get their hands on the money they will have to meet certain criteria, such as building a certain percent of affordable homes.

An extra $75 million will be added to the $150 million already set aside for refurbishing empty homes.

Underwriting mortgages

The most innovative part of the plans is the promise to underwrite a small percentage of home loans for new-build properties.

The government knows that one of the biggest problems first-time buyers face is getting the deposit. Figures from the Council of Mortgage Lenders suggest the average deposit required from first-time buyers is now more than the average annual salary i.e. more than $45,000.

The idea is that buyers will be able to borrow 95% of the property’s value, and the government and developers will underwrite some of the risk.

It’s good thing that the government understands that property is way too expensive which explains borrowers’ problems with getting deposits together.

But these measures will merely prop up buyer demand, meaning prices will stay at their current level or rise even higher. Not the answer to our problems.

The big winners are developers and lenders. For years lenders have been scpetical of the asking prices of new-build properties and have refused to lend at high loan-to-values on them, so developers find them hard to shift. The government scheme solves both of their problems but doesn’t really help borrowers.

See also Remortgaging Deals and  What is HAMP ?

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Nov
16

Home Loans for Landlords

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Home Loans for Landlords or Buy to Let Mortgages

Strange as it may seem this is a great time to buy to let. Rents are at ridiculous heights 600 a month (900 $) for a room in somebody else’s house. The Council of Mortgage Lenders statistics show that both volume and value of buy-to-let loans have risen significantly.

In the third quarter of this year 34,500 buy-to-let mortgages were agreed, an increase of 16% on Q2, amounting to £3.8 bn, up 19% over the quarter.

This is its highest level in 3 years.

One estate agent described the sector as “red hot”.

The reason for all this activity in the rental mortgage sector is that demand just keeps on growing (could it be people can’t actually afford to buy a house or get a mortgage or home loan so they have no alternative?).

Over Q3 properties it took an average of just 13 days to rent a home, a new record.

Viewings are also up, by 17.8% compared to Q2. There are 5 tenants for every property on the market.

And surprise surprise rents are up again, at an average of £718 ($1100) in September, another record.

Demand for rental properties shows little sign of abating.

So if you’ve got some spare cash sloshing about or ifyou can get a mortgage or home loan then this is probably a good time to consider investing in property again, just don’t bite off more mortgage than you can chew otherwise you might just end up giving your money to the banks, which is hardly the aim of the exercise.

See also are reverse mortgages a good idea? and home affordable modification program

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Sep
05

Time to Refinance Your Home Loan?

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Time to Refinance Your Home Loan?

U.S. home loan rates have fallen to their lowest levels in 50 years, which has led to a lot of people considering remortgaging or refinancing their loans.

Home Loans

Time to refinance your home loan?

Officials at Freddie Mac reported that the average thirty year fixed rate averaged 4.15%, the lowest it’s been in over 50 years.

Freddie Mac’s chief economist Frank Nothaft said:

“It’s not surprising, many homeowners took advantage of this low mortgage rate environment and have already refinanced their loans…In addition, an increasing share of refinancing borrowers chose to shorten their loan terms during Q2 , according to Freddie Mac’s Quarterly Product Transition Report.”

Freddie Mac’s report also states:

-The 15-year fixed rate averaged 3.36%, a drop from 3.5% last week and 3.9% 1 year ago.

- Adjustable rates also fell : The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.08% this week, a fall from 3.13% last week and 3.56% one year ago.

-The 1-year Treasury-indexed adjustable rate was 2.86% this week, compared with 2.89% last week and 3.53% this time last year.

So all in all a good time to try and refinance your home loan. Although with Bernanke vowing to keep interest at the same rate until 2013, there is particular rush, except of course that the sooner you get it done the more money you will save.

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Aug
16

Time to Remortgage ?

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Are Mortgage Rates Heading Lower?

Is it time to consider mortgage refinancing of your home loan? Mortgage applications soared 21.7% in the week ending August 5, says the Mortgage Bankers Association Market Composite Index. This was used in large part to a 30.4% jump in the group’s refinancing index.

“In a few years, these (low) rates will be a memory that people chat about at cocktail parties ” says Dan Nigro, principal at Warfield Consultants. “should lock in (these levels) for the long term and it certainly is what the government has in mind.”

But with the average rate on a 30-year fixed home loan just just below 4.5% – the lowest levels for 2011  – is now the time to refinance or buy a new home? Or should they hang on till we reach a new bottom?

Alex Stenback, from “Behind the Mortgage” blog says now is the time to act. After all the FED can move interest rates up “and this window can shut much faster than people imagine,” he says. But bear in mind too that has just said (August 2011) that interest rates will not move up until 2013 at the earliest.

Mortgage rates tend to reflect long-term U.S. Treasury rates, which have fallen in recent weeks. The 10-year Treasury note was around 2.12% on Wednesday and set a record low auction yield of 2.14% the same day.

Tips to bear in mind if you want to refinance your existing home loan, or buy a new home, now.

1. Shop around for your lender

Get an offer that is lower than what you are currently paying and go back to your current lender and tell them you are being offered a better deal  elsewhere. If they don’t match it then move your mortgage.  You could save yourself hundreds of dollars a month.

2. Watch out for costs – hidden or upfront

There is a rule that says if you can save 1% on your rate then it is probably worthwhile switching, but still bear in mind the various fees you will have to pay, title insurance, escrow waiver fees etc..  It may take you 3 years to recoup your fees so if you are moving in two years’ time it’s not worth the trouble.

3. Ask for a copy of your credit report

Make sure your credit history is good before contacting lenders.

You will need a FICO score of at least 760 to be in line for refinancing.

You are entitled to one free annual credit report from the three US credit agencies: Equifax, Experian, and TransUnion.

Having a good credit score makes life a lot easier, so it might be worth your while paying off any credit card debt before trying to refinance your home.

See below for general financial information for beginners on home loans, mortgage refinancing and stock trading online

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Jul
02

Reverse Mortgages a Good Idea?

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Is a Reverse Mortgage a Good Idea?

Wells Fargo and Bank of America are pulling out of reverse mortgages. The two banks account for more than 40% of all this type of home loan.

The news has left some elderly borrowers, who rely on reverse mortgages to fund their retirement concerned.

reverse mortgagesBoth banks say that people who already have reverse mortgages need not be concerned, they will continue to honor them.

A Wells Fargo’s sales manager, said “We will continue to service all of our portfolio. Don’t expect any changes in terms.”

John Lunde of Reverse Market Insight, said people should have no trouble in finding a reverse mortgage in future, but the providers might change.

What is a Reverse Mortgage ?

Officially called Home Equity Conversion Mortgages (HECMs), they were created by the HUD in 1987 for home owners aged 62 or more. They are federally insured and make it possible for owners to borrow money against their home.

The loan is repaid when the owner of the home dies, leaves the home or if it is sold.

Some people find their reverse mortgage a godsend but there are other people who advise against them.

In a press release Wells Fargo gave two reasons for getting out of reverse mortgage:

1) Unpredictable home values.
2) HUD restrictions “that make it difficult to determine seniors’ abilities to meet the obligations of homeownership and their reverse mortgage”

If property values fall and unpaid fees start mounting up, the amount owed can exceed the value of the property.

This may lead to foreclosure.

Mandatory counseling before the loan is agreed is designed to protect borrowers, as some who need money to fix up their home, might be better off finding their loan elsewhere rather than via a reverse mortgage. 

Is a Reverse Mortgage Good for You?

According to some a reverse mortgage is rarely the right option.

If you are 62 or older then a reverse morgage may seem appealing. Your lender will give you some cash and still let you stay in your house. There are no monthly payments and you only pay the mortgage back if you leave your home (i.e. when you die or move out).

The bank gets its money back when you sell your home, die, or if your home is no longer your “primary residence”.

There are three types of reverse mortgage

1 Single-purpose – made available by state and local government agencies or non-profit organizations
2 Federally-insured reverse mortgages, aka Home Equity Conversion Mortgages (HECM) backed by the Department of Housing and Urban Development
3 Proprietary reverse mortgages, – private loans from private companies providing the loan.

Reverse Mortgage Features

They are not taxed, and generally have no impact on any Social Security or Medicare benefits.
You retain the title to your home.
There are no monthly repayments.
The loan is paid back when the last living borrower sells the home or dies or if the home is no longer their principal residence.

A HECM loan allows you to live in a medical facility or nursing home for a maximum of 12 consecutive months before you are obliged to repay the mortgage.

However, there are disadvantages :-

The mortgage provider may end up owning your home. Some people refer to reverse mortgages as “Generational Theft”.
Banks are in business to make money not friends.
There is usually an origination fee, mortgage insurance premium (for federally-insured HECMs), plus additional closing costs.
The amount you owe on a reverse mortgage increases with time. Interest is added to the outstanding balance each month.
Reverse mortgages can destroy the equity in your home, thus you and your heirs may be left with very little.
You are still liable for property taxes, insurance, utilities, maintenance, fuel and other expenses. If you fail to keep up with the payments of any of these you may be required to repay the mortgage.
Interest is not deducted from income tax returns until you pay the loan off in full or in part.

Finally – make sure you shop around. With reverse mortgages you usually have 3 business days to cancel them, without penalty, but you must inform the lender by certified mail with a return receipt.

Further details available here – reverse mortgages

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Jun
11

HAMP – Home Affordable Modification Program

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Home Affordable Modification Program (HAMP)

HAMP – the government’s Home Affordable Modification Program, was created to offer assistance to home owners with loan modifications on their home loan debt. It was set up during the subprime mortgage crisis in the debt markets, started by the banks for reasons known only  to themselves in 2007 – 2008.

The people targeted by HAMP was 7 to 8 million homeowners at risk of foreclosure. The aim was to lower their monthly mortgage payments. The program was created as collaboration with banks, credit unions, services, the VA, the FHA, the USDA and the FHFA, to set up standard loan modification guidelines that lenders must take into consideration when assessing a borrower for a possible loan modification.

If you are considering a loan modification bear in mind that the company modifying your loan must verify, that you are able to make your payments and will continue to be in future.

Be aware that not everyone qualifies for a mortgage modification. It is in your interest to remain in contact with your advisor. You will need to provide documents and fill out a lot of forms. You must be honest about your situation to ensure that you don’t face foreclosure again downthe line.

The HAMP process

Under the government guidelines your servicer will need to obtain the following from you to assess you for a HAMP modification:

An explanation from you of your financial hardship and why you cannot or may soon be unable to make your home loan payments. Acceptable hardships include:-

a. Reduced income or loss of income.
b. Change in financial circumstances.
c. Recent or future increase in your mortgage payment.
d. Unavoidable increases in other expenses.
e. A lack of the cash reserves needed to maintain mortgage payments while covering basic living expenses. (This does not include retirement accounts.)
f. Excessive monthly loan payments and credit card payments. If you have been using credit cards, or other credit to meet your mortgage payments.
g. Other reasons as detailed by the borrower.

The first thing you need to do is contact your “servicer,” i.e. the company you pay your mortgage to, who must collect the following information :-

1. The current monthly of your household income including all salary or wages, bonuses, tips, alimony, unemployment benefits, retirement benefits, or public assistance. You must know when your benefits are scheduled to expire. You must have evidence that unemployment benefits will continue for 9 months at least. Borrowers should also provide documentation of any other income, if applicable, including disability, social security, pension, death benefits, or public assistance and should be able to show the duration and frequency of such benefits. You must also provide the two latest bank statements showing receipt of such payments.
2. Your current employers two most recent pay stubs with year-to-date earnings.
3. IRS Form 4506T that has been signed and dated by each borrower.
4. Self-employed must show their most recent quarterly or year-to-date profit / loss statements.
5. In some cases, signed copies of your latest federal tax return.
6. Household expenses, which may include but are not limited to second mortgages, car payments, revolving debt, alimony / child support and homeowners’ association and / or condominium fees, if applicable.
7. Hazard and flood insurance premiums, if any.
8. Real estate taxes.
9. Household assets, such as checking and savings accounts, certificates of deposit, stocks and bonds.

If you are up to date or less than 60 days delinquent with your mortgage payments but neverthless believe you may be at risk of “imminent default” and wish to discuss a possible loan modification, you will be required to give a more thorough review of your household finances.

Bear in mind also that a HAMP modification is not the only loss mitigation tool available. If HAMP is not possible for you, ask your servicer about alternatives, such as postponing regular payments (known as forbearance), repayment plans, and other options and modifications.

Finally take care, even in this area there are still plenty of fraudsters around. See here for a list of companies
http://www.makinghomeaffordable.gov/get-assistance/contact-mortgage/Pages/default.aspx

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