House Refinance Center
Mortgage Tips, News And Advice
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| Mortgage Tip Get Your Free Reports The Fair Credit Reporting Act (FCRA) requires each of the three nationwide credit reporting agencies to give you, free of charge, a copy of your credit report once each year. The three agencies are Equifax, Experian, and Transunion. report..When you receive the reports, check carefully for errors. It is common to find mistakes on a credit report. Contact the agency immediately and ask to have the errors corrected. You have to provide proof that there is an error. Have patience, be professional and be polite. It take time to have your new information verified. Once it it verified and the correction made, in about two months you should see the changes on your credit report. For more information about your free credit report you can visit the website: www.annualcreditreport.com. |
| Mortgage Tips Use Upfront Mortgage Brokers Upfront mortgage brokers (UMB) are a group of brokers that disclose their compensation upfront. At closing if the yield spread premium is greater than the fees quoted, the broker will pay the difference to you. In other words they take their agreed upon fees, and not a penny more. Find a broker who is part of this group. It could save you money. |
| Mortgage Tip Get Copies Of What You Sign At closing, before you leave the lawyer or settlement office, get copies of everything you sign. These documents contain information about your rights and obligations. |
| Mortgage Tip Do Not Co-sign A Mortgage Should you co-sign on a mortgage? We all want to help a relative or a friend buy a house. "You do not have to put out any money. We need your income and good credit to help us qualify for the mortgage. You know we are good for the money. No problem". How many times have you heard this story. But there is a problem. And it usually surfaces later. You want to buy a house, and when the lender pulls the credit report, he discovers that you are on the mortgage with your sister Mary and her husband Greg. So you contact Mary and Greg's lender and ask him to release you from the mortgage. He laughs. He says that of the three, you are the strongest candidate. You have the highest credit score and your job history is immaculate. Next, you talk to your lender and shows him that Mary and Greg have been paying the mortgage all these months, and there has never been a late payment. He is more sympathetic, and says he will do the deal but you won't be getting the best rate. Instead of 4.99% for a 30 year fixed, he offers 5.99%. Take it or leave it. On a $200,000 mortgage the monthly payment goes from $1,072.42 to $1,197.82. So you are paying an extra $125.40 each month. Looking at the situation from the lender's point of view, you can see why lenders seldom release a co-signer. If the original two borrowers were strong applicants, there would be no need for a co-signer. To get a release, the house needs to be sold and the mortgage paid off in full. The bottom line is that sometimes you have to say no to relatives and friends. Try and help them in other ways. Work on a budget with them. Suggest courses they can take to help them manage their finances, or loan them some money to help with the downpayment or closing costs. |
| Mortgage Tip Do Not Withdraw Cash From HELOC It is not a good idea to take cash from your HELOC just before you apply for refinancing. This raises a red flag and the lender will want some explanations. Why did you withdraw the cash? Where did it go? Why do you need more money? If you used the money to buy a couple flat screen televisions the lender won't be too pleased. Televisions are assets that depreciate. This is not the best use of money when you are asking for refinancing. |
| Mortgage Tip Consider all your options before refinancing. If you are having money problems, marriage issues or substance abuse. Talk to someone. Get help. Many times there are other factors that are stressing you, and leading to financial problems.
You should do all you can before deciding to refinance. If you have explored all avenues and the only way out is through refinancing, then be prepared to get the best deal possible. Have a discussion with your lender and show him a budget. Let the lender know upfront how much you can afford. Get an offer from the lender in writing, and then go and see another lender. The goal is to have more than one lender competing for your business. |
| Mortgage Tip Assessed Versus Appraised Values The assessed value of a house is not necessarily the same as the appraised value. There seem to be some confusion about house values when a borrower goes to a lender to refinance. The assessed value is established by the county or city and is used to determine how much property taxes to charge. The appraised value is used by your lender or banker and this value determines how much money you can borrow. The value is established by a certified professional appraiser. This is the value that is recognized by the courts in cases of default or foreclosure. The problem arises when there is a great disparity between the two values. The assessed value is generally higher than the appraised value. Save some money on an appraisal, and ask your lender if they will accept a Broker Price Opinion (BPO) letter. This is an assessment done by a real estate professional and it costs about $50. If the value comes in at an amount you can work with, then you can proceed with the refinance. |
| Mortgage Tip How Long Would It Take To Recoup Fees Do you know the break-even period when you refinance your mortgage? This is a "must know". To determine if refinancing at this time is right for you, the break-even period must be established. Take all your fees and closing costs associated with arranging the loan. Next, determine how much your new monthly mortgage payments are. Then divide the payments into the amount of fees. The result will give you the number of months needed to recoup all your fees and closing costs. The sooner you recoup your costs the better the deal. If you can recoup all your costs in four months, WOW! That's great. However, if you can do it in one year or less, this is acceptable. |
| Mortgage Tip How To Opt Out When you apply for a mortgage, within days, you will receive offers in the mail, offers in your email, people knocking on your door and yes, the annoying telemarketing. Just how do they know that you are shopping for a mortgage. That one application at your bank or lender starts the process. An inquiry shows on your credit report. And the credit reporting agencies sell lists to other lenders, mortgage brokers and banks. You obviously met certain criteria, therefore , you were a good prospect to go after. The criteria could be an inquiry from a bank or lender, a credit score of 680 plus. You can stop all the soliciting. However the process takes about 60 days. Call 1-888-5-OPTOUT (1-888-567-8688) or vist www.optoutprescreen.com If you have a joint mortgage both parties have to request the opt out. Remember, you can always opt in again. |
| Mortgage Tip Get On The Feds Do Not Call Registry If you want to reduce the number of telemarketing calls you can register your phone number with the federal government's National Do Not Call Registry. The process takes about 31 days. You need to separately register each phone. So you can register the home phone and the cell phone. The toll free number is 1-888-382-1222. You can also visit the website. www.donotcall.gov and enter your information. |
| Mortgage Tip Avoid Mortgage Fraud There are two basic types of mortgage fraud. You have fraud to obtain a house. This is referred to as, mortgage fraud for housing. The homeowner intends to stay in the house, make his payments, upkeep the property, be a part of the community. He embellished his income and job title in order to get the mortgage. Many lender might suspect this type of fraud but can not prove that it occurred. The other type of mortgage fraud is the scariest. We can call this mortgage fraud for profit. The perpetrators are well organized. They can obtain the highest quality documents to fool the lenders. They might even have lawyers, appraisers, and realtors involved in the scheme. There are many victims with mortgage fraud for profit. We have a duty to report all kinds of fraud. |
| Mortgage Tip Do Not Get Caught In Mortgage Fraud To help prevent mortgage fraud, you the consumer have to do your part. You have to start with the following. Choose a real estate lawyer to do your closing. Interview 3 or 4 lawyers. Ask lots of questions. Choose a realtor. Ask for references. Call each and everyone of them. When you select a house, ask the realtor to give you a history of the property over the last 10 years. You want to see how many time the house was bought and sold. What were the prices. Who were the realtors involved in the transactions. Which closing agents were used. If you see a pattern developing be careful. The same realtor being on both sides of the deal is a red flag. How many time do you find a realtor representing the seller and the buyer at the same time? If the house was sold 4 or 5 times in the last 10 years, what's the problem? Is the same realtor involved? The same closing agent? Protect your rights and your money, and ask lots of questions. Scam artists usually back off when someone is nosey and questions every little detail. |
| Mortgage Tip Do Not Pay Late Fees Or Penalties Sometimes a lender is late in paying homeowners' property taxes from the escrow account. Late fees are charged and some lenders will try and pass these fees onto the borrower, instead of absorbing the fees. This is the lender's mistake and the lender should pay, not the borrower. RESPA is clear on this fact. HUD requires lender to pay borrowers tax bills and insurance on time so long as the homeowner is current in their mortgage payments. The lender is responsible for any late charges or penalties. Mistakes happen for a number of reasons. So, always check your escrow account and make sure your taxes and insurance bills are paid. |
| Mortgage Tip Things the homeowner/seller must do. 1. Ask the lender for financial help. You have to rent an apartment or house which will require the minimum of 2 months rent. You also have to pay for moving. Even if you get relatives and friends to help, you still have to rent a moving van. And you might have to make deposits for utilities. The lender will offer some help just to get you out of the house. The reason for this is that it is easier to do the sale if the house is empty. If the homeowner is still in the house, there is always a possibility that the homeowner will get a refinancing deal. From the prospective buyer's point of view this is a waste of time and money. So until the house is empty, some buyers never take a short sale seriously. 2. Verify that a decision can and will be made when an offer with a fair price is received. Many banks have a loss mitigation department that evaluates all short sales. The last thing you need is a situation where the lender has to send documents to head office for approval. This could take time. And the buyer could have a clause in the offer which states that the offer must be accepted in 3 or 5 days or deal is off the table. 3. Ask the lender if your home loan was a non-recourse loan. This is important because with a non-recourse loan the asset (the house) that was pledged is all that the lender can seize. With a recourse loan the lender can still come after the homeowner for the short fall. He can garnishee wages or seize any other assets he can find. If the lender can not get any money, he will cancel or forgive the balance. He will then send a form 1099 to the homeowner and this might trigger some income taxes. Who wants to pay taxes after losing their house? If the loan is a recourse loan, try a work out a settlement. Many lenders will ask the seller to sign a promissory note. Do not sign any documents until your lawyer has reviewed them. 4. Find out if you qualify for Home Affordable Alternatives Program (HAFA). |
| Mortgage Tip Save For A Rainy Day You should save three months of expenditures and place this money in a separate bank account. In case you lose your job, you will have some funds to fall back on. You will be able to continue paying your mortgage. Here are some numbers to consider. Mortgage, Insurance and Taxes $2,000 Utilities, including water, electric, home phone $500 Car, including insurance, repairs $600 Food $400 Miscellaneous $300 Total $3,800 In this case you need to put aside $11,400. This is a lot of money so try to save gradually. Make a deposit each week. Save all your coins in a jar. Then at the end of each month roll the coins and take them to the bank. You will be amazed at how much you have saved. |
| Mortgage Tip Contact A Housing Counselor If you are having trouble with your mortgage payments, it might be time to seek the help of a housing counselor that is approved by HUD. A HUD approved housing counselor is an experienced, trained professional who can advise you on preventing foreclosure. The counselor can also give you some valuable information on reverse mortgages, buying a house, credit cards, and other credit issues. The US Department of Housing and Urban Development (HUD) sponsors housing counseling across the nation. Counseling on the prevention of foreclosure is free. However, there may be a small fee for other types of counseling. The counselor has the right to waive a fee if you can prove hardship and can not afford to pay. Before you contact a counselor, you should gather the following documents;
If you are just discussing your mortgage, and asking for help on preventing a possible foreclosure the help is free. |
| Mortgage Tip Paying your mortgage is simple and shouldn't cause you any extra money. Yet many homeowners end up paying hundreds of dollars extra each year. Set up an automatic withdrawal from your checking account. The lender takes the money on a specific day each month and everyone is happy. Mailing your payment spells trouble. Some months you forget to put the envelope in the mail. Some months you can't find a stamp or an envelope. Sometimes you can't find a $35 fee he collects for doing nothing. If you know that you are going to be late, there are a couple of options. One, you can call the lender. If you use the automatic telephone system, you can say or punch in your account information. There is a fee of $15 for this service with some lenders. If you select the "live person" option, you speak to a customer service representative, and the fee is $20. Keep more of your money, set up the automatic withdrawal. |
| Mortgage Tip Take Someone With You When you visit your lender take someone with you. It should be a spouse, a relative or a friend you can trust. Someone who knows your financial situation. Remember, the lender will be operating from a seat of power. He already has a psychological advantage over you. You are on his home turf. The well decorated office and the impressive desk have a purpose. They are positioned to make you feel small and powerless. With a friend by your side for moral support, you take away some of the lender's power. He has to sell you and your "friend". Immediate after leaving the lender, start discussing what just transpired. Review the key areas of the loan proposal. You will be surprised at how freshly and vividly the conversation with the lender will appear. Your friend might see things from a different perspective so take his comments seriously. |
| Mortgage Tip Many time we do not understand the document we are signing. But we usually go ahead and sign anyway. With refinancing your house, this could pose serious problems years later. You could lose your home. Ask the lender to go over the documents again, and ask him to use layman's terms. Never be embarrassed to say that you do not understand. Suggest to the lender that you would be more comfortable taking the documents home and reading them slowly, and that you can return to his office in a couple days. If you are allowed to take the documents, find a college or university near your house. Ask for a professor in the business and finance department, or one in the law department. You want to have a professor look over the documents with you. If a professor is too busy ask him or her to recommend a senior student. Many colleges and universities have community programs where faculty members and students volunteer their services by reviewing leases, and other contracts. If you are unable to get help at the college or university, then pay a lawyer a fee and have the documents reviewed and explained to you. The fee shouldn't be more than $100. This is a small price to pay when your house is involved. |
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