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Mortgage Forgiveness Debt Relief Act and Mortgage Debt Act

2010-03-04T22:43:00.001-05:00

The Mortgage Forgiveness Debt Relief Act

You may have heard about the Mortgage Forgiveness Debt Relief Act lately. This is a federal act which was designed to help people suffering from mortgage debt to get back on track. The Mortgage Debt Relief Act was signed in 2007, but may be helping more people today than ever! How many people do you know who have or recently had problems in keeping up with their mortgage payments?

The Mortgage Debt Relief Act applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt (for married couples) is eligible ($1 million if married filing separately). The exclusion does not apply if the debt discharge comes from services performed for the home's mortgage lender. The only debt that can be forgiven is debt related to a decline in the home’s value or a negative change in a taxpayer’s financial condition.

FAQs from the IRS on The Mortgage Forgiveness Debt Relief Act & debt cancellation (irs.gov article):

What is Cancellation of Debt?

If someone takes out a loan from a commercial lender and that lender eventually cancels or forgives the debt, the borrower may have to include the cancelled amount as part of his or her income for when filing for taxes, depending on the circumstances. At the time of the loan, you may not be required to include the loan money as income because you have an obligation to repay the lender (so it's no technically income). When that debt is forgiven, the amount you received as a loan will be considered part of your income and you will be responsible for paying taxes on it because you no longer have have to repay the lender. Your lender usually has to report the amount of the forgiven debt to both you and to the IRS on a Form 1099-C, Cancellation of Debt.

Is Cancellation of Debt income always taxable?

Well, not always. Cancellation of Debt is usually taxable, but there are some exceptions. Here are some of the more common occasions when cancellation of debt is not taxable"

* Qualified principal residence indebtedness: This is the exception created by the Mortgage Debt Relief Act of 2007 and applies to most homeowners.

* Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.

* Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you. You are insolvent when your total debts are more than the fair market value of your total assets.

* Certain farm debts: If you incurred the debt directly in operation of a farm, more than half your income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income.

* Non-recourse loans: A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. That is, the lender cannot pursue you personally in case of default. Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income. However, it may result in other tax consequences.

What does exclusion of income mean?

Usually, debt that is forgiven or cancelled by a lender must be included as income on your tax return and is taxable. But the Mortgage Forgiveness Debt Relief Act allows you to exclude certain cancelled debt on your principal residence from income. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.

Does the Mortgage Forgiveness Debt Relief Act apply to all forgiven or cancelled debts?

No. The Act applies only to forgiven or cancelled debt used to buy, build or substantially improve your principal residence, or to refinance debt incurred for those purposes. In addition, the debt must be secured by the home. This is known as qualified principal residence indebtedness. The maximum amount you can treat as qualified principal residence indebtedness is $2 million or $1 million if married filing

separately.

Does the Mortgage Forgiveness Debt Relief Act apply to debt incurred to refinance a home?

Debt used to refinance your home qualifies for this exclusion, but only to the extent that the principal balance of the old mortgage, immediately before the refinancing, would have qualified. For more information, including an example, see Publication 4681.

How long is this special relief in effect?

It applies to qualified principal residence indebtedness forgiven in calendar years 2007 through 2012.

Is there a limit on the amount of forgiven qualified principal residence indebtedness that can be excluded from income?

The maximum amount you can treat as qualified principal residence indebtedness is $2 million ($1 million if married filing separately for the tax year), at the time the loan was forgiven. If the balance was greater, see the instructions to Form 982 and the detailed example in Publication 4681.

If the forgiven debt is excluded from income, do I have to report it on my tax return?

Yes. The amount of debt forgiven must be reported on Form 982 and this form must be attached to your tax return.

Do I have to complete the entire Form 982?

No. Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Adjustment), is used for other purposes in addition to reporting the exclusion of forgiveness of qualified principal residence indebtedness. If you are using the form only to report the exclusion of forgiveness of qualified principal residence indebtedness as the result of foreclosure on your principal residence, you only need to complete lines 1e and 2. If you kept ownership of your home and modification of the terms of your mortgage resulted in the forgiveness of qualified principal residence indebtedness, complete lines 1e, 2, and 10b. Attach the Form 982 to your tax return.

Where can I get this form?

If you use a computer to fill out your return, check your tax-preparation software. You can also download the form at IRS.gov, or call 1-800-829-3676.

How do I know or find out how much debt was forgiven?

Your lender should send a Form 1099-C, Cancellation of Debt, by February 2, 2009. The amount of debt forgiven or cancelled will be shown in box 2. If this debt is all qualified principal residence indebtedness, the amount shown in box 2 will generally be the amount that you enter on lines 2 and 10b, if applicable, on Form 982.

Can I exclude debt forgiven on my second home, credit card or car loans?

Not under this provision. Only cancelled debt used to buy, build or improve your principal residence or refinance debt incurred for those purposes qualifies for this exclusion. See Publication 4681 for further details.

If part of the forgiven debt doesn't qualify for exclusion from income under this provision, is it possible that it may qualify for exclusion under a different provision?

Yes. The forgiven debt may qualify under the insolvency exclusion. Normally, you are not required to include forgiven debts in income to the extent that you are insolvent. You are insolvent when your total liabilities exceed your total assets. The forgiven debt may also qualify for exclusion if the debt was discharged in a Title 11 bankruptcy proceeding or if the debt is qualified farm indebtedness or qualified real property business indebtedness. If you believe you qualify for any of these exceptions, see the instructions for Form 982. Publication 4681 discusses each of these exceptions and includes examples.

I lost money on the foreclosure of my home. Can I claim a loss on my tax return?

No. Losses from the sale or foreclosure of personal property are not deductible.

If I sold my home at a loss and the remaining loan is forgiven, does this constitute a cancellation of debt?

Yes. To the extent that a loan from a lender is not fully satisfied and a lender cancels the unsatisfied debt, you have cancellation of indebtedness income. If the amount forgiven or canceled is $600 or more, the lender must generally issue Form 1099-C, Cancellation of Debt, showing the amount of debt canceled. However, you may be able to exclude part or all of this income if the debt was qualified principal residence indebtedness, you were insolvent immediately before the discharge, or if the debt was canceled in a title 11 bankruptcy case. An exclusion is also available for the cancellation of certain nonbusiness debts of a qualified individual as a result of a disaster in a Midwestern disaster area. See Form 982 for details.

If the remaining balance owed on my mortgage loan that I was personally liable for was canceled after my foreclosure, may I still exclude the canceled debt from income under the qualified principal residence exclusion, even though I no longer own my residence?

Yes, as long as the canceled debt was qualified principal residence indebtedness. See Example 2 on page 13 of Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments.

Will I receive notification of cancellation of debt from my lender?

Yes. Lenders are required to send Form 1099-C, Cancellation of Debt, when they cancel any debt of $600 or more. The amount cancelled will be in box 2 of the form.

What if I disagree with the amount in box 2?

Contact your lender to work out any discrepancies and have the lender issue a corrected Form 1099-C.

My student loan was cancelled; will this result in taxable income?

In some cases, yes. Your student loan cancellation will not result in taxable income if you agreed to a loan provision requiring you to work in a certain profession for a specified period of time, and you fulfilled this obligation.

Are there other conditions I should know about to exclude the cancellation of student debt?

Yes, your student loan must have been made by:

(a) the federal government, or a state or local government or subdivision;

(b) a tax-exempt public benefit corporation which has control of a state, county or municipal hospital where the employees are considered public employees; or

(c) a school which has a program to encourage students to work in underserved occupations or areas, and has an agreement with one of the above to fund the program, under the direction of a governmental unit or a charitable or educational organization.

Can I exclude cancellation of credit card debt?

In some cases, yes. Nonbusiness credit card debt cancellation can be excluded from income if the cancellation occurred in a title 11 bankruptcy case, or to the extent you were insolvent just before the cancellation. See the examples in Publication 4681.

How do I know if I was insolvent?

You are insolvent when your total debts exceed the total fair market value of all of your assets. Assets include everything you own, e.g., your car, house, condominium, furniture, life insurance policies, stocks, other investments, or your pension and other retirement accounts.

For more information on the Mortgage Forgiveness Debt Relief Act and Debt Cancellation, visit http://www.irs.gov/individuals/article/0,,id=179414,00.html

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$8,000 Home Buyer Tax Credit Extended to June 2010

2009-11-21T08:59:00.002-05:00

The $8,000 home buyer tax credit, part of the economic stimulus package, has been extended into Summer 2010 and has been expanded -- the tax credit will now also be available to higher income buyers and those who are not first-time home buyers, but want to "trade up" or "move up" to a new home. Analysts believe that including these two groups will help to further stimulate the ailing housing market.

In order to take advantage of the renewed $8,000 tax credit, home buyers must sign a contract by April 30, 2010 and close on the house by June 30. Eligible home buyers now include single persons who earn up to $125,000 and married couples who jointly earn up to $225,000.

$6500 Tax Credit for "Move Up" Buyers

The new home buyer tax credit bill allows even more homeowners to claim the credit on their tax return. In addition to first-time home buyers, The bill also makes more homeowners eligible to claim the credit on their taxes. People who have lived in their homes for at least five years can claim a $6,500 tax credit, though first-time buyers -- people who haven't owned a home in three years or more -- can still claim the full $8,000 rebate.

Experts predict that the addition of the $6,500 tax credit for move-up buyers will help to further improve home prices and continue the housing market turnaround. Move-up buyers may be considering buying a newer home than the one they own, but the $6,500 credit will persuade many to move their plans forward and "buy now."

Will the Home Buyer Tax Credit Work Long-Term?

The first phase of the $8,000 home buyer tax credit -- like the "Cash for Clunkers" automotive stimulus program -- seems to have helped home prices to stabilize and even move up slightly in recent months, according to major home price indexes... But have we become dependent on the tax credit?

What will happen when the tax credit program ends after June 2010? Some believe that the housing market will continue to decline after the short lift it is now receiving from the home buyer tax credit. Maybe the program's effect on the overall economy due to increased consumer spending -- home buyers spending their tax rebate on consumer goods -- will help to drive the economy upward and the housing market will follow suit. We will have to wait and see.

What do you think?

Please comment below and share your thoughts on the $8000/$6500 home buyer tax credit program.

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$8000 First Time Home Buyer Tax Credit Extended to 2010?

2009-11-04T13:13:00.003-05:00

$8000 Tax Credit Extended for First Time Home Buyers?

The $8,000 Tax Credit Available Now

Under the Obama Administration's housing plan -- part of the huge government stimulus package -- first-time home buyers can claim an $8,000 tax credit (or 10% of the home's value if the home is under $80,000) on their 2008 or 2009 income taxes.

The tax credit is refundable -- taxpayers who receive the credit will get a refund check or deposit for the full $8,000 even if their total taxes for the year totaled less than that. $8,000 in the bank can be a massive help for someone just getting started with a new home.

For a home buyer to qualify for the credit, the purchase must be made between Jan. 1, 2009 and Nov. 30, 2009. Buyers must not have owned a home for the past three years to qualify as "first time" buyer. They must also live in the house for at least three years, or they will be obligated to pay back the credit.

Home buyers must also earn less than $75,000 (individually) or $150,000 (as a couple) to qualify for the existing $8,000 first-time home buyer tax credit.

Will the First-Time Home Buyer Tax Credit Be Extended?

Many people have taken advantage of the tax credit, but time is now running out as December approaches and the deadline nears -- unless Congress votes to extend the $8,000 tax credit program well into 2010. The real estate industry is lobbying for an extended and expanded home buyer tax credit that would help to keep home sales going.

The U.S. real estate industry wants the home buyer tax credit to be extended at least halfway into 2010, and expanded from $8,000 to a lofty $15,000. The industry also wants the credit to be offered to all buyers -- not just first-time home buyers (or those who haven't owned a home in 3 years or more).

The Senator who originally backed the bill which provided the first-time buyer tax credit, Johnny Isakson (R) of Georgia, now says that the housing market may see another downturn if the current tax credit plan ends this year. Isakson is sponsoring a new bill that would continue to provide an $8,000 tax credit to first-time home buyers and up to $6,500 to those who have lived in the same home for at least 5 years. For a home purchase to qualify under the extended plan, it would have to close by June 30th, 2010.

The bill moved to a final vote, with 85 Senators voting in favor and only 2 against. Members of Congress expect the bill to pass this week.

Check back on The Mortgage Loan Zone for updates on this and other issues.

What Are Closing Costs? Home Loan Closing Costs Explained

2009-10-13T17:19:00.002-04:00

Home Loan Closing Costs Explained

As many of us know, buying a house costs a lot of money and it takes research and hard work to get the best deal while making sure that you are buying the right house. Once you have your mortgage chosen and are ready to buy, you discover that you have to pay closing costs on top of the other thousands and thousands you'll be spending. What are closing costs, why do we have them, what do they cover and which ones will you have to pay?

House Closing: Buying a Home

The last stage of buying a house is the closing. A house closing is the final real estate transaction during which the actual title to the property changes hands from seller to buyer. The closing is the finalization of a real estate contract, which, unfortunately for us home buyers, involves closing costs that are added on to the final agreed-upon price of the house. Though these closing costs are usually paid by the buyer (known as "buyer closing costs"), some costs are also paid by the seller (AKA "seller closing costs"), in many cases. Which party pays these costs can be negotiated prior to the closing; sometimes, the seller will pick up some or all of the closing costs to make a better deal for the buyer and sell his/her property more quickly.

How Much are Closing Costs?

House closing costs can be as expensive as several thousand dollars, so it's a smart idea to plan ahead for them when shopping for your home. Closing costs have to be paid up front, so you will need to save for them (or get a signature loan or something similar).

List of Closing Costs On a House

So what are all the different closing costs one might have to pay when buying a house? Below is a list of closing costs and an explanation for each. You will probably not have to pay ALL the fees in this list, but it is good to have an idea of the different possible closing costs to expect. Remember, closing costs may be paid by the seller if they are eager to sell. Try to negotiate and see where the seller stands on paying some or all of the closing costs.

Typical Closing Costs:

Appraisal Fees

A home should be appraised to determine its value before sale so that the seller gets a fair amount for their house and the buyer gets a fair deal. An appraisal is usually required before a home can be sold, but not always. The appraisal is not free -- an appraisal fee is usually paid by the buyer, though sometimes the seller pays for the appraisal. If you are buying a home and no appraisal has been made, you should ask why and make sure that the home is appraised so you know the fair value.

Attorney Fees (AKA Lawyer Fees)

Attorney fees may be paid by either the buyer or seller (or both), for careful preparation of legal documents. An attorney is usually required by lenders to make sure that legal documents are done correctly and officially.

Brokerage Fees (Brokerage Commission)

Brokerage fees are paid to the real estate broker to cover the broker's marketing, negotiation and sale assistance services. This fee is usually a percentage of the home's final sale price; the seller and broker should agree on the percentage before the sale is made. This may be a large closing cost.

Credit Report Fee

A credit report is usually required so that your lender can determine which interest rate to give out. If your FICO credit score is low, you will likely have a higher interest rate. This is done to protect the lender's investment against the likelihood of the loan defaulting.

Document Taxes

This is a government-required fee which may be paid by the buyer and/or the seller, depending on the location of the sale.

Down Payment

Not always considered a closing cost, the down payment is usually the biggest cost made at closing, though some down payments can be small or nothing at all, depending on the lender, credit score, mortgage agreement and other factors. The down payment is made by the buyer and creates immediate equity, or value, in the home.

Home Inspection Fees

Inspection fees are most often paid by the home buyer and go to home, pest or other inspectors who check the quality and integrity of different parts of the home (such as the foundation, plumbing, electrical, etc.) before sale to ensure that the home is in good shape and not a "lemon." The lender usually requires an approved inspection to assure good home value for the loan.

Loan Origination

The loan origination fee is very common and you will most likely be charged a loan origination fee at the time of closing. It is typically paid by the buyer, but the seller may pay this if the deal is arranged as such.

Application Fee (Mortgage Processing Fee)

This fee is paid to the lender by the buyer and covers the lender's loan application processing (printing and completing paperwork, retrieving signatures, etc.). The application fee may be paid at the time of the mortgage application or at the actual closing.

Points (Mortgage Points)

Points are generally only recommended for home buyers who plan to keep their homes for a long time. Points are considered to be a type of pre-paid interest, a way for home buyers to keep interest costs down for a certain length of time at the beginning of the loan, or to make a lower down payment. One point is equal to 1 percent of the loan principal.

Notary Fees

The notary fee is a simple legal fee paid to a notary public for notarizing the loan and/or sale documents at the time of sale.

Pre-Paid Property Insurance

A lender will usually require a buyer to keep property insurance on the home in question, and often will need the first year's insurance cost paid in advance.

Private Mortgage Insurance (PMI) Premium

PMI is optional for most mortgages, but required on some -- especially zero down payment home loans. Private mortgage insurance is a form of insurance that covers the lender in case you are unable to repay your loan.

Recording Fees

An amount charged for officially recording the home sale transaction by a government entity. Usually required during any real estate sale.

Surveying Fee

A survey of the land and buildings being traded is necessary for confirming the size of the land lot and building dimensions. Many lenders require this before closing.

Title Fees

The title fees cover title services including search, insurance and closing, and may be required during a home sale.

Remember to Plan for Closing Costs and Save

So remember to set aside some money (usually thousands of dollars) for the various closing costs you are sure to encounter, as well as those which may surprise you at the last minute. Good luck buying your new home!

Mortgage Loan Down Payments -- What is the Best Down Payment for Me?

2009-08-24T16:42:00.007-04:00

Choosing a Mortgage Down Payment

To decide how much your home mortgage loan down payment should be, you should consider your financial situation (income and savings), the home loan you can get, the cost of your home, and your preferences as far as building equity and the total length of the loan. If you are financially secure (be honest with yourself), you'll probably want to put down 20% of the home's purchase price (or more, if possible). If your current situation doesn't favor a 20% down payment, there are options for getting a mortgage with a lower down payment, albeit with some trade-offs.

Down Payments and Private Mortgage Insurance

Although many lenders require you to make a down payment of 20 percent of the home’s purchase price, some lenders do offer home loans with a down payment of less than 20 percent. If you do get a mortgage with a less than 20% down payment, the lender will usually require you to buy private mortgage insurance, or PMI, to protect the lender by covering some of the cost of your mortgage in case you're unable to make your payments. Statistics show that a borrower with less than 20% invested in a house is more likely to default on a mortgage than someone with 20% or more as a down payment.

The Piggyback Mortgage Loan

One option for putting less than 20% as a down payment is to get a piggyback loan, also known as an "80/10/10" (or other combinations). In this example, the "80" represents the 80% of the home's value that is financed through the primary or "1st" mortgage, the "10" represents your 10% down payment and the 2nd "10" is where the "piggyback" comes in -- it is a 2nd loan that is specifically used to cover a 10% portion of your home's value.

FHA Home Loans

The Federal Housing Authority (or FHA) offers mortgage programs with less than 20% down payment requirements. The FHA has offered mortgages with down payments as low as 3.5% for qualified buyers. Due to the subprime mortgage crisies, the FHA received millions of applications for special mortgages and helped tons of borrowers buy homes, often allowing a low down payment.

How to Get an FHA Home Mortgage Loan

Applying for an FHA loan isn't difficult, and the parameters for those who qualify are fairly straightforward. Start by calling a mortgage broker or an FHA-approved lender. You can search for an FHA lender on the Web site of the U.S. Department of Housing and Urban Development.

For lenders, income is the main factor in determining who qualifies for an FHA loan. The agency's guidelines dictate that that buyers spend no more than 31% of their gross income on mortgage payments. In addition, the interest rates that FHA borrowers get are not actually based on their FICO credit scores (as they would with most standard mortgage loans), but are calculated along the same lines as what any typically approved borrower would receive with a good credit score. The only piece of "fine print" here is that borrowers with a FICO score of 500 or lower will usually have to put 10% down instead of 3.5%.

Mortgage Loan Down Payment Calculator

Here is a helpful mortgage down payment calculator from bankrate.com to help you figure out the ideal down payment based on the home's purchase price, taxes & more:

Down payment calculator

Summary

Visit the Mortgage Loan Zone for more great home finance tips.

references: ftc.gov; money.cnn.com; loan.yahoo.com

Obama's Loan Modification Plan - Mortgage Loan Modification

2009-08-06T11:46:00.004-04:00

President Barack Obama's Loan Modification Plan aims to help millions of homeowners avoid foreclosure and regain control of their mortgage loan payments. This plan is meant not only to help individuals with their finances, but also to help the housing industry and eventually the economy as a whole by reducing the drop in home prices via fewer foreclosures and walk-aways.

Main Points of Obama's Loan Modification Program

Focus on Mortgage Payments

Obama's loan modification plan centers on the idea that struggling borrowers will stay in their homes -- even as values drop -- as long as they're able to make their monthly mortgage payments. Billionaire chairman of insurance giant Berkshire Hathaway, Warren Buffett, endorsed this strategy in his most recent letter to BH shareholders: "Commentary about the current housing crisis often ignores the crucial fact that most foreclosures do not occur because a house is worth less than its mortgage," Buffett wrote. "Rather, foreclosures take place because borrowers can’t pay the monthly payment that they agreed to pay."

31% - Thirty-One Percent

The administration's plan requires participating lenders to lower monthly mortgage payments to no higher than 38% of the borrower's gross monthly income. The government would assist by bringing payments down further, to no more than 31% of monthly income. In this plan, the lender would first lower the loan's interest rate to as little as 2%. If the 31 percent threshold is not reached, they would then extend the terms of the loan to up to 40 years. If 31% has still not been reached, the lender would cut the interest to zero.

Cash Incentives for Borrowers & Lenders:

To encourage participation, lenders will get $1,000 for each loan modification made and an additional $1,000 each year for up to 3 years, as long as the borrower continues making payments. Borrowers can get up to $1,000 taken off the principal (or total minus interest) of their loan each year for up to five years -- if they make their payments on time. Neither borrower or lender will receive the cash until the modified loan payments have been made for at least 3 months.

Who Is Eligible for the Loan Modification Program?

Only owner-occupied, primary residences with outstanding principal balances of up to $729,750 are eligible. Occupancy status will be verified through documents such as the borrower's credit report. In addition, the program is designed to target homeowners who are under such hardship as a loss of income, which puts them at risk of defaulting on their loans. Only loans which originated on or before Jan. 1, 2009, are eligible, and modified payments will be active for five years.

"Net Present Value"

To determine if a mortgage will be modified, the lender will perform what is called a "net present value" test. This test compares the expected income that the loan would generate if it were modified with the expected income it would generate otherwise. If the modified loan is expected to produce more revenue for the lending institution, the lender or servicer is to then go forward with modifying the loan.

Summary

The housing crisis has proven again and again the importance of being realistic -- buying only what you can truly afford -- if not, we have seen the results that surely follow. So, be responsible and help not only yourself, but everyone else.

How do you think the loan modification plan is working so far? Although in theory it would improve the current situation in the housing industry, the plan has received a mixed response. Comment below if you'd like to voice your opinion.

references: US News

Loan Modification: How to Get a Mortgage Loan Modification

2009-08-06T11:28:00.005-04:00

What is Loan Modification?

Mortgage loan modification is the renewal of a mortgage at different terms than what the lender (e.g. bank) and borrower (you) agreed to in the original mortgage contract. Basically any loan can be modified if the lender and borrower are in agreement with the new terms. Loan modification has become very popular recently as homeowners struggle to keep up with their monthly mortgage payments and lenders strain to collect all of their due incoming payments.

How Loan Modification Works

The way a mortgage normally works is that the borrower (homeowner) makes payments -- including interest -- until the mortgage is paid in full (or paid off). Typically, until the mortgage is fully paid off, the lender legally holds a lien on the property so that if the borrower sells the property before the mortgage is paid off, the unpaid balance of the home loan must be paid directly to the lender to release this lien. Any change to the terms of the mortgage is considered a modification, but "loan modification" mostly refers to a change in terms based upon either the inability of the borrower to keep up with monthly payments as they're stated in the mortgage contract.

Different Types of Loan Modification

Mortgages can be modified in different ways to help the borrower and make it easier for him or her to make monthly payments on time. Here are some of the things that a loan modification can change:

Lowering the interest rate
Changing from an adjustable rate to fixed rate mortgage
Improving an adjustable rate by changing the way it's computed (lower cost)
Reducing the loan's principal (total amount due)
Reducing late fees and other fees or penalties
Making the term or life of the mortgage longer so that monthly payments are lower
Fixing the borrower's monthly payment to a certain amount based on income

How to Get a Loan Modification

A homeowner can apply for a loan modification whether he/she is making current monthly payments, is falling behind on payments, has defaulted on the home loan, or is even in foreclosure or bankruptcy. Each case will mean that the terms will be different as far as how the loan can be modified, and will vary by lender.

Mortgage lenders have the motivation to make bank loan modifications and help the borrower because the lender will usually profit more from a loan that is eventually paid in full than a loan that forecloses and forces the property to be sold for less than it's worth. The lender can make a modification at its own discretion if it considers this the best course of action.

The government can create a mortgage loan modification program in which it's voluntary for lenders to participate, but at the same time make incentives for the lender to participate. A mandatory mortgage modification program requires the lender to make loan modifications according to each borrower's situation and loan payment history, as well as details on the property itself.

If you are falling behind on mortgage payments, take advantage of this opportunity and check to see if you are eligible for a loan modification. It can offer peace of mind as you are less stressed and better able to make payments, and can even prevent foreclosure and other problems. Good luck!

reference: wikipedia.org

Bad Credit Mortgage Loan - How to Get a Mortgage with Bad Credit

2009-07-21T20:10:00.005-04:00

If you have bad credit and think that getting a home mortgage loan is impossible, I have great news for you: getting a mortgage with bad credit can definitely be done!

Generally, credit scores below 600 are considered sub-prime and the lower your credit score, the harder it will be for you to secure a mortgage -- harder, but not impossible. A mortgage is a secured loan, meaning you must put up your house as collateral in case you default, or are unable to pay back the mortgage loan. Therefore, if you fail to pay off your loan or fall far enough behind on payments, your lender has the legal right to foreclose on your property. So as mentioned above, it may be more difficult -- but not impossible -- to get a mortgage if you have bad credit.

Statistically speaking, individuals with a lower credit score are more likely to default on their loans. To counter this risk, lenders will usually limit the amount of credit you may receive and charge you a higher interest rate. Lenders may also charge people with bad credit higher late payment fees. So what Can You Do?

If you have a bad credit score and want to get a home mortgage loan, here's what you can do:

Improve Your Credit Score Before Applying for a Loan

If you are patient and can wait to get your mortgage, you should consider trying to improve your credit score -- the higher your FICO score, the lower the interest rate you can get, and therefore your monthly loan payments will be less. You'll also pay a lot less over the life of your loan this way! You may want to consult a reputable credit counselor for help improving your credit score.

Ask for Someone with Good Credit to Co-Sign

Sometimes you can get a better interest rate if you have someone with a better credit score to co-sign on your loan. Your co-signer would also be responsible for repayment of the loan if you were to default for some reason. This could also prevent them from taking out loans in the future because the co-signed loan is considered as part of their debt ratio.

Have Someone Get the Mortgage for You

If your FICO credit score is so low that you can't get approved for a loan by anyone, try and see if you can convince someone close to you with good credit to get the mortgage for you in their name. The other person would have to be trustworthy and responsible, as this could hurt any relationship (romantic or not) if it were to somehow go wrong. If you have the right person in mind and they are willing to help, this can be a real blessing.

Sell Your Home and Pay Cash (or even Do a Short Sale)

You could sell your current home and use the proceeds to pay cash for your new home if it is less expensive. Another option is to come up with large downpayment from the sale of your home to help your chances of getting approved for a mortgage. This way, you can also work on rebuilding your credit by making on-time mortgage payments.

Getting approved for a home mortgage with a low credit score may not be as difficult as you think. You will probably spend more money on higher interest rates and you might have to settle for a smaller loan than someone with good credit could get, but the important part is that you have options and possibilities! Remember, it's never too late to start working on improving your FICO credit score. Good Luck!

Mortgage Videos -- Need Help with Your Mortgage?

2009-06-20T11:20:00.004-04:00

Here are some useful videos with great mortgage, refinancing, foreclosure and other tips and advice to help you with your home loan. If you have questions regarding your mortgage, if you are worried about making mortgage payments, unsure about refinancing, want a good mortgage tip, or are a first time home buyer looking for information on FHA or VA loans, these how to videos should be a great help to you!

Help with Mortgage Loan

Should I Refinance My Mortgage to Pay Off Credit Card Debt?

VA Loans vs. FHA Loans for First Time Home Buyers

Remember to make smart decisions with your money.. after all, it is yours and you can decide what to do with it. If you have bad credit but need a mortgage, there are options out there for a bad credit mortgage. We all wish we could get a free mortgage, or at least a cheap mortgage, but you do get what you pay for. The thing is, you can get quality without wasting extra money -- the key is to know all the tips and tricks. Keep visiting Get a Grip! Mortgage and Refinancing Tips for more great home loan and finance advice!

Mortgage Calculator :: Calculate Mortgage Payments

2009-06-16T19:30:00.010-04:00

Mortgage Calculator - Calculate your monthly mortgage payments

Here is a handy mortgage calculator (from bankrate.com) that will help you figure out your monthly payments according to the cost of your home and the terms of the home loan, such as length in years and interest rate.

Mortgage Calculator

I hope this helps you get the home you want, at the right price! Interest rates are still low and no one knows how long they might stay that way. It's a great time to buy or refinance!

Reverse Mortgages : What Is a Reverse Mortgage?

2009-06-15T23:07:00.007-04:00

A reverse mortgage is a loan available to seniors, and is used to release the home equity in the property as one lump sum or multiple payments. The homeowner's obligation to repay the loan is deferred until the owner dies, the home is sold, or the owner leaves (e.g., into aged care).

In a conventional mortgage the homeowner makes a monthly amortized payment to the lender; after each payment the equity increases within his or her property, and typically after the end of the term (e.g., 30 years) the mortgage has been paid in full and the property is released from the lender. In a reverse mortgage, the home owner makes no payments and all interest is added to the lien on the property. If the owner receives monthly payments, or a bulk payment of the available equity percentage for their age, then the debt on the property increases each month.

If a property has increased in value after a reverse mortgage is taken out, it is possible to acquire a second (or third) reverse mortgage over the increased equity in the home. But in certain countries (including the United States), a reverse mortgage must be the only mortgage on the property.

Reverse mortgage basics

Requirements

To qualify for a reverse mortgage in the United States, the borrower must be at least 62 years of age. There are no minimum income or credit requirements, but there are other requirements and homeowners should make sure that they qualify for the loan before they invest significant time or money into the process. For most reverse mortgages, the money can be used for any purpose; however, the borrower must pay off any existing mortgage(s) with the proceeds from the reverse mortgage and, if needed, additional personal funds. A pending bankruptcy which has not been finalized may, however, slow the process.

Some types of dwellings do not qualify, while others (like mobile homes) have special requirements (such as being on an approved permanent foundation and built after 1976) in order to be approved. Before borrowing, applicants must seek third party financial counseling from a source which is approved by the Department of Housing and Urban Development (HUD). The counseling is a safeguard for the borrower and his/her family, to make sure the borrower completely understands what a reverse mortgage is and how one is obtained.

Reverse mortgage proceeds

The amount of money available to the consumer is determined by five primary factors:

* The appraised value of the property, whether any health or safety repairs need to be made to the house, and whether there are any existing liens on the house.

* The interest rate, as determined by the U.S. Treasury 1 year T-Bill, the LIBOR index or 1 Year CMT.

* The age of the senior (The older the senior is, the more money he/she will receive).

* Whether the payment is taken as line of credit, lump sum, or monthly payments. Line of credit will maximize the money available, while lump sum provides the cash immediately, but the interest fees are the highest. Monthly payments are set up as a "Tenure" payment. Borrowers receive them for the rest of their lives no matter how long they live.

* The value of the property, and whether that value is higher than the national loan limit set by HUD.

All these factors contribute to the Total Annual Lending Cost (TALC) as defined by the US Federal Government Regulation Z, the single rate which includes all the loan costs. The specific formulas to calculate the impact of the factors listed above can be found in Appendix 22 of the HUD Handbook 4235.1.

There are reverse mortgages for homes valued over the maximum limit. These are called "Jumbo" reverse mortgages, and are generally offered as proprietary reverse mortgages. For homeowners of higher-valued homes, a Jumbo loan can provide a larger loan amount. However, these loans are currently uninsured by the FHA and their fees are often higher.

The money received (loan advances) from a reverse mortgage is not taxable and does not directly affect Social Security or Medicare benefits. However, an American Bar Association guide to reverse mortgages explains that if borrowers receive Medicaid, SSI, or other public benefits, loan advances will be counted as "liquid assets" if the money is kept in an account (savings, checking, etc.) past the end of the calendar month in which it is received. The borrower could then lose eligibility for such public programs if his or her total liquid assets (cash, generally) is then greater than those programs allow.

It is important to note that the homeowner must ensure that taxes and insurance are kept current at all times. If either taxes or insurance lapse, it could result in a default on the reverse mortgage.

Once the reverse mortgage is established, there are no restrictions on how the funds are used. In addition to the tenure monthly payments, the borrower has the option of moving the entire amount of money into investments, or they can simply take the money and spend it as they wish.

Among the options of interest bearing instruments, the borrower can keep them with the lender and (These accounts grow by the same percentage as the interest rate of the loan), move the funds to a directed account with a financial specialist (This option is risky unless you direct the investment options of the financial specialist), or withdraw the funds and manage their investment themselves.[citation needed]

HECM for Purchase

The Housing and Economic Recovery Act of 2008 provided HECM mortgagors with the opportunity to purchase a new principal residence with HECM loan proceeds -- the so-called HECM for Purchase program, effective January 2009. The program was designed to allow seniors to purchase a new principal residence and obtain a reverse mortgage within a single transaction by eliminating the need for a second closing. The program was also designed to enable senior homeowners to relocate to other geographical areas to be closer to family members or downsize to homes that meet their physical needs, i.e., handrails, one level properties, ramps, wider doorways, etc.

Costs and interest rates on a reverse mortgage

The cost of getting a reverse mortgage from a private sector lender may exceed the costs of other types of mortgage or equity conversion loans. Exact costs depend on the particular reverse mortgage program the borrower acquires. For the most popular type of reverse mortgage in the U.S., the FHA-insured Home Equity Conversion Mortgage (HECM), there is an insurance premium of 2% of the loan and an origination fee in addition to normal closing costs, which are typically several thousand dollars, but vary depending on the third-party costs (appraisal fees, title searches, etc.) which must be undertaken. The origination fee is capped by the FHA. The cap is 2% of the first $200,000 and 1% thereafter, with an overall cap of $6000. Thus a $200,000 loan would have approxiamately $8,000 in costs beyond the normal closing costs added onto the loan at the outset. Other programs skip the insurance premium but still require the origination fees and closing costs. In addition, a monthly service charge (between $25 and $35) is usually added to the total amount of the loan.

In all of these cases, the costs of a reverse mortgage can typically be financed with the proceeds of the loan itself, with the costs and fees being rolled directly into the principal balance of the loan, rather than paid by the borrower in cash. While this does permit borrowers with little or no available cash to get a reverse mortgage, it means that the initial loan principal will be increased, and consequently, that the fees will begin accruing interest. Since there are no payments made during the course of the loan, the compound interest accrued on the principal plus fees are added to the principal of the loan.

Interest rates on reverse mortgages are determined on a program-by-program basis, because the loans are secured by the home itself, and backed by HUD, the interest rate should always be below any other available interest rate in the standard mortgage marketplace for an FHA reverse mortgage. Prior to 2007, all major reverse mortgage programs had adjustable interest rates. Such adjustable rate reverse mortgages are still being offered which are adjusted on a monthly, semi-annual, or annual rate up to a maximum rate.

Several lenders now offer FHA HECM reverse mortgages that have fixed interest rates. Some of these mortgages have interest rates that are similar to the current FHA/VA rate plus the mandatory mortgage insurance premium. Some fixed rate reverse mortgages limit the cash proceeds to half of that offered by adjustable rate reverse mortgages. The borrower(s) will be required to take out the entire amount offered at closing.

Some state and local governments offer low-cost reverse mortgages to seniors. These "public sector" loans generally must be used for specific purposes, such as paying for home repairs or property taxes[3], but most of them often have more favorable interest rates and fewer or no fees associated with them. These programs are typically very restrictive in terms of qualification and location, and many regions, states, and areas do not have such programs at all.

HUD counseling

To apply for an FHA/HUD reverse mortgage, a borrower is required to complete a 45-minute counseling session with a HUD-approved counselor. The counselor will explain the legal and financial obligations of a reverse mortgage. After the counseling session, the borrower receives a "certificate of counseling" that is required before the loan application can be processed.

Taxes related to reverse mortgages

The American Bar Association guide advises that generally:

* the Internal Revenue Service does not consider loan advances to be income,

* annuity advances may be partially taxable, and

* interest charged is not deductible until it is actually paid, that is, at the end of the loan.

* The mortgage insurance premium is deductible on the 1040 long form.

When does a reverse mortgage end?

A reverse mortgage ends when the homeowner dies, sells the house, or, depending on the loan conditions, moves out of the house for 12 consecutive months (for example, to go into an assisted living home or due to physical or mental illness the borrower is not able to live in the property on which the loan has been taken). At that point, the reverse mortgage can be paid off with the proceeds of the sale of the house, or if the borrower has died, the property can be refinanced by the heirs of the homeowner's estate with a regular mortgage. If the proceeds exceed the loan amount including compounded interest and fees, the owner of the house receives the difference. If the owner has died, the heirs receive the difference. For cases where the proceeds are not sufficient to pay off the loan, then the bank (or insurance which the bank has on the loan) absorbs the difference.

The technical term for this cap on debt is "non-recourse limit." It means that the lender does not have legal recourse to anything other than the value of the home when the loan is to be paid off.

In most cases when the borrower moves out of the property or dies, as long as the borrower (or his estate) provides proof to the lender that he/she is attempting to sell the home or obtain financing to pay off the outstanding debt, the investor will allow him up to one year to do so. After the one year extension period is up, the lender cannot provide any further extension of time to the borrower (or estate).

Volume of loans

Home Equity Conversion Mortgages account for 90% of all reverse mortgages originated in the U.S. As of February 2007 the federal cap of 275,000 HECM loan guarantees had been issued since the program's inception in 1989. Legislators subsequently suspended the cap until September 1, 2007 allowing additional HECM loan guarantees to take place.

Program growth in recent years has been very rapid. The National Reverse Mortgage Lenders Association (NRMLA)[7] reports that 55,659 HECM loans were endorsed through the first nine months of fiscal year 2006, an 83% increase over the 30,404 loans endorsed during the same period in the prior fiscal year.

Section 255 of the National Housing Act, which governs the HECM program, limits the aggregate number of outstanding HECMs to 250,000. The cap could possibly be reached in 2007 or 2008, and efforts are currently underway to remove or increase the limit.

Other reverse mortgage options

A significant drawback to reverse mortgages are the high upfront costs. This upfront cost is tempered by the lower interest rate over time, but some seniors choose other options to draw on their home equity, particularly if they don't plan to remain at the property more than five years.

Other options which can free up home equity but avoid the high upfront costs of a reverse mortgage include: 1) intra-family loan or sale-leaseback and, 2) selling and moving to a less expensive dwelling or location. However, when selling the homeowner incurs high closing costs including, typically, a 6% commission, moving costs, and purchase costs on the new dwelling. Currently, there is a coordinated government program called "Aging in Place" intended to assist homeowners wishing to remain in their home and/or neighborhood. Studies conducted by various agencies, including AARP, show that over 80% of elderly homeowners do not want to move.[citation needed]

No cost and low cost reverse mortgages are available for those homeowners who anticipate moving from the home in the near future. These 'no cost' mortgages do carry higher interest rates than the standard monthly FHA HECM (reverse mortgage). For example, they may select a home equity line of credit (HELOC), requiring interest-only payments for 10 years. These loans typically have very low (or zero) upfront costs. HELOC interest rates are usually based on the prime lending rate and are therefore often higher than the FHA monthly HECM, which is based on the one-year constant maturity U.S. Treasury rate.

Demand for reverse mortgages

As recently as December 2007 the Senate Committee on Aging spent time discussing the aggressive marketing and sales techniques used by mortgage institutions to attract senior homeowners into purchasing reverse mortgages. As larger populations of seniors are turning 63 every year, the demand for reverse mortgage loans is on the rise. There was a 56% increase in these types of loan in 2006 from the prior year. The Federal government in December 2007 removed the restrictions on the number of outstanding reverse mortgage loans they would underwrite at any given time. Prior to the new legislation, the original limit was 275,000.

reference: www.wikipedia.org

Mortgage Refinancing Basics :: How to Refinance

2009-06-04T20:11:00.009-04:00

This is an introduction to refinancing a home. If you are thinking about refinancing your home, read this primer and you will hopefully gain a better understanding of how it all works. Once you know the basics (and not-so-basics), you'll be better equipped to save money on your house!

Refinancing is the replacement of an existing debt obligation with a debt obligation under new terms, usually for the purpose of saving money. The most common consumer refinancing is for a home mortgage. Most homeowners refinance their homes to take advantage of a lower interest rate than was available when they originally bought a house.

Refinancing Advantages

Refinancing may be done to reduce interest rate/interest costs (by refinancing at a lower rate), to extend the repayment time, to pay off other debt(s), to reduce one's periodic payment obligations (sometimes by taking a longer-term loan), to reduce or alter risk (such as by refinancing from a variable-rate to a fixed-rate loan), and/or to raise cash for investment, consumption, or the payment of a dividend.

Essentially, refinancing can alter the monthly payments owed on the loan either by changing the loan's interest rate, or by altering the term to maturity of the loan. More favorable lending conditions may reduce overall borrowing costs. Refinancing is used in most cases to improve overall cash flow.

Another purpose of refinancing is to reduce the risk associated with an existing loan. Interest rates on adjustable-rate loans and mortgages shift up and down based on the movements of the various indices used to calculate them. By refinancing an adjustable-rate mortgage into a fixed-rate one, the risk of interest rates increasing dramatically is removed, thus ensuring a steady interest rate over time. This flexibility comes at a price as lenders typically charge a risk premium for fixed rate loans.

In the context of personal (as opposed to corporate) finance, refinancing a loan or a series of debts can assist in paying off high-interest debt such as credit card debt, with lower-interest debt such as that of a fixed-rate home mortgage. This can allow a lender to reduce borrowing costs by more closely aligning the cost of borrowing with the general creditworthiness and collateral security available from the borrower. For home mortgages, in the United States, there may be certain tax advantages available with refinancing, particularly if one does not pay Alternative Minimum Tax.

Refinancing Risks

Always read your paperwork carefully, especially when entering a commitment which obligates you to repay a large sum of money (such as a home loan!).

Most fixed-term debt contains penalty clauses (known as "call provisions") that are triggered by an early payment of the loan, either in its entirety or a specified portion. In addition, there are also closing and transaction fees typically associated with refinancing debt. In some cases, these fees may outweigh any savings generated through refinancing the loan itself. Typically, one only rationally considers refinancing if the potential for a substantial cost savings exists, or if there is a need to extend the loan due to weak cash flow or other non-recurring commitments.

In addition, some refinanced loans, while having lower initial payments, may result in larger total interest costs over the life of the loan, or expose the borrower to greater risks than the existing loan, depending on the type of loan used to refinance the existing debt. Calculating the up-front, ongoing, and potentially variable costs of refinancing is an important part of the decision on whether or not to refinance.

"Points"

Refinancing lenders often require an upfront payment of a certain percentage of the total loan amount as part of the process of refinancing debt. Typically, this amount is expressed in "points" (also sometimes called "premiums"), with each "point" being equivalent to 1% of the total loan amount. Therefore, if the refinance option selected involves paying three points, then the borrower will need to pay 3% of the total loan amount upfront. Most refinancing lenders offer a variety of combinations of points and interest rates. Paying more points typically allows one to get a lower interest rate than one would be capable of getting if one paid fewer or no points. Alternately, some lenders will offer to finance parts of the loan themselves, thus generating so-called "negative points" (also called discounts).

The decision of whether or not to pay points, and how many points to pay, should be taken in consideration of the fact that with points, one tends to trade a higher upfront cost in exchange for a lower monthly premium later on. Points can be paid out of the cash saved by refinancing the loan in the first place.

Different Types of Refinancing

No Closing Cost

Borrowers with this type of refinancing typically pay few upfront fees to get the new mortgage loan. In fact, as long as the prevailing market rate is lower than your existing rate by 1.5 percentage point or more, it is financially beneficial to refinance because there is little or no cost in doing so.

However, what most lenders fail to disclose is that the money you save upfront is being collected on the back through what's called yield spread premium YSP). Yield spread premiums are the cash that a mortgage company receives for steering a borrower into a home loan with a higher interest rate. The latter will even eventually lead to borrower's overpaying.

Cash-Out

This type of refinance may not help lower the monthly payment or shorten mortgage periods. It can be used for home improvement, credit card and other debt consolidation if the borrower qualifies with their current home equity; they can refinance with a loan amount larger than their current mortgage and keep the cash difference.

Good Luck!

Remember to find a good lender whom you trust, and always read that paperwork! Don't sign without reading it. I wish you all the best in saving money on your home.

Reference: http://www.wikipedia.org

Short Sale : How to Sell a House Short

2009-04-16T21:53:00.013-04:00

What is a short sale?

In the real estate world, a short sale is a transaction in which you sell your home for a lower price than what you owe on your mortgage. "Why would I do that?" you might be thinking. When you sell short, the difference between what you owe and the sale price is usually forgiven by your bank or other lending institution. It is a great way to avoid foreclosure when you just can't seem to make the payments any more.

A short sale is usually allowed based on certain economic conditions (an example would be right now!) and the homeowner's financial situation. It offers both the homeowner and the lending institution to mitigate the losses they would incur in the event of a foreclosure.

Remember that a lender or mortgage company will only approve a short sale if they will lose less money on it than on a foreclosure. With so many people going into foreclosure due to the economy and poor lending practices these days, selling short is quite a popular move.

Benefits of Selling Short

Selling short can greatly reduce the negative effect that a foreclosure would have on your credit score. It is also faster, cheaper and easier than a foreclosure (not to mention less embarrassing and stressful!).

If you are struggling to make your loan payments, you might consider selling short on your home. It is of great advantage over allowing your property to go into foreclosure for the aforementioned reasons, and believe it or not, if more people sold short rather than the alternative, it could help improve the economy!

If your home is worth less than you owe on it, take a little time and see whether a short sale can get you out of trouble. After doing some research (great job on that step already!), talk with your lender to discuss your options; they are sure to appreciate your up-front approach and are more likely to work with you than if you just gave up and let your payments slip.

Facts:

It takes five years after a foreclosure to quality for an FHA-backed loan. It takes seven years after a bankruptcy! But in only two years after selling short, you can already qualify for an FHA loan. Are you starting to see all the advantages?

Banks and mortgage companies are approving short sales now more readily than before, when the market was stronger. Thus, there is more competition, and you need to have your ducks in a row in order to improve your chances of everything going smoothly and saving yourself a lot of money, time and frustration.

Here are the basic steps to selling short on your home:

1. Contact your bank or mortgage company, inform them of your situation and ask if they will consider allowing a short sale on your home.

2. Hire a reputable real estate agent who has experience with short sales.

3. Find out what your home is worth on the market and price it fairly.

4. Put your home for sale on the market.

5. Prepare your short sale documents to give to your lender.

6. Choose a buyer with good credentials.

7. Submit the deal to your lender for approval and be optimistic!

Remember, it's always better to be proactive and positive than to let things slip and get into financial trouble. I wish you the best of luck!

Mortgage Loan :: How to Mortgage Your Home

2009-03-29T13:25:00.003-04:00

Types of Mortgages and Which Mortgage Loan is the Best for You

Just wanted to quickly discuss the advantages (in stability and overall cost) of a 30-year fixed rate mortgage over an adjustable rate mortgage (aka ARM).

Adjustable Rate

With an ARM, you may get a very low interest rate to begin with, but once it resets and that rate adjusts, you might be looking at payments that you couldn't afford even if you stopped buying anything else for the month to cover it! Many folks are in foreclosure now for this very reason.

Fixed Rate

30-year fixed rate mortgages are more stable and predictable, and today you can get such a great deal due to low interest rates that I can't think of a reason NOT to go with one!

What to Watch Out For

Anything with a "balloon payment"
Fixed for only a certain length of time
Interest-only mortgages
Loan officers who don't want you to read the paperwork
Pushy mortgage companies

Very Important

A home loan is something you will be obligated to pay for decades. Be SURE to read every word of the paperwork you receive, and make copies of it as backup. If you have or can afford to have a lawyer, ask him or her to read over all paperwork to make sure it's fair and legit before you sign. The legal cost and extra time will be well worth it. If your mortgage company has a problem with this, you might want to consider a different shop.

So remember that YOU are the customer and the mortgage company is working FOR YOU. Keep your options open and be conscientious -- there are many great deals out there, especially right now -- and you will find the way to your new home.

Feel free to share/link to this page if you think it will help someone else!

How to Get an FHA Loan :: HUD Mortgages

2009-03-28T11:37:00.002-04:00

From the US Department of Housing and Urban Development -- http://www.hud.gov

FHA loans have been helping people become homeowners since 1934. How do they do it? The Federal Housing Administration (FHA) – which is part of HUD – insures the loan, so your lender can offer you a better deal.

Low down payments

Low closing costs

Easy credit qualifying

What does FHA have for you?

Buying Your First Home?
FHA might be just what you need. Your down payment can be as low as 3.5% of the purchase price, and most of your closing costs and fees can be included in the loan. Available on 1-4 unit properties.

Want a fixer-upper?
FHA has a loan that allows you to buy a home, fix it up, and include all the costs in one loan. Or, if you own a home that you want to re-model or repair, you can refinance what you owe and add the cost of repairs - all in one loan.

Financial help for seniors
Are you 62 or older? Do you live in your home? Do you own it outright or have a low loan balance? If you can answer "yes" to all of these questions, then the FHA Reverse Mortgage might be right for you. It lets you convert a portion of your equity into cash.

Want to make your home more energy efficient?
You can include the costs of energy improvements into an FHA Energy-Efficient Mortgage.

How about manufactured housing and mobile homes?
Yes, FHA has financing for mobile homes and factory-built housing. We have two loan products – one for those who own the land that the home is on and another for mobile homes that are - or will be - located in mobile home parks.

The poster of this blog has no affiliation with HUD or any mortgage company. Posted strictly as a public service.

Home Mortgage Loan : Get the Best Mortgage for You

2009-03-28T11:08:00.003-04:00

Here are a few quick and simple guidelines you may want to follow in looking for the right mortgage (or if you're ready to take advantage of low interest rates and refinance!):

Know What You Can Afford

The first and most vital step in taking the plunge into a home mortgage is knowing how much you can afford (realistically). Why commit to decades of monthly payments if you know deep down that you might find yourself struggling to make them? If you want a more expensive home and plan on calling it your own it some day, you can always put your current home on the market and upgrade when you're able!

Shop Around for the Best Deal

Even if the first mortgage company you consider is offering a great deal, there may be a better one out there waiting for you. Always shop around and find the right one, rather than the quickest one. This is a commitment that will likely last the better part of your life and you have to think about the long run.

Trust Your Gut Instinct

So you've done your homework, know what you can afford and looked around for the best deal. Now what? Well, it's not all about money. Consult your gut instinct and think about the first impression you got from each candidate. The one that seems the most honest and easy to work with may well be your best choice. If you are being pressured into a deal and you don't feel comfortable, take a step back, take a deep breath, and take some time to yourself to think about it. You'll be glad you did!

The above tips are meant to help prospective or current homeowners make wise decisions for themselves. Follow or ignore at your own risk :)