A Guide to Get a Home Loan Refinance
Jitesh Arora asked:
There are many advantages of a home loan refinance. Staying for a longer period of time, home owners have developed a bit of equity on their home. There can be other ways to get value appreciation for the property. Even the homeowners who have purchased a property in the area where the values have been increased to a considerable level, they could still have potential equity on their home and use it for home improvement, or use it for debt consolidation. Potential problems have to be identified earlier.
The borrower must have understood the nitty-gritty of the loans before hand. They should have a clear understanding on what to expect from the loans. A home loan refinance is no way different from getting the first mortgage loan. Borrowers will make sure that they get the loan amount for lower interests and the lenders will make sure that borrowers are credit worthy before approving the loan. An open conversation with the lender might be useful in exploring all the options. A suitable package that exactly suits the needs must be identified by both the parties.
Borrowers must explicitly express their concerns and purpose of the home loan refinance. Most of them use it to consolidate their debts. Lenders will perform a credit check on the borrowers and on the co-borrowers account history and this is a crucial part of approving the loan. They will also check for the credit history, number of delinquencies, the number of open accounts and the balances on those accounts. A general thumb rule for any lenders is that a prospective buyer should not have debt to income ration that is higher than 36%. They prefer that the total housing expenses not to exceed 28% of the total income. They inspect the salary accounts for this reason. The income to debt ratio level may increase if the buyer has got good credit history in the past.
Making a larger down payment will help you in getting the loan even with bad credit. Borrowers must understand their credit risks and potential future risks before applying the home loan refinance. There should be no discrepancies while submitting the application.
Jo
There are many advantages of a home loan refinance. Staying for a longer period of time, home owners have developed a bit of equity on their home. There can be other ways to get value appreciation for the property. Even the homeowners who have purchased a property in the area where the values have been increased to a considerable level, they could still have potential equity on their home and use it for home improvement, or use it for debt consolidation. Potential problems have to be identified earlier.
The borrower must have understood the nitty-gritty of the loans before hand. They should have a clear understanding on what to expect from the loans. A home loan refinance is no way different from getting the first mortgage loan. Borrowers will make sure that they get the loan amount for lower interests and the lenders will make sure that borrowers are credit worthy before approving the loan. An open conversation with the lender might be useful in exploring all the options. A suitable package that exactly suits the needs must be identified by both the parties.
Borrowers must explicitly express their concerns and purpose of the home loan refinance. Most of them use it to consolidate their debts. Lenders will perform a credit check on the borrowers and on the co-borrowers account history and this is a crucial part of approving the loan. They will also check for the credit history, number of delinquencies, the number of open accounts and the balances on those accounts. A general thumb rule for any lenders is that a prospective buyer should not have debt to income ration that is higher than 36%. They prefer that the total housing expenses not to exceed 28% of the total income. They inspect the salary accounts for this reason. The income to debt ratio level may increase if the buyer has got good credit history in the past.
Making a larger down payment will help you in getting the loan even with bad credit. Borrowers must understand their credit risks and potential future risks before applying the home loan refinance. There should be no discrepancies while submitting the application.
Jo
Is There a Home Loan Refinance Program That Lowers Your Principal Balance?
Charlie Kartchner asked:
They are hard to find but the answer is YES. There is a home loan refinance program that can dramatically reduce the amount a homeowner owes on the balance of their home loan(s) - as long as the homeowner meets a few criteria discussed at the end of this article. This is NOT a loan modification that simply offers a temporary reduction in the interest rate and monthly payment. Using a Note Repurchase Program or Loan Balance Reduction Program, homeowners who find themselves owing more than their home is worth can literally shave up to hundreds of thousands of dollars off their existing loan(s) balance which results in a small instant equity position and a large monthly savings from lower mortgage payments. As if this wasn’t enough good news, the homeowners credit score is NOT negatively affected by this program.
Here is how it works. The company that is handling the Loan Balance Reduction, usually a team of lawyers and real estate professionals, will group a portfolio of existing notes of their clients from a particular lender, Bank ABC, and present the bank with an all-cash, take it or leave it, offer to purchase the entire portfolio of notes at a significant discount to current market value. If accepted, and I’ll explain why the banks are often willing to do this, the investor then turns around and underwrites a loan back to the original homeowner at 95% of CURRENT APPRAISED value. The homeowner has now repurchased their home for under present market value, saving a bunch of money from a lower mortgage amount AND monthly payment!
Now why would any bank in their right mind take so much less than what is owed to them? The answer is simple. Liquidity. Banks today need cash to lend (this is their business) and are required to have certain cash reserve levels by The Federal Reserve to stay in business. Many major banks are struggling to get Uncle Sam out of their Board Rooms and rid themselves from the shackles known as TARP (Troubled Asset Relief Program). By removing a non-performing asset from their books it frees up cash that the bank can immediately turn around and use in their business activities. Rather than risk the increasing probability of having to foreclose and own these non-performing assets in a year or two, many banks are willing to take the immediate cash infusion.
Who qualifies for this program? In order to take advantage of this program a homeowner (including investment properties 1-4 units) must have a Loan-to-Value ratio of AT LEAST 125%. Meaning the total amount owed for all loans on the property must exceed the present value of the home by 25% or more. Secondly, the homeowner must have an income source and a debt-to-income ratio of 50% or less (based on the new lower mortgage payment!). The process takes approximately 2-3 months to complete and ALL credit quality qualifies, you can even be in the Notice of Default or Trustee Sale (except NV) phase and be able to take advantage of this program.
If you meet the criteria listed above and would like more information about a Loan Balance Reduction Program, please visit me online at http://www.lowermymortgagebalance.com
Raymond
They are hard to find but the answer is YES. There is a home loan refinance program that can dramatically reduce the amount a homeowner owes on the balance of their home loan(s) - as long as the homeowner meets a few criteria discussed at the end of this article. This is NOT a loan modification that simply offers a temporary reduction in the interest rate and monthly payment. Using a Note Repurchase Program or Loan Balance Reduction Program, homeowners who find themselves owing more than their home is worth can literally shave up to hundreds of thousands of dollars off their existing loan(s) balance which results in a small instant equity position and a large monthly savings from lower mortgage payments. As if this wasn’t enough good news, the homeowners credit score is NOT negatively affected by this program.
Here is how it works. The company that is handling the Loan Balance Reduction, usually a team of lawyers and real estate professionals, will group a portfolio of existing notes of their clients from a particular lender, Bank ABC, and present the bank with an all-cash, take it or leave it, offer to purchase the entire portfolio of notes at a significant discount to current market value. If accepted, and I’ll explain why the banks are often willing to do this, the investor then turns around and underwrites a loan back to the original homeowner at 95% of CURRENT APPRAISED value. The homeowner has now repurchased their home for under present market value, saving a bunch of money from a lower mortgage amount AND monthly payment!
Now why would any bank in their right mind take so much less than what is owed to them? The answer is simple. Liquidity. Banks today need cash to lend (this is their business) and are required to have certain cash reserve levels by The Federal Reserve to stay in business. Many major banks are struggling to get Uncle Sam out of their Board Rooms and rid themselves from the shackles known as TARP (Troubled Asset Relief Program). By removing a non-performing asset from their books it frees up cash that the bank can immediately turn around and use in their business activities. Rather than risk the increasing probability of having to foreclose and own these non-performing assets in a year or two, many banks are willing to take the immediate cash infusion.
Who qualifies for this program? In order to take advantage of this program a homeowner (including investment properties 1-4 units) must have a Loan-to-Value ratio of AT LEAST 125%. Meaning the total amount owed for all loans on the property must exceed the present value of the home by 25% or more. Secondly, the homeowner must have an income source and a debt-to-income ratio of 50% or less (based on the new lower mortgage payment!). The process takes approximately 2-3 months to complete and ALL credit quality qualifies, you can even be in the Notice of Default or Trustee Sale (except NV) phase and be able to take advantage of this program.
If you meet the criteria listed above and would like more information about a Loan Balance Reduction Program, please visit me online at http://www.lowermymortgagebalance.com
Raymond
Mortgage Refinance Options
Ashlee Pannell asked:
You don’t have to be looking for a house if you want to take advantage of the plenitude of government programs that are reducing mortgage payments for thousands of home owners - if you seek a condo, you may benefit as well. All varieties of housing units are being constructed in quantities at a level that hasn’t been seen since last summer; you may not get a better chance at the market than right now. The Dallas-Fort Worth area’s housing market has been surprisingly robust; not only was it relatively unaffected by the housing crash compared to more expensive areas such as Miami, but it was bolstered by the job growths in the energy sector. Even during the worst parts of the recession, prices remained fairly stable.
No matter what income bracket you reside in, it is recommended that you thoroughly investigate the many federal assistance initiatives for various tax credits and restructuring programs. But even if you do not qualify you may still benefit from a looser credit market if you purchase a home or condo in the next few months. This is because mortgage companies will be more willing to lend money if they are sure their investment will be returned.
However, this may only apply for a few months more. Mortgage companies like Freddie Mac are anticipating a rise in mortgage rates, as well as housing/condominium pricing, as the economy recovers. This is especially true in Dallas-Fort Worth: according to the federal price index for the year of 2009, Dallas was one of three Top 10 US metropolitan areas that saw increases in prices. This index tracks both new homes and the appreciation of old homes. In a longitudinal study over the past five years, Dallas-Fort Worth prices rose 12% overall and there may be more growth in the future.
Realtors and economists alike are anticipating greater levels of activity in the market this year. While last year saw lukewarm activity, the figures are less dismal than might first appear. Real estate agents have reported that while fewer people choose to follow up and post their homes and condos for sale, the level of initial activity is as high as it has ever been. This means that while market participants are still waiting for the market to stabilize, interest in buying and selling is still there. The same desires that drive the property market forward: desires for a different climate, a different job in a new location, or finding a family-friendly neighborhood for a growing number of kids-these desires are building up a kind of economic tension which will be released in a burst of market activity and increased prices once it becomes clear that the market will recover. Start looking for your new condo now, before the spike hits in force, and you could save yourself a lot of money down the line on your mortgage. The internet has many resources available to help you find the condo that fits your living needs and your budget.
Minnie
You don’t have to be looking for a house if you want to take advantage of the plenitude of government programs that are reducing mortgage payments for thousands of home owners - if you seek a condo, you may benefit as well. All varieties of housing units are being constructed in quantities at a level that hasn’t been seen since last summer; you may not get a better chance at the market than right now. The Dallas-Fort Worth area’s housing market has been surprisingly robust; not only was it relatively unaffected by the housing crash compared to more expensive areas such as Miami, but it was bolstered by the job growths in the energy sector. Even during the worst parts of the recession, prices remained fairly stable.
No matter what income bracket you reside in, it is recommended that you thoroughly investigate the many federal assistance initiatives for various tax credits and restructuring programs. But even if you do not qualify you may still benefit from a looser credit market if you purchase a home or condo in the next few months. This is because mortgage companies will be more willing to lend money if they are sure their investment will be returned.
However, this may only apply for a few months more. Mortgage companies like Freddie Mac are anticipating a rise in mortgage rates, as well as housing/condominium pricing, as the economy recovers. This is especially true in Dallas-Fort Worth: according to the federal price index for the year of 2009, Dallas was one of three Top 10 US metropolitan areas that saw increases in prices. This index tracks both new homes and the appreciation of old homes. In a longitudinal study over the past five years, Dallas-Fort Worth prices rose 12% overall and there may be more growth in the future.
Realtors and economists alike are anticipating greater levels of activity in the market this year. While last year saw lukewarm activity, the figures are less dismal than might first appear. Real estate agents have reported that while fewer people choose to follow up and post their homes and condos for sale, the level of initial activity is as high as it has ever been. This means that while market participants are still waiting for the market to stabilize, interest in buying and selling is still there. The same desires that drive the property market forward: desires for a different climate, a different job in a new location, or finding a family-friendly neighborhood for a growing number of kids-these desires are building up a kind of economic tension which will be released in a burst of market activity and increased prices once it becomes clear that the market will recover. Start looking for your new condo now, before the spike hits in force, and you could save yourself a lot of money down the line on your mortgage. The internet has many resources available to help you find the condo that fits your living needs and your budget.
Minnie
If I’m late on my mortgage can I still qualify for a remodification?
Sweet n Sour asked:
I’ve missed the past 2 payments and it’s getting harder to catch up. Would that disqualify me from getting a loan remoidification or refinance? I tried to get one before I was late but my lender was always giving me the runaround and now I don’t know what to do other than stop making payments permanently (mortgage is more than my home value anyways).
Pamela
I’ve missed the past 2 payments and it’s getting harder to catch up. Would that disqualify me from getting a loan remoidification or refinance? I tried to get one before I was late but my lender was always giving me the runaround and now I don’t know what to do other than stop making payments permanently (mortgage is more than my home value anyways).
Pamela
what is the catch? home loan question?
late but worth the wait asked:
I received a call today from a lender (referred to me by a friend months ago) she calls me to tell me they have a new program coming out in october that will allow you to refinance on what your house is worth and write off the balance. When I pushed for my answers, like what happens to the write off? and why would someone allow this? what is the catch she replied she would have more answer when the program starts october 1st. Has anyone heard of this? I told her that I assumed any write off would be something we would note on our taxes as income right? she again stated she would get us more information october 1st. this sounds too fishy…
Jerry
I received a call today from a lender (referred to me by a friend months ago) she calls me to tell me they have a new program coming out in october that will allow you to refinance on what your house is worth and write off the balance. When I pushed for my answers, like what happens to the write off? and why would someone allow this? what is the catch she replied she would have more answer when the program starts october 1st. Has anyone heard of this? I told her that I assumed any write off would be something we would note on our taxes as income right? she again stated she would get us more information october 1st. this sounds too fishy…
Jerry
Real Estate ?.how do I remove myself from joint home loan in uncontested divorce?
Chelle asked:
My situation is this. My husband and I are getting an uncontested divorce. We are ready to file and have a marital settlement. I decided to get a divorce 12/2/08 and moved out 2/7/09. When I moved out I was helping pay the bills for our joint residence until 6/09. When I moved into my own place at the end of June, 2009 my husband started paying the bills for our joint residence by himself. He has been having his dad paying the lender, Litton Loan, directly for the last seven months. My thought behind doing that was it might make his dad assuming my obligation on the loan easier. We tried to refinance the house into his name and his dad’s but we owe 270k on the loan and we are told it is only worth about 240k right now. I was thinking maybe a mortgage modification where we approach the lender and explain the situation and see if they will let his dad assume my portion of the loan. The lender isn’t going to lose out either way because he will pay the mortgage it will be me who ends up badly because my credit is tied up with this loan that is only five years old and is a 30 year loan. In the martial settlement we spelled out that he is keeping the house and that after the divorce is final I will be removing myself off title. I didn’t know if there was any special wording or information I should put in the marital settlement to help the case with the lender or if there was something else I could do. I would some input from anyone with experience in this area.
Ramon
My situation is this. My husband and I are getting an uncontested divorce. We are ready to file and have a marital settlement. I decided to get a divorce 12/2/08 and moved out 2/7/09. When I moved out I was helping pay the bills for our joint residence until 6/09. When I moved into my own place at the end of June, 2009 my husband started paying the bills for our joint residence by himself. He has been having his dad paying the lender, Litton Loan, directly for the last seven months. My thought behind doing that was it might make his dad assuming my obligation on the loan easier. We tried to refinance the house into his name and his dad’s but we owe 270k on the loan and we are told it is only worth about 240k right now. I was thinking maybe a mortgage modification where we approach the lender and explain the situation and see if they will let his dad assume my portion of the loan. The lender isn’t going to lose out either way because he will pay the mortgage it will be me who ends up badly because my credit is tied up with this loan that is only five years old and is a 30 year loan. In the martial settlement we spelled out that he is keeping the house and that after the divorce is final I will be removing myself off title. I didn’t know if there was any special wording or information I should put in the marital settlement to help the case with the lender or if there was something else I could do. I would some input from anyone with experience in this area.
Ramon
Difference Between A Home Equity Loan And Refinancing With A Cash Out
Scott Jangro asked:
Cash out refinancing and home equity financing can be used for utilizing your home’s equity to get tax-deductible borrowing power for large expenses such as college tuition or home improvements and is an option that many homeowners choose. There are some differences between a home equity loan and refinancing with cash out. Both cash out refinancing and home equity loans are tax deductible but the similarities end there.
With cash out refinancing:
You receive one loan and one loan payment. With home equity financing you have the choice between receiving one lump sum or a revolving line of credit. Your mortgage that is in place is refinanced for a higher overall amount using some of the equity that has been accumulated in your home. With home equity financing you will be able to borrow all or just a part of your home equity. This will be the difference between the mortgage balance you have and the estimated market value of your home. You have the ability to receive cash and spread the payments you make over a longer period of time. With home equity financing a home equity loan can give you the ability of having a shorter term to help to build your equity quicker because you can pay the loan off in a shorter period of time or reduced monthly payments by spreading the costs over a longer period of time. You can get lower interest rates than with home equity financing. With home equity financing you have the ability to borrow more money. With a line of credit the interest is only paid on the money that you actually use. You can have access to the money whenever you want it without having to reapply.
Make sure to shop around and compare each feature to see if a cash out refinance or home equity finance is right for your specific situation.
Jorge
Cash out refinancing and home equity financing can be used for utilizing your home’s equity to get tax-deductible borrowing power for large expenses such as college tuition or home improvements and is an option that many homeowners choose. There are some differences between a home equity loan and refinancing with cash out. Both cash out refinancing and home equity loans are tax deductible but the similarities end there.
With cash out refinancing:
You receive one loan and one loan payment. With home equity financing you have the choice between receiving one lump sum or a revolving line of credit. Your mortgage that is in place is refinanced for a higher overall amount using some of the equity that has been accumulated in your home. With home equity financing you will be able to borrow all or just a part of your home equity. This will be the difference between the mortgage balance you have and the estimated market value of your home. You have the ability to receive cash and spread the payments you make over a longer period of time. With home equity financing a home equity loan can give you the ability of having a shorter term to help to build your equity quicker because you can pay the loan off in a shorter period of time or reduced monthly payments by spreading the costs over a longer period of time. You can get lower interest rates than with home equity financing. With home equity financing you have the ability to borrow more money. With a line of credit the interest is only paid on the money that you actually use. You can have access to the money whenever you want it without having to reapply.
Make sure to shop around and compare each feature to see if a cash out refinance or home equity finance is right for your specific situation.
Jorge
Refinancing Your Home After Bankruptcy - Tips On Finding The Best Lender
Carrie Reeder asked:
While most financial guru’s recommend avoiding bankruptcy, some people discover that filing for chapter 7 or chapter 13 is their only alternative. Bankruptcy is extremely damaging to your credit. For the next seven to ten years, you can expect to receive ridiculously high interest rates on homes, cars, and personal loans. Fortunately, there are steps you can take to better your chances of getting a good rate. To begin, you must select the right lender.
Difference Between a Good Mortgage Lender and a Bad One
Mortgage companies are in the business of making money. Thus, they do not always have your best interest in mind. If you have poor credit or a recent bankruptcy, some lenders are reluctant to offer you a mortgage refinance. The lenders that do offer refinancing for poor credit applicants may add extra fees and a higher percentage. The goal is to boost their profit.
A good mortgage company will not take advantage of you. Instead, they will carefully review your situation, and offer the best rates possible. Of course, your refinance rates will be higher in comparison to an applicant with perfect or good credit. Still, a recent bankruptcy does not justify an interest rate that is 6 or 7 percent above the current rate.
Choosing a Lender to Refinance Your Mortgage Loan
When choosing a lender to refinance your home loan following a bankruptcy, you must be prepared to conduct your own research. Before applying for a refinancing, visit online websites and find information about the current mortgage rates being offered to individuals with bankruptcies or poor credit. This way, you can make your own comparisons.
Next, you should apply for a refinancing with your existing lender. If you have maintained a good payment history with this lender, they may be willing to refinance your mortgage with a low rate. You may select any mortgage lender. However, because you have not established a history with these lenders, they may consider you a risky applicant and refuse to offer you a new loan.
Getting Approved with Sub Prime Loan Lenders
If your existing mortgage lender and other traditional mortgage companies deny your application, you should submit an application through a mortgage loan broker. Brokers have access to many home loan financing companies. These include sub prime lenders who offer loans to people who cannot get approved through a bank or traditional mortgage company.
Evelyn
While most financial guru’s recommend avoiding bankruptcy, some people discover that filing for chapter 7 or chapter 13 is their only alternative. Bankruptcy is extremely damaging to your credit. For the next seven to ten years, you can expect to receive ridiculously high interest rates on homes, cars, and personal loans. Fortunately, there are steps you can take to better your chances of getting a good rate. To begin, you must select the right lender.
Difference Between a Good Mortgage Lender and a Bad One
Mortgage companies are in the business of making money. Thus, they do not always have your best interest in mind. If you have poor credit or a recent bankruptcy, some lenders are reluctant to offer you a mortgage refinance. The lenders that do offer refinancing for poor credit applicants may add extra fees and a higher percentage. The goal is to boost their profit.
A good mortgage company will not take advantage of you. Instead, they will carefully review your situation, and offer the best rates possible. Of course, your refinance rates will be higher in comparison to an applicant with perfect or good credit. Still, a recent bankruptcy does not justify an interest rate that is 6 or 7 percent above the current rate.
Choosing a Lender to Refinance Your Mortgage Loan
When choosing a lender to refinance your home loan following a bankruptcy, you must be prepared to conduct your own research. Before applying for a refinancing, visit online websites and find information about the current mortgage rates being offered to individuals with bankruptcies or poor credit. This way, you can make your own comparisons.
Next, you should apply for a refinancing with your existing lender. If you have maintained a good payment history with this lender, they may be willing to refinance your mortgage with a low rate. You may select any mortgage lender. However, because you have not established a history with these lenders, they may consider you a risky applicant and refuse to offer you a new loan.
Getting Approved with Sub Prime Loan Lenders
If your existing mortgage lender and other traditional mortgage companies deny your application, you should submit an application through a mortgage loan broker. Brokers have access to many home loan financing companies. These include sub prime lenders who offer loans to people who cannot get approved through a bank or traditional mortgage company.
Evelyn
Redlining Becoming a Topic of Concern in the Industry Once More
David Reinholtz asked:
The Community Reinvestment Act of 1977 forbade the practice of basing the cost or availability of banking services, including home mortgages or refinancing on ethnicity. However, a community group in California recently claimed that minorities in their state are now twice as likely to be denied a home loan application as their white counterparts. An interesting dilemma during this current housing and economic crisis and one that will certainly stretch far and wide throughout the country in the months and years to come.
While this community group is basing its findings on Home Mortgage Disclosure Act results for the calendar year 2008, there is some cause for concern in the housing market. The HMDA figures indicate a significant drop in prime lending during the fiscal years 2006 to 2008 and the California Reinvestment Coalition claims that redlining, the practice of basing decisions on race, is a prime factor in this drop.
First of all, to be fair, there is certainly a point to be made with regard to home loans being made strictly or even somewhat based upon ethnicity being both unethical and illegal and is a practice that the industry as a whole has worked hard over the past several decades to eliminate. The problem with this study, however, is its focus on HDMA figures, rather than on a broader range of economic principles and conditions that apply to any home loan application.
Maintaining integrity in the industry is one of the most crucial elements to long-term success and, on the heels of the current housing market crash, discipline and sound financial decisions are tantamount to longevity and overall health of the market. So how does this one report affect the mortgage industry as a whole?
It doesn’t, yet, but the markers have been lit and the light is being turned ever brighter on a mortgage industry that has been both ridiculed and maligned with the worst of the past few years’ of the nations economic and housing crises. Currently, loans are considered much more difficult to come by for millions of people, regardless of whether they are home loans, car loans, or simple credit cards. The basis for qualification stems now from a tighter consideration of credit score and history, work history, and an overall ability in the future for an applicant to keep up with the loan terms.
With the microscope potentially being turned up a few notches, or degrees, depending on the point of view, the question is how will this affect the mortgage industry in the near future? At this time it is difficult to predict but if past indicators are taken into account, mortgage lenders will find themselves pressed between the proverbial rock and a hard place. At present, the task of the mortgage industry is to free up credit and home loans for qualified individuals to purchase homes while at the same time attempting to refrain from approving loans to individuals who would not otherwise qualify.
If a minority population has lower income than a majority population and other factors in place categorize the minorities as higher risk and therefore their loan application is denied, will the mortgage lender be held accountable? More importantly, will he or she be forced into a situation to find a home loan, regardless of points, interest rate, or cost to classify that home loan as approved?
These are certainly questions that will be addressed in the coming months and years, but the precedent that this report sets is a dangerous one in an already trouble housing market. Claims of home loan applications being denied based on ethnicity require a foundation in facts that stretch beyond the numbers of approvals and into the factors for denial. Mortgage lenders must take heed and caution to review applications based solely on the numbers provided and not on ethnicity, lest the floodgates of legal action and ethics investigations open.
Shane
The Community Reinvestment Act of 1977 forbade the practice of basing the cost or availability of banking services, including home mortgages or refinancing on ethnicity. However, a community group in California recently claimed that minorities in their state are now twice as likely to be denied a home loan application as their white counterparts. An interesting dilemma during this current housing and economic crisis and one that will certainly stretch far and wide throughout the country in the months and years to come.
While this community group is basing its findings on Home Mortgage Disclosure Act results for the calendar year 2008, there is some cause for concern in the housing market. The HMDA figures indicate a significant drop in prime lending during the fiscal years 2006 to 2008 and the California Reinvestment Coalition claims that redlining, the practice of basing decisions on race, is a prime factor in this drop.
First of all, to be fair, there is certainly a point to be made with regard to home loans being made strictly or even somewhat based upon ethnicity being both unethical and illegal and is a practice that the industry as a whole has worked hard over the past several decades to eliminate. The problem with this study, however, is its focus on HDMA figures, rather than on a broader range of economic principles and conditions that apply to any home loan application.
Maintaining integrity in the industry is one of the most crucial elements to long-term success and, on the heels of the current housing market crash, discipline and sound financial decisions are tantamount to longevity and overall health of the market. So how does this one report affect the mortgage industry as a whole?
It doesn’t, yet, but the markers have been lit and the light is being turned ever brighter on a mortgage industry that has been both ridiculed and maligned with the worst of the past few years’ of the nations economic and housing crises. Currently, loans are considered much more difficult to come by for millions of people, regardless of whether they are home loans, car loans, or simple credit cards. The basis for qualification stems now from a tighter consideration of credit score and history, work history, and an overall ability in the future for an applicant to keep up with the loan terms.
With the microscope potentially being turned up a few notches, or degrees, depending on the point of view, the question is how will this affect the mortgage industry in the near future? At this time it is difficult to predict but if past indicators are taken into account, mortgage lenders will find themselves pressed between the proverbial rock and a hard place. At present, the task of the mortgage industry is to free up credit and home loans for qualified individuals to purchase homes while at the same time attempting to refrain from approving loans to individuals who would not otherwise qualify.
If a minority population has lower income than a majority population and other factors in place categorize the minorities as higher risk and therefore their loan application is denied, will the mortgage lender be held accountable? More importantly, will he or she be forced into a situation to find a home loan, regardless of points, interest rate, or cost to classify that home loan as approved?
These are certainly questions that will be addressed in the coming months and years, but the precedent that this report sets is a dangerous one in an already trouble housing market. Claims of home loan applications being denied based on ethnicity require a foundation in facts that stretch beyond the numbers of approvals and into the factors for denial. Mortgage lenders must take heed and caution to review applications based solely on the numbers provided and not on ethnicity, lest the floodgates of legal action and ethics investigations open.
Shane
Refinance Home Loan and Adjustable Rate Mortgage - What’s In It For You?
Rony Walker asked:
Your refinance home loan is a new loan using once again the subject property as collateral. But what if you have seen the possibility of relocating to another state because a child is going to college soon? What are your options?
Opting for an Adjustable Rate Mortgage
With the likely prospect of relocating in a few years, the option for an adjustable rate mortgage (ARM) for your refinance home loan is a smart one. For the last three or four years of your stay in your house, you will be paying low interest rates on your new loan before rates take an upward swing.
Commonly, people shy away from an ARM for their refinance home loan because of an unpredictable market. But here’s the advantages you’ll get from an ARM:
1. Low interest rates for the first few years.
2. Time to plan for the future.
3. More cash flow because of lower monthly payments.
4. When rates fall, you don’t need to refinance companies will ensure you get the low rates.
However, before you go for an ARM, you only have to answer one very important question: Can you afford to continue paying the loan in case the rates soar? If the answer is yes, then, by all means, go for it.
What You Need To Know
The interest rate for your refinance home loan on ARM changes over time. The first interest rate is set below the market standard comparable to a fixed rate loan. Unlike the fixed rate mortgage, the ARM rates rises and beyond three years or seven years depending on your loan contract, the rates exceed those of the fixed rate mortgage.
This is the reason why this is attractive for those who are planning to stay in the house for a few years. By the time the interest of your refinance home loan rises ,you can sell your home after working it out with your lender and checking your mortgage pay-off.
In selling your home, calculate your estimated expenses. Deduct the mortgage payoff from the fair market value of your home and subtract the charges to sell from the remaining balance to arrive at an estimate of proceeds due to you at the closing.
Here is the list of expenses to be incurred when you’re going to sell your home:
1. Commission of the real estate agency.
2. Advertising costs if you’re selling on your own.
3. Attorneys fees for the closing if you’re selling on your own.
4. Excise tax for the transaction.
5. Homeowner Association fees and property taxes and other fees.
6. Inspections and surveys.
When all is said and done, the amount paid to you at the closing should enable you to pay for a new home. If not, then you have to pursue a new loan. This is why you should get pre-approved for another loan before you sell your house. A ready house on the block makes it easier for you to calculate the amount of the new refinance home loan you will need.
Jill
Your refinance home loan is a new loan using once again the subject property as collateral. But what if you have seen the possibility of relocating to another state because a child is going to college soon? What are your options?
Opting for an Adjustable Rate Mortgage
With the likely prospect of relocating in a few years, the option for an adjustable rate mortgage (ARM) for your refinance home loan is a smart one. For the last three or four years of your stay in your house, you will be paying low interest rates on your new loan before rates take an upward swing.
Commonly, people shy away from an ARM for their refinance home loan because of an unpredictable market. But here’s the advantages you’ll get from an ARM:
1. Low interest rates for the first few years.
2. Time to plan for the future.
3. More cash flow because of lower monthly payments.
4. When rates fall, you don’t need to refinance companies will ensure you get the low rates.
However, before you go for an ARM, you only have to answer one very important question: Can you afford to continue paying the loan in case the rates soar? If the answer is yes, then, by all means, go for it.
What You Need To Know
The interest rate for your refinance home loan on ARM changes over time. The first interest rate is set below the market standard comparable to a fixed rate loan. Unlike the fixed rate mortgage, the ARM rates rises and beyond three years or seven years depending on your loan contract, the rates exceed those of the fixed rate mortgage.
This is the reason why this is attractive for those who are planning to stay in the house for a few years. By the time the interest of your refinance home loan rises ,you can sell your home after working it out with your lender and checking your mortgage pay-off.
In selling your home, calculate your estimated expenses. Deduct the mortgage payoff from the fair market value of your home and subtract the charges to sell from the remaining balance to arrive at an estimate of proceeds due to you at the closing.
Here is the list of expenses to be incurred when you’re going to sell your home:
1. Commission of the real estate agency.
2. Advertising costs if you’re selling on your own.
3. Attorneys fees for the closing if you’re selling on your own.
4. Excise tax for the transaction.
5. Homeowner Association fees and property taxes and other fees.
6. Inspections and surveys.
When all is said and done, the amount paid to you at the closing should enable you to pay for a new home. If not, then you have to pursue a new loan. This is why you should get pre-approved for another loan before you sell your house. A ready house on the block makes it easier for you to calculate the amount of the new refinance home loan you will need.
Jill