Mortgage Guide

MLS Reverse Mortgage asked:


Foreclosure filings were reported on 2.3 million U.S. properties in 2008, an increase of 81 percent from 2007 and up 225 percent from 2006, according to the RealtyTrac U.S. Foreclosure Market Report released January 15, 2009. The soaring number of forclosures have sent ripples through the housing and banking industry with the affects being felt by millions.

According to RealtyTrac, California, Florida, Arizona posted the highest 2008 foreclosure totals. A total of 523,624 California properties received a foreclosure filing in 2008, the nation’s highest state total. Foreclosure activity in the state increased nearly 110 percent from 2007 and nearly 498 percent from 2006. With 385,309 properties receiving a foreclosure filing in 2008, Florida documented the second highest state total. Florida foreclosure activity increased 133 percent from 2007 and nearly 412 percent from 2006. Arizona’s 2008 total of 116,911 properties receiving a foreclosure filing was third highest among the states. Foreclosure activity in Arizona increased 203 percent from 2007 and 655 percent from 2006. Other states with Top 10 totals for 2008 were Ohio, Michigan, Illinois, Texas, Georgia, Nevada and New Jersey.

With mounting job losses and a weakening economy, forclosures and mortgage delinquencies are expected to continue to rise. The nation’s unemployment rate shot up at the end of the year, reaching 7.2 percent in December — its highest level since early 1993, according to a Labor Department report release January 9, 2009. That puts U.S. job losses at 2.6 million for 2008.

However, with all this doom and gloom in the housing market, there is a glimmer of hope for senior homeowners 62 years of age and older. That hope comes in the form of a HUD Home Equity Conversion Mortgage (HECM) or Reverse Mortgage. Those who have obtained a reverse mortgage need not be concerned with the increasing forclosure rates and whether or not they can make their mortgage payments. With a HECM reverse mortgage, there are no monthly payments required. 

Borrowers remain in their homes for life and never have to worry about making a mortgage payment again. All they need to do is keep the property in good repair, pay their property taxes and keep their homeowners insurance current and paid. 

For seniors who currently do not have a reverse mortgage, now may be the time to explore the option. It does not matter if a senior is currently late on their mortgage. They may still qualify for a reverse mortgage. To qualify all borrowers on title must be 62 years or older, occupy the property as their primary residence and not currently be in a bankruptcy. That’s it! 

MLS Reverse Mortgage has helped save several seniors who were months away from losing their homes. 

So, in these tough economic times, there is still hope for seniors looking for mortgage payment relief or cash out to enjoy life’s pleasures.

Learn more online: http://www.mlsreversemortgage.com



Jill

Bruce Owens asked:


Understanding what mortgages are and how they work can be mystifying for first-time homebuyers faced with the need to get financing to purchase their first home. Technically, the type of mortgage that home buyers use to get a loan to purchase a home is a contractual instrument that gives the lender, known as the “mortgagee”, an interest and certain rights in the property purchased by the borrower, or “mortgagor” (When it comes time for you to read and review the documents setting out your mortgage, the easy way to keep the terms straight is to remember that the “e” that ends “mortgagee” is the same “e” at the beginning of “lender”, while the “or” at the end of “mortgagor” is the same “or” at the beginning of “borrower”.)

Like many legal terms, such as lien or trespass, the word “mortgage” has its origins in the Law French that heralds back to the beginning of British (and American) common law. A “mortgage” - from the French “morte”, meaning death - was known as a “death pledge”. That is, when the debt was repaid the interest and rights of the mortgagee or lender in the borrower’s land or property expires, or dies. The mortgagor then has clear title without any rights, interests or “encumberances” remaining with the mortgagee.

Amortization, Interest Rate and Term

There are three main terms that will apply to all mortgages - the amortization period, the interest rate, and the term of the mortgage. The “amortization period” is the total amount of time (usually expressed in years) which it will take for the mortgagor to pay off his or her mortgage given the terms of the mortgage. The most typical amortization period when an individual is purchasing a home is 25 years, although longer amortization periods of up to 40 years have become more common and commercially available.

The “amortization period” is not to be confused with the “term” of a mortgage. Most usually a mortgage agreement will be for a specific number of years, but for less than the full amortization period. Formerly, the longest term available for mortgage financing was five years, However, some longer term mortgages of up to ten or even twenty-five years have now become available from some commercial lenders.

The difficulty with longer term mortgages, for both mortgagor and mortgagee (borrower and lender), is determining what is a fair and reasonable interest rate to be charged on the mortgage over the duration of such a long period of time. Interest rates fluctuate over time, and forecasting interest costs over an extended period is exceedingly difficult.

The interest rate is the percentage of interest that a lender will charge on an annual basis for the mortgage loan. On a $100,000 mortgage loan, a 5% interest rate would mean that the borrower is paying $5,000 per year in interest.

Mortgages payments are most often made in equal installments paid on a monthly basis over the term of the mortgage. Each monthly payment will go first towards paying the interest on the mortgage loan, and then towards paying off the principal, or outstanding balance, of the loan according to a fixed formula. As the principal of the loan is reduced, less money is owed in interest and consequently more of each payment goes towards paying off the interest.

Each mortgage payment is thus a blended payment, consisting of both an interest payment and a payment towards the mortgage principal. Because the principal amount (and thus the money owing under the mortgage) is reduced over time. the first payments during the term of the mortgage will go mostly towards paying interest, while a greater proportion of principal will be paid off in payments made at the end of the mortgage term.

Fixed-Rate and Variable-Rate Mortgages

Mortgages are also distinguished on the basis of how the interest rate is set. There are two main types of mortgages a fixed-rate mortgage and an open-rate or variable rate mortgage. Under a fixed-rate mortgage, the interest rate is specified for the entire term of the mortgage. Under an open-rate or variable mortgage, the interest rate will vary based on market conditions, usually specified in terms of the mortgagor bank or trust company’s prime lending rate.

Whether to choose a fixed-rate or variable rate mortgage is one of the biggest decisions facing the first-time homebuyer, and anyone seeking mortgage financing. If interest rates are relatively low historically speaking, the interest rates that fixed-rate mortgages are offered at will be higher than the rate offered for a variable rate mortgage. Here the bank or other lender assumes that rates are likely to go up, and charges a higher interest rate for a fixed-rate mortgage to assume that risk.

When interest rates are relatively high - say 9% to 10% - fixed-rate mortgages are typically offered at a lower rate than is being offered for variable rate mortgages. Here, the borrower is assuming the risk that interest rates will not go down from historically high levels. Consequently he or she can usually borrow money at a better fixed-rate than variable rate.

Open Mortgages versus Closed Mortgages

The other significant differentiation between mortgage types that will be of great interest to first time homebuyers is whether their mortgage is an open mortgage or a closed mortgage. An open mortgage can typically be paid off without penalty at any time durng the term of the mortgage without penalty. Under a closed mortgage, on the other hand, there will be a sometimes quite significant monetary penalty for paying off the mortgage before the term of the mortgage expires (although, a closed mortgage may allow for periodic lump sum payments that will go directly towards paying off the principal of the mortgage).

Open mortgages are most often preferable where the homebuyer wants to avoid being locked into his or her mortgage arrangements, thinks interest rates may decrease during the mortgage term or thinks he or she may be selling the mortgaged property before the expiration of the mortgage’s term. Closed mortgages are usually preferable where the homebuyer is operating on a tight budget and needs the security of knowing that mortgage payments will be unaffected by rising interest rates.

Refinancing

Following the expiration of the initial mortgage term, the remaining principal that is outstanding on the mortgage will have to be paid to the lender. This will usually entail refinancing a mortgage for a new term with the same or a different lender. Again, on refinancing the principle variables will be the amortization period, the interest rate and the term of the refinancing. The same considerations will also apply: fixed-rate versus variable rate, open mortgage versus closed mortgage.

Importantly, refinancing may also be available during the term of your mortgage. As your home’s principal is paid off your home equity - or the difference between what is owed on a home and its market value - increases. Mortgage refinancing is also generally available that will enable you to access that home equity through a second mortgage or line of credit secured against the equity in your home, even during the term of your first mortgage.

Your realtor, financial advisor or an independent mortgage broker should be able and willing to walk you through the different mortgages that are available to you, so that you can determine the mortgage product that is right for your circumstances - whether you are purchasing your first home or refinancing.



Jose

1st American Mortgage asked:


Dealing with Colorado Mortgage Programs

If you are already a homeowner or just someone who wants to own a home, you know there are many Denver mortgage choices available to you. But since people who are interested in buying a home are different, the top Colorado mortgage providers must be diligent about coming up with the right types of Denver mortgages for their customers. Colorado mortgage providers are looking for ways to meet the financial demands of their customers, who come from different financial backgrounds and have varied mortgage concerns.

The Colorado Mortgage That Fits

Denver mortgage lenders have different products to meet different needs, but all with the same goal of getting would-be home owners into a house and getting refinancing customers a deal that works for them. If you are a qualified Colorado borrower, then you will be able to tap into a broad range of home loan products which help you get into a home.

The scope of these products also comes with a downside. It makes it tough for the typical potential home owner to find out what Denver mortgage works best for them. In order to get the Colorado mortgage product that fits, you will need help from a professional who can examine the different programs, hold them up to your situation and find the right fit in terms of affordability and terms. This help will take your goals and needs into consideration.

Understanding Denver Mortgage Options

The best way to approach the Colorado mortgage search is as an educated customer. You want to know about the Denver mortgages you will be able to choose from in order to understand what will work best for you. By getting this information, you will also understand:

• Which loans you like

• Which loans to ask about during your meeting with a Colorado mortgage lender

• The varied mortgage terms you will be told about

• Which Denver mortgage programs lenders are looking at for you

Being educated about these programs will ease your search and perhaps you can find an overlooked program or one that will work the best for your specific needs. You can do this better when you understand what your choices really are.

Among the programs you will see when you meet with a Colorado mortgage provider include:

• Colorado Fixed Rate Mortgages. The interest rates of these are the same over the term of the loan.

• Colorado Adjustable Rate Mortgages, or ARM’s. The interest rates of this loan can change and are considered risky, but helpful to those people who may not otherwise get into a loan.

• Variable termed Denver mortgages, including 10, 15, and 30 years.

• Interest-only Colorado mortgages

• How the interest rates can change, depending on your program, your down payment and loan to value ratios.

• FHA mortgages and other special programs

There will be Denver mortgage options that are risky, but when they adjust to your specific needs, that risk, along with how much they cost, can change. If you have a home that you aren’t going to be in for long, then you can get a lower interest ARM which will work. But a fixed Denver mortgage with a moderate interest rate works better if you are looking to be in a home for a longer period.

If you think about it, the number of Colorado mortgage choices can be too much to understand. But on a positive note, the numbers of options available to home owners give many more people a chance to take part in home ownership. If you work with a skilled Denver mortgage lender, you can be on your way to ownership. Mortgage choices for Denver and Colorado are easier to understand if you have a professional working with you.



Joel