Hot Mortgage Deals

In a dour year for the economy, the housing market has offered some glimmers of hope. Home sales have improved, recently hitting their highest level in more than two years. There's been talk of bidding wars resuming in places like Silicon Valley and New York City. And cocktail party chatter everywhere has started to turn to talk of a bottom. So at least where housing's concerned, things are looking not so bad -- right?

Last Thursday the big news was Obama’s Loan Modification program, Making Home Affordable. The first target the program set out for itself, reaching 500,000 trial loan modifications by November was reached nearly a month early.

Critics stated that the target was of little importance in the big picture of things with foreclosures continuing to affect more and more homeowners. Mark Zandi, chief economist for Moody’s Economy.com said the help provided by HAMP was a help on the margin. “But it is not going to end the foreclosure crisis”.
So what should we think of Obama’s HAMP? Is it a success or failure story?

The Good.
Reaching the target was no mean feat. The first months were painfully slow in reaping loan modifications and many did not think even this first target would be met. The fact that it was is proof of Obama’s administration skill at cajoling and bullying banks and providers into meeting their expectations.

Whatever we think of the “Big Picture” 500,000 families have lower monthly mortgage payments, that has to be good news, right?
According to Timothy F. Geithner mortgage payments are now being lowered faster than homes are being sold in foreclosure proceedings and 40 percent of eligible homeowners (1.2 million of them) have been helped. Here the figures vary, other put this figure at 16% of eligible homeowners, but that just represents differences on the definition of what an eligible homeowner it.

The Bad.
Economists say the program and its current success will not be enough to prevent many millions from losing their homes before the Great Recession ends.
By Mr. Zandi’s calculations from this year to the next over 4 million households will go through foreclosure or short sales.

The 500,000 loan modifications are only trial loan modifications. If the homeowners fail to pay one of the first 3 months in the trial, the modification is void. Even if the homeowner completes the trial period they then have to supply more paperwork which opens the doors for loans not being modified due to bureaucratic slips.

We don’t know how many of the loan modifications actually modified the principal balance of the loan and how many simply lengthened the loan or reduced the interest rate to reduce mortgage payments. Reducing the principle is an important factor if you want to reduce the rates of re-default on mortgage payments.

The problem HAMP was designed to attack, subprime mortgages that cannot benefit from current low interest rates because the value of the home has dropped is no longer the main type of mortgage going through foreclosure. It is not only subprime mortgage that are suffering now. Prime mortgages with 30 year fixed interest at low interest rates are also defaulting because of the increase in unemployment. Loan modifications cannot help much on good mortgages with owners that cannot afford any payment because they are out of work.

So whatever your view is, this issue is still far from being solved and playing with loans is just not going to fix it. The question is do you try to use tax dollars to bail people out of the mess or just let the economy weed itself out of bad loans?

Related posts:

1. Loan Modification Success Report, The Truth Is Far Worse
2. U.S Loan Modifications Hit Obama’s target Early But Nobody’s Impressed
3. Loan Delinquencies Fall As Banks Get Serious With Loan Modifications

Related posts:

1. Loan Modification Success Report, The Truth Is Far Worse
2. U.S Loan Modifications Hit Obama’s target Early But Nobody’s Impressed
3. Loan Delinquencies Fall As Banks Get Serious With Loan Modifications

Loan Modifications are a very emotionally charged issue. If you are a homeowner in trouble and want information on your chances of getting a much needed loan modification it can be a nightmare to get the right information for your specific situation. You have probable heard about the many scam artists ready to take advantage of desperate homeowners that will do pretty much anything to save their home. This is why it is best to get expert advice from one of the many government appointed (FREE) institutions.

However it is a good idea to get a general idea of your situation in order to at least make the right questions.

Let’s present a hypothetical scenario:
You are the owner of a house worth $300,000 on which you owe $400,000 you also have debt racked up on a second home. Can you get a loan modification?
This scenario is rather common. In the past years many saw wisdom in investing in bricks and mortar and buying to rent. When they struggle to find someone interesting in renting they struggle to pay both mortgages, and that’s if they haven’t lost their job.
Unfortunately, even though the scenario is common it is not a good candidate for a loan modification. The reason for this is that homeowners with two homes are too financially committed to qualify. In order to qualify for a loan modification your mortgage payments must not be over 31% of your income. If your mortgage payments are over 31% you are considered a high risk homeowner that should never have spent such a high percentage of their income on a mortgage.

The best options in this case is to try to keep payments and keep your head above water (easier said than done)  and down size your mortgage payments as soon as possible in order to qualify for a loan modification.

The question is, if you are in that situation, can you carry on your primary home until the economy decides to come back?

That will depend a lot on how high your interest rates are and what type of interest (ARM or Fixed) you have. The good news is that interest rates are low right now so even the riskier ARM loans are not so bad, at least for now. The issues might come in 2011 when many experts are predicting interest rates are going to climb. For those that are already overburdened this could be what brakes the proverbial camel’s back.

The key is to plan for that very real possibility and downscale now you can plan for it. This might mean short selling your second home and putting your mortgage payments below 31% in order to qualify for a loan modification. However if it is a case of losing both homes or keeping one it is a bit of a no-brainer.

Whatever your circumstances your best option is to get help straight from the experts. The good news is that this information is free as the government is providing it as part of their loan modification program.

Related posts:

1. Loan Modifications, Story Of Struggle For Banks And Borrowers Alike
2. Loan Modifications and FHA Refinance What Is The Deal
3. Loan Modifications No Match For Rising US Foreclosures.

Related posts:

1. Loan Modifications, Story Of Struggle For Banks And Borrowers Alike
2. Loan Modifications and FHA Refinance What Is The Deal
3. Loan Modifications No Match For Rising US Foreclosures.

Many believe that the only way to get out of an economic crisis is to buy yourself out of it. To spend enough to jumpstart the economy again. Loan Modifications are one of the tools the Government are using to get homeowners out of the whole they dug for themselves before they bury the whole economy with them.
Such is the determination and commitment the government has to this project they have earmarked 75 billion dollars to stimulate loan modifications on qualifying mortgages. That is the Hope anyway. The Hope is that changing the mortgages, reducing monthly payments, extending tenures, providing bonuses to borrowers as well as lenders and dropping interest rates will buy America’s homeowners out of the credit crisis.
Sadly it could seem that Hope, empty hope is all there is to this program. One of the foundations of the program is the assumption that banks will make an effort to create loan modifications for homeowners that are at risk of losing their homes. This is done by providing incentives to banks and homeowners to agree to sustainable loan modification. However the problem is that banks only have to “put forth an effort” and provide basic statistics in order to receive the stimulus. They are obliged to provide statistics on how many homeowners they’ve contacted but in no way forced to approve any loan modifications or even stop foreclosures while a loan modification is arranged.
Even if a loan modification is approved there is no assurance that it will be beneficial or even worthwhile for the homeowners. The cost of getting the loan modification can be so expensive and the monthly payment reduction so low it is not worthwhile to go through. One borrower is reported to have spent nearly $10,000 for a loan modification that only reduced the monthly payment by $25. To add insult to injury this outrageous waste of money will probably end up being a statistic that is used to show how generous and helpful banks are being.
After all is said and done the loan modification program is progressing very slowly. The number of loan modifications is around 200,000 while 9 million home loans are at risk to foreclose by next year.
Because there is no requirement for banks to make a real effort on loan modifications that are not profitable for them, the question remains if it is reasonable for us to expect banks to invest in providing loan modifications that are going to cost them money, money they are not likely to see turn any profit.
A more creative approach is needed to find a real solution to the credit crisis. Loan modifications on their own do not seem to the answer. The Hope Mortgage Program is actually only geared for homeowners that can still deal with a mortgage at a reduced rate. Those worst off cannot expect any help from the government.

Related posts:

1. Loan Modifications, lies, scams and misinformation
2. Loan Modifications Only Hope For American Dream
3. Mortgage Modifications Drop But Mortgage Workouts Rise in HOPE

Related posts:

1. Loan Modifications, lies, scams and misinformation
2. Loan Modifications Only Hope For American Dream
3. Mortgage Modifications Drop But Mortgage Workouts Rise in HOPE

Debt is truly a four letter word for many of us. When we fall in the grips of uncontrolled debt it can suck the life and joy out of whole families and even communities. The problem is that it is so easy to fall into debt. Everyone wants to lend us money and there are so many great things to buy with it.

When all we hear on the TV and radio is about loan modifications, mortgage refinances debt relief. It pays to understand these and other terms and be able to make an educated decision.

A recent report on the Nicaraguan economy, the poorest Central American country after Haiti, showed that only 1% of the population really had the resources to afford having a credit card. It goes without saying that the actual percentage of the population that own a credit card is much higher, well into the 50%. The economist behind the report advised his Nicaraguan readers that could not afford to have a credit card to burn it. It will only bring you difficulties. This somewhat simplistic approach to debt relief, getting rid of your credit card, does have its strong points, in fact it might even make our top 3 debt relief measures.

So what debt relief steps can we make to improve debt management?
The first step is to analyze your situation. You need to spend some time and effort working out exactly where you are financially. How much money you owe, to whom, how many expenses (including debts) do you have every month and what your monthly income is. You then need to work out how much you can afford to pay toward expenses every month. In your analysis you need to include interest rates, debt tenures (when the loan ends) and prepayment fees.

One you have all this information you can compare your current interest rate with what the going market rate is. If your pre-payment fees are not too high you could look into modifying your loan or mortgage.

Loan Modification is a very popular debt relief measure at the moment. Such is that case that the government has earmarked 75 billion (yep, that is a “b”) dollars towards helping desperate homeowners to get a loan modification.

Loan modifications can help homeowners to reduce their monthly interest payment, which can reduce their monthly mortgage payments. Loan modifications can also save you money on your principal (the cash you actually borrowed, taking away interest) if you take advantage of the bonuses the government programs provide on borrowers that pay on time. However loan modifications are far from a panacea, there are a lot of things you can get wrong so it is worth consulting with a government agency for unbiased information.

Debt Consolidation or the purchase of a super loan that pays off smaller loans with higher interests is also a popular choice. One must also be careful with this type of debt relief because it can be very expensive. Debt consolidation interest rates although lower than that of credit cards and car loans are still higher than the interest rates of mortgages and similar large loans. They also have the disadvantage of securing your loan with your home. You will not lose your home if you fail to pay your credit cards but if you secure a debt consolidation loan with your home to pay your credit card debts, you could.

Related posts:

1. Debt Relief DIY: 3 smart things you can do yourself
2. So What Is A Debt Consolidation And Is It A Good Idea For You?
3. New Credit Card Rules Spells Good News For Debt Relief

Related posts:

1. Debt Relief DIY: 3 smart things you can do yourself
2. So What Is A Debt Consolidation And Is It A Good Idea For You?
3. New Credit Card Rules Spells Good News For Debt Relief

The Mortgage crisis is hitting families hard all over the country with the devastating effects of a hurricane, destroying homes, affecting household economies and causing general havoc nationwide. As with all natural and human disasters everybody has a view of how to solve the situation. Some say the current crisis is nothing special, a normal depression after a market bubble where people got greedy and invested badly and that if the market is left to itself it will sort things out.
Others are of the opinion that the government must intervene with taxpayer’s money to bail out desperate homeowners and at the same time jump start the economy. Pretty much everyone disagrees on how the government should do this.

What many agree on is the seriousness of the situation. Recently President Obama said that “The American Dream is being tested by a home mortgage crisis that not only threatens the stability of our economy but also the stability of families and neighborhoods.”

One solution the government is investing strongly in is loan modifications. This program provides financial advice and aid to families struggling to pay their monthly mortgage payments. The plan is designed to reduce monthly payments and incentivize regular payments. To enroll in this mortgage plan homeowners must start with a three month trial. If during the three month trial all payments are made on time then they receive a cash bonus that is used to reduce the principal of the loan. After the trial period the government continues to pay an incentive to homeowners that are regular on their payments which can reduce their principal by $5,000 in three years.

This program is offered through Home Affordable Modification Program (HAMP) which is backed by $75 billion to be used to encourage and aid the loan modification program.

What are the results up-to-date?

By now there are 230,000 modifications that have already been started and the goal for November is to reach 270,000. It is interesting to note that in 2008 only 42% of the modifications by the largest servicers lowered homeowner’s monthly payments. However since March 4 with the help of the HAMP program all borrowers that receive a loan modification have seen their monthly payments reduced. This is a nice change, good news among the pages and pages of bad news that inundate our screens.  However it is sometimes good to understand a situation well even thought it might be bad news in order to make the best of the bad situation.

Although Loan Modifications are being presented as the be all and end all of the current Mortgage crisis, the truth is that only a small percentage of homeowners in trouble actually qualify for a loan modification. According to the website LoanModExposed.com  only 2 percent of homeowners qualify under current parameters.

It is therefore important to understand the qualifications and apply properly because a successful loan modification can reduce the principal balance (the amount you borrow and are paying interest on) reduce the interest rate and change the rate from variable to fixed and many other efficient modifications.

Related posts:

1. Mortgage Modifications Drop But Mortgage Workouts Rise in HOPE
2. Loan Modifications, The Truth Behind The Spin
3. Avoid Foreclosure, There Is Always HOPE

Related posts:

1. Mortgage Modifications Drop But Mortgage Workouts Rise in HOPE
2. Loan Modifications, The Truth Behind The Spin
3. Avoid Foreclosure, There Is Always HOPE

HARP, the government Home Affordable Refinance Program has consistently grown and expanded the help provided as more power and finances are invested in this program.
If you are in danger of losing your home or are struggling to make payments HARP could provide you with the break you need to get back on your feet.
If you are in that situation you probably have many questions you would like answering. How can I know if I am eligible for aid under HARP? How do I know if I will actually benefit from a HARP loan refinance? Or probably the scariest, I owe more on my property that it is worth, do I still qualify for a refinance with HARP?

What are the requirements to qualify for HARP?
1.)    Your loan must be owned or guaranteed by Fannie Mae or Freddie Mac. Most people don’t  actually know if this is the case and unfortunately in many of the hardest hit areas by the economy in the United Sates Freddie and Fannie don’t guarantee a large percentage of the loans. For you to find out if your loan is guaranteed or owned by Freddie and Fannie you can either contact your mortgage provider or find out at their respective websites.
For Fannie Mae  1-800-7FANNIE (8am to 8pm EST). www.fanniemae.com/loanlookup .  For Freddie Mac  contact  -800-FREDDIE (8am to 8pm EST)
o    www.freddiemac.com/mymortgage
2.)    The amount you owe on your FIRST mortgage cannot exceed 125% of the value of your home. This figure has been increased a few times in an effort to include those that really need the HARP program.
3.)    You must be current on your mortgage payments. Current means not having being later than 30 days on your payment in the last months or never having missed a payment if you have had the loan for less than 12 months. It seems strange that a mortgage aid program will only allow people that are “current” on their payments to participate, however the idea of the program is to provide long term help allowing homeowners that can reasonably rearrange their finances to pay their mortgage not provide emergency help to people who simply cannot meet their mortgage payments.
4.)    The loan modification must improve the overall long term affordability of the loan. This can me an different things depending on the mortgage. For instance if you switch from a variable interest or ARM mortgage to a fixed interest mortgage your initial payments might rise a little but your long term stability and ability to pay for your mortgage may increase.

How can you know if you a HARP loan modification will benefit you? The key is to understand the cost and benefits of your loan and to get that information you need to documents, a “Good Faith Estimate” and a Truth in Lending Statement”. The two disclosures will spell out for your new interest rate, mortgage payments, fees and other expenses. You can then compare the “new deal” with your current mortgage to assess if it is actually beneficial for you.

I hope this article has answered some of your questions on HARP. However if you are thinking of applying for help you have probably got many more questions, the best thing you can do is visit HARP’s website at www.makinghomeaffordable.gov where you will find these and other questions answered.

Related posts:

1. Mortgage modification Banks: Who Are The Movers And The Slackers
2. Mortgage Refinancing For Underwater Borrowers Now Available
3. What To Look For In A Loan Modification

Related posts:

1. Mortgage modification Banks: Who Are The Movers And The Slackers
2. Mortgage Refinancing For Underwater Borrowers Now Available
3. What To Look For In A Loan Modification

When the economy is putting on a big hurt, let someone assume your lease and save money.

Last week the Commerce Department announced an unexpected 3.6% increase in housing starts in June. The 582,000 units started last month is a solid gain from May’s 562,000 and much more than the 532,000 analysts had been expecting. The increases were concentrated in single-family homes which were up 14% — the biggest rise since December 2004. Housing permits were also up; the 8.75% increase was the largest gain in a year.

This would seem to be good news. A sign that more people are buying or commissioning homes and that developers expect this trend to continue. However, developers have guessed very wrong in the very recent past. (See Florida, Phoenix, Las Vegas and the Case/Schiller index for examples.)

Many economic indicators suggest developers haven’t suddenly become a lot better in predicting the economy:

• The nation currently has more housing stock than it needs. That is why the price of existing houses is going down. More stock continues to be placed on the market at lower prices each month by investors desperate to get anything back on their investments.
• While the increase in the number of people claiming unemployment benefits nationally has slowed slightly (up only .1% in June) it is difficult to see that as a reason to build more homes.
• Mortgage delinquencies have continued to increase. The most recent FHA numbers showed approximately 71,700 more loans became 60 days or more delinquent in April. Loans 60-plus-days delinquent increased approximately 7% that month to 1.2 million.
• Commercial real estate prices dropped 7.6% in May. So it hardly seems that businesses are about to expand or staff back up.
• Companies that sell to the construction trade are not optimistic about the coming year. Caterpillar announced dealer inventories had been cut $1.5 billion in the first half of 2009 and the company expects that to continue. The reasons: “Factors depressing construction included high inventories of unsold homes, lower selling prices and continued stringent standards for mortgage qualification.”

So why the increase? As with so much economic activity these days the cause seems to be wishful thinking. Developers think first time home buyers are going to flood the market before the Dec. 1 end to a federal program offering first-timers an $8,000 tax credit.

While there are undoubtedly a number of wise families who have kept their financial powder dry and will be able to take advantage of the federal aid, why would they buy a house that has either just been completed or is about to be? They are understandably going to want to get the most for their money. Why would they choose brand new construction over very recently brand new – for less money?

Housing starts are frequently referred to as a leading economic indicator. Perhaps we should change that to a leading economic prayer.

Related posts:

1. Housing starts go up in February and no one knows why
2. Housing Starts Jump in April
3. Home builder confidence up as housing starts fall off a cliff

Related posts:

1. Housing starts go up in February and no one knows why
2. Housing Starts Jump in April
3. Home builder confidence up as housing starts fall off a cliff

Are Loan Modifications Worth the Hassle

Your loan modification could be the best financial move you made since you worked out how your piggy bank worked, could be a financial disaster that immerses you deeper into debt with little to show for it, or could make no difference to your economy and just generate fees for Banks. Most of us don’t enjoy losing money and don’t particularly enjoy generating fees for corporate banks either so the question of if modifying a loan is worth the effort is a good one.

However it is also one of those questions that are impossible to answer in a straightforward way. This is rather frustrating, I know this from experience, when what you want is a direct reply. The truth is that loan modifications are one of many tools in finding a good deal on your mortgage. If used wisely at the right moment you could save yourself a lot of money. In short, the answer to if loan modifications are worth the hassle, is maybe, it depends.

An even more useful question would be: What makes a loan modification worth the hassle?

That we can answer more directly. The steps you must follow to work out for yourself if refinancing your mortgage or modifying your existing mortgage or loan is worth it are simple and mostly common sense (once you learn about them).

1)    View the loan modification as what it is, a business transaction, don’t allow emotions or “feelings” to determine what you do. You maybe have heard your friends have modified their loan and ended up with a load of extra cash you would like to have to spend also. Think about the implications of your loan modification. Most loan modifications either increase the principal amount you borrow, lengthen the loan period (tenure), vary rarely simply reduces the interest rate of the loan, and in most cases includes a combination of all three options. What will it cost? Do you need the extra cash, or the extra cost that lengthening your mortgage would imply? Getting straight answers from your lender on this topics is not always easy, a little like getting straight answers from your mortgage blogger, but they have a duty to provide them, especially if they want your business.

2)    What are the savings? This is such an important question it is worth asking again. To answer it you need to know the “real” cost of your loan modification. Ask your bank or lender for a complete breakdown of the costs included in modifying your loan. Then find out the extra interest you will be charged if you increase your principal (amount you borrow), put this on a piece of paper and ask yourself if the figures make sense to you.

3)    Why do you want the loan mod? If you are struggling to meet your monthly mortgage payments it is pretty vital that you find a loan or mortgage modification that alleviates the pressure of your payments or you risk losing your house. If you are not struggling to make the payments but simply want to save money on your mortgage by taking advantage of a drop in interest rates, like that which we are currently experiencing, then you are in a rather strong position to get a good deal.

Whatever your situation you must be clear on your goal and not allow yourself to be sucked in by the mortgage salesperson pitch when trying to increase your mortgage principal unless you really need it and want it.

Related posts:

1. Are Loan Modifications Worth your time
2. What To Look For In A Loan Modification
3. Foreclosure moratorium means more time for loan modifications

Related posts:

1. Are Loan Modifications Worth your time
2. What To Look For In A Loan Modification
3. Foreclosure moratorium means more time for loan modifications