Latest Mortgage Articles http://www.articletrader.com/ Articles at ArticleTrader en-us Home Mortgage Advice http://www.articletrader.com/finance/mortgage/homemortgage-advice.html http://www.articletrader.com/finance/mortgage/homemortgage-advice.html Tue, 01 May 2012 20:16:48 -0500
Paying off a mortgage is a noble goal, and one that can serve you well in retirement. But hang on, there's no rush. Despite the claims that you can save a fortune in interest by paying off a mortgage early, spreading the payments out over 30 years can be much smarter than putting your extra dollars into additional mortgage payments.

Click Here to View the Federal Trade Commission Official Mortgage Handbook - Free.
This pamphlet is extremely useful! Please read.

The interest paradox
While it is very true that a shorter mortgage incurs far less interest than a longer one, simply paying off your existing mortgage faster might not save you as much as you think. The key factor is that you pay most of the interest in the early years. It takes eight years to pay down the first 10% of the principal when you amortize a loan over 30 years. The rest of what you've shelled out is interest. By the time you are halfway through a 30-year mortgage, you've paid 67% of the interest. By year 20, two-thirds of the way through the mortgage, you've paid 84% of the interest.

Starting to make accelerated payments halfway through a 30-year mortgage will save you very little in interest. It would be better to put those extra payments into a money market account until they are actually due. Let the bank pay you interest instead.

Another problem is the way some lenders handle additional payments. Not all lenders automatically re-compute the interest you owe if you reduce your principal faster than they expect. Instead, they follow their amortization table, which divides each payment into a set amount of interest and principal. So even though your balance is lower, the interest you are paying doesn't change. With this type of mortgage, an early payoff amounts to a long-term, interest-free loan to your mortgage company. Yikes!

The paradox is that even if you work it right and do save tens of thousands of dollars in interest, that decision could cost you far more in terms of lost opportunity. The real question is: What is the best use of your money?

Peak Home Loans can help to mortgage or refinance your home with good credit, fair credit, poor credit, and any credit. We offer home refinancing and mortgages with any credit. Click here to learn how.

The anti-mortgage
Imagine if you will, an anti-mortgage account. Instead of sending a bunch of extra bucks to your mortgage lender every month, you send them to a broad-market index fund.

Let's look at what might happen with a $100,000 mortgage at 7%. You could pay it off in 30 years at $665 a month, or in 15 years at $899 per month -- and you'd save about $78,000 in interest with the 15-year option. But suppose you went for the 30-year option, sending $665 to the mortgage company and sending $234 to an index fund -- your anti-mortgage account. That's the same amount out-of-pocket every month, right?

Fast forward 15 years. Your mortgage has been paid down to $74,018 and you have $106,397 in your anti-mortgage account (assuming an average annual return of 11%). At that point, you could, if you chose, convert your anti-mortgage account to cash, pay the capital gains taxes due, and use what's left to pay off your mortgage. Assuming a federal capital gains tax of 20% and a state capital gains rate of 5%, you'd even have about $5,000 left over -- but don't spend it, you'll be needing new carpet soon.

The anti-mortgage account gives you options. You could cash it in and pay off your mortgage early if you prefer, or you could keep saving and building up your net worth as you pay down your mortgage. Or you could do any of the myriad other things that cash money is good for.

The value of cash
There are two common reasons people cite for paying off their mortgage early: To provide a safety net in case they lose their jobs and to reduce income needs in retirement. The prospect of losing your home because you can't make the mortgage payments is scary -- no doubt about it. And the prospect of devoting most of your retirement income to a monthly mortgage isn't much better. But let's look what happens if you choose to invest instead.

Investing lets you build up a portfolio of securities that are easily converted to cash. Cash can make a lot of mortgage payments if you're collecting unemployment. Cash will also make car payments and buy groceries. Of course, if your house were paid for, you could always raise cash by taking out a new mortgage, except, oops, you're out of work. Bad timing. You might be able to get a mortgage, but not a very big one and not at very favorable rates. To get a decent mortgage loan, you need more than a lot of equity in your home: You also need regular income, which makes owning your home less useful in an emergency than you might think.

Here's an even better idea: Use the earnings from your investments to make your mortgage payments. Yep, that's right. Once your anti-mortgage is big enough to pay off the mortgage at one time, you can use the earnings from the account to make the monthly payments -- and keep the cash!

Here's how. Remember the example above where you ended up with an anti-mortgage account worth $106,000 after 15 years? Let's assume you retired at that point and don't want the burden of mortgage payments. Who could blame you? You could cash out your anti-mortgage account and pay off the mortgage, OR you could keep your money in the index fund and simply withdraw enough every year to make your mortgage payments. If you pull $10,600 out of the account each year, that will cover your mortgage payments and the capital gains taxes on the withdrawals.

Here's the best part: By the time the 30-year mortgage is paid off, your investment account will have dropped a grand total of $2,000. (Again, we are assuming an 11% average rate of return.) Talk about having your cake and eating it, too! By saving the extra payments instead of sending them to the mortgage company for the first 15 years, you've built up an anti-mortgage account, used the earnings from it to make your mortgage payments for the next 15 years, and after 30 years, you're left with $104,000 in cash.

Don't believe us? Take a stroll over to our Personal Finance area and play around with our mortgage calculator and savings calculator. Run some scenarios and see what happens. You may also want to check out our Home Center, which has more calculators and information about mortgages. Then let's discuss a few more reasons not to pay off your mortgage, and a few reasons why you might want to consider it.

Peak Home Loans can help to mortgage or refinance your home with good credit, fair credit, poor credit, and any credit. We offer home refinancing and mortgages with any credit. Click here to learn how.

A word about investment returns
We just compared paying off a low-interest mortgage ahead of schedule with investing the additional payments in an index fund. We assumed an annual return of 11% for the index fund. In a sense that's like shooting fish in a barrel -- if you have a loan at 7% and an investment bringing in 11%, it's pretty obvious that you will do better by investing than by paying off the loan early. The problem is that while mortgage rates are clearly spelled out and fixed (except for adjustable-rate mortgages), stock market returns are not. In essence, our entire argument rests on the performance of the stock market.

So where did that 11% come from, anyway? Did we just pick it out of the air? No, 11% is the average annual return (CAGR) for the S&P 500 over the period from 1926 to 2000.

We used the S&P 500 as our benchmark for two reasons: 1) The 75-year history gives us confidence in our expectations of its future performance, and 2) virtually anyone can duplicate the S&P 500's future performance simply by investing in a well-managed S&P 500 index fund. (If you decide to invest in other mutual funds, stocks you pick yourself, or pork bellies, all bets are off.) Estimating the S&P 500's future performance is the key. We know that its average return has been just a shade over 11% over the last 75 years, but we don't know how it will do next year.

We don't even care.

Next year's market performance is disturbingly unpredictable. But over 30 years, the span of a typical mortgage, the average return of the S&P 500 has been relatively consistent -- and always higher than fixed-income investments. All the depressions, recessions, crashes, crises, booms, bubbles, and busts simply balance each other out if you wait long enough.

Warning: statistics ahead! During the history of the S&P 500 there have been 46 30-year periods starting with 1926-1955, 1927-1956, etc, and ending with 1971-2000. The average annual returns for those 46 periods ranged from 8.5% to 13.7%, forming a nice bell curve with the mean at 11%. Of course, you won't average exactly 11% per year from your index fund over the next 30 years, but based on the past performance of the S&P 500, you have a 98% chance of getting more than 7% and an 83% chance of getting better than 9%. Your most likely average return will be between 10% and 12%.

Feel better? If the statistics didn't do it for you, just hang on to this thought: The worst average annual return by the stock market over a 30-year span was 8.5%.

Peak Home Loans can help to mortgage or refinance your home with good credit, fair credit, poor credit, and any credit. We offer home refinancing and mortgages with any credit. Click here to learn how.

Reasons to prepay
Even with the odds greatly in favor of investing versus an early mortgage payoff, for some people the bottom line is not the only consideration. Let's look at some legitimate reasons one might choose to pay off a mortgage early and then discuss the best way to go about it should you decide that an early mortgage payoff is in your best interest.

Guaranteed returns
When you invest in stocks, your return is not guaranteed, but paying off a mortgage early gives you a solid, tangible return on your money. If you are looking for a guaranteed return, accelerating your mortgage payments gives you that, while index investing can't. Of course, with a low-interest mortgage, the return isn't very high (if you have a high-interest mortgage, refinance.)

Forced savings
Some people just won't save, but they will make the mortgage payment. You do what you have to do to increase your wealth over the years. (You might also consider automatic investment plans. Most mutual fund companies will gladly pull a fixed amount out of your bank account each month and invest it as you have specified. The money's gone before you miss it.)

Emotional satisfaction
Sure, that's a legitimate reason for paying off a mortgage early -- as long as you understand how much you are potentially giving up.

Guidelines for accelerated payoffs
Most of the pay-off-your-mortgage-early debate is emotional: The desire to own your very own piece of the Earth that no one can take from you, or the fear that investing will not provide the kind of return you expect. If those emotions are winning the argument in your mind, first argue with yourself some more. But if you end up deciding to pay off your mortgage early, here are some guidelines for making the payoff process work in your favor:

1) Make sure your other cash needs are funded first: retirement accounts, college funds, etc. Sinking all your spare cash into your home is under-diversification at its worst.

2) Start early. Making regular payments for five years on a 30-year mortgage then switching to a 10-year mortgage will cost you far more in interest than starting out with a 15-year mortgage. If you are well into a 30-year mortgage, run the numbers to make sure that you understand just how little you will really save.

3) Talk to your lender. To actually save money on interest, you need a "simple interest" mortgage where each month's interest is calculated based on the declining balance, or you need to re-amortize the mortgage based on a faster payment schedule. Lenders may charge to re-amortize so ask how much that costs, too.

Peak Home Loans can help to mortgage or refinance your home with good credit, fair credit, poor credit, and any credit. We offer home refinancing and mortgages with any credit. Click here to learn how.

Tax considerations
It may seem like we've saved the most important point for last, but actually tax considerations are not a driving factor in this debate. Tax savings are icing on the cake for those who pay off their mortgages slowly. If you work it right, paying off a mortgage quickly reduces the interest you pay, but that also reduces your mortgage interest deduction. While it's silly to spend money just to get a tax deduction, it's also silly to give up a tax deduction unless you net more money somewhere down the road. In this case though, we've seen that the investing option is likely to put more money in your pocket even before we consider the tax break, so what was the point of giving up that tax deduction again?

A second consideration is that while we used 20% as our federal capital gains tax rate in the examples in Part 1, investments made after Jan. 1, 2001 and held for more than five years will qualify for the new extra long-term capital gains rate of 18% (8% for those in the lowest tax bracket), making long-term buy-and-hold investments even more attractive.

Speaking of capital gains, the first $500,000 in capital gains on the sale of a principal residence can be tax free, so doesn't that make paying down the mortgage a better deal? Nope. The capital gain is the increase in the value of the home when you sell it. You subtract your net proceeds from the cost of the home to find your capital gain. The mortgage balance doesn't affect the capital gain in any way.

All tax considerations favor paying off your mortgage slowly and investing the difference.

Convinced?

If you find yourself still on the fence, try using our mortgage payment and savings calculators to compare the net effect of investing versus making additional mortgage payments for your particular situation. Visit our Home Center for more calculators, information on mortgages, and other abode-related goodies. And the Buying a Home discussion board is a great place to bounce ideas off Fools who've "been there."

If you are considering refinancing a home, a home equity loan, or purchasing a home, simply click APPLY NOW and select the Type of Loan desired?

Thank you,
Peak Home Loans


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Robert Pinzhoffer
Peak Home Loans

Apply Now<

Source: http://www.articletrader.com ]]> The Mortgage Loan Market http://www.articletrader.com/finance/mortgage/the-mortgage-loan-market.html http://www.articletrader.com/finance/mortgage/the-mortgage-loan-market.html Tue, 03 Apr 2012 10:15:50 -0500
Lenders provide funds against property to earn interest income, and generally borrow these funds themselves. The price at which the lenders borrow money therefore affects to cost of borrowing. Lenders may also in many countries, sell the mortgage loan to other parties who are interested in receiving the stream of cash payments from the borrower, often in the form of a security. Ther are many types of mortgages used worldwide, but several factors broadly define the characteristics of the mortgage. All of these may be subject to local regulation and legal requirements. Interest may be fixed for the life of the loan or variable and change at certain pre defined period the interest rate can also of course be higher or lower. Term mortage loans generally have a maximumterm, that is the number of years after which an amortizing loan will be rapid. Some mortgage loans may have no amortization, or require full repayment of any remaining balance at a certain date or even nagaive amortization.

Upon maning a mortgage loan for the purchase of a property, lenders usually require that the borrower make a downpayment, that is contribute a portion of the property. This downpayment mey be ecpressed as a portion of the value of the property. The loan to value ratio is the size of the loan against the value of the property. Therefore, a mortgage loan in which the purchaser has made a downpayment of 20% has a loan to value ratio of 80%. For loans made properties that the borrower already owns, the loan to value ratio will be imputed against the estimated value of the property.In most countries a number of ore or less standard measures of creditwotthiness may ne used. Common measures include payment to income and various net worth measures. In many countries cradit scores are used in lieu of or to supplementthese measures.

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Source: http://www.articletrader.com ]]> Monthly Mortgage Payments http://www.articletrader.com/finance/mortgage/monthly-mortgage-payments.html http://www.articletrader.com/finance/mortgage/monthly-mortgage-payments.html Mon, 02 Apr 2012 12:08:33 -0500
The points Amy be fixed or floating. Fixed points refer to a set number of points.A type of mortgage loan program popular in the United Kingdom and Australia that resembles the combination of a home equity loan and a checking account. Borrower's paychecks are deposited directly into the mortgage account and the mortgage balance is reduced by that amount, then as checks are writing against the account during the month, the mortgage balance rises. Any amount deposited in the account that is not withdrawn.The secondary market for conventional mortgages is extremely large and liquid. Most conventional mortgages are packed into pass through mortgage backed securities which trade in a well established forward market known as the mortgage tab market. Many conventional pass through security are further securitized into collateralized mortgage obligations.

Obtaining the lowest available interest rate on a mortgage should be every would be homeowner's objective. Lower interest rates in lower monthly payments, so you should spend a lot of time and effort searching for the best rate. If you do, you will probably find the most competitive one available.Age partnership is independent equity release specialists. Buying a house is a very exciting time. The good news is that if you do the legwork and set the right wheels in motion you can be before you get there. Mortgage represents a loan or lire on a property that has to be paid over a specified period of time. Think of it as your personal guarantee that you will repay the money you have borrowed to buy home. Mortgages come in many different shapes and sizes, each with its own advantage and advantages. Make sure you select the mortgage that is right for you, your future plans, and your financial picture.

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Source: http://www.articletrader.com ]]> Preventing Lumbago Is Not A New Model of Winnebago. http://www.articletrader.com/finance/mortgage/preventing-lumbago-is-not-a-new-model-of-winnebago.html http://www.articletrader.com/finance/mortgage/preventing-lumbago-is-not-a-new-model-of-winnebago.html Mon, 05 Mar 2012 09:54:28 -0600 preventing lumbago is not about vans or trucks, lumbago is a term for back pain, or more accurately lower back pain. And there are easy ways to eliminate it today. Back pain is big business and they have divided pain into two categories with sub categories. The main categories are...
  1. acute - pain that last less than 6 weeks
  2. chronic - pain that last more than 12 weeks.
With the new cutting edge technology that is being rediscovered and used today pain is more easily removed and eliminated and yet for the professionals getting them to look at, consider or even try the new paradigm is often a difficult endeavor. Here is something most professional agree with and yet it seems by the number of recurring lumbago patients it isn't stressed that much.

Preventing Lumbago

To read more: http://holistichealthdaily.com/pain-relief-2/preventing-lumbago-is-not-a-new-model-of-winnebago/

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Source: Preventing Lumbago Is Not A New Model of Winnebago.

Source: http://www.articletrader.com ]]> Top 10 tips for saving a deposit http://www.articletrader.com/finance/mortgage/top-10-tips-for-saving-a-deposit.html http://www.articletrader.com/finance/mortgage/top-10-tips-for-saving-a-deposit.html Tue, 17 Jan 2012 08:33:43 -0600
The report claimed that strict lending criteria, shortage of properties and high deposits were responsible for the 8.7% decline in home owners since 2001.

However, Arc Property Solicitors believes that buyers should be encouraged by latest figures indicating that 49,239 new loans were approved for house purchases in August 2011 - the highest level since May 2010.

In addition, Grant Schnapps, Housing and planning minister, commented in a recent BBC Radio 4 interview that the government were doing all they can to increase the amount of housing in England.

Many first-time buyers would agree that saving for a deposit is the hardest part of getting on the property ladder but there are options out there for buyers other than the 100% mortgage.

So to help you on your way Arc Property Solicitors have put together our Top 10 tips for saving a deposit for first-time buyers.

The average cost of a first home in England is ?120k, so if you were to opt for a 5% deposit you would need around ?6k and if you are moving in with a partner that's ?3k each.

1. Set aside ?250 each per month (each) for one year
2. Put your money into ISA's & Savings Accounts
3. Consider an interest free loan from parents / family members
4. Move back in with relatives to save on rental costs
5. Reduce un-necessary expenses such as TV packages & subscriptions
6. Get a part time job
7. Buy with a partner of friend to reduce the amount of deposit you will need to pay.
8. Set a food budget and opt to eat at home - reduce meals out, take-aways and those morning coffees
9. Walk or take public transport instead of using your own car where possible - or consider selling your car if you don't really need it.
10. Enter competitions after all someone's got to win, right?

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Source: http://www.articletrader.com ]]> Using Credit Repair To Clean Up After Divorce http://www.articletrader.com/finance/mortgage/using-credit-repair-to-clean-up-after-divorce.html http://www.articletrader.com/finance/mortgage/using-credit-repair-to-clean-up-after-divorce.html Thu, 05 Jan 2012 20:31:26 -0600 credit repair is needed to clean up the mess. Many times there are assets to divide and split up and questions of who will pay the car and house payments and for how long. Will responsibility switch over to the new owner? Sometimes payments are missed out of spite, and things like repossessions and foreclosures show up on the other individuals credit report because at the time of marriage the items were purchased jointly. Both sides argue and then Attorneys get involved. When the dust settles there is usually a large mess to clean up and the individual finances are usually on top of the list. It is hard to start over especially with bad credit, thus making credit repair very desirable and important when one is looking to recover financially after a messy divorce. If the process is dragged on then the damage sometimes settles by the time it is time to look into fixing credit. Late payments, charged off credit cards and repossessed vehicles are the most common credit bombs that are the result of a messy divorce battle. To help in the rebuilding process, many turn to a professional credit repair company to help clean up and improve their credit score in order to start regaining assets and a credit profile. This is not a quick fix and can take some time to recover from. With professional assistance it will be possible to map out a solid financial plan to get you back on your feet in the fastest time possible. For expert credit repair, contact Credit Restore USA and take advantage of their free consultation. Credit Restore USA is offering a FREE gift to you. Get your FREE copy of the eBook titled, "Top 10 Mistakes People Make While Attempting To Repair Credit" by visiting http://www.creditrestoreusa.com and filling out the form on the right side of the page.
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Source: Using Credit Repair To Clean Up After Divorce

Source: http://www.articletrader.com ]]> Mortgage Rates At There Best http://www.articletrader.com/finance/mortgage/mortgage-rates-at-there-best.html http://www.articletrader.com/finance/mortgage/mortgage-rates-at-there-best.html Sat, 31 Dec 2011 11:01:21 -0600
People also mortgage their houses because of many reasons which force them to do this activity. Like they have to shift somewhere else and they can't carry the whole stuff with them or they have to pay a big debt due to which they mortgage their house. Some people mortgage their house in this way that they don't actually sell their property completely they just lend them to the new ones for a specific time period. In the return of this activity, they keep on getting money and make their things and living comfortable and easy. Similarly people lends their land to the others from which they get money and whenever they want their land back they pay the interest to them and have it back completely.The better the condition of the property the more impressive and expensive is the mortgage rate of that property.

It is a common practice now days that, before mortgaging their property people renovate their property so that their mortgaging rate could get better. People will only agree on the high mortgaging rate when they will see that the person who is demanding such a rate is really giving them a well maintained property in that much amount of money. Even if the property is very much impressive and in good condition the people do fight for having it and they purchase it even by giving the highest amount for that property. In this way the real owner also gets happy with the money and gets satisfied with his maintenance. So the people do often go for the white wash or the renovation process when they are about to mortgage their property.Well this mortgaging activity is very much common now a day. It's an easy and effective way from which the person gets more than the actual value and it helps him too, economically and financially as well.

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Source: http://www.articletrader.com ]]> Credit Repair Article Provides Example http://www.articletrader.com/finance/mortgage/credit-repair-article-provides-example.html http://www.articletrader.com/finance/mortgage/credit-repair-article-provides-example.html Fri, 30 Dec 2011 08:19:14 -0600 Credit repair was a very valuable share of improving my financial situation. Many years ago my firm had a major layoff and I was out of labor. I had been hired by this job for over 20 years and in no way considered I would be out of vocation. I never desired credit repair before because I always had high credit. My bills were always paid on time and I was able to hide some cash away into savings month after month. Never in my fierce dreams did I vision I would ever need the help of a credit repair organization. When I was first laid off I had to plunge into my savings to satisfy the monthly debts. This continued for several months while I was finding new employment. I thought I would be able to obtain a new position before I was empty on cash but that did not happen and rapidly I would be in a situation that needed credit repair. Every single month that went by contributed in my money disappearing while satisfying the monthly debts such as my mortgage, auto payment, and utility bills. Soon the savings ran out and I was still without new employment. Commitments were not being paid and I would urgently need credit repair to assist me.

Credit Repair

I became much behind on my mortgage note and quickly began to receive foreclosure notices from my lender. I wasn't sure if credit repair would be able to aid about negotiating out a loan modification. I knew I had to find a new job rapidly. Thankfully I was signed by a very good company and took a position that paid slightly more money then my previous job. This permitted me to get caught up on my bills and work out a loan modification with my mortgage lender. Now it was time to research credit repair firms. I made sure that I paid all of my bills on time for the next couple of years. While maintaining all of my financial responsibilities I started to look into finding an expert credit repair service. It appeared that there were many choices and I wanted to make sure that I hired a credit repair service that would provide me with the best outcome. I looked at many websites until I found an organization I was comfortable with and that had plenty of examples of credit repair results obtained for earlier clients.

Credit Repair

The core reason I wanted to look into credit repair was to help fix my credit reports from the carnage resulted in my jobless situation from a couple years before. After speaking with the credit repair company I was confident in their ability to clean up and improve my credit reports. They helped me get my credit reports and scores from Trans Union, Equifax and Experian. I then examined each report with a credit repair consultant and we went over each account on my report. I was told that they would engage directly with the credit bureaus and dispute any incorrect, inaccurate, questionable and unverifiable information found on my reports and that I would receive an updated credit report from each bureau in fairly 35 days. I was also sent a username and password that would allow me to check the status of my file at anytime on the credit repair services website. This let me to keep track of the advancement at any time and not have to call in for updates. This is very opportune for me, allowing me to check the status even after business hours. Conveniences like this are one reason I chose to go with this credit repair company. Just about 29 days after I enrolled in the service I obtained an updated credit report from Equifax and reports from Trans Union and Experian arrived a few days after, just as my credit repair professional said. I was super happy with what I saw. Three of the six adverse accounts were deleted. That is 50% of the accounts erased in the first month of credit repair service! I was extremely happy and advanced copies of the credit reports directly to the organization. All I had to do was scan them and upload them into my client profile on their website which took me just a couple. This type of ease makes this credit repair organization fast and helpful. They quickly sent off round number two and I received another set of updated credit reports in the mail the following month showing me more credit repair results. One more account was erased, leaving me with only 2 bad accounts on my credit reports. This method was copied over the next two months and resulted in my credit being completely error free. I can not communicate how thrilled I am with this firm. I highly recommend this firm to anyone seeking a great credit repair company. Credit Restore USA is offering a FREE gift to you. Get your FREE copy of the eBook titled, "Top 10 Mistakes People Make While Attempting To Repair Credit" by visiting http://www.creditrestoreusa.com and filling out the form on the right side of the page.
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Source: Credit Repair Article Provides Example

Source: http://www.articletrader.com ]]> Where's the Promised Government Loan Money (HARP) for Distressed Homeowners? http://www.articletrader.com/finance/mortgage/wheres-the-promised-government-loan-money-harp-for-distressed-homeowners.html http://www.articletrader.com/finance/mortgage/wheres-the-promised-government-loan-money-harp-for-distressed-homeowners.html Mon, 26 Dec 2011 18:25:00 -0600 WHERE'S THE HARP MONEY?

Since 2007, when the American housing bubble burst, untold numbers of homeowners have found themselves in the dire dilemma of seeing the value of their homes sink below the amount they owe on their mortgages, putting them "under water" in mortgage jargon. With most mortgage lenders requiring a loan to value ratio (LTV) of 80% or less on refinancing (not requiring private mortgage insurance [PMI]), these homeowners have been basically locked out from taking advantage of the record low interest rates. Seeking solutions, the Federal Housing Finance Agency (FHFA) introduced the Home Affordable Refinance Program (HARP) in March 2008 thus began the history of HARP.

WHO QUALIFIES FOR HARP?

HARP was designed to help homeowners obtain refinancing when the value of their home exceeded 80% LTV without having to pay the additional PMI costs. Originally, this program was intended for homeowners with 105% LTV mortgages or less. This cap was subsequently lifted to 125% LTV later that year (2009), and subsequently, in October 2011, the cap was eliminated altogether, probably in response to the fact that home prices all over the country were still on a downward path. The 2011 HARP update was also designed to increase the number of Americans that will qualify for the government loan money.

However, the following conditions listed below still have to be met in order for you, a homeowner to qualify for a HARP refinance:

• Your mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac. This is a big source of confusion for many homeowners since neither lending agency deals directly with the public. If in doubt whether your particular qualifies, you can visit the Fannie Mae or Freddie Mac websites and use their Loan Lookup Tools.
• Your mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
• Your mortgage also had to have been secured on or before March 31, 2009. The reasoning behind this being that after this date mortgages already had lower interest rates.
• The current loan-to-value (LTV) ratio on your mortgage must be greater than 80%.
• You must be current on your mortgage at the time of the refinance, with no late payment in the past six months and no more than one late payment in the past 12 months.
• Only individual homeowners can qualify for HARP, as this program does not extend to companies or any other legal entities.
• Homeowners also must benefit from HARP either by (1) receiving lower monthly mortgage payments or (2) by switching to a more stable mortgage (i.e., from an adjustable rate mortgage to fixed rate mortgage).

OTHER HARP CONSIDERATIONS

And these are just the primary eligibility requirements. There are others. Therefore, it is imperative that homeowners seek the help of professionals who are well versed in the demanding and fairly complicated HARP loan process.

As you can see, the history of HARP is still evolving and subject to future changes. For now, HARP is due to expire on December 31, 2013, but if housing market conditions continue to decline, then hopefully the Federal Housing Finance Agency (FHFA) will continue to adjust to the new circumstances. Presently, a nice feature of HARP is that homeowners can avoid paying for an appraisal if a reliable automated property valuation model, such as Zillow, is available for your particular area, subject to the mortgage servicer's discretion of course.

The significant changes in HARP eligibility requirements announced by President Obama in October 2011 have led mortgage industry insiders to dub it HARP 2.0, even as the history of HARP is little more than two and a half years old. The Mortgage Bankers Association has previously estimated that $900 billion in mortgages will be originated in 2012 but with HARP 2.0 fast becoming effective, this number will certainly rise. Unfortunately, HARP was not designed to help homeowners already in foreclosure proceedings or in danger of being foreclosed upon.

CONCLUSION

The HARP mortgage application process can take a few months to complete and therefore, it is strongly advisable that homeowners who feel they may qualify for the HARP program should seriously consider contacting professionals who can efficiently guide them along the long and laborious process of refinancing under HARP 2.0. The history of HARP is by no means over yet and it will take professionals to keep track of developing changes in the process.


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Paul Jensen is a nationally published author, freelance technical, medical, and web content writer, ad agency exec, and successful businessman living in Utah with his beautiful wife and family: http://CoreNetworkMedia.com. For more about HARP contact info@MortgageReliefBoard.com

Source: http://www.articletrader.com ]]> Be Sensible And Try This Advice On Purchasing Real Estate http://www.articletrader.com/finance/mortgage/be-sensible-and-try-this-advice-on-purchasing-real-estate.html http://www.articletrader.com/finance/mortgage/be-sensible-and-try-this-advice-on-purchasing-real-estate.html Thu, 22 Dec 2011 23:26:44 -0600
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