Aug
31
Refinance 2nd Mortgage
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Kristy Annely asked:
The idea of refinancing your second mortgage is undoubtedly attractive - if you can pay off your present 2nd mortgage by obtaining another with better terms. But beware - refinancing your 2nd mortgage is only advisable under some situations. Study the prevailing interest rates and determine whether they are conducive to refinancing. Are the effective interest rates lower now than when you obtained your second mortgage? If so, then refinancing makes sense.
Refinancing can be tricky, so be prepared to do careful math before you decide. Take into consideration the length of time it will take you to pay off your home, and how much you will be paying (in total) over the years if you stick with your present 2nd mortgage or decide to refinance.
Before you refinance, be sure to properly educate yourself about the advantages and disadvantages of refinancing your 2nd mortgage. Refinancing has the power to put you in a better place if you use it properly, but can also yield catastrophic results when poorly timed. Such catastrophic results include ending up paying higher rates, having longer re-payment periods, a change in heart that could lead to yet a third refinance, or even the worst: foreclosure. Nobody wants that, but foreclosure occurs every day as a result of people being unable to keep up with payments.
Consult a trusted mortgage-lending expert before making your decision. If your current finance situation does not absolutely require you to refinance or get a second mortgage, then do not refinance. Stay the course and wait until you are sure before you change course.
Micheal
The idea of refinancing your second mortgage is undoubtedly attractive - if you can pay off your present 2nd mortgage by obtaining another with better terms. But beware - refinancing your 2nd mortgage is only advisable under some situations. Study the prevailing interest rates and determine whether they are conducive to refinancing. Are the effective interest rates lower now than when you obtained your second mortgage? If so, then refinancing makes sense.
Refinancing can be tricky, so be prepared to do careful math before you decide. Take into consideration the length of time it will take you to pay off your home, and how much you will be paying (in total) over the years if you stick with your present 2nd mortgage or decide to refinance.
Before you refinance, be sure to properly educate yourself about the advantages and disadvantages of refinancing your 2nd mortgage. Refinancing has the power to put you in a better place if you use it properly, but can also yield catastrophic results when poorly timed. Such catastrophic results include ending up paying higher rates, having longer re-payment periods, a change in heart that could lead to yet a third refinance, or even the worst: foreclosure. Nobody wants that, but foreclosure occurs every day as a result of people being unable to keep up with payments.
Consult a trusted mortgage-lending expert before making your decision. If your current finance situation does not absolutely require you to refinance or get a second mortgage, then do not refinance. Stay the course and wait until you are sure before you change course.
Micheal
Aug
21
Mortgage Rates Predictions As Forecast
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Julita Viola asked:
For many homebuyers they always look at the mortgage rates predictions so that they will know when to purchase their dream home. But buying your dream house is not going to be based on what the mortgage rates predictions are. It is better for you to know how much can I borrow for a mortgage. Using mortgage calculators or home loan calculators can give more information and quotes that may be more useful in your search for a house or home loan.
Mortgage rates predictions are just a mere forecast as to where to rates are going and how they can affect your variable mortgage rates. It is very difficult to accurately predict where the interest rates are going especially when the main factors affecting rates are going in opposite directions. The US is reeling from economic difficulty and these major factors that control mortgage rates are pulling in unrelated directions.
Accurately determining where the mortgage rates are going can be extremely difficult with the opposing directions of the major indicators. The ever slowing US economy plus the subprime mortgage fiasco, it is putting too much pressure on mortgage rates to go down. With too many home foreclosures and the oversupply of homes for sale and buyers, the pressure is on to lower rates. But there are the pressures of inflation to contend with.
The price of fuel or gas and food is increasing by the day and it seems that there is no end in sight. Rising prices of commodities, fuel or gas and food are indicators of inflation. And when there is inflation, there is pressure for mortgage rates to go up. But you cannot just move the rates higher when there is too much of homes for sale and no buyers. It just not going to work that way. The main culprit in inflation is the Federal Reserve or central banks printing too much money and nothing to back it up.
There are other factors that determine how home mortgage rates go. Stocks and bonds an also play a role in the determining or predicting where the mortgage rates are going. But unless the central banks stop printing too much money and put into circulation, inflation will stick its ugly head.
With the economic crisis, the ever increasing inflation will force financial institutions and lenders alike to move interest rates higher. Accurately determining which of the factors will stood up will mean the difference between a correct mortgage rates predictions and one that is way out of estimates. But these are not the sole determinant in your search for how much you can borrow for a mortgage.
Robert
For many homebuyers they always look at the mortgage rates predictions so that they will know when to purchase their dream home. But buying your dream house is not going to be based on what the mortgage rates predictions are. It is better for you to know how much can I borrow for a mortgage. Using mortgage calculators or home loan calculators can give more information and quotes that may be more useful in your search for a house or home loan.
Mortgage rates predictions are just a mere forecast as to where to rates are going and how they can affect your variable mortgage rates. It is very difficult to accurately predict where the interest rates are going especially when the main factors affecting rates are going in opposite directions. The US is reeling from economic difficulty and these major factors that control mortgage rates are pulling in unrelated directions.
Accurately determining where the mortgage rates are going can be extremely difficult with the opposing directions of the major indicators. The ever slowing US economy plus the subprime mortgage fiasco, it is putting too much pressure on mortgage rates to go down. With too many home foreclosures and the oversupply of homes for sale and buyers, the pressure is on to lower rates. But there are the pressures of inflation to contend with.
The price of fuel or gas and food is increasing by the day and it seems that there is no end in sight. Rising prices of commodities, fuel or gas and food are indicators of inflation. And when there is inflation, there is pressure for mortgage rates to go up. But you cannot just move the rates higher when there is too much of homes for sale and no buyers. It just not going to work that way. The main culprit in inflation is the Federal Reserve or central banks printing too much money and nothing to back it up.
There are other factors that determine how home mortgage rates go. Stocks and bonds an also play a role in the determining or predicting where the mortgage rates are going. But unless the central banks stop printing too much money and put into circulation, inflation will stick its ugly head.
With the economic crisis, the ever increasing inflation will force financial institutions and lenders alike to move interest rates higher. Accurately determining which of the factors will stood up will mean the difference between a correct mortgage rates predictions and one that is way out of estimates. But these are not the sole determinant in your search for how much you can borrow for a mortgage.
Robert
Aug
19
Mortgage News
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Lisa Dempsey asked:
As of March 31, 2010, the Federal Reserve has stopped the policy of buying mortgage-backed securities. The reason the Fed has implemented this policy in the first place was to help keep mortgage rates low while, in effect, subsidizing the real estate market and providing capital for distressed lenders as well as investors.
What happens now? For now, most real estate experts do not believe that mortgage rates will begin any major upswings in the near future. Freddie Mac CEO Ed Haldeman told Forbes.com in a recent article that he didn’t believe there would be “a major dislocation and a major move up in mortgage rates.” However, if the rates do start to skyrocket, the Fed has not completely closed the door on the possibility of beginning to purchase mortgage-backed securities again.
According to the Mortgage Bankers Association, US mortgage applications were up 1.3% for the week ending March 26, 2010. That shows a 6.8% increase since the week of October 30, 2009. Mortgage Bankers Association’s Michael Fratantoni said in a Reuters Report (March 31, 2010) that he believed the increase in mortgage activity appeared to be tied to the approaching deadline for the government’s homebuyer’s tax credit. To be eligible for the $8000 tax credit for first time homebuyers or the $6500 tax credit for current homeowners, all contracts must be signed by April 30, 2010 and must be closed by June 30, 2010.
These numbers all mean good news for the real estate market as a whole. An increase in mortgage applications indicates that home sales are on the rise as well. To see the exact impact these events are having on the local Houston area market, we will need to wait until next week, when the Houston Association of Realtors releases its March home sales results. Keep an eye out for updates in the Keller Williams blog.
Keller Williams Realty Northeast
Jeanne
As of March 31, 2010, the Federal Reserve has stopped the policy of buying mortgage-backed securities. The reason the Fed has implemented this policy in the first place was to help keep mortgage rates low while, in effect, subsidizing the real estate market and providing capital for distressed lenders as well as investors.
What happens now? For now, most real estate experts do not believe that mortgage rates will begin any major upswings in the near future. Freddie Mac CEO Ed Haldeman told Forbes.com in a recent article that he didn’t believe there would be “a major dislocation and a major move up in mortgage rates.” However, if the rates do start to skyrocket, the Fed has not completely closed the door on the possibility of beginning to purchase mortgage-backed securities again.
According to the Mortgage Bankers Association, US mortgage applications were up 1.3% for the week ending March 26, 2010. That shows a 6.8% increase since the week of October 30, 2009. Mortgage Bankers Association’s Michael Fratantoni said in a Reuters Report (March 31, 2010) that he believed the increase in mortgage activity appeared to be tied to the approaching deadline for the government’s homebuyer’s tax credit. To be eligible for the $8000 tax credit for first time homebuyers or the $6500 tax credit for current homeowners, all contracts must be signed by April 30, 2010 and must be closed by June 30, 2010.
These numbers all mean good news for the real estate market as a whole. An increase in mortgage applications indicates that home sales are on the rise as well. To see the exact impact these events are having on the local Houston area market, we will need to wait until next week, when the Houston Association of Realtors releases its March home sales results. Keep an eye out for updates in the Keller Williams blog.
Keller Williams Realty Northeast
Jeanne
Aug
17
A New Mortgage Elimination Scam
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Jeanette Joy Fisher asked:
It’s every homeowner’s fantasy: to own their home free and clear. There are lots of legitimate ways to pay off your mortgage loan faster, but here’s the latest scam for folks hoping to eliminate their entire 30-year mortgage–in less than a year.
Here’s how it works. A “mortgage elimination” company posts ads in magazines, on the Web, in newspapers, or anywhere else they can find victims, promising that their system is legal and effective.
One of the strangest arguments, though persuasive to potential victims, is that lenders don’t really lend money. Although it’s a convoluted argument, the bottom line is that lenders borrow money from other lenders, and when the lending chain is followed all the way to its source, it turns out to be the federal government, which prints money on ink and paper, meaning that the money has no real value. Since that’s the case, it was really the victim who generated the money the first place. If the victim buys that argument, it means their mortgage note is meaningless and no money is actually owed.
Conspiracy enthusiasts love that sort of talk, especially if it’s back up by hints that agencies such as the FBI don’t want us to know about the true lending process, because they’re afraid that when the American public finds out, the banking industry will no longer be able to cheat innocent homebuyers out of their hard-earned cash.
The next step is for the homeowner to send a check for several thousand dollars, on the mortgage eliminator’s promise to guide them through the process and to represent them in court, if necessary. After that, one of two things will happen. Some mortgage eliminators will simply disappear, and the victim will never hear from them again. Others will actually deliver a program, which inevitably will lead to the homeowner’s loss of their home through foreclosure.
Here’s how that second option works. The mortgage eliminator tells the homeowner to go to the county clerk’s office and file a discharge of debt form, stating that the mortgage is paid in full. That’s not the case, of course, but when clerk records the form, it does appear as if the property is owned free and clear. Next comes the part where scam artists really clean up. With the property seemingly free and clear, the homeowner can now apply for more loans, and the proceeds are then split, with the mortgage eliminator often getting the larger portion. Everything seems fine–until the county clerk and original lender discover the scam and confront the homeowner, who is soon caught up in a huge legal and financial bind, as well as facing possible fraud and conspiracy charges and jail time.
The saddest part of this scam is that the most vulnerable people are those who are already facing bankruptcy or foreclosure. Everyone dreams of owning their home free and clear–but when it comes to paying off your mortgage, remember the old adage: if it seems to good to be true, it probably is.
Copyright
It’s every homeowner’s fantasy: to own their home free and clear. There are lots of legitimate ways to pay off your mortgage loan faster, but here’s the latest scam for folks hoping to eliminate their entire 30-year mortgage–in less than a year.
Here’s how it works. A “mortgage elimination” company posts ads in magazines, on the Web, in newspapers, or anywhere else they can find victims, promising that their system is legal and effective.
One of the strangest arguments, though persuasive to potential victims, is that lenders don’t really lend money. Although it’s a convoluted argument, the bottom line is that lenders borrow money from other lenders, and when the lending chain is followed all the way to its source, it turns out to be the federal government, which prints money on ink and paper, meaning that the money has no real value. Since that’s the case, it was really the victim who generated the money the first place. If the victim buys that argument, it means their mortgage note is meaningless and no money is actually owed.
Conspiracy enthusiasts love that sort of talk, especially if it’s back up by hints that agencies such as the FBI don’t want us to know about the true lending process, because they’re afraid that when the American public finds out, the banking industry will no longer be able to cheat innocent homebuyers out of their hard-earned cash.
The next step is for the homeowner to send a check for several thousand dollars, on the mortgage eliminator’s promise to guide them through the process and to represent them in court, if necessary. After that, one of two things will happen. Some mortgage eliminators will simply disappear, and the victim will never hear from them again. Others will actually deliver a program, which inevitably will lead to the homeowner’s loss of their home through foreclosure.
Here’s how that second option works. The mortgage eliminator tells the homeowner to go to the county clerk’s office and file a discharge of debt form, stating that the mortgage is paid in full. That’s not the case, of course, but when clerk records the form, it does appear as if the property is owned free and clear. Next comes the part where scam artists really clean up. With the property seemingly free and clear, the homeowner can now apply for more loans, and the proceeds are then split, with the mortgage eliminator often getting the larger portion. Everything seems fine–until the county clerk and original lender discover the scam and confront the homeowner, who is soon caught up in a huge legal and financial bind, as well as facing possible fraud and conspiracy charges and jail time.
The saddest part of this scam is that the most vulnerable people are those who are already facing bankruptcy or foreclosure. Everyone dreams of owning their home free and clear–but when it comes to paying off your mortgage, remember the old adage: if it seems to good to be true, it probably is.
Copyright
Aug
17
Types Of Home Mortgage Refinancing
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Eshwarya Patel asked:
An augmentation in the amount of an outstanding home loan is referred to as a ‘home mortgage refinancing’. It requires the complete payment of a stupendous loan along with the earnings from the new one.
If you have built equity in your home, mortgage refinancing is, no doubt, an excellent option for you. You can opt for it in case you are willing to free up cash, invest in renovation of your home or consolidate all your debts.
The two most popular home mortgage refinancing options are second mortgage and reverse mortgage. These are described in detail as follows:
Second Mortgages
o It permits you to avail a second loan on your property or home in addition to your previous home loan.
o With second mortgages, it becomes possible to pull cash out of your home as you are required to give nominal monthly interest payments.
o However, the interest rate and the percentage of lender fees are higher than the first mortgage owing to the high risk involved in the former.
o Home loans are of two types: fixed rate mortgage and adjustable rate mortgage. Depending on which of the two you have, second mortgages might differ in length. The period varies from 1 year to as long as 20 years.
Reverse Mortgages
o With reverse mortgages, you are permitted to transfer your home equity into cash.
o Also, you need not repay your home loan until you no longer live in that home.
o They are very advantageous as they are tax deductible.
o If you are a retiree and looking to leverage your home equity, you can opt for reverse mortgages.
Norma
An augmentation in the amount of an outstanding home loan is referred to as a ‘home mortgage refinancing’. It requires the complete payment of a stupendous loan along with the earnings from the new one.
If you have built equity in your home, mortgage refinancing is, no doubt, an excellent option for you. You can opt for it in case you are willing to free up cash, invest in renovation of your home or consolidate all your debts.
The two most popular home mortgage refinancing options are second mortgage and reverse mortgage. These are described in detail as follows:
Second Mortgages
o It permits you to avail a second loan on your property or home in addition to your previous home loan.
o With second mortgages, it becomes possible to pull cash out of your home as you are required to give nominal monthly interest payments.
o However, the interest rate and the percentage of lender fees are higher than the first mortgage owing to the high risk involved in the former.
o Home loans are of two types: fixed rate mortgage and adjustable rate mortgage. Depending on which of the two you have, second mortgages might differ in length. The period varies from 1 year to as long as 20 years.
Reverse Mortgages
o With reverse mortgages, you are permitted to transfer your home equity into cash.
o Also, you need not repay your home loan until you no longer live in that home.
o They are very advantageous as they are tax deductible.
o If you are a retiree and looking to leverage your home equity, you can opt for reverse mortgages.
Norma
Jul
31
California Second Mortgages
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Kevin Stith asked:
A mortgage is a long-term loan for a large amount, commonly taken for a property or a house. It is a kind of home loan except that it is termed for longer. Mortgages are available through a bank, private lenders, or property sellers.
One advantage of considering a mortgage loan over other kinds of loans is that there can be multiple mortgages for a particular property. Although more than one mortgage can exist, it is essential to pay off the mortgages in the order of priority, i.e., the first mortgage needs to be cleared of first, and then the second and so on. However, mortgages taken on an already mortgaged property carry higher rate of interest and so are to be considered only in times of dire financial status.
Second Mortgages have the same initial costs as the initial first mortgage. Also they carry a higher rate of interest than the first mortgage. Hence, second or third mortgages are expensive and hard on the pocket. Second Mortgages are usually given based on the amount of equity available with the property owner after the first mortgage. Such types of Second Mortgages are the least expensive kind of Second Mortgages because of the equity security.
As with first mortgages, a number of varieties of second and third mortgages are available. The most common is the mortgage given on equity left with the property owner after the first mortgage, as mentioned. Another popular kind is the line-of-credit mortgage, wherein a line of credit is provided to the property owner to be used as and when required, instead of providing the same as a lump sum as in the case of equity secured Second Mortgage.
Multiple mortgages can be taken simultaneously for building on some property or developing and renovating the same to rent or lease it out for some extra income. The calculation would be similar as if the mortgages were taken one after the other, rather than simultaneously. Also, they provide some extra cash when the property owner is strapped with all the EMI due for the mortgages.
Although a Second Mortgage is given as per the total property value after the house is mortgaged for a certain amount, some mortgage lenders also lend some extra amount that might be more than what the property actually costs. However, this is not a usual occurrence, and the lender needs to be sure that the same would be repaid back without any hassles. Also it requires approval from higher-ups due to the risk involved in loaning more than the property’s worth. The interest would be charged on the whole amount and is usually very high on the EMI.
All mortgage lenders would be able to provide ample advice on Second Mortgages at no cost. It is a good option to look into all the pros and cons before getting into an agreement for a Second Mortgage.
Clarence
A mortgage is a long-term loan for a large amount, commonly taken for a property or a house. It is a kind of home loan except that it is termed for longer. Mortgages are available through a bank, private lenders, or property sellers.
One advantage of considering a mortgage loan over other kinds of loans is that there can be multiple mortgages for a particular property. Although more than one mortgage can exist, it is essential to pay off the mortgages in the order of priority, i.e., the first mortgage needs to be cleared of first, and then the second and so on. However, mortgages taken on an already mortgaged property carry higher rate of interest and so are to be considered only in times of dire financial status.
Second Mortgages have the same initial costs as the initial first mortgage. Also they carry a higher rate of interest than the first mortgage. Hence, second or third mortgages are expensive and hard on the pocket. Second Mortgages are usually given based on the amount of equity available with the property owner after the first mortgage. Such types of Second Mortgages are the least expensive kind of Second Mortgages because of the equity security.
As with first mortgages, a number of varieties of second and third mortgages are available. The most common is the mortgage given on equity left with the property owner after the first mortgage, as mentioned. Another popular kind is the line-of-credit mortgage, wherein a line of credit is provided to the property owner to be used as and when required, instead of providing the same as a lump sum as in the case of equity secured Second Mortgage.
Multiple mortgages can be taken simultaneously for building on some property or developing and renovating the same to rent or lease it out for some extra income. The calculation would be similar as if the mortgages were taken one after the other, rather than simultaneously. Also, they provide some extra cash when the property owner is strapped with all the EMI due for the mortgages.
Although a Second Mortgage is given as per the total property value after the house is mortgaged for a certain amount, some mortgage lenders also lend some extra amount that might be more than what the property actually costs. However, this is not a usual occurrence, and the lender needs to be sure that the same would be repaid back without any hassles. Also it requires approval from higher-ups due to the risk involved in loaning more than the property’s worth. The interest would be charged on the whole amount and is usually very high on the EMI.
All mortgage lenders would be able to provide ample advice on Second Mortgages at no cost. It is a good option to look into all the pros and cons before getting into an agreement for a Second Mortgage.
Clarence
Jul
19
Mortgage Note Brokers
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Steve Valentino asked:
There are several brokers who help people to sell and buy mortgage notes. They match people who want to sell their note with people who want to buy that note. Their professional fee is paid entirely by the note buyer. The real estate notes are today a massive industry, worth more than $400 billion.
Mortgage brokers are independent contractors who usually shop for loan applications amongst lenders to find the most attractive term for a borrower. Mortgage brokers offer loan products of multiple vendors. These multiple vendors are known as wholesalers. The mortgage broker gets paid for his services by the lender.
Mortgage brokers do not lend; they primarily counsel borrowers on the problems involved in qualifying for the loan. Brokers also help by compiling all the documents that are required for the transaction. This reduces delays in the loan processing.
Mortgage notes are usually produced by banks or mortgage companies. The federal government secures these notes. There are several agents who facilitate the sale of existing private mortgage notes or commercial mortgage notes. These agents or service providers can easily arrange for point of sale funding, commonly known as table funding or simultaneous closing. This enables the seller and the agent to offer financing to their buyers, without taking the trouble of securing their bank lines of credit.
While issuing mortgage notes, agents or service providers look at the type of property, location of the property, the way in which the mortgage is structured, and the credit history of the buyers. These elements essentially dictate the guidelines for the valuation of the mortgage note. The more information given to the service agent, the better they can evaluate the right transaction for sellers. To collect information, service providers usually seek information by E-mail, fax or telephone.
Frederick
There are several brokers who help people to sell and buy mortgage notes. They match people who want to sell their note with people who want to buy that note. Their professional fee is paid entirely by the note buyer. The real estate notes are today a massive industry, worth more than $400 billion.
Mortgage brokers are independent contractors who usually shop for loan applications amongst lenders to find the most attractive term for a borrower. Mortgage brokers offer loan products of multiple vendors. These multiple vendors are known as wholesalers. The mortgage broker gets paid for his services by the lender.
Mortgage brokers do not lend; they primarily counsel borrowers on the problems involved in qualifying for the loan. Brokers also help by compiling all the documents that are required for the transaction. This reduces delays in the loan processing.
Mortgage notes are usually produced by banks or mortgage companies. The federal government secures these notes. There are several agents who facilitate the sale of existing private mortgage notes or commercial mortgage notes. These agents or service providers can easily arrange for point of sale funding, commonly known as table funding or simultaneous closing. This enables the seller and the agent to offer financing to their buyers, without taking the trouble of securing their bank lines of credit.
While issuing mortgage notes, agents or service providers look at the type of property, location of the property, the way in which the mortgage is structured, and the credit history of the buyers. These elements essentially dictate the guidelines for the valuation of the mortgage note. The more information given to the service agent, the better they can evaluate the right transaction for sellers. To collect information, service providers usually seek information by E-mail, fax or telephone.
Frederick
Jul
17
Short Sale Second Mortgage - How To Get Out Of Two Mortgages At The Same Time
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Richard Geller asked:
Is a mortgage short sale possible if you have not one mortgage company to deal with, but two?
I am the developer of the Mortgage Relief Formula home study course. In my work I receive hundreds of questions from homeowners who owe more than their house is worth and cannot afford to continue making the payments. They want to avoid foreclosure appearing on their credit and they also want to do the right thing under the circumstances.
A mortgage short sale beats foreclosure both from the homeowner’s viewpoint and from the perspective of a mortgage lender. If you cannot pay on a mortgage, the bank would rather get partial payment of the mortgage, and not get your house back.
They can in fact deal with getting your house back because they are set up for it. But when they get a house back they must add it to their already bulging inventory. They must insure it. They have to fix it up. They have to put it on the market and sell it. They are selling into the same terrible market that you are facing.
But, a mortgage short sale helps the lender get partial payment on your mortgage and avoid getting your house.
Let’s recap what this type of sale is. It’s when you sell your house for less than the mortgage. The lender approves the sale and the lender collects the proceeds from the buyer, whatever is left at closing after paying closing costs and real estate broker commissions and so forth. They mortgage lender releases the mortgage so the transaction can close.
The mortgage company now has a financial loss. They may pursue you for that financial loss, which they can sometimes do through a civil court proceeding. Sometimes they cannot pursue you at all because state law prevents them from doing so. And sometimes you can negotiate with the home loan lender before the sale goes through, and they will agree in writing not to come after you for their financial losses.
But be that as it may, the question we are addressing is how you can do a sale that yields only partial payment of your first mortgage, if you have a second mortgage and not just a first mortgage?
What people forget is that even if they do a sale of their house, the loans go with the house so if they deed their house to someone else, the loans stay in place. A sale of a house does not affect the loans on that house.
The reason a short sale works is that the lender agrees to release their claim on the house at the closing table. So the new buyer can get the house free from your crushing mortgage. But if you have two mortgages such a sale is much more complicated. The buyer will want to be free of both your first and second mortgage.
That makes it twice as complicated.
Because if the first mortgage lender agrees to the sale even though it will not pay off the first mortgage, that isn’t enough. The house will be sold and still have a second mortgage on it.
A foreclosure sale, on the other hand, wipes out all the loans on the property. The lender who forecloses may get the property back through their “credit bid”. That is, if nobody bids higher than the balance on the loan including all delinquent payments and fees, the lender gets the house back. If someone bids higher, they will get the house.
Either way, all the junior loans are extinguished in the foreclosure sale. A foreclosure sale results in a transfer of title through a trustee’s deed or sherriff’s deed. A trustee’s deed or sheriff’s deed transfers title to either the lender, or the high bidder if there is a party that outbids the lender. And with that foreclosure deed, the junior loans are wiped out. So junior loans are not an issue in a foreclosure and in fact a lot of houses go through foreclosure in order to wipe out the junior loans.
But what if you want to avoid foreclosure through a short sale process, in order to help your credit and the lender? And what if you have junior loans?
There is a way to do it. Actually three ways.
Is the second mortgage a piggyback loan? Sometimes the lenders who made the first mortgage also made the second. Maybe they can allocate the short sale proceeds to release both loans.
Or, you may be able to buy out the second. They are in a position where they will get nothing at this point. If you can offer them a nickel on the dollar of debt, or a dime, maybe they will take it. That assumes you have a bit of cash. But it may not take much. After all they are already prepared to be wiped out. If you do a deal like this, make sure you get the arrangement in writing including how they will report to the credit bureaus (you want to avoid foreclosure appearing there) and also that they will not go after you any more — this is full payment of the second mortgage and forever wipes clean that debt.
And there is a third option for most folks who do not have cash to buy out the second mortgage.
This third option is doing a deal with the second mortgage holder: They will release the second mortgage in order to allow the short sale to go through. In return, you will sign a note for a percentage of that loan.
Such a note is a personal loan, an unsecured loan, and would be dischargeable in bankruptcy. But if you can manage the payments this is a good outcome for all concerned compared to the alternatives. Remember that if they get wiped out, the second mortgage holder can still come after you in civil court but by signing a note you make it cheaper for them and either way, something is better than nothing.
These three options are the best ones to consider if you want to do a short sale and avoid foreclosure, but have a second mortgage on the property. I would always recommend you consult a good lawyer to help you and best of luck.
Adam
Is a mortgage short sale possible if you have not one mortgage company to deal with, but two?
I am the developer of the Mortgage Relief Formula home study course. In my work I receive hundreds of questions from homeowners who owe more than their house is worth and cannot afford to continue making the payments. They want to avoid foreclosure appearing on their credit and they also want to do the right thing under the circumstances.
A mortgage short sale beats foreclosure both from the homeowner’s viewpoint and from the perspective of a mortgage lender. If you cannot pay on a mortgage, the bank would rather get partial payment of the mortgage, and not get your house back.
They can in fact deal with getting your house back because they are set up for it. But when they get a house back they must add it to their already bulging inventory. They must insure it. They have to fix it up. They have to put it on the market and sell it. They are selling into the same terrible market that you are facing.
But, a mortgage short sale helps the lender get partial payment on your mortgage and avoid getting your house.
Let’s recap what this type of sale is. It’s when you sell your house for less than the mortgage. The lender approves the sale and the lender collects the proceeds from the buyer, whatever is left at closing after paying closing costs and real estate broker commissions and so forth. They mortgage lender releases the mortgage so the transaction can close.
The mortgage company now has a financial loss. They may pursue you for that financial loss, which they can sometimes do through a civil court proceeding. Sometimes they cannot pursue you at all because state law prevents them from doing so. And sometimes you can negotiate with the home loan lender before the sale goes through, and they will agree in writing not to come after you for their financial losses.
But be that as it may, the question we are addressing is how you can do a sale that yields only partial payment of your first mortgage, if you have a second mortgage and not just a first mortgage?
What people forget is that even if they do a sale of their house, the loans go with the house so if they deed their house to someone else, the loans stay in place. A sale of a house does not affect the loans on that house.
The reason a short sale works is that the lender agrees to release their claim on the house at the closing table. So the new buyer can get the house free from your crushing mortgage. But if you have two mortgages such a sale is much more complicated. The buyer will want to be free of both your first and second mortgage.
That makes it twice as complicated.
Because if the first mortgage lender agrees to the sale even though it will not pay off the first mortgage, that isn’t enough. The house will be sold and still have a second mortgage on it.
A foreclosure sale, on the other hand, wipes out all the loans on the property. The lender who forecloses may get the property back through their “credit bid”. That is, if nobody bids higher than the balance on the loan including all delinquent payments and fees, the lender gets the house back. If someone bids higher, they will get the house.
Either way, all the junior loans are extinguished in the foreclosure sale. A foreclosure sale results in a transfer of title through a trustee’s deed or sherriff’s deed. A trustee’s deed or sheriff’s deed transfers title to either the lender, or the high bidder if there is a party that outbids the lender. And with that foreclosure deed, the junior loans are wiped out. So junior loans are not an issue in a foreclosure and in fact a lot of houses go through foreclosure in order to wipe out the junior loans.
But what if you want to avoid foreclosure through a short sale process, in order to help your credit and the lender? And what if you have junior loans?
There is a way to do it. Actually three ways.
Is the second mortgage a piggyback loan? Sometimes the lenders who made the first mortgage also made the second. Maybe they can allocate the short sale proceeds to release both loans.
Or, you may be able to buy out the second. They are in a position where they will get nothing at this point. If you can offer them a nickel on the dollar of debt, or a dime, maybe they will take it. That assumes you have a bit of cash. But it may not take much. After all they are already prepared to be wiped out. If you do a deal like this, make sure you get the arrangement in writing including how they will report to the credit bureaus (you want to avoid foreclosure appearing there) and also that they will not go after you any more — this is full payment of the second mortgage and forever wipes clean that debt.
And there is a third option for most folks who do not have cash to buy out the second mortgage.
This third option is doing a deal with the second mortgage holder: They will release the second mortgage in order to allow the short sale to go through. In return, you will sign a note for a percentage of that loan.
Such a note is a personal loan, an unsecured loan, and would be dischargeable in bankruptcy. But if you can manage the payments this is a good outcome for all concerned compared to the alternatives. Remember that if they get wiped out, the second mortgage holder can still come after you in civil court but by signing a note you make it cheaper for them and either way, something is better than nothing.
These three options are the best ones to consider if you want to do a short sale and avoid foreclosure, but have a second mortgage on the property. I would always recommend you consult a good lawyer to help you and best of luck.
Adam
Jul
17
Jonathan Andrew asked:
The most important factor you should consider when looking for a home mortgage is your interest rate. Getting even a slightly lower interest rate on your house mortgage can save you tens of thousands of dollars over the life of your mortgage.
The interest rate on your native mortgage, in fact, can actually have you paying twice for your home what it actually sold for by the time the mortgage is paid off in twenty or thirty years. So while your home may appreciate in value during that time so that you come out even, the housing market is notoriously unpredictable. It’s better to just look for a low interest mortgage and keep your money.
The Two Types Of Home Mortgages
Your property mortgage will be one of two types: adjustable rate or fixed rate. An adjustable rate mortgage has an interest rate tied to the prime lending rate and will rise and fall along with it. With an adjustable rate mortgage, your monthly payment will go up or down as the Federal Reserve raises or lowers the prime rate, and that can be either very bad, or very good, for you.
If you are someone who prefers to be able to budget for a consistent mortgage payment each month, you should definitely stay away from the adjustable real estate mortgage. You may be unhappy if the prime rate falls and your friends with adjustable mortgages have lower payments for a while, but you will never have to worry about being caught by a raise in your rates. And if you keep up on your payments, and build equity in your home you may be able to refinance if it appears that mortgage rates are going to continue dropping.
Be On the Lookout For Scammers
When you start looking for a home refinance you should first check the background of the prospective lenders in your area. Some mortgage scammers engage in the process of having fraudulent appraisals done which price homes at far more than their fair market value, enabling them to trick home buyers into taking out mortgages which are much higher than necessary.
Because those homeowners have to make excessively high property mortgage payments, they often get behind and in attempting to sell their homes to keep out of foreclosure, find .that the houses are worth far less than they thought. They either have to take the loss and find a way to make up the balance to pay off the personal mortgage, or face foreclosure, in which case the scammers take title to the home and resell it.
The laws against these kinds of real estate mortgage scams have been stiffened in many states since the collapse of the US housing market, but there are still thousands of shady lenders around trying to make a quick buck in any way they can. So you must be very vigilant in choosing your home refinance lender, and you would also be very wise to get an independent appraisal of the home in which you are interested. If it is significantly lower than the one your potential lender provides, take you business somewhere else.
Annie
The most important factor you should consider when looking for a home mortgage is your interest rate. Getting even a slightly lower interest rate on your house mortgage can save you tens of thousands of dollars over the life of your mortgage.
The interest rate on your native mortgage, in fact, can actually have you paying twice for your home what it actually sold for by the time the mortgage is paid off in twenty or thirty years. So while your home may appreciate in value during that time so that you come out even, the housing market is notoriously unpredictable. It’s better to just look for a low interest mortgage and keep your money.
The Two Types Of Home Mortgages
Your property mortgage will be one of two types: adjustable rate or fixed rate. An adjustable rate mortgage has an interest rate tied to the prime lending rate and will rise and fall along with it. With an adjustable rate mortgage, your monthly payment will go up or down as the Federal Reserve raises or lowers the prime rate, and that can be either very bad, or very good, for you.
If you are someone who prefers to be able to budget for a consistent mortgage payment each month, you should definitely stay away from the adjustable real estate mortgage. You may be unhappy if the prime rate falls and your friends with adjustable mortgages have lower payments for a while, but you will never have to worry about being caught by a raise in your rates. And if you keep up on your payments, and build equity in your home you may be able to refinance if it appears that mortgage rates are going to continue dropping.
Be On the Lookout For Scammers
When you start looking for a home refinance you should first check the background of the prospective lenders in your area. Some mortgage scammers engage in the process of having fraudulent appraisals done which price homes at far more than their fair market value, enabling them to trick home buyers into taking out mortgages which are much higher than necessary.
Because those homeowners have to make excessively high property mortgage payments, they often get behind and in attempting to sell their homes to keep out of foreclosure, find .that the houses are worth far less than they thought. They either have to take the loss and find a way to make up the balance to pay off the personal mortgage, or face foreclosure, in which case the scammers take title to the home and resell it.
The laws against these kinds of real estate mortgage scams have been stiffened in many states since the collapse of the US housing market, but there are still thousands of shady lenders around trying to make a quick buck in any way they can. So you must be very vigilant in choosing your home refinance lender, and you would also be very wise to get an independent appraisal of the home in which you are interested. If it is significantly lower than the one your potential lender provides, take you business somewhere else.
Annie
Jul
12
Nick Adama asked:
When homeowners are attempting to put together some plan to save their homes, one of the key pieces of information they need to gather is how much they owe the bank in total. Without knowing this figure, it will be impossible to refinance the house, sell for a reasonable price and not owe anything later on, or even put together a short sale with an investor.
The best way for homeowners to get a payoff figure is to request the figure specifically from the lender or its attorneys. That will give them the most updated information on how much is currently needed to satisfy the mortgage in full and stop foreclosure. Payoff statements usually have a “good through” date of up to thirty days on them, and an estimated “per diem” interest charge for every day after the payoff expires.
In addition to requesting a payoff statement from the mortgage company, there are a few other ways for owners to get a rough idea about how much the bank is asking for, but these will not be as accurate. Out of date payoff statements, monthly mortgage balance statements, and public records searches can be useful tools to provide estimates if the lender is not being responsive to requests for updated payoffs.
Out of date payoff figures can give homeowners a very good idea of how much the bank will be looking for in the future to pay off the mortgage, but even a per diem interest charge will leave out other potential future charges. Attorneys fees may increase, or the bank may add a property tax payment of several thousand dollars to the total payoff, which may drastically increase the amount needed to stop foreclosure by paying the loan in full. If the statement is not too far out of date, though, it may be a good estimate of the current due.
Many homeowners still receive a bill every month from their mortgage company that indicates the total amount due on the loan. Usually this is just a balance of the total amount of principal left to pay off and does not include late fees, interest charges on late payments, and the attorney and court costs involved in the foreclosure process. A monthly balance statement should probably never be relied on for any actual payoff numbers, but they are useful resources for bank contact numbers which can be used to get a more accurate payoff, if nothing else.
One final way to get an estimate of the total amount owed on a mortgage is to search the public records in the county in which the property is located. Usually, the history of the mortgages/deeds of trust will be available online (or the owners or any other interested party can just call the county recorder and request the information), which will tell them when the homeowners got each mortgage and how much it was originally for. Again, this will not include changes from the time the mortgage was issued, including the charges listed in the previous paragraph and any payments the homeowners made on the loan.
Searching the title will also give homeowners, real estate agents, mortgage brokers, or potential investors a good idea if there are more liens than just the first mortgage. The bank may be willing to take less on a short sale, for example, but if the owners or investors have to come up with more money to pay property taxes, and more to pay off a second mortgage, and more to pay IRS liens, and more to pay utilities liens, then there is a strong possibility they will not end up with a very good deal that will stop foreclosure. Of course, investors could negotiate down these liens as well, but that’s more time spent dealing with lenders who may not cooperate in the end.
In any event, if the bank is still able to provide payoff statements on a mortgage, that means the homeowners are still living in the house and it has not been sold at the sheriff sale yet. The best bet for anyone interested in helping foreclosure victims or buying foreclosed houses may be simply to ask the current owners to request a payoff from their mortgage company. They can give anyone they like a copy and any parties interested in working with homeowners will have the information they need to make an offer or work on paying off the loan and ending the foreclosure.
Stacey
When homeowners are attempting to put together some plan to save their homes, one of the key pieces of information they need to gather is how much they owe the bank in total. Without knowing this figure, it will be impossible to refinance the house, sell for a reasonable price and not owe anything later on, or even put together a short sale with an investor.
The best way for homeowners to get a payoff figure is to request the figure specifically from the lender or its attorneys. That will give them the most updated information on how much is currently needed to satisfy the mortgage in full and stop foreclosure. Payoff statements usually have a “good through” date of up to thirty days on them, and an estimated “per diem” interest charge for every day after the payoff expires.
In addition to requesting a payoff statement from the mortgage company, there are a few other ways for owners to get a rough idea about how much the bank is asking for, but these will not be as accurate. Out of date payoff statements, monthly mortgage balance statements, and public records searches can be useful tools to provide estimates if the lender is not being responsive to requests for updated payoffs.
Out of date payoff figures can give homeowners a very good idea of how much the bank will be looking for in the future to pay off the mortgage, but even a per diem interest charge will leave out other potential future charges. Attorneys fees may increase, or the bank may add a property tax payment of several thousand dollars to the total payoff, which may drastically increase the amount needed to stop foreclosure by paying the loan in full. If the statement is not too far out of date, though, it may be a good estimate of the current due.
Many homeowners still receive a bill every month from their mortgage company that indicates the total amount due on the loan. Usually this is just a balance of the total amount of principal left to pay off and does not include late fees, interest charges on late payments, and the attorney and court costs involved in the foreclosure process. A monthly balance statement should probably never be relied on for any actual payoff numbers, but they are useful resources for bank contact numbers which can be used to get a more accurate payoff, if nothing else.
One final way to get an estimate of the total amount owed on a mortgage is to search the public records in the county in which the property is located. Usually, the history of the mortgages/deeds of trust will be available online (or the owners or any other interested party can just call the county recorder and request the information), which will tell them when the homeowners got each mortgage and how much it was originally for. Again, this will not include changes from the time the mortgage was issued, including the charges listed in the previous paragraph and any payments the homeowners made on the loan.
Searching the title will also give homeowners, real estate agents, mortgage brokers, or potential investors a good idea if there are more liens than just the first mortgage. The bank may be willing to take less on a short sale, for example, but if the owners or investors have to come up with more money to pay property taxes, and more to pay off a second mortgage, and more to pay IRS liens, and more to pay utilities liens, then there is a strong possibility they will not end up with a very good deal that will stop foreclosure. Of course, investors could negotiate down these liens as well, but that’s more time spent dealing with lenders who may not cooperate in the end.
In any event, if the bank is still able to provide payoff statements on a mortgage, that means the homeowners are still living in the house and it has not been sold at the sheriff sale yet. The best bet for anyone interested in helping foreclosure victims or buying foreclosed houses may be simply to ask the current owners to request a payoff from their mortgage company. They can give anyone they like a copy and any parties interested in working with homeowners will have the information they need to make an offer or work on paying off the loan and ending the foreclosure.
Stacey