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Q-A Series – MORTGAGE INSURANCE

Q. WHAT IS MORTGAGE INSURANCE

Mortgage insurance is a policy that protects lenders against some or most of the losses that result from defaults on home mortgages. It’s required primarily for borrowers making a down payment of less than 20%.

Q. HOW DOES MORTGAGE INSURANCE WORK IS IT LIKE HOME OR AUTO INSURANCE

Like home or auto insurance, mortgage insurance requires payment of a premium, is for protection against loss, and is used in the event of an emergency. If a borrower can’t repay an insured mortgage loan as agreed, the lender may foreclose on the property and file a claim with the mortgage insurer for some or most of the total losses.

Q. DO I NEED MORTGAGE INSURANCE HOW DO I GET IT

You need mortgage insurance only if you plan to make a down payment of less than 20% of the purchase price of the home. The FHA offers several loan programs that may meet your needs. Ask your lender for details.

Q. HOW CAN I RECEIVE A DISCOUNT ON THE FHA INITIAL MORTGAGE INSURANCE PREMIUM

Ask your real estate agent or lender for information on the HELP program from the FHA. HELP – Homebuyer Education Learning Program – is structured to help people like you begin the homebuying process. It covers such topics as budgeting, finding a home, getting a loan, and home maintenance. In most cases, completion of this program may entitle you to a reduction in the initial FHA mortgage insurance premium from 2.25% to 1.75% of the purchase price of your new home.

Q. WHAT IS PMI

PMI stands for Private Mortgage Insurance or Insurer. These are privately-owned companies that provide mortgage insurance. They offer both standard and special affordable programs for borrowers. These companies provide guidelines to lenders that detail the types of loans they will insure. Lenders use these guidelines to determine borrower eligibility. PMI’s usually have stricter qualifying ratios and larger down payment requirements than the FHA, but their premiums are often lower and they insure loans that exceed the FHA limit.

Short Sale Highlights

We are aggressively and successfully performing short sales thus helping hundreds of people to avoid foreclosure in Charlotte, Lee and Collier counties. No worries if your property is not located in these areas. These highlights hold true nationwide. However, you should always consult your tax professional and attorney for your specific situation. With that said Here are some short sale highlights!!

    • A short sale can have a much less negative effect on your credit than a foreclosure or deed in lieu of foreclosure
    • A short sale acts as a traditional closing with specified close date once we get an approval
    • In most cases a short sale approval will have the language for a waiver of deficiency.
    • If you maintain your credit you may be able to purchase a home in 24 months or less.
    • We have other affiliates who have sold homes to people who have short sold their home 90 days from the short sale date. They kept current on their payment all the way to close and bought 3 months later!!
    • Banks are more willing to do a short sale than foreclose on you. The time is now when things are so lenient and the government encourages it.
    • Banks are making the short sale process even easier!
    • It is estimated that there will be another 3,000,000 short sales, deed in lieu of foreclosure and foreclosures combined nationwide before we see this slow down. Why foreclose when you do not have to?
    • A short sale will cost you NOTHING! If anyone is charging you money to do a short sale, RUN!
    • A short sale is a means to a quicker recovery for you and your family.
    • This can be time to relieve a bad asset for you! IE negative every month b/c the rental market is so low!
    • The short sale process is fairly easy for you There are certain documents that are required. Once we get them from you, it is all up to us!
    • We do not guarantee a short sale but we have a strong closing percentage
    • Short sales can be done with 2 mortgages on the property.
    • A short sale will clean up all past liens Back taxes, HOA fees, etc All are paid by your lender at closing.
    • We average 7 days on the market for short sales.
    • You do not have to be delinquent on your mortgage to do a short sale. It is a personal decision.
    • Depending on how the property is held, you may not be taxed on the deficient amount! Speak with your accountant.
    • Timelines for short sale approval are becoming quicker and quicker.

I am sure I am forgetting some other things, but these should answer some of the most common questions homeowners have about short sales.


Article Source: http://www.articlesnatch.com

About the Author:
Steve Daria is the Broker / Owner at Maxim Realtors, LLC in Fort Myers, Fl.

Maxim Realtors, LLC is short sale servicing all of Lee, Collier and Charlotte Counties That is Punta Gorda, North Fort Myers, Pine Island, Cape Coral, Fort Myers, Sanibel Island, Captiva Island, Lehigh Acres, Fort Myers Beach, Estero, Bonita Springs, Naples, Marco.

Read more: http://www.articlesnatch.com/Article/Short-Sale-Highlights/1193769#ixzz1hJY10Izy
Under Creative Commons License: Attribution No Derivatives

Q-A Series – FIRST STEPS

Q. WHAT STEPS NEED TO BE TAKEN TO SECURE A LOAN

The first step in securing a loan is to complete a loan application. To do so, you’ll need the following information.
– Pay stubs for the past 2-3 months
– W-2 forms for the past 2 years
– Information on long-term debts
– Recent bank statements
– tax returns for the past 2 years
– Proof of any other income
– Address and description of the property you wish to buy
– Sales contract

During the application process, the lender will order a report on your credit history and a professional appraisal of the property you want to purchase. The application process typically takes between 1-6 weeks.

Q. HOW DO I CHOOSE THE RIGHT LENDER FOR ME

Choose your lender carefully. Look for financial stability and a reputation for customer satisfaction. Be sure to choose a company that gives helpful advice and that makes you feel comfortable. A lender that has the authority to approve and process your loan locally is preferable, since it will be easier for you to monitor the status of your application and ask questions. Plus, it’s beneficial when the lender knows home values and conditions in the local area. Do research and ask family, friends, and your real estate agent for recommendations.

Q. HOW ARE PRE-QUALIFYING AND PRE-APPROVAL DIFFERENT

Pre-qualification is an informal way to see how much you maybe able to borrow. You can be ‘pre-qualified’ over the phone with no paperwork by telling a lender your income, your long-term debts, and how large a down payment you can afford. Without any obligation, this helps you arrive at a ballpark figure of the amount you may have available to spend on a house.

Pre-approval is a lender’s actual commitment to lend to you. It involves assembling the financial records mentioned in Question 47 (Without the property description and sales contract) and going through a preliminary approval process. Pre-approval gives you a definite idea of what you can afford and shows sellers that you are serious about buying.

Q. HOW CAN I FIND OUT INFORMATION ABOUT MY CREDIT HISTORY

There are three major credit reporting companies: Equifax, Experian, and Trans Union. Obtaining your credit report is as easy as calling and requesting one. Once you receive the report, it’s important to verify its accuracy. Double check the “high credit limit,”‘total loan,” and ‘past due” columns. It’s a good idea to get copies from all three companies to assure there are no mistakes since any of the three could be providing a report to your lender. Fees, ranging from $5-$20, are usually charged to issue credit reports but some states permit citizens to acquire a free one. Contact the reporting companies at the numbers listed for more information.

CREDIT REPORTING COMPANIES
Company Name Phone Number
Experian 1-888-397-3742
Equifax 1-800-685-1111
Trans Union 1-800-916-8800

Q. WHAT IF I FIND A MISTAKE IN MY CREDIT HISTORY

Simple mistakes are easily corrected by writing to the reporting company, pointing out the error, and providing proof of the mistake. You can also request to have your own comments added to explain problems. For example, if you made a payment late due to illness, explain that for the record. Lenders are usually understanding about legitimate problems.

Q. WHAT IS A CREDIT BUREAU SCORE AND HOW DO LENDERS USE THEM

A credit bureau score is a number, based upon your credit history, that represents the possibility that you will be unable to repay a loan. Lenders use it to determine your ability to qualify for a mortgage loan. The better the score, the better your chances are of getting a loan. Ask your lender for details.

Q. HOW CAN I IMPROVE MY SCORE

There are no easy ways to improve your credit score, but you can work to keep it acceptable by maintaining a good credit history. This means paying your bills on time and not overextending yourself by buying more than you can afford.

Secondary Mortgage Market

Conventional financing assistance and loan programs are offered by private lenders, non-profit organizations, savings and loan institutions, credit unions, commercial banks, mortgage banking companies and state and local housing finance agencies. These lenders, the originators of loans, are also called primary lenders.

By extension, the primary mortgage market is the place where loans originate and are issued directly to the homebuyer by primary lenders.

After issuing loans to homebuyers, primary lenders have the option to keep it in their portfolio or to sell it to the secondary mortgage market in order to replenish their funds and have more money available to issue new loans. The secondary mortgage market includes investors and financial companies, pension funds, housing GSEs (Government Sponsored Enterprises) and other financial agents.

The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) are the two GSEs that purchase loans from the primary lenders. Their purpose is to support homeownership. They replenish primary lenders funds and support their financial activity so that lenders have money available for more mortgage loans.

Fannie Mae and Freddie Mac do not lend money directly to homebuyers. Instead they fund several of the affordable financing programs in place in the mortgage market and publish a number of educational materials for the public, in some instances in other languages than English, to provide consumers with the necessary tools to become knowledgeable in the home-purchasing and home-owning process.

The loans issued through their sponsorship are called conforming loans because the primary lender drafts the loan according to the secondary purchaser s terms. Their loans are designed to help people become homeowners in spite of the challenges they face, such as coming with a down payment or having credit problems.

HOUSING PRIMER

Short Sale Law To Help Eliminate Foreclosures Inevitably

The Short Sale Law in California is helping a lot of people. The law is giving people the opportunity to keep their homes and not have to suffer foreclosure. Many people are a tad bit confused on how this law can benefit them, and cause these excellent results. It helps to gain a better understanding of what the law truly is.The Short sale law in California is a law that was enforced to help during the economic recession. Many people are struggling during these hard times; unemployment seems to be consistently rising, as well as expenses for pertinent things that we stand in need of. A few things that seem to be consistently rising in price are food, and gasoline.

People ultimately need food in order to survive, and they need gasoline as a means to get them to and from their place of employment. With the recession in full swing and prices for necessities at an all time high, people were losing their homes left and right.

The short sale law allows people the opportunity to negotiate a price that they can afford to pay on their mortgage. Everyone knows that a big chunk of mortgage payments are simply going towards excess fees and finance charges, they are not being applied to the overall home that you are trying to buy.

You can seek help from a specialist that knows a thing or two about short sales to assist you with the process. What you basically need to do, is sit down with your mortgage lender, and let them know your current financial obligations are exceedingly too much to continue paying the large amount on your mortgage every month.

Many companies are hesitant at first to apply with your demands, but the fact of the matter is Short sales take up a lot less time then a foreclosure would, and they are seen less expensive. Mortgage companies lose out on a lot when a home goes up for foreclosure. Most of the funds will never be returned.

So, when the company and you reach an agreement that suits the both of you, this is a turning point in your current financial arrangement. The amount that is taken off of your home does not need to be repaid. However, since such a substantial amount was removed in order to assist you with the burdens of life. You will be required to file the amount that was taken off of your mortgage as taxable income.

You will receive a 1099 form at the end of the year, you are to record the exact amount that was taken off of your mortgage during the short sale. You will still be held responsible for paying taxes on that amount, so the smart thing to do, is save up as much money as you can throughout the year to be able to pay your taxes on the amount.

You don’t want to be blessed with being able to do a Short Sale, just to wind up in a different boat with the IRS because you can’t pay the taxes on the amount due.


Article Source: http://www.articlesnatch.com

About the Author:
Short Sale Law in California, helping you gain advantage before foreclosure comes knocking at your door. Have a quick peek at http://www.nphsrealestate.org/short-sale/law-tax before you make up your mind.

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Daniel Andrade, REALTOR® DRE #: 01849983
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