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FHA-Insured Loans

FHA was established in 1934 under the National Housing Act and was consolidated into HUD in 1965.

The FHA s purpose is to improve housing standards and conditions, provide an adequate home financing through mortgage insurance, help stabilize the mortgage market and provide homeownership opportunities. HUD acts as an administrator and insurer of FHA s originated loans. FHA does not insure individuals, it insures the loans that lenders offer to borrowers. Lenders must offer long-term, self-amortizing, market rate, assumable loans in order to participate in the program.

By insuring lenders loans, lower down payment costs and mortgage insurance premiums are offered to homebuyers. Other advantages of FHA insured loans are: less stringent borrower qualifying criteria; financing up to 100% of up-front loan closing costs and insurance premiums; higher loan-to-value ratios on loan refinances; and higher allowances for seller-paid closing costs. In addition, the presence of FHA insured loans in the mortgage market have other benefits. They help lenders preservation of their fiduciary profile, stabilize the market, and provide a reliable secondary mortgage market participant.

FHA Single Family Insurance Programs

Loan Programs:

  • Energy Efficient Mortgages Program
  • Graduated Payment Mortgage Insurance (Section 245(a))
  • Growing Equity Mortgage Insurance (Section 245(a))
  • Home Equity Conversion Mortgage Program
  • Indian reservations and Other Restricted Lands
  • Insurance for Adjustable Rate Mortgages (Section 251)
  • Manufactured Home Loan Insurance (Title I)
  • Manufactured Home Lot and Combination Loan Insurance
  • Mortgage Insurance for Condominium Units (Section 234(c))
  • Mortgage Insurance for Low/Mod Income Buyers (Section 221(d)(2)
  • Mortgage Insurance for Members of the Armed Forces (Section 222)
  • Mortgage Insurance for Older, Declining Areas (Section 223(e))
  • Mortgage Insurance for One- to Four-Family Homes (Section 203(b))
  • Property Improvement Loan Insurance (Title I)
  • Rehabilitation Mortgage Insurance (Section 203(k))
  • Single-Family Cooperative Mortgage Insurance (Section 203(n))
  • Single-Family Mortgage Insurance for Disaster Victims (Section 203 (h))
  • Single-Family Mortgage Insurance for Outlying Areas (Section 203 (i))

Regulatory Programs

  • Insurance premiums
  • Interstate Landsales
  • Manufactured Home Construction and Safety Standards
  • Minimum Property Standards
  • Premium refunds
  • Reduction in mortgage insurance
  • Regulatory Programs Real Estate Settlement Procedures Act
  • Servicing and Loss Mitigation

HOUSING PRIMER

Q-A Series – GENERAL FINANCING QUESTIONS:THE BASICS

Q. WHAT IS A MORTGAGE

Generally speaking, a mortgage is a loan obtained to purchase real estate. The “mortgage” itself is a lien (a legal claim) on the home or property that secures the promise to pay the debt. All mortgages have two features in common: principal and interest.

Q. WHAT IS A LOAN TO VALUE (LTV) HOW DOES IT DETERMINE THE SIZE OF MY LOAN

The loan to value ratio is the amount of money you borrow compared with the price or appraised value of the home you are purchasing. Each loan has a specific LTV limit. For example: With a 95% LTV loan on a home priced at $50,000, you could borrow up to $47,500 (95% of $50,000), and would have to pay,$2,500 as a down payment.

The LTV ratio reflects the amount of equity borrowers have in their homes. The higher the LTV the less cash homebuyers are required to pay out of their own funds. So, to protect lenders against potential loss in case of default, higher LTV loans (80% or more) usually require mortgage insurance policy.

Q. WHAT TYPES OF LOANS ARE AVAILABLE AND WHAT ARE THE ADVANTAGES OF EACH

Fixed Rate Mortgages: Payments remain the same for the the life of the loan

Types
– 15-year
– 30-year

Advantages
– Predictable
– Housing cost remains unaffected by interest rate changes and inflation.

Adjustable Rate Mortgages (ARMS): Payments increase or decrease on a regular schedule with changes in interest rates; increases subject to limits

Types
– Balloon Mortgage- Offers very low rates for an Initial period of time (usually 5, 7, or 10 years); when time has elapsed, the balance is clue or refinanced (though not automatically)
– Two-Step Mortgage- Interest rate adjusts only once and remains the same for the life of the loan
– ARMS linked to a specific index or margin

Advantages
– Generally offer lower initial interest rates
– Monthly payments can be lower
– May allow borrower to qualify for a larger loan amount

Q. WHEN DO ARMS MAKE SENSE

An ARM may make sense If you are confident that your income will increase steadily over the years or if you anticipate a move in the near future and aren’t concerned about potential increases in interest rates.

Q. WHAT ARE THE ADVANTAGES OF 15- AND 30-YEAR LOAN TERMS

30-Year:
– In the first 23 years of the loan, more interest is paid off than principal, meaning larger tax deductions.
– As inflation and costs of living increase, mortgage payments become a smaller part of overall expenses.

15-year:
– Loan is usually made at a lower interest rate.
– Equity is built faster because early payments pay more principal.

Q. CAN I PAY OFF MY LOAN AHEAD OF SCHEDULE

Yes. By sending in extra money each month or making an extra payment at the end of the year, you can accelerate the process of paying off the loan. When you send extra money, be sure to indicate that the excess payment is to be applied to the principal. Most lenders allow loan prepayment, though you may have to pay a prepayment penalty to do so. Ask your lender for details.

Q. ARE THERE SPECIAL MORTGAGES FOR FIRST-TIME HOMEBUYERS

Yes. Lenders now offer several affordable mortgage options which can help first-time homebuyers overcome obstacles that made purchasing a home difficult in the past. Lenders may now be able to help borrowers who don’t have a lot of money saved for the down payment and closing costs, have no or a poor credit history, have quite a bit of long-term debt, or have experienced income irregularities.

Q. HOW LARGE OF A DOWN PAYMENT DO I NEED

There are mortgage options now available that only require a down payment of 5% or less of the purchase price. But the larger the down payment, the less you have to borrow, and the more equity you’ll have. Mortgages with less than a 20% down payment generally require a mortgage insurance policy to secure the loan. When considering the size of your down payment, consider that you’ll also need money for closing costs, moving expenses, and – possibly -repairs and decorating.

Q. WHAT IS INCLUDED IN A MONTHLY MORTGAGE PAYMENT

The monthly mortgage payment mainly pays off principal and interest. But most lenders also include local real estate taxes, homeowner’s insurance, and mortgage insurance (if applicable).

Q. WHAT FACTORS AFFECT MORTGAGE PAYMENTS

The amount of the down payment, the size of the mortgage loan, the interest rate, the length of the repayment term and payment schedule will all affect the size of your mortgage payment.

Q. HOW DOES THE INTEREST RATE FACTOR IN SECURING A MORTGAGE LOAN

A lower interest rate allows you to borrow more money than a high rate with the some monthly payment. Interest rates can fluctuate as you shop for a loan, so ask-lenders if they offer a rate “lock-in”which guarantees a specific interest rate for a certain period of time. Remember that a lender must disclose the Annual Percentage Rate (APR) of a loan to you. The APR shows the cost of a mortgage loan by expressing it in terms of a yearly interest rate. It is generally higher than the interest rate because it also includes the cost of points, mortgage insurance, and other fees included in the loan.

Q. WHAT HAPPENS IF INTEREST RATES DECREASE AND I HAVE A FIXED RATE LOAN

If interest rates drop significantly, you may want to investigate refinancing. Most experts agree that if you plan to be in your house for at least 18 months and you can get a rate 2% less than your current one, refinancing is smart. Refinancing may, however, involve paying many of the same fees paid at the original closing, plus origination and application fees.

Q. WHAT ARE DISCOUNT POINTS

Discount points allow you to lower your interest rate. They are essentially prepaid interest, With each point equaling 1% of the total loan amount. Generally, for each point paid on a 30-year mortgage, the interest rate is reduced by 1/8 (or.125) of a percentage point. When shopping for loans, ask lenders for an interest rate with 0 points and then see how much the rate decreases With each point paid. Discount points are smart if you plan to stay in a home for some time since they can lower the monthly loan payment. Points are tax deductible when you purchase a home and you may be able to negotiate for the seller to pay for some of them.

Q. WHAT IS AN ESCROW ACCOUNT DO I NEED ONE

Established by your lender, an escrow account is a place to set aside a portion of your monthly mortgage payment to cover annual charges for homeowner’s insurance, mortgage insurance (if applicable), and property taxes. Escrow accounts are a good idea because they assure money will always be available for these payments. If you use an escrow account to pay property tax or homeowner’s insurance, make sure you are not penalized for late payments since it is the lender’s responsibility to make those payments.

Why A Short Sale May Work Better Than A Foreclosure

When a homeowner realizes that they can no longer pay for their mortgage, they may wonder about their choices. The option of foreclosure may be possible and so will the idea of a short sale in Las Vegas. There are a few differences in both of the choices, that could impact the financial future of person. Whether there is lots of time to decide or just a few days, there are always options that can be discussed.

A short sale is when the home goes on the market for just under what it owes. Banks often like this approach better than just leaving the home, because they may get more for the house selling it that way. Often a house that is up for sale under a short sale, will sell in a fast amount of time.

Homeowners can seek help from banks, real estate agents and legal representation when trying to make the choice. A legal department that specializes in bankruptcy and foreclosure may be able to tell someone what the points are to consider if leaving the home is the only option.

Often when someone knows what the pros and cons are to their choice, they will make one that is responsible for them. Using this type of measure to sell off a property, may be better for someone’s credit. They may be able to get out of their home through selling it, and manage a way to pay off the rest of their debt. Learning how to get out of debt without claiming bankruptcy, may be the best way to salvage a credit score.

When a home is up on the market under a short sale, real estate agents will keep their eye out for it. It is in other buyer’s interests to take a look at the property listed under these circumstances. Typically the buyer is just trying to get out of their loan and the home will be sold for under its value.

Buying a home for under its actual value can allow someone to sell it again and this time make a profit. This type of listing may be great for someone who wants to simply sell it, fix it up and sell or move into a house at a really good rate.

This choice can be made just days before having to foreclose. Real estate agents can put it on the market and try to have it gone again in a matter of days. In some cases bidding wars break out from people trying to get their hands on the cheap deal.

When debts are climbing and the mortgage just cannot be paid, there are other options. While temporary loans may help in the short term, often they are only a quick solution. If someone is out of work or not able to work, then the present situation may also be the same in the future. When time is running out, the best thing to do may be to consider a short sale in Las Vegas.

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

About the Author:
Schwartz Law Firm (http://www.andopportunities.com/) is focused on short sale Las Vegas as aims to help homeowners who are in financial distress by guiding them through the challenging process of selling their homes when they are worth less than they owe.

Fannie Mae to offer 3.5 percent buyer assistance

Fannie Mae recently announced that people purchasing a Fannie Mae-owned HomePath property will receive up to 3.5 percent in closing cost assistance. The initial offer must be submitted on or after April 11, 2011; and the sale must close on or before June 30, 2011, to be eligible for the incentive. Additionally, buyers must reside in the home as their primary residence (sales to investors are excluded).

All Fannie Mae-owned HomePath properties are listed on HomePath.com and most listings include detailed property descriptions, photographs, community and school information, and more. In addition, many Fannie Mae-owned properties are eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing, which offers home buyers an opportunity to purchase with as little as 3 percent down.

Wells Fargo Short Sale Guide

A Wells Fargo Short Sale is a way for troubled borrowers to avoid losing their homes in a foreclosure. In a short sale, the bank agrees to accept less than the amount owed on a borrowers mortgage, allowing him or her to sell off the home at a discount. Often, this makes more sense to Wells Fargo than foreclosing, as they tend to lose less in the process.Banks have been put on the spot for being less than efficient in helping consumers, but the Wells Fargo short sale is known to be among the fastest in the industry. In fact, one can complete a short sale with the bank in as little as two months, instead of the six or more it usually takes with other lenders. If youre considering a Wells Fargo short sale, heres a simple guide to help you get started.

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Prepare Your Hardship Letter – Wells Fargo short sale officials put a lot of weight on the borrowers hardshipthey want to know that your only option is a short sale and youre not just taking advantage of market conditions. Your hardship letter should explain in detail how you fell behind, and how a Wells Fargo short sale can help you. Make sure youre able to back it up with the right documentation, such as dismissal slips, medical bills, or divorce papers.

Find A Good Agent.

You need to list your home with a qualified real estate agent before applying for a Wells Fargo short sale. The listing agreement is one of the main requirements in the short sale package. Find an agent who has specific experience in short sales, particularly with Wells Fargo, as theyll be more familiar with the system and in-house policies.

Check Your Homes Value.

Wells Fargo recommends short sales for people who cannot or do not want to stay in their homes, and whose homes have depreciated. Your agent can draw up a comparative market analysis of similar homes to give you a basis of comparison, which you can use to help your Wells Fargo short sale case. The bank is more willing to work with borrowers who have underwater mortgages than those who still qualify for other alternatives.

Market Your Home.

Like other major banks, Wells Fargo has tightened its rules in closing deadlines. You have to complete your Wells Fargo short sale before the date set in the agreement; otherwise the bank will choose to foreclose. Try to get your Wells Fargo short sale home viewed by as many buyers as possible, and work with your agent to negotiate with buyers for the best possible deals.”

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

About the Author:
The author regularly writes on Short sale related issues like buying, selling, real estate short sale and loan modifications. With over 14 years experience in the real estate short sale field as a real estate broker, he provides help even first-time buyers and sellers to get the perfect deal. His suggestions and views are based on his professional experience. If you are looking for more information on author and his article on short sale, real estate short sale, Wells Fargo short sale

Does Moving Up Make Sense ?

These questions will help you decide whether you re ready for a home that s larger or in a more desirable location. If you answer yes to most of the questions, it s a sign that you may be ready to move.

1. Have you built substantial equity in your current home Look at your annual mortgage statement or call your lender to find out. Usually, you don t build up much equity in the first few years of your mortgage, as monthly payments are mostly interest, but if you ve owned your home for five or more years, you may have significant, unrealized gains.

2. Has your income or financial situation improved If you re making more money, you may be able to afford higher mortgage payments and cover the costs of moving.

3. Have you outgrown your neighborhood The neighborhood you pick for your first home might not be the same neighborhood you want to settle down in for good. For example, you may have realized that you d like to be closer to your job or live in a better school district.

4. Are there reasons why you can t remodel or add on Sometimes you can create a bigger home by adding a new room or building up. But if your property isn t large enough, your municipality doesn t allow it, or you re simply not interested in remodeling, then moving to a bigger home may be your best option.

5. Are you comfortable moving in the current housing market If your market is hot, your home may sell quickly and for top dollar, but the home you buy also will be more expensive. If your market is slow, finding a buyer may take longer, but you ll have more selection and better pricing as you seek your new home.

6. Are interest rates attractive A low rate not only helps you buy a larger home, but also makes it easier to find a buyer.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

Fielding a Lowball Purchase Offer on Your Home

By: Marcie Geffner

Consider before you ignore or outright refuse a very low purchase offer for your home. A counteroffer and negotiation could turn that low purchase offer into a sale.

You just received a purchase offer from someone who wants to buy your home. You’re excited and relieved, until you realize the purchase offer is much lower than your asking price. How should you respond Set aside your emotions, focus on the facts, and prepare a counteroffer that keeps the buyers involved in the deal.

Check your emotions
A purchase offer, even a very low one, means someone wants to purchase your home. Unless the offer is laughably low, it deserves a cordial response, whether that’s a counteroffer or an outright rejection. Remain calm and discuss with your real estate agent the many ways you can respond to a lowball purchase offer.

Counter the purchase offer
Unless you’ve received multiple purchase offers, the best response is to counter the low offer with a price and terms you’re willing to accept. Some buyers make a low offer because they think that’s customary, they’re afraid they’ll overpay, or they want to test your limits.

A counteroffer signals that you’re willing to negotiate. One strategy for your counteroffer is to lower your price, but remove any concessions such as seller assistance with closing costs, or features such as kitchen appliances that you’d like to take with you.

Consider the terms
Price is paramount for most buyers and sellers, but it’s not the only deal point. A low purchase offer might make sense if the contingencies are reasonable, the closing date meets your needs, and the buyer is preapproved for a mortgage. Consider what terms you might change in a counteroffer to make the deal work.

Review your comps
Ask your REALTOR® whether any homes that are comparable to yours (known as “comps”) have been sold or put on the market since your home was listed for sale. If those new comps are at lower prices, you might have to lower your price to match them if you want to sell.

Consider the buyer’s comps
Buyers sometimes attach comps to a low offer to try to convince the seller to accept a lower purchase offer. Take a look at those comps. Are the homes similar to yours If so, your asking price might be unrealistic. If not, you might want to include in your counteroffer information about those homes and your own comps that justify your asking price.

If the buyers don’t include comps to justify their low purchase offer, have your real estate agent ask the buyers’ agent for those comps.

Get the agents together
If the purchase offer is too low to counter, but you don’t have a better option, ask your real estate agent to call the buyer’s agent and try to narrow the price gap so that a counteroffer would make sense. Also, ask your real estate agent whether the buyer (or buyer’s agent) has a reputation for lowball purchase offers. If that’s the case, you might feel freer to reject the offer.

Don’t signal desperation
Buyers are sensitive to signs that a seller may be receptive to a low purchase offer. If your home is vacant or your home’s listing describes you as a “motivated” seller, you’re signaling you’re open to a low offer.

If you can remedy the situation, maybe by renting furniture or asking your agent not to mention in your home listing that you’re motivated, the next purchase offer you get might be more to your liking.

More from HouseLogic
6 Tips for Choosing the Best Purchase Offer for Your Home (http://buyandsell.houselogic.com/articles/6-tips-choosing-best-offer-your-home/)

6 Reasons to Reduce Your Home Price (http://buyandsell.houselogic.com/articles/6-Reasons-To-Reduce-Your-Home-Price/)

Marcie Geffner is a freelance reporter who has been writing about real estate, homeownership and mortgages for 20 years. She owns a ranch-style house built in 1941 and updated in the 1990s, in Los Angeles.

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS
Copyright 2010. All rights reserved.

2012 Income Limits for the California Homebuyer’s Downpayment Assistance Program CHDAP

The CHDAP provides a deferred-payment junior loan – up to 3% of the purchase price, or appraised value, whichever is less, to be used for their down payment and/or closing costs. This program may be combined with a CalHFA or non-CalHFA, first mortgage loan.

For FHA, the Los Angeles Income Limits for the California Homebuyer’s Downpayment Assistance Program CHDAP
based on persons in the household

  1. person $51,550
  2. people $58,900
  3. people $66,250
  4. people $73,600
  5. people $79,500
  6. people $85,400
  7. call me

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Why Is JPMorgan Chase Paying Up to $30,000 for Short Sales?

Apparently Chase has been pursuing homeowners to enroll in their Short Sale Outreach Program. They are sending letters to certain mortgagors, offering up to $30,000 to people who are behind on their mortgages, to try to short sell the property, rather than letting it go to foreclosure. They promise to give approval within a short period of time, and to forgive any deficiency. There is one catch, the mortgage has to be owned by Chase (not merely serviced by Chase).

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Why would they do this? Because they understand the math involved in a foreclosure. The mortgagee (holder of the mortgage) usually loses a huge amount of money if the property goes to foreclosure. In Florida, the average time from beginning to end of a foreclosure is over 600 days! [Editor’s note: nationally, the average is over 500 days.] That’s almost two years worth of interest lost, real estate taxes and legal fees that have to be paid and association dues owed.

When you include the deterioration to the property, the loss in value overall, lenders are lucky to recoup 50% of the money owed on any foreclosure. The average price discount on a short sale is 12%, while on an REO it is 25%. It is much cheaper to pay the delinquent homeowner to get out, than to go through the entire foreclosure process.

The real question is why are they not being as aggressive on the loans which they service? Again, they understand the math involved. Since it is not their money being lost in the process (they already sold the loan to an investor, who is taking the loss), there is little incentive to stop the bleeding. And, the financial remuneration involved in servicing the loans actually goes up once a loan becomes delinquent.

As the servicer of a loan, a bank gets paid a small percentage (usually about 0.25%) of the principal balance of the loan, to take in the monthly payments, and distribute the money (taxes, insurance, interest, principal). But, when a loan becomes delinquent, they raise the percentage (to over 0.5% – doubling their income), charge late fees and make money on force-placing insurance. This means that if they encouraged modifications or short sales of these loans, servicing income would decrease dramatically (since the principal balance of the loans they service would decrease). Instead, the longer a property remains delinquent, the more money they earn.

But wait, how can they be making money when no payments are coming in? Because their servicing agreements state that they are entitled to be paid first out of any proceeds from the sale of the property. So, when the property is finally foreclosed, all of their fees (together with interest on any money they had to front) gets paid to them first, with anything left over going to the investors.

Chase’s program only underscores what many inside the industry have always known. If borrowers and investors could directly deal with each other to modify or allow a short sale, the real estate industry would recover much faster. However, it would mean that banks would not be able to make as much profit, so they do everything possible to keep the communication lines cut. [Bank of America, alone, reported a profit of $2 billion in the 2011 first quarter.]

Peter J. Pike is an attorney, working for a title company located in Orlando, Florida. He has spent the better part of the last four years assisting buyers and sellers of distressed real property, and is a frequent lecturer on the topics of short sales and foreclosures. Mr. Pike has been a practicing attorney for over 25 years, first in New York, where he was the founding partner of Pike & Pike, PC, a law firm in which he concentrated on real estate transactions and litigation. About 10 years ago, he moved to Destin, Florida, where he worked as in-house counsel for a local title agency. Mr. Pike can be reached at Peter.J.Pike@gmail.com.

from http://shortsaledailynews.com/why-is-jpmorgan-chase-paying-up-to-30000-for-short-sales/

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