Homeowners whose loan rates are soaring may want to head for the exits. Many of them, though, will find no way out. If they sell their home or refinance, they will face a penalty of thousands of dollars for paying off their loans early.
Timm Larson is in just such a predicament. Two years ago, he refinanced his home outside Minneapolis with a loan at a low interest rate that has since risen sharply. The monthly payment is eating up nearly half of their family income of about $45,000 a year.
Mr. Larson wants to move into a traditional loan, but can’t see how. He would have to pay the lender a $9,000 exit fee.
“We don’t have any money,“ Mr. Larson said in a phone interview from his three-bedroom house in St. Francis, Minn. “We are barely making our house payments.“
According to the Center for Responsible Lending, these exit fees, called prepayment penalties, were added to more than two-thirds of the adjustable-rate loans. Those loans initially carry a very low interest rate, known as a teaser because it is below the market rate and rises sharply over time.
The lenders say the trade-off is the only way to offer low monthly payments initially because otherwise borrowers would flee when rates adjust upward and make the loan a losing deal. The fees usually equal several months’ interest, and they decline over a few years before disappearing altogether.
Homeowners often think they can keep up with their rising payments or that they will simply refinance later. But the penalties can dash that hope, even if market conditions and their personal circumstances allow it.
Now state governments, regulators and members of Congress are considering whether to rein in prepayment penalties, as consumer advocates suggest. “Borrowers should not be penalized for paying off their debt,” said Ellen Harnick, senior policy counsel to the Center for Responsible Lending, a nonprofit group in Durham, N.C.
Senator Christopher J. Dodd, Democrat of Connecticut, said this week that he would introduce legislation to eliminate the penalties and make other changes in home lending practices.
“About 70 percent of subprime loans have costly prepayment penalties that trap borrowers in high-cost mortgages, mortgages that strip wealth rather than build it, and these penalties keep borrowers from shopping for a better deal,” Senator Dodd said in a hearing of the Senate Banking Committee early this year. When interest rates were high in the 1970s, states took steps to protect consumers from onerous prepayment penalties. Such fees generally disappeared from standard loans. In the late 1990s, though, subprime loans to people with weak credit blossomed, and with those loans came a resurgence in prepayment penalties.
A number of states limit the penalties, but only state-regulated banks are generally subject to those restrictions; mortgage companies and national banks are not.
One state, Wisconsin, actually reversed course and allowed prepayment penalties by state-chartered institutions last year, just as the housing bubble was about to burst. Lenders contended that with lower initial payments, many more people would be able to afford homes and it would level the playing field among lenders.
“You want to give pause before banning prepayment penalties,” said Kurt Pfotenhauer, senior vice president for government affairs at the Mortgage Bankers Association. “They save consumers’ money by lowering their interest rates.”
Mr. Larson and his wife would seem to be good candidates now for a traditional loan. They both have steady jobs: he trims trees, she waits tables. Their fateful refinancing was used to pay off $10,000 in credit card debt accumulated when they traveled to Thailand, his wife’s native country, for their wedding.
The $205,000 loan, which the Larsons signed in February 2005, required them to pay only interest at first, or $11,400 a year, with the 5.6 percent rate to reset after two years. Mr. Larson knew there was a prepayment penalty, but thought it expired in two years; it was actually three years. Now the Larsons’ payments have climbed to $19,000 annually, at a new rate of 9.3 percent.
“It was a loan made with no regard for whether it would be affordable when the rate increased,” said Jordon Ash of Acorn Financial Justice Center, an organization in St. Paul that is trying to help the Larsons. The mortgage broker who advised the Larsons could not be found, and phone calls to the company, Ace Mortgage, were not returned.
Mr. Larson worries that his creditworthiness is sinking as the couple struggle to make the monthly payments. By the time the penalty expires, he may not be able to refinance.
“I had good credit,” he said. “Now it is going down because we can’t keep up. I feel like I am drowning.”
Experts say that many borrowers do not really understand the implications of prepayment penalties — if they are aware they have them at all — and fall prey to sophisticated marketing. In a 2002 lawsuit by Acorn on behalf of a group of borrowers against Household Finance, Acorn said that lenders referred to the practice as “closing the back door” by making it too costly for borrowers to get out of loans with rising rates.
The art of finding borrowers was carefully honed, according to the lawsuit. Among the techniques was sending a check and telling recipients they could have access to a small loan by cashing it. Those who did went on a hot list of prospects in a strategy referred to as target practice, according to the suit.
The penalty “is just an added fee that means more money to the lenders,” said Melissa A. Huelsman, a Seattle lawyer who specializes in predatory lending law. “It is one piece of paper that a borrower signs in a stack of 50 papers. For many people, even if they saw the words, they wouldn’t understand them.”
That was the case for Gertrude Robertson, a 91-year-old widow and nurse’s aide living in Seattle who took out an adjustable-rate mortgage of $450,000 in January.
Even at her age, Mrs. Robertson was earning $3,500 a month, largely by caring for another elderly woman. Then the woman died. Mrs. Robertson’s income was reduced to her monthly Social Security payment of $1,500. Meanwhile, her loan ballooned to $475,000. Unable to make the payments, Mrs. Robertson is listing her home for $510,000.
Mrs. Robertson’s mortgage includes a prepayment penalty of $14,400. A sale at her asking price would not only wipe out any equity but require her to write a check for about $8,600 to cover the penalty and other costs.
Mrs. Robertson says her broker did not give her time to study the loan documents. “Some words I don’t understand,” she said. “When I heard the lady I used to work for tell someone that I was the ‘epitome of cleanliness,’ I went home and cried. I thought I was going to be fired.’ I didn’t know what it meant.”
Last week, Ms. Huelsman persuaded a court in California to waive the prepayment penalty for Mrs. Robertson. She is seeking to have other fees thrown out as well. The loan was made by New Century Financial, now in bankruptcy protection.
The loan servicer, HomeEq, prefers to work one-on-one with customers and does not comment on individual cases, a HomeEq spokeswoman said.
A study by the Center for Responsible Lending shows that borrowers in minority neighborhoods received a disproportionate share of loans with prepayment penalties. The Pew Hispanic Center reported in 2002 that African-American families had a median net worth of just under $6,000. Hispanic families had nearly $8,000. For white Americans, the median net worth was $88,651.
Waiting out the expiration of a penalty, especially a short one, does not sound so bad — until home prices turn south.
That is what happened to Dorinda Weisman, a social worker in Elk Grove, Calif. In 2005 she borrowed $353,000 from Pacific American Mortgage to buy a home in Sacramento with a small down payment. The prepayment penalty, of $9,000, expired in just a year.
“One of the things I always wanted was to own a house,” Ms. Weisman said in a telephone interview. “I was a single parent, and my son is a hemophiliac. I had been living in a middle-class African-American neighborhood that went downhill after the drugs came in.”
By the time the penalty expired, her house had declined in value. Refinancing was no longer possible.
Her interest rate had shot up to 9.8 percent from 4.75 percent. She says about 85 percent of what she brings home — her salary is $60,000 as a social service consultant with the state government — now goes to the mortgage.
She is trying to negotiate a new loan with the help of the Neighborhood Assistance Corporation of America, a nonprofit home ownership organization based in Jamaica Plain, Mass.
“Like a lot of people, the adjustable ate up her equity,“ said her mortgage broker, Antonio Cook of Toneco Financial. “She’s got to ride it out and sacrifice. I tell people, ‘I don’t care if you eat bologna sandwiches, just pay your bills on time.’ If she can ride it out, things start coming up good.”
http://www.timesdaily.com/article/20070913/ZNYT01/709130348&cachetime=5
Thursday, September 13, 2007
Modified mortgages: Lenders talking, then balking
Congress, banking regulators and President Bush all are promoting a potential way for subprime borrowers to avert foreclosure. Called loan modification or loan workout, it means changing a mortgage's terms to make the payments more affordable.
Mortgage lenders have publicly embraced the concept, saying they care about "home ownership preservation" and will work to prevent foreclosures. A "loan mod" might involve freezing the interest of an adjustable-rate mortgage, for example - perhaps setting payments at 8 percent instead of letting them soar to 11 percent.
But consumer advocates say it appears that few modifications are actually occurring, and lenders refuse to provide any data to show how common the practice is.
Chase, Washington Mutual and Wells Fargo banks all declined to provide The Chronicle with statistics on how many mortgages they modify and who qualifies, although all have said publicly that they want to help troubled homeowners. Countrywide Financial, which has also promoted its loan modification efforts, did not return calls.
"There definitely is a disconnect between what the lenders are saying and what borrowers and counseling agencies are experiencing," said Kevin Stein, associate director of the California Reinvestment Coalition, a statewide advocacy alliance that promotes access to credit. "It is disheartening to hear from counseling agencies that things are not working out the way they should. There is no accountability. There is no way for anyone to know if what the banks say is coming to pass."
Around the Bay Area, workers at housing counseling agencies said they have seen few, if any, loan modifications offered to their clients.
Lenders are uniformly unwilling to make loan modifications for homeowners whose interest rates are resetting higher, said Rick Harper, director of housing at Consumer Credit Counseling Services of San Francisco, which talks to about 1,000 delinquent borrowers a month.
On the other hand, he said, for people with short-term financial crunches - from job loss, illness or divorce, for instance - lenders today are more amenable to modifications and forbearance. That allows homeowners to make reduced or no payments temporarily, then the extra amount is tacked onto the loan at the end.
The catch-22 is that the homeowners who most need loan modifications are not those with temporary problems. They are people who signed up for adjustable-rate mortgages and now cannot make the escalating payments.
The problem is certain to get more acute. About 2 million ARMs are due to reset sharply higher in the next 18 months. Because most of those homeowners cannot afford the higher rates - and the softening housing market means they cannot refinance or sell for enough money to repay the loan - those resets are likely to trigger a huge wave of foreclosures unless the loans are modified.
"Lenders are not modifying these (adjustable-rate) loans," said Martin Eichner, director of dispute resolution at Sunnyvale's Project Sentinel, a nonprofit agency that helps consumers with housing problems. "A lot of these loans are so hopeless and irrational that lenders won't even talk to us."
Lenders are tight-lipped about many aspects of loan modification, including how they decide which borrowers qualify for workouts.
But anecdotal evidence suggests that the people who get loan workouts are those with healthy financial profiles: good income, high credit scores, money in the bank, equity in their house - in short, people who would qualify for prime loans or refinancing. That effectively leaves out the homeowners who most need loan modifications. If their finances had been sterling in the first place, they would not have been subprime borrowers.
To be sure, many subprime borrowers have a basic problem that a loan modification cannot solve: They cannot afford their houses. They never should have gotten the mortgages they have now. They might have exaggerated their incomes or underestimated the drain of monthly payments.
Still, it appears that more people might qualify for loan modifications than actually receive them.
The NeighborWorks America Homeownership Preservation Foundation runs a hot line for troubled homeowners. In recent months, a huge national campaign has promoted its (888) 995-4673 number. The hot line counseled 15,207 people in the second quarter, analyzing their budgets in detail. Of those, 26 percent were told they might qualify for a loan workout, according to Tracy Morgan, a spokeswoman for the group. Another 28 percent were told to try to improve their budgets then seek a workout.
The group has no data on whether any of those homeowners actually received a loan modification.
Lenders say it's only common sense that they apply due diligence to candidates for modifications.
"If the borrower is not going to be able to handle even a modified loan in the long term, it's probably good for the lender, investor and borrower to face that fact early on," said Tom Kelly, a spokesman for Chase, which services half a trillion dollars of mortgages. "To extend somebody so they can make payments for (an additional) six months and then face foreclosure anyway, (doesn't) accomplish very much. We've incurred more costs on behalf of the investors (and those) investors are not much closer to getting their money back. If the borrower can't handle it, they can't handle it."
In talking about investors, Kelly is referring to the fact that most mortgages today are packaged and sold on Wall Street in a process called securitization. That creates roadblocks for loan modification because the bank that collects consumers' payments often does not have the authority to decide about a workout. Securitization also raises concerns about tax and accounting consequences of loan modifications.
But this summer, Congress aggressively pushed government agencies to help remove those impediments. The Securities and Exchange Commission and the Financial Accounting Standards Board issued letters saying that loans could be modified even before the homeowner had missed payments if it was "reasonably foreseeable" that default might occur.
Kelly said Chase is proactively calling ARM borrowers two to five months before their reset date to make sure they are aware what their payments are likely to be. If homeowners say they cannot afford the higher rate, Chase contacts the investors to see if they are willing to offer a workout.
"We want to get as high and fair a rate as the contract allows, but we want to also be able to collect it," he said.
There are several reasons loan modifications could help all parties and might start becoming more common as the wave of ARM resets hits.
Politically, they are palatable because they do not involve a taxpayer bailout for homeowners who got in over their heads. Instead, the lender (or investor) picks up the tab, but the homeowner obviously still has to consistently make payments.
Financially, they make sense for lenders and investors compared with the alternative of foreclosure. A foreclosure can cost the lender from 20 to 40 percent of the loan balance, said John Mechem, a spokesman for the Mortgage Bankers Association in Washington, D.C. "There's a real incentive for lenders wherever possible to work out some sort of agreement," he said.
Chris Cagan, director of research and analytics at First American CoreLogic, a research firm in Santa Ana, agreed.
"The lender would rather have a performing loan than have a (property) vacant, possibly for a year in a slow market, paying taxes, maintenance, insurance and finally selling it at a discount. They really don't want to do that. They'd rather keep that thing on their books as a performing asset and not have to take a hit. It's not because they love humanity."
http://sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/09/13/MNJ8S1FKC.DTL
Mortgage lenders have publicly embraced the concept, saying they care about "home ownership preservation" and will work to prevent foreclosures. A "loan mod" might involve freezing the interest of an adjustable-rate mortgage, for example - perhaps setting payments at 8 percent instead of letting them soar to 11 percent.
But consumer advocates say it appears that few modifications are actually occurring, and lenders refuse to provide any data to show how common the practice is.
Chase, Washington Mutual and Wells Fargo banks all declined to provide The Chronicle with statistics on how many mortgages they modify and who qualifies, although all have said publicly that they want to help troubled homeowners. Countrywide Financial, which has also promoted its loan modification efforts, did not return calls.
"There definitely is a disconnect between what the lenders are saying and what borrowers and counseling agencies are experiencing," said Kevin Stein, associate director of the California Reinvestment Coalition, a statewide advocacy alliance that promotes access to credit. "It is disheartening to hear from counseling agencies that things are not working out the way they should. There is no accountability. There is no way for anyone to know if what the banks say is coming to pass."
Around the Bay Area, workers at housing counseling agencies said they have seen few, if any, loan modifications offered to their clients.
Lenders are uniformly unwilling to make loan modifications for homeowners whose interest rates are resetting higher, said Rick Harper, director of housing at Consumer Credit Counseling Services of San Francisco, which talks to about 1,000 delinquent borrowers a month.
On the other hand, he said, for people with short-term financial crunches - from job loss, illness or divorce, for instance - lenders today are more amenable to modifications and forbearance. That allows homeowners to make reduced or no payments temporarily, then the extra amount is tacked onto the loan at the end.
The catch-22 is that the homeowners who most need loan modifications are not those with temporary problems. They are people who signed up for adjustable-rate mortgages and now cannot make the escalating payments.
The problem is certain to get more acute. About 2 million ARMs are due to reset sharply higher in the next 18 months. Because most of those homeowners cannot afford the higher rates - and the softening housing market means they cannot refinance or sell for enough money to repay the loan - those resets are likely to trigger a huge wave of foreclosures unless the loans are modified.
"Lenders are not modifying these (adjustable-rate) loans," said Martin Eichner, director of dispute resolution at Sunnyvale's Project Sentinel, a nonprofit agency that helps consumers with housing problems. "A lot of these loans are so hopeless and irrational that lenders won't even talk to us."
Lenders are tight-lipped about many aspects of loan modification, including how they decide which borrowers qualify for workouts.
But anecdotal evidence suggests that the people who get loan workouts are those with healthy financial profiles: good income, high credit scores, money in the bank, equity in their house - in short, people who would qualify for prime loans or refinancing. That effectively leaves out the homeowners who most need loan modifications. If their finances had been sterling in the first place, they would not have been subprime borrowers.
To be sure, many subprime borrowers have a basic problem that a loan modification cannot solve: They cannot afford their houses. They never should have gotten the mortgages they have now. They might have exaggerated their incomes or underestimated the drain of monthly payments.
Still, it appears that more people might qualify for loan modifications than actually receive them.
The NeighborWorks America Homeownership Preservation Foundation runs a hot line for troubled homeowners. In recent months, a huge national campaign has promoted its (888) 995-4673 number. The hot line counseled 15,207 people in the second quarter, analyzing their budgets in detail. Of those, 26 percent were told they might qualify for a loan workout, according to Tracy Morgan, a spokeswoman for the group. Another 28 percent were told to try to improve their budgets then seek a workout.
The group has no data on whether any of those homeowners actually received a loan modification.
Lenders say it's only common sense that they apply due diligence to candidates for modifications.
"If the borrower is not going to be able to handle even a modified loan in the long term, it's probably good for the lender, investor and borrower to face that fact early on," said Tom Kelly, a spokesman for Chase, which services half a trillion dollars of mortgages. "To extend somebody so they can make payments for (an additional) six months and then face foreclosure anyway, (doesn't) accomplish very much. We've incurred more costs on behalf of the investors (and those) investors are not much closer to getting their money back. If the borrower can't handle it, they can't handle it."
In talking about investors, Kelly is referring to the fact that most mortgages today are packaged and sold on Wall Street in a process called securitization. That creates roadblocks for loan modification because the bank that collects consumers' payments often does not have the authority to decide about a workout. Securitization also raises concerns about tax and accounting consequences of loan modifications.
But this summer, Congress aggressively pushed government agencies to help remove those impediments. The Securities and Exchange Commission and the Financial Accounting Standards Board issued letters saying that loans could be modified even before the homeowner had missed payments if it was "reasonably foreseeable" that default might occur.
Kelly said Chase is proactively calling ARM borrowers two to five months before their reset date to make sure they are aware what their payments are likely to be. If homeowners say they cannot afford the higher rate, Chase contacts the investors to see if they are willing to offer a workout.
"We want to get as high and fair a rate as the contract allows, but we want to also be able to collect it," he said.
There are several reasons loan modifications could help all parties and might start becoming more common as the wave of ARM resets hits.
Politically, they are palatable because they do not involve a taxpayer bailout for homeowners who got in over their heads. Instead, the lender (or investor) picks up the tab, but the homeowner obviously still has to consistently make payments.
Financially, they make sense for lenders and investors compared with the alternative of foreclosure. A foreclosure can cost the lender from 20 to 40 percent of the loan balance, said John Mechem, a spokesman for the Mortgage Bankers Association in Washington, D.C. "There's a real incentive for lenders wherever possible to work out some sort of agreement," he said.
Chris Cagan, director of research and analytics at First American CoreLogic, a research firm in Santa Ana, agreed.
"The lender would rather have a performing loan than have a (property) vacant, possibly for a year in a slow market, paying taxes, maintenance, insurance and finally selling it at a discount. They really don't want to do that. They'd rather keep that thing on their books as a performing asset and not have to take a hit. It's not because they love humanity."
http://sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/09/13/MNJ8S1FKC.DTL
Va Home Loan Refinance
The point of this va home loan refinance newsletter is to help you to a higher level as well as show you all this remarkable topic has to propose.
Loan takers with the luxury of deciding from 30 and 15-year mortgages refinance terms must resolve if they`re payment-minimizers or profit-maximizers. The first position is mostly concerned with today while the maximizers with the future.
A home loan refinance installment for a 100K US$ 30-year loan at 7% is 665 US$ while for a 15-year loan at 6.75% it is 885 US$. A lower installment of the thirty year is certainly attractive.
On the other hand, after 5 years a borrower who received the fifteen year mortgage has repaid 20K USD while a borrower who took out the thirty year has paid out only 5 thousands US$. That totals a wide spread regarding assets accumulation of $15K.
The "flexibility" that you mention as the advantage of the 30-year mortgage is actually the freedom to spend the difference of cost on other items. Yet, I`m amazed by how many people choose the thirty year plan to get this freedom, and afterwards see they actually don`t want it! Following a few years of being homeowners, the people find out that the thing they really desire is to accrue ownership more rapidly than the 30-year loan enables. The people realize, essentially, the relevance of the future.
At this point, many of those that took out 30-year loans begin systematically putting down additional payments in order to build ownership faster. Of course, the people would`ve been wiser to take the 15-year from the beginning and benefiting from the reduced interest rate, but better late then never.
Several of these impatient borrowers are not able to find the willpower that a voluntary investments program requires. These are the ones that are attracted to the bi-weekly installment programs that are offered by several lenders and/or 3rd party groups. With a biweekly policy, in lieu of one monthly installment, a borrower puts down 50% the monthly payment every 2 weeks. This results in twenty-six payments yearly, which means 13 monthly payments as opposed to twelve. The additional installment yearly develops equity quicker.
Since a biweekly entails a contractual obligation from a loan taker, it offers a discipline that the personally designed policies don`t have. A loan taker covers this discipline with an initial fee and with forfeited interest on the accelerated payment. These are extra costs a loan taker might have avoided through taking out the 15-year mortgage at the beginning.
There is one circumstance where a profit-maximizing borrower that is able to make the payment on a fifteen year loan may otherwise opt for a thirty year loan. A loan taker with appealing business ventures, such as a private business or stocks, may select a longer term and use the difference in installment for fruitful ventures. This va home loan refinance work is the greatest solution to obtain the information that you require in order to fully comprehend the difficulty of this issue.
http://www.avahomeloanrefinance.com/
Loan takers with the luxury of deciding from 30 and 15-year mortgages refinance terms must resolve if they`re payment-minimizers or profit-maximizers. The first position is mostly concerned with today while the maximizers with the future.
A home loan refinance installment for a 100K US$ 30-year loan at 7% is 665 US$ while for a 15-year loan at 6.75% it is 885 US$. A lower installment of the thirty year is certainly attractive.
On the other hand, after 5 years a borrower who received the fifteen year mortgage has repaid 20K USD while a borrower who took out the thirty year has paid out only 5 thousands US$. That totals a wide spread regarding assets accumulation of $15K.
The "flexibility" that you mention as the advantage of the 30-year mortgage is actually the freedom to spend the difference of cost on other items. Yet, I`m amazed by how many people choose the thirty year plan to get this freedom, and afterwards see they actually don`t want it! Following a few years of being homeowners, the people find out that the thing they really desire is to accrue ownership more rapidly than the 30-year loan enables. The people realize, essentially, the relevance of the future.
At this point, many of those that took out 30-year loans begin systematically putting down additional payments in order to build ownership faster. Of course, the people would`ve been wiser to take the 15-year from the beginning and benefiting from the reduced interest rate, but better late then never.
Several of these impatient borrowers are not able to find the willpower that a voluntary investments program requires. These are the ones that are attracted to the bi-weekly installment programs that are offered by several lenders and/or 3rd party groups. With a biweekly policy, in lieu of one monthly installment, a borrower puts down 50% the monthly payment every 2 weeks. This results in twenty-six payments yearly, which means 13 monthly payments as opposed to twelve. The additional installment yearly develops equity quicker.
Since a biweekly entails a contractual obligation from a loan taker, it offers a discipline that the personally designed policies don`t have. A loan taker covers this discipline with an initial fee and with forfeited interest on the accelerated payment. These are extra costs a loan taker might have avoided through taking out the 15-year mortgage at the beginning.
There is one circumstance where a profit-maximizing borrower that is able to make the payment on a fifteen year loan may otherwise opt for a thirty year loan. A loan taker with appealing business ventures, such as a private business or stocks, may select a longer term and use the difference in installment for fruitful ventures. This va home loan refinance work is the greatest solution to obtain the information that you require in order to fully comprehend the difficulty of this issue.
http://www.avahomeloanrefinance.com/
Wednesday, September 12, 2007
Hard Money Mortgage Refinance
A hard money refinance loan is a loan backed by a private investor or investment firm. Hard money loans are meant to be a shot term solution and as more Americans slide towards foreclosure they may be forced to turn to a hard money refinance to save their homes.
Refinancing with a hard money loan is a a good option for home owners that are facing foreclosure. These loans fund very fast and can save your home from being auctioned off. Refinancing with a hard money loan is also a good alternative for home owners that have a credit score that does not allow them to refinance with a conventional or Sub Prime lender The credit score cut off for Sub Prime lending is 500, after you dip below a 500 credit score your options are severely limited and a hard money loan is usually the only option left.
Interest rates for hard money loans are usually in the 10-18% range and will vary greatly from lending investor to lending investor. One of the things that stays generally consistent is the amount of equity needed in your home. Hard money lenders will in most cases only lend to 65%-70% of the homes appraised value, this of course will also vary with investors and your particular geographic area. Hard money lenders will charge points to the borrower, These points are another way a hard money lender makes their money. Average points for a residential loan is 5-7 points. 1 point is 1 percent of the loan amount, this can get quite expensive on larger more expensive homes.
While the interest rates and fees will be considerably higher then a conventional or sub prime loan a hard money refinance does offer credit troubled home owners a short term solution to save their homes or pay off debt.
Learn More about Hard Money Refinance and Sub Prime Loans
Educate your self with more then 1500 Mortgage and Real estate articles at http://www.mkemortgage.net
Article Source: http://EzineArticles.com/?expert=Darin_Sewell
Refinancing with a hard money loan is a a good option for home owners that are facing foreclosure. These loans fund very fast and can save your home from being auctioned off. Refinancing with a hard money loan is also a good alternative for home owners that have a credit score that does not allow them to refinance with a conventional or Sub Prime lender The credit score cut off for Sub Prime lending is 500, after you dip below a 500 credit score your options are severely limited and a hard money loan is usually the only option left.
Interest rates for hard money loans are usually in the 10-18% range and will vary greatly from lending investor to lending investor. One of the things that stays generally consistent is the amount of equity needed in your home. Hard money lenders will in most cases only lend to 65%-70% of the homes appraised value, this of course will also vary with investors and your particular geographic area. Hard money lenders will charge points to the borrower, These points are another way a hard money lender makes their money. Average points for a residential loan is 5-7 points. 1 point is 1 percent of the loan amount, this can get quite expensive on larger more expensive homes.
While the interest rates and fees will be considerably higher then a conventional or sub prime loan a hard money refinance does offer credit troubled home owners a short term solution to save their homes or pay off debt.
Learn More about Hard Money Refinance and Sub Prime Loans
Educate your self with more then 1500 Mortgage and Real estate articles at http://www.mkemortgage.net
Article Source: http://EzineArticles.com/?expert=Darin_Sewell
Home Mortgage Refinance Rates Vary By Borrower
It may be rare to find a home mortgage refinance rate as low as the original mortgage, but with a little bit of research it may be possible. Many homeowners may have bought their home during a time when money for home loans was plentiful and during a downturn in the economy, the money may not be as freely available. When this occurs, the prospect of finding an adjustable rate mortgage is also unlikely.
In order to get out from under an adjustable rate mortgage, many seek to refinance their existing mortgage, using the home’s equity as collateral for the loan with a fixed rate. However, several factors may be used to determine the home mortgage refinance rate available for each individual borrower. Additionally, the mortgage company may have many stipulations on any refinancing loans they offer.
There are numerous companies offering a home mortgage refinance rate at a fixed mortgage and many advertise low rates. However, they usually have attached disclaimers that the loans at that rate are for persons with an impeccable credit history that usually do not need their services in the first place. Those that have a less than stellar credit report will be paying more in interest.
External Influences On Interest Rates
There are times when the location of a home can influence the home mortgage refinance rate. Regardless of a person’s credit history, if the lender deems the location of the home is in an area considered to be blighted, they may be reluctant to loan money for refinancing for any cause. Their reasoning may be that with the neighborhood going downhill, the value of the property will surely fall with it, making the value of the property considerably less than when it was first purchased.
Many times if money is available for homes in a so-called bad neighborhood, it will have a considerably higher home mortgage refinance rate than similar homes in other areas. The condition of the home will also play into the availability of loan money, even if the loan is for home improvements. The lender may determine the home mortgage refinance rate charged for a loan in that area may send the payment out of reach of the borrower.
Unfortunately, there are a few companies that practice predatory lending practices, loaning money with a high home mortgage refinance rate, knowing ahead of time the borrower will end up defaulting on the loan. When the house goes into foreclosure, the lender will try to buy it at auction to resell it over and over again, using the came practices.
Richard Henderson runs his own internet marketing business in Las Vegas. Check out these great Home Refinance articles and resources or the more general Personal Finance Articles and advice.
Article Source: http://EzineArticles.com/?expert=Rich_Henderson
In order to get out from under an adjustable rate mortgage, many seek to refinance their existing mortgage, using the home’s equity as collateral for the loan with a fixed rate. However, several factors may be used to determine the home mortgage refinance rate available for each individual borrower. Additionally, the mortgage company may have many stipulations on any refinancing loans they offer.
There are numerous companies offering a home mortgage refinance rate at a fixed mortgage and many advertise low rates. However, they usually have attached disclaimers that the loans at that rate are for persons with an impeccable credit history that usually do not need their services in the first place. Those that have a less than stellar credit report will be paying more in interest.
External Influences On Interest Rates
There are times when the location of a home can influence the home mortgage refinance rate. Regardless of a person’s credit history, if the lender deems the location of the home is in an area considered to be blighted, they may be reluctant to loan money for refinancing for any cause. Their reasoning may be that with the neighborhood going downhill, the value of the property will surely fall with it, making the value of the property considerably less than when it was first purchased.
Many times if money is available for homes in a so-called bad neighborhood, it will have a considerably higher home mortgage refinance rate than similar homes in other areas. The condition of the home will also play into the availability of loan money, even if the loan is for home improvements. The lender may determine the home mortgage refinance rate charged for a loan in that area may send the payment out of reach of the borrower.
Unfortunately, there are a few companies that practice predatory lending practices, loaning money with a high home mortgage refinance rate, knowing ahead of time the borrower will end up defaulting on the loan. When the house goes into foreclosure, the lender will try to buy it at auction to resell it over and over again, using the came practices.
Richard Henderson runs his own internet marketing business in Las Vegas. Check out these great Home Refinance articles and resources or the more general Personal Finance Articles and advice.
Article Source: http://EzineArticles.com/?expert=Rich_Henderson
Florida Mortgage Loan
I know there are lots of people out there who have a Florida mortgage loan and are under pressure with how they are going to be able to deal with the current situation that’s happening in Florida. Are you a person who don’t know if you are going to be able to stay on top of the bills? Is your Florida mortgage loan an adjustable rate mortgage and is your payment going to go up soon? I know that sound grim, but you are not alone and there are many options out there that will make a difference in your situation.
Most Florida Mortgage loans have been so easy to get for many people over the last couple of years. Florida mortgage rates have been extremely low making you want one. Florida homes have been going up in value like crazy. Well now in Florida it’s time to pay the price for some homeowners. When it comes to Florida mortgage loans most ways have become harder for Florida homeowners. Most Mortgage companies rates are higher than the past couple of years, homes are not appreciating in value like they once did. Florida mortgage loans are going into foreclosure at a fast pace.
So, the big question is what to do now. Well in Florida we need to be a little more artistic. One of the first things you need to do as a Florida homeowner is not to worry about the interest rate. If you have been on the search for the best Florida mortgage rate then you might be making a big mistake. Did you know that I can actually raise a homeowner’s rate and still save them thousands of dollars. This is all because as a homeowner what you really should be paying attention to is what is going to allow you a low overall monthly payment and what Florida mortgage loan is going to the financial freedom you deserve.
So many people that I speak with just care about what you can offer them for a new rate. I have found this to be true throughout every state and it is something that needs to change when it comes down to a Florida mortgage loan. If you are too concerned about what the mortgage rate is then you may miss your train on a big opportunity to save yourself lots of money.
Troy Francis is a mortgage loan officer for Dedicated Mortgage. Troy has several years as a mortgage professionals and has helped hundreds of homeowners in several states that we are licensed in. Please, feel free to contact him anytime if your looking for a refinance, home loan, home equity and much more.
Troy Francis is author for century mortgages. Please feel free to use this article for your use. We only ask you kindly leave our link active: http://www.centurymortgages.org
Article Source: http://EzineArticles.com/?expert=Troy_Francis
Most Florida Mortgage loans have been so easy to get for many people over the last couple of years. Florida mortgage rates have been extremely low making you want one. Florida homes have been going up in value like crazy. Well now in Florida it’s time to pay the price for some homeowners. When it comes to Florida mortgage loans most ways have become harder for Florida homeowners. Most Mortgage companies rates are higher than the past couple of years, homes are not appreciating in value like they once did. Florida mortgage loans are going into foreclosure at a fast pace.
So, the big question is what to do now. Well in Florida we need to be a little more artistic. One of the first things you need to do as a Florida homeowner is not to worry about the interest rate. If you have been on the search for the best Florida mortgage rate then you might be making a big mistake. Did you know that I can actually raise a homeowner’s rate and still save them thousands of dollars. This is all because as a homeowner what you really should be paying attention to is what is going to allow you a low overall monthly payment and what Florida mortgage loan is going to the financial freedom you deserve.
So many people that I speak with just care about what you can offer them for a new rate. I have found this to be true throughout every state and it is something that needs to change when it comes down to a Florida mortgage loan. If you are too concerned about what the mortgage rate is then you may miss your train on a big opportunity to save yourself lots of money.
Troy Francis is a mortgage loan officer for Dedicated Mortgage. Troy has several years as a mortgage professionals and has helped hundreds of homeowners in several states that we are licensed in. Please, feel free to contact him anytime if your looking for a refinance, home loan, home equity and much more.
Troy Francis is author for century mortgages. Please feel free to use this article for your use. We only ask you kindly leave our link active: http://www.centurymortgages.org
Article Source: http://EzineArticles.com/?expert=Troy_Francis
North Dakota Refinance Loans – Using Online Resources to Refinance Your Loan
Refinancing is a big decision. There are many different things you will need to consider before determining that a North Dakota refinance loan is right for you. If you want to make the research process quick and easy, try using some of the many online resources that are available to refinance your loan.
Refinance Articles
If you aren't familiar with refinance loans, the first thing you will want to do is read some of the refinance articles that can be found around the web. Learn the difference between adjustable rates, fixed rates, interest only, and balloon refinance loans, find out the pros and cons of long terms and short term loans, and much more. By reading up on the subject, you can make an informed decision when it comes time to choose a North Dakota refinance loan package.
Refinance Calculators and Rate Reports
Points, rate changes, and lending fees can affect how much your North Dakota refinance loan will cost you. To get help crunching the numbers, you should take advantage of some of the refinance calculators that can be found online. These calculators can help you determine which refinance loan options will be affordable and which ones won't.
To find out what rate you might be paying, you can also check out the various rate reports on the web. Do it frequently, as rates on refinance loans in North Dakota are dropping. The current average for 15-year refinance loans is 5.76 percent. A week from now, it could be even lower.
Online Pre-Qualifications
Just because you think you can afford a specific refinance loan package, it doesn't mean that lenders will think the same way. An online pre-qualification can help to eliminate any doubts. There are currently many different lenders who specialize in North Dakota refinance loans offering this no obligation service.
Visit North Dakota Lending Center to see our Top 3 Refinance Lenders Servicing North Dakota, whether you are looking for home purchase, refinance or a home equity loan.
Article Source: http://EzineArticles.com/?expert=Jane_A._Hale
Refinance Articles
If you aren't familiar with refinance loans, the first thing you will want to do is read some of the refinance articles that can be found around the web. Learn the difference between adjustable rates, fixed rates, interest only, and balloon refinance loans, find out the pros and cons of long terms and short term loans, and much more. By reading up on the subject, you can make an informed decision when it comes time to choose a North Dakota refinance loan package.
Refinance Calculators and Rate Reports
Points, rate changes, and lending fees can affect how much your North Dakota refinance loan will cost you. To get help crunching the numbers, you should take advantage of some of the refinance calculators that can be found online. These calculators can help you determine which refinance loan options will be affordable and which ones won't.
To find out what rate you might be paying, you can also check out the various rate reports on the web. Do it frequently, as rates on refinance loans in North Dakota are dropping. The current average for 15-year refinance loans is 5.76 percent. A week from now, it could be even lower.
Online Pre-Qualifications
Just because you think you can afford a specific refinance loan package, it doesn't mean that lenders will think the same way. An online pre-qualification can help to eliminate any doubts. There are currently many different lenders who specialize in North Dakota refinance loans offering this no obligation service.
Visit North Dakota Lending Center to see our Top 3 Refinance Lenders Servicing North Dakota, whether you are looking for home purchase, refinance or a home equity loan.
Article Source: http://EzineArticles.com/?expert=Jane_A._Hale
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