mortgage services

What is a Variable Rate Mortgage?

2009-06-22T16:23:00.000-07:00

We all know that the mortgage market all around the world is not in the best of shape right now. However, it is not completely frozen. There are still people applying and being accepted for mortgages in Australia and the rest of the world. And, as always, they have been given two mortgage options to choose from. One is the variable rate home loan and the other is the fixed mortgage interest rate.

A fixed mortgage rate is a home loan where the interest rate and monthly payment stay the same for the life of the fixed interest term. So if your payment is currently $1200 a month it will still be $1200 a month at the end of your loan. But the variable rate mortgage is an entirely different beast.

The variable rate mortgage

The variable rate mortgage is the type of mortgage where the rate will change throughout the life of the loan. Actually, it will increase.

This is the type of loan that individuals will take because they cannot afford the high payment of a fixed rate mortgage from the very beginning. They like the lower payment in the beginning because they're pretty sure that they will be able to pay the higher rate in the future due to pay raises, career changes, etc.

Some blame the variable rate mortgage for the mortgage situation throughout the world. Home owners took out variable rate mortgages but were unable to afford payments when the interest rate increased. Although this can be true for some people,it isn't so for all. There are plenty of individuals who were able to pay their variable rate mortgages. The trick, however, is being certain you can handle any increase in payment amount. If you are able to handle the larger amount, you can avoid a large balloon payment at the end of the loan. This is normally something that is part of a fixed rate mortgage. A balloon payment is a lump sum payment at the end of the loan and some individuals simply refinance that part of the loan or they may refinance the entire home. A variable rate mortgage may help you reduce the size of any balloon payment.

So how can you determine if you're able to handle it?

Well, think about how much you can afford now. Could you nearly afford to have a fixed rate mortgage? If so, then there is a chance you will be fine when the rate increases. However, it is hard to tell what is going to happen in the future. The only thing that is certain is that the future is uncertain. But if you stay on top of things, you should be okay. This means familiarizing yourself with the loan. This means knowing when the rate is going to increase so that you can be prepared. When you are prepared, you can cut corners where you need to cut corners and you can ensure that your income flow is what you need it to be when the time comes.

Should you go for it?

Whether or not you choose a variable rate mortgage is entirely up to you. No one can change your mind. Just make sure that you understand everything there is to understand about the loan. It is those who don't understand the loans that really mess up in the end, but those who do understand are the ones who are able to adapt to the changes that occur.

The Reasoning Lenders Use for Unloading Non-Performing Mortgage Notes as Well as Bulk REO Properties

2009-06-22T16:20:00.001-07:00

The impact felt by non-performing assets are detrimental to the economy and mortgage lenders alike. A defaulted mortgage could greatly limit a bank's borrowing ability by nearly 900%. If the property in question is defaulted on, leaving $100,000 owed, the mortgage lender is hindered from borrowing up to $900,000 until the property is unloaded. Also, as the defaulted asset loses value the lenders must record the adjusted value, thereby taking a great financial hit.

(A quick note from the editor: For related information, check out Bulk REO Investing.)

Lenders hands are all but tied when trying to solve the blow non-performing assets place on them. Lenders will exhaust all other avenues before resorting to foreclosure. The high price lenders incur with this process start with the hefty legal expenses. REO (Real Estate Owned) properties also incur pervasive property management headaches until they are unloaded. There is the concern that damage to REO properties, while they sit vacant, increases and further hurts the chances of any real profits. Lastly, there are business dealings, complete with incurred expenses that encompass transferring said properties.

Another problem that lenders face is staffing. Still, if a mortgage lender thinks foreclosure is teh only reasonable option, it is faced with the daunting task of finding enough staff to oversee and unload REO's, especially bulk REO's. It has been almost 15 years since the last major crisis in lending took place and personnel have been robbed of REO experts at staggering levels. Not to mention the fact that the US has few experts capable of handling bulk REO's while juggling the task of managing them, protecting them and divesting them with a low margin of loss.

Without a doubt, today's servicing agencies and mortgage companies seem to singlemindedly be in agreement to unload troubled loans as quickly as possible even if it means selling at a loss.

What Is Reverse Mortgage

2009-06-21T15:26:00.001-07:00

Although there are many mortgage options now being offered to potential homebuyers, one that has received a lot of attention is the reverse mortgage. The United States Department of Housing and Urban Development, also known as HUD, is currently being inundated with questions with a large number of people asking "what is reverse mortgage?"

One of the things that make a reverse mortgage different from others is that it is a private loan, although it also has the backing from the federal government. For homeowners who are 62 years and older, who own and live in the home, and have built up equity over the years, there are funds that can be used in any way wanted.

One of the main values when it comes to what is a reverse mortgage is that the homeowner's income is not checked or even considered. This means the person could have very little or even no income and still qualify for a reverse mortgage loan. Of course, as with any mortgage, there are various dynamics that are looked at by the lender in making the final decision on approval.

In answer to what is a reverse mortgage and is it a good choice, there are other things that come into play. As far as how the money is distributed to the homeowner, there are three options to include taking a lump sum, getting a specified monthly check, having a line of credit, or the homeowner can mix and match the choices. Keep in mind that paying back on this type of mortgage does not take place unless the homeowner moves, sells the home, or should die.

Of course, while there are many incredible value factors for what is a reverse mortgage, gaining knowledge about the good and bad is what will ultimately help the homeowner move in the right direction. As you will see below, consider the good and bad sides to a reverse mortgage prior to making your final decision.

Advantages

The first good thing in response to what is a reverse mortgage and is it a good choice is to know that the funds coming from the home's equity can be used in whatever way the homeowner prefers. This means the money could be used to take vacations, add on to or improve the home, send a child or grandchild off to college, pay off bills, have surgery, etc.

The other side of the question "what is reverse mortgage", you need to understand that along with pros, there are also some cons. One is that the interest rate attached to the loan is variable. This means the repayment would be more costly than that of a traditional type of refinance mortgage and that in the case of death; any family members would likely have little to no equity to inherit. Of course, any other savings, pension, or assets that would be left to loved family members would not be affected whatsoever by the reverse mortgage.

Without verification on income and no monthly payments until dying, moving, or selling, the reverse mortgage is beneficial to many. For the elderly homeowner, a mortgage such as this allows them to continue on with a certain lifestyle without being overwhelmed. People who have worked long and hard their entire life can use funds from a reverse mortgage to kick back and enjoy life.

Finally, if the homeowner were to pass away, any heirs would have the legal option to refinance the loan to that of a more traditional loan. However, there are variances of the reverse mortgage so is inheritance issues are important to the homeowner, these options need to be reviewed and analyzed carefully.

Negative Aspects

As you can see from the information provided above, there is tremendous value associated with what is a reverse mortgage. Unfortunately, there are also some downsides to this type of loan that should be reviewed. First, there are reverse mortgage rates and fees associated with any loan such as application fee, appraisal, insurance, closing, etc. However, in the case of a reverse mortgage, the fees are typically higher and in fact, there are some lenders that will also tack on a service fee of some kind.

Then, when looking at "what is reverse mortgage" and possible disadvantages, keep in mind that the home's condition would also be a factor looked at by the lender. For the loan process to be finalized, the home would have to be deemed structurally sound and in good condition. However, if problems are identified, most often any needed repairs to bring the home to set standards would be added into the reverse mortgage loan.

The question of what is a reverse mortgage and is it a good choice is very important. With a ton of information to decipher, doing your homework doing reverse mortgage quote comparisons and talking to a professional from HUD will help guide you in the right direction.

Home Mortgage lenders: Your one-stop shop!

2009-06-20T15:33:00.000-07:00

Finally! There is a way to solicit and receive multiple quotes from home mortgage lenders without having to make a million stops on the Internet. Mortgage--Lenders.org is your one-stop mortgage quotes shop.

Through this site, you can receive up to 10 quotes without having to access 10 different sites. And there is no better place to start when looking for quotes from multiple sources than Lending Tree, the industry leader for many years. Make Lending Tree your first stop on your mortgage-quotes itinerary.

Today many of the nation's largest lending institutions, as well as a wealth of regional and local lenders, have joined the LendingTree.com marketplace. This diverse network allows LendingTree, LLC to offer a broad range of lending products, including purchase mortgages, refinance loans, home equity loans and lines of credit, auto loans, personal loans, and credit cards, as well as access to student loans and commercial lending products. Dealing with a respected name that partners with the best in the industry is a great way to start.

Next, visit LowerMyBills.com. LowerMyBills.com has a network of respected lenders with which they work to provide multiple quotes, similar to Lending Tree.

LowerMyBills.com is part of Experian Interactive and a premier, free online service for consumers to compare low rates on monthly bills and reduce the cost of living.

BONUS: Maybe you're one of the millions of people who are dealing with the possibility of foreclosure. If so, visit Home Foreclosure Fighter to learn about a loan modification.

Loan modification is a process that allows homeowners and lenders to change the terms of a loan in order to help the borrower stop foreclosure. A loan modification is NOT a new loan. It is the loan restructuring – or renegotiation – of an existing mortgage note. For homeowners behind on their mortgage, or those with a low credit score, a loan modification is often the only option available because they are unable to get approved for a mortgage refinance or a short-refinance.