Category Archives: mortgage help

Women & Finance: Buying a House as a Single Woman

Posted on March 27, 2012 by admin

Owning a home has long been touted as the American dream, and more and more women are making the choice to buy their own homes rather than delaying home ownership until they marry or form a partnership with a significant other. Whether you are married or single at the time when you buy your home, however, you need to make sure you understand the financial and other implications of the house and are prepared to take the responsibility on. Buying a House as a Single Woman Deciding to buy a home when you are single can be a smart move when your money situation is right. When you buy a house on your own, you get the opportunity to purchase exactly what you would like without having to consult anyone else’s opinion. However, you will also need to be solely responsible for paying the mortgage and the bills on that house. This can be a risky position to be in, since a job loss means that your entire household income goes rather than just half of the income going.  As such, if you plan to buy a house on your own, you should make absolutely sure you have a solid emergency fund (6 months of living expenses, at a minimum, is advisable). As you consider purchasing a home when you are single, you should also think about: What will you do with the home if your family situation changes? Is it large enough to provide a home for you and your husband, or for you and your husband and children? If not, will you be able to rent the home out easily (and do you want to be a landlord) or will you be able to sell the house? Normally, you should not buy a house unless you plan to stay put for at least two years, as otherwise you are almost guaranteed to lose money on closing costs. So, be sure your situation is stable and that you won’t need to sell immediately soon. Are you ready to take on the responsibility, both financial and otherwise? When you buy a house on your own, you will become solely responsible for handling the repairs on that home and for maintaining the house. If you aren’t skilled in DIY work or solving home problems, then you will need to be responsible for hiring the right people to do the work and for overseeing that work. Even basic home maintenance takes a lot of time and money, and home repairs can be even more burdensome. Make sure you are prepared to take on the task before you decide to buy. Buying a Home When You are Married Buying a home when you are married brings with it its own complications as well. First and foremost, you will need to decide how to take title to the home and who is going to be responsible for the mortgage. In most cases, both spouses apply for a mortgage for a home together and take title to the house together. Sometimes, however, one spouse has significantly better credit than the other and it makes more financial sense to apply for the mortgage only in that spouse’s name. This requires a tremendous amount of trust on the part of both parties, as the spouse who takes the mortgage in his or her name needs to trust the other party to help pay it, and the party without the mortgage in his name needs to have some legal assurances that he is earning an ownership stake in the property. Making the Choice to Buy Whether you are single or married, you shouldn’t make a choice to buy a home until you are reasonably certain that you will be remaining in the home for a few years and that you have the money to both pay for and take care of the home. Career stability and an emergency fund are also necessary. You should also think carefully about how to structure any real estate transaction and consider getting help from a financial and a legal advisor to make sure your legal rights and interests are protected and that you are making a wise move. Continue reading →

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Understanding Principal Reduction for an Underwater Mortgage

Posted on March 14, 2012 by admin

Part of the American dream is to be a homeowner.  The pursuit of obtaining that status symbol, and separating oneself from those who have not yet achieved home ownership, caused housing prices to skyrocket.  Every bubble must burst, and with the drop off in housing sales came a slump in housing prices.  Many new homeowners found they owed more on their homes than the house was actually worth, in other words, they were in an underwater mortgage.  Since the start of the housing crisis congress has been working on a way to help those who face an imminent foreclosure with programs like the Principal Reduction Alternative of the Making Home Affordable program. After buying a house at the top of the bubble, a home owner may find they are underwater with their mortgage.  As long as they are still making payments, they have options as to what they can do to get their mortgage back on track.  The Principal Reduction Alternative will allow the person to work closely with their bank, and have the negative equity wiped out.  That means their mortgage will be reduced to the amount of the appraised value of the house.  This program is not for everybody, however, there are some pretty strict eligibility requirements a person must meet before they can be considered. The biggest benefit of the PRA program is obviously to the homeowner. The bank has to write off some of the principal on the loan in hopes that the homeowner will stick around and keep making their payments.  This is why even one missing document can cause the homeowner to start completely over in the application process .  Banks do not want to take a hit, but they would rather write off part of the loan, than the whole thing.  The homeowner could simply walk away and allow the house to be foreclosed.  This seems like the easiest option, but it can result in a 200 to 300 point reduction on their FICO score .  With that big of a hit there is little chance they will be able to finance anything in the near future.  While there are a great number of good aspects to the program, many people, such as James R. Hagerty from the Wall Street Journal feel the program could actually end up causing more foreclosures than it will prevent. Banks are not in the real estate business.  By taking ownership of a property they end up losing money by selling the house quickly and cheaply, and paying all the maintenance and upkeep costs until it can be sold.  So banks will do whatever they can in order to help a homeowner stay in their house.  Through the PRA program, or an FHA short refinance , or one of the many other options available through MakingHomeAffordable.gov people have options.  This program gives those who feel their home is no longer affordable some leverage. With care in filling out the application, and making sure all the proper documents are in order, they can keep their home and not worry quite as much about making those monthly payments. Continue reading →

Posted in Credit Report, Foreclosure, housing, Mortgage, mortgage help, mortgage info, Mortgage Rates, Online Banks, Prime Rate, Principal Reduction, real estate, underwater mortgage | Tagged , , , , , , , , | Leave a comment

Should You Prepay Your Mortgage?

Posted on March 6, 2012 by admin

Ever since the Mayflower arrived on the eastern shore of North America, Americans have pursued the dream of home ownership. But the mortgage that comes with home ownership in the modern era has become the source of a great deal of debate. While mortgages allow the vast majority of Americans to own their own homes, they have also become a millstone around the neck of many who end up purchasing more home than they can afford. Paying off your mortgage sounds like a great idea at first, but it may not always be the best move for you financially. There are many issues to consider in this equation and expert opinion varies widely on this subject. Some of the factors that can influence whether or not you should prepay your mortgage include: Tax Savings – If you are able to itemize deductions on your income tax return because of the mortgage interest that you are paying, then this takes a bite out of your total home ownership cost. In order to see just how much you are really saving from your interest, you can prepare your tax return both with and without declaring the interest and see what the difference is. In some cases, the difference will be quite substantial, because those who are able to itemize their deductions can then take a number of deductions that may not have added up to enough to itemize without their mortgage interest, such as charitable contributions, personal property tax and unreimbursed medical expenses. Therefore the difference can at times add up to considerably more than the amount that your mortgage interest exceeds the standard deduction. However, you may also discover that your interest is not making nearly as much of a difference as you think; those who will not be able to deduct their home mortgage interest are deprived of one of the key advantages of home ownership. Investment Return – If the rate of interest on your mortgage is relatively low, then you may want to consider focusing on long-term investments that pay higher returns over time. Most financial planners will tell you not to pay off your mortgage at the expense of saving for retirement, because if your mortgage rate is 5% and you are averaging a 10% return on investment in your IRA and company retirement plan, then you are probably smarter to keep your mortgage and play the spread than to pay it off. Of course, the zero net gain in the stock market from 2000 – 2010 further complicates this picture along with the abysmally low rates offered by fixed income instruments. Risk Tolerance – Proponents of mortgage prepayment use the above argument to justify doing exactly the opposite because of market uncertainty. After all, if your mortgage rate is 5% and you pay it off, then you have earned a 5% guaranteed rate of return. Furthermore, your house will remain paid off regardless of what the markets do in the future, and your monthly income will go considerably further without a mortgage payment. The Subprime Mortgage Meltdown of 2008 has also left thousands of homeowners upside-down on their mortgages, thus further complicating the picture. But there is ultimately no absolute right or wrong answer to the question of whether or not you should pay off your mortgage early. The factors listed above will differ substantially from one person to another, thus making what is right for one wrong for another. A careful examination of your entire financial picture is necessary before deciding what to do here, and those who are not financially sophisticated would be wise to consult a financial planner on this matter. Continue reading →

Posted in home mortgage, IRA, Loans and lending, Mortgage, mortgage help, mortgage info, Mortgage Rates, prepay your mortgage, Prime Rate, Retirement, savings | Tagged , , , , , , , | Leave a comment

Know Your Rights to Sue Mortgage Lenders for Unlawful Behavior

Posted on February 26, 2012 by admin

If you were a victim of unethical or unlawful behavior by servicing mortgage lenders, you may be wondering about your rights in terms of seeking restitution. Fortunately, even with the National Mortgage Settlement , there are a variety of options available to homeowners who experienced violations of foreclosure or lending laws.  Some of these options are even available to people who have already had their homes foreclosed on. Mortgage Help Numerous settlements have occurred in recent years that require mortgage lenders to make restitution to those they wronged.  These settlements benefit those who are currently struggling with their mortgages; who are underwater in terms of their mortgage (meaning they own more than the house is worth), or who have been the victims of unethical or unlawful treatment by their lenders. Homeowners who are still in their homes have many options to take advantage of in order to fix the situation and hopefully remain in their homes, including refinancing under favorable terms and sometimes having a portion of the principle balance forgiven The Hope for Homeowners program outlines a number of these options for refinancing and remaining in the home. Those looking to sue mortgage lenders who have already experienced a foreclosure on their property, however, have more limited remedies available to them. Government Aid for Wrongful Foreclosure A recent settlement between the government and five servicing lenders including Ally Financial, Bank of America, Citibank, JP Morgan Chase and Wells Fargo is unique in that it provides recourse to homeowners who have lost their homes as a result of wrongful or abusive foreclosure practices.   Under the rules of the settlement, individuals whose lenders violated foreclosure and lending laws could receive restitution including lost equity and interest. Independent Foreclosure Review is also available under an order by The Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency. Independent foreclosure review is available to anyone whose loan is serviced by a participating lender, including Bank of America, Chase, Citibank, Countrywide and numerous others.  The loan must have been in foreclosure between January 1, 2009 and December 31, 2010 and must have been a mortgage loan for your primary home to be eligible for review.  If it is determined that there were deficiencies in the foreclosure process, you may be entitled to financial compensation or other appropriate remedy. Independent Foreclosure Review.com provides a full list of banks participating. Other Recourse If you were the victim of a wrongful foreclosure action and are not able or willing to take advantage of government aid, there are other options available to you as well. First, an individual lawsuit is an option. Acceptance of funds from either of the aforementioned settlements does not prohibit you from pursuing a lawsuit against the servicing lender that performed a wrongful foreclosure action. Some reasons for pursuing such a lawsuit may include: The servicing lender did not provide enough (or any) time for loan modification paperwork to be completed and approved. Documents for loans were not properly reviewed or notarized Falsification of affidavits during foreclosure proceedings Missed deadlines for loan modification processing Seeking out a lawyer who has a strong background in and a good working knowledge of mortgages, banks, and foreclosure paperwork is crucial. Not only will your lawyer need to understand the financial language of your paperwork, but he will also need to be aware of any other lawsuits currently, or previously, charged against your lender in order to bring the best possible case against the bank that serviced your loan and foreclosed on your home. Additionally, a good lawyer with a strong networking system will also be able to help find others who are having, or have had, similar issues to those that you have had with your lender. This will add credibility to your case and possibly allow for initiation of a class action lawsuit. A class action lawsuit will bring more visibility to the case; the more people involved, the better your lawyer’s chances of winning a case against your servicing lender. While a lawsuit can be a useful tactic to achieve the restitution you deserve for the fraud or wrongful treatment by your servicing lender, lawsuits take time. Pursuing a lawsuit for restitution may be helpful only if you do not receive reasonable results from the other two aforementioned settlements, as it may take years to obtain compensation in court. Continue reading →

Posted in Credit Report, Economic News, federal reserve, Foreclosure, foreclosure process, Loans and lending, Mortgage, mortgage help, mortgage info, mortgage loan, Mortgage Rates, mortgage settlement, Online Banks, Prime Rate, sue mortgage lenders | Tagged , , , , , , , , , , | Leave a comment

Understanding Principal Reduction for Underwater Mortgages

Posted on January 3, 2012 by admin

Part of the American dream is to be a homeowner.  As housing sales and prices have slumped over the last few years, many homeowners found they owed more on their homes than the house was actually worth, in other words, their mortgage was underwater.  Having an underwater mortgage greatly complicates selling or refinancing a house to take advantage of lower interest rates.  In many cases, homeowners with underwater mortgages have simply mailed the keys back to the mortgage lender and walked away and allowed the house to be foreclosed.  This seems like the easiest option, but it can result in a 200 to 300 point reduction on their FICO score .  With that big of a hit there is little chance they will be able to finance anything in the near future. Since the start of the housing crisis, Congress has been working on a way to help those who face an imminent foreclosure with programs like the Principal Reduction Alternative of the Making Home Affordable program.  Even if a homeowner finds they are underwater with their mortgage, as long as they are still making payments, they have options.  The Principal Reduction Alternative will allow the person to work closely with their bank to eliminate the negative equity by reducing a mortgage to the amount of the appraised value of the house.  This program is not for everybody as there are strict eligibility requirements a person must meet before they can be considered. One benefit of the PRA program is obviously to the homeowner.  The bank writes off some of the principal on the loan in hopes that the homeowner will stick around and keep making their payments.  This is why even one missing document can cause the homeowner to start completely over in the application process .  Banks do not want to take a hit, but they would rather write off part of the loan, than go through the expense and hassle of taking the property through foreclosure.  While there are a great number of good aspects to the program, many people, such as James R. Hagerty from the Wall Street Journal feel the program could actually end up causing more foreclosures than it will prevent. Another benefit of the PRA program is to the lenders.  Banks are not in the real estate business.  By taking foreclosing on a property, banks end up are forced to sell an empty house in a slow housing market while paying all the maintenance and upkeep costs until it can be sold.  Banks can financial incentives to help a homeowner stay in their house through principal reduction.  In many cases, the write-off from a principal reduction is smaller than the total expense of the foreclosure process. Through the PRA program, or an FHA short refinance , or one of the many other options available through MakingHomeAffordable.gov , people have options.  These programs give those who feel their home is no longer affordable options other than foreclosure for dealing with an underwater mortgage. Continue reading →

Posted in Foreclosure, foreclosure process, interest rates, Loans and lending, Mortgage, mortgage help, Mortgage Rates, Principal Reduction | Tagged , , , , , | Leave a comment

Philadelphia Metro Area Mortgage Rates

Posted on December 7, 2011 by admin

In the first week of December, Philadelphia’s largest financial institutions offered potential borrowers a wide variety of mortgage rates.  Three of the institutions listed on their websites lower rates on 30-year fixed -rate conforming loans in the Philadelphia metro area for well-qualified borrowers.  The Wilmington Savings Fund Society ( www.wsfsbank.com ) led the way with loans as low as 3.75% for well-qualified borrowers looking for a 30-year fixed-rate loan.  Wells Fargo ( www.wellsfargo.com ) and Bank of America ( www.bofa.com ) followed closely with listed rates of 3.875%.  At the other end of the spectrum PNC bank ( www.pnc.com ) offered mortgage rates of 4.375%. When the time comes to get a loan, a borrower often thinks the best bet is to get quotes from multiple lenders, then choose who offers the best rates.  Getting quotes from several lenders can help the borrower gain bargaining power , but obtaining too many quotes will hurt a person’s credit score.  And what is the point of getting a quote from a bank that charges higher rates?  Instead of wasting your time getting quotes from random lenders, a little research will provide insight into where to look by showing current rates in one place. With a little work researching lenders, the borrower can shift negotiating power from the lender and get a competitive deal on a mortgage. Top Philadelphia Area Banks and Credit Unions As of 30-year Fixed 15-year Fixed 5/1 ARM TD Bank 12/3/11 4.250% 3.375% 2.875% Wells Fargo 12/3/11 3.875% 3.375% 2.375% PNC Bank 12/3/11 4.375% 3.500% NA Citizens Bank 12/2/11 4.250% 3.500% 2.875% Bank of America 12/2/11 3.875% 3.250% 2.625% Sovereign Bank 12/2/11 3.990% 3.375% NA Beneficial Mutual 12/3/11 4.250% 3.500% NA Citibank 12/3/11 4.250% 3.500% NA Wilmington 12/3/11 3.750% 3.250% 2.750%   Listed rates from banks, thrifts and credit union were listed on their websites on the date indicated for conforming loans with 0 points.  Data is believed accurate at time of collection, can change without notice, and will vary based on an individual’s credit history.  Contact a specific institution for current rates. Continue reading →

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