How to Cut Back on Mortgage Expenses

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Market volatility is unpredictable

Situation at the real estate market is changeable and it cannot be predicted whether interest rates are going to go up or down. Unfortunately people often get in mortgage challenges because of rate increases and find themselves at the risk of foreclosure. Millions of families struggle with volatile economic circumstances in order to get homes and to preserve their property.

The following paragraphs provides some information which you may find helpful in avoiding challenges connected with your house, as well as to minimize mortgage related costs.

Consider covering mortgage interest as a priority

It doesn’t matter whether people sign deals with a mortgage broker or any other lender, paying off the loan as early as possible should become the top priority. The faster you get free from contract terms the less a risk you will take to be damaged by unpredictable economic circumstances. But the situation is a little different for high and low interest loans.

For example, when you use the services of online cash advance lenders you will likely get a high interest rate and it will be evenly spread out (amortized) over the life of your loan in even monthly payments. That means that the faster you cover the loan, the less interest you will pay. This works only in the beginning of the loan term when we’re discussing a mortgage.

Payments are organized so that you return most of the interest in the early years after which the principal is reduced with a smaller amount going to interest payments. So when you decide to buy a home make all your efforts to repay the amount of interest as soon as you possibly can thereby insuring that subsequent payments will not be a burden on your budget in times of economic instability.

 

Consolidate your loan

There is a great program provided by the government which is called HARP. You have a unique chance to get more beneficial terms and record low interest rates in cases of mortgage refinancing. This program is provided for millions of families who may be in need of relief. But it is also true that not many people use such a perfect opportunity to save their money.

It doesn’t matter whether they are improperly informed about the HARP or just treat it lightly because they think that it is too good to be true. What does matter is the unique opportunity this program provides for those who are experiencing problems with their mortgage. The program has been extended and homeowners will have an opportunity to avail themselves of it until 2015. So take your chance and ease your life, if you are among those who could use this valuable program.

Choose the most relevant solution

Being a homeowner is a dream of many Americans but it is time to think about whether or not it is worth the struggle, sacrifice and stress home ownership places on your family’s well being. Prices are constantly increasing in the real estate market and that means that mortgages are also getting more and more expensive.

Of course once you’ve become a homeowner you will be able to sell that property at some later date for a higher price; but it is important to estimate time frames objectively. Half of your life you will pay off the huge amount of the mortgage and the pleasure of owning a house will not be so bright when you become a pensioner and realize what a big responsibility it is to own a house.

That is why sometimes it can sometimes be better to rent an apartment which can be surrendered rather quickly, and without too many problems, when crises arise. Whether an individual purchases a home or rents and apartment really depends on his/her lifestyle, which is often the ultimate determining factor in such decisions.

How to Negotiate a Mortgage Loan Modification with Your Lender


Houses Bought As-Is for ALL CASH! Fast Closings!

Mortgage modification can be defined as a process in which the mortgage terms are modified in a manner outside the contracts original terms of agreement between lender and borrower. This change in terms is on the basis of either the borrower’s inability to process the payments as per the mortgage or the mandate of the government to the lenders. The borrower may be late, bankrupt or in foreclosure when applying for the modifications.

Mortgage modification can benefit the borrower in many ways. The interest rate is reduced. Principal, late fees and other penalties are reduced. The term of loan is lengthened. The monthly income is capped to household income percentage. Mortgage forbearance program is adopted. Modifications are made at the lenders discretion. The lender offers better terms with the motivation and expectation of the borrower being able to afford payment which is lower. This is more valuable than proceeds of foreclosure sale.

Mortgage modification program offered by the government may be voluntary for the lender but there are incentives for participation for the lender. A mortgage modification program can also be mandatory where the lenders are required to modify mortgages in a manner that meets the criteria with regard to borrower, property as well as the history of loan payment. One of the federal mortgage modification plans is the home Affordable Program of Modification. This plan helps the struggling homeowners who are at foreclosure risk. This is done with the help of lenders by lowering the monthly mortgage payments. If one fails to meet the mortgage payments, one should not hide it from the lender who should be approached for assistance. The mortgage company will prefer to offer modification than commencing the proceedings of foreclosure which is costly for them.

A few steps have to be taken to negotiate a loan modification with a lender. It is important to know the state of ones finances before the lender is contacted. Find your monthly income, how much payments are done in bills and areas where the costs can be cut. A financial analysis should be done with the help of nonprofit counseling service. The counselor can help in negotiating with the lender. A good place where one can start is the consumer credit counseling.

The lender should then be contacted with ones needs, explaining the situation and the help one provide in a situation. Decide on a solution to the lenders query on how one can pay the loan eventually. An initial proposal should be submitted. If the financial strain is temporary, the lender can be requested for forbearance, or postponing the payments until the recovery of finances which may take a few months.

If one is not able to pay higher monthly payments, one can request the lender to grant a loan modification. One will then be required to provide complete financial history with details of income as well as the monthly expenses. It would be ideal if one has some kind of cushion in the income in order to justify the modification of the mortgage loan, if the lender changes the mortgage with fixed rate mortgage. On should show and explain the lender that fixed rate mortgage can be paid comfortably through extra income attend through a second job. This will result in easily being granted the modification of mortgage.

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Financing and Credit Score Frustration


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Having spent the last 19 years of my professional life writing mortgage loan applications, I know the anguish that can result when mortgage applicants learn about items on their credit report which they were either unaware of, or didn’t know the effect these items would have on the mortgage for which they had applied.

That having been said, I’ve enlisted the help of our friends at North Shore Advisory, Inc., the credit reporting analysts and experts in this field to provide you with a few tips, and what I regard as very valuable information on this subject. So here is the following by NSA:

No matter how sophisticated the mortgage applicant, many find credit blemishes that leave them vulnerable, confused, and rejected for financing.

It seems lately we have had an enormous amount of highly successful professionals on the verge of purchasing or refinancing who have been left frustrated, angry, and ultimately turned down for a mortgage due to lowered scores.

Example 1:

Sam and Carol, both successful Attorneys in NYC had been looking for an apartment for well over six months.  They were having difficulty compromising to find a place that met both their needs for practicality, style, neighborhood, and price. After much difficulty they finally found the perfect Manhattan Condo that brought all their qualifications together, while fulfilling their aesthetic dream.

When they first started their apartment hunting both their scores were well over the 740 fico requirement. With combined income of over a million dollars, good assets, and low debt ratio, it seemed like a slam dunk for loan approval. However, due to the length of time since credit was pulled the banker had to run new scores for loan application.

(The updated credit report showed that) Carol’s score dropped to a 652 which meant they would be denied mortgage approval. They were both astounded and angry when they learned that Carol had a tax lien recently updated on her credit which was placed in error dropping her score at least 60 points, as well as a recent late payment on a Bloomingdale’s card.

By the time Carol and Sam found us they had only a week to get the score increased before losing the property. Carol was devastated and felt it was her fault they were going to lose the home of their dreams. 

Example 2:

Jim, a high powered executive, and his wife Susan, an art dealer, were getting ready to refinance the $900,000 that was left on their mortgage. Since their Fico scores were around a 770 their current rate of 5% would be reduced down to around 3%. This would save about $1000 a month and around $300,000 over the life of the loan. 

Throughout the process of refinancing Jim was traveling and took a very long time to get all the documents the banker needed for loan submission. Since so much time had gone by the bank required a new credit report with the application. Unfortunately, when the credit was pulled Jim’s score dropped by 80 points.

Jim had opened two new credit cards not realizing his average age of credit would be reduced by these new born accounts which would drop his scores. He had no way of knowing the two zero percent balance transfer cards would now be costing him $300,000.

Carol and Sam were very lucky and were able to qualify for loan approval. Within a week we had success removing the lien from Carol’s credit profile and her scores went up to 715. With the couples ability to put more funds down and the increase in score they were able to get loan approval.


Unfortunately for Jim and his wife there was nothing anyone could do to help. Once new accounts are opened only time could increase the average age of credit and ultimately the credit scores.

How often could this happen to your clients?  Most individuals do not understand the confusing algorithms and counter intuitive rules of credit scoring.  By the time they realize just how important their credit behavior is, it is usually too late.

Making sure credit is analyzed with future financial goals in mind is a MUST before taking an action that can foil those plans and limit a consumer’s options for a better quality financial life.

Call us with any questions or feedback on credit challenged clients or credit in general!


“Great credit brings great opportunity!!”             Copyright 2012

 


North Shore Advisory, Inc. offers credit repair, restoration, monitoring, and education services. We’ve been providing credit education and credit improvement for almost 25 years. For bankers and realtors we can review your clients credit reports and scores to see if we can improve them.
We can help you with your business credit needs as well as any personal credit scores.
Contact Us:
914-524-8300
Email:
info@northshoreadvisory.com


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