If you’re a preforeclosure investor, with the tightening credit markets, you have no doubt noticed how much more difficult it is these days to close short sale deals.

 

In the past, plenty of hard money options, along with double closings and simultaneous closings made closing short sales a breeze. However, with the credit crunch, mortgage fraud, and tighter restrictions with lenders and title companies, closing short sales isn’t as easy as it used to be.

 

However, there is still one very simple and easy way to close your short sale transactions without using double closings, hard money, simultaneous closings, or even the over complex land trusts.

 

That method is using back-to-back closings to get all of your short sale deals closed and funded on time. Back to back closings take a short sale deal and turn it into two separate and distinct transactions. The first transaction is the homeowner facing foreclosure selling to the preforeclosure investor. The second transaction is the real estate investor then selling the property to the end retail buyer.

 

The easy, legal way for the real estate investor to do this type of transaction is through the use of an option contract. The option contract gives the real estate investor a vested legal interest in the property through an Option Agreement. The option is subject to the approval of the short sale.

 

Once the short sale is approved, then preforeclosure investor must complete the second transaction. That transaction involves the investor selling the property to an end retail buyer. The preforeclosure investor can legally sell the property, because he has executed an Option Agreement. This Option Agreement, which should be recorded at the local county courthouse for where the subject property is located, gives the investor the legal right to sell and market the property.

 

Before attempting to use a back to back closing, the preforeclosure investor should make sure that they have all of the necessary forms and documentation to remain in compliance. Without the correct forms, addendums, and notarized signatures, the preforeclosure investor risks the transaction not closing on time, or even worse, not at all.

 

Short sales do not have to be a complex transaction if the investor arms himself with the proper tools and techniques. Back to back closings are the simplest and easiest way to close short sale deals in today’s ever changing and volatile real estate market. They are widely accepted by lenders, title companies, and title insurance companies throughout the United States.

 

There has been a lot of talk lately about predatory lending in the mortgage industry, but not much talk about what it is. Predatory lending covers a lot of area and some of the practices that are used in it are somewhat difficult to understand for the average consumer. Here are a few aspects of predatory mortgage lending that might be of interest.

The first thing consumers should understand is that predatory lending does not begin and end with the lenders themselves. It is true that there are several lenders who are guilty of bad loan practices, but there are others just as guilty. These include appraisers, mortgage brokers, home builders, and home improvement contractors to name a few.

Some of the things that you want to watch out for when you are considering a home purchase include:

Always think twice before working with someone who will sell properties for much more than they are worth by using false appraisals that inflate the value of the home.

Never work with anyone who wants you to lie about your income, expenses, or job history. They may also want you to lie about the amount of cash that you have on hand.

Stay away from lenders who encourage you to borrow more money than you know you can repay. This is one of the fastest ways to foreclosure known.

Some predatory lenders will charge high interest rates to home buyers based solely on their race or national origin. The black community is especially hard hit with this one.

There are also some lenders and other professionals who will charge high fees that are not normally a part of the home buying process. If someone asks you to pay a fee for a product or a service make sure you understand what it is you are paying for.

Be very careful when working with anyone who tries to pressure you into taking a home loan that contains high-risk factors. These include things such as balloon loans, interest only payments, and steep pre-payment penalties.

The elderly seem especially vulnerable to those predators who use high-pressure sales tactics to sell home improvement projects or work and then finance them at very high interest rates.

Lending predators are good at their work. If they were not, there would not be such a problem with them. Some of the cons they use to pull people in include such things as telling a home buyer that they, and only they, are the only ones who will finance the home. They may also try to convince you that the home you are looking at is worth much more than surrounding homes even though there is no physical proof that it is. Many of these folks want home buyers to sign contracts or other documents that have blank spaces. Home buyers should never sign these types of documents.

Another crafty tactic is to hand over a higher than expected bill at closing. They understand that after all you have been through to get to this final stage you are more likely to pay the added charges. Do not pay them unless it is proven that they are legitimate charges.

The best advice is to be careful and to be wary. Take your time and do not allow lenders or others to pressure you or to push you into a contract that you do not fully understand.

So you don’t have enough financial strength but would still like to own your own home? There’s no need to worry. The government provides loan schemes that do not require you to produce too many documents and do not question your monetary background too much. These are called FHA loans.

But before we go into details and how you can avail of this plan, let’s ask first: What are FHA loans?

Defining FHA loans

An acronym for Federal Housing Administration loan, an FHA loan is a loan based on an insurance program that enables you to buy a home with a downpayment of as low as 3%. It is important to note, though, that FHA loans are not exactly home loans. If ever you fail to pay it off, your creditor will get compensated by the insurance fund where your loan was set.

FHA loans are best for first-time home buyers and people who are part of the minority sector. This is because when such loans were introduced in 1934, what the US government had in mind was creating a program that would satisfy the housing dreams of many Americans whose financial backgrounds do not easily qualify them for regular loans. Housing conditions in the country have improved since then.

Tracking the Numbers

Of course, while FHA loans make it easier for Americans to own their own houses, it still requires a certain level of qualification. To know if you can afford FHA loans and to calculate how much you can borrow, you need to compute your maximium PITI, or housing costs. Your PITI is determined by combining your property tax, mortgage principal, insurance and interest and multiplying this by 29%. (Most FHA loans require that your housing costs do not exceed 29% of your gross earnings a month.)

So, if your monthly gross earnings is US$3000, your PITI is US$1015.

In addition, your total monthly expenses should not go beyond 41% of your gross monthly earnings. Total monthly costs is determined by adding PITI and long term debts (like other loans and credit card balances).

Therefore, if your monthly income is US$3500, your total expenses for the same month should be US$1435 or lower. If you want to find out the maximum amount you should be paying monthly for long term debt, simply subtract your PITI from your monthly expenses. In this case, US$1435 minus US$1015 equals US$420.

Regular home loans usually accept only those whose PITI’s are under 26% to 28% of gross monthly earnings and those with total monthly expenses that are under 33% to 36%.

Comparing the two schemes, you can say that FHA loans are rather lenient.

The Process

To get approved for FHA loans, you need to have a sound credit history and enough income to ensure that you will be able to meet your payment deadlines. Once you close a loan, your creditor will ask you to place a 2% to 3% downpayment on the price of your chosen home. This will be used to cover charges like homeowners’ insurance, title insurance, title search, loan origination fees and FHA insurance fund fees, among others.

If you are only able to place a downpayment of less than 20%, your creditor will also ask you to pay a fee for private mortgage insurance.

In summary, when you think about it, FHA loans have been significant contributions to the growth of American society. It has allowed more people to own their own houses through less stressful loan programs. This is why US citizens are among the world’s best housed.

What is the benefit of using debt consolidation for credit card debt? I am trying to decide to either call the credit card companies myself and negotiate for a lower payoff/settlement amount, or to use a debt consolidation company? If I negotiate with the credit cards directly, will that be considered a charge off? I would want to settle myself if I can to avoid paying all the months of high interest. But if I use debt consolidation, then they will charge me a fee every month for so many years? What is their purpose? What would be the best route to go financially?

A person named John bought a new house by obtaining a loan from bank. He repays the loan to the bank on monthly basis. Oh! He comes to know that a local lending organization offers loans at an interest rate at a lower rate than what his lender charges from him. A lower interest rate means lower monthly payments and more cash in hand.

So he thinks “Why not take a loan from this lending institution and repay my existing loan with this money?” He analyzes the situation carefully and then thinks that such loans may result in larger total costs or a much higher risk than the existing loan. Then he goes around the lender and finally decides that he will go for second loan. This means he is refinancing his first loan. Refinancing is the process by which someone pays off an existing loan by borrowing a new loan.

Refinancing is a good idea if one has compared the interest rates and other fees charged by different lending institutions for the same principal amount and the same repayment time.

Instead of managing multiple debts it is always better to consolidate your debts under a single mortgage-refinancing scheme. Through refinancing you can save your hard earned money. A wide spectrum of options for refinancing is available, but then it depends on your individual situation. You can use refinance schemes to decrease your monthly payments with lower interest rates or make it short term. You can also pay off the other debts.

You must opt for loan types where interest over your mortgage is not tax-deductible. Some important points to consider for refinance are:

1)Getting a lower-rate mortgage

2)Transform the adjustable rate mortgage to a fixed one

3) Change a first and second mortgage into one lower rate mortgage

4)Choose cash-out refinancing to get adequate cash for other expenses.

These factors make refinancing a hot cake. Lenders provide homeowners with various options for reducing their current interest rate and payments. The refinancing packages are designed such as to help them out in attaining the cash they need for debt consolidation, other expenses, home renovations etc.

Refinance opens gate to all those people turned away by lenders. Refinance always helps you even if you have bad credit score, bankruptcies, poor payment history or no income verification. An excellent credit-scoring borrower is offered competitive rate programs and may borrow up to 100% financing. You can either choose from adjustable mortgage or fixed rate mortgage.

Refinance helps people burred under debts to revive themselves.

The benefits of 100% refinancing loan is as flexible as any other programs. If any of the following describe your current mortgage you may want to consider refinancing:

1)Current mortgage rate is too high

2)Mortgage term is too long or too short

3)High monthly payments

4)No fixed rate mortgage

If any of the above statements are true, you have a reason to consider mortgage refinance. If an inflow of cash is needed to:-

1)Renovate home

2)Buy a car

3)Educational expenses

4)Consolidate debt

Go for refinancing.

With the economy as shaky as it is, everyone is in search of new ways to reduce the financial burdens of daily living.  One of the greatest concerns among average Americans is their mortgage payments.  The interest alone eats up a great big chunk of the family budget.

The good news is, despite our current economic situation, you, as a homeowner, have available options to significantly reduce your loan balance.  In fact, an unfavorable economy could be favorable to you if you possess the right knowledge on how to reduce your mortgage loan balance. 

One of the most effective ways of doing this is through the negotiations of a loan modification service or loss mitigation service and your lender.  Third party negotiation is a proven way for you to slash a huge chunk off of your mortgage balance.  Most of the time, it turns out to be a huge reduction and you will most likely become the subject of envy in your neighborhood.

As much as you want to retain possession of your dream house and you are searching for ways to do that, your lender is also desperate to maintain you as a client.  Remember, this has something to do with the economy.  With the current financial crisis, more and more homes are being foreclosed on, yet buyers are becoming scarce, reducing the value of properties.

This is a situation where cooperation is more than welcome and lenders are more than willing to work with their borrowers so they can continue to pay for their loans.  Even if you are up to date with your payments, the present economic condition could be reason enough to negotiate a loan modification to reduce your monthly mortgage payment until the end of its term.

What could you negotiate for?  You could ask for a reduction of interest, reduction of the principal amount, a shorter paying period, combinations of these options, or even forgiving the remaining balance altogether.

This could be a very tricky task, however, that only a few would dare to partake in, especially knowing that you will be dealing with large institutions like banks and other financial giants.  With the help of a reliable loan modification expert, this is absolutely possible, even beyond your wildest imagination.

© 2008, Tom Brady

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Everyone wants their house to be comfortable enough to accommodate every member of the house. If you want to incorporate some changes in your house and start some construction for the purpose, you will require a good amount of money. In case you do not have the necessary amount, you can borrow a construction loan and work according to your needs.

Construction loan is usually called a story loan. This is so because the lender of the loan wants to know the actual ‘story’ behind the loan meaning that where you want to utilize the money, why you need the changes, how you plan to accomplish it, etc.

Being a temporary secured loan, it would require the borrower to pledge this house as collateral to borrow the money. Moreover construction loan is an interest only loan which requires the borrower to pay only the interest during the time of construction of the house.

While borrowing a Construction Loan, the borrower should be very particular about the rate of interest. He can receive the loan rate in two forms, locked interest rate or variable interest rate. Through the variable rate of interest, the borrower can take up the loan and the rate may rise during the course of construction of the house.

When the borrower takes up the locked interest rate option he should be careful about the other expenses that are locked in the loan amount. These hidden expenses can amount to great sums of money and can cause the borrower heavily. If the borrower is being offered low rate of interest for locking, he should get it in writing from the lender so that the lender is not able to back out from his commitment of the rate.

Construction loan is a short term loan with the repayment term of about 6 months to 12 months. During this term, the borrower can get his house constructing completed and also repay his construction loan back to the lender gradually.

What does this mean for the buyer. What then happens when the bank charges off the mortgage? Aside from it damaging ones credit due to the charge-off will they continue to try to come after the person for payment?

Is every month like a constant struggle with bills payment piling up? Do you feel like not opening the bills? Are you thinking of ways to avoid it? If answer to any of these questions is ‘yes’ - then you are certainly heading for debt consolidation.

Debt consolidation offers great support to self employed while budgeting and making financial decisions. An individual who operates a business, or a profession as a proprietor, consultant, independent contractor, freelancers or someone in changeable employment - then you are a self employed.

Debt consolidation for self employed was traditionally considered expensive and difficult to obtain. With more than 15% of UK being self employed the perspective has changed. Self employed are a very financially viable class. The cases of self employed debt consolidation have become considerably high.

Does debt consolidation for self employed makes sense?

Certainly! A debt consolidation for self employed is similar to any usual debt consolidation. It consolidates the smaller loans into a single loan. Debt consolidation for self employed you can fuse unsecured loans, utility bills, medical bills, or any other outstanding bills into a single debt consolidation loan. This debt consolidation loans has lesser interest rate and one single monthly payment for all the loans. So instead of paying separately on every loan, you save money by paying on this low interest debt consolidation loan. The monthly payments are usually lower thereby making it possible for self employed to meet their obligation each month.

Debt consolidation for self employed is usually of two kinds - secured or unsecured debt consolidation. Unsecured debt consolidation will serve well for those self employed who can offer no security for their loan amount. Unsecured debt consolidation will have higher interest rates than its secured sibling.

Secured debt consolidation requires security (home, car, real estate etc). With home equity debt consolidation, the security is in the form of home. This brings better rates, lower monthly payments, convenient terms, and approval for bigger amounts. With secured debt consolidation, a self employed must be aware that he can affect the loss of his property in case of non repayment. Though that is the last resort. Self employed can use Debt consolidation for the purpose of recovering credit. When you make payments on time, it reflects in your credit. Since monthly payments are lower with self employed debt consolidation, you are less likely to miss your payment and therefore improve your credit.

How is debt consolidation for self employed different?

Debt consolidation for self employed differs with respect to documentation. A lender looks for steady income as proof of the return of loan. Self employed usually does not have any pay checks to offer and no regular income. And also no third party to verify income. A self employed in order to avoid taxation usually do not declare their complete income. Therefore, self employed debt consolidation depends upon income tax returns. Self employed should be ready to produce income tax returns for two years.

There are lenders who offer debt consolidation to self employed with limited documentation or no documentation. However, this is true to some extent but “no” or “reduced” documentation debt consolidation will be compensated by comparatively higher interest rates.

Is there a threat to debt consolidation for self employed?

The threat is usually in the form of the self employed revisiting old borrowing ways. Getting off debt can stimulate a spendthrift indulgence in a self employed. This can neutralize the whole purpose of debt consolidation. A self employed looking for debt consolidation should understand that debt consolidation is trying to address something - your money spending habits. If one can’t take heed of this reality then they are only leading themselves to further debt condition. A self employed must see to it that no further financial risk are undertaken after debt consolidation.

Debt consolidation for self employed considerably reduces the monthly outgoings. This leaves self employed with free money and scope for improvement of lifestyle. This provides further boost to economic condition. More available income means either more savings for investment in industry and people in jobs. Debt consolidation for self employed is not an innovation in the loan market. However, it can offer innovative answers for your personal debt condition.

To have a foreclosed property is a nightmare. In most cases, it is part of a series of devastating events. A sudden loss of job could spark a chain of these unfortunate events. To lose your home during these occasions would be very damaging, to say the least.  This nightmare has undoubtedly increased the number of sleepless nights for homeowners in the state of Massachusetts.

Despite all measures to prevent a foreclosure, some unexpected things may come along the way, draining you of all the resources necessary to pay for the house. Having lost a sense of control with the situation makes it even more depressing.

At the same time, paying more for a property than its actual worth is excruciating. What’s even worse is receiving a notice that you have to pay a higher amount in the course of your succeeding payments.

But the good news is defaulted borrowers can regain control even in the face of a foreclosure. Mortgagors paying unreasonable bills for their homes can do something to cut their monthly payments. And even if you are not in this kind of situation right now, options are available for you to stop foreclosure or to make your loan more acceptable to you. The right knowledge, reliable ally, and quick response are all that are needed to successfully circumvent a foreclosure or reduce your payment.

Modifying a loan to stop foreclosure or lower the monthly installment is becoming a highly favored choice both among defaulted and up-to-date homeowners. In loan modification, the lender, usually a bank, agrees to adjust the terms of the mortgage loan. Changes could be any of or combinations of these - reduction in the interest rate, reduction in principal portions of payments, or an extension of the amortization in order to decrease overall payment obligations, or reduction of principal balance. These are the common adjustments that are most acceptable to the lenders.

In almost all cases of loan modification attempts, procedures can get extremely complicated. This can be very intimidating and frustrating. Just setting up an appointment with the lender’s decision makers is much like a hunt for Osama Bin Laden. They just can’t be found. Preparing all the necessary documents even at the onset of the process is very daunting.

This is the reason that loan modification companies, like LIG Loan Modification Services, are sought after by Massachusetts homeowners. They can provide expert analysis of your situation based on their experiences in this field and offer you workable plans to make your lender modify your loan and save you from foreclosure or unjust loan terms.

Having loan modification services working for you means increasing the possibility of success. Over the years, they have developed methods, to resolve the kind of situation you are in, by negotiating with all types of lenders. They are capable of delivering the best results to your greatest advantage.

©2008 Tom Brady

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