Financing a Home | RISMedia

How does an unsecured loan work?

The interest rates on these loans are often higher than on secured loans and you generally will not be able to get a tax deduction for the interest paid. However, the costs to obtain an unsecured loan are usually lower. And the relative ease of getting this type of loan makes it popular for small […]

What about a second mortgage?

It is a loan against the equity in your home. Financial institutions will generally let you borrow up to 80 percent of the appraised value of your home, minus the balance on your original mortgage.
You may incur all the fees normally associated with a mortgage, including closing costs, title insurance and processing fees.

How does refinancing work?

With a refinancing, you pay off an old loan on your home and take out a new one, usually at a lower mortgage interest rate. To refinance, you will generally need to have equity in your home, a good credit rating, and steady income. You can borrow a percentage of the equity to cover remodeling […]

How long do bankruptcies and foreclosure stay on a credit report?

They can remain on your credit record for seven to 10 years.
However, a borrower who has worked hard to reestablish good credit may be shown some leniency by the lender. And the circumstances surrounding the bankruptcy may also influence a lender’s decision. For example, if you went bankrupt because you were laid off from your […]

Will I be able to buy again after losing a home to foreclosure?

It can happen. But a lot will depend on your circumstances and the mortgage interest rate you are willing to pay. Generally, most lenders will consider your request for a home loan two to four years after your foreclosure. Predatory lenders will issue a home mortgage in less time. But beware - they routinely charge […]

Can a home be sold for less than its mortgage?

Sometimes. But it is a complicated process and a lot will depend on the lender.
This process is called a “short sale,” which occurs when a lender agrees to write off the portion of a mortgage that is higher than the value of a home. But, usually, a buyer must be willing to purchase the property […]

If faced with foreclosure, what are my options?

Talk with your lender immediately. The lender may be able to arrange a repayment plan or the temporary reduction or suspension of your payment, particularly if your income has dropped substantially or expenses have shot up beyond your control. You also may be able to refinance the debt or extend the term of your mortgage […]

How can I protect my home from creditors?

Check with your state. It may provide special protection through the filing of a homestead exemption, which exempts some or all of the value of your equity in the homestead - the home that you live in and the land on which it sits - from claims of unsecured creditors.
Whether to file a homestead exemption […]

How bad is a previous foreclosure on credit?

Unfortunately, it is a pretty bad blemish. A property foreclosure is one of the most damaging events in a borrower’s credit record. In terms of the effect on your credit history, a deed in lieu of foreclosure - where you voluntarily “give back” your property to the lender - or a short sale - when […]

How do you clear up bad credit?

It is not easy but certainly doable with both commitment and time.
By law, any unfavorable information in your credit file can stay there from 7 to 10 years. Today, however, a creditor must remove credit blemishes in a timely fashion if you challenge them and they turn out to be false.
The first step in any […]

How do lenders define bad credit?

It is all those things that appear on your credit report that are unflattering. They include: missing a credit card payment, defaulting on a previous loan, filing for bankruptcy in the past seven years, or not paying your taxes.
Other black marks include a judgment filed against you - perhaps for non-payment of spousal or child […]

What if I am turned down for a loan?

Unless your credit is absolutely abysmal - with all kinds of judgements, liens, excessive delinquencies or non-payments, foreclosures and bankruptcies that show no attempt on your part to make progress - you can generally get a loan.
More and more borrowers are finding ways to become homeowners despite past credit problems, a lack of a credit […]

Do I have to disclose a parent’s gift to the lender?

Lenders prefer that you do. But relax, you are not penalized in any way for receiving parental help. An estimated one-third of all first-time buyers purchase homes with a loan or a money gift from parents.
Lenders also will approve gifts, with the proper documentation, from relatives, friends, an employer, church, municipality, or nonprofit organization - […]

What are the benefits of prepaying my mortgage?

You get to save thousands of dollars and shave years off the life of your loan because the additional payments made toward your monthly principal basically constitutes a partial prepayment of your mortgage.
Each mortgage has specific terms describing how and when prepayment may occur. Some lenders impose a penalty if you repay the loan too […]

What about state and local governments?

Just about every state now offers loans for renovation and rehabilitation at below-market interest rates through its Housing Finance Agency or a similar agency. Call your governor’s office to get the name and phone number of the agency in your area.
At the municipal level, many cities also have programs for special improvements to certain blocks […]

Does the federal government offer home improvement programs?

Yes. Among the most popular:
Title 1 Home Improvement Loan. HUD insures the loan up to $25,000 for a single-family home and lenders make loans for basic livability improvements - such as additions and new roofs - to eligible borrowers.
Section 203(k) Program. HUD helps finance the major rehabilitation and repair of one- to four-family residential properties, […]

What about using an unsecured loan?

The interest rates on these loans are often higher than on secured loans and you generally will not be able to get a tax deduction for the interest paid. However, the costs to obtain an unsecured loan are usually lower. And the relative ease of getting this type of loan makes it popular for small […]

How can I finance work needed for home repairs?

According to the Millennial Housing Commission created by Congress, few lenders are willing to administer home improvement loans. Most prefer to make home equity loans or unsecured consumer loans because they are easier to manage. Home improvement loans usually require inspections and irregular draws on the loan amount as work is completed, which forces regional […]

Is private mortgage insurance always required on low-down payment loans?

Lenders require private mortgage insurance (PMI) on most loans with less than a 20 percent down payment. They believe there is a correlation between borrower equity and default. They have found that the less money borrowers put down, the more likely they are to default on a loan. PMI guarantees the lender will not lose […]

Do builders provide financing?

Many builders offer financing incentives to help move more buyers into a project. In fact, major building companies often have their own mortgage brokerage subsidiaries, while many other builders routinely refer buyers to “preferred” local lenders. If it is a buyer’s market in your area, you can be sure developers will offer incentives such as […]

What about Freddie Mac?

Freddie Mac, Fannie Mae’s counterpart, also offers low or no-down-payment home loans through partnerships it forms with various state governments to expand homeownership opportunities across the country, particularly for those persons with low or moderate incomes.
Coming up with a down payment has traditionally been one of the biggest obstacles to buying a home. Freddie Mac […]

How can Fannie Mae help homebuyers?

The Fannie Mae Community Home Buyers Program lets first-time buyers with little cash obtain 95 percent financing. Borrowers may put down as little as 3 percent of their own money, with a 2 percent gift from family, a government program, or nonprofit agency, and obtain private mortgage insurance to protect the lender against default.
The Fannie […]

What are mortgage credit certificates?

A mortgage credit certificate, or MCC, makes it easier for eligible buyers to qualify for a mortgage loan. Offered by many city and county governments, they allow first-time buyers to take advantage of a special federal income tax write-off.
Under MCC programs, the lender can reduce the housing expense ratio - the percentage of gross monthly […]

Can you tell me more about FHA and VA?

The Federal Housing Administration (FHA) is an agency within the Department of Housing and Urban Development (HUD). Its main goal is to help provide housing opportunities for low- to moderate-income families. FHA has single-family and multi-family mortgage programs but does not generally provide mortgage funds. Instead, it insures home loans made by private lenders.
Meanwhile, the […]

Do government programs exist that can help me finance a home?

Yes, although many are designed to assist first-time homebuyers, generally defined by lenders as people who have not owed a home in three years.
HUD offers several programs through the FHA that require down payments of as little as 3 percent. Veterans can get loans from the VA to buy, build, or improve a home, as […]

Is a home equity line of credit similar to a second mortgage?

A home equity loan, like a second mortgage, lets you tap up to about 80 percent of the appraised value of your home, minus your current mortgage balance. But because it is set up as a line of credit, you will not be charged interest until you actually make a withdrawal against the loan, although […]

What is a second mortgage?

It is a loan against the equity in your home. Financial institutions will generally let you borrow up to 80 percent of the appraised value of your home, minus the balance of your original mortgage.
You may incur all the fees normally associated with a mortgage, including closing costs, title insurance, and processing fees.
Home improvement loans […]

What is amortization and negative amortization?

When you amortize a loan you basically pay off the principal by making regular installment payments. This typically takes place gradually over several years.
Negative amortization is when the mortgage payment is smaller than the interest that is due, which causes the loan balance to increase rather than decrease. Negative amortization only happens with adjustable […]

What are subprime loans?

Subprime mortgages are made to borrowers, usually at a higher interest rate, who do not meet traditional credit criteria or who have unconventional borrowing needs.
Factors that can prevent someone from meeting the traditional criteria could be a high debt-to-income ratio, low reserves at settlement, as well as past credit woes - bankruptcies, defaults, foreclosures, or […]

What is a prepayment penalty?

Some mortgages have prepayment penalties written into them. This means you will have to pay the lender a percentage of the principal, or some other stated amount, if you decide to repay the loan early.
The prepayment clause is usually in effect for only one to three years and may be waived for special circumstances. Lenders […]

What is private mortgage insurance?

Also referred to as PMI, it is insurance you pay to protect the lender in case you default on the home loan. It is required when borrowers put down less than 20 percent of the purchase price.
Usually, a small fee is paid at the outset and a percentage of the face amount of the loan […]

What about equity?

It is the cash value of your property over and above what is owed on it, including mortgages, liens, and judgements.
The amount of equity almost always grows in a home over the years, although regional economic slumps or overbuilding might result in a temporary dip in prices.
The good thing is you can borrow against the […]

What is a loan-to-value ratio?

The loan-to-value ratio, or LTV, is the loan amount expressed as a percent of either the purchase price or the appraised value of the property. It is an important factor considered by lenders before approving a mortgage.
Few lenders will lend the full value of a property unless they have guarantees such as those offered by […]

What is APR?

The annual percentage rate, or APR, is an interest rate that differs from the loan rate. It is the actual yearly interest rate paid by the borrower, including the points charged to initiate the loan and other costs.
The APR discloses the real cost of borrowing by adding on the points and by factoring in the […]

Is it possible to refinance following a bankruptcy?

It can be difficult to do after a bankruptcy, unless you are willing to pay very high interest rates and fees. However, if you are contemplating bankruptcy, first talk with your lender and explain your situation. If your mortgage payments are current, the lender may be accommodating and refinance your loan, thereby helping to ease […]

Can I refinance a home loan more than once?

You most certainly can. During the most recent refinancing boom, for example, many homeowners refinanced their home loans two or three times within relatively short periods of time because interest rates kept treading downward, making it extremely attractive to trade in one loan for another.
Just remember that refinancing is basically like applying for a mortgage […]

When is the best time to refinance?

Many people flock to refinance while mortgage interest rates are low, particularly when rates are about two percentage points below their existing home loans.
Other factors, like when to finance, will depend on how long you plan to hold on to your home and whether you have to pay considerable fees to refinance. It also will […]

How does refinancing work?

With a refinancing, you pay off an old loan on your home and take out a new one, usually at a lower mortgage interest rate. To refinance, you will generally need to have equity in your home, a good credit rating, and steady income. You can borrow a percentage of the equity to cover remodeling […]

In seller financing, how does the seller determine what rate to provide?

The interest rate on a purchase money note is negotiable, as are the other terms in a seller-financed transaction. To get an idea about what to charge, sellers can check with a lender or mortgage broker to determine current mortgage rates on loans, including second mortgages. Most interest rates, however, are generally influenced by current […]

Are 40-year mortgages a good idea?

The main reason buyers sign on for these type of loans, which add 10 years to the traditional 30-year mortgage, is to take advantage of smaller monthly payments.
According to real estate experts, the shorter-term loan is usually more advantageous for the homebuyer. The drawback becomes apparent simply by calculating the cost of additional interest payments, […]

Which is better, a 15-year or 30-year loan?

The 15-year mortgage offers you a chance to save a lot of money over the life of the loan. This is because the amortization is half that of the 30-year loan, which means that the total interest paid on the 15-year note, as compared to a 30-year note, is significantly less.
Get a lender to help […]

What determines how adjustable-rate loans change?

They go up and down with interest rates, based on several esoteric money market indices that cause the cost of funds for lenders to vary. The most popular indices include Treasury Securities (T-Bills), Cost of Funds (COFI), Certificates of Deposit (CDs), and the Libor, which is the London inter-bank offering rate.
However, the interest rate and […]

Should I avoid an adjustable rate mortgage?

Because adjustable rate mortgages, or ARMs, fluctuate with the market, they offer less stability than fixed-rate loans. If an ARM is adjusted upward, monthly payments will increase, and for a lot of people that can be too big a risk to take. On the other hand, should rates drop dramatically, homeowners can reap the benefits […]

Why do most homebuyers prefer a fixed-rate mortgage?

Long-term, fixed-rate mortgages are preferred by most homebuyers because they offer security and stability. The interest rate does not fluctuate over the life of the loan, so the total amount of principal and interest always remains the same. The monthly payment can change, however, if local property taxes, which are normally part of the monthly […]

Are interest rates negotiable?

It depends who you negotiate with. Some lenders are willing to haggle on both the loan rate and the number of points, but this is not typical among more established lenders.
This is why it pays to shop around for the best loan rates. And know the market so that you sound informed when talking to […]

What is a lease option?

It is an agreement between a renter and a landlord in which the renter signs a lease with an option to purchase the property. The option only binds the seller; the tenant has a choice to make a purchase or not.
Lease options are common among buyers who would like to own a home but do […]

What is seller financing?

Also known as a purchase money mortgage, it is when the seller agrees to “lend” money to the buyer to purchase and close on the seller’s home. Usually sellers do this when money is tight, interest rates are high or when a buyer has difficulty qualifying for a conventional loan or meeting the purchase price.
Seller […]

What is a bridge loan?

It is a short-term bank loan of the equity in the home you are selling. You may take out a bridge loan, or interim financing, to help with a knotty situation: closing on the home you are buying before you close on the property you are selling. This loan basically enables you to have a […]

Is a reverse mortgage good for elderly homeowners?

A reverse mortgage is an increasingly popular option for older Americans to convert home equity into cash. Money can then be used to cover home repairs, everyday living expenses, and medical bills.
Instead of making monthly payments to a lender, the lender makes payments to the homeowner, who continues to own the home and hold title […]

What is a wraparound loan?

Also called an all-inclusive mortgage, it is where a new home loan is placed in a subordinate or secondary position to the original mortgage and the new loan includes the unpaid balance of the first.
The wraparound allows the buyer to purchase a home without having to qualify for a loan or pay closing costs. The […]

What are jumbo loans?

If you borrow at or below the conventional loan limit for non-government mortgages, you have what is known as a “conforming” loan. If the amount surpasses the loan limit that is set by both Fannie Mae and Freddie Mac -now $333,700 for a single-family home - you would then have a “jumbo” loan and pay […]

How do growing equity mortgages work?

Also called GEMs, these fixed-rate mortgages have monthly payments that increase in increments of 3 percent or more to reduce the principal loan amount. They are often written by the lender at a below market interest rate and have shorter terms.
A GEM lets you pay off the mortgage earlier, save tens of thousands of dollars […]

What is a balloon mortgage?

It is a mortgage in which the entire unpaid principal becomes due and payable on a given date, five, ten, or any number of years in the future. The borrower must pay up, refinance, or lose the property.
Interest rates on balloon mortgages are lower than for fixed-rate mortgages. So their monthly mortgage payments will be […]

Should I consider a “B,” “C,” or “D” paper loan if I have bad credit?

These loans do not meet the borrower credit requirements of “A” or “A-” category conforming loans, so if they are your only option for obtaining a home, then go for it.
The good news is that more lenders now offer these subprime loans. So, if you are a high-risk borrower, chances are you will have a […]

Are shared equity and shared appreciation mortgages the same?

No. With a shared appreciation mortgage, or SAM, a borrower receives a below-market interest rate in return for the lender receiving a share, usually 30 to 50 percent, in the future appreciation of the property upon its sale.
Introduced in the early 1980’s, when interest rates were high enough to make qualifying for a mortgage a […]

Is equity sharing a good idea?

A shared equity mortgage, or partnership mortgage, can be a good way to purchase a home with little or no money down. In such an arrangement, the borrower/homebuyer has an absentee partner who, as the investor, provides all or some of the down payment.
Equity sharing is not as popular in a slowly appreciating real estate […]

What about a hybrid loan?

Also called a fixed-period ARM, these crossbreed loans combine features of fixed-rate and adjustable-rate mortgages.
They start out with a fixed interest rate for a number of years - usually 3, 5, 7 or 10 years - and then convert to an ARM.
Initially, the interest rate for the fixed period of the loan is much lower […]

What is a two step mortgage?

Not to be confused with a biweekly mortgage, this type of home loan is also known as 5/25s and 7/23s. It has one interest rate for part of the life of the mortgage and a different rate for the remainder of the loan.
Two steps are 30-year mortgages. They can either be convertible or nonconvertible. The […]

Can I split my mortgage in two and pay biweekly?

The biweekly mortgage has become increasingly popular as more people favor paying off their home loan early and reducing interest charges.
Monthly payments on these loans are split in half, payable every two weeks.
Because there are 52 weeks in a year, you actually have 26 half-payments, or the equivalent of 13 monthly payments per year instead […]

What is an assumable mortgage?

It is a mortgage held by the seller that can be taken over by the buyer when a home is sold. Such loans are hard to find because most lenders stopped voluntarily writing them many years ago. Most new assumable loans today are adjustable rate mortgages.
An assumable mortgage may be attractive if the interest rate […]

Are there such things as no-cost and no-fee loans?

You see promotions for them all the time. But banking regulators have gone after lenders who misrepresent these loans. The reality is that no-cost and no-fee loans may actually cost the borrower more over the long term because costs are often hidden by rolling them into the new loan through higher principal or interest.
The rates […]

Is it true some lenders grant loans based on very little documentation?

Yes. They offer what are called “easy/no-doc” loans, mortgages that require little or no documentation to verify the borrower’s income and assets - that is as long as the borrower makes a big enough down payment, generally 25 percent or more.
These loans are common among self-employed borrowers who have difficulty substantiating all of their income, […]

Should I lock in the mortgage rate?

Because the interest rate market fluctuates constantly and is subject to quick movements without notice, locking in a mortgage rate with a lender certainly protects you from the time your lock is confirmed to the day it expires.
Lock-ins make sense in a rapidly-rising rate environment or when borrowers expect rates to climb during the next […]

What are conventional loan limits?

These are limits imposed by Fannie Mae and Freddie Mac on the amount of money you can borrow to finance a home purchase. The loan limit generally increases each year and applies to single-family homes in the 48 contiguous states, with higher limits in Alaska, Hawaii, Guam and the Virgin Islands and on homes with […]

What about the difference between a conventional and non-conventional loan?

They are the same as conforming and non-conforming loans. A conventional, or conforming, loan is one not insured by the Federal Housing Administration (FHA) or guaranteed by the Veterans Administration (VA), two federal government agencies that make homeownership possible and generally more affordable for a large segment of the population.
However, that said, many major banks […]

What is the difference between a conforming and non-conforming loan?

Conforming loans have terms and conditions that adhere to guidelines established by Fannie Mae and Freddie Mac, the two, big quasi-government corporations that purchase mortgage loans from lenders then packages them into securities that are sold to investors.
Their guidelines are far-reaching and as such set borrower credit and income requirements, as well as the down […]

Can I make an all-cash purchase instead of getting a mortgage?

That certainly is an option, although not one most people can afford. The national median home price is well above $170,000 and much more than that in many areas of the country. Unless you’re independently wealthy or have hit the jackpot, it may be difficult to make a “no-mortgage” investment.
And an investment is exactly how […]

Should I put more or less down, if I can afford it?

Putting down as little as possible lets you take full advantage of the tax benefits of homeownership. Mortgage interest and property taxes are both fully deductible from state and federal income taxes. Also, making a small down payment frees up cash that you can use to meet unexpected home improvements.
Some real estate experts contend it […]

Is it possible to get a no-down payment loan?

Builders will typically offer no-down-payment loans to sell properties in a slow-moving development or a depressed market. Desperate sellers also may commit to finance the down payment for the buyer to move a hard-to-sell home or to make a quick sale. And veterans may buy a home with nothing down through the Veterans Administration’s home […]

What things do lenders view positively and negatively during the application process?

When you apply for a loan, long, steady employment is always seen as a plus, as is a large down payment, a good credit rating, a history of regular savings, and property located in a “good” neighborhood.
Not so good in the lender’s mind: frequent job changes without salary increases, self-employment in a new venture, bad […]

What does a mortgage broker do?

Much like a stockbroker helps you buy stocks, a mortgage broker can help you purchase a home loan. Because the broker has access to many lenders, you will be able to select from a wide variety of loan types and terms that fit your specific needs.
Note, however, that brokers are not obligated to find […]

What’s the best way to choose a home loan?

A lot will depend on the length of time you plan to live in the home, other financial obligations, and potential savings gained from comparing the monthly costs of a home against the up-front costs and closing costs involved with a particular loan.
Also, you will need to be comfortable with whatever choice you decide to […]

How do I qualify for a home loan?

Your real estate agent has information on lender loan requirements and will be able to calculate a rough monthly figure you can afford based on the maximum monthly payment for the loan, taxes, insurance, and any type of maintenance fees. This pre-purchase evaluation by the agent can save you a lot of time spent looking […]

What is a mortgage and how does it work?

A mortgage makes homeownership possible for most people. In the simplest terms, it is a loan that is secured by real property. The lender holds title to the home until the loan is completely repaid. If you fail to pay up, the lender has a right to take the property, sell it, and recover the […]

What about guidelines for VA foreclosures?

As with HUD, anyone can purchase a VA home. Qualified buyers also can receive the benefit of a VA loan - no money down - even if they are not veterans. If you are interested in purchasing a VA foreclosure, visit its web site, www.va.gov.

What are some of the guidelines for purchasing HUD foreclosures?

If you have the cash or can qualify for a mortgage, you can buy a HUD home. Down payments vary depending on whether the property is eligible for FHA insurance. If so, the down payment can be lower than the 5 to 20 percent required on conventional loans. HUD requires that all accepted offers be […]

What are the disadvantages of buying foreclosures?

Buying directly at a legal foreclosure sale is risky. Among the disadvantages:
There is no financing. You need cash and lots of it.
The title needs to be checked before the purchase. If not, you risk assuming a seriously deficient title.
It may not be possible to inspect the property’s interior before the sale. So you have no […]

What happens at a trustee sale?

When a homeowner falls behind on three payments, the bank will record a notice of default against the property. When the owner fails to pay up, a trustee sale is held, and the property is sold to the highest bidder. The lender that initiated the foreclosure proceedings will usually set the bid price at the […]

What causes a foreclosure?

A lender decides to foreclosure, or repossess, a property when the owner fails to pay the mortgage. Unfortunately, thousands of homes end up in foreclosure every year. Many people lose their homes due to job loss, credit problems, divorce, unexpected expenses, and during periods of economic instability.
Failure to pay property taxes may also cause a […]

Do builders provide financing?

Many builders offer financing incentives to help move more buyers into a project. In fact, major building companies often have their own mortgage brokerage subsidiaries, while many other builders routinely refer buyers to “preferred” local lenders. If it is a buyer’s market in your area, you can be sure developers will offer incentives such as […]

What about low down payment loans?

Such loans are offered by a host of private lenders and government agencies. In fact, there are government programs at both the federal and state level to help cash-strapped buyers. Under many state guidelines, borrowers must usually be first-time homebuyers or have a limited family income to qualify for low down payment loans.
The Department of […]

Why do lenders require a down payment?

It protects them should you default on the loan, especially if you fail to make payments in the early years of the loan when more is owed on it. Foreclosure, property fix-up, and resale costs could result in a loss on the mortgage loan.
That is a bad situation the lender wants to avoid. So they […]

Where can I get a mortgage?

You can get a home loan from a number of different sources, a credit union, commercial bank, mortgage company, finance company, government agency, thrift - which includes savings banks and savings & loan associations - mortgage broker, and even the seller.
Begin your search by calling at least half a dozen lenders to inquire about the […]

What about state and local governments?

Just about every state now offers loans for renovation and rehabilitation at below-market interest rates through its Housing Finance Agency or a similar agency. Call your governor’s office to get the name and phone number of the agency in your area.
At the municipal level, many cities also have programs for special improvements to certain blocks […]

Does the federal government offer home improvement programs?

Yes. Among the most popular:Title 1 Home Improvement Loan. HUD insures the loan up to $25,000 for a single-family home and lenders make loans for basic livability improvements - such as additions and new roofs - to eligible borrowers.
Section 203(k) Program. HUD helps finance the major rehabilitation and repair of one- to four-family residential properties, […]

How can I finance work needed on a fixer-upper?

According to the Millennial Housing Commission created by Congress, few lenders are willing to administer home improvement loans. Most prefer to make home equity loans or unsecured consumer loans because they are easier to manage. Home improvement loans usually require inspections and irregular draws on the loan amount as work is completed, which requires […]

How does a lease option work?

A landlord agrees to give a renter an exclusive option to purchase the property. The option price is usually determined at the outset, but not always, and the agreement states when the purchase should take place—whether, say, six months, or a year or two down the road.
A portion of the rent is used to make […]

How long do bankruptcies and foreclosure stay on a credit report?

They can remain on your credit record for seven to 10 years.
However, a borrower who has worked hard to reestablish good credit may be shown some leniency by the lender. And the circumstances surrounding the bankruptcy may also influence a lender’s decision. For example, if you went bankrupt because you were laid off from your […]

Can a home be sold for less than its mortgage?

Sometimes. But it is a complicated process and a lot will depend on the lender.
This process is called a “short sale,” which occurs when a lender agrees to write off the portion of a mortgage that’s higher than the value of a home. But, usually, a buyer must be willing to purchase the property first.
A […]

What types of foreclosures are there?

There are two types—judicial and non-judicial. A foreclosure that results from a court action is a judicial foreclosure. The mortgage deed or trust does not have a power of sale clause, therefore the lender, trustee or another lienholder must take the borrower to court to recover the unpaid balance of a delinquent debt. By contrast, […]

If faced with foreclosure, what are my options?

Talk with your lender immediately. The lender may be able to arrange a repayment plan or the temporary reduction or suspension of your payment, particularly if your income has dropped substantially or expenses have shot up beyond your control. You also may be able to refinance the debt or extend the term of your mortgage […]

How does a lease option work?

A landlord agrees to give a renter an exclusive option to purchase the property. The option price is usually determined at the outset, but not always, and the agreement states when the purchase should take place - whether, say, six months, or a year or two down the road.
A portion of the rent is used […]

What is a lease option?

It is an agreement between a renter and a landlord in which the renter signs a lease with an option to purchase the property. The option only binds the seller; the tenant has a choice to make a purchase or not.
Lease options are common among buyers who would like to own a home but do […]

What are the benefits of seller financing?

Seller financing is a viable option when the seller does not immediately need the entire cash equity they have accumulated in the home.
In return for providing financial assistance to the buyer, the seller receives tax benefits, attracts a larger pool of potential buyers, generally completes the sale sooner, and gets good interest earnings.
As for the […]

What is seller financing?

Also known as a purchase money mortgage, it is when the seller agrees to “lend” money to the buyer to purchase and close on the seller’s home. Usually sellers do this when money is tight, interest rates are high or when a buyer has difficulty qualifying for a conventional loan or meeting the purchase price.
Seller […]

What is a bridge loan?

It is a short-term bank loan of the equity in the home you are selling. You may take out a bridge loan, or interim financing, to help with a knotty situation: closing on the home you are buying before you close on the property you are selling. This loan basically enables you to have […]

How does the seller determine what rate to provide?

The interest rate on a purchase money note is negotiable, as are the other terms in a seller-financed transaction. To get an idea about what to charge, sellers can check with a lender or mortgage broker to determine current rates on mortgage loans, including second mortgages.
Because sellers, unlike conventional lenders, do not charge loan fees […]

Avoiding Bankruptcy: What Every Consumer Should Know

RISMEDIA, Nov. 9, 2007-With U.S. bankruptcy filings up more than 40% this year, Americans 62 years old and older should realize they may be able to avoid bankruptcy by applying for a reverse mortgage loan.
Many people filing for bankruptcy have experienced a major health crisis or have suffered a life-changing event, such as job loss […]

De-Coding the Meaning of ‘Mortgage’

By Ralph Roberts
RISMEDIA, Nov. 6, 2007-The origin of the word “mortgage” is intriguing. It is a French word generally believed to be derived from two Latin words-”mort” (meaning death) and “gage” (meaning pledge or something of value that’s forfeited if the debt is not repaid).
Although you might feel as though you are signing your life […]

Mortgage Modifications May be Hampered by Securitization Problem

By Robert Schroeder,
RISMEDIA, Oct. 24, 2007-(MarketWatch)-If you’re a borrower holding a subprime-mortgage loan that’s about to readjust to a higher interest rate, chances are you’re wondering what options you have to get out of trouble and save your home and your money at the same time.
Here’s one option — with a catch. To help cushion […]