Important facts you must know about loan modifiaction

• Loan modification is a permanent change in some of the terms and conditions of the mortgage loan program. It also allows the loan to be reinstated which helps borrowers to make payment that they can afford.

• Lenders can make an interior inspection of the property to verify that the property don't have any physical conditions that can affect the borrower's ability to make mortgage payments.

• You are qualified for a loan modification if your lender is confident that you will be able to pay the modified payment.

• Missed payments can be added in the new loan modification.

• You should be prepared for what your lender or bank may ask for the loan modification, which can help you in getting a good deal.
  

Reasons to not to refinance your home mortgage

Refinancing your home mortgage can be a very good option, but not for all home owners. It can prove to be a wrong and costly decision for most of them. Below are some of the disadvantages of refinancing your home mortgage:

• Most of the home owners go for a refinance option in a hope that they can improve their credit scores by reduced monthly payments but they don't understand that if they are having credit problems they will not be able to qualify for a low interest rate refinance and can end up with a longer mortgage length or higher interest rates.

• If you have been paying your mortgage for a long time, then refinancing your mortgage will not be good option unless you are looking for a 10-15 years loan. Otherwise, it is a better option to pay off your mortgage.

• If you want to refinance, then you would want to get the best deal for yourself and so you must have 20% equity in your home. Equity is the difference between the value of the home and the amount you owe on your home. So, it would be a better option to pay off some debt first and increase the equity on your home.

Tips for first time home buyers

It is very important for first time home buyers to get information about home buying. For this they can easily contact U.S department of Housing and Urban Development (HUD). They not only provide valuable information but also down payment assistance programs, counseling and also special offers to buy HUD homes.

Home buyers should evaluate how much money they can afford. You should pre-qualify for a mortgage loan so that you can exactly know how much will be your monthly mortgage payments. Also if you are pre-qualified then the property owners lowers the price. First time home buyers should also understand about the closing cost. It can be between 1 to 10% of the value of your home and it includes various fees such as inspection, surveys, loan origination, title search etc. Most of the sellers agree to pay the closing cost to close on the transaction. Even some of the lenders agree to pay the closing cost but then they can charge higher interest rates.

First time home buyers can take counseling from HUD approved counselors so that they can understand all the legal actions to take before they buy a home. Also home-buyers can obtain a home inspection in order to ensure that the property is in proper conditions.

How to avoid foreclosure?

If you understand the process of foreclosure and what leads to HUD foreclosure, you may act better in that situation an can face the problem. Below are some tips for you if you are facing a foreclosure.

• You should not avoid the problem, rather you should act quickly so it becomes easier for you to get help.

• You should contact your lender as your lender may provide you with few options. You should act according to your lender as they often provide you with important information during the early phase of the problem and in the later phase details about legal actions and responsibilities.

• you should completely understand your mortgage rights and also what your lender can do if you don't make the mortgage payments and should also have knowledge about laws in your state.

• You should consider contacting a non-profit counselor who can help you with your finances and with the laws. These counselors are funded by HUD and are available throughout the country.

• You can sell your assets for cash to make your mortgage payments. Also, you can take a second job to get extra cash until you are facing the problem. Important thing is that you must show your lender that you are trying your best to meet your financial obligations.
  

Can investors buy HUD homes?

Most of the people don't know that even investors can buy HUD homes or HUD foreclosures. But, the criteria for them to buy a home is different from owner occupant and they must follow certain specific guidelines.

When a HUD home is listed for sale then for the first 10 days the bid is open only for those who wish to occupy the home. During that period, investors cannot place their bid. Investors can make their bid through a licensed real estate broker who can sell HUD homes and these bids are reviewed and the one with the highest bid is selected.

If your bid is selected then within 48 hours you have to submit signed sales contract and then within a period of 45 days you have to close on your investment. For investors, down payment is different as compared to owner occupants. If the home is single unit then minimum 25% down payment is required and if it is a 2-4 unit home then minimum 15% down payment is required.

Frequently asked questions about Reverse Mortgage...

Q1. Can I qualify FHA insured Reverse Mortgage?

If you are above 62 years old, own your home outright, or have low mortgage on your home that can be easily paid by the proceeds of reverse mortgage, then you qualify for the Reverse Mortgage. Also, for a reverse mortgage, there are no salary or credit score requirement.

Q2. What homes are eligible?

Single family homes or 1-4 unit homes of which at least 1 unit is occupied by the borrower are eligible. Also HUD approved condominiums and manufactured homes that meet FHA requirements are also eligible.

Q3. When do I pay back the loan?

You don't need to pay back the loan as long as you are using the home as your permanent residence. The loan is paid back when the last borrower dies or the home is no longer the permanent residence.

Q4. Are my public benefits affected by the loan?

No, reverse mortgage does not affect your public benefits like medicare benefits or social security, but you should not save the funds you receive as it will be counted as liquid assets and you may lose your public benefits.

Q5. How do I receive money?

• Lump Sum
• Monthly payments
• Line of credit

Tips on buying a HUD foreclosure

• The most important factor to consider is that not all HUD homes are great deals. HUD foreclosures are sold as in the same condition and HUD is not responsible for the condition of the house, so first you must have a proper home inspection and should also look for the merits of the deal.

• HUD homes are not sold as like other conventional homes. For every HUD foreclosure there is a bidding process. Home buyers have to provide their best offer and then the best offer according to the HUD is chosen.

• You must have a home inspection before bidding for the house as backing up from a HUD deal is trickier and you may lose your earnest money.

• HUD's aim is to increase the home ownership in America so when the HUD foreclosure is put on a sale, then for the first 10 days the bid is open only for owner-occupants and if the home is not sold after a certain time period then the investors can place their bid.
  

HUD homes can be a great deal on a property but due to different purchase process, you should do a proper research before going on to buy a home.

Things to know if you are interested in Reverse Mortgage

• A reverse mortgage is a special kind of loan in which you can convert your home equity into cash and like other home equity loans, you don't have to pay back the loan to the lender until you are using the home as your permanent residence.

• You should be minimum 62 years old to be eligible for the reverse mortgage, should owe your home, or have less mortgage balance that can be paid off by your reverse mortgage amount.

• Single family homes and 1-4 unit homes with one unit occupied by the borrower are eligible. Also condominiums that are HUD approved or manufactured homes that meet FHA requirements are also eligible.

• You don't need to pay back the long as long as you occupy the home and are paying the taxes on time. Also, you can never owe more than your home value when you sell the home.

• Amount of money you can borrow depends on your age, interest rate and the appraisal value of the home. The older you are, less the interest rates and more the appraisal value, more money you can borrow.
  

Home Refinance - things to understand

Home Refinance is a special loan that adds to the principal balance owed, and it alters the terms and amount of the existing mortgage. If your current mortgage loan has high interest rate or you want cash, then you can refinance your mortgage.

When to refinance your loan completely depends on your current situation. Before applying for refinancing you should ask yourself some questions

• How long will you stay in the home?
• How much home equity have you invested?
• Are new terms and conditions appropriate for you?

You should also consider the interest rates, as no one can determine whether the rates will increase or decrease, so you should choose carefully, as they affect your monthly payments.

FHA loan - advantages

FHA loans are insured by Federal Housing Administration to support individuals who have low income and bad credit scores to gain home ownership. There are many advantages of FHA insured mortgages as compared to conventional loans.

• As these loans are insured by FHA, there is less risk for the lenders and they can lend you more money.

• These loans require low down payment and interest rates. Also, bad credit scores can work in case of FHA loans.

• These loans are processed quicker as compared to other conventional home loans.

• You can also apply for down payment assistance programs and you don't need to pay back the funds you receive for down payment.
  

Home Equity Conversion Mortgages (HECM)

• HECM can be used as a supplement to your income. Social Security is the only source of income for most of the seniors and sometimes its not enough to fulfil their daily requirements.

• HECM can be used to make changes in the house or make some improvements. The money can be used to pay off your taxes and bills.

• HECM can be used to pay off your existing mortgages and can still hold substantial amount of money.

• Money obtained from HECM can be used to help your relatives financially as there are no restrictions on the use of the money.
  
  

Advantages of buying a HUD home

If you want to buy a home then HUD provides numerous benefits not only for the lender but also for the homebuyers. Following are some of the advantages of buying a HUD home.

• HUD homes are affordable as compared to average real estate homes. Also, HUD take care of legal affairs so HUD homes are of real value for first time homebuyers and also for investors.

• HUD homes are sold in as it is condition. So, it may require some repairs. The repairing cost is adjusted in the home value and you can have additional bargain on the home saving considerable amount of money. Also , on some occasions HUD provide funds to upgrade the property.

• HUD offers convenient bidding. You can submit your bid today and if your bid is selected then you will be informed within 48 hours.

• HUD covers most of the fees and costs of the program. It also pays the commission fees (6%) of your agent.

• HUD allows you to move in the home faster if the home qualifies for the FHA insured mortgage.
  

Recapture Tax

When you apply for FHA financing or first time homebuyer loans to buy a home, you get different benefits including low interest rates and down payment assistance. Some of the benefits are "recapture" according to federal law if,

• you sell the home before nine years of ownership.
• you gain from the sale of your house.
• your income increases significantly (more than 5% per year) in nine years.

You don't have to pay the recapture tax if,

• you sell the house after nine years of ownership.
• you don't gain by selling your home.
• your income does not increase significantly in the past nine years.
• your home is destroyed by fire, storm, flood or any other casualty.
• you transfer your home to your spouse and no profit or loss is included in your income by the transfer of the property.

The money you owe will be lesser of the 50% of the gain by selling the home or 6.25% of the original loan amount.

FHA financing

FHA provides an easy and affordable way for first time home buyers. To apply for a FHA loan, it is not necessary that you should be a first time home-buyer. You can buy your second, third or fourth home using FHA financing. FHA itself don't provide loans but it guarantees for your loan so the lenders provide you the loan on less interest rates.

Qualifying for an FHA financing is also easy. YOU don't require excellent credit scores. If you have credit scores more than 600, you can qualify for the loan. You need to provide your employment and bank statements. You should have a stable job for the past 2 years with the same employee.

FHA also provides down payment assistance for low or moderate income people to buy a home. Very low down payment is required for an FHA loan and you can transfer the loan to new owner if you sell the home.

Terms and Conditions to qualify for the $8,000 tax credit

• Tax credit program is for first time home buyers only. First time home buyers also include those who have not owned a home (primary residence) for the past 3 years.

• Tax credit amount you receive is 10% of the home purchasing amount. However, the maximum amount you can get is $8,000. This tax credit can be used for down payment to buy a home.
  

• Single buyers who have an income of $75,000 or less and married buyers who have an income of $150,000 or less are eligible for full tax credit program. There is also a reduced tax credit for those who does not meet the income requirements. However, single buyers having income $95,000 or more and married couples having income $170,000 or more are not eligible for the program.

• The closing date of the home must be between January 1 2009 and December 1 2009. Closing date is the date on which the title is provided to the home owner. You don't have to pay back the tax credit.

• Homes that will be used for primary residence will be eligible for the program.
  

Brief introduction to tax credit

First time home buyers purchasing any kind of home are eligible for the $8,000 tax credit. The purchase of the home must occur between 1st January 2009 to 1st December 2009. The date on which the closing occurs and the buyer gets the home ownership is considered as the purchasing date. Homes that will be used for permanent residence will be eligible. The homes include single family homes, condominiums and also manufactured homes.

There is an income limit for full tax credit to buy a home. Single buyers must have an income of $75,000 or less and married buyers must be $150,000 or less. The buyers don't have to pay back the credit. But, the buyers have to own the home for minimum 3 years, if they sell the home before earlier, they have to return the credit to the government.

Buying a HUD foreclosures

HUD's residential foreclosures are available throughout United states through a bidding process. HUD offers a period to buy a HUD foreclosure by taking your bid through your agent. After the time period overs, HUD accepts the highest bid. Cost of the homes are usually settled according to the market value and if the home is damaged then it is settled a bit low.

HUD does not finance for you to buy a home. You yourself has to arrange for your financing. Also, HUD sells you the home in the same condition, so it is advisable for you to have a home inspection and also you are responsible for the repairs and improvements in the home.

HUD foreclosure or HUD home are usually single family residential property. Initially the bidding is opened for owner-occupants only but if the home is not sold after a certain time period then investors can place their bid for the home. HUD pays the commission to the agents or brokers and the commission money is subtracted from your bid, so if your agent takes a less commission then it is favorable for you as your bid amount will be high.

Mortgage Revenue Bonds

Mortgage Revenue Bond's (MRB) are tax-exempt government issued bonds with the help of Housing Finance agencies (HFA) to help first time home-buyers who have below-market rates mortgages. The eligible borrowers are first time home-buyers who have low income.

Advantages to borrowers

1. These bond programs work for low or moderate income people in combination with HFA's that offers down payment assistance and also secondary FHA financing for the borrowers.

2. Government's investment in MRB's help HFA's to help the borrowers to get the home ownership.

Program Requirements:

• The property must be your permanent residence and also owner-occupied.
• Condominiums must be agency approved
• Cost of the home must be below the maximum permissible cost for the county.
  

HUD housing assistance

HUD housing assistance is designed for people with low or moderate income and also for disabled and senior citizens. It is provided to reduce the rent that low income people pay for their housing. At the time of filling the form for HUD home you must provide information about:

• You must mention every source of income or any change in income including welfare payments, pensions, retirements etc. if any of the member is getting.
• All assets including information about bank accounts, savings, stocks etc. of every member of the family.
• Any property you sold in the last 2-3 years at a amount less than the original price.
• The name of every member, adults, children, relatives that include your household.

Try to avoid any false information regarding you or your family members or it will be counted as fraud and you can end up in a big trouble.

HUD down payment assistance

HUD down payment assistance program initiative was started to increase the number of home ownership in America. The program motivated many citizens to buy a home of their own. under this program, people were provided with down payments to buy a home which was proving to be a hurdle in home ownership.

Down payment assistance program is available only to first time home buyers who have low or moderate income. This program provides the home buyer with down payment and also the closing cost. This really helped increasing the home ownership on America and fulfilling the dreams of thousands of people to buy a HUD home. Usually 6% of the total amount of the purchase was provided or $10,000, which ever is higher.

Main advantage of HUD down payment assistance program is that you never have to pay back the money......

Mortgage bond programs

Mortgage bond programs are primarily designed for low or moderate income individuals or families who are buying a home for the first time. Interest rates are provided below market rates and also down payment assistance program is provided to the borrower's. Also second mortgage is available.

To be eligible. your home must be single family units. It should be a agency approved condominiums or Planned Unit developments (PUD's). Rental homes, investment properties or second homes are not eligible.

There are several down payment assistance (DPA) programs available like Hope DPA program which provides up to $40,000 DPA but is available in HUD targeted areas. Also 6% DPA program available in more than 40 states.

Advantages and Disadvantages of Reverse Mortgage...

These days, reverse mortgages is attracting more and more senior citizens. But, before going for it, you must know its advantages and disadvantages so you don't suffer in future.

Advantages of Reverse Mortgage:

• You can never owe more than your home's value, even if the lender has paid you more than home's value.
• The money you get from Reverse Mortgage is tax free.
• You can spend the money anyway you want. There are no restrictions but you should clear you previous mortgage or debt on your home first.
• There are no income or credit history qualifications for a reverse mortgage.
• You don't have to make any repayments while living in your home.

Disadvantages of Reverse Mortgage:

• Interest rates are usually higher as compared to other home loans.
• Funds from Reverse Mortgage may affect you social security or other benefits and can also affect your eligibility for pension.
• You can have Reverse Mortgage on your primary residence only.
  

Down Payment Assistance Program

Down payment assistance program helps qualified individuals or families with low or moderate income to buy a home by providing them money for down payment. There are several down payment assistance program available for an individual to choose from.

In a Down payment Assistance program the seller of the property provides the home buyer with cash for down payment but a third party is always involved. They look at the transfer of the cash from the seller to the non-profit organization. These non-profit organizations provide money for down payment to the buyer and they don't have to return the money. In turn, these organizations, take a percentage of the transaction or a flat fee. HUD homes and single family homes are eligible for the program.

Introduction to Reverse Mortgage

If you are above 62 years of age and planning to go for a mortgage program then Reverse Mortgage is the best for you. Reverse Mortgage is specially designed for senior citizens in which your home equity is converted into cash. It usually acts as retirement pension.

You also don't have to repay the loan till you are living in that home or that is your permanent residence. The loan is paid back when the owner leaves the home. Amount of money that you can borrow depends on your age, appraised value of the home and the interest rate. The home should be a single family home or it should be 1-4 unit home with one unit occupied by the borrower. The home must be HUD or FHA approved. The money received in not taxable and it does not affect your other benefits.

Do you qualify for a mortgage?

There are number of factors that determine whether you qualify for the mortgage or not. These usually include your financial conditions at present. These are some of the factors that you must consider before you buy a home.

SALARY:
Your salary determines how early you can repay the loan. Amount of money and the monthly mortgage payment is also determined by your income.

CREDIT HISTORY:
How often you take loans? How much you have to pay? do you pay your bills and taxes on time? These questions helps you to evaluate yourself before going for the loan.

Other than the above factors, the amount you have for down payment and also the cash reserves you possess. The home you buy should provide security to protect the lender's money you have borrowed. Also, mortgage companies don't want that your monthly mortgage payment should exceed more than the 30-40% of your monthly gross income.

You can also go for government programs such as HUD loans to buy HUD homes at affordable rates.

What is Mortgage?

A mortgage is transfer of interest in property to a lender. It acts as security for the debt or the loan, the lender will provide to you. These loans depend on many factors such as your salary, your credit ranking and history and also the home equity. These factors determine the amount of money you can take as loan and also the monthly payment.

Mortgage companies usually prefer those who have a stable job with the same employer and a good income. Also, your credit card debts and other loans also affect the amount of money. Try to clear your credit card debts and also similar loans before going for the loan.

Also there are certain limitations to mortgages. You have to occupy the property you buy from the loan and also you cannot take the loan on the home if that is not your permanent residence.