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.