1st And 2nd Mortgage Refinance Loan

Refinancing a first and second mortgage requires some extra considerations.
Depending on your equity, you may find that combining the two mortgages results
in a higher interest rate. You may also find that you have to carry PMI with the
refinanced mortgage.

Will Refinancing Benefit You?

Refinancing two mortgages allows you to consolidate your loans into one payment,
often lowering your monthly bill. You may also find lower rates under the right
circumstances.

Those with a large amount of equity benefit most from consolidating loans since
they qualify for the lowest rates. It is important to look at interest savings,
not just monthly numbers which can be misleading.

However, if you have less than 25% equity, you may end up qualifying for higher
rates. With less than 20% equity, you will also have to pay for private mortgage
insurance. Even with these factors, you may still find that you will save money
by refinancing.

Have You Done Your Research?

To see if refinancing makes sense for you, research mortgage lenders. You can
quickly go online and request quotes and terms. Look at the different offers,
and work out the numbers. An online mortgage calculator can help you figure out
monthly payments and interest costs.

An easy way to compare cost is to first add up your interest payments for both
mortgages. Use this number to compare interest payments with each potential
mortgage.

You also need to factor in the cost of refinancing. Just like with your original
mortgage, you will have to pay fees and points. You want to be sure that you can
recoup these costs with your interest savings.

Why Do You Want To Refinance Both Mortgages?

While refinancing both mortgages is convenient, you may decide to refinance only
one or both separately. With your main mortgage, you can expect to get low
rates.

A second mortgage will usually qualify for higher rates, but you can lock them
in. You may also choose to convert from a line of credit to an actual mortgage.
Again, you will want to investigate financial packages before signing up with a
lender.

View our recommended mortgage Refi lenders. Carrie Reeder is the owner of ABC
Loan Guide, an informational website about various types of loans.

They are hard to find but the answer is YES. There is a home loan refinance program that can dramatically reduce the amount a homeowner owes on the balance of their home loan(s) – as long as the homeowner meets a few criteria discussed at the end of this article. This is NOT a loan modification that simply offers a temporary reduction in the interest rate and monthly payment. Using a Note Repurchase Program or Loan Balance Reduction Program, homeowners who find themselves owing more than their home is worth can literally shave up to hundreds of thousands of dollars off their existing loan(s) balance which results in a small instant equity position and a large monthly savings from lower mortgage payments. As if this wasn’t enough good news, the homeowners credit score is NOT negatively affected by this program.

Here is how it works. The company that is handling the Loan Balance Reduction, usually a team of lawyers and real estate professionals, will group a portfolio of existing notes of their clients from a particular lender, Bank ABC, and present the bank with an all-cash, take it or leave it, offer to purchase the entire portfolio of notes at a significant discount to current market value. If accepted, and I’ll explain why the banks are often willing to do this, the investor then turns around and underwrites a loan back to the original homeowner at 90% of CURRENT APPRAISED value. The homeowner has now repurchased their home for under present market value, saving a bunch of money from a lower mortgage amount AND monthly payment!

Now why would any bank in their right mind take so much less than what is owed to them? The answer is simple. Liquidity. Banks today need cash to lend (this is their business) and are required to have certain cash reserve levels by The Federal Reserve to stay in business. By removing a non-performing asset from their books it frees up cash that the bank can immediately turn around and use in their business activities. Rather than risk the increasing probability of having to foreclose and own these non-performing assets in a year or two, many banks are willing to take the immediate cash infusion.

Who qualifies for this program? In order to take advantage of this program a homeowner (including investment properties 1-4 units) must have a Loan-to-Value ratio of AT LEAST 125%. Meaning the total amount owed for all loans on the property must exceed the present value of the home by 25% or more. Secondly, the homeowner must have an income source and a debt-to-income ratio of 50% or less (based on the new lower mortgage payment!). The process takes approximately 2-3 months to complete and ALL credit quality qualifies, you can even be in the Notice of Default or Trustee Sale phase and be able to take advantage of this program.

If you meet the criteria listed above and would like more information about a Loan Balance Reduction Program, please visit me online at http://www.PrincipalReduction.us

Charlie Kartchner, Lic Broker, Principal Reduction Specialist http://www.PrincipalReduction.us
 
Article Source

The news is full of people who, for one reason or another, are unable to make payments on homes that they bought for top dollar back in the mid-2000s. However, these aren’t the only people who are walking away from their mortgage and choosing to rent. There are plenty of people who are still able to afford their mortgage payments, but don’t see the financial sense in staying in a place that is costing them hundreds or thousands of dollars more than a comparable rental.

According to The New York Times article, “No help in sight, more homeowners walk away” (Feb 2, 2010), “when a home’s value falls below 75 percent of the amount owed on the mortgage, the owner starts to think hard about walking away, even if he or she has the money to keep paying.” This is disturbing news to lenders around the country, as 2008 saw approximately 17% of owners (who were otherwise solvent) drop their mortgage payment.

There are a number of reasons why people are walking away, rather than holding on to what they own. Some people are looking at the likelihood that it could take a decade or more to get their home to the point where they could break even and considering that a ruined credit score could be repaired faster than their home’s equity. Some cite their banks’ refusal to work out new terms based on the new value of their homes. Others simply say that they aren’t going to pay more money to own a home – with all of its attendant maintenance and repair bills – when they could pay half as much and have the landlord take care of that.

The moral question of whether it’s ethical to walk away from a home loan is still very much in the air. While the White House is urging people to “do the right thing” and stay with their mortgages, there are plenty of corporations that unload properties that they owe millions for and there isn’t so much moral outrage – it’s just the cost of doing business. Many homeowners feel the same way, when it comes to the home that they paid $250,000 for and which is now maybe worth $100,000 on the market.

The fact is that people are built to operate within small groups. If someone’s actions are not directly affecting Uncle Henry and Aunt Em, they don’t have as much compunction about defaulting on their financial obligations. The problem is that these aren’t isolated instances; the number of people, both solvent and insolvent who are dropping their mortgages, along with their property taxes, are growing. Staying with your mortgage in this atmosphere is starting to look to many homeowners like rats staying with a sinking ship along with the captain.

Like it or not, an increasing number of homeowners are dropping their mortgage and choosing to take the hit on their credit. Morals are not a good platform to base one’s argument on – if major corporations can do it without being censured (or even noticed) by the majority, why should people who own their homes not be able to? Owning your own home is a business and when that business is not profitable, conventional market wisdom indicates that you should jettison it. In order to keep homeowners paying, lenders and the government need to find a different means of persuasion that neither beats home owners down nor absolves them of the debt they voluntarily took on.

Browse the latest listings for Boulder real estate at BoulderProperty.com. Easily compare prices for Boulder homes for sale with other surrounding communities.
Article Source

In order to successfully modify a loan for your client (or for yourself), you will need to write a good hardship letter to send to the lender along with the rest of the modification package documentation. Make sure to include the borrower’s name(s), the property address, the lender name, and the loan number at the top. In the body, state what kind of modification the borrower would like, the reason they fell behind, and why their situation is stabilized or better now.

Make the letter short and sweet. If the letter is too long, it will begin to sound like a sob story and could get skimmed or even ignored by the overworked people in the lender’s loss mitigation department. Also, for an extra personal touch, keep the voice in first person for the borrower (i.e. I, me, and we), and always have them sign it personally. Have them write it by hand on a blank sheet of paper even, as it will seem less likely to have come from you or a template (which it did), and more like it came from the heart.

Below is a sample template you can use with my permission. Just cut and paste the text into a Word document, fill in the blanks, and tailor it to your own borrower’s specific situation. You may even want to tweak the verbiage a bit, as the lenders will likely have seen many identical copies of just about every hardship letter you can find online.

–

Date
Client’s name
Property address:
Lender Name
Loan number: 99999999999

To Whom It May Concern:

This letter explains the unfortunate circumstances under which I fell behind on my mortgage. I’ve done everything I can to stay ahead, but I still fell behind. I would like to be considered for a loan modification to decrease my payments and interest rate to keep this from happening again, give me a fixed rate to prevent the payments from increasing down the road, and to recapitalize the delinquent payments. My number one goal is to keep this property for the long term.

I work as a (job) for (employer). In (month and year), I hit hard times financially because (hardship reason). Since that time, (reason hardship is over or at least stabilized). My income is now (back to normal, lower than before, whatever).

Despite my recent hardship and reduction in income, it is my full intention to pay what I owe. Now that (reason hardship is over), I would appreciate if you can work with me to lower or recapitalize the delinquent amount owed, lower my payments, and fix the rate for 30 years so that I can afford to keep this home for the long term and make amends with (lender name).

I pray you will work with me on this. I’d like to get it settled so we can both move forward without problems ever again.

Sincerely,

(Client signature)

(Client Name, typed)

If you’d like to learn more about starting a loan modification business, or if you want to access all the necessary forms, spreadsheets, and templates, click here:

http://StartALoanModBiz.com

Matt Sparks is a successful entrepreneur, both offline and on. He is also a licensed mortgage broker, employing real estate broker, and Realtor. He has written books, articles, and blogs about small business, real estate, finance, New Urbanism, and sustainable cities.
Article Source