Major Purchases before the Mortgage Closing

There are many things that you need to consider when you plan to close a mortgage with your chosen bank. Take note, a bank can be powerful and it can always embargo the items that you have right now. Hence, you better prioritize your needs. If you need a new car for your family, then, why not! You can always get one through your mortgage loan. However, banks do not want the idea that you are getting another big item. They look into you capacity to do so and your cash reserve as well. You should not actually consider this a threat on your part but only a reminder.

Career Change before the Mortgage Closing

No one can stop you from making a career change. It is actually your choice; however, the case will be different when you are closing a mortgage loan with the banks. If banks become persons, they would definitely get mad on you. They would see it as instability on your part and they would fear that your sudden career change could be the reason why you are unable to pay your dues to them.

Last Minute Credit Check before the Closing

Home mortgage loan would not be completed if without the last minute credit check and most banks do this thing. Hence, if have you any unpaid bills such as credit card bills or any credit card application as of the moment, your home mortgage loan can suffer and cannot be granted.

Closing Cost Awareness before Mortgage Closing

If you apply for a home loan mortgage, you need to consider many things even the small things. This closing cost which you fail to pay will stop you from closing the loan and will stop you from getting the house that you have been dreaming of.

With the financial crisis, small banks are profiting from the public outrage over the increase of fees in big banks. Day by day, small banks are earning at an increasing accelerated pace from their new bank patrons.

Smaller banks are generally excellent alternatives if you are looking for better personal service with a difficult mortgage application. Community banks are different from big banks regarding mortgage applications. Smaller banks have more control over the regulations and rules of their mortgages that they keep in their house or portfolio loans.

A portfolio loan is a great haven for a lot of borrowers who cannot meet all the needed standard requirements but are at good risk. They only need to pay for a slight increase in their interest rates which usually ranges to 0.25% to 0.5% more. For a lot of small banks, portfolio lending is a big chunk of their businesses.

It was in the year 2008 when Hurricane Ike ravages the state of Texas especially the small the low-lying homes of Galvenston Island leaving them in deep waters as high as 10 feet where small community banks showed why they should be considered as great banking institutions. Once the evacuated residents returned to their homes, the damage that Hurricane Ike was monumental and homeowners had to find ways to rebuild their homes. It was the small community banks that helped them get back on their feet by offering 90 day loans at low rate of 5%. The small banks were flexible enough to bend the rules. Small banks often waive strict requirements here and there regarding loan-to value requirements, credit scores and debt-to-income ratios.

Small community banks, as small as they are, offer great services to their customers at a more personal level.

Say No to Major Purchases

There are many things that you need to consider when you plan to close a mortgage with your chosen bank. Take note, a bank can be powerful and it can always embargo the items that you have right now. Hence, you better prioritize your needs. If you need a new car for your family, then, why not! You can always get one through your mortgage loan. However, banks do not want the idea that you are getting another big item. They look into you capacity to do so and your cash reserve as well. You should not actually consider this a threat on your part but only a reminder.

Career Change is Not Allowed

No one can stop you from making a career change. It is actually your choice; however, the case will be different when you are closing a mortgage loan with the banks. If banks become persons, they would definitely get mad on you. They would see it as instability on your part and they would fear that your sudden career change could be the reason why you are unable to pay your dues to them.

Last Minute Credit Check

Home mortgage loan would not be completed if without the last minute credit check. Hence, you never have to miss this for it will serve as your qualification. Hence, you need to keep this in mind always to get the house that you have been dreaming of.

Ideally, you would want to just sign a contract, give up your key and get your money and ride your way to the house of your dreams. Sorry to bust your windows but closing won’t be that easy especially in this greedy little world. So to avoid gaffes during closing here are a few tips for an easy closing and get yourself moving to your new house.

1. Don’t hesitate to ask questions. It would be wise that you get first hand information regarding your closing. Both parties should communicate to have a smooth closing. Talk with your real-estate agent about what is there to expect. As the past owner, you have every right to know the details regarding the closing.
2. Yes, you are professionals but it does not mean that they don’t make mistakes. Even experts can slip. You are dealing with humans so you should expect that gaffes might occur during your closing.
3. Always review your loan documents before you sign them. Sometimes we are so eager to get rid of the bad memories we shared with the house that we don’t bother reading the fine print on the loan documents. We immediately sign what we are handed and don’t even bother to read the important documents. 24 hours before closing, you are given the chance to review your closing-settlement statement. Take this chance to avoid getting into trouble.
4. The good thing about reviewing the closing-settlement statement is that you get to know how much money you need during closing. Bring a certified check if possible, a photo id, your copy of the homeowners-insurance policy and of course the HUD-1 statement.
5. Don’t stress yourself during the closing. Defray all your appointments until your closing has been done. You might have unexpected delays so it is wise that you have your day open.

It is important that sellers must reveal all the problems and flaws of the property to prevent further unexpected expenses. Sellers must disclose all the things that can affect the desirability and value of the property – from as simple as neighbourhood annoyances to as big as home’s foundation problems.

Below are 6 disclosures that sellers must make to prevent troubles later on.

1. Repairs. Any repairs in the property – big or small – should be disclosed to the buyer although the problem is fixed. Repairs and renovations involving plumbing, roof, heating and cooling, structural repairs and electrical system must all be divulged to the agents and buyers.
2. Termites. This is an invisible problem that buyers may not be aware of instantly until they have moved into the house. Still, the sellers need to disclose if the property has been infested by termites because it affects the value of the property. Before listing the property to housing market, make sure that sellers hire termite control before to clear all the pests in the home.
3. Mold/water damage. Seller should disclose any water problems such as mold or damp areas, flooded basement, or leaky attic or roof to the buyers.
4. Lead. Old houses that were built before 1978 should follow the rules to disclose identified hazards and lead-based paints in the home. All parties should sign a contract stating that requirements regarding lead safety were meant. Sellers must comply to this to avoid damages.
5. Natural hazards. Most states oblige sellers to divulge natural hazards such as floods, susceptibility to tornadoes and fires, or earthquake zone. This should be done to warn the new homeowners of the dangers and risks that they may face with their new house.
6. Property’s past. Sellers should also disclose everything that had happened to the property in the past such as previous crime happened in the property or if the home is haunted by spirits, etc.

The HARP refi allows homeowners to do refinancing even though their property drop sharply leaving them with debts higher than the current worth of their homes. A homeowner can avail up to 125% of their house’s appraised value under HARP refi.

De Lucia purchased the house in 2006 beside the bay of New Jersey shore. The value of the property were already declining at that time. In the early part of 2009, he learned from Bankrate.com about the falling rates. His debt is already more than value of the house so there is no other option but a HARP refi. He applied on May 1, 2009 with his current refi which closed at Nov. 5. Within those 6 months, he spent a lot of time on the phone, send lots of emails, and even had some screaming moments.

Here are some advice gathered from De Lucia’s experience.

• Nothing can go smoothly. De Lucia is an architect that is just waiting for his license. In the beginning, he already encountered problems with his application. De Lucia applied on the phone. The loan officer misspelled De Lucia as Delusia and although it is the officer’s mistake, De Lucia wasted so many time and effort fixing the problem. He provided a photocopy of his driver’s license as proof of identity. A loan officer was assigned to him. After that, he was transferred to another loan officer who requested to resend his documents. He send the documents via fax until he reaches the third time.
• Email your documents if possible than faxing them. Emailing is better than faxing to avoid lost dosuments.

Some banks forecloses a property and then sells them. Although most banks fix foreclosed properties – while other lets it stay as it is – they are not oblige to reveal the flaws of the properties; some don’t even know the exact defect of the properties. More so, banks are not even oblige to fix foreclosed properties and they only give very limited time frame for property inspections. This means that it is the buyer’s responsibility to be diligent enough to do the in-depth inspection of foreclosed properties. So even if the property that was foreclosed has some flaws – with or without the knowledge of the bank – they are not compel to fix that. The months (or even years) that the house remained unoccupied may result to even more damages like electrical and plumbing defects.

There are some cases where buyers discovered some flaws after buying the foreclosed house, still, banks are not responsible for any actions like inspections and repair. Much worst, electric companies disconnect the electricity in foreclosed properties after months a few days of service termination which may worsen the scenario. Depending on the city and site, it may cost you money for re installation of meter, a permit may be necessary with corresponding fee, and a meter inspector may still need to inspect your electric post, and an electrician may still need to do line inspection to ensure that the house is safe and will not burn after the power line is restored.

In short, potential buyers may need to spend some cash for the property inspection alone. Around $400 to $900 are needed for the inspection. This may cause the possible buyer to drop the deal, while other simply opt to give up the inspection process.

This serves as a lesson. In buying a foreclosed property, ensure that everything is in place. It may cost you money but the convenience of living in a convenient house is very much irreplaceable.

By the end of the last quarter of 2011, 22.8% or 1.1 million mortgage properties were with a negative equity. It increased from 10.7 million of the previous year or 22.1%. Much worst, 2.5 million borrowers even have below 5% equity which is almost near to a negative equity in the last quarter.

Decreasing home prices is the main culprit of negative equity. The value of the homes is decreasing because distressed properties are increasing sales. Houses that are in the stage of foreclosures are selling like pancakes. In fact, it increased from 20% from the third quarter of 2011 to 24% of the last quarter of 2011.

Negative equity is widespread in states such as Nevada, Florida and Georgia. In Nevada, 61% of borrowers have negative equity. In Florida, there are 44% of borrowers are with negative equity. Sales of foreclosures are also increasing in Georgia. The top 5 states with negative equity have an average of 44.3% share. The remaining states have only 15.3% share combined.

A new refinancing program is being proposed by the government for borrowers of Fannie Mae and Freddie Mac. They can get loans that have low rates even if they have negative equity. Another program is being proposed by Obama administration for non-GSE borrowers, by way of FHA. It is still seeking approval from the congress but is not getting enough support from there.

As earlier stated, there is an increased in home sales but, for the most part, through the investors selling distressed, low-end and foreclosed properties. There might be no movement upwards this spring as one-third of the borrowers are trapped in the negative equity.

Obama administration has already been pushing finance companies to agree to principal reduction but Fannie Mae and Freddie Mac refused in doing so. Unfortunately, more than half of U.S.’s mortgages are controlled by Fannie Mae and Freddie Mac – which is taken by the Federal government in 2008.

DeMarco, who is also the head of Federal Housing Finance Agency, is firm with his order to diminish taxpayer bailouts of Fannie Mae and Freddie Mac which reach $189 billion already. Today, there has been a $26 billion mortgage settlement that will lessen the principal of 1 million borrowers but none of these borrowers were from Fannie Mae and Freddie Mac. Of course, borrowers of Fannie Mae and Freddie Mac are annoyed.

Now, more and more people are asking for petitions for Pres. Obama to ditch DeMarco. Community groups from California – around 97 of them – are calling for DeMarco to permit principal reduction or he should resign from his position. Rep. Barney Franck is also calling DeMarco out of the office.  California Attorney General Kamala Harris has also asked DeMarco to step aside because, she said, DeMarco does not know what he is doing. Harris is the acting director of Federal Housing Finance Agency. Harris sent a letter to DeMarco asking for a stop to foreclosure by giving a transparent and thorough analysis of principal reduction to save struggling homeowners as well as taxpayers. Over 60% of the 500,000 California homeowners who are facing foreclosure nightmares are borrowers of Fannie Mae and Freddie Mac loans and not even one of them is covered by the $26 billion settlement.

Reverse mortgages are simply the process of borrowing money by the homeowners against the value of their property. It started in 1960s and has gained popularity ever since. Celebrities who are endorsing reversed mortgage are Robert Wagner, Henry Winkler and Fred Thompson. They have commercial on TV shown on late night viewing hours and on week ends. Whether or not it is because of financial need or the advertisements, reverse mortgage is becoming more attractive for seniors. In 2010, there were more than 80,000 American elders aged 60 years old and above finalized their reversed mortgage. It was only 25,000 in 1995.

It is very common that more and more elders are reversing their home mortgage at an early age because most of the people did not plan for their retirement, have high debts and cannot even buy their needs. Another factor for increased reversed mortgage is the higher number of elders now – rich or poor. Also, the age of the elders getting reversed mortgage are becoming younger. In U.S. alone, there are about 10,000 people a day who reached age 62 which means that the number will still increase and will get a lot bigger after ten years.

Reversed mortgage works like this, an elder 62 years or older can get a lump sum or money for the equity of their property. The loan is given with interest but does not need to repay immediately only until after the last living homeowner moved or passed away.