Author: justin narin

Subprime mortgages can be identified as loans made to people with past blemishes on their credit histories, may not be able to fully document their incomes, or who may have less equity or smaller down payment. refinancing mortgage

Lenders study your credit history before deciding which loan rate you qualify for. You’re likely to be offered a subprime mortgage if you have these factors on your credit report:

• Brief credit history refinancing mortgage


• Multiple 30-day delinquencies in the last year refinancing mortgage


• Multiple 60-day delinquencies in the last two years refinancing mortgage


• Foreclosures or repossessions in the last two years refinancing mortgage


• Charge-offs in the last two years


• Bankruptcies in the last five years. refinancing mortgage

You will probably also be faced with a subprime loan if your debt-to-income ratio -- the amount of debt you have compared to your income -- is higher than 50%. Student loan debts are viewed more favorably than credit card debts, but in general a high debt load makes you a high-risk borrower. refinancing mortgage

Subprime Mortgage Interest Rates
A subprime mortgage usually has a low “teaser” interest rate for the first two to five years of the loan, and then adjusts annually at a rate of prime plus 5% or more. If prime is at 5.25% when your teaser rate expires, the fully adjusted mortgage rate will be 10.25% whereas a prime loan would be closer to 5.5%. The rate usually resets annually, so your rate could skyrocket if the federal loan rate rises. refinancing mortgage

The Advantages and Disadvantages of a Subprime Mortgage
A subprime mortgage is never the ideal situation, but can be useful for certain types of borrowers. During the housing boom between 2000 and 2005, the loans were successfully used with borrowers whose credit scores were low, but whose incomes were sufficient to cover the monthly payments at their full interest rate. Unfortunately, many subprime mortgage lenders also approved loans for who couldn’t afford the full payments. refinancing mortgage

During periods when housing prices are rising, many subprime borrowers take advantage of initial low rates for two-to-five years. If prices continue to rise, the equity created allows them to refinance to prime rate mortgages before the teaser period expires. Unfortunately, many borrowers find themselves “upside down” in their loans if interest rates rise and housing prices level off or decline. That means their house is worth less than the mortgage. Many borrowers in this situation are forced to sell at a loss or default on their loans and face foreclosure. refinancing mortgage

Subprime Mortgage Restrictions
Due to the increase in default and foreclosure in late 2006 and 2007, lenders have tightened borrowing rules. Many have stopped offering subprime loans. Those that continue to offer subprime loans will no longer give loans for 100% of the purchase price. They are also tightening borrowing rules. In many cases, they will consider your ability to pay the full payment amount rather than your ability to pay the initial teaser rate. Some borrowers who would have qualified in the past will not be able to qualify under new lending policies. refinancing mortgage

How to Avoid a Subprime Mortgage
If you plan to buy, you must save at least 5% of the purchase price as a down payment. That 5% will provide you with an equity cushion should housing prices decline or stay flat in the early years of your loan when most of your monthly payment goes toward interest rather than the principal. refinancing mortgage

Before applying for a mortgage, buy your FICO credit scores. You’ll also see average interest rates for each credit score level, which will give you some idea of what to expect. If your credit score is low or your credit reports show negative marks, clean up your credit before applying for a mortgage. Although it might take you longer to get into a house, it will be worth it if it shaves points off your interest rate and allows you to avoid a subprime mortgage. refinancing mortgage

For information on subprime mortgages visit http://www.bills.com/subprime-mortgages/

About the Author:

Justin has more than 5 years experience as a financial adviser at bills.com, his key areas are loan consolidation, debt relief, mortgages etc. refinancing mortgage

Article Source: http://www.articlesbase.com/mortgage-articles/subprime-mortgage-demystified-684249.html

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Author: Julian Lim

There are many different determining factors that the lenders use to decide if they will approve your home refinancing application or deny it. Some of these include your current employment situation and total household income, your outstanding debts, your current credit score and credit report and the amount that you wish to refinance. Another determining factor is the current interest rate as compared to the original rate. Just because the current interest rate is lower that, what you are paying does not guarantee that you will get that lower rate.refinancing mortgage

Knowing Your Financial Standing

Any time you apply for any type of loan, your financial status will always be part of the determining factors. Applying for home refinancing is no different. As long as you are expected to repay any type of loan to a financial institution, your employment situation and financial status will be taken into account. The lenders need to know that you are earning enough or more than enough money to afford to repay the money you are borrowing from them. If they see that you are not making any more than what you would be paying per month as your payment, they may turn you down. refinancing mortgage

Keep Your Debts Down

Keeping your outstanding debts to a minimum is another good way to be sure that you will be approved when applying for home refinancing. The more debt that you have outstanding… such as open charge accounts or more than 10 remaining car loan payments… the greater the chances are that you will either be turned down or be given a very high interest rate. This is simply because the lenders know that you must also figure these debts into your personal budget. If there are too many currently, you might not be able to keep your mortgage payments current. refinancing mortgage

Know Your Own Credit History

Your current Credit Report and Credit score will also have a huge impact on any home refinancing that you are applying for. If there are more than a few late payments (30 to 90 days or more) this will not be looked at favorably by the lenders, as it says that you are have trouble keeping your current obligations met and might also have trouble repaying the mortgage loan if they approve it. Too many open lines of credit (credit cards and store charge accounts) are also causes for being denied a loan. refinancing mortgage

Other Thoughts in This Matter

Remember that you may be turned down for many reasons when applying for home refinancing. If you are denied financing by the lender(s) you need to ask them to tell you specifically what the reasons for rejection were. Most of the time they will do this anyway, but at times you will need to ask for specifics. If you are able to keep everything in order, it will not be that difficult to be approved for refinancing when the time comes that you need it. Being cautious and always watchful and honest works well. refinancing mortgage

About the Author:

Do you need more information about Home Refinancing or have other questions? http://www.homemortgageloan-refinance.com/Bad-Credit-Home-Loan-Refinance.php is a great place for reference material about this interesting topic. refinancing mortgage

Article Source: http://www.articlesbase.com/mortgage-articles/home-refinancing-3-ways-to-know-what-you-really-can-do-681035.html

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NBC 29 News, VA

Though much of the news from the real estate market hasn't been good, there's a silver lining. Mortgage interest rates are the lowest they've been in decades and many homeowners are turning to refinancing to save a little cash. refinancing mortgage

According to Freddie Mac, the average interest rate on a 30 year fixed mortgage is at 5.10 percent. That percentage is 37 year low. But there's a lot to consider before you change the terms of your mortgage, lock in the lower interest rate and refinance. refinancing mortgage

The Thornton family has had a house in Crozet for two and a half years. Daniel Thornton and his family are in the process refinancing the mortgage on their home now that interest rates have dropped to historic lows. Read More...

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Author: Brian S. Icenhower

Recent financial industry distress publicly attributed to widespread mortgage loan defaults has generated mounting pressure on federal prosecutors to increase investigations into incidents of mortgage fraud across the nation. On February 6, 2004, CNN reported that the FBI warned that mortgage fraud was becoming so rampant that the resulting “epidemic” of fraud could trigger a massive financial crisis. Mortgage fraud has now become so prevalent that the United States Department of Justice and the Federal Bureau of Investigation have been forced to create an entirely new category for tracking these cases. According to a CBS news report, the number of FBI agents assigned to mortgage related crimes increased by 50 percent from 2007 to 2008. Prosecutors and investigators on both the state and local levels are also feverishly organizing task forces and creating real estate fraud departments to counter this burgeoning wave of crime. refinancing mortgage

CRIME & PUNISHMENT

The primary focus of these investigations appears to be on borrowers, investors, mortgage brokers, appraisers and real estate agents. Some of the charges levied against these perpetrators have included making false statements on loan applications, bank fraud, mail fraud, wire fraud, conspiracy to launder funds and a number of applicable state laws. However, the primary legal vehicle implemented by federal prosecutors has been section 1014 of Title 18 of the United States Code which declares mortgage fraud as a federal crime encompassing anyone who willfully overvalues any land or property, or knowingly makes any false statement, for the purpose of influencing a financial institution upon a loan application, purchase agreement or other related documents. A violation of the federal mortgage fraud law (18 U.S.C. § 1014) alone is punishable by up to thirty years imprisonment and a one million dollar fine. refinancing mortgage

MORTGAGE FRAUD SCHEMES

The most effective way to avoid prosecution for mortgage fraud is to identify mortgage fraud schemes prior to any actual involvement. Most mortgage fraud offenses fall into one of two general categories: “fraud for housing” and “fraud for profit”. Fraud for housing often involves fraudulent acts committed by a borrower, often coached by his or her mortgage broker or real estate agent, to obtain a loan for the ultimate goal of acquiring a home. These fraudulent facts generally pertain to the falsification of facts and documents during the loan application process to enable the borrower to obtain financing that he or she would otherwise not be qualified to receive. Conversely, fraud for profit typically involves a more concerted plan to abuse the entire real estate transactional process for pecuniary gain. refinancing mortgage

FRAUD FOR HOUSING

Income Fraud

This occurs when a borrower inflates his or her amount of income to qualify for a loan or a larger loan amount. Although recent reductions in the use of “stated income” or “no-doc liar loans” has somewhat curbed income fraud, daring borrowers are increasingly generating more fraudulent documents to falsify income. Information technology and photocopy equipment have become so advanced that very convincing documentation, such as income statements, savings accounts and tax returns, can be produced on demand. refinancing mortgage

Employment Fraud

In order to justify overstated income in a loan application, borrowers will claim self-employment in a non-existent company or represent having a higher position in a company than the borrower actually holds. refinancing mortgage

Failure to Disclose Liabilities

The debt-to-income ratio is an important part of the loan underwriting criteria used to determine a borrower’s eligibility for mortgage loans. Consequently, borrowers will conceal financial obligations like newly acquired credit card debt, other mortgages, and private loans to artificially reduce their debt-to-income ratios. refinancing mortgage

Occupancy Fraud

Generally occurs when a borrower states on a loan application that he or she intends to occupy a property as a primary residence to secure a lower interest rate when the borrower actually intends to obtain the loan to acquire an investment property. refinancing mortgage

FRAUD FOR PROFIT

Equity Skimming and Cash-Back Schemes

A straw buyer is typically implemented as the buyer of the property due to his or her creditworthiness and resulting ability to obtain favorable financing. Unknowing straw buyers can be manipulated by mortgage brokers and real estate agents to purchase a property as a primary residence with the broker or agent later serving as a property manager to collect anticipated rental income. After the escrow closes and the mortgage and real estate brokers collect their commissions, they proceed to collect rental income and fail to make the mortgage payments. refinancing mortgage

Complex schemes can involve a knowing straw buyer, an appraiser who intentionally overstates the property’s value, a dishonest seller that intentionally inflates the selling price, and a dishonest settlement officer that makes undisclosed disbursements from the loan proceeds. All of these conspirators collaborate to collect portions of the proceeds of an inappropriately large loan before eventually letting it go into default. refinancing mortgage

Appraisal Fraud or Price Inflation

This fraud occurs when a dishonest appraiser intentionally overstates the value of a property or when an existing appraisal is altered to reflect a higher value. When a home is overvalued, more money can be obtained by the seller in a purchase transaction or by the borrower in a cash-out refinance. refinancing mortgage

The New Appraisal Fraud: Price Deflation

When done legitimately, a short sale occurs when a borrower that owes more than his or her property is worth sells the property below market value and the lender agrees to accept the lower repayment amount and forgive the difference. A new hybrid of fraud has emerged where an appraiser or a real estate agent drastically devalues the property in an appraisal or broker’s price opinion (BPO) so that the home will sell with ease at a price well below market value. Of course the new buyer is in collaboration with the seller, agent and appraiser, so all of the conspirators proceed to sell the home at a higher price for a big profit. refinancing mortgage

Identity Theft

Identity theft fraud occurs when a victim’s identity is assumed by another to obtain a mortgage without ever intending to make any payments on the loan. The perpetrators often abscond with a portion of the loan proceeds and sometimes are daring enough to lease the property and collect some deposits and rental income before disappearing. refinancing mortgage

The Buy and Bail

This completely new scheme is perpetrated by a home owner who cannot sell the home because more is owed on the property than its worth. Because no lender will provide the owner a loan for a second primary residence, the owner tells the lender that he or she plans to rent out the current home despite having no intention of doing so. Sometimes a falsified rental agreement is used to further support the falsehood. Once the second home is purchased, the owner “bails” on the original home and fails to make any further mortgage payments. refinancing mortgage

AVOIDING & PREVENTING FRAUD

Mortgage fraud frequently emanates from groups that complete an abnormal amount of similar transactions or churn out many offers to purchase at once. These outfits may appear disorganized or unprofessional due to the large amount of transactions they are attempting to manage. It is also no coincidence that mortgage fraud has significantly increased as housing values have decreased since most fraud schemes involve a financially distressed or otherwise vulnerable seller. It is equally important to remember that agents owe a very strict fiduciary duty to act in their clients’ best interests. So before reporting a client to your local authorities, speak with legal counsel or your state real estate licensing department to ensure that your proposed actions don’t constitute a breach of your fiduciary duty to your client. refinancing mortgage

Real estate agents are in a unique position that enables them to identify and even prevent the occurrence of fraud by recognizing the red flags, asking appropriate questions, and giving the principals in their transactions the full picture of what consequences are associated with participating in mortgage fraud. While a lot of damage has been done in the real estate market, we can prevent more of the same from occurring in the future. refinancing mortgage

About the Author:

Brian S. Icenhower, Esq., BS, JD, CRB, CRS, ABR, a California Association of Realtors Director, practicing real estate attorney, a real estate expert witness and litigation consultant, a prosecution consultant of Tulare County District Attorney Real Estate Fraud. He may be contacted at bicenhower@icenhowerrealestate.com, or www.icenhowerrealestate.com.

Article Source: http://www.articlesbase.com/mortgage-articles/identifying-and-avoiding-mortgage-fraud-680836.html

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MSNBC

With rates at historic lows, it’s a great time to buy a home — if you can refinancing mortgage

With all the doom and gloom over housing, you might be surprised to know that this is a fantastic time to get a mortgage. Not if you have poor credit, to be sure. But you can get a great deal on a 30-year, fixed-rate, conforming loan these days if you have a solid FICO score, a manageable debt burden, and proof positive of a reliable income. refinancing mortgage

You have to go back to around 1961 to find a time when 30-year mortgages had rates this low, according to Keith Gumbinger, a vice-president at financial publisher HSH Associates in Pompton Plains, N.J. For that, thank the U.S. government, which is trying to jump-start the stalled housing market by buying up mortgage-backed securities. On Dec. 31, Freddie Mac reported that average rates on 30-year fixed mortgages dropped to 5.1 percent for the week, down about 1.3 percentage points since late October and the lowest since its survey began in 1971. refinancing mortgage Read More...

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